[Federal Register Volume 60, Number 184 (Friday, September 22, 1995)]
[Notices]
[Pages 49251-49258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23580]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-803]
Heavy Forged Hand Tools, Finished or Unfinished, With or Without
Handles, from the People's Republic of China; Final Results of
Antidumping Duty Administrative Reviews
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
reviews.
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SUMMARY: On April 20, 1995, the Department of Commerce (the Department)
published the preliminary results of the administrative reviews of the
antidumping duty orders on heavy forged hand tools, finished or
unfinished, with or without handles, (HFHTs) from the People's Republic
of China (PRC). The reviews cover two exporters of the subject
merchandise to the United States and the period February 1, 1992,
through January 31, 1993. We gave interested parties an opportunity to
comment on our preliminary results. Based on our analysis of the
comments received, we have changed the results from those presented in
the preliminary results of reviews.
EFFECTIVE DATE: September 22, 1995.
FOR FURTHER INFORMATION CONTACT: Karin Price or Maureen Flannery,
Office of Antidumping Compliance, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-4733.
SUPPLEMENTARY INFORMATION:
Background
On April 20, 1995, the Department published in the Federal Register
(60 FR 19723) the preliminary results of the administrative reviews of
the antidumping duty orders on HFHTs from the PRC (56 FR 6622, February
19, 1991). The Department has now completed these administrative
reviews in accordance with section 751 of the Tariff Act of 1930, as
amended (the Act).
Applicable Statute and Regulations
Unless otherwise stated, all citations to the statute and to the
Department's regulations are references to the provisions as they
existed on December 31, 1994.
Scope of These Reviews
Imports covered by these reviews are shipments of HFHTs from the
PRC comprising the following classes or kinds of merchandise: (1)
hammers and sledges with heads over 1.5 kg. (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools and wedges
(bars and wedges); (3) picks and mattocks (picks/mattocks); and (4)
axes, adzes and similar hewing tools (axes/adzes).
HFHTs include heads for drilling, hammers, sledges, axes, mauls,
picks, and mattocks, which may or may not be painted, which may or may
not be finished, or which may or may not be imported with handles;
assorted bar products and track tools including wrecking bars, digging
bars and tampers; and steel woodsplitting wedges. HFHTs are
manufactured through a hot forge operation in which steel is sheared to
required length, heated to forging temperature and formed to final
shape on forging equipment using dies specific to the desired product
shape and size. Depending on the product, finishing operations may
include shot blasting, grinding, polishing and painting, and the
insertion of handles for handled products. HFHTs are currently provided
for under the following Harmonized Tariff System (HTS) subheadings:
8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically
excluded are hammers and sledges with heads 1.5 kg. (3.33 pounds) in
weight and under, hoes and rakes, and bars 18 inches in length and
under. Although the HTS subheadings are provided for convenience and
customs purposes, our written description of the scope of these
proceedings is dispositive.
These reviews cover two exporters of HFHTs from the PRC, Fujian
Machinery & Equipment Import & Export Corporation (FMEC) and Shandong
Machinery Import & Export Corporation (SMC). The review period is
February 1, 1992, through January 31, 1993.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received joint comments from FMEC, SMC, and
Olympia Industrial Inc., an importer of the subject merchandise,
(together, respondents), and rebuttal comments from Woodings-Verona
Tool Works, Inc., petitioner. At the request of FMEC, SMC, and
petitioner, a hearing was held on June 7, 1995.
Comment 1: Respondents argue that the Indian import statistics for
the period April-December 1992, which the Department used to value
direct materials and packing materials for the preliminary results of
these reviews, are aberrational and should largely be rejected.
Respondents contend that the aberrations in the surrogate values result
from the fact that basket categories were used to value the factor
inputs, that the imports sometimes reflected small import quantities,
and that the import statistics have deviant values. They argue that
other sources for surrogate values should be considered.
According to respondents, although the Department's first choice
for publicly available published information (PAPI) is import
statistics, as import prices theoretically represent the price paid by
producers in the surrogate country, the Department has in past cases
abandoned its reliance on import statistics and PAPI from the primary
surrogate country when they are aberrational and do not fairly
represent the market value of the input. They cite to the Notice of
Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol
from the People's Republic of China (60 FR 22544, May 8, 1995)
(Furfuryl Alcohol), the Notice of Final Determination of Sales at Less
Than Fair Value: Disposable Pocket Lighters from the People's Republic
of China (60 FR
[[Page 49252]]
22359, May 5, 1995) (Lighters), the Final Determination of Sales at
Less Than Fair Value: Coumarin from the People's Republic of China (59
FR 66895, December 28, 1994) (Coumarin), the Notice of Final
Determination of Sales at Less Than Fair Value: Silicon Carbide from
the People's Republic of China (59 FR 22585, May 2, 1994) (Silicon
Carbide), the Notice of Final Determination of Sales at Less Than Fair
Value: Saccharin from the People's Republic of China (59 FR 58818,
November 15, 1994) (Saccharin), and the Notice of Final Determination
of Sales at Less Than Fair Value: Certain Cased Pencils from the
People's Republic of China (59 FR 55625, November 8, 1994) (Pencils).
Respondents contend that, in each of these cases, the Department
determined that the import values in the surrogate country for certain
inputs could not be used because the import values were aberrational,
i.e., too high, when compared to other sources of market value, or
because the quantity imported was small, and used another source of
data to determine the surrogate value, such as export statistics or
price quotations in the surrogate country.
