[Federal Register Volume 61, Number 177 (Wednesday, September 11, 1996)]
[Notices]
[Pages 47874-47884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23234]
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DEPARTMENT OF COMMERCE
[A-427-811]
Certain Stainless Wire Rods From France: Final Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: On March 6, 1996, the Department of Commerce (the Department)
published the preliminary results of the administrative review of the
antidumping duty order on certain stainless steel wire rods from
France. This review covers Imphy S.A., and Ugine-Savoie, two
manufacturers/exporters of the subject merchandise to the United
States. The period of review (POR) is August 5, 1993, through December
31, 1994. We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have changed the results from those presented in the preliminary
results of review.
EFFECTIVE DATE: September 11, 1996.
FOR FURTHER INFORMATION CONTACT:
Stephen Jacques or Jean Kemp, AD/CVD Enforcement Group III, Office 9,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone (202) 482-3434 or (202) 482-4037,
respectively.
SUPPLEMENTARY INFORMATION:
The 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 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 March 6, 1996, the Department published in the Federal Register
the preliminary results of the administrative review of the antidumping
duty order on certain stainless steel wire rods from France (61 FR
8915, March 6, 1996). The Department has now completed this
administrative review in accordance with section 751 of the Act.
Scope of the Review
The products covered by this administrative review are certain
stainless steel wire rods (SSWR), products which are hot-rolled or hot-
rolled annealed, and/or picklet rounds, squares, octagons, hexagons, or
other shapes, in coils. SSWR are made of alloy steels containing, by
weight, 1.2 percent or less of carbon and 10.5 percent or more of
chromium, with or without other elements. These products are only
manufactured by hot-rolling, are normally sold in coiled form, and are
of solid cross section. The majority of SSWR sold in the United States
is round in cross-sectional shape, annealed, and picklet. The most
common size is 5.5 millimeters in diameter.
The SSWR subjet to this review is currently classified under
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030,
7221.00.0040, 7221.00.0045, 7221.00.0060, 7221.00.0075, and
7221.00.0080 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheadings are provided for convenience
and Customs purposes, our written description of the scope of the order
is dispositive.
Verification
As provided in section 782(i) of the Tariff Act, we verified
information provided by the respondent by using standard verification
procedures, including onsite inspection of the manufacturer's
facilities, the examination of relevant sales and financial records,
and selection of original documentation containing relevant
information. Our verification results are outlined in the public
versions of the verification reports.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received comments and rebuttal comments from
Imphy S.A. and Ugine-Savoie, manufacturers/exporters of the subject
merchandise (respondents), and from Al Tech Specialty Steel Corp.,
Armco Stainless & Alloy Products, Carpenter Technology Corp., Republic
Engineered Steels, Talley Metals Technology, Inc., United Steelworkers
of America, AFL-CIO/CLC (petitioners). At the request of petitioners,
the Department held a hearing on May 13, 1996.
Comment 1: Petitioners contend that the Department's decision to
depart from its practice of examining constructed export price (CEP)
sales during the POR because respondents were able to link-suspension
of liquidation entries with sales should be changed for the final
results. Petitioners urge the Department to revise its preliminary
results to analyze all constructed export price (CEP) sales during the
POR for the purpose of calculating antidumping assessment and cash
deposit rates. Petitioners claim that there is nothing in the new
statute that requires the Department to depart from its longstanding
practice of focusing on CEP sales rather than entries in a review.
Petitioners contend that the Department can analyze entries made prior
to the suspension of liquidation so long as assessment is applied only
to entries in the review period.
Petitioners claim that the only legal justification the Department
has offered for its position that sales of merchandise entered prior to
the POR should be excluded from the agency's analysis is that
``[m]erchandise proven to have entered to U.S. prior to the suspension
of liquidation . . . is not subject within the meaning of section
771(25) of the Act'' (61 FR 8915). Petitioners contend that section
771(25) of the Act is merely a general provision defining ``subject
merchandise'' as ``the class or kind of merchandise that is within the
scope of an investigation, a review, a suspension agreement, an order
under this title or section 303, or a finding under the Antidumping Act
of 1921,'' and that this provision did not change prior law.
Petitioners further note that nothing prevents the Department from
examining CEP sales to derive antidumping rates in the Agreement on
Implementation of Article VI of GATT 1994 (WTO Antidumping Agreement).
In addition, petitioners claim that neither U.S. law (see 19 U.S.C.
1673e) nor the WTO Antidumping Agreement discusses the manner in which
those antidumping duties are to be calculated or whether sales or
entries should serve as the basis of that calculation.
Petitioners also contend that the Court of International Trade
(CIT) held that it is perfectly lawful for the agency to analyze
entries made prior to the suspension of liquidation so long as the
assessment is applied only to POR entries (see The Ad Hoc Committee of
Southern California Producers of Gray Portland Cement v. United States,
18 CIT______, 914 F. Supp. 535 (1995)).
Petitioners note that the CIT stated ``the consideration of all
sales, rather than entries, made during the period of review may result
in the consideration of entries made prior to the suspension of
liquidation * * *'' Petitioners claim that the respondents' ability to
link sales
[[Page 47875]]
with entries in this review does not mean that the CIT's holding in Ad
Hoc Committee would not apply to this situation. Petitioners state that
in the review which was the subject of Ad Hoc Committee, duties were
only assessed on entries which occurred during the POR. Petitioners
allege that so long as duties are only assessed on POR entries, the
CIT's decision is valid in this proceeding and that the definition of
``subject merchandise,'' referring to merchandise on which duties will
be assessed, consistent with the CIT's holding.
Petitioners claim that the Department's proposed regulations also
recognize the continued need to focus on CEP sales rather than entries
to calculate margins. Petitioners cite the preamble to paragraph (b)(1)
of section 351,212 in which ``the Department normally will calculate a
duty assessment rate based on sales reviewed, and will apply those
rates to entries made during the review period. In all cases, this will
result in the assessment of duties on merchandise entered during the
review period.'' Antidumping Duties; Countervailing Duties; Proposed
Rule, 1(Proposed Regulations) 61 FR 7308, 7316 Feb. 27, 1996).
Consequently, petitioners argue that the Department should maintain its
practice of focusing on CEP sales for dumping analysis purposes but
only assessing duties on entries in the POR.
Respondents argue that in the preliminary results of review, the
Department correctly determined that respondents' merchandise sold
during the POR, but proven to have entered the United States prior to
suspension of liquidation should be excluded from the agency's
analysis. Respondents note that petitioners do not contest that the
merchandise excluded from review by the Department is non-subject
merchandise, but that petitioners claim that the Department can legally
review sales of merchandise entered prior to the suspension of
liquidation provided that duties are only assessed on entries during
the POR. Respondents claim that petitioners inappropriately cite Ad Hoc
Committee and NSK, which respondents claim deal with different factual
situations and are not applicable to this review.
Respondents argue that the statute, consistent with the WTO
Antidumping Agreement, excludes merchandise entered prior to the
publication of notice of suspension of liquidation. They claim that
section 736(b)(1) of the Tariff Act of 1930, as amended, provides for
the imposition of duties on ``entries of the subject merchandise, the
liquidation of which has been suspended under section 733(d)(2)''.
