[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Notices]
[Pages 8911-8914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5257]
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DEPARTMENT OF COMMERCE
[A-201-504]
Notice of Preliminary Results of Antidumping Duty Administrative
Review; Porcelain-on-Steel Cookware From Mexico
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request by petitioner, the Department of
Commerce is conducting an administrative review of the antidumping duty
order on porcelain-on-steel cookware from Mexico. The review covers
shipments of this merchandise to the United States during the period
December 1, 1991 through November 30, 1992. The review indicates the
existence of dumping margins during the review period. We invite
interested parties to comment on these preliminary results.
EFFECTIVE DATE: March 6, 1996.
FOR FURTHER INFORMATION CONTACT: Kate Johnson or Dolores Peck, Office
of Antidumping Investigations, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue NW., Washington, D.C. 20230; telephone, (202) 482-
4929.
SUPPLEMENTARY INFORMATION:
Background
On December 4, 1992, the Department of Commerce (the Department)
published in the Federal Register a notice of ``Opportunity to Request
an Administrative Review'' of the Antidumping Duty Order on Porcelain-
on-Steel Cookware from Mexico (57 FR 57419). In accordance with 19
C.F.R. 353.22(a)(2), on December 16, 1992, General Housewares
Corporation requested an administrative review of the antidumping order
covering the period December 1, 1991, through November 30, 1992. We
initiated the administrative review on February 23, 1993 (58 FR 11026),
and are conducting it in accordance with section 751 of the Tariff Act
of 1930, as amended (the Act).
Scope of the Review
Imports covered by this review are shipments of porcelain-on-steel
cookware, including tea kettles, which do not have self-contained
electric heating elements. All of the foregoing are constructed of
steel and are
[[Page 8912]]
enameled or glazed with vitreous glasses. This merchandise is currently
classifiable under Harmonized Tariff Schedule of the United States
(HTSUS) item number 7323.94.00. Kitchenware currently entering under
HTS item number 7323.94.00.30 is not subject to the order. Although the
HTSUS subheadings are provided for convenience and Customs purposes,
our written description of the scope of this proceeding is dispositive.
The review covers two manufacturers/exporters, Acero Porcelanizado,
S.A. de C.V. (APSA) and Cinsa, S.A. de C.V. (CINSA) of Mexican
porcelain-on-steel cookware. The period of review (POR) is December 1,
1991 to November 30, 1992.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are in reference to the provisions as they
existed on December 31, 1994.
Product Comparisons
In accordance with the Department's standard methodology, we first
compared identical merchandise. Where there were no sales of identical
merchandise in the home market to compare to U.S. sales, we made
similar merchandise comparisons on the basis of product type, quality,
color, and number of enamel coats for CINSA and product type and
quality for APSA.
CINSA argued that beginning in the fifth review period (1990-91),
its home market costs and prices began to differentiate between items
having different colors and enamel coats. We analyzed the information
on the record in the sixth review (1991-92) and determined that
appreciable differences in costs may result from different coats/colors
for a product otherwise the same which is sold in the same period of
time. We also noted that CINSA's home market pricing appears to
differentiate between items having different colors and enamel coats,
as argued by respondent. Accordingly, in addition to the product type
and quality criteria, we have also used color and coat as matching
criteria for CINSA.
APSA argues that color and coat should not be used in its product
comparisons since the difference in its cost of producing cookware of
different colors and coats is insignificant in relation to the total
cost of production (COP). Moreover, APSA argued that the Department had
matched only by product and quality in past reviews. As a result of our
analysis of the information on the record, we concluded that there is
no evidence indicating that the previous matching criteria are
inappropriate for purposes of this review for this company.
Accordingly, for APSA, we have compared products using only the product
type and quality criteria, as was done in past reviews. (See
Concurrence Memorandum dated September 13, 1995, for further discussion
of this issue).
For those U.S. sales for which we found no contemporaneous sales of
comparable merchandise sold in the home market and for which there was
no constructed value (CV) data on the record, we used best information
available (BIA). (See United States Price section of this notice).
United States Price
A. APSA
We based United States price (USP) on both exporter's sales price
(ESP) and purchase price (PP), in accordance with section 772 of the
Act, because the subject merchandise was sold both before and after
importation into the United States. We based ESP and PP on the packed,
ex-factory price to unrelated purchasers in the United States.
For both PP and ESP sales we made deductions from USP, where
appropriate, for foreign and U.S. inland freight and insurance, Mexican
and U.S. brokerage and U.S. import duties and user fees, in accordance
with section 772(d)(2) of the Act. We also made deductions for
discounts and rebates.
