E6-7771. Notice of Final Determination of Sales at Less Than Fair Value and Final Determination of Critical Circumstances: Diamond Sawblades and Parts Thereof from the Republic of Korea

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

May 22, 2006.

SUMMARY:

On December 29, 2005, the Department of Commerce (the Department) published its preliminary determination of sales at less than fair value (LTFV) in the antidumping duty investigation of diamond sawblades and parts thereof from the Republic of Korea (Korea). The period of investigation (POI) is April 1, 2004, through March 31, 2005.

Based on our analysis of the comments received, we have made changes in the margin calculations. Therefore, the final determination differs from the preliminary determination. The final weighted-average dumping margins for the investigated companies are listed below in the section entitled “Final Determination Margins.” Finally, we determine that critical circumstances do not exist with regard to certain exports of subject merchandise from Korea by Ehwa Diamond Industrial Co., Ltd. (Ehwa) and Hyosung Diamond Industrial Co. (Hyosung). However, we find that critical circumstances do exist with respect to Shinhan Diamond Industrial Co., Ltd. (Shinhan) and the companies covered by the “All Others” rate.

FOR FURTHER INFORMATION CONTACT:

Maisha Cryor or Thomas Martin, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

We determine that diamond sawblades from Korea are being, or are likely to be, sold in the United States at LTFV, as provided in section 735 of the Tariff Act of 1930, as amended (the Act). The estimated margins of sales at LTFV are shown in the “Continuation of Suspension of Liquidation” section of this notice. In addition, we determine that there is no reasonable basis to believe or suspect that critical circumstances exist with respect to imports of the subject merchandise produced by Ehwa and Hyosung. However, we find that there is a reasonable basis to believe or suspect that critical circumstances exist with respect to imports of the subject merchandise produced by Shinhan and companies covered by the “All Others” rate.

Case History

The preliminary determination in this investigation was published on December 29, 2005. See Notice of Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Negative Preliminary Critical Circumstances Determination: Diamond Sawblades and Parts Thereof from the Republic of Korea, 70 FR 77135 (December 29, 2005) (Preliminary Determination).

Since the preliminary determination, the following events have occurred.

In February 2006 and March 2006, we verified the questionnaire responses of the three participating respondents in this case, Ehwa, Shinhan, and Hyosung.

On April 17, 2006, we received case briefs from the petitioner,^[1] Ehwa, Shinhan, and Hyosung. We also received rebuttal briefs on April 24, 2006, from the petitioner, Ehwa, Shinhan, and Hyosung. The Department held a public hearing on May 1, 2006, at the request of the petitioner, Ehwa, Shinhan, and Hyosung.

Period of Investigation

The period of investigation is April 1, 2004, through March 31, 2005.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the “Issues and Decision Memorandum” from Stephen J. Claeys, Deputy Assistant Secretary for Import Administration, to David M. Spooner, Assistant Secretary for Import Administration, dated May 15, 2006, which is adopted by this notice. Parties can find a complete discussion of the issues raised in this investigation and the corresponding recommendations in this public memorandum, which is on file in the Central Records Unit, room B-099 of the main Commerce Building. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly on the Web at http://ia.ita.doc.gov/​frn/​index.html. The paper copy and electronic version of the Issues and Decision Memorandum are identical in content.

Scope of Investigation

The products covered by this investigation are all finished circular sawblades, whether slotted or not, with a working part that is comprised of a diamond segment or segments, and parts thereof, regardless of specification or size, except as specifically excluded below. Within the scope of this investigation are semifinished diamond sawblades, including diamond sawblade cores and diamond sawblade segments. Diamond sawblade cores are circular steel plates, whether or not attached to non-steel plates, with slots. Diamond sawblade cores are manufactured principally, but not exclusively, from alloy steel. A diamond sawblade segment consists of a mixture of diamonds (whether natural or synthetic, and regardless of the quantity of diamonds) and metal powders (including, but not limited to, iron, cobalt, nickel, tungsten carbide) that are formed together into a solid shape (from generally, but not limited to, a heating and pressing process).

