[Federal Register Volume 62, Number 136 (Wednesday, July 16, 1997)]
[Notices]
[Pages 38058-38064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18730]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-421-805]
Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From
the Netherlands; Final Results of Antidumping Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of the antidumping duty administrative
review; Aramid Fiber formed of poly para-phenylene terephthalamide from
the Netherlands.
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SUMMARY: On March 7, 1997, the Department of Commerce (the Department)
published the preliminary results of its administrative review of the
antidumping duty order on aramid fiber formed of poly para-phenylene
terephthalamide (PPD-T aramid) from the Netherlands. The review covers
one manufacturer/exporter and the period June 1, 1995 through May 31,
1996. We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have revised the results from those presented in the preliminary
results of review.
EFFECTIVE DATE: July 16, 1997.
FOR FURTHER INFORMATION CONTACT: Nithya Nagarajan at (202) 482-0193,
Eugenia Chu at (202) 482-3964, or Ellen Knebel at (202) 482-0409,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230.
Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all references to the
[[Page 38059]]
Department's regulations are to 19 CFR part 353 (1997).
SUPPLEMENTARY INFORMATION:
Background
The Department published in the Federal Register the antidumping
duty order on PPD-T aramid from the Netherlands on June 24, 1994 (59 FR
32678). On June 6, 1996, we published in the Federal Register (61 FR
28840) a notice of opportunity to request an administrative review of
the order on covering the period June 1, 1995, through May 31, 1996
(``POR'').
In accordance with 19 CFR 353.22(a)(1), Aramid Products V.o.F.
(Aramid) and Akzo Nobel Fibers Inc. (collectively ``Akzo'' or
respondent) and petitioner, E.I. du Pont de Nemours and Company
(petitioner), requested that we conduct an administrative review for
the POR. We published a notice of initiation of this antidumping duty
administrative review on August 8, 1996 (60 FR 41373). The Department
is conducting this administrative review in accordance with section 751
of the Act.
On March 7, 1997, the Department published the preliminary results
of the review. (See 62 FR 10524). The Department has now completed the
review in accordance with section 751 of the Act.
Scope of the Review
The products covered by this review are all forms of PPD-T aramid
from the Netherlands. These consist of PPD-T aramid in the form of
filament yarn (including single and corded), staple fiber, pulp (wet or
dry), spun-laced and spun-bonded nonwovens, chopped fiber and floc.
Tire cord is excluded from the class or kind of merchandise under
review. This merchandise is currently classifiable under the Harmonized
Tariff Schedule (HTS) item numbers 5402.10.3020, 5402.10.3040,
5402.10.6000, 5503.10.1000, 5503.10.9000, 5601.30.0000, and
5603.00.9000. The HTS item numbers are provided for convenience and
Customs purposes. The Department's written description of the scope
remains dispositive.
Analysis of the Comments Received
We gave interested parties an opportunity to comment on the
preliminary results of review. We received comments from respondent and
petitioner.
Comment 1: Petitioner argues that in the preliminary results, the
Department accepted Akzo's reported U.S. indirect selling expenses
(ISE), which are based upon two factors: (1) Operating expenses per
financial accounts (excluding financial expenses); and (2) interest
expenses for Akzo Nobel Inc., a wholly-owned subsidiary of Akzo Nobel
N.V. of the Netherlands.
Petitioner claims that both of these components of Akzo's reported
U.S. ISE are in error, or were not properly verified, and should be
revised in the final results. First, in petitioner's analysis of Akzo's
operating expenses, petitioner takes issue with the appearance of a
line item in Akzo's summary trial balance that relates to an Akzo
facility in Scottsboro, Alabama. See U.S. Sales Verification Report,
Exhibit 4, on file in the Central Records Unit (room B-099 of the Main
Commerce Building). Petitioner asserts that if the subsidiary in
Scottsboro performed function(s) relating to the production and sale of
PPD-T aramid fiber in the United States during the period of review,
then Akzo has failed to provide a full accounting of its U.S.
activities and their costs.
Second, petitioner raises concerns over the inclusion of a credit
on Akzo's trial balance relating to manufacturing cost. Petitioner
argues that the activities included in this credit have not been
properly explained by the respondent.
Third, petitioner alleges that certain amounts have not been
accounted for in Akzo's reported net U.S. ISE operating expenses during
the period of review. Petitioner cites U.S. Sales Verification Exhibit
24 to support its claim.
