[Federal Register Volume 60, Number 138 (Wednesday, July 19, 1995)]
[Notices]
[Pages 37047-37051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17766]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-834]
Notice of Amended Final Determination of Sales at Less Than Fair
Value: Disposable Pocket Lighters From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: July 19, 1995.
FOR FURTHER INFORMATION CONTACT: Cynthia Thirumalai or Todd Hansen,
Office of Countervailing Investigations, U.S. Department of Commerce,
Room B099, 14th and Constitution Avenue NW., Washington, DC 20230;
telephone (202) 482-4087 and 482-1276, respectively.
Amended Final Determination
In accordance with section 735(a) of the Tariff Act of 1930, as
amended (``the Act''), on April 27, 1995, the Department of Commerce
(``the Department'') made its final determination that disposable
pocket lighters from the People's Republic of China (``PRC'') are
being, or are likely to be, sold in the United States at less than fair
value (60 FR 22359, May 5, 1995). We have determined that ministerial
errors were committed for Cli-Claque Company Ltd. (``Cli-Claque'') and
PolyCity Industrial Ltd. (``PolyCity'') (see company-specific sections
below). The correct margin percentage for Cli-Claque is 0.55%, and
5.49% for PolyCity. The margin percentages for Gao Yao (HK) Hua Fa
Industrial Company, Ltd. (``Gao Yao''), China National Overseas Trading
Corp. (``COTCO''), and Guangdong Light Industrial Products Import and
Export Corp. (``GLIP''), and the PRC-wide rate remain the same.
Scope of Investigation
The products covered by this investigation are disposable pocket
lighters, whether or not refillable, whose fuel is butane, isobutane,
propane, or other liquefied hydrocarbon, or a mixture containing any of
these, whose vapor pressure at 75 degrees Fahrenheit (24 degrees
Celsius) exceeds a gauge pressure of 15 pounds per square inch. Non-
refillable pocket lighters are imported under subheading 9613.10.0000
of the Harmonized Tariff Schedule of the United States
[[Page 37048]]
(``HTSUS''). Refillable, disposable pocket lighters would be imported
under subheading 9613.20.0000. Although the HTSUS subheadings are
provided for convenience and Customs purposes, our written description
of the scope of this proceeding is dispositive.
Certain windproof refillable lighters, as described in memoranda to
Barbara R. Stafford, dated December 5, 1994, and April 25, 1995, are
excluded from the scope of this investigation. Also excluded from the
scope of this investigation are electric lighters (as described in the
April 25, 1995 memorandum) which use two AA batteries to heat a coil
for purposes of igniting smoking materials, rather than using butane,
isobutane, propane, or other liquefied hydrocarbon to fuel a flame for
purposes of igniting smoking materials.
Case History
On May 12, 1995, Cli-Claque and petitioner filed allegations of
ministerial errors. PolyCity filed its rebuttal to petitioner's
allegations on May 16, 1995, followed by Cli-Claque on May 19, 1995.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are references to the provisions as they
existed on December 31, 1994.
Company-Specific Issues
PolyCity
Issue 1: Energy
Petitioner claims that the Department erred in its choice of a
source to be used to value PolyCity's energy usage since information it
believes more appropriate was available.
PolyCity claims that the Department used the source described in
the Calculation Memorandum; therefore, the Department's choice was not
a ministerial error.
DOC Position: We agree with PolyCity that this is not a ministerial
error and have made no change in our calculations.
Issue 2: Factory Overhead
Petitioner first states that it should be allowed to comment on the
factory overhead rate the Department used in the final determination
since that was the first time any of the parties knew of the
Department's selection of that rate. Petitioner then argues that an
adjustment should be made to the factory overhead rate which was
applied to all respondents equally to account for the difference in the
structure of PolyCity's physical plant compared to other respondents.
Petitioner suggests that one possible source is PolyCity's own overhead
experience.
PolyCity maintains that in nonmarket economy (``NME'') cases, the
Department does not use a respondent's own factory overhead rate. Given
this, PolyCity states that petitioner's argument is really a challenge
to the Department's long-standing NME methodology.
