01-25271. Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From Germany: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of antidumping duty administrative review.

SUMMARY:

In response to requests by the petitioner, Goss Graphic Systems, Inc., and MAN Roland Druckmaschinen AG, the Department of Commerce is conducting an administrative review of the antidumping duty order on large newspaper printing presses and components thereof, whether assembled or unassembled, from Germany. This review covers MAN Roland Druckmaschinen AG, a manufacturer/exporter of the subject merchandise to the United States. The period of review is September 1, 1999, through August 31, 2000.

We preliminarily determine that sales have not been made below normal value for MAN Roland Druckmaschinen AG. If these preliminary results are adopted in our final results of administrative review, we will instruct the Customs Service not to assess antidumping duties on entries of the subject merchandise by MAN Roland Druckmaschinen AG covered by this review. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

October 9, 2001.

FOR FURTHER INFORMATION CONTACT:

David J. Goldberger, or Kate Johnson, Office 2, AD/CVD Enforcement Group I, Import Administration—Room B099, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone], or 482-4929, respectively.

SUPPLEMENTARY INFORMATION:

Period of Review

The period of review (POR) is September 1, 1999 through August 31, 2000.

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Act), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department of Commerce's (the Department's) regulations are to 19 CFR part 351 (April 2000).

Background

On July 23, 1996, the Department published in the Federal Register, 61 FR 38166, the final affirmative antidumping duty determination on large newspaper printing presses and components thereof, whether assembled or unassembled (LNPP), from Germany. We published an antidumping duty order on September 4, 1996 (61 FR 46623).

On September 20, 2000, the Department published in the Federal Register a notice advising of the opportunity to request an administrative review of this order for the period September 1, 1999, through August 31, 2000 (65 FR 56868). The Department received requests for an administrative review of MAN Roland Druckmaschinen AG and its U.S. affiliate MAN Roland Inc. (collectively MAN Roland).

On September 29, 2000, Goss Graphic Systems, Inc. (the petitioner) requested that the Department determine whether antidumping duties have been absorbed by KBA or MAN Roland. On April 20, 2001, the Department requested proof that unaffiliated purchasers will ultimately pay the antidumping duties to be assessed on entries during the review period. See discussion in the “Duty Absorption section,” below.

On October 10, 2000, the petitioner requested that the Department defer for one year the initiation of its review of entries by KBA subject to the above-referenced order covering the period September 1, 1999, to August 31, 2000. On October 30, 2000, we granted the petitioner's request to defer the review of KBA's entries, as well as initiated a review of MAN Roland. See Initiation of Antidumping Duty and Countervailing Duty Administrative Reviews, Requests for Revocation in Part, and Deferral of Administrative Reviews, 65 FR 64662.

On October 27, 2000, we issued an antidumping questionnaire to MAN Roland. We received a response on February 5, 2001. We issued supplemental questionnaires in April and August 2001, and received responses in May and September 2001.

On March 22, 2001, the Department extended the time limit for the preliminary results in this review until October 1, 2001. See Large Newspaper Printing Presses, and Components Thereof, from Germany and Japan: Notice of Extension of Time Limits for Antidumping Duty Administrative Reviews, 66 FR 16040.

Scope of the Order

The products covered by the order are large newspaper printing presses, including press systems, press additions and press components, whether assembled or unassembled, whether complete or incomplete, that are capable of printing or otherwise manipulating a roll of paper more than two pages across. A page is defined as a newspaper broadsheet page in which the lines of type are printed perpendicular to the running of the direction of the paper or a newspaper tabloid page with lines of type parallel to the running of the direction of the paper.

In addition to press systems, the scope of the order includes the five press system components. They are: (1) A printing unit, which is any component that prints in monocolor, spot color and/or process (full) color; (2) a reel tension paster (RTP), which is any component that feeds a roll of paper more than two newspaper broadsheet pages in width into a subject printing unit; (3) a folder, which is a module or combination of modules capable of cutting, folding, and/or delivering the paper from a roll or rolls of newspaper broadsheet paper more than two pages in width into a newspaper format; (4) conveyance and access apparatus capable of manipulating a roll of paper more than two newspaper broadsheet pages across through the production process and which provides structural support and access; and (5) a computerized control system, which is any computer equipment and/or software designed specifically to control, monitor, adjust, and coordinate the functions and operations of large newspaper printing presses or press components.

