[Federal Register Volume 64, Number 6 (Monday, January 11, 1999)]
[Notices]
[Pages 1592-1598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-435]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-201-504]
Porcelain-on-Steel Cookware From Mexico: Preliminary Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: In response to a request by the petitioner, Columbian Home
Products, LLC (formerly General Housewares Corporation), the Department
of Commerce is conducting an administrative review of the antidumping
duty order on porcelain-on-steel cookware from Mexico. This review
covers Cinsa, S.A. de C.V. and Esmaltaciones de Norte America, S.A. de
C.V., manufacturers/exporters of the subject merchandise to the United
States. The eleventh period of review is December 1, 1996, through
November 30, 1997.
We preliminarily determine that sales have been made below normal
value. Interested parties are invited to comment on these preliminary
results. If these preliminary results are adopted in our final results
of administrative review, we will instruct the Customs Service to
assess antidumping duties on all appropriate entries.
EFFECTIVE DATE: January 11, 1999.
FOR FURTHER INFORMATION CONTACT: Kate Johnson or David J. Goldberger,
Office 5, AD/CVD Enforcement Group II, Import
[[Page 1593]]
Administration--Room B099, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-4929 or 482-4136,
respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all citations to the Department's regulations are
to the regulations at 19 CFR part 351 (April 1998).
Background
On October 10, 1986, the Department published in the Federal
Register, 51 FR 36435, the final affirmative antidumping duty
determination on certain porcelain-on-steel (POS) cookware from Mexico.
We published an antidumping duty order on December 2, 1986, 51 FR
43415.
On December 5, 1997, the Department published in the Federal
Register a notice advising of the opportunity to request an
administrative review of this order for the period December 1, 1996,
through November 30, 1997 (the POR), 62 FR 64353. The Department
received a request for an administrative review of Cinsa, S.A. de C.V.
(Cinsa) and Esmaltaciones de Norte America, S.A. de C.V. (ENASA) from
Columbian Home Products, LLC (CHP), formerly General Housewares
Corporation (GHC) (hereinafter, the petitioner). We published a notice
of initiation of the review on January 26, 1998, 63 FR 3702.
On February 18, 1998, the petitioner requested that the Department
determine whether antidumping duties have been absorbed by Cinsa and
ENASA. On March 20, 1998, the Department requested proof that
unaffiliated purchasers will ultimately pay the antidumping duties to
be assessed on entries during the review period.
On April 9, 1998, CHP informed the Department that it is the legal
successor-in-interest to GHC pursuant to the March 31, 1998, sale of
all of GHC's POS cookware production assets, product lines, inventory,
real estate, and brand names to CHP.
On August 6, 1998, the Department extended the time limit for the
preliminary results in this case until December 31, 1998. See Extension
of Time Limit for Antidumping Duty Administrative Review, 63 FR 42001.
The Department is conducting this review in accordance with section
751(a) of the Act.
Scope of the Review
The products covered by this review are porcelain-on-steel
cookware, including tea kettles, which do not have self-contained
electric heating elements. All of the foregoing are constructed of
steel and are enameled or glazed with vitreous glasses. This
merchandise is currently classifiable under Harmonized Tariff Schedule
of the United States (HTSUS) subheading 7323.94.00. Kitchenware
currently classifiable under HTSUS subheading 7323.94.00.30 is not
subject to the order. Although the HTSUS subheadings are provided for
convenience and customs purposes, the written description of the scope
of this proceeding is dispositive.
Allegation of Reimbursement
For the reasons discussed below, the Department has preliminarily
determined that the producer/exporters, Cinsa and ENASA, reimbursed
their affiliated importer Cinsa International Corporation (CIC) for
antidumping duties assessed during this POR in connection with the
liquidation of entries made during the 5th and 7th review periods of
the antidumping duty order of POS cookware from Mexico. This
determination is based on the April 1997 cash transfer from Cinsa and
ENASA's corporate parent, Grupo Industrial Saltillo, S.A. de C.V. (GIS)
through its subsidiary GISSA Holding USA (GISSA Holding) to CIC.
The Department's reimbursement regulation, 19 C.F.R. section
351.402 (1998) provides for the Department to deduct from the export
price or constructed export price the amount of any antidumping duty
which the ``exporter or producer'' reimbursed to the importer. Cinsa
and ENASA have acknowledged that the April 1997 transfer was intended,
inter alia, to cover antidumping duties on 5th and 7th review entries
liquidated during the 11th review period.
