NSK Ltd. and NSK Corporation, Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A, NTN Bearing Corporation of America, NTN Corporation, American NTN Bearing Manufacturing Corporation, NTN Driveshaft, Inc. and NTN-Bower Corporation, and Nippon Pillow Block Sales Co., Ltd. and FYH Bearing Units USA Inc.
v. United States and The Torrington Company
Consol. Court No. 97-02-00216, Slip Op. 01-69 (CIT June 6, 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 JAPAN
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 NSK Ltd. and NSK Corporation, Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A, NTN Bearing Corporation of America, NTN Corporation, American NTN Bearing Manufacturing Corporation, NTN Driveshaft, Inc. and NTN-Bower Corporation, Nippon Pillow Block Sales Co., Ltd. and FYH Bearing Units USA Inc. v. United States and The Torrington Company, Consol. Court No. 97-02-00216, Slip Op. 01-69 (CIT June 6, 2001). In accordance with the U.S. Court of International Trade's instructions, the Department of Commerce has made changes to its calculations with respect to NSK Ltd. and NSK Corporation in the administrative reviews of the antidumping duty orders on ball bearings and cylindrical roller bearings and parts thereof from Japan covering the period May 1, 1994, through April 30, 1995. Please refer to the section of this redetermination entitled "Final Results of Redetermination" for the revised weighted-average percentage dumping margins that resulted from making the changes with respect to NSK Ltd. and NSK Corporation as instructed by the U.S. Court of International Trade.
On June 6, 2001, the U.S. Court of International Trade (the Court) issued its ruling in NSK Ltd. and NSK Corporation, Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A, NTN Bearing Corporation of America, NTN Corporation, American NTN Bearing Manufacturing Corporation, NTN Driveshaft, Inc. and NTN-Bower Corporation, and Nippon Pillow Block Sales Co., Ltd. and FYH Bearing Units USA Inc. v. United States and The Torrington Company, Consol. Court No. 97-02-00216, Slip Op. 01-69 (CIT June 6, 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 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 NSK Ltd. and NSK Corporation (NSK), and Koyo Seiko Co., Ltd., and Koyo Corporation of U.S.A (Koyo) with respect to the antidumping duty orders on ball bearings and cylindrical roller bearings and parts thereof from Japan.
On August 16, 2001, we released the draft results of redetermination and invited interested parties to comment. We received comments from NSK on August 20, 2001, and from Koyo on August 21, 2001.
The Court remanded AFBs 6 to the Department to address the following areas:
The Court instructed the Department to exclude any transactions that were not supported by consideration from NSK's U.S. sales database and to adjust the dumping margins accordingly. See Slip Op. 01-69 at 20. Pursuant to the order of the Court, we have set 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 U.S. 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 for ease of administration, the actual dumping margin is exclusive of sample merchandise. This practice is consistent with our practice in all reviews of this order since the Court of Appeals for the Federal Circuit's decision 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 did not receive any comments on this issue in response to our draft results.
The Court instructed the Department to include the imputed inventory carrying costs in the calculation of the constructed-export-price (CEP) offset for NSK when matching CEP sales to constructed value (CV). See Slip Op. 01-69 at 22. Therefore, we have calculated the inventory carrying costs for CV in the same manner as we calculate indirect selling expenses for CV and have included the inventory carrying costs in the calculation of the CEP offset for NSK.
We did not receive any comments on this issue in response to our draft results.
The Court instructed the Department to reconsider the issue of NSK's relationship with a certain affiliated supplier. See Slip Op. 01-69 at 25. In its order, the Court disagreed with the Department's contention that NSK had not exhausted its administrative remedies, but it did not address the merits of NSK's arguments.
NSK did not dispute the fact that it is affiliated with the supplier at issue pursuant to section 771(33) of the Tariff Act of 1930, as amended (the Act). However, it contended that it had rebutted the statutory presumption by placing facts on the record demonstrating that "NSK is not legally or operationally in a position to exercise restraint or discretion over" its supplier.
Section 771(33)(E) of the Act states:
The following persons shall be considered to be affiliated or "affiliated persons":
(E) Any person directly or indirectly owning, controlling, or holding with the power to vote, 5 percent or more of the outstanding voting stock or shares of any organization.
