[Federal Register Volume 64, Number 126 (Thursday, July 1, 1999)]
[Notices]
[Pages 35590-35625]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16657]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-801, A-428-801, A-475-801, A-588-804, A-485-801, A-559-801, A-
412-801]


Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof From France, Germany, Italy, Japan, Romania, Sweden, and 
the United Kingdom; Final Results of Antidumping Duty Administrative 
Reviews

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

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

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

SUMMARY: On February 23, 1999, the Department of Commerce published the 
preliminary results of administrative reviews of the antidumping duty 
orders on antifriction bearings (other than tapered roller bearings) 
and parts thereof from France, Germany, Italy, Japan, Romania, Sweden, 
and the United Kingdom. The classes or kinds of merchandise covered by 
these orders are ball bearings and parts thereof, cylindrical roller 
bearings and parts thereof, and spherical plain bearings and parts 
thereof. The reviews cover 21 manufacturers/exporters. The period of 
review is May 1, 1997, through April 30, 1998.
    Based on our analysis of the comments received, we have made 
changes, including corrections of certain programming and other 
clerical errors, in the margin calculations. Therefore, the final 
results differ from the preliminary results. The final weighted-average 
dumping margins for the reviewed firms are listed below in the section 
entitled ``Final Results of the Reviews.''

EFFECTIVE DATE: July 1, 1999.

FOR FURTHER INFORMATION: Please contact the appropriate case analysts 
for the various respondent firms as listed below, at Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, Washington, D.C. 20230; telephone: (202) 482-4733.

France

    Lyn Johnson (SKF), Larry Tabash or Davina Hashmi (SNFA), J. David 
Dirstine (SNR), Robin Gray, or Richard Rimlinger.

Germany

    Mark Ross (INA and Torrington Nadellager), Farah Naim or Davina 
Hashmi (SKF), Thomas Schauer (FAG), Robin Gray, or Richard Rimlinger.

Italy

    Anne Copper or J. David Dirstine (SKF), Edythe Artman or Mark Ross 
(FAG), Minoo Hatten (Somecat), Robin Gray, or Richard Rimlinger.

Japan

    J. David Dirstine (Koyo and Nachi), Thomas Schauer (NTN), Davina 
Hashmi (NPBS), Diane Krawczun (NSK), Robin Gray, or Richard Rimlinger.

Romania

    Suzanne Flood (TIE, S.A.) or Robin Gray.

Sweden

    Davina Hashmi (SKF) or Richard Rimlinger.

United Kingdom

    Stacey King (Barden), Diane Krawczun (NSK/RHP), Hermes Pinilla 
(FAG), Lyn Johnson (SNFA U.K.), Robin Gray, or Richard Rimlinger.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

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

Background

    On February 23, 1999, the Department of Commerce (the Department) 
published the preliminary results of administrative reviews of the 
antidumping duty orders on antifriction bearings (other than tapered 
roller bearings) and parts thereof (AFBs) from France, Germany, Italy, 
Japan, Romania, Sweden, and the United Kingdom (64 FR 8790). The 
reviews cover 21 manufacturers/exporters. The period of review (POR) is 
May 1, 1997, through April 30, 1998. We invited parties to comment on 
the preliminary results of reviews. At the request of certain 
interested parties, we held hearings for Germany-specific issues on 
April 1, 1999, and for Japan-specific issues on April 6, 1999. The 
Department has conducted these administrative reviews in accordance 
with section 751 of the Act.

Scope of Reviews

    The products covered by these reviews are AFBs and constitute the

[[Page 35591]]

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

Duty Absorption

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

------------------------------------------------------------------------
                                                              Percentage
                                                               of U.S.
                                                             affiliate's
             Name of firm                  Class or kind      sales with
                                                               dumping
                                                               margins
------------------------------------------------------------------------
                                 France
------------------------------------------------------------------------
SKF..................................  BBs                         18.44
SNR..................................  BBs                          5.14
                                       CRBs                        10.27
------------------------------------------------------------------------
                                 Germany
------------------------------------------------------------------------
SKF..................................  BBs                          3.17
                                       CRBs                        33.52
                                       SPBs                        20.31
Torrington Nadellager................  CRBs                         0.26
FAG..................................  BBs                         10.31
                                       CRBs                        24.59
INA..................................  BBs                          9.14
                                       CRBs                         9.24
                                       SPBs                         3.53
------------------------------------------------------------------------
                                  Italy
------------------------------------------------------------------------
FAG..................................  BBs                         10.38
SKF..................................  BBs                         20.73
------------------------------------------------------------------------
                                  Japan
------------------------------------------------------------------------
Koyo.................................  BBs                         29.73
                                       CRBs                        47.46
Nachi................................  BBs                         43.96
                                       CRBs                         8.04
NPBS.................................  BBs                          9.75
NSK..................................  BBs                          4.89
                                       CRBs                        16.23
NTN..................................  BBs                         28.83
                                       CRBs                        32.57
                                       SPBs                        57.17
------------------------------------------------------------------------
                                 Sweden
------------------------------------------------------------------------
SKF..................................  BBs                          4.16
                                       CRBs                       100.00
------------------------------------------------------------------------
                             United Kingdom
------------------------------------------------------------------------
Barden...............................  BBs                         19.43
NSK/RHP..............................  BBs                         31.46
                                       CRBs                        47.88
------------------------------------------------------------------------

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

Use of Facts Available

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

Sales Below Cost in the Home Market

    The Department disregarded home-market sales that failed the cost 
test for the following firms and classes or kinds of merchandise for 
these final results of reviews:

----------------------------------------------------------------------------------------------------------------
                 Country                              Company                       Subject merchandise
----------------------------------------------------------------------------------------------------------------
France..................................  SKF............................  BBs.
                                          SNR............................  BBs.
Germany.................................  SKF............................  BBs, CRBs, SPBs.
                                          FAG............................  BBs, CRBs.
                                          INA............................  BBs, CRBs, SPBs.
Italy...................................  FAG............................  BBs.
                                          SKF............................  BBs.
Japan...................................  Koyo...........................  BBs, CRBs.
                                          Nachi..........................  BBs, CRBs.
                                          NSK............................  BBs, CRBs.
                                          NTN............................  BBs, CRBs, SPBs.
                                          NPBS...........................  BBs.
Sweden..................................  SKF............................  BBs.
United Kingdom..........................  Barden.........................  BBs.
                                          NSK-RHP........................  BBs, CRBs.
----------------------------------------------------------------------------------------------------------------

Changes Since the Preliminary Results

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

Analysis of Comments Received

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

Final Results of Reviews

    We determine that the following percentage weighted-average margins 
exist for the period May 1, 1997, through April 30, 1998:

------------------------------------------------------------------------
                   Company                       BBs      CRBs     SPBs
------------------------------------------------------------------------
                                 France
------------------------------------------------------------------------
SKF..........................................     7.40      (2)     7.39
SNFA.........................................     0.41     0.21      (2)
SNR..........................................     0.31     0.37      (1)
------------------------------------------------------------------------
                                 Germany
------------------------------------------------------------------------
SKF..........................................     1.23     5.47     3.06
Torrington...................................      (2)     0.45      (3)
Nadellager
FAG..........................................     2.93     8.92      (1)
INA..........................................     7.38     3.88     0.87
------------------------------------------------------------------------
                                  Italy
------------------------------------------------------------------------
FAG..........................................     0.96      (1)
SKF..........................................     3.42      (3)
Somecat......................................     0.45      (2)
------------------------------------------------------------------------
                                  Japan
------------------------------------------------------------------------
Koyo Seiko...................................     7.23    11.15      (1)

[[Page 35592]]

 
Nachi........................................     4.33     1.02      (1)
NPBS.........................................     1.20      (2)      (2)
NSK Ltd......................................     1.12     4.55      (2)
NTN..........................................     6.13     3.48    12.49
------------------------------------------------------------------------
                                 Romania
------------------------------------------------------------------------
TIE..........................................     0.07
------------------------------------------------------------------------
                                  Sweden
------------------------------------------------------------------------
SKF..........................................     2.87    13.69
------------------------------------------------------------------------
                              United Kingdom
------------------------------------------------------------------------
Barden.......................................     2.89      (1)
FAG (U.K.)...................................      (1)      (1)
NSK-RHP......................................    21.02    49.13
SNFA.........................................     0.00     (2)
------------------------------------------------------------------------
(\1\) No shipments or sales subject to this review. The cash-deposit
  rate is from the last relevant segment of the proceeding in which the
  firm had shipments/sales.
(\2\) No shipments or sales subject to this review. The firm has no
  individual rate from any segment of this proceeding.
(\3\) No review.

Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b)(1), we have calculated, whenever possible, an 
exporter/importer- or customer-specific assessment rate or value for 
subject merchandise.

a. Export Price Sales

    With respect to export price (EP) sales for these final results, we 
divided the total dumping margins (calculated as the difference between 
normal value and EP) for each importer/customer by the total number of 
units sold to that importer/customer. We will direct the Customs 
Service to assess the resulting per-unit dollar amount against each 
unit of merchandise on each of that importer's/customer's entries under 
the relevant order during the review period.

b. Constructed Export Price Sales

    For constructed export price (CEP) sales (sampled and non-sampled), 
we divided the total dumping margins for the reviewed sales by the 
total entered value of those reviewed sales for each importer. When an 
affiliated party acts as an importer for EP sales we have included the 
applicable EP sales in this assessment-rate calculation. We will direct 
the Customs Service to assess the resulting percentage margin against 
the entered customs values for the subject merchandise on each of that 
importer's entries under the relevant order during the review period. 
While the Department is aware that the entered value of sales during 
the POR is not necessarily equal to the entered value of entries during 
the POR, use of entered value of sales as the basis of the assessment 
rate permits the Department to collect a reasonable approximation of 
the antidumping duties which would have been determined if the 
Department had reviewed those sales of merchandise actually entered 
during the POR.

Cash-Deposit Requirements

    To calculate the cash-deposit rate for each respondent (i.e., each 
exporter and/or manufacturer included in these reviews) we divided the 
total dumping duties due for each company by the total net value for 
that company's sales of merchandise during the review period subject to 
each order.
    In order to derive a single deposit rate for each order for each 
respondent, we weight-averaged the EP and CEP deposit rates (using the 
EP and CEP, respectively, as the weighting factors). To accomplish this 
when we sampled CEP sales, we first calculated the total dumping 
margins for all CEP sales during the review period by multiplying the 
sample CEP margins by the ratio of total days in the review period to 
days in the sample weeks. We then calculated a total net value for all 
CEP sales during the review period by multiplying the sample CEP total 
net value by the same ratio. We then divided the combined total dumping 
margins for both EP and CEP sales by the combined total value for both 
EP and CEP sales to obtain the deposit rate.
    We will direct the Customs Service to collect the resulting 
percentage deposit rate against the entered customs value of each of 
the exporter's entries of subject merchandise entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
this notice.
    Entries of parts incorporated into finished bearings before sales 
to an unaffiliated customer in the United States will receive the 
respondent's deposit rate applicable to the order.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of administrative 
reviews for all shipments of AFBs entered, or withdrawn from warehouse, 
for consumption on or after the date of publication, as provided by 
section 751(a)(1) of the Act: (1) the cash-deposit rates for the 
reviewed companies will be the rates shown above except that, for firms 
whose weighted-average margins are less than 0.5 percent and therefore 
de minimis, the Department shall not require a deposit of estimated 
antidumping duties; (2) for previously reviewed or investigated 
companies not listed above, the cash-deposit rate will continue to be 
the company-specific rate published for the most recent period; (3) if 
the exporter is not a firm covered in this review, a prior review, or 
the original less-than-fair-value (LTFV) investigation, but the 
manufacturer is, the cash-deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; and (4) 
the cash-deposit rate for all other manufacturers or exporters will 
continue to be the ``All Others'' rate for the relevant order made 
effective by the final results of review published on July 26, 1993 
(see Final Results of Antidumping Duty Administrative Reviews and 
Revocation in Part of an Antidumping Duty Order, 58 FR 39729 (July 26, 
1993), and, for BBs from Italy, see Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From France, et al: Final 
Results of Antidumping Duty Administrative Reviews, Partial Termination 
of Administrative Reviews, and Revocation in Part of Antidumping Duty 
Orders, 61 FR 66472 (December 17, 1996)). These rates are the ``All 
Others'' rates from the relevant LTFV investigation.
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative reviews.
    This notice serves as a 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 Department's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of doubled antidumping duties.
    This notice also serves as the only reminder to parties subject to 
administrative protective orders (APO) of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 351.305(a)(3) or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and terms of an APO is a violation which is 
subject to sanction.
    We are issuing and publishing this determination in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.


[[Page 35593]]


    Dated: June 23, 1999.
Richard W. Moreland
Acting Assistant Secretary for Import Administration.

Scope Appendix Contents

A. Description of the Merchandise
B. Scope Determinations

Issues Appendix Contents

 Abbreviations
 Comments and Responses
    1. Facts Available
    2. Duty Absorption
    3. Discounts, Rebates, and Price Adjustments
    4. Circumstance-of-Sale Adjustments
    A. Credit
    B. Technical Services and Warranties
    C. Commissions
    D. Other Direct Selling Expenses
    E. Indirect Selling Expenses
    5. Level of Trade
    6. Cost of Production and Constructed Value
    A. Profit for Constructed Value
    B. Affiliated-Party Inputs
    C. General, Selling, and Administrative Expenses
    D. When to Use Constructed Value
    E. Miscellaneous
    7. Packing and Movement Expense
    A. Repacking
    B. Inland Freight
    C. Ocean and Air Freight
    D. Inventory Carrying Costs
    8. Sales to Affiliated Parties
    9. Samples, Prototypes, and Sales Outside the Ordinary Course of 
Trade
    10. Constructed Export Price Profit
    11. Miscellaneous
    A. Clerical Errors
    B. Other
    12. Romania-Specific Issues

Scope Appendix

A. Description of the Merchandise

    The products covered by these orders, antifriction bearings (other 
than tapered roller bearings), mounted or unmounted, and parts thereof 
(AFBs), constitute the following classes or kinds of merchandise:
    1. Ball Bearings and Parts Thereof: These products include all AFBs 
that employ balls as the roller element. Imports of these products are 
classified under the following categories: antifriction balls, ball 
bearings with integral shafts, ball bearings (including radial ball 
bearings) and parts thereof, and housed or mounted ball bearing units 
and parts thereof. Imports of these products are classified under the 
following Harmonized Tariff Schedule (HTS) subheadings: 3926.90.45, 
4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00, 
8431.39.0010, 8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00, 
8482.99.05, 8482.99.2580, 8482.99.35, 8482.99.6595, 8483.20.40, 
8483.20.80, 8483.50.8040, 8483.50.90, 8483.90.20, 8483.90.30, 
8483.90.70, 8708.50.50, 8708.60.50, 8708.60.80, 8708.70.6060, 
8708.70.8050, 8708.93.30, 8708.93.5000, 8708.93.6000, 8708.93.75, 
8708.99.06, 8708.99.31, 8708.99.4960, 8708.99.50, 8708.99.5800, 
8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 
8803.90.90.
    2. Cylindrical Roller Bearings, Mounted or Unmounted, and Parts 
Thereof: These products include all AFBs that employ cylindrical 
rollers as the rolling element. Imports of these products are 
classified under the following categories: antifriction rollers, all 
cylindrical roller bearings (including split cylindrical roller 
bearings) and parts thereof, housed or mounted cylindrical roller 
bearing units and parts thereof.
    Imports of these products are classified under the following HTS 
subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 
6909.19.5010, 8431.20.00, 8431.39.0010, 8482.40.00, 8482.50.00, 
8482.80.00, 8482.91.00, 8482.99.25, 8482.99.35, 8482.99.6530, 
8482.99.6560, 8482.99.70, 8483.20.40, 8483.20.80, 8483.50.8040, 
8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 
8708.93.5000, 8708.99.4000, 8708.99.4960, 8708.99.50, 8708.99.8080, 
8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 8803.90.90.
    3. Spherical Plain Bearings, Mounted or Unmounted, and Parts 
Thereof: These products include all spherical plain bearings that 
employ a spherically shaped sliding element and include spherical plain 
rod ends.
    Imports of these products are classified under the following HTS 
subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 
6909.50.10, 8483.30.80, 8483.90.30, 8485.90.00, 8708.93.5000, 
8708.99.50, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 
8803.90.90.
    The HTS item numbers are provided for convenience and customs 
purposes. They are not determinative of the products subject to the 
orders. The written descriptions remain dispositive.
    Size or precision grade of a bearing does not influence whether the 
bearing is covered by the orders. These orders cover all the subject 
bearings and parts thereof (inner race, outer race, cage, rollers, 
balls, seals, shields, etc.) outlined above with certain limitations. 
With regard to finished parts, all such parts are included in the scope 
of these orders. For unfinished parts, such parts are included if (1) 
they have been heat-treated, or (2) heat treatment is not required to 
be performed on the part. Thus, the only unfinished parts that are not 
covered by these orders are those that will be subject to heat 
treatment after importation.
    The ultimate application of a bearing also does not influence 
whether the bearing is covered by the orders. Bearings designed for 
highly specialized applications are not excluded. Any of the subject 
bearings, regardless of whether they may ultimately be utilized in 
aircraft, automobiles, or other equipment, are within the scopes of 
these orders.

B. Scope Determinations

    The Department has issued numerous clarifications of the scope of 
the orders. The status of the following products was decided during the 
investigation:

Products covered:
     Rod end bearings and parts thereof
     AFBs used in aviation applications
     Aerospace engine bearings
     Split cylindrical roller bearings
     Wheel hub units
     Wave generator bearings
     Bearings (including mounted or housed units and flanged or 
enhanced bearings) ultimately utilized in textile machinery
Products excluded:
     Plain bearings other than spherical plain bearings
     Airframe components unrelated to the reduction of friction
     Linear motion devices
     Split pillow block housings
     Nuts, bolts, and sleeves that are not integral parts of a 
bearing or attached to a bearing under review
     Thermoplastic bearings
     Stainless steel hollow balls
     Textile machinery components that are substantially 
advanced in function(s) or value
     Wheel hub units imported as part of front and rear axle 
assemblies; wheel hub units that include tapered roller bearings; and 
clutch release bearings that are already assembled as parts of 
transmissions
     Slewing rings and slewing bearings

    In addition, since the time of the investigation the Department has 
issued the following rulings:
    Scope rulings completed between April 1, 1990, and June 30, 1990 
(see Scope Rulings, 55 FR 42750 (October 23, 1990)):

Products excluded:
     Antifriction bearings, including integral shaft ball 
bearings, used in textile machinery and imported with attachments and 
augmentations sufficient to advance their function beyond load-bearing/
friction-reducing capability

    Scope rulings completed between July 1, 1990, and September 30, 
1990 (see

[[Page 35594]]

Scope Rulings, 55 FR 43020 (October 25, 1990)):

Products covered:
     Rod ends
     Clutch release bearings
     Ball bearings used in the manufacture of helicopters
     Ball bearings used in the manufacture of disk drives

    Scope rulings published in Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof; Final Results of 
Antidumping Administrative Review, 56 FR 31692, 31696 (July 11, 1991):

Products covered:
     Load rollers and thrust rollers, also called mast guide 
bearings
     Conveyor system trolley wheels and chain wheels

    Scope rulings completed between April 1, 1991, and June 30, 1991 
(see Scope Rulings, 56 FR 36774 (August 1, 1991)):

Products excluded:
     Textile machinery components including false twist 
spindles, belt guide rollers, separator rollers, damping units, rotor 
units, and tension pulleys

    Scope rulings completed between July 1, 1991, and September 30, 
1991 (see Scope Rulings, 56 FR 57320 (November 8, 1991)):

Products covered:
     Snap rings and wire races
     Bearings imported as spare parts
     Custom-made specialty bearings
Products excluded:
     Certain rotor assembly textile machinery components
     Linear motion bearings

    Scope rulings completed between October 1, 1991, and December 31, 
1991 (see Scope Rulings, 57 FR 4597 (February 6, 1992)):

Products covered:
     Chain sheaves (forklift truck mast components)
     Loose boss rollers used in textile drafting machinery, 
also called top rollers
     Certain engine main shaft pilot bearings and engine crank 
shaft bearings

    Scope rulings completed between January 1, 1992, and March 31, 1992 
(see Scope Rulings, 57 FR 19602 (May 7, 1992)):

Products covered:
     Ceramic bearings
     Roller turn rollers
     Clutch release systems that contain rolling elements
Products excluded:
     Clutch release systems that do not contain rolling 
elements
     Chrome steel balls for use as check valves in hydraulic 
valve systems

    Scope rulings completed between April 1, 1992, and June 30, 1992 
(see Scope Rulings, 57 FR 32973 (July 24, 1992)):

Products excluded:
     Finished, semiground stainless steel balls
     Stainless steel balls for non-bearing use (in an optical 
polishing process)

    Scope rulings completed between July 1, 1992, and September 30, 
1992 (see Scope Rulings, 57 FR 57420 (December 4, 1992)):

Products covered:
     Certain flexible roller bearings whose component rollers 
have a length-to-diameter ratio of less than 4:1
     Model 15BM2110 bearings
Products excluded:
     Certain textile machinery components

    Scope rulings completed between October 1, 1992, and December 31, 
1992 (see Scope Rulings, 58 FR 11209 (February 24, 1993)):

Products covered:
     Certain cylindrical bearings with a length-to-diameter 
ratio of less than 4:1
Products excluded:
     Certain cartridge assemblies comprised of a machine shaft, 
a machined housing and two standard bearings

    Scope rulings completed between January 1, 1993, and March 31, 1993 
(see Scope Rulings, 58 FR 27542 (May 10, 1993)):

Products covered:
     Certain cylindrical bearings with a length-to-diameter 
ratio of less than 4:1

    Scope rulings completed between April 1, 1993, and June 30, 1993 
(see Scope Rulings, 58 FR 47124 (September 7, 1993)):
Products covered:
     Certain series of INA bearings
Products excluded:
     SAR series of ball bearings
     Certain eccentric locking collars that are part of housed 
bearing units

    Scope rulings completed between October 1, 1993, and December 31, 
1993 (see Scope Rulings, 59 FR 8910 (February 24, 1994)):

Products excluded:
     Certain textile machinery components

    Scope rulings completed between January 1, 1994, and March 31, 
1994:

Products excluded:
     Certain textile machinery components

    Scope rulings completed between October 1, 1994 and December 31, 
1994 (see Scope Rulings, 60 FR 12196 (March 6, 1995)):

Products excluded:
     Rotek and Kaydon--Rotek bearings, models M4 and L6, are 
slewing rings outside the scope of the order.

    Scope rulings completed between April 1, 1995 and June 30, 1995 
(see Scope Rulings, 60 FR 36782 (July 18, 1995)):

Products covered:
     Consolidated Saw Mill International (CSMI) Inc.--Cambio 
bearings contained in CSMI's sawmill debarker are within the scope of 
the order.
     Nakanishi Manufacturing Corp.--Nakanishi's stamped steel 
washer with a zinc phosphate and adhesive coating used in the 
manufacture of a ball bearing is within the scope of the order.

    Scope rulings completed between January 1, 1996 and March 31, 1996 
(see Scope Rulings, 61 FR 18381 (April 25, 1996)):

Products excluded:
     Marquardt Switches--Medium carbon steel balls imported by 
Marquardt are outside the scope of the order.

    Scope rulings completed between April 1, 1996 and June 30, 1996 
(see Scope Rulings, 61 FR 40194 (August 1, 1996)):

Products excluded:
     Dana Corporation--Automotive component, known variously as 
a center bracket assembly, center bearings assembly, support bracket, 
or shaft support bearing, is outside the scope of the order.
     Rockwell International Corporation--Automotive component, 
known variously as a cushion suspension unit, cushion assembly unit, or 
center bearing assembly, is outside the scope of the order.
     Enkotec Company, Inc.--``Main bearings'' imported for 
incorporation into Enkotec Rotary Nail Machines are slewing rings and, 
therefore, are outside the scope of the order.

    Scope ruling January 19, 1999, memorandum from Laurie Parkhill to 
Richard W. Moreland:

Products excluded:
     Nissei Sangyo America, Ltd.--Certain vacuum nozzle 
assembly, designated as part 630-063-2316, is outside the scope of the 
order.


[[Page 35595]]


    Scope ruling February 26, 1999, memorandum from Laurie Parkhill to 
Richard W. Moreland:

Products excluded:
     Holland Hitch--``Turntable bearing'' (slewing rings, 
gearless slewing rings, or slewing bearings) is outside the scope of 
the order.

Issues Appendix

Company Abbreviations

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

Other Abbreviations

CAFC--Court of Appeals for the Federal Circuit
COP--Cost of Production
CV--Constructed Value
CEP--Constructed Export Price
CIT--Court of International Trade
G&A--General and Administrative Expenses
EP--Export Price
NME--Non-market Economy
OEM--Original Equipment Manufacturer
POR--Period of Review
SAA--Statement of Administrative Action
URAA--Uruguay Round Agreements Act

AFB Administrative Determinations

    LTFV Investigation--Final Determinations of Sales at Less than Fair 
Value; Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof from the Federal Republic of Germany, 54 FR 19006 (May 3, 
1989).
    AFBs 1--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof from the Federal Republic of Germany; Final Results 
of Antidumping Duty Administrative Review, 56 FR 31692 (July 11, 1991).
    AFBs 2--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al.; Final Results of Antidumping 
Duty Administrative Reviews, 57 FR 28360 (June 24, 1992).
    AFBs 3--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al.; Final Results of Antidumping 
Duty Administrative Reviews and Revocation in Part of an Antidumping 
Duty Order, 58 FR 39729 (July 26, 1993).
    AFBs 4--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al; Final Results of Antidumping Duty 
Administrative Reviews, Partial Termination of Administrative Reviews, 
and Revocation in Part of Antidumping Duty Orders, 60 FR 10900 
(February 28, 1995).
    AFBs 5--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al; Final Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 66472 (December 17, 1996).
    AFBs 6--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al; Final Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 62 FR 2081 (January 15, 1997).
    AFBs 7--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 (October 17, 1997).
    AFBs 8--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, 63 FR 33320 (June 18, 1998).