In a June 2, 1997, submission in an earlier review which has been added
to the record of this review, respondents state: ``[t]o ensure that CIC
would have enough funds to cover anticipated antidumping duty deposits
and assessment liability subsequent to the liquidation of fifth and
seventh administrative review entries during the POR, on April 28,
1997, GISSA Holding, USA, the corporate owner of CIC, increased its
capital contribution to CIC.''
In the two prior reviews of this order, the Department declined to
find that this transaction involved reimbursement within the terms of
its regulation because it deemed that the transfer had not been made by
Cinsa or ENASA, i.e., it had not been made by an ``exporter or
producer.'' However, upon reconsideration, the Department finds that,
in making this transfer of funds dedicated to the payment of
antidumping duties, GIS acted on behalf of Cinsa and ENASA, such that
the transfer may be attributed to those two firms.
At the Department's February 3, 1998, verification in the tenth
review with respect to the reimbursement issue (the public version of
the report has been placed on the record of this review), company
officials explained that GIS handles all corporate treasury functions.
In essence, GIS ``sweeps'' all funds from all its subsidiary companies
on a daily basis into GIS' cash accounts. The primary purposes of this
cash management system include investing the funds available from the
various subsidiaries at preferential rates of return and providing
funds to subsidiaries at lower rates than they could obtain outside the
corporation. For example, GIS also pays out dividends to shareholders,
makes principal and interest loan repayments to banks, and pays taxes.
As necessary, GIS deposits funds into the individual bank accounts
of its subsidiaries so that they can pay suppliers. Charges are also
made between subsidiaries via the GIS corporate treasury department.
For example, when Cifunsa (foundry for engine blocks, automotive parts)
purchases scrap from Cinsa, GIS debits its Cifunsa inter-company
account and credits its Cinsa inter-company account. (There was no
record of a debit to the Cinsa inter-company account corresponding to
the April 1997 transfer by GIS.) GIS's cash from its subsidiaries is
comingled. Therefore, GIS does not monitor what portion of any specific
investment or disbursement was funded by what specific subsidiaries,
except as indicated above.
In short, GIS manages funds on behalf of its subsidiaries,
including Cinsa and ENASA. In making the transfer in question, GIS
acted for the direct benefit of Cinsa and ENASA and their U.S.
importation arm, CIC. CIC markets only products manufactured by Cinsa
and ENASA; it does not market products for any other member of the
corporate family. Thus, Cinsa and ENASA have a direct interest in
assisting CIC in paying antidumping duties on the POS cookware
products.
Given these facts, we find that GIS (through GISSA Holding) acted
on
[[Page 1594]]
behalf of Cinsa and ENASA in providing funds to CIC during the POR to
pay antidumping duties on prior entries. Therefore, those funds
constitute reimbursement within the meaning of the regulation.
In Certain Cold-Rolled Carbon Steel Flat Products From the
Netherlands: Final Results of Antidumping Duty Administrative Review,
63 FR 13204, 13214 (March 18, 1998), the Department concluded that,
where a respondent was previously found to have engaged in
reimbursement activities, the Department had the authority to establish
a rebuttable presumption that the importer must continue to rely on
reimbursements in order to meet its obligations to pay antidumping
duties. Thus, based on our finding that Cinsa and ENASA, through GIS,
reimbursed CIC for antidumping duties assessed on 5th and 7th review
entries, the Department has preliminarily determined that the
reimbursement regulation applies to entries made during the current
POR.
We will give Cinsa and ENASA an opportunity to submit factual
information to rebut the presumption. To rebut the presumption and
avoid a finding of reimbursement as to the entries being reviewed in
this review, or a subsequent review, respondents normally must
demonstrate that, during the POR (in this case the 11th POR),
antidumping duties were assessed against the affiliated importer and
the affiliated importer did in fact pay all antidumping duties assessed
during that POR, without reimbursement, directly or indirectly, by the
exporter/producer. In the alternative, failing such a demonstration, or
if circumstances indicate that this approach does not provide a
reasonable rebuttal (e.g., the volume or value of entries assessed was
insufficient; the impact of a financial windfall during the period),
respondents must demonstrate by clear and convincing evidence that
there are changed circumstances (e.g., completed corporate
restructuring) sufficient to obviate the need for reimbursement of
antidumping duties to be assessed on the entries under review.
