[Federal Register Volume 61, Number 221 (Thursday, November 14, 1996)]
[Notices]
[Pages 58374-58377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29091]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
[A-580-807]
Polyethylene Terephthalate Film, Sheet, and Strip From the
Republic of Korea; Final Results of Antidumping Duty Administrative
Review and Notice of Revocation in Part
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review and notice of revocation in part.
-----------------------------------------------------------------------
SUMMARY: On July 9, 1996, the Department of Commerce (the Department)
published the preliminary results of administrative review, intent to
revoke in part, and termination in part of the antidumping duty order
on polyethylene terephthalate (PET) film, sheet, and strip from the
Republic of Korea. The review covers three manufacturers/exporters of
the subject merchandise to the United States and the period June 1,
1994 through May 31, 1995.
As a result of comments we received, the dumping margins have
changed from those we presented in our preliminary results.
EFFECTIVE DATE: November 14, 1996.
FOR FURTHER INFORMATION CONTACT: Michael J. Heaney or John Kugelman,
AD/CVD Enforcement Group III, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230, telephone: (202) 482-
4475 or 0649, respectively.
SUPPLEMENTARY INFORMATION:
Background
On July 9, 1996 (61 FR 36032), the Department published the
preliminary results of administrative review, notice of intent to
revoke in part, and termination in part of the antidumping duty order
on PET film from the Republic of Korea (56 FR 25669, June 5, 1991).
Also, on July 9, 1996, we terminated the review with respect to
Cheil Synthetics Inc. (Cheil) because we revoked the order with respect
to Cheil on June 25, 1996.
This review covers three manufacturers/exporters of the subject
merchandise to the United States: Kolon Industries (Kolon), SKC Limited
(SKC), and STC Corporation (STC), and the period June 1, 1994 through
May 31, 1995.
We are revoking the order for Kolon because Kolon has sold the
subject merchandise at not less than normal value (NV) in this review
and for at least three consecutive periods.
On the basis of no sales at less than NV for a period of three
consecutive years, and the lack of any indication that such sales are
likely in the future, the Department concludes that Kolan is not likely
to sell the merchandise at less than NV in the future. Kolon has also
submitted a certification that it will not sell at less than NV in the
future and an agreement for immediate reinstatement, in accordance with
19 CFR 353.25(b). Therefore, the Department is revoking the order with
respect to Kolon.
The Department has concluded this review in accordance with section
751 of the Tariff Act of 1930, as amended.
Scope of the Review
Imports covered by this review are shipments of all gauges of raw,
pretreated, or primed polyethylene terephthalate film, sheet, and
strip, whether extruded or coextruded. The films excluded from this
review are metallized films and other finished films that have had at
least one of their surfaces modified by the application of a
performance-enhancing resinous or inorganic layer or more than 0.00001
inches (0.254 micrometers) thick. Roller transport cleaning film which
has at least one of its surfaces modified by the application of 0.5
micrometers of SBR latex has also been ruled as not within the scope of
the order.
PET film is currently classifiable under Harmonized Tariff Schedule
(HTS) subheading 3920.62.00.00. The HTS subheading is provided for
convenience and for U.S. Customs purposes. The written description
remains dispositive as to the scope of the product coverage.
The review covers the period June 1, 1994 through May 31, 1995
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Tariff Act)
by the Uruguay Round Agreements Act (URAA). In addition, unless
[[Page 58375]]
otherwise indicated, all citations to the Department's regulations are
to the current regulations, as amended by the interim regulations
published in the Federal Register on May 11, 1995 (60 FR 25130).
Analysis of Comments Received
We invited interested parties to comment on the preliminary results
of this administrative review. We received timely comments from each of
the three respondents.
Comment 1
Kolon contends that the Department should revoke the order with
respect to Kolon based on the company having three consecutive years of
de minimis margins. Kolon notes that it has provided a statement
agreeing to immediate reinstatement of the order if the Department
determines that Kolon sells merchandise at less than value (HV)
subsequent to revocation.