DOC Position: We find that petitioner's complaint is with our
methodology and is not properly an allegation of a clerical error.
Moreover, we disagree with petitioner that the factory overhead rate
should be adjusted to account for the difference in PolyCity's physical
plant structure compared to other respondents. This case is similar to
that found in the Final Determination of Sales at Less than Fair Value:
Pure Magnesium From Ukraine (Ukraine Magnesium), 60 FR 16432, 16447
(March 30, 1995), where petitioners asked that the overhead rate be
adjusted upwards to account for one item that had a significant cost
associated with it. In Ukraine Magnesium, the Department said
[T]he fact that one element (i.e., cell rebuild) of factory
overhead has significant cost associated with it does not invalidate
the overhead percentage used. Factory overhead is a combination of
elements, some of which may be more or less expensive depending on the
product or even the company.
Also, the Department has previously rejected line-by-line
examinations of factory overhead rates as petitioner would have us do
in this instance (see, e.g., Final Determination of Sales at Less Than
Fair Value; Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, From the Socialist Republic of Romania, 52 FR 17433, 17436,
May 8, 1987). Assuming, for argument's sake, that an adjustment was
found to be appropriate in such cases, we would be unable to determine
whether to adjust the rate upwards for some producers, or downwards for
the other producers.
Issue 3: Terminal Handling Charges
Petitioner states that the verification report indicates that an
additional terminal handling charge should be added to foreign market
value (``FMV'') for two transactions. According to petitioner, it does
not appear that these charges were included in the Department's final
margin calculations.
PolyCity states that terminal handling charges were reported as
``ocean freight'' expenses as per the Department's instructions
pursuant to verification findings. According to PolyCity, the
Department used the corrected amounts in its final margin calculations.
DOC Position: We agree with petitioner and PolyCity in part. The
terminal handling charges referenced in the verification report were
reported in the U.S. sales listing as ``ocean freight.'' While we did
properly deduct these expenses from U.S. price (as opposed to adding
them to FMV), we inadvertently deducted the incorrect amounts. We have
now revised our calculations based on the results of verification.
Gao Yao, COTCO, and GLIP
Issue 1: Labor Rates
Petitioner argues that in the final margin calculations there was
no skilled labor factor for Gao Yao, COTCO, and GLIP. While the
Department included a factor for direct and indirect labor for all
three companies, neither of these were valued at the skilled labor
rate. Petitioner asserts that it is difficult to imagine a lighter
production facility without any supervisory or management personnel
involved in the production process. Therefore, petitioner requests that
the Department recalculate the margins for these three companies
including a factor for skilled labor.
DOC Position: We disagree with petitioner's assertion that this was
a ministerial error. Verification showed that laborers classified by
COTCO, Gao Yao, and GLIP as direct or indirect were not skilled. (Some
administrative laborers at the factories may have been properly
classified as skilled, but expenses for administrative laborers are
subsumed in factory overhead in this case.) At none of the production
facilities did we note any direct laborers that were treated
differently from others or performed tasks that required more than a
minimal amount of training or skill. Most direct workers performed
simple assembly operations. A few direct workers operated the plastic
molding machines which mainly involved pouring raw plastic material
into the intake vat, occasionally pulling a lever when the machine
released, and sometimes removing extraneous pieces from the molded
parts.
As for indirect laborers at all companies, the verification reports
show that they performed tasks such as: driving trucks, guarding
factory gates, keeping inventory in the warehouses, lighting the
lighters and adjusting the flames, etc. At these factories some of the
indirect laborers were called ``supervisors'' and line leaders. These
``supervisors''/line leaders mainly kept tallies of the number of
pieces each direct laborer produced and, sometimes, recorded the hours
they worked. At
[[Page 37049]]
none of the factories did we note any indirect laborer whose job
required special knowledge, training or skill.
