[Federal Register Volume 62, Number 190 (Wednesday, October 1, 1997)]
[Notices]
[Pages 51449-51453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26044]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-421-701]
Brass Sheet and Strip From the Netherlands: Final Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On May 12, 1997, the Department of Commerce (the Department)
published the preliminary results of the administrative review of the
antidumping duty order on brass sheet and strip from the Netherlands.
This review covers sales to the United States by one manufacturer/
exporter, Outokumpu Copper Strip B.V. (OBV), and its U.S. affiliate,
Outokumpu Copper (USA), Inc., of the subject merchandise during the
period of
[[Page 51450]]
review (POR), August 1, 1995, through July 31, 1996. We gave interested
parties an opportunity to comment on our preliminary results. Based on
our analysis of the comments received, we have changed the results from
those presented in the preliminary results of review, where indicated
below.
FOR FURTHER INFORMATION CONTACT: Karla Whalen or Lisette Lach, Office
of Antidumping/Countervailing Duty Enforcement, Group III, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone: (202) 482-0408 or (202) 482-6412, respectively.
EFFECTIVE DATE: October 1, 1997.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Tariff Act), are to the provisions effective
January 1, 1995, the effective date of the amendments made to the
Tariff Act by the Uruguay Round Agreements Act (URAA). In addition,
unless otherwise indicated, all citations to the Department's
regulations are to the regulations, as codified at 19 CFR Part 353
(1997).
Scope of This Review
Imports covered by this review include brass sheet and strip, other
than leaded and tin brass sheet and strip, from the Netherlands. The
chemical composition of the products under review is currently defined
in the Copper Development Association (C.D.A.) 200 Series or the
Unified Numbering System (U.N.S.) C20000 series. This review does not
cover products the chemical composition of which are defined by other
C.D.A. or U.N.S. series. The physical dimensions of the products
covered by this review are brass sheet and strip of solid rectangular
cross section over 0.006 inch (0.15 millimeter) through 0.188 inch (4.8
millimeters) in gauge, regardless of width. Coiled, wound-on-reels
(traverse-wound), and cut-to-length products are included. The
merchandise under review is currently classifiable under items numbers
7409.21.00 and 7409.29.20 of the Harmonized Tariff Schedule of the
United States (HTSUS). Although the HTSUS subheadings are provided for
convenience and Customs purposes, the written description of the
merchandise under review is dispositive.
Background
On August 12, 1988, the Department published in the Federal
Register the antidumping duty order on brass sheet and strip (BSS) from
the Netherlands (53 FR 30455). On August 12, 1996, the Department
published the notice of ``Opportunity to Request Administrative
Review'' for the period August 1, 1995 through July 31, 1996 on BSS
from the Netherlands (61 FR 41768). In accordance with 19 CFR
353.22(a)(1), OBV requested that we conduct a review of its sales. On
September 17, 1996, we published in the Federal Register a notice of
initiation of this antidumping administrative review (61 FR 48882).
This review covers entries of BSS by OBV and its U.S. affiliate
Outokumpu Copper (USA), Inc. (OCUSA). On May 12, 1997, the Department
published in the Federal Register the preliminary results of the
administrative review (62 FR 25891). On May 27, 1997, respondent
submitted a ministerial error allegation.
On June 11, 1997, petitioners submitted a case brief and on June
18, 1997, respondent submitted a reply brief. Neither petitioners
(Hussey Copper, Ltd., The Miller Company, Olin Corporation, Revere
Copper Products, Inc., International Association of Machinists and
Aerospace Workers, the International Union, Allied Industrial Workers
of America (AFL-CIO/CLC)) nor respondent requested a hearing;
therefore, no hearing was held. The Department has now completed this
administrative review in accordance with section 751 of the Tariff Act.
