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NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH;
Consol. Court No. 97-10-01800, Slip Op. 01-76 (CIT June 22, 2001) 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 GERMANY SUMMARY 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 NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH; SKF USA Inc. and SKF GmbH; FAG Kugelfischer George Schafer AG and FAG Bearings Corporation; and INA Walzlager Schaeffler oHG and INA Bearing Company, Inc. v. United States and The Torrington Company, Consol. Court No. 97-10-01800, Slip Op. 01-76 (CIT June 22, 2001). In accordance with the U.S. Court of International Trade's instructions, the Department of Commerce has reconsidered certain issues and made changes to its antidumping duty weighted-average margin calculations with respect to FAG Kugelfischer George Schafer AG and FAG Bearings Corporation, and INA Walzlager Schaeffler oHG and INA Bearing Company, Inc., in the administrative reviews of the antidumping duty orders on ball bearings, cylindrical roller bearings, and spherical plain bearings and parts thereof from Germany covering the period May 1, 1995, through April 30, 1996. Furthermore, the Department of Commerce has annulled all findings and conclusions made pursuant to the duty-absorption inquiry conducted for the subject review with respect to NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH, SKF USA Inc. and SKF GmbH, FAG Kugelfischer George Schafer AG and FAG Bearings Corporation, and INA Walzlager Schaeffler oHG and INA Bearing Company, Inc. Please refer to the section of this final redetermination entitled "Final Results of Redetermination" for the revised antidumping duty weighted-average margins that resulted from making the changes instructed by the U.S. Court of International Trade. BACKGROUND On June 22, 2001, the U.S. Court of International Trade (the Court) issued its ruling in NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH; SKF USA Inc. and SKF GmbH; FAG Kugelfischer George Schafer AG and FAG Bearings Corporation; and INA Walzlager Schaeffler oHG and INA Bearing Company, Inc. v. United States and The Torrington Company, Consol. Court No. 97-10-01800, Slip Op. 01-76 (CIT June 22, 2001), 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 54043 (October 17, 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 61963 (November 20, 1997) (collectively AFBs 7). This remand directly affects NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH (NTN), SKF USA Inc. and SKF GmbH (SKF), FAG Kugelfischer George Schafer AG and FAG Bearings Corporation (FAG), and INA Walzlager Schaeffler oHG and INA Bearing Company Inc. (INA) with respect to the antidumping duty orders on ball bearings, cylindrical roller bearings, and spherical plain bearings and parts thereof from Germany. The Court remanded AFBs 7 to the Department to address the following instructions: 1) annul all findings and conclusions made pursuant to the duty-absorption inquiry conducted for the subject reviews; 2) attempt to match United States sales to similar home-market sales before resorting to constructed value; 3) reconsider the Department's determination to deny downward billing adjustments on INA's home-market sales; 4) clarify how the Department complied with the statutory framework of sections 776 and 782 of the Tariff Act of 1930, as amended (the Act), for using facts available and applying an adverse inference and, if the Department determines it did not adhere to all of the statutory prerequisite conditions, to give INA the opportunity to remedy or explain any deficiency regarding its alleged sample sales; and 5) include all expenses included in "total United States expenses" in the calculation of "total expenses" for INA. On September 12, 2001, we released the draft results of redetermination and invited interested parties to comment. We received no comments.
The Court instructed the Department to annul all findings and conclusions made pursuant to the duty-absorption inquiry conducted in AFBs 7. The Department hereby complies with the remand as directed by the Court with respect to FAG, INA, NTN, and SKF and annuls all findings and conclusions made pursuant to its duty-absorption inquiry conducted for the subject reviews. Upon a final and conclusive court decision, we will publish a notice of amended final results of review to that effect. This change does not affect our antidumping duty weighted-average margin calculations or duty-assessment rates for the respondents. However, the Department interprets section 751(a)(4) of the Act to mean that it has the 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 Court'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.
