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 SNR Roulements, SKF USA Inc., SKF France S.A. and SARMA v. United States, Slip Op. 00-131 (October 13, 2000). In accordance with the U.S. Court of International Trade's instructions, we have made changes to our calculations with respect to SNR Roulements that resulted in the following weighted-average margins for the period May 1, 1995, through April 30, 1996: 8.59 percent for ball bearings and 10.14 percent for cylindrical roller bearings. The remand did not result in a change in the margins for SKF France S.A.
On October 13, 2000, the U.S. Court of International Trade (CIT) issued an order in SNR Roulements, SKF USA Inc., SKF France S.A. and SARMA v. United States, Slip Op. 00-131 (October 13, 2000) (SNR v. U.S.), 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, Romania, Singapore, Sweden and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews, 62 FR 54043 (October 17, 1997), and Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore; Sweden and the United Kingdom; Amended Final Results of Antidumping Duty Administrative Reviews, 62 FR 61963 (November 20, 1997) (collectively, AFBs 7). In SNR v. U.S., the Court remanded the final results to the Department to make the following changes to its determination in AFBs 7: 1) annul all findings and conclusions made pursuant to the duty-absorption inquiry conducted for this review; and 2) include all expenses included in "total United States expenses" in the calculation of "total expenses" for SNR Roulements (SNR). The remand affects SNR and SKF France S.A. (SKF) with respect to the antidumping duty orders on ball bearings (BBs), cylindrical roller bearings (CRBs), and spherical plain bearings (SPBs) from France for the period May 1, 1995, through April 30, 1996.
On November 27, 2000, we released the draft results of redetermination and invited interested parties to comment.
The Court remanded AFBs 7 to the Department to annul all findings and conclusions made pursuant to the duty-absorption inquiry it conducted in AFBs 7.
The Department hereby complies with the remand as directed by the Court with respect to SNR and SKF and annuls all findings and conclusions made pursuant to its duty-absorption inquiry conducted for the subject reviews with respect to SNR and SKF. Upon a final and conclusive court decision, we will publish an 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, Slip Op. 00-28, and Accompanying Order of March 22, 2000, filed in Court No. 99-08-00473 (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). As such, there is no need to repeat it here. 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 Slip Op. 00-28 (March 22, 2000) on the issue of the duty-absorption inquiry.
Comment: Torrington concurs with the Department's position but argues that the remand results should be modified to indicate that Torrington has also appealed the decision in SKF USA Inc. v. United States, Slip Op. 00-28 (CIT March 22, 2000). Torrington argues further that the Department should state that it believes that the CIT exceeded its power on judicial review when it ordered the Department to annul its determination.
Department's Position: We confirm that Torrington has, as indicated in its brief, also appealed the CIT's decision in the aforementioned proceeding. As indicated above, we have respectfully stated our belief that the CIT erred in nullifying our duty-absorption findings.
Constructed-Export-Price (CEP) Profit Calculation
The Court remanded our calculation of CEP profit for SNR, finding that section 772 of the Act requires us to include all expenses included in "total United States expenses" (including imputed credit expense and imputed inventory-carrying costs) in the calculation of "total expenses" when we calculate CEP profit. Accordingly, we have complied with the Court's instruction by including imputed credit expense and imputed inventory-carrying costs in the calculation of total expenses in our calculation of CEP profit for SNR. However, in reviewing our calculations for the final results of redetermination, we discovered that this change had the unintended result of affecting our calculation of "total actual profit" because the program calculates "total actual profit" using the variable for "total expenses." To correct this inadvertent error, we restored the "total actual profit" calculation for the final results of redetermination, while continuing to include imputed credit expense and imputed inventory-carrying costs in the calculation of total expenses when we calculate the CEP-profit ratio.
Comment: Torrington argues that the Department's calculation of SNR's CEP-profit ratio was supported by substantial evidence and is in accordance with law. Torrington asserts that the Department's methodology recognizes that SNR USA is a related entity, whose recorded expenses may reflect the shifting of costs to the related parent in France. Torrington contends that the Department avoids any under-allocation of CEP profit by including imputed expenses in the U.S. expenses to which the Department applies the CEP ratio. Torrington believes that the CEP ratio should be calculated on actual expenses only. Accordingly, Torrington argues that the Department should state that it disagrees with the CIT's decision and that it believes that the CIT exceeded its power on judicial review.
Department's Position: 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 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, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al; Final Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 62 FR 2081, 2127 (January 15, 1997), 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 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 the imputed credit expenses and imputed inventory-carrying costs incurred on sales of the subject merchandise in the United States are included in "total United States expenses," inclusion of these items in the calculation of "total expenses" as directed by the CIT distorts the ratio of U.S. selling expenses to total expenses. The change we have made pursuant to the CIT'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 CIT ruled that "Commerce improperly excluded imputed inventory and carrying costs from 'total expenses' when it had included these expenses in 'total United States expenses.'" The CIT 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." The United States Court of Appeals for the Federal Circuit (CAFC), however, ruled recently that the statute "does not require or even vaguely suggest symmetry between the definitions of 'U.S. expenses' and 'total expenses.'" In fact, the CAFC stated that the statutory definitions themselves "undercut symmetrical treatment of 'total U.S. expenses' and 'total expenses.'" See U.S. Steel Group, et al v. United States, 225 F.3d 1284, 1290 (CAFC 2000); see also, Thai Pineapple Canning Industry Corp., Ltd. v. United States, 2000 Ct. Intl. Trade LEXIS 17 (CIT September 10, 2000) (affirming the Department's method of avoiding double-counting).
For the above reasons, we respectfully disagree with the CIT's instructions to include imputed expenses in "total United States expenses" in the calculation of "total expenses."
FINAL RESULTS OF REDETERMINATION
In accordance with the remand order, we have recalculated the antidumping duty margins for SNR as directed by the CIT. We made no changes to our margin calculations for SKF.
The recalculated weighted-average percentage dumping margins for the period May 1,
1995, through April 30, 1996, for BBs, CRBs, and SPBs are as follows:
Company BBs CRBs SPBs SKF 10.80 (1) 42.79 SNR 8.59 10.14 (1) (was 8.60) (was 10.14)
1) No shipments or sales subject to this review. The firm has no individual rate from any segment of this proceeding.
Troy H. Cribb
for Import Administration