Analysis of Comments Received
Comment 1: Reporting of Metal Prices on ``Rework'' Sales
Petitioners allege that for certain home market sales, OBV failed
to report a metal price. Petitioners base this claim on OBV's statement
in its section B response that ``[r]ework sales may also involve
reworking scrap purchased by OBV which is fabricated into a finished
product.'' Therefore, petitioners conclude that as the Department has
been working with an ``incomplete'' database for the home market sales,
the Department should reject the home market database as submitted and
resort to use of facts available, or at a minimum, impute the maximum
metal cost to these sales.
Respondent replies that petitioners' allegation evidences a
misunderstanding of ``rework'' sales as reported by OBV. OBV claims
that it accurately reported prices for all sales, including the metal
component, where applicable. First, OBV reasserts that when it
purchased metal, fabricated the metal, and invoiced the customer for
both metal and fabrication, the gross unit price reported to the
Department included both metal and fabrication prices. Further,
respondent asserts that if a transaction reported in the home market
sales list does not provide a metal price, that transaction was a toll
sale, whereby the customer supplied the metal, OBV processed the metal
and subsequently invoiced the customer solely for fabrication.
Therefore, OBV did not report a metal price for these toll sales.
Second, OBV believes that petitioners' allegation results partly
from confusion regarding the nature of the types of sales coded in
Field 8.5, REWRKH, of OBV's home market sales list. When OBV purchased
scrap from a customer and provided fabrication services to the
customer, OBV considered these non-toll sales, which it reported to the
Department with both a metal and fabrication price. Respondent points
out that all sales coded in Field 8.5, with an ``R'' or a ``B,'' are
toll sales in which the customer provided the metal to OBV for
fabrication and OBV invoiced the customer only for fabrication charges.
Sales designated in the sales listing by an ``R'' indicate transactions
where the customer provides scrap metal for processing into subject
merchandise. Sales designated by a ``B'' indicate transactions where
the customer provides virgin metal for processing into subject
merchandise. The metal fixation codes for each of these types of
transactions evidence a tolling process. Thus, respondent reported a
zero metal price for both ``R'' and ``B'' transactions, since there is
no applicable metal price for these types of transactions.
Third, respondent argues that at verification the Department
verified both types of transactions and verified that OBV reported a
metal price for all sales where the customer was actually charged for
the metal as well as for the fabrication. The Department found no
discrepancies in the sales traces. Finally, respondent notes that a
comparison of the average prices charged for rework and regular sales
demonstrates a credible difference in pricing.
For the reasons identified above, respondent argues that there is
no basis for the Department to apply facts available or to make changes
to the reported sales information as the record clearly demonstrates
that the sales price data reported by OBV was complete, accurate and
fully verified by the Department.
Department's Position: We agree with respondent that it fully
reported its sales
[[Page 51451]]
in accordance with the Department's instructions. Whenever there was a
metal price associated with any given sale, it was reported by OBV. The
Department verified several scenarios, including sales of the foreign
like product in the ordinary course of trade where customers purchased
the fully processed, finished product from OBV. The Department also
verified that OBV made what are commonly referred to as ``rework'' or
``tolled sales.'' (See OBV Sales Verification Report, dated April 16,
1997, at 32-37). OBV reported these as either an ``R'' or a ``B'' in
Field 8.5, REWRKH, of its home market data base. In this situation, OBV
acts purely as a subcontractor. OBV receives raw or semi-finished
material (whether scrap or plate) from the unaffiliated customer, which
OBV then fabricates into the finished merchandise before sending it
back to the customer. OBV performs this service for a fabrication fee
and never takes title either to the input product or the finished
merchandise.
Comment 2: Constructed Value Profit
Petitioners claim that the Department erroneously disregarded
``rework'' sales from its calculation of constructed value (CV) profit.
Petitioners maintain that the Department must include all sales of the
foreign like product in the CV profit calculation, whether or not such
sales are used as the basis of product comparisons. Petitioners argue
that the ``rework'' sales are made in the ordinary course of trade and
as such must be included in the calculation of CV profit. Petitioners
also argue that the nature of the metal or scrap input does not matter
in determining whether these sales are outside of the ordinary course
of trade, since the final product produced by OBV is identified by
identical product control numbers. They argue that it is unjustifiable
to exclude such sales for any reason other than a finding that the
sales are outside of the ordinary course of trade. Accordingly,
petitioners claim that ``rework'' sales should be included in the
calculation of CV profit.
