[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Notices]
[Pages 20216-20222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11246]
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DEPARTMENT OF COMMERCE
[A-580-812]
Dynamic Random Access Memory Semiconductors of One Megabit or
Above From the Republic of Korea; 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 September 11, 1995, the Department of Commerce (the
Department) published the preliminary results of administrative review
of the antidumping duty order on dynamic random access memory
semiconductors (DRAMS) of one megabit or above from the Republic of
Korea. The review covers two manufacturers/exporters of the subject
merchandise to the United States for the period October 29, 1992
through April 30, 1994. These manufacturers/exporters are LG Semicon
Co., Ltd. (LGS, formerly Goldstar Electron Co., Ltd.) and Hyundai
Electronics Industries, Inc. (HEI/Hyundai).
As a result of comments we received, the antidumping margins have
changed from those we presented in our preliminary results.
EFFECTIVE DATE: May 6, 1996.
FOR FURTHER INFORMATION CONTACT: Thomas F. Futtner, Office of
Antidumping Compliance, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230, telephone: (202)
482-3814.
SUPPLEMENTARY INFORMATION:
Background
On September 11, 1995, the Department published the preliminary
results (60 FR 47149) of administrative review of the antidumping duty
order on DRAMS of one megabit or above from the Republic of Korea. We
received timely comments from the petitioner and both respondents. At
the request of the petitioner, we held a hearing on October 26, 1995.
Scope of the Review
Imports covered by the review are shipments of DRAMS of one megabit
and above from the Republic of Korea (Korea). For purposes of this
review, DRAMS are all one megabit and above, whether assembled or
unassembled. Assembled DRAMS include all package types. Unassembled
DRAMS include processed wafers, uncut die and cut die. Processed wafers
produced in Korea, but packaged, or assembled into memory modules in a
third country, are included in the scope; wafers produced in a third
country and assembled or packaged in Korea are not included in the
scope of this review.
The scope of this review includes memory modules. A memory module
is a collection of DRAMS, the sole function of which is memory. Modules
include single in-line processing modules (SIPs), single in-line memory
modules (SIMMs), or other collections of DRAMS, whether unmounted or
mounted on a circuit board. Modules that contain other parts that are
needed to support the function of memory are covered. Only those
modules which contain additional items which alter the function of the
module to something other than memory, such as video graphics adapter
(VGA) boards and cards, are not included in the scope.
The scope of this review also includes video random access memory
semiconductors (VRAMS), as well as any future packaging and assembling
of DRAMS.
The scope of this review also includes removable memory modules
placed on motherboards, with or without a central processing unit
(CPU), unless the importer of motherboards certifies with the Customs
Service that neither it, nor a party related to it or under contract to
it, will remove the modules from the motherboards after importation.
The scope of this review does not include DRAMS or memory modules that
are reimported for repair or replacement.
The DRAMS subject to this review are classifiable under subheadings
8542.11.0001, 8542.11.0024, 8542.11.0026, and 8542.11.0034 of the
Harmonized Tariff Schedule of the United States (HTSUS). Also included
in the scope are those removable Korean DRAMS contained on or within
products classifiable under subheadings 8471.91.0000 and 8473.30.4000
of the HTSUS. Although the HTSUS subheadings are provides for
convenience and customs purposes, the written description of the scope
of this review remains dispositive.
The period of review (POR) covers from October 29, 1992 through
April 30, 1994 for all respondents.
Applicable Statute and Regulations
The Department has conducted this administrative review in
accordance with section 751 of the Tariff Action 1930, as amended (the
Tariff Act). Unless otherwise indicated, all citations to the statute
and to the Department's regulations refer to the provisions as they
existed on December 31, 1994.
United States Price
We calculated U.S. price according to the methodology described in
our preliminary results, except for the adjustment of value-added taxes
(VAT), as described below.
In light of the Federal Circuit's decision in Federal Mogul v.
United States, 63 F. 3d 1572 (Fed. Cir. 1995), 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
[[Page 20217]]
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 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 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 GATT.
Secondly, 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 U.S. 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.
Foreign Market Value
With the exception noted above for VAT, we calculated FMV according
to the methodology described in our preliminary results.
Analysis of Comments Received
We invited interested parties to comment on the preliminary results
of this administrative review. At the request of the petitioner, we
held a public hearing on October 26, 1995. We received timely comments
from the petitioner and both respondents.
