[Federal Register Volume 60, Number 59 (Tuesday, March 28, 1995)]
[Notices]
[Pages 15897-15901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7609]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-428-810]
High-Tenacity Rayon Filament Yarn From Germany; 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 June 22, 1994, the Department of Commerce published the
preliminary results of review of the antidumping duty order on rayon
filament yarn from Germany. The review covers the subsidiaries of one
producer/importer, Akzo Faser N.V. Its subsidiaries are Akzo Fibers,
Inc., in the United States, and Akzo Faser A.G., in Germany.
We gave interested parties an opportunity to comment on the
preliminary results. Based on our analysis of the comments received,
and the correction of clerical errors, we have changed the final
results from those presented in the preliminary results of review.
EFFECTIVE DATE: March 28, 1995.
FOR FURTHER INFORMATION CONTACT: Matthew Blaskovich or Zev Primor,
Office of Antidumping Compliance, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
5831/4114.
SUPPLEMENTARY INFORMATION:
Background
On June 29, 1993, Akzo Faser N.V. and its subsidiaries (Akzo)
requested that the Department of Commerce (the Department) conduct an
administrative review of the antidumping duty order on high-tenacity
rayon filament yarn from Germany. We initiated the review, which covers
the period February 20, 1992 through May 31, 1993, on July 21, 1993 (58
FR 39007). On June 22, 1994, the Department published the preliminary
results of the administrative review (59 FR 32181). 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 product covered by this administrative review is high-tenacity
rayon filament yarn from Germany. High-tenacity rayon filament yarn is
a multifilament single yarn of viscose rayon with a twist of five turns
or more per meter, having a denier of 1100 or greater, and a tenacity
greater than 35 centinewtons per tex. During the review period, such
merchandise was classifiable under Harmonized Tariff Schedule (HTS)
item number 5403.10.30.40. The HTS item number is provided for
convenience and Customs purposes. The written 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 comments from North American Rayon
Corporation (the petitioner) and the respondent on July 22, 1994. We
received rebuttal comments from the petitioner and the respondent on
July 29, 1994. At the request of the respondent, we held a public
hearing on August 5, 1994.
[[Page 15898]]
General Comments
Comment 1
Petitioner argues that significant issues within this review could
have been resolved during a verification, and challenges the accuracy
of the dumping margin because of the lack of verification. Petitioner
contends that key issues addressed in the following comments, such as
Research and Development expenses (R&D), General and Administrative
(G&A) expenses, and restructuring costs, could have been reconciled
through verification. Petitioner argues that the Department should not
assume that information relating to these issues is accurate simply
because it was verified during the investigation, as the issues and
calculations change between investigations and reviews.
Akzo states that the absence of verification does not undermine the
integrity of its responses, and that verification was not required in
this review. Referring to the statute and regulations, Akzo claims that
verification is required only if it was not performed in either of the
two immediately preceding reviews and it was requested by an interested
party within 120 days from publication of the notice of initiation of
the review. Akzo contends that neither element was satisfied in this
review. Moreover, Akzo asserts that it submitted all of its responses
with appropriate certifications of accuracy and completeness as
required by statute and regulation. Akzo cities Calcium Aluminate
Cement, Cement Clinker and Flux from France (59 FR 14,136, 14,140,
March 25, 1994), as an example of the Department's verification
practices.
Department's Position
The Department agrees with respondent that, in accordance with
section 776(b)(3) of the Tariff Act, in conducting an administrative
review, the Department will verify all information relied upon in
making a determination (1) if verification is timely requested and no
verification was made during the two immediately preceding reviews, or
(2) if good cause exists for verification. This administrative review
is the first review of the antidumping duty order in this case, and
verification was not timely requested. The Department has undertaken
verification for good cause only in exceptional circumstances. In
conducting this review, the Department determined that there was not
good cause for a verification. Section 776(b)(3) of the Tariff Act, and
the Department's regulations do not require verification under these
circumstances. See Tapered Roller Bearings, Finished and Unfinished,
and Parts Thereof, From Japan; Final Results of Antidumping Duty
Administrative Review (57 FR 4953, February 11, 1992), and Calcium
Aluminate Cement, Cement Clinker and Flux from France (59 FR 14136,
March 25, 1994).