Respondent argues that the Scottsboro facility is not involved in
the manufacture or sale of aramid fiber, and, therefore, the three
credits appearing on Akzo's summary trial balance relating to
Scottsboro are legitimately deducted from Akzo Nobel Aramid Product
Inc.'s operating expenses for antidumping purposes.
Respondent explains that petitioner's concerns regarding the credit
relating to manufacturing cost is misplaced. Respondent states that the
credit in question relates to beaming operations, that the costs
associated with beaming the subject merchandise were verified by the
Department and were therefore, properly included in manufacturing
costs.
Respondent disagrees with petitioner's allegation referring to U.S.
Sales Verification Exhibit 24. Respondent explains that a portion of
the amount petitioner claims was not accounted for was actually related
to expenses outside the POR. Moreover, respondent claims this expense
did not relate to the company's indirect selling expense and therefore,
pursuant to established Department practice, such expenses are not
properly included in net U.S. ISE as operating expenses. Respondent
further argues that the POR amount identified by petitioner results
from the fact that the income/expense booked in the January-May period
overvalued the anticipated expense of the full year.
The Department's Position: The Department agrees with respondent
that the credits on Akzo's trial balance relating to Scottsboro,
Alabama were properly deducted from Akzo's operating expenses. The
Department found no evidence to support petitioner's speculation that
Scottsboro is involved in the production or sale of subject
merchandise. The facility in Scottsboro, Alabama, Akzo Nobel Industrial
Fibers Inc., is described in Akzo's responses as a manufacturer of
polyester and nylon fiber and is part of the Industrial Fibers Business
Unit. Specifically, Akzo's September 19, 1996 Questionnaire Response
(Exhibits A-13 and A-14) references Scottsboro two times under the
Industrial Fibers heading in Akzo's Annual Report. The annual report
expressly defines the Industrial Fibers Business Unit as being
responsible for polyester, polyamide and viscose fibers for industrial
uses. Scottsboro does not appear under any subheading in Akzo's Annual
Reports that would indicate that Scottsboro produces the subject
merchandise. None of the information submitted by Akzo regarding Akzo
Nobel Industrial Fibers Inc. supports the claim that Akzo Nobel
Industrial Fibers Inc. is involved in the manufacture and sale of
aramid fiber. See, e.g., Exhibits A-2, A-3 and A-4 of Akzo's September
19, 1997, Questionnaire Response.
As explained by Akzo in its questionnaire response and discussed
with the Department at verification, Akzo Nobel Aramid Products Inc.'s
Conyers, Georgia facility is responsible for the sale of aramid fiber
in the United States, Canada and Mexico. During the POR, however, the
Conyers, Georgia facility was also used to warehouse certain industrial
fibers for the Industrial Fibers Business Unit of the Fibers Group and
to accommodate Industrial Fibers' salesmen and technical personnel.
Because the Industrial Fibers Business Unit (under which the Scottsboro
facility is categorized) is not involved in the manufacture or sale of
aramid fiber, any credits that relate to it should be deducted from
Akzo Nobel Aramid Products Inc.'s operating expenses.
The Department also verified Akzo's beaming operations. See U.S.
Sales Verification Report at 15 and Exhibit 28. The Department verified
that all costs associated with beaming the subject
[[Page 38060]]
merchandise during the POR were captured in Akzo's reported beaming
charges (REPACKU). See U.S. Sales Verification Exhibit 28. The
Department found no discrepancies and, therefore, agrees with Akzo that
the credit appearing in U.S. Sales Verification Report, Exhibit 4, was
accurately reported.
In addition, the Department verified that the credit amount
associated with the over booking of the anticipated expense that
petitioner claims was not accounted for was actually related to
expenses outside the POR. In addition, the Department verified that
Akzo has properly accounted for its ISE expense items appearing in U.S.
Sales Verification Exhibit 24.
For all of the reasons listed above, the Department has not made
any adjustment to Akzo's total U.S. ISE operating expenses or to its
U.S. ISE operating expense ratio.
