[Federal Register Volume 62, Number 122 (Wednesday, June 25, 1997)]
[Notices]
[Pages 34216-34228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16681]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-703]
Certain Internal-Combustion Industrial Forklift Trucks From
Japan; Final Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On August 6, 1996, the Department of Commerce published the
preliminary results of administrative review of the antidumping duty
order on certain internal-combustion industrial forklift trucks from
Japan. The review covers three manufacturers/exporters. The period of
review is June 1, 1993 through May 31, 1994.
Based on our analysis of the comments received, we have made
changes, including corrections of certain clerical errors, in the
margin calculation for Toyota Motor Corporation. 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 Review.''
EFFECTIVE DATE: June 25, 1997.
FOR FURTHER INFORMATION CONTACT: Thomas O. Barlow, Davina Hashmi or
Kris Campbell, at Import Administration, International Trade
Administration, U.S. Department of Commerce, Washington, D.C. 20230;
telephone: (202) 482-4733.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), and to the Department's regulations are
references to the provisions in effect on December 31, 1994.
Background
On August 6, 1996, the Department of Commerce (the Department)
published the preliminary results of administrative review of the
antidumping duty order
[[Page 34217]]
on certain internal-combustion industrial forklift trucks from Japan
(61 FR 40813) (Preliminary Results). This review covers the following
manufacturers/exporters: Toyota Motor Corporation and Toyota Motor
Sales, U.S.A., Inc. (Toyota), Nissan Motor Company (Nissan), and Toyo
Umpanki Company, Ltd. (Toyo). The period of review (the POR) is June 1,
1993, through May 31, 1994.
We invited parties to comment on our Preliminary Results. We
received briefs and rebuttal briefs on behalf of NACCO Materials
Handling Group, Inc. (petitioners), and Toyota. At the request of
Toyota, a hearing was scheduled but was subsequently canceled at
Toyota's request. The Department has conducted this administrative
review in accordance with section 751 of the Act.
Scope of Review
The products covered by this review are certain internal-
combustion, industrial forklift trucks, with lifting capacity of 2,000
to 15,000 pounds. The products covered by this review are further
described as follows: assembled, not assembled, and less than complete,
finished and not finished, operator-riding forklift trucks powered by
gasoline, propane, or diesel fuel internal-combustion engines of off-
the-highway types used in factories, warehouses, or transportation
terminals for short-distance transport, towing, or handling of
articles. Less-than-complete forklift trucks are defined as imports
which include a frame by itself or a frame assembled with one or more
component parts. Component parts of the subject forklift trucks which
are not assembled with a frame are not covered by this order.
Imports of these products are classified under the following
Harmonized Tariff Schedules (HTS) subheadings: 8427.20.00, 8427.90.00,
and 8431.20.00. The HTS item numbers are provided for convenience and
Customs purposes. The written descriptions remain dispositive.
This review covers the following firms: Toyota, Nissan, and Toyo.
Changes Since the Preliminary Results
Based on our analysis of comments received, we have made certain
corrections that changed our results. We have also corrected certain
programming and clerical errors in our Preliminary Results, where
appropriate, as discussed below.
Analysis of Comments and Responses
Issues raised in the case and rebuttal briefs by parties to this
administrative review are addressed below.
Toyota's Comments
Comment 1
Toyota contends that the Department properly included U.S.
commissions in determining the exporter's-sales-price-offset cap (ESP-
offset cap) but improperly excluded U.S. indirect selling expenses
(citing section 773(a)(4)(B) of the Act and 19 CFR 353.56(b)). Toyota
notes that the preliminary results analysis memo correctly describes
the ESP-offset cap as the sum of U.S. commissions and U.S. indirect
selling expenses. Toyota asserts that the Department should include
U.S. indirect expenses, including imputed expenses, in the ESP-offset
cap for purposes of the final results.
Department's Position
We have included Toyota's reported U.S. indirect selling expenses
in the ESP-offset cap for the final results.
Comment 2
Toyota maintains that, in calculating the adjusted U.S. price (USP)
for the preliminary results, the Department incorrectly deducted U.S.
discounts from Toyota's reported gross unit prices. Toyota states that
the gross unit prices were reported net of such discounts so that the
Department's subsequent deduction of these discounts amounts to double
counting. Toyota asserts, therefore, that the Department should not
deduct the discounts from respondent's reported gross unit prices for
the final results.
Department's Position
Because Toyota reported the gross unit prices net of such
discounts, we did not make the deduction for the final results.
Comment 3
Toyota asserts that the Department incorrectly used the variable
MONTHU (which represents the month of the invoice date on the U.S.
sales listing) in matching U.S. sales to home market sales. Toyota
states that this error caused the Department to compare many of the
reported U.S. sales to constructed value (CV) although there were
appropriate matches on the concordance. Toyota contends that the
Department should not use the invoice-date variable on the U.S. sales
listing to match to the comparison sales on Toyota's concordance. In
the alternative, Toyota suggests that the Department redefine the
matching variable as shipment date.
Petitioners argue that the Department should not modify the
matching variables it used to match U.S. sales to the concordance
listing. Petitioners assert that the Department's decision to use the
invoice date as one of the variables used to match U.S. sales to its
concordance stems from Toyota's contradictory and confusing description
of the date of sale in its responses. Petitioners also argue that, if
the Department revises the matching variables, the Department would, in
essence, be permitting Toyota to manipulate the administrative process
by selecting a date of sale that would produce more matches.
Petitioners further contend that the Department should instead use the
order date as a matching variable because the order date reflects the
date upon which Toyota's essential sale terms are established.
Department's Position
We have eliminated the variable MONTHU when matching Toyota's U.S.
sales to its concordance. The price and quantity terms for the vast
majority of Toyota's U.S. sales were established upon shipment of the
trucks. Accordingly, Toyota prepared its concordance using shipment
date as the date of sale in determining appropriate HM and U.S. matches
within the 90/60-day contemporaneity window. In so doing, Toyota
followed the instructions that we provided in our questionnaire.
Therefore, because Toyota appropriately used shipment date in
developing the concordance, it is inappropriate to apply the MONTHU
variable when matching U.S. sales to Toyota's concordance.
Comment 4
Toyota argues that the Department should exclude used, aged and
off-spec trucks sold in the United States from the antidumping
analysis. In the alternative, Toyota maintains that the Department
should modify its treatment of these sales to ensure that it makes
appropriate comparisons of these sales. Toyota contends that these
trucks were sold out of the ordinary course of trade at significant
discounts and, although new when imported, they were used, aged or off-
spec when sold to the first unaffiliated purchaser in the United
States.
Citing Antidumping Duty Order and Amendment to Final Determination
of Sales at Less Than Fair Value for Certain Internal-Combustion
Forklift Trucks From Japan, 53 FR 20882, 20883 (1988), Toyota argues
that the principle of excluding a used forklift truck from review
should not change merely because the truck was used in the United
States rather than in Japan. Therefore, Toyota maintains, given that
[[Page 34218]]
the scope excludes used trucks, the Department should exclude these
trucks from the final analysis.
Toyota also maintains that sales of aged and off-spec merchandise
should be excluded because they amount to a small percentage of its
U.S. sales and because the trucks are not ``new'', unlike the trucks
which are the true focus of this review (citing Preliminary
Determination of Sales at Less Than Fair Value and Postponement of
Final Determination: Foam Extruded PVC and Polystyrene Framing Stock
From the United Kingdom, 61 FR 22021, 22022 (1996)).
In the alternative, Toyota argues that the Department should make
an adjustment when making its comparisons to avoid the distortions
created by the inclusion of these trucks in its analysis. Toyota states
that a comparison of these sales to home market sales of new forklifts
amounts to unwarranted use of adverse best information available (BIA)
and recommends that the sales should be compared to similarly situated
sales in the home market (citing, among others, Porcelain-on-Steel
Cooking Ware From Mexico: Final Results of Antidumping Duty
Administrative Review, 58 FR 43327, 43328 (1993)).
Toyota further states that, given that there are no such comparable
sales in the home market, the Department should resort to reasonable
BIA instead of comparing these U.S. sales to home market sales. Toyota
proposes several ways the Department could reasonably account for
differences between the trucks, such as adjusting USP upward or home
market price downward or applying a weighted-average dumping margin to
these trucks, calculated on the basis of all other sales of new
merchandise in the United States (citing Television Receivers,
Monochrome and Color, from Japan; Final Results of Antidumping Duty
Administrative Reviews, 56 FR 37339, 37341 (1991)).
