[Federal Register Volume 63, Number 13 (Wednesday, January 21, 1998)]
[Notices]
[Pages 3085-3092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1400]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-832]
Pure Magnesium From the People's Republic of China: Final Results
of Antidumping Duty New Shipper Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
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SUMMARY: On October 23, 1997, the Department of Commerce published the
preliminary results of the new shipper administrative review of the
antidumping duty order on pure magnesium from the People's Republic of
China (62 FR 55215). This review covers one manufacturer/exporter of
the subject merchandise to the United States, Taiyuan Heavy Machinery
Import and Export Corporation, and the period of review is May 1, 1996,
through October 31, 1996. We gave interested parties an opportunity to
comment on our preliminary results.
We have determined that U.S. sales have been made below the normal
value, and we will instruct the U.S. Customs Service to assess
antidumping duties based on the difference between Export Price and
Normal Value.
EFFECTIVE DATE: January 21, 1998.
FOR FURTHER INFORMATION CONTACT: Everett Kelly or Brian C. Smith,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-4194 or (202) 482-1766,
respectively.
SUPPLEMENTARY INFORMATION: Unless otherwise indicated, all citations to
the statute are references to the provisions effective January 1, 1995,
the effective date of the amendments made to the Tariff Act of 1930, as
amended (the Act), by the Uruguay Round Agreements Act (URAA). In
addition, unless otherwise indicated, all citations to the Department
of Commerce (the Department) regulations are to those codified at 19
CFR part 353 (April 1997). Where appropriate, references are made to
the Department's final regulations, codified at 19 CFR part 351 (62 FR
27296), as a statement of current departmental practice.
Background
On October 23, 1997, the Department published in the Federal
Register (62 FR 55215) the preliminary results of its new shipper
administrative review of the antidumping duty order on pure magnesium
from the PRC (62 FR 55215). On November 13, the petitioner 1
and Taiyuan Heavy Machinery Import and Export Corporation (Taiyuan)
submitted publicly available information on surrogate values for
factors of production for consideration in the final results. On
November 18, the petitioner and Taiyuan each submitted case briefs. On
November 20, both parties submitted comments on the other's publicly
available information submitted on November 13. On November 26, the
parties submitted rebuttal briefs. On December 2, 1997, the Department
held a public hearing.
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\1\ The petitioner includes the following entities: Magnesium
Corporation of America, International Union of Operating Engineers,
Local 564, and the United Steelworkers of America, Local 8319.
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Scope of Order
The product covered by this order is pure primary magnesium
regardless of chemistry, form or size, unless expressly excluded from
the scope of this order. Primary magnesium is a metal or alloy
containing by weight primarily the element magnesium and produced by
decomposing raw materials into magnesium metal. Pure primary magnesium
is used primarily as a chemical in the aluminum alloying,
desulfurization, and chemical reduction industries. In addition, pure
primary magnesium is used as an input in producing magnesium alloy.
Pure primary magnesium encompasses products (including, but not
limited to, butt ends, stubs, crowns and crystals) 2 with
the following primary magnesium contents:
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\2\ Since the antidumping duty order was issued, we have
clarified that the scope of the original order includes, but is not
limited to, butt ends, stubs, crowns and crystals. See May 22, 1997,
instructions in U.S. customs and November 14, 1997, Final Scope Rule
of Antidumping Duty Order on Pure Magnesium from the PRC.
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(1) Products that contain at least 99.95% primary magnesium, by
weight
[[Page 3086]]
(generally referred to as ``ultra-pure'' magnesium);
(2) Products that contain less than 99.95% but not less than 99.8%
primary magnesium, by weight (generally referred to as ``pure''
magnesium); and
(3) Products (generally referred to as ``off-specification pure''
magnesium) that contain 50% or greater, but less than 99.8% primary
magnesium, by weight, and that do not conform to ASTM specifications
for alloy magnesium.
``Off-specification pure'' magnesium is pure primary magnesium
containing magnesium scrap, secondary magnesium, oxidized magnesium or
impurities (whether or not intentionally added) that cause the primary
magnesium content to fall below 99.8% by weight. It generally does not
contain, individually or in combination, 1.5% or more, by weight, of
the following alloying elements: Aluminum, manganese, zinc, silicon,
thorium, zirconium and rare earths.
Excluded from the scope of this order are alloy primary magnesium
(that meets specifications for alloy magnesium), primary magnesium
anodes, granular primary magnesium (including turnings, chips and
powder), having a maximum physical dimension (i.e., length or diameter)
of one inch or less, secondary magnesium (which has pure primary
magnesium content of less than 50% by weight), and remelted magnesium
whose pure primary magnesium content is less than 50% by weight.
Pure magnesium products covered by this order are currently
classifiable under Harmonized Tariff Schedule of the United States
(HTSUS) subheadings 8104.11.00, 8104.19.00, 8104.20.00, 8104.30.00,
8104.90.00, 3824.90.11, 3824.90.19 and 9817.00.90. Although the HTSUS
subheadings are provided for convenience and customs purposes, our
written description of the scope is dispositive.