Respondents argue that the Indian import statistics should not be
used for several reasons. First, respondents argue that the use of
import statistics from the period April-December 1992 is arbitrary and
unfair because the statistics were published in September 1993 and
therefore not available at the time the merchandise was sold or the
reviews requested. As a result, respondents complain that the exporters
and importers did not have any knowledge of or control over the values
which would be used to determine the margins.
Second, respondents note that the Indian import statistics do not
reflect data for the period January-March 1992 and that the Department
did not make an adjustment to the data to cover that period.
Respondents argue that, since a significant percentage of the
production of HFHTs took place outside of the period covered by the
Indian import statistics, and all production of picks sold by FMEC took
place in 1991, the Department should use the 1991 Indian import
statistics and carry the figures forward to reflect the appropriate
period, if it decides the Indian import statistics should be used as
the surrogate values. According to respondents, the 1991 statistics
should be adjusted forward, rather than adjusting the 1992 data
backwards, since it is impossible to relate future imports to past
periods.
Third, respondents argue that including data from December 1992
does not reflect the production of HFHTs. They contend that, since
production time is 30-45 days and purchases of raw materials are made
before production, raw materials for shipments made at the end of
December 1992 would need to be purchased no later than November 1992.
Next, respondents contend that the Department's assumption that
imports occur at prices equal to or just below those in the domestic
market does not apply to low-value factors. According to respondents,
since India is a major producer of steel and other HFHT input factors,
it is more reasonable to assume that India's imports represent those
products which India does not make, such as specialty steels or
expensive types of wood. As a result, respondents argue, the basket
categories which were used to determine the surrogate values and which
cover a broad range of products, rather than the basic input factors
used to produce and pack HFHTs, are biased toward higher values.
Respondents also argue that Yugoslavia was erroneously excluded
from several Indian import categories on the basis that it is a non-
market-economy (NME) country. They cite to Tapered Roller Bearings and
Parts Thereof, Finished or Unfinished, from the Republic of Romania;
Final Results of Antidumping Duty Administrative Review (56 FR 1169,
January 11, 1991) as evidence that the Department considers Yugoslavia
to be a market-economy country, and contend that, if Indian import
prices are used for the final results, imports from Yugoslavia should
be included in the calculation.
Last, respondents state that the 1992 Indian import statistics the
Department used for the preliminary results do not show the month in
which the imports were made (they note that the December import
statistics are separately reported). Therefore, respondents contend,
all of the imports could have taken place in November and December, and
they argue that the potential that imports could be grouped in a few
months should cause the Department to disregard those values
particularly when the import quantities are small.
Respondents argue that the surrogate values for the following
factor inputs are aberrational and should be disregarded, and that
other surrogate values, particularly Indian export statistics, should
be used: steel, steel pellets, wood for handles, detergent, resin glue,
paint, varnish, dilution (paint thinner), anti-rust oil, wood for
pallets, nails, cartons, iron straps, plastic straps, synthetic fiber,
plastic bags, anti-rust paper, anti-damp paper, iron wire, iron
buttons, and iron knots. They argue that these values are aberrational
as a result of the change in the average import value between 1991 and
1992, the differences between the export and the import figures, and
the range in quantities and values of imports from various countries.
Petitioner responds that use of Indian import statistics is
reasonable and conforms to long-standing Department practice. It notes
that FMEC and SMC suggested the use of Indian import statistics for a
variety of factors of production, including steel, prior to the
issuance of the preliminary results of reviews.
Petitioner contends that the Department should continue to exclude
Yugoslavia from its calculation of the average Indian import price. It
states that it is unclear whether the newly independent states of
Croatia, Slovenia, and Bosnia-Herzegovina, which were recognized by the
United States and the European Community in April 1992, were market
oriented during the period of review.
Department's Position: As discussed in the Final Determination of
Sales at less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe
Fittings from the People's Republic of China (57 FR 21058, May 18,
1992) (Pipe Fittings), the Department relies on PAPI for surrogate
values. In determining the most appropriate PAPI to use, the Department
prefers import data in the selected surrogate country over export data
because import prices more closely reflect the market price of that
factor in the surrogate country. See our response to comment 15 in the
Final Determination of Sales at Less Than Fair Value: Certain Helical
Spring Lock Washers from the People's Republic of China (58 FR 48833,
September 20, 1993) (Lock Washers), in which we state that any system
of priorities in the selection of surrogate values should result in the
use of import statistics when they are available, and Pencils, in which
the PAPI selected were average non-export values.
Prior to the issuance of the preliminary results of these reviews,
FMEC and SMC suggested the use of Indian import statistics for a number
of direct inputs and packing materials. They did not suggest any other
sources of surrogate values for direct inputs or packing materials,
with the exception of prices for specific imported material inputs.
Petitioner submitted a price quotation in India as a surrogate value
for steel, but did not provide any other surrogate values for direct
inputs or packing materials. The Department selected, for the
preliminary results, the HTS categories recommended by FMEC
[[Page 49253]]
and SMC for certain inputs, including steel, and used Indian import
statistics to value all inputs used to produce the subject merchandise,
as well as all packing materials. In its case brief, respondents
submitted new PAPI, which we returned to the respondents as untimely
filed.