The Court instructed the Department to attempt to match U.S. sales to "similar" home-market sales before resorting to constructed value. As a result of the decision of the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) 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 constructed value when sales of identical merchandise have been found to be outside the ordinary course of trade. Under this practice, the Department first attempts to match U.S. sales to similar home-market sales before resorting to constructed value. In accordance with the Court's instructions, we have changed our model-matching methodology for FAG and INA. Instead of relying on constructed value as the basis for normal value for U.S. models when we disregarded all sales of identical merchandise in the home market because they were made outside the ordinary course of trade, we attempted first to match models sold in the United States to models sold in the comparison market that fall within the same family of bearings (i.e., similar bearings). We used constructed value only if there were no sales of similar merchandise we could use to determine normal value.
The Court instructed the Department to reconsider its determination to deny a downward billing adjustment to INA's home-market sales. We concluded that we erred in denying INA's downward billing adjustments to its home-market sales and agreed with INA that the issue should be remanded so that we can make the adjustment. We have corrected the error by ensuring that we have included negative downward billing adjustments for home-market sales in our margin calculations for INA.
The Court instructed the Department to clarify how it complied with the statutory framework of sections 776(b) and 782(d) of the Act for using facts available and applying an adverse inference and, if we determine we did not adhere to all of the statutory prerequisite conditions, to give INA the opportunity to remedy or explain any deficiency regarding its alleged sample sales. After reviewing the record, we find that we did not comply with the statutory prerequisite conditions of section 782(d) of the Act which concerns deficient submissions. Section 782(d) of the Act states: If the administering authority or the Commission determines that a response to a request for information under this title does not comply with the request, the administering authority or the Commission (as the case may be) shall promptly inform the person submitting the response of the nature of the deficiency and shall, to the extent practicable, provide that person with an opportunity to remedy or explain the deficiency in light of the time limits established for the completion of investigations or reviews under this title. In the supplemental questionnaire we issued to INA while conducting the 1995/1996 reviews we did not address the deficiencies with INA's response to our request for information on samples and prototype transactions. Thus, in accordance with the Court's instructions, we have now provided INA with this opportunity. Specifically, on August 8, 2001, we sent a letter to INA requesting that it address properly the questions in our original questionnaire involving samples and prototype transactions. (1) INA responded to this request for information on August 14, 2001. As acknowledged by the Court (see Slip Op. 01-76 at 42) in NSK Ltd. v. United States, 115 F. 3d 965, 975 (Fed.Cir. 1997), the Federal Circuit held "that the term 'sold'...requires both a transfer of ownership to an unrelated party and consideration." After evaluating the information provided in INA's August 14, 2001, response, we find that, although there was transfer of ownership of the merchandise in question, there is no indication that the respondent received consideration for these sample transactions. Therefore, we have determined that INA's alleged sample transactions are not supported by consideration and, accordingly, we have excluded these transactions from our calculation of the weighted-average margin for INA. We now find that, after INA has been given the opportunity to respond to its deficiencies concerning sample sales, the necessary information is on the record which has allowed us to make a determination regarding INA's claimed sample sales. We also find that INA has acted to the best of its ability to provide the information. Therefore, we have not applied facts available with respect to INA's claimed sample sales.