Separate Rates
In proceedings involving non-market-economy (``NME'') countries,
the Department begins with a rebuttable presumption that all companies
within the country are subject to government control and thus should be
assessed a single antidumping duty deposit rate. To establish whether a
firm is sufficiently independent from government control to be entitled
to a separate rate, the Department analyzes each exporting entity under
a test arising out of the Final Determination of Sales at Less Than
Fair Value: Sparklers from the People's Republic of China (56 FR 20588,
May 6, 1991) and amplified in Final Determination of Sales at Less Than
Fair Value: Silicon Carbide from the People's Republic of China (59 FR
22585, May 2, 1994) (Silicon Carbide). Under the separate rates
criteria, the Department assigns separate rates in nonmarket economy
cases only if the respondent can demonstrate the absence of both de
jure and de facto governmental control over export activities.
1. De Jure Control
Taiyuan has placed on the administrative record documents to
demonstrate absence of de jure control: the ``Law of the People's
Republic of China on Industrial Enterprises Owned by the Whole
People,'' adopted on April 13, 1988; (the Industrial Enterprises Law),
and the 1992 regulations that supplemented it, ``Regulations for
Transformation of Operational Mechanisms of State-Owned Industrial
Enterprises'' (Business Operation Provisions). We have analyzed these
laws in previous cases and have found them sufficiently to establish an
absence of de jure control of companies ``owned by the whole people,''
such as Taiyuan. (See, e.g., Final Determination of Sales at Less than
Fair Value: Furfuryl Alcohol from the People's Republic of China
(``Furfuryl Alcohol'') 60 FR 22544 (May 8, 1995)). The Industrial
Enterprises Law provides that enterprises owned by ``the whole people''
shall make their own management decisions, be responsible for their own
profits and losses, choose their own suppliers, and purchase their own
goods and materials. The Business Operation Provisions confer upon
state-owned enterprises the responsibility for making investment
decisions, the right to dispose of retained capital and assets, and the
authority to form joint ventures and to merge with other enterprises.
Taiyuan also states that pure magnesium does not appear on any
government lists regarding export provisions or export licensing, and
that no quotas are imposed on pure magnesium. In sum, in prior cases,
the Department examined both the Industrial Enterprises Law and the
Business Operations Provisions, and found that they establish an
absence of de jure control. We have no new information in this
proceedings which would cause us to reconsider this determination with
regard to Taiyuan.
2. De Facto Control
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) Whether the export prices are set by or
subject to the approval of a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses. See Silicon Carbide and Furfuryl Alcohol.
Taiyuan asserted the following: (1) It establishes its own export
prices; (2) it negotiates contracts, without guidance from any
governmental entities or organizations; (3) it makes its own personnel
decisions; and (4) it retains the proceeds of its export sales, uses
profits according to its business needs and has the authority to sell
its assets and to obtain loans. During verification proceedings,
Department officials viewed such evidence as sales documents that
showed Taiyuan sales prices were negotiated solely by Taiyuan and its
customer. In addition, the Department generally noted no significant
indication of government involvement in Taiyuan's business operations.
Taiyuan officials are appointed by a bureau of the provincial
government, rather than the central government, and there are no other
known exporters of the subject merchandise under the control of the
provincial government. Sales documents reviewed indicated that Taiyuan
sales prices were negotiated solely by Taiyuan and its customer. In
addition, the Department reviewed sales payments, bank statements and
accounting documentation that provided evidence that Taiyuan received
payment in U.S. dollars, which was deposited into its bank account
after being converted to renminbi (RMB). See Taiyuan Sales Verification
Report. This information, taken in its entirety, supports a finding
that there is de facto an absence of governmental control of export
functions. Consequently, we have determined that Taiyuan has met the
criteria for the application of separate rates. See Notice of Final
Determination at Less Than Fair Value: Persulfates from the Peoples
Republic of China, 62 FR 27222 (May 19, 1997).
Fair Value Comparisons
To determine whether sales of the subject merchandise by Taiyuan to
the United States were made at less than fair value, we compared the
export price (EP) to the normal value (NV), as described in the
``Export Price and
[[Page 3087]]
Constructed Export Price'' and ``Normal Value'' sections of this
notice, below.
Export Price
We calculated EP in accordance with section 772(a) of the Act,
because the subject merchandise was sold directly by the PRC exporter
to unaffiliated parties in the United States prior to importation into
the United States and the constructed export price methodology was not
warranted based on the facts of record. We calculated EP based on the
same methodology used in the preliminary results, with the following
exception:
To value foreign inland freight, we used the average rate contained
in the Indian periodical The Times of India. We have used this same
rate in numerous NME cases where India has been selected as the primary
surrogate. See Final Determinations of Sales at Less Than Fair Value:
Brake Drums and Brake Rotors from the People's Republic of China (PRC),
62 FR 9160 (February 28, 1997) (Brake Rotors)).
Normal Value
We calculated NV in accordance with section 773(c) of the Act,
which applies to non-market economy countries. In accordance with
section 773(c)(4) of the Act, we must, to the extent possible, value
the factors of production in one or more market economy countries that
(1) are at a level of economic development comparable to that of the
non-market economy country, and (2) are significant producers of
comparable merchandise. We have determined that Indonesia and India are
the countries most comparable to the PRC in terms of overall economic
development and both are significant producers of comparable
merchandise (aluminum). Further, India also produces magnesium. For
these final results, we have continued to use India as a surrogate
country because it meets the Department's criteria for surrogate
country selection.
