[Federal Register Volume 59, Number 29 (Friday, February 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3182]


[[Page Unknown]]

[Federal Register: February 11, 1994]


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DEPARTMENT OF COMMERCE
[A-201-504]

 

Porcelain-on-Steel Cooking Ware From Mexico; Preliminary Results 
of Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration, 
Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to a request by petitioner, the Department of 
Commerce is conducting an administrative review of the antidumping duty 
order on porcelain-on-steel cooking ware from Mexico. The review covers 
shipments of this merchandise to the United States during the period 
December 1, 1990 through November 30, 1991. The review indicates the 
existence of dumping margins during the review period. We invite 
interested parties to comment on these preliminary results.

EFFECTIVE DATE: February 11, 1994.

FOR FURTHER INFORMATION CONTACT:
Lorenza Olivas or Richard Herring, Office of Countervailing Compliance, 
International Trade Administration, U.S. Department of Commerce, 
Washington, DC 20230; telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION: 

Background

    On December 2, 1991, the Department of Commerce (the Department) 
published in the Federal Register a notice of ``Opportunity to Request 
Administrative Review'' (56 FR 61228) of the antidumping duty order on 
porcelain-on-steel cooking ware from Mexico for the period December 1, 
1990 through November 30, 1991. On December 12, 1991, petitioner 
General Housewares Corporation requested an administrative review. We 
initiated the review on January 23, 1992 (57 FR 2704). The Department 
is conducting the administrative review in accordance with section 751 
of the Tariff Act of 1930, as amended (the Tariff Act).

Scope of Review

    Imports covered by this review are shipments of porcelain-on-steel 
cooking ware, including tea kettles, which do not have self-contained 
electric heating elements. All of the foregoing are constructed of 
steel and are enameled or glazed with vitreous glasses. This 
merchandise is currently classifiable under Harmonized Tariff Schedule 
(HTS) item number 7323.94.00. Kitchenware currently entering under HTS 
item number 7323.94.00.30 is not subject to the order. The HTS item 
numbers are provided for convenience and Customs purposes. The written 
description remains dispositive.
    The review covers two manufacturers/exporters, APSA and CINSA, of 
Mexican porcelain-on-steel cooking ware.

