[Federal Register Volume 61, Number 234 (Wednesday, December 4, 1996)]
[Notices]
[Pages 64328-64334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30876]
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DEPARTMENT OF COMMERCE
[A-588-028]
Roller Chain, Other Than Bicycle, From Japan; 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.
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SUMMARY: On June 4, 1996, the Department of Commerce (the Department)
published the preliminary results of its administrative reviews of the
antidumping finding on roller chain, other than bicycle, from Japan.
The reviews cover two manufacturers/exporters, Daido Kogyo, Ltd.
(Daido), and Enuma Chain Mfg. Co., Ltd. (Enuma), of the subject
merchandise to the United States during the period April 1, 1992
through March 31, 1993, and six manufacturers/exporters, Daido, Enuma,
Hitachi Metals Techno Ltd. (Hitachi), Izumi Chain Manufacturing Co.,
Ltd. (Izumi), Pulton Chain Co., Ltd. (Pulton) and R.K. Excel, of this
merchandise to the United States during the period April 1, 1993
through March 31, 1994.
We gave interested parties an opportunity to comment on the
preliminary results. Based on our analysis of the comments received and
the correction of certain clerical errors, we have made certain changes
to the final results of each review period. We will instruct U.S.
Customs to assess antidumping duties on all appropriate entries.
EFFECTIVE DATE: December 4, 1996.
FOR FURTHER INFORMATION CONTACT: Matthew Blaskovich, Jack Dulberger,
Ron Trentham or Zev Primor, AD/CVD Enforcement, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-5253.
SUPPLEMENTARY INFORMATION:
Background
On June 4, 1996, the Department published in the Federal Register
(61 FR 28171) the preliminary results of the above mentioned
administrative reviews of the antidumping finding on roller chain,
other than bicycle, from Japan. At the request of petitioner and five
respondents, we held a hearing on July 22, 1996.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and the
Department's regulations are in reference to the provisions as they
existed on December 31, 1994.
Scope of the Review
Imports covered by the reviews are shipments of roller chain, other
than bicycle, from Japan. The term ``roller chain, other than
bicycle,'' as used in these reviews includes chain, with or without
attachments, whether or not plated or coated, and whether or not
manufactured to American or British standards, which is used for power
transmission and/or conveyance. Such chain consists of a series of
alternately-assembled roller links and pin links in which the pins
articulate inside from the bushings and the rollers are free to turn on
the bushings. Pins and bushings are press fit in their respective link
plates. Chain may be single strand, having one row of roller links, or
multiple strand, having more than one row of roller links. The center
plates are located between the strands of roller links. Such chain may
be either single or double pitch and may be used as power transmission
or conveyer chain.
These reviews also cover leaf chain, which consists of a series of
link plates alternately assembled with pins in such a way that the
joint is free to articulate between adjoining pitches. These reviews
further cover chain model numbers 25 and 35. Roller chain is currently
classified under the Harmonized Tariff Schedule of the United States
(HTSUS) subheadings 7315.11.00 through 7619.90.00. HTSUS item numbers
are provided for convenience and Customs purposes. The written
description remains dispositive.
The reviews cover the periods April 1, 1992 through March 31, 1993,
and April 1, 1993 through March 31, 1994. The Department has now
completed these administrative reviews in accordance with section 751
of the Tariff Act of 1930, as amended (the Act).
Analysis of Comments Received
We invited interested parties to comment on the preliminary results
of these administrative reviews. We received timely comments from the
petitioner and all respondents except Hitachi.
Comment 1: Izumi claims that sales made to its related party were
made at arm's-length. Izumi asserts that there is no statutory or
regulatory requirement which mandates a certain threshold percentage of
unrelated party sales in order to conduct an appropriate arm's-length
test. Izumi therefore requests that the Department conduct an arm's-
length test on its related party sales. If the Department cannot
determine whether sales to its related party were made at arm's-length,
Izumi argues that those sales should be disregarded for the purpose of
calculating foreign market value and constructed value in the
Department's margin calculations.
Department's Position: We disagree with Izumi. An arm's-length test
in this proceeding would not produce reliable results because there was
an insufficient number of unrelated party sales available for
comparison to related party sales. While nothing in the statute
[[Page 64329]]
requires a specified percentage of unrelated home market sales in order
to conduct an appropriate arm's-length test, our regulations state that
we ``will calculate foreign market value based on that sale
[transactions between related persons] only if [the Department is]
satisfied that the price is comparable to the price at which the
producer or reseller sold such or similar merchandise to a person not
related to the seller.'' 19 CFR 353.45(a)(1994). We therefore have the
discretion to decide whether we could rely on the results of an arm's-
length test. The facts in this proceeding indicate that an arm's-length
test would not produce reliable results. While the sales to unrelated
parties may be bona fide, because of their limited number, it cannot be
established that Izumi's related party sales were made at arm's-length.