We made further deductions from ESP, where applicable, for
commissions, credit expenses and indirect selling expenses, pursuant to
section 772(e)(1) and (2) of the Act.
For three U.S. products, we found no identical home market products
sold in contemporaneous periods, and APSA did not provide an adjustment
for differences in merchandise or constructed value information, as we
had repeatedly requested. Therefore, we used BIA for these sales
pursuant to Section 776(C) of the Act. As partial BIA, we used the
weighted-average of 8.75 percent from Porcelain-On-Steel Cookware From
Mexico; Final Results of Antidumping Duty Administrative Review (3rd
Administrative Review), 58 FR 32095 (June 8, 1993),because it is the
highest rate ever determined for APSA. This is consistent with the
Department's general application of partial BIA (see, e.g., Final
Results of Antidumping Duty Adminisrative Reviews and Revocation in
Part of an Antidumping Duty Order; Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France, et. al.,(AFBs),
60 FR 10900, 10907 (February 28, 1995)).
B. CINSA
We based USP on PP, in accordance with section 772 of the Act,
because the subject merchandise was sold before importation into the
United States. We based PP on the packed, ex-factory price to unrelated
purchasers in the United States.
We made deductions from USP, where appropriate, for foreign and
U.S. inland freight and insurance, Mexican and U.S. brokerage and U.S.
import duties, in accordance with section 772(d)(2) of the Act.
We added to USP the amount of import duties which have been
rebated, or which not have been collected, by reason of the exportation
of the subject merchandise to the United States.
C. CINSA and APSA
For both CINSA and APSA we made an adjustment to USP for the value-
added tax (VAT) paid on the comparison sales in Mexico. In light of the
Federal Circuit's decision in Federal Mogul v. United States, CAFC No.
94-1097, the Department has changed its treatment of home market
consumption taxes. Where merchandise exported to the United States is
exempt from the consumption tax, the Department will add to the U.S.
price the absolute amount of such taxes charged on the comparison sales
in the home market. This is the same methodology that the Department
adopted following the decision of the Federal Circuit in Zenith v.
United States, 988 F. 2d 1573, 1582 (1993), and which was suggested by
that court in footnote 4 of its decision. The Court of International
Trade (CIT) overturned this methodology in Federal Mogul v. United
States, 834 F. Supp. 1391 (1993), and the Department acquiesced in the
CIT's decision. The Department then followed the CIT's preferred
methodology, which was to calculate the tax to be added to U.S. price
by multiplying the adjusted U.S. price by the foreign market tax rate;
the Department made adjustments to this amount so that the tax
adjustment would not alter a ``zero'' pre-tax dumping assessment.
The foreign exporters in the Federal Mogul case, however, appealed
that decision to the Federal Circuit, which reversed the CIT and held
that the statute did not preclude Commerce from using the ``Zenith
footnote 4'' methodology to calculate tax-neutral dumping assessments
(i.e., assessments that are unaffected by the existence or amount of
home market consumption taxes). Moreover, the Federal Circuit
recognized that certain international agreements of the United States,
in
[[Page 8913]]
particular the General Agreement on Tariffs and Trade (GATT) and the
Tokyo Round Antidumping Code, required the calculation of tax-neutral
dumping assessments. The Federal Circuit remanded the case to the CIT
with instructions to direct Commerce to determine which tax methodology
it will employ.
The Department has determined that the ``Zenith footnote 4''
methodology should be used. First, as the Department has explained in
numerous administrative determinations and court filings over the past
decade, and as the Federal Circuit has now recognized, Article VI of
the GATT and Article 2 of the Tokyo Round Antidumping Code required
that dumping assessments be tax-neutral. This requirement continues
under the new Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade. Second, the Uruguay Round Agreements
Act (URAA) explicitly amended the antidumping law to remove consumption
taxes from the home market price and to eliminate the addition of taxes
to U.S. price, so that no consumption tax is included in the price in
either market. The Statement of Administrative Action (p. 159)
explicitly states that this change was intended to result in tax
neutrality.
While the ``Zenith footnote 4'' methodology is slightly different
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA
law required that the tax be added to United States price rather than
subtracted from home market price, it does result in tax-neutral duty
assessments. In sum, the Department has elected to treat consumption
taxes in a manner consistent with its longstanding policy of tax-
neutrality and with the GATT.
Also, for both APSA and CINSA, the Department verified in the
original investigation and in previous reviews that both companies
incur the same packing expenses for sales of the subject merchandise in
the United States and in Mexico. Therefore, as in previous reviews, no
adjustment was made for packing.