Petitioners respond that the Department should reject Toyota's
claim for a variety of reasons. First, Toyota has admitted the trucks
were new when imported and the scope of the order excludes only trucks
that were used at the time of entry. Petitioners add that the
Department has determined that it will not exclude any U.S. sales that
involve a transfer of ownership even if the sales are aberrational and
that the age or condition of a truck is not relevant to whether it is
subject to the scope of the order (citing Polyethylene Terephthalate
Film, Sheet, and Strip from the Republic of Korea: Final Results of
Antidumping Duty Administrative Review, 60 FR 42835, (August 17,
1995)).
With respect to Toyota's alternative argument that the Department
should make an adjustment to the margin calculation if it includes
these trucks in the dumping analysis, petitioners assert that the cases
Toyota cites to support such an adjustment are factually distinct from
the situation in this case because, unlike those cases, the merchandise
at issue is not scrap, of poor quality, or substandard. Petitioners add
that, in the cited cases, the Department did not make an adjustment to
account for differences in quality but instead sought to match U.S.
sales of inferior quality to merchandise of similar quality in the home
market (citing Porcelain-on-steel Cookware from Mexico; Final Results
of Antidumping Duty Administrative Review, 58 FR 43327, 43328 (August
16, 1993)). Petitioners argue that, if merchandise with similar
specifications had been sold in the home market, the model-match
methodology would have resulted in a match of similar off-spec trucks.
Furthermore, petitioners assert, Toyota never specifically identified
whether any home market sales were similarly off-spec and could have
been matched. Petitioners conclude that any deficiency in matching is
solely Toyota's fault.
Department's Position
With respect to used trucks, the scope of the order only excludes
trucks that were ``used'' at the time of entry. The order does not
exclude trucks that are aged, ``off-spec,'' or become ``used'' after
importation.
In the less-than-fair-value (LTFV) investigation of this order, we
determined that a forklift could be considered ``used'' and excluded
from the order if, at the time of entry into the United States, the
importer could demonstrate to the satisfaction of the U.S. Customs
Service that the forklift was manufactured in a calendar year at least
three years prior to the year of entry into the United States. See
Final Determination of Sales at Less Than Fair Value; Certain Internal-
Combustion Industrial Forklift Trucks From Japan, 53 FR 12552 (April
15, 1988). Toyota admits the relevant trucks for this POR were imported
new. Therefore, they are properly subject to review and we have not
excluded them from our analysis.
Moreover, Toyota has neither established that the trucks were used,
aged, or off-spec to an extent that an adjustment is warranted nor has
it provided information that would permit us to quantify and make such
an adjustment. Therefore, our treatment of these trucks remains
unchanged from the Preliminary Results.
Comment 5
Toyota claims that the Department incorrectly categorized the
reported indirect selling expenses that its U.S. affiliate, Toyota
Motor Credit Corporation (TMCC), incurred in financing sales of subject
merchandise as direct expenses. Toyota states that TMCC's indirect
selling expenses were allocated to U.S. sales for which TMCC provided
financing and contends that the expenses are indirect because they are
fixed and are incurred regardless of whether a particular sale is made.
Toyota states its supplemental questionnaire response clearly
indicates that these expenses consist of indirect operational and
administrative expenses, not variable expenses (citing Toyota's January
16, 1996 submission at Supp. 46). In addition, Toyota argues that it
stated for the record that it ``does not pay commissions for credit
investigations or for preparing and processing documents'' (citing
Toyota's February 8, 1996 submission). Toyota further indicates that it
did identify certain small expenses that were variable that the
Department appropriately categorized as such. Toyota concludes that
there is no reason to arbitrarily recategorize the expenses as direct.
Toyota notes that the preliminary analysis memorandum incorrectly
states that no adjustment was made for TMCC's reported indirect
expenses in the preliminary results and incorrectly states that this
expense is ``credit revenue'', which was added to USP. Toyota asserts
that the expense is not credit revenue, that it was not added to USP,
and that it should not be included in U.S. direct expenses.
Petitioners argue that, while they do not believe the Department
should make any adjustment for credit revenue TMCC earned, if the
Department decides credit revenue is related directly to the sale, it
must also recognize that expenses TMCC incurred may also be related
directly to the sale. Petitioners assert that Toyota did not meet its
burden of proof that these expenses are not directly related to the
sales (citing 19 CFR 353.54). In addition, petitioners state that
Toyota never provided any detailed itemization of the expenses that
would have allowed the Department to determine whether the expenses
incurred were directly related to sales. Petitioners suggest that,
although Toyota now alleges that these expenses are fixed and are
incurred by TMCC regardless of whether a sale is made, there is nothing
in Toyota's
[[Page 34219]]
questionnaire response to support such a claim. Petitioners conclude
that Toyota's description of these expenses is not sufficiently
detailed to allow the Department to determine the exact nature of the
expenses and, accordingly, the Department should treat these expenses
as direct selling expenses for the final results.
Department's Position
Because the record reveals that the relevant expenses are fixed
expenses, not variable, we have treated TMCC's reported expenses as
indirect expenses for the final results. In reporting sales where
payment was made through TMCC, Toyota reported a sale-specific direct
credit revenue and a sale-specific direct imputed-credit expense.
Toyota also allocated a portion of TMCC's overhead to the sales and
separately reported them as TMCC's indirect selling expenses. The
record indicates that virtually all of the reported expense are
indirect in nature. In addition, treating as direct that portion of the
reported expenses that could be considered direct (e.g., filing fees),
if they could be isolated, would have no effect on the margin, given
the extremely low dollar-value of such expenses in comparison to the
sales values of this merchandise. Therefore, we have treated TMCC's
reported indirect expenses as indirect for the final results.
Comment 6
Toyota asserts that the Department's proposed method for assessing
duties will result in the calculation and assessment of duties on lease
transactions despite the Department's determination that Toyota's
operating leases are not subject to review. Toyota notes that the
preliminary results indicate that the Department calculated an
importer-specific ad valorem duty-assessment rate, based on the ratio
of the total amount of duties calculated for the examined sales during
the POR to the total customs value of the sales used to calculate the
duties, which the Customs Service will assess uniformly on all entries
during the POR. Toyota asserts that the Department should calculate an
assessment rate with respect to all merchandise reported by taking the
total antidumping duties for sold and leased trucks (which will be zero
for the latter) divided by the total customs value of the sold and
leased trucks, which Customs should then apply to all forklift trucks
entered during the POR.
Petitioners assert that Toyota misconstrues the purpose of the
proposed assessment method, which is to eliminate the problems caused
by assessing duties on individual entries through the creation of a
``master list.'' Petitioners assert that lowering overall duties on
subject trucks would defeat the purpose of the antidumping law to
assess duties to offset the unfair trade practice with respect to sales
subject to the order, which would not be accomplished if the Department
decreased the assessment on products covered while imposing duties on
merchandise not covered by the order. Petitioners contend that lowering
the duty-assessment rate would allow a respondent to manipulate the
prices of entries that would never be subject to analysis so as to lead
to a lower total assessment of antidumping duties.
Petitioners assert that the solution to any perceived problem is to
ensure that the Department only assesses duties on trucks subject to
review and Toyota is aware of which trucks were sold and which were
leased. Petitioners contend that the Department could eliminate the
total entered value of leased trucks from the total entered value of
all trucks to arrive at the total entered value for trucks subject to
the order in its calculation of the appraisement rate, which Customs
can then apply to the total entered value for trucks subject to the
order. Petitioners further assert that, regardless of the method the
Department uses to accomplish the task, it should make no change in its
calculation of the cash deposit rate.
Department's Position
We agree with petitioners that, by using an assessment-rate
methodology, we are able to eliminate the problems caused by assessing
duties on individual entries through the creation of master lists.