General Comments
Comment 1: The petitioner argues that Hyundai and LGS erred in
preparing their antidumping questionnaire responses by misallocating
corporate indirect selling expenses. Specifically, the petitioner
argues that Hyundai's U.S. subsidiary, Hyundai Electronics America,
Inc. (HEA), and LGS each mistakenly allocated corporate U.S. indirect
selling expenses among their various manufacturing divisions on bases
other than relative sales value. The petitioner maintains that
allocation on the basis of relative sales value is the standard
allocation methodology for all indirect selling expenses. The
petitioner argues that HEA and LGS's allocation method is incorrect
because both respondents under-allocated the proper amount of
administrative expenses to their respective semiconductor divisions.
Hyundai argues that the Department's questionnaire did not instruct
Hyundai to allocate indirect selling expenses on the basis of sales
value, and that the Department routinely accepts allocation bases other
than relative sales value, provided that the methodology is reasonable.
Hyundai also notes that the Department verified HEA's allocation
methodology during its U.S. sales verification of HEA.
LGS argues that the current allocation methodology for indirect
selling expenses has been twice verified and accepted by the
Department. Moreover, LGS argues that it has been the Department's
policy to accept reasonable, verified allocation methodologies of
indirect selling expenses.
DOC Position: We agree with Hyundai and LGS. It is not our policy
to require allocation of indirect selling expenses based upon relative
sales value in every instance (see Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof from France, et al., Final
Results of Antidumping Duty Reviews, Partial Termination of
Administrative Reviews, and Revocation in Part of Antidumping Duty
Orders, 60 FR 10900 (February 28, 1995) (AFBs 1995). More specifically,
in the final results of the less-than-fair-value investigation we
clearly noted that we would accept an allocation basis other than
relative sales value provided the methodology was reasonable. See
Dynamic Random Access Memory Semiconductors of One Megabit and Above,
from the Republic of Korea, 58 FR 15467, 15477 (March 23, 1993) (DRAMS
LTFV Final 1993).
Moreover, we note that Hyundai and LGS used three separate bases of
allocation for different selling expenses, one of which was relative
sales value. In addition, Hyundai used manpower hours in allocating
labor expenses and the number of invoices in allocating accounting
department expenses. LGS used a similar methodology to allocate its
indirect selling expenses that were not identified by subdivision. We
believe that it is more appropriate to allocate human resource and
accounting department expenses on the basis of manpower and number of
invoices than on the basis of sales value because human resource
expense is a function of the number of employees, and accounting
department expense is a function of the volume of invoices prepared.
Thus, we believe that these allocation bases are reasonable and have
continued to accept them for purposes of these final results of review.
Furthermore, we verified HEA and LGS's allocation bases for its
indirect selling expenses during our U.S. sales verifications and found
no discrepancies or inaccuracies in Hyundai or LGS's allocation
methodology. See Verification Report of Home Market Sales Questionnaire
Response of Hyundai Electronic Industries, Inc., April 27, 1995 (HEI
Home Market Sales Verification Report) at page pp. 12-13, and
Verification Report of Home Market Sales Questionnaire Response of LG
Semicon, Ltd., April 13, 1995 (LGS Home Market Verification Report) at
page 13.
Comment 2: LGS maintains that the Department should not include
research and development expenses (R&D) of non-DRAM products in the
DRAM R&D. LGS alleges that the product-specific R&D expenses, which
were specifically identified in its accounting system, were fully
quantified and verified by Department officials. LGS argues that the
Department's decision to include
[[Page 20218]]
non-DRAM R&D is inconsistent with the decision of the U.S. Court of
International Trade regarding the LTFV investigation which remanded the
final determination back to the Department, and, in part, ordered the
Department to calculate R&D expense on a product-specific basis. See
Micron Technology, Inc. v. Unites States, 893 F. Supp. 21 (CIT 1995)
(Micron Technology).
The petitioner argues that a product specific accounting
categorization of projects does not prove that R&D conducted for one
type of semiconductor cannot benefit the development of another type of
semiconductor (i.e., cross-fertilization). Therefore, the petitioner
maintains that the Department's treatment of R&D expenses in the
preliminary determination was appropriate.
DOC Position: We agree with the petitioner. At verification, we
confirmed that each R&D project is accounted for separately in each of
the respondent's respective books and records. Separate accounting,
however, does not necessarily mean that cross fertilization of
scientific ideas does not occur. Moreover, the CIT specifically stated
in Micron Technology that the Department did not ``direct the court to
any record evidence of R&D cross-fertilization in the semiconductor
industry.'' Micron Technology, 893 F. Supp., at 27. In this review, the
Department has provided such information. See Memorandum from Karen
Park to Holly Kuga regarding Cross Fertilization of R&D for DRAMS,
August 14, 1995 (cross fertilization memo). The cross fertilization
memo includes pages from verification exhibits, a memorandum from a
non-partisan expert from the semiconductor industry, as well as
information from certain articles widely read by experts in the DRAM
R&D field demonstrating the existence of cross-fertilization of R&D in
the DRAM industry.