Cli-Claque
Issue 1: Value of Silkscreen Ink
Petitioner argues that when valuing silkscreen ink, the Department
should have relied on the more detailed Purchase Order File (``PO
File'') provided in Cli-Claque's post-verification submission of March
23, 1995 rather than the verification exhibit prepared by Cli-Claque.
According to petitioner, the PO File shows that there were more
silkscreening chemicals used than the verification exhibit indicates;
therefore, the Department should use the quantity in the PO File to
calculate the per-unit silkscreen ink factor.
Cli-Claque explains that the verification exhibit regarding
silkscreen ink is based on the PO File with the following adjustments:
(1) Orders outside the period of investigation (``POI'') were removed;
(2) freight charges from Japan to Hong Kong were included; (3)
commissions were added; and (4) a change in quantity for one sale was
made based on the actual amount found on the invoice.
DOC Position: We relied on Cli-Claque's verification exhibit
regarding silkscreen ink to calculate the cost and usage of that input.
We confirmed that all the contracts in the PO File dated within the POI
were included in the verification exhibit. For the one contract whose
quantity in the verification exhibit was different from that in the PO
File, we are relying on the quantity recorded in the verification
exhibit. Since the Department confirmed the veracity of information in
the PO File during examination of other purchased materials, we found
the PO File and, by extension, the verification exhibit regarding
silkscreen ink, to be reliable.
Issue 2: Coloring Agents
Petitioner claims that some of the contracts listed in the
verification exhibit regarding silkscreen ink really pertain to
pigments used to color plastic parts because they are found in the PO
File under ``coloring agents,'' separate from ``silkscreen ink.'' Given
this, petitioner argues that these contracts should properly be
included in the valuation of pigment for plastic parts.
Cli-Claque explains that purchases of silkscreen ink were recorded
in its PO File both as ``silkscreen ink'' and ``coloring agents,'' as
indicated by the identical product descriptions and unit prices found
under both sections.
DOC Position: We disagree with petitioner's allegation that it was
an error to include the contracts pertaining to ``coloring agents'' in
the calculation of silkscreen ink usage and cost. We examined the PO
File and found that the contracts in dispute contained the same product
descriptions and prices as items in the silkscreen ink section and were
appropriately included with other purchases of silkscreen ink.
Issue 3: Tying of Material Inputs to Production
Since all the contracts for silkscreen ink but one listed in the PO
File are dated after the dates of sale for the imprinted lighters sold
to the United States, petitioner points out that these purchases of
silkscreen ink could not have been used in the production of the
merchandise sold to the United States. Petitioner then argues that the
value for silkscreen ink should be calculated from the one contract
dated before the imprinted lighters were sold to the United States.
DOC Position: We disagree with petitioner that it was an error to
use all purchases of silkscreen ink during the entire POI to value this
factor. It is the Department's practice not to tie specific market
economy inputs to particular production; rather, the Department looks
at the entire POI when calculating values.
Issue 4: Imprinted Ordinary Lighters
Petitioner argues that one sale of ordinary lighters should also
include a factor for silkscreen ink since it is described in the U.S.
sales listing as an imprinted/silkscreened lighter.
Cli-Claque agrees with petitioner that a factor for silkscreen ink
should be added to the one sale of ordinary lighters listed as being
imprinted.
DOC Position: We agree with both parties that a value for
silkscreen ink should be added to lighters listed as being imprinted/
silkscreened and have done so because this is a cost of silkscreening
and should have been included in that cost.
Issue 5: Freight Charges for Silkscreen Ink
Petitioner maintains that freight charges from Hong Kong to the
factory should be added to the cost for silkscreen ink since delivery
terms were C&F Hong Kong.
Cli-Claque concurs with petitioner that freight from Hong Kong to
the factory should be included in the cost of silkscreen ink.
DOC Position: With respect to including Hong Kong-to-factory
freight expenses in the cost of silkscreen ink, we agree with both
parties that a value for these expenses should have been included in
the calculation of FMV and have included a cost for this item.