Information seeking to rebut this presumption must be submitted no
later than February 1, 1999. Factual information in response to
respondents' submissions must be submitted by February 16, 1999.
Duty Absorption
On February 18, 1998, the petitioner requested that the Department
determine whether antidumping duties had been absorbed during the POR.
Section 751(a)(4) of the Act provides for the Department, if requested,
to determine during an administrative review initiated two or four
years after the publication of the order, whether antidumping duties
have been absorbed by a foreign producer or exporter, if the subject
merchandise is sold in the United States through an affiliated
importer. In this case, both Cinsa and ENASA sold to the United States
through an importer that is affiliated within the meaning of section
751(a)(4) of the Act.
Section 351.213(j)(2) of the Department's regulations provides that
for transition orders (i.e., orders in effect on January 1, 1995), the
Department will conduct duty absorption reviews, if requested, for
administrative reviews initiated in 1996 or 1998. Because the order
underlying this review was issued prior to January 1, 1995, and this
review was initiated in 1998, we will make a duty absorption
determination in this segment of the proceeding.
On March 20, 1998, the Department requested proof that unaffiliated
purchasers will ultimately pay the antidumping duties to be assessed on
entries during the review period. Neither Cinsa nor ENASA responded to
the Department's request for information. Accordingly, based on the
record, we cannot conclude that the unaffiliated purchaser in the
United States will pay the ultimately assessed duty. Therefore, we find
that antidumping duties have been absorbed by the producer or exporter
during the POR.
Fair Value Comparisons
To determine whether sales of POS cookware by Cinsa and ENASA to
the United States were made at less than normal value (NV), we compared
export price (EP) or constructed export price (CEP) to the NV, as
described in the ``Export Price and Constructed Export Price'' and
``Normal Value'' sections of this notice.
Pursuant to section 777A(d)(2), we compared the EPs or CEPs of
individual U.S. transactions to the weighted-average NV of the foreign
like product where there were sales made in the ordinary course of
trade at prices above the cost of production (COP), as discussed in the
``Cost of Production Analysis'' section, below.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by Cinsa and ENASA (as well as products produced by
Acero Porcelanizado S.A. de C.V. (APSA) and sold by Cinsa--see
discussion under ``Claim for Startup Cost Adjustment'' section, below)
covered by the description in the ``Scope of the Review'' section,
above, to be foreign like products for purposes of determining
appropriate product comparisons to U.S. sales. We compared U.S. sales
to sales made in the home market within the contemporaneous window
period, which extends from three months prior to the U.S. sale until
two months after the sale. Where there were no sales of identical
merchandise in the home market made in the ordinary course of trade to
compare to U.S. sales, we compared U.S. sales to the most similar
foreign like product made in the ordinary course of trade. In making
the product comparisons, we matched foreign like products based on the
physical characteristics reported by the respondents in the following
order: quality, gauge, cookware category, model, shape, wall shape,
diameter, width, capacity, weight, interior coating, exterior coating,
grade of frit (a material component of enamel), color, decoration, and
cover, if any.
Use of Constructed Value
On January 8, 1998, the Court of Appeals for the Federal Circuit
issued a decision in CEMEX v. United States, 133 F.3d 897 (Fed. Cir.
1998) (CEMEX). In that case, based on the pre-URAA version of the Act,
the Court discussed the appropriateness of using CV as the basis for
foreign market value when the Department finds home market sales to be
outside the ``ordinary course of trade.'' This issue was not raised by
any party in this proceeding. However, the URAA amended the definition
of sales outside the ``ordinary course of trade'' to include sales
below cost. See section 771(15) of the Act. Consequently, the
Department has reconsidered its practice in accordance with the CEMEX
decision and has determined that it would be inappropriate to resort
directly to CV, in lieu of foreign market sales, as the basis for NV if
the Department finds foreign market sales of merchandise identical or
most similar to that sold in the United States to be outside the
``ordinary course of trade.'' Instead, the Department will use sales of
similar merchandise, if such sales exist. The Department will use CV as
the basis for NV only when there are no above-cost sales that are
otherwise suitable for comparison. Therefore, in this proceeding, when
making comparisons in accordance with section 771(16) of the Act, we
considered all products sold in the home market, as described in the
``Scope of Investigation'' section of this notice, above, that were
made in the ordinary course of trade for purposes of determining
appropriate product comparisons to U.S. sales. Where there
[[Page 1595]]
were no sales of identical merchandise in the home market made in the
ordinary course of trade to compare to U.S. sales, we compared U.S.
sales to sales of the most similar foreign like product made in the
ordinary course of trade, based on the characteristics listed in
Sections B and C of our antidumping questionnaire, as described in the
``Product Comparisons'' section of this notice.