Consequently, we removed such sales from the home market sales
database.
We disagree with Izumi's assertion that we should use CV for those
sales made to its related party if it cannot be determined that such
sales were made at arm's-length. In accordance with 19 CFR 353.45(b),
where related party transactions were made, we decided to base FMV on
downstream sales made by such related parties.
Comment 2: Izumi states that the Department erred in assigning
partial best information available (BIA) as a result of Izumi's
inability to supply downstream sales on related party transactions.
Izumi argues that given the nature of its relationship with its related
party, Izumi does not have the economic leverage or legal basis to
persuade this party to submit downstream sales information. Further,
Izumi argues that since it has no control or input regarding downstream
sales, it is inequitable for the Department to require information that
is unreasonably difficult to obtain, or to base margins on sales in
which Izumi was not involved. Izumi further contends that reliance on
downstream sales information would be contrary to the intent of the
statute, and the Department's regulations do not provide for margin
calculations based on sales in which a respondent does not have the
ability to control, or at least influence, the price.
Petitioner argues that the Department was justified in applying
partial BIA. Petitioner asserts that Izumi fails to realize that the
affiliation it has with its related reseller necessitates that they be
considered as one entity for this proceeding. Petitioner cites to the
Department's questionnaire, where it states ``[w]here a sale is made
through an affiliated company, the price actually charged to the
unrelated buyer must be reported.'' See Department's Questionnaire of
May 26, 1994, at 10. Petitioner therefore contends that the refusal of
Izumi's related reseller to provide downstream sales information should
be considered as a refusal by Izumi itself. Further, petitioner states
that an argument similar to Izumi's claim of not having a legal basis
upon which to compel its related reseller to submit information was
rejected by the Department in a previous segment of this proceeding.
See Roller Chain, Other Than Bicycle, From Japan, 55 FR 42602, 42608
(1990).
Department's Position: We agree with petitioner. Izumi failed to
respond to our requests for information regarding downstream sales.
Although Izumi claims that it could not compel its related party to
supply this information, given their affiliation, we consider the
related party's non-compliance as an omission imputable to Izumi.
Moreover, we assigned Izumi BIA in a previous segment of this
proceeding, where circumstances similar to these in this review were
found to exist. In that review, the Department's position stated in
relevant part:
19 CFR 353.45(b) provides that the Department may calculate
foreign market value based on sales made through a related party.
Pursuant to 19 CFR 353.45(a), it is the Department's practice to
calculate foreign market value based on prices to related parties,
if the respondent can show that those sales are as between two
unrelated companies (i.e., that the sales were arm's-length
transactions). If the respondent cannot show that the sales were at
arm's-length, and the sales made through the related party are a
significant percentage of all sales in the home market, the
Department calculates foreign market value on the basis of the sale
price to the first unrelated party * * * Izumi's refusal or
inability to provide information on the sales to the first unrelated
purchasers left the Department no basis with which to calculate
foreign market value. Final Results of Antidumping Duty
Administrative Review: Roller Chain, Other Than Bicycle, From Japan,
55 FR 42608, (October 22, 1990).
Additionally, the U.S. Court of Appeals for the Federal Circuit
recently noted, ``[t]he burden of production is appropriately placed on
the party deemed to control the information.'' Koyo Seiko Co., Ltd. v.
United States, No. 96-1116, Slip Op. (Fed. Cir. Aug. 12, 1996). There,
the Court upheld our decision to apply BIA where the respondent was
related to a party within the meaning of section 771(13)(D) of the
Tariff Act and where the respondent failed to provide requested cost
data of the related party. Similarly, in this proceeding, Izumi is
related to its customer within the meaning of section 771(13)(C) and
failed to provide the downstream sales information of its related
party.
Section 776(c) of the Act requires us to use the best information
otherwise available whenever a party refuses or is unable to provide
information requested in a timely manner and in the form required.
Therefore, since Izumi did not supply us with requested information, we
are required to use BIA in reaching our determination.
