[Federal Register Volume 61, Number 205 (Tuesday, October 22, 1996)]
[Notices]
[Pages 54767-54773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27056]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-557-805]
Notice of Final Results of Antidumping Duty Administrative
Review: Extruded Rubber Thread From Malaysia
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: On May 20, 1996, the Department of Commerce published the
preliminary results of its administrative review of the antidumping
duty order on extruded rubber thread from Malaysia. The review covers
shipments of this merchandise to the United States during the period
April 2, 1992, through September 30, 1993.
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 22, 1996.
FOR FURTHER INFORMATION CONTACT: Cameron Werker or Shawn Thompson,
Office of Antidumping Investigations, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone, (202) 482-3874 and (202) 482-1776, respectively.
SUPPLEMENTARY INFORMATION:
Background
On May 20, 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 Extruded Rubber
Thread from Malaysia (61 FR 25190). The Department has now completed
that administrative review in accordance with Sec. 751 of the Tariff
Act of 1930, as amended (the Act).
Scope of the Review
The product covered by this review is extruded rubber thread.
Extruded rubber thread is defined as vulcanized rubber thread obtained
by extrusion of stable or concentrated natural rubber latex of any
cross sectional shape, measuring from 0.18 mm, which is 0.007 inch or
140 gauge, to 1.42 mm, which is 0.056 inch or 18 gauge, in diameter.
Extruded rubber thread is currently classified under subheading
4007.00.00 of the Harmonized Tariff Schedule of the United States
(HTSUS). The HTSUS subheadings are provided for convenience and customs
purposes. Our written description of the scope of this review is
dispositive.
This review covers the following producers/exporters of extruded
rubber thread: Heveafil Sdn. Bhd. (``Heveafil'') and Rubberflex Sdn.
Bhd. (``Rubberflex''). The period of review (POR) is April 2, 1992, to
September 30, 1993.
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.
Such or Similar Merchandise Comparisons
In determining similar merchandise comparisons, in accordance with
Section 771(16) of the Act, we considered the following physical
characteristics, which appear in order of importance: (1) Quality
(i.e., first vs. second); (2) size; (3) finish; (4) color; (5) special
qualities; (6) uniformity; (7) elongation; (8) tensile strength; and
(9) modulus.
Fair Value Comparisons
To determine whether sales of extruded rubber thread from Malaysia
to the United States were made at less than fair value, we compared the
United States price (USP) to the foreign market value (FMV) for
Rubberflex and Heveafil, as specified in the ``United States Price''
and ``Foreign Market Value'' sections of this notice.
For both respondents, we disregarded sales to the United States and
third countries which were written off as bad debt because bad debt was
accounted for in respondents' reported indirect selling expenses.
United States Price
For sales by both respondents, we based USP on purchase price, in
accordance with Section 772(b) of the Act, when the subject merchandise
was sold to unrelated purchasers in the United States prior to
importation and when the exporter's sales price (ESP) methodology of
Sec. 772(c) of the Act was not otherwise indicated. In addition, where
sales to the first unrelated purchaser took place after importation
into the United States, we based USP on ESP, in accordance with
Sec. 772(c) of the Act.
A. Heveafil
We removed all sales from the sales database with entry dates after
the POR. We also eliminated certain transactions that we verified were
not subject to the antidumping duty order. Specifically, these
transactions were sales to a U.S. customer that were shipped to Hong
Kong for further manufacturing into non-subject merchandise (see page 7
and exhibit 5 of the Malaysian sales verification report, dated August
30, 1995).
We based purchase price on packed, CIF prices to the first
unrelated purchaser in the United States. We revised Heveafil's data
based on our verification findings. We made deductions from USP, where
appropriate, for rebates. In addition, where appropriate, we made
deductions for foreign inland freight, foreign brokerage and handling,
ocean freight, marine insurance, U.S. customs duty, harbor maintenance
and merchandise processing fees, and U.S. brokerage and handling
expenses, in accordance with section 772(d)(2) of the Act.
At verification, we found that Heveafil did not report certain
purchase price sales of extruded rubber thread which entered the United
States during the POR. Because we specifically instructed Heveafil to
report all entries into the United States during the POR
[[Page 54768]]
as well as all sales made during the POR, we based the margin for these
unreported sales on the best information otherwise available (BIA) in
accordance with section 776(c) of the Act. As BIA, we applied the
weighted-average margin found in the less than fair value (LTFV)
investigation, because it is the highest rate ever determined for
Heveafil. 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) (AFBs)).
For sales made from the inventory of the U.S. branch office, we
based USP on ESP, in accordance with section 772(c) of the Act. In
addition, we reclassified certain purchase price sales as ESP sales
because we verified that the sales were canceled by the original
purchaser after shipment and resold after importation into the United
States.
