[Federal Register Volume 61, Number 246 (Friday, December 20, 1996)]
[Notices]
[Pages 67308-67318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32400]
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DEPARTMENT OF COMMERCE
[A-588-815]
Gray Portland Cement and Clinker From Japan; Final Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On October 6, 1995, the Department of Commerce (the
Department) published the preliminary results of review of the
antidumping duty order on gray portland cement and clinker from Japan.
The review covers one manufacturer/exporter, Onoda Cement Co., Ltd.,
and the period May 1, 1993, through April 30, 1994.
We gave interested parties an opportunity to comment on the
preliminary results. Based on our analysis of the comments received, we
have changed the final results from those presented in the preliminary
results of review
EFFECTIVE DATE: December 20, 1996.
FOR FURTHER INFORMATION CONTACT:
David Genovese, Import Administration, International Trade
Administration, U.S. Department of Commerce, Washington, D.C. 20230;
telephone (202) 482-4697.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions as they existed prior to January 1, 1995,
the effective date of the amendments made to the Tariff Act of 1930, as
amended (the Act) by the Uruguay Round Agreements Act (URAA).
Background
On May 12, 1994, and May 31, 1994, Onoda Cement Co., Ltd. (Onoda),
and the Ad Hoc Committee of Southern California Producers of Gray
Portland Cement (the Petitioner), respectively, requested that the
Department conduct an administrative review of the antidumping duty
order on gray portland cement and clinker from Japan (56 FR 21658, May
10, 1991) for Onoda. We initiated the review, covering the period May
1, 1993, through April 30, 1994, on June 15, 1994 (59 FR 30770). On
October 6, 1995, we published the preliminary results of the
administrative review (60 FR 52368). The Department has now completed
the administrative review in accordance with section 751 of the Tariff
Act of 1930, as amended (the Act).
Scope of the Review
The products covered by this review are gray portland cement and
clinker from Japan. Gray portland cement is a hydraulic cement and the
primary component of concrete. Clinker, an intermediate material
produced when manufacturing cement, has no use other than grinding into
finished cement. Microfine cement was specifically excluded from the
antidumping duty order.
Gray portland cement is currently classifiable under the Harmonized
Tariff Schedule (HTS) item number 2523.29, and clinker is currently
classifiable under HTS item number 2523.10. Gray portland cement has
also been entered under item number 2523.90 as ``other hydraulic
cements.''
The HTS item numbers are provided for convenience and Customs
purposes. The written product description remains dispositive as to the
scope of the product coverage.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received
[[Page 67309]]
comments from the petitioner and from the respondent. At the request of
the petitioner and respondent, we held a public hearing on November 20,
1995.
Comment 1
Onoda argues that in calculating foreign market value (FMV), the
Department should deduct home market pre-sale movement expenses either
in their entirety as direct selling expenses or as indirect selling
expenses up to the amount of U.S. pre-sale movement expenses. Onoda
states that it has been the Department's practice since The Ad Hoc
Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United
States, 13 F.3d 398 (Fed. Cir. 1994), cert. denied 115 S. Ct. 67 (1994)
(hereinafter Ad Hoc Committee I), to deduct pre-sale movement expenses
as direct expenses when the freight expenses are ``incurred in
positioning the merchandise at [a] warehouse,'' and the warehousing
expenses are classified as direct expenses. Onoda argues that in this
review, pre-sale movement expenses should be deducted from FMV as
direct expenses since the cost of warehousing the cement is a direct
expense. Onoda argues that warehousing is a direct expense because
sales of the subject merchandise constitute virtually all of its cement
sales; therefore, virtually all of Onoda's warehousing expenses are
associated with the subject merchandise.
Onoda argues that, alternatively, if the Department decides to
treat home market pre-sale movement expenses as indirect expenses, in
purchase price situations, the Department should deduct from FMV home
market pre-sale movement expenses up to the amount of U.S. pre-sale
movement expenses. Onoda argues that the Department has the power to
make such an adjustment pursuant to its authority to make
circumstances-of-sale (COS) adjustments and under its inherent
authority to achieve a fair comparison. Onoda further argues that 19
CFR Sec. 353.56 permits the Department to adjust FMV to account for
indirect expenses as a COS adjustment and that the Department has the
power to adjust FMV for indirect expenses under its inherent authority
to fill in gaps in an area where the statute is silent or ambiguous.
Onoda cites Timken Company v. United States, 865 F. Supp. 881 (CIT
1994) (hereinafter Timken) and Smith-Corona Group v. United States, 713
F.2d 1568 (Fed. Cir. 1983) (hereinafter Smith-Corona) in support of its
position.
Moreover, Onoda cites 19 C.F.R. Sec. 353.56(b)(1) and the Final
Determination of Sales at Less than Fair Value: Polyethylene
Terephthalate Film, Sheet, and Strip from the Republic of Korea, 56 FR
16305 (April 22, 1991) (hereinafter PET Film from Korea) as precedent
for offsetting direct selling expenses in the U.S. market with indirect
selling expenses in the home market in purchase price situations.
Petitioner contends that Onoda's argument that pre-sale movement
expenses should be deducted from FMV as a direct expense has been
rejected by the Department in a number of Japanese cases, including,
Polyethylene Terephthalate Film, Sheet and Strip, from Japan, 60 FR
32,133 (June 20, 1995), Stainless Steel Angle from Japan, 60 FR 16,608
(March 31, 1995), Granular Polytetraflourethylene Resin from Japan, 60
FR 5,622 (January 30, 1995), and Tapered Roller Bearings, Four Inches
or Less in Diameter, and Components Thereof, from Japan, 59 FR 56,035
(November 10, 1994) (hereinafter TRBs from Japan).
Petitioner states that contrary to Onoda's assertion, the
Department requires that pre-sale movement expenses be directly related
to specific sales in order to be classified as direct expenses.
Petitioner contends that in situations like this, where the merchandise
is not dedicated to specific customers but, instead, is kept in
inventory at the warehouse and is generally available for sale to any
customer, the pre-sale expenses are indirect because there is no
specific sale to which the expenses can be directly related. Petitioner
argues that the Department addressed the issue of whether or not
Onoda's pre-sale home market transportation expenses are direct
expenses, in the second review of this case. See Gray Portland Cement
and Clinker from Japan, 60 FR 43,761 (August 23, 1995) (hereinafter
Gray Portland Cement and Clinker--Second Review). Petitioner states
that in the second review of this case, the Department determined that
Onoda's pre-sale home market movement expenses were indirect expenses.
Petitioner argues that Onoda's home market distribution system has
not changed from the second review and that, therefore, the Department
should continue to consider Onoda's pre-sale home market movement
expenses as indirect expenses as it did in the preliminary results of
this review. Petitioner states that the methodology applied in the
preliminary results of this review and the second review of this case
(i.e., the methodology outlined in Ad Hoc Committee I) has been applied
by the Department in a number of Japanese cases where the Japanese
producers, like Onoda, have a home market distribution system whereby
products are transported from manufacturing plants to warehouses prior
to sale.
Petitioner further contends that the Department's methodology for
determining whether pre-sale home market movement expenses are indirect
expenses has been approved by the Court of International Trade (CIT)
and the Court of Appeals for the Federal Circuit (CAFC) in a number of
decisions including, Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray
Portland Cement v. United States, No. 95-1129 (Fed. Cir., October 10,
1995), Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland
Cement v. United States, 865 F. Supp. 857 (CIT 1994) (hereinafter, Ad
Hoc Committee II), Federal Mogul Corp. v. United States, 871 F. Supp.
443 (CIT 1994), Torrington Co. v. United States, 866 F. Supp. 1434 (CIT
1994), and Timken Co. v. United States, 855 F. Supp. 399 (CIT 1994).