The selection of the surrogate values was based on the quality and
contemporaneity of the data. Where possible, we attempted to value
material inputs on the basis of tax-exclusive domestic prices (see
Comment 17). Where we were not able to rely on domestic prices, we used
import prices to value factors. As appropriate, we adjusted input
prices to make them delivered prices. Where import values were used, we
added an amount for surrogate freight attributable to the lesser of
either the distance from the source to the factory or the nearest port
to the factory (see Comment 18). For those values not contemporaneous
with the POR, we adjusted for inflation using wholesale price indices
published in the International Monetary Fund's International Financial
Statistics. For a complete analysis of surrogate values, see the
January 14, 1998, Calculation Memorandum (Calculation Memorandum). We
note changes to surrogate valuation since the preliminary results as
follows:
To value ferrosilicon, we used a simple average of prices
applicable during the POR from Metal Bulletin, and the Iron and Steel
Newsletter (see Comment 6).
To value calcinate dolomite and fluorite powder, we have used
prices from Monthly Statistics of the Foreign Trade of India (Monthly
Statistics) (see Comments 8 and 9, respectively).
To value barium chloride, we used prices from United Nations Import
Statistics (see Comment 10).
To value electricity, we used the August 1996 rate in Business
World (see Comment 12).
To value truck freight rates, we used the average rate contained in
the Indian periodical The Times of India.
To value factory overhead, SG&A, and profit, we used the financial
report of Southern Magnesium and Chemicals Ltd. (SMCL) because this
company is a producer of the subject merchandise and the data from the
report is contemporaneous to the POR (see Comment 2).
We have considered the line item labeled ``stores and spares
consumed'' to include the reducing vessel and have treated the reducing
vessel as part of factory overhead because the reducing vessel is not a
direct material consumed in the production process. Although the SMCL
financial report may have treated the reducing vessel as a direct
material and included the reducing vessel as part of line item ``raw
materials consumed,'' we have, in calculating the surrogate overhead
percentage, reduced SMCL's cost of materials consumed and increased
overhead by the amount attributable to the reducing vessel costs (see
Comment 1). We have not included in the surrogate overhead and SG&A
calculations the excise duty amount listed in SMCL's financial report
(see Brake Rotors at 9164). We based our factory overhead calculation
on the cost of goods manufactured rather than on the cost of goods
sold. We also included interest and/or financial expenses in the SG&A
calculation. In addition, we only reduced interest and financial
expenses by amounts for interest income if the Indian financial report
noted that the income was short-term in nature. Where the financial
report did not distinguish short-term interest income as a line item
within total ``other income,'' we used the relative ratio of interest
income to total other income as reported for the Indian metals and
chemicals industry in the Reserve Bank of India Bulletin (RBI
Bulletin). For a further discussion of other adjustments made, see
January 14, 1998, Calculation Memorandum).
Interested Party Comments
We gave interested parties an opportunity to comment on the
preliminary results. We received comments and rebuttal comments from
the petitioner and Taiyuan.
Comment 1: Treatment of the Reducing Vessel. The petitioner claims
that evidence on the record demonstrates that the reducing vessel is
not part of factory overhead and that the Department must treat and
value the reducing vessel as a direct material regardless of which
public information it uses to calculate a value for factory overhead.
The petitioner also refers to a U.S. Bureau of Mines (BOM) study of the
silicothermic process of magnesium production which treats the reducing
vessel as a direct material cost and not part of factory overhead. If
the Department decides to use the financial report of SMCL (an Indian
producer) to value factory overhead, the petitioner argues, then it
should also take into consideration the fact that the data in the
financial report demonstrate that the vessel is treated as a direct
material rather than as part of stores and spares. The petitioner
points out that even though Indian accounting standards state that a
material can be considered part of factory overhead if it assists the
manufacturing process but does not enter physically into the
composition of the finished product, this is not necessarily the case
with reducing vessels. Alternatively, the petitioner argues that if the
Department decides to use data from the RBI Bulletin, then it should
take into consideration the fact that public information on the record
demonstrates that the cost of the reducing vessel is not captured in a
calculated factory overhead rate using data from the RBI Bulletin,
because the cost of the vessel is neither indirect nor minor. The
petitioner claims that if the Department uses the RBI Bulletin to
calculate factory overhead, then the Department needs to make an
adjustment to the factory overhead rate to account for the cost of the
reducing vessel.
Taiyuan contends that the reducing vessel is not a raw material
which is part of the direct cost of production. Rather, Taiyuan
maintains that the reducing vessel is a reusable piece of equipment
that does not physically enter into the finished product, and that
[[Page 3088]]
Indian general accounting principles treat such items as part of
overhead costs. Therefore, Taiyuan maintains that the Department should
continue to consider the reducing vessel as part of factory overhead.
DOC Position: We agree with Taiyuan. The reducing vessel is not
incorporated into the finished product. Rather, it is equipment
necessary for producing the subject merchandise which eventually needs
to be replaced after continuous use. Although we conclude that SMCL
treated the reducing vessel as a direct material in its 1995-96
financial report, we do not find that the reducing vessel should be
considered a direct material rather than an indirect material for
purposes of antidumping law. To the extent possible, we have adjusted
the direct material amount reflected in SMCL's financial report by
removing from the cost of direct materials and adding to factory
overhead an amount for the reducing vessel based on data contained in
SMCL's 1994-95 financial report. We have treated the reducing vessel
cost as part of factory overhead and have used the SMCL 1995-96
financial report to calculate a factory overhead percentage (see
Comment 2 for further discussion).