We calculated ESP based on packed, delivered prices to unrelated
customers in the United States. We revised the reported data based on
our findings at verification. We made deductions, where appropriate,
for rebates. We also made deductions for foreign inland freight,
foreign brokerage and handling, ocean freight, marine insurance, U.S.
inland freight, U.S. brokerage and handling, U.S. customs duty, harbor
maintenance and merchandise processing fees, and inspection charges. In
accordance with section 772(e)(2) of the Act, we made additional
deductions, where appropriate, for credit and indirect selling
expenses.
B. Rubberflex
We based purchase price on packed, CIF prices to the first
unrelated purchaser in the United States. We made deductions from USP,
where appropriate, for foreign inland freight, foreign brokerage and
handling, containerization expenses, ocean freight, marine insurance,
U.S. customs duties, harbor maintenance and merchandise processing
fees, and U.S. inland freight expenses, in accordance with section
772(d)(2) of the Act. Rubberflex did not report certain movement
charges, although the company reported that it incurred them on all
purchase price transactions. Accordingly, we based the amount of the
unspecified expenses on BIA. As BIA, we used the highest amount
reported in the purchase price sales listing for each specific movement
charge (see, e.g., Chrome-Plated Lug Nuts From the People's Republic of
China; Final Results of Antidumping Administrative Review, 60 FR 48687
(September 20, 1995) and AFBs). We disregarded a rebate which was
erroneously reported for one purchase price sale, because Rubberflex
stated in its questionnaire response that the company did not grant any
U.S. rebates during the POR.
For sales made from the inventory of the U.S. subsidiary, we based
USP on ESP, in accordance with section 772(c) of the Act. We calculated
ESP based on packed, delivered prices to unrelated customers in the
United States. We made deductions, where appropriate, for foreign
inland freight, foreign brokerage and handling, containerization
expenses, ocean freight, marine insurance, U.S. customs duty, harbor
maintenance and merchandise processing fees, and U.S. inland freight.
In accordance with section 772(e)(2) of the Act, we made additional
deductions, where appropriate, for credit and indirect selling
expenses.
Rubberflex did not report complete data for certain ESP sales.
Accordingly, we used BIA to determine these data, as follows. Where
price and/or credit expense data was missing for sales of second
quality merchandise, we used the average price and expense data
reported for other second quality sales. Where the date of sale was
missing and/or the control number was missing, we applied the weighted-
average margin found in the LTFV investigation, because it is the
highest rate ever determined for Rubberflex. This is consistent with
the Department's general application of partial BIA (see, e.g., AFBs).
Foreign Market Value
In order to determine whether the home market was viable during the
POR, we compared the volume of each of the respondent's home market
sales to the volume of its third country sales, in accordance with
section 773(a)(1)(B) of the Act and 19 CFR 353.48. Based on this
comparison, we determined that neither respondent had a viable home
market during the POR. Consequently, we based FMV on third country
sales.
We selected the appropriate third country markets for Heveafil and
Rubberflex. Specifically, we chose, as the appropriate third country
markets, Italy for Heveafil and Hong Kong for Rubberflex, in accordance
with 19 CFR 353.49(b).
Because the Department disregarded third country sales below the
cost of production (COP) for both Heveafil and Rubberflex in the
original investigation (see Final Determination of Sales at Less Than
Fair Value: Extruded Rubber Thread from Malaysia, 57 FR 38465 (August
25, 1992)), in accordance with our standard practice, there were
reasonable grounds to believe or suspect that both Heveafil and
Rubberflex had made third country sales at prices below COP in this
review.
In accordance with section 773(b) of the Act, and longstanding
administrative practice (see, e.g., Final Determination of Sales at
Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip
from Korea, 56 FR 16306 (April 22, 1991) and Final Results of
Administrative Review: Mechanical Transfer Presses from Japan, 59 FR
9958 (March 2, 1994)), if over ninety percent of a respondent's sales
of a given model were at prices above the COP, we did not disregard any
below-cost sales because we determined that the below-cost sales were
not made in substantial quantities. Where we found between ten and
ninety percent of respondent's sales of a given product were at prices
below the COP, and the below cost sales were made over an extended
period of time, we disregarded only the below-cost sales. Where we
found that more than ninety percent of a respondent's sales were at
prices below the COP, and the sales were made over an extended period
of time, we disregarded all sales for that product and calculated FMV
based on constructed value (CV), in accordance with section 773(e) of
the Act.
In order to determine whether third country prices were above the
COP, we calculated the COP for each model based on the sum of the
respondent's cost of materials, labor, other fabrication costs, and
general expenses and packing. We calculated CV for each model based on
the sum of the respondent's cost of manufacture (COM), plus general
expenses, profit and U.S. packing. For general expenses, which includes
selling and financial expenses (SG&A), we used the greater of the
reported general expenses or the statutory minimum of ten percent of
the COM. For profit, we used the greater of the weighted-average third
country profit during the POR or the statutory minimum of eight percent
of the COM and SG&A, in accordance with section 773(e)(B) of the Act.