However, we agree with Toyota that, short of creating a master list,
its proposal is reasonable and in accordance with our practice. In
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,
From Japan and Tapered Roller Bearings, Four Inches or Less in Outside
Diameter, and Components Thereof, From Japan; Final Results of
Antidumping Duty Administrative Reviews and Revocation in Part of an
Antidumping Finding (61 FR 57629 (November 7, 1996) (TRBs), we were
confronted with the issue of establishing an assessment rate for
bearings where some bearings were not subject to assessment under the
principles formulated in Roller Chain Other Than Bicycle From Japan, 48
FR 51804 (November 14, 1983). Given that trucks that potentially were
leased subsequent to entry into the United States are subject to
assessment of antidumping duties, a similar treatment is appropriate
here. In TRBs we determined that the assessment rate should take into
account the value of ``Roller Chain'' merchandise. Accordingly, we
included the value of the ``Roller Chain'' merchandise in the
denominator when we calculated an assessment rate. Likewise, in this
case, we have included the customs value of the leased trucks in the
denominator. While this will have the effect of reducing the percentage
assessment relative to the rate that we would calculate by excluding
these values, this lower assessment rate, when applied against all POR
entries, will allow Customs to collect the appropriate amount of
antidumping duties due and will effectively exclude the lease trucks
from assessment. Finally, we agree with petitioners that a change in
the calculation of the cash deposit rate is not appropriate, because it
is not possible at the time of entry to distinguish trucks that will be
sold from those that will be leased.
Comment 7
Toyota contends that, in the CV portion of the Department's
preliminary calculations, the application of the statutory minima for
selling, general and administrative expenses (SG&A) and profit is
incorrect in that if the actual amounts exceed the minima the
Department used the minima and vice versa. Toyota argues that the
Department should reverse the signs it used in the calculations of SG&A
and profit for CV for the final results.
Department's Position
We agree with Toyota and have made the necessary changes in the
calculations for these final results.
Comment 8
Toyota and petitioners both state that the Department incorrectly
used two different databases to calculate SG&A for CV. Petitioners note
that, when the Department tested SG&A against the statutory minimum, it
based the selling expenses on the selling expenses Toyota reported in
its home market sales listing. However, both parties contend that, when
the Department actually calculated SG&A, it used the total selling
expenses Toyota reported in its CV response. Petitioners suggest that
the Department should rely on the CV information for purposes of
determining whether Toyota's actual SG&A expenses meet the statutory
minimum and for purposes of calculating SG&A because it represents the
total selling expenses reported by Toyota for its CV data. Toyota
argues that for the sake of
[[Page 34220]]
internal consistency, the Department should use the selling expenses
Toyota reported in its home market sales listing.
Department's Position
We agree with both petitioners and respondent that we must use
consistent data with respect to the expenses we use in performing the
SG&A statutory minimum test and in the use of SG&A in the calculation
of CV. However, we disagree with petitioners' proposal that we use the
CV expense information in both calculations. It is our practice to use
actual home market expenses to calculate SG&A and in performing the
statutory minimum test for SG&A. Therefore, we agree with Toyota that,
in accordance with our practice, we should use the expenses reported in
the home market sales listing in both performing the SG&A statutory
minimum test and in the use of SG&A in the calculation of CV.
Petitioners' Comments
Comment 1
Petitioners maintain that, even though the Department recognized in
the 1994-95 review of this order that the data could not be verified,
it nevertheless decided to rely on the same type of data in this review
without conducting a verification. Petitioners state that the
Department cannot rely on data that it knows are not reliable and
asserts that the decision to accept it for this review constitutes a
major breach of discretion and violation of law.
Petitioners note that the Department conducted this review
concurrently with the 1994-95 review of this order. Petitioners state
that they requested verification of Toyota's responses in both reviews
because of serious deficiencies and omissions in Toyota's responses,
but that the Department conducted verification in the subsequent (1994-
95) review only. Petitioners further state that their concerns were
shown to be justified when the Department determined it could not
verify certain information in the 1994-95 review and instead relied on
facts otherwise available to calculate the dumping margins with regard
to the unverifiable information.
Petitioners argue that the Department must reject the data in
Toyota's response in this review that could not be verified for the
1994-95 review period. Petitioners maintain that, at a minimum,
Toyota's inability to pass verification in the 1994-95 review provides
good cause for the Department to verify the responses in this review
and they note that the Department is under no statutory deadline to
complete this review. Therefore, petitioners argue, the Department
should undertake a thorough verification of Toyota's cost and sales
responses for the 1993-94 review period.
Citing section 776 of the Act, Toyota responds that neither of the
factors requiring verification (no verification in the previous two
reviews or the existence of good cause) are present in this review.
Therefore, Toyota contends, the Department properly declined to verify
Toyota's responses in this review.
Toyota maintains that it is illegal to apply the conclusions from a
verification in one review to the data in a separate review (citing 19
CFR 353.2(q)). Toyota states that, where the Department does not
conduct verification, it must use the submitted data in its analysis.
Toyota adds that the issue of whether data from a separate review could
be verified has no bearing on whether the corresponding data in this
review are acceptable. Toyota notes that it would make as much sense,
and would be equally unlawful, to apply the results of the 1987-89
review verification to this review.
Second, Toyota maintains that the data-specific conclusions in the
1994-95 review, which involve a different set of data and a different
time period, have no bearing on whether good cause exists to verify the
data in this review. Toyota notes that, because the pre-Uruguay Round
Agreements Act (URAA) law and regulations do in fact require the
Department to complete this review in a timely manner, this issue is
only being raised because of the overlap of reviews, an overlap that
should not have occurred. Toyota claims that under the law it would be
impossible to raise the argument of whether the verification of
specific items in one review should have a bearing on verification
issues in a prior review. Finally, Toyota maintains, it would be unfair
for the Department to add to the delay of the final results of this
review.
Department's Position
Section 776(b) of the Act states that the Department must verify
information relied upon in making a determination in a review if (1)
verification is timely requested by an interested party and no
verification was made during the two immediately preceding reviews, or
(2) good cause for verification is shown. See sections 776(b)(3)(A) and
(B) of the Act and 19 CFR 353.36(a)(iv) and (v).
Because we verified Toyota's data during the first of the two
immediately preceding reviews, we were not required to conduct a
verification of Toyota's responses in this administrative review. In
accordance with the statute and regulations, we verified Toyota's
responses in the 1994-95 administrative review because no verification
had been conducted in either of the two immediately preceding reviews.
We disagree with petitioners that good cause exists for
verification of Toyota's responses in this review based on either the
responses themselves or on problems encountered in verifying the same
or similar items in the 1994-95 review. At the time we made the
decision not to verify Toyota's information submitted for this review,
we were satisfied that the information was appropriate to use in our
dumping analysis. This determination remains unchanged despite problems
we subsequently encountered at verification in the 1994-95 review. Each
review is a separate, independent segment of the overall proceeding. A
respondent's data is clearly unique to a period, and the respondent's
level of cooperation and preparation in the review, including
verification, can and often does vary. Therefore, it is our general
practice not to apply the results of verification conclusions reached
in one review to another (see, e.g., Final Results of Antidumping Duty
Administrative Reviews; 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,
58 FR 64720, 64727 (December 9, 1993)). We note that the facts
otherwise available (facts available) determinations in the 1994-95
review were substantially driven by our conclusion that Toyota failed
to cooperate with regard to the relevant verification items. Because
this situation did not arise in the instant segment of the proceeding,
applying best information otherwise available (BIA) to the relevant
expenses in this review would be inappropriate.
Finally, we note that, contrary to Toyota's position, 19 CFR
353.2(q), which defines a proceeding, does not segment a ``proceeding''
into review periods. A proceeding commences with the filing of a
petition and is concluded with, for example, revocation of the order.
Comment 2
Petitioners assert that Toyota's variable cost-of-manufacture
(VCOM) data, reported on the U.S. and home market sales listings for
purposes of a difference-in-merchandise (difmer) adjustment, are not
acceptable because they are not consistent with Toyota's
[[Page 34221]]
cost of production (COP) and constructed value (CV) data and they are
based on costs for certain components and on price or market value for
other components. Therefore, petitioners argue, the Department should
reject Toyota's difmer data and use the VCOM amounts reported in the
COP and CV data to make difmer adjustments for the final results.
Petitioners assert that the antidumping questionnaire indicates
that any claimed difference-in-merchandise adjustment should be limited
to differences in variable costs without regard to prices. Petitioners
note that Toyota acknowledges in submissions to the Department that the
difmer data are inconsistent with the COP/CV data. Petitioners claim
that case precedent indicates that VCOM amounts reported for the difmer
adjustment and for COP/CV should not differ (citing Notice of Final
Determination of Sales at Less Than Fair Value: Stainless Steel Bar
from Spain, 59 FR 66,931, 66938 (December 28, 1994), and the Statement
of Administrative Action (SAA), at 828).
