[Federal Register Volume 62, Number 122 (Wednesday, June 25, 1997)]
[Notices]
[Pages 34201-34213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16680]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-609]
Color Picture Tubes From Japan; Final Results of Antidumping
Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review of color picture tubes from Japan.
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SUMMARY: On February 11, 1997, the Department of Commerce (the
Department) published the preliminary results of administrative review
of the antidumping duty order on color picture tubes (CPTs) from Japan.
The period of review (POR) is January 1, 1995 through December 31,
1995.
Based on our analysis of comments received we have made changes to
the margin calculation, including correction of certain clerical
errors. Therefore, the
[[Page 34202]]
final results differ from the preliminary results. The final weighted-
average dumping margin is listed below in the section titled ``Final
Results of Review.''
We have determined that sales have been made at less than normal
value (NV) during the POR. Accordingly, we will instruct the U.S.
Customs Service to assess antidumping duties on all appropriate
entries.
EFFECTIVE DATE: June 25, 1997.
FOR FURTHER INFORMATION CONTACT: Charles Riggle or Thomas O. Barlow,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone (202) 482-4733.
Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended, (the Act), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, all citations
to the Department's regulations are to the current regulations, as
amended by the interim regulations published in the Federal Register on
May 11, 1995 (60 FR 25130).
Background
On February 11, 1997, the Department published in the Federal
Register the preliminary results of administrative review of the
antidumping duty order on CPTs from Japan. See Color Picture Tubes From
Japan; Preliminary Results of Antidumping Administrative Review, 62 FR
6168 (February 11, 1997). We gave interested parties an opportunity to
comment on our preliminary results and held a public hearing on April
16, 1997. The following parties submitted comments and rebuttal
comments: the International Association of Machinists and Aerospace
Workers, International Union of Electronic, Electrical, Salaried,
Machine & Furniture Workers, AFL-CIO, and Industrial Union Department
AFL-CIO (collectively ``the Unions''); Mitsubishi Electric Corporation,
Mitsubishi Electronics, Inc., and Mitsubishi Consumer Electronics
America, Inc. (collectively ``Mitsubishi'').
We have conducted this administrative review in accordance with
section 751(a)(1) of the Act and 19 CFR 353.22.
Scope of Review
Imports covered by this review are shipments of CPTs from Japan.
CPTs are defined as cathode ray tubes suitable for use in the
manufacture of color televisions or other color entertainment display
devices intended for television viewing. This merchandise is
classifiable under the Harmonized Tariff Schedule (HTS) item numbers
8540.11.00.10, 8540.11.00.20, 8540.11.00.30, 8540.11.00.40,
8540.11.00.50 and 8540.11.00.60. The HTS item numbers are provided for
convenience and customs purposes; our written description of the scope
of this proceeding is dispositive.
Analysis of Comments Received
Comment 1
The Unions argue that the Department should treat Mitsubishi's U.S.
and its home market technical service expenses in the same manner. The
Unions note that, whereas Mitsubishi claimed in its questionnaire
response that home market technical service expenses were direct
expenses, it claimed that its U.S. technical service expenses were
indirect selling expenses. Based on Mitsubishi's explanation of these
expenses, the Unions argue, there is no apparent distinction between
the expenses incurred in the home market and those in the United States
and, therefore, no basis for Mitsubishi's claim that the expenses
should be treated differently.
Furthermore, the Unions claim that Mitsubishi bears the burden of
demonstrating that its home market selling expenses are direct expenses
and that its U.S. selling expenses are indirect expenses, citing Timken
Co. v. United States, 673 F. Supp. 495, 513 (CIT 1987). The Unions
assert that Mitsubishi failed to demonstrate that its home market
technical service expenses warranted treatment as direct selling
expenses. For example, the Unions argue, Mitsubishi failed, both in its
questionnaire responses and during verification, to provide a detailed
description of the technical services it provided or the nature of the
customer visits which were the basis for Mitsubishi's calculation of
the claimed technical service expenses. Specifically, the Unions claim,
Mitsubishi failed to submit any evidence that the purposes of its
customer visits were to solve technical problems related to the
merchandise subject to review. Instead, the Unions argue, a review of
record data indicates that the customer visits were more likely in the
nature of routine customer visits rather than to solve specific
technical problems, given the amount of time spent on such visits.
Finally, the Unions claim that it strains credulity to believe that
Mitsubishi incurred no technical service expenses for its U.S. sales of
color televisions (manufactured from the imported CPTs) during the POR
while incurring substantial technical service expenses on its home
market sales of CPTs. Thus, the Unions argue, due to Mitsubishi's
failure to substantiate its claim that expenses related to these
customer visits were direct selling expenses and due to Mitsubishi's
refusal to identify the specific technical problems with its home
market sales that resulted in the claimed expenses, the Department
should, for the final results, treat all of Mitsubishi's claimed home
market technical service expenses as indirect selling expenses.
Mitsubishi counters that each market's expenses should be treated
on their own merits and that a common name for an adjustment does not
determine its treatment as a direct or an indirect expense. Mitsubishi
notes that, whereas in the home market it sells to original equipment
manufacturers who use Mitsubishi CPTs to manufacture televisions, in
the United States it sells televisions to resellers. Therefore,
Mitsubishi argues, the technical services incurred in the home market,
working with customers to optimize usage of the CPT in television
production, are irrelevant to sales in the U.S. market. Furthermore,
Mitsubishi claims, there is no record evidence to suggest that there
are direct U.S. technical service expenses.
Finally, Mitsubishi claims, notwithstanding the Unions' criticism
that the verification inadequately addressed the nature of the
technical service expenses, the Department verified the nature of these
expenses to the extent the Department deemed necessary, that Mitsubishi
has fully cooperated, and that the Unions are in no position to now
suggest that additional verification is needed. Mitsubishi argues that
the Unions' assertions that the visits seemed to be routine customer
visits or that the amount of time spent on these visits was overly long
are speculative and are not supported by record evidence.
Department's Position
We agree with Mitsubishi in part. We find that the travel-expenses
portion of the reported home market technical service expenses falls
within the adjustments warranted under 19 CFR 353.56 (a)(2) for
differences in circumstances of sale because the record evidence
supports Mitsubishi's claims. To warrant a circumstance-of-sale
adjustment, the respondent must demonstrate that the technical service
expenses are directly related to the sales subject to review (19 CFR
356.56). We treat technical services as direct expenses when the
respondent
[[Page 34203]]
demonstrates that services are provided to assist customers with
technical problems associated with the purchased product. See, e.g.,
Certain Small Business Telephone Systems and Subassemblies Thereof From
Taiwan; Final Results of Antidumping Duty Administrative Review, 57 FR
29283, 29286 (July 1, 1992). As Mitsubishi explained at verification,
the technical service visits in the home market are a circumstance of
selling to original equipment manufacturers (OEMs) which incorporate
Mitsubishi CPTs into color television sets. The documents that we
examined at verification indicate that Mitsubishi engineers visited the
OEM customers to provide technical assistance related to the
installation of Mitsubishi CPTs into the customers' televisions. We
find no evidence to suggest that any sales-related activity occurred.
In addition, the documents indicate that such visits only occurred
after the sale of the CPTs to the OEM customer and were unrelated to
future or pending sales. Furthermore, the Unions have not provided any
evidence to support their allegation that the engineers' visits may
have been for any purpose other than to provide technical assistance.
Therefore, we conclude that Mitsubishi has demonstrated that the travel
expenses' portion of the reported technical service expenses bears a
direct relationship to the sales compared.
We also agree with Mitsubishi that the technical service expenses
incurred in the home market are naturally different from those incurred
in the United States. Mitsubishi's home market sales are to OEM
customers who incorporate Mitsubishi's CPTs into color televisions. We
verified that Mitsubishi's claimed technical service expenses are
related to technical assistance provided to OEM customers. In the
United States, however, Mitsubishi sells televisions to resellers. No
technical service such as that provided to OEM customers in Japan would
be necessary in selling completed televisions to resellers in the
United States. It is, therefore, reasonable to assume that Mitsubishi
would not incur the same types of expenses for such different types of
sales activity.