For Heveafil, we made the following adjustments to the COP and CV
data used in the preliminary results. We recomputed Heveafil's general
and administrative (G&A) and interest expenses by adjusting the cost of
goods sold figure used as the denominator for clerical errors (see
comment 5 below). For further discussion of these
[[Page 54769]]
adjustments, see also the cost calculation memorandum from Stan Bowen,
accountant in the Office of Accounting, to Christian Marsh, Director of
the Office of Accounting, dated August 22, 1996.
For Rubberflex, we made the following adjustments to the reported
COP and CV data. We recalculated G&A and interest expenses using data
contained in Rubberflex's audited financial statements. For further
discussion of these adjustments, see the cost calculation memorandum
from Elizabeth Lofgren, accountant in the Office of Accounting, to
Christian Marsh, Director of the Office of Accounting, dated April 30,
1996.
A. Heveafil
Where FMV was based on third country sales, as in the original
investigation, we based FMV on CIF prices to unrelated Italian
customers in comparable channels of trade as the U.S. customer.
Specifically, FMV was based on direct sales from Malaysia to Italy for
purchase price sales comparisons, and on sales from the inventory of
Heveafil's Italian branch office for ESP sales comparisons, in
accordance with section 773(a)(1)(B) of the Act. We made adjustments to
Heveafil's reported sales data based on our findings at verification.
We made no adjustment to FMV for credits issued by the Italian branch
office based on our finding at verification that they were incorrectly
reported (see the Italian Branch's sales verification report, dated
August 30, 1995).
For third country price-to-purchase price comparisons, we made
deductions, where appropriate, for rebates. We also deducted post-sale
home market movement charges from FMV under the circumstance of sale
provision of section 773(a)(4)(B) of the Act and 19 CFR 353.56. This
adjustment included Malaysian foreign inland freight, brokerage and
handling, ocean freight, marine insurance, Italian brokerage and
handling, and Italian inland freight to Heveafil's unrelated customers
in Italy, where appropriate. Pursuant to 19 CFR 353.56(a)(2), we made
circumstance of sale adjustments, where appropriate, for differences in
credit expenses.
For third country price-to-ESP comparisons, where appropriate, we
made deductions for rebates and credit expenses. We deducted the third
country market indirect selling expenses, including inventory carrying
costs, pre-sale freight (i.e., foreign inland freight, brokerage and
handling, ocean freight, marine insurance, Italian brokerage and
handling, and Italian freight to Heveafil's warehouse) and other
indirect selling expenses, up to the amount of indirect selling
expenses incurred on U.S. sales, in accordance with 19 CFR
353.56(b)(2).
For all price-to-price comparisons, we deducted third country
packing costs and added U.S. packing costs, in accordance with
section773(a)(1) of the Act. At verification, we found that Heveafil
had incorrectly reported its third country and U.S. packing material
expenses. Therefore, we based the adjustment for packing materials on
BIA. As BIA, we used the lowest packing material expense reported for
any Italian sale and the highest packing expense reported for any U.S.
sale (see Concurrence Memorandum to Barbara R. Stafford from Team,
dated April 30, 1996). In addition, where appropriate, we made
adjustments to FMV to account for differences in physical
characteristics of the merchandise, in accordance with section
773(a)(4)(C) of the Act and 19 CFR 353.57.
For CV-to-purchase price comparisons, we made circumstance of sale
adjustments, where appropriate, for credit expenses in accordance with
section 773(a)(4)(B) and 19 CFR 353.56.
For CV-to-ESP comparisons, we made deductions, where appropriate,
for credit expenses. We also deducted the third country market indirect
selling expenses, including inventory carrying costs and other indirect
selling expenses, up to the amount of indirect selling expenses
incurred on U.S. sales, in accordance with 19 CFR 353.56(b)(2).
For all CV-to-price comparisons, we added U.S. packing expenses as
specified above, in accordance with section 773(e)(1)(C) of the Act.
B. Rubberflex
Where FMV was based on third country sales, as in the original
investigation, we based FMV on CIF prices to unrelated Hong Kong
customers in comparable channels of trade as the U.S. customer.
Specifically, FMV was based on direct sales from Malaysia to Hong Kong
for purchase price sales comparisons, and on sales from the inventory
of Rubberflex's Hong Kong subsidiary for ESP sales comparisons.
For third country price-to-purchase price comparisons, we made
deductions, where appropriate, for rebates. We also deducted post-sale
home market movement charges from FMV under the circumstance of sale
provision of 19 CFR 353.56. This adjustment included Malaysian foreign
inland freight, brokerage and handling charges, containerization, ocean
freight, and marine insurance. Pursuant to section 773(a)(4)(B) of the
Act and 19 CFR 353.56(a)(2), we also made circumstance of sale
adjustments, where appropriate, for differences in credit expenses.
For third country price-to-ESP comparisons, we made deductions for
rebates, where appropriate. We also made deductions for credit
expenses.
