Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Sweden and the United Kingdom, Final Results of Redetermination Pursuant to USCIT Remand, Slip. Op. 01-56

THE TORRINGTON COMPANY V. UNITED STATES,

Consol. Court No. 99-08-00462, Slip Op. 01-56 (May 11, 2000)

FINAL RESULTS OF REDETERMINATION PURSUANT TO COURT REMAND

SUMMARY

The Department of Commerce has prepared these final results of redetermination pursuant to the remand order from the U.S. Court of International Trade in The Torrington Company v. United States, Consol. Court No. 99-08-00462, Slip Op. 01-56 (May 11, 2001). In accordance with the U.S. Court of International Trade's instructions, we have annulled all findings and conclusions made pursuant to the duty-absorption inquiry conducted during the review and we have made changes to our calculations with respect to NTN Corporation that resulted in the following weighted-average margins for the period May 1, 1997, through April 30, 1998: 6.18 percent for ball bearings, 3.45 for cylindrical roller bearings, and 12.48 for spherical plain bearings. The remand did not result in a change in the margins for Koyo Seiko Co., Ltd.

BACKGROUND

On May 11, 2001, the U.S. Court of International Trade (CIT) issued an order in The Torrington Company v. United States, Consol. Court No. 99-08-00462, Slip Op. 01-56 (May 11, 2001) (Torrington), remanding to the Department of Commerce (the Department) the final results in Final Results of Antidumping Duty Administrative Reviews: Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Sweden and the United Kingdom, 64 FR 35590 (July 1, 1999) (AFBs 9). In Torrington, the Court remanded the final results to the Department to make the following changes to its determination in AFBs 9: 1) annul all findings and conclusions made pursuant to the duty-absorption inquiry conducted for NTN Corporation (NTN) and Koyo Seiko Co., Ltd. (Koyo), for this review; 2) clarify what action it took with respect to inputs that NTN obtained from affiliated parties, articulate the reasoning for these actions, and open the record for additional information; 3) articulate the methodology it used in conducting the arm's-length test for NTN and apply the test in accordance with 19 CFR 351.402(c); and 4) explain its final decision concerning NTN's packing expenses. The remand affects NTN and Koyo with respect to the administrative reviews of the antidumping duty orders on ball bearings (BBs), cylindrical roller bearings (CRBs), and spherical plain bearings (SPBs) from Japan for the period May 1, 1997, through April 30, 1998.

On July 2, 2001, we released our draft results of redetermination to interested parties for comment. On July 9, 2001, we received comments from NTN and The Torrington Company (Torrington), the petitioner in this proceeding.

DISCUSSION

Duty Absorption

The Court remanded AFBs 9 to the Department to annul all findings and conclusions made pursuant to the duty-absorption inquiry it conducted in AFBs 9.

The Department hereby complies with the remand as directed by the Court with respect to NTN and Koyo and annuls all findings and conclusions made pursuant to its duty-absorption inquiry conducted for the subject reviews with respect to NTN and Koyo. Upon a final and conclusive court decision, we will publish a notice of amended final results of review to that effect. This change has no effect on the respondents' weighted-average margins or duty-assessment rates.

However, the Department interprets section 751(a)(4) of the Tariff Act of 1930, as amended (the Act), to mean that it has authority to conduct a duty-absorption inquiry in the second and fourth reviews and is not precluded from conducting duty-absorption inquiries in reviews other than those specified under section 751(a)(4) of the Act. On April 14, 2000, the Department presented a motion to the Court to modify its ruling in a related proceeding on the ground that the Court had erred as a matter of law. See Defendant's Motion for Rehearing and Modification of the Court's Decision, Consol. Court No. 99-08-00473, Slip Op. 00-28, and Accompanying Order of March 22, 2000 (CIT April 14, 2000). That motion in the related proceeding set forth the Department's position on the matter (i.e., that the Court erred in nullifying the Department's duty-absorption inquiry). The United States has filed a notice of appeal with the United States Court of Appeals for the Federal Circuit regarding the CIT's adverse decision in SKF USA Inc. v. United States, 94 F. Supp. 2d 1351, appeal docketed, No. 01-1039 (Fed. Cir. October 26, 2000), on the issue of the duty-absorption inquiry.

Comment: Torrington contends that the Department has inherent authority to conduct duty-absorption inquiries in any review. Torrington also asserts that the CIT exceeded its power of judicial review when it remanded the case to the Department with no other option but to annul, instead of permitting the agency to reach a determination consistent with the CIT's order. Torrington urges the Department to state, in the final remand results, that it disagrees with the decision of the CIT with regard to this issue and that it believes the Court exceeded its power of judicial review.

Koyo disagrees with the Department's assertion that, despite the decision of the CIT, the Department "has authority to conduct a duty-absorption inquiry in the second and fourth reviews and is not precluded from conducting duty-absorption inquiries in reviews other than those specified under [the statute]." Koyo strongly agrees with the interpretation of the relevant statutory provisions by the CIT in its opinion.

Department's Position: As described above, we disagree with the CIT's decision with regard to this issue, and we have filed a notice of appeal with the United States Court of Appeals for the Federal Circuit regarding the CIT's adverse decision in SKF USA Inc. v. United States, 94 F. Supp. 2d 1351, appeal docketed, No. 01-1039 (Fed. Cir. October 26, 2000), on this issue.