We agree with respondents that prices which are aberrational should
not be used to value the factors of production, and we have in past
cases, such as Saccharin, turned to sources other than import
statistics from the selected surrogate country when certain surrogate
values have been found to be aberrational. Therefore, for these final
results, where we have other sources of market value such as Indonesian
import statistics or U.S. import statistics, we have compared the
Indian import statistics to these sources of market value to determine
whether the Indian import values are aberrational, i.e., too high or
too low. We have also compared the average import values to other
sources of market values if the total quantity imported under a
specific category was small, and, if the value was found to be
aberrational, i.e., too high or too low, we have chosen another
surrogate value.
For these final results, we have continued to use Indian import
statistics for all direct inputs and packing materials, except for the
iron wire, and we have selected the basket categories which most
closely correspond to the inputs being valued. For certain factors, we
have chosen a different HTS category than was used for the preliminary
results. For iron wire, we have found that the Indian import statistics
are aberrational, and have used Indonesian import statistics for the
surrogate values for this factor. Specific factor inputs are discussed
in the following comments.
With respect to respondents' complaint that the ranges of
quantities and values of imports into India result in aberrational
values, we note that imports into any country will reflect imports from
a variety of countries in varying quantities and with varying prices.
This does not mean that the average value derived from those imports is
aberrational. Moreover, there is no basis for rejecting import values
simply because the values are too high or too low. See Lock Washers.
Therefore, we have used the Indian import statistics unless we have
found that the values are aberrational by comparison to other sources
of market value. However, where the quantity imported from a specific
country was insignificant, we have eliminated imports from that country
from the calculation of the surrogate value.
We disagree with respondents' arguments that use of import
statistics from the April-December 1992 period is unfair because they
were not available when the merchandise was sold or the reviews
requested. It is the Department's standard practice to use surrogate
values from a time period which is contemporaneous to the period of
investigation or the period of review. See, e.g., Furfuryl Alcohol, in
which the surrogate value for furfuryl was selected because it was more
contemporaneous than other sources, and the Preliminary Determination
of Sales at Less Than Fair Value: Manganese Metal from the People's
Republic of China (60 FR 31282, June 14, 1995), in which surrogate
values within the period of investigation, or most contemporaneous with
the period of investigation, were selected.
With respect to respondents' arguments that the surrogate values do
not reflect the period January-March 1992 and were not adjusted to
reflect that period, and that production of the subject merchandise
took place prior to the period covered by the import statistics, we
have changed our calculations for the final results to use 1991
surrogate values for production which occurred in 1991, and 1992
surrogate values for production which occurred in 1992.
With regard to respondents' argument that data from December 1992
does not reflect the production of HFHTs, we note that the period of
review covers the period through January 1993. Therefore, for shipments
which occurred in the last month of the period, raw materials purchases
could have taken place in December 1992, since the average production
time is 30-45 days. It is thus appropriate to include imports in this
month in the calculation of the surrogate values. In the event that
there might not have been shipments during January 1993, it would still
be appropriate to include statistics from December 1992 since that
month is in the period of review.
The Department has consistently used basket categories under the
HTS to value factor inputs. In Pipe Fittings, we state that basket
import statistics that closely correspond to the factor input more
accurately reflect the market price of that factor than other sources
of surrogate data. In these reviews, there is no information on the
record regarding more specific sources of surrogate values, with the
exception of the prices of imported materials from market economy
countries for specific factors. We have discussed the use of import
prices in comments 2 and 8 below. Further, there is no evidence on the
record to indicate that any of the factors being valued are of low
value compared to other items in the basket categories, thus biasing
the statistics toward higher values. The Department has selected the
HTS categories which most closely represent the factors being valued,
and, for certain factors, has selected HTS categories other than those
selected in the preliminary results, as discussed in the following
comments.
We agree with respondents that imports from Yugoslavia should not
have been excluded from the calculation of the surrogate values since
Yugoslavia has been treated as a market economy country in past
investigations and reviews. Therefore, for these final results, we have
included imports from Yugoslavia in our calculations of the surrogate
values.
We disagree with respondents that the potential that imports could
be grouped in a few months should cause the Department to disregard
certain import statistics. When it uses import statistics, the
Department bases the surrogate values on imports over a certain period,
and does not perform an analysis of when those imports occurred.
However, we agree with respondents' concern about small import
quantities, and have, when the import volume is small, compared the
import value to other sources of surrogate values to determine whether
the value is aberrational.
Comment 2: Respondents argue that the import statistics used to
determine the surrogate value for steel do not provide a statistically
valid basis on which to calculate an average value because of the small
quantity of imports during the time period. According to respondents,
the small quantity of steel imported for that HTS category, 7213.49.09,
makes the statistics vulnerable to distortion because a shift of the
product mix within the HTS category could have a dramatic effect on the
per-unit calculations. Moreover, respondents contend that the Indian
import statistics for this category have experienced tremendous shifts
over different periods, resulting in significant changes in the average
value between 1991 and 1992 and demonstrating that the average values
are unreliable and aberrational. They note that the average import
value in 1991 was less than half the average import value in 1992.
Furthermore, respondents contend that there is a huge disparity
between the Indian import and export statistics for steel, stating that
a comparison between the import and export prices shows that the import
statistics are aberrational.