Respondents also note that section 751 of the antidumping law directs
the Department to determine the ``normal value and export price (or
constructed export price) of each entry of the subject merchandise''
and calculate the ``dumping margin for such entry'' which is to serve
as the basis for assessing duties on the entries. Therefore,
respondents argue that the statute is clear that reviewing sales of
merchandise that are shown to involve non-subject merchandise via
linkage of sales to entries would exceed the mandate of the Department.
Respondents note that the Department's decision in the preliminary
results is consistent with previous proceedings. In support of their
position, respondents cite Preliminary Results of Antidumping Duty
Administrative Review of High-Tenacity Rayon Yarn from Germany, 59 FR
32181, 32182 (June 22, 1994), and Final Results of Antidumping Duty
Administrative Review of Industrial Belts and Components and Parts
Thereof, Whether Cured of Uncured, From Italy, 57 FR 8295, 8296 (March
9, 1992). Respondents note that in reaching its determination in the
Yarn case, the Department clearly stated its practice ``not to include
ESP sales that were not subject to the antidumping duty order in the
calculation of U.S. price, regardless of when the sale occurred.'' The
Department further stated that ``such ESP sales would be excluded from
the administrative review if [respondent] could provide adequate
documentation, on a sale-by-sale basis, proving that the individual
entries of merchandise prior to the preliminary determination could be
traced to individual sales during the POR.'' Respondents note that the
Department precisely followed this practice in the preliminary results
of this review.
Respondents also not that petitioners' counsel has previously
advised the Department that respondents can and should link entries of
merchandise subject to an antidumping order to sales. Respondents claim
that petitioners have not explained their change of position on this
issue.
Department's Position: We disagree with petitioners. Sales of
merchandise that can be demonstrably linked with entries prior to the
suspension of liquidation are not subject merchandise and therefore are
not subject to review by the Department. Merchandise that entered the
United States prior to the suspension of liquidation (and in the
absence of an affirmative critical circumstances finding) is not
subject merchandise within the meaning of section 771(25) of the Act.
As we stated in our preliminary results, under Section 751 of the
Act, the Department is required to determine the normal value and
export price (EP) or constructed export price (CEP) of each entry of
subject merchandise during the relevant review period. Because there
can be a significant lag between entry date and sale date for CEP
sales, it has been the Department's practice to examine U.S. CEP sales
during the period of review. Gray Portland Cement and Clinker from
Japan, Final Results of Antidumping Duty Administrative Review, 58 FR
48826 (September 20, 1993) (the Department did not consider ESP (now
CEP) merchandise entered during the POR but sold after the POR). The
proposed regulation cited by petitioners (section 361.221) recognizes
this practice.
However, the Department has a well established exception to its
practice of examining CEP sales during the period of review. That
exception applies when a respondent is able to demonstrate, to the
satisfaction of the Department, that the merchandise covered by a
particular sale entered prior to the suspension of liquidation pursuant
to the Department's preliminary determination in the LTFV
investigation. See, High-Tenacity Rayon Filament Yarn, Preliminary
Results of Antidumping Duty Administrative Review, 59 FR 32181 (June
22, 1994). In that review, the Department determined that because
merchandise was entered prior to the date of the preliminary
determination, it was not covered by the antidumping order. Therefore,
the Department excluded these sales from the review. In contrast, in
Certain Corrosion-Resistant Carbon Steel Flat Products from Australia;
Preliminary Results of Antidumping Duty Administrative Review, 60 FR
42507 (August 16, 1995), the respondent was unable to link POR sales to
specific pre-suspension entries and, therefore, the Department did not
exclude those sales.
In this review, respondents claimed that certain merchandise was
not subject to review because it entered prior to the period of review
for sale by Metalimphy Alloys Corporation (MAC), an affiliated U.S.
company during the period of review. The Department verified that
respondents were able to link specific sales during the period to
entries of merchandise prior to the suspension of liquidation. In the
preliminary results, we excluded those sales from our analysis because
respondent had demonstrated that the
[[Page 47876]]
merchandise entered prior to the suspension of liquidation.
Petitioners' cite of Ad Hoc Committee and NSK is not appropriate in
this case. Ad Hoc Committee differed because, in that case, respondent
argued the dumping margins and the assessment of duties on entries made
during a review period should have been based on sales of merchandise
entered after the review period. The approach advocated by respondent
in that case raised the possibility of double counting or missing sales
in future reviews, as noted by the Court. The Department's practice, as
reflected in the present case, does not involve the danger of
inconsistent future reporting. The NSK case did not involve a situation
in which the respondent could link specific sales and entries. Further,
in that case, the Department determined dumping margins based on
sampling and not a review of all sales and entries.
Comment 2: Petitioners also contend that respondents' ability to
link CEP sales with entries does not permit the Department to examine
all entries during the POR, leaving the Department with an incomplete
review of sales. Petitioners note that in the preliminary results, the
Department did not examine either all sales or all entries during the
POR but some very limited hybrid of the two, leading to an incomplete
examination of subject merchandise. Petitioners contend that because
respondents enter CEP merchandise in one POR and sell it in another
POR, the Department cannot examine those entries because the sale has
not been made. Specifically, petitioners contend that certain scenarios
exist where CEP sales take place during the review but are not reviewed
by the Department.
First, petitioners contend that CEP sales made during the POR but
where the entry occurs after the POR are not being reviewed by the
Department. Petitioners assert that these sales should be included in
the Department's final results as the date of sale is in the POR.
Likewise, petitioners contend that CEP sales entered during the POR
but sold after the POR are not included in the Department's analysis in
this review. Petitioners contend that respondents have not reported the
sales linked to these entries at all in their U.S. sales databases.
Petitioners note that respondents also have pressed the Department to
exclude POR sales with pre-POR entry dates because respondents can link
sales with entries. Petitioners assert that the logical consequence of
this exclusion is that all entries within the current POR with
subsequent (post-POR) dates of sales should be examined in this review
by the Department. However, they assert that respondents have not
reported CEP entries with post POR sale dates.
Petitioners also noted that the Department included in its
preliminary those CEP sales where the entry occurs during the POR but
the sale pre-dates the POR. Petitioners contend that the Department has
provided no explanation as to why it has included these sales in its
analysis.
Petitioners contend that the only practical way to ensure coverage
of subject merchandise is by examining all CEP sales. Petitioners argue
that the Department include in its final results all sales that fall
within the POR.
Respondents state that there is no merit to petitioners' suggestion
that the Department's preliminary results lead to a non-comprehensive
review of respondents' sales. They contend that petitioners' argument
is irrelevant to the issue of whether sales of demonstrably non-subject
merchandise are appropriately subject to review. Also, respondents
assert that petitioners' position completely ignores the Department's
instructions regarding what sales should be reported in an
administrative review.
Respondents note that they reported all CEP sales consistent with
the instructions of the Department's questionnaire. Respondents assert
that the Department's questionnaire instructions ensure that reviews
are comprehensive and that no sales of subject merchandise go
unreviewed.