Comment 3: Izumi states, arguendo, that had there been
justification for the Department's use of BIA, the use of an adverse
inference was not warranted. Citing Holmes Products Corp. v. United
States, 16 CIT 628, 631 (1992) (Holmes), Izumi contends that there is
no statutory requirement that an adverse inference be made in
determining BIA, when a party substantially complies in a review
proceeding. Further, Izumi claims that an adverse inference is based on
the presumption that a party would have supplied accurate information
if that information would have resulted in lower margins. In light of
this, Izumi claims that since it has no influence on, or knowledge of,
pricing of downstream sales, it could not be charged with having
constructive knowledge that the downstream sales would be made at a
rate higher than the BIA rate of 43.29 percent. Izumi also cites the
Court of International Trade's (CIT) decision in Usinor Sacilor,
Sollac, and GTS v. United States, 872 F. Supp. 1000, (CIT 1994)
(Usinor) in which Izumi claims that the CIT directed the Department to
select the weighted-average calculated margin as BIA because the
respondent was unable to submit data of a related reseller over which
it had no operational control. Izumi contends that, as the facts in
this review model those of Usinor, the Department should use Izumi's
constructed value data or the weighted average calculated margin as
non-adverse BIA.
Petitioner claims that it cannot be determined whether or not the
downstream sales information would have produced a higher margin for
Izumi. Nevertheless, petitioner states that an adverse inference in
this regard is highly likely, given the extent of the sales at issue
and the affiliation between Izumi and the reseller. Further, petitioner
challenges Izumi's claim that this instant review is similar to Usinor.
Petitioner states that in Usinor, voluminous downstream sales data was
submitted. The Department, however, rejected the submission because the
resellers were not able to conduct a material trace within the time
limits of the investigation. The Department did not request downstream
sales
[[Page 64330]]
information for steel centers in which the manufacturer had no
operational control, as these sales constituted a small percentage of
total sales. Those sales were subject to the same cash deposit as the
company's other sales.
Department's Position: We agree with petitioner. In Holmes as well
as in Usinor, due to the minuscule nature of the amount of sales at
issue, non-adverse BIA margins were recommended. In Holmes, the
manufacturer ``Hoogovens did not omit data, but only provided
inaccurate information, which in most instances was due to a computer
conversion error, nor were the errors systematic in nature.'' See
Holmes at 1137. In Usinor, the court rejected the Department's argument
``that Usinor's submissions were deficient due to Usinor's failure to
report downstream sales from its minority-owned secondary steel
centers.'' See Usinor at 1006. The court held that Usinor:
substantially met the requirements of the original and modified
questionnaire requests. Usinor supplied more data than was required
under the limited reporting arrangement and provided well over 99%
of the data demanded by the original questionnaire * * * The
question, therefore, is whether Commerce may use adverse BIA on the
sole basis of Usinor's inability to trace the source of the steel
processed by its secondary steel centers.
Id. at 1001-07. However, as the downstream sales in this review would
comprise most of Izumi's home market sales, Izumi's failure to report
those sales could not be construed as similar in scope to the
aforementioned cases. Because the omission in this case was
substantial, we followed our normal practice in determining BIA.
Comment 4: Izumi states arguendo, that had an adverse inference
been warranted, the Department should have taken the ``second-tier''
BIA rate from the most recent review in which BIA was applied, and not
from a review more than ten years old. In regard to the methodology the
Department should follow in assigning a BIA rate, Izumi cites a number
of court decisions. In National Steel Corporation v. United States, 870
F. Supp. 1130, 1136 (CIT) 1994), the Court stated that the Department
``must be reasonable in its application of its chosen methodology.''
Further in Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1560
(Fed. Cir. 1984), the use of BIA was compared to an ``investigative
tool'' which may be wielded as an ``informal club'' over recalcitrant
parties. Izumi also cites Rhone Poulenc, Inc. v. United States, 899
F.2d 1185, 1190 (Fed. Cir. 1990) (Rhone Poulenc) to support its view
that it is the Department's requirement that it ``consider the most
recent information in its determination of what is best information.''
Allied-Signal Aerospace Co. v. United States, 996 F.2d 1185 (Fed. Cir.
1993) (Allied-Signal) is further cited for the proposition that the
Department was required to obtain and consider the most recent
information in its determination of what constitutes BIA. Izumi
contends that the Department should have used as partial BIA the 17.57
percent rate assigned to Izumi in the 1989-1990 review instead of the
43.29 percent rate assigned to Izumi in the 1983-1985 review periods.
Izumi claims that the 17.57 percent rate is more probative of current
conditions, while the 43.29 percent rate is outdated.
Petitioner contends that the Department adhered to its standard
``two-tier'' BIA methodology in selecting the second-tier partial BIA
rate. Petitioner stresses that the Department's ``two-tier'' BIA
methodology is well-established and has been upheld by the courts.
Further, petitioner states that the 43.29 percent BIA rate is more
current than the 17.57 percent rate, since the final results of the
1983-1985 review periods (where the 43.29 percent rate applies) were
published subsequent to the final results of the 1989-1990 review
(where the 17.57 percent margin applies).
Department's Position: We agree with petitioner. Our ``two-tier''
BIA methodology has been upheld in numerous court decisions. Allied-
Signal states that ``[t]he two-tier BIA methodology employed by the ITA
in selecting the best information available for nonresponsive parties
is a permissible and reasonable exercise of its statutory authority.''
