[Federal Register Volume 61, Number 204 (Monday, October 21, 1996)]
[Notices]
[Pages 54616-54621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26833]
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DEPARTMENT OF COMMERCE
[A-201-504]
Notice of Final Results of Antidumping Duty Administrative
Review: Porcelain-on-Steel Cookware From Mexico
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice.
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SUMMARY: On March 6, 1996 the Department of Commerce published the
preliminary results of its administrative review of the antidumping
duty order on porcelain-on-steel (POS) cookware from Mexico. The review
covers shipments of this merchandise to the
[[Page 54617]]
United States during the period December 1, 1991 through November 30,
1992.
Based on our analysis of the comments received and the correction
of certain clerical and computer program errors, we have changed the
preliminary results. The final results are listed below in the section
``Final Results of Review.''
EFFECTIVE DATE: October 21, 1996.
FOR FURTHER INFORMATION CONTACT: Katherine Johnson or James Terpstra,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone, (202) 482-4929 and (202) 482-3965,
respectively.
SUPPLEMENTARY INFORMATION:
Background
On March 6, 1996, the Department of Commerce (the Department)
published in the Federal Register the preliminary results of its
administrative review of the Antidumping Duty Order on Porcelain-on-
Steel Cookware from Mexico (61 FR 8911). The Department has now
completed that administrative review in accordance with section 751 of
the Tariff Act of 1930, as amended (the Act).
Scope of the Review
Imports covered by this review are shipments of porcelain-on-steel
cookware, including tea kettles, that 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) item number 7323.94.00. Kitchenware
currently entering under HTSUS item number 7323.94.00.30 is not subject
to the order. Although the HTSUS subheadings are provided for
convenience and Customs purposes, our written description of the scope
of this proceeding is dispositive.
The review covers two manufacturers/exporters, Acero Porcelanizado,
S.A. de C.V. (APSA) and Cinsa, S.A. de C.V. (Cinsa) of Mexican POS
cookware. The period of review (POR) is December 1, 1991 to November
30, 1992.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are in reference to the provisions as they
existed on December 31, 1994.
United States Price
A. APSA
We based United States price (USP) on both exporter's sales price
(ESP) and purchase price (PP), in accordance with section 772 of the
Act, because the subject merchandise was sold both before and after
importation into the United States. We based ESP and PP on the packed,
ex-factory price to unrelated purchasers in the United States.
For both PP and ESP sales we made deductions from USP, where
appropriate, for foreign and U.S. inland freight and insurance, Mexican
and U.S. brokerage and U.S. import duties and user fees, in accordance
with section 772(d)(2) of the Act. We also made deductions for
discounts and rebates. We added an amount to account for the
countervailing duty assessment on entries of the subject merchandise
entered during the instant review period. (See, Comment 3).
We made further deductions from ESP, where applicable, for
commissions, credit expenses and indirect selling expenses, pursuant to
section 772(e) (1) and (2) of the Act.
B. Cinsa
We based USP on PP, in accordance with section 772 of the Act,
because the subject merchandise was sold before importation into the
United States. We based PP on the packed, ex-factory price to unrelated
purchasers in the United States.
We made deductions from USP, where appropriate, for foreign and
U.S. inland freight and insurance, Mexican and U.S. brokerage and U.S.
import duties, in accordance with section 772(d)(2) of the Act.
We added to USP the amount of import duties which have been
rebated, or which have not been collected, by reason of the exportation
of the subject merchandise to the United States.
C. Cinsa and APSA
For both Cinsa and APSA we made an adjustment to USP for the value-
added tax (VAT) paid on the comparison sales in Mexico.
In light of the Federal Circuit's decision in Federal Mogul v.
United States, CAFC No. 94-1097, the Department has changed its
treatment of home market consumption taxes. Where merchandise exported
to the United States is exempt from the consumption tax, the Department
will add to the USP the absolute amount of such taxes charged on the
comparison sales in the home market. This is the same methodology that
the Department adopted following the decision of the Federal Circuit in
Zenith v. United States, 988 F. 2d 1573, 1582 (1993), and which was
suggested by that court in footnote 4 of its decision. The Court of
International Trade (CIT) overturned this methodology in Federal Mogul
v. United States, 834 F. Supp. 1391 (1993), and the Department
acquiesced in the CIT's decision. The Department then followed the
CIT's preferred methodology, which was to calculate the tax to be added
to USP by multiplying the adjusted USP by the foreign market tax rate;
the Department made adjustments to this amount so that the tax
adjustment would not alter a ``zero'' pre-tax dumping assessment.