Comments and Responses

1. Facts Available
    Comment 1: Torrington contends that NTN refused to (1) explain its 
method for distinguishing subject CRBs from nonsubject needle roller 
bearings, (2) provide adequate documentation to support its claim that 
it could not obtain sales information from affiliated home-market 
resellers, (3) report the total downstream value of merchandise sold by 
affiliated home-market resellers on a class-or-kind basis for companies 
in which NTN owns a majority interest, (4) revise its calculation of 
home-market and U.S. inventory carrying costs in accordance with the 
Department's instructions, (5) explain an apparent discrepancy between 
its narrative description and its reported home-market packing 
expenses, (6) provide supplemental information regarding its U.S. 
indirect selling expenses for which the Department asked, (7) 
recalculate its freight and packing expenses on the basis on which they 
were incurred, and 8) segregate U.S. warehousing expenses as instructed 
by the Department. Citing Koyo Seiko Co., Ltd. v. United States, 92 
F.3d 1162, 1166-1167 (CAFC 1996), Torrington argues that the Department 
should apply total adverse facts available because of NTN's refusal to 
cooperate.
    NTN asserts that it answered all of the Department's requests for 
information fully and completely. NTN contends that the case Torrington 
cites is irrelevant because it interpreted the pre-URAA statutory 
provision for best information available. NTN also contends that the 
Department has verified and approved NTN's data and methodologies in 
almost every single past review of this case. Citing Borden v. United 
States, 4 F. Supp. 2d 1221, 1244 (CIT 1998) (Borden), NTN argues that 
the Department must use a respondent's information, regardless of the 
condition of the information, if the criteria of section 782(e) of the 
Act have been met. Regarding its own situation, NTN claims that it has 
met the statutory criteria.
    NTN argues that, in contrast to Torrington's argument, it has 
explained how it segregated subject CRBs from nonsubject needle roller 
bearings and that the Department has verified its methodology in prior 
reviews. NTN argues that the Department asked that NTN report 
downstream-sales information only where possible and that NTN explained 
that it was not possible to provide such information. With respect to 
inventory carrying costs, NTN argues that the Department asked that NTN 
report these costs on a

[[Page 35596]]

particular basis only where possible and that NTN explained that it was 
not possible. With respect to indirect selling expenses, NTN contends 
that it provided detailed explanations of each of its worksheets and 
that Torrington did not offer any substantive argument regarding the 
merit of the worksheets. With respect to freight and packing expenses, 
NTN contends that it explained why it could not allocate the expenses 
on the basis on which they were incurred and that the Department has 
verified NTN's methodology in prior reviews. Finally, NTN argues that 
the Department segregated warehousing expenses itself in the 
preliminary results.
    Department's Position: For the majority of items which Torrington 
raised, NTN provided adequate information which we could use to 
calculate NTN's margin. More specifically, with respect to the 
segregation of subject CRBs from nonsubject needle roller bearings, we 
have verified NTN's methodology in past reviews and found it to be 
acceptable and there is no evidence in these reviews that NTN either 
reported sales of nonsubject merchandise or did not report sales of 
subject merchandise. With regard to warehousing expenses, as NTN 
observes, we were able to segregate these expenses for the preliminary 
results. With regard to U.S. indirect selling expenses, we find that 
NTN excluded the adjustments to which Torrington refers from its 
indirect selling expense calculation properly.
    We find, however, that NTN should have addressed an adjustment 
elsewhere in the response but did not. We are unable to discuss this 
adjustment further due to the proprietary nature of this data (see NTN 
final results analysis memorandum dated June 16, 1999, for our 
analysis, a description of this adjustment, and how we addressed it in 
our analysis of NTN).
    Because NTN's responses to our requests for information allowed us 
to calculate margins, it would not be appropriate to base NTN's margin 
on total facts available.
    However, we find that NTN's responses to our requests for the total 
value of sales by home-market affiliates and for revised home-market 
packing expenses is not adequate for us to use in calculating NTN's 
margin. Therefore, the use of partial facts available for these items 
is appropriate. Further, we determine that, because NTN did not act to 
the best of its ability in responding to our requests for information 
concerning these items, the use of adverse facts available is warranted 
for these items.
    With regard to sales by home-market affiliates, we requested that 
NTN report the total value of sales by affiliates on a class-or-kind 
basis. We also requested that, if NTN could not ``obtain this 
information for all affiliated resellers, please provide it for at 
least those companies in which NTN owns a majority interest.'' See 
supplemental questionnaire dated September 24, 1998, at 1. We asked 
this question to determine whether sales to affiliates would be a 
reasonable substitute for sales by affiliates in our calculation of 
normal value. Because NTN did not provide this information, we are not 
able to make this determination. Therefore, the use of facts available 
is warranted.
    Contrary to NTN's assertion, we did not indicate in our 
supplemental questionnaire that NTN should only report this ``where 
possible.'' Instead, we indicated that, if NTN could not obtain this 
information from affiliates in which it does not own a majority 
interest, NTN should at least obtain this information from affiliates 
in which it does own a majority interest. Furthermore, NTN's 
explanation for why it could not obtain this information from those 
companies in which it owns a majority interest is not convincing. We 
are unable to go into further detail due to the proprietary nature of 
the explanation. See NTN final results analysis memorandum dated June 
16, 1999, for our analysis of NTN's explanation and why we find it 
unsatisfactory.
    As a result of our analysis, we determine that NTN did not act to 
the best of its ability in responding to our requests for information 
concerning sales by affiliated resellers. Therefore, the use of the 
adverse facts available with regard to NTN's sales by affiliated 
resellers in which NTN owns a majority interest is appropriate. The use 
of facts available affects the calculation of normal value. Therefore, 
where we compared U.S. sales to weighted-average normal values which 
are wholly or partly comprised of sales to affiliated resellers in 
which NTN owns a majority interest, we applied facts available. Because 
it is appropriate to use the facts available to the extent we use these 
sales to calculate normal value, we have adjusted the calculated net 
prices of these sales by increasing them by the class-or-kind-specific 
adverse facts-available rate applicable to NTN. In this manner, we 
ensure that the facts available are being used only when the sales are 
used to calculate normal value and, in instances where such sales are 
weight-averaged with sales to unaffiliated companies, the facts 
available are ``diluted'' accordingly.
    Finally, with regard to home-market packing expenses, NTN did not 
revise its packing-expense calculation in the manner we requested nor 
did it attempt to do so. NTN stated merely that it does not keep 
records in that manner and made no attempt at a more reasonable 
segregation pursuant to our request. In addition, NTN's methodology is 
distortive. However, due to the proprietary nature of NTN's 
calculation, we are unable to explain the decision. See NTN final 
results analysis memorandum dated June 16, 1999, for an explanation of 
why we consider NTN's calculation to be distortive. Therefore, because 
NTN did not attempt to revise its packing expenses in the manner we 
requested and did not offer a reasonable alternative and because the 
methodology it used is manifestly distortive, we have denied NTN's 
home-market packing adjustment for these final results.
    Comment 2: Torrington contends that NTN did not include either 
retirement benefits for directors and statutory auditors or a certain 
proprietary expense in its general and administrative (G&A) expenses. 
Torrington argues that the Department should include amounts for these 
expenses using, where necessary, non-punitive facts available.
    With respect to retirement benefits, NTN argues that it explained 
that these expenses have no effect on its responses because the 
expenses in question were extraordinary. With regard to the certain 
proprietary expense, NTN contends that the Department's questionnaire 
instructed NTN to report costs for subject merchandise only. Therefore, 
NTN asserts that its cost response complies fully with the Department's 
instructions.
    Department's Position: NTN did not include an amount for retirement 
benefits for directors and statutory auditors in its reported costs on 
the grounds that it does ``not have any effect on the questionnaire 
response because it was an extraordinary expense.'' See NTN's 
supplemental response dated October 19, 1998, at A-7. However, it is 
incumbent upon the respondent to demonstrate that it is entitled to a 
favorable expense adjustment. NTN did not explain how retirement 
benefits are an ``extraordinary expense'' and provided no other 
justification for exclusion of these expenses. Therefore, we have 
recalculated NTN's G&A expenses to include these benefits.
    With regard to the certain proprietary expense, we determine that, 
based on the evidence on the record of this review, it is appropriate 
to exclude this

[[Page 35597]]

expense from G&A. Because of the proprietary nature of this expense, 
please see NTN final results analysis memorandum dated June 16, 1999, 
for an explanation of our determination.
    Comment 3: SKF Sweden disagrees with the Department's 
characterization of it as a non-cooperative respondent. SKF Sweden 
contends that the Department's assignment of the highest SKF Sweden-
specific CRB margin, 13.69 percent, as total adverse facts available 
for its CRB sales is unlawful. SKF Sweden asserts that it informed the 
Department in a timely manner that its production of CRBs sold to the 
United States during the POR had ceased in 1993. SKF Sweden submits 
that, in light of this fact, it cooperated fully with the Department by 
providing aggregated U.S. quantity and value sales data, informing the 
Department that there were no home-market sales of CRBs made during the 
review period, and that no detailed cost data existed with respect to 
this merchandise. Accordingly, SKF Sweden argues, it did not have 
sufficient information to provide detailed cost or CV data in response 
to the Department's questionnaire.
    SKF Sweden contends that the Department should not resort to facts 
available because it was unable to comply with the Department's 
requests for information, citing Borden. SKF Sweden argues that, 
because it no longer produced CRBs, its inability to provide the 
requested CRB data should not lead to the mischaracterization of SKF 
Sweden as a non-cooperative respondent and therefore to the use of 
adverse facts available. To do otherwise, SKF Sweden asserts, would be 
opposite to the position the Department took recently in Final Results 
Administrative Review; Certain Pasta from Italy, 64 FR 6615 (February 
10, 1999) (Pasta Italy Review), in which the Department determined that 
adverse facts available should not be applied to a company which 
informs the Department in a timely manner of its inability to comply 
with information requests due to the liquidation of assets. Finally, 
SKF Sweden argues that the Department determined erroneously that SKF 
Sweden absorbed 100 percent of the dumping duties on its CRB 
transactions.
    Torrington contends that it was appropriate for the Department to 
determine SKF Sweden as a non-cooperative respondent and assign an 
adverse facts-available rate to its CRB sales. Torrington posits that 
inconsistencies in the record demonstrate that SKF Sweden has not 
cooperated fully with the Department. Torrington points to several 
discrepancies on the record where SKF Sweden states that it sold CRBs 
during the review period and where it states it did not sell CRBs. 
Torrington also identifies language in SKF Sweden's case brief that 
indicates SKF Sweden's acknowledgment that it could have provided some 
information about the CRB sales. Torrington argues that reporting all 
sales of CRBs would not have been burdensome given that SKF Sweden had 
already provided aggregate quantity and value data.
    Torrington also contends that it is unlikely that SKF Sweden would 
not retain cost and CV data of its CRBs for at least a five-year period 
following ceased production of such merchandise, given the existence of 
the antidumping duty order. Torrington also asserts that SKF Sweden did 
not address the issue of why it did not retain such data and that SKF 
Sweden should not benefit from having destroyed the cost data for CRBs. 
Torrington points out that the Department requested the CRB data in 
both the original and second supplemental questionnaires and never 
informed SKF Sweden that it was not required to report such data. 
Torrington also argues that SKF Sweden has not established the basis on 
which the Department would not assess duties on its CRBs, citing The 
Torrington Company v. United States, 82 F.3d 1039, 1047 (CAFC 1996) 
(Torrington I). Accordingly, Torrington argues that SKF Sweden did not 
act or cooperate to the best of its ability to provide the requested 
information.
    Torrington asserts that, while the Department should, at the least, 
assign the highest SKF Sweden-specific CRB margin to SKF Sweden's 
unreported CRBs, a higher more punitive facts-available rate should be 
assigned to the unreported sales. Torrington suggests that, owing to 
the fact that SKF Sweden continued to withhold requested data, the LTFV 
margins of 76.2 percent assigned to SKF Germany or 212.45 percent 
assigned to SKF Italy would be more appropriate to use as the total 
facts-available rate for SKF Sweden's CRB sales. Finally, Torrington 
contends that the Department should continue to determine that SKF 
Sweden absorbed duties on all of its CRB transactions.
    SKF Sweden rebuts Torrington's claim that the record demonstrates 
inconsistencies in SKF Sweden's responses and argues that Torrington is 
misconstruing the facts on the record. SKF Sweden contends that it 
never stated that there were no sales of CRBs in the United States 
during the review period. Rather, SKF Sweden submits that it stated 
that there were no home-market sales of CRBs during the review period. 
SKF Sweden asserts that there is no justification to use the SKF 
Germany or SKF Italy facts-available rates Torrington suggests, arguing 
that the investigation must pertain to the same class or kind of 
merchandise in the same country of origin, citing Peer Bearing Company 
v. United States, 12 F. Supp. 2d 445, 451 n.4 (CIT 1998) (Peer 
Bearing). SKF Sweden contends that, given that the SKF Germany and SKF 
Italy rates Torrington suggests relate to different orders from 
different countries, the underlying price and cost data of merchandise 
involved in those orders is in no way indicative of the prices or costs 
of CRBs from Sweden.
    Department's Position: SKF Sweden sold CRBs in the United States 
during the POR but did not provide CRB sales or cost data, thereby 
precluding us from conducting an analysis of its CRB sales. Section 
776(a) of the Act requires us to make a determination on the basis of 
the facts available where requested information is missing from the 
record and, thus, cannot be used because it was not provided. 
Therefore, in accordance with the Act, we must rely upon facts 
available for these final results of review.
    In order to determine whether we should make an adverse inference 
in the application of facts available, we considered whether SKF Sweden 
cooperated to the best of its ability in the instant administrative 
review with respect to its CRB sales. We requested CRB sales and cost 
data in both our original and supplemental questionnaires. However, 
despite our requests for CRB information, SKF Sweden did not provide 
such information, indicating that, because (a) SKF Sweden ceased 
production of CRBs in 1993, (b) the imports of the CRBs in question 
were de minimis during the review period, and (c) the cost involved to 
prepare the data would outweigh the benefits of submitting the 
requested data for the administrative review, it would not respond to 
our requests for CRB information. See SKF Sweden's original 
questionnaire response, dated August 28, 1998, at 1.
    Section 776(b) of the Act permits us to draw an adverse inference 
where a party has not cooperated in a proceeding. This section of the 
Act deems a respondent uncooperative where it has not acted to the best 
of its ability to comply with requests for necessary information. See 
the SAA at 870. Because SKF Sweden chose not to provide the requested 
CRB information, we find that SKF Sweden was not cooperative. 
Specifically, we are not convinced that SKF Sweden could not provide 
the requested cost data.

[[Page 35598]]

Accordingly, we find that SKF Sweden did not act to the best of its 
ability to comply with our requests for this information. Therefore we 
have made an adverse inference and assigned a total facts-available 
rate to SKF Sweden's sales of CRBs.
    In its original and supplemental questionnaire responses, SKF 
Sweden submitted only total quantity and value data with respect to its 
CRB sales. At no time did SKF Sweden indicate that it did not have the 
sales data underlying its CRB sales transactions. It appears that SKF 
Sweden could have provided all of the data maintained in its records as 
it pertains to the sales of CRBs, albeit only the U.S. sales data. We 
also note that the quantity of CRBs sold during the review period is 
irrelevant.
    SKF Sweden also claimed in its original questionnaire response that 
because it did not make any sales of CRBs in the comparison market it 
would have to provide cost information for purposes of CV, but it no 
longer had such cost information because it ceased production of CRBs 
in 1993. As discussed below, we find that ceasing production of subject 
merchandise does not relieve SKF Sweden of its responsibility to 
provide requested information. On May 15, 1989, we published in the 
Federal Register the orders on AFBs from Sweden for both BBs and CRBs. 
Thus, while SKF Sweden ceased production of CRBs in 1993, it was aware 
of the order on the subject merchandise and had already participated in 
several administrative reviews. SKF Sweden pointed out in its response 
that it retained in its inventory the CRBs that it sold in this review 
period. Given that SKF Sweden retained this merchandise in inventory, 
it anticipated that it might sell such merchandise in the future. Based 
on SKF Sweden's experience as a participant in these administrative 
reviews, it was well informed that, upon selling those CRBs during a 
period in which we are conducting an administrative review and in which 
it was a participant, we would, in accordance with our statute and 
regulations, request sales and possibly cost data and other information 
with regard to that merchandise. Accordingly, SKF Sweden cannot benefit 
from its failure to maintain relevant records merely because it ceased 
production of the subject merchandise.
    In addition, SKF Sweden's reliance upon Pasta Italy Review is 
misplaced. In Pasta Italy Review, the respondent was precluded from 
using financial and personnel resources in responding to our 
questionnaires due to legal proceedings underlying the liquidation of 
its assets. In Certain Fresh Cut Flowers from Colombia; Final Results 
of Antidumping Administrative Review, 59 FR 15159, 15173 (March 31, 
1994) (Flowers from Colombia), a case cited in Pasta Italy Review which 
elaborated on the issue of how liquidation affects a respondent's 
ability to provide information to the Department, the companies that 
went out of business were required by law to sell or dispose of their 
assets. Herein lies the difference between the situation that SKF 
Sweden faces after ceasing production of its CRBs and the situation 
that the respondents faced in Pasta Italy Review and Flowers from 
Colombia. Unlike those respondents, SKF Sweden was not required to 
relinquish its assets and dispose of its records with regard to its 
CRBs. SKF Sweden merely chose not to maintain such records, despite its 
knowledge of and experience in the AFB proceedings. In fact, SKF Sweden 
decided to retain some of its assets, the physical merchandise in 
question, in its inventory. In contrast, the respondents which 
liquidated their assets were legally required to sell or dispose of all 
of their assets. Therefore, SKF Sweden's decision not to maintain its 
CRB cost records does not excuse SKF from responding to our requests 
for cost and sales information with respect to CRBs. See Koyo Seiko Co. 
v. United States, 796 F. Supp. 517, 525-26 (CIT 1992), and Pulton Chain 
Co., Inc, v. United States, 17 CIT 1136 (October 18, 1993).
    The Department's practice when selecting an adverse rate from among 
the possible sources of information is to ensure that the margin is 
sufficiently adverse ``as to effectuate the purpose of the facts 
available rule to induce respondents to provide the Department with 
complete and accurate information in a timely manner.'' See Static 
Random Access Memory Semiconductors from Taiwan; Final Determination of 
Sales at Less Than Fair Value, 63 FR 8909, 8932 (February 23, 1998). 
The Department also considers the extent to which a party may benefit 
from its own lack of cooperation in selecting a rate. See Roller Chain 
Other Than Bicycle, From Japan; Notice of Final Results and Partial 
Recission of Antidumping Duty Administrative Review, 62 FR 69472, 60477 
(November 10, 1997).
    We disagree with Torrington's suggestion that we use the LTFV 
margins assigned to SKF Germany and SKF Italy because the rate used as 
facts available normally should pertain to the same class or kind of 
merchandise from the same country of origin. See Peer Bearing. In order 
to ensure that the rate is sufficiently adverse so as to induce SKF 
Sweden's cooperation, we have assigned to SKF Sweden's CRB sales as 
adverse total facts available a rate of 13.69 percent, which we 
determined in the LTFV investigation and which is the highest margin 
ever calculated for CRBs from Sweden. Finally, because we have 
determined that a dumping margin does exist on the sales in question 
based on adverse facts available and lacking other information, we find 
duty absorption on all U.S. sales of CRBs made by SKF Sweden.
    Comment 4: Torrington argues that NSK provided inadequate responses 
to the Department's supplemental questionnaire regarding NSK's 
downstream sales for certain affiliates. Torrington asserts that NSK's 
claim that it need not report downstream sales of certain affiliates 
because it did not have to do so in the LTFV investigation is 
irrelevant to this review. Torrington also contends that, in spite of 
the Department's request, NSK did not provide documentation 
demonstrating that sales to certain affiliates were made at arm's 
length. Torrington argues that the Department should apply facts 
available to all U.S. sales matched to models sold to affiliates in the 
home market for which NSK did not provide resale data.
    NSK argues that the Department should not apply facts available 
regarding its home-market downstream-sales information because it 
responded fully to the Department's requests. NSK argues that it is for 
the Department, not Torrington, to decide whether NSK's explanations 
were adequate. NSK notes that the downstream-sales information with 
which Torrington takes issue represents a de minimis amount of NSK's 
home-market sales of scope merchandise. NSK argues further that 
Torrington's argument regarding arm's-length sales is irrelevant 
because the Department's arm's-length test removes from the home-market 
database all sales that fail the test.
    Department's Position: We normally do not calculate normal value 
based on the sales by an affiliated party if sales of the foreign like 
product by an exporter or producer to affiliated parties account for 
less than five percent of the total value (or quantity) of the foreign 
like product in the market in question (see 19 CFR 351.403(d)(1998)). 
Based on information NSK submitted for the record, the sales in 
question comprise less than five percent of the total quantity of home-
market sales. See NSK's section A response dated August 28, 1998, at A-
26. Therefore, we consider NSK's response to be adequate with respect 
to this matter and have not used facts available.

[[Page 35599]]

    Comment 5: Torrington argues that NSK did not respond to the 
Department's request that NSK report price adjustments made after NSK 
submitted its home-market sales listing. Torrington argues that, as 
facts available, the Department should assume that all home-market 
sales had unreported upward adjustments in the amount of the highest 
upward adjustment on any reported home-market sale.
    NSK responds that it explained in its response, and the Department 
verified, the issue of NSK's updated billing-adjustments. NSK contends 
that the Department's decision not to resort to facts available in the 
preliminary results was appropriate and should be the same in the final 
results.
    Department's Position: NSK claimed in its response and at 
verification that it was impractical to report post-submission billing 
adjustments and that such an exercise would require NSK to recreate its 
entire database. Based on records we examined at verification, we found 
evidence that NSK's exclusion of this price-adjustment has no material 
impact on our margin calculation and, thus, does not warrant the use of 
facts available. The details of our findings are not susceptible to 
public summary. See Verification Report of NSK's Sales Response at 8 
and Exhibit VI. Accordingly, we have not applied facts available for 
NSK's unreported billing adjustments.
    Comment 6: Torrington argues that NSK did not cooperate with the 
Department's request that NSK demonstrate the estimated period during 
which subject merchandise remains in home-market distribution centers. 
According to Torrington, this precludes the proper calculation of NSK's 
inventory carrying cost calculation for U.S. sales. Torrington argues 
that, as facts available, the Department should apply the highest 
inventory carrying cost rate (expenses to sales value) in the home 
market for any other Japanese respondent.
    NSK responds that Torrington's argument is irrelevant to the margin 
calculation because the Department does not deduct inventory carrying 
costs in the home market from CEP or EP. NSK argues that, nonetheless, 
it responded fully to the Department's supplemental questionnaire.
    Department's Position: NSK cooperated with our request for 
information regarding this issue adequately. In response to our request 
that NSK explain how it calculated the estimated period during which 
merchandise destined for the United States remains in distribution 
centers, NSK stated that it based the reported time period on its 
normal shipping schedules and average experience for shipping 
merchandise. See NSK's Supplemental Response at 27. NSK explained that 
it did not provide worksheets pursuant to our request because there 
were none to provide. Thus, we determined that NSK cooperated with our 
request as best it was able. Accordingly, we did not apply facts 
available for NSK's inventory carrying costs. However, contrary to 
NSK's assertion, inventory carrying costs are germane to our margin 
calculation because these costs comprise part of the expenses used to 
calculate a commission offset.
    Comment 7: Torrington argues that NSK did not respond to the 
Department's request that NSK justify its reporting of depreciation 
costs for equipment obtained from affiliated suppliers. Torrington 
argues that NSK's statement that any adjustment to the purchase price 
of machinery from affiliates would result in a de minimis change to COP 
is inadequate and unresponsive. Torrington argues, therefore, the 
Department should restate depreciation based on facts available.
    NSK responds that the Department should not restate NSK's 
depreciation costs based on facts available because NSK responded fully 
to the Department's question regarding equipment from affiliated 
suppliers. NSK notes that, according to its standard accounting 
practices and Japanese Generally Accepted Accounting Practices (GAAP), 
equipment purchases from affiliated companies were treated no 
differently than those purchases from unaffiliated companies. NSK 
argues further that, since any adjustment to the purchase price of 
equipment from affiliates would result in a de minimis adjustment to 
COP, it would gain nothing by attempting to alter the treatment of 
these depreciation costs.
    Department's Position: NSK's supplemental response dated October 
29, 1998, at 36, demonstrates that the amount of depreciation costs on 
equipment from affiliates is small enough that any adjustment to NSK's 
purchase price of equipment from affiliates would have an insignificant 
impact on NSK's reported COP. Also, NSK's methodology was in accordance 
with GAAP of the country of exportation, which we generally accept 
unless the methodology is determined to be distortive. That is not the 
case in this situation. Furthermore, NSK responded adequately to our 
requests for information. Therefore, we have not used facts available.
    Comment 8: Torrington argues that the Department should use facts 
available for certain major inputs obtained from affiliated parties for 
which SKF France did not provide market prices. For valuing major 
inputs, Torrington notes that the Department's questionnaire instructs 
respondents to report the highest of the following values: (a) The 
transfer price from the affiliate, (b) the affiliate's COP, or (c) the 
market price. Torrington asserts that SKF France only reported the 
higher of the transfer price or the affiliate's COP. Therefore, 
Torrington argues, since SKF France has not responded fully to the 
questionnaire, the Department should use facts available for the inputs 
at issue.
    SKF France states that, in response to the Department's 
supplemental questionnaire, it reported the overlap of components that 
it purchased from both affiliated and unaffiliated parties. SKF France 
notes that it explained in its response that the number of overlaps is 
insignificant compared to the thousands of parts used. SKF France 
argues that this substantiates its contention that market prices are 
generally not available for such components and notes that during 
verification the Department examined the issue of SKF France's 
valuation of materials purchased from affiliated parties and found no 
discrepancies. Therefore, SKF France contends, the Department is 
correct in accepting its reporting of values for these inputs.
    Department's Position: SKF France did not respond fully to our 
questionnaire and the use of partial facts available is appropriate. 
SKF France admits in its questionnaire response and case brief that it 
valued major inputs purchased from affiliated suppliers based on the 
higher of transfer price or COP and that it did not take into 
consideration the market prices for some components which it purchased 
from both affiliated and unaffiliated suppliers. Therefore, SKF's 
reporting is not in accordance with section 351.407 of the Department's 
regulations which states that, for purposes of section 773(f)(3) of the 
Act, the value of a major input purchased from an affiliated person 
will be 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. In an effort to obtain market values for major inputs 
in usable form, we sent SKF France a supplemental questionnaire 
requesting that it provide a chart listing, for each

