[Federal Register Volume 59, Number 119 (Wednesday, June 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15182]


[[Page Unknown]]

[Federal Register: June 22, 1994]


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DEPARTMENT OF COMMERCE
[A-428-810]

 

High-Tenacity Rayon Filament Yarn, Preliminary Results of 
Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration, 
Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to a request by the respondents, Akzo Faser A.G. 
and Akzo Fibers, Inc. (Akzo), producers/importers of high-tenacity 
rayon filament yarn from Germany, the Department of Commerce (the 
Department) has conducted an administrative review of the antidumping 
duty order on high-tenacity rayon filament yarn from Germany. The 
review period is February 20, 1992 through May 31, 1993. This review 
involves one manufacturer/exporter of this merchandise to the United 
States, Akzo, and its United States subsidiary/importer.
    The review indicates the existence of dumping margins for the 
period, and we preliminary determine to assess antidumping duties equal 
to the difference between the United States price (USP) and the foreign 
market value (FMV).
    Interested parties are invited to comment on these preliminary 
results of review.

EFFECTIVE DATE: June 22, 1994.

FOR FURTHER INFORMATION CONTACT:
Debra R. Crumbie, Amy S. Wei, or Michael J. Heaney, Office of 
Antidumping Compliance, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
5253.

SUPPLEMENTARY INFORMATION:

Background

    On June 30, 1992, the Department published in the Federal Register 
the antidumping duty order on high-tenacity rayon filament yarn from 
Germany (57 FR 29062). On June 7, 1993, the Department published a 
notice in the Federal Register notifying interested parties of the 
opportunity to request an administrative review of high-tenacity rayon 
filament yarn from Germany (58 FR 31941). On June 29, 1993, Akzo 
requested, in accordance with section 353.22(a) of the Commerce 
regulations, that we conduct an administrative review for the period 
February 20, 1992 through May 31, 1993. We published a notice of 
initiation of the antidumping duty administrative review on July 21, 
1993 (58 FR 39007).
    The Department has now conducted a review for this period in 
accordance with section 751 of the Tariff Act of 1930, as amended (the 
Act).

Scope of the Review

    The product covered by this administrative review is high-tenacity 
rayon filament yarn from Germany. During the review period, such 
merchandise was classifiable under the Harmonized Tariff Schedule (HTS) 
item number 5403.10.30.40. High-tenacity rayon filament yarn is a 
multifilament single yarn of viscose rayon with a twist of five turns 
or more per meter, having a denier of 1100 or greater, and a tenacity 
greater than 35 centinewtons per tex. The HTS item number is provided 
for convenience and U.S. Customs purposes. The written description 
remains dispositive as to the scope of the product coverage. The review 
covers Akzo and the period February 20, 1992 through May 31, 1993 
(POR).

United States Price

    In calculating USP, the Department treated Akzo's sales as purchase 
price (PP), as defined in section 772 of the Act, because the 
merchandise was sold to unrelated U.S. purchasers prior to importation. 
PP was based on the free-on-board (FOB) price to unrelated purchasers 
in the United States. We made adjustments, where applicable, for 
foreign brokerage and handling, foreign inland freight, ocean freight, 
U.S. duty, U.S. inland freight, foreign inland insurance, and U.S. 
brokerage.
    We made an addition to USP for taxes which were rebated upon 
exportation. 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 U.S. 
merchandise at the same point in the chain of commerce that the foreign 
market tax was applied to the foreign market sales (see Federal-Mogul,) 
Slip Op. 93-194 at 12).
    In accordance with the Federal-Mogul decision, the Department added 
to USP the result of multiplying the foreign market tax rate by the 
U.S. price 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 
to account for expenses that are later deducted from USP and FMV. 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 not taxes were levied upon foreign market sales.
    Without the adjustments, margins would be artificially increased 
because 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 deductions are made for these expenses, 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 rather is the result of the 
price of the U.S. merchandise containing more expenses than the price 
of the foreign market merchandise.
    The Department's policy of avoiding the creation of artificial 
margins is in accordance with court decisions. The United States Court 
of Appeals for the Federal Circuit has held 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 
(see 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 (see 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, the Department requested that Akzo submit information 
relating to all exporter's sales price (ESP) sales made during the POR. 
The Department analyzed data submitted by Akzo and determined that the 
ESP sales reported were entered and liquidated prior to the date of the 
Department's preliminary determination of sales at less-than-fair-value 
(LTFV). Because this merchandise was entered prior to the date of the 
preliminary determination, it was not covered by this order (see Notice 
of Antidumping Duty Order: High-Tenacity Rayon Filament Yarn from 
Germany, 57 FR 29062 (June 30, 1992)). Therefore, we have excluded 
these sales from this review.
    No other adjustments to USP were claimed or allowed.