Comment 3: The petitioner argues that the fees paid by HEI and LGS
for the services of their respective trading companies were understated
in their questionnaire response (QR). The petitioner maintains that the
fees reported by HEI did not reflect the true cost of the services
provided by HEI's trading company. The petitioner urges the Department
to quantify the real cost of the services provided by HEI's trading
company by resorting to best information available (BIA), using the
petitioner's estimate of the trading company's costs as derived from
the public information of another respondent in this review.
Hyundai argues that the Department should reject the petitioner's
assertion because the trading company in question is unrelated to HEI
and the Department verified the fee reported. Hyundai states that the
fees reported fully reflect the services provided by the trading
company to HEI.
The petitioner alleges that despite the number of services provided
by LGS' trading company, LGS acknowledged no costs associated with
these services. The petitioner argues that a circumstance of sale
adjustment should be made to U.S. price to capture the selling expenses
associated with this trading company.
LGS argues that the Department has verified that LGS does not incur
any additional expenses through the use of the trading company's name
as the exporter of record for some of LGS' exports of subject
merchandise to the United States. LGS maintains that its trading
company did not provide any service for LGS in its sales transactions.
DOC Position: We agree with the respondents. We agree that the
trading companies in question are unrelated to HEI and LGS. We verified
this during our home market sales verification in Korea. See HEI Cost-
of-Production/Constructed Value (COP/CV) Verification Report at page 5,
LGS COP/CV Verification Report at page 6. Furthermore, we examined the
fees paid to HEI's unrelated trading company by HEI and found no
discrepancies in the fee amounts reported. (HEI Home Market Sales
Verification Report, p. 16). Despite the petitioner's assertion that
these fees do not reflect the actual cost of services provided to HEI,
there is no evidence on the record to suggest that this is the case.
We also examined LGS's relationship with its trading company. See
LGS Home Market Sales Verification Report, pp. 18-19. We verified that
LGS did not incur any costs for the use of its trading company's name.
Moreover, we verified that this trading company did not provide any
services related to sales of subject merchandise to LGS.
Comment 4: The petitioner urges the Department to impute costs for
loan fees borne by certain companies. The petitioner maintains that the
fees reported by Hyundai and LGS do not include the risk and cost by
certain firms. The petitioner urges the Department to increase HEI and
LGS's financing costs by a percentage derived from HEI and LGS's
financial statements.
Hyundai counters that the petitioner's argument is without merit
because the Department thoroughly verified all financing fees incurred
by HEI during the POR. Hyundai further explains that the petitioner
ignored the evidence on the record that because Hyundai's fixed assets
are used as loan collateral, that the full risk and cost of the loans
were accurately reported.
LGS argues that no payment was made related to the loan guarantees.
Moreover, LGS notes that the Korean law does not require the guarantor
to charge for related party guarantees unless there is a default.
DOC Position: We agree with Hyundai and LGS. During our COP
verification of HEI and LGS, we examined HEI's and LGS's financial
expenses and specifically addressed the issue of loan fees. See Report
on the Verification of the Cost of Production Questionnaire Response of
Hyundai Electronic Industries, Inc., April 17, 1995 (HEI COP/CV
Verification Report) at pp. 26-27 and Verification of the Cost of
Production Questionnaire Response of Goldstar Electron Company, Ltd.
(GSEN), July 26, 1996, (LGS COP/CV Verification Report), at page 9.
Because our COP verification indicates that HEI and LGS accurately
reported all loan fees, there is no reason to impute a cost for such
expenses.
Company-Specific Comments
LGS
Comment 5: The petitioner alleges that certain royalty agreements
require a different percentage payment of royalty expenses depending on
whether the covered merchandise is sold in the U.S. or elsewhere.
Therefore, the royalty agreements constitute a difference in
circumstance of sale, directly related to sales. LGS claims that the
petitioner's allegation is factually incorrect. The royalty agreements
in question require the same payment for merchandise sold in the U.S.
or elsewhere. Moreover, LGS claims that it is the Department's standard
practice to treat royalties as a cost of manufacturing.
DOC Position: The royalty agreements in question do not require a
different percentage payment depending on whether the covered
merchandise is sold in the U.S. or elsewhere. See LGS's October 19,
1994 response to the Department's supplemental sales questionnaire. The
petitioner is referencing information that was submitted in the
original questionnaire response which was later revised by the
respondent in its supplemental questionnaire response to the
Department.