We deducted the third country market indirect selling expenses,
including inventory carrying costs, bank charges, pre-sale freight
expenses (i.e., foreign inland freight, brokerage and handling charges,
containerization, ocean freight, marine insurance, Hong Kong duty and
brokerage expenses, and freight from the port in Hong Kong to
Rubberflex's warehouse), and other indirect selling expenses, up to the
amount of indirect selling expenses incurred on U.S. sales, in
accordance with 19 CFR 353.56(b)(2).
Regarding Hong Kong duties, Rubberflex reported a combined amount
for document declaration fees, terminal handling charges, and bank
charges. Because the Department's practice is to treat bank charges as
a selling expense (rather than a movement charge), we reclassified bank
charges as selling expenses and recalculated Hong Kong duties
accordingly (see, e.g., Final Determination of Sales at Less Than Fair
Value; Oil Country Tubular Goods from Korea, 60 FR 33561, 33562 (June
28, 1995) and Final Determination of Sales at Less Than Fair Value;
Dynamic Random Access Memory Semiconductors of One Megabit and Above
from Korea, 58 FR 15467, 15467-70 (March 23, 1993)).
For all price-to-price comparisons, we deducted third country
packing costs and added U.S. packing costs, in accordance with section
773(a)(1) of the Act. In addition, where appropriate, we made
adjustments to FMV to account for differences in physical
characteristics of the merchandise, in accordance with section
773(a)(4)(C) of the Act and 19 CFR 353.57.
For CV-to-purchase price comparisons, we made circumstance of sale
adjustments, where appropriate, for credit expenses, in accordance with
section 773(a)(4)(B) of the Act and 19 CFR 353.56.
For CV-to-ESP comparisons, we made deductions, where appropriate,
for credit expenses. We also deducted third country market indirect
selling expenses, including inventory carrying costs, bank charges, and
other indirect selling expenses, up to the amount of indirect selling
expenses incurred on U.S. sales, in accordance with 19 CFR
353.56(b)(2).
For all CV-to-price comparisons, we added U.S. packing expenses, in
[[Page 54770]]
accordance with section 773(e)(1)(C) of the Act.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received comments from both petitioner and
respondents. We received rebuttal comments from Rubberflex only.
Comment 1: Treatment of Countervailing Duties
Respondents assert that, where FMV is based on CV, the Department
should adjust USP for certain countervailing duties paid, in accordance
with section 772(d)(1)(D) of the Act. Specifically, respondents assert
that the Department should increase USP by the amount of the
countervailing duties attributable to all income tax holidays and tax
abatement programs.
According to respondents, the Department's assumption that export
subsidies are reflected in a company's production costs is not correct
when the benefit conferred is in the form of income tax holidays or
abatements, because income taxes are not an element of COP. Therefore,
respondents maintain, it is impossible for any benefit relating to
income taxes to be reflected in either COP or CV, although these
benefits are included in USP.
DOC Position
In this case, each of the countervailable programs identified by
respondents (i.e., Pioneer Status, Abatement of Income Tax Based on the
Ratio of Export Sales to Total Sales, Abatement of Five Percent of the
Value of Indigenous Malaysian Materials Used in Exports, Industrial
Building Allowance, and Double Deduction for Export Promotion Expenses)
were classified as export subsidies in the Final Affirmative
Countervailing Duty Determination and Countervailing Duty Order;
Extruded Rubber Thread from Malaysia, 57 FR 38472 (August 25, 1992).
However, we disagree with respondents that U.S. price should be
increased by the amount of the countervailing duties imposed in
connection with these subsidies in the first and second administrative
reviews of the countervailing duty order on extruded rubber thread from
Malaysia.
In accordance with section 772(d)(1)(D) of the Act, we normally
increase U.S. price by ``the amount of any countervailing duty imposed
on the [subject] merchandise to offset an export subsidy.'' The purpose
of this adjustment is to avoid double-counting when compensating for
the same situation of dumping or export subsidization (i.e., once in
the form of antidumping duties and once in the form of countervailing
duties). For example, we assume that U.S. price reflects the benefit of
export subsidies (i.e., it is lower than it would be were there no
subsidies). However, FMV normally does not reflect the same benefit,
because FMV normally is not based on an export price, but instead on
the sales price in the home market. Under this scenario, all other
factors being equal, comparison of U.S. price to FMV would yield a
dumping margin equal to the export subsidy. Therefore, if no upward
adjustment were made to U.S. price to offset the subsidy, the benefit
from the subsidy would be double-counted.
On the other hand, we do not increase U.S. price under
Sec. 772(d)(1)(D) of the Act when, like the U.S. price, the foreign
market value already reflects the benefit of the export subsidies. See,
e.g., Notice of Final Determination of Sales at Less Than Fair Value:
Certain Carbon Steel Butt-Weld Pipe Fittings from India, 60 FR 10545,
10550 (February 27, 1996). As in the Antidumping Duty Order and
Amendment to Final Determination of Sales at Less Than Fair Value:
Extruded Rubber Thread from Malaysia, 57 FR 46150 (October 7, 1992),
foreign market value for both Rubberflex and Heveafil was based on
third country sales and CV. With respect to exports to third country
markets, respondents receive the same benefits from export subsidies as
with exports to the United States. Therefore, the benefits from the
export subsidies were reflected in both the U.S. price and the foreign
market value and no adjustment was made to U.S. price. For those sales
where CV was used as the basis for foreign market value, we used third
country SG&A expenses, as well as third country profit in determining
CV for both companies. Since third country SG&A and profit reflect the
benefits from the export subsidies, we have similarly made no
adjustment to U.S. price for the benefits from export subsidies.