Petitioners state that allowing a respondent to report different
VCOM amounts for purposes of the difmer adjustment and for COP/CV
allows for the possibility of manipulation of the dumping analysis.
Therefore, petitioners argue, the Department should reject Toyota's
difmer data and use the VCOM data in Toyota's COP and CV database to
determine the difmer adjustment.
Toyota responds that petitioners' arguments are groundless. Toyota
asserts that the Department specifically approved of Toyota's method of
reporting difmer data in the original investigation and in the
preceding administrative reviews. Toyota states that it reported difmer
data consistent with its reporting in prior segments of the
proceedings.
Toyota states that the record is clear that, given its accounting
system, it could submit the data in a form slightly different from that
which the Department requested by including the invoice prices of
certain options and attachments instead of their variable costs of
production. Toyota asserts that 19 CFR 353.57 supports its approach as
it states the Department ``normally will consider differences in the
cost of production but, where appropriate, may also consider
differences in the market value.'' Toyota indicates that, because the
prices of the attachments are based on uniform price lists, the
differences in such prices represent differences in market value.
Toyota also disputes petitioners' assertion that such an approach is
subject to manipulation and points out that the prices are published in
Toyota's price list.
Finally, Toyota notes that it used its difmer data to generate the
concordance on which the Department relied for product matching and
suggests that to change the values now would require Toyota to rematch
its sales and revise the concordance. Toyota argues that, given that
the difmer values are appropriate and accurate and reflect a
methodology acceptable in prior reviews in selecting similar home
market sales and adjusting those sales for comparison purposes, there
is no compelling reason to change these data now.
Department's Position
We have utilized Toyota's reported cost information (COP and CV) to
calculate the difmer adjustment for the final results. However, we do
not believe that it was inappropriate for Toyota to submit its difmer
data based in part on invoice prices and we have used this data for
matching purposes.
When we issued the questionnaire, we had not yet initiated a cost
investigation of Toyota. Therefore, based on prior experience with
Toyota in the investigation and administrative reviews, in which we
recognized the difficulties in collecting variable cost information for
small attachments, we determined that it was acceptable for Toyota to
derive and present its difmer data as it had presented the information
in prior segments of this proceeding. However, unlike prior segments of
this proceeding, during the course of this review we initiated a cost
investigation of Toyota's sales and obtained complete cost information,
including costs for the attachments for which Toyota was previously
only able to give prices.
The VCOM data from the sales listing, which Toyota used to develop
the concordance according to our instructions, is sufficiently precise
to allow us to determine which U.S. and comparison-market merchandise
``may reasonably be compared.'' See section 771(16)(C)(iii) of the Act.
Further, Toyota calculated the VCOMs that we compared in making this
determination using the same methodology for both markets, i.e., VCOMs
that are generally cost-based with the exception of certain attachments
that Toyota valued using invoice prices to its customers. Therefore, we
have used the concordance Toyota submitted for sales-matching purposes
and do not find it necessary to revise the concordance in order to take
into account the COP/CV information.
However, as a result of our cost investigation, we have more
precise VCOM data, because Toyota provided cost-based values for its
attachments. Accordingly, we have used the COP/CV data to make the
difmer adjustment in our calculations. The difmer adjustment to FMV is
mandated by the statute to account for differences between the U.S. and
home market products under comparison. See section 773(a)(4)(C) of the
Act. Given that the more precise, cost-based information is on the
record of this review, it is more appropriate to use the COP/CV data
for the actual adjustment where we compare sales of non-identical
merchandise. Therefore, in the final results we have used Toyota's VCOM
data as reported in the COP and CV databases to adjust for physical
differences in the merchandise.
Comment 3
Petitioners claim that, in providing its cost data, Toyota refused
to provide any evidence that its transactions with certain related
suppliers were at arm's length. Petitioners argue that Toyota's claimed
inability to obtain its related suppliers' cost data cannot absolve it
of the burden of demonstrating that the transactions were arm's length.
Petitioners assert that Toyota's claim that its transactions with
related suppliers are always at arm's length and that Toyota cannot
obtain access to its suppliers' cost data is directly contradicted by
information the Department gathered in the investigation of New
Minivans from Japan (Initiation of Antidumping Duty Investigation: New
Minivans from Japan, 56 FR 29221 (June 26, 1991) (Minivans)). Citing
the record in Minivans, petitioners state that Keiretsu have group
members known to exchange information and take a long-term view of cost
recovery for products. Petitioners note that Keiretsu members may
separately reimburse other members for pricing below their costs and,
therefore, Toyota may be making separate payments to its related
suppliers that have not otherwise been reflected in its reported costs.
Thus, petitioners contend, Toyota's unsupported claims are in conflict
with information the Department already possesses. Petitioners argue
that, other than rejecting Toyota's questionnaire response, the
Department must request supplemental information concerning Toyota's
transfer prices as well as information on any payments, assists, or
other transactions between Toyoda Automatic Loom Works Ltd. (TAL) or
Toyota Motor Corporation (TMC) and these related suppliers.
Petitioners also claim that, despite a specific request by the
Department to provide the information, Toyota failed
[[Page 34222]]
to provide the actual costs for inputs from suppliers who share common
ownership of 50 percent or more with Toyota. Petitioners state that,
instead of providing the information requested by the Department,
Toyota responded to this request with a claim that its transactions are
at arm's length and with costs for a self-selected representative
model. Petitioners conclude that Toyota should have submitted the
complete information the Department requested and that, even if Toyota
were allowed to rely on the prices from these related suppliers, it
still has not adequately demonstrated that its transactions with these
related suppliers are at arm's length. Rather, petitioners claim, costs
for a ``representative'' model are insufficient to demonstrate that
Toyota's transactions with these related parties are at arm's length
and cite to Hyster Co. v. United States, 848 F.Supp. 178, 187 (CIT
1994) (Hyster) in support of this proposition.
Toyota asserts that the information it submitted demonstrates that
transactions between TAL and its related suppliers are at arm's length
and that TAL engages in competitive bidding and negotiation processes
with its suppliers. Therefore, Toyota maintains, it appropriately based
its COP calculations on prices paid by TAL rather than its suppliers'
COP. Toyota claims that it did not purchase identical parts during the
same time period from different suppliers so it is not possible to
compare prices from related and unrelated suppliers. Toyota notes,
however, that it submitted data for certain major components as well as
actual costs based on a representative model for purchases from more-
than-50-percent-related suppliers which demonstrate that the purchases
were above cost, a strong indicator that they were arm's-length
transactions. Toyota states that, despite its detailed explanation of
why it cannot obtain an entire universe of its suppliers' cost data for
all parts for all sales (citing its March 29, 1996 submission),
petitioners continue to rely on a memorandum in the record of the
Minivans investigation which, contrary to petitioners' assertions, does
not contradict Toyota's statements that it cannot obtain access to its
suppliers' cost data. Toyota further states that the memorandum is
largely irrelevant to this administrative review of forklift trucks.
Toyota notes that, even if TAL could obtain the costs from its less
than 50-percent-related suppliers, the data would be of minimal utility
because it would be an impossible task to substitute the suppliers'
costs within TAL's accounting system for each of approximately 2,000 or
more components at issue. Toyota notes that such a task, even if
feasible, would be of limited use because the cost information would
not conform to TAL's accounting system.
Toyota also maintains that it affirmed in its cost responses that
all parts it purchased were purchased at arm's length and at prices
that exceeded the suppliers' COP (citing its December 20, 1995 and
January 11, 1996 submissions). Toyota further states that it provided
costs of all parts from more-than-50-percent-related suppliers based on
a representative model and provided the fully loaded costs for certain
engines. Toyota concludes that it was thorough and comprehensive in
responding to the Department's questionnaires on this issue (citing
Toyota's March 29, 1996 submission).
