[Federal Register Volume 60, Number 72 (Friday, April 14, 1995)]
[Notices]
[Pages 19021-19023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9275]



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DEPARTMENT OF COMMERCE
[C-201-003]


Ceramic Tile From Mexico; Final Results of Countervailing Duty 
Administrative Review

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

ACTION: Notice of final results of countervailing duty administrative 
review.

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SUMMARY: On November 10, 1994, the Department of Commerce (the 
Department) published in the Federal Register its preliminary results 
of administrative review of the countervailing duty order on ceramic 
tile from Mexico (59 FR 56057) for the period January 1, 1992 through 
December 31, 1992. We have now completed this review and determine the 
total bounty or grant to be zero or de minimis for 32 companies, and 
2.08 percent ad valorem for all other companies. In accordance with 19 
CFR 355.7, any rate less than 0.5 percent ad valorem is de minimis. We 
will instruct the U.S. Customs Service to assess countervailing duties 
as indicated above.

EFFECTIVE DATE: April 14, 1995.

FOR FURTHER INFORMATION CONTACT: Gayle Longest or Kelly Parkhill, 
Office of Countervailing Compliance, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On November 10, 1994, the Department published in the Federal 
Register (59 FR 56057) the preliminary results of its administrative 
review of the countervailing duty order on ceramic tile from Mexico (47 
FR 20012; May 10, 1982). The Department has now completed this 
administrative review in accordance with section 751 of the Tariff Act 
of 1930, as amended (the Act).
    We invited interested parties to comment on the preliminary 
results. On December 12, 1994, a case brief was submitted by Ceramica 
Regiomontana, S.A., a producer of the subject merchandise which 
exported ceramic tile to the United States during the review period 
(respondent).
    The review period is January 1, 1992, through December 31, 1992. 
This review involves 33 companies and the following programs:

(1) BANCOMEXT Financing for Exporters;
(2) The Program for Temporary Importation of Products used in the 
Production of Exports (PITEX);
(3) Other BANCOMEXT preferential financing;
(4) Other Dollar-Denominated Financing Programs;
(5) Fiscal Promotion Certificates (CEPROFI);
(6) Import duty reductions and exemptions;
(7) State tax incentives;
(8) Article 15 Loans;
(9) NAFINSA FONEI-type financing; and
(10) NAFINSA FOGAIN-type financing.

    In accordance with the recent Court of International Trade (CIT) 
decision in Ceramica Regiomontana, S.A. et al. v. United States, Slip 
Op. 94-74, the Department is changing the rate of 2.55 percent ad 
valorem preliminarily assigned to Ceramica Regiomontana to the country-
wide rate of 2.08 percent ad valorem.

Applicable Statute and Regulations

    The Department is conducting this administrative review in 
accordance with section 751(a) of the Act. Unless otherwise indicated, 
all citations to the statute and to the Department's regulations are in 
reference to the provisions as they existed on December 31, 1994.

Scope of Review

    Imports covered by this review are shipments of Mexican ceramic 
tile, including non-mosaic, glazed, and unglazed ceramic floor and wall 
tile. During the review period, such merchandise was classifiable under 
the Harmonized Tariff Schedule (HTS) item numbers 6907.10.0000, 
6907.90.0000, 6908.10.0000, and 6908.90.0000. The HTS item numbers are 
provided for convenience and Customs purposes. The written description 
remains dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

    We calculated the total bounty or grant on a country-wide basis by 
first calculating the bounty or grant for each company subject to the 
administrative review. We then weight-averaged the rate received by 
each company using as the weight its share of total Mexican exports to 
the United States of the [[Page 19022]] subject merchandise, including 
all companies, even those with de minimis and zero rates. We then 
summed the individual companies' weighted-average rate to determine the 
total bounty or grant from all programs benefitting exports of the 
subject merchandise to the United States.
    Since the country-wide rate calculated using this methodology was 
above de minimis, as defined by 19 CFR 355.7(1994), we proceeded to the 
next step, and examined the total bounty or grant calculated for each 
company to determine whether individual company rates differed 
significantly from the weighted-average country-wide rate, pursuant to 
19 CFR 355.22(d)(3). Thirty-two companies had a significantly different 
total bounty or grant during the review period pursuant to 19 CFR 
355.22(d)(3). Accordingly, these companies are treated separately for 
assessment and cash deposit purposes. All other companies are assigned 
the country-wide rate.