Comment 2: Assessment of Antidumping Duties
Respondents assert that, in accordance with section 737(a) of the
Act, the Department should instruct Customs to ``cap'' their
antidumping duty liability for entries made between the time of the
preliminary determination in the less-than-fair-value investigation and
the final injury determination by the International Trade Commission
(ITC) at the amount collected as security. Respondents assert that the
cap should apply regardless of whether security was provided in the
form of cash or a bond. In support of this position, respondents rely
on Daewoo Electronics Co., Ltd. v. United States, 6 F.3d 1511 (Fed.
Cir. 1993).
DOC Position
We agree with respondents that Heveafil's and Rubberflex's
antidumping duty liability for entries made between the Department's
preliminary determination and the ITC's final injury determination in
this case should be ``capped'' at the amount collected as security for
antidumping duties, and the Department will instruct the U.S. Customs
Service accordingly. Section 737(a)(1) of the Act [19 U.S.C.
1673f(a)(1)] provides:
(a) Deposit of Estimated Antidumping Duties Under
Sec. 733(d)(2).--If the amount of a cash deposit collected as
security for an estimated antidumping duty under section 733(d)(2)
is different from the amount of the antidumping duty determined
under an antidumping duty order issued under section 736, then the
difference for entries of merchandise entered, or withdrawn from
warehouse, for consumption before notice of the affirmative
determination of the Commission under section 735(b) is published
shall be--
(1) disregarded, to the extent that the cash deposit collected
is lower than the duty under the order
* * * * *
Section 737(a)(1) of the Act, known as the ``provisional measures
deposit cap,'' operates to cap (i.e., limit) the assessment rate at the
amount provided as security for estimated antidumping duty liability at
the time the subject merchandise is entered into U.S. commerce. See,
e.g., AOC International, Inc. v. United States, 721 F. Supp. 314, 322-
323 (CIT 1989) (``AOC International''), Daewoo Electronics v. United
States, 6 F.3d 1511, 1520-22 (Fed. Cir. 1993) (``Daewoo''), and
Torrington Co. v. United States, 903 F. Supp. 79, 88 (CIT 1995).
Moreover, the Department's regulation implementing section
737(a)(1) of the Act makes clear that the provisional measures deposit
cap applies whether the security for antidumping duty liability is
provided by cash deposit or bond. The relevant regulation, 19 CFR
section 353.23, provides in relevant part:
This section applies to the merchandise entered, or withdrawn
from warehouse, for consumption before the date of publication of
the Commission's notice of affirmative final determination. If the
cash deposit or bond required under the Secretary's affirmative
preliminary determination or affirmative final determination is
different from the dumping margin * * *, the Secretary will instruct
the Customs Service to disregard the
[[Page 54771]]
difference to the extent that the cash deposit or bond is less than
the dumping margin * * *. (emphasis supplied)
Thus, the provisional measures deposit cap that limits the amount
of assessment at the amount collected as security on the subject
merchandise as entered before the ITC's final injury determination
applies whether that security is provided in the form of a cash deposit
or a bond. The courts have repeatedly upheld the Department's practice
in this regard. See, e.g., Daewoo, 6 F.3d at 1521 and AOC
International, 721 F. Supp at 723.
In the instant case, there are four provisional measures deposit
caps. From the period of April 2, 1992 to April 28, 1992, the amount of
security required for both respondents' entries was zero. See
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination: Extruded Rubber Thread From
Malaysia, 64 FR 12287, 12290 (April 2, 1992) (``Preliminary
Determination''). From the period of April 28, 1992 to August 25, 1992,
the amount of security required was 2.62 percent and 2.22 percent for
Heveafil and Rubberflex, respectively. Id. From the period of August
25, 1992 to October 7, 1992, the amount of security required was 10.68
percent and 22.00 percent for Heveafil and Rubberflex, respectively.
See Final Determination of Sales at Less Than Fair Value: Extruded
Rubber Thread from Malaysia 57 FR 38465 (August 25, 1992). From the
period of October 7, 1992 to October 15, 1992 (i.e., the date of
publication of the International Trade Commission's final
determination), the amount of security required was 10.68 percent and
20.38 percent for Heveafil and Rubberflex, respectively. See Final
Determination: Extruded Rubber Thread from Malaysia 57 FR 47351
(October 15, 1992).
Accordingly, we will instruct the U.S. Customs Service to cap
respondents' dumping liability on the entries in question at the amount
collected as security.