Comment 2: Surrogate Values for Factory Overhead, SG&A and Profit.
The petitioner claims that the Department must use the financial
statement of SMCL rather than the RBI Bulletin to value factory
overhead, SG&A and profit because the Indian producer uses the
silicothermic process employed by Taiyuan's supplier and therefore
consumes the reducing vessel in producing magnesium. In addition, the
petitioner claims that the data contained in SMCL's financial statement
are more specific to magnesium production and more contemporaneous to
the period of review (POR) than the data in the RBI Bulletin.
Taiyuan argues that the Department should use the data on the
chemicals and metals industry from the RBI Bulletin to value factory
overhead, SG&A and profit because the Department has used these data in
numerous NME cases and because it has a high degree of reliability
given that it contains data compiled from many companies. Taiyuan
argues that the Department should not rely on the SMCL financial report
to calculate these surrogate percentages because that financial report
is not publicly available published information. Taiyuan also alleges
that the SMCL financial report is not in accordance with Indian
generally accepted accounting principles (GAAP) because SMCL may have
considered the reducing vessel as part of direct materials and Indian
GAAP require that materials which assist in the manufacturing process,
but which do not enter physically into the finished product, are not to
be considered as direct materials. Finally, Taiyuan argues that the
SMCL financial report is unusable because information in the report
indicates that SMCL was unable to produce and sell product during
periods of high demand, undertook major capital improvement projects
and maintained an abnormally high level of raw material stocks, all of
which may have distorted its factory overhead, SG&A and profit ratios.
DOS Position: We agree with the petitioner. In numerous NME cases,
we have expressed a preference for using the ``most product-specific
information possible from the surrogate market'' (see, e.g., Brake
Rotors at 9168). We find that SMCL's 1996 financial report is for an
Indian producer of the subject merchandise and more specific than the
industry-wide data for metals production contained in the 1992-93 RBI
Bulletin. Moreover, we find that the 1996 SMCL financial report
contains data which is more contemporaneous to the POR than data
contained in the 1992-93 RBI Bulletin. In addition, we find that the
SMCL financial report is publicly available information within the
meaning of 19 CFR 351.301. As for Taiyuan's argument that SMCL's
financial report is not in accordance with Indian GAAP, we find that
the financial report has been audited by an Indian accounting firm and
that even though SMCL may have treated the reducing vessel as a direct
material in its financial report, this designation does not necessarily
indicate that the financial report is not in accordance with Indian
GAAP. With regard to the argument that SMCL's financial report is not
usable because of possible production, capital investment and inventory
irregularities, we note that there is no evidence in the financial
report which indicates that these factors were abnormal for Indian
producers in general. In addition, we find that Taiyuan has not
provided any evidence which indicates that the data contained in the
1996 SMCL financial report is not reasonably representative of the
production and selling experience of other producers of the subject
merchandise in India during the time period in question.
Comment 3: Calculation of SG&A. Taiyuan contends that the
Department should deduct from SG&A certain selling expenses (i.e.,
royalty, selling commission, and advertisement) normally deducted from
EP and CEP and also an amount reflected in the RBI Bulletin for ``other
expenses'' and then take the remainder and divide it by the sum of
total SG&A and COM to derive the SG&A percentage. Taiyuan cites to the
Department's Antidumping Manual which states that SG&A should be
expressed as a percentage of the cost of goods sold.
The petitioner contends that the Department should not deduct the
royalty, selling commissions, or advertisement expenses from SG&A
because it has made no such deductions to EP and because it cannot make
a circumstance-of-sale (COS) adjustment based on the data on the
record. Moreover, the petitioner maintains that the Department should
not deduct ``other expenses'' from SG&A because there is no evidence
that this expense category includes expenses already reported
separately in the response (i.e., packing costs). Finally, the
petitioner states it is the Department's established practice to
include only the COM in the denominator of the SG&A ratio.
DOC Position: We agree in part with the petitioner. We have not
made a COS adjustment to NV. In NME proceedings, the Department does
not generally adjust NV for COS differences given (a) the imprecise
information for distinguishing between direct and indirect selling
expenses in the surrogate SG&A source (i.e., SMCL's financial report);
and (b) the absence of non-NME information about what direct selling
expenses are included in EP (except where CEP is used) (see Final
Determination of Sales at Less Than Fair Value: Bicycles from the
People's Republic of China, 61 FR 19026, 19031 (April 30, 1996)
(Bicycles)). As for accounting for expenses already reported separately
in the response (i.e., packing expenses), we note that SMCL's financial
report does not provide a separate line item for packing expenses.
Since there is no information in the financial report which indicates
that SMCL incurs packing expenses, we have not removed any packing
expenses from the SG&A calculation. Regarding the calculation of the
SG&A percentage, we have used the cost of goods manufactured, not the
cost of goods sold, in the denominator of the SG&A ratio consistent
with our current practice, which is not reflected in the Antidumping
Manual (see Brake Rotors at 9164).