A press addition is comprised of a union of one or more of the press components defined above and the equipment necessary to integrate such components into an existing press system.

Because of their size, large newspaper printing press systems, press additions, and press components are typically shipped either partially assembled or unassembled, complete or incomplete, and are assembled and/or completed prior to and/or during the installation process in the United States. Any of the five components, or collection of components, the use of which is to fulfill a contract for large newspaper printing press systems, press additions, or press components, regardless of degree of assembly and/or degree of combination with non-subject elements before or after importation, is included in the scope of this order. Also included in the scope are elements of a LNPP system, addition or component, which taken altogether, constitute at least 50 percent of the cost of manufacture of any of the five major LNPP components of which they are a part.

For purposes of the order, the following definitions apply irrespective of any different definition that may be found in Customs rulings, U.S. Customs law or the Harmonized Tariff Schedule of the United States (HTSUS): the term “unassembled” means fully or partially unassembled or disassembled; and (2) the term “incomplete” means lacking one or more elements with which the LNPP is intended to be equipped in order to fulfill a contract for a LNPP system, addition or component.

This scope does not cover spare or replacement parts. Spare or replacement parts imported pursuant to a LNPP contract, which are not integral to the original start-up and operation of the LNPP, and are separately identified and valued in a LNPP contract, whether or not shipped in combination with covered merchandise, are excluded from the scope of this order. Used presses are also not subject to this scope. Used presses are those that have been previously sold in an arm's-length transaction to a purchaser that used them to produce newspapers in the ordinary course of business.

Further, this order covers all current and future printing technologies capable of printing newspapers, including, but not limited to, lithographic (offset or direct), flexographic, and letterpress systems. The products covered by this order are imported into the United States under subheadings 8443.11.10, 8443.11.50, 8443.30.00, 8443.59.50, 8443.60.00, and 8443.90.50 of the HTSUS. Large newspaper printing presses may also enter under HTSUS subheadings 8443.21.00 and 8443.40.00. Large newspaper printing press computerized control systems may enter under HTSUS subheadings 8471.49.10, 8471.49.21, 8471.49.26, 8471.50.40, 8471.50.80, and 8537.10.90. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of the order is dispositive.

Duty Absorption

On September 29, 2000, the petitioner requested that the Department determine whether antidumping duties had been absorbed during the POR. Section 751(a)(4) of the Act provides for the Department, if requested, to determine during an administrative review initiated two or four years after the publication of the order, whether antidumping duties have been absorbed by a foreign producer or exporter, if the subject merchandise is sold in the United States through an affiliated importer. In this case, MAN Roland sold to the United States through an importer that is affiliated within the meaning of section 771(33) of the Act.

Because this review was initiated four years after the publication of the antidumping duty order, we will make a duty absorption determination in this segment of the proceeding.

On April 20, 2001, the Department requested proof that unaffiliated purchasers will ultimately pay the antidumping duties to be assessed on entries during the review period. On June 18, 2001, MAN Roland responded to the Department's request stating that there is no basis under the statute for a finding that any antidumping duties “have been absorbed” by MAN Roland or its affiliates since the final results of the only review completed to date found no dumping by MAN Roland. As we have found preliminarily that there is no dumping margin for MAN Roland with respect to its U.S. sale under this review, we find preliminarily that there is no duty absorption.

Fair Value Comparisons

To determine whether MAN Roland's sale of a LNPP to the United States was made at less than normal value, we compared constructed export price (CEP) to the normal value, as described in the “Constructed Export Price” and “Normal Value” sections of this notice.

Although MAN Roland's home market was viable, in accordance with section 773 of the Act and our past practice in this proceeding and in the companion proceeding involving Japan, we based normal value on constructed value because we determined that, even though the general product characteristics of LNPP systems are comparable enough for them to be considered a foreign like product, the physical differences in the sub-component specifications between LNPPs sold in the United States and the home market are so great that meaningful price-to-price comparisons cannot be made. See Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, from Japan: Preliminary Results of Antidumping Duty Administrative Reviews, 65 FR 62700, 62702 (October 19, 2000), followed in Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, from Japan: Final Results of Antidumping Duty Administrative Review, 66 FR 11555 (February 26, 2001); and Large Newspaper Printing Presses and Components Thereof: Whether Assembled or Unassembled, from Germany: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Reviews and Final Determinations of Scope Inquiries, 65 FR 62695, 62697 (October 19, 2000), followed in Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, from Germany: Final Results of Antidumping Duty Administrative Review, 66 FR 11557 (February 26, 2001) (1998-1999 Final Results).

