[Federal Register Volume 60, Number 76 (Thursday, April 20, 1995)]
[Notices]
[Pages 19723-19726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9837]



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DEPARTMENT OF COMMERCE
[A-570-803]


Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, From the People's Republic of China; Preliminary Results of 
Antidumping Duty Administrative Reviews

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

action: Notice of preliminary results of antidumping duty 
administrative reviews.

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summary: In response to a request by a U.S. importer, the Department of 
Commerce (the Department) is conducting 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 subject merchandise 
to the United States and the period February 1, 1992, through January 
31, 1993. The reviews indicate the existence of dumping margins during 
the period of review.
    We have preliminarily determined that sales have been made below 
the foreign market value (FMV). If these preliminary results are 
adopted in or final results of administrative reviews, we will instruct 
U.S. Customs to assess antidumping duties equal to the difference 
between United States price (U.S. price) and the FMV.
    Interested parties are invited to comment on these preliminary 
results.

effective date: April 20, 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 NW., Washington, DC 20230; telephone: (202) 482-
4733

SUPPLEMENTARY INFORMATION:

Background

    On February 19, 1991, the Department published in the Federal 
Register (56 FR 6622) the antidumping duty orders on HFHTs from the 
PRC. On February 17, 1993, the Department published in 
[[Page 19724]] the Federal Register (58 FR 8739) a notice of 
opportunity to request administrative reviews of these antidumping duty 
orders. On February 26, 1993, in accordance with 19 CFR 353.22(a), a 
U.S. importer of HFHTs from the PRC, Olympia Industrial Inc., requested 
that we conduct administrative reviews of its two suppliers, Fujian 
Machinery & Equipment Import & Export Corporation (FMEC) and Shandong 
Machinery Import & Export Corporation (SMC). We published the notice of 
initiation of these antidumping duty administrative reviews on March 
26, 1993 (58 FR 16397). The Department is conducting these 
administrative reviews in accordance with section 751 of the Tariff Act 
of 1930, as amended (the Act).

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 trucks 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 from these reviews 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.
    These reviews cover two exporters of HFHTs from the PRC, FMEC and 
SMC. The review period is February 1, 1992 through January 31, 1993.

Separate Rates

    The business licenses of both FMEC and SMC indicate that they are 
owned by ``all the people.'' As stated in the 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), 
``ownership of a company by all of the people does not require the 
application of a single rate.'' Accordingly, FMEC and SMC are eligible 
for consideration for separate rates.
    To establish whether a company is sufficiently independent to be 
entitled for separate rates, the Department analyzes each exporting 
entity under the test established in the Final Determination of Sales 
at Less Than Fair Value: Sparklers from the People's Republic of China 
(56 FR 20588, May 6, 1991) (Sparklers), as amplified in Silicon 
Carbide. Under this policy, exporters in non-market-economy (NME) 
countries are entitled to separate, company-specific margins when they 
can demonstrate an absence of government control, both in law and in 
fact, with respect to exports. Evidence supporting, though not 
requiring, a finding of de jure absence of government control includes: 
(1) an absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies. 
De facto absence of government control with respect to exports is based 
on four criteria: (1) whether the export prices are set by or subject 
to the approval of a government authority; (2) whether each exporters 
retains the proceeds from its sales and makes independent decisions 
regarding the disposition of profits or financing of losses; (3) 
whether each exporter has autonomy in making decisions regarding the 
selection of management; and (4) whether each exporter has the 
authority to negotiate and sign contracts.
    We have found that the evidence on the record demonstrates an 
absence of government control, both in law and in fact, with respect to 
FMEC's and SMC's exports according to the criteria identified in 
Sparklers and Silicon Carbide. For further discussion of the 
Department's preliminary determination that FMEC and SMC are entitled 
to separate rates, see Decision Memorandum to Holly A. Kuga, Director, 
Office of Antidumping Compliance, dated March 13, 1995; ``Separate 
rates for Fujian Machinery & Equipment Import & Export Corporation and 
Shandong Machinery Import & Export Corporation in the second 
administrative reviews of heavy forged hand tools, finished or 
unfinished, with or without handles, from the People's Republic of 
China,'' which is on file in the Central Records Unit (room B099 of the 
Main Commerce Building).

Verification

    Verification of the questionnaire responses of FMEC and SMC was 
conducted between June 24, 1994, and July 5, 1994, at FMEC's facility 
in Fuzhou, Fujian Province, at SMC's facility in Qingdao City, Shandong 
Province, and at two factories which manufacture HFHTs for FMEC and 
SMC, Rizhao Hardware & Machinery Factory (Rizhao) and Linyi Tool 
Factory (Linyi).

