01-28404. Porcelain-On-Steel Cookware From Mexico: 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 a request by the petitioner, Columbian Home Products, LLC (formerly General Housewares Corporation), the Department of Commerce is conducting an administrative review of the antidumping duty order on porcelain-on-steel cookware from Mexico. This review covers Cinsa, S.A. de C.V. and Esmaltaciones de Norte America, S.A. de C.V., manufacturers/exporters of the subject merchandise to the United States and the period December 1, 1999, through November 30, 2000 (fourteenth review period).

We preliminarily determine that sales have been made below normal value. Interested parties are invited to comment on these preliminary results. If these preliminary results are adopted in our final results of administrative review, we will instruct the Customs Service to assess antidumping duties on all appropriate entries.

EFFECTIVE DATE:

November 13, 2001.

FOR FURTHER INFORMATION CONTACT:

Rebecca Trainor, or Katherine 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 [phone], respectively.

SUPPLEMENTARY INFORMATION:

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's regulations are to 19 CFR part 351 (April 2000).

Background

On October 10, 1986, the Department published in the Federal Register, 51 FR 36435, the final affirmative antidumping duty determination on certain porcelain-on-steel (POS) cookware from Mexico. We published an antidumping duty order on December 2, 1986, 51 FR 43415.

On December 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 December 1, 1999, through November 30, 2000 (the POR), 65 FR 79802. The Department received a request for an administrative review of Cinsa, S.A. de C.V. (Cinsa) and Esmaltaciones de Norte America, S.A. de C.V. (ENASA) from Columbian Home Products, LLC (CHP), formerly General Housewares Corporation (GHC) (hereinafter, the petitioner), and from the respondents, Cinsa and ENASA. We published a notice of initiation of the review on January 31, 2001, 66 FR 8368.

On February 2, 2001, the Department issued an antidumping duty questionnaire to Cinsa and ENASA. We issued supplemental questionnaires on May 17, and July 26, 2001. On April 2, June 7, and August 9, 2001, we received responses to the original questionnaire and to our two supplemental questionnaires. The Department is conducting this review in accordance with section 751(a) of the Act.

Scope of the Order

The products covered by this order are porcelain-on-steel cookware, including tea kettles, which 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) subheading 7323.94.00. Kitchenware currently classifiable under HTSUS subheading 7323.94.00.30 is not subject to the order. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this proceeding is dispositive.

Fair Value Comparisons

To determine whether sales of POS cookware by Cinsa and ENASA to the United States were 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.

Pursuant to section 777A(d)(2) of the Act, we compared the CEPs of individual U.S. transactions to the weighted-average normal value of the foreign like product where there were sales made in the ordinary course of trade at prices above the cost of production (COP), as discussed in the “Cost of Production Analysis” section, below.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products produced by Cinsa and ENASA covered by the description in the “Scope of the Order” section, above, to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. We compared U.S. sales to sales made in the home market within the contemporaneous window period, which extends from three months prior to the U.S. sale until two months after the sale. Where there were no sales of identical merchandise in the home market made in the ordinary course of trade to compare to U.S. sales, we compared U.S. sales to sales of the most similar foreign like product made in the ordinary course of trade. In making the product comparisons, we compared individual cookware pieces with identical or similar pieces, and cookware sets to identical or similar sets. Within these groupings, we matched foreign like products based on the physical characteristics reported by the respondents in the following order: quality, gauge, cookware category, model, shape, wall shape, diameter, width, capacity, weight, interior coating, exterior coating, grade of frit (a material component of enamel), color, decoration, and cover, if any.

Constructed Export Price

We calculated CEP in accordance with section 772(b) of the Act because the subject merchandise was first sold by Cinsa's and ENASA's affiliated reseller, Cinsa International Co. (CIC), after importation into the United States. We based CEP on packed prices to unaffiliated purchasers in the United States. We made deductions from the starting price, where appropriate, for billing adjustments, rebates, U.S. and foreign inland freight, U.S. and Mexican brokerage and handling expenses, and U.S. duty in accordance with section 772(c)(2) of the Act and 19 CFR 351.402(a). We set certain rebates to zero, as explained in our Preliminary Results Calculation Memo, on file in Room B-099 of the Commerce Department. We made further deductions, where appropriate, for credit, commissions, advertising, and indirect selling expenses that were associated with economic activities occurring in the United States, pursuant to section 772(d)(1) of the Act and 19 CFR 351.402(b). For those sales for which the payment date was not reported, we calculated credit based on the average number of days between shipment and payment using the sales for which payment information was reported. We calculated inventory carrying costs for those sales for which no values were reported, using data reported in the questionnaire response. We made an adjustment for profit in accordance with section 772(d)(3) of the Act.