OBV states that the Department properly excluded the rework sales
from the calculation of constructed value profit because they are toll
sales which should properly be classified as outside of the ordinary
course of trade. Rework sales are sales of fabrication services, not
sales of the foreign like product. OBV equates its rework sales to toll
sales because the customer provides the material to be fabricated by
OBV. OBV, in turn, fabricates the material into a finished product that
is shipped back to the customer, and the customer is only invoiced for
the fabrication service provided by OBV. Respondent reiterates that
fabrication does not encompass the sale of a product, and consequently,
any profit earned by OBV on toll sales should be excluded from the
constructed value calculation for normal sales of brass sheet and
strip. OBV further argues that it has been the Department's policy to
exclude toll sales from the calculation of normal value, where the U.S.
transactions did not involve toll sales. See Brass Sheet and Strip from
the Republic of Korea, 51 FR 40833, 40834 (November 10, 1986). Thus,
respondent urges the Department to continue to follow Department
practice and exclude rework/toll sales from the normal value
calculation and from the calculation of constructed value profit.
OBV adds, however, that should the Department deviate from its own
precedents with regard to the issue of rework/toll sales, as well as
its established policy in all reviews of Brass Sheet and Strip from the
Netherlands, the Department should apply a sales-below-cost test using
the data reported by OBV and verified by the Department. Respondent
argues that petitioners' recommendation that the Department alter the
verified prices reported in OBV's sales list for the rework sales prior
to the cost test is legally and factually unsubstantiated.
Alternatively, respondent suggests that the Department rely on the
reported gross price and the reported cost of production (COP).
Department's Position: Previously, the Department treated tolling
operations as involving the sale by the subcontractor of the subject
merchandise. Under this view, in tolling situations, ``only the
fabrication would be subject to the order on brass sheet and strip.''
Brass Sheet and Strip From Canada; Final Affirmative Determination of
Circumvention of Antidumping Duty Order, 58 FR 33610, 33612 (June 18,
1993). Accordingly, when possible, the Department compared tolled sales
to tolled sales and non-tolled sales to non-tolled sales. See, e.g.,
Final Determination of Sales at Less Than Fair Value: Brass Sheet and
Strip From Italy, 52 FR 816 (Jan. 9, 1987); Final Determination of
Sales at Less Than Fair Value; Brass Sheet and Strip from Canada, 51 FR
44319 (Dec. 9, 1986).
Recently, however, the Department revised its practice and now
considers the party contracting for the tolling, rather than the
processor or subcontractor, to be the producer/exporter of the
merchandise. See Final Determination of Sales at Less Than Fair Value:
Polyvinyl Alcohol From Taiwan, 61 FR 14064, 14070 (March 29, 1996). The
Department's new approach to tolling is reflected in the recently
adopted regulations implementing the Uruguay Round Agreements Act
(URAA). See Antidumping Duties; Countervailing Duties; Final Rule, 62
FR 27296, 27411 (May 19, 1997) (Sec. 351.401(h)). These regulations do
not govern the present review because the review was initiated prior to
the date the regulations became effective. However, to the extent the
regulations reflect the Department's practice, they do provide
guidance.
In the case of tolling, the Department revised its practice prior
to the date the new regulations were proposed. Although this change was
not directly necessitated by the URAA, the Department considers its new
approach to tolling a more reasonable interpretation of the statute's
intent. This is because, as described in the preamble to the proposed
regulations, the party owning the components of the subject
merchandise, the general contractor who arranges for the outside
processing or assembly, ``has ultimate control over how the merchandise
is produced and the manner in which it is ultimately sold. The
Department will not consider the subcontractor to be the manufacturer
or producer, regardless of the proportion of production attributable to
the subcontracted operation or the location of the subcontractor or
owner of the goods.'' Antidumping Duties; Countervailing Duties;
Proposed Rule, 61 FR 7308, 7330 (Feb. 27, 1996) (preamble).