[[Page 49254]]
Instead of the Indian import statistics, respondents have suggested
the following alternative surrogate values which they claim fall within
a range of prices which are reasonably comparable with each other: the
prices of imported steel used by the HFHT factories, Indian export
values, Indonesian export values, world steel prices (such as Japanese
export prices to the PRC), and lastly, if the Department continues to
use Indian import statistics to value steel, Indian imports of HTS
category 7214.50, which respondents claim is the HTS category best
covering the steel used to produce HFHTs.
Petitioner notes that, in their supplemental questionnaire
responses, FMEC and SMC urged the use of steel import values, and
contends that they are now attempting to pick the best surrogate values
from around the world. Petitioner argues that the official Indian
import statistics for steel are reasonable, and that the data submitted
by petitioner on actual steel prices for the specific type and grade of
steel used for manufacturing HFHTs closely correspond to the import
values. Petitioner cites to Coumarin, where the Department noted its
strong preference for using surrogate country import statistics as the
best PAPI, despite the fact that, in that case, the Department rejected
import statistics in favor of more specific and reliable price
quotations. Petitioner notes that, in this case, the Indian import
prices used by the Department in the preliminary results are consistent
with the price quotations submitted by petitioner to the record of
these reviews, covering the specific categories of steel used to
produce HFHTs. According to petitioner, these price quotations are the
next best surrogate data after the Indian import statistics.
Petitioner contends that all other possible surrogate values
offered by respondents should be rejected. Petitioner argues that the
import prices should not be used because there was no evidence on the
record regarding which products were produced from imported steel and
which were produced from domestically-produced steel. Moreover, it
notes that only one factory used imported steel in its production.
Also, according to petitioner, Indian export values are unreliable
because they do not represent home market consumption in India and the
vast majority of these exports are to countries not at a level of
economic development comparable to the PRC. Petitioner also argues that
Indonesian export prices should be rejected as Indonesia is the last of
the five countries selected by the Department as possible surrogate
countries. Petitioner rejects the use of world market prices as
reported in the American Metal Market, arguing that the prices
contained therein vary significantly by grade and type and, therefore,
have no relation to the type of steel used to produce HFHTs. Petitioner
also rejects the use of Japanese prices. Finally, petitioner argues
that the Department used the proper tariff heading, HTS category
7213.49.09, in valuing steel, and that the HTS category suggested by
respondents, 7214.50, is incorrect because it includes bars already
forged, noting that respondents perform the forging in the production
of HFHTs. Petitioner states that there is no evidence to show that HTS
category 7213.49.09 covers steel in wound coil form which is more
expensive than the bar steel used to produce HFHTs.
Department's Position: For the preliminary results of reviews, we
used HTS category 7213.49.09, bars and rods containing more than 0.25
percent but less than 0.60 percent carbon in wound coils, to value the
steel bars used to produce HFHTs, as suggested by FMEC, SMC, and
petitioner. However, we have determined that, since this category
covers steel in wound coils, it does not cover the cut-to-length steel
bars used to produce HFHTs. Instead, for the final results, we have
used Indian import statistics and HTS category 7214.50, forged bars and
rods containing more than 0.25 percent carbon but less than 0.60
percent carbon, to determine the surrogate value for steel. We have
determined that this HTS category is more specific to the cut-to-length
steel bars used to produce the subject merchandise.
Because the quantities imported into India under HTS category
7214.50 were not large in 1991 and 1992, we compared the steel values
against other sources of market value, i.e., Indonesian import values
and U.S. import values, to determine whether they were aberrational. We
found that the 1992 Indian import value is not aberrational, and have
used this value in our final results. We found that the 1991 value is
aberrational by comparison to Indonesian and U.S. import statistics.
Therefore, for the final results, for the 1991 surrogate value for
steel, we have deflated the 1992 value to 1991 using wholesale price
indices published by the International Monetary Fund. Because we have
been able to use Indian import values in our analysis, we have not
considered the other sources of surrogate values suggested by
respondents.
We did not use the prices of steel imported by the factories
because we do not know what models were produced using the imported
steel or the portion of steel used by the factories which was imported.
Comment 3: Respondents argue that detergent used for cleaning and
pellets used to remove the oxidation from the surface of the tool heads
are considered by the factories, and should be considered by the
Department, to be part of factory overhead, as these items are not
physically incorporated into the finished product. They also note that
the pellets are recycled until they are pulverized. Respondents cite to
the Notice of Final Determination of Sales at Less Than Fair Value:
Certain Paper Clips From the People's Republic of China (59 FR 51168,
October 7, 1994) (Paper Clips) as evidence for their position.
Respondents contend that, if the Department determines that the steel
pellets are a direct factor input, the steel pellets should be valued
as scrap, as the pellets are made from scrap steel bought locally.
Department's Position: We agree with respondents that pellets and
detergent should be considered as factory overhead, and have changed
our analysis accordingly. These items are used for the purposes of
removing oxidation from the tool heads and for cleaning the tool heads,
and are not physically incorporated into the subject merchandise. As
such, they should not be valued as direct material inputs in the
production of the subject merchandise. This is consistent with the
Department's position in Paper Clips, in which the Department valued
certain inputs as direct materials because they were physically
incorporated into, and became part of, the subject merchandise.
Comment 4: Respondents contend that HTS category 3814, selected for
dilution (paint thinner) for the preliminary results, is too broad, and
argue that the narrower HTS category 3814.00.09 should be selected for
this input.
