[Federal Register Volume 63, Number 240 (Tuesday, December 15, 1998)]
[Notices]
[Pages 69045-69049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33212]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-559-001]
Final Results of Countervailing Duty Administrative Review:
Certain Refrigeration Compressors from the Republic of Singapore
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Countervailing Duty Administrative
Review.
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EFFECTIVE DATE: December 15, 1998.
FOR FURTHER INFORMATION CONTACT: Maria K. Dybczak or Rick Johnson,
Office of Antidumping/Countervailing Duty Enforcement, Group III,
Office IX, Import Administration, U.S. Department of Commerce, Room
1874, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone (202) 482-1398, or 482-3818, respectively.
SUMMARY: On August 11, 1998, the Department of Commerce published the
preliminary results of its administrative review of the Agreement
suspending the countervailing duty investigation on certain
refrigeration compressors from the Republic of Singapore.
In our preliminary results of review, we preliminarily determined
that the signatories to the Suspension Agreement complied with the
terms of the Agreement during the period of review (POR). We gave
interested parties an opportunity to comment on our preliminary
results. We received comments from petitioner Tecumseh Products Company
(``Tecumseh'') and respondents, the Government of the Republic of
Singapore (GOS), Matsushita Refrigeration Industries (Singapore) Pte.
Ltd. (MARIS), and Asia Matsushita Electric (Singapore) Pte. Ltd. (AMS).
We have now completed this review, the fourteenth review of this
Agreement, and determine that the Government of the Republic of
Singapore, MARIS, and AMS, the signatories to the Suspension Agreement,
have complied with the terms of the Agreement during the period April
1, 1996 through March 31, 1997. Based on our analysis of the comments
received, we have not changed the results from those
[[Page 69046]]
presented in the preliminary results of review.
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 the regulations set forth at 19 CFR
part 351 (62 FR 27296, May 19, 1997).
SUPPLEMENTARY INFORMATION:
Background
On August 11, 1998, the Department of Commerce (the Department)
published in the Federal Register (63 FR 42825) the preliminary results
of its administrative review of the Agreement suspending the
countervailing duty investigation on certain refrigeration compressors
from the Republic of Singapore.
In our preliminary results of review, we preliminarily determined
that the signatories to the Suspension Agreement complied with the
terms of the Agreement during the period of review (POR). We gave
interested parties an opportunity to comment on our preliminary
results. We received comments from petitioner and respondents. We have
now completed this administrative review in accordance with section 751
of the Act.
Scope of the Review
Imports covered by this review are shipments of hermetic
refrigeration compressors rated not over one-quarter horsepower from
Singapore. This merchandise is currently classified under Harmonized
Tariff Schedule (HTS) item number 8414.30.40. The HTS item number is
provided for convenience and Customs purposes. The written description
remains dispostive.
The review period is April 1, 1996 through March 31, 1997, and
includes two programs. The review covers one producer and one exporter
of the subject merchandise, MARIS and AMS, respectively. These two
companies, along with the GOS, are the signatories to the suspension
agreement.
Under the terms of the suspension agreement, the GOS agrees to
offset completely the amount of the net bounty or grant determined by
the Department to exist in this proceeding with respect to the subject
merchandise. The offset entails the collection by the GOS of an export
charge applicable to the subject merchandise exported on or after the
effective date of the agreement. See Certain Refrigeration Compressors
from the Republic of Singapore: Suspension of the Countervailing Duty
Investigation. (``Suspension Agreement'') 48 FR 51167, 51170 (November
7, 1983).
Analysis of Comments Received
Comment 1: Petitioner claims that Singapore's tax laws permit
delays in assessment and collection that can result in erroneous
determinations of the proper export charge under the Suspension
Agreement. Petitioner notes that under Singapore's tax laws, assessment
and collection of taxes can be negotiated up to six years following the
year under consideration. Thus, as a result, the Department must
complete its final determination for each annual review period based
upon the provisional data. For example, petitioner notes that,
following the publication of the final results of the most recently
completed review, MARIS submitted for the record on the current review
another calculation for the export charge for the previous review.
Petitioner argues that if the updated tax information had been received
prior to the final results of review, the export charge rate would have
doubled. Petitioner notes that essentially the same fact pattern was in
effect in the two most recent administrative reviews (12th and 13th).
Petitioner contends that the Department's determinations in the 12th
and 13th reviews may not reflect the total benefits relating to those
periods as their respective tax assessments have not been finalized.
Petitioner argues that the Department should require respondents to
submit information on all tax liabilities made final during the POR,
regardless of when the liability accrued, and then to adjust the
current POR's calculations to reflect the benefits not previously
accounted for in the earlier POR. Petitioner contends that the
Department's use of provisional tax data where final assessments are
not available provides an incentive to respondents to delay final
determination of tax liabilities until an administrative review has
been concluded.