Constructed Export Price

We calculated CEP, in accordance with sections 772(b), (c) and (d) of the Act, for MAN Roland's sale under review because the contract governing the U.S. sale was executed in the United States by MAN Roland's affiliated sales agent in the United States.

We calculated CEP based on the packed price to an unaffiliated customer in the United States. In accordance with section 772(c)(2) of the Act, we made deductions for the following charges: foreign inland freight charges; combined German inland insurance, marine insurance and U.S. inland insurance expenses; German handling, ocean freight, U.S. handling and U.S. inland freight expenses; U.S. brokerage; and U.S. Customs duty (including harbor maintenance and merchandise processing fees). We also made deductions for commissions, imputed credit, warranty, direct training expenses, testing expenses, casualty insurance premium expenses and other direct selling expenses, pursuant to section 772(d)(1) of the Act. We deducted further those indirect selling expenses incurred by MAN Roland and its U.S. affiliate that related to economic activity in the United States.

As in prior segments of this proceeding, we calculated an imputed credit expense by multiplying an interest rate by the net balance of production costs incurred, and progress payments made, during the construction period. Consistent with the revised methodology discussed at Comment 4 of the 1998-1999 Final Results, we used MAN Roland's euro short-term interest rate for the production period, and the U.S. dollar short-term interest rate for the post-production imputed credit portion. MAN Roland used the commercial production date to mark the end of the production period, rather than the installation date as requested in our supplemental questionnaire. For purposes of the preliminary results, we have accepted the imputed credit calculation using the commercial production date. However, we may consider this part of the methodology further in our final results.

In addition, we deducted the cost of further manufacturing or assembly expenses in accordance with section 772(d)(2) of the Act.

Further, we made an adjustment for CEP profit in accordance with section 772(d)(3) of the Act. In accordance with section 772(f) of the Act, we calculated the CEP profit rate using the expenses incurred by MAN Roland and its affiliate on their sales of the subject merchandise in the United States and the foreign like product in the home market and the profit associated with those sales.

Normal Value

As noted above under the “Fair Value Comparisons” section of this notice, we based normal value on constructed value in accordance with section 773 of the Act because we determined that the unique, custom-built nature of each LNPP sold does not permit proper price-to-price comparisons, even though the home market was viable for MAN Roland.

Cost of Production Analysis and Constructed Value

Pursuant to section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to believe or suspect MAN Roland made sales in the home market at prices below its cost of production (COP) in this review because the Department disregarded certain sales made by MAN Roland during the less-than-fair-value (LTFV) investigation and during the previous administrative review pursuant to a finding that sales failed the cost test. See 1998-1999 Final Results. As a result, the Department initiated an investigation to determine whether MAN Roland made home market sales during the POR at prices below its COP within the meaning of section 773(b) of the Act.

We calculated the COP based on the sum of MAN Roland's cost of materials and fabrication for the foreign like product, plus amounts for general and administrative (G&A) and financial expenses, in accordance with section 773(b)(3) of the Act.

We compared the COP figures to home market prices of the foreign like product, as required under section 773(b) of the Act, in order to determine whether these sales had been made at prices below the COP. On a contract-specific basis, we compared the COP to home market prices, less any applicable movement charges, direct and indirect selling expenses, and packing expenses.

MAN Roland reported commissions paid to unaffiliated and affiliated sales agents, and claimed that the commissions paid to its affiliated sales agents are made at arm's length. In support of this claim, MAN Roland provided a regression analysis based on the estimated profitability of each sale. However, as we discussed in Comment 5 of the Decision Memorandum to the 1998-1999 Final Results, this analysis fails to demonstrate that the affiliated commissions were made at arm's length. Further, our analysis comparing the commissions paid to both affiliated and unaffiliated agents for the home market sales in this review shows that the average commission percentage paid to affiliated agents was significantly different than the average commission percentage paid to unaffiliated agents (see Memorandum to the File entitled Preliminary Results Calculation Worksheets for MAN Roland, dated October 1, 2001). Consequently, we have not deducted affiliated party commissions from the home market price for purposes of comparison to the COP.