Department's Position: We agree with respondents. The HTS category
selected for dilution (paint thinner) for the preliminary results, HTS
3814, includes both ``composite solvents and thinners for varnishes and
similar products'' and ``solvents for printing.'' The HTS category
3814.00.09 is specific to solvents and thinners and has been used for
the final results.
Comment 5: Respondents state that the wedges are made by the HFHT
factories from scrap steel generated from the production of the tool
heads, rather than from steel bars. Therefore, respondents argue that
the Department should value the wedges using the HTS category selected
for scrap, rather than
[[Page 49255]]
the HTS category selected for steel. Further, respondents contend that,
since the wedges are produced at the factories, there should be no
adjustment for transportation for this input.
Department's Position: We agree with respondents. The record
indicates that scrap steel resulting from the production process is
used to produce other products which require small pieces. Therefore,
we have adjusted the calculations so that wedges are valued with the
value for scrap. Since these items are made at the factory, we have not
made an adjustment for freight costs for this input.
Comment 6: Respondents argue that the packing costs determined by
the Department are too high and clearly do not represent reasonable
packing costs. According to respondents, the materials used to pack
HFHTs are generally low-value items which are discarded once the
shipments reach the importer's site. Respondents contend that deriving
the cost of packing from surrogate values leads to erroneous results
and that the use of basket categories biases the values toward high
average values.
Respondents note that, in comparable cases, packing rates were 1-2
percent of production costs. Respondents cite as evidence Chrome-Plated
Lug Nuts from the People's Republic of China; Preliminary Results of
Antidumping Duty Administrative Review (60 FR 19719, April 20, 1995)
(Lug Nuts I), where a rate of 1 percent of production costs was used as
the best information available (BIA), and Lock Washers, in which the
petitioner stated that its packing costs were 2 percent of its
production costs.
Petitioner responds that there is no support on the record to show
that the purportedly high packing costs result from surrogate country
data which are unreliable because the packing materials are low-value
inputs. Petitioner also states that it is irrelevant that packing costs
are lower in the two cases cited by respondents because each case is
fact specific. Moreover, petitioner argues that the supposed
aberrations in the Indian import data do not justify rejecting valid
data published by the Indian government.
Department's Position: We disagree with respondents that we should
not use surrogate values to calculate packing costs. It is the
Department's standard practice to use surrogate values to value packing
costs. See, e.g., the Notice of Preliminary Determination of Sales at
Less Than Fair Value and Postponement of Final Determination: Certain
Partial-Extension Steel Drawer Slides With Rollers from the People's
Republic of China (60 FR 29571, June 5, 1995) and Pencils, for which
Indian import statistics were used to value packing materials.
Moreover, in Lock Washers, the Department valued packing materials
using Indian import statistics. We further note that, in the
administrative review of lug nuts from the PRC subsequent to that cited
by respondents, factors data for packing were on the record of the
review and were used to determine packing costs (Chrome-Plated Lug Nuts
from the People's Republic of China; Preliminary Results of Antidumping
Duty Administrative Review (60 FR 42504, August 16, 1995) (Lug Nuts
II).
For these reviews, unlike Lug Nuts I, the information needed to
calculate packing costs using surrogate values is on the record.
Therefore, for the final results, we have continued to value these
packing inputs using surrogate values. However, as discussed in our
response to comment 1 above, and in our responses to comments 7-11
below, we have made adjustments in the valuation of packing materials
for the final results.
See our response to comment 1 regarding respondents' complaint
about the use of basket categories.
Comment 7: Respondents argue that the Department should abandon its
factor methodology for valuing the pallets based on the costs of the
wood and the nails used to construct the pallets, and, instead, should
determine a separate price for pallets. Respondents argue that the cost
of a pallet as calculated by the Department is much higher than the
cost to purchase a pallet in the United States.
Petitioner responds that the fact that the Department calculated a
pallet cost which is substantially more than the cost of a wood pallet
in the United States is irrelevant to the price of pallets in India or
the PRC.
Department's Position: We agree with respondents that we should
value the pallets separately, rather than valuing both the wood and the
nails used to make the pallets. To value the pallets, we have used
Indian import statistics and HTS category 4415.10, packing cases,
boxes, crates, drums, and similar packings of wood, which was suggested
by FMEC and SMC in their supplemental questionnaire responses prior to
the preliminary results.
Comment 8: Respondents argue that the HTS category selected to
value the cartons is too broad a category to determine a specific value
for the cartons, and that a more specific price should be used. They
note that two of the HFHT factories used imported cartons, and that the
Department used the price of the imported cartons to value cartons for
only one of those factories. They further state that the surrogate
value is roughly three times higher than the value of the imported
cartons, and argue that the price of the imported cartons should be
used as a benchmark.
Department's Position: We disagree with respondents. We have
continued to use for the final results the HTS category selected for
the preliminary results of these reviews, HTS category 4819.10. There
is no information on the record to indicate that either of the two
narrower HTS categories, 4819.10.01, boxes of corrugated paper and
paperboard, or 4819.10.09, cartons and cases of corrugated paper and
paperboard, are more specific to this input. Therefore, we have valued
the cartons using the broader HTS category 4819.10.