Thus, the Department does not view OBV's sales of its tolling
services as sales of the foreign like product within the ordinary
course of trade. See 19 U.S.C. Sec. 1677b(a)(1) (1995). Therefore, we
have not included OBV's reported sales of its tolling services within
the home market data base for comparison purposes or otherwise.
Similarly, any profit derived from these sales should not be included
in the calculation of constructed value.
Comment 3: Packing Conversion Error
Petitioners note that in calculating OBV's packing costs for sales
in the United States, the Department divided by the conversion factor
when it should have multiplied by the conversion factor in converting
pounds to kilograms. Therefore, the Department should correct this
error in its final margin calculation program. OBV did not comment.
Department's Position: The Department agrees with petitioners and
has corrected this error in the final program.
[[Page 51452]]
Comment 4: U.S. Imputed Credit Expenses
Petitioners allege that OBV incorrectly used a home market interest
rate, instead of a U.S. interest rate, to determine imputed credit
expenses for U.S. sales. Petitioners argue that this is inconsistent
with the Department's practice, for the Department usually calculates
imputed credit expenses by using a weighted-average, short-term
borrowing rate that reflects the currency in which the sale was
invoiced. Therefore, given that OBV's U.S. sales were invoiced in U.S.
dollars, the U.S. short-term interest rate should be used to determine
imputed credit expenses for OBV's U.S. sales.
Petitioners state that the Department should recalculate OBV's U.S.
imputed credit expenses using the publicly available U.S. short-term
borrowing rate prevailing during the POR, since OBV's actual short-term
borrowing rate in the United States is not available. Petitioners
suggest that the Department use 8.52 percent, which is the average U.S.
prime rate for third-quarter 1995 through second-quarter 1996, as
published by the International Monetary Fund (See International
Financial Statistics at 645 (April 1997)). OBV did not comment.
Department's Position: The Department agrees with petitioners.
Ordinarily, the Department calculates imputed credit expenses using a
weighted-average, short-term borrowing rate which reflects the currency
in which the sale was invoiced. See, e.g., Final Determination of Sales
at Less Than Fair Value: Certain Pasta from Turkey, 61 FR 30309, 30324
(June 14, 1996); Final Determination of Sales at Less Than Fair Value:
Canned Pineapple Fruit from Thailand, 60 FR 29553, 29557 (June 5,
1995); and Final Determination of Sales at Less than Fair Value:
Certain Carbon Steel Butt-Weld Pipe Fittings from Thailand, 60 FR 10552
(February 27, 1995). The Department has continued to apply OBV's actual
Dutch guilders denominated short-term borrowing rates as reported for
all home market sales. OBV had no reported short-term borrowing rates
for its sales to the United States, all of which were denominated in
U.S. dollars. Therefore, consistent with our current practice, the
Department has applied 8.47 percent, the average U.S. prime rate for
August 1995 through July 1996, as published by the Board of Governors
of the Federal Reserve System. See Federal Reserve Bulletin at A22
(July 1997).
Comment 5: Cost of Manufacturing
Petitioners note that the Department's cost of production
verification report states that OBV discovered errors in its submitted
COM while preparing for verification. Petitioners maintain that for the
final determination the Department should correct the errors reported
by OBV. OBV did not comment on this issue.
Department's Position: The Department agrees with petitioners and
has made the required adjustment to COM in the final margin calculation
program.