With regard to Onoda's argument that in purchase price situations
the Department should deduct home market pre-sale freight expenses up
to the amount of the U.S. pre-sale movement expenses, Petitioner states
that such a methodology would require the Department to overrule the
CAFC's decision in Ad Hoc Committee I and all of the judicial and
administrative rulings based on this decision. Petitioner contends that
in Ad Hoc Committee I, the CAFC plainly stated that because Congress
drafted the FMV section of the antidumping statute without any
authority for the deduction of home market pre-sale movement expenses,
Congress did not intend those expenses to be deducted from FMV under
any ``inherent'' authority. Petitioner states that this principle is
supported by the decision of the current Congress, in enacting the
implementing legislation for the Uruguay Round amendments to the
antidumping law, to provide expressly for the deduction of pre-sale
home market movement expenses from FMV.
With regard to Onoda's argument that the Department has the power
to adjust FMV for indirect expenses under its inherent authority to
fill in gaps in an area where the statute is silent or ambiguous,
Petitioner argues that the Department has recognized that Ad Hoc
Committee I plainly held that in purchase price comparisons there was
no ``gap'' with respect to whether pre-sale movement charges could be
deducted from FMV. Petitioner cites to TRBs from Japan, in which the
Department stated: ``The Ad Hoc Committee decision states that the
statute does not give the Department the
[[Page 67310]]
authority to deduct home market movement expenses from FMV by invoking
its inherent power to fill `gaps' in the antidumping statute.'' TRBs
from Japan, at 56042.
In a related issue, Petitioner argues that because home market pre-
sale transportation costs should be considered indirect selling
expenses and because Onoda reported home market pre-sale transportation
expenses with other direct selling expenses in the field DIRSELH, the
Department should treat all expenses reported in the DIRSELH field as
indirect, rather than direct, selling expenses.
In response, Onoda states that DIRSELH consists of freight expenses
associated with swap transactions and periodic adjustments made to the
freight expenses recorded in Onoda's books. Onoda contends that freight
expenses associated with swap transactions are post-sale rather than
pre-sale freight expenses since such freight occurs after the sale has
been made by the other manufacturer. Moreover, states Onoda, while the
freight costs associated with the tanker freight adjustment include
pre-sale freight expenses, the Department should still deduct these
expenses from FMV pursuant to Onoda's aforementioned argument on the
deduction of pre-sale freight expenses as a direct expense or as an
indirect expense capped by U.S. pre-sale freight expense.
Department's Position
We disagree with Onoda. Onoda is correct that since Ad Hoc
Committee I the Department has deducted pre-sale movement expenses as
direct expenses when freight expenses are incurred in positioning the
merchandise at the warehouse, and the warehousing expenses are
classified as direct expenses. However, as with the first and second
reviews of this case, the Department has determined that Onoda's
warehousing expense is an indirect selling expense. The Department's
determination in the first review that Onoda's warehousing expense is
an indirect selling expense has been upheld by the CIT in The Ad Hoc
Committee of Southern California Producers of Gray Portland Cement v.
United States, 914 F. Supp. 535 (CIT 1995) (hereinafter Southern
California Producers.). In its decision the CIT stated that:
Home market expenses for which Commerce makes an allowance,
must, as a general matter, be directly tied to specific sales or
specific customers. Hussey Copper, 17 CIT at 1001, 834 F. Supp. at
421. If the expenses are not directly tied to specific sales, but
are incurred to advance sales in general, then Commerce may treat
them as indirect selling expenses * * *
Upon review, the Court finds that Commerce's decision to
classify Onoda's home market service station expenses as warehousing
expenses, and to treat them as indirect selling expenses, is
supported by substantial evidence and otherwise in accordance with
law for several reasons. First, Onoda has not earmarked the cement
held in the service stations for particular sales or particular
customers; indeed, Onoda admits that the service stations
temporarily store cement that is awaiting sale. Final Results, 58
Fed. Reg. 48,828. Second, Onoda failed to submit evidence showing
that service stations differ from warehouses in their physical
structure. See Id. Third, some repacking, a job that is
traditionally done at warehouses, is done at the service stations.
Id.; Pub. Doc. 107, Conf. Doc. 46. Fourth, Commerce found evidence
to indicate that the service stations are not entirely necessary to
transport cement to customers.
Id. at 540-541. The facts of this review are no different from the
facts in the first review upheld by the CIT. Accordingly, the
Department continues to view Onoda's warehousing as an indirect expense
and therefore, we continue to view Onoda's home market pre-sale
movement charges as an indirect expense.
The Department also disagrees with Onoda's argument that in
purchase price situations the Department should deduct from FMV as
indirect expenses home market pre-sale movement expenses up to the
amount of U.S. pre-sale movement expenses through the Department's
inherent authority to fill in gaps in an area where the statute is
silent or ambiguous. We have determined, in light of Ad Hoc Committee I
and its progeny, that the Department no longer can deduct home market
movement charges from FMV pursuant to its inherent power to fill in
gaps in the antidumping statute. We instead adjust for those expenses
under the COS provision of 19 CFR Sec. 353.56 and the ESP offset
provision of 19 CFR Sec. 353.56(b) (1) and (2), as appropriate, in the
manner described below.
When USP is based on either ESP or purchase price, we adjust FMV
for home market movement charges through the COS provision of 19 CFR
Sec. 353.56(a). Under this adjustment, we capture only direct selling
expenses, which include post-sale movement expenses and, in some
circumstances, pre-sale movement expenses. Specifically, we treat pre-
sale movement expenses as direct expenses if those expenses are
directly related to the home market sales of the merchandise under
consideration. In order to determine whether pre-sale movement expenses
are direct, the Department examines the respondent's pre-sale
warehousing expenses, since the pre-sale movement charges incurred in
positioning the merchandise at the warehouse are, for analytical
purposes, linked to pre-sale warehousing expenses. See Final Results of
Redetermination Pursuant to Court Remand, dated January 5, 1995
(pertaining to Slip. Op. 94-151). If the pre-sale warehousing
constitutes an indirect expense, the expense involved in getting the
merchandise to the warehouse, in the absence of contrary evidence, also
must be indirect; conversely, a direct pre-sale warehousing expense
necessarily implies a direct pre-sale movement expense. See Gray
Portland Cement and Clinker--Second Review, at 43765; Ad Hoc Committee
II, 865 F. Supp. 861-862.
Onoda reported in its questionnaire response of August 22, 1994,
that it incurred no after-sale warehousing expenses and respondent did
not claim any warehousing expenses as direct COS expenses. The
Department interprets this to mean that any warehousing expenses
incurred are properly classified as pre-sale, indirect selling expenses
and that the expense of transporting the cement to the warehouse should
also be treated as an indirect expense. Accordingly, the Department has
not deducted home market pre-sale movement expenses from FMV for
comparison to PP sales. However, we deducted post-sale movement
expenses from FMV as a direct expense.
Additionally, it is the Department's standard practice when a
respondent commingles direct and indirect home market expenses in the
same field to treat that field as an indirect expense. See Gray
Portland Cement and Clinker--Second Review, at 43766; Antifriction
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From
France, et al. 58 FR 39729, 39742 (July 26, 1993). Accordingly, we
agree with Petitioner that since Onoda reported home market pre-sale
transportation expenses (which are indirect expenses) with direct
selling expenses in the field DIRSELH, we should treat all expenses
reported in the DIRSELH field as indirect, rather than direct, selling
expenses.
