SKF USA Inc., SKF France S.A., SARMA and SNR Roulements v.
United States and the Torrington Company
Slip Op. 00-128 (CIT October 11, 2000)
FINAL RESULTS OF REDETERMINATION PURSUANT TO COURT REMAND:
ADMINISTRATIVE REVIEW OF THE ANTIDUMPING DUTY ORDERS ON ANTIFRICTION BEARINGS (OTHER THAN TAPERED ROLLER BEARINGS) AND PARTS THEREOF FROM FRANCE
The Department of Commerce has prepared these final results of redetermination pursuant to the remand order of the U.S. Court of International Trade in SKF USA Inc., SKF France S.A., SNR Roulements and SARMA v. United States and The Torrington Company, Slip Op. 00-128 (CIT October 11, 2000). These final results of redetermination pertain to the May 1, 1994, through April 30, 1995, administrative review of the antidumping duty orders on antifriction bearings (other than tapered roller bearings) and parts thereof from France. In accordance with the U.S. Court of International Trade's instructions, the Department of Commerce has reconsidered certain issues and modified the antidumping duty margin calculations with respect to SKF USA Inc., SKF France, S.A., Sarma, and SNR Roulements.
On October 11, 2000, the U.S. Court of International Trade (the Court) issued its ruling in SKF USA Inc., SKF France S.A. and SARMA (collectively "SKF"), SNR Roulements and v. United States and The Torrington Company, Slip Op. 00-128 (CIT October 11, 2000), remanding to the Department of Commerce (the Department) the final results in Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Singapore, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews, 62 FR 2081 (January 15, 1997), as amended by Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, and Singapore; Amended Final Results of Antidumping Duty Administrative Reviews, 62 FR 14391 (March 26, 1997) (collectively AFBs 6). This remand directly affects SKF and SNR with respect to the antidumping duty orders on ball bearings (SKF and SNR) and cylindrical roller bearings (SNR) and parts thereof from France. Additional discussion regarding all changes made to the underlying margin-calculation programs pursuant to this final redetermination can be found in the SKF and SNR final analysis memoranda, dated March 6, 2001.
The Court remanded AFBs 6 to the Department to address the following areas:
1) reconsider its decision to calculate SKF's home-market credit expense based upon price and then apply that rate to cost; 2) exclude any transactions that were not supported by consideration from SKF's U.S. sales database and adjust the dumping margins accordingly; 3) attempt to match SKF's U.S. sales to similar home-market sales before resorting to constructed value (CV); 4) assign the correct level-of-trade code for SKF's export price (EP) sales in the margin-calculation program; 5) determine whether SKF-France's billing adjustment number two is insignificant within the meaning of section 777A(a)(2) of the Tariff Act of 1930, as amended (the Act); and 6) reconsider the treatment of depreciation expenses incurred in France in calculating constructed export price (CEP) for SNR.
On February 14, 2001, we released the draft results of redetermination and invited interested parties to comment.
CV Credit Expense
The first remanded issue concerns our calculation of home-market credit expenses which we deduct from CV. In calculating these credit expenses for AFBs 6, we first calculated a credit rate by dividing the home-market credit expenses by the total gross unit price and then allocated this expense on the basis of the cost of production (COP) (1) in order to yield an amount for credit expenses to deduct from CV.
SKF contends that the calculation of home-market credit expenses that the Department used to deduct credit from CV is mathematically incorrect and inconsistent because the Department calculated a home-market credit-expense rate based upon price and then applied this rate to the COP for that model. SKF argues that the credit rate should be calculated on the basis of the COP, rather than price, because the credit rate should be based on the same values that serve as the basis upon which the rate is allocated (i.e., the COP of the model). In addition, SKF argues that the current calculation of the CV-credit rate in some instances results in an overstatement or understatement of the amount to deduct from CV, depending upon the value of the gross unit price, and thereby distorts the calculation of normal value as well as the dumping margins.
Having reconsidered the calculation of SKF's CV-credit rate, for the draft results of redetermination, as per the Court's instructions, we found that the use of a cost figure, rather than price, in the denominator of the credit rate was appropriate. Because the ratio is applied to a cost amount, by using a cost figure in the denominator of the CV-credit ratio, we ensure that the ratio is calculated on the same basis upon which it is applied and allocated.
The credit expense at issue is one of several circumstance-of-sale adjustments we make to reduce the price, or CV, in accordance with section 773(a)(6)(C) of the Act. In the case of SKF, we also make a deduction from CV for direct selling expenses and commissions. We extract these direct selling expenses and commissions from SKF's home-market database, sum them, and then divide them by a cost figure that is comprised of the total cost of manufacture, general and administrative expenses, and interest expenses yielding a direct-selling and commission rate. Similar to the CV-credit rate, we apply these rates to a cost figure, the results of which we deduct from the CV. Accordingly, the use of a cost figure in the denominator of the CV-credit rate is consistent with the manner in which we calculate the direct-selling and commission rates. Therefore, for the reasons noted above, we included the respective cost figure in the denominator of the CV-credit rate calculation for purposes of establishing the rate to use in determining the credit expense to deduct from CV.