Department's Position
We have determined that Toyota has established the arm's-length
nature of inputs supplied by TAL's related suppliers. Section 773(e)(2)
of the Act states that ``[a] transaction directly or indirectly between
[related parties] may be disregarded if, in the case of any element of
value required to be considered, the amount representing that element
does not fairly reflect the amount annually reflected in sales in the
market under consideration of merchandise under consideration.'' For
its related suppliers of inputs, Toyota responded that it could not
provide market-value sales prices between related suppliers and third
parties or between TAL and unrelated suppliers of the same inputs
because the information was not obtainable given the large number of
inputs and the enormous variety of forklift configurations or such
transactions did not exist. Toyota did, however, supply cost
information for a number of inputs supplied by related parties. It is
the Department's practice to permit limited reporting in appropriate
circumstances, such as a case like this where there are scores of parts
used in the production of a forklift truck, there are no third-party
transactions on which to rely, and the respondent is unable to obtain
cost information or prices to other purchasers from its suppliers. We
disagree with petitioners that Hyster requires us to obtain more
complete cost information. Unlike Hyster, there is no information on
the record that prompts the Department to make further inquiry. Id. at
187. In addition, to support its position that TAL deals with its
suppliers at arm's length and, therefore, that the amount for the
relevant input ``fairly reflect[s] the amount[s] annually reflected in
sales in the market under consideration of merchandise under
consideration,'' TAL provided internal documents that evidence
competitive bidding practices on the part of its related and unrelated
suppliers (see Toyota Submission, March 29, 1996). The documents
establish that Toyota selects its suppliers using a competitive bidding
process and that Toyota is not averse to switching from a related
supplier to an unrelated supplier based on price. This is further
evidence that Toyota deals with suppliers, both related and unrelated,
at arm's length. Therefore, we are satisfied that the information on
inputs Toyota provided supports its claim that it deals with related
suppliers on an arm's-length basis.
Finally, we agree with Toyota that the Minivans memorandum
petitioners cite is not relevant to this proceeding since its
observations are general in nature with respect to the Keiretsu and
because it provides no specific information concerning the relevant
companies. The record in this review does not suggest that we draw any
conclusions based on such observations.
Comment 4
Petitioners claim that the Department should not include the
interest income which TMCC, a separately incorporated U.S. affiliate of
Toyota Motor Sales, U.S.A., Inc. (TMS), received for loans it made to
dealers that purchased Toyota forklift trucks as an offset to the
credit expense TMS incurred in selling trucks in the United States.
Petitioners argue that the loan a customer obtains constitutes a
separate transaction from the negotiation process related to the sale
of a forklift truck and, therefore, under the express terms of the
statute and the Department's longstanding practice, income earned or
expenses incurred that are not related to the sales-negotiation process
cannot be taken into consideration in the dumping analysis.
Petitioners provide a number of examples in Toyota's questionnaire
response to support their position that payment terms are separate and
have no impact on the sales-negotiation process between TMS and the
dealer. Petitioners also refer to certain business-proprietary passages
from TMS's financial statements which, they argue, conflict with
Toyota's position that TMCC simply operates as an arm of TMS.
Petitioners assert that the notes to the financial statements raise
serious questions as to the accuracy of Toyota's calculation of the
expense, given the possibility of prepayments and credit losses which
may not have been factored into its calculations.
[[Page 34223]]
Toyota responds, first, that it is the Department's longstanding
practice to include credit revenues and to deduct credit expenses in
its calculation of exporter's sales price (ESP). Second, Toyota argues
that it is nonsensical to claim that financing does not affect the
selling price of a truck because the customer pays a price that
includes the credit revenue TMCC earns. Toyota points to the record
evidence that, in the relevant transactions, TMCC receives the payment
from the first unrelated customer, which is a price that includes
credit revenue, and TMS receives only an intra-party transfer from
TMCC, a payment that cannot serve as the basis for ESP under section
772(c) of the Act. Toyota states that the ``separate nature'' of the
financing transaction is belied by the facts in Toyota's questionnaire
response.
Toyota maintains that it is irrelevant that TMCC is separately
incorporated and uses its income for various purposes and, therefore,
the Department's determination to treat TMCC and TMS as a single entity
was correct. Toyota further maintains that petitioners' argument that
TMS and TMCC are ``separate legal entities'' is contradicted by the
reality of the relationship, given that they are 100-percent-affiliated
entities, share a common address, and share certain operational
structures. Toyota also claims its method of applying assets and income
has no relevance to whether credit revenue Toyota received is properly
part of USP. Toyota adds, in conclusion, that petitioners' speculation
that Toyota's credit revenue might not be accurate, based on broad
statements in TMCC's financial statements, is unfounded.
Department's Position
We disagree with petitioners that we should reject Toyota's claimed
adjustment for credit revenue. We have addressed this issue in prior
reviews and in our October 9, 1996, Final Results of Redetermination
Pursuant To Court Remand, NACCO Materials Handling Group, Inc., v.
United States, Slip Op. 96-99 (June 18, 1996) (NACCO), which we have
put on the record of this review.
In NACCO, we explained that, in our antidumping analysis, ``we
examine thoroughly the corporate structure of respondents in order to
capture all expenses and revenues incurred by related companies that
pertain to sales of subject merchandise. In [NACCO], Toyota's revenue
and expense pertain directly to the particular sales in question,
whether deemed part of the same transaction or not, and must be
included in our dumping analysis.'' Id. at 23-24. We further stated
that ``[t]he inclusion of TMCC's credit expense and credit revenue in
the dumping analysis is not dependent on whether or not ostensibly
separate transactions are combined. Such inclusion is required because,
otherwise, the Department would be unable to fulfill its statutory
mandate to capture all U.S. selling expenses in its analysis, as
required by section 772(d) of the Act.'' Id. at 26. The essential
mechanics of the relevant transactions in this review do not differ
materially from those in NACCO. Petitioners' arguments concerning the
separateness of the transactions and the corporate separateness of the
entities are irrelevant, given that ``the expenses and revenues that
derive from the financing arrangement are related to the sales in
question and are relevant, therefore, to the calculation'' of USP. Id.
at 31.
References by petitioners to Toyota's description of the process
(i.e., where a dealer may decide separately how it will pay, is not
obligated to use payment terms offered by TMCC, etc.) do not alter the
conclusion that, for purposes of section 772 of the Act, the revenues
and expenses pertain directly to the particular sales in question and
are appropriately part of our dumping analysis. As we concluded in
NACCO, ``TMC, TMS, and TMCC together constitute the exporter and have
provided financing services in selling the subject merchandise * * *,
it is necessary to focus on the expenses that relate to sales of
subject merchandise, regardless of which related entity incurs the
expenses, in the interest of accuracy and in order to prevent the
manipulation of the dumping analysis through shifting expenses to
subsidiaries.'' Id. at 29. We consider our analysis and conclusions in
NACCO to be directly relevant to the facts of this review and
petitioners have not advanced any argument that would alter this
conclusion.
Petitioners' arguments based on portions of TMS' financial
statements are also not persuasive. As explained above, arguments
concerning the corporate separateness based on certain descriptions of
ostensibly independent activities in which the entities engage are not
relevant and, therefore, whether TMCC simply operates as an arm of
Toyota does not alter our analysis.
Furthermore, petitioners' suggestion that, based on Toyota's
financial statements, Toyota's reported credit revenue might not be
accurate, either because of the possibility of prepayment of leases or
because Toyota might not have accounted for credit losses, constitutes
unfounded speculation. Moreover, this speculation is irrelevant to
petitioners' position that credit revenue should not be recognized
because the transactions are separate. Nonetheless, with regard to
whether it factored credit losses into its calculations, Toyota stated
for the record that it had done so. See February 8, 1996 Toyota
submission at 4: correction submitted March 19, 1996 at 2.
Finally, nothing in the record contradicts Toyota's statement that
prepayments are not relevant to forklift financing. Toyota has stated
that ``the referenced comment in Toyota's financial statements applies
primarily to automobile installment contracts and leases, and not to
forklift leases, which are rarely paid off early.'' Id. This
explanation supports our conclusion to accept Toyota's claimed
adjustment for credit revenue.
Comment 5
Petitioners claim that the payment terms for loans and leases can
range from one to five years and thus constitute long-term, not short-
term, financing. Therefore, petitioners contend, the Department should
consider the credit expense Toyota incurred as long-term debt and
should not base the calculation on the short-term borrowing rate Toyota
reported. Petitioners argue that, in the absence of information from
Toyota on long-term interest rates, the Department should rely on BIA.
Toyota argues that the Department has an established practice of
using short-term interest rates to calculate credit expense and
believes that the Department should adhere to this practice.