Export Price and Constructed Export Price
For certain sales made by Cinsa and ENASA, we calculated EP in
accordance with section 772(a) of the Act, because the subject
merchandise was sold directly to the first unaffiliated purchaser in
the United States prior to importation and because CEP methodology was
not otherwise indicated. We based EP on packed prices to unaffiliated
purchasers in the United States. We made deductions from the starting
price, where appropriate, for billing adjustments, rebates, U.S. and
foreign inland freight, U.S. and Mexican brokerage and handling
expenses, and U.S. duty. We also deducted the amount of antidumping
duties reimbursed to CIC by Cinsa and ENASA, consistent with our
reimbursement finding discussed above. (See, December 31, 1998,
Calculation Memorandum) (Calculation Memo).
For the remaining sales made by Cinsa and ENASA during the POR, we
calculated CEP in accordance with section 772(b) of the Act, because
the subject merchandise was first sold by CIC after having been
imported into the United States. We based CEP on packed prices to
unaffiliated purchasers in the United States. We made deductions from
the starting price, where appropriate, for billing adjustments,
rebates, U.S. and foreign inland freight, U.S. and Mexican brokerage
and handling expenses, and U.S. duty. We also deducted the amount of
antidumping duties reimbursed to CIC by Cinsa and ENASA, consistent
with our reimbursement finding discussed above. (See Calculation Memo).
We made further deductions, where appropriate, for credit,
commissions, and indirect selling expenses that were associated with
economic activities occurring in the United States. We recalculated
CIC's indirect selling expenses to include bad debt expenses, financial
expenses, marketing and research expenses, and depreciation expenses.
Because CIC is a sales subsidiary and does not perform any further
manufacturing, all CIC's expenses were deemed to be sales-related. For
purposes of calculating the indirect selling expense ratio, we also
reallocated CIC's total expenses over the total sales value excluding
the value of EP sales. (See Calculation Memo). We performed this
reallocation because CIC performs limited sales-related functions with
respect to EP sales and equal allocation of all CIC expenses across all
U.S. sales in which CIC is involved would disproportionately shift
these costs from CEP to EP sales. Finally, we made an adjustment for
profit in accordance with section 772(d)(3) of the Act.
Normal Value
Based on a comparison of the aggregate quantity of home market and
U.S. sales, we determined that the quantity of the foreign like product
sold in the exporting country was sufficient to permit a proper
comparison with the sales of the subject merchandise to the United
States, pursuant to section 773(a) of the Act. Therefore, we based NV
on either (1) the price (exclusive of value-added tax) at which the
foreign like product was first sold for consumption in the home market,
in accordance with section 773(a)(1)(B)(i) of the Act, or (2)
constructed value (CV), in accordance with section 773(a)(4) of the
Act, as noted in the ``Price-to-Price Comparisons'' and ``Price-to-CV
Comparisons'' sections of this notice, respectively.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (LOT) as the EP or CEP transaction. The NV LOT
is that of the starting-price sales in the comparison market or, when
NV is based on CV, that of the sales from which we derive selling,
general and administrative (SG&A) expenses and profit. For EP, the U.S.
LOT is also the level of the starting-price sale, which is usually from
the exporter to an unaffiliated U.S. customer. For CEP, it is the level
of the constructed sale from the exporter to an affiliated importer,
after the deductions required under section 772(d) of the Act. To
determine whether NV sales are at a different LOT than EP or CEP, we
examine stages in the marketing process and selling functions along the
chain of distribution between the producer and the unaffiliated
customer. If the comparison-market sales are at a different LOT, and
the difference affects price comparability, as manifested in a pattern
of consistent price differences between the sales on which NV is based
and comparison-market sales at the LOT of the export transaction, we
make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally,
for CEP sales, if the NV level is more remote from the factory than the
CEP level and there is no basis for determining whether the difference
in the levels between NV and CEP affects price comparability, we adjust
NV under section 773(a)(7)(B) of the Act (the CEP offset provision).