Comment 3: Assessment of Antidumping Duties More Than 120 Days After
the Department's Preliminary Determination and Before Publication of
the ITC's Final Injury Determination
Relying on Article 10.3 of the Antidumping Code of the General
Agreement on Tariffs and Trade (GATT), respondents assert that the
Department does not have the authority in an antidumping investigation
to impose provisional measures for more than 120 days after the
Department's preliminary determination and, therefore, does not have
the authority to assess antidumping duties on entries made on August 1,
1992, through September 26, 1992. Accordingly, respondents argue that
these entries should be liquidated without regard to antidumping
duties.
DOC Position
We disagree with respondents that no provisional measures could be
imposed, and no dumping duties can be assessed, on entries made during
the period August 1, 1992, through September 26, 1992.
In the Preliminary Determination, we stated:
``Effective April 28, 1992, however, the Department will
terminate the suspension of liquidation and the deposit of estimated
countervailing duties in the countervailing duty investigation,
because, in accordance with Sec. 705 of the Act, and article 5,
paragraph 3 of the Subsidies Code, provisional measures may remain
in effect no longer than 120 days. Consequently, the adjustment to
the United States price for countervailing duties imposed will not
be made for entries made on or after this date. Therefore, by virtue
of this antidumping determination, on April 28, 1992, we will also
direct the U.S. Customs Service to suspend liquidation of all
entries of extruded rubber thread from Malaysia, as defined in the
``Scope of the Investigation'' section of this notice, that are
entered, or withdrawn from warehouse, for consumption on or after
April 28, 1992. In addition, the U.S. Customs Service shall require
a cash deposit or posting of a bond on these entries equal to the
estimated preliminary dumping margins shown above. This suspension
of liquidation, when imposed, will remain in effect until further
notice.'' Preliminary Determination, 60 FR at 11290.
Article 10.3 of the GATT Antidumping Code specifically states that the
imposition of provisional measures for antidumping duty liability
purposes may extend beyond four months (i.e., 120 days) to six months
(i.e., 180 days). Article 5.3 of the GATT Subsidies Code (unlike
Article 10.3 of the GATT Antidumping Code) does not contain a similar
provision for the extension of provisional measures. Therefore, in a
countervailing duty case, we do not impose provisional measures beyond
the 120 days, as stated in the Preliminary Determination. Thus, in the
Preliminary Determination, the Department did not terminate the
imposition of provisional measures for antidumping liability purposes
after 120 days as it did with respect to the imposition of provisional
measures for countervailing duty liability. Indeed, the Preliminary
Determination states that ``[t]his [AD] suspension of liquidation * * *
will remain in effect until further notice.'' Preliminary
Determination, 60 FR at 11290. The Department's differing treatment of
provisional measures in the antidumping and countervailing duty cases
is consistent with our GATT obligations.
Furthermore, there is no requirement in the statute that there be a
request for an extension of provisional measures. In fact, it is the
Department's practice (see, e.g., Notice of Final Determination of
Sales at Less Than Fair Value: Certain Pasta from Italy, 61 FR 30326
(June 14, 1996)) to infer a request for the extension of the
provisional measures period when, as in this case, exporters request an
extension of the final determination pursuant to Sec. 735(a)(2) of the
Act. This practice is consistent with our new statute, which expressly
incorporates the GATT provisions. Therefore, because provisional
measures for antidumping duty liability purposes were properly imposed
on entries made beyond the 120 days, the Department will instruct the
U.S. Customs Service to assess antidumping liability on entries made
during the period August 1, 1992, through September 26, 1992.
Comment 4: Contemporaneous Product Comparisons
According to Heveafil, the concordance program used in calculating
the preliminary results does not limit the sales chosen as the ``most
similar'' merchandise to U.S. sales to contemporaneous third-country
sales. Heveafil argues that the Department should revise its product
concordance programs to ensure that matches are made using only
contemporaneous sales.
DOC Position
We agree and have revised our product concordances for Heveafil
accordingly. Moreover, although this issue was not raised with respect
to Rubberflex, it also applies to the comparisons selected for this
respondent. Consequently, we have also revised the product concordances
for Rubberflex to take contemporaneity into account in selecting the
most similar merchandise.
Comment 5: Alleged Clerical Errors in the Margin Calculations for
Heveafil
Heveafil argues that the Department made the following clerical
errors in the calculation of its margin for purposes of the preliminary
results: (1) The Department failed to adjust third country price for
packing material expenses; (2) The Department deducted from USP the per
kilogram cost of certain movement expenses, rather than the per pound
cost; (3) the Department did not include certain sales reclassified as
ESP sales in its ESP concordance; (4)
[[Page 54772]]
the Department double-counted effluent treatment costs in the
calculation of COP and CV; and (5) G&A and financial expenses included
in COP and CV were overstated because Heveafil's cost of sales stated
on the income statement did not include fixed overhead. Heveafil
requests that the Department correct these errors for purposes of the
final results.
DOC Position
We agree with Heveafil on all items noted above and have made the
appropriate corrections for purposes of the final results.