Allied-Signal at 1193. The fact that the 43.29 percent rate was a
``first-tier'' rate assigned to Izumi in a previous review is of no
relevance to our analysis. Our BIA methodology does not require that we
determine why a particular margin was assigned in a previous review.
Further, our ``two-tier'' BIA methodology, ``like its predecessor,
merely establishes a presumption that the highest prior margins are the
best information available. That presumption can be rebutted by the
respondent with evidence showing the actual margin to be less.'' Rhone
Poulenc at 1190. As partial BIA, we simply adhered to our well
established ``two-tier'' BIA methodology by using the highest margin
ever assigned to Izumi in a previous segment of this proceeding. Izumi
has not shown that the preliminary margins were demonstrably less
probative of current market conditions.
Comment 5: Izumi states that the 43.29 percent rate was
unjustifiably assigned as a second-tier rate since this rate was also
assigned as a ``first-tier'' BIA rate to Pulton for this review. Izumi
argues that the Department failed to consider the intent of 19 CFR
353.37(a) by not considering the degree to which a respondent
cooperated before assigning the BIA rate. Izumi therefore states that
the Department acted contrary to the purpose of the ``two-tier'' BIA
system.
Further, Izumi cites to the CIT's remanded decision in a previous
segment of this proceeding. Although Pulton was characterized as
uncooperative in that case, the CIT ruled that the Department's
``attempt to assert a 43.54 percent rate is arbitrary and capricious
and has no basis in law or fact.'' Pulton Chain Co., Inc. v. United
States, 17 CIT 1136, 1144 (1993) (Pulton). Izumi asserts that since it
has cooperated to the best of its ability in this review and since it
does not have the ability to respond to the Department's request for
information regarding downstream sales, the assignment of an adverse
BIA rate of 43.29 percent is therefore punitive. Moreover, Izumi claims
that the Department unlawfully assigned this adverse BIA, citing the
following Court decisions as justification. In Allied-Signal, 996 F.2d
1193 (Fed. Cir. 1993), the Court stated that ``[n]either is the goal of
encouraging future compliance furthered by the application of the first
tier to SNFA, because it apparently has no ability to respond more
completely than it already had done.'' The CIT notes in Usinor, 872 F.
Supp. at 1007, that ``Commerce's selection of a severely adverse BIA is
`improper'* * * when the missing data is beyond the control of the
respondent.''
Petitioner argues that unless an adverse partial BIA rate is
imposed, Izumi would be rewarded for its inability to provide
downstream sales information. Petitioner is concerned that should CV be
utilized in regard to Izumi's related party sales, an unavoidable
policy problem would result for the Department. Petitioner contends
that ``it will open a gaping hole in the antidumping law that will
permit foreign manufacturers to `screen out' high-price transactions
from the calculation of FMV. All a foreign manufacturer need do is
channel high-price transactions through an affiliated reseller with the
(tacit) understanding that the reseller will refuse to supply data on
the resale transactions to unaffiliated customers.'' Petitioner's
letter of July 15, 1996, at 7. Petitioner further argues that there
will be no
[[Page 64331]]
incentive for Izumi to provide downstream sales information in future
reviews if CV would be substituted for those sales.
Department's Position: We disagree with Izumi. As mentioned
earlier, our use of a ``second-tier'' BIA rate for the sales in
question follows our ``two-tier'' BIA methodology. The fact that the
``second tier'' BIA rate for a particular segment of a proceeding also
equals the ``first tier'' BIA rate is a consequence of the two-tier
methodology, one which has been upheld by the U.S. Court of Appeals for
the Federal Circuit. See Allied-Signal Aerospace Co. v. United States,
996 F.2d 1185 (Fed. Cir. 1993).
We also disagree that Pulton Chain Co., Ltd. v. United States, 17
CIT 1136 (1993) precludes our use of the 43.29 rate as a BIA rate. As
the CIT has recognized in a case subsequent to Pulton, the holding in
Pulton was limited to the ``particular facts of the case.'' Sugiyama
Chain Co., Ltd. v. United States, 852 F. Supp. 1103, 1114 (CIT 1994).
Moreover, the Sugiyama Court upheld our use of the 43.29 percent rate
as a BIA rate. Id. Therefore, we will continue to use that rate here.
Concerning Izumi's argument that an adverse BIA rate is
inappropriate because the data was purportedly not within the company's
control, we refer to our reply to comment two.
Comment 6: Izumi requests that certain models of specialty chain
sold in the United States should not be matched to models sold in the
home market because a comparison is precluded by significant physical
differences and different uses. Izumi claims that the Department's 20
percent difference in merchandise (difmer) cap does not prevent skewed
results. Izumi requests that the Department compare certain U.S. models
to constructed value, as performed in past reviews.
