[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4506]
[Federal Register: February 28, 1994]
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DEPARTMENT OF COMMERCE
[A-588-604]
Preliminary Affirmative Determination of Scope Inquiry on
Antidumping Duty Order on Tapered Roller Bearings and Parts Thereof
From Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary determination of scope inquiry.
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SUMMARY: We preliminarily determine that subject forgings are within
the scope of the antidumping duty order on tapered roller bearings and
parts thereof, finished or unfinished, from Japan. Interested parties
are invited to comment on this preliminary determination.
EFFECTIVE DATE: February 28, 1994.
FOR FURTHER INFORMATION CONTACT: Maureen Shields at (202) 482-1690 or
John Kugelman at (202) 482-5253, Office of Antidumping Compliance,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230.
SUPPLEMENTARY INFORMATION:
Background
On September 17, 1993, Koyo Seiko Company Ltd. and Koyo Corporation
of U.S.A. (Koyo) requested that the Department of Commerce (the
Department) issue a ruling that Koyo's imported forgings, including
tower forgings, hot forgings, and cold forgings, be found outside the
scope of the antidumping duty order on tapered roller bearings and
parts thereof from Japan (52 FR 37352, October 6, 1987). The Department
initiated its scope inquiry on September 28, 1993, and granted
interested parties an opportunity to comment on whether these forgings
fall within the scope of the order. We received comments on November
15, 1993, from the petitioner, the Timken Company, and rebuttal
comments from Koyo on November 22, 1993. Due to the significant
difficulty presented by this scope inquiry, we have determined that it
is appropriate to issue a preliminary determination, in accordance with
the Department's regulations (19 CFR 353.29(d)(3) (1993)).
Koyo requested the scope ruling in response to a change in the U.S.
Customs classification of Koyo's imported forgings. At the time of the
original investigation, Koyo's imported forgings were classified as
forgings under the Tariff Schedules of the United States (TSUS)
606.7340. When the Harmonized Tariff Schedule (HTS) replaced the TSUS
in 1989 and a specific provision for forgings ceased to exist, Koyo
classified its forgings as ``semifinished steel'' under HTS 7224.90,
and later, based on the advice of a Customs port, as ``steel articles''
under HTS 7326.19. Customs recently examined the subject forgings and
informed Koyo that it considers them to be ``parts of tapered roller
bearings (TRBs)'' under HTS 8482.99. Customs generally classifies an
article as a ``part'' of another article if that is its chief or
principal use. Based on this general principle, Customs determined that
under the HTS Koyo's forged rings should be classified as TRB parts as
long as they are chiefly used for incorporation into TRBs. Although
Koyo's scope clarification request was prompted at least in part by the
action of Customs, neither classification choices made by producers nor
classification decisions made by Customs determine the scope of
antidumping duty orders. Rather, the scope of antidumping duty orders
is determined by the Department at the time of the original
investigation and issuance of an order.
In accordance with 19 CFR 353.29(i)(1), in analyzing the scope
request in this proceeding, the Department took into account the
descriptions of the merchandise contained in the petition, the initial
investigation, and the determinations of the Department and the
International Trade Commission (ITC). The regulations provide that if
the Department determines these descriptions are ambiguous, it will
further consider the factors provided for under 19 CFR 353.29(i)(2),
known commonly as Diversified Products criteria (see Diversified
Products Corp. v. United States, 572 F. Supp. 883 (CIT 1983)).
Analysis
Koyo makes the forgings at issue from bearing grade steel bar,
which is sheared, pierced, and extruded into the shape of the forging.
The forgings are not machined in any way prior to exportation.
We note that the term ``forgings'' covers a broad spectrum of
products. The Summaries of Trade and Tariff Information (Schedule 6,
Volume 4) identifies two basic types of forgings in its description of
the product. Open-die forgings are large shapes produced by hammering
or pressing heated ingots, blooms, billets, slabs, or bars on
regulation press-and-hammer forging equipment with dies that are flat
or slightly shaped. Closed-die or drop forgings are small- or medium-
size shapes forged by using dies accurately formed to the size and
shape of the desired finished product. Open-die forgings require
machining to acquire the desired dimensions of the finished product.
Closed-die forgings require little or no subsequent machining and are
generally considered parts for import classification purposes. The
forgings at issue have not been categorized as either open-die or
closed-die forgings.