The foreign exporters in the Federal Mogul case, however, appealed
that decision to the Federal Circuit, which reversed the CIT and held
that the statute did not preclude Commerce from using the ``Zenith
footnote 4'' methodology to calculate tax-neutral dumping assessments
(i.e., assessments that are unaffected by the existence or amount of
home market consumption taxes). Moreover, the Federal Circuit
recognized that certain international agreements of the United States,
in particular the General Agreement on Tariffs and Trade (GATT) and the
Tokyo Round Antidumping Code, required the calculation of tax-neutral
dumping assessments. The Federal Circuit remanded the case to the CIT
with instructions to direct Commerce to determine which tax methodology
it will employ.
The Department has determined that the ``Zenith footnote 4''
methodology should be used. First, as the Department has explained in
numerous administrative determinations and court filings over the past
decade, and as the Federal Circuit has now recognized, Article VI of
the GATT and Article 2 of the Tokyo Round Antidumping Code required
that dumping assessments be tax-neutral. This requirement continues
under the new Agreement on Implementation of Article VI of the GATT.
Second, the Uruguay Round Agreements Act (URAA) explicitly amended the
antidumping law to remove consumption taxes from the home market price
and to eliminate the addition of taxes to USP, so that no consumption
tax is included in the price in either market. The Statement of
Administrative Action (p. 159) explicitly states that this change was
intended to result in tax neutrality.
While the ``Zenith footnote 4'' methodology is slightly different
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA
law required that the tax be added to USP rather than subtracted from
home
[[Page 54618]]
market price, it does result in tax-neutral duty assessments. In sum,
the Department treats consumption taxes in a manner consistent with its
longstanding policy of tax-neutrality and with the GATT.
Also, for both APSA and Cinsa, the Department verified in the
original investigation and in previous reviews that both companies
incur the same packing expenses for sales of the subject merchandise in
the United States and in Mexico. Therefore, as in previous reviews, no
adjustment was made for packing.
Foreign Market Value
A. APSA
In calculating foreign market value (FMV), the Department used home
market price, as defined in section 773 of the Act. Home market price
was based on the packed, ex-factory price to certain related and
unrelated purchasers in the home market. In our margin calculations, we
used sales to related parties which we found were at arm's length. See
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the
United Kingdom; Final Results of Antidumping Duty Administrative
Review, 60 FR 44012 (August 24, 1995).
We made deductions from the home market price for discounts and
rebates. For comparison to PP sales, pursuant to section 773(a)(4)(B)
and 19 CFR 353.56(a)(2), we made a circumstance-of-sale (COS)
adjustment, where appropriate, for differences in credit expenses. For
comparison to ESP sales, we also deducted credit expenses from FMV.
We adjusted for differences in commissions in accordance with 19
CFR 353.56(a)(2) (1994).
Regarding indirect selling expenses, APSA calculated inventory
carrying costs based on sales price. We recalculated these costs based
on APSA's cost of goods sold.
We adjusted for VAT in accordance with our practice. (See the
``United States Price'' section of this notice, above.)
For three U.S. products, we found no identical home market products
sold in contemporaneous periods, and APSA did not provide an adjustment
for differences in merchandise or CV information, as we had repeatedly
requested. Therefore, we used BIA for these sales pursuant to Section
776(C) of the Act. As partial BIA, we used the weighted-average dumping
margin of 8.75 percent from Porcelain-On-Steel Cookware From Mexico;
Final Results of Antidumping Duty Administrative Review (3rd
Administrative Review), 58 FR 32095 (June 8, 1993), because it is the
highest rate ever determined for APSA. This is consistent with the
Department's general application of partial BIA (see, e.g., Final
Results of Antidumping Duty Administrative Reviews and Revocation in
Part of an Antidumping Duty Order; Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France, et al., 60 FR
10900, 10907 (February 28, 1995)).