NSK owns five percent or more of the outstanding voting stock or shares of the supplier at issue. See Slip Op. 01-69 at 22. Therefore, NSK is affiliated with the supplier, by definition, as provided in section 771(33)(E) of the Act. NSK asserts that it has provided evidence demonstrating that it does not "control" the supplier at issue and that this evidence rebuts the presumption of affiliation under section 771(33) of the Act. See Slip Op. 01-69 at 22-23. "Control" was not a factor in the Department's determination, however. Under section 771(33)(E) of the Act, persons are affiliated based solely on an ownership interest of five percent or more of outstanding voting stock or shares. Given that NSK has at least five percent stock ownership in the supplier at issue, it is affiliated with the supplier pursuant to section 771(33)(E) of the Act. Under these circumstances, evidence of control or lack thereof was not germane to our affiliation determination. Therefore, NSK and the supplier at issue are affiliated and the only issue is whether the inputs supplied by the supplier at issue were sold to NSK at arm's-length prices and whether the inputs should be valued based on cost of production or transfer price.
As indicated in AFBs 6, we conducted our standard analysis to determine whether the purchases for inputs from the supplier at issue were made at arm's-length prices. We determined that the purchases were not made at arm's-length prices solely on the basis of the price information NSK submitted. See 62 FR at 2114. Therefore, because we found that the prices NSK paid to its affiliated supplier were not at arm's length, we have valued those inputs at the affiliated-party's cost of production.
We did not receive any comments on this issue in response to our draft results.
The Court instructed the Department to "reconsider its determination that Model X of Koyo's was [not] outside the ordinary course of trade and to articulate a clear basis for any conclusion it reaches." See Slip Op. 01-69 at 40. In its order, the Court found that, in addition to evidence of price, Koyo presented evidence of other factors such as quantity, product specifications requiring special materials, standards, and processes required to produce the model, particular use of the model, and special packaging requirements to support its claim that Model X was outside the ordinary course of trade. See Slip Op. 01-69 at 31-40. The Court held that there is no indication in the final results of AFBs 6 that the Department considered these factors. See Slip Op. 01-69 at 40.
Our practice is to exclude home-market sales transactions from the margin calculation as outside the ordinary course of trade based on all the circumstances particular to the sales in question. Section 351.102 (b) of the Department's regulations states that "[t]he Secretary may consider sales or transactions to be outside the ordinary course of trade if the Secretary determines, based on an evaluation of all of the circumstances particular to the sales in question, that such sales or transactions have characteristics that are extraordinary for the market in question. Examples of sales that the Secretary might consider as being outside the ordinary course of trade are sales or transactions involving off-quality merchandise or merchandise produced according to unusual product specifications, merchandise sold at aberrational prices or with abnormally high profits, merchandise sold pursuant to unusual terms of sale, or merchandise sold to an affiliated party at a non-arm's-length price."
We reviewed the record as instructed by the Court and find that the "evidence" Koyo provided consists of statements Koyo made in its August 6, 1996, brief (2) that it filed following the publication of our preliminary results of reviews for the 1994/1995 period. That is, we find that Koyo never provided evidence, other than an analysis of price, to support the statements it made in its brief that sales of Model X are outside the ordinary course of trade. However, in light of the Court's instructions, we have considered the statements Koyo made in its brief by attempting to correlate the factors identified by the Court with the information already on the administrative record for this segment of the proceeding on antifriction bearings from Japan. We found the following for each factor:
In conclusion, we find the statements Koyo made in its brief with regard to quantity, product specifications, special materials, standards and processes, usage, and packaging requirements to be unsupported by record evidence. Because Koyo did not provide evidence to support its contention that sales of Model X were outside the ordinary course of trade, we continue to include these sales in the calculation of Koyo's margin.
Comment 1: Koyo argues that the Department is incorrect in concluding that there is no record evidence to support Koyo's arguments about the characteristics of sales of Model X. Koyo claims that record evidence exists which supports its arguments. For example, Koyo explains, the list of prefixes and suffixes supplied in Exhibit A-27 of its 1994/1995 Section A questionnaire response demonstrates that the letters that appear in Koyo's product names have a particular meaning regarding the characteristics of the model. Koyo states further that, although the prefix and suffix for Model X are not included in this list and although Model X does not appear in any of Koyo's catalogues, the absence of this information serves as evidence of the uniqueness of this model. Koyo notes that the prefix and suffix were added, however, to the prefixes and suffixes list in the subsequent review (i.e., the 1996/1997 review). Additional evidence of the uniqueness of this model, Koyo claims, is found in its 1994/1995 Section D questionnaire response which demonstrates that, compared to all other models, the production quantity of Model X was extremely low.
Furthermore, Koyo argues, the Department was incorrect in relying on general descriptive statements in Koyo's 1994/1995 Section A and D questionnaire responses to support the Department's conclusion that there is no evidence on the record to support that Model X is unique. Koyo claims that the statements to which the Department refers are merely general descriptions of the entire database of sales. Koyo argues that it could not have been expected to address the particular characteristics of individual models in its narrative responses, considering the magnitude of this case. Further, Koyo argues, its silence on the particular characteristics of Model X cannot be construed as having any significance.