Foreign Market Value
A. APSA
In calculating foreign market value (FMV), the Department used home
market price, as defined in section 773 of the Act. Home market price
was based on the packed, ex-factory price to certain related and
unrelated purchasers in the home market. In our margin calculations, we
used sales to related parties which we found were at arm's length. See
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the
United Kingdom; Final Results of Antidumping Duty Administrative
Review, 60 FR 44012 (August 24, 1995).
We made deductions from the home market price for discounts and
rebates. For comparison to PP sales, pursuant to section 773(a)(4)(B)
and 19 C.F.R. 353.56(a)(2), we made a circumstance-of-sale (COS)
adjustment, where appropriate, for differences in credit expenses. For
comparison to ESP sales, we also deducted credit expenses from FMV.
We adjusted for differences in commissions in accordance with 19
CFR 353.56(a)(2)(1994).
Regarding indirect selling expenses, APSA calculated inventory
carrying costs based on sales price. We recalculated these costs based
on APSA's cost of goods sold.
We adjusted for VAT in accordance with our practice. (See the
United States Price section of this notice, above.)
B. CINSA
We also used home market price for CINSA, when sufficient
quantities of such or similar merchandise were sold in the home market,
at or above the cost of production (COP), to provide a basis for
comparison.
Home market price was based on the packed, delivered and ex-factory
price to certain related and unrelated purchasers in the home market.
In our margin calculations, we used sales to related parties which we
found were at arm's length. We made deductions from home market price
for discounts, where applicable.
In light of the Court of Appeals for the Federal Circuit's decision
in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v.
United States, 13 F.3d 398 (Fed. Cir. 1994), 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. Instead, we
adjust for those expenses under the COS provision of 19 CFR 353.56(a).
Accordingly, in the present case, we adjusted for post-sale home market
inland freight charges under the COS provision of 19 CFR 353.56(a). We
did not deduct pre-sale inland freight charges because, as in the fifth
administrative review, CINSA did not demonstrate to the Department's
satisfaction that these expenses are directly related to sales of the
subject merchandise. Because CINSA did not report warehousing as a
direct selling expense, it is reasonable to assume that freight to the
warehouse also is not directly related to sales. See Final
Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit
from Thailand, 60 FR 29553, 29563 (June 5, 1995) for a complete
discussion on the Department's policy concerning pre-sale movement
charges.
Pursuant to section 773(a)(4)(B) and 19 C.F.R. 353.56(a)(2), we
made a COS adjustment, where appropriate, for differences in credit
expenses. We recalculated home market credit using the revised interest
rate reported in the May 2, 1994, supplemental response. Also, as
stated in this response, we did not calculate credit expenses for sales
in the home market where there were missing pay dates. We determined
that the bank fees associated with the letter of credit transactions
for certain U.S. customers are a direct selling expense and have added
these fees to FMV. We deducted home market commissions and added U.S.
indirect selling expenses capped by the amount of home market
commissions.
We adjusted for VAT in accordance with our practice. (See the
``United States Price'' section of this notice, above.)
Cost of Production
With regard to CINSA, there is a history of sales below the COP. In
order to determine whether home market prices were below COP within the
meaning of section 773(b) of the Act, we performed a product-specific
cost test, in which we examined whether each home market product sold
during the POR was priced below the COP of that product. For CINSA's
home market models for which there were insufficient sales at or above
the COP, we used CV.
Regarding APSA, petitioner's June 18, 1993, letter requested an
extension for filing a sales below cost allegation, however, no such
allegation was filed with the Department. Therefore, we did not perform
a sales below cost analysis of APSA.
A. Calculation of COP
We calculated COP based on the sum of respondent's cost of
materials, fabrication, general expenses and packing costs, in
accordance with 19 CFR 353.51(c). In our COP analysis, we have relied
on COP information submitted by CINSA, except in the following
instances where it was not appropriately quantified or valued: 1) We
included expenses related to employee profit sharing in the cost of
manufacture; 2) We revised CINSA's submitted interest costs to exclude
the calculation of negative interest expense; and adjusted the VAT
amount included in COP.