Comment 6: Direct Cost Center Allocation
Petitioners note that in OBV's normal accounting records, it
allocates costs for its direct cost centers on the basis of kilograms
processed. However, for this review, OBV allocated costs for two of its
costs centers on the basis of linear meters processed. Petitioners
argue that section 773(f)(1)(A) of the Act requires and the
Department's practice is to rely on the respondent's books and records
if they reasonably reflect the costs associated with the cost of
producing the subject merchandise. See Final Determination of Sales at
Less Than Fair Value: Canned Pineapple Fruit From Thailand, 60 FR
29533, 29559 (June 5, 1995). Petitioners state that the Department
obtained information during verification indicating that the allocation
methodology used by OBV in its questionnaire response is not consistent
with the allocation methods used by OBV in the normal course of
business. Therefore, petitioners conclude that the Department should
adjust OBV's reported conversion costs to reflect the cost allocation
methods used by OBV in the normal course of business.
Respondent states that the Department must reject petitioners'
request to adjust OBV's control number specific costs submitted to the
Department. According to OBV, the allocation it uses in the normal
course of business assigns costs to broad product groups and fails to
capture the cost of the product characteristics defined by the
Department. Respondent notes that the Department's Section D
questionnaire requires that the submitted costs recognize the
differences in physical characteristics of the subject merchandise.
Respondent maintains that it developed the linear meters processed
allocation methodology in order to accurately report product-specific
costs to the Department. Respondent contends that allocating costs
based on OBV's normal methodology (i.e., on a per kilogram processed
basis), as requested by petitioners, results in control numbers being
assigned the same average costs. OBV notes that products with different
dimensions require vastly differing amounts of processing time, with
thin products undergoing more processing than the average product,
while thick products undergo less processing. Respondent states that
the cost centers allocated based on linear meters processed are
primarily responsible for setting the dimension of the products
manufactured. Respondent explains that the allocation of these cost
center expenses over linear meters processed most accurately recognizes
the differences in processing time in a manner that was tied directly
to the company's production and financial records.
Department's Position: We agree with OBV that its method of
allocating costs based on linear meters processed is reasonable. As a
general matter, section 773(f)(1)(A) of the Act provides:
Costs shall normally be calculated based on the records of the
exporter or producer of the merchandise, if such records are kept in
accordance with the generally accepted accounting principles of the
exporting country (or the producing country, where appropriate) and
reasonably reflect the costs associated with the production and sale
of the merchandise.
Accordingly, the Department adheres to an individual firm's
recording of costs, if we are satisfied that the methodology reasonably
reflects the costs of producing the subject merchandise, and is in
accordance with the generally accepted accounting principles (GAAP) of
the producer's home country. See, e.g., Canned Pineapple Fruit from
Thailand; Final Determination of Sales at Less Than Fair Value, 60 FR
29553, 29559 (June 5, 1995); Certain Stainless Steel Welded Pipe from
the Republic of Korea; Final Determination of Sales at Less Than Fair
Value, 57 FR 53693, 53705 (November 12, 1992); and Furfuryl Alcohol
from South Africa: Final Determination of Sales at Less Than Fair
Value, 60 FR 22550, 22556 (May 8, 1995). Normal accounting practices
provide an objective standard by which to measure costs, while allowing
respondents a predictable basis on which to compute those costs. The
Department will only reject or adjust a party's reported costs based
upon its normal accounting practices if those practices result in an
unreasonable allocation of production costs. See, e.g., Final
Determination of Sales at Less Than Fair Value: Large Newspaper
Printing Presses and Components
[[Page 51453]]
Thereof, Whether Assembled or Unassembled, From Japan, 61 FR 38139,
38154 (May 26, 1992).
At the same time, parties may adapt their normal cost accounting
system to report data to the Department on a product-specific basis,
provided the reporting methodology used is reasonable. See Canned
Pineapple From Thailand, 60 FR at 29559-60. In the instant proceeding,
OBV developed its linear meters processed allocation methodology in
order to report its cost of production and constructed value on a
product-specific basis to the Department. At verification, the
Department requested and analyzed in detail source documents relating
both to OBV's normal cost accounting system and its linear meter
allocation methodology as reported. See OBV COP/CV Verification Report,
dated March 2, 1997, at 20. OBV argued and we confirmed that OBV's
normal cost accounting system, which relied upon an average cost for
all products, did not account for the cost differences associated with
varying dimensions of brass sheet products. These cost differences
resulted from processing time differences between different thicknesses
and grades of brass sheet. Although we have not necessarily determined
that OBV's normal cost accounting system does not reasonably reflect
OBV's costs for reporting purposes, we have determined that the linear
meters processed allocation methodology captures the cost differences
between the varying dimensions of brass sheet products. Accordingly, we
have determined that OBV's submitted methodology for allocating costs
to specific products is reasonable and we have continued to rely upon
this methodology for the final results.