Department's Position: We disagree with Koyo's assertion that the absence of information on the record with respect to Koyo's Model X bearing serves as evidence of the uniqueness of the model. The burden is on the respondent to provide evidence to support its claim. See Preamble to Regulations, 62 Fed. Reg. 27296, 27299 (May 19, 1997). See also, NTN Bearing Corp. v. United States, Consol. Court No. 97-10-1800, Slip Op. 2001-76 (June 22, 2001) at 68; and Koyo Seiko Co., Ltd., v. United States, 932 F.Supp. 1488, 1497-98 (CIT 1996). Koyo provided no credible information during the course of the review nor during this remand proceeding that Model X has unique or unusual characteristics. Koyo merely provides statements about this model that cannot be correlated with any information placed on the record during the administrative review. Koyo itself admits that the information concerning the characteristics of this Model X is not on the record of the 1994/1995 review but, rather, was provided for the record of the 1996/1997 review. However, the information provided in the 1996/1997 review was not on the record of the 1994/1995 review nor is it on the record of this remand redetermination. Furthermore, Koyo contradicts its comments regarding the uniqueness of the prefix of Model X by stating that a model with the same prefix as Model X generated a much lower transaction-specific margin than the margin generated by Model X. (See Comment 2 below.) We agree with Koyo's assertion that its Section D response demonstrates that the production quantity of Model X was low (see Comment 3 below).
With respect to Koyo's argument that the statements in its 1994/1995 Section A and D questionnaire responses were only general descriptions of the entire database of sales, again, it was Koyo's responsibility to provide the necessary information to help us make our determination. Not only was there no indication or evidence of differences in the product specifications or the standards and processes required to produce Model X in Koyo's Sections A and D questionnaire responses, Koyo did not demonstrate or provide any evidence to support the statements it made in its brief. Moreover, the Department had no other information on the record upon which to determine that sales of this model were outside the ordinary course of trade.
Comment 2: Koyo argues that the Department's draft redetermination does not address the aberrant nature of the margin generated by the match of the U.S. model to Model X. Koyo points out that the Statement of Administrative Action instructs the Department to avoid basing normal value on sales which are extraordinary, particularly when the use of such sales would lead to irrational or unrepresentative results, citing Statement of Administrative Action, in Message from the President Transmitting the Uruguay Round Trade Agreements, etc., H.R. Doc. No. 316, 103d Cong., 2d Sess., Vol. I at 834 (1994). However, Koyo asserts, the two U.S. sales that the Department matched to Model X resulted in abnormally high, transaction-specific margins which contrasts sharply with the overall weighted-average margin of 18.60 percent for ball bearings. Koyo notes that the only other model sold in the home market with the same prefix to which a U.S. sale was matched generated a much lower transaction-specific margin, hence, confirming the unique characteristics of Model X. Koyo concludes that the inclusion of Model X in thehome-market database resulted in an inflated dumping margin which is plainly irrational.
Department's Position: It is not unusual for transaction-specific margins to deviate significantly from the weighted-average margin. Evidence of this can be found in the margin calculations of other companies that have participated in the administrative review of AFBs 6 (see, e.g., the final margin calculations program for Asahi Seiko dated February 27, 1997). Therefore, we find that Koyo's argument lacks merit because there is nothing extraordinary about high individual margins alone.
Comment 3: Koyo argues that the Department's analysis of the number of units sold and the packing costs of Model X is flawed and does not support the Department's conclusion. Specifically, Koyo explains that, although the Department was able to determine that there are other home-market models in Koyo's database for which an equal or smaller number of units were sold, the total number of units of all sales of these models, including Model X, accounts for significantly less than one percent of the total home-market sales database. Koyo comments that the Department does not explain why low quantity is not a relevant factor in its determination of whether sales are in the ordinary course of trade.
Department's Position: We agree that the number of sales of Model X is lower than many of Koyo's sales of other models and we agree that quantity could be a relevant factor in determining ordinary course of trade. However, as we stated above, since we found that 23 percent of other models had the same percentage as or a smaller percentage than the total quantity of sales for Model X, we find that Model X was not sold in unusual quantities. Furthermore, if we were to conclude that Model X was sold in unusual quantities, we would also have to conclude that almost a quarter of the models reported in Koyo's home-market sales database were sold in unusual quantities. In any case, a determination that there were unusual quantities of sales alone would not lead to a determination that sales of Model X were made outside the ordinary course of trade once taking into consideration all of the circumstances particular to the sales of Model X.