Comment 2: Petitioner urges the Department to make an adjustment to
Akzo's U.S. ISE for financial interest expenses. Petitioner notes that,
in the past, the Department has taken the position that a respondent's
net interest expenses should be based upon the financing expenses
incurred on behalf of the consolidated group of companies to which the
respondent belongs because (1) the invested capital resources (debt and
equity) within a consolidated group are fungible, and (2) the
controlling entity within the consolidated group has the power to
determine the specific capital structures of each member unit within
the group. See Aramid Fiber Formed of Poly Para-Phenylene
Terephthalamide from the Netherlands: Final Results of Antidumping
Administrative Review, 61 FR 51,406 (October 2, 1996) at 51,407.
Petitioner argues that Akzo has not explained how the financing
expenses are allocated to Akzo Nobel Aramid Products Inc. or to any of
the other operating units. Petitioner urges the Department to depart
from the way it generally calculates financing expenses, arguing that
the Department's established method does not adequately capture the
true financing costs of the respondent. Petitioner alleges that the
amount of interest expenses that appears on Akzo Nobel Aramid Product
Inc.'s books ``better accounts'' for Akzo's financing costs and
business requirements than the consolidated data taken from Akzo Nobel
Inc.'s financial statement. In addition, petitioner contends that the
Department should revise Akzo Nobel Aramid Product Inc.'s U.S. ISE
financial interest expense factor in the final results to take full
account of its actual short-term borrowing costs in selling PPD-T
aramid fiber in the United States.
Respondent states that Akzo has justified its use of Akzo Nobel
Inc.'s consolidated figures on the ground that the U.S. parent borrows
on behalf of its related companies in the United States and then
charges the various operating units a share of this cost. Akzo's
October 25, 1996, submission at 111. Akzo claims that the only loans
and corresponding interest expense on the books of Akzo Nobel Aramid
Products Inc. and Aramid Products V.o.F. are intercompany loans from
the parent companies Akzo Nobel Inc. and Akzo Nobel N.V. respectively.
Respondent further argues that the only actual interest expense is on
the books of the parent companies because it is only these companies
that actually borrow money. Akzo further explains that during the
consolidation process, the interest expense recorded on the books of
the subsidiaries is rolled into the interest expense of the parent.
Akzo also states that it is the parent that determines the source from
which funds to operate the company are obtained, and it is the parent
alone that borrows money and incurs the actual interest expense when
such funds are needed. Respondent claims that petitioner's speculations
on how and why companies borrow money, as well as how a parent
determines the amount of the loans and interest allocated to the
subsidiary, are misplaced and irrelevant. These are internal decisions
that take into account a variety of factors and the parent incurs the
only actual interest expenses.
Respondent states that the Department's current method of
calculating interest is a well founded practice that should continue to
be followed in determining the final results for this review.
The Department's Position: The Department's preliminary treatment
of Akzo's U.S. interest expense is in accordance with the Department's
long standing practice and its final determinations in the original
less-than-fair-value (``LTFV'') investigation and the first review of
the order, Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide
from the Netherlands, 61 FR 51,406 (Dep't Comm. 1996) (final admin.
rev.).
It is the Department's practice to calculate the respondent's net
interest expense based on the financing expenses incurred on behalf of
the consolidated group of companies to which the respondent belongs. In
general, this practice recognizes the fungible nature of invested
capital resources (i.e., debt and equity) within a consolidated group
of companies. In Cambargo Correa Metais, S.A. v. United States, Slip
Op. 93-163 (CIT August 13, 1993), the Court of International Trade
ruled that the Department's practice of allocating interest expense on
a consolidated basis due to the fungible nature of debt and equity was
reasonable. The Court specifically quoted the following from Final
Determination of Sales at Less than Fair Value: Certain Small Business
Telephone Systems and Subassemblies Thereof from Korea, 54 FR 53,141,
53149 (1989).
The Department recognizes the fungible nature of a corporation's
invested capital resources, including both debt and equity, and does
not allocate corporate finances to individual divisions of a
corporation * * *. Instead, [Commerce] allocates the interest
expense related to the debt portion of the capitalization of the
corporation, as appropriate to the total operations of the
consolidated corporation.
See also, Final Determination of Sales at Less than Fair Value: Certain
Carbon Steel Butt-Weld Pipe Fittings from Thailand, 60 FR 10552, 10557
(February 27, 1995). The controlling entity within a consolidated group
has the ``power'' to determine the capital structure of each member
company within the group. In this case, Akzo Nobel maintains a
controlling interest in Aramid and includes the company in its
consolidated financial statements. See Final Determination of Sales at
Less Than Fair Value: New Minivans from Japan, 57 FR at 21946 (comment
18) (May 26, 1992).
