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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6201labor rate which more accuratelyrepresents the actual direct-labor cost tothe manufacturer.Comment 12Petitioner claims that indirect labor isnot reflected in the SG&A and overheadrates used in the preliminary results,notwithstanding the fact that, at 49575,the Preliminary Results state that‘‘indirect labor is reflected in the selling,general and administrative andoverhead rates.’’ Petitioner claims thatno portion of the amount shown as‘‘payments to and provisions foremployees’’ in SKF’s annual report isincluded in either the overhead or theSG&A calculation. Petitioner states that,consistent with the 1989–90administrative review, indirect labormust be added to the CV.Petitioner contends further that theindirect-labor amounts supplied byrespondents, reported as a percentage ofdirect-labor costs, are generallyunsupported by explanation,calculations or documentation, and thatthe Department apparently made noattempt to verify the information.Petitioner suggests that the Departmentshould use, as BIA, respondents’ ownindirect-labor rates—as was done in the1989–90 review—or, alternatively, thehighest indirect-labor rate on the recordin this review.Guizhou Machinery et al. note thatthe Department used the SKF annualreport to calculate the SG&A rate andthat, since that calculated rate wasbelow the statutory minimum, theDepartment applied the statutoryminimum of 10 percent in thecalculation of CV. Guizhou Machineryet al. contend that there is no basis forasserting that the Department must addan amount to the statutory minimum forindirect SG&A labor since this is not theDepartment’s practice.With respect to overhead, GuizhouMachinery et al. point out that the SKFreport includes, under the category‘‘expenses for manufactureadministration and selling,’’ itemsdesignated as ‘‘repairs to buildings’’ and‘‘repairs to machinery.’’ GuizhouMachinery et al. assert that theDepartment can reasonably concludethat the repair expenses indicated areinclusive of the labor associated withsuch activities. Respondents argue that,as such, the Department should not alterthe SG&A and overhead portions of itscalculations for the final results.Department’s PositionWe agree with Petitioner that we didnot include indirect labor attributable tooverhead and labor attributable to SG&Ain the CV calculations in thepreliminary results. For these finalresults, we calculated overhead andSG&A expenses using the line items inthe SKF report which pertained to theseexpenses. The results of thesecalculations from the SKF report (seealso our response to Comment 13)yielded an SG&A rate that exceeded thestatutory minimum; therefore, we didnot use the statutory minimum. We didnot include any item from the SKFreport specifically representing indirectlaborcosts in calculating the overheadand SG&A expenses. We also did notinclude the item ‘‘payments to andprovisions for employees’’ because thisitem does not allocate amounts betweendirect and indirect labor. Further,contrary to the suggestion by GuizhouMachinery et al., there is no evidence inthe SKF report indicating that the lineitems we used to calculate theseexpenses were inclusive of indirectlabor costs.However, we disagree with Petitionerthat the indirect-labor amounts suppliedby respondents are inadequate. Therecord evidence in this case, based onour initial and supplementalquestionnaires as well as informationwe obtained at verification, does notindicate any misreporting of theindirect-labor ratios supplied byrespondents. For these final results, wehave calculated the expenses forindirect labor attributable to overheadand SG&A labor using the ratios of eachas reported in the responses.Comment 13Petitioner states that the Departmentdid not include interest expensesincurred by SKF in the CV calculation.Petitioner contends that interestexpenses and other financing chargesare ordinarily incurred in marketeconomies where companies rely ondebt as well as equity as a source ofcapital. Petitioner states it should beincluded in the CV calculation asinstructed by the Department’sAntidumping Manual, Ch. 8 at 55 (7/93ed.). Petitioner notes that Jilin andHenan identified ‘‘loan interest’’ in theiritemized list of expenses and that, in the1989–90 review, the Departmentincluded interest expense in SG&A forits CV calculations.Guizhou Machinery et al. state thatPetitioner’s argument should be rejectedbecause the Department used the 10-percent statutory minimum SG&A.Guizhou Machinery et al. argue thatPetitioner does not cite to any authorityfor adjusting the statutory 10-percentminimumSG&A. In fact, GuizhouMachinery et al. argue, the statutoryminimum SG&A includes an amount forfinancing charges, and any additionalamount for this charge would result indouble-counting. Respondents contendthat Petitioner only cites legal authorityfor the proposition that SG&A shouldinclude an amount for interest expenses,which is already included within thestatutory minimum for SG&A, such thatPetitioner’s claim as to this point ismoot. Moreover, Guizhou Machinery etal. assert that Petitioner does not specifywhich charges from SKF’s annual reportshould be included in the calculations.Shanghai responds that inventoryfinancing costs are subsumed within thestatutory minimum for SG&A as interestcharges and to add a separate charge toCV would result in unacceptabledouble-counting of these charges.Chin Jun states that, whereasPetitioner argues that finance chargesshould be added, there is no recordevidence regarding SKF’s interestexpenses which pertain exclusively tosales. Chin Jun argues that Petitionerfails to point out what surrogate financecosts should be applied and provides noevidence that SKF India, part of a hugemultinational organization, would havefinancing charges representative of anormal Indian producer. Due to theforegoing, Chin Jun argues, the overheadrate should be reduced, not increased.Department’s PositionWe agree with Petitioner that,consistent with our practice, financingcharges should be treated as ordinarybusiness expenses. Therefore, we haveincluded, in the general expenses forthese final results, interest expenses aslisted in SKF’s report.As noted in our response to Comment12, we calculated the SG&A expenses byadding each line item from the SKFreport that pertained to such expenses.The line items we used in thepreliminary results did not includeinterest expense. The recalculation ofSG&A to include interest and the itemsdiscussed in Comment 12 exceeded thestatutory minimum; therefore, theargument of Guizhou Machinery et al.and Shanghai regarding doublecountingis moot.Concerning the comment by GuizhouMachinery et al. that Petitioner has notsufficiently demonstrated therepresentativeness of SKF’s interestexpense and Chin Jun’s comment thatno document demonstrates that SKF’sinterest expenses pertain exclusively tosales, we note that this sourceconstitutes the best availableinformation and that GuizhouMachinery et al. have provided noalternative source for the valuation ofthis expense. See TRBs IV–VI at 65534.