Further, respondents contend that petitioners' arguments regarding
which sales are included and excluded from the Department's review is
inaccurate. They state that in accordance with the Department's
reporting instructions, all CEP sales of subject merchandise are
included in the Department's initial review or in subsequent reviews.
Respondents argue that petitioners' position on the reporting of
CEP transactions includes types of sales that are not covered by the
Department's questionnaire as they involve neither POR entries nor
post-importation POR sales. Respondents state that the Department will
review these sales in the period in which entered. They also argue that
the Department's questionnaire instructions do not cover CEP entries
made during the POR but with a date of sale after the POR. Respondents
contend that these are precisely the type of transactions, as
recognized in Gray Portland Cement, for which the data required to
calculate CEP are not necessarily available at the time of responding
to a questionnaire for the period in which the merchandise entered.
Finally, respondents argue that petitioners have no basis for
alleging that the sales will not be examined because the corresponding
entries will have been liquidated at the time of the second
administrative review. They argue under a master-list approach, the
entries in the prior review period will not be liquidated until the
sale occurs and, even if they are liquidated on a simplified assessment
basis, the sale of subject merchandise could be pertinent to a
subsequent review for purposes of determining a duty assessment rate
and duty deposit rate.
Department's Position: The Department disagrees with petitioners
that the Department did not make a comprehensive examination of all
relevant sales or entries in the preliminary results. The Department
closely examined respondents' submission of sales/entries data in this
review, including specifically addressing this issue in its December 1,
1995 supplemental questionnaire and conducting verifications in both
the home market and the United States. The Department verified that
respondents correctly reported the quantity and value of subject
merchandise pursuant to the Department's questionnaire instructions.
The questionnaire instructed that respondents were to ``[r]eport each
U.S. sale of merchandise entered for consumption during the POR except
(1) for EP sales, if you do not know the entry dates, report each
transaction involving merchandise shipped during the POR; and (2) for
CEP sales made after importation, report each transaction that has a
date of sale within the POR'' (emphasis in original). The Department
found that respondents correctly reported the quantity and value of
their home market and U.S. sales consistent with the questionnaire
instructions.
CEP sales made after importation will be examined by the Department
in the POR in which they are sold consistent with the questionnaire
instructions. As indicated in Gray Portland Cement and NSK, these are
the type of CEP transactions for which the data required to calculate
CEP may not be available at the time of responding to the Department's
questionnaire because the sale occurs after the period of review. We
also disagree with petitioner's claim that CEP sales made during the
POR but entered after the POR (i.e., after sale) will not be examined.
These sales are not covered by the Department's questionnaire
instructions for this review, as they do not involve POR entries or
post-importation POR sales. The Department will review these sales in
the POR in which they are entered
[[Page 47877]]
into the United States, if a review is requested. While the Department
has some latitude to examine POR sales in lieu of examining POR
entries, it is not necessary to do so when the sale occurs prior to
entry. For example, respondents reported, and the Department included
in this review, CEP transactions in which the merchandise entered
during the POR but was sold before the POR (i.e., prior to entry)
pursuant to the Department's questionnaire instructions.
Consequently, the Department disagrees with petitioners' view that
there has been an incomplete examination of sales and entries during
this review. Respondents accurately reported their U.S. sales during
the POR pursuant to the questionnaire instructions issued by the
Department and the information was fully verified. Petitioners'
scenarios of CEP sales and entries not examined in this review were
either non-subject merchandise under section 771(25) of the Act or are
subject merchandise that will be examined by the Department in any
future reviews.
Comment 3: Petitoners argue that the Department's decision in the
preliminary results to exclude sales during the POR where the entries
preceded the POR would invite manipulation of the dumping laws. In
addition, petitioners contend that if respondents can avoid a finding
of dumping on sales following issuance of an antidumping order merely
by linking those sales with entries made prior to the POR, linkage will
become common as a way to avoid dumping duties. Consequently,
petitioners argue that the linkage of values and entries would invite
respondents to send in as much merchandise as possible before a
preliminary determination and sell that merchandise during future years
at dumped prices without recourse.
Petitioners note that in their letter to the Department of February
21, 1996, they indicated that there was price discrimination by
respondents on CEP sales that entered the U.S. prior to suspension of
liquidation when compared to POR sales. Petitioners assert that the
Department's policy of linking sales with entries permits dumping
practices that would cause a domestic manufacturer to lose business
because of price discrimination during the POR. Consequently,
petitioners contend that the purpose of the antidumping laws in
remedying price discrimination taking place during the POR would be
effectuated by the imposition of an antidumping margin that took
account of the unfair pricing, even if the duties applied only to POR
entries and were used to establish future cash deposit rates.
Petitioners assert that the critical circumstances provision of the
statute would not prohibit manipulation. They contend that by law, a
finding of critical circumstances is predicated on a number of
statutory factors, including not only massive imports of the
merchandise, knowledge that dumping is occurring, and a finding by the
International Trade Commission (ITC) that the imports are likely to
undermine the antidumping order. Thus, petitioners contend that
critical circumstances findings go not only to the question of import
surges prior to a preliminary decision but to resultant serious
injury--a finding that, petitioners assert, is rarely made by the ITC.
Petitioners also contend that the critical circumstances provision does
not have anything to do with dumping practices in sales that occur
after the investigation. Accordingly, petitioners claim that the
Department cannot rely on the critical circumstances provision as a
means of addressing this price manipulation problem with its approach
in the preliminary results.
Petitioners contend that the Department should recognize that
examination of CEP sales is critical not only to assessment of duties
on past entries, but also to the establishment of a cash deposit rate.
Petitioners argue that the cash deposit rate should reflect
respondent's pricing practices during the POR. Petitioners state that
failure to examine sales that relate to pre-POR entries will ignore
potentially significant price discrimination during the POR merely
because respondents beat the preliminary determination by their
shipments.
Respondents contend that there is no manipulation of the
antidumping laws, as all subject merchandise is reviewed by the
Department, in accordance with its reporting instructions.
Respondents assert that the exclusion from review of sales of pre-
suspension entries requires a rigorous demonstration of verifiable
linkage between the particular entries being excluded and their
subsequent sale. Respondents believe that linkage will not become the
rule because the majority of respondents do not and cannot maintain the
necessary information and records to do so. Respondents claim that the
Department has recognized this situation citing Proposed Regulations at
7316.
Respondents also point out that the critical circumstances
provision of the statute is designed to prevent manipulation.
Furthermore, respondents note that the Department did not find critical
circumstances in the LTFV investigation (see Final Determination of
Sales at Less than Fair Value: Certain Stainless Steel Wire Rods from
France, 58 FR 68865, 68868 (December 29, 1993)).
Respondents argue that petitioners' assertions that the
Department's approach will invite price manipulation have nothing to
with this case. Respondents claim that petitioners failed to establish
any price discrimination between subject and non-subject merchandise
(i.e. those sales that entered prior to suspension of liquidation)
during this review. Respondents assert that the prices charged for all
CEP sales examined by petitioners were virtually identical.
Consequently, respondents contend that they did not engage any price
discrimination.
