[Federal Register Volume 64, Number 176 (Monday, September 13, 1999)]
[Notices]
[Pages 49447-49460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23777]
[[Page 49447]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-840]
Manganese Metal From the People's Republic of China; Final
Results of Second Antidumping Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Antidumping Duty Administrative
Review of Manganese Metal from the People's Republic of China.
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SUMMARY: We have determined that sales by China Metallurgical Import &
Export Hunan Corporation/Hunan Nonferrous Metals Import & Export
Associated Corporation have been made below normal value during the
period of review of February 1, 1997, through January 31, 1998. Since
we were unable to verify that China Hunan International Economic
Development Corporation reported all of its U.S. sales during the
period of review, we are applying adverse facts available to calculate
the dumping margin for this exporter of the subject merchandise. Based
on these final results of review, we will instruct the U.S. Customs
Service to assess antidumping duties based on the difference between
the export price and normal value on all appropriate entries.
EFFECTIVE DATE: September 13, 1999.
FOR FURTHER INFORMATION CONTACT: Greg Campbell or Craig Matney, Group
1, Office I, Antidumping/Countervailing Duty Enforcement, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue NW., Washington, DC
20230; telephone (202) 482-2239 or (202) 482-1778, respectively.
SUPPLEMENTARY INFORMATION:
Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, all references
to the Department's regulations are to 19 CFR Part 351 (April 1998).
Background
On February 6, 1996, the Department of Commerce (the Department)
published in the Federal Register the antidumping duty order on
manganese metal from the People's Republic of China (PRC). See Notice
of Amended Final Determination and Antidumping Duty Order: Manganese
Metal from the People's Republic of China, 61 FR 4415 (February 6,
1996) (LTFV Investigation). In accordance with 19 CFR 351.213(b)(2), on
February 9, 1998, Elkem Metals Company and Kerr-McGee Chemical
Corporation (the petitioners) requested that we conduct an
administrative review of this order. On March 23, 1998, in accordance
with 19 CFR 351.213(c)(3), we published a notice of initiation of this
antidumping duty administrative review. See 63 FR 13837.
On March 8, 1999, we published our preliminary results of review.
See 64 FR 10986. Included in our Preliminary Results notice was our
notice of partial rescission of this review with respect to two PRC
exporters: China National Electronics Import and Export Hunan Company
(CEIEC) and Minmetals Precious & Rare Minerals Import & Export
Corporation (Minmetals).
We subsequently provided interested parties an opportunity to
comment on the preliminary results, and held a public hearing on May
14, 1999. The following parties submitted comments: Elkem Metals
Company and Kerr-McGee Chemical Corporation (together comprising the
petitioners), and China Hunan International Economic Development
Corporation (HIED) and China Metallurgical Import & Export Hunan
Corporation/Hunan Nonferrous Metals Import & Export Associated
Corporation (CMIECHN/CNIECHN) (together comprising the respondents), as
well as Sumitomo Canada, Limited (SCL) (a Canadian reseller of subject
merchandise). Because it was not practicable to complete the review
within the time limit mandated by section 751(a)(3)(A) of the Act, on
July 1, 1999, we published a notice of extension of time limit for this
review. See 64 FR 35626.
The Department is conducting this administrative review in
accordance with section 751 of the Act. The period of review (POR) is
February 1, 1997 through January 31, 1998.
Scope of Review
The merchandise covered by this review is manganese metal, which is
composed principally of manganese, by weight, but also contains some
impurities such as carbon, sulfur, phosphorous, iron and silicon.
Manganese metal contains by weight not less than 95 percent manganese.
All compositions, forms and sizes of manganese metal are included
within the scope of this administrative review, including metal flake,
powder, compressed powder, and fines. The subject merchandise is
currently classifiable under subheadings 8111.00.45.00 and
8111.00.60.00 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 this
proceeding is dispositive.
Verification
We verified factor information provided by Xiang Tan Huan Yu
Metallurgical Products Plant (Huan Yu). We also conducted sales
verifications at HIED, CMIECHN/CNIECHN, and Minmetals. Our verification
at each of these companies consisted of standard verification
procedures, including the examination of relevant sales and financial
records and the selection of original documentation containing relevant
information. In addition to these standard verifications, we also
verified the sales documents submitted by SCL. Our verification results
for each of these companies are detailed in the verification reports on
file in the Central Records Unit (CRU) in room B-099 of the
Department's main building.
Export Price
For those U.S. sales made by CMIECHN/CNIECHN and which we verified,
we calculated an export price, in accordance with section 772(a) of the
Act, because the subject merchandise was sold to unaffiliated
purchasers in the United States prior to importation into the United
States and constructed export price treatment was not otherwise
indicated.
For these sales, we calculated export price based on the price to
unaffiliated purchasers. We deducted an amount, where appropriate, for
foreign inland freight, ocean freight, and marine
insurance.1 The costs for these items were valued in the
surrogate country.
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\1\ For a detailed discussion of how we derived net export price
and constructed value, see Memorandum to the Case File; Calculations
for the Final Results of Review for CMIECHN/CNIECHN (September 7,
1999), a public version of which is available in room B-099 of the
Department's main building.
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As discussed in the Customs Data section below, there were many
more shipments of manganese metal listing CMIECHN/CNIECHN as the
manufacturer/exporter entered into the United States during the POR
than the number of CMIECHN/CNIECHN's verified U.S. sales. We have
determined that these additional entries are not CMIECHN/CNIECHN sales
for the purposes of this review and, therefore,
[[Page 49448]]
we have not calculated an export price for these entries. Likewise, for
the reasons enumerated in the Facts Available section below, we have
not calculated an export price for HIED's sales.
Normal Value
1. Non-Market-Economy Status
For companies located in NME countries, section 773(c)(1) of the
Act provides that the Department shall determine normal value (NV)
using a factors-of-production methodology if (1) the merchandise is
exported from an NME country, and (2) the information does not permit
the calculation of NV using home-market prices, third-country prices,
or constructed value under section 773(a) of the Act.
The Department has treated the PRC as an NME country in all
previous antidumping cases. In accordance with section 771(18)(C)(i) of
the Act, any determination that a foreign country is a NME country
shall remain in effect until revoked by the administering authority.
None of the parties to this proceeding has contested such treatment in
this review. Furthermore, available information does not permit the
calculation of NV using home-market prices, third-country prices or
constructed value under section 773(a) of the Act. Therefore, we
treated the PRC as a NME country for purposes of this review and
calculated NV by valuing the factors of production in a comparable
market-economy country which is a significant producer of comparable
merchandise.
2. Surrogate-Country Selection
In accordance with section 773(c)(4) of the Act and section
351.408(b) of our regulations, we find that India has a level of
economic development comparable to the PRC and that it is a significant
producer of comparable merchandise.2 Therefore, for this
review, we have selected India as the surrogate country and have used
publicly available information relating to India, unless otherwise
noted, to value the various factors of production.
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\2\ See Memorandum to Susan Kuhbach from Jeff May; Non-Market-
Economy Status and Surrogate Country Selection (June 23, 1998), a
public copy of which is available in the Central Records Unit.
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3. Factors-of-Production Valuation
For purposes of calculating NV, we valued PRC factors of
production, in accordance with section 773(c)(1) of the Act. Factors of
production include but are not limited to the following elements: (1)
hours of labor required; (2) quantities of raw materials employed; (3)
amounts of energy and other utilities consumed; and (4) representative
capital cost, including depreciation. In examining potential surrogate
values, we selected, where possible and appropriate, the publicly
available value which was: (1) an average non-export value; (2)
representative of a range of prices either within the POR or most
contemporaneous with the POR; (3) product-specific; and (4) tax-
exclusive. Where we could not obtain a POR-representative price for an
appropriate surrogate value, we selected a value in accordance with the
remaining criteria mentioned above and which was the closest in time to
the POR. In accordance with this methodology, we have valued the
factors as described below.3
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\3\ For a more detailed explanation of the methodology used in
calculating various surrogate values, see Memorandum to the File
from Case Team; Factors of Production Valuation for the Final
Results (September 7, 1999).
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We valued manganese ore using a June 1998 export price quotation
(in U.S. dollars) from a Brazilian manganese mine for manganese
carbonate ore. Consistent with our methodology used in the first
administrative review final results, this price was adjusted to reflect
the decline in manganese ore world prices since the POR.4 We
adjusted this price further to account for the reported manganese
content of the ore used in the PRC manufacture of the subject
merchandise and to account for the differences in transportation
distances.
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\4\ See Manganese Metal from the PRC; Final Results and Partial
Rescission of Antidumping Duty Administrative Review, 63 FR 12440,
12442 (March 13, 1998) (First Review Results).
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To value various process chemicals used in the production of
manganese metal, we used prices obtained from the following Indian
sources: Indian Chemical Weekly (February 1997 through November 1997);
the Monthly Statistics of Foreign Trade of India, Volume II--Imports
(February through May 1997) (Import Statistics); price quotations from
Indian chemicals producers, and the Indian Minerals Yearbook (1995)
(IMY). Where necessary, we adjusted these values to reflect inflation
up to the POR using an Indian wholesale price index (WPI) published by
the International Monetary Fund (IMF). Additionally, we adjusted these
values, where appropriate, to account for differences in chemical
content and to account for freight costs incurred between the suppliers
and manganese metal producers.
To value the labor input, consistent with 19 CFR 351.408(c)(3), we
used the regression-based estimated wage rate for the PRC as calculated
by the Department and updated in May 1999.
For selling, general, and administrative expenses (SG&A), factory
overhead, and profit values, we used information from the Reserve Bank
of India Bulletin (January 1997) for the Indian industrial grouping
``Processing and Manufacturing: Metals, Chemicals, and Products
Thereof.'' To value factory overhead, we calculated the ratio of
factory overhead expenses to the cost of materials and energy. Using
the same source, we also calculated the SG&A expense as a percentage of
the cost of materials, energy and factory overhead, and profit as a
percentage of the cost of production (i.e., materials, energy, labor,
factory overhead and SG&A).