B. Cinsa
We also used home market price for Cinsa, when sufficient
quantities of such or similar merchandise were sold in the home market,
at or above the COP, to provide a basis for comparison (See COP section
of this notice). Home market price was based on the packed, delivered
and ex-factory price to certain related and unrelated purchasers in the
home market. In our margin calculations, we used sales to related
parties which we found were at arm's length. We made deductions from
home market price for discounts, where applicable.
In light of the Court of Appeals for the Federal Circuit's decision
in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v.
United States, 13 F.3d 398 (Fed. Cir. 1994), the Department no longer
can deduct home market movement charges from FMV pursuant to its
inherent power to fill in gaps in the antidumping statute. Instead, we
adjust for those expenses under the COS provision of 19 CFR 353.56(a).
Accordingly, in the present case, we adjusted for post-sale home market
inland freight charges under the COS provision of 19 CFR 353.56(a). We
did not deduct pre-sale inland freight charges because, as in the fifth
administrative review, Cinsa did not demonstrate to the Department's
satisfaction that these expenses are directly related to sales of the
subject merchandise. Because Cinsa did not report warehousing as a
direct selling expense, we concluded that Cinsa's inland freight to the
warehouse is also not directly related to sales. See Final
Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit
from Thailand, 60 FR 29553, 29563 (June 5, 1995) for a complete
discussion on the Department's policy concerning pre-sale movement
charges.
Pursuant to section 773(a)(4)(B) and 19 CFR 353.56(a)(2), we made a
COS adjustment, where appropriate, for differences in credit expenses.
We recalculated home market credit using the revised interest rate
reported in the May 2, 1994, supplemental response. Also, we did not
calculate credit expenses for sales in the home market that were
missing pay dates. Furthermore, we determined that the bank fees
associated with the letter of credit transactions for certain U.S.
customers are a direct selling expense and have made a COS adjustment
for these fees. We deducted home market commissions and added U.S.
indirect selling expenses capped by the amount of home market
commissions.
We adjusted for VAT in accordance with our practice. (See the
``United States Price'' section of this notice, above.)
Cost of Production
With regard to Cinsa, we disregarded sales below cost in the most
recent administrative review. Therefore, in accordance with Department
practice, we determined that there were reasonable grounds to believe
or suspect sales below cost in the current review period. In order to
determine whether home market prices were below COP within the meaning
of section 773(b) of the Act, we performed a product-specific cost
test, in which we examined whether each home market product sold during
the POR was priced below the COP of that product. For Cinsa's models
for which there were insufficient home market sales at or above the
COP, we compared USP to CV.
Regarding APSA, petitioner's June 18, 1993, letter requested an
extension for filing a sales below cost allegation; however, no such
allegation was filed with the Department. Therefore, we did not perform
a sales below cost analysis of APSA.
A. Calculation of COP
We calculated COP based on the sum of respondent's cost of
materials, fabrication, general expenses and packing costs, in
accordance with 19 C.F. R. 353.51(c). In our COP analysis, we relied on
COP information submitted by Cinsa, except in the following instances
where COP was not appropriately quantified or valued: (1) We included
expenses related to employee profit sharing in the cost of manufacture;
(2) we revised Cinsa's submitted interest costs to exclude the
calculation of negative interest expense; and (3) we increased
depreciation expense to account for the revaluation of its fixed
assets.
B. Test of Home Market Sales Prices
As required by section 773(b) of the Act, we tested whether a
substantial quantity of respondent's home market sales of subject
merchandise was made at prices below COP over an extended period of
time. We also tested whether
[[Page 54619]]
such sales were made at prices which permit recovery of all costs
within a reasonable period of time in the normal course of trade. On a
product-specific basis, we compared the COP (net of selling expenses)
to the reported home market prices, less any applicable movement
charges, rebates, and direct and indirect selling expenses. To satisfy
the requirement of section 773(b)(1) of the Act that below-cost sales
be disregarded only if made in substantial quantities, we applied the
following methodology. If over 90 percent of the respondent's sales of
a given product were at prices equal to or greater 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.'' If between 10 and 90 percent of the respondent's sales of
a given product were at prices equal to or greater than the COP, and
sales of that product were also found to be made over an extended
period of time, we disregarded only the below-cost sales. Where we
found that more than 90 percent of the respondent's sales of a product
were at prices below the COP, and the sales were made over an extended
period of time, we disregarded all sales of that product, and
calculated FMV based on CV, in accordance with section 773(b) of the
Act.