Petitioner contends that there is no evidence on the record which
substantiates Izumi's claim that differences in physical
characteristics and use exist between certain models sold in the United
States and in Japan. Petitioner cites to the model match methodology
used in the AFB proceedings, in which all parties were able to submit
detailed comments in regard to reported differences in physical
characteristics in order to distinguish between various bearing models.
Petitioner claims that since no such briefing process occurred for this
review, the Department was justified in utilizing Izumi's model-match
concordance for price-to-price comparison purposes.
Department's Position: Izumi's comment is moot. Due to the
Department's correction of a programming error for these final results
(see ``Additional Programming Error,'' p. 34), certain U.S. models,
including those models of concern to Izumi, are now compared to CV
instead of to models sold in the home market.
Comment 7: Petitioner states that the Department should determine
whether Izumi's related party resold the subject merchandise to the
United States. Petitioner states that any U.S. sales made by Izumi's
related party should be treated as either purchase price (PP) or
exporter's sales price (ESP) transactions. Petitioner argues that Izumi
and its related party should be required to certify whether or not the
related party resold to the United States.
Izumi contends that petitioner's allegations in this regard are
mere speculation since there is no evidence on the record to indicate
that Izumi had knowledge that merchandise sold in the home market was
destined for export to the United States Izumi further argues that as
the Department rejected the same argument raised by petitioner in the
1990-1991 review, there is then no need to revisit this issue. Izumi
states that petitioner's requirement that it provide certification
whether or not the related party resold to the United States has no
basis in statute or regulation.
Department's Position: We agree with Izumi. In a previous segment
of this proceeding, petitioner raised this identical argument which we
rejected as lacking merit since there was no indication on the record
to support its allegations.
Izumi certified for this review that its U.S. and home market sales
and distribution systems were reported in a complete and accurate
manner. Further, as there is no information on the record on which to
conclude that merchandise Izumi sold to its related party was
subsequently resold to the United States, we have determined that Izumi
need not submit any additional certifications regarding possible U.S.
sales that its related party may have made.
Comment 8: Pulton maintains that if the Department declines to
permit it to submit a response concerning its unreported U.S. sale, it
should use ``second-tier'' BIA because first-tier is reserved for
uncooperative respondents. According to Pulton, as soon as the error
was brought to its attention, it sought permission to submit a response
and continues to be willing to submit this information. Pulton alleges
that under these circumstances, it is unduly harsh to apply ``first-
tier'' BIA. Further, Pulton asserts that the application of ``second-
tier'' BIA would be more consistent with the way in which the
Department treats other respondents which have inadvertently, or even
deliberately, failed to report sales.
Petitioner argues that Pulton, by failing to file an accurate
questionnaire response, has totally frustrated the Department's goal of
calculating an accurate dumping margin. According to petitioner,
because Pulton's failure is total, it is easily distinguished from the
decisions cited in Pulton's brief involving respondents who provided
partial information to the Department. Moreover, petitioner asserts
that where a party totally frustrates the goal of calculating accurate
margins, it is reasonable to conclude that the party has ``
`significantly impede[d] the Department's review,' and accordingly, to
assign it a `first-tier' BIA margin.''
Department's Position: We disagree with Pulton that it should be
permitted to submit a questionnaire response. Section 353.31(a)(ii) of
our regulations allows parties to submit factual information no later
than ``the earlier of the date of publication of notice of preliminary
results of review or 180 days after the date of publication of notice
of initiation of the review.'' Here, the 180-day deadline had passed.
Moreover, to accept a questionnaire response from Pulton would delay
our completion of these reviews.
We disagree with Pulton's allegation that the imposition of
``first-tier'' BIA is unduly harsh. The Department generally assigns a
respondent ``first-tier'' BIA when that respondent is considered to be
uncooperative because it fails to provide requested information in a
timely manner or otherwise significantly impedes the review. It was the
responsibility of Pulton to submit accurate and complete information in
response to the Department's questionnaire. By certifying that it had
no sales and no exports to U.S. customers of merchandise subject to the
finding, when in fact it did have at least one such sale, Pulton
significantly impeded the Department's review.
Comment 9: Pulton claims that if the Department agrees to apply
``second-tier'' BIA, the appropriate rate would be 5.45% from the 1982-
1983 review period. Pulton claims that although Izumi has a higher
preliminary rate in the current review, this rate is itself largely
based on BIA, and is in that sense not a calculated rate.
