FINAL RESULTS OF REDETERMINATION PURSUANT TO COURT REMAND
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 SKF USA Inc. v. United States, Slip Op. 99-127 (CIT December 2, 1999). In accordance with the court's instructions, we have 1) excluded any transactions that were not supported by consideration that SKF GmbH reported in its U.S. sales database from our margin calculations, 2) applied the profit-variance test to each customer who failed the arm's-length test before calculating the profit element of constructed value for FAG Kugelfischer Georg Schafer AG, and 3) removed rebates paid on sales of out-of-scope merchandise from any adjustments made to SKF GmbH's foreign market value or, if there is no viable method to do so, denied such an adjustment in the calculation of foreign market value. The results of these changes are identified in the Final Results of Redetermination, below.
On February 9, 2000, the Department released draft results of redetermination pursuant to the remand order in Slip Op. 99-127 to all parties for comment. On February 14, 2000, we received comments from SKF GmbH. We have addressed the party's comments in the "Discussion" section that follows.
On December 2, 1999, the U.S. Court of International Trade (CIT) issued an order in SKF USA Inc. v. United States, Slip Op. 99-127 (December 2, 1999), 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, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, 61 FR 66472 (December 17, 1996) (AFBs V). In SKF USA Inc. v. United States, the CIT remanded the final results to the Department to: 1) exclude transactions not supported by consideration from SKF GmbH's (SKF) U.S. sales database, 2) apply the profit-variance test to each customer who failed the arm's-length test before calculating the profit element of constructed value (CV) for FAG Kugelfischer Georg Schafer AG (FAG), and 3) remove rebates paid on sales of out-of-scope merchandise from any adjustments made to SKF's foreign market value (FMV) or, if there is no viable method to do so, deny such an adjustment in the calculation of FMV. The remand affects SKF and FAG with respect to the antidumping duty order on ball bearings (BBs), cylindrical roller bearings (CRBs), and spherical plain bearings (SPBs) from Germany for the period May 1, 1993, through April 30, 1994.
Transactions With No Consideration
Pursuant to the order of the CIT, we have excluded from SKF's U.S. sales database transactions for which SKF received no consideration. We did this by setting the U.S. price and the antidumping duty margin for such transactions to zero. Thus, these transactions are effectively excluded from our weighted-average margin calculation. However, the Customs Service collects the ad valorem (or per-unit, where applicable) duty-assessment rate on all entries of subject merchandise regardless of whether the merchandise was a sample transaction.(1) Thus, even though the assessment rate is applied to all subject merchandise because of the logistical limitations of the Customs Service, the actual dumping margin is exclusive of sample merchandise. This practice is consistent with our practice in all reviews of this order since the decision by the Court of Appeals for the Federal Circuit (CAFC) in NSK Ltd. v. United States, 115 F.3d 965, 975 (Fed. Cir. 1997). See, e.g., Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews, 62 FR 54043, 54068-9 (October 17, 1997).
We received no comments regarding this issue.
CV Profit for FAG
The CIT ordered us, upon our request for a remand, to apply the profit-variance test to each customer who failed the arm's-length test in order to ensure that the profit-variance test is consistent with the arm's-length test. We have done this and have recalculated FAG's margin accordingly. See FAG's draft results analysis memorandum dated February 4, 2000, for a description of our findings.
We received no comments regarding this issue.
The CIT upheld our treatment of the rebates in question as indirect selling expenses but ordered us to remove rebates paid on sales of out-of-scope merchandise from any adjustments made to SKF's FMV for SKF's reported rebate number 2. The CIT ordered further that, if there is no viable method to do so, we were to deny such an adjustment in the calculation of FMV.
We first note that indirect selling expenses, by their nature, cannot be attributed to particular in-scope and out-of-scope sales. They can, however, be allocated (or misallocated) to in-scope versus out-of-scope merchandise. We have examined the record and found that there is no viable method for us to remove rebates paid on sales of out-of-scope merchandise for rebate number 2. This is because SKF's response does not indicate clearly whether rebate number 2 was allocated between in-scope and out-of-scope merchandise properly. Moreover, the expenses SKF reported for its rebate number 2 were based on customer-specific factors. See SKF's section C response dated September 6, 1994, at page 59. Because we do not have the sales values and rebate amounts SKF used to calculate these factors, we are unable to determine whether SKF actually removed by allocation the portion of the rebates attributable to out-of-scope merchandise. Therefore, it is impossible for us to remove rebates paid on sales of out-of-scope merchandise for rebate number 2, and, pursuant to the order of the CIT, we have denied SKF's claimed adjustment to FMV for rebate number 2.