Comment 2
Onoda argues that the Department should not include home market
sales of bagged cement in the FMV calculation since it only sold bulk
cement in the United States. Onoda argues that comparing bulk sales to
bagged sales in this case contravenes the Department's past practice of
comparing, whenever possible, sales of identically packed
[[Page 67311]]
merchandise. Onoda cites to the Final Determination of Sales at Less
Than Fair Value: Gray Portland Cement and Clinker from Japan, 56 FR
12,156 (March 22, 1991), Final Determination of Sales at Less Than Fair
Value: Fresh Kiwifruit from New Zealand, 57 FR 13,695 (April 17, 1992)
(hereinafter, Kiwifruit from New Zealand), Final Determination of Sales
at Less Than Fair Value: Gray Portland Cement and Clinker from Mexico,
55 FR 29,244 (July 18, 1990) (hereinafter Cement from Mexico), and the
concurrence memorandum for Gray Portland Cement and Clinker from
Venezuela, 56 FR 56,390 (November 4, 1991) (hereinafter Cement from
Venezuela), in support of its position.
Petitioner argues that Onoda made this same argument in the second
review and that the Department determined in the second review that it
was appropriate to compare bulk sales in the United States to bulk and
bagged sales in the home market after adjusting for differences in
packing costs. See Gray Portland Cement and Clinker--Second Review, at
43763. Petitioner argues that home market sales of bagged cement should
be included in the calculation of FMV since the technical
specifications for cement sold in bags and in bulk are identical.
Moreover, asserts Petitioner, Onoda has made no attempt to demonstrate
that bagged cement is sold in different distribution channels or at
different levels of trade than bulk cement, or that sales of bagged
cement are not in the ordinary course of trade.
Department's Position
We agree with the petitioner. As we stated in the second review of
this case, there is no physical difference between the bagged and bulk
cement sold in Japan. The only difference is the manner in which the
merchandise is packed. Since packing is not a criterion for
comparability, and because there is no physical difference between bulk
and bagged cement sold in the home market, we did not exclude home
market sales of bagged cement from our calculations of FMV. See Gray
Portland Cement and Clinker--Second Review, at 43763.
In the second review of this case, we determined that the cases
cited by Onoda in support of its argument did not construct a standard
whereby the Department will not make bulk-to-bag comparisons. Further,
the LTFV investigation of this case is distinguishable from both the
second and present case. In the LTFV investigation, bagged cement was
sold in the United States, not in the home market, and the amount sold
in the United States was ``insignificant.'' Accordingly, in the LTFV
investigation, we did not require Onoda to report U.S. sales of bagged
cement and we did not use bagged sales in our margin calculations. In
the second review of this case, and in this review, bagged cement was
sold in the home market and the amount was not insignificant.
Accordingly, Onoda was required to report bagged sales and such sales
were included in the Department's margin calculations.
We conclude here, as we did in the second review of this case, that
the cases cited by Onoda do not stand for the proposition that the
Department must always compare bulk-to-bulk and bag-to-bag sales, and
that packing is not a criterion for matching types of cement.
Therefore, we compared sales of bulk cement in the United States to
sales of both bulk and bagged cement in the home market, and made the
appropriate adjustments to reflect the packing costs associated with
bagged cement.
Comment 3
Onoda argues that in the preliminary results of review, the
Department improperly classified a commission paid to an unrelated
trading company as a ``document handling fee'' (i.e., as a movement
expense that was directly deducted from U.S. price). Onoda states that
its sales to the United States are made through an unrelated trading
company which purchases the cement from Onoda at a discount and then
resells the cement at the pre-discount price to Lone Star Northwest
(LSNW), a party related to Onoda. Onoda claims that the payment the
trading company receives (i.e., the difference between what the trading
company pays Onoda and what LSNW pays the trading company for the
cement) is a commission compensating the trading company for arranging
transportation and providing other services in support of cement sold
to the United States.
Onoda asserts that under the antidumping law, payments for a wide
range of services may qualify for treatment as commissions. Onoda,
citing to Chapter 8, page 26 of the Department's antidumping manual,
states that the services provided by a commissionaire may vary from the
level of minimal services in facilitating communication to substantive
services including maintaining inventory and providing support in all
areas of the sales transactions. Similarly, Onoda cites to Final
Determination of Sales at Less Than Fair Value: Coated Groundwood Paper
from France, 56 FR 56,380 (November 4, 1991) to argue that the
``Department treats payments for `ensuring that production, shipping,
and deliveries meet . . . scheduling requirements, taking title to the
merchandise, performing sales accounting and collection functions,
arranging for the provision of technical services, and participating in
trade shows and other events' as commission.'' See Onoda's case brief
at page 10, fn 14.
Onoda, citing to Final Determination of Sales at Less Than Fair
Value and Final Determination of Sales at Not Less Than Fair Value:
Certain Carbon Steel Products from Austria, 50 FR 33,365 (August 19,
1985) (hereinafter Carbon Steel Products from Austria), states that the
Department has, in the past, treated payments like that which Onoda
pays to the trading company as commissions. Onoda states that in Carbon
Steel Products from Austria, the Department stated the following:
Home market purchasers contact [the respondent] to establish
price and terms of sale. Once the parties have agreed on the terms
of sale, the purchaser designates a trading company to handle the
paperwork. [The respondent] then sells to the trading company at a
reduced price and the trading company resells to the purchaser at
the full price. Under these facts, the payments are clearly
commissions paid to the trading company for services rendered in
connection with the sale. (emphasis added by Onoda)
Onoda also argues that the payment to the trading company does not
affect the final price to the U.S. customer, and, therefore, it should
not be deducted from U.S. price as a discount. Onoda cites to Carbon
Steel Products from Austria and the Final Determinations of Sales at
Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products,
Certain Cold-Rolled Carbon Steel Flat Products, and Certain Cut-to-
Length Carbon Steel Flat Products from Belgium, 58 FR 37,083 (July 9,
1993), in support of its position.
Petitioner argues that the role of the trading company has not
changed since the LTFV investigation in which ``Onoda minimized the
role of the trading company in the sales process, stating that the
trading company `arranged the freight and takes care of the shipping,'
but that otherwise it was a `bystander'.'' See Petitioner's Case Brief,
at 16. Petitioner states that since the trading company merely arranged
for the shipment of merchandise that had already been sold, the
Department should continue to treat payments to the trading company as
a movement expense. Petitioner cites to Certain Internal-Combustion,
Industrial Forklift Trucks from Japan, 57 FR 3,167 (January 28, 1992),
accord Certain Internal-Combustion, Industrial Forklift Trucks
[[Page 67312]]
from Japan, 59 FR 1,374 (January 10, 1994), Mechanical Transfer Presses
from Japan, 55 FR 335 (January 4, 1990), in support of its argument.
Petitioner argues that the Department classifies payments to
trading companies as commissions only if the services provided by the
trading company involve selling the merchandise (i.e., finding and
cultivating customers, marketing the product, negotiating transactions,
retaining customers, etc.). Petitioner cites to Oil Country Tubular
Goods from Austria, 60 FR 33,551 (June 28, 1995) (hereinafter OCTG from
Austria), Stainless Steel Angle from Japan, 60 FR 16,608 (March 31,
1995) (hereinafter SSA from Japan), and Sweaters Wholly or in Chief
Weight of Man-Made Fiber from Taiwan, 55 FR 34,585 (August 23, 1990)
(hereinafter Sweaters from Taiwan), in support of its position.
Petitioner argues that alternatively, the Department could classify
payments to the trading company as discounts on sales to the United
States. Petitioner asserts the Onoda classified the payment as a
discount in its August 22, 1994, questionnaire response. Petitioner
cites to Industrial Phosphoric Acid from Israel, 52 FR 25,440 (July 7,
1987), accord Mirrors in Stock Sheet and Lehr End Sizes from the United
Kingdom, 51 FR 43,411 (December 2, 1986), and Portland Hydraulic Cement
from Japan, 48 FR 41,059 (September 13, 1983), to argue that Department
precedent supports this approach.