Respondents also urge the Department to reject petitioners'
suggestion that dumping margins should be calculated on non-subject
merchandise for purposes of establishing a cash deposit rate for future
entries. Respondents assert that it is inappropriate to use sales of
non-subject merchandise for deposit rate purposes, in that such sales
do not represent a fair, reasonable or accurate basis to gauge
estimated duties which is the very purpose of the cash deposit.
Finally, respondents argue that the remedial purpose of the
antidumping law in no way supports the examination of non-subject
merchandise. Respondents contend that they changed their behavior as a
consequence of the LTFV investigation. They argue that the law
contemplates that the dumping margins (if any) calculated by the
Department should accurately reflect respondent's behavior regarding
subject merchandise, not the pricing practices during the POR that
include non-subject merchandise.
Department's Position: We disagree with petitioners that the
Department's decision in the preliminary results would invite
manipulation of the dumping law. We do not agree with petitioners'
contention that linkage would encourage other respondents to flood the
U.S. market with merchandise prior to a preliminary determination. As
we stated in our preliminary results, the exclusion of sales of
merchandise entered prior to suspension of liquidation requires that a
respondent must demonstrate, to the satisfaction of the Department, the
linkage between the entry and the sale. This stringent requirement,
coupled with the provisions on critical circumstances, eliminates a
significant risk of manipulation. See, e.g. Certain
[[Page 47878]]
Corrosion-Resistant Carbon Steel Flat Products from Australia;
Preliminary Results of Antidumping Duty Administrative Review, 60 FR
42507 (1995) (the Department did not exclude certain sales because the
respondent was unable to link the sales to specific pre-suspension
entries).
We disagree with petitioners' contention that linkage would
encourage dumping as most producers would not have the necessary
linkage information that would meet the Department's requirement in a
verification. In fact the necessary linkage has been demonstrated in
only one case. (See High-Tenacity Rayon Filament Yarn, Preliminary
Results of Antidumping Duty Administrative Review, 59 FR 32181, (June
22, 1994)).
We examined the issue of potential manipulation throughout the
proceeding as well as at our sales verifications of respondents. We
found no evidence of ``paired sales,'' where the price of that sale
that entered prior to suspension of liquidation was priced lower than
the simultaneous sales of the same merchandise to the same customer. We
reviewed petitioners' February 21, 1996 submission to the Department
concerning alleged price manipulation by respondents as well as
respondents' rebuttal submission of February 22, 1996. After examining
the issue, we found no evidence that respondents were engaged in price
manipulation with sales of pre-POR entries (see Final Analysis
Memorandum).
We also disagree with petitioners' arguments concerning critical
circumstances in this review. The requirements of the critical
circumstances provision demonstrate that Congress only intended that
entries made prior to the LTFV preliminary determination be covered
under very specific circumstances. In the LTFV investigation, the
Department found no critical circumstances warranting inclusion of such
entries.
We also disagree with petitioners' assertion that the Department's
approach results in an inappropriate cash deposit rate. As discussed
above, merchandise proven to have entered the United States prior to
the suspension of liquidation (and in the absence of an affirmative
critical circumstances finding) is not subject to merchandise within
the meaning of section 771(25) of the Act. Sales of non-subject
merchandise are not an appropriate basis for the Department to estimate
the duties that will be due on future entries of subject merchandise.
Comment 4: Petitioners contend that the Department should not
segregate home market channels of distribution for purposes of product
group averaging. Petitioners state that the statute and proposed
regulations provide for the derivation of averaging groups only for
U.S. sales in investigations. Petitioners note that Section 777A(d) of
the statute was modified by the Uruguay Round Agreement Act (URAA) to
require the averaging of U.S. prices of investigations (see, 19 U.S.C.
1677A(d)(1)). Petitioners also state that under the Statement of
Administrative Action (SAA), the averaging of U.S. price with respect
to groups of comparable merchandise is limited only to the
investigation phase of the proceeding (see, SAA at p. 843). In
addition, petitioners state that the statutory section pertaining to
averaging in reviews says nothing about the averaging of comparable
merchandise in the home market based on factors relating to regions or
customers.
Petitioners argue that the Department has erroneously extended this
concept to averaging of home market prices in administrative reviews.
Petitioners state that neither the plain language of the statute nor
the Statement of Administrative Action contemplates extension of the
product averaging concept to reviews.
Petitioners argue that the Department has already determined in
this review that sales in the home market comprise a single level of
trade based on common functions in both channels. Thus, petitioners
contend that the Department cannot distinguish between its channels of
distribution as different levels of trade for product group averaging.
Petitioners also state that the channels of distribution are not
distinct based on the class of customer, as all home market sales are
to end users. Petitioners argue that the manner in which the sales are
made--either from inventory or direct from factory--provide no basis to
distinguish these alleged ``channels,'' as all sales are shipped direct
from the factory. Consequently, petitioners allege that there is no
basis to segregate home market sales in product group averaging based
on these ``channels of distribution.''
Petitioners also assert that the Department cannot rely on the
``class of customer'' to distinguish averaging groups. They claim that
all sales are to end users and do not involve different points in the
claim of distribution of the product. Petitioners note that in past
cases, the Department has differentiated between sales to distributors
and end-users, recognizing that sales at different points in a chain of
commerce may reflect different functions and/or different pricing
practices. In support of their position, petitioners cite Final
Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit
from Thailand, 60 FR 29553 (June 5, 1995) and Final Determination of
Sales at Less Than Fair Value: Certain Carbon and Alloy Steel Wire Rod
from Canada, 59 FR 18791, 18794 (April 20, 1994).
Petitioners argue that the ``channels'' of trade are not, in fact,
different channels of distribution but merely reflect different sales
entities that undertake the same role. In the past, petitioners contend
that the Department has differentiated between different sales entities
that undertake the same role (see, Final Determination of Sales at Less
Than Fair Value: Stainless Steel Bar from Spain, 59 FR 66931, 66936
(December 28, 1994)).
Consequently, petitioners state that there is no legal or factual
justification for segregating averaging groups based on whether the
sale was made by Imphy/Ugine-Savoie or by an agent of the wholly-owned
joint venture, Ugine-Service. Accordingly, petitioners argue that the
Department should eliminate channels of distribution as a factor in its
product averaging groups.
Respondents agree that the Department inappropriately included a
preference for matching U.S. sales to home market sales in the channel
of distribution which the Department deemed ``most comparable to that
in which the U.S. transaction was made.'' Respondents contend that
having determined that all home market sales were at the same level of
trade, the Department should not have truncated its analysis of sales
of the foreign like product. Respondents assert that the Department
should have conducted its matching exercise on the basis of
contemporaneous sales within the level of trade, without excluding
sales based upon distribution channel. Respondents contend that the
Department's approach subordinated physical comparability to a
criterion (distribution channel) which has no foundation in the statute
and, hence, which should not have been employed. They state that the
Department's elevation of distribution channel over physical
characteristics is inappropriate under the antidumping law. Respondents
assert that the courts have made clear that selecting proper product
matches based on physical characteristics lies at the heart of a fair
dumping comparison (see Timkpin Co. v. United States, 630 F. Supp.
