[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: 94-3274]


[[Page Unknown]]

[Federal Register: February 11, 1994]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-815]

 

Gray Portland Cement and Clinker From Japan; 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 from the Ad Hoc Committee of Southern 
California Producers of Gray Portland Cement (the petitioner), the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on gray portland cement and 
clinker from Japan. The review covers one manufacturer/exporter, Onoda 
Cement Co., Ltd. (Onoda), and the period May 1, 1992, through April 30, 
1993. The review indicates the existence of dumping margins during this 
period.
    As a result of the review, the Department has preliminarily 
determined to assess antidumping duties equal to the difference between 
the United States price (USP) and foreign market value (FMV). 
Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE: February 11, 1994.

FOR FURTHER INFORMATION CONTACT: David Genovese or Michael Heaney, 
Office of Antidumping Compliance, International Trade Administration, 
U.S. Department of Commerce, Washington, DC 20230; telephone (202)482-
5254.

SUPPLEMENTARY INFORMATION:

Background

    On April 28, 1993, the Department published a notice of 
``Opportunity to Request an Administrative Review'' (58 FR 25802) of 
the antidumping duty order on gray portland cement and clinker from 
Japan (56 FR 21658, May 10, 1991). On May 3, 1993, the petitioner 
requested that the Department conduct an administrative review of the 
antidumping duty order on gray portland cement and clinker from Japan 
for Onoda. We initiated the review, covering the period May 1, 1992, 
through April 30, 1993, on June 25, 1993 (58 FR 34414). The Department 
is conducting this review in accordance with section 751 of the Tariff 
Act of 1930, as amended (the Act).

Scope of the Review

    The products covered by this review are gray portland cement and 
clinker from Japan. Gray portland cement is a hydraulic cement and the 
primary component of concrete. Clinker, an intermediate material 
produced when manufacturing cement, has no use other than grinding into 
finished cement. Microfine cement was specifically excluded from the 
antidumping duty order. Gray portland cement is currently classifiable 
under the Harmonized Tariff Schedule (HTS) item number 2523.29, and 
clinker is currently classifiable under HTS item number 2523.10. Gray 
portland cement has also been entered under item number 2523.90 as 
``other hydraulic cements''.
    The HTS item numbers are provided for convenience and Customs 
purposes. The written product description remains dispositive as to the 
scope of the product coverage.
    This review covers Onoda and the period May 1, 1992, through April 
30, 1993.

Product Comparisons

    Product comparisons were made on the basis of standards established 
by the American Society for Testing and Materials (ASTM standards). All 
of the cement sold in the United States fell within two ASTM standards: 
Type I and Type II. Onoda sold thirteen kinds of cement in the home 
market during the period of review. Onoda provided documents indicating 
the chemical composition, technical specifications, and uses for each 
cement type sold in the home market during the period of review.
    Based on information submitted on the record, the Department's 
finding in the 1983 investigation (see Final Determination of Sales at 
Less Than Fair Value: Portland Hydraulic Cement from Japan, 48 FR 
41049, September 13, 1983), and our own research, we have determined 
that Type N cement is the closest comparable model to Type I cement and 
Type M Cement is the closest comparable model to Type II cement.
    Onoda made no sales of clinker in the United States during the 
period of review.

United States Price

    In calculating USP, the Department used purchase price (PP) or 
exporter's sales price (ESP), as defined in sections 772(b) and (c) of 
the Act. We made deductions, where appropriate, for loading costs, 
ocean freight, marine insurance, U.S. duty, unloading costs, all U.S. 
freight and insurance, terminal expenses, discounts, credit, 
commissions, and credit memoranda. We also deducted indirect selling 
expenses where appropriate, which included Onoda's reported indirect 
selling expenses, plus technical services, advertising, bad debt, 
quality control expenses, dispatcher expenses, foreign inspection 
costs, general and administrative expenses, inventory carrying costs, 
and product liability expenses. We added to the USP the interest 
charged to late-paying customers.
    On October 7, 1993, the United States Court of International Trade 
(CIT), in Federal-Mogul Corporation and The Torrington Company 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 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 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 the foreign market sales (Federal-Mogul, Slip Op. 93-194 at 
12).
    The Department has changed its methodology in accordance with the 
Federal-Mogul decision. The Department has added to USP the result of 
multiplying the foreign market tax rate by the price of the merchandise 
sold in the United States at the same point in the chain of commerce 
that the foreign market tax was applied to foreign market sales. The 
Department has also adjusted the USP tax adjustments and the amount of 
tax included in FMV. These adjustments deducted 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 holding of the United States 
Court of Appeals for the Federal Circuit that the application of the 
USP tax adjustment under section 772(d)(1)(C) of the 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 from FMV and USP upon the USP tax adjustment and the amount of 
tax included in FMV (Daewoo Electronics Co., Ltd. v. United States, 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.
    In addition to the aforementioned deductions, we deducted value 
added in the United States pursuant to section 772(e)(3) of the Act for 
ESP sales involving further manufacture in the United States. We have 
determined that further manufacturing costs include: (1) The cost of 
manufacture; (2) movement charges; and (3) general expenses, including 
selling, general, and administrative expenses. The value added consists 
of the further manufacturing costs incurred in converting the cement 
into a ready mix product, and a proportional amount of profit or loss 
related to the value added. We calculated profit or loss by deducting 
from the sales price of the ready mix: (1) The production cost of the 
cement; (2) the finishing costs incurred in the United States; and (3) 
all expenses incurred in transporting the cement into the United 
States.
    We then allocated proportionately the total profit or loss to the 
imported cement and the ready mix based on the proportion of the total 
cost of production to the cost of production attributable to the 
further manufacturing cost in the United States. We deducted only the 
profit or loss attributable to the U.S. value added.