Respondents argue that there is no basis for the Department to
reexamine benefits allegedly provided in prior reviews. Respondents
assert that the Singapore tax system allows for negotiation of
assessments for the purpose of ensuring a fair tax assessment, not, as
petitioner contends, for the purpose of delay or forgiveness of the tax
liability. Respondents contend that the Singapore tax system functions
like those of many other countries in allowing the taxpayer to object
to and appeal a tax interpretation with which it disagrees. Respondents
argue that the Department should reject petitioner's request to require
respondents to submit information on tax liabilities made final during
any POR, regardless of when the liability accrued, and then to adjust
current year calculations to reflect any benefits recognized after
reviews were completed. In support of their position, respondents make
the following five arguments.
First, respondents assert that both petitioner and the Department
have long been aware of the Singapore tax system and how it operates,
and that the Department knowingly used provisional tax computations
when final tax computations were not available. Second, respondents
note that the Department has made many determinations involving the
Singaporean tax system, and has a long-standing practice of calculating
benefits received based on the latest income tax information available
(citing, e.g., Antifriction Bearings (Other than Tapered Roller
Bearings) and Parts Thereof from Singapore, 57 FR 4987 (Feb. 11, 1992);
Antifriction Bearings (Other than Tapered Roller Bearings) and Parts
Thereof from Singapore, 56 FR 9681 (March 7, 1991); Industrial Belts
and Components and Parts Thereof, Whether Cured or Uncured, from
Singapore, 54 FR 15520 (April 18, 1989)). Additionally, respondents
argue that the Department has consistently taken the position that it
will not adopt a change in methodology absent some intervening change
in either the basic facts or the governing law (citing Certain
Compressors from the Republic of Singapore, 55 FR 53028, 53029 (Dec.
26, 1990)). Respondents contend that no such change in either the facts
of the case or to the governing law has occurred and therefore, the
Department has no basis to revise its practice.
Third, respondents argue that there is no support for petitioner's
contention that respondents have no incentive to prepare an accurate
and timely tax return. Respondents contend that the Department has
explicitly relied on the IRAS's oversight function to ensure that
taxation figures submitted to the Department are accurate and verified
the accuracy of those figures over the last fifteen years during
previous reviews (citing, e.g., Certain Refrigeration Compressors from
the Republic of Singapore, 53 FR 25647, 25648 (July 8, 1988); Certain
Refrigeration Compressors from the Republic of Singapore, 53 FR 7778,
7779 (March 10, 1988); Certain Refrigeration Compressors from the
Republic of
[[Page 69047]]
Singapore, 50 FR 6025, 6026 (Feb. 13, 1985)).
Fourth, respondents argue that as a matter of law, the Department
cannot open prior administrative reviews. Respondents assert that under
U.S. law (specifically, 19 U.S.C. Sec. 1675(a)(1)), each administrative
review is a separate proceeding, conducted based upon its own record.
Additionally, respondents contend that previous entries that were
covered in a prior review cannot be assessed an additional export
charge once their countervailable status has been determined (citing
FAG Kugelfischer Georg Schafer KGaA v. United States, 932 F.Supp. 315
(CIT 1996)).
Finally, respondents contend that the Suspension Agreement does not
allow further adjustments to an export charge once a final export
charge has been imposed, and that there is no provision providing for
the collection of any other charges after the collection of the annual
adjustment. Respondents point out that the Suspension Agreement
explicitly requires the GOS to collect the annual adjustment ``within
30 days of notification by the Department of its determination'' in a
review. See Suspension Agreement at paragraph B.4.c, reprinted in
Certain Refrigeration Compressors from the Republic of Singapore, 48 FR
51167, 51170 (Nov. 7, 1983) (``Suspension Agreement'').
Department's Position: We disagree with petitioners. At the request
of the Department in this and the previous review, respondents have
provided updated tax information as it became available. See, e.g.,
Certain Refrigeration Compressors from the Republic of Singapore:
Fourteenth Administrative Review, Questionnaire Response, September 10,
1998; Certain Refrigeration Compressors from the Republic of Singapore:
Thirteenth Administrative Review, Questionnaire Response, April 6,
1998. We first note that the revised calculation submitted by
respondent was not finalized during the current review, and indeed
respondents reported that no tax assessments for any prior period of
review had been finalized during the current period of review. See
Certain Refrigeration Compressors from the Republic of Singapore:
Fourteenth Review, Rebuttal to Petitioner's Comments, May 21, 1998. As
such, no benefits relating to a prior review were recognized during the
current period of review.