Department's Position
We disagree with Onoda. If the trading company provides services
related to the movement of the merchandise, the Department considers
the payment the trading company receives for such services as a
movement expense which is deducted directly from U.S. price. See
Forklift Trucks from Japan, at 3178. The Department considers a payment
to a trading company to be a commission if the trading company provides
services related to the sale of the merchandise. See Chapter 8, page 26
of the Department's antidumping manual. In this case, the trading
company is not involved in the sale of the merchandise to the customer.
Rather, LSNW sells cement to the United States. The price of the cement
is set by LSNW, in consultation with Onoda. After the terms of the sale
are negotiated between LSNW, Onoda, and the U.S. buyer, Onoda hires the
trading company to arrange shipment of the cement. Clearly, the work
performed by the trading company (i.e., arranging for transportation of
the cement) is a movement expense rather than a commission. This is
supported by Onoda's statement in its case brief of November 6, 1995 at
page 11, where Onoda states that the trading company ``is primarily
responsible for arranging transportation of cement.'' Additionally, in
its supplemental questionnaire response of October 31, 1994 at page 30,
Onoda clarifies the role of the trading company, stating, that the
trading company does not take physical possession of the merchandise;
it is not a freight-forwarder, although it does coordinate with the
broker and with arranging the shipments; and, it is not the importer of
record. Again, the service provided by the trading company is to
arrange for shipment, after the sale between Onoda, LSNW and the U.S.
customer has been completed.
Onoda's cite to Carbon Steel Products from Austria is accurate;
however, the Department's practice has evolved since 1985.
Specifically, the Department has recognized that commissions paid to
trading companies have certain characteristics: (1) they are agreed
upon in writing; (2) they are earned directly on sales made, based on
flat rates or percentage rates applied to the value of individual
orders; (3) they take into consideration the expenses which a trading
company must incur to cultivate and maintain successful relationships
with purchasers; and, (4) they take into consideration the sales and
marketing services performed by a trading company in lieu of an
exporter/manufacturer establishing its own larger sales force. See OCTG
from Austria, at 33554. Again, the trading company in this case does
not cultivate and maintain relationships with purchasers nor does it
perform sales and marketing services. Rather, the trading company is
paid to arrange for shipment of the cement after it has been sold and
the terms set.
Moreover, Onoda's cite to Groundwood Paper from France is
misleading in that the quote cited is not attributable to the
Department, but rather to the respondent who argued that a markup to a
related party should not be considered a commission because the related
party ``performs a number of additional selling and administrative
functions not undertaken by commission agents, including ensuring that
production, shipping, and deliveries meet printers' scheduling
requirements, taking title to the merchandise, performing sales
accounting and collection functions, arranging for the provision of
technical services, and participating in trade shows and other
events.'' See Groundwood Paper from France, at 56381. In that case,
although the Department granted the deduction as a commission, it
focused its response on the related-party nature of the commission
rather than the actual services performed for the commission payment.
Moreover, in the instant case, the only function performed by the
trading company is to arrange for shipment of the merchandise.
We do agree with Onoda that the payment to the trading company
should not be considered a discount since the payment to the trading
company does not reduce the final price to the U.S. customer. See
Carbon Steel Products from Austria, at 33366.
Accordingly, for these final results of review, we have continued
to treat the payment to the trading company as a movement expense and
have deducted this expense directly from U.S. price.
Comment 4
Onoda argues that in performing the calculations for determining
whether Onoda made home market sales below cost, the Department
erroneously double-counted the expenses reported in the DIRSELH field
on the sales tape (i.e., the Department included the field DIRSELH in
its calculation of COP, and the Department deducted the DIRSELH field
from the home market price that was used in the cost test). Onoda
asserts that the Department should revise its COP calculations for the
final results to make only one of these adjustments. The Department
should either (1) include the DIRSELH field in the COP and not deduct
it from the home market price used in the cost test, or (2) the
Department should not include the DIRSELH field in COP and deduct the
DIRSELH field from the home market price used in the cost test.
Petitioner agrees with Onoda and has no objection to the
Department's correcting the COP test in the manner suggested by Onoda
so that the DIRSELH field is either included in COP or deducted from
the net price compared to COP, but not both.
Department's Position
We agree with Onoda and Petitioner. For these final results, we
included the DIRSELH field in the COP and did not deduct the field
DIRSELH from the home market price used in the cost test.
Comment 5
Petitioner argues that the Department should use best information
available (BIA) to account for unreported downstream sales by related
distributors that failed the arm's-length test rather than drop such
sales from the analysis.
[[Page 67313]]
Petitioner argues that the Department has repeatedly asked for this
information, and Onoda has refused to provide it. Petitioner, citing to
Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Carbon Steel Products from Argentina, 58 FR 37,062 (July 9,
1993) (hereinafter Steel from Argentina), argues that the Department
has stated in the past that when a related seller fails the arm's-
length test, the need for downstream sales becomes evident.
Moreover, states Petitioner, citing to Gray Portland Cement and
Clinker from Mexico, 60 FR 26,865 (May 19, 1995) (hereinafter Cement
from Mexico) and Certain Malleable Cast Iron Pipe Fittings from Brazil,
60 FR 41,876 (August 14, 1995) (hereinafter Pipes from Brazil), it is
the Department, not respondent which determines what information is to
be provided for an administrative review, and, respondent should not be
allowed to control the results of the review by providing only partial
information.
Petitioner hypothesizes that given the Department's prior practice
of applying BIA for unreported downstream sales only to establish FMVs
for those U.S. sales left without adequate matches when non-arm's-
length sales are excluded, Onoda could have reasonably concluded that
refusing to report downstream sales in this review would carry no
risks. Under such circumstances, asserts Petitioner, the Department
should resort to BIA for unreported downstream sales lest Onoda be
rewarded for ``stonewalling'' and refusing to respond. Petitioner,
citing to Silicon Metal from Argentina, 58 FR 65,336 (December 14,
1993), states that Onoda should not be placed in a better position as a
result of non-compliance than it would have occupied had it provided
the Department with complete, accurate, and timely data. Petitioner
concludes that based on the foregoing, the Department should report to
BIA for unreported downstream sales, and as BIA, the Department should
use the highest net home market price otherwise reported by Onoda and
verified by the Department. Alternatively, the Department should apply
as BIA the weighted-average price of all related-party home market
sales that passed the arm's-length test, increased by the standard
distributor mark-up.
Onoda argues that it cooperated with the Department in every aspect
of this administrative review, but that it was unable to report
downstream sales because none of the related distributors is
consolidated with Onoda, and Onoda does not have the power to compel
its minority-owned distributors to report information on their sales to
unrelated customers. Onoda states that in the LTFV investigation and
the first and the second review of this case, the Department has not
required it to report downstream sales; rather, the Department has
simply applied an arm's-length test to determine whether to include
sales to the related distributors in the FMV calculations. Moreover,
Onoda asserts that there are other cases in which the Department has
not required the reporting of downstream sales if the respondent
demonstrates that the sales to the related parties were made on an
arm's-length basis. Onoda cites to Certain Corrosion Resistant Carbon
Steel Flat Products from Australia; Preliminary Results of Antidumping
Duty Administrative Review, 60 FR 42,507 (August 16, 1995), in support
of its position. Further, asserts Onoda, it is not the Department's
practice to resort to BIA when there are sufficient home market sales
to unrelated customers to provide matches for all of a respondent's
U.S. sales. Onoda cites to Steel from Argentina and Final
Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat
Products, Certain Corrosion-Resistant Carbon Steel Flat Product, and
Certain Cut-to-Length Carbon Steel Plate from France, 58 FR 37,125
(July 9, 1993) (hereinafter Steel from France), in support of its
position.