Kolon further contends that in litigation involving the first
review period (November 30, 1990-May 31, 1992) the Department has
agreed to recalculate margins for Kolon using its current tax-
adjustment methodology. Kolon argues that if the recalculated margins
for the first review period de minimis, the Department should neither
require nor rely upon a statement from Kolon agreeing to possible
reinstatements in the order, since Kolon would never have been found to
have sold the subject merchandise at less than NV.
Department's Position
We agree with Kolon that its tentative revocation should be made
final based upon its having three consecutive years of zero or de
minimis margins, and our determination that it is not likely that Kolon
will in the future sell the merchandise at less than NV. Since we are
issuing these final results prior to completion of litigation of the
first review, a statement from Kolon, pursuant to 19 CFR 353.25(b)(2),
is required.
Comment 2
SKC argues that B-grade film is a by-product of PET film rather
than a co-product, and, therefore, the Department's reallocation of
manufacturing costs between A-grade and B-grade film is contrary to
Department practice and unreasonably overstates SKC's B-grade film
costs. SKC asserts that as a by-product, B-grade film should not bear
the same cost as A-grade film because B-grade film cannot be used by
SKC's normal PET film customers. SKC contends that the Department's
allocation of costs to B-grade film should reflect the economic value
of the products manufactured.
SKC also claims that the Department's reallocation of manufacturing
costs based on physical measures is inconsistent with the Department's
treatment of jointly produced products in other cases. SKC notes that
in the Final Determination of Sales at Less Than Fair Value: Canned
Pineapple Fruit from Thailand, 60 FR 29533, 29560 (June 5, 1995)
(Pineapple Fruit from Thailand) the Department did not use physical
measures to allocate joint products but rather used an allocation
methodology that recognized the significantly different economic values
of the products. SKC also cites to Elemental Sulphur from Canada; Final
Results of Antidumping Finding Administrative Review, 61 FR 8239, 8241-
8243 (March 4, 1996), (Sulphur), and Oil Country Tubular Goods from
Argentina, Final Determination of Sales at Less Than Fair Value, 60 FR
33539, 33547 (June 28, 1995), OCTG from Argentina, as two additional
cases where the Department did not use physical measures to allocate
costs.
SKC contends that these cases demonstrate that the Department has
consistently rejected the use of physical allocation methodologies in
cases where the one joint product has a significantly lower economic
value than the other product. Based on the dissimilarity of A-grade and
B-grade film, SKC asserts that the Department's joint allocation of
costs between these two products is economically unreasonable. SKC
contends that it reported costs for A-grade and B-grade film in
accordance with widely accepted accounting principles; therefore, the
Department should follow its well-established practice of using a
company's normal accounting system unless that system results in an
unreasonable allocation of costs.
SKC further argues that the Department's methodology of allocating
yield losses equally between A-grade an B-grade film produces absurd
results because that methodology allocates expenses associated with one
type of scrap (B-grade film) to another type of scrap (PET film that is
not saleable). SKC also contends that the physical defects inherent in
B-grade film compel SKC to (1) sell B-grade film for non-PET film
applications, and (2) assign B-grade film a lower value than A-grade
film. Moreover, SKC asserts that the Department's decision to allocate
yield losses equally between A-grade and B-grade film conflicts with
the model-match and cost test methodologies employed in this review.
SKC notes that for model-match purposes, the Department restricted
comparisons of U.S. B-grade film to home market sales of B-grade film.
SKC asserts that the Department cannot ignore differences between A-
grade and B-grade film for purposes of its cost analysis.
Finally, SKC asserts that the Department should accept its cost
methodology even if the Department determines that B-grade film is a
co-product rather than a by-product of A-grade film. SKC asserts that
its cost system is consistent with the decision in Ipsco Inc. v. United
States, 965 F. 2d. 1056 (Fed. Cir. 1992) (Ipsco Appeal), because unlike
the allocation methodology reversed in Ipsco Appeal, SKC does not rely
upon sales value to allocate costs.