Moreover, it has been the Department's longstanding practice to
treat royalty payments for production technology as cost of
manufacturing, even in circumstances where the royalty payments were
based on sales revenue. See Extruded Rubber Thread from
[[Page 20219]]
Malaysia, 57 FR 38465 (August 25, 1992) and Certain Hot-Rolled Carbon
Steel Flat Products, etc. from Canada, 58 FR 37099, 37118 (July 9,
1993).
Comment 6: LGS asserts that the Department should accept
amortization of purchased R&D amounts over the relevant contract
period. LGS argues that the Department's decision in the preliminary
determination to expense purchased R&D in the year incurred is
inconsistent with the CIT decision in the less-than-fair-value
investigation. See Micron Technology. LGS asserts that the Micron
decision requires the Department to amortize R&D expenses over the life
cycle of the product.
The petitioner argues that LGS's own financial statements expensed
the purchased R&D in the year incurred. Therefore, all payments related
to the purchased R&D should be acknowledged in the year in which they
were incurred, since this is how the expenses were recorded in the
company's books and records.
DOC Position: We agree with the petitioner that LGS's purchased R&D
expenses should be acknowledged in the year in which they were
incurred, since this is how the expenses were recorded in the company's
books and records. See LGS COP/CV Verification Report of July 26, 1995
at page 8. Moreover, the Micron decision requires the Department to
allow the allocation of R&D expenses over time, when the allocation is
made in accordance with the generally accepted accounting practices in
effect in the home country, and when Commerce is satisfied that those
principles reasonably reflect all of the costs associated with the
production of the subject merchandise. In this case, although the
Korean GAAP may allow LGS to amortize its purchased R&D over a given
period, LGS did not do so. Rather, LGS expensed purchased R&D for its
financial statements, and amortized it over a longer period for the
antidumping response. In these calculations, the Department relied on
LGS's accounting system to determine the total R&D figure applicable to
the analysis: it amortized any R&D expenses that LGS amortized in its
own books and records and it expensed any R&D expenses that LGS
expensed. As a result, the Department is not taking a position contrary
to the CIT decision, nor is it rejecting the Korean GAAP which allows
parties the option of expensing or allocating such costs. Due to the
proprietary nature of LGS's internal accounting system, see the LGS
COP/CV Verification Report for further information.
Comment 7: LGS noted the following clerical errors in the
Department's computer program: (1) LGS notes that the Department did
not apply the correct exchange rate to the home market letter of credit
sales; (2) LGS notes clerical errors for duty drawback adjustment; (3)
LGS argues that the computer program does not use the actual home
market sales quantity in the cost test; (4) LGS notes that the
Department's computer program inadvertently disregards the submitted
data in the model match; (5) LGS argues that the Department's computer
program does not correctly read the module cost of production data; and
(6) LGS noted that the Department's computer program reads the wrong
variable in the submitted information which affects the total cost of
production calculation.
DOC Position: We agree with LGS on each of these points and have
revised our calculations accordingly.
Hyundai
Comment 8: Hyundai maintains that the Department made a clerical
error in its final calculations by incorrectly comparing all of its
further-manufactured sales of memory modules to the CV of the imported
merchandise. Hyundai argues that it is the Department's practice to
resort to CV only in instances where there are insufficient home market
sales above COP or insufficient home market sales during a
contemporaneous period to be used with comparison to U.S. sales.
Hyundai urges the Department to revise its final results calculations
to include price-to-price comparisons for sales of further-manufactured
products and suggests two possible methodologies as discussed below.
The petitioner maintains that the Department was correct in
comparing respondents' further-manufactured U.S. sales to CV. The
petitioner argues that the complexity of determining the basis on which
to allocate the U.S. module price net of further-manufactured costs to
the different types of DRAMS in the modules made CV a reasonable choice
of comparison methodology. The petitioner urges the Department to
adhere to its comparison methodology for further-manufactured U.S.
sales as contained in its preliminary results of review.
DOC Position: We agree that it is generally the Department's policy
to calculate the foreign market value for the U.S. sales of further-
processed merchandise on the basis of products in the condition as
imported, not as in the condition sold.