United States Price

    In calculating U.S. price, the Department used purchase price and 
exporter's sales price, as defined in section 772 of the Tariff Act. 
For those sales made directly to unrelated parties prior to importation 
into the United States, we based the United States price on purchase 
price, in accordance with section 772(b) of the Act. In those cases 
where sales were made through a related sales agent in the United 
States to an unrelated purchaser prior to the date of importation, we 
also used purchase price as the basis for determining U.S. price. For 
the latter sales, the Department determined that purchase price was the 
appropriate determinant of United States price because the merchandise 
was shipped directly from the manufacturer to the unrelated buyers, 
without being introduced into the inventory of the related selling 
agent. Moreover, direct shipment from the manufacturers to the 
unrelated buyers was the customary commercial channel for sales of this 
merchandise between the parties involved. Finally, the related selling 
agent located in the United States acted only as a processor of sales-
related documentation and a communication link with the unrelated U.S. 
buyers.
    Where all the above elements are met, we regard, the routine 
selling functions of the exporter as merely having been relocated 
geographically from the country of exportation to the United States, 
where the sales agent performs them. Whether these functions take place 
in the United States or abroad does not change the substance of the 
transactions or the functions themselves.
    Where sales to the first unrelated purchaser occurred after 
importation into the United States, we based U.S. price on exporter's 
sales price, in accordance with section 772(c) of the Tariff Act. 
Purchase price and exporter's sales price (ESP) were based on the 
packed, f.o.b. price to unrelated purchasers in the United States. We 
made deductions from purchase price and ESP, where applicable, for 
brokerage, foreign inland freight and insurance and U.S. import duties, 
in accordance with section 772(d)(2) of the Act. We also made 
deductions for discounts and rebates. We made further deductions from 
ESP, where applicable, for commissions, credit expenses and indirect 
selling expenses, pursuant to sections 772(e)(1) and (2) of the Act.
    In addition, we made adjustments for the value added tax. On 
October 7, 1993, the United States Court of International Trade (CIT), 
in Federal-Mogul Corp. and the Torrington Co. v. United States, Slip 
Op. 93-194 (CIT, October 7, 1993), rejected the Department's 
methodology for calculating an addition to USP under section 
772(d)(1)(C) of the Tariff Act to account for taxes that the exporting 
country would have assessed on the merchandise had it been sold in the 
home market. The CIT held that the addition to USP under section 
772(d)(1)(C) of the Tariff Act should be the result of applying the 
foreign market tax rate to the price of the United States merchandise 
at the same point in the chain of commerce that the foreign market tax 
was applied to foreign market sales. Federal-Mogul, Slip Op. 93-194 at 
12.
    The Department has changed its methodology in accordance with the 
Federal-Mogul decisions. The Department added to USP the result of 
multiplying the foreign market tax rate by the price of the United 
States merchandise at the same point in the chain of commerce that the 
foreign market tax was applied to foreign market sales. The Department 
also adjusted the USP tax adjustment and the amount of tax included in 
FMV. These adjustments deduct the portions of the foreign market tax 
and the USP tax adjustment that are the result of expenses that are 
included in the foreign market price used to calculate foreign market 
tax and are included in the United States merchandise price used to 
calculate the USP tax adjustment and that are later deducted to 
calculate FMV and USP. These adjustments to the amount of the foreign 
market tax and the USP tax adjustment are necessary to prevent our new 
methodology for calculating the USP tax adjustment from creating 
antidumping duty margins where no margins would exist if no taxes were 
levied upon foreign market sales.
    This margin creation effect is due to the fact that the bases for 
calculating both the amount of tax included in the price of the foreign 
market merchandise and the amount of the USP tax adjustment include 
many expenses that are later deducted when calculating USP and FMV. 
After these deductions are made, the amount of tax included in FMV and 
the USP tax adjustment still reflects the amounts of these expenses. 
Thus, a margin may be created that is not dependent upon a difference 
between USP and FMV, but is the result of the price of the United 
States merchandise containing more expenses than the price of the 
foreign market merchandise. The Department's policy to avoid the margin 
creation effect is in accordance with the United States court of 
Appeals' holding that the application of the USP tax adjustment under 
section 772(d)(c) of the Tariff Act should not create an antidumping 
duty margin if pre-tax FMV does not exceed USP. Zenith Electronics 
Corp. v. United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In 
addition, the CIT has specifically held that an adjustment should be 
made to mitigate the impact of expenses that are deducted form FMV and 
USP upon the USP tax adjustment and the amount of tax included in FMV. 
Daewoo Electronics Co., Ltd. v. United States (Daewoo), 760 F. Supp. 
200, 208 (CIT, 1991). However, the mechanics of the Department's 
adjustments to the USP tax adjustment and the foreign market tax amount 
as described above are not identical to those suggested in Daewoo.
    Sales or merchandise manufactured by APSA which entered the United 
States between December 1, 1990 and December 31, 1991, have been 
assessed countervailing duties; therefore, they are entitled to an 
upward adjustment to the U.S. price pursuant to section 772(d)(1)(D) of 
the Tariff Act. As a result, we have increased APSA's U.S. price by the 
amount of the export subsidies found in the countervailing duty order 
on porcelain-on-steel cooking ware from Mexico.