Department's Position
We disagree with SKC. As we explained in the final results for the
second and third reviews of this order, we determine that A-grade and
B-grade PET film have identical production costs, and accordingly, we
continue to rely on an equal cost methodology for A-grade and B-grade
film in this final determination. (See Polyethylene Terephthalate Film,
Sheet, and Strip from the Republic of Korea; Final Results of Review
and Tentative Revocation in Part, 61 FR 35177, 35182-83, July 5, 1996)
(Final Results of Second and Third Reviews). Moreover, as noted in the
Final Results of Second and Third Reviews, the Court of International
Trade (CIT) has determined that our allocation of SKC's production
costs between A-grade and B-grade film is reasonable. (See E.I. DuPont
de Nemours & Co., Inc. et al. v. United States, 932 F. Supp. 296 (CIT
1996).)
As explained in the Final Results of Second and Third Reviews, we
do not consider B-grade film to be a by-product because A-grade and B-
grade film undergo an identical production process that involves an
equal amount of material and fabrication expenses. The only difference
in the resulting A-grade and B-grade film is that at the end of the
manufacturing process a quality inspection is performed during which
some of the film is classified as high quality A-grade product, while
other film is classified as lower quality B-grade film. Accounting
literature identifies by-products as separate and distinct products,
not grades of the same product. (See Final Results of Second and Third
Reviews, 35182.)
We continue to maintain that SKC's reliance on Sulphur, Pineapple
Fruit from Thailand, and OCTG from Argentina is misplaced. Those cases
[[Page 58376]]
concerned the appropriate cost methodology for products manufactured
from a joint production process.
SKC has mischaracterized the continuous production process of PET
film as joint processing. A joint production process occurs when ``two
or more products result simultaneously from the use of one raw material
as production takes place.'' (see Management Accountants' Handbook,
Keeler, et. al., Fourth Edition at 11:1.) A joint production process
produces two distinct products and the essential point of a joint
production process is that ``the raw material, labor, and overhead
costs prior to the initial split-off can be allocated to the final
product only in some arbitrary, although necessary, manner.'' Id. The
identification of different grades of merchandise does not transform
the manufacturing process into a joint production process which would
require the allocation of costs. In this case, since production records
clearly identify the amount of yield losses for each specific type of
PET film, out allocation of yield losses to the films bearing those
losses is reasonable, not arbitrary.
Moreover, in none of the cases cited by SKC were both products
within the scope of the same antidumping order. The PET film production
process produces two finished products, both of which are saleable, and
both of which are PET film products covered by the order. B-grade PET
film (like A-grade film) is sold as PET film and consumed as PET film.
By contrast, the resulting joint products or by-products in the cases
cited by SKC were of a different class or kind of merchandise than the
products that the manufacturer set out to produce, and included both
products covered by antidumping duty orders and products not covered by
orders. Pineapple shells, cores, and ends are made into pineapple
juice, which is not of the same class or kind as pineapple fruit.
Natural gas was not of the same class or kind as elemental sulphur, nor
were secondary OCTG products of the same class or kind as OCTG. In
addition, we note that in the ordinary course of business SKC treats
methanol, and not B-grade film, as the by-product of the PET film
production process.
SKC's reported costs are not consistent with Ipsco Appeal simply
because SKC has not allocated costs based on sales value. Ipsco Appeal
involved the Department's use of an appropriate methodology for
allocating costs between two grades of steel pipe, which were
distinguishable on the basis of quality. Ipsco Appeal, 965 F.2d at
1058. The same production inputs for materials, labor, and overhead
went into the manufacturing lot that yielded both grades of pipe. Id.