Therefore, for the final results of review, we have relied on
Akzo's submitted interest expense, which is based on Akzo Nobel's
consolidated financial statements, and have not imputed interest
expense on affiliated party loans as suggested by the petitioner.
Comment 3: The petitioner alleges that either Akzo Nobel Inc. or
Akzo Nobel N.V. has reimbursed Akzo Nobel Aramid Products Inc. for
antidumping duty payments. See Petitioner's Case Brief at 14-16. To
support its claim, petitioner refers the Department to an account item
on the summary trial balance of Akzo Nobel Aramid Products Inc.
Petitioner further supports its position by speculating that certain
amounts may be reimbursed by either Akzo Nobel Inc. or Akzo Nobel N.V.
Petitioner requests the Department, pursuant to 19 CFR 353.26 (a),
deduct from Akzo's U.S. price (USP) an amount equal to 66.92% of Akzo's
total reported entries during the POR.
Akzo claims that it is not being reimbursed for antidumping duties
and
[[Page 38061]]
the petitioner's speculation to the contrary does not warrant a
deduction of antidumping duty deposits from Akzo's U.S. price. Akzo
cites the Department's regulations requiring the Department to deduct
from U.S. price the amount of any antidumping duty which the producer
or reseller: (i) Paid directly on behalf of the importer; or (ii)
reimbursed to the importer. 19 CFR Sec. 353.26 (a). Akzo notes that
this regulation also requires the importer to file a certificate, prior
to liquidation, with the U.S. Customs Service attesting to the absence
of any agreement for the payment or reimbursement of any part of the
antidumping duties by the manufacturer, producer, seller or exporter.
19 CFR Sec. 353.26 (c). The regulation provides that the Department may
presume from an importer's failure to file this certificate that the
producer or reseller paid or reimbursed the antidumping duties. 19 CFR
Sec. 353.26 (c). Akzo argues that it is in full compliance with the
Department's regulations. It states that as required by Sec. 353.26
(c), Akzo Nobel Aramid Products Inc. has filed, prior to liquidation,
certifications with Customs attesting to the absence of any agreement
with the manufacturer, producer, seller or exporter (i.e., Aramid
Products V.o.F.) for the payment or reimbursement of antidumping
duties. Further, the respondent claims that Akzo Nobel Aramid Products
Inc. has not entered into such an agreement with Akzo Nobel Inc. or
Akzo Nobel N.V. In support of its arguments, Akzo cites the ruling in
The Torrington Corp. v. United States, 881 F. Supp. 622, 632 (1995)
(hereafter ``Torrington'') that ``once an importer . . . has indicated
on this certificate that it has not been reimbursed for antidumping
duties, it is unnecessary for the Department to conduct an additional
inquiry absent a sufficient allegation of customs fraud.'' Akzo claims
that because it has filed the requisite certification, and because
petitioner has failed to show any customs fraud, the record establishes
that neither Akzo Nobel Inc. nor Akzo Nobel N.V. has reimbursed Akzo
Nobel Aramid Products Inc. for antidumping duty payments.
Akzo further contends that the CIT has affirmed the Department's
longstanding precedent that absent evidence of reimbursement, the
Department has no authority to make the adjustment to U.S. price
requested by the petitioner. Torrington, at 632. Akzo states that,
according to the CIT, the party who requests the reimbursement
investigation must produce some link between the transfer of funds and
reimbursement of antidumping duties. Akzo argues that the petitioner
has failed to meet this burden because petitioner only pointed to an
account title in a financial statement and speculated as to the nature
of that account. Akzo argues that petitioner has failed to establish
any agreement for reimbursement of antidumping duties between either
Akzo Nobel Inc. or Akzo Nobel N.V. and Akzo Nobel Aramid Products Inc.
Respondent argues that Sec. 353.26 (a) applies only if petitioner shows
that the foreign manufacturer either paid the antidumping duty on
behalf of the U.S. importer or reimbursed the U.S. importer for its
payment of the antidumping duty. According to Akzo, the regulation does
not impose upon the Department an obligation to investigate based on
unsupported allegations. Torrington, at 631; see also Tapered Roller
Bearings from Japan, 62 FR at 11,831, comm.2.