For most packing materials values, we used per-unit values based on
the data in the Import Statistics. For iron drums, however, we used a
price quotation from an Indian manufacturer rather than a value from
the Import Statistics because the quoted price was for the appropriate
type of container used, whereas the Import Statistics were aggregated
over various types of containers. We made further adjustments to
account for freight costs incurred between the PRC supplier and
manganese metal producers.
To value electricity, we used the average rate applicable to large
industrial users throughout India as reported in the 1995 Confederation
of Indian Industries Handbook of Statistics. We adjusted the March 1,
1995, value to reflect inflation up to the POR using the WPI published
by the IMF.
To value rail freight, we relied upon rates published in June 1998
by the Indian Railway Conference Association, deflated by the Indian
WPI to derive a surrogate value contemporaneous with the POR. To value
truck freight, we used a price quotation from an Indian freight
provider. Because this quotation was for a period subsequent to the
POR, we deflated the value back to the POR using the WPI published by
the IMF.
4. Changes Since the Preliminary Results
We have made certain changes, as identified below, in our margin
calculations pursuant to comments we received from interested parties,
to the availability of updated information, and to the discovery of
clerical errors since the preliminary results.
(a) Liquid ammonium: see Comment 5
(b) Sulphuric acid: see Comment 5
(c) Rail freight: see Comment 10
(d) Packing materials: see Comment 13
[[Page 49449]]
(e) Labor: In May 1999, the Department revised its regression-based
PRC wage rate (as published on the Department's website). This revised
wage rate has been incorporated into these final results.
Customs Data
In the course of this administrative review, the Department
obtained customs entry documentation from the U.S. Customs Service
(Customs). We initially requested this customs data to verify the non-
shipment claims by certain PRC exporters. Our request for entry data
was also responsive to concerns expressed by the petitioners that many
more shipments of manganese metal had entered the United States during
the POR than were reported as sales by the respondents. The information
we obtained included the documentation submitted by the U.S. importers,
as required upon entry, for each shipment of subject merchandise that
entered during the POR. We have closely examined this documentation for
each entry and find the following.5
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\5\ For a detailed analysis of the issues raised by this customs
data, see Memorandum to Richard W. Moreland from Greg Campbell;
Major Concurrence Issues for the Final Results of Review (September
7, 1999) (Final Concurrence Memo), a public version of which is
available in room B-099 of the Department's main building.
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To start, the customs data indicates that many more shipments of
manganese metal listing CMIECHN/CNIECHN as the exporter were entered
into the United States than the number of U.S. sales reported by
CMIECHN/CNIECHN and verified by the Department. In fact, the verified
sales represent less than five percent of the total value of POR
entries listing CMIECHN/CNIECHN as the exporter. CMIECHN/CNIECHN
maintains that its verified sales are the only sales it made to the
United States during the POR. Thus, the issue before the Department was
whether this merchandise was properly identified as being exported by
CMIECHN/CNIECHN and, consequently, whether these entries were entitled
to CMIECHN/CNIECHN's cash deposit rate.
An examination of this customs documentation shows that these
disputed CMIECHN/CNIECHN entries can be classified into three
categories. The first category consists of entries which correspond to
sales of subject merchandise reported by the respondents in the first
administrative review. The Department therefore has previously reviewed
these sales and calculated the appropriate dumping margin on these
entries accordingly.
The second category of disputed CMIECHN/CNIECHN entries includes
what appear to be resales of subject merchandise that was, at some
point, purchased from CMIECHN/CNIECHN. The documentation for these
reseller entries generally includes a commercial invoice from the
reseller to the U.S. importer. In certain instances this commercial
invoice also indicates that this merchandise was originally sourced
from CMIECHN/CNIECHN.6 The defining characteristic of the
documentation for this category of entries, however, is that there are
no commercial invoices from CMIECHN/CNIECHN addressed directly to the
U.S. importer.
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\6\ The documentation for some of these reseller entries also
includes inspection certificates, country of origin certificates, or
secondary commercial invoices indicating that the merchandise was,
at some point, purchased from CMIECHN/CNIECHN.
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We note that most of the entries in the second-category are U.S.
sales of the third-country reseller SCL. During this review, the
Department verified at SCL that this merchandise was, in fact,
purchased from CMIECHN/CNIECHN. The Department also verified at SCL and
CMIECHN/CNIECHN that there was no reason to believe that CMIECHN/
CNIECHN would have known that these sales to SCL were destined for
exportation to the United States.7
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\7\ For a detailed account of the Department's verification at
SCL, see Memorandum to the Case File; Results of Verification of SCL
(July 23, 1999), a public version of which is available in room B-
099 of the Department's main building.
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The third category of disputed CMIECHN/CNIECHN entries is comprised
of shipments for which the customs documentation includes commercial
invoices from CMIECHN/CNIECHN directly to the U.S. importer. CMIECHN/
CNIECHN alleges that these commercial invoices and certain other
documents submitted to Customs for these entries are, in fact, forged
and has formally asked Customs to investigate whether these documents
represent customs fraud. However, Customs has not made any
determination regarding the accuracy and authenticity of these
documents as of the date of these final results.
Nevertheless, in the course of this review the Department has
examined a considerable amount of evidence regarding the nature of and
circumstances surrounding these disputed CMIECHN/CNIECHN entries. There
is substantial evidence which supports a finding that CMIECHN/CNIECHN
was improperly identified as the exporter of record of these disputed
entries and, consequently, that these entries should not have been
subject to CMIECHN/CNIECHN's cash deposit rate.8 For
instance, an affidavit on the record of this review suggests that one
U.S. importer may have knowingly entered subject merchandise
incorrectly under CMIECHN/CNIECHN's cash deposit rate rather than under
the PRC-wide rate. Moreover, we note that the relationship between
other PRC exporters and the other U.S. importer of these disputed
CMIECHN/CNIECHN entries is already in question and was one of the
reasons we have used adverse facts available to determine HIED's
dumping margin in these final results. See Facts Available section
below. Thus, based on this evidence and the fact that these entries do
not reflect sales from third-country resellers, there is reason to
believe that the importers of these disputed entries did not enter the
merchandise at the proper cash deposit rate.
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\8\ See Final Concurrence Memo.
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Given the above, and based upon our verification of CMIECHN/
CNIECHN's total U.S. sales, we have determined that the disputed
CMIECHN/CNIECHN entries which comprise this third category are neither
U.S. sales nor exports by CMIECHN/CNIECHN for the purposes of this
review. Consequently, we determine that these entries were not entitled
to CMIECHN/CNIECHN's cash deposit rate and, instead, should have been
subject to the PRC-wide rate of 143.32 percent. Therefore, as explained
in the Assessment and Cash Deposit Rates section below these entries
will be liquidated at the PRC-wide rate of 143.32 percent.
Facts Available
Section 776(a)(2) of the Act provides that if an interested party
(1) withholds information that has been requested by the Department,
(2) fails to provide such information in a timely manner or in the form
requested, (3) significantly impedes a proceeding under the antidumping
statute, or (4) provides information that cannot be verified, the
Department shall use, subject to section 782(d), facts available in
reaching the applicable determination. While section 782(d) of the Act
provides certain conditions that must be satisfied before the
Department may disregard all or part of the information submitted by a
respondent, these conditions only apply when the information submitted
can be verified and the interested parties have cooperated to the best
of their abilities. See section 782(e) of the Act.
1. Application of Facts Available
We determine that, in accordance with sections 776(a)(2) and 776(b)
of the
[[Page 49450]]
Act, the use of facts otherwise available, adverse to the company, is
appropriate for HIED because its sales data could not be verified and
because it did not cooperate to the best of its ability in the course
of this review. The bases for these conclusions are detailed below.
On August 13, 1998, the Department provided HIED with the customs
data showing the POR entries into the United States of manganese metal
purportedly from HIED. In an accompanying letter we noted that these
entries differed in material ways from HIED's reported U.S. sales and
requested that HIED comment on this inconsistency. HIED replied that
its reported sales were correct and could be reconciled with its books.
HIED further noted that any inconsistencies were likely due to
``fraudulent schemes'' on the part of other exporters to export subject
merchandise into the United States under the most favorable
circumstances.
The Department subsequently conducted a verification of HIED's
reported sales. During the course of verification, we encountered
numerous inconsistencies and delays, and certain documents were not
available. For instance, HIED officials' explanation of the company's
relationship to its U.S. customer was, in general, incongruous and
incomplete and, at times, entirely contrary to what other company
officials had stated previously. Moreover, although company officials
claimed initially that only one of HIED's departments and one of its
affiliates made sales of manganese metal during the POR, Department
officials conducting the verification (the Verification Team)
subsequently identified accounting records which indicated that at
least one additional business unit may also have been involved in
selling manganese metal. Furthermore, the Verification Team was unable
to verify the total quantity and value of subject merchandise sold by
HIED and its affiliates because certain intermediate accounting records
could not be reconciled to source data or to the financial statements.
Verification of the completeness of HIED's sales reporting was also
seriously hindered by the Verification Team's inability to review
several of the sales and accounting records reportedly maintained by
HIED. In some cases, the source documentation requested by the
Department to verify total sales was reportedly discarded prior to
verification. Company officials offered no explanation as to why they
were unable to retrieve other sales and accounting records, maintained
at the company headquarters, for the majority of HIED's sales
departments. Sales and accounting records for HIED's affiliates,
including those selling manganese metal, were likewise not available
though, according to HIED management, this was because company
officials were unwilling to travel to other locations in the PRC where
the documents were kept.
There were many significant delays in the verification process as a
result of sorting through conflicting statements by officials and of
the difficulty in locating documents which were explicitly requested by
the Department in the verification outline sent prior to the
verification. Despite the fact that the verification was extended--at
the Department's initiative--for an additional half day, several
important documents were not presented to the Verification Team until
near or at the end of verification, preventing an adequate review of
important data.