Sawblades with diamonds directly attached to the core with a resin or electroplated bond, which thereby do not contain a diamond segment, are not included within the scope of this investigation. Diamond sawblades and/or sawblade cores with a thickness of less than 0.025 inches, or with a thickness greater than 1.1 inches, are excluded from the scope of this investigation. Circular steel plates that have a cutting edge of non-diamond material, such as external teeth that protrude from the outer diameter of the plate, whether or not finished, are excluded from the scope of this investigation. Diamond sawblade cores with a Rockwell C hardness of less than 25 are excluded from the scope of the petition. Diamond sawblades and/or diamond segment(s) with diamonds that predominantly have a mesh size number greater than 240 (such as 250 or 260) are excluded from the scope of this investigation. Merchandise subject to this investigation is typically imported under heading 8202.39.00.00 of the Harmonized Tariff Schedule of the United States (HTSUS). When packaged together as a set for retail sale with an item that is separately classified under headings 8202 to 8205 of the HTSUS, diamond sawblades or parts thereof may be imported under heading 8206.00.00.00 of the HTSUS. The tariff classification is provided for convenience and U.S. Customs and Border Protection purposes; however, the written description of the scope of this investigation is dispositive.

Scope Rulings

During the course of this investigation, the Department issued several scope rulings, all of which are affirmed through this final determination. Specifically, in the Preliminary Determination, the Department ruled that concave and convex cores, and finished diamond sawblades produced from such cores, are within the scope of this investigation. See Memorandum from Maisha Cryor, Senior International Trade Compliance Analyst, to Thomas F. Futtner, Acting Office Director, “Consideration of Scope Exclusion and Clarification Requests,” dated December 20, 2005, at page 8. The Department also ruled that metal-bonded, diamond 1A1R grinding wheels are within the scope of this investigation. Id. at 11. On April 7, 2006, the Department found granite contour diamond sawblades within the scope of the investigation. See Memorandum from Maisha Cryor, Senior International Trade Compliance Analyst, to Thomas F. Futtner, Acting Office Director, “Consideration of Scope Exclusion Request,” dated April 7, 2006. In this decision, the Department confirmed that the Rockwell C hardness threshold contained in the scope of the investigation applies only to cores, and not to finished diamond sawblades. Id. at 7. Lastly, the term “sawblade” is defined as those products that meet the 1A1R specification, where the segment thickness is larger than the thickness of the core. See the petitioner's May 3, 2005, submission at Exhibit I-10 (“The segment or rim is slightly wider than the steel blade to allow the attacking edge to penetrate the material without the steel blade rubbing against it”); the petitioner's May 10, 2005, submission, at page 14 (“the segment or rim is slightly wider than the steel blade to allow the attacking edge to penetrate the material without the steel blade rubbing against it”); Transcript to April 25, 2006, Public Hearing in the companion investigation of diamond sawblades from the People's Republic of China (statement by the petitioner that the “international codes for ... sawblades are 1A1R, 1A1RS, and 1A1RSS, where the R means recessed. And that refers to the core, {where} the core is thinner than the segments”); and ITC Investigation No. 731-TA-1093, August 2005 (“The segment, or rim, is slightly wider than the steel blade to permit the leading edge to penetrate the material without the steel blade rubbing against it and to discourage blade binding”).

Changes Since the Preliminary Determination

Based on our analysis of the comments received and our findings at verification, we have made certain changes to the margin calculations. For a discussion of these changes, see the “Margin Calculations” section of the Issues and Decision Memorandum.

Critical Circumstances

In our preliminary determination, we found that critical circumstances did not exist for any mandatory respondent or any company subject to the “All Others” rate. See Preliminary Determination, 70 FR at 77142-77144. We received comments on our critical circumstances determination from the petitioner, Ehwa, and Shinhan. Based upon those comments, we have revised our analysis to include the margins listed in the “Final Determination Margins” section below, and we based our analysis of whether imports were massive according to the value of shipments, rather than quantity. See Memorandum from Mark J. Manning, Acting Program Manager, to Thomas F. Futtner, Acting Office Director, “Final Determination of Critical Circumstances,” dated May 15, 2006. Due to the changes made in our analysis, we determine that critical circumstances do not exist for imports of subject merchandise from Ehwa and Hyosung because, as required section 735(a)(3)(A)(ii) of the Act, there is no evidence that importers knew, or should have known, that the exporter was selling subject merchandise at LTFV. In addition, we also note that the requirements of section 735(a)(3)(B) of Act are not met for Ehwa and Hyosung because their imports were not massive. However, we find that critical circumstances do exist for imports of subject merchandise from Shinhan and the “All Others” companies because, pursuant to section 735(a)(3)(A)(ii) of the Act, there is evidence that importers knew, or should have known, that the exporter was selling subject merchandise at LTFV. In addition, we also note that Shinhan and the “All Others” companies satisfy section 735(a)(3)(B) of Act because their imports were massive. Id.