The prices for the further-manufactured modules were an inadequate
basis for comparison because there are no comparable home market sales
for U.S. sales of memory modules with specific collections of different
types of DRAMS assembled together in particular configurations for
specific applications. The configuration and application of mixed
memory modules are critical factors in determining the foreign market
value (FMV) of these modules. Therefore, we resorted to CV in
accordance with section 1677b(a)(2) of the Tariff Act. We calculated
the FMV for the modules sold in the United States using the
Department's traditional methodology. To obtain the FMV, we have summed
the cost of production for each DRAM included on each type of module to
obtain the cost of all the imported components included on the module.
We then developed the FMV by applying the appropriate selling, general
and administrative expenses, and home market profit to arrive at the CV
of the imported components of the module. We then compared the CV of
the imported parts to the USP of the module sold in the United States,
less appropriate amounts for selling expenses, freight, further
manufacturing and profit. We believe that this is the most reasonable
comparison methodology for these types of sales given the circumstances
mentioned above. We disagree that in this instance either proposed
method would lead to an accurate determination of FMV because both
would require adjustments to the USP for the purposes of matching the
FMV of the product sold in the home market.
In respondent's first proposed method, the Department would derive
an FMV by summing the FMVs of DRAMS sold in Korea in the same number
and combination as they appear on the modules sold in the United
States. However, we note that this new ``bundled FMV'' would represent
an FMV for a product that is not sold in the home market, and as such,
represents the cost of a hybrid and a hypothetical product.
Furthermore, there is no indication that the resultant ``bundled FMV''
would be comparable to the price of the product sold in the United
States.
In respondent's second proposed method, the Department would strip
the United States price (USP) of the modules sold in the United States
down to the price of each of its component parts. Then the Department
would make adjustments for the total number of the individual DRAMS
sold in the United States, and compare the results with the FMVs
otherwise developed for home market sales. We rejected this methodology
because it would require adjustments to the USP for matching
[[Page 20220]]
purposes and would not guarantee an accurate comparison.
Comment 9: The petitioner maintains that Hyundai failed to provide
the Department with the necessary sales information in its August 29,
1995, questionnaire response on sales of DRAMS contained in personal
computers and computer workstations sold by HEA's ISD and Axil
divisions. The petitioner urges the Department to reject Hyundai's
entire questionnaire response for failure to report complete
information on sales of subject merchandise during the POR and apply
total BIA. Alternately, if the Department decides not to apply total
BIA to Hyundai's entire questionnaire response, the petitioner urges
the Department to use BIA in calculating the U.S. price of the value-
added products in accordance with the petitioner's methodology
contained in the petitioner's October 11, 1995 case brief.
Hyundai argues that it reported complete sales information on
computers and workstations which were sold with the memory modules
separately invoiced (option sales) and all reasonably available
information on sales of computers and workstations which were sold
without separately invoiced memory modules (embedded sales). Hyundai
maintains that it would have been unreasonable to require complete
sales information on embedded sales by ISD and Axil due to the extreme
complexity of the value-added calculations. According to Hyundai, this
type of calculation would have required an additional complete COP
calculation and verification for all input products in the computers
and workstations (e.g., computer monitors). Hyundai argues, that
because embedded sales by Axil and ISD constituted an extremely small
portion of HEA's U.S. sales of DRAMS, it would have been unreasonable
to require full sales information on the embedded sales of subject
merchandise.
Hyundai further asserts that total BIA is unwarranted, as Hyundai
cooperated fully with the Department during the course of the first
administrative review including the sales and COP verifications.
Hyundai urges the Department to calculate the dumping margins on
embedded sales by applying one of the following three margins to these
sales: (1) the weighted-average margin found for the remainder of HEA's
sales, (2) the margin calculated for Axil and ISD's option sales, or
(3) the weighted-average margin from the original LTFV investigation.
DOC Position: We agree with the petitioner that Hyundai should have
provided complete information on embedded sales of DRAMS by HEA's two
computer divisions during the POR. There is neither a statutory nor a
regulatory basis for excluding any U.S. sales of subject merchandise
from review regardless of the complexity of the required calculations.
See AFBs 1995. The statute requires the Department to analyze all U.S.
sales within the POR. See section (a)(2)(A) (1994) of the Tariff Act.
However, we disagree that total BIA is warranted in this case. In
cases where the respondent has substantially cooperated with the
Department, as Hyundai has in this case, we do not typically apply
total BIA, but rather apply partial BIA to the particular deficiencies
in a respondent's questionnaire response. See Industrial Nitrocellulose
from the United Kingdo DOC Position: m, Final Results of Antidumping
Duty Administrative Review, 59 FR 66902, 66903 (December 28, 1994), and
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof, from France, et al., Final Results of Antidumping Duty
Administrative Reviews and Revocation in Part, 58 FR 39729, 39739-40
(July 26, 1993).