Subsequent to verification, the Department received from Customs
supporting documentation (e.g., Customs Form 7501, commercial invoices,
packing lists) filed by the U.S. importer upon entering the subject
merchandise into the United States for several of the entries which
appeared in the customs data. The supporting documentation for several
entries listed in the customs data identified HIED as the actual
exporter of the subject merchandise. However, for many of these entries
there were no corresponding sales listed in HIED's U.S. sales listing,
as submitted to the Department.
These numerous inconsistencies and delays, and the unavailability
of documentation, taken together, constitute a verification failure
under section 776(a)(2)(D) of the Act. Thus, we have determined that
HIED failed to report sales it made to the United States. The
Department has, therefore, determined that, because HIED's reported
sales data could not be verified and, generally, the credibility of the
information contained in HIED's questionnaire responses could not be
established, section 776(a) of the Act requires the Department to
disregard HIED's questionnaire responses and apply facts available.
2. Use of Adverse Facts Available
In selecting from among the facts available, section 776(b) of the
Act authorizes the Department to use an adverse inference if the
Department finds that a party has failed to cooperate by not acting to
the best of its ability to comply with requests for information. See
Statement of Administrative Action (SAA), H.R. Doc. 316, Vol. 1, 103rd
Cong., 2d sess. 870 at 870 (1994). To examine whether the respondent
``cooperated'' by ``acting to the best of its ability'' under section
776(b) of the Act, the Department considers, inter alia, the accuracy
and completeness of submitted information and whether the respondent
has hindered the calculation of accurate dumping margins. See, e.g.,
Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final
Results of Antidumping Duty Administrative Review, 62 FR 53808, 53819-
53820 (October 16, 1997).
As discussed above, HIED failed to provide much of the
documentation requested by the Verification Team and necessary to
verify HIED's sales. Moreover, various company officials' statements
were contradictory on several points central to a successful
verification. Furthermore, the Department identified unreported sales
of subject merchandise by HIED which the company knew, or should have
known, should have been properly included in the reported U.S. sales
list. Thus, we have determined that HIED withheld information we
requested and significantly impeded the antidumping proceeding.
We find, therefore, that HIED has not acted to the best of its
ability to comply with our requests for information. Accordingly,
consistent with section 776(b) of the Act, we have applied adverse
facts available to this company.
3. Corroboration of Secondary Information
In this review, we are using as adverse facts available the PRC-
wide rate (143.32 percent) determined for non-responding exporters
involved in the LTFV Investigation. This margin represents the highest
margin in the petition, as modified by the Department for the purposes
of initiation. See Initiation of Antidumping Duty Investigation:
Manganese Metal from the PRC, 59 FR 61869 (December 2, 1994) (LTFV
Initiation).
Information derived from the petition constitutes secondary
information within the meaning of the SAA. See SAA at 870. Section
776(c) of the Act provides that the Department shall, to the extent
practicable, corroborate secondary information from independent sources
reasonably at its disposal. The SAA provides that ``corroborate'' means
that the Department will satisfy itself that the secondary information
to be used has probative value. The SAA at 870, however, states further
that ``the fact that corroboration may not be practicable in a given
circumstance will not prevent the agencies from applying an adverse
inference.'' In addition, the
[[Page 49451]]
SAA, at 869, emphasizes that the Department need not prove that the
facts available are the best alternative information.
To corroborate secondary information, to the extent practicable the
Department will examine the reliability and relevance of the
information to be used. To examine the reliability of margins in the
petition, we examine whether, based on available evidence, those
margins reasonably reflect a level of dumping that may have occurred
during the period of investigation by any firm, including those that
did not provide us with usable information. This generally consists of
examining, to the extent practicable, whether the significant elements
used to derive the petition margins, or the resulting margins, are
supported by independent sources. With respect to the relevance aspect
of corroboration, the Department will consider information reasonably
at its disposal as to whether there are circumstances that would render
a margin not relevant. Where circumstances indicate that the selected
margin may not be relevant, the Department will attempt to find a more
appropriate basis for facts available. See, e.g., Fresh Cut Flowers
from Mexico; Final Results of Antidumping Duty Administrative Review,
61 FR 6812, 6814 (February 22, 1996) (where the Department disregarded
the highest margin as best information available because the margin was
based on another company's uncharacteristic business expense resulting
in an unusually high margin).
For the initiation of the investigation, based on an analysis of
the petition and a subsequent supplement to the petition, the
Department modified the dumping margin contained in the petition. See
LTFV Initiation at 61870. In the petition, the U.S. price was based on
price quotations obtained for manganese metal from the PRC during
December 1993 through May 1994. The factors of production were valued,
where possible, using publicly available published information for
India. Where Indian values were not available, the petitioners used
data based on their own costs. For the initiation, however, the
Department disallowed all factors valued by using the petitioners' own
costs. Instead, we recalculated factory overhead and depreciation
expenses using the statistics in the Reserve Bank of India Bulletin
(December 1992), a publicly available and independent source used in
other investigations of imports from the PRC. We also recalculated the
valuation of several process chemicals using data from the independent
source Chemical Marketing Reporter. Furthermore, we revalued
electricity costs using World Bank data on electricity rates for
industrial users in Indonesia, an appropriate surrogate country at a
comparable level of economic development to the PRC.
We find, therefore, for the purpose of these final results that the
PRC-wide margin established in the LTFV Investigation is reliable. As
there is no information on the record of this review that demonstrates
that the rate selected is not an appropriate adverse facts available
rate for HIED, we determine that this rate has probative value and,
therefore, is an appropriate basis for facts otherwise available.
Analysis of Comments Received
We received comments from interested parties regarding the
following general topics: (1) The use of facts available, (2) the
appropriate rate for resellers, and (3) the valuation of factors of
production and the by-product credit. Summaries of the comments and
rebuttals, as well as the Department's responses to the comments, are
included below.
1. Use of Facts Otherwise Available
Comment 1: The petitioners argue that the Department, consistent
with its established practice regarding respondents who have failed to
report a significant portion of their U.S. sales, should apply total
adverse facts available to all customs entries indicating HIED or
CMIECHN/CNIECHN as the manufacturer/exporter. As a basis for this
adverse facts available finding, the petitioners note that customs
entry documentation and port arrival data indicate that there were
several more entries from these exporters than their reported U.S.
sales. None of the record information or arguments submitted by the
respondents, the petitioners maintain, adequately accounts for these
additional entries which the respondents claim not to have made.
First, argue the petitioners, the respondents have not sufficiently
substantiated their allegations that these additional entries represent
customs fraud. Minor differences in the appearance of the sales
documents of an exporter are not uncommon, and do not establish one
document form as authentic and the other fraudulent.
Second, the petitioners continue, even if these additional,
disputed entries do represent legitimate sales by the respondents to
intermediary resellers, who then resold the merchandise to the United
States, these sales might still be U.S. sales for the purposes of this
review if the respondents had knowledge of the ultimate U.S.
destination of the sales.
The petitioners further argue that the Department encountered major
problems at the verification of HIED and CMIECHN/CNIECHN and,
therefore, was unable to verify the completeness of these respondents'
sales reporting. In particular, the verification of CMIECHN/CNIECHN's
total sales was dependent on the respondent's consistent use of its
invoice numbering system. The petitioners note that the invoice numbers
on many of the disputed CMIECHN/CNIECHN entries were not consistent
with this numbering system. Moreover, although the Department examined
at verification all of CMIECHN/CNIECHN's sales invoices reflecting this
system, the Department could not then trace those invoices to the
company's general accounting records. Therefore, the petitioners
assert, the completeness of CMIECHN/CNIECHN's reporting of total sales
remains unverified.
With regard to HIED, the petitioners note that the Department
applied adverse facts available to this exporter in the preliminary
results based in part on the fact that the Department could not confirm
HIED's sales at verification. There is no new information on the record
since the preliminary results, the petitioners maintain, that would
warrant a change in this decision.
Given the above, in the petitioners' view, the Department cannot
reasonably conclude that the disputed entries do not represent U.S.
sales by the respondents for the purpose of this review. The
Department, therefore, cannot proceed with its intention, as stated in
the preliminary results, of assigning facts available to CMIECHN/
CNIECHN's ``unreported sales'' while applying a calculated margin to
that company's ``reviewed sales.'' The petitioners maintain that the
Department has a longstanding practice of applying facts available to
all of a respondent's sales if a significant portion of those sales are
found to be unreported. Therefore, the petitioners argue, the
Department should apply total adverse facts available to all of
CMIECHN/CNIECHN's sales, ``reported and unreported,'' for these final
results. Likewise, the Department should continue to apply total
adverse facts available to all of HIED's sales.
The respondents counter that there is no credible evidence on the
record that CMIECHN/CNIECHN failed to include a significant portion of
its U.S. sales, that it withheld information, or that it has done
anything wrong in this case. To the contrary, the respondents argue,
CMIECHN/CNIECHN has provided
[[Page 49452]]
accurate and complete information regarding its U.S. sales.
The respondents further note that CMIECHN/CNIECHN's allegations
regarding fraudulent entry data are still under consideration by
Customs. See Customs Data section above. Therefore, until Customs makes
an official determination regarding these allegations, no wrongdoing by
CMIECHN/CNIECHN can be proven, and the petitioners arguments are mere
speculation. CMIECHN/CNIECHN cannot be penalized based on the disputed
customs data, the respondents maintain, if no finding in any fraud
investigation by Customs has been made.
Moreover, the respondents continue, CMIECHN/CNIECHN has cooperated
fully with the Department's requests for information and fully
disclosed the required U.S. sales information. Contrary to the
petitioners' assertion, insist the respondents, at verification the
Department was able to review and trace a variety of records and
documents, none of which indicated unreported sales. The Department has
not found any of the problems initially identified in CMIECHN/CNIECHN's
accounting practices at verification to be evidence of unreported U.S.
sales.