See Notice of Final Determination of Sales at Less Than Fair Value:
Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731
(November 19, 1997). In this review, Cinsa and ENASA reported three
channels of distribution in the home market: (1) direct sales to
customers from the Saltillo plant, (2) sales shipped from their Mexico
City warehouse, and (3) sales shipped from their Guadalajara warehouse.
In analyzing the data in the home market sales listing by distribution
channel and sales function, we found that the three home market
channels did not differ significantly with respect to selling
activities. Similar services, such as freight and delivery services and
inventory maintenance, were offered to all or some portion of customers
in each channel. Based on this analysis, we find that the three home
market channels of distribution comprise a single level of trade.
Cinsa and ENASA reported both EP and CEP sales in the U.S. market.
The EP sales were made by the exporter to the unaffiliated customer,
who received the merchandise at the border between Mexico and the
United States (FOB Laredo, Texas). We noted that EP sales involved
basically the same selling functions associated with the home market
level of trade described above. Therefore, based upon this information,
we have determined that the level of trade for all EP sales is the same
as that in the home market.
The CEP sales were based on sales made by the exporter to CIC, the
U.S. affiliated reseller, who then sold the merchandise directly to
unaffiliated purchasers in the United States from its San Antonio
warehouse. Based on our analysis, after making the appropriate
deductions under section 772(d) of the Act, there are two selling
activities associated with Cinsa's and ENASA's sales to CIC reflected
in the CEP: (1) freight and other movement expenses from the plant to
the affiliated reseller's San Antonio warehouse, and (2) freight and
delivery services (excluding actual freight charges), and inventory
maintenance, and other support services (such as sales personnel, order
processing personnel, and billing
[[Page 1596]]
personnel), which are the same functions found in the home market.
Therefore, we determine that Cinsa's and ENASA's CEP sales and their
home market sales are made at the same level of trade. Accordingly,
because we find the U.S. sales and home market sales to be at the same
level of trade, no level of trade adjustments under section
773(a)(7)(A) of the Act are warranted.
CEP Offset
Section 773(a)(7)(B) of the Act provides for an adjustment to NV
when NV is based on a level of trade different from that of the CEP, if
the NV level is more remote from the factory than the CEP and if we are
unable to determine whether the difference in levels of trade between
CEP and NV affects the comparability of their prices. This latter
situation can occur where there is no home market level of trade
equivalent to the U.S. sales level or where there is a different home
market level of trade but the data are insufficient to support a
conclusion on price effect. This adjustment, the CEP offset, is
identified in section 773(a)(7)(B) of the Act and is the lesser of the
following:
The indirect selling expenses on the home market sale, or
The indirect selling expenses deducted from the starting
price in calculating CEP.
The CEP offset is not automatic each time we use CEP.
In their questionnaire responses, Cinsa and ENASA claimed that the
sales support activities (such as freight and delivery services,
excluding actual freight charges, and inventory maintenance), and other
support services (such as sales personnel, order processing personnel,
and billing personnel) provided to home market and to U.S. customers
are generally the same. The respondents nevertheless requested an
adjustment to NV when NV is compared to U.S. CEP sales because they
claim that home market sales are made at a more advanced level of trade
than CEP sales because the NV sales price includes indirect selling
expenses attributable to sales support activities and other support
services noted above, while the CEP sales price is exclusive of all
indirect selling expenses and the selling functions attributable
thereto.
However, as discussed above, we find that the selling functions
performed at the CEP level are essentially the same as those performed
in the home market. Accordingly, we consider the home market and CEP
levels of trade comparable. We disagree with respondents' assertion
that differences in indirect selling expenses reflect a difference in
level of trade. Because we find the CEP and home market levels of trade
are the same, an adjustment to NV is not warranted.
Cost of Production Analysis
The Department disregarded certain sales made by Cinsa and ENASA
for the period December 1, 1995, through November 30, 1996 (the most
recently completed review of Cinsa and ENASA), pursuant to a finding in
that review that sales were made below cost. Thus, in accordance with
section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to
believe or suspect that respondents Cinsa and ENASA made sales in the
home market at prices below the cost of producing the merchandise in
the current review period. As a result, the Department initiated
investigations to determine whether the respondents made home market
sales during the POR at prices below their COP within the meaning of
section 773(b) of the Act.