In accordance with section 773(b)(1) of the Act, in order to
determine whether below-cost sales had been made over an extended
period of time, we compared the number of months in which below-cost
sales occurred for each product to the number of months in the POR in
which that product was sold. If a product was sold in three or more
months of the POR, we do not exclude below-cost sales unless there were
below-cost sales in at least three months during the POR. When we found
that sales of a product only occurred in one or two months, the number
of months in which the sales occurred constituted the extended period
of time, i.e., where sales of a product were made in only two months,
the extended period of time was two months; where sales of a product
were made in only one month, the extended period of time was one month.
See Final Determination of Sales at Less Than Fair Value: Certain
Carbon Steel Butt-Weld Pipe Fittings from the United Kingdom, 60 FR
10558, 10560 (February 27, 1995).
C. Results of COP Test
We found that for certain products, between 10 and 90 percent of
Cinsa's home market sales were sold at below COP prices over an
extended period of time. Because Cinsa provided no indication that the
disregarded sales were at prices that would permit recovery of all
costs within a reasonable period of time in the normal course of trade,
in accordance with section 773(b) of the Act, we based FMV on CV for
all U.S. sales left without a home market sales match as a result of
our application of the COP test.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of respondent's cost of materials, fabrication,
general expenses, packing costs, and profit. In accordance with section
773(e)(1)(B) (i) and (ii), we used: (1) The actual amount of general
expenses because those amounts were greater than the statutory minimum
of ten percent and (2) the actual amount of profit where it exceeded
the statutory minimum of eight percent.
We recalculated the respondent's CV based on the methodology
described in the calculation of COP above. In addition, we revised CV
profit based upon the calculation provided by Cinsa.
Price-to-CV Comparisons
Where we made CV to PP comparisons, we made a COS adjustment for
direct selling expenses.
Interested Party Comments
Comment 1: Inclusion of Revalued Depreciation in the Calculation of
Cinsa's COP and CV
Petitioner asserts that Cinsa's revalued depreciation expense, as
reported on the Company's audited financial statements, must be
included in COP and CV. Petitioner contends that failure to use Cinsa's
revalued depreciation in COP and CV would significantly understate and
distort Cinsa's actual costs. Furthermore, the petitioner states that
the inclusion of the revalued depreciation expense is consistent with
the final results of Cinsa's fourth and fifth administrative reviews.
(See, Final Results of Antidumping Duty Administrative Review:
Porcelain-On-Steel Cooking Ware From Mexico, 60 FR, 2378, 2378 (January
9, 1995) and 58 FR, 43327, 43331 (August 16, 1993), respectively.)
Cinsa contends that increasing the Company's depreciation expense
for the effects of the revaluation of its assets is contrary to law
because it distorts the actual COP of the subject merchandise. Cinsa
argues that the revaluation of its assets has no fiscal effect on the
Company and is only required for financial statement purposes. Thus,
the inclusion of revalued depreciation overstates the actual
depreciation expense incurred in producing subject merchandise.
However, Cinsa points out that the submitted cost database provided the
necessary information to revalue the Company's depreciation expense.
DOC Position: We agree with petitioner and included Cinsa's
revalued depreciation expense in the Company's COP and CV. We disagree
with Cinsa's assertion that this inclusion distorts the actual
production costs of subject merchandise. It is the Department's policy
to adhere to the home market Generally Accepted Accounting Principles
(GAAP) as long as they reflect actual costs. In this case, we find the
use of revalued depreciation reasonably reflects Cinsa's actual costs.