Given these facts, in our final determination, we allocated production
costs equally between those two grades of pipe. We reasoned that
because they were produced at the same time. on the same production
lines, and following the identical manufacturing process, the two
grades of pipe in fact had identical production costs. Id. The Federal
Circuit ruled that this methodology was consistent with the antidumping
statute. As discussed above and in the Final Results of Second and
Third Reviews, the same reasoning applies to A-grade and B-grade films
and supports our determination that an equal cost methodology is
appropriate to calculate costs of A-grade and B-grade film.
Finally, SKC's argument that matching A-grade and B-grade film to
identical merchandise necessitates that each of these models have a
unique cost is without merit. Two products that are not ``identical''
for model-match purposes may indeed have the same costs.
Comment 3
SKC contends that the computer program used to calculate its
dumping margin contains a flaw in the product matching portion of the
program. SKC contends that the program erroneously references the U.S.
product code rather than the home market product code. SKC asserts that
this error results in matches of U.S. products to dissimilar comparison
products.
Department's Position
We agree with SKC. In these final results we have amended our
calculations, and have used the home market code in the product
matching portion of the program.
Comment 4
STC asserts that the Department's computer program failed to match
certain U.S. sales to normal values in the 90/60-day window period. STC
asserts that the computer program incorrectly matched these sales to
constructed value instead of to a contemporaneous home market sale that
occurred within the 90/60-day window.
Department's Position
We agree with STC. In these final results, we searched for a
contemporaneous home market sale within the 90/60-day window before
using constructed value.
Comment 5
STC asserts that in its preliminary calculations, the Department
inconsistently calculated and applied the DV profit rate. STC contends
that the Department calculated profit across a home market cost of
production that included the sum of the cost of manufacturing (COM),
general and administrative expenses (GNA) and interest expenses. STC
notes that the Department applied profit to a COP that included the
COM, GNA, indirect selling expenses reported by STC, and direct selling
expenses reported by STC. STC argues that the Department should apply
the CV profit rate on the same allocation basis as it was calculated.
Department's Position
We agree. In these final results we have applied the CV profit rate
in the same allocation basis as we calculated it, and have allocated
profit across the sum of COM, GNA and interest expenses.
Final Results of Review and Revocation in Part
Upon review of the comments submitted, the Department has
determined that the following margins exist:
------------------------------------------------------------------------
Margin
Company (percent)
------------------------------------------------------------------------
Kolon........................................................ 0.14
SKC.......................................................... 0.70
STC.......................................................... 4.95
------------------------------------------------------------------------
Based upon the information submitted by Kolon during this review
and the second and third administrative reviews, we determine that
Kolon has met the requirements for revocation set forth in
Sec. 353.25(a)(2) and Sec. 353.25(b) of the Department's regulations.
Kolon has demonstrated three consecutive years of sales at not less
than normal value and has submitted the certifications required under
19 CFR 353.25(b). The Department conducted a verification of Kolon as
required under 19 CFR 353.25(c)(2)(ii).
The Customs Service shall assess antidumping duties on all
appropriate entries. Individual differences between U.S. Price and NV
may vary from the percentages stated above. The Department will issue
appraisement instructions concerning each respondent directly to the
U.S. Customs Service.
Furthermore, the following 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
these final results of administrative review, as provided for by
section 751(a)(1) of the Tariff Act: (1)
[[Page 58377]]
The cash deposit rate for the reviewed firms will be the rates
indicated above except for Kolon; because we are revoking the order
with respect to Kolon, no cash deposit will be required for Kolon; (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 in 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) if neither the exporter nor the manufacturer
is a firm covered in this or any previous review conducted by the
Department, the cash deposit rate will be 4.82 percent, the all-others
rate established in the LTFV investigation.
These deposit requirements shall remain in effect until publication
of the final results of the next administrative review.
This notice serves as the 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 these review periods. Failure to comply with
this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective 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 or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of the APO is a sanctionable
violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: November 6, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-29091 Filed 11-13-96; 8:45 am]
BILLING CODE 3510-DS-M