Issue 6: Hardener
Petitioner maintains that the hardener used in the silkscreening
process should be included as a factor in the margin calculation. Since
Cli-Claque provided a listing of the price and quantity of hardener
used during the POI, petitioner argues that the Department should
divide the quantity of hardener used during the POI by the number of
lighters silkscreened during the POI to derive the factor usage during
the POI. Petitioner also claims that freight charges should be added to
the factor cost of hardener.
Cli-Claque argues that this is not a ministerial error. The
Department did not include a factor for hardener in its calculation;
therefore, petitioner's disagreement is with the Department's
methodology. Should the Department nonetheless decide to include a
factor for hardener, Cli-Claque provides calculations of usage and
applicable freight expenses.
DOC Position: We agree with petitioner that a factor for hardener
should have been included in our calculations since information on the
record shows that Cli-Claque used hardener in making its imprinted
lighters. To calculate amounts for usage and cost, we followed the
methodology proposed by Cli-Claque and petitioner which was based on
purchases of hardener during the POI as found in the PO File, average
available freight costs for hardener found in the verification exhibit
regarding silkscreen ink, and commission rates also found in the
verification exhibit.
Issue 7: Tank Body Pigment
Although the Department included a factor for pigment for tank
bodies for ordinary lighters, petitioner points out that a factor for
pigment was not included for electronic lighters. According to
petitioner, the Department should include the same tank body pigment
factor for electronic lighters as it did for ordinary lighters since
there is no indication that pigment is not used for electronic
lighters.
Cli-Claque agrees that a factor for tank body pigment should be
included in the calculations for electronic lighters. Instead of using
the amount for usage applicable to ordinary lighters, Cli-Claque says
that the Department should use its reported amount.
DOC Position: We agree with both petitioner and respondent that a
factor for tank body pigment should have been included in the
calculations for electronic lighters since pigment is used
[[Page 37050]]
to make these lighters. We also agree with Cli-Claque that its reported
usage amount should be used.
Issue 8: Foreign Inland Freight
Petitioner argues that the actual freight amount for one U.S. sale
as found in the verification report should be used.
Cli-Claque points out that the actual freight charges in the
verification report for this sale were based on rates provided to Cli-
Claque by a related carrier whereas the freight rate used by the
Department in the final determination was based on a quote from an
unrelated company.
DOC Position: We disagree with petitioner that the freight charges
by the related carrier should be used and have made no change to the
freight rate for this one U.S. sale.
Issue 9: Electronic Lighters
Petitioner argues that the Department should use the verified usage
amount for one material input used by Cli-Claque in its electronic
lighters. Cli-Claque agrees with petitioner.
DOC Position: We agree with both petitioner and Cli-Claque that the
verified factor usage for this input should be used.
Issue 10 Purchase of Parts
Cli-Claque alleges that the Department erred when it calculated
single weighted-average costs for small O-rings, large O-rings, T-
packing and disks. Instead, Cli-Claque argues that the Department
should have separated out purchases of parts specific to electronic
lighters from those specific to ordinary lighters.
DOC Position: We agree with Cli-Claque that purchases of small O-
rings, large O-rings, T-packing, and disks to be used in electronic
lighters should be separated from those for ordinary lighters before
calculating lighter-specific average costs for these items. The costs
of these items are different depending upon the type of lighter they
are intended for, and the items are specific to particular lighters and
are not interchangeable. Therefore, we have calculated lighter-specific
average costs for small O-rings, large O-rings, T-packing and disks.
Issue 11: Filters
Cli-Claque claims that the Department made an error in calculating
the per-unit cost of filters for ordinary lighters.
DOC Position: We agree with Cli-Claque that we made an error in
calculating the per-unit cost of filters for ordinary lighters and have
recalculated that cost. In Cli-Claque's PO File, one purchase of
filters contained a data entry error regarding total invoice value. The
total invoice value was ten times the amount derived by multiplying the
unit price by the quantity ordered. (In the final determination, we
used the amounts for total invoice value to calculate the average cost
of filters.) Since the reported unit price for this purchase was
consistent with prices for other contracts, we used the reported unit
prices and quantities to recalculate the average unit cost of filters.