1327, 1336 (CIT 1986) and Hussey Copper, Ltd. v. United States, No. 95-
145 at 6 (CIT 1995)). Respondents argue that in making its comparison,
the Department's matching of U.S. and home market sales must be based
on the closest identity of physical
[[Page 47879]]
characteristics (see Hussey Copper, Ltd. v. United States, No. 95-145
at 6 (CIT 1995)). Respondents state that any channel of distribution
choice is irrelevant to the proper selection. Consequently, respondents
contend that the Department's final results should be based on
comparisons of contemporaneously sold, identical merchandise within the
level of trade being compared and, if identical merchandise was not
sold, the most similar merchandise contemporaneously sold within that
level of trade should be utilized.
However, if the Department should regard EP sales as more
comparable to sales by Imphy/Ugine-Savoie.
Department's Position: We agree with petitioners and respondents
that the Department should not use home market channels of distribution
for purposes of product group averaging in its calculation of normal
value in this administrative review. The Department indicated in the
SAA that in determining which sales to include with a particular
average, ``Commerce will consider factors it deems appropriate, such as
the physical characteristics of the merchandise, the region of the
country in which the merchandise is sold, the time period, and class of
customer involved.'' SAA at 842. See also, Proposed Regulations at
7349. However, that section of the SAA is discussing the average-to-
average methodology in investigations. With the exception of the
contemporaneity rule in section 777A(d)(2), neither the statute nor the
SAA provides any guidance of what, if any, factors should be considered
when averaging in reviews. The facts of this case do not warrant
averaging by channel of distribution.
Consequently, for the final results, we have not segregated home
market channels of distribution for purposes of product group averaging
of normal values to compare to U.S. prices. Instead, after correcting
the model match program (see comment 6), we have taken the identical
and similar merchandise matches generated by the model match program
and attempted to match with contemporaneous sales within the same level
of trade. If we found no contemporaneous identical merchandise within
the same level of trade, we matched without regard to level of trade.
Comment 5: Petitioners allege the Department's level of trade
analysis and decision to grant a CEP offset is fundamentally flawed and
not consistent with the law. They assert that the Department was
incorrect in analyzing CEP sales for level of trade purposes with an
adjusted price that deducts U.S. selling expenses. Petitioners contend
that there is no legal justification for adjusting the CEP to deduct
actual U.S. selling expenses incurred in selling the merchandise prior
to determining at what level of trade the sale is made. They claim that
the statute says nothing about an adjusted CEP for level of trade
purposes, but that the statute merely sets forth the factors the agency
must consider in determining whether an adjustment for differences in
levels of trade is appropriate.
Petitioners note that the Department, in its preamble to the
Proposed Rules, stated that we will look at the CEP as adjusted but
will look at the EP and normal value (NV) price as unadjusted for
levels of trade. Petitioners assert that by making the U.S. CEP level
of trade a ``constructed'' or ``adjusted'' level of trade but NV sales
``unconstructed'' or unadjusted, the Department is beginning its
analysis with an apples-and-oranges comparison that is inconsistent
with law and longstanding agency practice to ``make a fair comparison
of sales in the two markets by reconstructing prices at a specific
common point in the chain of commerce, when the merchandise is leaving
the factory gates.'' (See Porcelain-on-Steel Cooking Ware from Mexico,
58 FR 43327, 43330 (August 16, 1993) and AOC International, Inc. v.
United States, 713 F.2d 1568, 1572 (Fed. Cir. 1983), cert. denied, 465
U.S. 1022 (1984)).
Petitioners note that by law, the starting price for a CEP sales is
the price offered to an unaffiliated purchaser in the United States and
they contend that the Department cannot alter the statutory definition
of CEP sales merely to ease its ability to make a level of trade
adjustment.
Petitioners also assert that if the Department does not use the
unadjusted starting price for CEP sales just as it does for EP and
normal value sales, the Department will establish a system whereby
sales that are made in the same fashion in both the U.S. and home
markets will not be regarded as the same level of trade. Petitioners
contend this approach is unreasonable and illogical. They note that the
Department used the same alleged incorrect CEP deduction methodology in
Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide from the
Netherlands; Preliminary Results of Antidumping Duty Administrative
Review, 61 FR 15766, 15768 (April 9, 1996).
Petitioners also contend that the Department should not rely solely
on selling functions as the determinant of whether different levels of
trade exist. Petitioners state that the statute sets forth two
factors--selling functions and price distinctions--as the basis for
determining whether an adjustment for differences in levels of trade
should be granted (see 19 U.S.C. 1677b)(a)(7)). Petitioners argue that
the statute does not, however, state that levels of trade themselves
are based on selling functions. Petitioners continue that the term
``level of trade'' is not new, but has been subject to much litigation
and has consistently been defined as the point in the chain of commerce
that a sale is made, such as the wholesale, retail or end-user level.
In support of their position, petitioners cite NAR S.p.A. v. United
States, 13 CIT 82, 707 F. Supp. 553, 556 (1989). Petitioners argue that
based on this definition and the facts of record, the Department should
treat all U.S. sales as a single level of trade.
Petitioners argue that if the Department persists in its assumption
that section 772(d) adjustments to CEP must be made to place CEP on an
equal basis as EP, then the Department cannot conclude that having made
these adjustments the CEP and EP sales reflect different levels of
trade, as the entire purpose of the adjustment was to render the CEP
and EP prices as comparable.
Respondents contend that petitioners' challenges to the
Department's methodology for analyzing level of trade and the decision
to grant a CEP offset are without merit. Respondents assert that the
methodology used by the Department for analyzing level of trade is
consistent with, and required by, the law. They contend that the
Department properly conducted its examination of the CEP level of trade
based on the price after adjustments under section 772(d), i.e.,
looking at the selling functions performed by the foreign exporters in
selling to MAC, an affiliated U.S. super-distributor, and to end-users
in the home market. Respondents argue that the Department conducted a
careful and thorough analysis of selling functions and properly
determined that Imphy and Ugine-Savoie assumed significantly different
and more selling functions for home market sales to end-users, which
constitutes a more advanced level of trade than the CEP sales.
Respondents state that pursuant to section 773(a)(7)(b), the Department
appropriately granted a CEP offset.
Department's Position: We agree with respondents. As described in
our recent Preliminary Results of Antidumping Duty Administrative
Reviews of Antifriction Bearings (Other Than Tapered Roller Bearings)
and Parts Thereof From France, Germany, Italy, Japan, Romania,
Singapore, Thailand and the United Kingdom, 61 FR 35713 (July 8, 1996),
the Department's position
[[Page 47880]]
is that it will, to the extent practicable, calculate normal value (NV)
based on sales at the same level of trade as the U.S. sales. When the
Department is unable to find sales of the foreign like product in the
comparison market at the same level of trade as the U.S. sale, the
Department may compare the U.S. sale to sales at a different level of
trade in the comparison market.