[[Page 35600]]

major input, the per-unit transfer price charged by the affiliated 
party and the per-unit COP incurred by the affiliated party. In 
addition, we asked that SKF France include in its chart the sales 
prices charged by unaffiliated parties (where possible) and that SKF 
France provide documentation to support these prices. See supplemental 
questionnaire dated October 26, 1998, at 9. In response to our 
question, SKF provided a chart with the requested information for COP 
and transfer prices. However, the market-price information it provided 
for components purchased by unaffiliated parties was not comparable to 
the manner in which it reported the COP and transfer price information. 
Therefore, we could not determine whether the market prices were higher 
than the reported COP or transfer prices. Since SKF France did not 
provide the market-price data in the form which we requested, it could 
not be used. In addition, contrary to SKF France's contention, the 
market value of materials was not examined during verification.
    Section 776(a) of the Act provides for the use of facts available 
where a company fails to provide requested information in the form and 
manner requested. See also the SAA at 869 (providing that the 
Department may use facts available to fill gaps in the record due to 
deficient submissions). As a result of SKF France's failure to provide 
requested information, we have used partial facts available to ensure 
that these market prices are taken into consideration. We applied 
partial facts available by making an adjustment to SKF France's 
reported total cost of manufacturing on a transaction-specific basis. 
Because of the proprietary nature of the information, we cannot discuss 
the details of the facts available we are applying in this public 
notice. See SKF France's final results analysis memorandum dated June 
16, 1999.
2. Duty Absorption
    Section 751(a)(4) of the Act provides that, if requested, the 
Department will determine whether antidumping duties have been absorbed 
by a foreign producer or exporter subject to the order if the subject 
merchandise is sold in the United States through an importer who is 
affiliated with such foreign producer or exporter. Section 751(a)(4) of 
the Act authorizes this type of inquiry during an administrative review 
initiated two years or four years after publication of an order.
    For transition orders as defined in section 751(c)(6)(C) of the Act 
(i.e., orders in effect as of January 1, 1995), section 351.213(j)(2) 
of the Department's regulations provides that the Department will make 
a duty-absorption determination, if requested, for any administrative 
review initiated in 1996 or 1998. On May 29, 1998, and July 29, 1998, 
Torrington requested the Department to determine, with respect to all 
respondents except Torrington Nadellager and SNFA UK, whether 
antidumping duties had been absorbed during the POR. On May 29, 1998, 
FAG Bearings Corp. requested that the Department determine for 
Torrington Nadellager whether antidumping duties had been absorbed 
during the POR. Since these reviews were initiated in 1998 and we 
received timely requests, we have made a duty-absorption determination 
as part of these administrative reviews.
    In our preliminary results of review, we calculated the percentage 
of sales by a U.S. affiliate with dumping margins for each exporter. We 
stated that, with respect to those companies (with affiliated 
importer(s)) that had dumping margins, we would rebuttably presume that 
the duties will be absorbed for those sales which were dumped. We 
received several comments responding to these preliminary findings.
    Comment 1: Certain respondents argue that the statute only permits 
the Department to conduct a duty-absorption inquiry initiated two or 
four years after the publication of an antidumping duty order. These 
respondents claim that, although the Department defended its decision 
to conduct a duty-absorption inquiry in these reviews on the grounds 
that these cases involve transition orders, there is nothing in section 
751(c) of the Act that suggests that the definition of ``transition 
order'' for purposes of sunset reviews applies to the definition of 
``antidumping duty order'' in section 751(a)(4) of the Act for purposes 
of duty-absorption inquiries. Therefore, these respondents argue, the 
Department is incorrect in justifying the duty-absorption inquiry by 
calling AFBs orders ``transition orders'' in accordance with section 
751(c)(6)(C) of the Act as this section only applies to ``sunset'' 
reviews. These respondents conclude that the lack of explicit 
Congressional approval for duty-absorption inquiries for transition 
orders shows that Congress did not intend for duty-absorption inquiries 
to be initiated more than four years after publication of an 
antidumping duty order. Finally, these respondents assert that the 
Department cannot rely on its own regulation to create an exception for 
transition orders when such an exception is not authorized by the 
statute.
    Torrington argues that, in AFBs 7, the Department rejected 
respondents' claim that the statute only permits duty-absorption 
determinations in the second and fourth reviews following the initial 
publication of the order. Citing the SAA at 885-886, Torrington 
contends that the respondents' position, if accepted, would ``gut'' the 
statute since the existence of duty absorption is a critical factor in 
the context of both the Department's determination in sunset reviews of 
whether dumping is likely to continue or recur and the International 
Trade Commission's determination in sunset reviews of whether injury is 
likely to continue or recur. Torrington argues that accepting the 
respondents' restrictive reading of the statute would mean that duty 
absorption, while remaining as an analytical tool in sunset reviews of 
new orders, would no longer be available in sunset reviews of any 
transition orders. Torrington argues further that even new orders would 
be affected, as the respondents' narrow reading of the statute would 
allow an absorption inquiry only in the second and fourth year after 
the issuance of an order. Finally, citing Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR at 27317 (May 19, 1997) (Final 
Rule) (discussing 19 CFR 351.213(j)(1)), Torrington argues that, in the 
context of drafting its revised regulations in order to implement the 
new law, the Department considered the statute and the comments of 
interested parties carefully and determined that the duty-absorption 
inquiry is equally applicable to transition orders.
    Department's Position: With regard to the time frame in which we 
are conducting these reviews, section 351.213(j)(1) of our regulations, 
in accordance with section 751(a)(4) of the Act, provides for the 
conduct, upon request, of absorption inquiries in reviews initiated two 
and four years after the publication of an antidumping duty order. With 
respect to transition orders, the preamble to the proposed antidumping 
regulations explains that reviews initiated in 1996 will be considered 
initiated in the second year and reviews initiated in 1998 will be 
considered initiated in the fourth year (61 FR at 7317). Because these 
orders on AFBs have been in effect since 1989, these are transition 
orders in accordance with section 751(c)(6)(C) of the Act. This being a 
review initiated in 1998 and a request having been made, we have made 
duty-absorption determinations as part of these administrative reviews.
    We believe that Congress intended that the International Trade 
Commission would consider the issue of duty

[[Page 35601]]

absorption in all sunset reviews. In this regard, the statutory 
provision requiring the consideration of duty absorption does not 
distinguish between antidumping orders issued after January 1, 1995, 
and transition orders. See section 752(a)(1)(D) of the Act. Moreover, 
in all of the legislative history, Congress explained the implications 
of affirmative duty-absorption findings and clearly contemplated that 
such findings would be considered in all sunset reviews. See S. Rep. 
103-412 at 50 (1994). See also H. Rep. 103-826 at 60-61 (1994) 
(``Commerce will inform the Commission of its findings regarding duty 
absorption, and the Commission will take such findings into account in 
determining whether injury is likely to continue or recur if an order 
were revoked''). Thus, we have made duty-absorption determinations as 
part of these administrative reviews.
    Comment 2: Certain respondents state that gauging absorption on 
information that they do not know until completion of an administrative 
review is unfair. More specifically, they claim that the nature of the 
review process prevents them from determining the U.S. price increase 
necessary to pass dumping duties on to customers because the ultimate 
liability is not known until the end of a review. The respondents claim 
further that, other than dumping deposits paid at the time of entry, 
they have no means of estimating the price increases necessary to pass 
dumping duties to the customers.
    The respondents also argue that the Department cannot presume that 
duty absorption on sales to the U.S. affiliate exists if the record 
does not contain evidence of the U.S. purchaser's assumption of 
liability for ultimate assessment. They claim that the Department's 
rebuttable presumption ignores commercial reality in that no U.S. buyer 
would agree to assume liability for an unascertainable amount of 
duties. The respondents claim that the Department has not provided any 
reason for adopting the presumption of duty absorption and that the 
presumption is not allowable by law.
    SKF states that the Department's 15-day deadline for submitting 
evidence to rebut the assumption that unaffiliated U.S. purchasers will 
pay the assessed dumping duty is too short, given the amount of 
evidence that would have to be collected and the number of customers 
that would have to be contacted.
    FAG argues that, notwithstanding the fact that the Department does 
not have the authority to conduct an absorption review in this review, 
the methodology chosen by the Department is arbitrary and capricious. 
FAG argues that the Department has simply calculated the percentage of 
FAG's U.S. affiliate's sales with dumping margins versus total sales 
and concluded that this figure demonstrates duty absorption within the 
meaning of the statute. FAG contends that, absent some explanation of 
the relevance of this information, there is no connection between the 
percentage of sales of a U.S. importer with dumping margins and any 
alleged duty absorption by the affiliated foreign producer or exporter. 
Therefore, FAG argues, the Department should demonstrate how its 
methodology has performed the analysis required by the statute (i.e., 
determining whether the foreign producer or exporter has absorbed 
antidumping duties). Finally, FAG contends that, if the Department 
cannot explain how its methodology has fulfilled the task specified by 
the statute, then the results of the absorption inquiry should be 
disregarded.
    Torrington contends that the Department's decision was fair. 
According to Torrington, it was correct to reject SKF's arguments that 
the Department's methodology does not give respondents enough time and 
that the use of a presumption renders the duty-absorption provision 
superfluous. Torrington states further that in AFBs 7 the Department 
rejected SKF's argument that the record shows SKF did not absorb duties 
correctly. Torrington also states that the Department rejected FAG's 
argument that there is no connection between the percentage of sales 
dumped and the presence of duty absorption in AFBs 7.
    Department's Position: An investigation as to whether there is duty 
absorption does not simply involve publishing the margin in the final 
results of review. As we noted in the preliminary results of these 
reviews, the determination that duty absorption exists is also based on 
the lack of any information on the record that the first unaffiliated 
customer will be responsible for paying the duty that is ultimately 
assessed. Absent an irrevocable agreement between the affiliated U.S. 
importer(s) and the first unaffiliated customer, there is no basis for 
us to conclude that the duty attributable to the margin is not being 
absorbed.
    Section 751(a)(4) of the Act does not specify the methodology we 
are to use in an administrative review in determining whether duty 
absorption occurred. Similarly, the SAA at 885 simply notes that the 
Department ``will examine * * * whether absorption has taken place.'' 
Moreover, the legislative history provides no guidance on what 
methodology the Department is to employ in making its determination. 
See also S. Rep. No. 103-412 at 44 (1994).
    In considering methodologies that might be used for a duty-
absorption inquiry, the Department sought to adopt one that would 
comply with the statute, as well as one that would be administrable 
within the time frame of a review period and still provide respondents 
with a sufficient opportunity to cure any deficiencies. The method the 
Department adopted accomplishes these goals. As the Department 
explained in AFBs 7, 62 FR at 54076, the ``existence of a margin raises 
an initial presumption that the respondent and its affiliated 
importer(s) are absorbing the duty.'' This is a reasonable presumption 
because the continued existence of dumping duties indicates that the 
producer and its affiliated U.S. importer have not adjusted their 
prices to eliminate dumping. If the producer has not set its price to 
the first unaffiliated U.S. customer high enough to eliminate dumping, 
it is reasonable to presume that the producer is also absorbing the 
dumping duties. The reasonableness of this presumption is also 
reflected in the SAA at 885, which states that ``the affiliated 
importer may choose to pay the antidumping duty rather than eliminate 
the dumping'' (emphasis added). In sum, the existence of dumping gives 
rise to a reasonable presumption that the affiliated importer is 
absorbing dumping duties.
    This is an instance where the existence of a margin raises an 
initial presumption that the respondent and its affiliated importer(s) 
are absorbing the duty. As such, the burden of producing evidence to 
the contrary shifts to the respondent. See Creswell Trading Co., Inc. 
v. United States, 15 F.3d 1054 (CAFC 1994). Here the respondents have 
not placed evidence on the record, despite being given ample time to do 
so, in support of their position that they and their affiliated 
importer(s) are not absorbing the duties. Regarding FAG's argument that 
there is no connection between the percentage of sales of a U.S. 
importer with dumping margins and any alleged duty absorption by the 
affiliated foreign producer or exporter, the percentage of sales with 
dumping margins is an indication of the volume of imports for which 
antidumping duties are being absorbed.
    Comment 3: SKF argues that, by using data already available on the 
record, the Department is able to conduct an accurate analysis of 
whether dumping duties are being absorbed by comparing

[[Page 35602]]

the total profit of CEP sales to the total amount of the antidumping 
liability. SKF, Koyo, and NSK also emphasize that, while dumping must 
be measured on a transaction-specific basis, there are no reasons why a 
duty-absorption inquiry can not be done on an aggregate basis. SKF 
argues that the Department must consider aggregate sales if an accurate 
duty-absorption determination is to be made. SKF states that, when the 
Department calculates dumping margins for transactions where the U.S. 
price exceeds normal value, the margin is set to zero. SKF contends 
that these ``negative'' margins need to be taken into account since 
``negative'' margins indicate that, overall, duties are not being 
absorbed but, rather, that a company is offsetting dumping prices 
completely by passing on the cost of duties to its customers through 
universally higher prices. SKF also argues that, at a minimum, the 
Department's duty-absorption methodology must be modified to exclude 
from the percentage of dumped sales those transactions with de minimis 
margins. SKF contends that, if this is not done, a nonsensical result 
could be achieved where a respondent is found not to be dumping yet is 
found to be absorbing antidumping duties. SKF states that to disregard 
de minimis margins for purposes of the duty-absorption analysis is 
consistent with the Department's treatment of such margins for other 
purposes. NSK contends that, by adopting an aggregate approach, the 
Department would be creating a much more equitable standard consistent 
with World Trade Organization obligations for measuring duty 
absorption.
    Torrington argues that the Department should reject SKF's 
proposals, as it did in AFBs 7, that sales with negative margins should 
be used for purposes of the duty-absorption determination and that no 
inquiry should proceed where total CEP profit exceeds the dumping 
duties due. Torrington argues further that the fact that there are 
sales by an importer at fair value is of no consequence for duty-
absorption inquiries just as they are of no consequence for dumping-
margin calculations. Torrington states that, as there is no basis in 
the antidumping law to use negative margins as an offset or credit 
against positive margins, the same consideration applies in the context 
of duty absorption.
    Department's Position: The Department treats so-called ``negative'' 
margins as being equal to zero in calculating a weighted-average margin 
because otherwise exporters would be able to mask their dumped sales 
with non-dumped sales. See Tapered Roller bearings and Parts Thereof, 
Finished and Unfinished from Japan; Final Results of Antidumping Duty 
Administrative Reviews, 63 FR 2559, 2576 (January 15, 1998), and AFBs 
7, 62 FR at 54076. It would be inconsistent on one hand to calculate 
margins using only positive-margin sales, which is the Department's 
practice, and then effectively argue for duty absorption purposes that 
there are no margins for duty-absorption purposes because a deduction 
from the total duties determined should be made for non-margin sales. 
See Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the 
United Kingdom; Final Results of Antidumping Duty Administrative 
Review, 62 FR 18744, 18745 (April 17, 1997). In addition, accounting 
for negative margins would allow respondents to absorb duties 
selectively (on a customer, regional, or some other basis). With 
respect to de minimis margins, we apply de minimis margins on an 
aggregate, not on a sale-by-sale, basis. We disregard aggregate de 
minimis weighted-average margins for cash-deposit purposes, but we do 
not disregard individual sales that may have been dumped at less than 
0.5 percent from a company's weighted-average margin.
    Finally, a company's profit on CEP sales is not relevant to a duty-
absorption inquiry. The existence of profit on such sales does not 
negate the fact that the dumping duties assessed on the entries are 
absorbed by the affiliate.
3. Discounts, Rebates and Price Adjustments
    Comment 1: Torrington argues that the Department should not deduct 
FAG's reported home-market rebates because FAG used a broad allocation 
to report its rebates. Torrington contends that the CAFC, in Torrington 
I, ruled that direct expenses must be reported on a transaction-
specific basis. Torrington argues that FAG's reported rebates are 
distortive because they assign a rebate amount to all sales of a 
particular customer rather than only to the individual sales on which 
the rebate was incurred. Torrington also asserts that FAG has not shown 
that it reported these rebates to the best of its ability.
    FAG argues that, where a rebate program only applied to a 
customer's purchase of specific products, the rebate FAG paid was 
factored only over those product purchases rather than all of the 
customer's purchases. Thus, FAG contends, the rebate is only reported 
for those sales on which it incurred the expense. FAG also observes 
that the Department has examined this issue in prior reviews and 
rejected Torrington's argument.
    Department's Position: Under section 351.401(g) of the Department's 
regulations, we accept allocated price adjustments, such as rebates, 
when transaction-specific reporting is not feasible and the allocation 
method used does not cause unreasonable inaccuracies or distortions. In 
judging the feasibility of transaction-specific reporting, we take into 
account the records maintained by a respondent, as well as such factors 
as the accounting practices in the country and industry in question and 
the number of sales made during the POR. See also AFBs 7, 62 FR at 
54049.
    FAG's home-market rebates were reported in the same manner as in 
prior reviews (see AFBs 7, 62 FR at 54051) and are limited to the sales 
on which FAG actually incurred the rebate expense. FAG stated in its 
supplemental response that rebates that were payable in connection with 
purchases of certain types of products or for purchases made during 
certain select periods were reported on the basis on which they were 
granted. See FAG's supplemental response dated October 27, 1998, at 6. 
In addition, Exhibit B-6 of FAG's section B response dated August 28, 
1998, shows that FAG allocated the rebate only over those sales which 
received a rebate and it applied the allocation only to the sales for 
which it paid a rebate. Based on these facts, we determine that FAG's 
methodology for reporting its home-market rebates is reasonable and not 
distortive because it assigns rebates only to those sales which 
incurred rebates on a customer-specific basis.
    With regard to Torrington's reliance on Torrington I, as we have 
stated in prior determinations and in the preamble to our regulations, 
Torrington I does not address the propriety of allocation methods but 
rather holds that we may not treat direct price adjustments as if they 
were indirect selling expenses. See Final Rule, 62 FR at 27347, and 
AFBs 7, 62 FR at 54050.
    Comment 2: Torrington asserts that the Department should reject SKF 
Germany's claim for home-market billing adjustment two, which applies 
to multiple transactions involving the same customer. Torrington 
contends that SKF Germany summed all adjustments applicable to the 
customer number involved and allocated this amount over all sales to 
that customer. Torrington asserts that this allocation is contrary to 
the court's decision in Torrington I regarding the reporting of direct 
selling expenses. Torrington alleges that, by accepting SKF

[[Page 35603]]

Germany's allocation, the Department in effect treated these as 
indirect expenses. Torrington argues that SKF Germany's reporting 
method is distortive because it does not tie the reported adjustment to 
specific transactions (or specific groups of transactions) to which 
they actually applied, but instead it allocates adjustments across 
product lines. Torrington argues that SKF Germany's reporting method is 
therefore contrary to the Department's post-URAA practice regarding 
such adjustments and that, as facts available, only positive billing 
adjustments should be retained for purposes of calculating the net 
home-market price. Furthermore, Torrington contends that, to the extent 
the facts seem to indicate that customers are simply awarded certain 
lump sums, the adjustment claimed by SKF Germany is not a billing 
adjustment but a rebate. Torrington argues that the Department does not 
accept rebates unless they were contemplated at the time of sale or are 
understood from past dealings of the parties.
    SKF Germany responds that its reporting of billing adjustment two 
is not distortive, is consistent with the way that it incurs this 
expense, and constitutes a reasonable allocation under U.S. law. SKF 
Germany asserts further that the Department has accepted this 
adjustment in the last three reviews, as well as verified it in the 
last administrative review where it found that transaction-by-
transaction reporting is simply not possible because the adjustments 
related to multiple transactions and, therefore, could not have been 
reported more specifically. SKF Germany contends that Torrington I was 
decided under the pre-URAA law and that the 1994 amendments emphasized 
that reasonable allocations of direct expenses are acceptable. SKF 
Germany contends further that, in Torrington I, the CAFC merely held 
that the Department could not treat direct adjustments as indirect 
selling expenses and that, therefore, acceptance of an allocation is 
not incompatible with its holding. SKF Germany insists that there is no 
factual or legal basis for distinguishing between upward and downward 
billing adjustments with respect to the amounts reported in its home 
market billing-adjustments-two field since it has reported this 
adjustment in a manner consistent with its business records. Moreover, 
SKF Germany asserts, the Department examined these adjustments in prior 
reviews and found them to be allocated reasonably.
    Department's Position: We accept post-sale billing adjustments as 
direct adjustments to price if we determine that a respondent, in 
reporting these adjustments, acted to the best of its ability to 
associate the adjustment with the sale on which the adjustment was 
made, rendering its reporting methodology not unreasonably distortive. 
See AFBs 6, 62 FR at 2090. While we prefer that respondents report 
these adjustments on a transaction-specific basis (or, where a single 
adjustment was granted for a group of sales, as a fixed and constant 
percentage of the value of those sales), we recognize that this is not 
always feasible, particularly given the extremely large volume of 
transactions involved in these reviews and the time constraints imposed 
by the statutory deadlines.
    SKF Germany's two billing adjustments were part of credit or debit 
notes issued to the customer that related to multiple invoices, 
products, or invoice lines, and which, therefore, could not be tied to 
a single specific transaction. In these cases, the most feasible 
reporting methodology that SKF Germany could use was a customer-
specific allocation, which is not unreasonably inaccurate or 
distortive.
    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. Because these adjustments are 
associated with multiple invoices, products, or product lines, they 
could not be tied to a specific transaction. Verification in the 96/97 
review was an opportunity to determine whether billing adjustment two 
represented a reasonable approximation of SKF Germany's experience in 
granting this adjustment. Our conclusion in that review was that there 
was no reason to believe that the actual data would differ 
significantly. In this review, there is no evidence on the record to 
indicate that the bearings included in SKF Germany's current 
allocations vary significantly, either in terms of value, physical 
characteristics, or the manner in which they were sold. For this 
reason, we find that this methodology is not unreasonably distortive. 
With regard to the holding in Torrington I, see our response to the 
previous comment.
    Comment 3: Torrington argues that the Department should reject all 
of Koyo's downward billing adjustments to home-market prices reported 
as billing adjustment two because the reporting methodology was 
incorrect and distortive. Torrington contends that billing adjustment 
two is distortive because it includes adjustments which Koyo granted on 
a model-specific basis but allocated over all sales to the customer 
involved, as well as lump-sum adjustments granted on a customer-
specific basis, with the result that adjustments are made to 
transactions for which no adjustment actually applied. Citing 
Torrington I, the petitioner argues further that expenses which vary 
from sale to sale are direct expenses and must be reported as such 
(i.e., varying from sale to sale) or be denied. Torrington contends 
that, by accepting Koyo's allocation, the Department in effect is 
treating Koyo's reported billing adjustments as an indirect expense 
(i.e., not varying from sale to sale) and, thus, reaching a result that 
is incompatible with Torrington I.
    In rebuttal, Koyo argues that Torrington has offered no new reason 
why the Department should not reject Torrington's arguments in these 
reviews as it has done in the past three AFB reviews. Koyo contends 
that the petitioner continues to rely on Torrington I even though the 
Department dismissed Torrington I as inapplicable to the issue at hand, 
citing AFBs 6, 62 FR at 2091.
    Department's Position: Koyo has reported billing adjustment two to 
the best of its ability. We have based this determination on the fact 
that this post-sale price adjustment is comprised of two types of 
adjustments: (1) Lump-sum adjustments negotiated with customers without 
reference to model-specific prices, and (2) adjustments granted on a 
model-specific basis but which Koyo records in its computer system on a 
customer-specific basis only. Given the large number of sales involved, 
it is not feasible to report this on a more specific basis. See AFBs 7, 
62 FR at 54050-51, and AFBs 8, 63 FR at 33328. Furthermore, we examined 
this expense closely at verification and found no indication that 
Koyo's methodology would result in distortive allocations. Therefore, 
we have allowed Koyo's billing adjustment two as a direct adjustment to 
normal value.
4. Circumstance-of-Sale Adjustments
4.A. Credit
    Comment 1: Torrington notes that a home-market verification exhibit 
discloses that FAG Italy was uncertain of the dates of payments for 
some home-market sales. Torrington requests that the Department accept 
revised, post-verification data from FAG Italy only to the extent that 
it is satisfied that the payment dates have been reported accurately. 
Torrington requests that the Department otherwise apply partial facts 
available to the imputed credit calculation.
    FAG Italy responds that, after verification, it revised its home-
market

[[Page 35604]]

credit expense calculation properly; it notes that it based the dates 
of payments for transactions of April and May 1998 on the customer-
specific averages of the prior six months and that it recalculated 
imputed credit using these new dates. It asserts that, because the 
payment dates have now been reported accurately, the Department should 
accept its revised data.
    Department Position: We have no reason to believe that FAG Italy 
reported payment dates for home-market sales inappropriately. Per our 
request, on December 18, 1998, FAG Italy submitted its post-
verification amendments to account for corrections it presented at the 
beginning of verification and to correct certain errors that we 
discovered during verification. The revised payment dates for April and 
May 1998, based on customer-specific averages, comprised part of FAG 
Italy's post-verification amendments. In these reviews, as in past 
reviews, we allowed FAG Italy to calculate its payment dates on the 
basis of customer-specific averages because it did not maintain its 
payment records in a manner which provided transaction-specific payment 
dates. See FAG Italy's August 28, 1998, Section B questionnaire 
response at 31. We have not found the use of the averages to be 
unreasonably inaccurate or distortive. Moreover, this methodology is 
consistent with ones we have accepted in other segments of these 
proceedings where companies were not able to provide transaction-
specific payment dates. See, e.g., AFBs 6, 62 FR at 2101, and AFBs 7, 
62 FR at 54053. For these reasons, we have accepted FAG Italy's 
methodology and, consequently, its revised data for these final 
results.
    Comment 2: Torrington argues that the Department should either 
reject or recalculate Koyo's home-market credit adjustment because its 
reporting method accounts for neither actual payment periods nor 
special agreements between Koyo and its customers for reducing 
accounts-receivable balances. Torrington contends that, since Koyo is 
able to distinguish all home-market transactions by product code, the 
sale date, the customer code, and the sales branch, reporting of actual 
payment periods is possible. Torrington concludes that, since Koyo 
calculates a customer-specific average, based on the ratio between 
receivables and sales rather than reporting actual payment periods, its 
methodology is inherently flawed.
    Koyo argues that, although Torrington states that Koyo can 
distinguish home-market transactions by product code, the sale date, 
the customer code, and the sales branch, Torrington does not mention 
that these data are all invoice items, not payment information. Koyo 
states that it keeps its customer receivables on a customer-specific 
basis but not on an invoice-specific basis. When Koyo receives payment 
from a customer, the respondent explains, it applies the payment to 
that customer's accounts receivable balance and not to a specific 
invoice. Koyo states that its methodology of calculating the average 
number of days until receipt of payment by dividing the accumulated 
month-end receivables for each customer by the average daily sales to 
that customer is acknowledged widely as a standard measure of accounts 
receivable turnover. Koyo maintains that the Department has accepted 
this methodology in previous reviews. Finally, Koyo argues that certain 
arrangements it has with specific customers regarding payment types, 
e.g., cash and 30-day notes, do not distort Koyo's home-market credit 
expenses because it accounted for these payments in its calculation of 
the average number of days outstanding which it then used for 
calculation of home-market credit expense.
    Department's Position: Based on our review of information on the 
record, we find no indication that Koyo has changed its computerized 
payment-record system so that it can link specific shipments to 
payments. We examined Koyo's credit expense calculations during 
verification and found, as in AFBs 4, 5, 6, and 7, that Koyo's 
methodology reflects that which it reported in its questionnaire 
response dated August 28, 1998, at B-11. Therefore, in these reviews, 
as in AFBs 4 through 7, we have accepted Koyo's calculation of its 
home-market credit expense for each customer on the basis of the 
average number of days that receivables are outstanding. We are also 
satisfied by information on the record of this and previous reviews 
that the arrangements that Koyo has with certain customers regarding 
payments do not distort Koyo's home-market credit expense calculations.
4.B. Technical Services and Warranties
    Comment 1: Torrington argues that SNR's claim that it incurred no 
direct technical-service expenses on its EP sales is not supported by 
information on the record. Torrington states that SNR's description of 
its selling functions regarding EP sales reveals that EP sales benefit 
from considerable technical-service expenditures by SNR and that such 
service expenditures are likely to have a significant direct expense 
portion. Since SNR did not distinguish direct and indirect technical-
service expenses, Torrington asserts that the Department should treat 
such expenses as direct expenses.
    SNR argues that Torrington completely ignores the fact that SNR did 
distinguish its technical-service expenses in its August 28, 1998, 
questionnaire response at C-32. SNR concludes that, since Torrington 
has not rebutted SNR's evidence illustrating why SNR's treatment of 
technical-services expenses was correct, the Department should accept 
these expenses as indirect in nature.
    Department's Position: We have examined the information on the 
record and have concluded that the record supports SNR's contention 
that the technical services rendered were indirect. In particular, 
SNR's Section C questionnaire response dated August 28, 1998, at C-32 
indicates that the expenses reported under this item covered the fixed 
expenses incurred in providing technical advice to salesmen concerning 
subject and non-subject merchandise. We have found that SNR's U.S. 
technical expense (i.e., salary and benefit expense) is a fixed expense 
that can neither be related to individual sales nor subject or 
nonsubject merchandise. We examined the information on the record and 
found no support for Torrington's allegation that SNR's EP sales 
benefit from ``considerable technical service expenditures'' by SNR. 
Since there is no indication on the record that SNR incurred direct 
technical expenses, we have made no changes to our treatment of SNR's 
technical services as an indirect expense.
    Comment 2: Torrington argues that the Department should review 
Nachi's direct and indirect technical-services expenses and, if Nachi 
included any direct technical-service expense in indirect technical-
service expense, the Department should restate Nachi's indirect 
expenses and reduce the CEP-offset ``cap.'' Torrington contends that 
Nachi replaces faulty bearings as part of its technical-services 
program and reported the costs of replacements as an indirect 
technical-service expense.
    Nachi argues that the Department's practice has been to accept 
Nachi's reporting of the costs associated with the activities of Nachi 
Technical Center (NTC) as an indirect technical-service expense since 
NTC does not provide services, whether related to sales, repairs, or 
replacement of bearings, to customers directly. Nachi contends that it 
did not report the costs of replacements as indirect technical-service 
expense but as a direct expense in another expense category.