Department's Position
Maintaining our approach is reasonable and we have not altered our
practice of using a company's short-term borrowing rate to calculate
imputed credit expense. The Department's position is buttressed by the
fact that ``TMCC's issuance of short-term commercial paper contributes
to the pool of funds used to finance all transactions, regardless of
credit term'' and that ``there are [very few] occasions in which
reported credit terms exceed one year.'' See Toyota's Submission, March
6, 1996, at 8-9. Therefore, we have not adjusted Toyota's reported
credit expenses by using a long-term interest rate as petitioners
propose.
Comment 6
Petitioners maintain that it is the Department's consistent
practice to use the date of the final results as the date
[[Page 34224]]
of payment for U.S. sales where there is no reported date of payment
(citing Certain Stainless Steel Wire Rods from France; Final Results of
Antidumping Duty Administrative Review (September 3, 1996)).
Petitioners suggest that, whenever Toyota has reported a payment date
of May 31, 1995, the Department should instead use the date of the
final results to calculate Toyota's credit expense.
Toyota explains that, for certain U.S. sales for which it had not
yet received payment by the time it was preparing its questionnaire for
filing on August 21, 1995, it reported a payment date of May 31, 1995,
which was the date Toyota was using as the closing date for the data to
include in the questionnaire response. Toyota asserts that the relevant
transactions consist of sales with extended payment terms that include
credit revenue. Toyota argues that, if the Department changes the
reported date of payment to the date of the final results to
recalculate the credit expense, the Department would likewise have to
revise the calculation of credit revenue. Toyota contends that, because
credit revenue is not calculated but is based on actual payments
received, Toyota would have to submit these amounts to the Department.
Toyota states that, although it has no objection in principle to
revising both credit expense and revenue (given that Toyota would gain
more in credit revenue than it loses in credit expense), due to the
complications of resubmitting new information at this late stage of
review, the company requests that the Department maintain the current
``default'' payment date.
Department's Position
Use of the date of the final results to calculate credit expense
and credit revenue for those sales for which payment has not yet been
received is not appropriate because there is no evidence to suggest
that this data will provide greater accuracy in the calculation of
either credit expense or credit revenue. Due to the nature of the
credit expense and credit revenue at issue, it is not possible to
derive exact expense and revenue amounts for certain transactions
within the time permitted for responding to our information requests.
In addition, because Toyota calculated its credit expense and credit
revenue using the same period, any adjustment to one will require a
corresponding adjustment to the other. Accordingly, we have not adopted
petitioners' proposal for the final results.
Comment 7
Petitioners claim that Toyota never stated for the record that all
of its U.S. technical-services expenses were actually indirect in
nature. Petitioners claim that Toyota reported the expenses as indirect
expenses because Toyota was unable to segregate them from other
expenses and petitioners argue that Toyota cannot be allowed to benefit
from its alleged inability to isolate these expenses. Petitioners
assert that Toyota bears the burden of demonstrating that these
expenses are indirect pursuant to 19 CFR 353.54 and argue that the
Department should treat the expenses as direct selling expenses.
Toyota disputes petitioners' assertion that it classified
technical-service expenses as ``indirect'' because the expenses could
not be separately quantified. Toyota asserts that the record is clear
that these expenses are all fixed and do not relate to specific sales.
Department's Position
In Toyota's initial questionnaire response, the company reported
that its ``[t]echnical services in the United States were allocated and
included in selling expenses.'' Toyota also explained that ``[t]hese
are not recorded separately in TMS's records, and, therefore, cannot be
isolated.'' August 21, 1995 Questionnaire Response at VIII-43.
Furthermore, responding to a comment made by petitioners earlier in
this review, Toyota stated that ``these expenses are indirectly related
to the sales under review, both in the United States and Japan.''
Toyota Submission, February 8, 1996 at 6. Based on the record of this
review, we find no reason to dispute Toyota's characterization of its
reported technical-service expenses as indirect. The fact that Toyota
is unable to break out a particular expense does not suggest that this
characterization is inaccurate. Accordingly, we have maintained our
treatment of these expenses as indirect selling expenses in the final
results.
Comment 8
Petitioners maintain that the Department's treatment of Toyota's
U.S. servicing commissions as indirect selling expenses is not
consistent with the statute or with the Department's practice in the
1987-89 administrative review. Petitioners contend that these expenses
are in fact value-added expenses. Petitioners state that section 772 of
the Act provides that the Department will derive the ESP by reducing
the USP by the cost of any further manufacture or assembly, but that
section 772 does not provide that U.S. value-added expenses be included
in the pool of U.S. indirect selling expenses which, in turn,
establishes the limit of the ESP offset. Petitioners claim further
that, in the 1987-89 review, the Department included Toyota's
servicing-commission payments in U.S. value-added costs. Petitioners
note that, in that review, the Department determined that Toyota's
servicing ``commissions'' were payments to a third party, the dealer,
and considered them as a cost of further manufacturing because the
expenses involved preparing, servicing, and delivering a forklift truck
to the customer, all of which, petitioners contend, are operations that
add value to the forklift. Petitioners further note that, in the 1994-
95 preliminary results of review, the Department deducted further-
manufacturing costs to determine CEP for sales that involved
installation of accessories by an affiliate of TMC.
Toyota responds that these commissions are different from a direct
payment to subcontracted value-added activities. Toyota asserts that
the law and regulations describe how commissions are to be treated and
that commissions are always paid to third parties to compensate for
some service or activity. Toyota argues that the fact that some of
these activities may involve certain servicing obligations does not
render them value-added expenses.
Department's Position
Petitioners inappropriately cite the record of the 1994-95
administrative review of this order to establish the nature of these
commissions and for other purposes. Based on the record of the 1993-94
period we do not consider these payments to be for specific further-
manufacturing activity. Based on Toyota's description of the purpose of
these payments, while they may potentially involve such activity or
obligations, they are more akin to payments that we normally treat as
commissions. In its sales questionnaire response Toyota stated that
these ``commissions are paid to unrelated authorized forklift dealers
for National Account transactions in their territories * * *.'' August
21, 1995 Questionnaire Response at VII-40. Toyota's description of
these payments does not indicate that they are for further-
manufacturing activities but rather are primarily intended to
compensate dealers for servicing obligations they may be called upon to
provide with regard to sales to National Accounts.
While we may have characterized these payments as further-
manufacturing expenses in a prior
[[Page 34225]]
review, based on the record of this review, we believe these payments
are more appropriately categorized as commissions. We have previously
considered similar payments for servicing obligations to be
commissions. In TRBs at 57638, respondent ``explained in its response
that, as a means of compensating [its U.S. affiliate] for expenses it
incurred with respect to services it provided for certain of
[respondent's] purchase price sales, [respondent] made `commission'
payments to [its U.S. affiliate].'' While the ``commission'' concerned
payments to a related party on purchase price sales that were
ultimately determined not to have been at arm's length, the case stands
for the proposition that the Department will consider such payments to
be commissions.
There is nothing on the record, and petitioners cite to nothing, to
support the position that these commissions were related directly to
specific further-manufacturing activities. Therefore, for purposes of
the final results, we have maintained our treatment of Toyota's
servicing commissions as ``commissions.''
Comment 9
Petitioners note that, in its supplemental questionnaire response,
Toyota informed the Department that it miscalculated inland freight and
proposed an alternate methodology to calculate the freight cost on the
basis of units shipped rather than on the basis of weight. Petitioners
assert that such a methodology is improper because it understates the
amount of inland-freight expense for heavier trucks. Petitioners
propose an alternate methodology using the total weight of individual
trucks and the freight factor Toyota provided in its January 16, 1996
Supplemental Questionnaire Response at Supp. 39-40.
Toyota responds that its original yen/kg inland freight factor is
incorrect and that any use of the factor would be incorrect. Toyota
states that, contrary to its initial belief, there is no way to
calculate a yen/kg inland freight factor because its records only
permit the calculation of a per-unit amount for inland freight based on
the total units shipped and the total payments made. Toyota asserts
that this is an accurate way of allocating the expense because Toyota
is charged by the truckload regardless of the number of trucks shipped.
Department's Position
Petitioners' proposed methodology would be based on a freight
factor that we determined was flawed. Toyota apprised the Department of
this error in its supplemental questionnaire response and calculated a
per-unit expense by taking the total expense for the POR and allocating
it over the total units it shipped.