Onoda concludes that because there were more than enough home
market sales to unrelated parties to provide matches for all of Onoda's
U.S. sales during the POR, any sales to the related distributors which
are found not to be at arm's-length should simply be dropped from the
FMV calculation.
Department's Position
We disagree with Petitioner. As Onoda points out, it is the
Department's practice to drop from our FMV calculations sales to home
market related parties which have failed the arm's-length test. If
sales to a related party in the home market are determined not to be at
arm's-length, and the Department does not have information pertaining
to downstream sales (because respondent has refused or is unable to
provide such information), it is the Department's practice to resort to
BIA. However, the Department will only resort to BIA if it cannot find
a home market match for a U.S. sale (i.e., there are no home market
sales to unrelated parties or to related parties that have passed the
arm's-length test to match to a U.S. sale) and that sale would be
matched to a non-arm's length sale.
In this case, the Department did not include those home market
sales to related parties which were not made at arm's-length prices. In
order to determine whether these sales were made at arm's-length
prices, we calculated a weighted-average price of the home market sales
for each related party. Where the weighted-average price charged to a
related party was less than the weighted-average price charged to all
of Onoda's unrelated customers, we determined that those related party
sales were not made at arm's-length prices, and removed those sales
from our FMV calculation.
We agree with Petitioner that the Department has stated in the past
that when a ``related seller fails the arm's-length test, the need for
downstream sales becomes evident.'' However, as fully explained in
Steel from Argentina:
As outlined in the preliminary determinations, when the
respondents could not, or would not, report downstream sales, we
applied margins based on BIA to any U.S. sale matched only to a sale
to a related reseller in the home market that failed the arm's-
length test, and we will continue to do so for these final
determinations. In other words we did not simply disregard the fact
that respondents failed to report downstream sales. Once a related
reseller fails the arm's-length test, the need for downstream sales
becomes evident, but only as an alternative to the sale to that
related reseller. The integrity of FMV is not seriously challenged
because in all other cases U.S. sales are matched to unrelated party
sales in the home market or to related party sales at arm's length.
(emphasis added)
Id. at 37083. In the instant case, all U.S. sales were matched to
unrelated-party sales in the home market or to related-party sales that
were conducted in an arm's-length manner.
We agree that the Department, not respondent, determines what
information is to be provided and that respondent should not be allowed
to control the results of review by providing partial information.
However, in the instant case, these principles have not been breached.
The Department requested information, and the respondent did not
provide it. In this instance, BIA was not necessary since all U.S.
sales were matched to unrelated-party sales in the home market or to
related-party sales that were conduced in an arm's-length manner.
Accordingly, the Department did determine what information was to be
provided and respondent has not been allowed to control the results of
the review.
[[Page 67314]]
We also agree that Onoda should not be placed in a better position
due to non-compliance with a request for information. As stated above,
it is the Department's practice to require downstream sales information
when a related party fails the arm's-length test and the Department
does not have home market matches for U.S. sales. If the Department
does have home market matches for U.S. sales, the Department drops
related party sales that failed the arm's length test, as was the case
here. Under these circumstances, Onoda does not benefit from its
noncompliance since U.S. sales were matched with home market sales to
unrelated parties and to related parties at prices determined to be on
an arm's-length basis.
Accordingly, for these final results, as with the preliminary
results, we have not resorted to BIA to account for unreported
downstream sales by related distributors that have failed the arm's-
length test. Rather, we have dropped these sales from our analysis of
FMV.
Comment 6
Petitioner argues that because Onoda failed to report distributor
rebates and prompt payment discounts (PPDs) on a transaction-specific
basis and these adjustments were not granted as a fixed and constant
percentage of sales on all transactions for which they were reported,
these adjustments should be classified as indirect selling expenses.
Petitioner argues that the Department requested that Onoda report
rebates and discounts on a transaction specific basis but that Onoda
responded that: (1) its central accounting system is ``unable to tie
the rebates and discounts to specific sales'' and (2) rebates and
discounts were allocated over all sales because Onoda's accounting
system ``is unable to identify the specific distributors which earned
the rebates and discounts.'' (See Onoda's October 31, 1994 Deficiency
questionnaire Response at 16-17.) Petitioner also argue that Onoda's
rebate calculations inappropriately allocated rebates granted on sales
of non-comparison merchandise (i.e., gray portland cement other than
Type N cement) over all sales of gray portland cement, including sales
of comparison merchandise.
Petitioner argues that at verification the Department found that no
written rebate contracts exist between the distributor and Onoda.
Instead, Onoda informs the distributor verbally about rebates. Also at
verification, the Department noted that Onoda's records do not reflect
which distributors actually received rebates. Accordingly, argues
Petitioner, Onoda's rebates and discounts were not granted as a fixed
and constant percentage of sales on all transactions for which they are
reported. Petitioner states that contrary to being fixed and constant,
Onoda did not grant rebates and/or discounts on every reported home
market sale.
Citing to Smith Corona, Torrington Co. v. United States, 832 F.
Supp 379 (CIT 1993) (hereinafter Torrington), Koyo Seio Co. v. United
States, 796 F. Supp. 1526 (CIT 1992) (hereinafter Koyo Seiko), and SKF
USA Inc. v. United States, 874 F. Supp 1395 (CIT 1995), Petitioner
argues that because Onoda's rebates and discounts were not actually
paid on all sales, and the expenses could not be directly correlated
with the sales to which they actually related, the Department should
deny Onoda's claim for a direct adjustment to price for rebates and
discounts. Petitioner argues that to adjust home market prices downward
without any evidence that any rebate or discount was even granted in
the months in which U.S. sales were made, has the potential to result
in a severe distortion when calculating FMV.
Petitioner argues that Onoda's only argument in support of its
allocation methodology is that the Department accepted the same
methodology in previous reviews. Petitioner asserts, however, that the
Department's findings in previous reviews, based on different factual
records, are irrelevant. Petitioner argues that antidumping
administrative reviews are separate and distinct proceedings, and the
results of this review must be in accordance with law and based on
substantial evidence in the record of this review.
With specific regard to PPDs, Petitioner states that the Department
should make no adjustment to FMV for such discounts because they were
allocated over sales of non-subject merchandise (i.e., white cement).
Petitioner asserts that this methodology distorts the prices used to
calculate Onoda's dumping margin. Petitioner argues that because the
total amount of PPDs reported by Onoda includes PPDs granted on sales
of non-subject merchandise, Onoda's claim for any PPD adjustment to FMV
(either direct or indirect) must be rejected.
With specific regard to rebates, Petitioner argues that Onoda
included in its rebate amounts rebates paid to distributors to sell
cement manufactured by two cement manufacturers who rely on Onoda to
sell their products under Onoda's label. Petitioner contends that these
rebates should not be included in the rebate amount because Onoda
charges (i.e., is reimbursed by) the two manufacturers for these
rebates.
Onoda argues that the Department's general policy always has been
to favor the reporting of transaction-specific information but that the
Department has accepted Onoda's allocation methodology in prior
administrative reviews of this case and the CIT and CAFC have, on
numerous occasions (e.g., Torrington and Smith-Corona), upheld the
Department's authority to treat allocated rebates and discounts as
direct expenses.
Onoda asserts that an allocation methodology is appropriate in this
case because Onoda grants rebates based on a distributor's sales for an
entire six-month period rather than on specific sales transactions.
Moreover, asserts Onoda, its sales records simply do not permit it to
report transaction-specific information and its central accounting
system is unable to tie the rebates and discounts to specific sales.
Onoda, citing to Final Determinations of Sales at Less Than Fair Value:
Professional Electric Cutting Tools and Professional Electric Sanding/
Grinding Tools from Japan, 58 FR 30,144 (May 26, 1993), states that the
Department has held in prior cases that a respondent should not be
required to submit information it does not maintain, nor should it be
required to report information which would be unduly burdensome to
provide. Accordingly, asserts Onoda, the Department should not penalize
Onoda for not reporting information which it does not maintain in its
central accounting system.