[[Page 35605]]

    Department's Position: Based on our analysis of the record, we 
agree that Nachi reported the costs associated with NTC as indirect 
expenses correctly. Because such expenses, consisting principally of 
salaries and benefits of NTC personnel, are fixed expenses, it was 
proper to report them as indirect expenses. In addition, the record 
supports Nachi's claim that replacement costs are captured as a direct 
expense in another expense category. Due to the proprietary nature of 
this argument, see the Department's Analysis Memorandum for Nachi, 
dated June 15, 1999, for a more detailed discussion of this expense.
    Comment 3: Torrington argues that SKF France's claim that it incurs 
no direct expenses for technical services on its EP sales to the United 
States for merchandise manufactured by its affiliate, Sarma, is not 
supported by the record. It argues that, due to the demanding nature of 
the market to which Sarma sells (i.e., OEMs in the aerospace industry), 
it is likely that Sarma incurs significant direct selling expenses for 
technical and engineering services. Torrington contends that this is 
confirmed by SKF's reporting of a high degree of engineering services 
performed by Sarma. Torrington adds that the ledger of Sarma's indirect 
selling expenses includes items traditionally regarded as variable 
expenses. Citing AFBs 3 and AFBs 4, Torrington argues that, where the 
Department finds that the respondent has not distinguished between 
direct and indirect technical-services expenses, it is the Department's 
policy to treat such expenses as direct in the United States. When such 
information is lacking, Torrington continues, the Department calculates 
a direct-expense deduction on the basis of facts available. Torrington 
concludes that the Department should calculate and apply a direct-
expense rate based on facts available in this case.
    SKF France states that its reporting of indirect selling expenses 
for Sarma is correct and that the Department should continue to accept 
such expenses as reported. SKF France asserts that its response to the 
Department's questionnaire indicates that Sarma does not provide direct 
technical services or advice to its customers and that Sarma's 
technical department only provides general design and quality-control 
advice for future bearing development. Thus, the respondent contends, 
the response supports SKF France's claim that expenses are indirect in 
nature. SKF notes that its selling-function chart, which depicts the 
levels of activity and functions for indirect selling activities and 
which shows a high level of engineering services, is consistent with 
its narrative response. It argues that the expenses related to the 
activity the petitioner identifies (in Sarma's indirect selling expense 
ledger as being traditionally regarded as a variable expense) are not 
direct since they do not vary with the quantity sold nor are they tied 
to specific sales.
    Department's Position: SKF France stated in response to our 
questionnaire that its affiliate, Sarma, does not provide direct 
technical services to its U.S. customers. We found no record evidence 
that SKF France misclassified these expenses as indirect selling 
expenses. Moreover, there is no presumption that a company operating in 
Sarma's market should have direct selling expenses. Thus, the 
petitioner's allegation alone does not call into question Sarma's 
responses. In response to the petitioner's reference to AFBs 3 and AFBs 
4, it is clear that in these cases the Department found that the 
respondents did not distinguish direct and indirect expenses. 
Furthermore, in AFBs 3, in addition to not distinguishing between 
direct and indirect expenses, the respondent did not indicate that the 
expenses were all indirect in nature. Because there is no indication 
from the record of these reviews that certain indirect expenses should 
be reclassified as direct expenses, we have accepted SKF France's 
expenses as reported.
    Comment 4: Torrington argues that the Department should reallocate 
FAG Germany's U.S. technical-service expenses because FAG Germany's 
allocation methodology is distortive. Torrington contends that FAG 
Germany's selling-functions chart indicates that these expenses are 
incurred in greater amounts for some types of sales than for others and 
argues that the Department should reallocate these expenses to take 
this into account. Torrington argues further that the record shows that 
FAG Germany likely incurred significant direct technical-service 
expenses on certain EP sales even though FAG Germany did not report 
such expenses. Torrington argues that the Department should, consistent 
with its policy where a respondent has not distinguished direct and 
indirect technical-service expenses, treat all of FAG Germany's 
indirect technical-service expenses as direct expenses.
    FAG Germany argues that there is no demonstrative correlation on 
the record between selling functions and selling expenses. In this 
regard, FAG Germany notes that the description of selling functions in 
the selling-functions chart includes indirect as well as direct 
technical-service expenses and thus cannot be used as a basis for 
determining the accuracy of its reported direct expenses. FAG Germany 
contends further that, because it had no reported U.S. sales of the 
type that Torrington contends should incur more expense, the issue is 
essentially moot. Thus, FAG Germany concludes that there is no basis 
for imputing a facts-available direct technical-service expense for FAG 
Germany's EP sales.
    Department's Position: FAG Germany reported no direct technical-
service expenses on its EP sales. See FAG Germany's supplemental 
response dated October 27, 1998, at 12. Because the chart of selling 
functions FAG Germany provided in its response includes all technical-
service expenses, including indirect selling expenses, it is not a 
reliable guide for demonstrating an inconsistency in FAG Germany's 
response with regard to technical-service expenses. Moreover, 
Torrington's suggestion that FAG Germany should have incurred such 
expenses, without record evidence demonstrating the existence of such 
expenses, is insufficient to call the record evidence into question. 
Therefore, we have not made any adjustment to FAG Germany's claimed 
amount.
    Comment 5: Torrington argues that the Department should reject NSK-
RHP's claim that RHP Aerospace incurred no direct technical-service 
expenses for EP sales. Torrington argues that NSK-RHP's questionnaire 
response contradicts the respondent's claim that this expense is 
indirect in nature and, therefore, the Department should calculate a 
direct-expense factor for technical-service expenses as a basis for 
facts available.
    NSK-RHP responds that the Department verified NSK-RHP's reported 
U.S. indirect technical service expenses and found no discrepancy, 
thereby confirming that there was no direct link between RHP 
Aerospace's technical services and sales. NSK-RHP argues that 
Torrington has attempted to refute NSK-RHP's claim by overlapping 
different sections of NSK-RHP's response inaccurately.
    Department's Position: We verified the accuracy of NSK-RHP's claim 
that it incurred no direct technical-service expenses for EP sales and 
found no discrepancies. See Verification Report of NSK-RHP's Response 
to Sections A, B and C of the Department's Questionnaire at 14, dated 
January 21, 1999. Accordingly, we have not calculated a direct 
technical-service expense factor for RHP Aerospace based on facts 
available.

[[Page 35606]]

4.C. Commissions
    Comment: NTN argues that the Department's methodology for 
determining that its home-market commissions were not made at arm's 
length is unreasonable. NTN contends that commission rates vary 
significantly between selling agents according to the services provided 
by each agent and that the Department's methodology does not account 
for these differences. NTN also asserts that the Department's 
methodology does not account for differences related solely to levels 
of trade. Finally, NTN asserts that the fact that commissions paid to 
related parties are often much higher than those paid to unrelated 
parties demonstrates that the Department's methodology is distortive. 
By reviewing commission rates on an individual basis rather than a 
weighted-average basis, NTN asserts, the Department can determine which 
sales were made on an arm's-length basis accurately.
    Torrington argues that the Department's methodology is appropriate. 
Torrington contends that NTN provides no concrete evidence that the 
Department's reliance on a commission-rate comparison is not 
appropriate to determine whether commissions paid to related sales 
agents were at arm's length. Citing AFBs 6, 62 FR at 2099, Torrington 
observes that the Department's test of NTN's commissions conforms with 
it prior practice with regard to other respondents.
    Department's Position: There is no evidence on the record 
supporting NTN's claim that commission rates vary significantly between 
selling agents according to the services provided by each agent. As NTN 
notes, its response indicates that it negotiates commission rates with 
each selling agent. However, NTN has not provided any explanation as to 
how or why commission rates might vary or any information regarding the 
differences in services rendered by different selling agents. In the 
absence of such information, it is reasonable to presume that 
commissions paid to affiliates which are higher than those paid to 
unaffiliated parties are not at arm's length.
    Furthermore, NTN's assertion that ``commissions paid to related 
parties are often much higher than those paid to unrelated parties' 
does not demonstrate that our methodology is unreasonable. Rather, it 
indicates that the commissions paid to those related parties are more 
favorable than those paid to unrelated parties and, therefore, are not 
at arm's length. In addition, while it is true that NTN performs a 
number of different selling functions for different levels of trade, 
the record does not show or suggest that the selling functions 
performed by the selling agent vary by level of trade.
    The record also does not show or suggest that NTN pays different 
commissions to selling agents depending on the level of trade of the 
ultimate customer. Finally, with respect to this issue, it is important 
to note that the purpose of our commission arm's-length test is to 
determine whether the commissions paid are at arm's-length amounts, not 
whether the sales themselves made to affiliated parties were at arm's-
length prices. Indeed, we have a separate test for determining whether 
sales were made at arm's-length prices. Therefore, we have not altered 
our methodology.
4.D. Other Direct Selling Expenses
    Comment 1: Torrington argues that the Department should recalculate 
Koyo's U.S. direct selling expenses. Torrington asserts that Koyo did 
not account for the expenses of administering a certain sales program 
sponsored by Koyo Corporation of the U.S.A. (KCU). Koyo argues that 
Torrington's argument is a misrepresentation of the record because Koyo 
accounted for the expenses fully in KCU's U.S. selling expenses 
reported in Section C of its questionnaire response.
    Department's Position: We are satisfied by information on the 
record that Koyo has accounted for these expenses in its response. We 
have verified this item in previous reviews and find no information for 
these reviews that would indicate that the reporting of this expense 
has changed. Due to the proprietary nature of the comments raised by 
Torrington, see the Department's Analysis Memorandum for Koyo, dated 
June 16, 1999, for a more detailed discussion of this expense.
    Comment 2: NPBS argues that the statute makes no provision for the 
deduction of repacking expenses from U.S. price. Accordingly, NPBS 
asserts that the Department should not make any adjustment to U.S. 
price for repacking expenses.
    Department's Position: As we discussed in the CEP-profit section of 
this notice (see below) we view repacking expenses as direct selling 
expenses that the respondent incurs as a result of the sale. 
Accordingly, we deduct such expenses from U.S. price pursuant to 
section 772(d)(1)(B) of the Act which directs us to deduct from the CEP 
``* * * expenses that result from, and bear a direct relationship to, 
the sale, such as credit expenses, guarantees and warranties.'' See 
also AFBs 8, 63 FR at 33339, and Porcelain-on-Steel Cookware from 
Mexico; Final Results of Antidumping Duty Administrative Review, 64 FR 
26934, 26942 (May 18, 1999). Therefore, we have deducted repacking 
expenses from the CEP.
4.E. Indirect Selling Expenses
    Comment 1: Torrington argues that the Department should not deduct 
from normal value Koyo's indirect selling expenses and those reported 
for two consolidated affiliated resellers (distributors) in the home 
market. Torrington contends that Koyo has not supported its claim that 
the former are in addition to the latter expenses.
    Koyo contends that it was appropriate to accept its reported 
indirect selling expenses. Koyo argues that all three companies--Koyo 
Seiko and its two consolidated distributors--are involved in the 
selling of the product to the ultimate customer. Koyo argues, 
therefore, that it is appropriate to deduct the indirect selling 
expenses of each of the three from the gross home-market price. Koyo 
states that Torrington bases its argument incorrectly on a situation 
where the product is sold to a related party. In the instant situation, 
Koyo argues, it does not sell the bearings to its consolidated 
distributors but rather simply shifts the responsibilities of some of 
the selling functions to the consolidated distributors.
    In response to Torrington's assertion that Koyo's indirect selling 
expenses are the same as those reported for its two consolidated 
distributors, Koyo argues that, at each stage in the chain from Koyo 
Seiko to the ultimate customer, Koyo Seiko and the two consolidated 
distributors incur expenses individually in support of those sales to 
the ultimate customer. Koyo contends further that, because each company 
incurred discrete expenses in the process of selling the merchandise to 
the ultimate customer, the Department adjusted home-market price for 
those expenses correctly. Finally, Koyo concludes that there has been 
no double-counting of indirect selling expenses and therefore there is 
no need for the Department to recalculate Koyo's home-market indirect 
selling expenses.
    Department's Position: We examined Koyo's distributors' expenses 
closely at verification. We found no indication that there had been 
double-counting of indirect selling expenses. We were able to verify 
that each company incurred discrete expenses in the process of selling 
the merchandise to the ultimate customer. Therefore, we have not 
recalculated Koyo's home-market indirect selling expenses.

[[Page 35607]]

    Comment 2: Torrington notes that INA reported that its U.S. 
affiliate reimbursed the parent company for certain indirect selling 
expenses incurred in Germany to support sales to the United States. The 
petitioner contends that these reimbursements are associated with U.S. 
commercial activity and should be deducted from CEP. As facts 
available, the petitioner suggests that the Department deduct from CEP 
all of the reported indirect selling expenses incurred in Germany to 
support sales to the United States.
    INA argues that it has included the reimbursed expenses in the 
total U.S. indirect selling expenses incurred by its U.S. affiliate. 
INA asserts that, as a result, the Department has already deducted such 
expenses from the CEP.
    Department's Position: The evidence on the record indicates that 
the reimbursements in question are reflected in INA's ISE totals. Thus, 
we have already deducted the reimbursements at issue from CEP and the 
use of facts available is not warranted.
    Comment 3: Torrington argues that the Department should review 
NTN's U.S. ISE calculation to ensure that it is not distortive. 
Torrington contends that NTN apparently removed a portion of the 
warehousing expense from its total indirect selling expenses on the 
ground that these expenses were not allocable to subject merchandise. 
Torrington argues that, because NTN allocated the remaining indirect 
selling expenses to both subject and non-subject merchandise, NTN's 
methodology may be distortive.
    NTN indicates that it removed a portion of its warehousing expense 
from total warehousing expenses because this portion was associated 
exclusively with warehousing non-subject merchandise. NTN asserts that 
the remaining expenses have to be allocated between subject and non-
subject merchandise because these expenses were incurred on both 
subject and non-subject merchandise.
    Department's Position: It is appropriate to remove the warehousing 
expenses incurred exclusively on non-subject merchandise to the extent 
that the sales of the non-subject merchandise in question are not 
included in the sales total used to allocate the expenses. A comparison 
of Exhibit C-8 to the financial statements NTN submitted in Exhibit A-
18 of its September 5, 1998, response suggests that NTN did not include 
the sales on which these warehousing expenses were incurred in its 
calculation of per-unit indirect selling expenses. Therefore, we 
determine that NTN's allocation of warehousing expenses is not 
distortive.
    Comment 4: NTN argues that the Department should not have 
recalculated its home-market and U.S. indirect selling expenses without 
regard to its customer categories. NTN observes that its selling 
functions differ between levels of trade and NTN contends that, by 
reallocating selling expenses without regard to the level of trade, the 
Department distorted the margin calculation because the expenses are 
not the same for each level of trade. NTN argues this is particularly 
true of sales made by NSCL, an affiliated party in the home market, 
because NSCL sells only to distributors.
    Torrington observes that the Department has rejected NTN's argument 
in prior reviews. Torrington contends further that NTN neither 
acknowledges the Department's prior decisions nor does it acknowledge 
any changes in its reporting.
    Department's Position: We rejected NTN's allocation methodology 
because the method that NTN used to allocate its indirect selling 
expenses does not bear any relationship to the manner in which NTN 
incurs the expenses in question, thereby leading to distorted 
allocations. We have addressed this issue in prior reviews. See AFBs 8, 
63 FR at 33329, first addressed in AFBs 3, 58 FR at 39750. NTN has not 
changed the methodology we rejected in these prior reviews nor has it 
presented any evidence that its selling expenses are incurred in the 
manner in which it allocated the expenses. In addition, we note that we 
allocated expenses incurred by NSCL only to NSCL's sales. The only 
change we made to NSCL's expenses was to segregate warehousing expenses 
so we could treat them as a movement expense. Therefore, we have not 
distorted the selling expenses attributable to NSCL's sales.
    Comment 5: Torrington notes that, under a reserve for doubtful 
accounts, SKF Italy reported negative amounts as revenue for the 
account and reported positive amounts as bad-debt expenses. Torrington 
argues that the Department should not accept the positive amount in SKF 
Italy's reserve for doubtful accounts as indirect selling expenses 
because SKF Italy has not demonstrated that the bad-debt expense was 
incurred on sales of subject merchandise and contends that, without 
supporting evidence, no adjustment should be made. In support of its 
position, Torrington cites AFBs 4, 60 FR at 10916: ``(a)lthough [the 
respondent] claimed as an expense an amount set aside in reserve in the 
event that its customers fail to pay outstanding charges in the future, 
Koyo failed to demonstrate that it actually wrote off any bad debts 
during the [POR]'' (material in brackets added).
    SKF Italy contends that Torrington misapprehends the nature of the 
respondent's reserve for doubtful accounts. SKF Italy explains that the 
negative amount represents the actual collection of bad debt that was 
outstanding and written off which offsets the positive amount that 
represents bad debt that was actually written off. SKF Italy indicates 
that it considers and records such expenses as indirect and argues 
that, since indirect selling expenses are allocated over all home-
market sales, whether such expenses relate strictly to subject 
merchandise is not an appropriate issue.
    Department's Position: As SKF Italy reported in its response that 
it incurred actual bad-debt expenses during the instant review from the 
write-off of actual bearing sales, this situation differs from the one 
cited by Torrington, and we believe an expense adjustment is 
appropriate. Further, as we said in AFBs 4, 60 FR at 10917, we consider 
bad-debt expense to be either direct or indirect depending on the 
relationship between the bad-debt expense and the sale. Based on the 
information reported in SKF Italy's response, we find that the bad-debt 
expense does not bear a direct relationship to the sale of merchandise 
made during the POR because SKF Italy is unable to tie these expenses 
to particular sales. Accordingly, we have treated its bad-debt expenses 
as indirect for these final results.
5. Level of Trade
    Comment 1: Torrington argues that NTN has not demonstrated that it 
is entitled to a level-of-trade adjustment or CEP offset because it did 
not provide information that the Department requested. In addition, 
Torrington argues that NTN's descriptions of the selling functions it 
performs for its EP level of trade demonstrates that the EP level of 
trade is not comparable to any level of trade in the home market and, 
therefore, NTN is not entitled to a level-of-trade adjustment with 
respect to any of its home-market sales. Torrington asserts that NTN 
has an office which serves the EP customer and performs a number of 
selling functions that are not performed at any other level of trade. 
Torrington also observes that Exhibit A-7 of NTN's September 5, 1998, 
questionnaire response indicates that all merchandise is packaged and 
shipped to the EP customer's specifications and, Torrington argues, NTN 
does not provide this service to customers at any level of trade in the 
home market.

[[Page 35608]]

Finally, Torrington asserts that the record does not demonstrate that 
there are patterns of consistent price differences among sales at 
different levels of trade in the home market. Torrington bases its 
argument on its assertion that there is significant overlap between the 
prices at the different levels of trade. Torrington asserts that, 
because a popular model could skew the relative figures significantly 
and distort the analysis of consistent price patterns, the Department's 
analysis of the patterns of price differences by quantity is 
misleading.
    NTN contends that it provided the information which the Department 
requested. NTN also argues that the Department issues supplemental 
questionnaires routinely and that the fact that the Department asks a 
question does not necessarily mean that a response contains a 
deficiency.
    With respect to its EP sales, NTN contends that it provides 
essentially the same services for its EP sales as it does for one of 
its home-market levels of trade. NTN argues that the fact that it has 
an office which acts as a facilitator for EP sales is no more 
remarkable than the existence of branch sales offices throughout Japan 
to service customers in particular regions. NTN also argues that the 
fact that merchandise shipped to the EP customer is shipped to that 
customer's specifications is not unique because NTN packs all 
merchandise to its customers' specifications. Finally, NTN argues that 
the record demonstrates that there is a pattern of consistent price 
differences, that Torrington's arguments are based on conjecture, and 
that Torrington's claims are not supported by the record. NTN also 
contends that the Department's analytical methodology removed the 
distortions that Torrington suggests could occur.
    Department's Position: For the preliminary results, we granted a 
level-of-trade adjustment for NTN's EP sales and made a CEP offset for 
NTN's CEP sales based on an analysis of NTN's responses to our requests 
for information. See Level of Trade Memorandum dated January 26, 1999. 
We have not changed the analysis for these final results.
    We disagree with Torrington's assertion that NTN did not provide 
information to justify a level-of-trade adjustment. The information NTN 
provided was adequate for us to make an determination regarding NTN's 
level-of trade claims; therefore, Torrington's cite to NTN's 
supplemental response in support of its contention is inappropriate. 
NTN's supplemental response indicated that there was no additional 
information beyond that originally reported and we made our 
determination that NTN was entitled to a level-of-trade adjustment for 
EP sales and a CEP offset for CEP sales on the basis of NTN's original 
submissions.
    With regard to EP sales, we find that the record demonstrates that 
the level of trade of EP sales is the same as that of one of the home-
market levels of trade. First, the existence of a separate sales office 
to service EP sales does not demonstrate, by itself, that the level of 
trade is necessarily different from one of the home-market levels of 
trade. Rather, what is important is whether the selling functions 
performed by NTN (including the functions performed by the selling 
office) for EP sales are similar to those performed for one of the 
home-market levels of trade. We find that this is, in fact, the case. 
We disagree with Torrington's claim that the selling functions 
performed by NTN's EP sales office are not performed for any of the 
home-market levels of trade. Rather, we find that most of the expenses 
incurred by the EP sales office to which Torrington refers are likely 
to be incurred by any sales office and that the others can reasonably 
be correlated with the home-market selling functions NTN performed. See 
NTN final results analysis memorandum dated June 16, 1999.
    Second, we do not find remarkable that merchandise shipped to the 
EP customer is packaged and shipped to that customer's specifications, 
given the nature of the customer for EP sales. There is no evidence on 
the record, nor any logical reason to believe, that merchandise shipped 
to customers which comprise one of the home-market levels of trade are 
not also packaged and shipped to the customer's specifications.
    Furthermore, the SAA at 830 directs that, ``[w]hile the pattern of 
pricing at the two levels of trade under section 773(a)(7)(A) must be 
different, the prices at the levels need not be mutually exclusive; 
there may be some overlap between prices at the different levels of 
trade.'' We agree with Torrington that the amount of overlap measured 
in the number of models sold is substantial. However, the record 
demonstrates that the overlapping models account for a very small 
percentage of the total quantity of sales. The record also demonstrates 
that, for the vast majority of sales, measured by quantity, prices are 
higher at one level of trade than for the other. It is on this basis 
that we conclude that there is a pattern of consistent price 
differences between the two levels of trade.
    Finally, while it may be theoretically possible that one popular 
model could skew the relative figures significantly and distort the 
analysis of consistent price patterns, Torrington does not cite any 
evidence on the record to suggest that this is happening. In addition, 
if one accepts Torrington's premise, it is also just as possible that a 
popular model could skew the relative figures so that we would not find 
a pattern of consistent price differences. More importantly, however, 
if we do not incorporate the figures from our analysis of the pattern 
of price differences by quantity into our calculations, it would be 
possible that a number of models that are sold infrequently and in low 
quantities could influence our analysis unduly. Therefore, we continue 
to base our findings on all of the information available to us and, on 
this basis, we find that there is a pattern of consistent price 
differences between the home-market levels of trade. Because there is 
such a pattern and because the level of trade of NTN's EP sales is the 
same as one of its home-market levels of trade, we made a level-of-
trade adjustment whenever we compared NTN's EP sales to home-market 
sales made at a different level of trade for these final results.
    Comment 2: NTN argues that the Department should use the 
transaction to the first unaffiliated customer in the United States to 
determine the level of trade of CEP sales. NTN contends that it would 
then qualify for a price-based level-of-trade adjustment. NTN also 
asserts that the Department's methodology of examining the level of CEP 
sales net of the functions whose expenses are deducted from CEP 
effectively bars all CEP transactions from ever being granted a price-
based level-of-trade adjustment because the selling functions which a 
respondent performs in the home market are performed by its affiliated 
U.S. importer for CEP sales. NTN argues that this is contrary to the 
intent of the SAA and the legislative history of the Act.
    Torrington observes that the Department has rejected NTN's argument 
in prior reviews. Torrington contends further that NTN neither 
acknowledges the Department's prior decisions nor discusses why the 
Department should reach a different decision in these reviews.
    Department's Position: The statutory definition of ``constructed 
export price'' contained at section 772(d) of the Act indicates clearly 
that we are to base CEP on the U.S. resale price adjusted for selling 
expenses and profit. As such, the CEP reflects a price exclusive of all 
selling expenses and profit associated with economic activities 
occurring in