Comment 2
Petitioner argues that Akzo did not provide cost data maintained in
the normal course of business; rather, petitioner contends that Akzo
generated this data solely for purposes of this review. Petitioner
maintains that, with respect to fixed costs, Akzo claimed that
differences between actual and standard costs were not maintained in
the normal course of business. It is the petitioner's viewpoint that
Akzo does maintain records of actual costs for its fixed costs, but has
not provided this information. Also, petitioner claims that Akzo did
not provide the information necessary for the Department to calculate
an actual per-unit cost on a product-specific or plant basis.
Petitioner asserts that Akzo instead provided the Department with a
plant-wide ``variance'' used to calculate cost of manufacture.
Respondent states that it reported actual costs by calculating the
product-specific per-unit costs through the application of plant-wide
variances, according to questionnaire instructions and Departmental
practice. Therefore, respondent argues that the costs, as reported, are
correct and valid.
Department's Position
We agree with Akzo, in that there is no evidence that Akzo's costs
were incorrectly reported. Akzo stated in its questionnaire response
that it based its costs on the standard cost system used in its normal
course of business. As Akzo explained in its rebuttal brief and
questionnaire submission, it based its costs on the standard costs
system, and deviated from this basis only when necessary to comply with
certain calculations as required by the Department's questionnaire. The
plant-wide variance was calculated as the difference between total
standard costs and total actual costs of production. The Department has
accepted the use of plant-wide variances in similar cases. See Tapered
Roller Bearings, Finished and Unfinished, and Parts Thereof, From
Japan; Final Results of Antidumping Duty Administrative Review (57 FR
4956, February 11, 1992).
General and Administrative Expenses
Comment 3
Petitioner argues that the extraordinary costs incurred by Akzo
Faser N.V. due to plant closure are not fully reflected in the cost of
manufacture. Petitioner believes that the Department handled these
expenses correctly when it reallocated all of the industrial rayon-
specific shutdown expenses to the product under review. The petitioner
contends that Akzo has two facilities in Germany which produce the
subject merchandise, and that one of them was in the process of closing
during the period of review (POR). Petitioner adds that such a dramatic
change in operations results in higher product-specific costs.
Petitioner also contends that the methodology used by the respondent
virtually eliminates these costs by allocating them over all of the
production of Akzo Faser N.V.
Akzo states that it included the extraordinary loss associated with
the plant closure in its reported G&A expenses, using the methodology
it used in the less than fair value (LTFV) investigation. See High
Tenacity Rayon Filament Yarn from Germany (57 FR 21773, May 22, 1992).
Akzo argues that it is inappropriate to allocate all of the expenses of
a plant closure solely to industrial rayon yarn when such expenses
relate to the operations of the entire corporation. Akzo also contends
that an expense can be applied solely to rayon yarn operations only if
it is not extraordinary and, as a plant closure has not occurred in
years, this expense qualified as ``extraordinary.'' Akzo cites
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof from the Federal Republic of Germany (54 FR 18992, 1976, May 5,
1989), as an example of the Department's practice regarding
extraordinary expenses.
Department's Position
We disagree with Akzo's characterization of the plant closing costs
as extraordinary losses and with the company's contention that
extraordinary losses cannot be charged specifically to the subject
merchandise. The fact that plant closings are infrequent in occurrence
does not necessarily make the costs associated with such events
extraordinary. Nor does it dictate how the Department will treat these
costs for purposes of computing COP and CV.
Nonetheless, after further examination of the record, it is not
evident that the plant closing losses reported by Akzo relate solely to
the company's rayon [[Page 15899]] yarn production. Consequently, the
Department regards these costs as general in nature rather than
specific to the subject merchandise. For the final results, the
Department has, therefore, accepted Akzo's plant closing cost
calculation which was based on an allocation across all products
manufactured by the company.