The Language of the Petition
The original petition describes the subject merchandise as follows:
The merchandise covered by this petition is all tapered roller
bearings, tapered rollers and other parts thereof (both finished and
unfinished) including, but not limited to, single-row, multiple-row
(e.g., two-, four-), and thrust bearings and self-contained bearing
packages (generally pre-set, pre-sealed, and pre-greased), but only
to the extent that such merchandise is not presently covered by an
outstanding antidumping duty order or finding in the United States.
In the petition, Timken stressed that it had identified TSUS
numbers to the best of its ability, but that it did not intend that
products under other classification numbers be excluded from the scope
if they fell within the description of the product in the petition.
Timken argues that the language of the petition unambiguously includes
Koyo's forgings, since the petition requested coverage for all
unfinished TRB parts not included in the A-588-054 finding which covers
TRBs four inches or less in outside diameter. Timken takes the position
that the instant forgings fall under the category of unfinished parts
and they should properly have been classified that way. The fact that
they were not named specifically in the petition does not imply that
Timken did not intend to include them. Timken states that it was
impossible for it to name each item that might be considered a TRB
part.
Koyo, however, claims that since the petition never mentioned
forgings, they were not included. In its ruling request Koyo argues
that forgings are outside the scope of the order because they are
``precursor materials'' that have not yet begun the manufacturing
process. Koyo claims that including forgings would be tantamount to
including bearing grade steel in the scope of the order.
The Department's position is that the petition clearly includes
unfinished TRB parts in its scope. However, the language in the
petition is ambiguous with respect to whether forgings are considered
unfinished parts.
The Language of the Commerce Department's Determinations
The products covered by the preliminary and final determinations
and the order as it was published in 1987 are ``tapered roller bearings
and parts thereof, currently classified under Tariff Schedules of the
United States (TSUS) item numbers 680.30 and 680.39; flange, take-up
cartridge, and hanger units incorporating tapered roller bearings,
currently classified under TSUS item number 661.10; and tapered roller
housings (except pillow blocks) incorporating tapered rollers, with or
without spindles, whether or not for automotive use, and currently
classified under TSUS item number 692.32 or elsewhere in the TSUS.
Products subject to the outstanding antidumping duty order covering
certain tapered roller bearings from Japan (T.D. 76-227, 41 FR 34974)
were not included within the scope of this investigation'' (see
Antidumping Duty Order: Tapered Roller Bearings and Parts Thereof,
Finished and Unfinished, from Japan, 52 FR 37352, October 6, 1987). At
issue is whether forgings should be considered unfinished parts within
the scope of the order.
Timken claims that at the time of the order Koyo's imported
forgings should have properly been classified as TRB parts, and that
they are clearly included within the scope of the order. Koyo argues
that the language of the order unambiguously excludes forgings, since
at the time of the investigation Koyo was importing forgings under TSUS
606.7340 as ``non-machined steel forgings'', a provision not mentioned
in the order. Koyo clearly stated in each of the first three
administrative reviews that it considered its imported forgings to be
outside the scope of the order, and neither the Department nor the
petitioner objected. Therefore, Koyo argues that forgings have been
considered outside the scope since the order was published.
The Department's position is that, absent the rare case in which
there is no narrative description of the subject merchandise, any TSUS
or HTS numbers mentioned in the scope of an order are for reference
only, and do not limit the scope in any way. The Department's position
in this respect is supported by the fact that the scope description for
each of the administrative reviews has contained a statement to the
effect that the Customs classification numbers are provided for
reference purposes only. However, the language used in the order to
describe the products is ambiguous with respect to forgings, since
forgings are not mentioned and there is no explicit indication of what
products are included as unfinished parts. Moreover, while Koyo stated
in its review responses that it did not report forgings, it is not
apparent from these statements the form the imports took. As was
described earlier, the term ``forgings'' covers a wide range of
products. The question this scope inquiry poses for the Department is
whether the instant forgings are advanced to the point that the
Department considers them TRB parts.