[[Page 35609]]

the United States. See SAA at 823. These adjustments are necessary in 
order to arrive at, as the term CEP makes clear, 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 for Constructed Export Price''), normally 
change the level of trade. Accordingly, we must determine the level of 
trade of CEP sales exclusive of the expenses (and concomitant selling 
functions) that we deduct pursuant to this sub-section. Therefore, 
because no home-market levels of trade reported by NTN were equivalent 
to the level of trade of its CEP sales, we were unable to make a level-
of-trade adjustment for such sales.
    The CIT has held recently that the Department's level-of-trade 
practice (basing the level-of-trade comparisons of CEP after making CEP 
deductions) is an impermissible interpretation of section 772(d) of the 
Act. See Borden at 58; see also Micron Technology v. United States, 
Court No. 96-06-01529, Slip Op. 99-02 (CIT January 28, 1999) (Micron). 
The Department believes, however, that its practice is in full 
compliance with the statute and that the CIT decision does not contain 
persuasive statutory analysis. The Borden decision became final on June 
4, 1999 (Slip. Op. 99-50, Court No. 96-08-01970 (CIT 1999)). Because 
the time for filing an appeal of Borden has not yet run and Micron is 
not yet final, the Department has continued to follow its normal 
practice of adjusting CEP under section 772(d) of the Act prior to 
starting a level-of-trade analysis, as articulated in 19 CFR 351.412.
    Comment 3: NSK and NSK-RHP argue that the Department should make a 
level-of-trade adjustment when CEP sales are matched to home-market 
aftermarket sales. NSK and NSK-RHP contend that the Department can make 
a level-of-trade adjustment on the basis of the difference between the 
OEM and aftermarket levels of trade in the home market. NSK asserts 
that, although the home-market OEM sales and the level of CEP sales are 
not equivalent, the Department is not required to adjust for the entire 
amount of the difference between levels of trade when making a level-
of-trade adjustment and could make a partial adjustment instead. NSK 
and NSK-RHP contend that the levels of home-market OEM sales are closer 
to the levels of CEP sales than the levels of home-market aftermarket 
sales because the prices for home-market OEM sales are lower than the 
prices for home-market aftermarket sales. NSK and NSK-RHP assert that 
it would be appropriate, therefore, to adjust normal value with a 
level-of-trade adjustment based on the difference between the home-
market levels of trade whenever CEP sales are compared to home-market 
aftermarket sales.
    Torrington notes that the Department rejected this argument in AFBs 
8 when NSK raised it for those reviews. Torrington, citing the 
Department's position from the prior reviews, argues that the 
Department should maintain its position.
    Department's Position: There is no provision in the statute for 
making such a partial adjustment. We make a level-of-trade adjustment 
when there is ``any difference between the export price or constructed 
export price and the normal value that is shown to be wholly or partly 
due to a difference in level of trade between the export price or 
constructed export price and the normal value.'' See section 
773(a)(7)(A) of the Act. We interpret the statutory phrase ``wholly or 
partly due to a difference in level of trade'' to mean that we may make 
a level-of-trade adjustment only if part of the differences in prices 
between levels of trade is attributable to the difference in level of 
trade. In other words, we need not demonstrate that no factor other 
than level of trade influenced a pattern of price differences. Thus, we 
do not read into this language of the statute the authority to make a 
level-of-trade adjustment between two home-market levels of trade where 
neither level is equivalent to the level of trade of the U.S. sale. 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; Final Results of 
Antidumping Duty Administrative Reviews, 63 FR 2558, 2578 (January 15, 
1998), and AFBs 8, 63 FR at 33330.
    Comment 4: Torrington argues that Nachi's sales to affiliated and 
unaffiliated resellers do not constitute one level of trade. Torrington 
asserts that selling-expense levels must differ for Nachi's affiliated 
and unaffiliated customers due to the nature of the affiliated 
customers' relationships to Nachi and, in certain cases, the Department 
should not allow a CEP offset to Nachi's home-market prices (the 
proprietary nature of the information does not permit us to describe 
this issue with more specificity). Torrington supports its position by 
citing the SAA at 829, which states that ``a sales subsidiary created 
merely to perform the role of a de facto sales department is not an 
appropriate basis for level-of-trade adjustments.''
    Nachi argues that Torrington does not cite any information on the 
record to demonstrate how Nachi's sales to affiliated and unaffiliated 
parties involve ``different selling activities.'' Nachi argues that, 
when it provided the Department with an analysis of its selling 
functions performed in sales to OEMs and sales to distributors, it did 
not distinguish between affiliated and unaffiliated distributors 
precisely because there are no differences in selling functions between 
the two. Nachi maintains that the Department was correct in finding 
that one level of trade exists in Nachi's home market and that a level-
of-trade difference from the CEP level of trade justifies the 
application of a CEP-offset adjustment to normal value in accordance 
with section 773(a)(7)(B) of the Act.
    Nachi argues that Torrington's reference to the SAA is irrelevant 
and taken out of context. Nachi maintains that it is clear that its 
affiliated resellers are not subsidiaries created merely to act as de 
facto Nachi sales offices. Nachi contends that Nachi has its own sales 
branches and that it reported the selling expenses of these sales 
branches as indirect selling expenses. Nachi argues further that a 
close reading of the SAA reveals that it is addressing the potential 
for manipulation that could result when a company incorporates a sales 
branch, thereby turning the sales branch into a subsidiary. Nachi 
states that the parent company may then claim that sales made by the 
subsidiary are at a different and higher level of trade than that of 
the parent, even though there has been no change at all in the 
functions performed, in order to gain the benefits of the CEP offset. 
Nachi states that Torrington's argument is focused on the selling 
activities which Nachi performed when selling to the affiliates and not 
the selling activities of the affiliated distributors. Nachi also 
argues that, through the application of the arm's-length test, the 
Department eliminates sales by Nachi to its affiliates that are not 
made at an arm's-length price. Nachi states that those remaining sales 
are made at the same or higher price than the prices of sales made to 
unaffiliated parties. Nachi maintains that the similarity in pricing of 
the sales that are used in the margin calculation is further assurance 
that Nachi incurs the same costs and performs the same selling 
functions in sales to both affiliated and unaffiliated parties.
    Department's Position: Based on our review of the information on 
the record, we find no indication that Nachi's dealings with both 
affiliated and unaffiliated parties involve different selling functions 
and services. We

[[Page 35610]]

reviewed the selling functions and services Nachi performed in sales to 
OEMs and sales to distributors and found that the selling functions and 
services performed were similar in making sales to both. There is no 
information on the record that indicates that Nachi's actual experience 
in the home market is contrary to that reported in its submissions. 
Therefore, we determined that there was one level of trade in Nachi's 
home market. Based upon our examination of the information on the 
record, we found that the home-market level is not equivalent to the 
level of the CEP. Our determination is supported further by the arm's-
length test, through which we found that Nachi dealt with its resellers 
on an arm's-length basis with respect to pricing. Also, there is 
insufficient evidence on the record to indicate that any of Nachi's 
resellers performed the role of a de facto sales department. Therefore, 
since we determined that the home-market level of trade was at a more 
advanced stage than the CEP level of trade, a CEP-offset adjustment to 
home-market price is appropriate.
6. Cost of Production and Constructed Value
6.A. Profit for Constructed Value
    Comment 1: FAG Germany and FAG Italy (collectively, FAG), Barden, 
INA, NSK, NSK-RHP, SNR, and SKF France, SKF Germany, SKF Italy, SKF 
Sweden (collectively, SKF) argue that the Department's calculation of 
profit for CV is unlawful in that it excludes below-cost sales from the 
calculation. The respondents argue that the profit-calculation 
methodology, which the Department based on all reported sales at each 
level of trade within each class or kind of merchandise, is not 
permitted under section 773(e)(2)(A) of the Act, which requires the 
Department to calculate profit ``in connection with the production and 
sale of a foreign like product, in the ordinary course of trade, for 
consumption in the foreign country.'' The respondents argue that 
``foreign like product'' is indisputably a much smaller group than the 
``class or kind'' of merchandise. Moreover, they argue, the 
Department's interpretation of ``foreign like product'' for the 
purposes of calculating CV profit is contrary to the definition of the 
term under section 771(16) of the Act. Under this section, the 
respondents continue, ``foreign like product'' is defined as 
merchandise in the first of three enumerated categories which is 
merchandise sold in the home market that is either identical or 
sufficiently similar to particular subject merchandise. They contend 
that calculating profit by aggregating different foreign like products 
results in the use of merchandise classified on a class-or-kind basis, 
which is consistent with the provision under section 773(e)(2)(B)(i) of 
the Act, requiring the Department to calculate profits ``in connection 
with the production and sale, for consumption in the foreign country, 
of merchandise that is in the same general category of products as the 
subject merchandise.''
    The respondents contend further that, when calculating CV profit 
pursuant to section 773(e)(2)(B)(i) of the Act, it would be proper to 
assume that sales outside the ordinary course of trade should be 
included in the calculation because language limiting the calculation 
to sales within the ordinary course of trade is included in sections 
773(e)(2)(A) and 773(e)(2)(B)(ii) of the Act but not in section 
773(e)(2)(B)(i) of the Act. INA argues that, since the Department did 
not actually apply the methodology set forth in section 773(e)(2)(A) of 
the Act but, in fact, applied the methodology in section 
773(e)(2)(B)(i) of the Act, the Department had no authority to exclude 
below-cost sales from its calculation of CV profit. SKF comments that 
the ``normal rule of statutory construction [is] that identical words 
used in different parts of the same act are intended to have the same 
meaning,'' citing Sullivan v. Stroop, 496 U.S. 478, 484 (1990) 
(internal quotations and citations omitted). SKF asserts further that, 
when the relevant act includes an explicit definition of the word or 
term in the same subchapter, this presumption is strengthened, citing 
Sorenson v. Treasury, 475 U.S. 851, 860 (1986). Thus, SKF concludes, 
the term ``foreign like product'' for purposes of the CV-profit 
calculation should be consistent with the definition of the term as 
used for matching purposes. FAG and Barden argue that, although the 
Department has stated in the past that it has adopted a different 
meaning for ``foreign like product'' for the purposes of calculating CV 
profit, this reasoning cannot prevail because Congress was aware of the 
statutory definition of ``foreign like product'' at the time it chose 
to include the term within the language of section 773(e)(2)(A) of the 
Act. Furthermore, FAG and Barden contend, the SAA states that section 
773(e)(2)(B)(i) of the Act is consistent with the existing practice of 
relying on a producer's sales of products in the ``general class or 
kind of merchandise,'' which the SAA indicates ``encompasses a category 
of merchandise broader than the `foreign like product,' '' citing the 
SAA at 840. INA adds that calculating profit on a foreign-like-product 
basis, as required by the plain language of the statute, is not any 
more complicated than other calculations performed routinely by the 
Department in a review, noting that the Department calculates weighted-
average prices for each foreign like product and that CV is already 
calculated separately for each different bearing model, based on model-
specific costs. INA argues further that, since CV serves as a proxy for 
a sales price, the logical reason for establishing section 773(e)(2)(A) 
of the Act as the preferred method of profit calculation is that it 
results in normal value that most closely approximates the normal value 
that would be determined based on sales of the foreign like product. 
Therefore, INA explains, under this method, if the profit earned on 
sales of the foreign product that is like the U.S. product is 
relatively high, then the profit add-on would be relatively high, 
resulting in CV for the U.S. product that correlates to price-based 
normal value. Conversely, INA continues, if the profit earned on sales 
of the foreign product that is like the U.S. product is relatively low, 
the profit add-on for CV would be relatively low. INA concludes that 
this differentiation, and thus the purpose of the section 773(e)(2)(A) 
method, is lost under the aggregated approach the Department applied in 
the preliminary results. INA, NSK, and NSK/RHP argue that, if all 
merchandise sold in the home market constituted a single foreign like 
product, then an average of all such sales would be used to determine a 
single normal value applicable to sales of every type of subject 
merchandise.
    INA observes that the Department has made a subtle change in its 
description of foreign like product comparisons for AFBs. In prior 
reviews, citing Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof From France, et al.; Preliminary Results of 
Antidumping Duty Administrative Reviews, Termination of Administrative 
Reviews, 61 FR 35713, 35717 (July 8, 1996), among others, INA contends 
that the Department stated ``[a]s defined in the questionnaire, a 
bearing family consists of all bearings within a class or kind of 
merchandise that are the same in the following physical characteristics 
* * *,'' However, in these reviews, INA continues, the Department 
stated that, ``[a]s defined in the questionnaire, a bearing family 
consists of all bearings which are the foreign like product that are 
the same in the following physical characteristics * * *,'' referring 
to

[[Page 35611]]

Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts 
Thereof From France, et al; Preliminary Results of Antidumping Duty 
Administrative Review and Partial Rescission of Administrative Reviews, 
64 FR 8790, 8795 (February 23, 1999). INA believes that this is 
evidence of a shift by the Department in the rationale for its 
aggregate profit-calculation approach. ``Foreign like product'' is a 
product-specific concept and not a collective description of all 
foreign like products sold in the home market, INA asserts.
    Torrington contends that the Department has already addressed the 
respondents' proposal to make multiple product-specific CV-profit 
calculations in AFBs 7, 62 FR at 54062, and that the Department 
concluded correctly that the respondents' proposal would be overly 
complex and make the statutorily preferred method inapplicable in most 
cases. Torrington concludes that the Department's method results in the 
application of the statutorily preferred method and is consistent with 
the similar use of aggregate data for profit and selling and general 
expenses in pre-URAA practice.
    Department's Position: As we stated in AFBs 7, 62 FR at 54062, and 
AFBs 8, 63 at 33333, we believe that an aggregate calculation that 
encompasses all foreign like products under consideration for normal 
value represents a reasonable interpretation of section 773(e)(2)(A) of 
the Act. Moreover, we believe that, in applying the preferred method 
for computing CV profit under section 773(e)(2)(A) of the Act, the use 
of aggregate data results in a reasonable and practical measure of 
profit that we can apply consistently where there are sales of the 
foreign like product in the ordinary course of trade. In the preamble 
to our regulations, we stated:

    The Department recognizes that there are other methods available 
for computing SG&A and profit for CV under section 773(e)(2)(A) of 
the Act, including those suggested by the commenters. We continue to 
believe, however, that an aggregate calculation that encompasses all 
foreign like products under consideration for normal value 
represents a reasonable interpretation of the statute. This approach 
is consistent with the Department's method of computing SG&A and 
profit under the pre-URAA version of the statute, and, while the 
URAA revised certain aspects of the SG&A and profit calculation, we 
do not believe that Congress intended to change this particular 
aspect of our practice.
    Moreover, the Department believes that in applying the preferred 
method for computing SG&A and profit under section 773(e)(2)(A), the 
use of aggregate data results in a reasonable and practical measure 
of profit that the Department can apply consistently in each case. 
By contrast, a method based on varied groupings of foreign like 
products, each defined by a minimum set of matching criteria shared 
with a particular model of the subject merchandise, would add an 
additional layer of complexity and uncertainty to [antidumping] 
proceedings without generating more accurate results.

Final Rule

    In addition, we disagree with the respondents' interpretation of 
the term ``foreign like product.'' In accordance with the definition of 
foreign like product under section 771(16) of the Act, it is clear that 
``foreign like product'' is not limited to the product which is 
identical in physical characteristics to the subject merchandise 
(section 771(16)(A)) or even to the product that is similar to the 
subject merchandise (section 771(16)(B)). Merchandise of the ``same 
general class or kind'' as the subject merchandise (section 771(16)(C)) 
will qualify as the ``foreign like product'' in cases where either the 
identical or the similar merchandise is not available. There is no 
indication that, by referring to ``a foreign like product'' in section 
773(e)(2)(A) of the Act, Congress intended that profit be calculated 
upon the basis of merchandise that is identical or similar to the 
subject merchandise. If Congress had such intentions, then the 
``preferred'' method provided in section 773(e)(2)(A) of the Act would 
rarely be applicable since CV ordinarily becomes necessary for 
determining normal value when identical or similar home market 
merchandise is not available for comparison to the U.S. merchandise. 
Furthermore, the respondents imply that the term ``general category of 
products'' is synonymous with the class or kind of merchandise. 
However, there is no statutory indication that, for purposes of 
sections 773(e)(2)(B)(i) or 773(e)(2)(B)(iii) of the Act, the ``general 
category of products'' must correspond to the ``same class or kind of 
merchandise.'' It has been our past practice to interpret the term 
``general category of products'' to ``encompass a group of products 
that is broader than the subject merchandise.'' See 19 CFR 351.405. For 
example, if the profit amount for AFBs were unavailable and the 
``general category of products'' were available, then the Department 
could consider a profit amount for the general category of 
``bearings,'' which could include all AFBs as well as tapered roller 
bearings (i.e., subject and non-subject merchandise). This general 
category is broader than the ``subject bearings,'' which, in these 
cases, would be limited to ball, cylindrical, and spherical plain 
bearings, respectively. See Shop Towels from Bangladesh, Preliminary 
Results of Antidumping Duty Administrative Review, 61 FR 55957, 55961 
(October 30, 1996), and Silicomanganese from Brazil; Final Results of 
Antidumping Duty Administrative Review, 62 FR 37869, 37878 (July 15, 
1997).
    We also disagree with INA that calculating profit on a product-by-
product basis is not any more complicated than calculating weighted-
average prices or CV for each product. In general, the respondents have 
reported numerous varieties of bearings which fall into hundreds of 
product or family categories. Calculating CV profit on a product-by-
product basis would require a product-by-product analysis and profit-
calculation determination. For certain products, if there were sales 
(i.e., sales in the ordinary course of trade) of identical or family 
bearings, we would be able to use the preferred method under section 
773(e)(2)(A) of the Act to calculate profit. However, for other bearing 
families, we would need to determine which of the three alternative 
methods under section 773(e)(2)(B) of the Act would be appropriate 
based on the factual situation before us. Given the number of bearing 
families, this would add layers of complexity which the Department does 
not face in calculating weighted-average prices or in calculating an 
aggregate profit figure. In the Department's view, Congress did not 
intend such a result when it enacted section 773(e)(2) of the Act.
    Finally, we disagree with INA's comment that we have changed our 
description of bearing families in an effort to support our rationale 
for our CV-profit calculation. In describing bearing families for 
comparison purposes, we replaced the term ``class or kind'' with 
``foreign like product'' simply because the term ``foreign like 
product'' is reflective of the new-law terminology concerning the 
merchandise subject to an order.
    Comment 2: The SKF companies argue that, assuming that the 
Department continues to rely on section 773(e)(2)(A) of the Act for the 
CV-profit calculation, it should take the revenue from non-disregarded 
profitable sales, subtract from that figure the COP for those sales, 
and then divide by the total COP for all sales, both profitable and 
unprofitable (total sales revenue on non-disregarded profitable sales 
minus total COP on non-disregarded profitable sales divided by total 
COP on all sales). SKF asserts that the URAA requires that CV profit 
reflect the ``actual amounts * * * realized'' by foreign producers. It 
also

[[Page 35612]]

asserts that this proposed methodology would arrive at a more realistic 
assessment of a foreign producer's actual profit.
    Torrington argues that the Department has rejected SKF's argument 
previously that non-profitable sales could be used in calculating 
profit and cites AFBs 7, 62 FR at 54062.
    Department's Position: As we concluded in AFBs 7, section 
773(e)(2)(A) of the Act requires us to use the actual amount for profit 
in connection with the production and sale of a foreign like product in 
the ordinary course of trade. Section 771(15) of the Act defines sales 
outside the ordinary course of trade as those sales disregarded under 
section 773(b)(1) of the Act because they failed the cost test. Thus, 
as required by law, the Department has continued to exclude sales that 
failed the cost test from the CV-profit calculation under section 
773(e)(2)(A) of the Act.
6.B. Affiliated-Party Inputs
    Comment 1: NTN disagrees with the Department's recalculation of the 
value of NTN's affiliated-party inputs. It contends that the Department 
should use NTN's reported actual costs for affiliated-party inputs. NTN 
observes that, while sections 773(f)(2) and 773(f)(3) of the Act 
provide for disregarding certain affiliated transactions, these 
provisions do not apply to NTN's factual situation. With regard to 
section 773(f)(2) of the Act, NTN contends that there is no evidence 
that its affiliated-party inputs do not reflect the amount usually 
reflected in the sales of merchandise under consideration. NTN also 
claims that the fact that an input may be sold at less than its COP 
does not necessarily mean that it is not reflective of a fair market 
price.
    With regard to section 773(f)(3) of the Act, NTN contends that the 
Department must have reasonable grounds to believe that inputs are 
being sold at less than the COP before it may use COP information to 
value the inputs. NTN also contends that, while the statute permits the 
use of the rule only for major inputs, the Department did not 
distinguish between major and minor inputs in its recalculation of 
NTN's costs for the preliminary results. NTN also contends that the 
Department applied this methodology inappropriately to production 
processes performed by affiliated parties, which are, according to NTN, 
clearly different from major inputs.
    Finally, NTN argues that, assuming the Department was justified in 
making the adjustment, the Department's calculation is distortive 
because it does not take into account NTN's cost accounting system. NTN 
claims that its reported costs are based on standard costs multiplied 
by variances. Thus, according to NTN, if the transfer price of a 
particular component were 100 yen and the variance was 5 percent, NTN 
reported a cost of 105 yen. Thus, NTN argues, if the affiliated 
supplier's actual cost was 103 yen, the Department would have made an 
adjustment based on the difference between the transfer price and the 
supplier's actual cost rather than NTN's actual cost.
    Torrington observes that the Department has rejected this argument 
made by NTN in AFBs 8 and should continue to reject it for the reasons 
the Department enunciated in that decision.
    Department's Position: Pursuant to section 773(f)(3) of the Act, in 
the case of a transaction between affiliated persons involving the 
production of a major input, the Department may consider whether the 
amount represented as the value of the major input is less than its 
COP. In addition, section 351.407 of the Department's regulations 
states that, for purposes of section 773(f)(3) of the Act, the value of 
a major input purchased from an affiliated person will be 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. We have 
relied upon this methodology in past AFB reviews as well as in other 
cases. See, e.g., AFBs 6, 62 FR at 2117, AFBs 7, 62 FR at 54065, AFBs 
8, 63 FR at 33337, and Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Round Wire from Taiwan, 64 FR 17336 (April 9, 
1999) (Round Wire from Taiwan).
    In this case, we asked NTN in our COP questionnaire to provide a 
list of the major inputs it received from affiliated parties which it 
used to produce the subject merchandise. NTN responded to the question 
by directing us to several exhibits. These exhibits list inputs which 
NTN considered to be major inputs and identify the respective transfer 
prices and supplier's cost information for the inputs. We examined this 
information and determined that in some instances the company's 
reported transfer prices were less than its respective costs. As there 
were no other market prices available in most instances, we restated 
NTN's COP and CV in the instances where the affiliated supplier's cost 
of producing the inputs was higher than the transfer price. Therefore, 
since we reasonably relied upon the information provided by NTN 
regarding the cost of major inputs it used in manufacturing the subject 
merchandise, we applied section 773(f)(3) of the Act correctly for 
purposes of determining COP and CV for our analysis.
    NTN argues that the Department must have reasonable grounds to 
believe that inputs are being sold at less than COP before it may use 
COP information. The Department considers the initiation of a cost 
investigation concerning home-market sales a specific and objective 
reason to believe or suspect that the transfer price from a related 
party for any element of value may be below the related suppliers' COP. 
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; Final Results of 
Antidumping Duty Administrative Reviews and Termination in Part, 63 FR 
20585 (April 27, 1998). This practice was affirmed by the Court of 
International Trade in NSK Ltd. v. United States, 910 F. Supp 663 (CIT 
1995). Therefore, based upon prior case precedent, it was appropriate 
to consider the cost data available on the record in determining how to 
value major inputs.
    Regarding NTN's allegation that we should not apply the major-input 
rule to production processes performed by affiliates, section 773(f)(3) 
of the Act directs us to examine the costs incurred for transactions 
between affiliated persons. These transactions may involve either the 
purchase of materials, subcontracted labor, or other services. Thus, we 
applied the major-input rule properly to the production processes 
performed by affiliates. This decision is consistent with our practice 
in prior reviews. See AFBs 8, 63 FR at 33337.
    Finally, we disagree with NTN that our methodology is distortive. 
NTN's cost-reporting methodology does not account for the fact that the 
affiliate's cost is higher than the transfer price. NTN calculated its 
variances by comparing its standard costs to its actual costs, which 
are, for all inputs it purchased from all suppliers, based on the 
transfer prices from each supplier. As a result, the affiliate's costs 
do not enter into the calculation of NTN's variances and NTN's reported 
``actual'' costs are based on transfer prices. Therefore, because the 
reported costs are based on transfer prices, it was appropriate to 
adjust the reported costs for the difference between the affiliate's 
cost and the transfer price when the affiliate's cost is higher than 
the transfer