Comment 1: SKF contends that the Department made two errors in the text of its draft redetermination. First, SKF contends that the Department's statement, that it does not have the customer-specific factors SKF used to report rebate 2, is inaccurate. Second, SKF contends that the Department's position, that it is not clear whether the reported rebate 2 amounts included rebates paid on out-of-scope merchandise, is inaccurate. SKF argues that, because it allocated all rebate 2 amounts granted to a customer over all sales to that customer (which can include in-scope and out-of-scope merchandise), SKF's methodology effectively removes any rebates paid on out-of-scope merchandise. SKF also contends that there is no evidence on the record that rebate 2 is granted on out-of-scope merchandise in a disproportionate manner. Finally, SKF argues that its methodology is consistent with the methodology approved by the CAFC in Koyo Seiko Co., Ltd. v. United States, 190 F.3d 1321 (1999) (Koyo).
Department's Position: We agree with SKF that it did provide the customer-specific factors it used to calculate the amounts for rebate 2. However, as discussed above, we do not have the sales values and rebate amounts SKF used to calculate these factors. Furthermore, while SKF is correct that there is no evidence on the record that rebate 2 is granted on out-of-scope merchandise in a disproportionate manner, there is also no evidence on the record that it is granted in a proportionate manner. Rather, the record is silent concerning whether rebate 2 is granted to in-scope and out-of-scope merchandise proportionately. However, because SKF is claiming a favorable adjustment to FMV, the burden is on SKF to demonstrate that the reported amounts do not include rebates paid on out-of-scope merchandise or that the allocation methodology effectively removes the rebates paid on out-of-scope merchandise. SKF did neither. Therefore, pursuant to the CIT's order, we have denied an adjustment to FMV for SKF's reported rebate 2.
Finally, SKF's citation to Koyo is inapposite. While the allocation methodology the respondent used in that case may have effectively removed the adjustment related to out-of-scope merchandise with respect to warranties (the expense in question in Koyo), the same cannot be said here. As noted above, we have no way of knowing whether SKF's allocation methodology effectively removed the rebates paid on out-of-scope merchandise because we do not know whether SKF paid different amounts of rebate for different products when it granted these rebates to its customers. Thus, the CAFC's decision in the case cited by SKF is not relevant here.
Comment 2: SKF contends that the Department erred by deducting the values of rebate 2 from the gross unit price it used when it recalculated SKF's home-market credit expenses. SKF alleges that, by deducting the values of rebate 2 from the gross unit price in calculating credit expenses, the Department does not fully deny any adjustment for rebate 2 in the home market.
Department's Position: We disagree with SKF. The CIT ordered us to deny rebate 2 as an adjustment to FMV but did not instruct us concerning any other adjustments which may be affected by our treatment of rebate 2. However, if we do not calculate SKF's home-market credit expenses net of rebate 2, SKF would benefit from not reporting the rebates in a proper manner because not deducting rebate 2 from the gross unit price we use in calculating credit expenses would increase the deduction we make from normal value for credit expenses. This would result in lowering SKF's dumping margin. As the CIT upheld our principle of not allowing respondents to benefit from not complying with our requests for information in its discussion of SKF's positive billing adjustments in this remand, similarly, it is proper to deduct SKF's rebate 2 in our calculation of SKF's home-market credit expenses because SKF has not reported the rebates in a manner that allows us to determine the correctness of its allocation methodology. Therefore, we have not made this change for the final results of remand.
Comment 3: SKF contends that the Department made a clerical error by characterizing some further-manufactured sales as having margins calculated on the basis of the best information available.
Department's Position: We agree with SKF. However, the error has no effect on the margin calculation because this characterization is performed merely for printing transactions of various margin calculation methodologies (e.g., price-to-price comparisons, CV comparisons). Therefore, we have not made this change for the final results of remand.
FINAL RESULTS OF REDETERMINATION
In accordance with the remand order, we have recalculated the antidumping duty margins for FAG and SKF as directed by the CIT.
The recalculated weighted-average percentage dumping margins for the period
May 1, 1993 through April 30, 1994, for BBs, CRBs, and SPBs are as follows:
* No change from AFBs V.
This redetermination is pursuant to the order of the CIT in SKF USA Inc. v. United
Joseph A. Spetrini
(Date: March 1, 2000)
1. Customs has no way of distinguishing between "sample" and "sold" subject merchandise as the subject merchandise enters the country. Thus, we calculate the assessment rate by taking the dumping margin that we calculated after excluding sample merchandise and then spreading that margin over the value of all subject merchandise.