Comment 4: Material Consumption Figures. The petitioner argues that
the Department should not have subtracted the monthly values reported
as negative from the total amount of material consumed because it is
impossible that Taiyuan's supplier consumed negative amounts of inputs
in any months in
[[Page 3089]]
which it produced magnesium ingots. Instead, the petitioner argues that
the Department should require Taiyuan to provide additional information
on its supplier's actual consumption figures for the inputs and months
for which the supplier provided negative values. Alternatively, the
petitioner argues that the Department should not reduce the quantities
of the factors of production consumed by the amount of the reported
negative consumption figures.
Taiyuan contends that if the Department recognizes adjustments to
increase material usage, then the Department should also recognize
adjustments which decrease material usage.
DOC Position: We agree with the respondent. The negative numbers do
not reflect negative consumption amounts. Rather, the negative numbers
noted in the inventory records are corrections to Taiyuan's supplier's
records to reflect actual usage. The verification report specified all
necessary corrections to reported data, and the correct information has
been used for the final results.
Comment 5: Reseller SG&A Expenses and Profit. The petitioner argues
that in calculating CV and/or EP, the Department failed to account for
expenses Taiyuan incurred in reselling its product to the United States
market. The petitioner contends that the Department should have
included in CV both surrogate producer SG&A expenses and profit (noted
in SMCL's financial statement) plus an amount of reseller SG&A expenses
and profit (noted in the RBI Bulletin). Alternatively, the petitioner
argues that the Department should reduce EP by the amount of reseller
SG&A expenses and profit in accordance with 19 U.S.C. 1677a(c)(2)(A)
and also adjust EP for reseller SG&A expenses and profit as a COS
adjustment in accordance with 19 U.S.C. 1677b(a)(6)(C)(iii).
Taiyuan states that if the Department decides to include in CV an
additional amount for the reseller's SG&A and profit, then the
Department must make a corresponding level of trade adjustment to
account for the different marketing level represented by such costs.
However, Taiyuan states that the Department should not add these
additional amounts to CV based on applicable costs to be included in
the CV to establish NV.
DOC Position: We disagree with the petitioner. In cases involving
NMEs, we do not use exporter expenses and profit in our analysis.
Instead, we obtain ratios for expenses and profit from a surrogate
country, which in this case is India, and include in NV amounts based
on the surrogate ratios. We consider those selling expenses and profit
to approximate the selling expenses incurred and profit realized by
both Taiyuan and Taiyuan's supplier of the subject merchandise.
Therefore, we have accounted for the expenses incurred and profit
realized by Taiyuan in reselling the subject merchandise to the U.S.
market. As for subtracting an amount for these expenses and profit from
export price or making a COS adjustment we have no basis to conclude
that such adjustments are warranted or feasible (see Comment 3 for
further discussion).
Comment 6: Surrogate Value for Ferrosilicon. Taiyuan argues that
the publication the Department used to value ferrosilicon in the
preliminary results (i.e., Metal Bulletin) does not provide sufficient
details on or reliable information for domestic values. Instead,
Taiyuan claims that the Department should use a ferrosilicon import
value submitted on November 13, 1997, from the publication Iron and
Steel Newsletter (Iron and Steel). According to respondent, this
information is more specific and reliable.
The petitioner contends that the Department should not derive an
import value from data in Iron and Steel because the value (1) Is
either based on imports from NME countries (i.e., Russia) or from
countries that are not ferrosilicon producers (i.e., Germany, the
Netherlands); and (2) does not most closely correspond to the actual
input consumed by Taiyuan. In addition, the petitioner contends that
the import data on ferrosilicon contained in Iron and Steel are not
representative of the price paid by purchasers in India nor are these
import values most contemporaneous with the POR. Furthermore, the
petitioner argues that the Department should not use price data from a
1995-96 Indian producer financial statement submitted on November 20,
1997, because the price is aberrationally low when compared with the
data from Monthly Statistics and Metal Bulletin. Therefore, the
petitioner maintains that the Department should continue to use data
from Metal Bulletin to value ferrosilicon.
DOC Position: We disagree in part with the petitioner. We have used
a simple average POR value for all grades of ferrosilicon from two
publications (i.e., Metal Bulletin and Iron and Steel). We find the
July 1996 value of ferrosilicon in Metal Bulletin is no more
representative or contemporaneous to the POR than is the July and
August 1996 values of ferrosilicon in Iron and Steel. Therefore, we
have used both values in the average price calculation. However, we
have not removed an amount for excise or sales taxes from the domestic
ferrosilicon value listed in Metal Bulletin because the publication
does not indicate that the price is inclusive of these taxes. We have
not included the values or quantities of ferrosilicon exported to India
by countries listed in Iron and Steel which the Department has
determined are NMEs (i.e., Russia, Kazakhstan). We have included the
values and quantities of ferrosilicon from countries listed in Iron and
Steel that are market economies but which the petitioner claims are not
known to be producers of ferrosilicon because these countries are the
exporters of record and are market economies that are determining the
price of ferrosilicon that they sell to the Indian market. We have no
evidence on the record which indicates that the ferrosilicon exported
from these countries originates in NMEs.