In deciding what to use as BIA, the Department's regulations
provide that the Department may take into account whether a party
refuses to provide requested information (19 CFR 353.37(b)). Thus, the
Department determines, on a case-by-case basis, what constitutes BIA.
For the purposes of these final results, we applied the following two-
tier BIA analysis where we were unable to use a company's response for
purposes of determining a dumping margin (see Final Results of
Antidumping Duty Administrative review of Antifriction Bearings and
Parts Thereof from France, et al., 58 FR 39739, July 26, 1993):
1. When a company refuses to cooperate with the Department or
otherwise significantly impedes these proceedings, we used as BIA
the higher of (1) the highest of the rates found for any firm for
the same class or kind of merchandise in the same country of origin
in the less than fair value investigation (LTFV) or prior
administrative reviews; or (2) the highest rate found in this review
for any firm for the same class or kind of merchandise in the same
country of origin.
2. When a company substantially cooperates with our requests for
information and, substantially cooperates in verification, but fails
to provide the information requested in a timely manner or in the
form required or was unable to substantiate it, we used as BIA the
higher of (1) the highest rate ever applicable to the firm for the
same class or kind of merchandise from either the LTFV investigation
or a prior administrative review or if the firm has never before
been investigated or reviewed, the all others rate from the LTFV
investigation; or (2) the highest calculated rate in this review for
the class or kind of merchandise for any firm from the same country
of origin.
Hyundai, although it failed to report full cost data for its sales of
embedded DRAMS in the United States, cooperated substantially with our
requests for information and our sales and cost verifications.
Accordingly, we applied the second-tier BIA rate of 11.16 percent to
HEA's sales of embedded DRAMS. This rate represents the highest rate
ever applicable to Hyundai.
We found petitioner's methodology in calculating partial BIA to be
inappropriate because it recalculated prices for memory modules whose
actual prices were obtained from the separate invoices prepared for
these products. See Mechanical Transfer Presses from Japan, 55 FR 335,
337 (January 4, 1990).
Comment 10: The petitioner maintains that, based upon information
contained in certain U.S. sales verification exhibits, there are large
unaccounted for quantities of DRAMS transferred from HEA to its
computer divisions ISD and Axil. The petitioner maintains that there is
no correlation between the total quantity of DRAMS transferred to ISD
and Axil during the POR and the total quantity of DRAMS sold by these
two divisions during the POR. The petitioner urges the Department to
account for the alleged ``loose'' DRAMS by assigning a USP of zero to
all DRAMS imported by HEA during the POR and including them in the
dumping analysis.
Hyundai maintains that the petitioner used incorrect numbers in
making the above assertion and that there is not necessarily a
correlation between the quantity of DRAMS transferred to ISD and Axil
and the quantity of DRAMS sold by these two divisions during the POR.
Hyundai argues that the petitioner failed to consider that a
significant percentage of ISD and Axil sales were exported and that the
Department fully verified total quantity and value of DRAMS sold in the
United States.
DOC Position: We agree with Hyundai. We believe that the
petitioner's assertion that a correlation must exist between the total
quantity of DRAMS imported and sold during the POR is unfounded. The
petitioner ignores the number of DRAMS and memory modules exported to
third countries and, in their October 11, 1995 Case Brief, base part of
their argument on an assumption that computer assemblers can only use
DRAMS mounted on SIMMs boards. There is no
[[Page 20221]]
evidence on the record of this proceeding to support such an assertion.
In addition, we thoroughly verified total quantity and value of all
U.S. sales of subject merchandise during our U.S. sales verification of
HEA, including sales by ISD and Axil, and found no discrepancies. See
Verification of the U.S. Sales Questionnaire Response of Hyundai
Electronics America, Inc. In the First Antidumping Administrative
Review of Dynamic Random Access Memory Semiconductors from Korea,
December 12-15, 1994. HEA U.S. Sales Verification Report, pp. 4-10.
Comment 11: The petitioner maintains that Hyundai misclassified its
reported advertising expenses in the home and U.S. markets. As evidence
for this assertion, the petitioner points out that Hyundai classified a
trade journal ad in the home market for future products under
development but not commercially available as direct but classified a
magazine ad for an existent product in the United States as indirect.
The petitioner claims that it is inconsistent to classify an existent
product as indirect while classifying a future product as direct. The
petitioner urges the Department to reclassify all of Hyundai's U.S.
advertising expenses as direct expenses and all of Hyundai's home
market advertising expenses as indirect expenses.