United States Price

    With the exception of certain of SMC's U.S. sales for which the 
best information available (BIA) was used, as described below, the 
Department used purchase price and exporter's sales price (ESP), in 
accordance with sections 772(b) and (c) of the Act, in calculating U.S. 
price.
    We calculated purchase price based on, as appropriate, the FOB, 
CIF, or C&F port price to unrelated purchasers. We made deductions from 
purchase price and ESP sales, where appropriate, for brokerage and 
handling, foreign inland freight, ocean freight, and marine insurance. 
Ocean freight services were provided by both PRC-owned and non-PRC-
owned companies. Where we knew that the company providing the ocean 
freight services was not a PRC-owned company, we used the actual rates 
charged; for ocean freight services provided by PRC-owned companies, we 
applied a weighted-average ocean freight rate derived from those sales 
for which we used actual ocean freight rates. Since marine insurance 
services were provided by PRC-owned companies, we based the deduction 
for marine insurance on surrogate values. We also used surrogate data 
to value foreign inland freight and brokerage and handling. We selected 
India as the surrogate country for reasons explained in the ``Foreign 
Market Value'' section of this notice.

Foreign Market Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine FMV using a factors of 
production methodology if (1) the merchandise is exported from a NME 
country, and (2) the information does not permit the calculation of FMV 
using [[Page 19725]] home market prices, third country prices, or 
constructed value (CV) under section 773(a) of the Act.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. None of the parties to these 
proceedings has contested such treatment in these reviews. Accordingly, 
we calculated FMV in accordance with section 773(c) of the Act and 
section 353.52 of the Department's regulations. We determined that 
India is comparable to the PRC in terms of per capita gross national 
product (GNP), the growth rate in per capita GNP, and the national 
distribution of labor, and is a significant producer of comparable 
merchandise. For further discussion of the Department's selection of 
India as the primary surrogate country, see Memorandum to Laurie 
Lucksinger dated March 18, 1993; ``AD Order on Heavy Forged Hand Tools 
from the People's Republic of China (case #A-570-803): Nonmarket-
Economy Status and Surrogate Country Determinations,'' which is on file 
in the Central Records Unit (room B099 of the Main Commerce Building).
    For purposes of calculating FMV, we valued PRC factors of 
production as follows, in accordance with section 773(c)(1) of the Act:
     To value all direct materials used in the production of 
HFHTs, including steel, steel pellets, resin glue, paint, varnish, wood 
for handles, iron wedges, anti-rust oil, scrap steel, detergent, and 
dilution, we used the rupee per metric ton, per kilogram, or per cubic 
meter value of imports into India for April-December 1992, obtained 
from the Monthly Statistics of the Foreign Trade of India, Volume II--
Imports, December 1992 (1992 Indian Import Statistics). We made 
adjustments to include freight costs incurred between the suppliers and 
the HFHT factories. We also made an adjustment to the steel input 
factor for scrap and waste steel which was sold.
     For direct labor, we used the labor rates reported in the 
Business International Corporation report IL&T India, released November 
1992. This source breaks out labor rates between skilled, unskilled, 
semi-skilled, and foreman labor for 1992 and provides information on 
the number of labor hours worked per week.
     For factory overhead, we used information reported in the 
December 1992 Reserve Bank of India Bulletin. From this information, we 
were able to determine factory overhead as a percentage of total cost 
of manufacture.
     For selling, general, and administrative (SG&A) expenses, 
we used information obtained from the December 1992 Reserve Bank of 
India Bulletin. We calculated an SG&A rate by dividing SG&A expenses by 
the cost of manufacture. Since the calculated SG&A expense rate is less 
than 10 percent, we used the statutory minimum of 10 percent to 
calculate SG&A expenses.
     To calculate a profit rate, we used information obtained 
from the December 1992 Reserve Bank of India Bulletin.
     To value the packing materials, including cartons (except 
for cartons used at Rizhao), wood for pallets, anti-rust paper, anti-
dump paper, plastic and iron straps, plastic bags, iron buttons and 
knots, nails, synthetic fiber, and iron wire, we used import statistics 
for India obtained from the 1992 Indian Import Statistics. We adjusted 
these values to include freight costs incurred between the suppliers 
and the HFHT factories. Rizhao uses imported cartons for packing; we 
used the import price of these cartons to value cartons for Rizhao.
     To value coal, we used the price of steam coal reported 
for 1990 in the International Energy Agency publication Energy Price 
and Taxes, 3rd Quarter 1993. We adjusted the value of coal to reflect 
inflation through 1992 using wholesale price indices of India (WPI) as 
published in the International Financial Statistics by the 
International Monetary Fund (IMF).
     To value electricity, we used the price of electricity for 
1990 reported in the Asian Development Bank publication Energy 
Indicators of Developing Member Countries of Asian Development Bank, 
July 1992. We adjusted the value of electricity to reflect inflation 
through 1992 using WPI published by the IMF.
     To value truck freight, we used the price reported in a 
June 1992 cable from the U.S. Embassy in India submitted for the Final 
Determination of Sales at Less Than Fair Value; Sulfanilic Acid from 
the People's Republic of China (57 FR 29705, July 6, 1992).
     To value rail freight, we used the price reported in a 
December 1989 cable from the U.S. Embassy in India submitted for the 
Final Results of Antidumping Duty Administrative Review: Shop Towels of 
Cotton from the People's Republic of China (56 FR 4040, February 1, 
1991). We adjusted the rail freight rates to reflect inflation through 
1992 using WPI published by the IMF.