In response to petitioner's argument concerning whether GAAP
permits a company to recognize anticipated refunds from the U.S.
government, Akzo states that it had a reasonable expectation of
obtaining significant refunds of the dumping deposits from the U.S.
Customs Service through the administrative review process. Akzo argues
that the LTFV margin established that the deposit rate was not tied
entirely to pricing analyses, but was largely attributable to imputed
costs based on a corporate structure that no longer exists. Moreover,
upon issuance of the antidumping order, Akzo claims that it ceased
making the lower-priced sales that contributed to the LTFV margin and
cash deposit rate.
Akzo states that, in support of its reimbursement allegation,
petitioner focuses on the April 1996, publication of the preliminary
results of the first administrative review as providing the first
possible indication of antidumping duty liability. The sales subject to
that review, Akzo claims, were concluded in May 1995, which Akzo claims
allowed it sufficient time to fairly estimate the antidumping duty
liability associated with such sales for its 1995, financial statement
and December 31, 1995, trial balance. Accordingly, Akzo claims that
petitioner's speculation of reimbursement of antidumping duties must be
rejected and no punitive inferences taken with regard to the
calculation of Akzo's U.S. prices.
The Department's Position: The Department agrees with Akzo. The
Department's regulations require the Department to deduct from U.S.
price the amount of any antidumping duty which the producer or reseller
(i) paid directly on behalf of the importer or (ii) reimbursed to the
importer. 19 C.F.R.Sec. 353.26 (a)(1996). Absent evidence of
reimbursement, the Department has no authority to make the adjustment
to U.S. price. Torrington, 881 F. Supp. at 632, citing Brass Sheet and
Strip From Sweden, 57 F.R. 2706, 2708 (Dep't Comm. 1992) (final admin.
rev.) and Brass Sheet and Strip From the Republic of Korea, 54 Fed.
Reg. 33,257, 33,258 (Dep't Comm. 1989) (final admin.rev.). In the
instant review, we found no evidence of inappropriate financial
intermingling between Akzo Nobel Aramid Products, Inc. And Akzo Nobel
Inc. or Akzo Nobel N.V. The Department verified that Akzo Nobel Aramid
Products, Inc. is responsible for all cash deposits and duties
assessed. The evidence cited by petitioner, (much of which is
proprietary) does not constitute evidence of reimbursement. At
verification, we found no evidence that the account referenced by
petitioner was in any way related to reimbursement. Further, Akzo Nobel
Aramid Products Inc. has filed the required certifications with Customs
attesting to the absence of any agreement with the manufacturer,
producer, seller, or exporter (i.e., Aramid Products V.o.F.) for the
payment or reimbursement of antidumping duties. The Department found no
evidence that Akzo Nobel Aramid Products Inc., has entered into such an
agreement with Akzo Nobel Inc. or Akzo Nobel N.V. (For a more detailed
discussion of this issue, see the memorandum to the file dated July 7,
1997). Based upon the above, we find that 19 C.F.R. Sec. 353.26 is not
applicable in this case.
Comment 4: The petitioner argues that the Department should include
Akzo's third party payments as part of Akzo's home market indirect
selling expenses because such payments cannot be tied to specific sales
transactions. The petitioner also argues that, if the Department
continues to treat the payments as direct selling expenses, it should
not apply the adjustment to sales made in the POR because the third
party did not make any claims for such payments and because the
calculated rate for direct selling expenses was based upon the previous
year's sales.
Akzo argues that the Department properly treated home market third
party payments as direct selling expenses, just as it treated U.S.
third party payments. Akzo states that it made third party payments as
an incentive for companies to specify the use of its products in their
goods. The respondent claims that Akzo only made third party payments
after purchases of the subject
[[Page 38062]]
merchandise in a converted form were made. Akzo claims that petitioner
advances no theory regarding why Akzo would make such payments other
than to further the sale of the subject merchandise to Akzo's direct
customers. Akzo argues that the petitioner is mistaken that the
Department requires third-party payments to be transaction specific and
tied to particular sales to qualify as direct selling expenses. Akzo
claims that the Department normally accepts claims for home market
direct selling expenses as direct adjustments to price if it determines
that a respondent reported the expense:
on an allocated basis, provided that it was not feasible for the
respondent to report the expense on a more specific basis and the
allocation does not cause unreasonable distortions (i.e., was likely
to have been granted proportionately on sales of scope and non-scope
merchandise).