Hyundai argues that its advertising classification is correct and
that the petitioner ignores the type of customer to which the
advertisement is targeted and the type of publication in which it is
published. Hyundai maintains that the advertisements for future
generation products were printed in a publication directed at end-users
of Hyundai's DRAMS and is properly classified as a direct expense.
Hyundai also argues that advertising expenses for future generation
products are not inherently indirect as the scope of the review covers
future generation products. Finally, Hyundai maintains that the
petitioner ignored the fact that the majority of Hyundai's home market
advertising expenses consisted of television advertisements, which are
clearly direct expenses since they are aimed at the end-user.
DOC Position We agree with Hyundai. Hyundai's classification of its
home market and U.S. advertising expenses is consistent with our
policy. As stated on page V-13 of our instructions in our antidumping
questionnaire, the classification of an advertising expense as direct
or indirect depends upon to whom the advertisement is directed. It is
our policy to classify advertising expenses directed to a respondent's
end-user as direct while advertising directed toward the respondent's
intermediary's customers as indirect. See Antifriction (Other Than
Tapered Roller Bearings) Bearings from the France, et. Al.; Final
Results of Antidumping Duty Administrative Reviews; Partial Termination
of Administrative Reviews, and Revocation in Part of Antidumping Duty
Orders, 60 FR 10909 (February 28, 1995) and Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof from the
Republic of Germany, et al., Final Results of Antidumping Duty
Administrative Review, 54 FR 18992, 19507 (May 3, 1989). For the one
sample U.S. advertisement mentioned by the petitioner, it is clear from
our U.S. sales verification that this advertisement was directed to
original equipment manufacturers (OEMs), not the distributors'
customers. Thus the U.S. magazine ad was properly classified as an
indirect expense. See HEA U.S. Sales Verification Report. Regarding the
one home market advertisement concerning a product under development,
we agree that certain costs for these products are properly included in
the scope of this review. See DRAMS LTFV Final 1993. Finally, we do not
believe that two advertisements constitute sufficient evidence for
questioning respondent's advertising expenses, especially in light of
the thorough home market and U.S. sales verifications conducted by the
Department. See Pure and Alloy Magnesium from Norway, 57 FR 30942 (July
13, 1992).
Comment 12: The petitioner argues that the Department should revise
Hyundai's reported U.S. inventory carrying costs for further-
manufactured products by including the time during which the further-
manufactured products are undergoing certain processing to the time the
product was in inventory.
Hyundai maintains that its inventory carrying cost methodology is
in accordance with previous Departmental precedents, including the
final results of the original investigation. Hyundai argues that the
Department should only make an inventory carrying cost adjustment to
U.S. price for finished, not unfinished merchandise held in inventory.
DOC Position: We agree with Hyundai that an inventory carrying cost
adjustment to U.S. price should only be made for finished goods in
inventory and should not include unfinished goods, because unfinished
goods represent production expenses rather than U.S. selling expenses.
See DRAMS LTFV Final 1993 at 15476 (Comment 32) and Roller Chain, Other
Than Bicycle, from Japan, Final Results of Antidumping Administrative
Review, 58 FR 30769 (May 27, 1993).
Comment 13: The petitioner maintains that Hyundai's purchase of
construction services from a related company may not be at arms-length.
As evidence for this assertion, the petitioner cites certain COP
verification exhibits which the petitioner purports demonstrate that
the related construction firm earned a lower profit on sales to HEI
than on sales to other companies. The petitioner maintains that these
exhibits also show that sales of construction services to HEI by the
related party were made at prices below COP. The petitioner urges the
Department to presume that all construction services were provided to
HEI at prices below COP and calculate a BIA rate on these services by
increasing the acquisition and depreciation costs claimed by HEI to
reflect market-based values.
Hyundai contends that the record of this proceeding does not
support the petitioner's assertion that certain construction services
purchased by HEI from a related party were not at arms-length prices.
Hyundai argues that the petitioner misread the related party's
financial statements contained in the COP verification exhibits and
that the services were provided at prices comparable to those charged
other companies.
DOC Position: We agree with Hyundai. During our home market sales
and COP verifications of Hyundai in Korea, we examined the issue of
related parties to determine whether transactions between these parties
and HEI were at arms-length. We specifically examined the transactions
between HEI and a related party which provided construction services
during the POR. We determined that, based upon prices charged to other
companies for construction services, the services purchased by HEI were
at arms-length. See page 5 and Exhibit 33 of the Report on the
Verification of the Cost of Production Questionnaire Response of
Hyundai Electronic Industries, Inc., April 17, 1995 (HEI COP/CV
Verification Report).