Comment 7: Surrogate Value for Dolomite. Taiyuan argues that the
Department should not continue to use the April 1995-March 1996 value
from a 1995-96 financial report of a single company (i.e., Indian
Ferroalloy) to value dolomite because that price is unreliable and
because there is no information in the financial report which indicates
the type of dolomite referenced in that report. Instead, Taiyuan
contends that the Department should use an indexed and averaged import
value for three grades of dolomite from the Indian government
publication 1994 Index Numbers of Wholesale Prices in India (Index
Numbers). According to respondent, the data have been updated in this
publication and are more contemporaneous to the POR than the data from
a single company.
The petitioner contends that the Department should continue to use
the 1995-96 dolomite value from Indian Ferroalloy's financial report
because the report provides a more contemporaneous value that is
specific to the grade of dolomite used in magnesium production.
DOC Position: We agree with the petitioner. We have used the April
1995-March 1996 value from Indian Ferroalloy's financial report because
it is more representative and more contemporaneous to the POR than the
data contained in Index Numbers. We also have not used the data in
Index Numbers because, although the Indian government publication
appears to provide POR values for dolomite, there is no explanation how
the product-specific indices were determined or why 1994 prices were
selected for
[[Page 3090]]
indexation. We have not removed an amount for excise or sales taxes
from the domestic dolomite value listed in Indian Ferroalloy's
financial report because the financial report does not indicate that
the price is inclusive of these taxes.
Comment 8: Surrogate Value for Calcinated Dolomite (i.e.,
Calcinate). Taiyuan argues that it is the Department's policy to use,
to the extent possible, statistics from a single country when
developing the values for the factors of production. According to
respondent, the Department used import statistics from Indonesia to
value calcinated dolomite in the preliminary results. Taiyuan claims
that because India is the primary surrogate country in this case, the
Department should use the April-July 1996 Indian import value for
calcinated dolomite from Monthly Statistics which Taiyuan furnished in
its November 13, 1997, submission.
DOC Position: We agree with Taiyuan. We have used the April-July
1996 import value from Monthly Statistics to value calcinated dolomite.
Comment 9: Surrogate Value for Fluorite Powder. Taiyuan argues that
the April 1995-March 1996 value from Monthly Statistics the Department
used in the preliminary results to value fluorite powder provides
unreliable information during the POR. Taiyuan claims that the
Department should use the April-July 1996 fluorite value import value
from Monthly Statistics contained in its November 13, 1997, submission.
The respondent argues that the data from this publication are more
contemporaneous to the POR than the data used in the preliminary
results.
DOC Position: We agree with Taiyuan. We have used the April-July
1996 import value from Monthly Statistics to value fluorite powder
because it is more contemporaneous to the POI than is the April 1995-
March 1996 import value.
Comment 10: Surrogate Value for Barium Chloride. The petitioner
contends that the Department should use the January-December 1996
Indian import value from United Nations Import Statistics instead of
the Indonesian import value used in the preliminary results. The
petitioner maintains that even though the Indian import value includes
imports from the United States while the U.S. export data does not show
exports of barium chloride to India, the export data of one country may
not correspond to the import data of another for any number of reasons,
including shipment of goods through intermediate countries. The
petitioner also argues that if the Department continues to use the
Indonesian import data to value barium chloride, the Department should
not derive a hypothetical volume and value of U.S. imports into
Indonesia and remove those amounts from the Indonesian import data
since the Indonesian import data is not separately broken out by
country of origin and because there is no necessary correlation between
two different countries' import and export data.
Taiyuan argues that the Department should use the Indonesian import
data rather than the Indian import data to value barium chloride
because the Indian import data contains imports from the United States
while U.S. export data does not show exports of barium chloride to
India. Taiyuan also maintains that the U.S. quantity and value data
contained in the Indonesian import data is aberrational and that the
Department should therefore remove the U.S. data from Indonesian import
data by taking the volume and value of imports of barium chloride from
all countries reported in the Indonesian import data and subtracting
the volume and value of exports of barium chloride to Indonesia
reflected in U.S. export data.
DOC Position: We agree with the petitioner. Since India is the
primary surrogate country in this case, we have used the Indian import
prices to value barium chloride. We have used the January-December 1996
Indian import price from United Nations Import Statistics to value
barium chloride because the data in United Nations Import Statistics
for this material is more contemporaneous to the POR than the Indian
import prices contained in Monthly Statistics. We do not agree that the
Indian import data are necessarily in error because they do not
correlate with U.S. export data. The lack of correlation between two
different countries' import and export data could result from various
factors such as the reporting of intermediate destinations on export
declarations. Therefore, we have no basis to conclude that the Indian
data are erroneous.
Comment 11: Surrogate Value for Coal. Taiyuan argues that the April
1995-March 1996 import value from Monthly Statistics the Department
used in the preliminary results is unreliable. Instead, Taiyuan claims
that the Department should use an indexed and averaged import value for
coal from the Index Numbers. As asserted by the respondent, the data
are current to the POR and thus need no index calculation.
The petitioner maintains that the Department should not use the
prices from Index Numbers because those prices are domestic prices for
coal produced in India, which are subject to government control. In
addition, the petitioner asserts that the prices from this publication
predate the POR by more than two years and are for a range of coal
grades, none of which are used by Taiyuan. If the Department decides to
use a domestic Indian coal price, then the petitioner contends that the
Department should calculate an average price from Index Numbers using
only the ``heat-intensive'' grades of coal listed in the publication.