A. Calculation of COP
We calculated the COP on a product-specific basis, based on the sum
of Cinsa's and ENASA's cost of materials and fabrication costs for the
foreign like product, plus amounts for home market SG&A and packing
costs in accordance with section 773(b)(3) of the Act. Because Cinsa
and ENASA reported monthly costs, we created an annual average COP on a
product-specific basis.
We relied on COP information submitted by Cinsa and ENASA, except
in the following instances where it was not appropriately quantified or
valued: (1) frit prices from an affiliated supplier did not approximate
fair market value prices; therefore, we increased frit prices by the
amount of the undocumented discount given by the affiliated supplier;
(2) we included the APSA acquisition costs in Cinsa's general and
administrative expenses (see, Calculation Memo); and (3) we revised
Cinsa's and ENASA's submitted interest costs to exclude the calculation
of negative interest expense.
B. Claim for Startup Cost Adjustment
The information submitted by Cinsa and ENASA in this review fails
to demonstrate entitlement to a startup cost adjustment under section
773(f)(1)(C) for the additional production costs incurred in connection
with the July 1977 acquisition of APSA. Under the definition of a
startup cost adjustment, two conditions must both be satisfied: (1) a
company is using new production facilities or producing a new product
that requires substantial additional investment, and (2) production
levels are limited by technical factors associated with the initial
phase of commercial production. Since the claim for a startup cost
adjustment is not being made for the production of a new product, the
first condition must be satisfied through evidence of either a new
plant or the substantially complete retooling of the existing plant.
This substantial retooling must involve the replacement of nearly all
production equipment and a complete revamping of existing machinery.
The Department has addressed the issue of what constitutes a ``new
production facility'' within the meaning of section 773(f)(1)(C) in
several recent cases. See, Stainless Steel Wire Rod from Spain, 63 FR
40391, 40401 (July 29, 1998), Small Diameter Circular Seamless Carbon
and Alloy Steel Standard, Line and Pressure Pipe from Germany, 63 FR
13170, 13199 (March 18, 1998), and Final Determination of Sales at Less
Than Fair Value: Collated Roofing Nails from Korea, 62 FR 51420, 51426
(October 1, 1997) (Roofing Nails from Korea). In order for an existing
facility to be considered a new production facility within the meaning
of section 773(f)(1)(C) of the Act, the Statement of Administrative
Action (SAA) at 836 provides that it must be retooled to the extent
that it becomes a brand new facility in virtually all respects. The SAA
and the Department's regulations define new production facilities as
including ``the substantially complete retooling of an existing plant''
during the period of investigation or review (SAA at 836; 19 CFR
351.407(d)(1)(i)). This substantial retooling must involve the
replacement of nearly all production equipment and a complete revamping
of existing machinery (SAA at 836). Thus, the SAA makes clear that, in
analyzing these situations, an adjustment for startup costs is
warranted only in those circumstances wherein the renovations result in
a nearly-new facility.
In Roofing Nails from Korea, the Department rejected respondent
Kabool's startup claim noting that Kabool had not replaced or rebuilt
existing machinery and equipment but, instead, had merely moved these
assets to a new site. The Department also stated that, because the
first condition of startup-- a new production facility or product--had
not been met, it was not required to address whether Kabool's
production levels had been limited during the POR.
In this review, we do not consider Cinsa's installation of new
equipment and adaptation of existing kilns to handle increased
production volume a new plant or a substantially complete
[[Page 1597]]
retooling of the existing plant. We consider the situation in the
instant review to be parallel to that in Roofing Nails from Korea where
respondent Kabool moved equipment from one location to another. The
partial retooling of Cinsa's plant to incorporate machinery acquired
from APSA and to begin commercial production of APSA-designed cookware
did not have a substantial effect on virtually all of the assets at
Cinsa's facility.
With regard to the second factor--whether production levels were
limited by technical factors associated with the initial phase of
commercial production--it need not be addressed because the first
factor of the test has not been satisfied. This finding that Cinsa did
not use new production facilities or produce a new product during the
POR is sufficient to deny Cinsa's claim. See Final Determination of
Sales at Less Than Fair Value: Certain Preserved Mushrooms from Chile,
63 FR 56613, 56618 (October 22, 1998), and Roofing Nails from Korea.
Therefore, we have denied respondents' claim for a startup cost
adjustment. See the Calculation Memo for an explanation of how the
aforementioned acquisition costs were included in Cinsa's costs.