Therefore, the respondents conclude, the Department should continue
to base CMIECHN/CNIECHN's dumping margin on the sales and factors data
submitted by the company. Likewise, the Department should apply a
separate rate to HIED for these final results because HIED has
cooperated with the Department.
Department's Position: We agree with the respondents that adverse
facts available is not the appropriate basis for determining the
dumping margin of CMIECHN/CNIECHN. The petitioners point to the
disputed entries in the customs data and the Department's alleged
inability to verify CMIECHN/CNIECHN's total sales at verification as
support for the use of total adverse facts available. With regard to
the first issue, for the reasons discussed in the Customs Data section
above we have determined that the disputed CMIECHN/CNIECHN entries are
not U.S. sales by CMIECHN/CNIECHN for the purposes of this review.
As to the verification of sales, although the Department
experienced certain difficulties in tracing total sales through
CMIECHN/CNIECHN's accounting system, these difficulties did not
preclude us from verifying the completeness of CMIECHN/CNIECHN's sales
reporting.9 It is true that, due to the nature of CMIECHN/
CNIECHN's methodology for recording sales, the company's accounting
records cannot be fully relied upon to confirm sales made during the
POR. However, for the purposes of conducting an antidumping review the
Department does not require that responding companies adopt a specific
accounting methodology. The Department recognizes that while some
companies maintain more sophisticated records including audited
financial statements, other companies have more rudimentary record-
keeping systems and may lack audited financial statements. In these
cases, the Department attempts to use other reasonable methods of
verifying the respondents' data.
---------------------------------------------------------------------------
\9\ For a detailed account of the Department's verification at
CMIECHN/CNIECHN, see Memorandum to the Case File; Results of
Verification of CMIECHN/CNIECHN (October 14, 1998), a public version
of which is available in room B-099 of the Department's main
building.
---------------------------------------------------------------------------
Therefore, in the case of CMIECHN/CNIECHN, because sales were not
necessarily recorded in their accounting system in a consistent manner,
we found other means at verification of confirming that no POR
manganese metal sales were unreported. For instance, relying on the
accuracy of the company's invoicing system, we reviewed in sequential
order the commercial invoices for sales of all products by CMIECHN/
CNIECHN. In this process, we did not identify any evidence of
unreported sales.
The petitioners contend that because there were no means of
confirming the accuracy and consistency of this invoicing system, the
Department cannot rely on this system to verify sales. Apart from the
allegedly-forged commercial invoices for the disputed entries, however,
we found no inconsistencies or inaccuracies in CMIECHN/CNIECHN's
application of its system of assigning numbers to its commercial
invoices. We therefore find that it is reasonable to rely on this
system as one means of establishing the completeness and accuracy of
CMIECHN/CNIECHN reported U.S. sales.
With regard to HIED, we agree with the petitioners that continued
use of adverse facts available in these final results is warranted. No
significant new information has become available since the preliminary
results that would lead us to reconsider this position. In response to
the respondents' argument that the Department should apply a separate
rate to HIED for these final results because HIED has cooperated with
the Department, we note that the rate we have found for HIED is a
separate rate based on facts available. Moreover, for the reasons
enumerated in the Facts Available section above, we find that HIED has
not fully cooperated with the Department in this review.
2. Appropriate Rate for Resellers
Comment 2: During the POR, SCL imported into the United States
subject merchandise which it had purchased from CMIECHN/
CNIECHN.10 SCL entered its appearance in this review
subsequent to the preliminary results and submitted, along with its
case brief, sales documentation for all of its POR entries. SCL argues
that it was necessary to become a party to this proceeding in order to
object to the change in practice, as first articulated in the
preliminary results, in the Department's treatment of third country
exporters of subject merchandise. SCL argues that this change is an
abuse of the Department's discretion and is contrary to law, for the
following reasons.
---------------------------------------------------------------------------
\10\ SCL was both the foreign exporter and the U.S. importer of
record for its entries of subject merchandise.
---------------------------------------------------------------------------
First, SCL states that the Department's established policy is to
assign a third-country exporter of subject merchandise the specific
rate applicable to its supplier of subject merchandise in instances
where the third-country exporter has not been named in a request for
review, has not received a questionnaire from the Department, and where
no allegation of middleman dumping has been made. SCL maintains that it
is clear from the facts of this case that SCL meets these criteria and
is, therefore, entitled to CMIECHN/CNIECHN's reviewed rate.
Second, the Department cannot, SCL argues, draw the adverse
inference that all of the disputed entries not reported directly by
CMIECHN/CNIECHN are not genuine sales of CMIECHN/CNIECHN-supplied
material. To do so would be to treat SCL, a legitimate reseller of
CMIECHN/CNIECHN-supplied material, the same as an unscrupulous importer
committing customs fraud. In entering its merchandise under CMIECHN/
CNIECHN's cash deposit rate, SCL maintains, it was not acting
fraudulently but was merely acting according to its understanding of
the Department's practice concerning resellers of PRC material.
Third, SCL notes that 19 U.S.C. 1675(a)(2)(B) (section 751(a)(2)(B)
of the Act) provides for ``new shipper reviews'' in instances where the
Department receives a request for review from a producer or exporter
who did not export, during the period of
[[Page 49453]]
investigation, the merchandise subject to the antidumping duty order.
However, SCL argues, it was not eligible for a new shipper review given
that its supplier CMIECHN/CNIECHN had previously exported merchandise
subject to the dumping order.
Fourth, SCL argues that the PRC-wide rate which the Department
preliminarily determined to apply to all of the disputed CMIECHN/
CNIECHN entries was originally calculated in the LTFV Investigation
based on adverse best information available because some PRC suppliers
in the investigation refused to respond to the Department's
questionnaire. This adverse best information available (BIA) rate was
imposed prior to the URAA. The current review, however, is subject to
the URAA amendments to the Act. Under the amended Act, SCL continues,
the Department can only apply facts otherwise available (formerly BIA)
where an interested party withholds information, fails to provide the
information in the form or manner requested by the Department, impedes
the proceeding, or provides information which cannot be verified. None
of these criteria apply to the actions of SCL. Moreover, the Department
cannot apply inferences adverse to SCL because SCL has never failed to
cooperate with the Department but, rather, has acted to the best of its
ability by providing its sales documents along with its case brief as
soon as it was made aware in the preliminary results of the
Department's intended change in practice regarding resellers.
Based on the above, SCL argues that the Department should not
liquidate SCL's entries at the PRC-wide rate, as envisioned in the
preliminary results, but instead adopt one of the following alternative
approaches. First, the Department could initiate a changed
circumstances review in order to determine the extent of third-country
sales of CMIECHN/CNIECHN merchandise and the identity of the third-
country resellers. Under this approach, SCL argues, SCL would be given
the opportunity to establish that CMIECHN/CNIECHN supplied SCL's
merchandise and that the sales were not made below normal value.
A second alternative approach suggested by SCL would be to assess
CMIECHN/CNIECHN's calculated rate on all direct or indirect sales to
the United States of CMIECHN/CNIECHN material. The Department would
accept SCL's factual information (submitted after the preliminary
results) and then verify SCL's sales data to confirm that the
merchandise was originally sourced from CMIECHN/CNIECHN.
A final alternative proposed by SCL would be to calculate a new
rate specific to SCL based, not on adverse facts available, but on
SCL's reported U.S. sales prices.
The petitioners argue that, according to SCL's own admission, SCL,
not CMIECHN/CNIECHN, was the party with the knowledge of the U.S.
destination of the merchandise entered by SCL. Thus, the petitioners
contend, SCL is the exporter for the purposes of the antidumping law.
Furthermore, the petitioners assert, the statute clearly requires the
Department to assess antidumping duties on entries at the margin of
dumping on those entries. Therefore, CMIECHN/CNIECHN's assessment rate
cannot be applied to entries of merchandise exported by SCL given that
the calculation of CMIECHN/CNIECHN's rate does not take into account
the prices of sales from SCL to its unrelated U.S. customers.
The petitioners further maintain that if the Department finds that
CMIECHN/CNIECHN, not SCL, is the exporter of these entries, then the
Department must conclude that CMIECHN/CNIECHN failed to report a
significant volume of U.S. sales to SCL. Therefore, the Department
would have to apply the 143.32 percent facts available rate to all
entries corresponding to CMIECHN/CNIECHN sales.
If the Department concludes that SCL is the exporter of these POR
entries, then SCL was required to request an administrative review to
obtain an assessment rate for those entries different from the PRC-wide
rate. The petitioners argue that even if SCL was not the exporter of
the merchandise and, therefore, could not request a new shipper review,
SCL could nevertheless have requested an administrative review as the
U.S. importer. The petitioners continue that the Department cannot now
calculate a margin for SCL after the preliminary results when the
company failed to request in a timely manner a review of its POR
entries.
Finally, the petitioners contend, the Department could apply the
PRC-wide rate to SCL even if that rate was based on BIA (or facts
available) because in other proceedings the courts have upheld the
Department's application of a BIA-based PRC-wide rate to parties that
failed to request administrative reviews.
Department's Position: We agree with SCL that it's been the
Department's established practice to assign to the entries of non-PRC
exporters of subject merchandise from the PRC the rate applicable to
the PRC supplier of that exporter. See e.g., Manganese Metal from the
People's Republic of China; Amended Final Results of Antidumping Duty
Administrative Review, 64 FR 7624, 7626 (February 16, 1999); Fresh
Garlic from the PRC; Final Results of Antidumping Duty Administrative
Review and Partial Termination of Administrative Review, 62 FR 23758,
23760; Sparklers from the PRC; Final Results of Antidumping Duty
Administrative Review, 61 FR 39630, 39631.
The assessment language in the preliminary results was premised on
the information on the record at the time. Prior to the preliminary
results, much of the available information and argument centered on the
possibility of unreported sales by CMIECHN/CNIECHN and potential fraud
on the part of U.S. importers. At that point, SCL had not entered an
appearance as an interested party. Recognizing the potential need for
additional information, in the notice of our preliminary results we
stated that we would reconsider, in the final results, our preliminary
determination that CMIECHN/CNIECHN was not the exporter of these
disputed entries in the event that ``any substantive new information on
the matter, including any potential determination by the Customs
Service regarding alleged customs fraud, becomes available.'' 64 FR at
10988.