Comment 4
Akzo disagrees with the Department's re-allocation of its G&A
expenses in the preliminary results. Akzo argues that the Department
should not have disregarded Akzo's submitted G&A costs, which were
allocated to different groups based on specific allocation
methodologies.
Akzo states that the Department's re-allocation of G&A expenses
across all operations was not in accordance with Departmental
practices, and that the ratios, as submitted by Akzo, are in accord
with Departmental practice and case precedent. Akzo states that,
because of the organizational structure and the integrated nature of
its operations across national borders, the reported ratios are clearly
more accurate than any overall average ratios for Akzo Faser. Akzo also
states that the G&A expense ratios it reported are in accord with the
audited financial statements of Akzo N.V., and have been reconciled to
the audited financial statements.
Akzo argues further that the expenses accumulated at each
organization unit do not relate to operations outside that unit.
According to Akzo, the Department's allocation methodology attributes
to Akzo Faser itself G&A expenses incurred solely by Akzo Fibers B.V.
(an affiliate of Akzo Faser not involved in the review). Akzo also
argues that if the Department follows its position in Certain Hot
Rolled Carbon Steel Flat Products, Certain Cold Rolled Carbon Steel
Flat Products, and Certain Corrosion-Resistant Carbon Steel Flat
Products from Japan (58 FR 37154, July 9, 1993), it should reject
Akzo's methodology only if the facts specific to the situation indicate
that the divisional G&A expenses are not accurate.
Petitioner argues that the Department's recalculation of the G&A
expenses is the most accurate and transparent method, and is in accord
with Akzo's financial statement and the Department's standard
practices. Petitioner argues further that there are discrepancies
between Akzo's three-tiered G&A expense levels and Akzo's financial
statements. Petitioner asserts that the best methodology of measuring
G&A expenses is using Akzo's financial statements and not the tier
methodology that Akzo used for the response.
Department's Position
We agree with the petitioner. Akso submitted company-specific G&A
expenses based on a three-tiered calculation methodology consisting of
the company's business, divisional, and corporate levels. Akzo's G&A
calculation, however, did not reconcile to Akzo Faser AG's audited
financial statements. Nor did the Akzo's submitted G&A expense include
amounts for certain miscellaneous items that were treated as G&A in the
company's annual report. Because of these inconsistencies, for the
final results, the Department computed Akzo's G&A expenses using the
company's unconsolidated audited financial statements and including an
amount representing an allocated share of G&A incurred by companies
related to Akzo and involved in the production of the subject
merchandise. The Department calculated per unit G&A expenses for the
subject merchandise based on a factor derived as the ratio of Akzo's
total G&A to the company's cost of sales. This method is consistent
with our past practice. See Certain Hot Rolled Carbon Steel Flat
Products, Certain Cold rolled Carbon Steel Flat Products, and Certain
Corrosion-Resistant Carbon Steel Flat Products from Japan; Final
Determination of Sales at Less Than Fair Value (58 FR 37154, July 9,
1993), and Frozen Concentrated Orange Juice From Brazil; Final
Determination of Sales at Less Than Fair Value (52 FR 8329, March 17,
1987).
Research and Development
Comment 5
Akzo disagrees with the Department's allocation of its R&D expenses
over all of its product lines, and asserts that a product-specific
breakdown of R&D expenses would be more accurate and in accordance with
prior Department decisions. Akzo allocates R&D expenses on a product-
specific or product-line basis, according to the nature of the research
being performed. Akzo explains that the vast majority of R&D expenses
listed in Akzo Faser AG's annual report are specifically related to
products other than industrial rayon, and thus are not general in
nature and do not relate to all operations. Akzo contends that it acted
properly and in accordance with precedent by not allocating these R&D
costs to subject merchandise. Akzo cites Certain Hot Rolled Carbon
Steel Flat Products, Certain Cold Rolled Carbon Steel Flat Products,
Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain
Cut-to-Length Carbon Steel Flats From France (58 FR 37125, July 9,
1993), and Antifriction Bearings (Other than Tapered Roller Bearings
and Parts Thereof from France, Germany, Italy, Japan, Romania,
Singapore, Sweden, Thailand, and United Kingdom (58 FR 39729, July 26,
1992).