Foreign Market Value

    Akzo had sufficient home market sales of the subject merchandise 
during the POR. Therefore, the sales of high-tenacity rayon filament 
yarn in the home market served as a viable basis for calculating FMV.
    Based on findings in the LTFV investigation that home market sales 
of the subject merchandise were made by Akzo at prices below the cost 
of production (COP), the Department conducted a cost investigation for 
this administrative review. We examined whether home market sales were 
made below cost in substantial quantities over an extended period of 
time, and whether such sales were made at prices which permitted 
recovery of all costs within a reasonable period of time in the normal 
course of trade. We calculated Akzo's COP on a model-specific basis as 
the sum of all reported materials costs, labor expenses, factory 
overhead, selling expenses, net interest expense, and revised general 
and administrative expenses. We reallocated general and administrative 
costs as a percentage of cost of goods sold. We compared COP to home 
market prices, net of movement charges, third-party payments, packing, 
rebates, and discounts. Based upon this comparison, we found that there 
were sales below cost.
    Where we determined that less than 10 percent of the home market 
sales of rayon yarn of a particular model were sold at prices below the 
COP, we did not disregard any sales of that model in our calculation of 
FMV. If 10 percent or more, but not more than 90 percent, of the home 
market sales of a particular model of rayon yarn were below cost, we 
excluded the below-cost home market sales prices from our calculation 
of FMV, provided that these below-cost home market sales were made over 
an extended period of time. For those models where more than 90 percent 
of the home market sales were made below cost over an extended period 
of time, we disregarded all home market sales of those models from our 
calculation of FMV and used the constructed value of those models as 
described below.
    To determine whether sales below cost were made over an extended 
period of time, we compared the number of months in which sales below 
cost occurred for a particular model to the number of months in which 
that model was sold. If the model was sold in fewer than three months, 
we did not disregard below-cost sales unless there were below-cost 
sales of that model in each month sold. If a model was sold in three or 
more months, we did not disregard below-cost sales unless there were 
sales below cost in at least three of the months in which the model was 
sold.
    Akzo has not submitted information indicating that any of its sales 
below cost were made at prices which would have permitted ``recovery of 
all costs within a reasonable period of time in the normal course of 
trade,'' as required by section 773(b)(2) of the Act. Therefore, we 
have no basis for concluding that the costs of production of such sales 
have been recovered within a reasonable period of time. As a result of 
our investigation, we disregarded Akzo's below-cost sales made over an 
extended period of time.
    We used constructed value (CV) as FMV for those U.S. sales for 
which there were insufficient sales of the comparison home-market model 
at or above the COP. We calculated CV in accordance with section 773(e) 
of the Act. We made an adjustment to general and administrative 
expenses based on our finding that Akzo had allocated general and 
administrative costs to different product groups based on specific 
allocation methodologies. The costs reported were general in nature and 
related to all operations, and we allocated them to all of Akzo's 
product lines. In addition, we summed the cost of materials, indirect 
selling expenses, direct selling expenses, revised general and 
administrative expenses, net interest expenses, and imputed credit. In 
our calculation of the selling, general, and administrative expenses 
(SG&A), where the sum of the actual selling expenses and the revised 
general and administrative expenses was less than the statutory minimum 
of 10 percent of the cost of manufacturing (COM), we calculated SG&A as 
10 percent of the COM. Where the actual profits were less than the 
statutory minimum of 8 percent of COM plus SG&A, we calculated profit 
as 8 percent of the sum of COM plus SG&A. We adjusted CV for selling, 
credit, and packing expenses.
    For those models that had sufficient above-cost sales, the 
Department calculated FMV using home market prices based on the FOB 
price to unrelated purchasers. Where applicable, we made adjustments 
for inland freight (post-sale), inland insurance, packing, discounts, 
other discounts, interest revenue, rebates, and third party payments. 
We made adjustments for differences in technical services expenses and 
credit. We also made adjustments for differences in the physical 
characteristics of merchandise. 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.

Preliminary Results

    As a result of our review, we preliminarily determine the dumping 
margin to be:

------------------------------------------------------------------------
                                                                 Margin 
          Manufacturer/Exporter                Time period     (percent)
------------------------------------------------------------------------
Akzo Faser A.G...........................     2/20/92-5/31/93      1.11 
------------------------------------------------------------------------

    Parties to this proceeding may request disclosure within 5 days 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, or the first workday 
thereafter. Interested parties may submit case briefs and/or written 
comments not later than 30 days after the date of publication. Rebuttal 
briefs and rebuttals to written comments, limited to issues raised in 
such briefs or comments, may be filed not later than 37 days after the 
date of publication. The Department will publish a notice of the final 
results of this administrative review, which will include the results 
of its analysis of issues raised in any such briefs or comments.
    The Department shall determine, and the U.S. 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 U.S. Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of high-tenacity rayon filament yarn from Germany 
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) of the Act: (1) The cash deposit rate for 
Akzo will be that established in the final results of this review; (2) 
for merchandise exported by manufacturers or exporters not covered in 
this review but covered in the original LTFV investigation, the cash 
deposit will continue to be the rate published in the final 
determination for which the manufacturer or exporter received a 
company-specific rate; (3) if the exporter is not a firm covered in 
this review, or the original investigation, but the manufacturer is, 
the cash deposit rate will be that established for the manufacturer of 
the merchandise in the final results of this review, or the original 
investigation; (4) if neither the exporter nor the manufacturer is a 
firm covered in this or any previous review, the cash deposit rate will 
be the ``all others rate'' from the LTFV investigation.
    On May 25, 1993, the CIT in Floral Trade Council v. United States, 
822 F. Supp. 766 (1993), and Federal-Mogul Corporation and the 
Torrington Company v. United States, 822 F. Supp. 782 (1993), decided 
that once an ``all others'' rate is established for a company, it can 
only be changed through an administrative review. The Department has 
determined that in order to implement these decisions, it is 
appropriate to reinstate the original ``all others'' rate from the LTFV 
investigation (or that rate as amended for correction for clerical 
errors or as a result of litigation) in proceedings governed by 
antidumping duty orders for the purposes of establishing cash deposits 
in all current and future administrative reviews. Thus, the ``all 
others'' rate for the purposes of this review will be 24.58 percent, 
the ``all others'' rate established in the final notice of LTFV 
investigation by the Department (57 FR 21770).
    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: June 15, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-15182 Filed 6-21-94; 8:45 am]
BILLING CODE 3510-DS-M