Tapered Roller Bearings from Japan, 62 FR at 11, 839, comm.9.
Akzo states that it has reported its third party payment expense on
a non-distortive, allocated basis by dividing the total payment over
the total quantity of all eligible sales, i.e., sales of a specific
product, to a specific customer. For this reason, Akzo believes that
there is no basis for the Department to deny Akzo's claim for a direct
selling expense.
Akzo claims it has reported in its questionnaire response that its
third party payments are identical to the programs verified by the
Department during the course of the original LTFV investigation. Akzo
notes that the Department accepted its allocation methodology without
verification during the first administrative review. Akzo states that,
in the second review, it has reported third party payments on home
market sales in the same manner as in the original LTFV investigation
and first review. Akzo states that payments were made to the very same
company in the first review as in the current review. The respondent
notes that the Department accepted this approach in the previous
administrative review and in the instant review verified the underlying
data. According to Akzo, the Department made reference to this issue in
its Home Market Sales Verification Report at 9. Akzo argues that it
adopted the identical allocation methodology for its third party
payments made in the U.S. market as in the home market. According to
Akzo, the petitioner has not raised any objection to Akzo's identical
third party payment methodology in the U.S. market because these
payments are included in the margin calculation to reduce U.S. price.
Akzo argues that, if the Department agrees with petitioner's objection
to the home market methodology, it must adopt the same position for the
identical U.S. market methodology. However, Akzo argues that the
Department properly used Akzo's legitimate third party payments in the
home market to reduce home market prices, and that the Department
should maintain this decision in the calculation of the final results.
The Department's Position: We agree that Akzo has properly included
home market third party payments in its direct selling expenses. The
Department requires third party payments to be transaction-specific and
tied to particular sales to qualify as direct selling expenses. The
Department normally accepts claims for home market direct selling
expenses as direct adjustments to price on an allocated basis, provided
that it was not feasible for the respondent to report the expense on a
more specific basis and the allocation does not cause unreasonable
distortions (i.e., the allocation of direct selling expenses was likely
to have been granted proportionately on sales of scope and non-scope
merchandise). See Tapered Roller Bearings from Japan, 62 FR at 1,839,
comm.9. The Department verified that Akzo was not able to report the
expense on a more specific basis. See Home Market Sales Verification
Report at 9. Therefore, the Department accepted the allocation
methodology that is consistent with the Department's position in the
LTFV investigation and the first administrative review. Akzo has
reported its third party payment expense on a non-distortive, allocated
basis by dividing the total payment over the total quantity of all
eligible sales, i.e., sales of a specific product, to a specific
customer. For this reason, the Department will continue to treat home
market third party payments as direct selling expenses.
We verified that Akzo's third party payments are based upon total
purchases of converted Aramid product from Aramid's direct customers
(the converters who provide additional finishing or further
manufacturing to Aramid's products). During verification, the
Department verified the third party payment programs and reviewed
letter agreements between the parties, credit notes issued to the third
party payment recipient and purchases by the direct customer and found
no discrepancies. See Home Market Sales Verification Report, Exhibit
16. The Department also verified that Akzo made third party payments as
an incentive for companies to specify the use of its products in their
goods, and that Akzo only made third party payments after purchases of
the subject merchandise in a converted form were made. For the above
reasons, the Department has determined that it is appropriate to
include home market third party payments in its direct selling
expenses.
Comment 5: The petitioner argues that the Department did not carry
out its intention to remove from the pool of potential home market
matches the sales that failed the arm's-length test and suggests the
Department correct its mistake in the final results. In addition, the
petitioner makes two arguments--one methodological, and one
computational--regarding the model matching methodology applied for the
preliminary results of the review. First, the petitioner claims that
the Department mistakenly applied a model-match program in which the
earliest home market sale found within the Department's 90/60 day
window is used for comparison, rather than the home market sale that
``most closely'' corresponds to the U.S. sale. Second, petitioner
claims that the Department improperly resorts to constructed value if
the first home market sale selected for comparison is below-cost, even
though other suitable above-cost home market sales are available for
comparison.