[[Page 35613]]

price. Therefore, we conclude that there is no reason to alter our 
methodology.
    Comment 2: Torrington asserts that the Department should use facts 
available to value certain major inputs SKF Germany obtained from 
affiliated parties for which it did not provide market prices, contrary 
to the Department's questionnaire instructions.
    SKF Germany rebuts that, since its related supplier does not sell 
these major inputs to unaffiliated parties, it does not have a 
comparable market value or price for the inputs it purchased from its 
affiliated suppliers. SKF Germany argues that its reporting is 
consistent with the questionnaire instructions as it has reported the 
higher of COP or transfer price for these inputs.
    Department's Position: In its August 28, 1998, Section D response 
at 14, SKF Germany stated that the components it buys from affiliated 
suppliers are not sold by these affiliates to unaffiliated customers in 
Germany. In addition, at 17 of its Section D response, SKF Germany 
asserted that, ``[a]bsent an observable market for such purchases, the 
higher of cost/transfer price necessarily defines the statutory value 
for those inputs.'' Pursuant to section 773(f)(3) of the Act and 19 CFR 
351.407(b), we have accepted SKF Germany's reporting of its major-input 
costs. As cited above in response to comment 1, we have relied upon 
this methodology in past AFB reviews as well as in other cases.
    Comment 3: Citing the Department's February 16, 1999, verification 
report for FAG Italy's COP and CV data, Torrington contends that the 
Department determined that FAG Italy's unaffiliated supplier's prices 
were not always lower than prices from affiliates even though FAG Italy 
claimed otherwise in an earlier submission. According to the 
petitioner, at the beginning of verification, FAG Italy presented 
revised COP and CV information that valued affiliated-party inputs on 
the higher of cost, transfer price, or arm's-length price. Further, the 
petitioner asserts, the Department's preliminary analysis memorandum 
regarding FAG Italy indicates that, for the preliminary results, the 
Department used the revised COP and CV information. The petitioner 
argues that, for the final results, the Department should only accept 
FAG Italy's revised COP and CV information to the extent that it is 
satisfied that FAG Italy reported the values of the affiliated-party 
inputs accurately based on the higher of COP, transfer prices, or 
arm's-length prices.
    FAG Italy contends that it reported the revised costs for materials 
purchased from affiliated parties correctly and that the Department 
should accept them. Citing the Department's verification report, FAG 
Italy argues that the Department verified these corrections fully.
    Department's Position: FAG Italy reported its revised costs of 
materials accurately and we have used the revised information for the 
final results of these reviews.
    Comment 4: Citing the verification report, Torrington contends that 
FAG Italy excluded net financing expenses from its calculation of the 
COP of materials purchased from affiliated parties. The petitioner 
argues that the Department should only accept FAG Italy's revised data 
to the extent that it is satisfied that the correct amounts have been 
reported. Otherwise, Torrington contends, the Department should make 
all appropriate adjustments to FAG Italy's reported costs, thereby 
increasing the company's COP by the full net financing expenses for 
materials purchased from affiliated parties.
    FAG Italy argues that it added financial expenses to the revised 
cost information specifically at the request of the Department. The 
respondent also contends that the Department verified this issue fully 
and accepted the information during the cost verification. FAG Italy 
contends that Torrington's concerns are unwarranted because the 
percentage of affiliated-party inputs to total inputs (by value and 
volume) is negligible and these revised material costs have no effect 
on the ultimate margin calculation.
    Department's Position: FAG Italy included the net financial 
expenses in its revised cost information. We verified and accepted 
these new costs during our verification. See February 16, 1999, 
verification report on FAG Italy at 16.
    Comment 5: Citing INA's August 28, 1998, section D questionnaire 
response at 7, Torrington notes that the respondent purchased inputs 
such as cages, blanks, and subcontracted processing from certain 
affiliates. The petitioner also notes that the Department requested 
that INA report the highest of transfer price, the affiliated 
supplier's cost, or the input's market price for major inputs purchased 
from an affiliated supplier. The petitioner asserts that INA did not 
comply with the Department's request since it reported neither transfer 
prices nor market values for the inputs purchased from a Slovakian 
affiliate and did not provide market values for the inputs obtained 
from a Hungarian affiliate. Furthermore, with respect to the inputs 
provided by the Slovakian affiliate, Torrington contends that, while 
INA valued the inputs at the affiliated supplier's costs, such costs 
are not reliable since INA ``grossed up'' the reported amounts to 
account for situations where INA supplied the affiliate with raw 
materials free of charge. For the inputs provided by the Hungarian 
affiliate, the petitioner also contends that INA did not support its 
claim that the transfer prices exceeded the affiliate's costs 
consistently. In light of the alleged reporting deficiencies, the 
petitioner requests that the Department not accept INA's reported costs 
for models incorporating inputs supplied by these affiliates and 
instead use facts available for the models involved.
    INA contends that it followed the Department's instructions in 
reporting the value of the inputs which it obtained from its 
affiliates. It states that it reported the value of inputs purchased 
from the Slovakian affiliate at the affiliate's costs since no market 
prices were available and compiling transfer prices was extremely 
burdensome because to do so would have required tracing information 
manually through thousands of transactions. INA notes, however, that in 
its original questionnaire response it provided information to support 
its assertion that the cost figures were higher than the transfer 
prices. Moreover, for its supplemental questionnaire response, INA 
states that it conducted a manual search for transfer-price information 
and provided a comparison of transfer prices with costs to substantiate 
that the costs were almost always higher than the transfer prices. 
Furthermore, in situations where INA discovered that the transfer 
prices were higher than costs, it says it revised the COP and CV 
submissions to value the inputs from the affiliate based on the 
transfer prices.
    INA rebuts the petitioner's assertion that the reported costs of 
inputs from the Slovakian supplier are not reliable. It contends that 
the petitioner has misconstrued the manner in which INA determined the 
costs and that the allegedly distortive ``gross up'' to which the 
petitioner refers was necessary for converting standard costs to actual 
costs, an adjustment that is consistent with the Department's 
instructions in its questionnaire. INA clarifies that, for situations 
in which it provided materials free of charge to its affiliate for the 
production of bearing inputs, it included standard and actual material 
consumption to calculate the gross-up factor for converting the 
standard material cost to an actual material cost.

[[Page 35614]]

INA asserts that this results in costs that reflect the cost of 
material consumed in producing the parts supplied by the affiliate 
accurately. INA cites the criteria set forth under section 782(e) of 
the Act for accepting information: the information is acceptable if it 
is timely, verifiable, sufficiently complete to serve as a reliable 
basis for a determination, provided to the best of the respondent's 
ability, and can be used without undue difficulty. INA contends that 
its valuation of the inputs meets these criteria.
    INA contends that it provided both transfer price and cost data 
concerning purchases from its Hungarian affiliate as requested by the 
Department, and it clarifies that it did not provide market prices 
since it did not purchase the inputs from other sources and the 
affiliate did not sell the inputs to unaffiliated purchasers. INA 
contends that its valuation of these inputs on the basis of transfer 
prices is proper since the transfer prices were in all instances higher 
than the affiliate's costs. Finally, INA contends that it supported its 
claim by referring to the exhibit of its questionnaire response that 
contains a comparison of costs with transfer prices.
    Department's Position: We find that the information INA used to 
value cages, blanks, and subcontracted processing provided by 
affiliates is proper in light of the information that it had available. 
Moreover, INA's reporting methodology complies with our regulatory 
requirements for valuing inputs from affiliates. Section 351.407 of our 
regulations states that, for purposes of calculating the COP and CV 
under section 773(f)(3) of the Act, the value of a major input 
purchased from an affiliated person will be based on the higher of the 
following: (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. INA's 
reporting methodology fulfills this requirement considering the 
information that was reasonably available to it. Moreover, we have 
relied upon this methodology for valuing inputs in past AFB reviews as 
well as in other cases. See, e.g., AFBs 8, 63 FR at 33337, and Round 
Wire from Taiwan, 64 FR 17336 (April 9, 1999). Thus, we find that this 
situation does not warrant the use of facts available.
6.C. General and Administrative Expenses
    Comment 1: Torrington argues that the Department should deny FAG 
Germany's claimed offset to its G&A for the gain on the sale and 
leaseback of certain assets. Torrington contends that, even if the 
Department agrees with FAG Germany that these assets are related to 
production, the Department should reject this offset because FAG 
Germany's sales-and-leaseback arrangement is not a routine disposition 
of fixed assets. Torrington cites Certain Welded Stainless Steel Pipe 
from the Republic of Korea, Final Determination of Sales at Less than 
Fair Value, 57 FR 53693, 53704 (November 12, 1992), in support of this 
contention. Torrington also claims that other evidence on the record 
suggests that the assets in question are related to real property owned 
by FAG Germany rather than to production.
    FAG Germany argues that the case Torrington cites is inapposite to 
this case because, in that case, the plant that the respondent sold was 
not related to the production of the subject merchandise and the 
transaction was not a routine disposition of fixed assets. In this 
case, FAG Germany contends, the asset in question is the plant where 
most of the AFBs shipped to the United States are manufactured. FAG 
Germany also argues that a sale-and-leaseback transaction is a common 
commercial financing method and that the annual lease payments, as well 
as the amortized gain, FAG Germany made relative to the sale-and-
leaseback transaction are included routinely in its G&A calculation. 
FAG Germany cites Certain Steel Concrete Reinforcing Bars from Turkey, 
62 FR 9737, 9748 (March 4, 1997), and Oil Country Tubular Goods from 
Mexico, 60 FR 33567, 33574 (June 28, 1995), in support of its 
contention that its offset to G&A is proper. Finally, FAG Germany 
argues that, while the transaction included the land upon which the 
facilities are located, it was not simply a real-estate transaction but 
also included assets involved in the production of subject merchandise.
    Department's Position: It is our practice to adjust G&A expenses 
for miscellaneous revenue and expenses related to the production of 
subject merchandise. See, e.g., Certain Steel Concrete Reinforcing Bars 
from Turkey, 62 FR 9737, 9748 (March 4, 1997), and Oil Country Tubular 
Goods from Mexico, 60 FR 33567, 33574 (June 28, 1995).
    In this case, FAG Germany demonstrated, and the petitioner does not 
dispute, that the plant in question produced subject merchandise during 
the POR. See Exhibit D-1 of FAG Germany's section D response dated 
August 28, 1998. Further, FAG Germany's claimed offset to G&A expenses 
corresponds to the portion of the gain on the plant sale attributable 
to the current period, which FAG Germany amortized over the life of the 
lease. See FAG Germany's section D response dated August 28, 1998, at 
28. In addition, FAG Germany included the expense from this lease in 
its calculation of the reported G&A expenses. See Exhibit 14 of FAG 
Germany's section D response dated August 28, 1998 (compare lessor's 
name to 18 of FAG Germany's supplemental response dated October 27, 
1998). Therefore, we conclude that it is appropriate to offset FAG 
Germany's G&A expenses by the amortized gain on the sale of the plant.
6.D. When To Use Constructed Value
    Comment: NTN argues that the Department should base normal value on 
CV where all contemporaneous sales of identical merchandise were 
disregarded because they were sold below cost. NTN argues that the 
Department's interpretation of CEMEX v. United States, 133 F.3d 897 
(CAFC 1998) (CEMEX), the basis of the Department's current practice, is 
erroneous because it is inconsistent with the current statutory scheme. 
NTN contends that the statute provides that normal value be based on 
the foreign like product, which the statute defines as the first of 
several categories. NTN argues that, if there is identical merchandise, 
that merchandise is the foreign like product. NTN also contends that 
the statute directs that, if no sales made in the ordinary course of 
trade remain, the normal value shall be based on CV.
    NTN argues that the CEMEX decision was for a pre-URAA case with 
facts different than those in the instant case. NTN claims that below-
cost sales were not an issue in the CEMEX case. NTN also contends that 
the treatment of both sales below cost and sales outside the ordinary 
course of trade has changed under the revised statutory scheme.
    Torrington observes that the Department addressed this issue in the 
prior review and should not alter its methodology.
    Department's Position: The CAFC stated in CEMEX that ``[t]he 
language of the statute requires Commerce to base foreign market value 
on nonidentical but similar merchandise * * * rather than CV when sales 
of identical merchandise have been found to be outside the ordinary 
course of trade.'' See CEMEX, 133 F.3d at 904. NTN is correct that 
there was no cost test in CEMEX and CEMEX was under the pre-URAA 
statute; however, under the URAA, below-cost sales which are 
disregarded pursuant to section

[[Page 35615]]

773(b)(1) of the Act are now defined to be outside the ordinary course 
of trade and, therefore, not included in normal value. Therefore, 
consistent with CEMEX, when making comparisons in accordance with 
section 771(16) of the Act, we considered all products sold in the home 
market that were comparable to merchandise within the scope of each 
order and which were sold in the ordinary course of trade for purposes 
of determining appropriate product comparisons to U.S. sales. Where 
there were no sales of identical merchandise in the home market made in 
the ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade. Only where there were no sales of foreign 
like product in the ordinary course of trade did we resort to CV.
6.E. Miscellaneous
    Comment 1: Torrington argues that the Department should 
recharacterize certain expenses NSK claimed as non-operating expenses.
    NSK responds that the Department characterized certain NSK expenses 
as non-operating expenses correctly. NSK argues that the Department 
verified thoroughly that NSK reported each of its claimed non-operating 
expenses properly. Moreover, NSK argues, any adjustment for non-
operating expenses would be de minimis and would require the Department 
to offset the non-operating expenses by comparable non-operating income 
so as to avoid double-counting.
    Department's Position: Based on our findings at verification, NSK 
recorded the expenses in question properly as non-operating expenses. 
Torrington provided no argument or explanation as to why these expenses 
were not non-operating expenses. Thus, we have not recharacterized 
these expenses as Torrington argued that we should.
    Comment 2: Torrington raises four other arguments regarding NSK's 
section D costs. Because of their proprietary nature, the arguments are 
not susceptible to public summary.
    Department's Position: We have summarized the arguments and 
addressed them in the Final Analysis Memorandum of NSK, dated June 15, 
1999. For the reasons explained therein, we have not made any 
adjustments to NSK's section D costs based on these four arguments.
    Comment 3: Torrington states that, based on its concerns about 
certain aspects of verification, the Department asked FAG Italy to 
explain instances where the reported cost for a model deviated 
significantly from the average cost for models within the product 
family. Because the Department found that the product code had been 
entered incorrectly in some of the instances, Torrington asserts that 
the Department should reject FAG Italy's COP/CV data. According to 
Torrington, the Department's verification report also shows that FAG 
Italy had entered incorrect cost into the data for one transaction. 
According to Torrington, these discoveries indicate that there are 
other errors in the cost data and that the Department should accept 
only revised COP/CV data from FAG Italy where it is satisfied that 
accurate product codes and costs have been reported.
    FAG Italy rebuts that Torrington identified code and costs 
anomalies prior to verification, at which time the Department verified 
the corrections for any errors. FAG Italy affirms that the identified 
anomalies were the only inaccuracies the Department or Torrington 
discovered in the COP/CV data. It dismisses Torrington's conclusion 
that additional errors exist as untrue and a distortion of the record 
evidence.
    Department's Position: As discussed in our CV and COP verification 
report, we examined at verification the records Torrington had 
identified. See Constructed Value and Cost-of-Production Verification 
Report for FAG Italia S.p.A., dated February 16, 1999, at 20-21. We 
concluded that product codes had been entered erroneously in some 
instances due to input errors in source documentation. In reviewing the 
records, FAG Italy acknowledged that it had made an error in entering 
the cost for one of the observations. We examined reported costs for 
other models at verification and confirmed that they were reported 
accurately. On this basis, we do not have reason to find that the 
anomalous records are reflective of FAG's entire database.
    We continue to be satisfied that the revised COP/CV information 
which FAG Italy presented is accurate and, accordingly, have used it in 
our final results.
7. Packing and Movement Expenses
7.A. Repacking Expenses
    Comment: Torrington argues that Nachi reported labor costs incurred 
for repacking in the United States incorrectly as U.S. indirect selling 
expenses and thereby increased the CEP offset eligible for deduction 
from home-market prices improperly. Torrington contends that the 
Department should correct Nachi's error by restating U.S. repacking 
costs and U.S. indirect selling expenses. Torrington argues that, if 
this adjustment cannot be made on the basis of information on the 
record, the Department should use data of another Japanese respondent 
as facts available.
    Nachi argues that repacking labor costs incurred by Nachi America 
are characterized correctly as an ISE. Since such costs are not 
identified in Nachi's books and records separately, Nachi argues that 
any attempt to state repacking labor costs separately would require it 
to make an allocation. Nachi states that, before this review, it has 
not allocated repacking labor costs because it would result in an 
infinitesimal amount. Nachi states further that the Department should 
determine that its repacking labor costs meet the definition of an 
insignificant adjustment under section 351.413 of the Department's 
regulations. Nachi suggests that, if the Department wishes to segregate 
repacking labor expense, it should use the U.S. repacking labor costs 
that Nachi reported in its November 20, 1998, supplemental 
questionnaire response.
    Department's Position: We have recalculated repacking expenses, a 
direct selling expense, to include repacking labor costs for these 
final results. We also have recalculated U.S. indirect selling expenses 
to exclude repacking labor costs which had been included by Nachi 
incorrectly. We made our recalculations based on information in Nachi's 
November 20, 1998, supplemental questionnaire response.
7.B. Inland Freight
    Comment 1: Torrington argues that questionnaire responses from FAG 
Italy contradict one another with regard to inland-freight expenses. 
Torrington asserts that FAG Italy stated in one response that it could 
only report freight expenses on an allocation basis and that, in 
another response, FAG Italy stated that freight arrangements were 
recorded on a transaction-specific manner, thus allowing for home-
market price adjustments where the invoice did not reflect the freight 
arrangements properly. Torrington asserts that FAG Italy should be 
required either to explain the discrepancies between the two statements 
or to report freight expenses on a transaction-specific basis. It 
requests that the Department apply a partial facts-available approach 
in the event that FAG Italy does not undertake one of these two 
actions.
    FAG Italy responds that Torrington has confused freight charges, 
which are billed to FAG Italy by freight forwarders at the end of each 
month for shipments from FAG Italy to its home-market customers, with 
freight reimbursements, which are charged to certain customers

[[Page 35616]]

by FAG Italy on an invoice-specific basis. FAG Italy states that the 
freight costs it reported in the inland-freight data element are based 
on an allocation of freight charges invoiced to FAG Italy at the end of 
each month by freight companies. It states that it cannot link these 
charges to individual orders because the bills for these charges do not 
specify the individual shipments underlying the charges. FAG Italy 
asserts that therefore it cannot tie the monthly freight charges to the 
individual orders of its customers. It clarifies, however, that it 
maintains terms of sale with certain home-market customers which 
dictate that the customer reimburses FAG Italy for freight charges. FAG 
Italy states that, when this occurs, the reimbursements are billed to 
the customer on its invoice. FAG Italy asserts that, because these 
reimbursements are not traceable to the original freight charges, there 
is no inconsistency in its questionnaire responses.
    Department's Position: While we prefer that respondents report 
freight charges on a transaction-specific basis, we are satisfied with 
FAG Italy's explanation that it is unable to report its freight 
expenses on that basis. As we stated in AFBs 8, 63 FR at 33340, the 
averaging of home-market prices, for the purpose of calculating a 
weighted-average home-market price, has the effect of averaging the 
components used to calculate those net prices, including inland 
freight. Therefore, the use of an allocated freight expense would not 
necessarily result in a distortion of home-market prices and a partial 
facts-available approach is not appropriate.
    We are satisfied that FAG Italy reported the components of its 
inland-freight expenses accurately and allocated these expense 
reasonably for the calculation of normal value. Accordingly, we have 
used these expenses in our final results.
    Comment 2: Torrington argues that FAG Germany and FAG Italy did not 
report certain freight which apparently was incurred on U.S. sales made 
by an affiliated party. Torrington argues that, if the reported price 
includes this freight charge, the Department should calculate this 
expense and deduct it from the price of these sales.
    FAG Germany and FAG Italy contend that the reported prices do not 
reflect freight charges because the customer pays the freight on these 
sales. The respondents state further that, for some sales, they grant a 
freight allowance but that this allowance is reflected as a reduction 
in the sales price to the customer. Thus, the respondents conclude, no 
adjustment to their reported freight or prices is warranted.
    Department's Position: FAG Germany's section C response dated 
August 28, 1998, at 34 makes clear that this affiliated party did not 
incur freight charges on sales to U.S. customers. Furthermore, FAG 
Germany's section C response dated August 28, 1998, at 20 makes clear 
that the prices charged by this affiliated party are net of any freight 
allowance granted to a customer. Similarly, we have reviewed FAG 
Italy's Section C response dated August 28, 1998, at 34 which shows 
that no freight charges were incurred on sales by the affiliate to U.S. 
customers. FAG Italy's Section B response dated August 28, 1998, at 20 
clarifies that prices charged by the affiliate were net of any freight 
allowance. Thus, no adjustments are necessary.
    Comment 3: Torrington argues that Nachi's pre-sale warehousing 
expense incurred after shipment from the factory should be treated as 
movement expense, not U.S. indirect selling expenses, citing section 
351.401(e)(2) of the Department's regulations.
    Nachi argues that the Department's long-standing practice has been 
to treat Nachi's U.S. pre-sale warehousing as a U.S. ISE.
    Department's Position: The practice Nachi cites pre-dates the URAA. 
The SAA states that warehousing expenses should be treated as movement 
expenses. SAA at 823. This treatment is reflected in our regulations. 
For these final results we treated Nachi's warehousing expense incurred 
after the merchandise left the factory as a movement expense in 
accordance with 19 CFR 351.401(e)(2).
    Comment 4: Torrington argues that the Department should ensure that 
amounts Barden reported as freight reimbursements in one data element 
have a corresponding amount billed in another element.
    Barden contends that it reported both the freight reimbursements 
and the amount billed in the two data elements correctly and on a 
corresponding basis.
    Department's Position: We have compared the billing amounts Barden 
reported and find that the information corresponds correctly.
7.C. Ocean and Air Freight
    Comment 1: Torrington asserts that FAG Italy incurred air-freight 
expenses as the result of specific existing orders and that, as a 
result, it should not be permitted to aggregate its ocean-freight and 
air-freight expenses. Torrington states that other respondents in the 
reviews were able to report the two expenses separately. Asserting that 
air freight is generally substantially more expensive than ocean 
freight, it argues that FAG Italy should be required to identify the 
sales which were subject to air freight and apply an air-freight rate 
to these sales.
    FAG Italy responds that the Department's past practice and 
decisions, which permitted the aggregation of ocean and air freight 
where a respondent was unable to identify freight charges on a 
transaction-specific basis and the record evidence did not show 
aggregation to be distortive, is the correct approach. It asserts that 
Torrington misinterprets a statement by FAG Italy in reaching the 
conclusion that FAG Italy was, and is, able to relate an air or sea 
shipment to a specific order. On the contrary, FAG Italy contends, its 
business practices do not permit traceable linkage between a U.S. 
customer's order, the air or sea shipment, inventoried bearings, and 
the ultimate resale. FAG Italy states that whether another respondent 
can trace its specific transactions to a mode of shipping is not a 
relevant consideration.
    Department's Position: We have found that it is generally not 
feasible for respondents to report air and ocean freight on a 
transaction-specific basis in these proceedings. See AFBs 8, 63 FR at 
33340, and AFBs 7, 62 FR at 54081. Where respondents were unable to 
report ocean and air freight separately, we have accepted aggregated 
international freight data. See AFBs 6, 62 FR at 2121; see also The 
Torrington Company v. United States, 965 F. Supp. 40 (CIT 1997) 
(Torrington II) (affirming the Department's methodology for accepting 
combined ocean and air freight where a respondent could not report the 
two expenses separately). Furthermore, section 351.401(g) of our 
regulations provides that we may consider allocated expenses and price 
adjustments when transaction-specific reporting is not feasible, 
provided we are satisfied that the allocation method used does not 
cause inaccuracies or distortions.
    At 29 of its section C response, FAG Italy explained that it could 
not tie resales of merchandise in the United States to its shipment of 
that merchandise. FAG Italy stated that it delivered merchandise to the 
United States by both air and freight and that, once delivered, the 
merchandise was entered into the inventories of importing companies. 
From that point, the merchandise was resold to unaffiliated U.S. 
customers. FAG Italy could not trace its shipment costs to this resale. 
Because the use of air freight was not limited to particular models or 
customers, allocated reporting of the air-

