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6182 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesper month actually worked. Petitionerstates that the Department calculatedthe hourly wage rate on the basis of4.333 working weeks per month, basedon a full 52-week year, which assumesthat workers never get sick, takevacations or have other days off.Petitioner observes that IL&T Indiashows that mandatory benefits includeone day of paid vacation for every 20days worked, sick leave of seven days ayear with full pay, and seven to ten daysof casual leave. Petitioner claims thatRespondents have not allocated anyportion of vacation or sick leave to thelabor hours they reported as their factorsof production. Petitioner states that thegoal is to determine the cost to anemployer of each hour that an employeeis on the job and, therefore, the laborhours used in the denominator of thesurrogate labor-rate calculation mustinclude only time on the job. Petitionersuggests that the number of weeks permonth should be recalculated to takeinto account at least the minimumbenefits and derives a figure of 3.72working weeks per month using thisapproach.Guizhou Machinery et al. respondthat the Department should rejectPetitioner’s argument to adjust thecalculated labor rate which theDepartment used in the preliminaryresults for vacation, sick leave andcasual leave. Guizhou Machinery et al.claim that Petitioner provides nosupport for the statement that hourlylabor costs should reflect only theexpenses accrued to an employer for thetime the employee is on the job.Guizhou Machinery et al. state that thereal hourly cost to the employer reflectsmany factors, including fringe benefitssuch as paid vacation, sick leave, etc.Guizhou Machinery et al. suggest thatthe Department’s calculations shouldinclude the cost of fringe benefits suchas vacation and sick leave in thenumerator and, because the numeratordoes include such fringe benefit costs,the denominator should likewise reflectthese fringe benefits by including hoursrelated to vacation and sick leave. .Department’s PositionWe disagree with Petitioner. In ourpreliminary results we valued directlabor using rates reported in IL&T India,which states that fringe benefitsnormally add between 40 percent and50 percent to base pay. SeeMemorandum to the File from CaseAnalyst: Factors of Production ValuesUsed for the Eighth Antidumping DutyAdministrative Review (Memorandum),September 1, 1995, attachment 5.Accordingly, we multiplied base pay by1.45 in order to incorporate fringebenefits. Memorandum at 3–4.Whereas Petitioner suggests wecalculate a wage rate based only on timespent on the job, we find that expensesrelated to holidays, vacation, sick leave,etc., belong in the numerator of thesurrogate labor-rate calculation and timespent on vacation and sick leave belongsin the denominator of the calculation.Because the employer incurs expensesboth for employees on vacation andemployees on the job, it incurs a fullyloaded labor cost to produce themerchandise. By adjusting the base payto include such fringe benefits asvacation, sick leave, casual leave, etc.,we calculated a fully loaded direct-laborrate that more accurately represents theactual direct-labor cost to themanufacturer. See TRBs VII at 49–50.2.(c) Overhead, SG&A and ProfitValuationComment 10Petitioner contends that theDepartment incorrectly designated theline item ‘‘power and fuel’’ in the SKFReport as a material cost, not anoverhead cost, in its calculation ofoverhead expenses. Petitioner arguesthat power and fuel are not materialsincorporated into the subjectmerchandise and Respondents did notreport this expense as a material factoror any other factor. Rather, Petitionercontends, energy is generally used tooperate the manufacturing plants and isproperly considered as part of factoryoverhead. For the final results,Petitioner suggests that the Departmentinclude power and fuel costs in SKF’soverhead cost or calculate this expenseas a separate factor but notes that nopurpose is served by isolating theenergy costs as a separate factor.East Sea argues that the statute doesnot specifically list ‘‘power and fuel’’ aspart of overhead, citing section773(c)(3)(C) of the Act. East Sea asserts,therefore, that the Department’sinclusion of these items within rawmaterials was not improper.Department’s PositionWe agree with Petitioner that powerand fuel are not direct material inputs.Power and fuel consumption cannot bedirectly linked to the output of thesubject merchandise. Therefore, forthese final results, we have incorporatedpower and fuel as part of overhead.Comment 11Petitioner contends that theDepartment incorrectly designated theline item ‘‘stores and spares consumed’’in the SKF Report as a material cost, notan overhead cost, in its calculation ofoverhead expenses. Petitioner states thatthis line item concerns expenses relatedto tools, grinding wheels, and spareparts used in the production process orincorporated into the equipment andmachinery, but which are notincorporated into the finished product.Petitioner argues that Respondents didnot report ‘‘stores and sparesconsumed’’ as part of the materialsfactor of production, which is properbecause this item is an overheadexpense. Petitioner explains that ‘‘storesand spares’’ are listed under ‘‘expensesfor manufacture,’’ not under ‘‘rawmaterials’’ in the SKF Report, and notesthat the SKF Report refers to ‘‘stores andspares’’ as tools.East Sea contends that the footnotes ofthe SKF Report state that ‘‘stores andspares consumed’’ includes ‘‘work-inprocess.’’East Sea states that it isunclear whether this line item relates tosteel or other types of materials and,given the lack of clarity, it would beunfair to allocate all of this item tooverhead. East Sea suggests that,because this item relates to ‘‘stores’’taken from inventory, it is logical toclassify this expense as non-overhead.Department’s PositionWe agree with Petitioner. Because thisline item involves expenses relating toequipment and machinery used in theproduction process but not incorporatedinto the finished product, we considerthis expense as part of overhead, eventhough the SKF Report does notdescribe the nature of this line itementirely. Accordingly, for the finalresults, we have treated ‘‘stores andspares consumed’’ as an overhead item.Comment 12Petitioner argues that the Departmentincorrectly designated the line item‘‘traded goods’’ in the SKF Report as amaterials cost to be included in thedenominator of the calculation of theoverhead, SG&A, and profit rates.Petitioner states that ‘‘traded goods’’ arefinished products purchased and soldby SKF that have nothing to do with itsmanufacturing operations. Petitionernotes that the SKF Report segregates‘‘purchases of traded goods’’ from ‘‘rawmaterials and bought out componentsconsumed’’ and, in a different part ofthe report, separates them from productsSKF ‘‘manufactured and sold during theyear.’’ Petitioner states further that thereport identifies ‘‘purchases of tradedgoods’’ as ‘‘ball and roller bearings,’’‘‘bearing accessories and maintenanceproducts,’’ and ‘‘textile machinerycomponents.’’ Petitioner notes that, inpast reviews, the Department included