Since we issued the preliminary results, substantial new
information has become available that has clarified the status of SCL
as a reseller. This new information includes, inter alia, SCL's sales
documentation tracing its purchases of manganese metal from CMIECHN/
CNIECHN and the subsequent resale of this subject merchandise into the
United States. Our subsequent verification of SCL's documents further
confirmed SCL's position as a third-country reseller of merchandise
supplied by CMIECHN/CNIECHN. The SCL verification also further
confirmed that, at the time of the sales transactions, CMIECHN/CNIECHN
was not aware of the ultimate U.S. destination of the merchandise it
sold to SCL. Moreover, the additional customs documentation which the
Department obtained only after the preliminary results were issued
played an important part in differentiating the disputed CMIECHN/
CNIECHN entries that represented sales by the reseller SCL from those
disputed entries for which customs fraud has been alleged. See Customs
Data section above.
We took the unusual step in this review of accepting substantial
new information onto the record from an interested party which entered
its appearance only after the preliminary
[[Page 49454]]
results were issued. However, the facts and circumstances of this
review, particularly as they relate to the customs data and alleged
customs fraud, are themselves highly unusual. Moreover, these final
results were postponed in part to develop an adequate record on which
to make a determination with respect to SCL, and to give all parties
sufficient time to analyze and comment on the additional information
the Department has collected since the preliminary results. Therefore,
the interests of no party have been prejudiced by this unusual step.
For all the above reasons, we find that the PRC-wide rate is not
the rate applicable to SCL's POR entries and that SCL, as a third-
country reseller, was entitled to enter the subject merchandise under
CMIECHN/CNIECHN's cash deposit rate.
3. Valuation of Factors of Production
(a) Ore Valuation
Comment 3: In the preliminary results, to value the respondents'
``ore 1'' we used a June 1998 price quotation for carbonate manganese
ore obtained by the respondents from a Brazilian manganese ore mine.
The petitioners argue that this was an inappropriate surrogate value
given that, according to information on the record provided by the
petitioners, the Brazilian ore producer had ceased mining operations by
1998 and was only selling from its remaining small stock, consisting of
off-specification ore, at the time of the price quote. According to the
petitioners, companies in the process of closing down operations often
reduce their prices below normal market levels and, therefore, this
price quotation is not representative of a commercial value for the
ore. The petitioners further note that the U.S. manganese importer to
whom the ore price quotation was addressed (and from whom the
respondents obtained the price information) has otherwise been
implicated in this review in the respondents' fraud allegation. The
Department cannot, the petitioners assert, rely on this price quotation
as though it were obtained from a party whose information can be relied
upon as truthfully presented and obtained in good faith. There is,
finally, no compelling reason to rely on this price quotation given
that, according to the petitioners, there are other reasonable
surrogate ore values on the record, including the value the Department
used in the First Review Results.11
---------------------------------------------------------------------------
\11\ In the first administrative review of this proceeding, the
Department used as a surrogate value for ore 1 a 1993 price
quotation for the same basic grade of ore from the same Brazilian
mine.
---------------------------------------------------------------------------
The respondents counter by noting, first, that the price quotation
from the Brazilian ore producer included the full specifications for
the type of ore being offered; based on the chemical content listed,
there is no reason to believe that the price quoted was for off-grade
ore. Second, the respondents note that the price quotation originated
from the Brazilian ore producer, not the U.S. importer to whom the
quotation was addressed. In lieu of any indication or allegation that
the document itself was fraudulent, the respondents argue, there is no
reason to reject the price quotation as inaccurate or unreliable merely
because it was addressed to an importer allegedly committing customs
fraud. Finally, the respondents contend, this price quotation
represents the best ore surrogate value because it is the most current
information available and because it pertains to an ore type most
similar to that used by the PRC manganese metal producers.
Department's Position: We agree with the respondents that the 1998
Brazilian ore price quotation represents the best ore surrogate
information available on the record. To start, we note that the ore
price quotation originated with the Brazilian ore producer in question,
whereas the seemingly contrary information was provided by the
petitioners' researcher. In light of other information regarding this
surrogate value, we cannot conclude that commercial sales did not exist
during the POR simply because the petitioners' researcher could not
obtain information on commercial prices from the ore producer's
management.
Next, we note that the ore grade's chemical composition and
physical properties listed in the 1998 price quote, with the exception
of the moisture content, were provided at a level of detail and
specificity greater than that of the 1993 price quote, the suggested
surrogate of the petitioners. The petitioners are correct in that the
ore specifications listed (in either the 1993 or the 1998 quote) do not
account for 100 percent of the ore's chemical content. However, based
on the criteria established on the record of this and previous segments
of this proceeding, we find the level of specification and detail, with
regard to the ore's primary physical and chemical properties, to be
sufficient for determining the quotation's suitability as a surrogate
value.12
---------------------------------------------------------------------------
\12\ The suitability of alternative ore surrogate values was a
particularly contentious and closely examined issue in the
investigation and first administrative review segments of this
proceeding. The Department has, therefore, accumulated extensive
expertise in considering the physical and chemical properties of
manganese ore, one of the most significant inputs in the subject
merchandise. See LTFV Investigation and First Review Results.
---------------------------------------------------------------------------
Moreover, given that the specifications stated for the 1998 price
quotation were essentially the same as those for the 1993 price
quotation (which was, undisputably, for a commercial grade ore), it
would seem likely that the ore producer, a long-established seller of
ore on the world market, would clearly indicate in the 1998 quotation
that the ore grade on offer was not of commercial quality, if that were
the case. There is nothing in the 1998 price quote, however, indicating
that the merchandise on offer is not of normal commercial grade. Also,
contrary to the information provided by the petitioners' researcher
that ``the remaining inventories of 1998 refers to the cleaning of
stocks, with very low quantity * * *'' the quoted 1998 price is for a
quantity of 35,000 to 44,000 metric tons, an amount which would
generally be considered commercial. Additionally, despite the
petitioners' general assertion to the contrary, there is no evidence on
the record to suggest that in 1998 the Brazilian mine sold its ore at a
discount merely because it was in the process of closing down its
mining operations.
Furthermore, we reject the petitioners' argument that we should not
utilize information that was sent to a company accused by parties in
this case of customs fraud. The price quotation was generated by the
Brazilian producer and there is no evidence indicating that the
producer was involved in any fraudulent activity.
Despite the petitioners' argument that there is no compelling
reason to use the 1998 price quotation because there are other
reasonable ore surrogate values on the record, we find that the 1998
price quotation represents the best ore 1 surrogate available. As
discussed in the Factors of Production Valuation section above, where
we could not identify an appropriate POR-representative surrogate
value, we selected a value, in accordance with the normal surrogate
criteria, which was the closest in time to the POR. In the first
administrative review of this proceeding, we selected the ore grade
from the Brazilian producer because among all the available ore
surrogates, it best fulfilled the standard criteria for surrogate
selection. However, because the 1993 price quotation was not
contemporaneous with the first review POR, we adjusted the quoted price
to reflect movement in manganese ore
[[Page 49455]]
prices in the intervening years. Using the 1993 price quotation in the
current administrative review, however, would require a time-adjustment
spanning roughly four years. Given that the 1998 price quotation is
dated only four months after the POR, consistent with the Department's
established methodology we have used the more contemporaneous 1998
value.
(b) Electricity Valuation
Comment 4: To value electricity in the preliminary results, we used
the average electricity rate for large industrial electricity users in
India as of March 1, 1995, inflated to the POR using the Indian WPI.
Subsequent to the preliminary results, the petitioners submitted an
Indian WPI that was specific to the electricity industry. The
petitioners argue that the general Indian WPI used in the preliminary
results reflects changes in the price of a wide variety of goods across
the full spectrum of the Indian economy. In contrast, the electricity-
specific WPI reflects more accurately the movement in Indian
electricity prices in particular. Given the Department's practice of
selecting surrogates that correspond as closely as possible to the
inputs used by the respondents, the petitioners argue, the Department
should inflate the 1995 electricity rate by the electricity-specific
WPI to derive an electricity surrogate value that is contemporaneous
with the POR.
The respondents counter that, consistent with the calculations
performed in previous segments of this proceeding, the Department
should continue using the general Indian WPI to inflate the 1995
electricity rate. The respondents further note that the Department has
never used in any case before the electricity-specific WPI submitted by
the petitioners.
Department's Position: We have continued to use the general WPI to
inflate the 1995 Indian electricity rate. The petitioners are correct
in stating that it is the Department's general practice to use
surrogate information as specific as possible to the input and industry
in question. Thus, we considered very carefully the electricity-
specific WPI that the petitioners submitted. Given that the Department
has not examined this information in prior proceedings, and given that
the publisher of this data appears to be a private research
organization rather than a government agency, we attempted to analyze
the methodology used to collect, synthesize and report this
data.13 We found, however, that there was insufficient
information on the record to confirm the accuracy, objectivity, and
breadth of coverage (i.e., the extent to which the electricity data
reflects price trends throughout all of India) of the data presented.
---------------------------------------------------------------------------
\13\ See Memorandum to the Case File from Andrew Covington;
Research into Center for Monitoring Indian Economy (August 31,
1999), a copy of which is available in the Department's Central
Records Unit.
---------------------------------------------------------------------------
Therefore, considering the uncertainty surrounding this data, we
find that the continued use of the general Indian WPI, as published in
the International Financial Statistics and as used by the Department
for factors of production surrogates in numerous prior PRC cases, is
more appropriate for purposes of this administrative review.
(c) Chemical Valuation
Comment 5: The respondents argue that the Department incorrectly
calculated the tax-exclusive price for sulphuric acid. The respondents
claim that Indian excise and sales taxes are assessed sequentially, a
fact the Department has acknowledged in other cases, and that this
should be accounted for in the calculation of tax-exclusive prices for
this chemical.