This methodology is the most feasible manner in which Toyota can
report this expense based on its records, which only permit the
calculation of per-unit amounts using the total units shipped and total
payments made. Further, we consider this to be an accurate and
reasonable method of allocating the expense, given that Toyota is
charged by the truckload, not by weight. Accordingly, we have accepted
Toyota's methodology for the final results.
Comment 10
Petitioners maintain that the Department should use Toyota's
revised data on the home market truck-replacement incentive for the
final results.
Toyota agrees with petitioners that the Department should use the
revised data for the final results.
Department's Position
We have incorporated Toyota's revised truck-replacement incentive
data into the final margin analysis.
Comment 11
Petitioners state that the Department has provided no justification
for a departure from its standard practice for determining whether
transactions with affiliated parties are at arm's length based on its
99.5 percent test. Petitioners claim that they performed an affiliated-
party test and, given that the evidence of record indicates that
Toyota's prices to its affiliated dealers are not at arm's length, the
Department must require Toyota to submit complete home market sales
data.
Petitioners note that the Department confirmed at verification in
the 1994-95 review that TMC's price list makes no distinction between
prices charged to affiliated and unaffiliated dealers, but they argue
that price lists alone cannot determine where sales are at because
certain affiliated dealers might receive higher rebates, better payment
terms, or any other number of benefits that result in a lower net price
than that which unaffiliated dealers pay.
Toyota responds that the Department should not require Toyota to
submit sales information on sales by affiliated dealers to unrelated
end-users because all of its sales are at arm's length. Toyota adds
that petitioners' own analysis demonstrates that sales to affiliated
dealers are at arm's length, since this analysis reveals that
affiliated dealers paid prices slightly above and slightly below the
average price to unaffiliated dealers. Toyota states that this very
narrow range of deviation from the average does not suggest that prices
to affiliated dealers are not at arm's length and adds that the small
deviation is created solely by a deficiency in petitioners' method of
analysis, whereby petitioners adjusted the prices by the costs of the
attachments and options. Toyota provides three examples indicating that
differences in prices are attributable to differences in the number of
options/attachments, credits for removal of certain equipment, and
differences in the types of attachments. Toyota states that petitioners
wrongly tried to compensate for the different attachments through cost
adjustments and that petitioners should have used the prices for the
attachments which the Department verified, prices which were identical
to affiliated and unaffiliated dealers. Toyota states that the
Department has recognized in each of its prior reviews that Toyota's
sales are all at arm's length and neither Toyota's business practices
nor the law have changed such that there is no basis for the Department
to alter its analysis for this review.
Department's Position
During the period of review, Toyota's sales prices to affiliated
and unaffiliated dealers in the home market, for the basic truck and
parts, were based on published price lists. See Toyota's August 21,
1995 Section VI Response, at VI-9. This is the same situation that
prevailed during the 1994-95 period of review. Petitioners refer to our
verification report in the 1994-95 review wherein we noted that there
was no deviation from the price lists for sales to affiliated or
unaffiliated dealers for either the basic truck or parts. Similarly,
the information submitted in this review indicates that Toyota sold to
both affiliated and unaffiliated dealers in the home market exclusively
from its published price lists.
In addition, while petitioners claim that the arm's-length test
they conducted appears to indicate that Toyota's sales to affiliated
dealers fail our 99.5-percent arm's-length test, we note that, due to
the unique nature of this product, where differences between products
beyond the basic truck (options, attachments, etc.) can be significant
and where these differences are not always individually distinguished
in the submitted data, an arm's-length test is not always feasible.
Petitioners' methodology in their arm's-length test for calculating
average variances for options does not adequately account for all such
[[Page 34226]]
differences. Therefore, based on the fact that both affiliated and
unaffiliated dealers purchased trucks and parts based on the same price
lists, we have determined that Toyota's sales to affiliated dealers in
the home market form a proper basis for consideration and the
calculation of foreign market value (FMV).
Comment 12
Petitioners claim that, for those comparison matches involving
different levels of trade, the Department must make a level-of-trade
adjustment. For U.S. sales, petitioners identify three levels of trade:
(1) sales from TMS to unrelated dealers who then sold to end-users, (2)
sales from TMS to National Accounts, and (3) sales from Toyota Lift of
Los Angeles (TLA) to end users. In the home market, petitioners
identify one level: sales from TMC to related and unrelated dealers who
then sold to end-users. Petitioners assert that the law requires that,
if sales comparisons cannot be made at the same level of trade, the
Department will make appropriate adjustments for differences affecting
price comparability (citing 19 CFR 353.58 and, inter alia, Certain Cut-
to-Length Carbon Steel Plate from Finland; Final Results of Antidumping
Duty Administrative Review, 61 FR 2792, 2796 (January 29, 1996)).
Petitioners state that the Department's practice is to examine whether
sales are made at the same position in the chain of distribution and to
examine the distinct functions and selling services in each market to
ensure that it is comparing sales at the same level. Petitioners
maintain that differences in the class of customer in the U.S. and home
markets indicate that sales are made at different levels of trade and
that the financing arrangements provided in the United States create an
important distinction between the functions performed in the home
market. Petitioners note that price differentials between the United
States and the home market can be directly attributable to income
received for special financing arrangements provided on certain U.S.
sales. Petitioners argue that Toyota should be required to report home
market sales by its related dealers to end-users, which could then be
compared to U.S. sales to end-users at the same level of trade.
Otherwise, petitioners argue, the Department must make a level-of-trade
adjustment. Petitioners suggest that the most practical method with
respect to the U.S. financing arrangements is to make an upward
adjustment to home market price for the interest income earned on sales
in the United States.
Toyota responds that its home market sales to related and unrelated
dealers are made at arm's length and, further, there is no reason to
examine its retail sales nor to make a level-of-trade adjustment.
Toyota asserts that it is not relevant that Toyota makes sales through
TLA and to National Account Customers for several reasons. First,
Toyota states, if all of its home market sales are arm's length, there
is no need for or use served by downstream sales. Second, Toyota
contends, the level of trade of sales by TLA and by TMS to National
Accounts, after all mandatory adjustments have been made for U.S.
selling expenses, is at a minimally advanced level of trade and,
therefore, under no circumstances should such adjusted sales be
compared to retail sales (end-user) in Japan. Third, Toyota argues, the
adjustments to USP and FMV eliminate any need to make an adjustment
given that the differences in financing arrangements are differences in
circumstances of sale that relate to extending credit and do not result
from differences in levels of trade. Toyota notes that, while it offers
credit options to U.S. customers other than dealers, such options
represent differences in how Toyota chooses to extend credit in the
U.S. market and not differences in the level of trade. Toyota concludes
that the adjustments the Department makes to U.S. and home market
prices to take into account imputed credit expenses and revenue fully
compensate for these differences in circumstances of sales and that
once made, making a further level-of-trade adjustment would be
inappropriate.
Department's Position
We have not made an upward level-of-trade (LOT) adjustment to FMV,
as recommended by petitioners. Further, we have determined that
Toyota's home market sales constitute a single level of trade involving
sales to both related and unrelated customers (see, generally, Comment
11 regarding the arm's length nature of home market sales to related
parties). Although petitioner contends that financing activities are a
determinative factor in identifying differences in LOT, the financing
activities of an entity involved in the production and/or sale of
subject merchandise is not a function which in and of itself determines
whether differences in levels of trade exist. In order to determine
whether there exist differences in LOT, there must be record evidence
demonstrating such differences.
Petitioners have not provided evidence that differences in LOT
exist between the U.S. and home markets. Instead, petitioners have
merely made allegations that differences in LOT exist which can be
attributed to financing arrangements. However, prior to the amended
Tariff Act of 1930, which became effective January 1, 1995, our policy
was to determine, based on the reported functions, whether the
respondent sells to ``distinct, discernable levels of trade.'' See
Policy Bulletin 92.1, July 29, 1992, at 2. In accordance with our
policy, for the purpose of this review, we do not find that Toyota
sells to distinct, discernible levels of trade based on discernible
functions. Moreover, while petitioners claim that there are three
levels of trade in the United States, they did not show that there was
a correlation between price and selling expenses on one hand and the
alleged levels of trade on the other, although they had access to the
same information as the Department. Accordingly, we have accepted the
respondent's reporting for purposes of level of trade and have compared
U.S. sales to foreign market value without any adjustment for alleged
differences in level of trade.