Petitioner states that if the Department were to apply ``second-
tier'' BIA, the minimum applicable margin would be 15.92%--the margin
assigned to Pulton in the final determination in the 1989-1990
administrative review. However, petitioner contends that if the
[[Page 64332]]
final calculated margin for Izumi or any other respondent exceeds
15.92%, that high margin should be used.
Department's Position: Since we have assigned Pulton ``first-tier''
BIA, the arguments of Pulton and petitioner are moot.
Comment 10: Pulton argues that even if the Department decides that
``first-tier'' BIA is appropriate, the 43.29% rate is inappropriate
because it is based on a margin that was not finalized and because it
is unduly punitive. According to Pulton, although the rate was used in
a final results notice--1979-1980 administrative review--the Department
recognized that it could not be used for duty assessment purposes.
Moreover, Pulton claims that the CIT has recognized that 43.29% was not
a valid rate for BIA (Pulton Chain Co., Ltd., 17 CIT at 1144).
Furthermore, Pulton asserts that if the Department continues to apply
``first-tier'' BIA, the appropriate margin would be 17.57%--the highest
calculated rate in any prior review of the antidumping finding not
based on the 43.29% aberrational number.
Petitioner alleges that the CIT has sustained the application of
the 43.29% first-tier margin in the roller chain reviews. Further,
petitioner maintains that contrary to Pulton's claims, the CIT did not
hold the 43.29% rate unlawful. Moreover, petitioner argues that the
43.29% margin has been imposed as ``first-tier'' BIA on a number of
occasions. Finally, petitioner states that since there is no
information on the record concerning Pulton's actual margin, it is
appropriate to impose the 43.29% rate.
Department's Position: We disagree with Pulton. Our use of a
``first-tier'' BIA rate for Pulton follows our ``two-tier'' BIA
methodology. This methodology has been upheld by the U.S. Court of
Appeals for the Federal Circuit. See Allied-Signal Aerospace Co. v.
United States, 996 F.2d 1185 (Fed. Cir. 1993).
We also disagree that Pulton Chain Co., Ltd. v. United States, 17
CIT 1136 (1993) precludes our use of the 43.29 rate as a BIA rate for
Pulton. As the CIT has recognized in a case subsequent to Pulton, the
holding in Pulton was limited to the ``particular facts of the case.''
Sugiyama Chain Co., Ltd. v. United States, 852 F. Supp. 1103, 1114 (CIT
1994). Moreover, the Sugiyama Court upheld our use of the 43.29 percent
rate as a BIA rate. Id. Therefore, we will continue to use that rate
here.
Comment 11: R.K. Excel claims that although foreign brokerage and
handling expenses (BROKHP) were reported in yen, the Department
incorrectly treated BROKHP as a dollar-denominated expense in the
calculation of net U.S. price for direct sales to U.S. customers.
Petitioner states that R.K. Excel's case brief contains new factual
information concerning the denomination for BROKHP.
Department's Position: We agree with R.K. Excel's claim and have
made the appropriate adjustments.
It is evident from R.K. Excel's questionnaire response that BROKHP
is a yen-denominated expense and the Department had no need to refer to
the documentation presented in R.K. Excel's case brief to confirm its
claim.
Comment 12: R.K. Excel maintains that the Department's program
failed to try to match the U.S. model 50D sales and the most similar
model in the home market, model 50.
The petitioner argues that given the significant number of
unmatched sales, and given the likelihood that material margins would
have been produced if the relevant data had been supplied, this is
clearly a case in which it is appropriate to apply adverse BIA.
Department's Position: We agree with R.K. Excel. Due to a computer
error, our program failed to match U.S. model 50D and the most similar
model in the home market, model 50. There was missing data; this was
merely a programming error. The error has been corrected for these
final results. Thus, the use of BIA is not warranted.
Comment 13: Enuma's U.S. sales subsidiary, Daido Corporation (DC),
contends that the Department erroneously disregarded its further
manufacturing (FM) cost information for the purpose of calculating
exporter's sales price (ESP), and wrongly assigned BIA to the sales in
question. It requests that we recalculate the margin using the
information submitted in its response instead of BIA.
Specifically, DC objects to the Department's disregarding its FM
material cost information and rejecting its cost allocation
methodology. DC claims that its non-material costs were allocated on a
transaction-specific basis, not on a broad-based allocation formula
and, therefore, were isolated to individual FM products distinct from
all other FM chain.
Petitioner responds that ``under the circumstances, the Department
had no choice but to apply BIA to these sales.'' It contends that DC's
``allocation ratio may be convenient, but it does not produce accurate
further manufacturing data.'' (Emphasis in original.) According to the
petitioner, the Department was justified in concluding that both the
material cost information and DC's cost allocation methodology are
unreliable.