Moreover, the respondents argue that we did not properly exclude
the non-market economy imports from the Import Statistics used to value
liquid ammonium. The respondents point to other cases where the
Department has explicitly excluded the imports of these countries when
deriving surrogate values.
The petitioners have no comment.
Department's Position: We agree with the respondents that our
calculation for excluding taxes from the sulphuric acid surrogate value
was incorrect in our preliminary results. For these final results, we
have corrected this calculation so that it is consistent with the
Department's established formula for deriving tax-exclusive Indian
surrogate values, as articulated in Chrome Plated Lug Nuts from the
People's Republic of China; Final Results of Antidumping Duty
Administrative Review, 63 FR 53872, 53874 (October 7, 1998).
Likewise, the respondents are correct regarding our practice of
excluding non-market economy imports from the trade data used as
surrogate values. We have revised our liquid ammonium surrogate value
in these final results accordingly.
Comment 6: In our preliminary results, we valued selenium dioxide
using a 1998 price quotation from an Indian selenium manufacturer. The
respondents argue that we should use the Indian import statistics they
submitted to value the input because the import statistics are
publicly-available published information.
The petitioners argue that the Department used the correct
surrogate value in the preliminary results. The value in the Indian
import statistics is for selenium, the petitioners note, whereas the
manufacturer's price quotation is for selenium dioxide, the input
actually used by the respondents.
Department's Position: We agree with the petitioners that the 1998
price quotation used in our preliminary results is the best available
surrogate value because it is for the actual chemical used by the
respondents. The value in the Import Statistics preferred by the
respondents is for selenium, not selenium dioxide.
Moreover, the regulations at section 351.408(c)(1) state that the
Department ``will normally use publicly available information to value
factors.'' In prior segments of this proceeding, as well as in numerous
other proceedings, the Department has used price quotations to value
production factors. As discussed above, for instance, we have used a
price quotation submitted by the respondents to value ore 1 in these
final results. See Normal Value section above. We, therefore, have
continued to value selenium dioxide in these final results using this
price quotation.
Comment 7: The respondents argue that the Department misunderstood
the information they submitted regarding the concentration of the SDD
chemical used in the production of the respondents' merchandise. In the
preliminary results, the Department used a price quotation from an
Indian chemicals producer for SDD with a 40 percent purity. We then
adjusted this price to account for the fact that the reported purity of
the SDD actually used by the respondents was significantly different.
The respondents claim that all standard SDD has a purity level of 40
percent, and that the respondents' reported purity level should be
interpreted as a percentage of the 40 percent.
The petitioners counter that the information on which the
respondents base their arguments was first submitted on the record by
the respondents with their case brief, well after the deadline for new
factual information. Moreover, the petitioners continue, it is not
clear that the information in the affidavit, provided by the
respondents in support of their argument, pertains to the type of SDD
used by the PRC manganese metal producers. Nor does it appear, the
petitioners note, that the manganese
[[Page 49456]]
metal producer certified these facts supplied by the respondent.
Department's Position: We have not revised our adjustment to the
SDD surrogate value for these final results. In the Department's June
12, 1998 initial questionnaire, we asked the respondents' to report
``the chemical composition/purity for each raw material input * * *''
and, in our subsequent August 21, 1998 supplemental questionnaire we
asked them to confirm the correct composition of their SDD input. In
our preliminary results, we used the purity level as reported and
confirmed by the respondents.
Although the respondents had ample opportunity to clarify or revise
any misleading or incorrect information in their responses within the
regulatory deadlines for factual information, it was not until their
April 16, 1999 case brief that the respondents submitted additional
factual information regarding purported standard purity levels for this
chemical. In a May 18, 1999 letter to the respondents' counsel, the
Department informed the respondents that this portion of the case brief
contained untimely filed, new factual information which would be
removed from the record of this review.
Therefore, for these final results, we have continued to adjust the
SDD surrogate value to reflect the SDD purity level as reported in the
respondents' questionnaire and supplemental responses.
(d) Overhead, SG&A and Profit
Comment 8: The respondents argue that the Department should include
the labor and labor benefit items, such as the ``Provident Fund'' and
``Employees Welfare Expense,'' in the cost of manufacture before
calculation of overhead, SG&A and profit ratios. The respondents cite
an accounting textbook that states that, ``* * * a labor-intensive
firm--a firm whose operations are performed manually and only
incidentally by machines--should use a labor-oriented base * * *'' in
making labor-exclusive overhead allocations.'' Citing several past
cases, the respondents claim further that the standard Department
practice is to include such expenses in the COM for determining the
overhead, SG&A and profit ratios.
Furthermore, the respondents argue that the fact that the
Department adopted an approach similar to that used in the preliminary
results in calculating labor-exclusive overhead and SG&A ratios in
TRBs-10 \14\ is irrelevant to this proceeding because the surrogate
values used in TRBs-10 were from a different source and because the
methodology in TRBs-10 was an exception to the Department's normal
practice.
---------------------------------------------------------------------------
\14\ Tapered Roller Bearing and Parts Thereof, Finished and
Unfinished, from the People's Republic of China: Final Results of
1996-97 Antidumping Duty Administrative Review and Determination Not
to Revoke Order in Part, 63 FR 63842 (November 17, 1998) (TRBs-10).
---------------------------------------------------------------------------
The petitioners counter by first noting that, contrary to the
respondents' assertion, the Department did include labor costs in its
calculation of a surrogate profit percentage. The petitioners continue
by stating that it was appropriate for the Department to exclude all
labor from the calculation of overhead and SG&A surrogate percentages
because the Department separately had valued all labor, including
direct and indirect factory labor and SG&A labor. Had the Department
not excluded all labor from the numerator and denominator in
calculating factory overhead and SG&A expense ratios, certain labor
costs would have been double-counted. Rather, the Department's approach
in the preliminary results was consistently applied and appropriate
given the level of detail on the record of the respondents' reported
labor costs.
Moreover, continue the petitioners, the respondents' quotation from
the accounting text is irrelevant in this instance. In looking at the
context of the quotation, the petitioners argue that the text deals
with the cost-accounting issue of allocation of factory overhead costs
among multiple products. Given that this review involves non-market
economy producers, producers costs are irrelevant and no allocation
among different products is being made.
Finally, the petitioners argue, the overhead and SG&A ratios in
this case are based on Indian, and not PRC, production experience.
Although the amount of labor hours incurred in different countries in
the production of a unit of given merchandise may vary significantly,
the amounts of raw materials and energy consumed per unit of output is
generally more uniform. Therefore, the petitioners claim that it is
appropriate to use a labor-exclusive basis for calculating the
surrogate overhead and SG&A percentages in one country that will be
used to derive production costs in a different country.
Department's Position: We believe that the calculation of labor-
exclusive surrogate overhead and SG&A percentages is appropriate and
reasonable. To start, we note that our calculation of the profit
surrogate ratio fully includes all labor costs in the numerator and
denominator. We have excluded all labor costs from our calculation of
overhead and SG&A ratios, however, to increase the accuracy and
specificity of our valuation of the respondents' costs of production.
In particular, we have the somewhat unusual benefit in this case of
having reported total unit labor inputs (broken down into direct,
factory overhead and SG&A labor categories). We therefore have valued
the total unit labor costs of the PRC producers by multiplying the
total unit labor inputs by the surrogate wage rate. In many past cases,
only direct labor was reported and, therefore, overhead and SG&A labor
was subsumed within the general surrogate percentages for the overhead
and SG&A cost categories.
Given that we are valuing overhead and SG&A labor directly based on
the respondents' reported factors, we have excluded all labor (from
both the numerator and denominator) in calculating surrogate ratios for
the remaining overhead and SG&A costs. Likewise, we have excluded all
labor components from the respondents' direct inputs cost base to which
we apply these labor-exclusive surrogate overhead and SG&A ratios. As
the petitioners point out, failure to do so would in this case
overstate the respondents' total labor costs.
Turning to the respondents' other points, the passage in the
accounting text cited by the respondents does not necessarily pertain
to the facts of this case. First, it does not appear that the
respondents' producer is a labor-intensive firm, ``whose operations are
performed manually and only incidentally by machines.'' To the
contrary, based on reported and verified information, the manufacture
of manganese metal is technologically sophisticated, involving advanced
equipment and machinery to support complex chemical and electrolytic
processes. Labor, therefore, would not appear to be the central input
driving the overhead and SG&A cost structure of the producer.
Moreover, we agree with the petitioners' argument that the cited
passage is referring to the allocation of factory overhead costs among
multiple products. The issue at hand, however, is the appropriate means
of estimating the costs of certain producers (the PRC manganese metal
manufacturers) based on the relative size of certain costs to the total
cost structure of other producers (Indian chemicals and metals
manufacturers).
[[Page 49457]]
Furthermore, it is true that the overhead and SG&A ratios in TRBs-
10 were based on the reported costs of particular Indian TRBs producers
whereas the overhead and SG&A surrogates in this review are based on
the aggregated data of Indian chemicals and metals producers generally
as published by the Reserve Bank of India. It is important to note,
first, that these two sources are not that dissimilar given that the
aggregate data presumably incorporates the experiences of individual
producers. Any differences between the surrogates, however, are beside
the point. Whether or not to exclude labor in deriving overhead and
SG&A ratios is a methodological issue specific to each case which
depends on whether and to what extent the Department must adjust and
manipulate the surrogate data to derive cost estimates that best
reflect the production costs in the respondents' country.
Therefore, for the reasons above, we have continued to derive
labor-exclusive overhead and SG&A surrogate ratios for these final
results.