Comment 7: Duty Absorption
Petitioners allege that the Department incorrectly stated in its
duty absorption analysis that dumped sales through OBV's affiliate were
1.13 percent of total U.S. sales. Petitioners state that previous
Department duty absorption findings indicate the duty absorption
finding should represent the percentage volume of sales that are dumped
over the total U.S. sales in the POR, rather than the percentage margin
of dumping. As such, in its final results of this review, the
Department should identify in its duty absorption finding only the
percent of OBV's U.S. sales (by quantity) where dumping was found.
Respondent did not comment on this issue in its reply brief.
Department's Position: The Department agrees with petitioners that
when there are margins for particular sales, in our final duty
absorption determination, we will provide the percentage (by volume )
of sales that are dumped out of the total U.S. sales during the POR.
During this review, however, the Department has determined that there
is no dumping margin for OBV on any of its U.S. sales during the POR.
Therefore, the final duty absorption finding is negative.
Comment 8: Ministerial Error Allegation Regarding Credit Adjustments
On May 27, 1997, respondent alleged that the Department made a
ministerial error in the preliminary margin calculation program
regarding certain credit adjustments. The Department added these
reported credit adjustments in the calculation of home market discounts
and rebates. In doing so, respondent claimed that the Department
double-counted these credit adjustments as the home market gross unit
price was reported net of these credit adjustments. Accordingly, OBV
requested that this error be corrected prior to the issuance of the
final results. Petitioners did not comment on this allegation.
Department's Position: Based on respondent's submissions and the
Department's verification findings, we agree with OBV that the credit
adjustment field should not have been included in the calculation of
discounts and rebates. This error has been corrected in the
Department's final margin calculation program. The Department did not
issue an amended preliminary determination because doing so is not the
Department's standard practice and the noted error did not
significantly affect the preliminary results.
Final Results of Review
As a result of this review, we have determined that the following
margin exists for the period August 1, 1995 through July 31, 1996:
------------------------------------------------------------------------
Percent
Manufacturer/exporter margin
------------------------------------------------------------------------
Outokumpu Copper Strip B.V. (OBV)............................. 0.00
------------------------------------------------------------------------
The Department shall determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and foreign market value may
vary from the percentage stated above. The Department will issue
appraisement instructions directly to the U.S. Customs Service.
Furthermore, the following deposit requirements shall be effective
upon publication of his notice of final results of review for all
shipments of the subject merchandise from the Netherlands entered, or
withdrawn from warehouse, for consumption on or after the publication
date, as provided for by section 751(a)(1) of the Act: (1) the cash
deposit rates for OBV will be the rate as stated above; (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, 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) if neither the exporter nor the manufacturer
is a firm covered in this review, the cash rate will be 16.99 percent,
which was the ``all others'' rate as established in the LTFV
investigation. The deposit requirements, when imposed, shall remain in
effect until publication of the final results of the next
administrative review.
This notice serves as a final reminder to importers of their
responsibility under 19 CFR section 353.26 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.
This notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d) of the Department's
regulations. Timely notification of return/destruction of APO materials
or conversion to judicial protective order is hereby requested. Failure
to comply with the regulations and the terms of an APO is a
sanctionable violation.
This administrative review and this notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 CFR 353.22.
Dated: September 9, 1997.
Jeffrey P. Bialos,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-26044 Filed 9-30-97; 8:45 am]
BILLING CODE 3510-DS-P