Analysis of Comments

    Comment 1. As in past reviews, Ceramica Regiomontana contends that 
the Department does not have the legal authority to assess 
countervailing duties on ceramic tile from Mexico and must terminate 
the review. Effective April 23, 1985, the date of the ``Understanding 
Between the United States and Mexico regarding Subsidies and 
Countervailing Duties'' (the Understanding), Mexico became a ``country 
under the Agreement.'' Therefore, Ceramica Regiomontana argues that 19 
U.S.C. 1671 requires an affirmative injury determination as a 
prerequisite to the imposition of countervailing duties on any Mexican 
merchandise imported on or after April 23, 1985. Furthermore, Ceramica 
Regiomontana argues that the only applicable statutory authority for 
this review would be 19 U.S.C. 1303; however, because Mexico became a 
country under the Agreement, the provisions of section 1303 could no 
longer apply. Therefore, Ceramica Regiomontana maintains the Department 
has no authority to conduct this review and the review should be 
terminated.
    Department's Position. We fully addressed this issue in a previous 
administrative review of this countervailing duty order. See Ceramic 
Tile from Mexico; Final Results of Countervailing Duty Administrative 
Review (55 FR 50744; December 10, 1990). The CIT and the U.S. Court of 
Appeals for the Federal Circuit (Federal Circuit) have sustained the 
Department's legal position that Mexican imports subject to an 
outstanding countervailing duty order already in effect when Mexico 
entered into the Understanding are not entitled to an injury test 
pursuant to section 701 of the Act and paragraph 5 of the Understanding 
(Ceramica Regiomontana, S.A., et. al v. United States, Slip Op. 96-78, 
Court No. 89-06-00323 (May 5, 1994) (Ceramica Regiomontana''); Cementos 
Anajuac del Golfo, S.A. v. U.S., 879 F.2d 847 (Fed. Cir. 1989), cert. 
denied, 110 S.CT. 1318 (1989)). The countervailing duty order on 
ceramic tile from Mexico was published prior to Mexico's entering into 
the Understanding and, therefore, imports of ceramic tile are not 
entitled to an injury test pursuant to section 701 of the Act.
    Comment 2. Ceramica Regiomontana argues that the Department failed 
to include zero or de minimis companies in calculating the country-wide 
subsidy rate. Ceramica Regiomontana maintains that the Federal Circuit 
has ruled on this issue in Ipsco, Inc. v. United States (Ipsco), 899 
F.2d 1192, 1197 (Fed. Cir. 1990), and the Department is required to 
follow this ruling. According to Ceramica Regiomontana, the Federal 
Circuit's interpretation of Ipsco is that ``the country-wide 
countervailing duty rate calculation should be made inclusive of those 
companies receiving no benefit or de minimis in instances where such 
methodology would result in a zero or de minimis rate as well as in 
instances where the country-wide countervailing duty rate is greater 
than de minimis.'' Ceramica Regiomontana also argues that the CIT has 
recently affirmed the Ipsco decision in Ceramica Regiomontana, and that 
the Department should follow the CIT's holdings by including de minimis 
and zero companies in the calculation of the country-wide rate.
    Department's Position. We agree that, pursuant to the CIT's holding 
in Ceramica Regiomontana, de minimis and zero rate companies should be 
included in the calculation of the country-wide rate. Accordingly, all 
33 companies covered by this administrative review have been included 
in the calculation of the country-wide rate as stated in the above 
section of this notice concerning calculation methodology for 
assessment and cash deposit purposes. In accordance with the recent CIT 
decision in Ceramica Regiomontana, we are thus assigning the country-
wide rate of 2.08 percent ad valorem to Ceramica Regiomontana.
    Comment 3. As in past administrative reviews, Ceramica Regiomontana 
contends that the Department incorrectly treated the benefit from the 
PITEX program as a grant. According to Ceramica Regiomontana, PITEX 
benefits should be calculated as interest-free loans similar to the 
Department's treatment of loan duty deferrals under a Peruvian program 
in Cotton Sheeting and Sateen from Peru; Final Results of 
Administrative Review of Countervailing Duty Order (49 FR 34542).
    Ceramica Regiomontana contends that the Department provides no 
legal justification for refusing to treat PITEX as an interest-free 
loan rather than a grant in Certain Textile Mill Products from Mexico; 
Final Results of Countervailing Duty Administrative Review (56 FR 
50858). Furthermore, Ceramica Regiomontana argues that the Department 
``bases its refusal to calculate PITEX as an interest-free loan on the 
difficulty of doing the calculation.'' Ceramica Regiomontana maintains 
that although there is no certainty whether a company will ultimately 
be exempt from payment of all or a portion of the duty, the deferral 
should be treated as a loan rather than a grant in accordance with 
legal requirements.
    Department's Position. We fully addressed this issue in the 
previous administrative review of this case. See Ceramic Tile from 
Mexico; Final Results of Countervailing Duty Administrative Review (57 
FR 24247; June 8, 1992). Under PITEX, an exporter may temporarily 
import machinery for five years. At the end of five years, the exporter 
can renew the temporary stay on an annual basis indefinitely. Since 
payment of import duties upon conversion to permanent import status is 
based on the depreciated value of the equipment at the time it is 
converted to permanent import status, the exporter can continue the 
temporary import status until the depreciated value of the equipment is 
zero and no import duties are owed. Therefore, duty exemptions under 
PITEX are properly treated as grants, and we expensed them in full at 
the time of importation, when the exporters otherwise would have paid 
duties on the imported machinery. Id.; Final Negative Countervailing 
Duty Determination; Silicon Metal From Brazil (56 FR 26988). Ceramica 
Regiomontana has presented us with no new evidence or arguments on this 
issue.
    Comment 4. Ceramica Regiomontana argues that the calculation of the 
PITEX net subsidy is incorrect, because the Department improperly 
divided the PITEX benefit by each company's total exports. Ceramica 
Regiomontana contends that since the machinery imported under the PITEX 
program may be used to produce products for both the 
[[Page 19023]] export and domestic markets, the benefits from the 
program should be divided by total sales rather than by total exports. 
Furthermore, Ceramica Regiomontana argues that the program does not 
limit the use of imported machinery to production for export products 
only. According to Ceramica Regiomontana, machinery imported by the 
company is used for production of merchandise for both export and 
domestic markets. Ceramica Regiomontana claims that the Department's 
allocation method in PITEX is incorrect because it does not measure the 
benefit of the subsidy to the recipient and the proper method of 
allocation would be based on total sales.
    Department's Position. We disagree. In order to meet the 
eligibility criteria for the PITEX program, a company is required to 
have a proven export record, and to use the imported merchandise (both 
raw materials and equipment) in the production of goods for export. 
Since receipt of benefits under PITEX is tied to the company's exports, 
thereby making the program an export subsidy, the proper basis for 
allocation of these benefits is total exports, as opposed to total 
sales. See Certain Textile Mill Products from Mexico; Final Results of 
Countervailing Duty Administrative Review (56 FR 12175, 12178; March 
22, 1991).