Comment 1: Torrington states that, although the Department calculated separate credit-expense values for the denominator of the CV-credit rate for each of the two levels of trade, it did not do so for the numerator of the calculation. As a result, Torrington asserts, the numerator reflects credit expenses on all home-market sales while the denominator reflects costs of sales in one level of trade only, resulting in an overstatement of the value of the credit rate.
Department's Position: For the draft results of redetermination, we calculated the numerator of the CV credit rate by adding together a weighted sum of the total home-market credit expenses on a class-or-kind basis. However, we calculated the denominator of the CV credit rate by adding together a weighted sum of the costs of manufacture, general and administrative expenses, and interest expenses on class-or-kind- and level-of-trade-specific bases. Calculating the CV credit rate using this methodology results in an inconsistent ratio because of the differences in the numerator and denominator. Therefore, we have modified our calculations to ensure that the ratio we calculate is internally consistent.
Comment 2: Torrington also states that the numerator in the credit-rate calculation contains credit expenses on all sales, whether or not above cost, while the denominator reflects the total cost of above-cost sales only. The petitioner asserts that, as identified in the previous comment, the mismatch again results in the overstatement of the credit rate.
Department's Position: We agree with the petitioner's comment that we extracted the figures we used in the numerator and denominator of this ratio from different databases, rendering a CV credit rate that is internally inconsistent. Therefore, we have changed the calculation of the CV credit rate to make the origin of the numerator consistent with the origin of the denominator. This is consistent with our calculation of other ratios, such as CV direct-selling expense rate and CV commission rate.
2. U.S. Sample Sales
With respect to U.S. sample sales, the Court directed us to exclude any transactions that were not supported by consideration from SKF's U.S. sales databases and to adjust the dumping margins accordingly. Having found that SKF's U.S. sales database contained sample sales with a zero unit price and, absent other record evidence that these sales received consideration, we determined that these sample sales were not supported by consideration. Accordingly, for the draft results of redetermination, we excluded these transactions from SKF's U.S. sales database for the purpose of calculating SKF's dumping margin. We received no comments; therefore, the final results of redetermination reflect this change.
The third issue remanded by the Court concerns matching U.S. sales to "similar" home-market sales prior to resorting to CV. Pursuant to the decision in CEMEX, S.A. v. United States, 133 F.3d 897, 904 (Fed. Cir. 1998), the Department now bases normal value on non-identical but similar merchandise rather than CV when sales of identical merchandise have been found to be outside the ordinary course of trade. Therefore, in light of this decision and in accordance with the Court's instructions, for the draft results of redetermination, we matched U.S. sales to similar home-market sales before resorting to CV. We received no comments; therefore the final results of redetermination reflect this change.
Pursuant to the Court's instructions, for the draft results of redetermination, we reassigned the correct level-of-trade code to SKF's EP sales.
Comment: Torrington argues that the Department made a large level-of-trade adjustment to normal value in the case of all EP sales, including when the Department compared such sales to CV. Where normal value is CV, the petitioner asserts, such an adjustment is inappropriate because the Department has already calculated CV on a level-of-trade-specific basis.
Department's Position: No party raised before the Court the issue of whether a level-of-trade adjustment is appropriate when we base normal value on CV. Further, in its remand, the Court did not comment on the appropriateness of our decision in AFBs 6 (62 FR 2081, 2105) to make a level-of-trade adjustment when comparing U.S. sales to CV. In its remand instructions, the Court simply instructed us to "assign the correct level-of-trade code for SKF's export price sales in the margin calculation program."
During the administrative review, we stated in our preliminary analysis memorandum that the EP level of trade constitutes the same level of trade as sales to large industrial users in the home market. See Memorandum from Matthew Rosenbaum to The File, concerning the preliminary results analysis of SKF, dated June 27, 1996, at 3. Accordingly, for these final results of redetermination, we have adjusted our calculations to reflect our intended level-of-trade assignment for EP sales, as instructed by the Court. After making this change, we applied our stated level-of-trade adjustment methodology. We do not believe it is appropriate to revisit that methodology in this final determination.
5. SKF's Billing-Adjustment Number Two
The Court remanded this issue for the Department to determine whether SKF's billing adjustment number two is insignificant within the meaning of 19 CFR 353.59(a)(1995) (2) or whether the effect of this adjustment was a reduction to normal value. On November 20, 2000, SKF responded to our additional request for supplemental information with regard to billing adjustment number two. While the Court requested that we determine whether the adjustment is insignificant or results in a reduction to normal value, our supplemental questionnaire and SKF's response addressed both issues.
Based on the information SKF provided during this remand, we found that, had SKF reported billing adjustment number two and had we deducted this adjustment from normal value, the adjustment would have decreased the normal value and, thus, SKF's dumping margin.