DOC Position: We disagree with Taiyuan. Taiyuan has offered no
reason for finding that the April 1995-March 1996 coal import price
from Monthly Statistics is unreliable. We have not used the coal prices
from Index Numbers because, although that Indian government publication
appears to provide POR values for coal, there is no explanation for how
the product-specific indices were determined or why 1994 prices were
selected for indexation.
Comment 12: Surrogate Value for Electricity. Taiyuan argues that
the Department should not use the August 1996 price in Business World
to value electricity because this publication is not one normally
considered by the Department in previous NME cases. Taiyuan maintains
that the Department should use instead a 1995 value from the
publication Confederation of India Industrial Handbook (``Industrial
Handbook''), which has been used in previous NME cases, because the
publication provides electricity rates applicable for rural areas in
India. Taiyuan argues that since its producer is located in a rural
area in the PRC, the rural electricity rates contained in Industrial
Handbook would more accurately reflect the electricity costs incurred
by the PRC producer.
The petitioner contends that the Department should not use the
rates in Industrial Handbook to value electricity because the rates it
contains are not contemporaneous with the POR. In addition, the
petitioner argues that in previous NME cases the Department has not
adjusted a surrogate value to account for the fact that a production
facility is located in a particular type of region within a country and
should not do so in this case. Moreover, the petitioner contends that
the data in Industrial Handbook identify different rates for rural and
urban customers for only two Indian states, and that for the other
states, the publication only provides one set of rates without making
any distinction between urban and rural areas.
DOC Position: We agree with the petitioner. We have used the August
1996 industrial electricity rate
[[Page 3091]]
contained in Business World because it is more contemporaneous to the
POR than the 1995 industrial electricity rate contained in Industrial
Handbook. We do not agree with Taiyuan that we should use the rural
electricity rate in Industrial Handbook because Taiyuan's supplier is
located in a rural area in the PRC. The 1995 Industrial Handbook lists
differentiated rural industrial rates for only one Indian state. This
indicates that in general rural electricity rates are not different
than urban electricity rates in India. Therefore, we find that the
cited rural rates from Industrial Handbook would not be representative
of rural rates for India as a whole.
Comment 13: Inclusion/Exclusion of Provident Fund and Employees'
Welfare Expenses in COM. Taiyuan contends that the labor portion of the
NV calculation already includes provident fund and employees' welfare
expense contributions. Therefore, when calculating COM, Taiyuan
maintains that including these expenses in the overhead would result in
double-counting.
The petitioner maintains that the Department's new regression-based
wage rate methodology uses wage rates from the Yearbook of Labor
Statistics (Labor Statistics) published by the International Labor
Office (ILO) and that these rates are based on cash payments received
by employees. The petitioner contends that since provident fund
payments and employee welfare expenses are not cash payments to
employees, Taiyuan is incorrect that these costs are included in the
surrogate value for labor. Therefore, the petitioner maintains that the
Department should include these expenses in the factory overhead rate
calculation.
DOC Position: We agree with Taiyuan. The regression-based wage rate
we have used to value labor in this case is based on wage rates
contained in Labor Statistics. Information contained in Labor
Statistics states that the Indian wage rate is a comprehensive wage
rate which also includes employers' social security expenditures and
welfare services. Therefore, consistent with Department practice, we
have not included provident fund payments and employee welfare expenses
in the numerator of the factory overhead rate calculation. See Final
Determination for Sales at Less Than Fair Value: Polyvinyl Alcohol from
the People's Republic of China 61 FR 14057, 14061 (March 29, 1996)
(Comment 5).
Comment 14: Adjustment of the Surrogate Value for No. 2 Flux.
Taiyuan states that the Department made a clerical error in its
preliminary results when it did not multiply the flux no. 2 surrogate
value by the percentage purity of the input used by Taiyuan's suppliers
as specified in the preliminary results calculation memorandum, in
effect assuming the value to be for 100 percent pure flux.
The petitioner maintains that the value the Department calculated
for no. 2 flux incorporates the percentage factor.
DOC Position: We agree with the petitioner. We have rechecked our
calculation and find that our calculation is not in error.
Comment 15: Inclusion of Transportation Fee in Electricity Rate.
Taiyuan claims that in the preliminary results the Department
incorrectly included a transportation fee in its surrogate value
calculation for electricity. Therefore, Taiyuan maintains that the
Department should exclude the transportation fee from its electricity
value calculation.
DOC Position: We agree with Taiyuan and have removed the
transportation fee from the electrical surrogate value calculation.
Comment 16: Packing Cost Calculation. Taiyuan claims that in the
preliminary results the Department incorrectly determined the packing
labor cost by calculating a cost based on labor hours rather than on
labor minutes as reported in the response. Therefore, Taiyuan maintains
that the Department should recalculate the packing labor cost using the
reported labor minute factor.
DOC Position: We agree with Taiyuan and have calculated a labor
cost based on the labor minutes reported in Taiyuan's response.
Comment 17: Deduction of Taxes from Surrogate Values Assigned to
Raw Materials. Taiyuan contends that in any case where the Department
uses financial statements of Indian producers to establish surrogate
values for raw material inputs, the Department should follow the normal
practice used in Brake Rotors to calculate a tax-exclusive value (see
Brake Rotors at 9163). To ensure that surrogate values are exclusive of
all taxes, Taiyuan states that the excise duty amount between 15 and 20
percent plus a minimum of 4 percent for sales taxes should be deducted
from any domestic purchase prices.