Normal Value

Based on a comparison of the aggregate quantity of home market and U.S. sales, we determined that the quantity of the foreign like product sold in the exporting country was sufficient to permit a proper comparison with the sales of the subject merchandise to the United States, pursuant to section 773(a) of the Act. Therefore, we based normal value on the price (exclusive of value-added tax) at which the foreign like product was first sold for consumption in the home market, in accordance with section 773(a)(1)(B)(i) of the Act.

Cost of Production Analysis

The Department disregarded certain sales made by Cinsa and ENASA for the period December 1, 1998, through November 30, 1999 (the most recently completed review of Cinsa and ENASA), pursuant to a finding in that review that sales failed the cost test (see Porcelain-on-Steel Cookware from Mexico: Final Results of Antidumping Duty Administrative Review, 66 FR 12926 (March 1, 2001)). Thus, in accordance with section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to believe or suspect that respondents Cinsa and ENASA made sales in the home market at prices below the cost of producing the merchandise in the current review period. As a result, the Department initiated investigations to determine whether the respondents made home-market sales during the POR at prices below their COP within the meaning of section 773(b) of the Act.

A. Calculation of COP

We calculated the COP on a product-specific basis, based on the respective sums of Cinsa's and ENASA's cost of materials and fabrication for the foreign like product, plus amounts for home-market SG&A and packing costs in accordance with section 773(b)(3) of the Act. Because Cinsa's and ENASA's fiscal year is different from the POR by only one month, we allowed the respondents to report costs based on their fiscal year 2000 costs.

We relied on COP information submitted by Cinsa and ENASA, except in the following instance where it was not appropriately quantified or valued: enamel frit prices from an affiliated supplier did not approximate fair market value prices; therefore, we increased Cinsa's and ENASA's enamel frit prices to account for the portion of the reported cost savings to affiliated parties which was not due to market-based savings. See the Preliminary Results Calculation Memo for further details.

B. Test of Home Market Prices

We compared the adjusted weighted-average COP figures for the POR to home market sales of the foreign like product, as required by section 773(b) of the Act, in order to determine whether these sales were made at prices below the COP. In determining whether to disregard home market sales made at prices below the COP, we examined in accordance with sections 773(b)(1)(A) and (B) of the Act, whether such sales were made: (1) In substantial quantities within an extended period of time, and (2) at prices which did not permit the recovery of all costs within a reasonable period of time. On a product-specific basis, we compared the COP (net of selling expenses) to the home market prices, less any applicable movement charges, rebates, discounts, and direct and indirect selling expenses.

C. Results of COP Test

Pursuant to section 773(b)(2)(C), where less than 20 percent of the respondent's sales of a given product during the POR were at prices less 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.” Where twenty percent or more of the respondent's sales of a given product during the POR were at prices less than the COP, we disregarded the below-cost sales where such sales were found to be made at prices which would not permit the recovery of all costs within a reasonable period of time (in accordance with section 773(b)(2)(D) of the Act).

The results of our cost tests for Cinsa and ENASA indicated for certain home market models, less than twenty percent of the sales of the model were at prices below COP. We therefore retained all sales of these models in our analysis and used them as the basis for determining normal value. Our cost tests also indicated that for certain other home market models, more than twenty percent of home market sales within an extended period of time were at prices below COP 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 of these models from our analysis and used the remaining sales as the basis for determining normal value.

Price-To-Price Comparisons

For both respondents, we calculated normal value based on the value-added tax-exclusive, home market gross unit price and deducted, where appropriate, inland freight and rebates in accordance with section 773(a)(6) of the Act and 19 CFR 351.401. We made a deduction for credit expenses, where appropriate, pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We also deducted commissions and the lesser of comparison-market indirect selling expenses and the indirect selling expenses deducted from CEP (the CEP offset) pursuant to section 773(a)(7)(B) of the Act and 19 CFR 351.412(f). For those comparison-market sales for which the payment date was not reported, we calculated credit based on the average number of days between shipment and payment using the sales for which payment information was reported. For those sales for which no inventory carrying costs were reported, we calculated inventory carrying costs based on information contained in the questionnaire response. We made no adjustment for packing expenses, because respondents reported that these expenses are identical in both markets, and the databases did not contain values in the packing data fields for all sales. We made adjustments to normal value, where appropriate, for differences in costs attributable to differences in the physical characteristics of the merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. See the Preliminary Results Calculation Memo for further details of our calculations.