Issue 12: Nozzles and Nozzle Bottoms
Cli-Claque argues that the weighted-average price calculated for
nozzles and nozzle bottoms for ordinary lighters is overstated because
the prices for nozzle/nozzle bottom sets were included in the
calculation as single pieces. According to Cli-Claque, the Department
should divide the price of sets by two to arrive at a price for either
a nozzle or nozzle bottom separately.
DOC Position: We agree with Cli-Claque that the prices of nozzle/
nozzlebottom sets were incorrectly included as single pieces.
Therefore, we have revised our calculations of per-unit costs of
nozzles and nozzle bottoms to reflect that the price of a set should be
allocated to both the nozzle and the nozzle bottom.
Issue 13: Weight of Sidewheels
Cli-Claque states that the Department inadvertently used the wrong
per-unit weight for sidewheels.
DOC Position: We agree that the wrong weight for sidewheels was
used and have revised our calculations.
Issue 14: Freight Cost for Sidewheels and Certain Packing Materials
In calculating the freight cost for sidewheels and certain packing
materials, Cli-Claque maintains that the Department did not multiply
the surrogate freight rate (which is on a per kilogram basis) by the
weight of the item.
DOC Position: We agree with Cli-Claque that the per-kilogram
freight rate should have been multiplied by the weight of the sidewheel
to arrive at the per-unit freight cost and have revised our
calculations accordingly.
Issue 15: Skilled Labor
Cli-Claque argues that when calculating the factor for both skilled
and unskilled labor, the Department added the factor for skilled
assembly labor to the factors for unskilled plastic and metal labor
rather than to the factors for skilled plastic and metal labor.
DOC Position: We agree with Cli-Claque that the factor for skilled
assembly labor should be added to that for skilled metal and plastic
labor and have revised our labor calculations.
Issue 16: Pigment for Plastic Parts
Cli-Claque states that the Department erred when it valued the
factor for pigment with the per-unit cost of silkscreen ink. According
to Cli-Claque, pigment, which is different than silkscreen ink, was
sourced from the PRC; therefore, the Department should value this
factor with a surrogate value.
DOC Position: We agree with Cli-Claque that the factor for pigment
should not be valued using a cost for silkscreen ink and, instead, have
valued pigment for plastic parts using information on first quarter
1994 Indonesian import statistics found in Foreign Trade Statistical
Bulletin: Imports, March 1994.
Issue 17: Profit:
During our examination of Cli-Claque's margin calculations pursuant
to this amended final determination, we noticed that profit had not
been added to the calculation of FMV for ordinary lighters. We have
corrected this error.
Amended Weighted Average Dumping Margins
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average Critical
Manufacturer/producer/exporter margin circumstances
percentage
------------------------------------------------------------------------
Tianjin Jin Yi Lighter Co./China National 0.00 Affirmative.
Overseas Trading Corporation.
Cli-Claque Company Ltd.................... 0.55 Affirmative.
Gao Yao (HK) Hua Fa Industrial Co., Ltd... 0.00 Negative.
Guangdong Light Industrial Products Import 27.91 Negative.
and Export Corporation.
PolyCity Industrial, Ltd.................. 5.49 Negative.
PRC-Wide.................................. 197.85 Affirmative.
------------------------------------------------------------------------
ITC Notification
In accordance with section 735(d) of the Act, we notified the
International Trade Commission (``ITC'') of our amended final
determination.
[[Page 37051]]
Termination of Suspension of Liquidation
On June 2, 1995, the ITC determined that these imports neither
cause, nor threaten to cause, material injury to the industry in the
United States. Therefore, we are directing the U.S. Customs Service to
refund or cancel all securities posted.
This notice is published pursuant to sections 735(d) and (e) of the
Act and 19 CFR 353.20(a)(4).
Susan G. Esserman,
Assistant Secretary for Import Administration.
Dated: July 5, 1995.
[FR Doc. 95-17766 Filed 7-18-95; 8:45 am]
BILLING CODE 3510-DS-P