Affiliated-Party Inputs

The Court remanded AFBs 9 to the Department to clarify what action it took with respect to inputs that NTN obtained from affiliated parties, to articulate the reasoning for these actions, and to open the record for additional information. In its opinion, the Court notes that the Department conceded that it did not explain its test for distinguishing major inputs from minor inputs nor did it explain the methodology used to determine the value for minor inputs in this case. See Torrington, Slip Op. 01-56 at 34-35.

As indicated by our questionnaire, a "major input is an essential component of the finished merchandise which accounts for a significant percentage of the total cost of materials, the total labor costs, or the overhead costs incurred to produce one unit of the merchandise under review (e.g., inner or outer rings, cages, rolling elements). All inputs which do not meet this definition are minor inputs (e.g., seals)." See the questionnaire dated June 23, 1998, at page D-3.

For AFBs 9, we treated all of NTN's affiliated-party inputs as major inputs because NTN did not identify which of its affiliated-party inputs were major inputs and which inputs were minor inputs. Thus, we valued all of NTN's affiliated-party inputs at the highest of the affiliate's cost of production, the market price, or the transfer price.

After reviewing the record, however, we found that we had not given NTN a specific opportunity to make this identification. Therefore, pursuant to the Court's order to re-open the record, we issued to NTN a supplemental questionnaire asking it to identify which of its affiliated-party inputs were major inputs and which were minor inputs.

On June 5, 2001, NTN provided the data we requested, with one exception as noted below. We have incorporated this data into our margin calculations and we have valued minor affiliated-party inputs using our normal methodology for these final results of redetermination. That is, we valued minor affiliated-party inputs at the higher of the market price or the transfer price. Where no market price existed, we valued minor affiliated-party inputs at the higher of the affiliate's cost of production or the transfer price. We valued major affiliated-party inputs at the highest of the affiliate's cost of production, the market price, or the transfer price. See, e.g.,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, 2115 (January 15, 1997).

NTN asserted that it was not able to provide the data we requested with regard to one affiliated supplier. See NTN's response dated June 5, 2001, at 2. However, there is no market-price information on the record for such inputs. See the supplier's cost-of-production data submission dated August 28, 1998. Where no market price exists for an affiliated-party input, there is effectively no difference between our treatment of major and minor inputs. As we described above, when there is no market price for a minor input, we value minor affiliated-party inputs at the higher of the affiliate's cost of production or the transfer price. Similarly, when there is no market price for a major input, we value major affiliated-party inputs at the higher of the affiliate's cost of production or the transfer price. Therefore, even though NTN did not identify which of the affiliated supplier's inputs were major or minor inputs, the data on the record is sufficient for us to make proper adjustments to NTN's costs. Thus, no change in our methodology is necessary for our treatment of inputs purchased from this affiliated supplier.

Comment: NTN argues that the Department erred when it stated that there were no market prices for the inputs supplied by the one affiliated party described above. NTN asserts that it reported the market prices of such inputs in its August 28, 1998, response.

Department's Position: We have reexamined the record and have found that, while NTN is correct in asserting that it reported market prices for parts supplied by affiliated parties, we found that no market prices existed with respect to any of the specific inputs supplied by the affiliated party in question. See Memorandum to File dated July 20, 2001. Thus, our statements with regard to this supplier were factually accurate. Therefore, no change to our calculation of NTN's margin is necessary.

Arm's-Length Test

The Court remanded AFBs 9 to the Department to articulate the methodology it used in conducting the arm's-length test and to apply the test in accordance with 19 CFR 351.403(c).

For AFBs 9, we applied adverse facts available to NTN's sales to certain affiliated parties because we found that NTN had not acted to the best of its ability in reporting the downstream sales. The Court upheld our use of adverse facts available. See Torrington, Slip Op. 01-56 at 40. This adverse facts available is our estimation of what the price would have been had NTN reported the downstream sales to unaffiliated parties. However, we inadvertently did not change the customer-relationship variable to indicate that the prices were for sales to unaffiliated parties. Instead, we continued to treat the sales as if they were sales to affiliated parties and incorrectly conducted our arm's-length test on these sales.

For these final results of redetermination, we have corrected this inadvertent error by changing the value of the variable in the program and have not applied the arm's-length test to such sales.

We did not receive any comments on this issue.

NTN's Packing Expenses

The Court observed that, in AFBs 9, the Department stated that it applied partial adverse facts available but also stated that it denied the adjustment with regard to NTN's home-market packing expenses. Noting an apparent inconsistency, the Court remanded AFBs 9 to the Department to explain its final decision concerning NTN's home-market packing expenses.

Our statement that we applied partial adverse facts available with regard to home-market packing expenses was in error. Indeed, as the Court observed, we denied the expense in its entirety because we found that NTN's allocation methodology was distortive for the proprietary reasons described in the NTN final results analysis memorandum dated June 16, 1999.

We did not receive any comments on this issue.

FINAL RESULTS OF REDETERMINATION

In accordance with the remand order, we have recalculated the antidumping duty margins for NTN as directed by the CIT. We made no changes to our margin calculations for Koyo.

The recalculated weighted-average percentage dumping margins for the period May 1, 1997, through April 30, 1998, for BBs, CRBs, and SPBs are as follows:

Company	BBs	CRBs	SPBs
Koyo Seiko	7.23	11.15	(1)
NTN Corporation
Original	6.13	3.48	12.49
Revised	6.18	3.45	12.48

(1) No shipments or sales subject to this review.

These final results of redetermination are pursuant to the remand order of the CIT in The Torrington Company v. United States, Consol. Court No. 99-08-00462, Slip Op. 01-56 (May 11, 2001).

______________________

Faryar Shirzad
Assistant Secretary
for Import Administration

August 8, 2001
Date