MAN Roland reported an additional warranty expense for delayed installation. MAN Roland allocated this expense based on past historical experience, although it reported that it did not incur this expense on any of the home market sales included in this review (see May 29, 2001, supplemental Section B response at page 34). As explained at Comment 6 of the Decision Memorandum to the 1998-1999 Final Results, this expense is properly considered a direct selling expense and will be deducted only from those sales to which the expense applies. Since none of the sales in this review incurred this expense, we have not deducted this expense from the home market price for purposes of comparison to the COP.

In determining whether to disregard home market sales made at prices below the COP, we examined whether: (1) Within an extended period of time, such sales were made in substantial quantities; and (2) such sales were made at prices which permitted the recovery of all costs within a reasonable period of time. See section 773(b)(1) of the Act.

The results of our cost test for MAN Roland indicated that certain home market sales were at prices below COP within an extended period of time, were made in substantial quantities, and would not permit the full recovery of all costs within a reasonable period of time. In accordance with section 773(b)(1) of the Act, we therefore excluded the below-cost sales from our analysis and used the remaining sales as the basis for determining selling expenses and profit.

In accordance with section 773(e) of the Act, we calculated constructed value based on the sum of MAN Roland's cost of materials, fabrication, selling, general and administrative (SG&A) expenses and U.S. packing costs. In accordance with section 773(e)(2)(A), we based SG&A expenses and profit on the amounts incurred and realized by MAN Roland in connection with the production and sale of the foreign like product in the ordinary course of trade, for consumption in the foreign country.

We relied on MAN Roland's reported COP and constructed value amounts.

CEP to Constructed Value Comparisons

For CEP to constructed value comparisons, where appropriate, we deducted imputed credit, in accordance with sections 773(a)(6)(C)(iii) and 773(a)(8) of the Act. We calculated imputed credit for constructed value purposes in accordance with the methodology explained in the “Constructed Export Price” section of this notice.

We also made a CEP offset adjustment to normal value, as explained below, in accordance with section 773(a)(7)(B) of the Act, by deducting the home market indirect selling expenses up to the amount of indirect selling expenses incurred on U.S. sales.

Level of Trade and CEP Offset

Section 773(a)(1)(B)(i) of the Act states that, to the extent practicable, the Department will calculate normal value based on sales at the same level of trade (LOT) as the export price or CEP transaction. Sales are made at different LOTs if they are made at different marketing stages (or their equivalent). See 19 CFR 351.412(c)(2). Substantial differences in selling activities are a necessary, but not sufficient, condition for determining that there is a difference in the stages of marketing. See id.; see also Notice of Final Determination of Sales of Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732 (November 19, 1997) (Steel Plate). In order to determine whether the comparison sales were at different stages in the marketing process than the U.S. sales, we reviewed the distribution system in each market (i.e., the “chain of distribution”),^[1] including selling functions, class of customer (customer category), and the level of selling expenses for each type of sale.

Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying LOTs for export and comparison market sales (i.e., normal value based on either home market or third country prices ^[2] ), we consider the starting prices before any adjustments. For CEP sales, we consider only the selling activities reflected in the price after the deduction of expenses and profit under section 772(d) of the Act. See Micron Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 2001).

When the Department is unable to match sales of the foreign like product in the comparison market at the same LOT as the export price or CEP, the Department may compare the U.S. sale to sales at a different LOT in the comparison market. In comparing export price or CEP sales at a different LOT in the comparison market, where available data make it practicable, we make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if a normal value LOT is more remote from the factory than the CEP LOT and we are unable to make a LOT adjustment, the Department shall grant a CEP offset, as provided in section 773(a)(7)(B) of the Act. See, Steel Plate, 62 FR at 61731, 61732.

We obtained information from MAN Roland regarding the marketing stages involved in making the reported home market and U.S. sales, including a description of the selling activities performed by MAN Roland for each channel of distribution.

MAN Roland reported home market sales through one channel of distribution: directly from MAN Roland's production facilities to the customer. We observed that MAN Roland provides the following services on sales to home market customers: market research, sales contacts and negotiations, personnel training for customer, installation at customer site, advertising to customer, packing, warranty service, and freight and delivery arrangements. Accordingly, all of MAN Roland's home market sales are made through the same channel of distribution and constitute one LOT.

As discussed above, we have determined that MAN Roland's U.S. sale under review is properly classified as a CEP sale. In its questionnaire response, MAN Roland reported that sales to the unaffiliated customers were made at the same LOT in both the United States and the home market. However, MAN Roland contends that, in the event that the Department classifies its U.S. sale as a CEP sale, then a LOT adjustment is appropriate to account for the differences between the actual LOT of the home market sales and the constructed LOT of the U.S. sale.