Level of Trade and CEP Offset

In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determine normal value based on sales in the comparison market at the same level of trade (LOT) as the export price or CEP transaction. The normal value LOT is that of the starting-price sales in the comparison market or, when normal value is based on constructed value, that of the sales from which we derive selling, general and administrative (SG&A) expenses and profit. For export price, the U.S. LOT is also the level of the starting-price sale, which is usually from the exporter to an unaffiliated U.S. customer. For CEP, it is the level of the constructed sale from the exporter to an affiliated importer, after the deductions required under section 772(d) of the Act. See Micron Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 2001). To determine whether normal value sales are at a LOT different from export price or CEP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which normal value is based and comparison-market sales at the LOT of the export transaction, we make a LOT adjustment under section 773(a)(7)(A) of the Act. For CEP sales, if the normal value level is more remote from the factory than the CEP level, and there is no basis for determining whether the difference in the levels between normal value and CEP affects price comparability, we adjust normal value under section 773(a)(7)(B) of the Act (the CEP offset provision). See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

In this review, Cinsa and ENASA had only CEP sales. They reported that comparison-market and CEP sales were made at different LOTs, and that comparison-market sales were made at a more advanced LOT than were sales to CIC in the United States. The respondents requested that the Department make a CEP offset in lieu of a LOT adjustment, as they were unable to quantify the price differences related to sales made at the different LOTs.

Cinsa and ENASA reported four channels of distribution in the home market: (1) Direct sales to customers from the Saltillo plant; (2) sales shipped from their Mexico City warehouse; (3) sales to Pacific zone customers; and (4) sales shipped to supermarkets and discount stores. In analyzing the data in the home market sales listing by distribution channel and sales function, we found that the four home market channels are all handled by Cinsa's and ENASA's affiliated distributer, COMESCO, and did not differ significantly with respect to selling functions. Similar services were offered to all or some portion of customers in each channel. Based on this analysis, we find that the four home market channels of distribution comprise a single LOT.

All CEP sales were made through the same distribution channel: by the Mexican exporter to CIC, the U.S. affiliated reseller, which then sold the merchandise directly to unaffiliated purchasers in the United States. The same selling functions/services were provided by Cinsa and ENASA to all customers in this distribution channel. Therefore, we preliminarily determine that all CEP sales constitute a single LOT in the United States.

To determine whether sales in the comparison market were at a different LOT than CEP sales, we examined the selling functions performed at the CEP level, after making the appropriate deductions under section 772(d) of the Act, and compared those selling functions to the selling functions performed in the home-market LOT.

In the comparison market, Cinsa and ENASA sold subject merchandise to their affiliated distributor, COMESCO, which then resold the POS product to unaffiliated customers. In the United States, Cinsa sold its and ENASA's subject merchandise to its affiliate, CIC, which then resold the subject merchandise directly to unaffiliated purchasers. Therefore, we compared the selling functions and the level of activity associated with Cinsa's sales to CIC with the sales by COMESCO to unaffiliated purchasers in the Mexican market. We found that several of the functions performed in making the starting-price sale in the comparison market either were not performed in connection with sales to CIC (e.g., market research, order solicitation, after sale services/warranties, and advertising), or were only performed to a small degree in connection with sales to CIC (e.g., inventory maintenance), thus supporting respondents' contention that different LOTs exist between comparison-market and CEP sales.

These differences also support the respondents' assertion that the comparison-market merchandise is sold at a more advanced LOT (see the Preamble to the Department's Regulations, 62 FR 27295, 27371 (May 19, 1997) (“Each more remote level must be characterized by an additional layer of selling activities, amounting in the aggregate to a substantially different selling function.”) Furthermore, many of the same selling functions that are performed at the comparison-market LOT are performed, not at the CEP LOT, but by the respondents' U.S. affiliate. Based on this analysis, we preliminarily conclude that the comparison-market and CEP channels of distribution are sufficiently different to determine that two different LOTs exist, and that the comparison-market sales are made at a more advanced LOT than are the CEP sales.

Because there is only one LOT in the home market, it is not possible to determine if there is a pattern of consistent price differences between the sales on which normal value is based and comparison market (i.e., home market) sales at the LOT of the export transaction. 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. The CEP offset is calculated as the lesser of:

1. The indirect selling expenses on the comparison-market sale, or

2. The indirect selling expenses deducted from the starting price in calculating CEP.

Currency Conversion

We made currency conversions in accordance with section 773A of the Act based on the official exchange rates in effect on the dates of the U.S. sales 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 margins for the period December 1, 1999, through November 30, 2000, are as follows:

Manufacturer/exporter	Period	Margin [percent]
Cinsa	12/1/99—11/30/00	16.42
ENASA	12/1/99—11/30/00	15.66

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 and rebuttal 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 37 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. See 19 CFR 351.310(c).

Assessment Rates

The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate appraisement instructions directly to the Customs Service upon completion of this review. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future deposits of estimated duties. We will instruct the Customs Service to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rate calculated in the final results of this review is above de minimis. For assessment purposes, we intend to calculate importer-specific assessment rates for the subject merchandise by aggregating the dumping margins calculated for all U.S. sales examined and dividing this 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 rates for the reviewed companies will be those established in the final results of this review; (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 less-than-fair-value (LTFV) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 29.52 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) 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 is published in accordance with section 751(a)(1) of the Act and 19 CFR 351.221.

Dated: November 2, 2001.

Faryar Shirzad,

Assistant Secretary for Import Administration.