Comment 9: To value the respondents' factory overhead, SG&A and
profit in the preliminary results, we calculated surrogate ratios based
on financial data reported in the Reserve Bank of India Bulletin (RBI
Data). Subsequent to the preliminary results, the petitioners submitted
data published by the Center for Monitoring Indian Economy (CMIE Data)
regarding factory overhead, SG&A and profit of Indian nonferrous metals
producers. The petitioners argue that we should use the CMIE Data to
value these costs because the Department's established practice is to
base surrogates upon the industry experience closest to the producer
under investigation. The petitioners suggest that the CMIE Data which
is specific to Indian nonferrous metals producers is more
representative of manganese metal manufacture than the RBI data, which
more broadly encompasses the ``processing and manufacture'' of
``metals, chemicals and products thereof.''
Moreover, the petitioners continue, the RBI Data pertains to the
period 1992-93, whereas the CMIE Data reports financial information for
1996-97 and is, therefore, more contemporaneous with the POR. The
petitioners thus conclude that the CMIE Data is a more appropriate
basis for deriving surrogate ratios for overhead, SG&A and profit.
The respondents disagree that the CMIE Data is the most appropriate
surrogate source for these expenses for several reasons. First, this
source has never been used by the Department in other PRC cases to
value these expenses whereas the Department has relied upon the RBI
Data as a basis for valuing overhead, SG&A and profit. To support this
contention, the respondents cite to several past proceedings and note
that, in several cases, the surrogates in earlier segments were based
on other sources but that in the more recent segments of those
proceedings the Department relied on the RBI Data.
The respondents also maintain that, contrary to the claims of the
petitioners, the CMIE Data is not specific to nonferrous metals
producers, but rather, according to the notes accompanying the data,
includes information for a wide variety of non-metals related
manufacturers (e.g., food products, fertilizers, chemicals). Moreover,
the respondents continue, this data appears to encompass ``central
government public sector'' companies as well as companies with an
indeterminate volume of sales.
Department's Position: We have continued to use the RBI Data in
these final results to derive surrogate factory overhead, SG&A and
profit ratios. The Department has used this source of data to value
these expenses in all previous segments of this proceeding as well as
in numerous other PRC cases.
The petitioners' proposed data is based on the same source as their
electricity-specific Indian WPI discussed in Comment 4 above. Given
that the Department has not examined this information in prior
proceedings, and given that the publisher of this data appears to be a
private research organization rather than a government agency, we
attempted to analyze the methodology used to collect, synthesize and
report this data. Although we do not necessarily agree with the
inferences regarding industry coverage the respondents draw from CMIE's
notes on its sampling methodologies, we find, nevertheless, that there
is insufficient information on the record to confirm the accuracy,
objectivity, and breadth of coverage (i.e., the extent to which the
data reflects the financial experience of companies across all of
India) of the data presented.
This paucity of background and explanatory information for the CMIE
Data is especially worrisome in light of the fact that, as the
petitioners note, several further adjustments must be made to the
reported data so that it comports with the standard definitions and
methodology underlying the Department's surrogate overhead, SG&A and
profit calculations. For instance, in their proposed calculation of a
factory overhead rate, the petitioners estimated certain expense line
items, which were not reported individually in the CMIE Data, based on
allocation ratios derived from data in a separate publication. Given
that we know so little about how this data is collected, aggregated and
reported, it is not clear that deriving allocation ratios based on the
information in one publication to adjust the data from a different
publication is methodologically correct and reasonable.
Therefore, considering the uncertainty surrounding this data, we
find that the continued use of the RBI Data, as used by the Department
for valuing surrogates in numerous prior PRC cases, is more appropriate
for the purposes of this administrative review.
(e) Freight Valuation
Comment 10: In the preliminary results, we valued inland rail
freight using Indian rail rates reported in an August 13, 1997 ore
price quotation from an Indian manganese mine. The petitioners argue
that manganese metal is packed in drums or closed containers whereas
manganese ore is shipped in open rail cars and, therefore, rates quoted
for ore transportation are not representative of manganese metal
freight costs. Instead, the petitioners contend, the Department should
rely on rates published by the Indian Railway Conference Association
(IRCA), as contained in the petitioners' March 29, 1999 submission.
According to the petitioners, this surrogate source for rail freight
has been used by the Department in several other cases for valuing the
costs of rail transportation of finished metals such as manganese
metal.
The respondents counter \15\ that the petitioners' proposed
surrogate rail rates are inappropriate because (1) they came into
effect only after the POR and (2) the rates do not apply to the
respondents' reported freight distances.
---------------------------------------------------------------------------
\15\ Based on the context of the comment, the respondents appear
to be addressing the petitioners' proposed rail freight although the
actual text of respondents' comment refers to ``truck rates.''
---------------------------------------------------------------------------
Department's Position: We agree with the petitioners that the IRCA
data is a more accurate surrogate source for rail freight. In choosing
among alternative surrogate values, we select the one that, inter alia,
most broadly represents the cost of the input across the surrogate
country. The surrogate rail values used in our preliminary results were
based on the rates offered by one Indian ore producer, whereas the IRCA
data provided by the petitioners represents rates widely available
throughout India, as published with the authority of the central Indian
government.
It is true that, all other things being equal, the Department will
normally
[[Page 49458]]
choose the surrogate value most contemporaneous with the POR. In this
instance, however, the IRCA values came into effect only roughly five
months after the POR. Moreover, although the IRCA data submitted by the
petitioners does not correspond to the reported rail distances for the
respondents' factor inputs, the data does correspond to the distances
reported for the rail transportation of the respondents' end product.
The input freight costs are inconsequential relative to the costs of
transporting inland the manganese metal. We note that the surrogate
value used in the preliminary results and favored here by the
respondents did not directly correspond to the reported transportation
distances of either the input factors or the manufactured manganese
metal.
Finally, we note that the IRCA data has been used in other recent
cases by the Department to value PRC rail freight rates.\16\ Therefore,
weighing all of the above considerations, we find that the IRCA data is
the most appropriate surrogate source for valuing the respondents' rail
freight costs, and have revised the calculations for these final
results accordingly.
---------------------------------------------------------------------------
\16\ See, e.g., TRBs-10.
---------------------------------------------------------------------------
Comment 11: The respondents claim that the Department's decision to
apply facts available to value ocean freight was unreasonable and
ungrounded and that the Department should use CMIECHN/CNIECHN's
reported information to value ocean freight in these final results. The
respondents argue that although the bills of lading reviewed at
verification did not show freight charges, they are otherwise accurate
and complete, and can be tied to CMIECHN/CNIECHN's expense ledgers and
audited financial statements which show the applicable freight charges.
Additionally, the respondents state that it is not reasonable to
disregard CMIECHN/CNIECHN's international freight information on the
basis that the payments for this service were made through a local
Chinese agent. The respondents point out that foreign freight
forwarders must hire local agents to handle billing if that company is
not locally registered. However, if the Department determines that it
should continue to apply facts available for ocean freight, the
respondents argue that it should calculate a more reasonable surrogate
value based on price quotations from a sample of international
forwarding companies.
The petitioners contend that the Department should reject the
respondents' argument because CMIECHN/CNIECHN was unable to support at
verification its claim that it purchased ocean freight services from
market-economy carriers and that there is no evidence that the PRC
companies from which CMIECHN/CNIECHN purchased ocean freight acted
merely as agents for the market-economy carriers, rather than PRC
resellers of ocean freight services.
The petitioners argue, citing to 19 U.S.C. 1673b(c) of the Act,
that the Department cannot use the ocean freight information provided
by the respondents because transactions between NME entities are
presumed to be distorted and unuseable for purposes of calculating a
dumping margin. The petitioners point out that the Department will
normally determine ocean freight using the actual amounts paid by NME
entities to market-economy shippers; however, in situations where the
NME exporter purchased the ocean freight services from an NME entity,
the Department must use a surrogate value. In Saccharin,\17\ note the
petitioners, the Department rejected the use of an actual freight cost,
as directed by the statute, because those costs were purchased from a
domestic supplier in an NME.
---------------------------------------------------------------------------
\17\ Final Determination of Sales at Less Than Fair Value;
Saccharin from the People's Republic of China, 59 FR 58818, 58825
(November 15, 1994).
---------------------------------------------------------------------------
The petitioners further argue that the fact that CMIECHN/CNIECHN
paid rates to NME entities that are well below surrogate rates is
evidence that it did not pay market-determined rates.
Department's Position: We agree with the petitioners that CMIECHN/
CNIECHN was unable to support its claim that it purchased ocean freight
services from market-economy carriers. Furthermore, the respondents
have not supplied evidence that the PRC agents from which CMIECHN/
CNIECHN allegedly purchased ocean freight acted as agents for the
market-economy carriers, rather than as PRC resellers of ocean freight
services. At verification, the Department reviewed ocean freight
documentation for the majority of CMIECHN/CNIECHN's sales. Ultimately
the verification team could not determine that the ocean freight
CMIECHN/CNIECHN reported as supplied by a market-economy carrier was,
in fact, supplied by a market-economy carrier. Furthermore, the bills
of lading did not tie to the other documentation pertaining to the
ocean freight costs nor did they tie to the company's accounting
records. Additionally, there was no evidence that CMIECHN/CNIECHN
purchased ocean freight directly from the market-economy carrier.
Therefore, in these final results the Department has continued to value
CMIECHN/CNIECHN's ocean freight costs using a surrogate freight rate.
With regard to the respondents' arguments regarding which surrogate
value we should use for ocean freight, see the following comment.
Comment 12: The petitioners state that, consistent with the
Department's established practice of using the most specific surrogate
data available, the Department should rely on the ocean freight values
submitted by the petitioners subsequent to the preliminary results,
since these values are both route- and product-specific. The
petitioners contend that the ocean freight surrogates used in the
preliminary results are not as accurate because they are based on
averages of quoted rates to the U.S. east and west coasts freight
rates, taken from TRBs-9 18 and adjusted using the U.S.
producer price index. The petitioners maintain that the freight
quotations they provided are specific to manganese metal and are
specific to the actual routes and destinations, as reported by the
respondents, to which the subject merchandise was shipped.