Comment 2
The Unions next argue that the Department should recalculate
Mitsubishi's home market technical service expenses to exclude the
salaries of Mitsubishi's engineers. The Unions note that in
Mitsubishi's questionnaire response Mitsubishi stated that its home
market technical service expenses consisted of travel expenses related
to engineers' visits to customers plus the engineers' wages applicable
to the duration of the business trip. Further, the Unions claim, the
Department's verification report states that the salary and benefits
figure used to calculate technical services expenses was based on
salaries paid to Mitsubishi employees, citing Verification Report for
Mitsubishi Electric Corporation (MELCO) for the 1995 Administrative
Review of the Antidumping Duty Order on Color Picture Tubes (CPTs) from
Japan, December 27, 1996, at 6 (Verification Report). The Unions argue
that including the salaries paid to Mitsubishi employees as part of the
technical services expenses runs counter to the Department's practice
as stated in the Department's antidumping manual.
Mitsubishi rebuts that the service visits and accompanying expenses
are circumstances of selling to the large screen customers in the home
market and, accordingly, fall within the expenses named in the statute
at section 776(a)(6)(C)(iii), ``other differences in circumstances of
sale.''
Mitsubishi remarks that the Unions do not challenge the amounts or
the allocation bases of these expenses. Thus, Mitsubishi claims, if the
Department agrees with the Unions' basic argument the expenses should
be reclassified as indirect expenses with no change in the amounts.
Mitsubishi states that, because the Department consistently adheres to
the principle that selling expenses should be allocated as specifically
as possible, the wage costs associated with visits to a particular
customer should be assigned to sales to that customer rather than to
some broader universe. Therefore, Mitsubishi asserts, any reduction in
technical service expenses would be matched by a corresponding increase
in indirect selling expenses for the same transactions.
Department's Position
We disagree with the Unions' contention that salaries paid to
Mitsubishi's engineers should be excluded from the acceptable technical
service expenses. We treat technical services as direct expenses when
the respondent demonstrates that services are provided to assist
customers with technical problems associated with the purchased
product. We require respondents to segregate the variable and fixed
portions of these expenses and treat variable costs as direct and fixed
costs as indirect. See Zenith Elec. Corp. v. United States, 77 F.3d
426, 430 (Fed. Cir. 1996) (upholding the Department's practice of
analyzing each component of claimed expenses for purposes of
determining whether to make a circumstance-of-sale adjustment). We
generally consider travel expenses to be directly related to sales
because the technicians are visiting customers to assist with specific
matters. We generally consider salaries to be fixed costs because they
would have been incurred whether or not sales were made. See, e.g.,
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From 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 10900, 10910
(Feb. 28, 1995). In keeping with our standard practice, we have allowed
a circumstance-of-sale adjustment for the travel expenses (see our
response to Comment 1) and we have determined that the salaries should
be treated as indirect expenses.
Comment 3
The Unions argue that the Department should use facts available to
calculate inland freight costs for Mitsubishi's home market sales
because Mitsubishi's inland freight data contain serious errors that
cannot be corrected at this stage of the review. The Unions claim that
information obtained at verification indicated that the average freight
costs in Mitsubishi's questionnaire response hid obvious errors in the
calculation of freight costs. For instance, the Unions claim, data on a
worksheet provided at verification show that Mitsubishi failed to
allocate inland freight costs to merchandise not subject to review and,
accordingly, the average freight costs reported in Mitsubishi's
questionnaire response should not be used for the final results.
To support this argument the Unions note variations in the reported
freight costs for shipments of the same quantities to the same
customers, stating that the only explanation for such variations is
that the inland freight costs shown on the shipment-by-shipment
worksheet obtained at verification represented the total freight bill
for all of the products included in the delivery rather than the
freight costs allocated to the CPT models subject to review. Thus, the
Unions argue, if Mitsubishi actually allocated the total freight cost
to all of the products that were shipped to each customer, the average
freight costs in the questionnaire response should be less than the
average costs shown by the data on the verification worksheet because
the average freight costs in the questionnaire response should be only
for the specific models in question. Finally, the Unions question why
[[Page 34204]]
Mitsubishi reported average freight costs when it apparently was able
to determine and compile the freight costs for each observation in its
reported home market sales list.
The Unions also state that the verification report and the
verification worksheet indicate that Mitsubishi double-counted inland
freight expenses for its home market sales in that, for the specific
sale verified, the freight bill from the trucking company was for a
round trip but that the amount claimed in Mitsubishi's sales listing
was based on a one-way trip, referring to the Verification Report at 9.
However, the Unions note, the round-trip freight expense amount was the
amount shown on the shipment-by-shipment worksheet provided by
Mitsubishi at verification. Thus, the Unions claim, Mitsubishi's
reported inland freight costs for its home market sales represent the
costs of deliveries and returns rather than only delivery costs.
The Unions argue that the verification report and the verification
worksheet indicate that Mitsubishi charged the entire freight cost to
the merchandise subject to review despite the fact that its shipments
included non-subject products, in that the entire freight bill for a
given shipment was used to calculate the freight costs reported in the
questionnaire response.
Finally, the Unions argue that the customer-by-customer inland
freight costs that Mitsubishi reported for its home market sales are
inconsistent and unreliable because Mitsubishi's reported inland
freight expenses bear no relation to the distances shipped. Therefore,
the Unions argue, the Department should use in its calculation of
inland freight on home market sales, as facts available, the Japanese
inland freight costs that Mitsubishi reported for its U.S. sales. The
Unions reason that these costs represent a reasonable proxy because
Mitsubishi has no incentive to overstate these costs and because they
are costs incurred to ship the same product. Alternatively, if the
Department does not use facts available for Mitsubishi's inland freight
costs for home market sales, the Unions suggest that the Department use
the average, customer-specific freight costs indicated on the documents
obtained at verification.
Mitsubishi refutes the Unions' arguments as a laundry list of
suppositions that provide no reason for the Department to reverse its
preliminary calculations with respect to inland freight expenses.
Instead, Mitsubishi claims, the Department verified the correctness of
Mitsubishi's reported freight expenses and should use them in the final
results.
First, Mitsubishi claims, there is no basis to the Unions'
conclusion that large shipment-to-shipment variations in per-unit
freight costs are due to the fact that shipments must have included
non-subject merchandise that did not attract freight charges.
Mitsubishi notes that the Unions' exhibit in the case brief indicates
that freight charges vary widely because the number of units carried
varies widely. Further, Mitsubishi claims, fixed trip costs, spread
over more or fewer units, will yield lesser or greater per-unit freight
costs.
Mitsubishi next argues that the Unions assume, incorrectly, that
all trucks are full and, if a truck contains only three units of one
model, it must be filled out with other models. In fact, Mitsubishi
asserts, in both its submissions and at verification, it has
demonstrated that when shipments included multiple models on a truck
the freight charges were allocated among the models based on their
cubic volume.
Mitsubishi rebuts the Unions' argument that Mitsubishi double-
counted inland freight costs because the freight bills were for round
trips, i.e., Mitsubishi was responsible for the return trip. However,
Mitsubishi states, the charge for delivery was the amount on the
freight bill and the fact that the amount is to cover the return of the
empty trucks to their starting point does not affect the amount of the
expense. Mitsubishi notes that the record does not suggest, nor do the
Unions allege, that Mitsubishi's customers were sending something back
to Mitsubishi that would lead to a broader allocation of the freight
expense and, consequently, the Unions' argument of double-counting is
unsupported and should be rejected.
Mitsubishi rebuts the Unions' allegation that the verification
report shows that freight was not allocated to non-subject merchandise.
Mitsubishi comments that the Unions quoted a passage from the
verification report which first demonstrates that Mitsubishi allocated
freight expenses reasonably over all relevant products and, second,
discusses a particular shipment examined by the Department precisely
because it had high unit freight costs and that the Department verified
that this shipment included only the three units in question.
Mitsubishi argues that this does not support the Unions' allegation
that freight expenses were overallocated to certain models but, rather,
supports the freight charge on the specific shipment in question.
With respect to the Unions' argument that the reported freight
costs bear no relation to the distances shipped, Mitsubishi states
that, as before, this argument ignores that fact that freight expenses
are driven in large part by the number of units shipped. Mitsubishi
asserts that, without correcting for the portion of the truckload
occupied by a particular group of sets, the Unions' freight calculation
is meaningless. Mitsubishi adds that, even with such a correction it
would be necessary to determine the actual freight charged, not just
ratios based on distance, because distance does not take into account
the fixed trip charges, traffic conditions, etc., and that the
Department properly verified the actual freight charged.