Mexican GAAP require Cinsa to use revalued depreciation in its
financial statements. Thus, Mexican GAAP recognizes the effect of
inflation upon the value of assets and requires companies to revalue
assets to compensate for the change. Depreciation enables companies to
spread large expenditures on purchases of machinery and equipment over
the expected useful lives of these assets. Not adjusting for the
deflation of currency due to inflation results in the depreciation
deferred to future years being understated in constant currency terms,
and therefore, distorts the Department's COP and CV calculations. Thus,
in light of the rate of inflation in Mexico, it would be distortive to
use historical depreciation in this case.
The Department's determination to use revalued rather than
historical depreciation in accordance with home market GAAP was most
recently upheld by the Court of International Trade in Laclede Steel
Co. v. United States Slip op. 91-160 at 29 (October 12, 1994). In
Laclede Steel, the Court found that depreciation expense based on the
historical method rather than depreciation expense based on the
revalued method would distort the production costs of the company
because such a methodology would overlook the significant impact that
revaluing the assets had on the company. We find the Court's analysis
in Laclede Steel instructive with respect to the instant review. Due to
the revaluation of assets as reflected on Cinsa's financial statements,
Cinsa would enjoy an increase to its equity values reflected on the
Company's balance sheet, a potentially enhanced stock value resulting
from greater equity, and an improved ability to borrow or acquire
capital. Therefore, the Department followed Mexican GAAP and adjusted
CINSA's COP data to
[[Page 54620]]
reflect the revalued depreciation. We note, although it is not binding
precedent, a NAFTA Panel has affirmed the Department's use of revalued
depreciation for Cinsa in the fifth administrative review in In the
Matter of Porcelain-on-Steel Cookware From Mexico, USA-95-1904-01
(April 30, 1996) (POS Cookware), at 31.
Comment 2: Inclusion of Home Market Sales of Second-Quality Merchandise
in the Cost Test
Petitioner argues that the Department's exclusion of sales of
second-quality merchandise from the preliminary cost test was
inappropriate, and that such sales should be included in the cost test
for purposes of the final results. Petitioner contends that the
Department's preliminary results in this regard are inconsistent with
its standard practice, including its previous practice in reviews of
imports subject to this order. In addition, petitioner argues that the
exclusion of second-quality cookware from the cost test had a
significant impact on the number of home market products the Department
preliminarily found to be sold below cost in significant quantities
over an extended period of time. Finally, according to petitioner,
because there is no evidence on the record of this review to support
the Department's exclusion of these sales, they should be included in
the cost test for the final results.
Cinsa argues that the Department properly limited the cost test to
first quality merchandise. Cinsa asserts that the practice of comparing
U.S. sales of first quality POS cookware to an FMV based on home market
sales of first quality POS cookware dates from the original
investigation. According to respondent, because the product matching
criteria used by the Department already excluded second quality
merchandise from the pool of home market sales upon which FMV could be
based, the cost test was properly applied to those sales eligible for
inclusion in the calculation of FMV (i.e., first quality home market
sales). Moreover, Cinsa contends that petitioner would have the
Department include Cinsa's home market sales of second quality
merchandise only for purposes of the cost test, but would continue to
insist that the Department exclude such sales from the FMV calculation,
even if these sales pass the cost test.
DOC Position: We agree with petitioner that all home market sales
of both first and second quality merchandise should be included in the
cost test. However, we disagree with both petitioner and respondent
that the Department failed to include these sales in the cost test
performed in the preliminary results. The cost test covered all home
market sales of such or similar merchandise covered by the scope of the
order (i.e., both first and second quality merchandise). Petitioner and
respondent apparently misinterpreted the computer program the
Department used for the preliminary results. See, Memorandum from
Analyst to The File dated May 20, 1996, for a more detailed discussion
of this issue.
Cinsa is correct in its assertion that the Department's margin
program compared U.S. sales of first quality cookware to home market
sales of first quality cookware, as was done in the original
investigation as well as in previous reviews. As we stated in the
fourth review of Porcelain-on-Steel Cooking Ware From Mexico: Final
Results of Antidumping Duty Administrative Review, 58 FR 43327 (August
16, 1993), ``We agree that we should compare first quality merchandise
sold in the U.S. market with only first quality merchandise sold in the
home market . . .'' We did not compare sales of second quality
merchandise in the instant review because there were no sales of second
quality merchandise in the United States, unlike in the fourth review
where second quality merchandise sold in the United States was compared
with second quality merchandise sold in the home market.