In accordance with section 773(a)(7)(A) of the Act, if sales at
allegedly different levels of trade are compared, the Department will
adjust the NV to account for the difference in level of trade if two
conditions are met. First there must be differences between the actual
selling activities performed by the exporter at the level of trade of
the U.S. sale and the level of trade of the comparison market sales
used to determine NV. Second, the differences must affect price
comparability as evidenced by a pattern of consistent price differences
between sales at the difference levels of trade in which NV is
determined.
Section 773(a)(7)(B) of the Act establishes that a CEP ``offset''
may be made when two conditions exist: (1) NV is established at a level
of trade which constitutes a more advanced stage of distribution than
the level of trade of the CEP; and (2) the data available do not
provide an appropriate basis for a level-of-trade adjustment.
In implementing these principles in this review, we issued a
supplemental questionnaire on December 13, 1995 concerning level of
trade. We asked respondents to explicitly state what specific
differences and similarities there were in selling functions and/or
support services between all channels of distribution in the home
market and the United States.
In order to determine whether separate levels of trade actually
existed within or between the U.S. and home markets, we reviewed the
selling activities associated with each channel of distribution claimed
by the respondents. However, the starting point for our analysis was
the separate channels. Therefore, we did not rely solely on selling
activities.
Pursuant to section 773(a)(7)(B)(i) of the Act and the SAA at 827,
in identifying levels of trade for EP and home market sales we
considered the selling functions reflected in the starting price before
any adjustments. For CEP sales, we considered only the selling
activities reflected in the constructed price, i.e. after the expenses
and profit were deducted under section 772(d) of the Act. Whenever
sales were made by or through an affiliated company or agent, we
considered all selling activities of both affiliated parties, except
for those selling activities related to the expenses deducted under
section 772(d) of the Act in CEP situations.
In reviewing the selling functions reported by the respondents, we
examined all types of selling functions and activities reported in
respondents' January 18, 1996 supplemental response on level of trade.
In analyzing whether separate levels of trade existing in this review,
we found that no single selling function was sufficient to warrant a
separate level of trade in the home market (see Proposed Regulations at
7348).
In determining whether separate levels of trade existed in or
between the U.S. and home market, the Department considered the level-
of-trade claims of respondents. To test the claimed levels of trade, we
analyzed the selling activities associated with the channels of
distribution respondents reported. We determined that fewer and
different selling functions were performed for CEP sales to MAC than
for home market sales to end-users. In addition, we found that the home
market sales involved a more advanced stage of distribution (to end-
users) as compared to respondents' CEP sales in the United States
(distributor).
In this review there were no sales of the foreign like product in
the home market at the same level of trade as that of the CEP sales.
Therefore, we examined whether a level-of-trade adjustment was
appropriate.
We disagree with petitioners that there is no evidence of any
commercial differences or distinct selling functions between the
claimed two levels of trade in the U.S. market. For the U.S. market,
respondents reported two levels of trade: (1) sales to end users
through MAC (EP sales); and (2) sales to distributors through MAC,
Techalloy and US&A (CEP sales). The Department examined and verified
the selling functions performed for both levels of trade. As we
indicated in our preliminary results, we found that the selling
functions were sufficiently different in customer sales contacts,
technical services, inventory maintenance, computer systems and
administrative functions to warrant two levels of trade in the United
States.
We disagree with petitioners' contention that the Department should
base the level of trade on the starting price of CEP sales. As we
discussed in the commentary of the Proposed Regulations at 7347, the
Department believes that this position is not supported by the statute
or the SAA, and that it is neither reasonable nor logical. First, the
statue clearly defines CEP as a U.S. price ``as adjusted'' (Section
772(b) of the Act). Moreover, if the starting price is used for all
U.S. sales, the Department's ability to make meaningful comparisons at
the same level of trade (or appropriate adjustments for differences in
levels of trade) would be severely undermined in cases involving CEP
sales. Using the starting price to determine the level of trade of both
EP and CEP sales would result in a finding of different levels of trade
for an EP an EPA and a CEP sale adjusted to a price that reflected the
same selling functions. Accordingly, the Department will follow the
commentary of the proposed regulations which specify that the level of
trade analyzed for EP sales is that of the starting price, and for CEP
sales it is the constructed level of trade of the price after the
deduction of U.S. selling expenses and profit.
Comment 6: Petitioners contend that the Department's product
concordance computer program is flawed and does not compare U.S. sales
to the most similar merchandise in accordance with the methodology that
the Department intended to use. Petitioners note that they do not
disagree with the proposed comparisons or the hierarchy and they agree
that a focus on a hierarchy of grade, diameter and further processing
is consistent with the approach adopted in the underlying
investigation.
However, petitioners allege that the program had the following
errors: (1) The program failed to search for differences in further
processing before searching for different grades; (2) the product match
program failed to search for differences in diameters before searching
for different grades; (3) the program ignored similar grade comparisons
and substituted non-similar grade comparisons; (4) where similar grade
comparisons were not possible, the program selected dissimilar
merchandise rather than relying on constructed value; and (5) the
program improperly rejected similar comparison sales because the
Department compared home market variable manufacturing costs stated in
cost per kilogram to U.S. variable manufacturing costs stated in cost
per pound for purposes of the 20 percent difference-in-merchandise
analysis.
Respondents agree that the Department's model match computer
program did not properly match U.S. sales to the identical or most
similar merchandise sold in the home market. Respondents agree with
petitioners that the Department should use the same model matching
methodology that the Department used in the LTFV investigation.
Respondents contend that
[[Page 47881]]
the Department should match identical U.S. and home market products by
control number (CONNUM), before matching similar products. Respondent
notes that to identify identical products, Imphy used its internal
product code and Ugine-Savoie used its commercial grade and internal
product code, in addition to the Department's specified characteristics
(i.e., grade, diameter, and further processing). Therefore, respondents
urge the Department to correct the ministerial error in the model match
program and rely on CONNUMs to identify and match identical products.
Department's Position: We agree with both petitioners and
respondents, in part, that the Department's model computer program did
not match products as we intended. We have corrected the errors for the
final results. For the final results, we have used the model match
methodology used by the Department in the LTFV investigation and are
therefore using respondents' CONNUMs to match identical products. The
Department confirmed the accuracy of respondents' reported home market
and U.S. CONNUMs, product codes and physical characteristics of the
products at verification.
For those U.S. sales that do not have an identical match in the
home market, the model match program identifies similar matches using
the following three physical criteria: the grade of the wire rod, the
diameter and whether the product was further processed or not. The
Department's model match program matches similar products by grade
using the identical or most similar grade as indicated in Appendix 3 of
the January 11, 1996 supplemental response and the product matching
hierarchy as described in Appendix 4 of the same January 11, 1996
supplemental response.
We disagree with petitioners that the Department's model match
program failed to search for differences in further processing or
diameters before searching for different grades. The program did search
for differences in further processing or diameters; however, the error
in the difference in merchandise portion of the program resulted in
erroneous comparisons in the model match that made it appear that the
program did not search for differences in further processing or
diameters before searching for different grades. We have corrected this
error for the final results.