Finally, Mitsubishi states that the Unions' suggestion that the
Department apply, as facts available, the freight charges incurred in
Japan on sales to the United States is senseless. Mitsubishi notes that
the Unions would prefer these data be used because the large volumes of
U.S. sales lead to multiple fully loaded trucks and, thus, lower per-
unit costs. However, Mitsubishi argues, this is not relevant to the
home market freight expenses it incurred.
Department's Position
We agree with Mitsubishi that the Unions' arguments with respect to
Mitsubishi's inland freight costs are based on speculation and are not
supported by record evidence. We verified Mitsubishi's reported home
market inland freight costs (Verification Report at 9) and find that
these data are reliable for use in the final results.
The purpose of verification is to test the accuracy and
completeness of information provided by a party. Using standard
verification procedures we conducted a selective examination of the
reported information rather than a test of the entire universe of
information. See Bomont Indus. v. United States, 733 F. Supp. 1507,
1508 (CIT 1990) (upholding our verification procedures). We chose to
examine documentation related to shipments for which Mitsubishi
reported the highest per-unit freight costs. We found the information
submitted by Mitsubishi to be accurate and complete. The alleged
discrepancies identified by the Unions appear to result from a
misinterpretation of our findings at verification.
For example, we examined Mitsubishi's allocation methodology at
verification and found that for shipments that included multiple
products Mitsubishi allocated the freight costs to the foreign like
product by volume. Verification Report at 9. Using this methodology
Mitsubishi was able to calculate an average freight cost per customer
and report only the freight
[[Page 34205]]
expenses allocable to the foreign like product.
We also found no evidence that Mitsubishi double-counted its inland
freight expenses.
For example, with respect to the sale for which Mitsubishi claimed
the highest inland freight expenses, documentation gathered at
verification indicated that the shipment consisted only of the three
units in question. Although we noted that Mitsubishi was charged for a
round trip we found no evidence to indicate that the customer returned
anything to Mitsubishi. Instead, we determined that Mitsubishi, in
hiring the truck to deliver the CPTs to the customer, was responsible
for a fixed expense related to the round trip. We verified the reported
expense as the amount paid by Mitsubishi to the shipping company for
the shipment in question. Id. We also found no evidence that distance
was a factor in Mitsubishi's freight expenses. Our examination
demonstrated that Mitsubishi reported its actual freight costs for the
shipment in question. The quantities shipped from the warehouse to the
home market customer vary from sale to sale. As was evident from
Mitsubishi's response and from information gathered at verification,
the freight expenses vary accordingly, and we found no reason to
question the validity of Mitsubishi's data.
Finally, we reject the Unions' suggestion that we apply, as facts
available, Mitsubishi's domestic inland freight applicable to its U.S.
sales of subject merchandise. Because we found Mitsubishi's reported
data were reliable the use of facts available is unnecessary.
Comment 4
The Unions and Mitsubishi argue that Mitsubishi's home market
warranty expenses should be revised to reflect information obtained at
verification. The Unions and Mitsubishi note that during verification
the Department reviewed the warranty expenses for home market sales to
a particular customer and asked that Mitsubishi recalculate the
warranty expenses on a per-model basis for sales to this customer.
The Unions claim that documents obtained at verification by the
Department indicate that Mitsubishi overstated the number of returns of
the model in question and that, when recalculating the warranty
expenses, the Department should use the correct number of returned
units.
In addition to revision of the warranty expenses Mitsubishi asserts
that revised data relating to discounts and rebates, presented as
corrections at the beginning of verification, should be incorporated
into the final results.
Department's Position
We agree with the Unions and with Mitsubishi that we neglected to
incorporate certain changes into our preliminary margin calculation. At
the beginning of verification Mitsubishi provided certain corrections
related to reported discounts and rebates and during verification we
requested additional information from Mitsubishi with respect to its
reported warranty expenses. For the final results we have made the
changes to our calculations to reflect the correction of warranty
expenses as described in the verification report. We have not changed
the calculations with respect to rebates because the information
provided by Mitsubishi is insufficient for these purposes.
We have reexamined the documents obtained at verification with
respect to the Unions' argument that Mitsubishi overstated the number
of returns. Although we agree that Mitsubishi presented evidence of
returned units of a different model than the model we verified, other
documents presented by Mitsubishi at verification indicate that this
was an inadvertent mistake and that the number of returns we verified
from Mitsubishi's worksheet was accurate.
Comment 5
The Unions assert that the Department must investigate whether
Mitsubishi made sales in the home market at prices below the cost of
production. The Unions claim that, based on language in the original
questionnaire, they believed that the Department intended to conduct a
full cost-of-production investigation to determine whether Mitsubishi
was selling below cost in the home market and, as a result, they did
not believe it was necessary to submit a separate request that the
Department do so. Because the Department failed to consider in its
preliminary results whether Mitsubishi sold any comparison models below
cost, the Unions argue, the Department must conduct a complete below-
cost-sales investigation for purposes of its final results.
The Unions argue further that the cost investigation may be
critically important in this case depending on the Department's
treatment of Mitsubishi's home market inland freight expenses. The
Unions claim that even though Mitsubishi had available its actual
freight costs on a sale-by-sale basis it improperly averaged home
market freight costs over all sales of the particular size CPTs by
customer. The Unions assert that the averaging of these freight costs
not only tends to mask dumping margins for individual comparisons but
also masks individual sales that were sold below Mitsubishi's cost of
production. The Unions argue that it is important that the freight
costs be calculated accurately such that they represent a reasonable
cost for transporting the CPT from the warehouse to the customer and,
once that is done, the Department must then compare the selling expense
to the cost of production to determine whether individual sales were
made below cost.
Mitsubishi argues that the Unions' request at this stage of the
review that the Department conduct a cost investigation is contrary to
the Department's regulations and to its practice. Mitsubishi states
that, in accordance with section 353.31(c) of the Department's
regulations, the Department will not consider allegations of below cost
sales submitted more than 120 days after publication of the notice of
initiation. Mitsubishi notes that this deadline has been upheld by the
Department on numerous occasions in denying petitioners' requests for
below-cost sales investigations, citing, e.g., Certain Forged Steel
Crankshafts from the United Kingdom (Crankshafts), 60 FR 52150, 52153
(October 5, 1995), and Sulfur Dyes, Including Sulfur Vat Dyes, from the
United Kingdom (Sulfur Dyes), 58 FR 3253, 3255 (January 8, 1993), in
which the Department denied a similar request for such investigation
based on an allegation first made in the petitioner's case brief.
Mitsubishi states that, as in this case, absent a timely allegation of
below-cost sales or a prior below-cost finding the Department cannot
simply disregard below-cost sales.
Additionally, Mitsubishi states, section 351.301(c)(2)(ii) of the
Department's proposed regulations (referring to 61 FR 7325 (February
27, 1996)) requires that allegations of below-cost sales be made within
20 days after the respondent submits the relevant section of the
questionnaire and that the Section B home market sales submission is
the ``relevant section'' for these purposes. Mitsubishi argues that
regardless of whether the Department uses deadlines set forth by
section 353.31(c) or by section 351.302 of the proposed regulations the
Unions' allegation of below-cost sales is grossly untimely.
Mitsubishi notes that the Department's cover letter attached to the
questionnaire dated March 11, 1996 instructed Mitsubishi to respond to
the cost-of-production portion of the
[[Page 34206]]
questionnaire only if the Department disregarded below-cost sales in
the most recently completed review or investigation of Mitsubishi, but
that in the event of a timely allegation from a domestic party that
sales in the comparison market were made at prices below the cost of
production, the Department may request at a later date that Mitsubishi
complete the cost-of-production portion of the questionnaire.
Mitsubishi states that the Department did not exclude below-cost sales
from Mitsubishi's home market database in the original investigation
and that there has been no prior administrative review of Mitsubishi in
this case. Accordingly, Mitsubishi states, the cover letter not only
confirmed that Mitsubishi was not required to respond to the cost-of-
production portion of the questionnaire but also instructed the Unions
on what they needed to do if they wanted the Department to initiate a
cost investigation. Mitsubishi argues that, instead of giving the
impression that the Department intended to initiate a cost
investigation, the cover letter provided the Unions with clear notice
that it was incumbent upon the Unions to come forward with sufficient
allegations of below-cost sales if the Unions intended to raise the
issue. In addition, Mitsubishi claims that the Unions' argument that a
cost investigation is necessary because of variances in home market
inland freight expenses does not negate the Unions' duty to make a
timely allegation of below-cost sales and, as a result, the Department
should reject the Unions' argument.