[[Page 8914]]
B. Test of Home Market Sales Prices
As required by section 773(b) of the Act, we tested whether a
substantial quantity of respondent's home market sales of subject
merchandise were made at prices below COP over an extended period of
time. We also tested whether such sales were made at prices which
permit recovery of all costs within a reasonable period of time in the
normal course of trade. On a product-specific basis, we compared the
COP (net of selling expenses) to the reported home market prices, less
any applicable movement charges, rebates, and direct and indirect
selling expenses. To satisfy the requirement of section 773(b)(1) of
the Act that below-cost sales be disregarded only if made in
substantial quantities, we applied the following methodology. If over
90 percent of the respondent's sales of a given product were at prices
equal to or greater than the COP, we did not disregard any below-cost
sales of that product because we determined that the below-cost sales
were not made in ``substantial quantities.'' If between 10 and 90
percent of the respondent's sales of a given product were at prices
equal to or greater than the COP, and sales of that product were also
found to be made over an extended period of time, we disregarded only
the below-cost sales. Where we found that more than 90 percent of the
respondent's sales of a product were at prices below the COP, and the
sales were made over an extended period of time, we disregarded all
sales of that product, and calculated FMV based on CV, in accordance
with section 773(b) of the Act.
In accordance with section 773(b)(1) of the Act, in order to
determine whether below-cost sales had been made over an extended
period of time, we compared the number of months in which below-cost
sales occurred for each product to the number of months in the POR in
which that product was sold. If a product was sold in three or more
months of the POR, we do not exclude below-cost sales unless there were
below-cost sales in at least three months during the POR. When we found
that sales of a product only occurred in one or two months, the number
of months in which the sales occurred constituted the extended period
of time, i.e., where sales of a product were made in only two months,
the extended period of time was two months; where sales of a product
were made in only one month, the extended period of time was one month.
See Final Determination of Sales at Less Than Fair Value: Certain
Carbon Steel Butt-Weld Pipe Fittings from the United Kingdom, 60 FR
10558, 10560 (February 27, 1995).
C. Results of COP Test
We found that for certain products, between 10 and 90 percent of
CINSA's home market sales were sold at below COP prices over an
extended period of time. Because CINSA provided no indication that the
disregarded sales were at prices that would permit recovery of all
costs within a reasonable period of time in the normal course of trade,
in accordance with section 773(b) of the Act, we based FMV on CV for
all U.S. sales left without a home market sales match as a result of
our application of the COP test.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of respondent's cost of materials, fabrication,
general expenses and packing costs. In accordance with section
773(e)(1)(B) (i) and (ii), we used: (1) The actual amount of general
expenses because those amounts were greater than the statutory minimum
of ten percent and (2) the actual amount of profit where it exceeded
the statutory minimum of eight percent.
We recalculated the respondent's CV based on the methodology
described in the calculation of COP above, with the exception of the
VAT adjustment. In addition, we revised CV profit based upon the
calculation provided by CINSA.
Price-to-CV Comparisons
Where we made CV to PP comparisons, we made a COS adjustment for
direct selling expenses.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the
following margins exist for the period December 1, 1991, through
November 30, 1992:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Review period (percent)
------------------------------------------------------------------------
APSA..................................... 12/1/91-11/30/92 1.65
CINSA.................................... 12/1/91-11/30/92 4.93
------------------------------------------------------------------------
Interested parties may request a disclosure within 5 days of
publication of this notice and may request a hearing within 10 days of
the date of publication. Any hearing, if requested, will be held no
later than seven days after the scheduled date for submission of
rebuttal briefs. Case briefs will be due on April 22, 1996, and
rebuttal briefs, limited to issues raised in the case briefs, will be
due on April 29, 1996. We will publish a notice of the final results of
this administrative review, which will include the results of its
analysis of issues raised in any such case briefs.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between USP and FMV may vary from the percentages stated
above. The Department will issue appraisement instructions directly to
the Customs Service.
Furthermore, the following deposit requirement will be effective
for all shipments of subject merchandise from Mexico entered, or
withdrawn from warehouse, for consumption on or after the publication
date of the final results of this administrative review, as provided by
section 751(a)(1) of the Tariff Act: (1) the cash deposit rates for the
reviewed companies will be those rates established in the final results
of this review; (2) for previously reviewed or investigated companies
not listed above, the cash deposit rate will continue to be the
company-specific rate published for the most recent period; (3) if the
exporter is not a firm covered in this review, a prior review, or the
original less-than-fair-value investigation, but the manufacturer is,
the cash deposit rate will be the rate established for the most recent
period for the manufacturer of the merchandise; and (4) if neither the
exporter nor the manufacturer is a firm covered in this or any previous
review conducted by the Department, the cash deposit rate will be the
``all others'' rate of 29.52 percent from the original investigation.
This notice serves as a preliminary 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 administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: February 29, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-5257 Filed 3-5-96; 8:45 am]
BILLING CODE 3510-DS-P
