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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6197types of scrap generated in bearingproduction. Furthermore, Petitionerstates, the category used by theDepartment in the preliminary results islargely composed of ‘‘defective sheet ofiron and steel’’ (subheading 7204.49.01).Petitioner argues that inclusion of‘‘defective sheet’’ in cage production isinappropriate because scrap generatedduring cage production is in the natureof stampings, trimmings, shavings,chips, milling waste or filings. Finally,Petitioner claims that inclusion ofdefective sheet is incorrect because itleads to the result that the valueobtained by the Department for thisnon-alloy-steel scrap is somewhathigher in value than the value found foralloy-steel scrap.Guizhou Machinery et al. respondthat Petitioner provides no evidence tosupport its arguments. For instance,Guizhou Machinery et al. claim,Petitioner provides no evidence tosupport its assertion that ‘‘high-speed’’steel is not used for bearings. Instead,Guizhou Machinery et al. argue,inclusion of the high-speed steel isreasonable given the fact thatrespondents use high-quality steel in theproduction of bearings, cups and cones.In addition, Guizhou Machinery et al.state that the U.S. HTS does not evensegregate heading 7204.29 betweenhigh-speed and other alloy-steel scrap,suggesting that the differences betweenthe types of scrap are not significant.With respect to category 7204.49,Guizhou Machinery et al. state thatPetitioner provides no evidence of itsargument that this category isinappropriate because it excludesturnings, shavings, chips, milling waste,sawdust, filings, trimmings andstampings, whether or not in bundles,which Petitioner claims are preciselythe kinds of scrap generated in bearingproduction—or that it includesdefective sheet of iron and steel.Guizhou Machinery et al. state thatscrap types such as sawdust, which areunrecoverable, do not enter into thecalculation of scrap credit. Rather,respondents contend the calculation isbased on scrap that was sold or reused.Furthermore, respondents claim that thescrap for which the Department gavecredit did include defective steel, citinga verification report.Department’s PositionWe used Indian import statistics tovalue the steel for cages and rollers and,therefore, we have used Indian importstatistics to value scrap for thesecomponents. In the same manner, weused Indonesian statistics to value boththe steel and scrap for cups and cones.We agree with Petitioner that, in orderto determine the best category by whichto value scrap, it is appropriate to setaside those specific categories that didnot include bearing steel.Consistent with our previous reviews,we agree with Petitioner that, for theIndian scrap values, categories7204.41.00 and 7204.29.09 best capturethe types of residues generated as scrap.Category 7204.41.00 describes the typesof scrap created during production ofcages, i.e., turnings, shavings, chips,trimmings, stampings, etc. Similarly,category 7204.29.09 (Waste and Scrap ofOther Alloy Steel) includes bearing steelwhich is applicable to other bearingcomponents. Therefore, we usedcategory 7204.41.00 from the Indianimport statistics to value scrap for cagesand category 7204.29.09 from the Indianimport statistics to value scrap forrollers.The Indonesian statistics do notprovide a category comparable to Indiancategory 7204.29.09 for which to valuescrap. We have chosen a comparablecategory, 7204.29.00 (Other Waste andScrap), and used the Indonesian importstatistics from this HTS number to valuescrap for cups and cones (see ourresponse to Comment 3).Comment 6Petitioner contends that the steelimport prices the Department used inthe preliminary results do not reflectmarket-economy transactions. (Forcertain steel inputs for certainrespondents, the Department used theactual values at which Chinese tradingcompanies imported the steel into thePRC and paid in convertible currencies.)Petitioner notes that steel is a‘‘controlled commodity’’ in the PRC andthat China Foreign Trade DevelopmentCompanies, Inc., is generally the PRCimporter. Petitioner insists that, giventhis fact pattern involving contracts fora controlled commodity, the purchase ofwhich must be carried out through themandatory intervention of a statetrading company, any such purchasecannot rationally be considered anarm’s-length transaction reflectinguncontrolled market prices. Petitionerclaims that the Department departs fromusing surrogate values only when theactual imports from a market economyreflect market-economy practices andprices, citing Final Determination ofSales at Less Than Fair Value:Oscillating Fans and Ceiling Fans Fromthe People’s Republic of China, 56 FR55271 (October 25, 1991) (Ceiling Fans).Petitioner contends that, under thecircumstances of this case, the statecontrolledtrading company is by lawgiven a leading role in negotiating theterms of sale and that such tradingcompanies, acting as coordinators ofsteel purchases for the entire Chineseeconomy, would enjoy such marketpower as to enable them to obtain betterprices than any individual bearingsproducer in a market economy.Petitioner suggests, in addition, thatsteel supplied by the China ForeignTrade Development Companies to PRCproducers might be part of, or related to,broader deals between those producersand the trading companies which, forreasons unrelated to the factors thatwould govern normal purchases directlyfrom a market-economy company, couldaffect the prices paid by the producersfor reasons unrelated to the factors thatwould govern normal commercialtransactions between market-orientedcompanies.Guizhou Machinery et al. respondthat, consistent with section 773(c) ofthe Act and with 19 CFR 353.52, theDepartment has established a practice ofusing actual import prices if they arefrom market-economy countries.Guizhou Machinery et al. contend thatthe ‘‘Department practice allows for thevaluation of inputs in NME cases basedon market prices paid by themanufacturer for goods obtained from amarket-economy source because theseprices reflect commercial reality’’ (citingCoumarin at 66895). GuizhouMachinery et al. state that Petitioner’sassertion that the contracts do notreflect market-economy transactionsbecause steel is a ‘‘controlledcommodity’’ and because the contractsinvolved a ‘‘state trading company’’ isirrelevant because such arguments donot negate the fact that the sellers, whoestablish the sales prices, are marketeconomycompanies (citing Hand Toolsand Final Determination of Sales at LessThan Fair Value: Saccharin from thePeople’s Republic of China, 59 FR 58818(November 15, 1994) (Saccharin)). Inaddition, Guizhou Machinery et al.contend that Petitioner’s statement thatsteel supplied to PRC-based producersfrom the PRC trading company mighthave been part of related or broaderdeals is merely speculation with nosupport on the administrative record.Guizhou Machinery et al. discussPetitioner’s reference to Timken fromComment 2, stating that the Court ofInternational Trade (CIT) and the Courtof Appeals for the Federal Circuit(CAFC) did not rule that the Departmentcannot use different sources to obtainsurrogate values for the various CVcomponents but, rather, that theDepartment cannot use surrogate-valuedata which yield distortive results andwhich are inconsistent with otherrecord evidence. Guizhou Machinery etal. assert that Petitioner has not shown