Department's Position
We agree with Mitsubishi. Section 773(b) of the Act directs us to
initiate a cost inquiry only when there are ``reasonable grounds to
believe or suspect'' that sales have been made below cost. The
Statement of Administrative Action Accompanying the URAA, reprinted in
H.R. Doc. No. 103-316, vol. 1, at 833 (1994) (``SAA''), notes that this
provision codifies our existing practice that in administrative
reviews, ``reasonable grounds'' exist when an interested party submits
a sufficient allegation of below-cost sales or when we have disregarded
below-cost sales of the particular producer or exporter in the most
recently completed segment of the proceeding. Because we did not
exclude any below-cost sales in the less-than-fair-value investigation
(i.e., the most recently completed segment in which we examined
Mitsubishi's sales), an allegation by the Unions is the only
appropriate basis to initiate a cost inquiry in this review. However,
in accordance with our existing regulations, an allegation of below-
cost sales must be submitted no later than 120 days after the
publication of the notice of initiation of the review, unless a
relevant response is considered untimely or incomplete. Section
353.31(c)(1)(ii) of Interim Regulations, 60 FR at 25135. If the
allegation is received later than 120 days after initiation the
Department may exercise its discretion in determining a reasonable
amount of time for the domestic interested party to submit its cost
allegation. See Crankshafts at 52153.
In this instance, the Unions did not make an allegation of below-
cost sales until they filed their case brief, 390 days after
publication of the initiation notice. However, the Unions had access to
Mitsubishi's relevant home market sales data as early as May 10, 1996,
when Mitsubishi filed its response to section B. We find that the
Unions had sufficient time to provide a timely cost allegation. In past
cases, we have rejected cost allegations submitted in case briefs. See
Crankshafts at 52153; Sulfur Dyes at 3255-56. Moreover, the SAA
expresses an intent that we initiate cost inquiries at the outset of a
proceeding in order to enhance our ability to complete reviews ``in a
timely, transparent, and effective manner.'' SAA at 833. The CIT stated
in Floral Trade Council v. United States, 704 F. Supp. 233, 236 (CIT
1988), that ``it is not reasonable to expect [the Department] in every
case to pursue all investigative avenues, even such important areas as
less-than-cost-of-production sales, without some direction by
petitioners * * * cost of production need not be investigated in every
case, but only where reasonable grounds are present. Part of whether
[the Department] has ``reasonable grounds to believe or suspect'' that
a less than cost-of production analysis is needed is whether it has
been requested.'' In light of these considerations, we have not
conducted a cost-of-production analysis for these final results.
We note that the Unions' assertion that they relied upon the fact
that we sent Section D of the questionnaire to Mitsubishi as an
expression of our intent to initiate a cost inquiry is untenable. The
questionnaire is sent in its entirety to respondents in any review. The
cover letter accompanying the questionnaire clearly stated that, unless
we had disregarded any of Mitsubishi's below-cost sales in the most
recently completed segment, we would require Mitsubishi to provide
cost-of-production information only if the Department received a timely
cost allegation. Accordingly, we find no ``reasonable grounds'' to
warrant a below-cost inquiry of Mitsubishi's sales in this review.
Comment 6
The Unions argue that, pursuant to section 772(d)(1) of the Act,
the Department must deduct all direct and indirect selling expenses
incurred by the foreign producer, exporter or the U.S. affiliate in
selling to the United States. The Unions argue that this section
reflects the statutory requirements as they existed prior to the URAA
(referring to section 772), claiming that the Department interpreted
this provision to require the deduction of all selling expenses
incurred in selling to the United States, including all indirect
selling expenses incurred by the foreign producer or exporter in its
home country that related to U.S. sales. The Unions claim that such
interpretation was upheld in Silver Reed America, Inc. v. United
States, 12 CIT 250, 683 F. Supp. 1393, 1397 (1988).
The Unions argue that, while the two statutory provisions--pre-URAA
and the URAA--contain the same requirements regarding deductions, the
Department failed in its preliminary results to deduct indirect selling
expenses and inventory carrying expenses from the time of final
production in the country of manufacture to the time of arrival in the
United States that Mitsubishi identified in its questionnaire response
as being incurred in selling to the United States. The Unions claim
that the failure to deduct these expenses is inconsistent with the
statute.
With regard to Mitsubishi's inventory carrying costs, the Unions
argue that, even if the Department determines that it can only deduct
from CEP those selling expenses related to commercial activity in the
United States, the Department must, at a minimum, deduct the inventory
carrying costs that the foreign producer/exporter incurred following
exportation of the merchandise from Japan. The Unions note that the
Department stated in the preliminary results that it had deducted
various selling expenses related to economic activity in the United
States, among them inventory carrying costs, but that a review of
preliminary margin calculation indicates that the Department not only
failed to deduct inventory carrying costs incurred prior to exportation
but also failed to deduct inventory carrying costs incurred for the
time the merchandise was in transit from Japan to the United States.
The Unions assert that inventory carrying costs incurred while the
merchandise is
[[Page 34207]]
in transit to the United States are akin to other costs that the
Department has recognized must be deducted when calculating CEP because
such costs clearly relate to the product sold in the United States.
Furthermore, the Unions argue (referring to Silver Reed at 1397), the
CIT has recognized that this expense must be deducted in the
calculation of CEP.
The Unions acknowledge that the Department may have attempted to
distinguish the new statutory calculation of CEP from the prior
calculation of exporter's sale price by limiting the deductions to
those attributable exclusively to U.S. sales. However, in interpreting
the new statute, the Unions claim, the Department has determined that
inventory carrying costs that are shown to relate exclusively to U.S.
sales are deductible, even when incurred in the exporter's home market
(citing Notice of Final Determination of Sales at Less Than Fair Value:
Certain Pasta from Italy (Pasta), 61 FR 30326, 30352 (June 14, 1996)).
The Unions claim that the distinction the Department drew in Pasta was
that, given evidence that the expense at issue was related to a U.S.
sale and not to any other sale, inventory carrying costs incurred in
shipping the merchandise following exportation should be deducted
because such expenses related to U.S. sales. Similarly, the Unions
argue, where the CPT is loaded in Japan onto a ship destined
exclusively for the United States all costs incurred following
exportation relate only to the U.S. sales and, accordingly, even if the
Department declines to deduct other indirect selling expenses incurred
in Japan in selling to the United States the Department should deduct
from CEP inventory carrying costs incurred after exportation because
such costs are exclusively attributable to U.S. commercial activity.
Finally, the Unions argue that the Department should be consistent
in its treatment of indirect selling expenses incurred in Japan,
whether in the calculation of CEP or in the calculation of CEP profit.
The Unions insist that if, as discussed above, the Department decides
to ignore indirect selling expenses incurred by Mitsubishi in Japan for
its U.S. sales in the calculation of CEP, the Department must likewise
disregard the same expenses in calculating the total U.S. selling
expenses for the purpose of calculating the CEP-profit ratio. The
Unions claim that, although the Department failed in the preliminary
results to deduct from CEP the indirect selling expenses incurred by
Mitsubishi in Japan for its U.S. sales, the Department included these
same expenses in the calculation of Mitsubishi's total selling expenses
for the determination of the CEP-profit ratio. Such uneven treatment,
the Unions argue, not only violates the antidumping law but is
unreasonable and unfair. The Unions claim that on one hand the
Department determined that, for purposes of calculating CEP, these
expenses were not related to U.S. economic activity even though
Mitsubishi identified these expenses as being incurred on behalf of the
U.S. sales and even though the same types of expenses were deducted
from normal value, whereas on the other hand, for purposes of
calculating the CEP-profit ratio, the Department accepted these
expenses as being related to U.S. sales. The Unions argue that nothing
in the statute allows the Department to distinguish between the
treatment of these selling expenses for purposes of calculating CEP and
the CEP-profit ratio and, accordingly, for the final results the
Department should either deduct all indirect selling expenses for the
U.S. sales from CEP or, alternatively, the Department should exclude
the same expenses from the calculation of total selling expenses for
U.S. sales, thereby excluding these expenses from the calculation of
the CEP-profit ratio.