Comment 13
Petitioners argue that the Department's verification report for the
1994-95 review period and Toyota's supplemental questionnaire response
in this review indicate that Toyota misreported the date of sale for
home market sales. Petitioners note that Toyota explained in its
supplemental questionnaire response that a dealer may modify an order
by changing the configuration of the truck between 10 and 15 percent of
the time but that the Department determined at verification in the
1994-95 review the frequency instead ranged from 4.3 to 7.5 percent.
Petitioners assert that the low frequency of changes fails to justify
Toyota's decision to base date of sale on date of shipment when the
majority of sales are established on the order date; further,
petitioners contend, the changes to certain attachments do not alter
the essential terms of sale between Toyota and its customer.
Petitioners state that it is likely there would be a set price for the
particular attachments or changes in configuration of the truck and,
although a purchaser may request different attachments, the basic truck
and negotiated price would not be altered after the order is placed.
Therefore, petitioners argue that Toyota should have used the order
date for matching purposes.
Toyota responds that the date the basic terms of the contract are
agreed to is the date of shipment, which is generally on or about the
date of
[[Page 34227]]
invoice. Toyota notes that, under the Department's proposed
regulations, the invoice date is considered the date of sale. Toyota
contends that customers can request modifications in payment terms,
configuration, and price up to the date of shipment (citing Toyota's
Supplemental Questionnaire Response January 16, 1996 at Supp. 10-11).
Toyota states further that the date of order is not a date of sale in
Toyota's records, is not significant enough to record on a systematic
basis and, even where recorded, the order may or may not describe the
merchandise actually shipped. Therefore, Toyota notes, the order date
is not a date that permits the verification of total sales quantities.
Toyota further notes that this is not a case in which the date of sale
is substantively significant to the final results, given that Toyota's
sales are relatively even over the period and there are no factors such
as hyperinflation that would cause the date of sale to affect the
analysis. Consequently, Toyota maintains, a different date of sale
would shift the universe of reported sales slightly and not change the
outcome, particularly since the Department plans to assess duties on
all trucks entered during the POR.
Department's Position
The date of shipment is the appropriate date of sale for home
market sales in this case for the following reasons. First, the
reported date of sale, which is based on shipment date, closely
corresponds to invoice date in this case and is in accord with our
current practice and with the date-of-sale methodology in our proposed
regulations, where invoice date is considered the appropriate date of
sale. Second, the potential for configurations and prices to change for
the reported sales supports a sale date based on the shipment date.
Information on the record indicates that these basic sales terms can,
and in fact do, change up to the date of shipment.
Third, the record indicates that Toyota records the date of
shipment as the date of sale for financial reporting and internal
purposes and it records the sales transaction as complete upon shipment
(e.g., payment is due from a dealer based on this date--see, e.g., the
August 21, 1995 Questionnaire Response at VI-6 Terms of Payment).
Therefore, we have not changed our treatment of Toyota's reported
date of sale for the final results.
Comment 14
Petitioners argue that the Department failed to include Toyota's
reported inventory-carrying expense in the calculation of U.S. indirect
expenses and, therefore, the Department failed to deduct the expense
from USP. Citing section 772(d) of the Act, petitioners maintain that
the Department is obligated to reduce reported USPs for inventory-
carrying expenses incurred for sales in the United States and that
exclusion of the expense constitutes a clerical error that the
Department should correct for the final results.
Toyota responds that the Department properly categorized its
inventory-carrying costs as general export expenses attributable to the
sales to the affiliated purchaser which should not be deducted from
ESP. Toyota contends that, if the Department deducts these costs from
USP for the final margin analysis, then it must include these expenses
in the ESP-offset cap and make a corresponding adjustment to FMV for
home market inventory-carrying costs.
Department's Position
In accordance with section 772(e)(2) of the Act, we adjust ESP
downward for ``* * * expenses generally incurred by or for the account
of the exporter in the United States in selling identical or
substantially identical merchandise * * *.'' These expenses include
inventory-carrying costs incurred in connection with exports of the
subject merchandise to the United States. We have therefore made a
deduction for such costs from Toyota's reported U.S. prices. We also
agree with Toyota that we must include the expense in the ESP-offset
cap and have done so for the final results.
Comment 15
Petitioners claim that the Department uniformly reduced Toyota's
home market sales prices by reported inland-freight expenses, which is
inappropriate because Toyota's reported home market prices were
exclusive of inland freight for certain sales. Petitioners assert that
deducting these amounts resulted in an understatement of FMV for those
sales for which the price did not include delivery.
Toyota responds that it reported inland-freight amounts only where
the prices were inclusive of inland freight (citing Toyota's
Questionnaire Response at VI-13). Toyota asserts that the Department's
Preliminary Results accomplish exactly what petitioners claim is
proper.
Department's Position
Toyota's reported home market gross unit price ``includes inland
freight only where the sales term is c.&f.'' August 21, 1995
Questionnaire Response, Section VI at VI-10. In accordance with the
petitioners' suggestion, we have ensured that our calculations reflect
the information Toyota provided in its response concerning this
expense.
Comment 16
Petitioners contend that, because the Department reset the quantity
of sales for each sales transaction in Toyota's U.S. sales database
equivalent to one, Toyota's total U.S. sales quantity was understated.
Petitioners argue that the Department should modify the computer
language in the margin calculation program to reflect any reported
sales transactions which reported a quantity greater than one.
Toyota responds that it is clear from the unique model number/
serial number combination, unique invoice number and other reported
information for the transaction that the only sale in question consists
of one forklift truck.
Department's Position
While the quantity field mistakenly indicates a quantity of greater
than one for the transaction, the associated data (i.e., serial number)
indicate the sale of one forklift truck. Therefore, we have not made
the change petitioners recommend.
Comment 17
Petitioners assert that the Department should change certain
computer programming language with respect to Toyota's movement
expenses and U.S. indirect selling expenses for errors associated with
brokerage expenses, home market inland freight and Toyota's reported
indirect expenses incurred by TMCC.
Toyota responds that the Department should correct any programming
errors consistent with Toyota's positions in its case and rebuttal
briefs.
Department's Position
We have corrected the following errors for the final results. We
have included brokerage in Toyota's U.S. movement expenses, corrected
the duplication of the inventory-carrying-cost variable from the
relevant composite variable (see also Comment 14 above) and excluded
the inland insurance from the calculation of net price. With regard to
Toyota's indirect expenses incurred by TMCC, we have reclassified the
expenses as indirect (see our response to Toyota Comment 5 above) and
recognize that they are not properly categorized as credit revenue.
Final Results of Review
After consideration of the comments received, we determine that the
following weighted-average margins
[[Page 34228]]
exist for the period June 1, 1993, through May 31, 1994:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Toyota..................................................... 31.58
Nissan..................................................... \1\ 7.36
Toyo....................................................... \1\ 4.48
------------------------------------------------------------------------
(\1\) No shipments or sales subject to this review. Rate is from the
last relevant segment of the proceeding in which the firm had
shipments/sales.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. We will
calculate importer-specific ad valorem duty-assessment rates for the
merchandise based on the ratio of the total amount of antidumping
duties calculated for the examined sales made during the POR to the
total customs value of the sales used to calculate those duties as
adjusted by the non-subject trucks (see our response to Toyota's
comment 6). This rate will be assessed uniformly on all entries of that
particular importer made during the POR. (This is equivalent to
dividing the total amount of antidumping duties, which are calculated
by taking the difference between foreign market value and United States
price, by the total United States price value of the sales compared and
adjusting the result by the average difference between United States
price and customs value for all merchandise examined during the POR.)
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. The Department will issue appropriate appraisement
instructions directly to the Customs Service upon completion of this
review.
Furthermore, the deposit requirements made effective by the final
results of the 1994-95 administrative review of this order shall
continue to be effective upon publication of this notice of final
results of administrative review for all shipments of forklift trucks
entered, or withdrawn from warehouse, for consumption on or after the
date of publication, as provided by section 751(a)(1) of the Act (see
Certain Internal-Combustion Industrial Forklift Trucks From Japan;
Final Results of Antidumping Duty Administrative Review, 62 FR 5592
(February 6, 1997). Those deposit requirements shall remain in effect
until publication of the final results of the next administrative
review.
This notice also 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 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 353.34(d)(1). Timely
written notification of the return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply is a violation of the APO.
This administrative review and this notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22
(1996).
Dated: June 19, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-16681 Filed 6-24-97; 8:45 am]
BILLING CODE 3510-DS-P