[[Page 35617]]

freight and ocean-freight expenses is not unreasonably distorted in 
this case. Therefore, we have accepted FAG Italy's data concerning 
these expenses.
    Comment 2: Torrington argues that the Department should not accept 
Koyo's continued failure to account for air-freight expenses for 
shipments to the United States separately when direct links between the 
sale and the air shipment exist. Torrington argues further that, given 
the relative cost of air freight versus ocean freight, the Department 
should apply an appropriate facts-available adjustment to increase the 
reported freight costs of all U.S. transactions.
    Koyo states that Torrington admits that the Department does not 
require companies to report their air and ocean freight separately when 
there is an absence of a direct link between the air shipment and the 
resale to the unaffiliated U.S. customer. Koyo contends that it is 
because Koyo cannot tie its air-freight shipments to specific customer 
invoices that the Department does not require Koyo to segregate its 
air-freight expenses. Finally, Koyo argues that Torrington provides no 
new evidence that Koyo can now tie those shipments to specific 
invoices.
    Department's Position: We find no new information on the record 
that would indicate that Koyo has changed the manner in which it 
records these expenses in its accounting system and is now able to 
determine a direct link between a sale and an air shipment. We have 
discussed this issue extensively in previous reviews. See AFBs 4, 60 FR 
at 10942, AFBs 5, 61 FR at 66510, AFBs 6, 62 FR at 2121, and AFBs 8, 63 
FR at 33340. We have found that it is generally not feasible for 
respondents to report air and ocean freight on a transaction-specific 
basis in these proceedings. Therefore, we have accepted Koyo's 
reporting of these movement expenses for the final results.
    Comment 3: Torrington contends that SKF Germany, SKF Italy, and SKF 
Sweden should report their air-freight and ocean-freight expenses for 
EP and CEP sales separately. Torrington posits that it is general 
knowledge that air freight is substantially more expensive than ocean 
freight. Torrington asserts that, given that this is the ninth 
administrative review of these orders, the respondents have had ample 
time to modify their reporting systems. Torrington also argues that the 
respondents' alleged inconvenience in segregating these expenses is not 
a valid excuse, citing Torrington II. The petitioner states that other 
respondents participating in these administrative reviews, including 
SKF Germany, have identified separately those sales that were shipped 
by air freight and calculated separate factors for such sales. 
Torrington argues further that, if these respondents do not report such 
expenses separately, the Department should use some form of facts 
available, suggesting that it rely upon the highest air-freight rate 
reported by any other respondent participating in the current AFB 
reviews.
    The respondents state that their reporting of combined air-freight 
and ocean-freight expenses is factually and legally correct, and they 
contend that it is consistent with the manner in which such expenses 
have been reported in all prior reviews and with the Department's 
determinations in those reviews. The respondents state that the 
reporting capabilities of other respondents is not a measure of their 
own reporting capabilities. SKF Germany indicates that it did not 
report its air-freight and ocean-freight factors separately even though 
it identified those transactions for which the subject merchandise was 
transported by air.
    The respondents submit that it is not an issue of inconvenience to 
report such expenses separately but, rather, as explained in their 
responses, they do not incur the international freight expenses on a 
transaction-specific basis. SKF Sweden points out further that, as 
stated in its responses, shipments from its European consolidation 
point to SKF USA are not segregated by country of manufacture and, 
thus, the expenses at issue relate to products shipped from Italy, 
Germany, France, and Sweden. Moreover, the respondents contend that 
they receive cumulated bills which are independent of the invoices they 
issued to their customers and their pricing is unrelated to the manner 
in which goods are shipped internationally.
    The SKF respondents also assert that they can identify post-hoc 
whether the merchandise sold out of SKF USA's inventory was shipped via 
air or ocean freight but argue that post-hoc linkage does not affect 
the pricing of merchandise for any given transaction. SKF Sweden 
contends further that, before the Department can make a determination 
of whether a respondent is uncooperative and, thus, resort to adverse 
facts available, the Department is required to request information at 
issue from a respondent in a supplemental questionnaire, citing Olympic 
Adhesives, Inc. v. United States, 899 F. 2d 1565, 1572-75 (CAFC 1990). 
SKF Sweden contends that the Department is precluded from resorting to 
facts available because the issue of reporting air-freight and ocean-
freight expenses separately was not raised in either of the two 
supplemental questionnaires it received from the Department.
    Department's Position: With respect to SKF Italy and SKF Sweden, we 
were not informed until the submission of the respondents' rebuttal 
briefs that these firms were capable of segregating air freight for 
particular U.S. resales in the United States. Since we did not request 
in our questionnaires and, thus, did not receive this information in 
questionnaire responses for these reviews, we have used the combined 
freight charges of those firms for these final results. For other 
respondents which were unable to report ocean and air freight 
separately, we have accepted aggregated international freight data. See 
AFBs 8, 63 FR at 33340; see also Torrington II. Furthermore, section 
351.401(g) of our regulations provides that we may consider allocated 
expenses and price adjustments when transaction-specific reporting is 
not feasible, provided we are satisfied that the allocation method does 
not cause inaccuracies or distortions. In addition, because the use of 
air freight is not limited to particular models or customers, allocated 
reporting of freight expenses is not unreasonably distortive in this 
case. Because we determine that these respondents acted to the best of 
their ability, it would be improper to make adverse inferences about 
their reported data by applying facts available simply because their 
record-keeping system does not record the data on a transaction-
specific basis.
    Our practice in prior AFB reviews has been to accept aggregated 
ocean-freight and air-freight expenses in cases where the respondent 
indicates that it cannot report such expenses separately. SKF Germany 
demonstrated in response to our supplemental questionnaire, however, 
that it could identify separately the relevant sales transactions for 
which it incurred air-freight expenses. While SKF Germany identified 
the relevant transactions in its supplemental questionnaire response, 
it did not provide the actual air-freight expenses specific to these 
transactions. However, it did provide calculations yielding separate 
air-freight and ocean-freight factors. Because we did not have 
transaction-specific air-freight expenses, we used these factors and 
other information reported in its supplemental questionnaire response 
to determine a separate amount for air and ocean freight for purposes 
of our margin calculation. See the Final Analysis Memorandum for SKF 
Germany for a complete discussion of the proprietary data we used in 
the air-freight and

[[Page 35618]]

ocean-freight calculations for these final results.
    Comment 4: Torrington argues that the Department should not permit 
Barden to aggregate air and ocean freight but should require that 
Barden report air freight separately for those U.S. sales which were 
shipped by air, particularly those shipped directly to the U.S. 
customer. Torrington argues that, in such instances, Barden UK should 
know whether the shipment was by ocean or air. Torrington argues that 
the Department should require Barden to identify those sales shipped by 
air and apply the air-freight rate to those sales.
    Barden argues that it did not incur ocean-freight expenses on 
bearing shipments made during this review period and all expenses 
reported as ``air and ocean freight'' are indeed air-freight expenses.
    Department's Position: Barden reported, at 32 of its November 24, 
1998, supplemental questionnaire response, that it shipped all bearings 
via air freight. As Barden reported in its August 28, 1998, Section C 
questionnaire response, the ocean-freight data element includes all 
freight charges from Barden UK to Barden US, i.e., air freight. Since 
Barden does not incur ocean freight, the air-freight rate was applied 
to all sales.
7.D. Inventory Carrying Costs
    Comment 1: Torrington argues that the Department should deduct 
inventory carrying costs for the time that merchandise was in transit 
from the exporting country to the United States from CEP.
    With regard to SKF Italy and SKF Sweden, Torrington argues that 
amended section 772(d) of the Act provides for such a deduction under 
subsection (d)(1)(B) as a credit expense or, alternatively, under 
subsection (d)(1)(D) as a selling expense. Torrington asserts that the 
SAA at 823 provides broad categories under which the deduction can be 
undertaken, that the SAA is silent as to a prohibition of such a 
deduction, and that 19 CFR 351.402(b) does not preclude the deduction. 
It asserts that inventory carrying costs should be deducted pursuant to 
this regulation, as they are expenses associated with commercial 
activities in the United States that relate to the sale to an 
unaffiliated purchaser, regardless of where or when the costs are paid, 
citing Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Pasta from Italy, 61 FR 30326, 30352 (June 14, 1996) (Pasta 
Italy LTFV) (where the Department deducted inventory carrying costs for 
time in transit after finding that the costs were attributable to U.S. 
economic activity because virtually all the subject merchandise was 
sold in the United States), and Notice of Final Results and Partial 
Rescission of Antidumping Duty Administrative Review: Certain Pasta 
from Turkey, 63 FR 68429 (December 11, 1998) (Pasta Turkey Review) 
(where a deduction for inventory carrying costs was permitted for time 
that the merchandise was held in U.S. Customs). Torrington argues that 
the Department should follow the approach taken in the above-referenced 
Pasta notices because, in these AFB reviews, the inventory carrying 
costs were borne on the books of the U.S. affiliate and because the 
subject merchandise would not have been placed in transit to the United 
States if not intended for that market. Torrington asserts that these 
circumstances establish the inventory carrying costs for time in 
transit are attributable to U.S. economic activity. Torrington also 
argues that, in the event the Department retains its current position, 
SKF Italy and SKF Sweden have not demonstrated that the costs were not 
associated with commercial activities in the United States and did not 
relate to the resale to the unaffiliated customer which, according to 
Torrington, is an affirmative burden on the respondent. Finally, 
Torrington asserts that, at minimum, the Department should deduct 
inventory carrying costs for the time that merchandise was held in U.S. 
Customs or otherwise remained at the port of entry, pursuant to its 
finding in Pasta Turkey Review, 63 FR at 68432.
    With regard to SKF Germany, INA, and FAG Germany, Torrington argues 
that the Department's position in AFBs 8 was based in part on the 
finding that inventory carrying costs in transit reflected part of the 
interest expense incurred by the home-market company when it extended 
credit on the sale to the U.S. affiliate. It requests that the 
Department reconsider its AFBs 8 rationale in light of Pasta Italy 
LTFV, 61 FR at 30326. Torrington argues that, with respect to the 
German respondents, SKF France, Barden UK, NSK-RHP, and SNR France, 
regardless of credit arrangements between the exporting company and the 
U.S. affiliate, the cost of carrying inventory is borne by the company 
owning the inventory. It asserts that, because the costs are listed on 
the books of the U.S. affiliate, the affiliate has assumed 
responsibility for the merchandise. Torrington argues that, moreover, 
the business purpose of these companies is to sell bearings in the 
United States. Thus, it concludes that inventory carrying costs relate 
to commercial activity in the United States and should be deducted from 
CEP.
    Torrington argues similarly for a deduction of in-transit inventory 
carrying costs for NTN. Torrington asserts that, through transference 
of ownership of the inventory to a U.S. affiliate who will resell the 
goods in the United States, inventory carrying costs for time in 
transit have been incurred in connection with commercial activities in 
the United States.
    Torrington contends, with regard to SKF Germany, that the inventory 
carrying costs should be deducted from CEP because these expenses 
appear on the books of SKF USA and are associated with U.S. commercial 
activity.
    SKF Italy, SKF Sweden, and SKF Germany rebut that there is no legal 
or factual support for Torrington's position and that, therefore as in 
prior reviews, the inventory carrying costs should not be deducted from 
CEP. They assert that the Department has interpreted the provisions of 
the law properly. The companies argue that reliance upon Pasta Italy 
LTFV is misplaced since, unlike the pasta manufacturer, they do not 
sell their products exclusively in the United States. They distinguish 
Pasta Turkey Review because there the exporting company had not 
calculated any U.S. inventory carrying costs, having alleged that the 
importer did not inventory the merchandise and thus had not incurred 
any such costs. According to the respondents, in that review the 
Department found that U.S. inventory carrying costs had been incurred 
by the importer because of a 16-day delay of the merchandise at U.S. 
Customs. The respondents contrast this situation to their own, noting 
that these are not issues in the instant administrative reviews. The 
respondents cite several recent determinations by the Department, 
including Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Final 
Results of Antidumping Duty Administrative Review, 63 FR 67855 
(December 9, 1998), which support their position that inventory 
carrying costs incurred in transit are not associated with commercial 
activity in the United States and do not relate to resale of the 
merchandise to the U.S. unaffiliated customer.
    INA responds that, as determined in AFBs 8, inventory carrying 
costs in transit are deductible neither as a movement expense under 
section 772(c) of the Act, since they are not associated with bringing 
merchandise to the United States, or as a CEP selling expense under 
section 772(d) of the Act. INA cites to Color Picture Tubes from Japan; 
Final Results of Antidumping

[[Page 35619]]

Administrative Review, 62 FR 34201, 34207 (June 25, 1997), in which the 
Department declined to apply its decision of Pasta Italy LTFV on two 
grounds. According to INA, the first reason was that in-transit 
inventory carrying costs were incurred regardless of the final 
destination of the merchandise; the second reason was that the in-
transit costs were not considered to be associated with U.S. commercial 
activity but rather were associated with the sale by the foreign 
producer to its U.S. affiliate. INA asserts that these same 
considerations apply in the current reviews. It rebuts Torrington's 
argument that the destination of the bearings relates inventory 
carrying costs to U.S. commercial activity by asserting that costs in 
transit are not related to such activity and do not relate to the 
resale of the merchandise to an unaffiliated purchaser. It responds to 
Torrington's argument regarding ownership of the merchandise by noting 
that the costs are incurred by the party incurring an imputed interest 
cost, a cost that is not associated with ownership and which does 
relate to the sale by the foreign producer to the U.S. affiliate.
    FAG Germany asserts that Torrington has presented no new argument 
in support of its request for a deduction. It notes that AFBs which the 
U.S. affiliate imports from FAG Germany are shipped on a Delivered-
Duty-Unpaid basis, which means that the exporter bears all costs and 
risks in delivering the merchandise to a named place in the country of 
importation. It asserts that, therefore, in-transit inventory carrying 
costs are not associated with U.S. commercial activity.
    SKF France agrees with the Department's decision regarding the 
deduction. SKF France argues that the fact that SKF USA paid the costs 
is irrelevant; it asserts that the relevant consideration is where the 
economic activity associated with the expense has occurred. It cites 
recent determinations of the Department which support the position that 
inventory carrying costs in transit are not associated with U.S. 
economic activity and do not relate to resale of the merchandise to the 
unaffiliated customer.
    Barden UK rebuts that the SAA at 823 states that CEP can only be 
reduced by amounts associated with economic activities occurring in the 
United States. It also cites to the Notice of Proposed Rulemaking and 
Request for Public Comments, 61 FR 7308, 7331 (February 27, 1996), in 
which the Department set forth its intent not to deduct a foreign 
seller's expenses associated with selling to the affiliated reseller in 
the United States under section 772(d) of the Act. Barden UK asserts 
that this is the correct approach and asks that the Department not 
reconsider its methodology.
    NSK-RHP responds that the Department should reject Torrington's 
argument because the Department already deducts inventory carrying 
costs incurred in the United States from CEP. NSK-RHP notes that, 
moreover, the Department has concluded consistently that inventory 
carrying costs incurred for the time merchandise was in transit should 
not be deducted from CEP, as decided in AFBs 8.
    SNR France notes that, in AFBs 8, the Department found that 
deducting inventory carrying costs for time in transit would be 
contrary to the SAA and its own regulations. It asserts that Torrington 
offers no new justification for a departure from prior practice and 
that, accordingly, Torrington's argument should be rejected.
    NTN rebuts that section 351.402(b) of the Department's regulation 
and the SAA at 823 prohibit the deduction; it asserts that the in-
transit inventory carrying costs are not associated with commercial 
activities in the United States that relate to the unaffiliated 
purchaser, a position that the Department took in AFBs 8. NTN argues 
that, because the facts in the current reviews are consistent with 
those in the previous reviews and those in other cases in which the 
Department has declined to make the deduction, it should continue its 
practice.
    Department's Position: In AFBs 8, 63 FR at 33344, we concluded that 
both the SAA at 823 and section 772(d) of the Act permit us to deduct 
from CEP only those expenses which were associated with commercial 
activity in the United States and which related to the resale to an 
unaffiliated purchaser. We concluded that in-transit inventory carrying 
costs did not meet these criteria but rather reflected the interest 
expense of the exporting company. As such, we found the costs to be 
related solely to the sale to the affiliated importer in the United 
States. Moreover, we noted that section 351.402 of our regulations 
directs us not to deduct from CEP starting price any expenses related 
to the sale to the affiliate.
    The Department clarified its position further in Stainless Steel 
Butt-Weld Pipe Fittings from Taiwan, 63 FR at 67856. We stated there 
that, according to the SAA at 823, CEP should be calculated to be, as 
closely as possible, a price which corresponds to a price between non-
affiliated exporters and importers. This approach is codified at 
section 351.402(b) of the Department's regulations, which provides that 
the Department will make adjustments to CEP under section 772(d) of the 
Act for expenses associated with commercial activity in the United 
States that relate to the sale to an unaffiliated purchaser, no matter 
where it was incurred. Therefore, in Stainless Steel Butt-Weld Pipe 
Fittings from Taiwan, we concluded that, consistent with section 772(d) 
of the Act and the SAA, we could deduct only those expenses 
representing activities undertaken to make the sale to the unaffiliated 
customer in the United States and not indirect expenses incurred in 
selling to the affiliated U.S. importer.
    We maintain that in-transit inventory carrying costs are indirect 
selling expenses relating to the sale to the affiliate and, 
consequently, are not associated with U.S. economic activity or related 
to the resale of the merchandise. The issue of whether the exporting 
company or the affiliate holds title to the merchandise is irrelevant 
in light of this finding. Likewise, it does not matter whether the 
expenses are listed on the accounts of the exporting company or the 
affiliate. Our decision in Pasta Italy LTFV, 61 FR at 30352, that the 
in-transit costs should be deducted was based on the fact that the 
subject merchandise was produced solely for the U.S. market. Here, 
there is no evidence that any of the bearings under review were 
produced solely for the U.S. market. Thus, the finding in Pasta Italy 
LTFV is not applicable here. Torrington's reliance on Pasta Turkey 
Review is misplaced because, contrary to that case, the respondents' 
inventory carrying costs do not reflect costs for a period of time when 
the merchandise was being stored or held at U.S. Customs.
    For all of these reasons, we have not deducted inventory carrying 
costs for time in transit from CEP.
    Comment 2: Torrington argues that U.S. interest rates should be 
applied in the calculation of in-transit and U.S. inventory carrying 
costs for NTN and NSK, since U.S. dollars are the functional currency 
for the U.S. affiliates. It notes that this approach conforms to the 
fundamental scheme of the amended antidumping law; it asserts that 
another approach would undermine the objective, when calculating CEP, 
of arriving at arm's-length, ex-factory prices that are not influenced 
by affiliations. It asserts that, in the attempt to construct arm's-
length ex-factory prices, the Department should not assume that the 
costs are being financed by the exporting company at the most favorable 
rates that it can obtain.
    NTN argues that Torrington ignores regulatory and administrative 
authority

[[Page 35620]]

concerning the calculation of inventory carrying costs. It asserts that 
the use of the yen borrowing rate for calculation of inventory carrying 
costs in the preliminary results was appropriate and that the facts of 
the current reviews support the use of the yen. It observes that this 
issue was settled by the CIT in Timken Co. v. United States, 858 F. 
Supp. 206 (CIT 1994).
    NSK responds that Torrington's argument has been rejected for years 
and that the law is settled on the point of the proper interest rate to 
be applied.
    Department's Position: Normally, the Department calculates U.S. 
inventory carrying costs using the U.S. interest rate because the 
affiliate bears the costs of carrying the merchandise. However, where 
the payment terms that an exporting company extends to its affiliate 
and the time that the merchandise remains in the affiliate's inventory, 
indicate that the exporting company bears the cost of carrying the 
merchandise for a portion of the time that the merchandise is in 
inventory, then the exporting company's short-term interest rate will 
be used to calculate that portion of the inventory carrying costs. As 
noted by NTN, this practice was sustained by the CIT in Timken, 858 F. 
Supp. at 212 (citing Tapered Roller Bearings, Four Inches or Less in 
Outside Diameter, and Certain Components Thereof, from Japan; Final 
Results of Antidumping Duty Administrative Review, 56 FR 65228, 65236 
(Dec. 16, 1991)).
    Both NTN and NSK have demonstrated that they extended their 
financing terms to their affiliates through the time in transit and the 
time that merchandise remained in inventory in the United States. 
Therefore, we have applied the yen borrowing rate to the calculation of 
in-transit and U.S. inventory carrying costs.
    Comment 3: Torrington argues that the Department should restate 
Nachi's U.S. inventory carrying costs. Nachi does not make a rebuttal.
    Department's Position: We are satisfied from information on the 
record that Nachi calculated its U.S. inventory carrying costs 
correctly. For a more detailed explanation of this expense, see page 4 
of the Department's Analysis Memorandum for Nachi, dated June 16, 1999 
(which provides, inter alia, the Department's position on Torrington's 
proprietary argument).
8. Sales to Affiliated Parties
    Comment: Torrington asserts that the chairman of SKF Germany's 
parent company, AB SKF, also chairs six other companies, including 
Investor AB, which is the largest single shareholder of AB SKF. 
Torrington states further that Investor AB also holds shares in seven 
companies and that SKF Germany made home-market sales to one of those 
seven companies during the POR. Torrington asserts that the Department 
should apply the affiliated-party test to determine whether sales to 
this customer are in fact at arm's-length prices.
    SKF Germany contends that Investor AB's share of the specified 
customer is not large enough to be considered a controlling interest. 
SKF Germany claims that it does not own any shares in the specified 
company and the company is not a shareholder in SKF Germany. SKF 
Germany claims further that the entities do not share management teams 
or have supply, sales, marketing, or financial agreements with each 
other. SKF Germany believes that all of these elements confirm an 
absence of common control.
    Department's Position: SKF Germany and the specified customer are 
not affiliated parties and, therefore, have not applied our arm's-
length test to transactions between the two entities. Section 
771(33)(E) of the Act states that ``[a]ny person directly or indirectly 
owning, controlling, or holding with power to vote, five percent or 
more of the outstanding voting stock or shares of any organization and 
such organization'' shall be considered to be ``affiliated''. Record 
evidence shows that SKF Germany does not own any shares of the customer 
concerned and that the customer in turn is not a shareholder of SKF 
Germany. Section 771(33)(F) of the Act states that ``[t]wo or more 
persons directly or indirectly * * * controlled by * * * any person'' 
shall also be considered to be ``affiliated''. However, there is no 
evidence indicating the presence of management control of any kind 
between SKF Germany and the specified customer. Since there is no 
evidence of affiliation in the context of the remaining provisions of 
section 771(33) of the Act, we conclude that SKF Germany and the 
specified customer are not affiliated parties and have not applied our 
arm's-length test to transactions between the two entities.
9. Samples, Prototypes and Sales Outside the Ordinary Course of Trade
    Comment 1: NTN argues that the Department should exclude its 
reported sales made outside the ordinary course of trade from the 
calculation of normal value and CV profit. NTN contends that the 
purpose of the ordinary-course-of-trade provision of the statute is to 
prevent dumping margins from being based on sales which are not 
representative of the home market. NTN claims that the Department 
should regard all of its sales which have abnormally high profits as 
outside the ordinary course of trade. Citing CEMEX, NTN contends that 
the Department has regarded sales as outside the ordinary course of 
trade in other cases because of significant differences in profit 
levels.
    NTN also argues that the Department should exclude its claimed 
sample sales from its normal-value calculation because they are outside 
the ordinary course of trade. Citing Granular Polytetrafluoroethylene 
Resin from Japan; Preliminary Results of Antidumping Administrative 
Review, 60 FR 5622 (January 30, 1995), and Notice of Final 
Determinations of Sales at Less than Fair Value: Hot-Rolled Carbon 
Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products, 
Certain Corrosion-Resistant Carbon Steel Flat Products, and Cut-to-
Length Carbon Steel Plate from France, 58 FR 73125, 73126 (July 9, 
1993), NTN claims that the Department has regarded sample sales as 
outside the ordinary course of trade in other cases.
    Torrington argues that NTN has not justified its claim that these 
sales should be regarded as outside the ordinary course of trade. 
Torrington contends that NTN did not provide the information the 
Department requested with regard to its claim and that the only 
information NTN did provide was the profit amounts for its sales. 
Torrington observes that the Department has rejected identical claims 
made by NTN in prior AFB reviews.
    Department's Position: Our practice is to exclude home-market sales 
transactions from the margin calculation as outside the ordinary course 
of trade based on all the circumstances particular to the sales in 
question. See Murata Mfg. Co. v. United States, 820 F. Supp. 603, 607 
(CIT 1993). This practice has been codified in section 351.102 of the 
Department's regulations, which states:

[t]he Secretary may consider sales or transactions to be outside the 
ordinary course of trade if the Secretary determines, based on an 
evaluation of all of the circumstances particular to the sales in 
question, that such sales or transactions have characteristics that 
are extraordinary for the market in question. Examples of sales that 
the Secretary might consider as being outside the ordinary course of 
trade are sales or transactions involving off-quality merchandise or 
merchandise produced according to unusual product specifications, 
merchandise sold at aberrational prices or with abnormally high 
profits, merchandise sold pursuant to unusual terms of sale, or 
merchandise sold to an affiliated party at a non-arm's-length price.

(Emphasis added.)


[[Page 35621]]


    In these reviews, NTN provided no evidence, other than the 
allegedly high profits of some sales, to suggest that any of these 
sales, whether ``high profit'' or sample sales, are outside the 
ordinary course of trade. The simple fact of high profits, standing 
alone, is not sufficient for us to determine that a sale is outside the 
ordinary course of trade. See AFBs 8, 63 FR at 33344: ``the presence of 
profits higher than those of numerous 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 sale in question which make it 
unrepresentative of the home market.'' Thus, it would only be 
appropriate to exclude these sales from our normal-value calculation if 
there were circumstances surrounding these sales which would lead us to 
conclude that they were, in fact, made outside the ordinary course of 
trade.
    NTN's citation to CEMEX is inapposite to this situation. In CEMEX, 
the profitability of the sales in question was merely one of the 
factors we considered in our determination that those sales were made 
outside the ordinary course of trade. In addition to profits, we found 
the sales in question were sales of ``specialty [products] that were 
sold to a niche market,'' that these ``sales represent[ed] a minuscule 
percentage of [the respondent's] total sales of cement,'' that ``the 
shipping arrangements for home market sales of Types II and V cements 
were not ordinary,'' and that the record ``indicated that the home 
market sales of Types II and V cements were of a promotional nature.'' 
See CEMEX, 133 F.3d at 901. Thus, it was the totality of circumstances, 
rather than the relative profitability alone, which, in CEMEX, led us 
to conclude that the sales were made outside the ordinary course of 
trade. In this case, the level of profitability is the only indicator 
that the sales might have been made outside the ordinary course of 
trade.
    Furthermore, NTN provided no evidence which demonstrated that the 
profit amounts experienced on its claimed outside-the-ordinary-course-
of-trade sales are particularly, much less abnormally, high. NTN has 
selected an arbitrary profit margin which it defines as ``high,'' but 
it provides no evidence or analysis which suggests that the profit 
margin it chose is in any way unusual. To the contrary, there are 
enough of these claimed ``high profit'' sales in NTN's home-market 
database that it is apparent that these sales are not unusual but, 
rather, occur typically within NTN's normal course of business.
    With regard to NTN's claimed non-zero-priced sample sales (we 
excluded all zero-priced sales because the record suggests that NTN did 
not receive consideration for these sales), NTN provided no evidence to 
support its contention that these sales were made outside the ordinary 
course of trade. The mere labeling of a sale as a sample, absent any 
other evidence, is an insufficient basis on which to find the sale 
outside the ordinary course of trade.
    Finally, while we agree with NTN as to the purpose of the ordinary-
course-of-trade provision of the statute, the burden is on respondents 
to demonstrate that the sales in question were made outside the 
ordinary course of trade. NTN did not demonstrate this with regard to 
any of its claimed outside-the-ordinary-course-of-trade sales. 
Accordingly, we have not excluded NTN's ``high-profit'' sales or sample 
sales from our analysis.
    Comment 2: Torrington argues that, with respect to SKF Sweden and 
SKF Italy (collectively SKF), the Department should include U.S. sample 
sales in the margin calculation. Torrington comments that exclusion of 
sample sales is not automatic, citing NSK Ltd. v. United States, 115 
F.3d 965 (CAFC 1997), and asserts that SKF did not provide all of the 
information the Department requested. For instance, Torrington 
observes, SKF did not provide price and quantity comparisons and 
described only in vague terms the ultimate disposition of the sample 
sales.
    SKF argues that it provided detailed responses to the Department's 
questions concerning sample and prototype sales. SKF argues that, with 
regard to Torrington's assertion that it discussed the ultimate 
disposition of the sample sales vaguely, SKF provided as complete an 
answer as it could. SKF contends that, while Torrington desires more 
detailed information on the record, it responded fully to the 
Department's questions and, accordingly, the Department should continue 
to exclude the U.S. sample and prototype sales from the margin 
calculation.
    Department's Position: Contrary to Torrington's assertions, we find 
that there is sufficient information provided in SKF Italy's and SKF 
Sweden's responses for us to make a determination as to whether the 
respondents received consideration for these sales. SKF Italy and SKF 
Sweden described how orders for sample or prototype sales were 
communicated, identified the documents available to demonstrate that 
the sales in question were sample or prototype sales, explained the 
ultimate disposition of the bearings, indicated whether such bearings 
were tested and destroyed during trial application, and, to the extent 
possible, contrasted sample or prototype sales prices and quantities 
with the prices and quantities of normal-priced sales. Based on this 
information, we determined that no consideration was provided for their 
reported U.S. zero-priced sample and prototype sales. Therefore, we did 
not calculate a margin on U.S. sales which SKF Italy and SKF Sweden 
designated as zero-priced samples and prototypes.
10. Constructed Export Price Profit
    Comment 1: NTN argues that the Department should calculate CEP 
profit on a level-of-trade-specific basis. NTN asserts that prices 
differed significantly between levels of trade and contends that, to 
account fully for price differences between levels of trade, the 
Department must consider profit levels. NTN claims that there is a 
clear statutory preference for the Department to calculate CEP profit 
on the narrowest basis.
    Torrington observes that the Department has rejected NTN's argument 
in prior reviews and that NTN neither acknowledges the Department's 
prior decisions nor discusses why the Department should alter its 
decision.
    Department's Position: It is not our practice to calculate CEP 
profit for different levels of trade. See, e.g., AFBs 7, 62 FR at 
54072, 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, 63 FR 2570, 2583 
(January 15, 1998) (TRBs).
    We believe that NTN's reliance on the term ``narrowest'' as used in 
sections 772(f)(2)(c)(ii) and (iii) of the Act is misplaced. While the 
statute uses the term ``narrowest'' in describing the second and third 
alternative methods, methods in which CEP profit is calculated based on 
financial reports, for NTN we used the first alternative method since 
the company provided the necessary data (i.e., U.S. and home-market 
sales information as well as CV and COP data for the subject 
merchandise and the foreign like product, respectively). This is 
consistent with the instructions set forth in section 772(f)(2)(C) of 
the Act and the SAA at 824-825. Moreover, regardless of the basis for 
the CEP-profit calculation,