With regard to Petitioner's claim that Onoda inappropriately
allocated rebates over non-comparison merchandise, Onoda asserts that
the subject merchandise covered by the antidumping duty order includes
all types of gray portland cement, not just Type N cement. Moreover,
argues Onoda, it offers rebates on all of its home market sales of gray
portland cement to distributors not just on home market sales of Type N
cement. Consequently, in calculating the per unit distributor rebates,
Onoda allocated the rebates only over sales to distributors of gray
portland cement in the home market.
Onoda asserts that there is no requirement that Onoda allocate its
rebates over the specific product (Type N cement) which serves as the
model match for sales to the United States. Onoda, citing to
Torrington, asserts that while the CIT has held that the Department may
deny adjustments for rebates if they include rebates on non-subject
merchandise, the CIT has permitted allocations over the subject
merchandise.
[[Page 67315]]
With regard to Petitioner's argument that Onoda's rebates and
discounts were not granted as a fixed and constant percentage of sales
on all transactions for which they were reported, Onoda contends the
Department made no such finding at verification and that the record
evidence leads to a contrary conclusion. Onoda cites to its August 22,
1994 Questionnaire Response at B-4, to argue that the distributor
rebates that it granted were given according to a fixed schedule on the
basis of the total volume of cement purchased by each distributor.
Similarly, argues Onoda, the PPD was applied as a fixed percentage, and
all of Onoda's home market sales were eligible for the discount. Onoda
asserts that the Department verified Onoda's cost and sales information
and the total amount of the rebates and discounts and, therefore, it is
appropriate to grant a full adjustment for these expenses.
With regard to Petitioner's argument that the Department should not
adjust home market prices downward without any evidence that any rebate
or discount was even granted in the months in which U.S. sales were
made, Onoda claims that its methodology precludes the possibility that
rebates and discounts have been applied to sales which did not receive
them. First, argues Onoda, the rebates were given only on sales to
distributors, and, therefore, were only allocated to sales to
distributors. Accordingly, argues Onoda, if there were no sales to
distributors in a given month, then no rebates would be applied to the
sales in that month. Second, argues Onoda, rebates were given on all of
its distributors sales, even if a distributor only purchased one ton of
cement during the period. Therefore, asserts Onoda, there is no
possibility that a rebate would have been reported for a particular
sale when no rebate was actually given on that sale. Third, argues
Onoda, the distributor rebates were not given based on the volume of
individual transactions. Rather, states Onoda, the distributor rebates
were calculated based on the aggregate volume of the sales made to the
distributors over a six-month period. Therefore, a portion of the total
rebates should be allocated to each sale made during that six-month
period. Consequently, argues Onoda, there is no possibility that any
distributor sales within a particular month did not receive a rebate.
Finally, argues Onoda, the Department must calculate FMV based on
weighted-average monthly prices. Thus, the Department will calculate
FMV by dividing the total value of sales for the month over the total
volume of sales for the month. Regardless of whether the rebates and
discounts granted on sales during the month are allocated or reported
on a transaction-specific basis, the total value of the sales will not
be affected. Therefore, argues Onoda, the fact that the rebates and
discounts cannot be matched to specific transactions does not distort
the FMV calculation.
Onoda argues that contrary to Petitioner's assertion, it did not
include PPDs paid on non-subject merchandise in the reported PPD
adjustment. Onoda argues that, as in the first and second reviews, it
gave PPDs on sales of both gray and white cement during the POR but
that Onoda's central accounting system does not permit it to trace
these discounts to individual transactions. Consequently, in
calculating the per unit discounts, Onoda allocated the total discounts
over total sales of cement and not just sales of gray portland cement.
Onoda asserts that this methodology was upheld by the CAFC in Smith
Corona and CIT in Torrington Co. v. United States, 818 F. Supp. 1563,
1577 (CIT 1993) (hereinafter Torrington II).
Onoda argues that the total amount of rebates granted should not be
reduced by the amounts reimbursed by other manufactures. Onoda argues
that sales of cement manufactured by the two other producers were
included in Onoda's reported volume and value if the cement was sold
under the Onoda brand. Because cement produced by the other
manufacturers are reported on the sales tape, the rebates reimbursed by
the producers must be included in the total rebate amount in the
allocation calculation. Onoda contends that Petitioner's methodology
would artificially inflate the net price and would distort the total
income Onoda and the other producer received because, while the amount
of rebates would be reduced, the volume of cement sold would remain the
same. This would reduce the rebate adjustment thereby inflating FMV in
the Department's calculations.
Department's Position
We agree with Petitioner. It is our practice to make a direct
adjustment to the home market price for rebates and discounts if (a)
they were reported on a transaction-specific basis or (b) they were
granted as a fixed and constant percentage of sales on all transactions
for which they were reported. See Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof from France, et al., 60 FR
10,900, 10929 (February 28, 1995) (hereinafter AFBs from France); NSK
Ltd. v. United States, 896 F. Supp. 1263, 1271 (CIT 1995) (hereinafter
NSK); and Torrinngton at 387. The rationale for this practice is that
we only accept direct adjustments to price if actual amounts are
reported for each transaction. Discounts and rebates based on
allocations are not allowable as direct adjustments to price since
allocated price adjustments have the effect of partially averaging
prices by diluting discounts or rebates on some sales, inflating them
on others, and attributing them to sales which received no such
discounts. Just as we do not normally allow respondents to report
average prices, we do not allow average direct additions or
subtractions to price. Although we usually average FMVs on a monthly
basis, we require individual prices to be reported for each sale.
In this case, Onoda took the total amount of rebates granted to
distributors of gray portland cement and divided this amount by total
sales of gray portland cement by all distributors for a six-month
period. This amount was then applied to the home market unit price to
calculate the amount of rebate to allocate to each sale of Type N
cement. Onoda's rebate adjustment fails to provide actual amounts that
were discounted or rebated on each individual sale. Under this
methodology there is no way to determine which discount or rebate was
applied to each particular sale. Onoda's allocation methodology
presents the very type of flaws discussed above.
Although we verified that the rebates granted to distributors were
given according to a fixed schedule, we found that Onoda's rebate were
not granted as a fixed and constant percentage of sales but rather
varied based on the volume of cement sold by a distributor. If one
distributor sold more cement than another distributor it received a
higher rebate per metric ton. Thus, consistent with our practice
discussed above, because Onoda did not report discounts or rebates on
either a transaction-specific basis or as a fixed and constant
percentage of sales, we have disallowed its claim as a direct
adjustment to FMV.
Onoda is correct in its statement that in Torrington and Smith-
Corona the courts have upheld the Department's authority to treat
allocated rebates and discounts as direct expenses. However, in order
for allocated price adjustments to be regarded as a direct deduction
from FMV, the allocation methodology employed by respondent must ``be
directly correlated with specific merchandise'' (i.e., results in the
calculation of the actual amount incurred on each individual sale). See
[[Page 67316]]
Torrington at 390; AFBs from France at 10929.
Onoda calculated its PPD in a fashion similar to its rebate
calculation. Accordingly, we have also disallowed a direct deduction
from FMV for PPDs. Moreover, Onoda included non-subject merchandise in
its calculation of PPDs. It is the Department's practice to disallow an
adjustment which relies on a methodology that includes discounts,
rebates, and other price adjustments paid on out-of-scope merchandise.
See AFBs from France at 10935; Torrington II at 1578. Therefore, since
Onoda's prompt payment discounts were given for and allocated over
sales of non-subject merchandise, we have made no adjustment to FMV for
Onoda's prompt payment discounts.
