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6202 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesComment 14Petitioner argues that direct andindirect selling expenses incurred in theUnited States must be deducted fromexporter’s-sales-price (ESP) transactions.Petitioner argues that section 772(e)(2)of the Act requires that expensesincurred ‘‘by or on behalf of’’ an‘‘exporter’’ in selling the subjectmerchandise in the United States mustbe deducted from ESP. Petitioner statesthat such expenses may not instead beadded to CV or included in aconsolidated SG&A expense, which isitself reported as an item of the FOP(citing Zenith Electronics Corp. v.United States, 10 CIT 268, 276, 633 F.Supp. 1382, 1389 (1986)). Instead,Petitioner argues, expenses incurredwith respect to the selling activities ofaffiliated importers must be separatelyidentified and deducted from the ESP.Petitioner adds that the Departmentlacks the discretion to create anexception for selling expenses incurredby U.S. subsidiaries of companies inNME countries (citing ZenithElectronics Corp. v. United States, 988F.2d 1573 (Fed. Cir. 1993), and Ad HocComm. v. United States, 13 F.3d 398,401 (Fed. Cir. 1994)), arguing that amajor reason for the creation of the‘‘ESP offset’’ at 19 CFR 353.56(b)(2) wasthe recognition that ESP, unlikepurchase price, required the deductionof all direct and indirect sellingexpenses incurred on U.S. sales (citingSmith-Corona Group, SCM Corp. v.United States, 713 F2d 1568, 1578 (Fed.Cir. 1983)). Petitioner argues thatsection 772 has never been amended todistinguish U.S. prices with respect toNME-produced imports; rather, theadjustments required to calculatedumping margins with respect to NMEcases have been codified in section773(c). Petitioner claims that Congressnever intended that a different formulafor ESP would be applied to relatedpartytransactions in NME cases.Petitioner recognizes that theDepartment has declined to make ESPadjustments on the grounds that ‘‘thereis a lack of information on the record tomake adjustment to both sides of theequation * * * ’’ (citing Ceiling Fans at55276). However, Petitioner claims thatthere are two major distinctions whichrender the precedent set in Ceiling Fansinapposite to this review.First, Petitioner argues that the U.S.importers of TRBs function at a differentlevel of trade from that derived in theDepartment’s CV calculations, i.e., thatthe U.S. importers are resellers thatfunction as distributor, whereas the CVdoes not include any SG&A expenseswhich represent expenses associatedwith reselling. Petitioner adds that, inthe preliminary results, the Departmentrelied on the statutory minimum SG&Aexpenses, in which case the minimumactivities of the manufacturer arerepresented in the CV and, as such,there is no basis to conclude that CVrequires any deduction similar to thestatutory deduction required from ESP.Petitioner further distinguishes thecurrent review from Ceiling Fans byarguing that the SKF report providessufficient evidence to calculate the ESPoffsetadjustment to FMV, if theDepartment chooses to make such anadjustment.With respect to deductions of sellingexpenses from FMV, Petitioner contendsthat, by using the SG&A expenses ofSKF in the final results, the Departmentwould exclude those expensesanalogous to resale activities. Therefore,Petitioner contends, there is no basis toconclude that CV requires anydeduction similar to the statutorydeduction from ESP. Petitioner alsoasserts that the home market or thirdcountryselling expenses of the foreignproducer/U.S. importer are not relevantto the derivation of CV and that theseexpenses cannot therefore be deductedfrom the surrogate or statutoryminimum SG&A expenses used in CV.Finally, Petitioner asserts, if theDepartment does choose to make an ESPoffset, there is no basis on which toassume that an ESP offset would beequal to U.S. selling expenses; rather,the Department should subtract onlythat portion of SG&A attributable toindirect selling expenses.Shanghai states that the Departmentcan make no adjustments to ESPbecause there is no information todistinguish between foreign direct andindirect selling expenses which wouldenable the Department to makecorresponding adjustments to FMV andthat the SKF report does not present anybreakdown of selling expenses such aswould be necessary to make therequired adjustments.Shanghai claims that the Departmenthas recognized that section 772(e) of thestatute does not require, nor does itanticipate, the unfair adjustment of U.S.price (USP) in ESP transactions withouta corresponding adjustment to FMV(citing Ceiling Fans). Rather, Shanghaiargues, the statute requires theDepartment to make fair comparisonsbetween USP and FMV (citing The BuddCompany v. United States, 746 F. Supp.1093, 1098 (CIT 1990)). Shanghai assertsthat such a fair comparison cannot bemade if available information does notpermit the corresponding FMVadjustment.Guizhou Machinery et al. state that anadjustment to ESP without thecompanion ESP offset to FMV wouldlead to distorted results. GuizhouMachinery et al. argue that, whiledeductions for U.S. selling expenses andthe ESP offset can be made in marketeconomycases without problems, thosedeductions cannot be made in NMEcases because there is no equivalentmarket-based value for indirect sellingexpenses on the FMV side of theequation.Guizhou Machinery et al. cite CeilingFans as the Department’s bestexplanation of the calculation problemand of why, traditionally, theDepartment has declined to makeadjustments for U.S. selling expenses toeither USP or FMV in an NME case.Guizhou Machinery et al. state that,while Petitioner acknowledges theDepartment’s decision in Ceiling Fans,Petitioner fails to recognize that there isa direct precedent for the Department’streatment of selling expenses in thiscase (citing TRBs at 67591).Guizhou Machinery et al. take issuewith Petitioner’s argument that this casediffers from Ceiling Fans because in thiscase the U.S. importers are ‘‘resellers’’and operate at a different level of tradefrom that the Department derived forCV. Guizhou Machinery et al. state thatthe U.S. importers in Ceiling Fans, as invirtually every ESP case, were resellersand that this review cannot bedistinguished from Ceiling Fans on thatbasis. In all such cases, GuizhouMachinery et al. argue, the Departmenthas determined that respondents areentitled to an ESP offset; if none can bemade, the Department does not deductselling expenses from USP. GuizhouMachinery et al. note further that, forthe preliminary results, the Departmentused the statutory minimum as asurrogate value. Guizhou Machinery etal. argue that the statutory minimumincludes all selling expenses, includingindirect selling expenses normallydeducted from FMV with an ESP offset,but which cannot be separatelyidentified. Guizhou Machinery et al.claim that Petitioner’s argument doesnot deal with this element of thecalculation.With respect to Petitioner’s argumentthat, if necessary, there is recordevidence that will allow for an ESPoffset to FMV, Guizhou Machinery et al.contend that Petitioner’s suggestion thatthe Department use SKF India’s indirectselling expense as a surrogate ESP offsetdemonstrates the very reason why theDepartment avoids ESP offsets in NMEcases. Guizhou Machinery et al. assertthat the information in the SKF reportdoes not provide a reasonable method