Department's Position: We agree with petitioner. We specifically
and clearly requested, in both the original and supplemental
questionnaires, that DC ``furnish the cost of production data [and] * *
* [i]f the item was transferred at `market price,' the price should be
supported by documentation of actual sales * * * to unrelated third
parties.'' (Questionnaire, August 9, 1993 at 45-46; Supplemental
Questionnaire, October 19, 1995 at 25 and Section E, ``Cost of Further
Manufacture or Assembly Performed in the United States'' (Section E).)
In addition, we stated in Section E that ``[t]he further manufacturing
costs that you report in response to this section of the questionnaire
should be calculated based on the actual costs incurred by your U.S.
affiliate,'' and that FM costs ``include direct materials and
fabrication costs actually incurred by the company.'' Section E at E-1,
E-8. We find that DC did not follow our questionnaire instructions as
to FM costs.
In computing FM costs, DC based its material costs on the related
party transfer price (instead of actual cost of production (COP)) to
value the roller chain attachments, stating only that it was ``not
possible to provide production costs for the value of these attachments
* * * within the time provided.'' Rather than reporting COP, DC
suggested in its supplemental response that the Department use sampling
to test arm's-length pricing of its attachments. However, DC failed to
provide supporting detail for its sampling idea and did so at a point
late in the review process. In view of this, we rejected DC's sampling
concept.
In Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, et al., 58 FR 39729, 39754 (July 26, 1993),
we determined that where a party failed to provide either purchase
prices from unrelated parties from which the Department could determine
whether transfer prices paid to related parties were at arm's-length,
or COP data to demonstrate that the transfer prices were not less than
COP, then such data did not provide a reliable basis for FMV. Here,
DC's methodology was an unacceptable response to our question because
it lacked COP information, sample or otherwise, and did not permit a
test of transfer pricing information.
In addition, DC stated that it lacked records for the labor element
of FM, preventing it from calculating the FM costs in the manner
suggested by the questionnaire. Further, DC stated that it also lacked
records for factory overhead and SG&A expenses attributable to FM.
[[Page 64333]]
DC therefore submitted a factor representing gross profit (revenue
minus cost of goods sold), which it multiplied by the transfer price of
the attachments used in the FM process, to estimate the missing labor,
overhead, and SG&A components of the FM process. However, this
methodology was unacceptable because it was unsupported by information
on the record demonstrating that use of a gross profit factor
accurately reflects DC's non-material FM costs.
In summary, DC provided no COP information, sample or otherwise.
Accordingly, no test of transfer pricing information was possible. In
addition, it provided no information on the record to support its
contention that the use of a gross profit factor accurately reflects
its non-material FM costs. Therefore, we determine that DC's reported
FM costs do not provide a reliable basis on which to adjust USP and, as
a result, we have continued to use ``second-tier'' BIA margins for the
U.S. sales in question.
Comment 14: The petitioner argues that the Department should have
disallowed a portion of Daido's reported home market indirect selling
expenses because its data was not submitted on a transaction-specific
basis. Specifically, the petitioner claims that Daido failed to report
its commissions, discounts, and rebates in the home market on a
transaction-specific basis. Instead, Daido included these expenses with
indirect selling expenses in a category called ``Other Expenses'' and
allocated them across total home market sales. Petitioner argues that
commissions, discounts and rebates must be tied to individual sales
transactions. It requests that, because Daido failed to provide this
data, we remove these ``Other Expenses'' from this adjustment. The
petitioner requests that the Department disallow Daido's ESP offset in
the Department's final margin calculations.
Daido responds that the Department's position is correct and that
the petitioner failed to show any legal prohibition against calculating
this deduction on an allocated basis. Daido further argues that the
Department's practice is to treat commissions, discounts, and rebates
as indirect expenses when they cannot be tied directly to specific
sales or customers. Daido further points out that the allocation here
works against its favor by subjecting commissions, discounts and
rebates expenses to the ESP offset cap.
Department's Position: We agree with petitioner. We requested, in
both the original and supplemental questionnaires, that Daido report
these expenses ``on a transaction-specific basis.'' Instead, Daido
included its commissions, rebates, and discounts in its indirect sales
expenses. Daido then allocated indirect sales expenses as follows:
Daido's total corporate SG&A (i.e., worldwide, scope and non-scope)
expenses were divided by its total sales (i.e., worldwide, scope and
non-scope) to arrive at a percentage figure, which was then multiplied
by yen per meter price to arrive at a yen per meter SG&A expense
figure.
We consider rebates and discounts to be direct adjustments to price
and will make adjustments for these expenses pursuant to sections 772
and 773 of the Act (which require us to determine what price was
actually charged for subject merchandise). See Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From France; et
al.; Final Results of Antidumping Duty Administrative Reviews, 57 Fed.