The ITC's Determination
The International Trade Commission's (ITC) questionnaires in the
investigation defined unfinished parts as ``* * * those that have been
shaped sufficiently that they may be used only in the manufacture of
tapered roller bearings.'' (p. 5). Likewise, the ITC considered whether
to treat unfinished parts as separate like products in its final
determination. It rejected Koyo's request to consider each of the
following groups as discrete like products:
1. ``Precursor materials'' (i.e., unfinished forged rings) and
``finished bulk parts'' (i.e., rollers and cages) of tapered roller
bearings;
2. Unfinished tapered roller bearing components (i.e.--
unfinished outer rings and inner rings);
3. Finished tapered roller bearings.
(Tapered Roller Bearings and Parts Thereof, and Certain Housings
Incorporating Tapered Rollers, from Japan, Inv. No. 731-TA-343 (Final),
USITC Pub 2020, September 1987, p. 5). The ITC reasoned that all parts
are destined to become complete, finished TRBs and that neither
finished nor unfinished parts have commercial value except as
components of TRBs. To the extent that the ITC considered the items in
this list a single like product, this statement suggests that the ITC
considered forged rings to be unfinished parts.
The ITC also states in its final determination that:
Unfinished bearing components are the cones, cups, and rollers
that have been green machined and heat treated, but that require
final finishing * * * Green machining is an industry term that
relates to the machining operations performed on the raw materials
prior to heat treatment for cups, cones, and rollers. (p. A-8)
However, Timken points out that the ITC was discussing cups and cones
made from tubing rather than forgings, and argues that the ITC's view
that green machining is the first stage in the production process
applies only to tubing. Timken claims that, in the bar-based
manufacturing process Koyo uses, the first step in production is
forging.
This is consistent with an ITC footnote (p. A-8) that the forging
process is used instead of green machining, indicating that at least
some of the green machining necessary on rings cut from tube steel is
not necessary on forgings. Although the ITC considered green machining
to be the turning point in Timken's tube-based production process, the
distinction is blurred when forgings are used. Since forging can
accomplish some of the same results as green machining, the ITC's
description of the production process does not necessarily imply that
forged rings are outside the scope of the order.
Diversified Products Analysis
While stages of production can be helpful in determining when raw
material becomes an unfinished part, the descriptions of the
merchandise in the petition and the Department's determinations are
ambiguous with respect to the question of whether these forgings are
unfinished parts. The ITC's final determination, though not perfectly
clear, points toward the conclusion that forgings are within the scope
of the order. However, because there is some ambiguity, the Department
considered it appropriate to analyze the Diversified Products criteria.
The four additional criteria the Department considered in determining
if forgings are within the order are listed at 19 CFR 353.29(i)(2): (1)
the physical characteristics of the product; (2) the expectations of
the ultimate purchasers; (3) the ultimate use of the product; and (4)
the channels of trade.
Physical Characteristics
Timken points out that forgings are similar in size and shape to
finished cups and cones. However, Koyo argues that there are dramatic
differences between forgings and finished cups and cones. Some forgings
are split in two to form both the cup and the cone. In the
manufacturing steps that take place during the turning process, between
24% and 30% of the steel is removed from a forging, resulting in a
green machined ring with the specific dimensions and tolerance of the
finished cup or cone, or inner and outer raceways.
Koyo argues further that the forged rings are most similar to steel
tube rings, which undergo the same processes (green machining, heat
treatment, polishing, and grinding) before becoming a finished TRB
part. Koyo states that ``both rings cut from tube and forged rings are
intermediate donut-shaped pieces of steel that are first produced from
steel bar and later further processed into parts for bearings'' (Koyo's
letter to the Department, November 22, 1993, p.4). Both parties agree
that rings cut from tube are outside the scope of the order, as
indicated by Koyo's statement to that effect on page 24 of its letter
and Timken's reference to rings cut from tube as raw material (p.23).
However, Timken points out that the forgings in question are a much
more processed product than rings cut from tube steel. Forged rings
have the approximate shapes of the cups and cones that they will be
turned into. Indeed, forging gives them much of the definition that
green machining would otherwise give. As a result, the forgings are
effectively dedicated to use as TRB parts. Conversely, rings cut from
tube steel bear little resemblance to cups or cones. Tube rings lose
50% to 75% of the weight of the ring during green machining, and can
only be considered TRB parts after this process takes place. Given the
advanced shape that forging gives the components, and the consequent
reduction in green machining, the green machining process does not
appear determinative in this case. Rather, it is the advanced physical
characteristics of the component forgings that are definitive.
The Department preliminarily determines that forged rings are more
processed than rings from tube stock, and, as such, are physically
distinct from rings cut from tube steel. While some final machining is
necessary, the forging process used in this case effectively transforms
the metal input into a product sufficiently advanced in state that it
is essentially a TRB component. Consequently, an examination of
physical characteristics indicates that forgings are included in the
scope of the order.