[[Page 35622]]

neither the statute nor the SAA requires us to calculate CEP profit on 
a basis more specific than subject merchandise and foreign like 
product. See Toyota Motor Sales, USA v. United States, Court No. 97-
0300415, Slip Op. 98-95 (CIT July 2, 1998) (Toyota). Thus, we have not 
adopted NTN's suggestion.
    Comment 2: NTN argues that the Department should exclude EP sales 
from its CEP-profit calculation. NTN contends that section 
772(f)(2)(C)(i) of the Act directs the Department to calculate CEP 
profit based on ``[t]he expenses incurred with respect to the subject 
merchandise sold in the United States and the foreign like product sold 
in the exporting country if such expenses were requested by the 
administering authority for the purposes of establishing normal value 
and constructed export price.'' NTN argues that, because this section 
refers specifically to CEP sales and not EP sales, it precludes the 
Department from including EP sales in the CEP-profit calculation.
    Torrington contends that the Department's approach in these reviews 
is consistent with Policy Bulletin 97.1 and that the Department 
rejected NTN's argument in a prior review.
    Department's Position: It is our practice to include EP sales in 
the calculation of CEP profit. See, e.g., AFBs 8, 63 FR at 33345, TRBs, 
63 FR at 2570, and Certain Fresh Cut Flowers From Colombia; Final 
Results and Partial Rescission of Antidumping Duty Administrative 
Review, 62 FR 53295 (October 14, 1997). In addition, our analysis in 
these reviews is consistent with Policy Bulletin 97.1 of September 4, 
1997.
    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 the foreign like product sold in the exporting country). Thus, 
where the respondent makes both EP and CEP sales to the United States, 
sales of the subject merchandise would encompass all such transactions. 
Therefore, because NTN had EP sales, we have included these sales in 
the calculation of CEP profit.
    Comment 3: NPBS, NSK, and NSK-RHP argue that the Department erred 
in deducting U.S. repacking expenses under section 772(d)(1) of the Act 
and including such expenses in the pool of selling expenses for which 
it then calculated CEP profit. NPBS contends that section 772(d)(3) of 
the Act does not provide for profit to be attributed to repacking 
expenses because the statute limits the application of profit to 
selling expenses and further-manufacturing costs and, according to 
NPBS, repacking expenses are neither. NSK and NSK-RHP argue that the 
Department should treat U.S. repacking expenses as movement expenses 
deductible from U.S. price under section 772(c)(2)(A) of the Act. The 
respondents contend that section 772(c)(2)(A) of the Act does not 
preclude the Department from including U.S. repacking just because the 
expenses may relate directly to particular sales. As support, the 
respondents point out the direct nature of certain movement expenses 
which the Department deducts from U.S. price in accordance with section 
772(c)(2)(A) of the Act. NSK and NSK-RHP also assert that U.S. 
repacking does not qualify as a deductible expense under section 
772(d)(1)(B) of the Act because the selling expenses included under 
this part of the statute do not involve bringing the goods from the 
exporting country to the U.S. unaffiliated customer. The respondents 
also assert that, unlike the deductible selling expenses under section 
772(d)(1)(B) of the Act, repacking expenses do not entice a customer to 
purchase a product. NSK and NSK-RHP request that, for the final 
results, the Department reclassify U.S. repacking as a movement expense 
and exclude it from the selling expenses it uses to calculate CEP 
profit.
    Torrington argues that the Department should not treat U.S. 
repacking expenses as a movement expense. Citing AFBs 8 at 33338, 
Torrington asserts that the Department has rejected the respondents' 
argument in prior reviews and that the Department's position is valid.
    Department's Position: Section 772(c)(2)(A) of the Act covers 
``transportation and other expenses, including warehousing expenses, 
incurred in bringing the subject merchandise from the original place of 
shipment in the exporting country to the place of delivery in the 
United States.'' See SAA at 824. As we stated in AFBs 8, 63 FR at 
33339, we do not view repacking expenses as movement expenses. The 
repacking of subject merchandise in the United States bears no 
relationship to moving the merchandise from one point to another. The 
fact that repacking is not necessary to move merchandise is borne out 
by the fact that the merchandise was moved from the exporting country 
to the United States prior to repacking. We regard repacking expense as 
a direct selling expense because the company incurred the expense on 
individual products in order to sell the merchandise to the 
unaffiliated customer in the United States. We deducted this repacking 
expense pursuant to section 772(d)(1)(B) of the Act, which directs us 
to reduce CEP by ``expenses that result from, and bear a direct 
relationship to, the sale, such as credit expenses, guarantees, and 
warranties.'' Furthermore, because these expenses are direct selling 
expenses, we attribute profit to them pursuant to section 772(d)(3) of 
the Act by including them in the calculation of total CEP selling 
expenses.
    Comment 4: INA argues that the Department erred by calculating the 
CEP-profit rate on a class-or-kind basis rather than a product-specific 
basis. To support this argument, INA contends that section 772(d) of 
the Act requires the Department to calculate and apply all CEP 
deductions on sales of subject merchandise on a transaction-specific 
basis. In addition, INA asserts that the use of the term ``subject 
merchandise'' in section 772(f)(2)(C)(i) of the Act was intended to 
mean the specific product in the particular transaction for which the 
Department is calculating CEP.
    Torrington contends that the Department has calculated the CEP-
profit rate correctly. Torrington notes that the Department rejected 
INA's arguments for a product-specific CEP-profit rate calculation in 
AFBs 7. Citing AFBs 7, 62 FR at 54071, Torrington argues that the 
Department stated correctly that INA's proposed methodology for 
calculating a product-specific CEP-profit rate is not required by the 
statute, would complicate the margin calculation, would not increase 
accuracy, and would invite manipulation.
    Department's Position: Section 772(d)(3) of the Act requires that 
we adjust CEP for an amount of profit allocable to U.S. sales, and our 
practice is to base this calculated profit on revenues and expenses 
associated with total sales of subject merchandise (both in the home 
market and the United States). As discussed in AFBs 6, 61 FR at 2125, 
AFBs 7, 62 FR at 54072, and our response to Comment 1 of this section, 
we find that neither the statute nor the SAA requires us to calculate 
CEP profit on a basis that is more specific than the one applied 
currently. See also Toyota (upholding our decision to calculate total 
expenses and total actual profit for all subject merchandise sold in 
the United States and all foreign like products sold in the home market 
rather than segregating certain products when performing the CEP-profit 
calculation). Consistent with the rationale in these

[[Page 35623]]

cases, we have not altered our CEP-profit calculation methodology.
    Comment 5: INA argues that the Department erred by excluding 
imputed expenses (credit and inventory carrying costs) from the 
calculation of the ratio that it applied to total U.S. selling expenses 
(including imputed expenses) to determine CEP profit. INA argues that 
excluding the imputed interest expenses from the calculation of the 
ratio and then applying the ratio to a value that includes imputed 
interest expenses results in an unlawful double deduction of imputed 
expenses in determining CEP (once as an expense and once as a component 
of profit). INA cites Circular Welded Non-Alloy Steel Pipe from the 
Republic of Korea; Amended Final Results of Antidumping Duty 
Administrative Review, 63 FR 39071 (July 21, 1998), as an example of a 
situation where the Department recognized the necessity for consistency 
in calculating and applying a profit rate. INA asserts that the 
Department's exclusion of the imputed expenses from the calculation of 
the CEP-profit ratio is at odds with the statute since imputed expenses 
are recognized as an expense under section 772(f) of the Act, which 
establishes the rules for determining profit.
    Torrington contends that the Department calculated CEP profit 
correctly and refers to the Department's position on this topic in AFBs 
7, 62 FR at 54072. The petitioner also asserts that by including 
imputed expenses in the U.S. expenses the Department recognizes that 
related parties may shift expenses among them, thus affecting the 
accuracy of the calculation. The petitioner asserts that such shifting 
is not a concern when calculating the total expenses mentioned under 
section 772(f)(2)(C) of the Act.
    Department's Position: It is our practice to exclude imputed 
selling expenses in calculating the total actual profit for sales of 
the subject merchandise and the foreign like product. See, e.g., Notice 
of Final Results of Antidumping Duty Administrative Review; Canned 
Pineapple Fruit From Thailand, 63 FR 7395 (February 13, 1998). In the 
preamble to our Final Rule we address INA's issue directly. In response 
to a comment that we should include imputed expenses in the total 
selling expenses used to derive total profit to avoid double-counting, 
we stated, ``(w)e have not adopted this suggestion, because the 
Department does not take imputed expenses into account in calculating 
cost. Moreover, normal accounting principles permit the deduction of 
only actual booked expenses, not imputed expenses, in calculating 
profit.'' See the preamble to our new regulations at section 351.402 
(Final Rule, 62 FR at 27354).
    In Policy Bulletin 97.1 of September 4, 1997, which describes our 
methodology for calculating profit for CEP transactions, we explain why 
it is appropriate to exclude imputed selling expenses in calculating 
the total actual profit for sales of the subject merchandise and the 
foreign like product while including these expenses as part of the 
total U.S. expenses when allocating a portion of the total actual 
profit to U.S. sales. Specifically, we stated that ``there is no need 
to include imputed interest amounts in the profit calculation since we 
have already accounted for actual interest in computing ``actual 
profit'' under section 772(f).'' See Policy Bulletin 97.1 at fn. 5. 
Furthermore, we stated that, ``when allocating a portion of the actual 
profit to each U.S. CEP sale, we will include imputed credit and 
inventory carrying costs as part of the total U.S. expenses allocation 
factor.'' Id. As noted in the Policy Bulletin, the latter statement is 
consistent with section 772(f)(1) of the Act which defines the term 
``total U.S. expenses'' as those expenses described in sections 
772(d)(1) and (2) of the Act. Therefore, we have not altered our CEP-
profit calculation methodology for these final results of reviews.
11. Miscellaneous
    11.A. Clerical Errors FAG Germany, FAG Italy, INA, Koyo, NSK, NSK-
RHP, Nachi, NPBS, NTN, SKF France, SKF Germany, SKF Italy, Somecat, 
SNR, and the petitioner have alleged that we made certain programming 
and/or clerical errors in the preliminary results calculations. Where 
we and all parties agree that a programming or clerical error occurred, 
we have made the necessary correction and addressed the comment only in 
the final-results analysis memoranda. (See company-specific Final 
Results Analysis Memoranda of June 1999.) The comments included in this 
notice address situations where parties alleged that we made a 
programming or clerical error but either we disagree or a party to the 
proceedings disagrees with the allegation.
    Comment 1: FAG Germany argues that the Department neglected to add 
to U.S. price amounts for ``other revenue'' it received from customers 
on U.S. sales. FAG Germany argues further that in all prior reviews the 
Department has acknowledged this type of revenue and added it to U.S. 
price.
    Torrington contends that some of the revenue at issue includes 
amounts FAG Germany received where the company arranged freight and 
collected freight charges for transportation between the U.S. warehouse 
and the unaffiliated customer. Torrington concludes that an addition of 
such revenue is appropriate only on sales for which FAG Germany 
reported freight expenses and that the Department should limit the 
revenue adjustment to the amount reported for freight.
    Department's Position: FAG Germany stated in its response that, for 
``CEP sales, FAG US bills to and collects from its customer the freight 
charges incurred and prepaid by FAG.'' See FAG Germany's section C 
response dated August 29, 1998, at 65. Therefore, we find it is 
appropriate to add the revenue reported only to the extent that it 
offsets the reported freight expense and we have done this for the 
final results. In addition, we have only added the revenue to CEP sales 
since FAG Germany did not receive this revenue on its EP sales.
    Comment 2: NTN argues that the Department made a clerical error in 
recalculating inventory carrying costs for home-market sales. 
Torrington agrees with NTN.
    Department's Position: NTN calculated its inventory carrying costs 
for home-market sales erroneously by using 360 days as the period of 
inventory. For the preliminary results, we adjusted these miscalculated 
inventory carrying costs by multiplying the reported amounts, which 
presumably were calculated using the formula NTN indicated in its 
brief, by a ratio we calculated by dividing the actual number of days 
in inventory by 360 days. Therefore, no adjustment is necessary.
    Comment 3: Torrington argues that the Department made a clerical 
error in calculating the CEP offset for SNR by suppressing certain 
programming language. Torrington claims that this error could lead to a 
potential overstatement or understatement of the CEP offset.
    SNR argues that the alleged clerical error is part of a new set of 
standard programming language the Department uses to calculate the CEP 
offset properly when there are commissions on only some of the home-
market sales. SNR asserts that, since it did not pay commissions on 
home-market sales, the suppressed programming language was not 
necessary for the Department's margin calculation.
    Department's Position: We did not need to use the programming 
language concerning home-market commissions in our calculation of SNR's 
margin. However, to avoid the appearance of a

[[Page 35624]]

programming error, we have not suppressed the programming instruction 
for the final results of these reviews. This change did not affect the 
weighted-average margin for SNR.
    Comment 4: SKF Germany contends that, in its preliminary analysis 
memorandum, the Department listed inventory carrying costs for ocean 
transit time between Europe and the United States as subtracted in the 
calculation of the CEP incorrectly but that the calculations were 
accurate.
    Torrington argues that, consistent with SKF Germany's recording of 
such expenses, the Department should have deducted these costs as an 
expense associated with U.S. commercial activity.
    Department's Position: Listing these particular inventory carrying 
costs in the analysis memorandum as a subtraction from the calculation 
of CEP was a clerical error. With regard to Torrington's argument for 
subtracting the expenses at issue, we disagree because we find that the 
expenses are not associated with U.S. economic activity. See our 
response to Comment 1 in the section on inventory carrying costs above.
    Comment 5: Nachi asserts that the Department made a clerical error 
that exaggerates values for ``Other U.S. Direct Selling Expenses'' by a 
factor of one hundred.
    Torrington expresses concern over whether Nachi has identified the 
alleged error adequately and states that it only concurs with the 
respondent's argument to the extent that a clerical error occurred.
    Department's Position: Upon examining Nachi's U.S. sales database, 
we determined that we made a formatting error that caused the values 
for ``Other U.S. Direct Selling Expenses'' to be overstated by a factor 
of 100 which may have occurred when we processed the U.S. sales 
database Nachi submitted. We have corrected this error for the final 
results of review.
    Comment 6: NPBS argues that the Department made a clerical error in 
calculating the ratio it used to determine CEP profit. Specifically, 
NPBS asserts that, in calculating the total profit for use in 
determining the CEP-profit ratio, the Department ``grossed up'' the 
profit and costs for the U.S. sales made in the sample weeks but 
neglected to ``gross up'' the profit and costs for the home-market 
sales made in the sample months, thereby understating profit on home-
market sales. NPBS asserts that this error led to an overstatement of 
the CEP-profit ratio and, therefore, an inflation of its dumping 
margin. To correct this error, NPBS proposes a methodology for 
``grossing-up'' the sampled home-market sales.
    Torrington argues that the Department's calculation of the ratio 
used to determine CEP profit was reasonable and consistent with the 
section 772(f)(2)(C) of the Act. Torrington therefore contends that the 
Department should not alter its calculation of the ratio.
    Department's Position: We find that we made a clerical error in our 
calculation of the total actual profit we used to determine the ratio 
for CEP profit. Since NPBS reported sales on a sampled basis, before 
calculating total actual profit it is necessary to ``gross up'' the 
revenues and expenses for the U.S. and comparison-market sales to 
ensure that they are on a comparable basis. Due to a clerical error, we 
did not make this adjustment to NPBS's sampled home-market sales for 
the preliminary results. We have corrected this error for the final 
results by applying our customary ``grossing-up'' ratio to the sampled 
home-market sales. We did not use NPBS's proposed methodology because 
it is not consistent with our practice in these proceedings.
    Comment 7: NPBS argues that the Department treated its reported 
U.S. advertising expenses erroneously as direct selling expenses. NPBS 
states that, in its response, it explained that its U.S. affiliate does 
not assume expenses for advertising directed at its customers' 
customers. NPBS states that, despite the fact that it identified its 
U.S. advertising expenses separately, this does not deem such expenses 
as direct in nature. NPBS concludes that the Department should treat 
the reported U.S. advertising expenses as indirect selling expenses. In 
addition, NPBS requests that the Department add its reported U.S. 
advertising expenses to the calculation of U.S. indirect selling 
expenses in the margin calculations.
    Torrington disagrees with NPBS, stating that the burden rests upon 
NPBS to prove that its reported U.S. selling expenses are indirect. 
Torrington contends that, because NPBS did not satisfy this burden, the 
Department should continue to treat these expenses as direct selling 
expenses for the final results.
    Department's Position: We treated NPBS's reported advertising 
expenses inadvertently as a direct expense for the preliminary results 
of review. Since NPBS stated in its questionnaire response that the 
advertising expenses were indirect in nature and we did not find it 
necessary to subject this response to additional verification, we have 
accepted its description of these expenses as indirect and have treated 
them as indirect for these final results. In addition, because NPBS 
removed its reported U.S. advertising expenses from its per-unit ISE 
calculation and reported these expenses separately from one another, we 
added the advertising expenses to its reported indirect selling 
expenses in our final margin calculations.
    Comment 8: SNR argues that the Department's arm's-length test 
contains a clerical error which distorts the calculation of the 
customer-specific percentage ratio of affiliated-to-unaffiliated sales 
prices. SNR contends that the error occurs when there is a sale of a 
model to an affiliated party but no sale of that same model to an 
unaffiliated party. SNR states that in these situations the Department 
assigns a zero to these sales which distorts the overall average 
because the ratios are weighted by the total quantity of affiliated-
party sales. SNR argues that this distortion virtually guarantees that 
the overall average will drop below 99.5 percent and that, as a result, 
the Department disregards all sales of models to affiliated parties 
without corresponding sales to unaffiliated parties in the 
calculations.
    Torrington did not rebut this issue.
    Department's Position: We find that the test does contain a 
clerical error. We have made the appropriate changes to our 
calculations for these final results. For the same reason, we have also 
made the appropriate changes to the calculations for SKF Sweden, SKF 
Italy, SKF France, SKF Germany, NTN, Nachi, Koyo, FAG Germany, FAG 
Italy, NSK-RHP, NSK, Somecat S.p.A., the Barden Corporation, Torrington 
Nadellager, and INA.
11.B. Miscellaneous Other
    Comment 1: Somecat contends that the Department should clarify that 
Somecat's dumping margin applies to Italian bearings marked ``SNFA'' to 
reduce the likelihood of confusion for the Customs Service at the time 
of entry and for liquidation purposes. The respondent asserts that the 
record demonstrates that Somecat bearings are laser-marked with the 
label ``SNFA ITALY'' and that Somecat's bearings are packaged in boxes 
marked with the SNFA trade name. In addition, Somecat contends, the 
cover page to its product catalog plainly shows a bearing marked ``SNFA 
Italy'.
    The petitioner takes no position with respect to Somecat's request 
for clarifying that its dumping margin applies to Italian bearings 
marked ``SNFA Italy'.
    Department's Position: The record reflects that Somecat's bearings 
are

[[Page 35625]]

marked ``SNFA ITALY''. To reduce the possibility of confusion at the 
time of entry and to ensure that the Customs Service assesses dumping 
duties on Somecat's bearings properly, we will refer to Somecat as 
``Somecat or SNFA Italy'' in our cash-deposit instructions and 
liquidation instructions.
    Comment 2: Torrington asserts that it requested that the Department 
make a determination at verification as to whether FAG Italy reimbursed 
its U.S. affiliate for antidumping duties. It now requests that the 
Department pursue additional inquiries into this issue or make a 
determination of the issue based on the current record.
    FAG Italy rebuts that the Department stated in its report on the 
home-market sales verification that the verification was not the 
appropriate forum at which to conduct a reimbursement inquiry. It 
asserts that the Department was correct in this assessment. FAG Italy 
argues that, notwithstanding this point, Torrington has actually 
presented record evidence which supports the position that no 
reimbursement occurs. It contends that Torrington has cited to the 
consolidated 1997 FAG Group financial statement, which accounts for FAG 
US's antidumping duty liabilities. FAG Italy asserts that Torrington 
must submit either record evidence of financial intermingling between 
group companies or the existence of a written agreement between these 
companies regarding reimbursement before the Department is obligated to 
conduct a further inquiry into reimbursement.
    Department's Position: There is no obligation to conduct an inquiry 
into reimbursement based on the information on the record. 
Reimbursement, within the meaning of section 351.402(f) of the 
Department's regulations, takes place between affiliated parties if 
evidence demonstrates that the exporter pays antidumping duties on 
behalf of the affiliated importer or reimburses the importer for such 
duties. In this case, the petitioner has not presented evidence that a 
reimbursement agreement exists. Mere allegations of reimbursement are 
not sufficient to sustain a more in-depth reimbursement inquiry. See 
AFBs 7, 62 FR at 54043. See also Torrington v. United States, 881 F. 
Supp. 622, 632 (CIT 1997), aff'd, 127 F.3d 1077, 1080 (CAFC 1997). 
Therefore, we have not conducted any further inquiry into 
reimbursement.
12. Romania-Specific Issues
    Comment 1: Torrington argues that the Department should modify the 
calculation of normal value in its analysis of TIE by applying the 
appropriate inflators, based on changes in the published Consumer Price 
Index (CPI), to the base data used in the Department's memorandum 
entitled ``Expected Wage Rates of Selected NME Countries--1995 Income 
Data'' (wage memorandum). Torrington argues that the wage values upon 
which the Department relied in the preliminary results have not been 
updated to account for changes due to inflation since 1995. Citing 
section 351.408(c)(3) of the Department's regulations, Torrington 
claims that the Department's calculation of wage rates should be based 
on current data. Torrington also asserts that the Department's wage 
memorandum uses a CPI inflator to adjust pre-1995 wage data and that, 
in prior reviews, the Department valued wages based on a single 
surrogate by applying an inflator to values obtained for wages whenever 
the values pertained to periods preceding the investigation period, 
citing Preliminary Results of Antidumping Administrative Review; 
Tapered Roller Bearings and Parts Thereof, Finished or Unfinished, From 
Romania, 63 FR 11217, 11218 (March 6, 1998).
    Department's Position: We have updated the 1995 base data by 
applying 1997 data in accordance with section 351.408(c)(3) of our 
regulations and used this information in calculating normal value for 
our analysis of TIE.
    Comment 2: TIE argues that the Department's preliminary margin 
calculation for one model contains an obvious ministerial error, 
causing an abnormally high normal value for this model. TIE claims that 
it provided an overstated weight value for low-density foil in its 
questionnaire response inadvertently and the Department then used this 
erroneous value in its margin calculation. TIE points out that the low-
density foil weight exceeds the total weight of the bearing. TIE claims 
further that the Department has the authority to correct errors which 
are obvious and has done so in previous cases, citing 
Technoimportexport, S.A. v. United States, 766 F. Supp. 1169, 1178 (CIT 
1991). Therefore, for purposes of the final results, TIE requests that 
the Department correct this error and use the low-density foil weight 
listed in its March 22, 1999, case brief or the low-density foil weight 
found in TIE's response for similar models.
    In rebuttal, Torrington contests TIE's argument that an obvious 
ministerial error occurred in the reporting of this packaging factor. 
Torrington asserts that the new information is untimely and unreliable, 
citing section 351.301 of the Department's regulations. Torrington 
argues further that the Department recognizes an exception to the 
general rule in the case of obvious errors, provided that: (1) the 
error is of a clerical nature; (2) the fact of the error is obvious 
from the record at the time the new data are submitted; and (3) the 
correctness of the new data is obvious, citing RHP Bearings v. United 
States, 19 CIT 1389, 1392 (1995), and RHP Bearings v. United States, 
875 F. Supp. 854, 857 (CIT 1995). Torrington claims that there is 
nothing on the record which supports the corrections of the new data 
offered by TIE. Therefore, Torrington argues, the Department should not 
accept TIE's amended data.
    Department's Position: We will accept corrections of clerical 
errors made in a party's submission under the following conditions: (1) 
The error in question must be demonstrated to be a clerical error, not 
a methodological error, an error in judgment or a substantive error; 
(2) the Department must be satisfied that the corrective documentation 
provided in support of the clerical error allegation is reliable; (3) 
the respondent must have availed itself of the earliest reasonable 
opportunity to correct the error; (4) the clerical-error allegation, 
and any corrective documentation, must be submitted to the Department 
no later than the due date for the respondent's administrative case 
brief; (5) the clerical error must not entail a substantive revision of 
the response; and (6) the respondent's corrective documentation must 
not contradict information previously determined to be accurate at 
verification. See Final Results of the Antidumping Duty Administrative 
Review; Heavy Forged Hand Tools, Finished or Unfinished, With or 
Without Handles, From the People's Republic of China, 63 FR 16758 
(April 6, 1998). TIE's alleged clerical error satisfies these six 
criteria. We agree that the error is obvious and clerical in nature. It 
is not a substantive error and does not entail a substantive revision 
of TIE's response. We have reviewed the record and found that similar 
models had approximately the same weight for low-density foil as 
reported in TIE's case brief. Therefore, we accept TIE's request that 
we revise this error and have used the information in TIE's case brief 
in our final margin calculations.

[FR Doc. 99-16657 Filed 6-30-99; 8:45 am]
BILLING CODE 3510-DS-P