Finally, Onoda's argument that the Department should allow these
deductions in this review since it permitted them in prior reviews is
without merit. The Courts have recognized that antidumping
administrative reviews are separate and distinct proceedings, and the
results of this review must be in accordance with law and based on
substantial evidence in the record of this review. See, e.g.,
Torrington Co. v. United States, 786 F. Supp. 1027, 1028 (CIT 1992).
Accordingly, based on the foregoing, we have not adjusted FMV for
Onoda's claimed rebates and PPDs.
Comment 7
Petitioner, citing to Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof from Japan, 58 FR 39,729 (July 26,
1993) (hereinafter AFBs from Japan) and accord Tapered Roller Bearings
and Parts Thereof, Finished and Unfinished, from Japan, and Tapered
Roller Bearings, Four Inches or Less in Outside Diameter, and
Components Thereof, from Japan, 58 FR 64,720 (December 9, 1993), argues
that the Department should have included the depreciation of idle
machinery in Onoda's cost of production. Petitioner, citing to Small
Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line, and
Pressure Pipe from Italy, 60 FR 31,981 (June 19, 1995), states that the
Department's practice requires that this cost be included in Onoda's
COP because the machinery was temporarily idle, not permanently idle
and due to be sold or scraped.
Onoda states that it has no objection to Petitioner's suggestion
that the Department add the depreciation of idle assets on Onoda's COP.
Department's Position
The Department agrees with Petitioner. In AFBs from Japan, we
stated:
We include in the fully absorbed factory overhead the
depreciation of equipment not in use or temporarily idle. While
Japan's accounting methodology does provide that depreciation for
idle equipment may be stopped, we do not accept this accounting
method because idle fixed assets are a cost to the company.
Id. at 39756.
Accordingly, for these final results, we have included the
depreciation of idle machinery in Onoda's COP.
Comment 8
Petitioner argues that the Department should exclude from its
calculation of FMV sales in which other cement manufacturers shipped
cement from their inventory to Onoda's customers (with the sale
recorded by Onoda) as well as sales of cement purchased by Onoda from
other manufacturers.
Petitioner, citing to section 773(a)(1)(A) of the Act, states that
the FMV of imported merchandise shall be the price ``at which such or
similar merchandise is sold, or in the absence of sales, offered for
sale in the . . . country from which exported.'' Petitioner, citing to
section 771(16) (A), (B), and (C) of the Act, states that ``such or
similar'' in turn, is defined as merchandise ``produced in the same
country by the same person'' as the merchandise that is the subject of
the investigation. Petitioner, citing to Antifriction Bearings (Other
Than Tapered Roller Bearings) and Parts Thereof from France, et al., 57
FR 28,360 (June 24, 1992); accord Canned Pineapple Fruit from Thailand,
60 FR 2,734 (January 11, 1995); Titanium Sponge from Japan, 57 FR 557
(January 7, 1992) and Brass Sheet and Strip from Japan, 53 FR 23,296
(June 21, 1988), argues that based on the definition of ``such or
similar'' merchandise, it has been the Department's policy to exclude
sales of merchandise produced by a manufacturer other than the
respondent from the calculation of FMV for the respondent.
Petitioner contends that the Department should be able to exclude
such merchandise since Onoda identifies sales of merchandise produced
by other manufacturers. Petitioner notes that Onoda has not separately
identified sales of cement produced by two unrelated manufacturers
(i.e., the two manufacturers referred to in comment 6 above) based on
the claim that they cannot separately identify these sales. Petitioner
argues that this claim is inconsistent with Onoda's ability to identify
the amount of rebates it paid with respect to sales of cement
manufactured by the two manufacturers. Petitioner contends that if
Onoda can identify the amount of rebates paid with respect to sales of
merchandise produced by the two manufacturers, Onoda should be able to
identify these sales. Accordingly, argues Petitioner, the Department
should require Onoda to identify sales of cement manufactured by the
two manufacturers so that such sales can be excluded from the
calculation of FMV. Petitioner contends that this is necessary since
using sales of merchandise produced by one manufacturer to calculate
another manufacturer's FMV could distort FMV (i.e., manufacturers
generally have different costs of production resulting in a possible
price differential).
Onoda states that it does not object if the Department wishes to
drop the sales of cement which are indicated on the sales tape as
having been produced by other manufacturers and shipped directly to
Onoda's customer (i.e., not commingled with Onoda cement). However,
Onoda states that it cannot provide a revised sales tape indicating
which of the remaining sales were resales of cement manufactured by two
specific cement producers. Onoda states that it cannot provide a
revised sales tape because it cannot identify which sales contained
cement produced by the two manufacturers. Onoda states that cement it
purchased from the two manufacturers was intermixed with Onoda cement
and was sold under the Onoda brand name. Accordingly, states Onoda,
while it knows the total amount of the two manufacturers' cement that
it sold, it sales records cannot trace this cement to individual
transactions. Onoda allocates a portion of its total rebates to the two
manufacturers based on the total volume of the two manufacturers'
cement that it sold. Accordingly, asserts Onoda, the fact that it can
determine the amount of the total rebates allocated to the two
manufacturers does not mean that Onoda can provide a revised sales tape
which indicates which individual sales were of cement produced by the
two manufacturers. Moreover, argues Onoda, due to the intermixing of
the cement, it prices the cement produced by Onoda and the other
manufacturers in exactly the same manner. Accordingly, argues Onoda,
there is no merit to Petitioner's allegations that including such sales
in the FMV calculation could result in distortion.
[[Page 67317]]
Department's Position
In AFBs from France the Department stated:
In accordance with the definition of such or similar merchandise
in section 771(16)(B)(i), we have not considered merchandise known
to have been produced in the facilities of one manufacturer to be
such or similar to the merchandise produced in the facilities of
another manufacturer, even if the merchandise is physically
identical or physically similar and is sold by the same person.
Id. at 28367. Accordingly, for these final results of review, we have
excluded from our calculation of FMV those sales that Onoda could
indicate were produced by other manufacturers.
Although Onoda's home market sales listing also includes sales that
commingled Onoda-produced cement with cement produced by manufacturers
other than Onoda, we continue to find it reasonable to use this sales
listing because (1) we verified that Onoda was unable to indicate which
sales were sales of commingled cement and (2) the commingled sales were
sold under the Onoda name necessitating that Onoda price such sales as
if they were Onoda-produced cement. In contrast, in the cases cited by
Petitioner in support of excluding the commingled sales from the
calculation of FMV, the respondent was able to identify the commingled
sales. Onoda's inability to identify commingled sales is not
inconsistent with Onoda's ability to identify the amount of rebates it
paid with respect to cement manufactured by these two producers because
its allocation methodology was based upon the total volume of cement
sold rather than individual transactions.
In other cases where the respondent has been unable to identify
commingled sales, the Department has utilized a weighting methodology
in order to neutralize the effect of including commingled sales. See,
Certain Cut-to-Length Carbon Steel Plate From Sweden, 60 FR 48502
(September 19, 1995). As in those cases, in this case, we applied to
the reported home market quantities a ratio of the volume of Onoda-
produced cement to the combined total volumes of Onoda-produced and
purchased cement sold on a biannual basis for the fiscal year. These
ratios were derived from verified rebate documents which indicated, on
a six-month basis for Onoda's fiscal year (i.e., April 1993-September
1994 and October 1993-March 1994), the total amount of cement sold, the
amount of Onoda-produced cement sold and the amount that was
manufactured by other producers. Additionally, since the POR is May 1,
1993-April 30, 1994, we applied the ratio for the October 1993-March
1994 period to Onoda's April 1994 sales.