Petitioner contends that although in prior NME cases the Department
has adjusted for taxes only where the quoted price was specifically
identified as being inclusive of excise and/or sales taxes, in this
review, Taiyuan has not identified a single surrogate value that is
specifically identified as being inclusive of taxes.
DOC Position: We agree in part with Taiyuan. Consistent with
Department practice, we have removed, where applicable, an amount for
excise taxes (i.e., 15 percent since 1995 based on information
contained in the record) and an amount for sales taxes (i.e., 4
percent) from the domestic Indian values we are using in our
calculations. Only one of the Indian publications we used for domestic
values (i.e., sulfuric acid from Chemical Weekly) noted that the price
was inclusive of excise and sales taxes. Therefore, we only removed tax
amounts from prices we obtained from Chemical Weekly. Our decision in
this case is consistent with the Department's decision in Brake Rotors
where we removed taxes from prices for certain steel products obtained
from an Indian government steel publication (i.e., Statistics for Iron
and Steel) because data in the publication indicated that taxes were
included in the prices.
Comment 18: Use of Import Surrogate Values Net of Any Additional
Amount for Domestic Inland Freight. Taiyuan argues that if the
Department uses Indian import statistics for surrogate values of raw
material inputs, it cannot add a constructed freight charge. Taiyuan
cites Sigma Corp. v. United States (Sigma), 117 F.3d 1401 (CAFC July 7,
1997) in which Taiyuan claims the Court held that using such a
methodology was beyond the limits of permissible approximation. Sigma
at 15.
Petitioner argues that the Department properly calculated inland
freight for raw materials in the preliminary results. Petitioner
contends that Taiyuan misread the Sigma ruling. Petitioner states that,
in Sigma, the Court did not determine that no additional amount for
inland freight could be included in CV. According to petitioner,
Sigma's ruling requires only that, when the surrogate value for an
input is based on a CIF import value, any additional amount for freight
for that input may not exceed the calculated freight costs of shipping
the material from respondents' seaports in the PRC to their factories.
DOC Position: We agree in part with the petitioner. Although the
holding in Sigma permits, rather than dictates, the methodology
referenced by the petitioner, it also does not dictate the outcome
urged by Taiyuan. Instead, it leaves to the discretion of the
Department the determination of a freight component which is not
excessive. We do not find that the import values contained in Indian
publications include all of the freight cost associated with
transporting the imported input to the factory. Therefore, in
accordance with Sigma decision, we
[[Page 3092]]
have included a freight amount equal to the lesser of: (1) The
calculated freight cost of shipping material from the PRC port Taiyuan
uses to export finished goods to its PRC factory or (2) the cost of
shipping material from the domestic supplier to the factory. See Final
Determination of Sales at Less Than Fair Value: Collated Roofing Nails
From the People's Republic of China, 62 FR 51410,51413 (October 1,
1997).
Currency Conversion
We made currency conversions pursuant to section 773A(a) of the Act
and 19 CFR 353.60 based on the rates certified by the Federal Reserve
Bank.
Final Results of the Review
As a result of our comparison of EP and NV, we determine that the
following weighted-average margin exists for the period May 1, 1996,
through October 31, 1996:
------------------------------------------------------------------------
Percent
Manufacturer/producer/exporter margin
------------------------------------------------------------------------
Taiyuan Heavy Machinery Import and Export Corporation...... 69.53
------------------------------------------------------------------------
The Customs Service shall assess antidumping duties on all
appropriate entries. Individual differences between export price and
normal value may vary from the percentage stated above. We have
calculated an importer-specific duty assessment rate based on the ratio
of the total amount of AD duties calculated for the examined sales made
during the POR to the total value of subject merchandise entered during
the POR. This rate will be assessed uniformly on all entries of that
particular importer made during the POR. The Department will issue
appraisement instructions concerning the respondent directly to the
U.S. Customs Service.
Furthermore, the following deposit rates shall be required for
merchandise, entered, or withdrawn from warehouse, for consumption on
or after the publication date of these final results of administrative
review, as provided for by section 751(a)(1) of the Tariff Act: (1) The
cash deposit rate for Taiyuan will be the rate indicated above; (2) for
previously reviewed or investigated companies not listed above that
have a separate rate, the cash deposit rate will continue to be the
company-specific rate published for the most recent period; (3) for all
remaining PRC exporters, the cash deposit rate will be 108.26 percent,
the PRC-wide rate established in the LTFV investigation; and (4) for
non-PRC exporters, the cash deposit rate will be the rate applicable to
the PRC supplier of that exporter.
These deposit requirements shall remain in effect until publication
of the final results of the next administrative review.
This notice serves as the final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during the 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.
This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d). Timely written notification or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and terms of the APO is a sanctionable
violation.
This new shipper administrative review and notice are in accordance
with section 751(a)(2)(B) of the Act (19 U.S.C. 1675(a)(2)(B)) and 19
CFR 353.28(c).
Dated: January 14, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-1400 Filed 1-20-98; 8:45 am]
BILLING CODE 3510-DS-P