As discussed above in our response to comment 2, we have used
import prices where we knew the percentage of the imported material to
the total material purchased. Therefore, for one factory, we were able
to use the price of the imported cartons to value the cartons. As
mentioned by respondents, another factory also used imported cartons.
Since the price paid by this factory for the imported cartons was in
Chinese currency, we were unable to use this price.
Comment 9: Respondents argue that the categories selected to value
the iron straps and the plastic straps are too broad and the variations
in the Indian import statistics for these categories too great to
reflect reasonable values for these factor inputs, and contend that an
alternative source of valuation must be found. Further, according to
respondents, imports from Yugoslavia were incorrectly excluded from the
calculation of the average import value.
Department's Position: We agree with respondents that imports from
Yugoslavia were incorrectly excluded from the calculation of the
plastic strap, and have included such imports in our calculation of the
surrogate value for the final results. We note, however, that
respondents have not suggested an alternative HTS category or source
for valuing the plastic strap, and, for the final results, we have
continued to use the value selected for the plastic strap for the
preliminary results.
Prior to the preliminary results, FMEC and SMC suggested HTS
categories 7216.21.00 and 7216.60.01, angles, shapes and sections of
hot-rolled steel and of cold-rolled steel to value the iron straps; the
Department selected HTS category 7216.90.01, other angles, shapes and
sections, as the appropriate category for iron straps for the
[[Page 49256]]
preliminary results. There is no information on the record to indicate
which of these categories better covers the iron straps. Since
respondents have not provided evidence to indicate that the HTS
categories FMEC and SMC suggested are more appropriate, and since their
brief simply indicates that an alternative source of valuation must be
found since the category selected is too broad, without identifying an
alternative source, we have continued to use the same category we
selected for the preliminary results for the iron strap. Moreover,
there is no indication that the HTS categories suggested by FMEC and
SMC would be any less broad than that selected by the Department.
Comment 10: Respondents argue that the Department made significant
errors in valuing the synthetic fiber (PVC bags) by inaccurately
determining the weight of the bags, and contend that the calculation
should be corrected.
Petitioner asserts that the respondents have not alleged that the
information on which the Department based its calculation was wrong,
but merely that the Department reached a different conclusion from
respondents.
Department's Position: We agree with respondents, and have
reweighed the synthetic fiber and adjusted the calculations
accordingly.
Comment 11: Respondents argue that six materials used to pack HFHTs
are incidental items and that their collective values are extremely
small or de minimis. These materials are plastic bags, anti-rust paper,
anti-damp paper, iron wire, iron buttons, and iron knots. Respondents
argue that the use of basket categories to value these items makes
their individual and collective values significant.
Respondents further argue that the anti-damp paper and the anti-
rust paper are de minimis items which should be eliminated from the
Department's calculations. Although they do not disagree with the HTS
categories selected, they note that the aberrational values for these
HTS categories indicate that the HTS categories include many items
other than those being valued.
Respondents contend that the Department selected too broad a
category for the plastic bags, inaccurately determined the weight of
the plastic bags, and incorrectly excluded imports from Yugoslavia from
the calculation.
Furthermore, according to respondents, the HTS category selected
for the iron wire is too broad, and the iron wire was inaccurately
weighed for the preliminary results. They also argue that the HTS
categories selected for the iron knots and the iron buttons are too
broad.
Petitioner responds that the record shows that anti-damp paper and
anti-rust paper are not de minimis factors in India. Petitioner also
states that it is impossible to reweigh the plastic bags at this point
in the process, and that FMEC and SMC should have provided additional
information regarding the weights of these items with their
questionnaire responses or at verification.
Department's Position: We disagree with respondents that certain
factor inputs should be eliminated from the analysis because of their
small value. The items identified by respondents as being incidental
items are all materials used to pack the subject merchandise, and, as
such, they should be valued.
We agree with respondents that the HTS categories selected for the
plastics bags and the iron wire were incorrect. We have used, for the
final results, the categories suggested by the respondents, HTS
category 3923.21 for the plastic bags and HTS category 7217.90 for the
iron wire. However, we have found that the Indian import statistics for
the iron wire are aberrational, and have used Indonesian import
statistics to determine the surrogate values for the iron wire for
these final results. Moreover, as samples of these items were provided
to the Department prior to the issuance of the preliminary results of
reviews, we have reweighed these items and have adjusted our
calculations accordingly. We also agree that imports from Yugoslavia
should be included in the calculation of the average import values;
however, we note that there were no imports into India from Yugoslavia
in 1991 or 1992 under the HTS category for plastic bags selected for
the final results.
We have continued to use the same HTS categories selected for the
preliminary results for the anti-damp paper, the anti-rust paper, the
iron buttons and the iron knots. We note that we used the categories
suggested by the respondents prior to the preliminary results for the
anti-damp paper and the anti-rust paper, and that respondents did not
suggest a category for the iron buttons. For the iron knots, we have
selected HTS category 8309.90.09, other packing accessories of base
metal, rather than the HTS category suggested by respondents,
7326.90.09, other articles of iron or steel, because it is more
specific to the packing input being valued.