Comment 9
Petitioner argues that Onoda is not entitled to a difference-in-
merchandise (difmer) adjustment for the cost differences between U.S.
model Type I and home market model Type N. Petitioner argues that Onoda
has failed to meet the criterion for a difmer adjustment that was
articulated in the Department's Policy Bulletin No. 92.2 and in other
antidumping cases. According to petitioner, respondents are entitled to
a difmer adjustment only if they show that the difference in cost
between the two models is attributable to the difference in physical
characteristics of the merchandise. Petitioner relies upon plant-by-
plant variable cost of manufacture data for Type N cement to argue that
the weighted-average difmer adjustment reported by Onoda is largely
attributable to differences in efficiencies between Onoda's various
production facilities and not to cost differences associated with the
physical characteristics of the merchandise.
Petitioner argues that the Department's rationale for granting a
difmer adjustment in the first and second reviews of this case does not
support granting a difmer adjustment in this review. Petitioner asserts
that there is ample evidence that the cost differences between Type I
and Type N cement are attributable to differences in efficiencies
between Onoda's plants. Accordingly, petitioner requests that the
Department deny Onoda's difmer adjustment.
Onoda argues that it followed the exact same procedure in preparing
its difmer adjustment in this segment of the proceeding as it did in
the LTFV investigation and the first and second reviews. Onoda asserts
that the Petitioner has presented no new arguments or evidence which
would justify a change in the Department's prior decisions in this
case. Onoda states that in its August 22, 1994, Questionnaire Response
and October 31, 1994, Deficiency Response, it has fully documented its
difmer claim, which is based on differences in both the physical and
chemical characteristics of the comparable types of cement. Onoda
states that these differences include differences in the amounts of
clinker and gypsum, and differences in fineness and compressive
strength between Type I and Type N. Onoda states that other differences
between Type I and Type N include both material inputs (e.g.,
limestone, clay, silica, fuel inputs, fuel oil, coal, and anthracite)
and energy, due to the different fineness and compressive strengths of
these comparable cement types.
Onoda asserts that in its August 22, 1994, Questionnaire Response
it provided detailed charts setting out the variable costs of producing
comparable types of cement and that the Department verified these
charts and tied them directly to Onoda's cost accounting system in the
LTFV investigation and in this review. Onoda notes that during the LTFV
investigation and in this review, the Department verified the difmer
data, and granted the difmer adjustment in calculating the dumping
margin. Furthermore, Onoda observes that in the LTFV investigation and
in this review, the Department was satisfied that Onoda had reasonably
tied cost differences to physical differences. Additionally, Onoda
notes that the Department determined in the final results of the first
and second reviews that evidence on the record did not establish that
any differences in plant efficiencies were the source of the cost
differences.
Additionally, Onoda argues that the only way it can calculate the
difmer adjustment is to weight-average the variable costs to produce
Type N cement at all plants and compare that amount to the variable
costs to produced Type I cement at the single plant where it produce
Type I cement. Onoda argues that this methodology of weight-averaging
costs across all plants is consistent with Departmental practice.
Furthermore, argues Onoda, the evidence on the record of this
proceeding parallels exactly the type of evidence that was on the
record of the prior proceedings. Onoda states that the factories
producing Type I and Type N cement are the same factories that were
producing these cement types since the original investigation.
Moreover, states Onoda, the production processes used to produce these
types of cement are virtually unchanged, as are the physical
specifications and characteristics of the cement. Additionally, Onoda
states that it has also calculated and reported the difmer adjustment
in exactly the same manner as it has in all other prior proceedings of
this case.
Thus, according to Onoda, there is no reason for the Department not
to grant the difmer adjustment in this review.
Department's Position
Consistent with the Department's practice in the LTFV investigation
and the first and second reviews of this case, we have allowed the
difmer adjustment claimed by Onoda. As we stated in the
[[Page 67318]]
first and second reviews, although Onoda's plants may have different
efficiencies, evidence on record does not establish that any
differences in plant efficiencies are the source of the cost
differences identified by Onoda. Rather, cost differences are due to
differences in material inputs and the physical differences which
result from different production processes.
First, as stated previously, the Department compared Type I cement
in the United States with Type N cement in the home market. The
specific differences in cost between Type I and Type N were due to the
varying costs of the inputs, including material inputs (limestone,
clay, silica, etc.), fuel inputs (fuel oil, coal, anthracite, etc.) and
electricity (mixing, grinding, burning, etc.). For example, Type I
cement contains clinker, gypsum and minor grinding agents. In contrast,
Type N cement contains clinker, gypsum, minor grinding agents and
additives. Furthermore, Type I cement contains a higher percentage of
clinker and gypsum than Type N cement. Moreover, Type I, on average,
has a slightly higher percentage of silicon dioxide.
Second, as noted in the LTFV investigation, ``we verified Onoda's
claimed difference in merchandise adjustment and found it to be an
accurate representation of the relevant variable costs of production as
reflected in its actual cost accounting records. Given the fact that
physical differences between types of cement arise from differences in
the production process (e.g., amount and duration of heat), and from
differences in component materials, we are satisfied that Onoda has
reasonably tied cost differences to physical differences'' (see Gray
Portland Cement and Clinker--LTFV Investigation at 12161). We also
verified the information supplied by Onoda with regard to its difmer
adjustment in this review and did not note any discrepancies.
Additionally, with regard to the weighted-average methodology employed
by Onoda, the Department specifically requested that Onoda report is
cost of manufacture information on a weighted-average basis (see the
Department's questionnaire at page 60: ``If the subject merchandise is
manufactured at more than one facility, the reported COM should be the
weighted-average manufacturing cost from all facilities'').
The Department's determination that Onoda is entitled to a difmer
adjustment for differences between Type I and Type N cement has been
upheld by the CIT in the first review of this case (See Supra Southern
California Producers). In affirming the Department's decision to grant
the difmer adjustment, the Court stated:
Upon review, the Court finds that Commerce's determination that
price differences between U.S. and home market models were caused by
differences in the physical characteristics of the merchandise
compared, and Commerce's concomitant decision to grant a difference
in merchandise adjustment to Onoda, are supported by substantial
evidence and otherwise in accordance with law. First, evidence
submitted by Onoda shows that U.S. models contain different
materials than type N * * * In addition * * * U.S. models are
produced in a different manner, i.e. with a different amount and
duration of heat than type N, and that this causes differences in
the chemical and physical composition of the cements * * * Further *
* * Commerce verified that Onoda was entitled to a difference in
merchandise adjustment.
Id. at 545 (cites omitted).
Accordingly, we have allowed Onoda's claimed difmer adjustment.
Final Results of Review
Based on our analysis of comments received, and the correction of
clerical errors, we have determined that a final margin of 30.12
percent exists for Onoda for the period May 1, 1993, through April 30,
1994.
The Department will instruct the U.S. Customs Service to assess
antidumping duties on all appropriate entries. Individual differences
between USP and FMV may vary from the percentage stated above. The
Department will issue appraisement instructions 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 by section
751(a)(1) of the Act: (1) the cash deposit rate for Onoda will be 30.12
percent; (2) for merchandise produced by manufacturers or exporters not
covered in this review but covered in a previous review or the original
less-than-fair-value (LTFV) investigation, the cash deposit rate will
continue to be the rate published in the most recent final results or
determination for which the manufacturer or exporter received a
company-specific rate; (3) if the exporter is not a firm covered in
this review, earlier reviews, or the original investigation, but the
manufacturer is, the cash deposit rate will be that established for the
manufacturer of the merchandise in these final results of review,
earlier reviews, or the original investigation, whichever is the most
recent; and (4) the ``all others'' rate, as established in the original
investigation, will be 70.23 percent.
These deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d). Timely written notification of
return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 CFR 353.22.
Dated: December 13, 1996.
Jeffery P. Bialos,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-32400 Filed 12-19-96; 8:45 am]
BILLING CODE 3510-DS-M