Akzo contends that both of these arguments should be rejected. Akzo
asserts that the first argument petitioner makes is incorrect on the
grounds that the Department applied a long-standing practice rooted in
the statutory definition of such or similar merchandise. Respondent
argues that petitioner's second argument regarding the use of CV is
similarly flawed because the Department has issued policy papers which
set forth a model matching methodology that contradicts petitioner's
claim that the Department improperly resorted to constructed value if
the first home market sale selected for comparison is below-cost, even
though other suitable above-cost home market sales are available for
comparison. Import Administration Policy Bulletin No. 92/4 (Dep't Comm.
12/15/92) entitled ``The Use of Constructed Value in COP Cases.''
The Department's Position: The Department did carry out its
intention to remove the sales that failed the arm's length test from
its preliminary model match program. The petitioner's contrary
conclusion was due to the Department's shortened print command. In the
``print setup'' of the preliminary ``arm's length'' computer program,
the Department specified (when printing out customer numbers), that
only six digits of the eight digit reference numbers were to be
printed, even though the respondent's eight digit code
[[Page 38063]]
was properly being read by the computer and used in the calculations.
Petitioner may have been confused by a six digit customer reference
number printed in the program output when in actuality the customer
numbers had eight digits. For clarity, the Department has changed the
print command in the final arm's length computer program so that eight
digit customer codes are printed out, rather than being cut off at six
digits. The result of this print command change is that in the final
model match and final margin programs (which read in the output of the
arm's length program), all eight digits of the customer code will be
printed in the program outputs.
The Department has continued to use its model match program which
finds the most similar home market model (CONNUMH), based on physical
characteristics, that is within the 90/60 day window and passes the
difference in merchandise (DIFMER) test. The Department relies on its
margin calculation program to find the most contemporaneous match of a
given home market model. The model match program generates home market
month (MONTHH) data. However, the (MONTHH) data that appears in the
model match output is not read into the Department's margin program,
and does not influence the final margin calculations.
Consistent with the Department's practice, we resorted to
constructed value if the first best home-market sale selected for
comparison was below-cost, even though other suitable above-cost home
market sales were available for comparison. See Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof from France, et
al. (57 FR 28360, 28373); (``although section 773(b) expresses a
preference for using sales rather than CV as the basis of FMV, it does
not instruct the Department to use the next most similar merchandise as
the basis for FMV, but rather it requires the use of CV''); see also
Certain Circular Welded Carbon Steel Pipes and Tubes from Thailand (61
FR 1328, 1331). (The Department rejects the position that, prior to
using CV, the Department should have exhausted all three alternative
matches provided in the company concordance.)
Comment 6: The petitioner states that the Department should
amortize goodwill expenses over a period that covers the POR. The
petitioner contends that, unless the Department includes this amount,
it will improperly understate the actual cost of producing PPD-T aramid
fiber during the POR. The petitioner argues that in the prior review
the Department adjusted Akzo's costs to account for revalued assets and
excluded the entire amount of Akzo's goodwill amortization from general
expenses to avoid double counting the expense and to recognize that any
goodwill remaining after adjustment to the revalued assets was not part
of Aramid's production costs. The petitioner believes that the
Department's treatment of Akzo's goodwill expenses in the first review
is not supported by substantial evidence on the record and is contrary
to law.
The petitioner states that proper treatment of Akzo's goodwill
expenses requires that these costs be amortized over a period that
includes the current review. The petitioner contends that the
preliminary results fail to take such expenses into account. Petitioner
argues that unless Akzo's cost of production is revised in the final
results to include an amount for amortized goodwill expenses, the
Department once again will improperly understate Akzo's cost of
producing PPD-T aramid fiber during the period of review.
Akzo states that the proper treatment of the goodwill that arose
from the purchase of Aramid Products was the focus of the first
administrative review, and that the Department spent a significant
amount of time gathering and analyzing all aspects of the purchase. At
the end of the analysis, the Department determined that, for cost
calculation purposes, it was more appropriate to isolate those
components of goodwill that pertained to assets used in the production
of subject merchandise. See Aramid Fiber Formed of Poly Para-Phenylene
Terephthalamide from the Netherlands, (61 FR 51,406). Akzo states that
it complied with the decision presented in the first administrative
review in preparing the response for this review, and that the
Department complied with the petitioner's request to verify. Akzo cites
Cost Verification Exhibits 36 and 37, which were used to verify the
submitted depreciation expense for Emmen and Delfzijl. Akzo suggests
that no circumstances warrant deviation from the well-reasoned decision
in the first administrative review.