Concerning the issue of whether this billing adjustment was insignificant, section 777A(a)(2) of the Act states that the Department may "decline to take into account adjustments which are insignificant in relation to the price or value of the merchandise." Section 353.59(a) of the regulations defines "insignificant" as individual adjustments having an ad valorem effect of less than 0.33 percent. In the information it submitted on November 20, 2000, SKF provided the calculations it used to determine the significance of this billing adjustment. These were the same calculations it provided in its original supplemental questionnaire response submitted during the course of the administrative review. Specifically, SKF calculated the billing adjustments as a percentage of home-market sales of the foreign like product. This percentage was below the 0.33 percent threshold provided in our regulations, thus rendering the adjustment "insignificant." Accordingly, for the draft results of redetermination, we did not make a deduction from normal value for SKF's billing adjustment number two. We received no comments; therefore the final results of redetermination reflect this change.
6. SNR's Depreciation Expenses
Pursuant to the Court's remand order, we have reconsidered our treatment of SNR's depreciation expenses incurred in France in calculating the CEP for SNR. On December 22, 2000, SNR submitted its response to our December 1, 2000, supplemental questions. Based on the information in SNR's supplemental questionnaire response and the information included in the SNR verification exhibit 20, entitled Indirect Selling Expenses (verification exhibit), we have concluded that we should not deduct SNR's depreciation expenses at issue from the CEP.
In its December 22, 2000, response, SNR stated the following: (1) the depreciation expenses in question were incurred in the home market as reported in its financial books in accordance with the French Generally Accepted Accounting Principles (GAAP), (2) they relate to office equipment in France, and (3) they were not incurred in connection with export sales. SNR contends that, if we determine that these depreciation expenses were incurred in France for export sales, they would be classified as part of the pool of indirect selling expenses incurred in the country of manufacture and, hence, would not be deducted from the CEP because such expenses were not associated with economic activity occurring in the United States.
SNR's verification exhibit included a worksheet that SNR used to allocate the depreciation expenses at issue to its home-market and export sales (Worksheet I). The depreciation expenses allocated to the home market were extracted from two pages within this exhibit entitled "Dumping 1994: Charges and Cost Adjustments - HM Sales to OEM" (Worksheet II) and "Dumping 1994: Charges and Cost Adjustments - HM Sales to Distributors" (Worksheet III). (3) Worksheets II and III specifically indicated that the depreciation expenses listed in such worksheets were incurred in connection with home-market sales made to original equipment manufacturers (OEMs) and to distributors. There is no indication from the record of this administrative review that SNR's depreciation expenses incurred in France were associated with economic activity in the United States.
SNR calculated the home-market OEM and distributor depreciation expenses as a basis of sales value yielding OEM and distributor depreciation allocation percentages. We verified the OEM and distributor allocation percentages SNR used in its calculation of depreciation expenses without discrepancy, during the examination of research and development expenses for indirect selling expenses as noted in the verification report. In order to determine the depreciation expenses allocated to export sales, as listed in Worksheet I, SNR calculated allocation percentages by deducting from one the sum of the distributor and OEM home-market depreciation allocation rates. For further explanation of this calculation, see the analysis memorandum for SNR dated March 6, 2001. Accordingly, the depreciation expenses determined for export sales were based on an allocation and were not based on depreciation expenses actually incurred for export sales. Moreover, the depreciation expenses that SNR incurred and extracted from Worksheets II and III represented one-hundred percent of the depreciation expenses SNR incurred as reflected in those worksheets.
Because the depreciation expenses were incurred in connection with sales made in the home market and were not associated with economic activity in the United States, we have not made a deduction from the CEP for SNR's depreciation expenses. We received no comments.
FINAL RESULTS OF REDETERMINATION
As a result of recalculating the antidumping duty margins for SKF and SNR in accordance with the remand order, the weighted-average dumping margins for SKF's and SNR's ball bearings (BB) and SNR's cylindrical roller bearings (CRB) for the period May 1, 1994, through April 30, 1995, changed as follows:
Company POR BB CRB
Rates SKF USA 94/95 16.61% (1)
Rates SKF USA 94/95 5.08% (1)
Rates SNR 94/95 5.99% 5.19%
Rates SNR 94/95 4.29% 6.36%
(1) No shipments or sales subject to this review.
This final redetermination is pursuant to the remand order of the CIT in SKF USA Inc., SKF France S.A., SARMA and SNR Roulements v. United States and the Torrington Company, Slip Op. 00-128 (CIT October 11, 2000).
Timothy J. Hauser
Acting Under Secretary
for International Trade
1. The COP reflects the sum of the costs reported for that particular model which include materials, labor,
factory overhead, taxes, general and administrative expenses, and interest expenses (COPCV).
2.Although we conducted these administrative reviews in accordance with the provisions of the statute effective January 1, 1995, the effective date of the amendments to the Tariff Act of 1930 by the Uruguay Round Agreements Act, we relied upon the section of the regulations in effect at the time of these reviews, 19 CFR 353.59(a)(1995). The new regulations that became effective on May 19, 1997, contain the same threshold (found at 19 CFR 351.413).
3.These worksheets were examined at verification without any discrepancies. See SNR Roulements Sales Verification Report, dated July 22, 1996.