The Court instructed the Department to reconsider its determination that a certain home-market ball bearing produced by Koyo (i.e., Model X) could be compared to U.S. sales because it is a foreign like product. It also directed the Department to articulate the basis for its determination under section 771(16)(B) or (C) of the Act and demonstrate how each element of the applicable subsection is satisfied.
In AFBs 6, we determined that Model X is a foreign like product in accordance with 771(16)(C) of the Act for the following reasons. First, we found Model X to be merchandise produced in the same country, by the same person, and of the same general class or kind as the merchandise which is the subject of this review. That is, Model X was produced in Japan by Koyo and is of the same general class or kind of the subject merchandise which is ball bearings. Second, we found that Model X is like the merchandise in the purposes for which it is used. That is, Model X is being used for antifriction purposes. See Koyo's August 6, 1996, Brief at page 18. Third, we found that Model X is merchandise which the administering authority determined may reasonably be compared with subject merchandise. That is, Model X met our model-matching criteria and our 20-percent difference-in-merchandise test which we use to identify similar merchandise. See 62 FR at 2124. Also see the February 28, 1997, Amended Final Margin Calculations Program at lines 231-408 and 1001-1193. Therefore, we find that Model X is a foreign like product in accordance with section 771(16)(C) of the Act and can reasonably be compared with subject merchandise.
Comment: Koyo argues that the Department's discussion of the foreign-like-product issue is not sufficient to satisfy the court's instructions since the Department does not demonstrate how the elements detailed in subparagraphs (ii) and (iii) under section 771(16)(C) of the Act are satisfied. Specifically, Koyo claims that Model X and the model in the United States to which it is matched do not have the same prefix and, therefore, the purposes for which the two products are used are not the same. Furthermore, Koyo argues, the Department's assertion that Model X is like the merchandise in the purposes for which it is used because it is being used for antifriction purposes is insufficient. Koyo explains that there are many bearing products, such as tapered roller bearings, which are used for antifriction purposes and would not be considered by the Department to be foreign like products. Therefore, Koyo asserts, such an assertion by the Department to satisfy the foreign-like-product criterion is meaningless.
Department Position: In our questionnaire, we specifically instruct respondents to report sales made in the comparison market which are comparable to the subject merchandise. See the Department's Questionnaire dated July 6, 1995, at Appendix V, pages V.4-V.5. Moreover, for those reported sales, respondents must report the bearing family. See id. at B-6. This consists of all bearings within a class or kind of merchandise that are the same in certain physical characteristics. See id. at Appendix V-V.2. It is based on this bearing-family information that the Department determines the suitable foreign like product. Therefore, our determination that Model X is an appropriate foreign like product is based on the information reported by Koyo.
In reporting sales of Model X, Koyo has identified it as foreign like product. Furthermore, Koyo could have requested during the course of the review that the Department exclude such sales from its analysis, but never made such a request. The burden for such an exclusion clearly lies with the respondent. However, Koyo did not provide a description of Model X until after the completion of the preliminary results of review. That is, Koyo submitted this new information in its August 6, 1996, case brief. The Department would not automatically exclude sales without evidence to indicate that use of the reported sales was inappropriate. As explained previously, no such evidence was on the record at the time of the preliminary results of review nor is there such evidence on the record now. Finally, Koyo has made contradictory statements in which it has demonstrated that the prefix of Model X can not be relied upon to determine whether the model is a reasonable foreign like product. That is, in Comment 2 under Ordinary Course of Trade above, Koyo states that another model with the same prefix as Model X generated a much lower transaction-specific margin than the margin generated by Model X. For these reasons, Koyo's argument that the Department should not have included the model as foreign like product has no merit.
Comment: NSK requests that the Department make corrections to the public version of the computer program log so that proprietary data is not included.
Department's Position: The Department agrees to the corrections and has made the changes.
FINAL RESULTS OF REDETERMINATION
As a result of recalculating the antidumping duty margins for NSK in accordance with the remand order, the weighted-average dumping margins for NSK for the period May 1, 1994, through April 30, 1995, with respect to ball bearings and cylindrical roller bearings from Japan changed as follows:
This redetermination did not result in any changes to Koyo's weighted-average margins or duty-assessment rates.
Richard W. Moreland
September, 4, 2001
1. Customs has no means to distinguish between "sample" and "sold" subject merchandise as the product enters the country. Thus, the assessment rate is derived by taking the dumping margin, as calculated after setting dumping duties for sample merchandise to zero, and spreading that margin over the entered value (or quantity, where applicable) of all subject merchandise.
2. Koyo identified its August 6, 1996, case brief as a rebuttal brief. It is clear from the briefing schedule published in the preliminary results (61 FR 35713, 35723) that case briefs were due on August 6, 1996, and rebuttal briefs were due on August 13, 1996.