Comment 12: Respondents contend that the labor rates and the fringe
benefit and bonus rates used by the Department in its preliminary
results, collected from the Business International Corporation (BIC)
report IL&T India, released November 1992, appear to reflect wage rates
in urban areas, while the Chinese HFHT factories are located in rural
areas. They note that the BIC is a non-government organization which
provides estimates of Indian labor rates based on available data. The
respondents state that they do not contest the estimated wage rates
used by the Department in its preliminary results, as they believe that
they are comparable to those used by the Department in other cases,
such as Lighters and Furfuryl Alcohol, but argue that the adjustment
for fringe benefits and bonuses should be reduced to those required by
Indian law.
Petitioner responds that the respondents' assertion that the labor
rates reported in IL&T India appear to reflect wages in urban areas is
without citation or support, and that there is no evidence on the
record to suggest that these data are inappropriate for valuing labor.
It contends that the respondents' suggested bonus rates are based
solely on the mandatory statutory bonus rates and do not reflect any
amounts for fringe benefits paid in India or any benefits privately
negotiated between employers and employees. It notes that there could
easily be benefit levels beyond the statutory minimum requirements.
Petitioner further notes that respondents do not contest the use of
wage rates from the same publication from which these fringe benefit
and bonus rates were obtained. Petitioner further contends that the
wage rates used in Lighters and Furfuryl Alcohol are irrelevant to this
case because these industries are not comparable to the HFHT industry
and because the surrogate country used in those cases was Indonesia.
Department's Position: We disagree with respondents. Respondents
have not placed any information on the record to demonstrate that the
labor rates used in our preliminary results reflect wage rates in
urban, rather than rural, areas. Moreover, we agree with petitioner
that there could be benefit levels beyond what is statutorily required.
The data provided by the BIC with respect to fringe benefits and
bonuses provide an estimate of what is actually paid, and is therefore
more indicative of actual fringe benefits and bonuses paid to workers
in India than the minimum requirements of Indian law. Since the
surrogate values should reflect actual costs in the surrogate country,
we have continued to use the wage rates and the fringe benefit and
bonus rates used in the preliminary results, rather than the
[[Page 49257]]
minimum requirements of Indian law, as suggested by respondents.
Comment 13: Respondents argue that the surrogate values for
electricity and coal should be adjusted to account for the period
during which picks sold by FMEC were produced.
Department's Position: We agree with respondents. As discussed
above in our response to comment 1, we have valued production occurring
in 1991 using 1991 values, and production occurring in 1992 using 1992
values. Accordingly, all inputs for merchandise produced in 1991 have
been valued using 1991 values, not just coal and electricity.
Comment 14: Respondents argue that the Department erred in
determining the amounts of scrap and waste which were sold, and should
recalculate these amounts. According to respondents, the amounts
reported in the questionnaire responses as total scrap and waste
collected were verified and represent scrap sold.
Department's Position: We agree with respondents. As discussed in
FMEC's and SMC's questionnaire responses, the amounts reported as scrap
and waste collected are the amounts of salable scrap. We have adjusted
our calculations to reflect these reported amounts of salable scrap.
Comment 15: According to respondents, the Department should
determine the steel input factor according to the methodology applied
in Lock Washers. Respondents contend that, in that case, the Department
determined the steel input factor by disregarding the scrap and valuing
the steel factor based on the net weight of the finished product plus
the waste. According to respondents, the Department would not have to
determine scrap values with this methodology.
Department's Position: We disagree with respondents. In order to
determine the costs of materials to a producer, we multiply the gross
amounts of the materials used in the production process by the
surrogate values. If the producer sells scrap resulting from the
production process, we allow revenue resulting from that sale as an
offset to the materials costs. Since the value of the scrap which is
sold is less than the value of the material input purchased by the
manufacturer, we calculate the revenue from the sale of scrap by
multiplying the amount of scrap sold by the value of the scrap, and
subtracting that result from the materials costs. Using respondents'
methodology would mean that the scrap is valued at the original input
cost, which would overstate the scrap value.
Comment 16: Respondents recommend that the Department use the rail
rate reported in Doing Business in India--An Economic Profile,
published by the Director, Economic Coordination Unit, Ministry of
External Affairs. According to respondents, this information should be
used because it is official Indian government data, is more current
than the data used for the preliminary results of reviews, and provides
a specific rate on a per-kilometer basis, rather than for a range of
kilometers.
Petitioner responds that the Department should reject the freight
rate suggested by the respondents as it is less detailed than the cable
data used in the preliminary results of these reviews, as well as other
investigations and reviews.
Department's Position: We disagree with respondents. The rail
freight rate suggested by the respondents was submitted to the record
of these reviews after the preliminary results were issued, and
therefore was returned as untimely filed pursuant to section
353.31(a)(3) of the Department's regulations.
Comment 17: Respondents argue that, in those instances where the
distance between a factory and one of its suppliers is not supplied,
the Department should use a simple average of the distances which were
provided, rather than applying the longest distance as BIA. Respondents
contend using the longest distance imposes a burden on small, rural
factories to keep records beyond their abilities and unfairly adds to
the input costs.
Moreover, as mentioned in Comment 5, respondents contend that the
Department should not adjust the factor input for wedges for
transportation as the wedges were made at the factory site from scrap.
In the case of pellets, respondents argue that the Department should
recognize that the pellets were sourced locally and make the adjustment
for transportation accordingly, if the Department does not include
pellets in factory overhead.
Lastly, respondents contend that the factories used their own
trucks to pick up materials from the rail yards, and that expenses
associated with these trucks are considered as overhead by the
factories. Accordingly, they contend that where factory trucks are
used, no adjustment for transportation costs should be made.