Mitsubishi claims that the Unions' argument would have the
Department abandon its existing practice and deduct certain expenses
from the CEP even though the expenses do not relate to economic
activities in the United States. Mitsubishi notes that the expenses in
question are indirect selling expenses and inventory carrying costs
incurred prior to importation and that the Department has consistently
not deducted such expenses in its practice under the URAA, citing
Dynamic Random Access Memory Semiconductors of One Megabit or Above
from the Republic of Korea: Final Results of Antidumping Duty
Administrative Review, 62 FR 965 (January 7, 1997), in which the
Department stated ``we have not deducted indirect selling expenses and
inventory carrying costs incurred in Korea from U.S. price because
these expenses do not result from or bear relationship to selling
activities in the United States.''
Mitsubishi argues that the reasoning in that case applies directly
to this case and that the Department is treating the expenses in
question in the same manner in both cases. Mitsubishi also states that,
because the Unions recognize that the Department calculates CEP by
limiting the deductions to those related to U.S. economic activity, the
Unions then argued that one piece of pre-importation inventory carrying
costs should be deducted, i.e., that portion attributable to the time
in transit. Mitsubishi claims that it submitted its imputed inventory
carrying costs in its original questionnaire response and that the
transit period represents one part of the inventory carrying costs that
cannot be distinguished on the record from the inventory period in
Japan. Therefore, Mitsubishi argues, this expense cannot be attributed
exclusively to U.S. sales and is not an appropriate adjustment. In
addition, Mitsubishi states, the Unions are extremely untimely in their
request that a portion of the expense be identified and attributed to
U.S. sales. Furthermore, Mitsubishi argues, the adjustment is very
small and is well within the parameters for ignoring minor adjustments.
For the foregoing reasons Mitsubishi claims that, even if the
Department agreed with the substance of the Unions' argument the
Department should reject it.
Department's Position
We disagree with the Unions' argument that section 772(d)(1) of the
Act requires us to deduct the same direct and indirect selling expenses
as were deducted under the pre-URAA statute. Section 772(d)(1) of the
Act instructs us to deduct from the starting price the amount of the
expenses generally incurred by or for the account of the producer or
exporter, or the affiliated seller in the United States, in selling the
subject merchandise. It is clear from the SAA that under the new
statute we should deduct from CEP only those expenses associated with
commercial activity in the United States. The SAA also indicates that
the CEP ``is now calculated to be, as closely as possible, a price
corresponding to a price between non-affiliated exporters and
producers.'' SAA at 823. Section 351.402(b) of the proposed regulations
codifies this principle, stating that we will make adjustments under
section 772(d) for expenses associated with commercial activity in the
United States, no matter where it is incurred. Therefore, consistent
with section 772(d) and the SAA, we deduct only those expenses
representing activities undertaken to make the sale to the unaffiliated
customer in the United States. We ordinarily do not deduct indirect
expenses incurred in selling to the affiliated U.S. importer. See,
e.g., Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or
Less in Outside Diameter, and Components Thereof, From Japan; Final
Results of Antidumping Duty Administrative
[[Page 34208]]
Reviews and Termination in Part, 62 FR 11825, 11834 (March 13, 1997);
Gray Portland Cement and Clinker From Mexico: Final Results of
Antidumping Duty Administrative Review, 62 FR 17148, 17168 (April 9,
1997) (Mexican Cement).
Our analysis of Mitsubishi's indirect selling expenses incurred in
Japan indicates that these costs, including items such as salaries,
office expenses and equipment expenses, relate to activities performed
in selling to the affiliated U.S. importer. While we recognize that in
Pasta we reevaluated our treatment of indirect selling expenses
incurred in Italy for the final determination, the circumstances
differed from this case. In Pasta, based on information obtained at
verification which indicated that enriched pasta, other than whole
wheat pasta, is virtually all sold in the United States, we determined
that any inventory carrying costs incurred on enriched pasta were
necessarily attributable to U.S. economic activity. But in this case,
Mitsubishi's indirect selling expenses cannot be attributed exclusively
to its U.S. sales to unaffiliated customers. Unlike Pasta, we found no
models that Mitsubishi produces for sale exclusively in the United
States and, therefore, Mitsubishi incurs these costs regardless of the
final destination of the sale.
Moreover, we do not consider the portion of Mitsubishi's inventory
carrying costs during the period of transit to be associated with
commercial activity in the United States. These expenses were incurred
from the date of exportation to the date the affiliated importer
received the subject merchandise in the United States and, therefore,
relate to the sale to Mitsubishi's U.S. affiliate and not to the sale
to the unaffiliated customer. See Certain Stainless Steel Wire Rods
From France: Amended Final Results of Antidumping Duty Administrative
Review (Steel Wire Rods) 62 FR 25915, 25916 (May 12, 1997).
Accordingly, for these final results we have not deducted such costs
from the CEP.
Although we agree with the Unions' argument that these expenses
should be excluded from the numerator of the CEP-profit ratio (i.e.,
the calculation of total U.S. expenses), we have included these
expenses in the denominator as total expenses in accordance with
section 772(f)(2)(C). In deducting profit from CEP the statute directs
us to allocate profit to CEP sales based upon the ratio of total U.S.
expenses to total expenses. See sections 772(f)(1) and (2). Consistent
with section 772(f)(2)(B) and the SAA, we include only expenses
deducted under sections 772(d)(1) and (2) in the calculation of total
U.S. expenses. See SAA at 824; Mexican Cement, 62 FR at 17167. However,
section 772(f)(2)(C) defines total expenses as all expenses incurred by
or on behalf of the foreign producer/exporter and the affiliated U.S.
seller with respect to the production and sale of subject merchandise
and the foreign like product. This calculation requires the inclusion
of all expenses even if not associated with commercial activity in the
United States. Accordingly, we have included Mitsubishi's indirect
selling expenses and inventory carrying costs incurred in Japan in the
calculation of total expenses.
Comment 7
The Unions argue that the Department should exclude from the
calculation of profit for constructed value (CV) Mitsubishi's home
market sales that were made below the cost of production. The Unions
note that the Department based normal value on CV for comparison with
U.S. sales for which there were no home market comparison models and
that, when calculating CV, the Department added an amount for CV profit
to the model-specific cost of production provided by Mitsubishi. The
Unions argue that, pursuant to section 773(e), CV must include an
amount for profits earned in the ordinary course of trade in the
production and sale of the foreign like product. The Unions add that in
accordance with section 771(15) the Department must consider as outside
the ordinary course of trade sales disregarded under section 773(b)(1)
due to below-cost prices and under section 773(f)(2) due to non-arm's-
length prices. Furthermore, the Unions claim, the Department has
consistently implemented this statutory requirement (citing, e.g.,
Notice of Final Results of Antidumping Duty Administrative Review:
Mechanical Transfer Presses from Japan (Mechanical Transfer Presses),
62 FR 11820, 11822 (March 13, 1997)). The Unions assert that in that
case, as here, the particular market situation did not permit proper
price-to-price comparisons between home market sales and all of the
respondent's U.S. sales and that the Department had to rely on CV to
compare to certain U.S. sales. The Unions claim that, when analyzing
the cost and sales data for home market sales of the foreign like
product in the Mechanical Transfer Presses case, the Department had
reason to believe that such sales were made at prices below the cost of
production and that the Department excluded below-cost sales from the
CV calculation on that basis even though technically the Department did
not disregard those sales in the price-based determination of normal
value.
In the instant review, the Unions point out, Mitsubishi provided
model-specific cost-of-production data in its Section D questionnaire
response that allows the Department to determine whether there were
sales made in the home market at prices below the cost of production
during the POR within an extended period and in substantial quantities.
The Unions argue that, although they believe the Department should
undertake a full cost-of-production investigation (see Comment 5), at a
minimum the Department should ensure for the final results that below-
cost sales are excluded from its calculation of profit for CV.
Mitsubishi claims that the Unions' argument with respect to the
calculation of profit for CV is fundamentally the same argument
requesting that the Department undertake an investigation of below-cost
sales. Mitsubishi states that the facts on the record have been there
for months and that the deadlines for making such allegations are long
past. Mitsubishi adds that it is completely inappropriate to request at
this point in the review that the Department undertake analyses of new
issues that should have been raised much earlier.