---------------------------------------------------------------------------
\18\ Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From the People's Republic of China; Preliminary Results
of Antidumping Duty Administrative Review and Partial Termination of
Administrative Review, 62 FR 36764 (July 9, 1997) (TRBs-9).
---------------------------------------------------------------------------
The respondents counter that if the Department uses a surrogate to
value ocean freight in these final results, the Department should
continue to use the surrogate source used in the preliminary results.
The petitioners' preferred surrogate rates, the respondents claim,
should be disregarded as aberrational because these rates increased in
excess of inflation over a three-year period. Furthermore, the
respondents note, the petitioners' rate quotes were in effect only
after the POR. Moreover, the respondents note that the petitioners'
quotations are not publicly available published information.
Department's Position: We have continued to use the surrogate rates
used to value ocean freight in the preliminary results. Although the
petitioners' rates appear to be closer to (though still not
contemporaneous with) the POR than those used in our preliminary
results, the petitioners surrogate information, in its entirety, was
submitted as proprietary data. As stated in the Department's response
above to the comment regarding selenium dioxide surrogate values, the
regulations at section 351.408(c)(1) state that the Department ``will
normally use
[[Page 49459]]
publicly available information to value factors.'' In this instance,
the petitioners' ocean freight rate quotations do not constitute
publicly available information.
Moreover, there is no information on the record that suggests the
rates used in TRBs-9, as supplied by the same shipping company that
supplied the petitioners' rates, are not applicable to the shipment of
manganese metal. Therefore, because the TRBs-9 rates are publicly
available information, and because there is no reason to believe they
are not representative of the costs of shipping manganese metal, we
have continued to use these rates as a surrogate for valuing ocean
freight in these final results.
(f) Packing Material Valuation
Comment 13: The petitioners claim that the Import Statistics used
by the Department as surrogate values for plastic bags and wooden
pallets are based on imports that pre-date the POR. The petitioners
argue that the Department should rely on the data submitted by the
petitioners subsequent to the preliminary results to value plastic bags
and pallets because this import data, for the period June 1997 through
October 1997, is contemporaneous with the POR.
The respondents agree with the Department's choice of surrogates in
the preliminary results for packing materials.
Department's Position: We agree with the petitioners. We have
reviewed the Import Statistics used in the preliminary results to value
plastic bags and wooden pallets and note that, although these Import
Statistics cover Indian imports in general through the initial months
of the POR, there appear not to have been POR imports within the
particular product categories relevant to the packing materials in
question. The more recent Import Statistics submitted by the
petitioners subsequent to the preliminary results, however, report POR
imports for these particular product categories. Therefore, in these
final results we have based our valuation of plastic bags and wooden
pallets on these more recent Import Statistics.
(4) Valuation of By-Product Credit
Comment 14: To value the ``positive mud'' generated as a by-product
in manganese metal manufacture, we have used the 82-84 percent
manganese dioxide ore price published in the Indian Minerals Yearbook
(IMY). The respondents argue that this IMY 82-84 percent ore is an
incorrect surrogate value, for several reasons. First, positive mud is
not an ore, but a by-product resulting from the electrolytic processing
of MnO2 ore. Therefore, the respondents reason, a product resulting
from the transformation of the ore cannot be considered to be the ore
itself. Rather, the resulting product should command a higher price
than the ore. However, the IMY 82-84 percent ore surrogate value the
Department used for positive mud was ``at an almost 100 percent lower
price'' than the surrogate the Department used to value the
respondents' ``ore 2'' input.
According to the respondents, the IMY 82-84 percent manganese
dioxide ore surrogate value is clearly aberrational and should be
disregarded. This finding would be consistent with the Department's
practice in the LTFV Investigation where, according to the respondents,
to value this by-product the Department used manganese dioxide but not
manganese dioxide ore. Therefore, conclude the respondents, in these
final results the Department should use a value for electrolytic
manganese dioxide (EMD) to value positive mud.
The petitioners counter that the IMY 82-84 percent manganese
dioxide ore price used in the preliminary results is a proper
surrogate. The petitioners note that respondents did not provide
detailed information specifying the full metallurgical content of the
positive mud. And, in fact, the only specification the respondents did
provide'the manganese oxide content'was roughly comparable to that of
the IMY 82-84 percent surrogate.
According to the petitioners, the respondents' argument that, based
on reported differences in manganese contents, the value of the
positive mud surrogate value should be almost double the value of the
ore 2 surrogate value, is mistaken and is based on confusion in
understanding the reported metallurgical composition; the content of
the positive mud is stated as a percentage of manganese dioxide whereas
the content of the ore 2 surrogate is stated in terms of manganese
(only). The petitioners state that the IMY 82-84 manganese dioxide ore
is an appropriate surrogate for positive mud precisely because the MnO2
content is the only specification reported by the respondents for the
positive mud. The MnO2 content is known for the 82-84 percent ore but
not known for the ore 2 surrogate value. Using the IMY 82-84 percent
surrogate enables the Department to make the appropriate adjustments to
the surrogate price to reflect the actual MnO2 content of the positive
mud.
Finally, the petitioners conclude, electrolytic manganese dioxide
(EMD) prices should not be used as a surrogate value for positive mud
because EMD is a high-value product used mainly in the production of
dry-cell batteries, and was specifically rejected by the Department as
a surrogate in the first administrative review in this proceeding.
Department's Position: As suggested by the parties' comments, we
have considered this issue in prior segments of this proceeding. As in
the first administrative review, we disagree with the respondents'
contention that the IMY 82-84 percent manganese dioxide ore is an
inappropriate surrogate for valuing positive mud. In the First Review
Results we stated,
The Department disagrees with the respondents' argument for the
use of EMD as a surrogate value. First, the respondents are
incorrect in stating that the Department used for a by-product
surrogate in the LTFV Investigation an Indian import value for
manganese dioxide excluding ores. In the LTFV Final Determination,
the Department used an 82-84 percent MnO2 peroxide ore, as listed in
the 1993 Indian Minerals Yearbook, to value the respondents' by-
product credit. EMD is a very high-valued product used mainly in the
production of dry-cell batteries * * * The respondents have not
sufficiently demonstrated that the PRC by-product is of the same
rigorous specifications as EMD.
The respondents have demonstrated, however, that their by-
product does have some resale value. In lieu of any information on
the Indian value of the actual by-product in question, the
Department is maintaining the methodology used in the LTFV Final
Determination of using for a surrogate the price of high-valued
Indian manganese dioxide ore. (63 FR at 12448).
Moreover, we find the respondents' comparison of the surrogate
value for positive mud with the surrogate value for ore 2 to be
misplaced. The respondents reason that the value of a by-product must
be greater than the value of an input from which the by-product was
generated. However, a by-product (as distinct from a co-product) is
something that is generated incidentally in the course of manufacturing
some primary finished good, in this case manganese metal. The fact that
the respondents' by-product happens to have some residual value does
not require that value to be greater than the value of the ore used in
the manufacturing process.
The respondents imply that our choice of a lower-valued by-product
surrogate suggests value destruction, which occurs when the value of
the inputs is greater than the value of the final product. This is not
the case. The value created in this manufacturing
[[Page 49460]]
process is captured in the price of the primary product--manganese
metal--and is fully recoverable, under normal market conditions, in the
sale of that product. Any value recovered from the sale of the by-
product merely serves to offset the production costs incurred in the
production of the primary product. We, therefore, have not changed our
choice of the positive mud surrogate value for these final results.
Final Results of the Review
We hereby determine that the following weighted-average margins
exist for the period February 1, 1997, through January 31, 1998:
------------------------------------------------------------------------
Margin
Exporter (percent)
------------------------------------------------------------------------
CMIECHN/CNIECHN............................................ 4.30
HIED....................................................... 143.32
------------------------------------------------------------------------
Because we are rescinding the review with respect to CEIEC and
Minmetals, the respective company-specific rates for these exporters
remain unchanged.
Assessment and Cash Deposit Rates
The Department shall determine, and Customs shall assess,
antidumping duties on all appropriate entries. The Department will
issue appraisement instructions directly to Customs.
In order to assess duties on appropriate entries as a result of
this review, we have calculated entry-specific duty assessment rates
based on the ratio of the amount of duty calculated for each of
CMIECHN/CNIECHN's verified sales during the POR to the total entered
value of the corresponding entry. The Department will instruct Customs
to assess these rates only on those entries which correspond to sales
verified by the Department as having been made directly by CMIECHN/
CNIECHN. The Department will also instruct Customs to liquidate all POR
entries by bona fide third-country resellers at rates equal to the cash
deposit rate required at the time of their entry.
On all remaining entries that entered under CMIECHN/CNIECHN's cash
deposit rate, the Department will instruct Customs to assess the PRC-
wide rate of 143.32 percent. The Department will likewise instruct
Customs to assess the facts available rate, also 143.32 percent, on all
POR entries which entered under HIED's cash deposit rate.
Moreover, the following cash deposit requirements will be effective
upon publication of the final results of this administrative review for
all shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date, as
provided for by section 751(a)(1) of the Act: (1) For HIED and CMIECHN/
CNIECHN, the cash deposit rate will be the rates for these firms
established in the final results of this review; (2) for Minmetals and
CEIEC, which we determined to be entitled to a separate rate in the
LTFV Investigation but which did not have shipments or entries to the
United States during the POR, the rates will continue to be 5.88
percent and 11.77 percent, respectively (these are the rates which
currently apply to these companies); (3) for all other PRC exporters,
all of which were found not to be entitled to a separate rate, the cash
deposit rate will continue to be 143.32 percent; and (4) for non-PRC
exporters of subject merchandise from the PRC, the cash deposit rate
will be the rate applicable to the PRC supplier of that exporter. These
deposit requirements, when imposed, shall remain in effect until
publication of the final results of the next administrative review.
This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 351.402(f) 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.
We are issuing and publishing this determination in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: September 7, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-23777 Filed 9-10-99; 8:45 am]
BILLING CODE 3510-DS-P