Comment 6: Consolidated G&A and Financial Expenses
Heveafil argues that the Department should not include any costs of
its holding company, Perbadanan Nasional Berhad (PNB), in calculating
G&A and financial expenses for purposes of computing COP and CV.
Heveafil asserts that the Department does not collapse subsidiaries
with entities which do nothing more than hold stock in the subsidiary.
In support of this contention, Heveafil cites Silicon Metal from
Argentina: Final Results of Antidumping Administrative Review (58 FR
65336, Dec. 14, 1993) (Silicon Metal). According to Heveafil, because
PNB is merely a holding company, it is not actively involved in running
Heveafil's business.
Moreover, regarding G&A, Heveafil contends that any management
services provided by PNB (e.g., participation on the Board of
Directors) are paid for by Heveafil and, thus, are already reflected in
the reported G&A expenses. Finally, Heveafil asserts that any internal
audits performed by PNB are not for the benefit of Heveafil, but rather
for PNB's shareholders. Therefore, Heveafil contends that these costs
are not part of the cost of producing rubber thread.
DOC Position
We disagree with Heveafil that a portion of PNB's G&A and interest
expenses should not be allocated to Heveafil. For G&A, it is the
Department's long-standing practice to require the respondent to report
not only its own G&A expenses, but also a proportional share of an
affiliated party's G&A expense incurred on the reporting entity's
behalf. (See, e.g., Final Determination of Sales at Less than Fair
Value: Certain Carbon Steel Butt-Weld Pipe Fittings from the United
Kingdom, (60 FR 10558, 10561, February 27, 1995); Final Determination
of Sales at Less than Fair Value: Certain Hot-Rolled Carbon Steel Flat
Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain
Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-
length Carbon Steel Plate from Canada, (58 FR 37082, 37114, July 9,
1993); and, Final Determination of Sales at Less Than Fair Value:
Ferrosilicon from Venezuela, (58 FR 27524, May 10, 1993). Furthermore,
the transactions that did occur between PNB and Heveafil clearly
demonstrated that PNB's involvement was more than that of a passive
investor. For example, PNB accountants performed internal audits on
Heveafil's accounting records which resulted in changes to Heveafil's
internal accounting controls and operating procedures. Further,
Heveafil's reliance on Silicon Metal is misplaced because it is
contrary to the facts of the instant review. In that determination, the
Department found that the company in question was privately owned by
seven Argentine citizens and that no corporate transactions occurred
between the parties. As for Heveafil's concern that our G&A adjustment
may double count some reimbursed general expenses (e.g., Board of
Director fees), we corrected our calculation for the final results to
avoid double counting the reimbursed G&A expenses.
It is also the Department's long-standing practice to calculate
interest expense for COP/CV purposes based on the borrowing costs
incurred by the consolidated group. (See, e.g., Small Diameter Circular
Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from
Italy, (60 FR 31981, 31990, June 19, 1995).) This methodology, which
has been upheld by the CIT in Camargo Correa Metals, S.A. v. U.S., 17
CIT 897, Slip Op. 93-163, at 12-13 (CIT 1993), is based on the fact
that the consolidated group's controlling entity has the power to
determine the capital structure of each member of the group. In this
case, the controlling entity has such power because it owns a
substantial majority of Heveafil.
Comment 7: Inclusion of a Write-Off of Idle Equipment in Heveafil's G&A
Heveafil argues that the Department inappropriately increased its
G&A expenses by including an extraordinary loss related to idle plant
equipment. Heveafil maintains that, while this loss appeared in its
draft financial statements, it was removed from the final financial
statements issued by Heveafil's independent auditors. Heveafil further
maintains that it provided copies of the final audited statements at
verification, although these copies were not taken as verification
exhibits. Heveafil notes, however, that the working trial balance
associated with the final financial statement is included in the record
of this administrative review as cost verification exhibit three, which
demonstrates that the assets are still recorded on the books.
DOC Position
We disagree with Heveafil that the write-off of idle manufacturing
equipment should not be included in the COP and CV. In 1993, company
officials deemed this manufacturing equipment worthless. Heveafil's
write-off is documented in footnote six of Filmax Sendirian Berhad's (a
subsidiary of Heveafil's) 1993 audited financial statements provided as
a supplemental section D exhibit. These financial statements are signed
and dated by the company's independent auditors, they contain signed
declarations of accuracy by the Chairman and Director of the company,
and they contain the official dated regulatory seal of the Malaysian
Commissioner for Oaths. As for Heveafil's concern that the 1993 working
trial balance taken as cost verification exhibit three shows that it
still owns these assets, this does not change the fact that this
manufacturing equipment was considered worthless, unusable, and no
longer depreciable by company officials during the POR.