Mitsubishi argues that the Department's policy is to include in the
calculation of CV profit all sales of the like product unless there has
been a finding that such sales were not in the ordinary course of
trade. Mitsubishi states that the Department has expressly considered
and rejected the position that all below-cost sales are outside the
ordinary course of trade. Mitsubishi notes that in comments
accompanying the proposed regulations the Department stated that sales
must have been disregarded under the cost test before they will be
excluded from the calculation of profit (referring to 61 FR 7335
(February 27, 1996)). Mitsubishi points out that the reference to a
``cost test'' is to the investigation conducted under section 773(b) of
the Act pursuant to an allegation of below-cost sales. Mitsubishi adds
that the test considers not only whether the sales were made below the
cost of production but whether the sales were made in substantial
quantities over a substantial period of time at prices that do not
permit the recovery of all costs within a reasonable period of time
(referring to section 773(b)). Mitsubishi adds that, as discussed in
response to an earlier comment, the Department has specific regulations
regarding the procedures for determining such issues and that the
[[Page 34209]]
Unions' arguments come far too late in the review.
Mitsubishi also argues that Mechanical Transfer Presses is readily
distinguishable from this case because the Department determined to go
directly to CV because mechanical transfer presses are large, custom-
built capital equipment and, while the home market was viable, the fact
that subject merchandise was built to each customer's specifications
did not permit proper price-to-price comparison in either the home
market or third countries. As a result, Mitsubishi notes, the
Department did not require that the respondent provide home market
sales data. Consequently, Mitsubishi claims, the Department had
determined that allegations of below-cost sales--for the purpose of
eliminating below-cost sales from price-to-price comparisons--were not
necessary. In the present case, Mitsubishi notes, home market sales
data were not only requested but were extensively used in price-to-
price comparisons. Mitsubishi asserts that the statutory structure is
clear in that the Department should have been requested, on a timely
basis, to conduct a below-cost sales investigation as a prerequisite to
the Unions' arguments.
Department's Position
Section 773(e)(2)(A) directs us to calculate CV profit using home
market sales of the foreign like product in the ordinary course of
trade. Consistent with the definition of ``ordinary course of trade''
contained in section 771(13) and the SAA, we have interpreted this
requirement to preclude an automatic exclusion of below-cost sales from
the CV profit calculation. Proposed Regulations, 61 FR at 7335.
Instead, our normal practice is to exclude below-cost sales only when
such sales have been disregarded under our cost test pursuant to
section 773(b)(1). See Certain Welded Carbon Steel Pipes and Tubes From
Thailand: Final Results of Antidumping Duty Administrative Review, 61
FR 56515, 56518 (November 1, 1996). As discussed above, we have not
conducted a cost test in this administrative review of Mitsubishi's
home market sales. Accordingly, we have not disregarded any below-cost
sales as being outside the ordinary course of trade and, therefore,
have not excluded any sales from our calculation of CV profit.
The Unions' cite to Mechanical Transfer Presses is misplaced
because in that case we excluded below-cost sales because of unique
factual circumstances not present in this review. In that case, because
the particular market situation rendered a price-to-price comparison
inappropriate, the need for an examination of whether home market sales
were below cost was not apparent. Thus, when the relevance of the issue
became apparent, we analyzed the cost data and determined that the
respondent did have below-cost sales that would have been disregarded
under section 773(b)(1). Mechanical Transfer Presses, 62 FR at 11822.
We determined that it was, therefore, appropriate to exclude such sales
from the calculation of CV profit.
Comment 8
The Unions argue that for comparison to U.S. sales for which
Mitsubishi failed to supply complete data the Department should use, as
facts available, the highest cost-of-production data and that the
preliminary decision to use the weighted-average dumping margin
calculated for all other sales was inappropriate and inconsistent with
the Department's past practice. The Unions state that in a case in
which the respondent failed to submit the cost of further manufacturing
for certain sales the Department used, as facts available, the highest
reported cost of further manufacturing, citing Granular
Polytetrafluoroethylene Resin from Italy; Final Results of Antidumping
Duty Administrative Review (PTFE Resin), 62 FR 5590 (February 6, 1997).
In this case, too, the Unions argue, while it would be inappropriate to
resort to total facts available, Mitsubishi should not be rewarded for
its failure to provide requested data--data which might reveal higher
dumping margins for certain sales than the weighted-average dumping
margins for other sales. The Unions state that if the Department were
to use the weighted-average margin to fill in data that a respondent
failed to supply respondents would be encouraged to withhold particular
data that would lead to higher margins. Accordingly, the Unions argue,
the Department should use, as facts available, the highest CV reported
by Mitsubishi for the same model size to calculate margins for these
sales.
With respect to the question of facts available, Mitsubishi states
that the Department has broad discretion in selecting a facts-available
margin for sales having less than complete data. In this review,
Mitsubishi argues that a very small number of U.S. sales were made of
models for which cost-of-manufacturing data was not available and,
given the small number of sales at issue and the similarity of these
models to other models for which data was supplied, the Department's
decision to apply the weighted-average margin calculated for other U.S.
sales was correct.
Mitsubishi disputes the Unions' assertion that Mitsubishi is
benefitting by the application of the weighted-average margin for these
sales. Mitsubishi argues that there is no benefit or preferential
treatment accorded these sales but, rather, an appropriate decision not
to apply a punitive rate to these sales in view of the overall
reasonableness and reliability of Mitsubishi's response. Mitsubishi
states that one of the significant revisions under the new law is the
shift from the use of best information available to the use of facts
available pursuant to section 776(b).
Department's Position
We disagree with the Unions' argument regarding our use of adverse
facts available (i.e., apply the highest calculated CV for the same-
size-screen models) for Mitsubishi's U.S. sales of models for which we
had no CV data. Given the level of cooperation by Mitsubishi, including
timely submission of its initial and supplemental questionnaire
responses as well as its participation in a verification of its data,
the absence of CV data for these sales does not warrant the use of
adverse facts available pursuant to section 776(b). On the contrary,
for more than 93 percent of its U.S. sales of subject merchandise
during the POR Mitsubishi provided information such that we are able to
calculate an accurate margin. For the relatively few sales for which we
had no CV data we exercised our discretion under section 776(a) to
determine how to apply facts available to account for the missing data.
Accordingly, for these final results we have continued to apply as
facts available to such sales the weighted-average margin which we
calculated for Mitsubishi's other sales.
Comment 9
The Unions argue that the Department should determine that
Mitsubishi has absorbed antidumping duties in this review. The Unions
claim that the Department's proposed regulations provide that for
transition orders the Department will make a duty-absorption
determination, if requested, for any review initiated in 1996
(referring to 61 FR 7308, 7366 (February 27, 1996) and also citing
Certain Welded Stainless Steel Pipe from Taiwan; Preliminary Results of
Administrative Review (Stainless Steel Pipe), 62 FR 1435, 1436 (January
10, 1997)).
The Unions acknowledge that this is the first time that they have
raised the issue of duty absorption in this review. However, the Unions
assert, the Department's analysis of this issue is unaffected by the
timing of the Unions'
[[Page 34210]]
request for a duty-absorption determination. The Unions claim that in
the review of Stainless Steel Pipe the Department did not obtain any
additional information from the respondent in deciding whether
absorption occurred. Instead, the Unions claim that the Department
determined, based on information obtained during the regular course of
the review, that duty absorption occurred within the meaning of the
statute. The Unions argue that in this case, too, the Department can
make a decision on duty absorption based on information already
available to it.
Mitsubishi points out that the notice of initiation, published on
February 20, 1996, stated that, if requested within 30 days of
publication, the Department would determine whether antidumping duties
had been absorbed by an exporter or producer subject to the review if
the merchandise was sold in the United States through an affiliated
importer (61 FR 6348). Mitsubishi states that, according to the notice,
the Unions had the opportunity to request a determination on this issue
not later than March 22, 1996. Instead, Mitsubishi argues, the request
submitted for the first time on March 17, 1997, was 360 days late. In
addition, Mitsubishi argues that section 351.213(j) of the proposed
regulations are clear regarding the manner in which the Department
should decide this issue: ``* * * the Department will make a
determination regarding duty absorption only if the request for such a
determination is made within 30 days after the initiation of the
administrative review'' (61 FR 7317 (February 27, 1996)). Mitsubishi
notes that the Unions make no attempt to explain the lateness of their
request but, instead, argue that the record is complete and that the
Department would not have sought or gathered any additional information
if the request had been filed earlier. Finally, Mitsubishi argues that
the Unions ignore Mitsubishi's rights to be advised that such a review
has been requested and to put such information on the record as it
deems useful and that if the Department accepts the Unions' request,
Mitsubishi's rights will be entirely abrogated by the Unions'
procedural tactic. Considering the 30-day deadline as stated in the
proposed regulations and in the accompanying comments, as well as in
the notice of initiation, Mitsubishi argues that there is no merit to
the Unions' request and that such a request should be denied.
