federal register - U.S. Government Printing Office

6192 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesGuizhou Machinery et al. respond byarguing that it is irrelevant whether theSKF report represents a single, coherentsource for valuing all FOP componentsand note that the Departmentconsistently uses multiple sources ofinformation for surrogate data in NMEcases (citing Final Determination ofSales at Less Than Fair Value: SebacicAcid from the People’s Republic ofChina, 59 FR 28053 (May 31, 1994)(Sebacic Acid), and Final Determinationof Sales at Less Than Fair Value:Certain Cased Pencils from the People’sRepublic of China, 59 FR 55625(November 8, 1994)), selecting the bestsource for each element of the FOP.Guizhou Machinery et al. add thatPetitioner’s citation to Timken ismisplaced and state that, in thatinstance, the Department was notcriticized for the use of different sourcesbut for the disparity between the ratiosresulting from the Department’scalculation and other ratios on therecord. Shanghai concurs that, in thepast, the Department has not requiredthe use of a ‘‘single, coherent source’’for all FOP information when thatsource is a single, private company,particularly one engaged in lines ofbusiness other than the manufacture ofsubject merchandise. Shanghai statesthat the Department correctly calculatedsurrogate labor costs and that the IL&TIndia data represent a better choice thanthe SKF report. Shanghai explains thatthe SKF data constitutes unverified datacovering several different product linesof a single producer and that there is amuch greater risk of unacceptabledistortions and aberrations in dataderived from one producer withdisparate products than could exist withaggregate national data.Guizhou Machinery et al. further statethat the fact that the SKF report containscosts and expenses incurred by aproducer of the class or kind ofmerchandise subject to review does notmake the report a better source ofsurrogate data. On the contrary,Guizhou Machinery et al. state, whereasthere is no evidence to indicate that SKFused the same type of steel asrespondents, the Indian import statisticsenable the Department to pinpoint aparticular type of steel.With respect to Petitioner’s argumentthat the overhead and SG&A rates mustbe adjusted to reflect the use of lowermaterials and labor values from separatesources, Guizhou Machinery et al. citeFinal Determination of Sales at LessThan Fair Value: Coumarin From thePeople’s Republic of China, 59 FR 66895(December 28, 1994) (Coumarin), inwhich the Department calculatedmaterials costs from various sources andused the Reserve Bank of India Bulletin(RBI) data to calculate SG&A but did notadjust SG&A and overhead costs simplybecause it did not use the same sourceas material costs. Shanghai adds that, inthe event that the Department rejects theuse of SKF materials, labor and othercosts except overhead, profit and SG&A,the Department should not furtheradjust overhead and SG&A as suggestedby Petitioner’s alternative argument.Shanghai notes that the SKF reportindicates that, in addition to TRBproduction, SKF has other lines ofbusiness, including the manufacture oftextile machine components and othertypes of bearings. Shanghai contendsthat the report does not allow for theallocation of labor or materials to TRBproduction for SKF’s overhead andSG&A and there is insufficientinformation on which to baseadjustments to overhead and SG&Abased on different valuations ofmaterials and labor used for TRBproduction. Guizhou Machinery et al.state that the Department’s use of datacontained in SKF’s annual report toestablish percentages or ratios to beused for determination of surrogatevalue for overhead and SG&A is fullyconsistent with the Department’sstandard surrogate methodology.Guizhou Machinery et al. state thatthe Department’s NME/surrogatecountrymethodology is based upon theapplication of reliable andrepresentative ratios and input valuesselected from multiple sources and thatthe Department does not typically‘‘adjust’’ the component values used toderive SG&A and overhead ratios in themanner proffered by Petitioner.Consequently, Guizhou Machinery et al.argue, the Department should not adjustthe expenses taken from the SKF report,as suggested by Petitioner, indetermining representative ratios for usein determining actual amounts foroverhead and SG&A.Guizhou Machinery et al. arguefurther that Petitioner’s assertion thatthe Department must deduct importduties from the materials elements ofthe overhead and SG&A rate calculationis based on the assumption that steelinputs were imported, but Petitioner hasprovided no evidence regarding whichparticular materials were imported.Guizhou Machinery et al. claim that theannual report itself contradictsPetitioner’s suggestion because it showsthat almost half of the materialspurchased by SKF India were from localsources, which would suggest that theeffect of import duties would not affectthe entire materials component of thecalculation. Additionally, GuizhouMachinery et al. claim that Petitionerhas not accounted for the fact thatIndian producers are entitled to dutydrawback upon exportation of finishedproducts that incorporate importedmaterials, which further reduces theeffect of import duties. Shanghaisuggests that, because the SKF reportcontains no information concerning theproportion of materials represented byTRB steel costs, what portion of SKF’ssteel was imported, or how much waspaid in duties, if the Departmentcontinues to use the SKF report foroverhead and SG&A, it should make nofurther adjustment to the rate it used forthe preliminary results.In response to Petitioner’s argumentthat it is inherently distortive to use theSKF report for overhead, SG&A andprofit but not for materials and labor,Guizhou Machinery et al. and Chin Junargue that the use of the SKF report forthe materials component would be moredistortive than the import statistics usedby the Department due to a lack of detailregarding the types of steel SKF used.Chin Jun notes that the SKF report doesnot provide separate prices for bar, rodor steel sheet but instead provides asingle value for all steel used in thefactory, including steel used in theproduction of non-subject merchandise.Chin Jun submits that the Petitioner, theDepartment, and respondents have noidea what types of steel were includedin SKF’s material-cost calculation.Guizhou Machinery et al. add thatPetitioner has provided no informationdemonstrating that the SKF reportcovers the specific steel inputs relevantto subject merchandise. Chin Junsuggests that the steel referenced in theSKF report could be tube steel (insteadof bar steel), stainless steel (a muchmore expensive product), alreadymachined ‘‘green parts’’ supplied bySKF India’s many related companies, orinnumerable other types of steel.Guizhou Machinery et al. and ChinJun also dismiss Petitioner’s claim thatthe SKF report most nearlyapproximates a verified surrogatequestionnaire response. Respondentsstate that an annual report, thoughperhaps audited, is not verified and notethat the Department has a preference forverifiable, public information (citingSebacic Acid, Final Determination ofSales at Less Than Fair Value:Manganese Sulphate from the People’sRepublic of China, 60 FR 52155(October 5, 1995) (ManganeseSulphate), and Final Determination ofSales at Less Than Fair Value: CertainCarbon Steel Butt-Weld Pipe Fittingsfrom the People’s Republic of China, 58FR 21058 (May 18, 1992)). Chin Junadds that the SKF report has data onlythrough March 1991 and this review