Channels of Trade
The forgings at issue are either produced by Koyo or purchased from
steel forgers and sold by Koyo to AKBMC, its related subsidiary.
Forgings move through the same channel of trade as unfinished parts,
namely, to bearings producers for incorporation into tapered roller or
antifriction bearings. Therefore, the Department preliminarily
determines that the channels of trade criterion indicates that forgings
are within the scope of the order.
Expectations of the Ultimate Purchaser
The forgings in question are imported into the United States for
use in the production of TRBs. Timken points out that these forgings
have undergone initial processing which renders them dedicated to use
in a limited range of part numbers. Timken notes that the bearings
producers who purchase these forgings have no expected use other than
the production of finished bearings. Koyo submits, however, that
finding forgings to be within the scope of the order based on the
expectation criterion is comparable to concluding that bearing grade
steel is also within the scope, since it too is imported for use in
production of TRBs and has almost no alternative uses. Koyo argues
further that rings cut from tube steel, which are outside the scope,
are also limited to use in a specific range of models.
The Department notes that although the expectations of the
purchasers of bearing grade steel and of rings cut from tube steel are
the same as those of purchasers of in-scope TRB parts, no one argues
that bearing grade steel or rings cut from tube are steel are covered
by the order. Moreover, bearing steel might be destined for bearing-
related production but it has not been advanced to the point of
dedicating it to a TRB component, finished or unfinished. By the same
token, it is also possible that some rings cut from tube steel may not
necessarily be intended for use in TRBs. However, the forgings in
question have been advanced to the point that some use other than a TRB
component is highly unlikely. Because the expectation of the parties
importing the instant forgings is to make TRBs, the Department's
position is that this criterion indicates that forgings are within the
scope of the order.
Ultimate Use
Timken points out that forgings are more dedicated to use in TRBs
than rings cut from tube steel, since these forgings more closely
approximate the dimensions of the finished cup or cone and do not
require as extensive a turning process as steel tube rings. Koyo
contends that a ring cut from steel tube is as dedicated to use in TRBs
as a forging is, because both are made from bearing grade steel, which
Koyo claims is too expensive to be used for other purposes.
Furthermore, Koyo argues, a steel tube ring and these forgings are
equally limited in the range of bearings for which they can be used.
However, Koyo uses the overwhelming portion of its imported forgings in
the production of TRBs. Koyo suggests that it is possible to use some
of the forgings to make both TRB and ball bearing parts (Koyo submitted
an example of a ball bearing and a TRB that have inner rings made from
the same forged ring), and it is theoretically possible for the
manufacturer to use a forging originally intended for use in a TRB to
produce a ball bearing instead, if production needs change after
importation. In practice, this possibility is seldom realized because
it is not cost efficient to create a forging with multiple uses.
Forgings are used to limit the amount of machining that is necessary.
The very concept of forging embodies shaping a blank to the degree that
it appears dedicated to one product.
The Department preliminarily determines that since the instant
forgings appear dedicated to the production of TRBs, these forgings are
essentially parts of TRBs. Therefore, the ultimate use criterion
indicates that these forgings are within the scope of the order.
Conclusion
Based on our analysis of the comments provided by interested
parties on the language of the petition and the determinations of the
ITC and the Department, and on the physical characteristics, channels
of trade, expectations of the ultimate purchasers, and the ultimate use
of the product, in accordance with 19 CFR 353.29(i), we preliminarily
determine that such forgings are the same class or kind of merchandise
as unfinished TRB parts, and therefore are within the scope of the
order on tapered roller bearings and parts thereof from Japan. The
Department preliminarily determines these forgings to be within the
scope based on the totality of the facts presented above and especially
for the following reasons: (1) the ITC clearly includes precursor
materials such as forgings within its definition of like product; (2)
the physical characteristics, channels of trade, ultimate use of
forgings, and expectations of ultimate purchasers indicate that such
forgings are within the scope of the order.
We invite interested parties to comment on this preliminary
determination no later than March 18, 1994. Rebuttal comments are due
no later than March 25, 1994. The Department will consider such
comments in reaching its final determination.
This preliminary scope ruling is in accordance with 19 CFR
353.29(d)(3).
Dated: February 18, 1994.
Joseph A. Spetrini,
Deputy Assistant Secretary for Compliance.
[FR Doc. 94-4506 Filed 2-25-94; 8:45 am]
BILLING CODE 3510-DS-P