Verification

As provided in section 782(i) of the Act, we verified the information submitted by Ehwa, Shinhan and Hyosung for use in our final determination. We used standard verification procedures including examination of relevant accounting and production records, and original source documents provided by the respondents.

Continuation of Suspension of Liquidation

In accordance with section 735(c)(1)(B) of the Act, we are directing U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all imports of subject merchandise that are entered, or withdrawn from warehouse, for consumption on or after December 29, 2005, the date of publication of the preliminary determination in the Federal Register. However, since we have determined that critical circumstances exist with respect to subject merchandise produced by Shinhan and the companies covered by the “All Others” rate, we will instructed CBP to suspend liquidation of all unliquidated entries of merchandise produced and/or exported by these companies that entered on or after September 30, 2005, which is 90 days before the date of publication of the Preliminary Determination. See section 735(c)(4)(B). We will instruct CBP to continue to require a cash deposit or the posting of a bond for all companies based on the estimated weighted-average dumping margins shown below. The suspension of liquidation instructions will remain in effect until further notice.

Final Determination Margins

We determine that the following weighted-average dumping margins exist for the period April 1, 2004, through March 31, 2005:

Exporter/Manufacturer	Weighted-Average Margin Percentage	Critical Circumstances
Ehwa	12.76%	No
Shinhan	26.55%	Yes
Hyosung	6.43%	No
All Others	16.39%	Yes

In accordance with section 735(c)(5)(A) of the Act, we have based the “All Others” rate on the weighted-average of the dumping margins calculated for the exporters/manufacturers investigated in this proceeding. The “All Others” rate is calculated exclusive of all de minimis margins and margins based entirely on adverse facts available.

ITC Notification

In accordance with section 735(d) of the Act, we have notified the ITC of our determination. As our final determination is affirmative, the ITC will determine within 45 days whether these imports are causing material injury, or threat of material injury, to an industry in the United States. If the ITC determines that material injury or threat of injury does not exist, the proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP officials to assess antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

This notice serves as the only reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). 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.

We are issuing and publishing this determination and notice in accordance with sections 735(d) and 777(i) of the Act.

Dated: May 15, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.

Appendix

List of Issues in the Issues and Decision Memorandum

Comment 1: Whether the Department Should Revise the Physical Characteristics and Model Match Criteria.

Comment 2: Whether the Department Should Reaffirm Its Preliminary Scope Conclusions In the Final Determination And Include These Conclusions in Instructions to Customs.

Comment 3: Whether the Department Should Treat the Location of Segment Manufacture As the Country of Origin for DSB.

Comment 4: Whether U.S. Repacking Expenses, U.S. Warehousing Expenses, and U.S. Movement Expenses Should Be Treated as Selling Expenses for Purposes of Calculating CEP Profit.

Comment 5: Whether Further Manufacturing Costs Should be Deducted from the Calculation of Net U.S. Price When Such Sales are Not Reported.

Comment 6: Whether Further Manufacturing Costs and Revenues Should be Included in the Calculation of CEP Profit When Such Sales are Not Reported.

Comment 7: Whether the Department Should Use the Adjustments to Respondents' Costs to Account for NME Inputs in the Calculation of CEP Profit.

Comment 8: Whether the Department Should Correct VCOM and TCOM for any Changes it Makes to the Reported Costs.

Comment 9: Whether the Department Should Reconsider its Preliminary Critical Circumstances Determination.

Comment 10: Whether the Department Should Adjust Ehwa's and Shinhan's Purchases from Affiliated Suppliers.

Comment 11: Whether the Department Should Provide Offsets to Dumping.

Comment 12: Whether the Department Should Adjust the Reported Costs for Purchases from Unaffiliated NME Suppliers.

Comment 13: Whether the Department's Preliminary Decision to Collapse Ehwa and Shinhan was Contrary to Law and the Department's Longstanding and Consistent Past Practice.

Comment 14: Whether the Department Should Treat Information Regarding a Particular Relationship Between Ehwa and Shinhan as Public Information.

Comment 15: Whether the Department Should Collapse Ehwa with its Chinese Affiliates.

Comment 16: Whether Ehwa's Other Discounts and Certain Billing Adjustments Should be Treated As Selling Expenses for Purposes of Calculating CEP Profit.

Comment 17: Whether Ehwa Placed Conflicting Values Related to its Indirect Selling Expenses on the Record.

Comment 18: Whether the Department Should Correct Formulas Used in Ehwa's Calculation of Indirect Selling Expenses.