Petitioner argues that the Department's recalculation of R&D
expenses in the preliminary results of review was the most accurate and
transparent, and is in accord with Akzo's financial statement and the
Department's standard practices.
Department's Position
The Department agrees with Akzo. The R&D expenses submitted by Akzo
were allocated on a product-specific or product line basis, according
to the nature of the research being performed. The methodology used to
allocate the R&D is that used in Akzo's normal course of business and
reconciles to the financial statements. Further, the Department has
accepted the submitted methodology in similar cases. See Certain Hot
Rolled Carbon Steel Flat Products, Certain Cold Rolled Carbon Steel
Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products,
and Certain Cut-to-Length Carbon Steel Plate from France (58 FR 37125,
July 9, 1993), and Antifriction Bearings (Other than Tapered Roller
Bearings) and Parts Thereof from France, Germany, Italy, Japan,
Romania, Singapore, Sweden, Thailand, and United Kingdom (58 FR 19729,
July 26, 1992).
Foreign Market Value Adjustments
Comment 6
Petitioner disagrees with the Department's decision in the
preliminary results to allow an adjustment to FMV for a third-party
payment. Petitioner contends that this payment is based on the sale of
a further-manufactured product, rather than the subject merchandise,
unprocessed yarn, which Akzo sells to a converter. In the petitioner's
viewpoint, the payment appears to have no impact on the price of the
unprocessed yarn.
According to Akzo, it sells rayon in the home market to a
converter, who alters the rayon yarn for a specific use and then sells
the rayon to a third party. Akzo provides a rebate directly to this
third party. Akzo argues that, in the preliminary results, the
Department treated the third-party payments in a manner consistent with
the final determination of sales at LTFV in the original investigation.
Akzo asserts that there can be no other purpose for the third-party
payment except to encourage certain third parties to use the
[[Page 15900]] respondent's merchandise. Therefore, Akzo contends that
the third-party payment represents a price decrease for the third
party, and that the payment does have an impact on the price of the
yarn when sold to the first unrelated party.
Department's Position
We agree with respondent. Based upon the record evidence for this
review, the Department has concluded that these expenses should be
considered direct expenses to be deducted from the FMV.
When making adjustments attributable to differences in
circumstances of sale, it is incumbent upon the Department to ensure
that such adjustments account only for those expenses that have a
direct impact upon any existing U.S. and home market price
differentials. Section 773(a)(4) of the Tariff Act states that an
adjustment shall be made only ``if it is established to the
satisfaction of the administering authority that the amount of any
difference between United States price and foreign market value'' is
due to differences in circumstances of sale.
Since Akzo's third party payments qualify as variable and
reasonably attributable to the subject merchandise, Akzo met the
Department's criteria for identifying whether an expense can have a
direct impact upon price. Therefore, Akzo's payments can qualify as a
circumstance of sale adjustment.
In the LTFV verification report, the Department, indicated that:
Akzo makes payments to tire manufacturers based upon their
purchases of Akzo-sourced yarn from converter-customers of Akzo's.
The converters provided additional finishing to the Akzo yarn.
Given that those expenses fluctuate depending on a tire company's
purchases from a converter and correspondingly, such expenses would not
have been incurred were it not for certain sales of the subject
merchandise, those payments are then considered variable. Furthermore,
the Department is in agreement with Akzo's assertion that the third
party payments are primarily made as an inducement to purchase
responsent's merchandise. In this regard, these expenses are
promotional in nature and thereby have a direct relationship to Akzo's
sales to the converter.
As the respondent established its claim to the adjustments with
record evidence, the Department will adjust FMV for this expense in the
final results.
Differences in Merchandise
Comment 7
Petitioner argues that, if the third party payment for the
converted rayon yarn (as discussed above in Comment 6) is allowable,
then a difference-in-merchandise calculation should be conducted in
order to compare the converted rayon yarn (and not the unprocessed
rayon yarn) to similar U.S. sales.