Foreign Market Value

    In calculating foreign market value, the Department used home 
market price, as defined in section 773 of the Tariff Act, for APSA. We 
also used home market price for CINSA, when sufficient quantities of 
such or similar merchandise were sold in the home market, at or above 
the cost of production, to provide a basis for comparison. Home market 
price was based on the packed, ex-factory or delivered price to related 
and unrelated purchasers in the home market. In our margin 
calculations, we used related and unrelated party sales because we 
found that the prices were comparable. Where applicable, we made 
deductions from the home market price for inland freight and insurance, 
discounts, rebates and home market packaging. We made an adjustment to 
home market price, where appropriate, for physical differences in the 
merchandise, in accordance with 19 CFR 353.57.
    For comparisons involving both purchase price and exporter's sales 
price, we included in the foreign market value, the amount of value 
added tax collected in the home market. We also calculated the amount 
of the tax that was due solely to the inclusion of price deductions in 
the original tax base (i.e., the tax rate times the sum of any 
adjustments, expenses, charges, and offsets that were deducted from the 
tax base). This amount was deducted from the amount of value added tax 
collected in the home market. By making this additional tax adjustment, 
we avoid a distortion that would cause the creation of a dumping margin 
even when pre-tax dumping is zero.
    For comparisons to purchase price, pursuant to section 773(a)(4)(B) 
and 19 CFR 353.56(a)(2), we made a circumstances-of-sale adjustment, 
where appropriate, for differences in credit expenses.
    For comparisons involving ESP transactions, we made further 
deductions from home market price, where appropriate, for credit 
expenses and commissions, and we made an adjustment to home market 
price for indirect selling expenses, in accordance with 19 CFR 
353.56(b). In addition, we calculated a re-adjustment of the amount of 
tax on the U.S. direct selling expenses added to foreign market value 
by applying the tax rate to those expenses. This re-adjustment amount 
was also added to foreign market value.
    For CINSA's home market models for which there were insufficient 
sales at or above the cost of production (COP), we used constructed 
value. (See, Office of Accounting COP analysis memorandum dated 
November 5, 1993 (OA memorandum)). Constructed value consists of the 
sum of materials, fabrication, overhead, general expenses, profit, and 
U.S. packing. In accordance with section 773(e)(1)(B) (i) and (ii), we 
used: (1) The actual amount of general expenses because those amounts 
were more than the statutory minimum of ten percent and (2) the actual 
amount of profit where it exceeded the statutory minimum of eight 
percent.
    In our COP analysis, we have relied on COP information submitted by 
CINSA, except in instances where it was not appropriately quantified or 
valued. More notable, we recalculated direct labor expenses to account 
for expenses related to employee profit sharing. Also, because CINSA 
failed to provide requested information on depreciation based upon the 
revaluation of assets in accordance with the Department's normal 
practice (See, e.g., Gray Portland Cement and Cylinder from Mexico; 
Final Results of Antidumping Administrative Review (58 FR 25803; April 
28, 1993) and Final Results of Antidumping Administrative Review; 
Porcelain on Steel Cooking Ware from Mexico (58 FR 43327; August 16, 
1993)), we have recalculated depreciation expenses using best 
information available (BIA) based on information submitted in CINSA's 
response to the Department's supplemental questionnaire. Accordingly, 
we increased the reported fixed overhead expenses (which includes 
depreciation expenses). See OA memorandum of November 5, 1993.

Preliminary Results of the Review

    As a result of our review, we preliminarily determine that the 
following margins exist for the period December 1, 1990 through 
November 30, 1991:
    As a result of our review, we determine the margins to be:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
APSA.......................................................         8.71
CINSA......................................................        45.59
All others.................................................        29.52
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice. Representatives of parties to 
the proceeding may request disclosure of proprietary information under 
administrative protective order no later than 10 days after the 
representative's client or employer becomes a party to the proceeding, 
but in no event later than the date the case briefs are due. Any 
interested party may request a hearing not later than 10 days after 
publication of this notice. Any hearing, if requested, will be held no 
later than seven days after the scheduled date for submission of 
rebuttal briefs. Persons interested in attending the hearing should 
ascertain with the Department the date and time of the hearing. Copies 
of case briefs and rebuttal briefs must be served on interested parties 
in accordance with 19 CFR 353.38(e). Interested parties may submit 
written arguments in case briefs within 30 days of the date of 
publication. Rebuttal briefs, limited to arguments raised in case 
briefs, may be submitted seven days after the time limit for filing the 
case brief.
    The Department will publish the final results of the administrative 
review, including the results of its analysis of issues raised in any 
case or rebuttal brief or at a hearing.
    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.
    Further, the following 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 by section 751(a)(1) of the Tariff Act: (1) The cash deposit 
rates for the reviewed companies will be those rates established in the 
final results of this administrative review; (2) for previously 
reviewed or investigated companies not listed above, the cash deposit 
rate will continue to be the company-specific rate published for the 
most recent period; (3) if the exporter is not a firm covered in this 
review, a prior review, or the original less-than-fair value 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will be the ``all others'' rate established 
in the final notice of the less-than-fair value investigation in this 
case (51 FR 36435 October 10, 1986), in accordance with the Court of 
International Trade's decision in Floral Trade Council v. United 
States, Slip Op. 93-79, and Federal Mogul Corporation v. United States, 
Slip Op. 93-83. The ``all others'' rate is 29.52 percent.
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 190 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and subsequent assessment 
of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: February 4, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-3182 Filed 2-10-94; 8:45 am]
BILLING CODE 3510-DS-P-M