Department's Position
We agree with Mitsubishi that a duty-absorption inquiry is not
appropriate in this review. Section 351.213(j) of our proposed
regulations states that ``the Secretary, if requested within 30 days of
the initiation of the review, will determine whether antidumping duties
have been absorbed * * *.'' Our notice of initiation of this review
reflected this procedural requirement, stating that we would make such
a determination if a request was received within 30 days of
publication. Initiation of Antidumping and Countervailing Duty Reviews,
61 FR 6347, 6348 (February 20, 1996). Thus, the Unions had clear notice
of the established 30-day deadline for submitting a duty-absorption
request. Because our absorption inquiry is fact-intensive and conducted
on a case-by-case basis, the Stainless Steel Pipe case is irrelevant in
considering whether to conduct such a determination in this review.
Comment 10
The Unions claim that the Department erroneously treated
Mitsubishi's further-manufacturing costs as though they were incurred
in Japanese yen rather than in U.S. dollars and, therefore, applied
exchange rates incorrectly in its preliminary calculations. The Unions
note that the further-manufacturing costs, including costs of
materials, labor and overhead, as well as other applicable expenses,
were incurred by Mitsubishi to incorporate CPTs into color televisions
that were assembled in the United States. Because those costs were
incurred in the United States, the Unions point out, they were already
denominated in dollars and, thus, no currency conversion was required.
Department's Position
Although Mitsubishi had originally indicated that its further-
manufacturing data were denominated in Japanese yen, upon further
review of Mitsubishi's section E response we agree with the Unions that
Mitsubishi reported its further-manufacturing expenses incurred in the
United States in dollars. Therefore, for the final results we have
treated them accordingly.
Comment 11
The Unions argue that, when calculating CEP expenses, the
Department should include repacking expenses incurred by Mitsubishi in
the United States. The Unions note that in the preliminary results the
Department deducted from the CEP starting price repacking expenses
incurred by Mitsubishi for its U.S. sales but that the Department
failed to include repacking expenses in the calculation of total
expenses incurred by Mitsubishi in the United States for sales of
subject merchandise, thereby understating the sum of the expenses that
were subsequently used for the calculation of CEP profit.
The Unions claim that, pursuant to section 772(d)(3) of the Act,
the Department is required to deduct the profit allocated to the
expenses generally incurred by or for the account of the producer or
exporter, or the affiliated reseller in the United States, in selling
the subject merchandise, as well as the cost of any further
manufacturing or assembly. The Unions assert that repacking expenses
incurred by Mitsubishi in the United States for the sale of merchandise
to which value had been added fall into the domain of the expenses
described by section 772(d)(3) for purposes of the CEP-profit
calculation. Further, the Unions argue, inclusion of the repacking
expenses in the total expenses incurred by Mitsubishi in the United
States for purposes of the CEP-profit calculation is consistent with
the Department's practice, citing Certain Stainless Steel Wire Rod from
France: Amended Final Results of Antidumping Duty Administrative
Review, 61 FR 58523, 58524 (November 15, 1996), and, accordingly,
should be included for the final results in the calculation of total
expenses incurred by Mitsubishi in the United States.
Mitsubishi dismisses the Unions' argument as incorrect. Mitsubishi
claims that section 772(d)(3) explicitly limits the deductions that
attract a profit to a well-defined group: selling expenses and further-
manufacturing costs. Mitsubishi argues that repacking expenses are
neither. In fact, Mitsubishi argues, there does not appear to be a
statutory basis to deduct repacking expenses from U.S. price at all.
Mitsubishi agrees that packing of subject merchandise is a recognized
adjustment, made to normal value, but repacking of further-manufactured
non-subject merchandise is not an adjustment recognized under the
statute. Therefore, Mitsubishi argues, rather than assigning profit to
repacking, the Department should not adjust for this expense at all.
Department's Position
We agree with the Unions. Repacking in the United States is an
expense associated with the further manufacture and assembly of the
merchandise and, as such, is among the expenses deducted from the
starting price under section 772(d)(2) and for purposes of the
allocation of profit under 772(d)(3). See Antifriction Bearings (Other
Than Tapered Roller Bearings) and Parts Thereof From France, et. al.;
Final Results of Antidumping Duty
[[Page 34211]]
Administrative Reviews, 57 FR 28360, 28396 (June 24, 1994). As
discussed in response to Comment 6 above, all expenses deducted under
section 772(d) (1) and (2) are included in the numerator for total U.S.
expenses in the calculation of the CEP-profit ratio. Accordingly, for
the final results, we have continued to deduct these expenses from the
starting price pursuant to section 772(d)(2) and included such
repacking expenses in our calculation of CEP profit.
Comment 12
The Unions assert that the Department should ensure that the full
amount of dumping duties is assessed and collected. The Unions state
that when the Department issues its final results it will be able to
determine the total amount of dumping duties payable for all sales made
during the POR and that the Department should instruct the Customs
Service to assess and collect on Mitsubishi's entries during the POR
the absolute amount of duties payable plus interest.
Mitsubishi agrees that the Department should collect the duties
payable in this review. However, Mitsubishi argues, the assessment
methodology indicated in the preliminary results would, if used, result
in a large overcollection of duties. Mitsubishi states that, while it
understands that the Department calculated the percentage duty because
the assessment instructions that may be issued may instruct Customs to
apply the percentage duty to all entries made during the POR,
Mitsubishi requests the Department to reconsider this approach because
it would cause Customs to collect an amount that far exceeds the amount
of dumping duties determined on the POR sales. Specifically, Mitsubishi
states, the Department calculated the percentage duty based on the
entered value for all sales of subject merchandise during the POR but,
Mitsubishi argues, the Department should have based its calculation on
Mitsubishi's Section A response of the entered value of entries during
the POR. Mitsubishi claims that not all CPTs entered during the POR
were sold during the POR and if the percent duty is applied to CPTs
actually entered during the POR, a substantial overcollection of
dumping duties will result. Mitsubishi adds that overcollection would
result regardless of the margin calculated for the final results
because of the significant difference in the total entered value of
CPTs sold during the POR compared with the total value of all entries
of CPTs during the POR.
Mitsubishi states that in a review involving sampling it may be
reasonable and permissible for the Department to assess duties on all
entries at the ratio derived by dividing the dumping duties for the
sample sales divided by the total value of those sample sales. However,
Mitsubishi argues, in non-sampling cases such as the present case, the
Department has on record an exact quantification of the total value of
entries of subject merchandise during the POR. Consequently, Mitsubishi
argues, the Department can compute an exact percentage for realizing
the precise amount of dumping duties due in the event the Department
wishes to have duties assessed uniformly across all entries during the
POR. Alternatively, Mitsubishi suggests that the Department could
instruct Customs that the assessment is to be capped at the level of
the percentage margin.
Mitsubishi argues further that, in CEP sales reviews, the entries
that are in excess of the entries accounting for sales of a particular
review belong to the sales of other reviews. Mitsubishi argues that the
duties relating to such entries are assessed and collected within the
review period within which those sales occurred. Through consistent
application of the proper methodology in each review, Mitsubishi
argues, the appropriate dumping duties are calculated, assessed and
collected on all entries subject to an order. Thus, Mitsubishi argues,
the Department should revise the percentage duty variable or other
aspects of its assessment methodology so as to ensure against an
overcollection of duties.
Department's Position
We agree with Mitsubishi and the Unions that we should assess and
collect the correct amount of duties payable. We believe that the best
way to do so is the methodology which has become our established
practice in recent years and which has been upheld by the courts. See,
e.g., Antifriction Bearings (Other Than Tapered Roller Bearings) From
France, Germany, Italy, Japan, Singapore, and the United Kingdom; Final
Results of Antidumping Duty Administrative Reviews, 61 FR 2081, 2083
(January 15, 1997); FAG Kugelfischer Georg Schafer KgaA v. United
States, No. 92-07-00487, 1995 Ct. Int'l. Trade LEXIS 209, at CIT *10
(Sept. 14, 1995), aff'd. No. 96-1074 1996 U.S. App. LEXIS 11544 (Fed.