C. Test of Home Market Prices
We compared the weight-averaged, per-unit COP figures for the
period December 1996 to November 1997, to home market sales of the
foreign like product as required under section 773(b) of the Act, in
order to determine whether these sales were made at prices below the
COP. In determining whether to disregard home market sales made at
prices below the COP, we examined whether: (1) within an extended
period of time, such sales were made in substantial quantities; and (2)
such sales were made at prices which permitted the recovery of all
costs within a reasonable period of time. On a product-specific basis,
we compared the COP (net of selling expenses) to the home market
prices, less any applicable movement charges, rebates, discounts, and
direct and indirect selling expenses.
D. Results of COP Test
Pursuant to section 773(b)(2)(C), where less than 20 percent of the
respondent's sales of a given product were at prices less than the COP,
we did not disregard any below-cost sales of that product because we
determined that the below-cost sales were not made in ``substantial
quantities.'' Where 20 percent or more of the respondent's sales of a
given product during the POR were at prices less than the COP, we
disregarded the below-cost sales where such sales were found to be made
at prices which would not permit the recovery of all costs within a
reasonable period of time (in accordance with section 773(b)(2)(D) of
the Act).
The results of our cost tests for both Cinsa and ENASA indicated
that for certain home market models less than twenty percent of the
sales of the model were at prices below COP. We therefore retained all
sales of these models in our analysis and used them as the basis for
determining NV. Our cost tests also indicated that for certain other
home market models more than twenty percent of home market sales within
an extended period of time were at prices below COP and would not
permit the full recovery of all costs within a reasonable period of
time. In accordance with section 773(b)(1) of the Act, we therefore
excluded the below-cost sales of these models from our analysis and
used the remaining above-cost sales as the basis for determining NV.
Finally, our cost tests also indicated that for certain home market
models all contemporaneous sales of comparable products were made at
prices below the COP. Therefore, we calculated NV based on CV, in
accordance with section 773(a)(4) of the Act.
E. Calculation of CV
For Cinsa's and ENASA's products for which we could not determine
the NV based on comparison market sales because there were no
contemporaneous sales of a comparable product, we compared U.S. prices
to CV, in accordance with CEMEX, as discussed above.
In accordance with section 773(e)(1) of the Act, we calculated a CV
based on the sum of the respondents' cost of materials, fabrication,
SG&A, and U.S. packing costs as reported in the U.S. sales listing. We
calculated CV based on the methodology described in the ``Calculation
of COP'' section, above.
In accordance with section 773(e)(2)A), we based SG&A and profit on
the actual amounts incurred and realized by Cinsa and ENASA in
connection with the production and sale of the foreign like product in
the ordinary course of trade, for consumption in the foreign country.
For selling expenses, we used the weighted-average home market selling
expenses.
F. Price-to-Price Comparisons
For those comparison products for which there were sales at prices
above the COP, we based the respondents' NV on home market prices. For
both of the respondents, we calculated NV based on the VAT-exclusive
gross unit price and deducted, where appropriate, inland freight,
rebates, and early payment discounts.
For comparisons to Cinsa's and ENASA's EP sales, we made a
circumstance-of-sale adjustment, where appropriate, for differences in
credit expenses and commissions. We offset home market commissions with
U.S. indirect selling expenses capped by the amount of home market
commissions (no commissions were incurred on EP sales). For comparisons
to Cinsa's and ENASA's CEP sales, we also deducted credit expenses and
commissions from NV. We made adjustments for differences in packing
expenses for both Cinsa and ENASA. We also made adjustments to NV,
where appropriate, for differences in costs attributable to differences
in the physical characteristics of the merchandise, pursuant to section
773(a)(6)(C)(ii) of the Act.
G. Price-to-CV
Where we compared EP or CEP to CV, we made circumstance-of-sale
adjustments by deducting from CV the weighted-average home market
direct selling expenses and adding the U.S. direct selling expenses
(except those deducted in calculating CEP), in accordance with section
773(a)(8) of the Act and section 351.410(c) of the Department's
regulations.