Respondents cite to Lock Washers as evidence for their position.
Petitioner responds that use of the longest reported distance
between a factory and one of its suppliers in those instances where no
distances have been reported is reasonable and consistent with past
Department practice.
Department's Position: We disagree with respondents. We have
applied as BIA the longest distance in two situations: first, when the
distance between a factory and its supplier was not reported; and
second, when several suppliers supplied a factory with the input and
the percentage of material purchased from each supplier was not
reported. In their questionnaire responses, FMEC and SMC did not
indicate that they could not provide such information for all factors.
As petitioner states, it is the Department's practice to use the
longest distance in such instances. See, e.g., Pencils and Saccharin,
where the most expensive distance/mode of transportation was used when
a respondent had failed to provide information regarding transportation
between factories and suppliers.
As discussed in our response to comment 12, we agree with
respondents that wedges were made at the factory and have not made an
adjustment for transportation for this input.
We disagree with respondents that certain truck costs should be
considered as factory overhead. There is nothing on the record to
indicate that factory trucks are used to pick up merchandise from the
rail yards.
Comment 18: Respondents argue that, in calculating the average
ocean freight rates for FMEC and SMC for shipments made by non-PRC-
owned ocean freight companies, which have been applied to those sales
for which ocean freight services were provided by PRC-owned companies,
the Department omitted several non-PRC-owned company shipments.
According to respondents, the calculation of the average ocean freight
rates should be revised to include these shipments.
Department's Position: We agree with respondents that there is
additional information on the record regarding ocean freight shipments
provided by non-PRC-owned carriers which was not included in our
preliminary calculation of the average ocean freight rates. Therefore,
for these final results, we have recalculated the average ocean freight
rates using the additional shipments.
Comment 19: According to respondents, the Department should have
calculated the average ocean freight rates for shipments supplied by
non-PRC-owned companies on a weight basis, by dividing the reported
per-piece ocean freight charge by the weight per piece.
Department's Position: We disagree with respondents. We calculated
the
[[Page 49258]]
average ocean freight rate by dividing the ocean freight charge for
each shipment by non-PRC-owned companies by the weight of the finished
product; then, the results were summed for those shipments, and the
total divided by the total number of pieces shipped by non-PRC-owned
companies. This methodology is more accurate than respondents'
methodology because it allocates the weight of each shipment to the
charge for that shipment. Conversely, respondents' methodology, by
which the total of the ocean freight charges for shipments by non-PRC-
owned companies would be divided by the total weight of those
shipments, allocates the weight of each shipment over all ocean freight
charges. Therefore, we have not changed our calculation of the average
ocean freight rates, except to include the additional shipments, as
discussed in our response to comment 18.
Final Results of Reviews
As a result of our reviews, we have determined that the following
margins exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Fujian Machinery & Equipment Import & Export Corporation
------------------------------------------------------------------------
Axes/Adzes.............................. 2/1/92-1/31/93 21.92
Bars/Wedges............................. 2/1/92-1/31/93 66.32
Hammers/Sledges......................... 2/1/92-1/31/93 44.41
Picks/Mattocks.......................... 2/1/92-1/31/93 108.20
------------------------------------------------------------------------
Shandong Machinery Import & Export Corporation
------------------------------------------------------------------------
Axes/Adzes.............................. 2/1/92-1/31/93 21.92
Bars/Wedges............................. 2/1/92-1/31/93 49.69
Hammers/Sledges......................... 2/1/92-1/31/93 35.57
Picks/Mattocks.......................... 2/1/92-1/31/93 49.64
------------------------------------------------------------------------
The Department shall determine, and the Customs service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and foreign market value may
vary from the percentages stated above. The Department will issue
appraisement instructions directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of reviews for all
shipments of HFHTs from the PRC entered, or withdrawn from warehouse,
for consumption on or after the publication date, as provided for by
section 751(a)(1) of the Act: (1) the cash deposit rates for the
reviewed companies named above which have separate rates will be the
rates for those firms as stated above; (2) for all other PRC exporters,
the cash deposit rates will be the rates established in the less-than-
fair-value (LTFV) investigations; and (3) the cash deposit rates for
non-PRC exporters of the subject merchandise from the PRC will be the
rate applicable to the PRC supplier of that exporter. The rates
established in the LTFV investigations are 45.42 percent for hammers/
sledges, 31.76 percent for bars/wedges, 50.81 percent for picks/
mattocks, and 15.02 percent for axes/adzes. These deposit requirements,
when imposed, shall remain in effect until publication of the final
results of the next administrative reviews.
This notice serves as a final reminder to importers of their
responsibility under section 353.26 of the Department's regulations to
file a certificate regarding the reimbursement of antidumping duties
prior to liquidation of the relevant entries during this review period.
Failure to comply with this requirement could result in the Secretary's
presumption that reimbursement of antidumping duties occurred and the
subsequent assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with section 353.34(d) of the Department's
regulations. Timely notification of return/destruction of APO materials
or conversion to judicial protective order is hereby requested. Failure
to comply with the regulations and the terms of an APO is a
sanctionable violation.
These administrative reviews and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22
of the Department's regulations.
Dated: September 13, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-23580 Filed 9-21-95; 8:45 am]
BILLING CODE 3510-DS-P