Akzo argues that a difference-in-merchandise calculation is not
warranted, as the merchandise, when sold to the first unrelated party,
is subject merchandise; Akzo maintains that it is only after sale to
the first unrelated party that the merchandise undergoes further
manufacturing.
Department's Position
We agree with Akzo in that a difference-in-merchandise calculation
would be necessary, in this case, only when the product sold to the
first unrelated purchaser in the home market differs physically from
the product sold in the United States. (See 19 CFR 353.57.) However, as
the Department determined that the third party payment expense was
directly attributable to the subject merchandise and applicable as a
deduction to the FMV, a difference-in-merchandise calculation is
unnecessary.
Ministerial Errors
Comment 8
The respondent asserts that the Department made a clerical error
with respect to the extraordinary expenses of Akzo N.V., in that the
Department calculated a ratio of extraordinary expenses, denominated in
guilders, to the cost of sales, which is denominated in Deutschemarks.
Further, the respondent asserts that the Department should capture
these costs at the corporate level using the methodology submitted in
the response, and not at the company level as the Department did for
the preliminary results. The respondent states these costs relate to
the operations of the entire corporation and not solely to industrial
yarn.
While petitioner does not specifically address this clerical error,
petitioner does state that it supports the Department's position of
allocating the plant closure expenses directly to the product under
review. Petitioner further states that the Department has not fully
applied the actual cost of restructuring Akzo's yarn production
facilities to Akzo's actual costs, and that the calculations for G&A
expenses presented by Akzo were not useable.
Department's Position
We agree with Akzo that we calculated the ratio in two different
currencies. However, as discussed in our response to Comment 3, we have
disregarded this ratio for these final results, and have instead used
Akzo's submitted plant closure costs and extraordinary losses.
Therefore, although we agree with respondent, this issue is moot.
We also agree with Akzo that its extraordinary expenses should be
captured at the corporate level because, as discussed in our response
to Comment 3, there is no evidence on the record to indicate that the
extraordinary losses, as reported, relate solely to rayon yarn.
Therefore, we adjusted for the expenses at a corporate level, and not
at a product-specific level. As Akzo submitted its expenses at a
corporate level, no adjustment to its reported plant closure and
extraordinary losses was deemed necessary.
Comment 9
The respondent asserts that the Department made a clerical error
with respect to the foreign unit price in dollars (FUPDOL)
calculations, in that the Department treated U.S. packing costs as a
Deutschemark per pound expense, rather than a Deutschemark per kilogram
expense, and that the Department should divide the reported packing
costs by the pounds-to-kilograms conversion rate to arrive at the
correct unit amount.
Petitioner does not contest this clerical error.
Department's Position
We agree that the calculation should be corrected to reflect the
metric measurement, and have changed the calculation accordingly.
Final Results of Review
Based on our analysis of comments received and the correction of
ministerial errors, we have determined that a final margin of 0.56
percent exists for Akzo for the period February 20, 1992, through May
31, 1993.
The Department will instruct the U.S. Customs Service to assess
antidumping duties on all appropriate entries. Individual differences
between United States price (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 [[Page 15901]] 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 Akzo will
be 0.56 percent; (2) for merchandise exported by manufacturers or
exporters not covered in this review but covered in the original less-
than-fair-value (LTFV) investigation, the cash deposit rate will
continue to be the rate published in the most recent final
determination for which the manufacturer or exporter received a
company-specific rate; (3) if the exporter is not a firm covered in
this review, or the original investigation, but the manufacturer is,
the cash deposit rate will be that established for the manufacturer of
the merchandise in the original investigation; and (4) the ``all
others'' rate will be 24.58 percent, established in the LTFV
investigation, and in accordance with the Department's practice. See
Floral Trade Council v. United States, 822 F. Supp. 766 (2993), and
Federal Mogul Corp., 822 F. Supp. (1993).
These deposit requirements shall remain in effect until publication
of the final results of the next administrative review.
This notice services as a 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
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: March 16, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-7609 Filed 3-27-95; 8:45 am]
BILLING CODE 3510-DS-M