Cir. May 20, 1996). This method, by which we calculate an importer-
specific ad valorem duty assessment rate for the merchandise based on
the ratio of the total amount of antidumping duties calculated for the
examined sales made during the POR to the total customs value of the
sales used to calculate those duties, yields the best representation of
what the dumping margins on sales of merchandise entered are, because
in most cases respondents are unable to link specific entries to
specific sales. Mitsubishi's proposal would require such a link, which
it has not done for this review. For these reasons we will use our
current methodology to calculate the assessment rates which we will
instruct Customs to apply to entries during the POR.
Comment 13
Mitsubishi argues that the Department mistakenly treated domestic
inland freight from the plant to the distribution warehouse on U.S.
sales as if it were reported in dollars rather than yen. As a movement
expense incurred entirely within Japan, Mitsubishi claims that the
Department should multiply the reported expense by the dollar/yen
exchange rate.
Department's Position
We agree with Mitsubishi and have made the appropriate currency
conversion for the final results.
Comment 14
Mitsubishi argues that the Department did not deduct inland freight
expenses to the customer from home market price and, for the final
results, the Department should modify its margin calculations in order
to adjust for these expenses.
The Unions argue that Mitsubishi's reported freight expenses have
been misreported and cannot legitimately be used by the Department in
its calculation for the final results (see earlier comment above).
Accordingly, the Unions assert, the Department should reject
Mitsubishi's claim for an adjustment to home market inland freight but,
at a minimum, the Department must adjust the freight expenses reported
by Mitsubishi to ensure that those expenses reflect a reasonable amount
for transporting the merchandise from Mitsubishi's warehouse to the
customer.
Department's Position
We agree with Mitsubishi. As explained in our response to Comment 3
above, at verification we found Mitsubishi's reported inland freight
expenses to the customer to be accurate and complete. For the final
results we have deducted those expenses from normal value.
Comment 15
Mitsubishi argues that the Department erroneously set direct
selling expenses
[[Page 34212]]
for cost of production equal to zero in its calculations. Because the
same variable is used later to calculate profit for CEP and CV,
Mitsubishi claims, overriding its value with zero affects these
calculations by overstating profit for CEP and CV. Mitsubishi argues
that, although it is the Department's practice to eliminate one
component of direct selling expenses--imputed credit expenses--from the
profit calculation, there is no basis for eliminating all direct
selling expenses.
Department's Position
We agree with Mitsubishi and have adjusted our calculations for the
final results.
Comment 16
Mitsubishi notes that the Department erroneously did not calculate
margins for U.S. sales that were compared to CV because the computer
programming language referenced a non-existent data set. Mitsubishi
claims that this caused a series of errors in subsequent parts of the
program and suggests programming language which would correct this
problem.
Department's Position
We agree with Mitsubishi and have ensured that we use all datasets
appropriately.
Comment 17
Mitsubishi argues that the Department should modify its
calculations in order to base the calculations of CV profit and
expenses and CEP profit on all home market sales of the like product
rather than just on sales of certain models. Mitsubishi claims that the
Department incorrectly restricted these calculations to sales of large-
screen sizes but that it should have based these calculations on all
home market sales of the like product, including smaller-screen sizes.
Mitsubishi notes that the foreign like product, as defined in the
Department's questionnaire, is CPTs regardless of screen size. Further,
Mitsubishi argues that the Department's practice is clear in this
regard, citing Professional Electric Cutting Tools from Japan; Final
Results of Antidumping Duty Administrative Review (PECTs), 62 FR 386,
389-390 (January 3, 1997), and Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy,
Japan, Singapore and the United Kingdom (AFBs VI), 62 FR 2081, 2112-
2113 (January 15, 1997), in which the Department used all sales of the
foreign like product for the purposes of calculating CV and CEP profit
and stated that it interpreted the term foreign like product to be
inclusive of all merchandise sold in the home market which was in the
same class or kind of merchandise as that under consideration.
The Unions state that in this case and in the cases Mitsubishi
cites the Department properly calculated CV and CEP profit based on all
sales that could potentially be used for comparison to the U.S. sales.
The Unions add that the Department's past practice has been to include
in its calculation of CV and CEP profit all home market sales of
comparison models because these data encompass all foreign like
products under consideration for normal value, referring to Certain
Internal-Combustion Industrial Forklift Trucks from Japan; Final
Results of Antidumping Duty Administrative Review (Forklift Trucks), 62
FR 5592, 5598 (February 6, 1997). Accordingly, the Unions argue, after
eliminating sales below cost in the CV-profit calculation, the
Department should continue to base the profit-rate calculation on sales
of the same models as those it used in the preliminary results.
Department's Position
We agree with Mitsubishi that our calculation of CV and CEP profits
should include all home market sales during the POR of the foreign like
product. For purposes of calculating CV and CEP profit we use an
aggregate calculation that encompasses all foreign like products sold
in the home market. See AFBs VI at 2113; PECTs at 390; Antidumping
Duties; Countervailing Duties; Final Rule, 62 FR 27295, 27359 (May 19,
1997). The Unions have misconstrued our decision in Forklift Trucks. In
that case, we applied the same methodology we applied in PECTs and are
applying here. It is the facts of Forklift Trucks, not the methodology,
that differs from the present case. Consistent with that methodology we
determine the foreign like product is inclusive of all of Mitsubishi's
reported home market sales, and we have calculated CV profit on an
aggregate basis.
Final Results of the Review
As a result of our analysis of the comments received, we determine
that the following dumping margin exists for the period January 1, 1995
through December 31, 1995:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Mitsubishi.................................................. 5.93
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Because the
inability to link sales with specific entries prevents calculation of
duties on an entry-by-entry basis, we have calculated an importer-
specific ad valorem duty assessment rate for the merchandise based on
the ratio of the total amount of antidumping duties calculated for the
examined sales made during the POR to the total customs value of the
sales used to calculate those duties. This rate will be assessed
uniformly on all entries of that particular importer made during the
POR. (This is equivalent to dividing the total amount of antidumping
duties, which are calculated by taking the difference between NV and
CEP, by the total CEP value of the sales compared, and adjusting the
result by the average difference between CEP and customs value for all
merchandise examined during the POR.) The Department will issue
appraisement instructions directly to the Customs Service.
Furthermore, the following cash deposit requirements will be
effective upon publication of these final results for all shipments of
the subject merchandise entered, or withdrawn from warehouse, for
consumption on or after the publication date, as provided for by
section 751(a)(1) of the Act: (1) For Mitsubishi the cash deposit rate
will be the rate listed above; (2) if the exporter is not a firm
covered in this review, a previous review, or the original less-than-
fair-value investigation (LTFV), but the manufacturer is, the cash
deposit rate will be that which was established for the most recent
period for the manufacturer of the merchandise; (3) for non-Japanese
exporters of subject merchandise from Japan, the cash deposit rate will
be the rate applicable to the Japanese supplier of that exporter; (4)
if neither the exporter nor the manufacturer is a firm covered in this
or any previous reviews, the cash deposit rate will be 27.93 percent,
the ``all others'' rate established in the LTFV investigation, as
explained below. These deposit requirements shall remain in effect
until publication of the final results of the next administrative
review.
On May 25, 1993, the Court of International Trade (CIT) in Floral
Trade Council v. United States, 822 F.Supp. 766 (CIT 1993), and
Federal-Mogul Corporation and The Torrington Company v. United States,
822 F.Supp. 782 (CIT 1993), decided that once an ``All Others'' rate is
established for a company it can only be changed through an
administrative review. We
[[Page 34213]]
have determined that, in order to implement these decisions, it is
appropriate to reinstate the ``All Others'' rate from the LTFV
investigation (or that rate as amended for correction of clerical
errors or as a result of litigation) in proceedings governed by
antidumping duty orders. Therefore, we are reinstating the ``All
Others'' rate made effective by the final determination of sales at
LTFV (see Color Pictures Tubes, 52 FR 44171, November 18, 1987).
This notice also serves as a reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to APOs of
their responsibility concerning disposition of proprietary information
disclosed under APO in accordance with 19 CFR 353.34 (d). Timely
written notification of the return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of an APO is a sanctionable
violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: June 11, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-16680 Filed 6-24-97; 8:45 am]
BILLING CODE 3510-DS-P