There is nothing unusual about a company's writing off
manufacturing plants or equipment. Accordingly, we do not consider
write-offs to be a type of extraordinary expense that we exclude from
the cost of producing subject merchandise. The Department has in the
past included similar equipment write-offs in the calculation of COP
and CV. (See, e.g., Final Determination of Sales at Less Than Fair
Value: Small Diameter Circular Seamless Carbon and Alloy Steel,
Standard, Line and Pressure Pipe from Italy, 60 FR 31981, 31990 ( June
19, 1995); Final Results of Antidumping Duty Administrative Review:
Certain Cut-To-Length Carbon Steel Plate from Germany, 61 FR 13834,
13836 (March 28, 1996); and Final Results of Antidumping Duty
Administrative Review: High-Tenacity Rayon Filament Yarn from Germany,
59 FR 15897, 15899 (March 28, 1995).)
Finally, although Heveafil attempted to defer this write-off based
on the contents of revised 1993 audited financial statements, these
revised financial statements were properly rejected and returned to the
respondent because they constituted new factual information that was
untimely submitted within the meaning of 19 CFR 353.31(a)(3). See
Letter from Louis Apple, Acting Office Director, Group II,
[[Page 54773]]
Office of AD/CVD Enforcement, to White & Case, dated August 21, 1996.
Comment 8: Alleged Clerical Errors in the Margin Calculations for
Rubberflex
Petitioner alleges that the Department made two clerical errors in
the calculation of Rubberflex's margin for purposes of the preliminary
results. First, petitioner claims that the Department did not deduct
certain movement expenses denominated in Hong Kong dollars (e.g.,
warehousing in Hong Kong and Hong Kong import duties) from the net
price used in the cost test. In addition, petitioner maintains that the
Department converted CV into pounds by dividing by 2.2046 twice.
Rubberflex disagrees. Regarding the question of movement expenses,
Rubberflex notes that (1) it did not incur the types of expenses cited
by petitioner on its purchase price sales, and (2) the Department
properly deducted all movement expenses on its ESP sales. Regarding the
calculation of CV, Rubberflex states that petitioner clearly misread
the computer programs used in the preliminary results. Specifically,
Rubberflex notes that petitioner's allegation is based on the computer
language for the calculation of FMV for price-to-price comparisons,
rather than the CV calculation language.
DOC Position
We agree with Rubberflex. Upon review of our computer programs, we
find that the movement expenses referenced by petitioner were
appropriately deducted from net price for ESP sales (see lines 1184,
1186, and 1190 of the computer program created for purposes of the
preliminary results). Regarding purchase price transactions, we note
that Rubberflex did not incur the expenses referenced in petitioner's
brief. Because these expenses did not exist, they were not deducted
from net price.
Regarding CV, we also agree with Rubberflex that we properly
converted the per kilogram costs into pounds (see lines 1979 and 2008
in the ESP preliminary program and lines 1679 and 1704 in the purchase
price preliminary program). Accordingly, we have made no changes to the
movement expense or CV calculations performed for Rubberflex for
purposes of the final results.
Comment 9: Matching Criteria for Diaper Grade Thread
Petitioner claims that the Department placed an undue importance on
the matching criterion of color when matching sales of diaper grade
thread. Specifically, petitioner maintains that diaper grade thread is
differentiated from other types of rubber thread by color only.
Therefore, because Rubberflex's control numbers included a designation
for grade of thread (i.e., diaper- vs. non-diaper grade), the
Department counted color twice in its matching methodology.
Rubberflex maintains that the Department's matching methodology was
not only appropriate, but it was also based on the characteristics
identified in the questionnaire. Moreover, Rubberflex asserts that the
company's differentiation of diaper grade in its control numbers had no
bearing on the results of the model matching because control numbers
were not used in determining the most similar merchandise.
DOC Position
We agree with Rubberflex. All matches involving non-identical
products were based solely on the model matching criteria identified in
the questionnaire and not on the control numbers. As such, contrary to
petitioner's assertion, we made no distinction between diaper and non-
diaper grades when making non-identical comparisons. Because neither
petitioner nor respondents have contested the matching hierarchy
established at the beginning of the review, nor has any interested
party provided valid reasons to depart from this hierarchy, we have
continued to use it for purposes of the final results.
Final Results of Review
As a result of our review, we determine that the following margins
exist for the period April 2, 1992, through September 30, 1993:
------------------------------------------------------------------------
Margin
Manufacturer/ exporter Review period (percent)
------------------------------------------------------------------------
Heveafil......................... 4/2/92-9/30/93............ 10.65
Rubberflex....................... 4/2/92-9/30/93............ 1.88
------------------------------------------------------------------------
The Department shall determine, and the U.S. 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 U.S. Customs Service.
Furthermore, the following deposit requirement will be effective
for all shipments of subject merchandise from Malaysia entered, or
withdrawn from warehouse, for consumption on or after the publication
date of the final results of this administrative review, as provided by
Sec. 751(a)(1) of the 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 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; and, (4) the cash deposit rate for all other manufacturers
or exporters will be 15.16 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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: October 16, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-27056 Filed 10-21-96; 8:45 am]
BILLING CODE 3510-DS-P