Comment 7: Petitioners contend that the Department should apply
facts available to recalculate imputed credit for certain U.S. sales
with unreported payment dates, by relying on the date of the final
results of this review as the date of payment, as the Department did in
the underlying investigation. Petitioners also assert that when date of
payment is not reported because payment has not been made, the
Department's long-standing practice has been to use the date of the
final determination as the surrogate for the date of payment. In
support of their position, petitioners cite Final Determination of
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat
Products, Certain Cold-Rolled Carbon Steel Flat Products, and Certain
Cut-to-Length Carbon Steel Plate from Belgium, 58 FR 37083 (July 9,
1993) and Final Determination of Sales at Less Than Fair Value Certain
Stainless Steel Wire Rod from France, 58 FR 68865, 68871 (December 29,
1993).
Department's Position: We agree with petitioners and we have used
the date of the final results as date of payment for those U.S. sales
when there is no reported date of payment, consistent with Department
practice. (See Carbon Steel Flat Products from Belgium and Certain
Stainless Steel Wire Rods from France).
Comment 8: Petitioners allege that the Department erroneously
treated marine insurance expenses as an indirect selling expense.
Petitioners contend that these expenses should be treated as movement
charges, as the Department did in the underlying investigation and
consistent with the Department's normal practice.
Department's Position: We agree with petitioners and have corrected
the error for the final results.
Comment 9: Petitioners allege that the Department made the
following ministerial errors: (1) The Department failed to include cost
of manufacture in calculating constructed value; (2) the Department
failed to convert the CEP offset from French francs to U.S. dollars;
(3) the Department failed to cap the CEP offset by the amount of
indirect selling expenses incurred in the United States; (4) the
Department failed to include inventory carrying expenses in its
calculation of total U.S. indirect selling expenses; (5) the Department
failed to subtract respondents' repacking expenses from U.S. price; (6)
the Department failed to subtract movement expenses from net home
market price for its sales below-cost analysis; and (7) the Department
failed to subtract home market indirect selling expenses from home
market prices in conducting its arm's length test.
Department's Position: We agree with petitioners with the exception
of point seven (subtraction of home market indirect selling expenses
from home market prices for the arm's length test). In calculating the
net home market price used for the arm's length test, the Department
deducts direct selling expenses, discounts and rebates, movement
expenses and packing from the home market gross unit price. There is no
deduction for indirect selling expenses in the arm's-length test.
Comment 10: Respondents allege that the Department incorrectly
converted the quantity fields for U.S. sales by dividing the quantity
when it should have multiplied the quantity field by the pounds to
kilogram conversion factor.
Department's Position: We agree and have corrected this error for
the final results.
Comment 11: Respondents allege that the Department should not have
deducted indirect selling expenses incurred in France in its
calculation of CEP. Respondents claim that Section 772(d)(1) of the
antidumping law does not provide for the deduction of indirect selling
expenses incurred in the home market as they do not represent expenses
``associated with economic activities occurring in the United States.''
Respondents also note that the Department's proposed antidumping
regulations confirm that indirect selling expenses incurred in the home
market for sales to an affiliated importer are not expenses within the
meaning of section 772(d)(1). Respondents claim the commentary makes a
clear distinction between expenses associated with selling to the
affiliated reseller in the United States and those expenses made to the
affiliated reseller's unaffiliated customer.
Petitioners disagree with respondents' comment that the Department
incorrectly calculated CEP by deducting all selling expenses,
regardless of where incurred. Petitioners argue that the plain language
of section 772(d)(1) requires the Department to deduct all expenses
that relate to U.S. sales. Petitioners contend that this provision has
been interpreted by the courts to require the deduction of the types of
indirect selling expenses incurred by the foreign producer outside of
the United States. In support of their position, petitioners cite
Silver Reed America, Inc. v. United States, 683 F. Supp. 1393, 1397
(CIT 1988). Petitioners allege that the new statute did not change this
fundamental requirement and, indeed, the legislative history and the
SAA show clear legislative intent not to change the calculation of CEP
from prior law (see, SAA at 823-4; S. Rep. No. 412, 103d Cong. 2d Sess.
At 63 (1994). Petitioners argue that based on the plain language of the
statute, the agency may not construe another, ambiguous sentence
[[Page 47882]]
in the SAA to limit CEP deduction to those incurred in the United
States.
Department's Position: We agree with respondents in part. The
Department does not deduct indirect expenses incurred in selling to the
affiliated U.S. importer under section 772(d) of the Act. See Notice of
Final Determination of Sales at Less Than Fair Value: Certain Pasta
from Italy, 61 FR 30326, 30352 (June 14, 1996). As stated clearly in
the SAA, and as required by the WTO antidumping agreement, that
provision only permits deduction of expenses associated with economic
activities occurring in the United States. See SAA at 823: Antidumping
Agreement, article 2.4. However, some of the respondents' indirect
expenses incurred in the home market are actually associated with
economic activities in the United States. Specifically, liability
insurance purchased in France is associated with U.S. economic
activities to the extent it covers subject merchandise while warehoused
in the United States. On the other hand, some indirect expenses
involved in this case relate solely to the sale to the affiliated
importer. For example, inventory carrying costs incurred prior to
exportation relate solely to the sale to the affiliated importer.
Further, unlike the situation in Pasta from Italy, the inventory
carrying costs in the present case were not verified to relate
exclusively to the product sold to the unaffiliated purchaser in the
United States. Finally, contrary to petitioners' contention, the URAA
changed the deductions in CEP situations. SAA at 823. Therefore, cases
addressing pre-URAA practice are not applicable.
Comment 12: Respondents allege that the Department erroneously
failed to take into consideration freight charges borne by customers in
the U.S. market in the calculation of EP and CEP. Respondents claim
that the Department should correct this apparent ministerial error by
adding freight revenue to price.
Department's Position: We agree with respondents and have corrected
this error for the final results.
Comment 13: Respondents claim that the Department overstated total
profit by failing to take into account imputed expenses (credit
expenses and inventory carrying costs) in total expenses used to
calculate total actual profit. Respondents note that the Department
took imputed expenses into account in its calculation of CEP and normal
value. They argue that, to the extent that imputed expenses are
considered expenses for that purpose, by definition, they are also
expenses within total expenses pursuant to section 772(f)(2)(C).
Consequently, respondents argue that the Department should correct this
error in its final results of review and either include imputed
expenses in the total expenses deducted from total revenue used in
calculating total actual profit or eliminate their deduction in
determining CEP and normal value.
Petitioners argue that the Department correctly calculated excluded
expenses from the expenses used to calculate total actual profit.
Petitioners note that the Department based its profit calculations on
the actual total revenues and the actual expenses reported by
respondents for subject merchandise. Petitioners contend where the
Department relies on actual expenses in its calculation, the use of
imputed expenses is unnecessary and unwarranted. Also, petitioners
argue that including the imputed credit and inventory carrying expenses
as respondents requested, would double-count interest expenses.