Comment 14: The petitioner maintains that the Department made a
clerical error in its assignation of BIA to certain sales due to an
incorrect decimal point in the BIA rate of 11.16 percent. The
petitioner also maintains that the Department made a clerical error in
the final calculations by failing to test all of HEI's reported profit
figures to check that the larger of the actual profit amount or the
statutory eight percent is used in the calculation of CV.
[[Page 20222]]
DOC Position: We agree with the petitioner and have revised our
final calculations accordingly.
Comment 15: Hyundai maintains that three clerical errors are
contained in the Department's model matching section of the preliminary
calculations. Hyundai argues that these errors are as follows: (1) the
calculations did not identify similar products where there was not an
identical home market match for a U.S. sale, (2) the model matching
calculations fail to include the 90/60 day rule for identifying
contemporaneous matches, and (3) the calculations' matching hierarchy
mistakenly ranks the month of sale above the level of trade.
DOC Position: We agree with Hyundai and have corrected the model
matching of our calculations accordingly for the final results of
review.
Comment 16: Hyundai maintains that the Department's preliminary
calculations mistakenly double count certain U.S. sales due to a
clerical error.
DOC Position: We agree and have revised our final calculations
accordingly.
Comment 17: Hyundai maintains that the Department's preliminary
calculations contained a clerical error in its calculation of Hyundai's
ESP offset cap. Hyundai maintains that the preliminary calculations
failed to include U.S. commissions in the ESP offset cap.
DOC Position: We agree and have revised the ESP offset cap portion
of our final calculations to include U.S. commissions.
Comment 18: Hyundai and the petitioner maintain that the
Department's preliminary calculations contained a clerical error in its
calculation of profit for CV. Hyundai argues that the Department failed
to recompute Hyundai's profit to account for the revisions the
Department made to Hyundai's reported COP data for the preliminary
results of review. The petitioner argues that the preliminary
calculations automatically applied the statutory minimum profit
percentage of eight percent for all sales of DRAMS without first
testing to determine whether the actual profit was less then eight
percent.
DOC Position: We agree and have recomputed Hyundai's profit for CV
in our final calculations to reflect the increase in Hyundai's COP. We
also revised the preliminary calculations to compare Hyundai's actual
profit to the statutory minimum of eight percent in calculating CV for
the non-further manufactured sales where this did not occur. For our
final calculations, we used the statutory minimum in cases where
Hyundai's actual profit was below the statutory minimum.
Comment 19: Hyundai maintains that the Department's preliminary
calculations contained a clerical error in the calculation of U.S.
price. Hyundai argues that the Department failed to add duty drawback
to USP in its net price calculations.
DOC Position: We agree and have revised our final results
calculations accordingly.
Comment 20: Hyundai maintains that the Department's preliminary
results calculations contained three clerical errors in its calculation
of FMV. Hyundai maintains that these clerical errors were as follows:
(1) the calculations failed to convert home market selling expenses
incurred in U.S. dollars into Korean won, (2) the Department mistakenly
added U.S. repacking expense to HEI's reported home market price, and
(3) the Department failed to deduct indirect selling expenses form FMV
for further-manufactured sales.
DOC Position: We agree and have revised our final results
calculations accordingly.
Final Results of Review
Upon review of the comments submitted, the Department has
determined that the following margins exist for the companies for the
period October 29, 1992 through April 30, 1994:
------------------------------------------------------------------------
Percent
Manufacturer/exporter margin
------------------------------------------------------------------------
LG Semicon Co., Ltd........................................ 0.00
Hyundai Electronic Industries, Inc......................... 0.06
------------------------------------------------------------------------
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 concerning each respondent 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 for by
section 751(a)(1) of the Tariff Act: (1) The cash deposit rate for the
reviewed firms will be zero percent; (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 in the original LTFV 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 3.85%, the all others rate established in the LTFV
investigation. Samsung Electronics Co., Ltd. (Samsung), formerly a
respondent in this administrative review, was excluded from the
antidumping duty order on DRAMS from Korea on February 8, 1996. See
Final Court Decision and Partial Amended Final Determination: Dynamic
Random Access Memory Semiconductors of One Megabit and Above From the
Republic of Korea, 61 FR 4765 (February 8, 1996).
These deposit requirements shall remain in effect until publication
of the final results of the next administrative review.
This notice serves as the 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 order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d). Timely written notification or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of the APO is a sanctionable
violation.
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.
Date: April 26, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-11246 Filed 5-3-96; 8:45 am]
BILLING CODE 3510-DS-P