Comment 3: Addition of Countervailing Duties to APSA's USP
Respondent argues that for purposes of the final results, the
Department should recalculate APSA's USP and margin calculations to
include the countervailing duty (CVD) assessments as required by law,
because the future CVD assessment on entries of the subject merchandise
entered during the instant review period has already been determined.
Accordingly, respondent contends that for the final results APSA's USP
should be increased by the amount of CVD that will be assessed once
these entries are subject to liquidation.
DOC Position: We agree with respondent and have increased APSA's
USP by the amount of these CVD, in accordance with section 772(d)(1)(D)
of the Act. See, ``United States Price'' section of this notice.
Comment 4: Inclusion of Profit Sharing Payments in Cinsa's COP and CV
Cinsa asserts that the inclusion of employee profit-sharing
payments as a direct labor expense is contrary to law because the
Department's regulations expressly exclude profit-based expenses from
the calculation of COP (19 CFR, 353.51(c)). According to Cinsa, this
payment is similar to dividend distributions or income tax payments
which are not included in COP and CV. Cinsa also asserts that the
Company's profit-sharing expense is derived from the Company's profits.
Therefore, including the profit-sharing expense results in the double
counting of profit because profit is already included in CV.
Petitioner contends that the Department should include profit-
sharing expenses in Cinsa's COP and CV. Petitioner points out that
Cinsa cites no case in which the Department has treated profit sharing
expenses as anything other than labor costs and included these expenses
in COP and CV. Petitioner also contends that profit-sharing expenses do
relate to production and that the inclusion of these expenses in the
calculation of CV does not double count profit.
DOC Position: We disagree with respondent and have included Cinsa's
profit-sharing expense in COP and CV because it relates to the
compensation of direct labor, a factor of production. We treat profit-
sharing distributions to employees in a manner similar to bonuses.
Furthermore, we disagree with Cinsa's argument that the profit-sharing
expense is similar to profit, dividends, and income tax.
Profit-sharing is not profit because it is an expense which is a
reduction to profit. Therefore, profit-sharing is not explicitly
excluded from COP calculations under 19 CFR 353.51 (c). As for Cinsa's
concern that we doubled counted profit in its CV, we note that profit-
sharing expense is not part of the Company's ``profit'' included in CV.
The ``profit'' that is included in Cinsa's CV represents the amount
that remains after reductions to income, such as the profit-sharing
expense.
Cinsa's profit-sharing expense is distinct from dividends in two
key respects. First, Cinsa's profit-sharing payments represent a legal
obligation to a productive factor in the manufacturing process and not
a distribution of profits to the owners of Cinsa. Second, the right to
participate in profit-sharing conveys no ownership rights in Cinsa.
Cinsa's profit-sharing expense is unlike an income tax because it
is paid to labor. Thus, unlike income taxes paid to the government,
profit sharing payments flow directly to a factor of production. Also,
Cinsa's income tax is based on taxable income that is net of Cinsa's
profit-sharing expense.
We note that, although it is not binding precedent, a NAFTA Panel
has
[[Page 54621]]
affirmed the Department's inclusion of Cinsa's profit-sharing in COP
and CV in the fifth administrative review. See POS Cookware, at 37-39.
Comment 5: Calculation of Cinsa's Profit Sharing Expense
Cinsa states the Department's computer program mistakenly
overstated the Company's profit-sharing expense in calculating COP and
CV.
Petitioner agrees with Cinsa.
DOC Position: We agree with both Cinsa and petitioner and have
corrected our calculation of Cinsa's COP and CV for the final results.
Comment 6: Inclusion of the Full Amount of Short-term Interest Income
Earned by Cinsa's Corporate Parent in COP and CV
Cinsa contends that the Department's practice of allowing short-
term interest income only up to the amount of reported interest
expenses is subjective because there is no difference between the
short-term interest that was recognized and that which was disregarded.