Currency Conversion
We made currency conversions based on the official exchange rates
in effect on the dates of the U.S. sales as certified by the Federal
Reserve Bank of New York. Section 773A(a) of the Act directs the
Department to use a daily exchange rate in order to convert foreign
currencies into U.S. dollars, unless the daily rate involves a
``fluctuation.'' In accordance with the Department's practice, we have
determined as a general matter that a fluctuation exists when the daily
exchange rate differs from a benchmark by 2.25 percent. See, e.g.,
Certain Stainless Steel Wire Rods from France: Preliminary Results of
Antidumping Duty Administrative Review, 61 FR 8915, 8918, March 6,
1998, and Policy Bulletin 96-1: Currency Conversions, 61 FR 9434, March
8, 1996. The benchmark is defined as the rolling average of rates for
the past 40 business days. When we determine a fluctuation exists, we
substitute the benchmark for the daily rate.
Preliminary Results of Review
As a result of this review, we preliminarily determine that the
weighted-average dumping margins for
[[Page 1598]]
the period December 1, 1996, through November 30, 1997, are as follows:
------------------------------------------------------------------------
Manufacturer/exporter Period Margin
------------------------------------------------------------------------
Cinsa................................ 12/1/96-11/30/97 64.02
ENASA................................ 12/1/96-11/30/97 124.69
------------------------------------------------------------------------
Cash Deposit Requirements
The following deposit requirements will be effective for all
shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date of the
final results of this administrative review, as provided by section
751(a)(1) of the Act: (1) the cash deposit rates for the reviewed
companies will be those established in the final results of this
review; (2) for previously reviewed or investigated companies not
listed above, the cash deposit rate will continue to be the company-
specific rate published for the most recent period; (3) if the exporter
is not a firm covered in this review, a prior review, or the original
less than fair value (LTFV) investigation, but the manufacturer is, the
cash deposit rate will be the rate established for the most recent
period for the manufacturer of the merchandise; and (4) the cash
deposit rate for all other manufactures or exporters will continue to
be 29.52 percent, the ``All Others'' rate made effective by the LTFV
investigation. These requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
Assessment Rates
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. The Department
will issue appraisement instructions directly to the U.S. Customs
Service upon completion of this review. The final results of this
review shall be the basis for the assessment of antidumping duties on
entries of merchandise covered by the final results of this review and
for future deposits of estimated duties. For assessment purposes, we
intend to calculate importer-specific assessment rates for the subject
merchandise. In calculating these importer-specific assessment rates,
we will take into account the amount of the reimbursement calculated on
sales during the POR. See Calculation Memorandum for details. For both
EP and CEP sales, we will divide the total dumping margins (calculated
as the difference between NV and EP (or CEP) for each importer) by the
entered value of the merchandise. Upon the completion of this review,
we will direct the U.S. Customs Service to assess the resulting ad
valorem rates against the entered value of each entry of the subject
merchandise made by the importer during the POR.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f) to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
Parties to the proceeding may request disclosure within five days
of the date of publication of this notice. Any interested party may
request a hearing within 30 days of publication. Any hearing, if
requested, will be held 44 days after the date of publication or the
first business day thereafter.
Issues raised in the hearing will be limited to those raised in the
respective case briefs and rebuttal briefs. Case briefs from interested
parties and rebuttal briefs, limited to the issues raised in the
respective case briefs, may be submitted not later than 30 days and 37
days, respectively, from the date of publication of these preliminary
results. Parties who submit case briefs or rebuttal briefs in this
proceeding are requested to submit with each argument (1) a statement
of the issue and (2) a brief summary of the argument.
The Department will subsequently issue the final results of this
administrative review, including the results of its analysis of issues
raised in any such written briefs or at the hearing, if held, not later
than 120 days after the date of publication of this notice.
Interested parties who wish to request a hearing or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, Room B-099, within 30 days of the
date of publication of this notice. Requests should contain: (1) The
party's name, address and telephone number; (2) the number of
participants; and (3) a list of issues to be discussed. Issues raised
in the hearing will be limited to those raised in the respective case
briefs and rebuttal briefs.
This administrative review and notice are published in accordance
with section 751(a)(1) of the Act and 19 CFR 351.221.
Dated: December 31, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-435 Filed 1-8-99; 8:45 am]
BILLING CODE 3510-DS-P