INA argued before the Court that the Department should include U.S. credit expenses and inventory carrying costs in the calculation of "total expenses" for the constructed-export-price (CEP)-profit ratio since the Department included these expenses in "total United States expenses." In its remand order, the Court directed the Department to "include all expenses included in 'total United States expenses' in the calculation of 'total expenses'" for INA. To comply with the Court's instruction, for the CEP-profit ratio we have modified our margin calculations to include U.S. credit expenses and inventory carrying costs in the calculation of "total expenses" (since we included such expenses in "total United States expenses"). We respectfully reaffirm our position that it is appropriate to base the CEP-profit ratio on actual expenses as indicated in the wording of section 772(f)(1) of the Act, which directs us to calculate CEP profit on the basis of "total actual profit." As discussed below, the Department's practice with respect to imputed costs like U.S. credit expenses and inventory carrying costs is reasonable. Furthermore, recent court decisions support the Department's interpretation concerning the calculation of the CEP-profit ratio. Normal accounting principles only permit the deduction of actual booked expenses, not imputed expenses, in calculating profit. Inventory- carrying costs and credit expenses are imputed expenses, not actual booked expenses, so we have established a practice of not including them in the calculation of total actual profit. See, e.g., Antidumping Duties; Countervailing Duties; Final Rule, 62 FR at 27317, 27354 (May 19, 1997), Import Administration Policy Bulletin number 97/1, issued on September 4, 1997, concerning the Calculation of Profit for Constructed Export Price Transactions, at 3 and note 5, and Notice of Final Results of Antidumping Duty Administrative Review; Canned Pineapple Fruit from Thailand, 63 FR 7392, 7395 (February 13, 1998). Likewise, since the cost of the U.S. and home-market merchandise (i.e., the total expenses) includes the actual booked interest expenses, it is not appropriate to include imputed interest amounts as well in total expenses. Doing so double-counts this expense to a certain extent and overstates the cost attributed to sales of this merchandise. This overstatement of cost understates the ratio of U.S. selling expenses to total expenses and, consequently, understates the amount of actual profit allocated to selling, distribution, and further-manufacturing activities in the United States. In addition, there is another inconsistency. Although we include the imputed credit expenses and imputed inventory-carrying costs incurred on sales of the subject merchandise in "total United States expenses," inclusion of these items in the calculation of "total expenses" as directed by the Court distorts the ratio of U.S. selling expenses to total expenses. The change we have made pursuant to the Court's order results in the addition of imputed expenses incurred on sales of the subject merchandise in the United States, but it does not result in the addition of imputed expenses incurred on sales of the foreign like product sold in the exporting country (i.e., the latter expenses are not included in "total United States expenses"). This cumulation of expenses on sales of the subject merchandise sold in the United States in a manner that is inconsistent with the cumulation of expenses on sales of the foreign like product sold in the exporting country is distortive. Finally, in this case the Court held that "Commerce improperly excluded imputed inventory and carrying costs from 'total expenses' when it had included these expenses in 'total United States expenses.'" See Slip Op. 01-76 at 64. The Court concluded that, "since Commerce determined that imputed inventory and carrying costs were to be included in 'total United States expenses,' they must be included in 'total expenses' as well." See Slip Op. 01-76 at 65-66. The Federal Circuit held recently, however, that the statute "does not require or even vaguely suggest symmetry between the definitions of 'United States expenses' and 'total expenses.'" See U.S. Steel Group v. United States, 225 F.3d 1284, 1290 (Fed. Cir. 2000). In fact, the Federal Circuit stated that the statutory definitions themselves "undercut symmetrical treatment of 'total U.S. expenses' and 'total expenses.'" Id. See also Thai Pineapple Canning Industry Corp., Ltd. v. United States and Maui Pineapple Co., Ltd., and International Longshoremen's and Warehousemen's Union, Consol. Court No. 98-03-00487, Slip Op. 00-17 (CIT February 10, 2000) (affirming the Department's method of avoiding double-counting). For the above reasons, while we have fully implemented the instructions of the Court, we respectfully disagree with the instruction to include imputed expenses in "total United States expenses" in the calculation of "total expenses." As a result of recalculating the antidumping duty weighted-average margins for FAG and INA in accordance with the remand order, the weighted-average dumping margins for FAG and INA for the period May 1, 1995, through April 30, 1996, with respect to ball bearings, cylindrical roller bearings, and spherical plain bearings and parts therof from Germany changed as follows:
Faryar Shirzad
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footnote: 1. INA only reported sample sales which it identifies as zero-priced transactions. See Slip Op. 01-76 at 42. |