We examined the sales to MAN Roland's affiliated importer, MAN Roland, Inc., and found only one LOT. This CEP LOT differed considerably from the home market LOT with respect to selling activities associated with market research, sales contacts and negotiations, personnel training for customers, installation at the customer site, advertising to customers, and warranty service. Therefore, we find the CEP LOT to be different from the home market LOT and to be at a less advanced stage of distribution than the home market LOT. Based on this analysis, we conclude that the comparison market and U.S. channels of distribution, and the sales functions associated with each are sufficiently different so as to constitute two different levels of trade, and we find that the comparison market sales are made at a more advanced level of trade than are CEP sales. Because MAN Roland made sales in the home market at only one level of trade, the difference in the level of trade cannot be quantified. Further, we do not have information which would allow us to examine pricing patterns based on MAN Roland's sales of other products, and there are no other respondents or other record information on which such an analysis could be based. Accordingly, because the data available do not form an appropriate basis for making a level of trade adjustment, but the level of trade in the home market is at a more advanced stage of distribution than the level of trade of the CEP, we have made a CEP offset to normal value in accordance with section 773(a)(7)(B) of the Act.

Currency Conversion

We made currency conversions, in accordance with section 773A(a) of the Act, based on the official exchange rates in effect on the date of the U.S. sale as certified by the Federal Reserve Bank of New York.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the weighted-average dumping margin for the 1999-2000 POR is:

Manufacturer/exporter	Period	Margin
MAN Roland	9/1/99-8/31/00	0.00

We will disclose the calculations used in our analysis to parties to this proceeding within five days of the publication date of this notice. See 19 CFR 351.224(b). Any interested party may request a hearing within 30 days of publication. See 19 CFR 351.310(c). If requested, a hearing will be held 44 days after the publication of this notice, or the first workday thereafter.

Issues raised in the hearing will be limited to those raised in the respective case briefs. Case briefs from interested parties and rebuttal briefs, limited to the issues raised in the respective case briefs, may be submitted not later than 30 days and 35 days, respectively, from the date of publication of these preliminary results. See 19 CFR 351.309(c) and (d). Parties who submit case briefs or rebuttal briefs in this proceeding are requested to submit with each argument (1) a statement of the issue and (2) a brief summary of the argument. Parties are also encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited.

The Department will issue the final results of this administrative review, including the results of its analysis of issues raised in any written briefs, not later than 120 days after the date of publication of this notice.

Interested parties who wish to request a hearing or to participate if one is requested, must submit a written request to the Assistant Secretary for Import Administration, Room B-099, within 30 days of the date of publication of this notice. Requests should contain: (1) the party's name, address and telephone number; (2) the number of participants; and (3) a list of issues to be discussed.

Assessment Rates

The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. Upon completion of this review, the Department will issue appraisement instructions directly to the Customs Service. If these preliminary results are adopted in our final results, we will instruct the Customs Service to liquidate all entries subject to this review without regard to antidumping duties.

If these preliminary results are not adopted in the final results, we will instruct the Customs Service to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rates calculated in the final results of this review are above de minimis (i.e., at or above 0.5 percent). For assessment purposes, we intend to calculate importer-specific assessment rates for the subject merchandise by aggregating the antidumping duty margins calculated for all U.S. sales examined and dividing the amount by the total entered value of the sales examined.

Cash Deposit Requirements

The following cash deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(1) of the Act: (1) the cash deposit rate for the reviewed company (MAN Roland) will be that established in the final results of this review, except if the rate is less than 0.50 percent, and therefore, de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 30.72 percent, the “All Others” rate made effective by the LTFV investigation. These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Importers

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) 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 administrative review and notice are published in accordance with section 751(a)(1) of the Act and 19 CFR 351.221.

Dated: October 1, 2001.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  The marketing process in the United States and comparison markets begins with the producer and extends to the sale to the final user or consumer. The chain of distribution between the two may have many or few links, and the respondent's sales occur somewhere along this chain. In performing this evaluation, we considered the narrative responses of the respondent to properly determine where in the chain of distribution the sale occurs.

2.  Where normal value is based on constructed value, we determine the normal value LOT based on the LOT of the sales from which we derive selling expenses, G&A and profit for constructed value, where possible.