Reg. 28360, 28400 (June 24, 1992); SKF USA Inc. v. United States, 874
F. Supp. 1395, 1402 (CIT 1995). Because Daido failed to report its
discounts and rebates on a transaction-specific basis, as we requested,
we are denying the adjustment.
Our regulations define commissions as an expense which may receive
an adjustment as a difference in circumstances of sale. See 19 CFR
353.56(a)(2) (1994). However, Daido has requested that we treat its
commissions as an indirect selling expense and grant it an adjustment
pursuant to 19 CFR 353.56(b)(2) (1994) (the ESP offset provision). The
U.S. Court of Appeals for the Federal Circuit has recently held that we
may not include direct selling expenses as part of the ESP offset
because our regulations do not allow such an adjustment. See Torrington
Co. v. United States, 82 F.3d 1039, 1051 (Fed. Cir. 1996). The Court
noted that the method by which an expense is allocated does not change
its nature from being a direct expense to an indirect expense. Since
commissions are a direct expense, we must therefore deny Daido an
adjustment for this expense pursuant to the ESP offset provision.
Comment 15: Petitioner claims that the Department failed to deduct
foreign inland freight incurred by DT (on behalf of Daido and Enuma)
from Daido and Enuma's PP sales. Daido and Enuma contend that the
Department had in fact made the deductions to PP sales for both PORs.
Department's Position: We agree with Daido and Enuma. Daido and
Enuma computed foreign inland freight charges for sales to the United
States in the same manner as for home market freight charges.
Consequently, values for inland freight charges are identical to those
for home market freight charges. Both of these adjustments appeared in
the PP margin programs as INLFRTH, which was also deducted from U.S
price to arrive at net adjusted U.S price.
Additional Clerical Errors
In addition to the changes we made in response to the parties'
comments above, we have corrected three inadvertent clerical errors as
follows:
(a) We erroneously calculated the weighted-average indirect selling
expense factor used for Izumi's preliminary margin program, due to a
decimal placement error; we made the appropriate correction.
(b) In analyzing Izumi's similar merchandise in the model match
section of the program, we inadvertently failed to use the absolute
values for the differences in merchandise percentage valuations; we
made the necessary correction.
(c) The Department's second-tier BIA policy states that we will
take as the BIA rate the higher of: (1) The highest rate (including the
``all others'' rate) ever applicable to the firm for the same class or
kind of merchandise from either the LTFV investigation or a prior
administrative review or, if the firm has never before been
investigated or reviewed, the all others rate from the LTFV
investigation; or (2) the highest calculated rate in this review for
the same class or kind of merchandise for any firm. However, we
incorrectly identified Daido and Enuma's second-tier BIA rate. We made
the necessary correction in these final results.
Additional Programming Error
We detected a minor programming error in Izumi's margin program,
when merging the CV database to the U.S. sales database. We made the
necessary correction.
Final Results of Review
As a result of our analysis of the comments received, we determine
that the following margins exist for the periods indicated:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Period (percent)
------------------------------------------------------------------------
Daido............................................... 92-93 0.14
Daido............................................... 93-94 0.10
Enuma............................................... 92-93 0.04
Enuma............................................... 93-94 0.18
Hitachi............................................. 93-94 *12.68
Izumi............................................... 93-94 10.01
Pulton.............................................. 93-94 43.29
R.K. Excel.......................................... 93-94 0.37
------------------------------------------------------------------------
* No sales during the period. Rate is from the last period in which
there were sales.
[[Page 64334]]
The Department shall determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. The Department
will issue appraisement instructions directly to the U.S. Customs
Service. Individual differences between U.S. price and NV may vary from
the percentages listed above.
Furthermore, the following deposit requirements will be effective,
upon publication of these final results of administrative reviews for
all shipments of the subject merchandise from Japan that are entered,
or withdrawn from warehouse, for consumption on or after the
publication date, as provided by section 751(a)(1) of the Act: (1) The
cash deposit rates for the reviewed companies will be those rates
listed above; (2) for previously reviewed or investigated companies not
listed above, the cash deposit rate will continue to be the company-
specific rate published for the most recent period; (3) if the exporter
is not a firm covered in these reviews, a prior review, or the original
LTFV investigation, but the manufacturer is, the cash deposit rate will
be the rate established for the most recent period for the manufacture
of the merchandise; and (4) the cash deposit rate for all other
manufacturers or exporters will continue to be 15.92 percent, the all
others rate based on the first review conducted by the Department in
which a ``new shipper'' rate was established in the final results of
antidumping finding administrative review (48 FR 51801, November 14,
1983).
This notice serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d). Timely written notification of
the return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: November 25, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-30876 Filed 12-3-96; 8:45 am]
BILLING CODE 3510-DS-P