Even if we were to recalculate the margin using the most recent
revised tax calculation (submitted in the current review after the
corresponding review had been completed), the total countervailing duty
rate calculated for respondents for the relevant period of review would
still remain de minimis. See Certain Refrigeration Compressors from the
Republic of Singapore: Fourteenth Review; Petitioner's Brief, September
10, 1998, Exhibit 1. Similarly, the Department reviewed petitioner's
same assertion during the previous review, and determined that an
export charge calculation based on the revised information would have
remained de minimis. See Certain Refrigeration Compressors from the
Republic of Singapore: Final Results of Countervailing Duty
Administrative Review, 63 FR at 32851 (June 16, 1998).
Nevertheless, we disagree with respondents' assertion that they are
only required to provide the Department with updated tax computations
when the updates occur prior to the completion of the administrative
review to which they pertain. Under paragraph C.1. of the Suspension
Agreement, the signatories to the Agreement ``agree to supply to the
Department any information and documentation the Department deems
necessary to demonstrate that they are in full compliance with the
Agreement.'' See Suspension Agreement at 51170. Despite respondents'
argument presented in its rebuttal brief, we note that, in response to
the Department's request, respondents appeared to acknowledge this
authority. That is, respondents did in fact provide tax statements for
the previous period of review, even though that review had been
completed. See Supplemental Questionnaire Response of September 3,
1998, Exhibit A. While the Department does not reopen prior
administrative reviews, this procedural restriction does not equate
with a lack of authority to review overall compliance with the
Suspension Agreement, particularly when the Suspension Agreement itself
allows for such review. Indeed, under section 751(a)(1)(C) of the Act,
the Department can ``review the current status of, and compliance with,
any agreement by reason of which an investigation was suspended, and
review the amount of any net countervailable subsidy * * * involved in
the agreement * * *''. Therefore, the Department has full authority to
require respondents to provide tax assessment information, not only for
the present period of review, but for all prior reviews where tax
assessments were revised or finalized during the instant POR.
Comment 2: Petitioner claims that respondents have refused to
provide the information required by the Suspension Agreement and
requested by the Department. Petitioner claims that respondent has not
met its obligations to provide complete and updated information,
specifically with regard to respondent's income tax liabilities (as
argued in Comment 1 by petitioner). Petitioner notes that respondents
made several commitments: to advise the Department if MARIS's tax
liability increased; to provide final tax calculations; and to provide
this information regardless of the period currently under review.
Petitioner claims that MARIS failed to notify the Department of its
modified tax assessment for the 12th and 13th reviews during the course
of the 13th administrative review period.
Petitioner argues that the Department should require respondents to
provide more regular reporting of information relating to taxes owed.
Petitioner suggests that, as the Government of Singapore is required by
the Suspension Agreement under paragraph C.2.2 (See Suspension
Agreement at 51170) to provide a quarterly certification that it
continues to be in compliance with the Agreement, the Department should
require that tax liability information (updated quarterly) be included
in the quarterly report. Petitioner also suggests that the Department
should advise respondents that failure to adhere to promises to supply
information will result in the application of adverse information
available.
Respondents argue that there is no basis in the Suspension
Agreement to require the GOS to provide financial or tax information on
a quarterly basis. Respondents assert that, contrary to petitioner's
contention, they have consistently indicated in their responses that
the tax calculations submitted were provisional and that respondents
would supplement their response if assessments were finalized prior to
the completion of the review. Additionally, respondents point out that
each of the alleged failures to provide information relate to prior
reviews, and that petitioner has no basis for complaint in the current
review.
Department's Position: We disagree with petitioner. Petitioner
contends that respondents failed to provide information during the
course of the previous review. This argument was considered by the
Department in the previous review, where we found that respondents had
not failed to provide information in response to requests from the
Department. See Certain Refrigeration Compressors from the Republic of
Singapore: Final Results of Countervailable Duty Administrative Review,
63 FR at 32852 (June 16, 1998). Petitioner has not made any contention
regarding a failure to submit
[[Page 69048]]
information during the current POR, and therefore, there is no basis to
further consider petitioner's claims within the context of this
administrative review. While we do not agree with respondent's
assertion that the Suspension Agreement provides no basis to require
the GOS to provide financial or tax information on a quarterly basis
(see Suspension Agreement, paragraph C, 48 FR at 51170), at this time,
we do not find it necessary to require such information from the GOS.
Comment 3: Petitioner claims that respondents have submitted false
information to the Department. Petitioner claims that respondents
submitted false information on three separate occasions: (1) statements
made during the previous review regarding the availability and filing
date of tax assessments; (2) statements made in the previous review
regarding the volume and value of sales of subject merchandise; and (3)
statements relating to the testing and rating of compressors made
during the hearing for the previous review. Petitioner suggests that
the Department instruct respondents that any subsequent submissions of
false information will result in the immediate imposition of adverse
facts available.