The Department's Position: The Department agrees with Akzo. As
explained at length in the final results of the first administrative
review, the Department determined to accept Akzo's accounting method
for the amortization of goodwill expense as reasonable. The Department
spent a significant amount of time gathering and analyzing all aspects
of the facts surrounding the goodwill issue during the first
administrative review. At the end of its analysis, the Department
determined that, for cost calculation purposes, it was more appropriate
to isolate those components of goodwill that pertained to assets used
in the production of subject merchandise. See Aramid Fiber Formed of
Poly Para-Phenylene Terephthalamide from the Netherlands, 61 FR 51,406.
The Department verified that Akzo complied with the Department's
determination on goodwill in the first administrative review in
preparing its response for the instant review. Cost Verification
Exhibits 36 and 37 were used to verify the submitted depreciation
expense for Emmen and Delfzijl. See Cost Verification Report to the
File, dated February 21, 1997.
Comment 7: The petitioner suggests the following corrections be
made to the preliminary margin program: (1) Correct the customer code
or other aspects of the programming so that sales to the affiliated
customer that failed the arm's-length test are properly excluded; (2)
correctly apply the warranty-rate factor reported by Akzo; (3) use the
highest value for the specific U.S. expense reported by Akzo in its
data base to fill in missing U.S. expense data rather than use zeros;
(4) at lines 3581 to 3584 of the preliminary program, petitioner
recommends that the Department not divide guilder (NLG)-denominated
home market variables by the conversion factor (2.2046 lbs/kg) before
adding them to corresponding NLG-denominated U.S. variables; (5)
petitioner recommends not duplicating conversions at lines 3727 to 3730
of the preliminary margin program, because these weight conversions
already had occurred at lines 3488, 3716, 3489, and 3490; (6) at line
3757 petitioner recommends that the Department convert credit reported
in Akzo's constructed value data base (CREDCV) from a per-kilogram to a
per pound amount before making subtractions; and (7) at line 3734 of
the preliminary margin program, petitioner recommends the correction of
a currency conversion error in adding a dollar denominated U.S. packing
variable (PACKU) to a NGL-denominated components of constructed value
(CV).
Akzo recommends that, in calculating foreign movement expenses
(line 3500), the Department convert the international freight costs
from guilders to dollars before adding these costs to dollar
denominated insurance costs to arrive at the value for foreign movement
expenses. Akzo did not make any further recommendations regarding the
Department's preliminary margin program. In addition, Akzo did not
object to any of petitioner's
[[Page 38064]]
aforementioned suggested corrections in its rebuttal briefs.
The Department's Position: The Department agrees with both
petitioner and respondent and has addressed all of the suggestions in
its final margin program. For further explanation see Calculation
Memorandum, July 7, 1997.
Final Results of Review
As a result of our review, we determine that the following
weighted-average margin exists:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Period of review (percent)
------------------------------------------------------------------------
Akzo...................................... 6/1/95-5/31/96 26.25
All Other................................. 6/1/95-5/31/96 66.92
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between export price and normal value may vary from the
percentage stated above. The Department will issue appraisement
instructions on each exporter directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of review for all
shipments of PPD-T aramid fiber from the Netherlands entered, or
withdrawn from warehouse, for consumption on or after the publication
date, as provided by section 751(a)(1) of the Act: (1) The cash deposit
rate for the reviewed company will be the rate listed above; (2) for
previously reviewed or investigated companies not listed above, the
cash deposit rate will continue to be the company-specific rate
published for the most recent period; (3) if the exporter is not a firm
covered in this review, a prior review, or the original 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) for all other producers and/or exporters of
this merchandise, the cash deposit rate shall be 66.92 percent, the
``all others'' rate established in the LTFV investigation (59 FR 32678,
June 24, 1994). These deposit requirements shall remain in effect until
publication of the final results of the next administrative review.
This notice serves as a 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 subsequent assessment
of double antidumping duties.
Notification to Interested Parties
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 of
return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
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: July 7, 1997.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18730 Filed 7-15-97; 8:45 am]
BILLING CODE 3510-DS-P