Department's Position: We agree with petitioners. It is the
Department's policy to base the calculation of profit for CEP sales on
actual revenues and expenses that are listed on the company's audited
financial statements. Section 772(f)(1) and 772(f)(2)(D) state that the
profit shall be an amount determined by multiplying the total actual
profit by the applicable percentage and that the total actual profit
means the total profit earned by the foreign producer, exporter, and
affiliated parties. In calculating the per unit cost figures, the
Department has included net interest expense. Therefore, the Department
does not need to include imputed interest expenses in the profit
calculation since we have already accounted for actual interest in
computing ``actual profit'' under section 772(f)(1). When the
Department allocates a portion of the actual profit to each U.S. CEP
sale, we have included imputed credit and inventory carrying costs as
part of the total U.S. expenses allocation factor. This methodology is
consistent with Section 772(f)(1) of the statute which defines ``total
United States Expenses'' as the total expenses described under section
772(d) (1) and (2). Such expenses include both imputed credit and
inventory carrying costs.
Comment 14: Respondents contend that the Department should not have
included indirect selling expenses incurred in France in the total
United States expenses used to calculate CEP profit. Respondents state
that indirect selling expenses incurred in the home market are not
expenses encompassed within section 772(d)(1) of the antidumping law.
Accordingly, respondents argue that for the same reasons that these
expenses should also not be deducted from CEP (see Comment 11), they
should also not be treated as U.S. expenses to which profit is to be
allocated pursuant to section 772(d)(3).
Petitioners argue that the relevant expenses under section
772(d)(1) are all selling expenses related to U.S. sales, regardless of
where incurred. Consequently, petitioners contend that the Department's
decision in the preliminary results to account for all direct and
indirect selling expenses in the CEP profit calculations is correct and
should be maintained for the final result.
Department's Position: We agree with respondents in part to the
extent these expenses are not part of the 772(d)(1) adjustment (see
comment 11), they should also not be included in U.S. expenses for
purposes of calculating CEP profit.
Comment 15: Respondents allege that the Department inadvertently
overstated normal value by double-counting U.S. commissions in its
circumstances of sale adjustment to normal value for EP sales.
Respondents also contend that the Department double-counted selling and
packing expenses and that the Department neglected to apply the CEP
offset when basing NV on constructed value.
Petitioners agree with respondents that the Department double-
counted commissions and should correct the ministerial error.
Department's Position: We agree and have corrected these errors for
the final results.
Comment 16: Respondents contend that the Department's proposed duty
assessment methodology is impractical and unnecessarily burdensome.
Respondents claim in view of their verified linkage of entities to
sales, the Department is in a position to issue assessment instructions
on a master list approach in this review. Respondents note that the
Department's commentary to the Proposed Regulations acknowledged that
linking sales to entries results in the most precise determination/
assessment of antidumping duties.
At the same time, respondents state that they recognize that the
Department may prefer not to proceed with a master list approach, for
its own convenience and that of the U.S. Customs Service. In that
event, respondents state that they would not object to the ad valorem
assessment rate approach set forth in the Department's proposed
regulations provided that the rate is not constructed based on
transactions involving entries of non-subject merchandise (i.e.,
[[Page 47883]]
merchandise outside the scope of the SSWR order because it entered
prior to the suspension of liquidation). Respondents assert that
encompassing sales of entities which are not subject to the antidumping
duty order in this review in the calculation of the duty assessment
rate would grossly distort the margin calculation and resultant duties.
Respondents assert that the proposed methodology contemplates
calculating an individual duty assessment amount for EP transactions
and a duty assessment rate for CEP transactions. Respondents argue that
the proposed duty assessment rate methodology for EP transactions is
entirely unnecessary since MAC is the only importer. Therefore,
respondents argue there is no need to distinguish between EP and CEP
sales. They contend that the Department should either compute a uniform
duty assessment amount or rate, based upon the sales quantity or the
entered value of the sale reviewed, as applicable, if it opts for a
simplified assessment approach.
Petitioners state that the assessment instructions are consistent
with the Department's past practice of assessing duties on entered
values and also consistent with the proposed regulations. In support of
their position, petitioners cite Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof from the Federal Republic of
Germany, Final Results of Antidumping Duty Administrative Review, 56 FR
31692, 31693-5, and 31698--701 (July 11, 1991); and Proposed
Regulations at 7316 and 7364. Petitioners contend that the only
justifiable reason to rely on entries rather than sales is if the
Department can tie all entries with sales and assess sale-specific
duties on POR entries. Petitioners claim that where respondents cannot
derive dumping margins on all POR entries as is true in this review,
the use of a uniform assessment rate in lieu of sales-specific rates is
a reasonable alternative for the Department. However, petitioners state
that given this approach, the most accurate manner of determining the
magnitude of dumping during the POR is based on an examination of all
CEP sales, not entries, which petitioners claim is consistent with the
Department's normal practice and its proposed regulations.
Department's Position: We agree with petitioners that our
assessment instructions are consistent with those described in our
Proposed Regulations at 7316. As the Department discusses in its
commentary in the Proposed Regulations, section 351.212(b)(1) of the
proposed regulations provides that the Department normally will
calculate a duty assessment rate based on sales reviewed, and will
apply those rates to entries made during the review period. This is
consistent with past practice and has been upheld by the courts. See,
Antifriction Bearings from France, et al., 60 FR 10900, 10902 (1995);
Koyo Seiko v. United States, 796 F. Supp. 1526, 1529 (CIT 1992). In all
cases, this will result in the assessment of duties on merchandise
entered during the review period. To the extent possible, these
assessments will be specific to each importer, because the amount of
duties assessed should correspond to the degree of dumping reflected in
the price paid by each importer. In this review, all subject
merchandise was imported by MAC, an affiliated distributor of the
respondents.
We disagree with petitioners' contention that the only reason to
rely on entries rather than sales is if the Department can tie all
entries with sales. As we stated in our Proposed Rule, it is the
Department's belief that, except in unusual situations, it should not
abandon the objective of assessing duties on the basis of entries. In
most antidumping proceedings, it is necessary to assess duties on the
basis of entries in order to maintain continuity with periods of no
review and to avoid the over- or under-collection of duties.
Final Results of Reviews
As a result of our review, we have determined that the following
margins exist:
----------------------------------------------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
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Imphy/Ugine-Savoie............................ 8/5/93-12/31/94.................................... 10.06
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The Department shall determine, and the Customs service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and foreign market value may
vary from the percentages stated above. The Department will issue
appraisement instructions 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 certain stainless steel wire rods from France 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) The cash
deposit rates for the reviewed companies will be the rates for those
firms as stated above (except that if the rate for a particular product
is de minimis i.e., less than 0.5 percent, a cash deposit rate of zero
will be required for that company); (2) for previously 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, or the original
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) the cash deposit rate for all other
manufacturers or exporters will continue to be 24.51 percent for
stainless steel wire rods, the all others rate established in the LTFV
investigations. See Amended Final Determination and Antidumping Duty
Order: Certain Stainless Steel Wire Rods from France, (59 FR 4022,
January 28, 1994).
These deposit requirements, when imposed, 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 the subsequent
assessment of double antidumping duties.
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with section 353.34(d) of the Department's
regulations. Timely notification of return/destruction of APO materials
or conversion to judicial
[[Page 47884]]
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: September 3, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-23234 Filed 9-10-96; 8:45 am]
BILLING CODE 3510-DS-M