Foreign Market Value

    In calculating FMV, we used home market price, as defined in 
section 773(a) of the Act. Home market price was based on ex-factory, 
CIF terminal, or delivered prices to related and unrelated customers in 
the home market. The Department has not excluded sales to related 
parties because the Department has determined for this review that 
prices to related parties are comparable to prices to unrelated parties 
and, as a result, are at arm's-length.
    Due to the existence of sales below the cost of production (COP) in 
the first administrative review, the Department had reasonable grounds 
to believe or suspect that sales below the COP may have occurred during 
this review. Accordingly, the Department initiated a COP investigation 
for this review. We calculated COP based on Onoda's cost of materials, 
fabrications, and general expenses. The results of our cost test showed 
that more than ten percent but less than ninety percent of home market 
sales were below the COP and therefore, sales below the COP were made 
in substantial quantities. We determined that these below-cost sales 
were made over an extended period of time because they were made in 
more than two months of the review period. Furthermore, no evidence was 
presented to indicate that below-cost COP prices would permit the 
recovery of all costs within a reasonable period of time in the normal 
course of trade. Thus, we dropped from our calculations of FMV all home 
market sales that were made below the COP.
    In calculating the FMV used in the dumping calculation, we made 
deductions, where appropriate, for post-sale transportation costs, 
credit, packing, commissions, all freight costs, and all rebates and 
discounts. We made an upward adjustment to the home market sales price 
for interest Onoda charged to late-paying customers.
    The Department also made an adjustment to the amount of consumption 
taxes included in FMV in accordance with the Department's 
aforementioned tax adjustment methodology.
    For comparison to PP sales, pursuant to 19 CFR 353.56 (1993) of the 
Department's regulations, we made a circumstance-of-sale adjustment, 
where appropriate, for differences in credit. In addition, the 
Department did not deduct pre-sale transportation costs in accordance 
with the United States Court of Appeals for the Federal Circuit's 
ruling in The Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray 
Portland Cement v. United States, Slip Op. 93-1239 (CAFC, January 5, 
1994).
    For comparisons to ESP sales, we made further deductions for home 
market indirect selling expenses, which were comprised of pre-sale 
transportation costs, general indirect selling expenses, technical 
services, advertising, quality control cost, and expenses incurred for 
the scrapping of distribution terminals and the disposal of obsolete 
equipment. We limited the amount we deducted as home market indirect 
selling expenses to the amount of indirect selling expenses incurred on 
sales in the U.S. market, in accordance with Sec. 353.56(b)(2) of the 
Department's regulations.
    Where appropriate, we made further adjustments to FMV to account 
for differences in physical characteristics of the merchandise, in 
accordance with Sec. 353.57 of the Department's regulations.

Preliminary Results of Review

    As a result of our comparison of USP to FMV, the Department 
preliminarily determines that a margin of 8.22 percent exists for Onoda 
for the period May 1, 1992, through April 30, 1993.
    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice and any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the date of publication of this 
notice, or the first workday thereafter and will be limited to those 
issues raised in the case briefs and/or written comment. Case briefs 
and/or written comments from interested parties may be submitted not 
later than 30 days after the date of publication. Rebuttal briefs and 
rebuttals to written comments, limited to the issues raised in the case 
briefs and comments, may be filed not later than 37 days after the date 
of publication. The Department will publish the final results of this 
administrative review, including the results of its analysis of any 
written comments or case briefs.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between USP and FMV may vary from the percentage stated 
above. The Department will issue appraisement instructions directly to 
the Customs Service.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise, entered or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
company will be that rate established in the final results of this 
administrative review; (2) for merchandise exported by manufacturers or 
exporters not covered in this review but covered in a previous review 
or the original less-than-fair-value (LTFV) investigation, the cash 
deposit rate will continue to be the rate published in the most recent 
final results or determination for which the manufacturer or exporter 
received a company-specific rate; (3) if the exporter is not a firm 
covered in this review, earlier reviews, or the original investigation, 
but the manufacturer is, the cash deposit rate will be that established 
for the manufacturer of the merchandise in these final results of 
review, earlier reviews, or the original investigation, whichever is 
the most recent; and (4) the ``all others'' rate will be 63.73 percent.
    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 preliminary reminder to importers of 
their responsibility under 19 CFR 353.26 to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: February 4, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-3274 Filed 2-10-94; 8:45 am]
BILLING CODE 3510-DS-P