Cinsa further argues that this methodology distorts the actual
financial position of the parent and does not reflect the economic
reality of the information on the financial statements.
Petitioner argues that it is correct to limit Cinsa's short-term
interest income to the amount of interest expense. Petitioner states
that interest income in excess of interest expense does not reduce
production cost because it is unrelated to a company's operating costs.
(See e.g., Final Results of Antidumping Administrative Review:
Porcelain-On-Steel Cooking Ware From Mexico, 60 FR 2378, 2379, (January
9, 1995); Final Results of Antidumping Administrative Review:
Porcelain-On-Steel Cooking Ware From Mexico, 58 FR 43327, 43332,
(August 16,1993); Final Determination of Sales at Less Than Fair Value:
Steel Wire Rope from Korea, 58 FR, 11029, 11038 (February 23, 1993).)
DOC Position: We agree with petitioner. It is the Department's
normal practice to allow short-term interest income to offset financing
costs only up to the amount of such financing costs. (See, Final
Results of Antidumping Administrative Review: Porcelain-On-Steel
Cooking Ware From Mexico, 60 FR 2378, 2379, (January 9, 1995); Final
Results of Antidumping Administrative Review Porcelain-On-Steel Cooking
Ware From Mexico, 58 FR 43327, 43332, (August 16,1993); Final
Determination of Sales at Less Than Fair Value: Steel Wire Rope from
Korea, 58 FR, 11029, 11038 (February 23, 1993); Final Results of
Antidumping Administrative Review Frozen Concentrated Orange Juice from
Brazil; 55 FR 26721 (June 29, 1990); Final Results of Antidumping
Administrative Review: Brass Sheet and Strip from Canada, (55 FR,
31414, (August 2, 1990); and, Final Determination of Sales at less than
Fair Market Value; Sweaters from Taiwan, 55 FR, 34585, (August 23,
1990).) The Department reduces interest expense by the amount of short-
term income to the extent finance costs are included in COP. Using
total short-term interest income to reduce production cost, as
suggested by Cinsa, would permit companies with large short-term
investment activity to sell their products below the COP. The
application of excess interest income to production costs would distort
a company's actual costs. Interest income does not lessen the burden of
other costs, regardless of how much excess interest income there is;
labor will still have its cost, as will materials and factory overhead.
Accordingly, we limited the amount of the offset to the amount of the
expense from the related activity.
We note that, although it is not binding precedent, a NAFTA Panel
has affirmed the Department's calculation of interest expense in COP
and CV in the fifth administrative review. See POS Cookware, at 42-45.
Final Results of Review
As a result of our review, we determine that the following margins
exist for the period December 1, 1991, through November 30, 1992:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Review period (percent)
------------------------------------------------------------------------
APSA.................................... 12/1/91-11/30/92 1.44
Cinsa................................... 12/1/91-11/30/92 5.40
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between USP and FMV may vary from the percentages stated
above. The Department will issue appraisement instructions directly to
the Customs Service.
Furthermore, the following deposit requirement will be effective
for all shipments of subject merchandise from Mexico 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 Tariff Act: (1) the cash deposit rate for the
reviewed companies will be as outlined above; (2) for merchandise
exported by manufacturers or exporters not covered in this review but
covered in previous reviews or the original less-than-fair-value (LTFV)
investigation, the cash deposit rate will continue to be the rate
published in the most recent final results or determination for which
the manufacturer or exporter received a company-specific rate; (3) if
the exporter is not a firm covered in this review, an earlier review,
or the LTFV investigation, but the manufacturer is, the cash deposit
rate will be that established for the manufacturer of the merchandise
in the final results of this review, earlier reviews, or the LTFV
investigation, whichever is the most recent; (4) the cash deposit rate
for all other manufacturers or exporters will be 29.52 percent, the
``all others'' rate established in the original LTFV investigation by
the Department.
These cash deposit requirements, when imposed, shall remain in
effect until publication of the final results of the next
administrative review.
This notice also serves as a 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 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 the only 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 of
return/destruction of APO materials 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 administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: October 9, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-26833 Filed 10-18-96; 8:45 am]
BILLING CODE 3510-DS-P