Final Results of Review

    As a result of our review, we determine the total bounty or grant 
to be zero or de minimis for the following 32 companies during the 1992 
review period and 2.08 percent ad valorem for all other companies. In 
accordance with 19 CFR 355.7, any rate less than 0.5 percent ad valorem 
is de minimis.

(1) Adrian Sifuentes Jimenez.
(2) Agustin Cedillo Ruiz.
(3) Alejandro Estrada Silva.
(4) Apolonio Arias Vasquez.
(5) Arturo Leija Lucio.
(6) Aurelio Cedillo Ruiz.
(7) Azuelejos Decorativos Carrillo, S.A.
(8) Efrain Medina Carrillo.
(9) Emilio Pacheco.
(10) Faustino Nuncio Silva.
(11) Ima Regiomontana, S.A. de C.V.
(12) Industrias Intercontinental, S.A. de C.V.
(13) Internacional de Ceramica, S.A. de C.V.
(14) Javier Leija Lucio.
(15) Jesus Gallegos Loivares.
(16) Jesus Jimenez Lucio.
(17) Jose Arellano Valdez.
(18) Jose Dolores Hernandez.
(19) Jose Silva Romero.
(20) Juan Cortez Coronel.
(21) Leopoldo Montiel Rincon.
(22) Luis Najera Flores.
(23) Luis Paulino Flores.
(24) Norberto Cuellar Zuniga.
(25) O.H. Internacional, S.A. de C.V.
(26) Pedro Lopez Alonso.
(27) Raul Leija.
(28) Recubrimientos Mezquital, S.A. de C.V.
(29) Ricardo Berrones.
(30) Taller de Azuelejos Coloniales.
(31) Vicente Jalomo Reyna.
(32) Zenon Cortez Coronel.

    Therefore, the Department will instruct the Customs Service to 
liquidate, without regard to countervailing duties, entries of the 
subject merchandise from Mexico exported by the 32 companies listed 
above for the period on or after January 1, 1992, and on or before 
December 31, 1992, and to assess countervailing duties of 2.08 percent 
of the f.o.b. invoice price of shipments from all other companies for 
the same period.
    The Department will instruct the Customs Service to collect cash 
deposits of zero estimated countervailing duties for the 32 companies 
listed above and 2.08 percent ad valorem estimated countervailing 
duties, as provided by section 751(a)(1) of the Act, on shipments of 
this merchandise from all other companies entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice. This deposit requirement shall remain in effect until 
publication of the final results of the next administrative review.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19 CFR 355.22 and 
19 CFR 355.25.

    Dated: April 7, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-9275 Filed 4-13-95; 8:45 am]
BILLING CODE 3510-DS-P