Currency Conversion

    We made currency conversions in accordance with 19 CFR 353.60(a). 
Currency conversions were made at the rates certified by the Federal 
Reserve Bank.

Best Information Available

    In deciding what to use as BIA, section 353.37(b) of the 
Department's regulations provides that the Department may take into 
account whether a party refuses to provide requested information or 
impedes a proceeding. Thus, the Department determines on a case-by-case 
basis what is BIA. When a company refuses to provide the information 
requested in the form required, or otherwise significantly impedes the 
Department's review, the Department will normally assign to that 
company the higher of (1) The highest of the rates found for any firm 
for the same class or kind of merchandise in the less-than-fair value 
(LTFV) investigation or a prior administrative review; or (2) the 
highest rate found in the current review for any firm for the same 
class or kind of merchandise.
    When, on the other hand, a company has cooperated with the 
Department's request for information but fails to provide information 
requested in a timely manner or in the form required such that margins 
for certain sales cannot be calculated, the Department will normally 
assign to those sales the higher of either: (1) The highest margin 
calculated for that company in any previous review or the original 
investigation; or (2) the highest calculated margin for any respondent 
that supplied an adequate response for the current review. See Final 
Results of Antidumping Duty Administrative Reviews and Revocation in 
Part of An Antidumping Duty Order (Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof from France, Germany, Italy, 
Japan, Rumania, Singapore, Sweden, Thailand and the United Kingdom) (58 
FR 39729, July 26, 1993).
    The Department used BIA for the following sales made by SMC: 
purchase price sales of axes and sales that were first presented to the 
Department at the onset of verification and not reported in SMC's 
questionnaire responses.
    SMC's sales of axes, a separate class or kind, were first reported 
to the Department in its second supplemental questionnaire response 
dated May 14, 1994. Additional sales of axes were then presented to the 
Department for the first time at verification. SMC did not submit 
factors of production data for the models sold in these sales. Since 
these sales data were not submitted in a timely fashion, and because 
SMC failed to submit data necessary for the calculation of FMV for this 
class or kind of merchandise, we are applying the [[Page 19726]] most 
adverse BIA to all sales of axes. See 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) (comment 
6). As BIA, we are using the highest margin calculated for that class 
or kind in the investigation or any review of sales of subject 
merchandise from that same country.
    At the onset of verification, SMC presented certain sales of axes, 
picks, and splitting mauls which had not been reported to the 
Department in the questionnaire responses. As discussed above, we have 
applied BIA to all sales of axes. With regard to picks and splitting 
mauls, since these sales data had not been previously reported to the 
Department in any of SMC's questionnaire responses, we have applied BIA 
to these sales.
    Because SMC reported most of its sales of these classes or kinds of 
merchandise in its questionnaire responses and because it was an 
oversight on the part of SMC that these certain sales were not 
presented to the Department until verification, we are assigning as BIA 
the higher of either: (1) The highest margin calculated for the same 
class or kind of merchandise for that company in any previous review or 
the original investigation; or (2) the highest margin calculated for 
the same class or kind of merchandise for any respondent that supplied 
an adequate response for the current review.

Preliminary Results of the Reviews

    As a result of our reviews, we preliminarily determine 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        89.99
    Bars/Wedges.......................       2/1/92-1/31/93       156.68
    Hammers/Sledges...................       2/1/92-1/31/93       130.93
    Picks/Mattocks....................       2/1/92-1/31/93       249.35
Shandong Machinery Import & Export                                      
 Corporation:                                                           
    Axes/Adzes........................       2/1/92-1/31/93        89.99
    Bars/Wedges.......................       2/1/92-1/31/93       167.72
    Hammers/Sledges...................       2/1/92-1/31/93       131.38
    Picks/Mattocks....................       2/1/92-1/31/93       140.34
------------------------------------------------------------------------

    Parties to the proceedings may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. See section 353.38(d) of the Department's regulations. The 
Department will publish a notice of final results of these 
administrative reviews, which will include the results of its analysis 
of issues raised in any such comments.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and FMV 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 the final results of these administrative 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 case 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 LTFV investigations; and (3) the cash deposit rates for non-PRC 
exporters of subject merchandise from the PRC will be the rates 
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.

Notification of Interested Parties

    This notice serves as a preliminary 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.
    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: April 13, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-9837 Filed 4-19-95; 8:45 am]
BILLING CODE 3510-DS-P