Comment 19: Whether the Department Should Disallow Ehwa's Allocation of Indirect Selling Expenses Between the Industrial and the Stone & Construction Divisions because Ehwa's Sales of 1A1R Merchandise are from the Industrial Division.

Comment 20: Whether the Department Should Calculate the Indirect Selling Expense Ratio for Each of Ehwa's U.S. Affiliates.

Comment 21: Whether Ehwa Properly Excluded its Sales of Refurbished Products from its HM Sales Database.

Comment 22: Whether the Department Should Adjust Costs Related to the Allocation of Costs Between Indirect Selling and G&A Expenses.

Comment 23: Whether Ehwa's Use of Surrogate Costs Was Appropriate.

Comment 24: Whether the Department Should Adjust G&A Expenses to Account for the Over-Accrual of the Provision for Retirement Expenses.

Comment 25: Whether Shinhan Failed to Report COM for SHINUS04 and SHINHM04.

Comment 26: Whether the Department Should Base Shinhan's Starting Price on INVNPRU Rather than GRSUPRU.

Comment 27: Whether the Department Should Apply AFA to Shinhan's Inland Freight Expenses.

Comment 28: Whether the Department Should Allocate Shinhan's Freight Revenue on the Same Basis as Inland Freight.

Comment 29: Whether the Department Double-Counted Shinhan's Freight Revenue.

Comment 30: Whether the Department Should Recalculate Shinhan's HM and International Movement Expenses.

Comment 31: Whether the Department Should Exclude Shinhan's Sales of Refurbished DSB from Shinhan's HM Sales Database or Weight-Average the Sales and Costs Databases for Refurbished and Non-Refurbished DSB.

Comment 32: Whether the Department Should Collapse Shinhan With Its Korean Affiliates.

Comment 33: Whether the Department Should Collapse Shinhan with Its Chinese Affiliate.

Comment 34: Whether the Department Should Make Symmetric Adjustments to Shinhan's Reported Sales and Cost Data.

Comment 35: Whether the Department Should Ensure that Segments are not Compared with DSB in the Dumping Margin Calculations.

Comment 36: Whether the Department Should Allow Shinhan's Residual Cost Variance Adjustment.

Comment 37: Whether the Department Should Use SG&A Methodology Submitted During the Cost Verification.

Comment 38: Whether the Department Should Adjust for Items in Shinhan's G&A Expense Rate Calculation.

Comment 39: Whether the Department Should Correct Certain Minor Errors in Its Proposed Cost Adjustments.

Comment 40: Whether the Department Should Use the Costs Based on Shinhan's Normal Accounting System.

Comment 41: Whether the Department Should Adjust Shinhan's Costs for Certain CONNUMs.

Comment 42: Whether the Department Should Reduce Shinhan's Materials Rebate Adjustment.

Comment 43: Whether the Department Should Adjust the Production Quantities of CONNUMS not Produced in the POI.

Comment 44: Whether the Department Should Base Shinhan's Financial Expense Rate on Facts Available.

Comment 45: Whether The Department Should Revise Certain Freight Expenses in Hyosung's U.S. Sales Database.

Comment 46: Whether the Department Should Apply AFA to Hyosung's Reported HM Inland Freight.

Comment 47: Whether the Department Should Revise the Indirect Selling Expense Ratio for Domestic and Export Sales.

Comment 48: Whether Hyosung Fully and Accurately Reported all HM and U.S. Sales of Subject Merchandise.

Comment 49: Whether the Department Should Allow a Duty Drawback Adjustment for Hyosung.

Comment 50: Whether the Department Should Recalculate Credit Expense for the EP Sales with Revised Shipment Dates in the Final Determination.

Comment 51: Whether the Department Should Use Hyosung's Originally Reported Costs of Production.

Comment 52: Whether the Department Should Adjust Hyosung's Reported Costs for Unreconciled Differences.

Comment 53: Whether the Department Should Exclude Hyosung's Prior Period Income Tax Payments From G&A Expenses.

Comment 54: Whether the Department Should Allow the Short-Term Income Generated From Investment Securities as an Offset to Hyosung's Financial Expenses.

Comment 55: Whether the Department Should Correct the Surrogate CONNUM for two Products on the COP Database.

Comment 56: Whether the Department Should Ensure that the Products Purchased from Unaffiliated Suppliers Should be Assigned the Reported Costs of Production for Those Products.

Comment 57: Whether the Department Should Reject the Petitioner's Case Brief for Failure To Comply With the Department's Regulations.

Footnotes

1.  The petitioner in this investigation is the Diamond Sawblade Manufacturers' Coalition.