Respondents argue that petitioner's reference to any alleged
failure to adhere to obligations to provide information relate solely
to the previous review. Respondents cite to the final results of the
previous administrative review (see Certain Refrigeration Compressors
from the Republic of Singapore: Final Results of Countervailable Duty
Administrative Review, 63 FR at 32855 (June 16, 1998)), and assert that
the Department considered petitioner's contention in the previous
administrative review and found that respondents had not failed to
cooperate with the Department, and had acted to the best of their
ability in complying with all requests for information. Respondents
contend, therefore, that the Department should reject petitioner's
suggestion to advise respondents that failure to comply with requests
to provide information will result in the application of adverse facts
available.
Department's Position: We agree with respondents. All of
petitioner's allegations of false information relate to the previous
review, where they were fully considered by the Department and found to
be without merit. See Certain Compressors from the Republic of
Singapore: Final Results of Countervailable Duty Administrative Review,
63 FR at 32855 (June 16, 1998). Petitioner has made no allegation of
false information submitted in the current review, and the Department
has no reason to believe that the information respondent provided for
the record is inaccurate.
Comment 4: Petitioner claims that the problems cited in comments 1
and 2 require the Department to review the effectiveness of the current
Suspension Agreement. Petitioner notes that the Suspension Agreement
requires that benefits received by MARIS and AMS are to be offset
completely by payments to the Government of Singapore. Petitioner
asserts that the value of these benefits is sometimes not established
at the time the Department makes its final determination in a
particular administrative review. Petitioner suggests that, in order to
ensure that the Suspension Agreement is fully and fairly implemented,
the Department adopt the following measures: (1) require the GOS to
submit quarterly reports that include disclosure of any actions taken
by IRAS with regard to taxation of MARIS or AMS; (2) develop
questionnaires that require respondents to disclose any changes in
their tax liabilities for any prior review period; and (3) include
within any benefit analysis for the current POR any increased benefit
received by respondents that was unrecognized in a previous POR due to
a delay in ascertaining final tax obligations.
Respondent did not comment on this issue.
Department's Position: We disagree with petitioner in part. We do
not agree, at this time, that the Department should require the GOS to
submit tax information on a quarterly basis, nor should we include
within our current benefit analysis any increased benefit received by
the respondents in the current POR that relates to a previous review
period. However, the Department has asked, and will continue to ask,
that respondents provide information relating to tax assessments
finalized during a current POR, whether or not the assessment relates
to that POR.
Petitioner claims that respondents realize benefits which have
accrued after an administrative review has been closed, based on the
Singaporean tax system, which allows finalization of tax assessments up
to six years after the year of consideration. Because of the mechanics
of the Department's administrative review process, it is possible that
respondents can accrue benefits greater or less than those considered
in calculating the export charge rate for that period of review. Thus,
it is possible that respondents may be found to have been in compliance
with the Agreement within the context of the Department's
administrative review procedures, even though an offset calculation
based on finalized taxes may yield a different figure. However, in the
current review, respondents report that no tax assessments had been
finalized during the period of review, and therefore, no additional
benefits relating to a prior review have been recognized in current
POR. Therefore, petitioner's argument that respondents have accrued
benefits that were previously unrecognized is moot for this period of
review.
Under section 751(a)(1)(C) of the Act, the Department has the
authority to review the status of a suspension agreement within the
context of the administrative review. Given the possibility that
respondents may accrue benefits unrecognized during the period of
review to which they pertain, the Department intends to continue to ask
respondents for information relating to finalized tax assessments for
any prior period of review as a normal part of its administrative
review procedure.
Final Results of Review
We determine that the signatories to the Suspension Agreement have
complied with the terms of the Agreement, including the payment of the
provisional export charge, for the review period. From April 1, 1996 to
August 27, 1996, a provisional export charge of 3.00 percent was in
effect. From August 28, 1996 to March 31, 1997, a provisional export
charge of 2.22 percent was in effect.
We determine the net subsidy to be 0.56 percent of the f.o.b. value
of the merchandise for the April 1, 1996 through March 31, 1997 review
period. Following the methodology outlined in paragraph B.4 of the
Suspension Agreement, the Department determines that, for the period of
review, a negative adjustment may be made to the provisional export
charge rate in effect. The adjustments will equal the difference
between the provisional rate in effect during the review period and the
rate determined in this review, plus interest. For this period, the GOS
may refund or credit to the companies, in accordance with paragraph
B.4.c of the Suspension Agreement, the difference between the two
provisional rates noted above and the 0.56 percent, plus interest,
calculated in accordance with section 778(b) of the Tariff Act.
Notification of Interested Parties
This notice serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the
[[Page 69049]]
disposition of proprietary information disclosed under APO in
accordance with 19 CFR 355.306. 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 the
terms of an APO is a sanctionable violation.
This administrative review and this notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.221.
Dated: December 8, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-33212 Filed 12-14-98; 8:45 am]
BILLING CODE 3510-DS-P
