[Federal Register Volume 60, Number 159 (Thursday, August 17, 1995)]
[Notices]
[Pages 42835-42845]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20436]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-807]
Polyethylene Terephthalate Film, Sheet, and Strip From the
Republic of Korea; Final Results of Antidumping Duty Administrative
Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
Review.
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SUMMARY: On July 8, 1994, the Department of Commerce (the Department)
published the preliminary results of administrative review of the
antidumping duty order on polyethylene terephthalate film, sheet, and
strip from the Republic of Korea. The review covers four manufacturers/
exporters of the subject merchandise to the United States for the
period November 30, 1990 through May 31, 1992.
As a result of comments we received, the antidumping margins have
changed from those we presented in our preliminary results.
EFFECTIVE DATE: August 17, 1995.
FOR FURTHER INFORMATION CONTACT: Roy F. Unger, Jr., or Thomas F.
Futtner, Office of Antidumping Compliance, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230,
telephone: (202) 482-0651/3814.
SUPPLEMENTARY INFORMATION:
Background
On July 8, 1994, the Department published the preliminary results
(59 FR 35098) of administrative review of the antidumping duty order on
polyethylene terephthalate (PET) film from the Republic of Korea (56 FR
25660, June 5, 1991). At the request of petitioners and one respondent,
we held a hearing on September 2, 1994.
Scope of the Review
Imports covered by the review are shipments of all gauges of raw,
pretreated, or primed polyethylene terephthalate film, sheet, and
strip, whether extruded or coextruded. The films excluded from this
review are metallized films and other finished films that have had at
least one of their surfaces modified by the application of a
performance-enhancing resinous or inorganic layer of more than 0.00001
inches (0.254 micrometers) thick. Roller transport cleaning film which
has at least one of its surfaces modified by the application of 0.5
micrometers of SBR latex has also been ruled as not within the scope of
the order.
PET film is currently classifiable under Harmonized Tariff Schedule
(HTS) subheading 3920.62.00.00. The HTS subheading is provided for
convenience and for U.S. Customs purposes. The written description
remains dispositive as to the scope of the product coverage. For most
of the respondents the period of review (POR) covers November 30, 1990
through May 31, 1992. Because Cheil was determined to have a de minimis
margin in the Preliminary Determination of Sales at Less Than Fair
Value (56 FR 16305) (LTFV), Cheil's POR begins on April 22, 1991, when
suspension of its merchandise was first ordered, and runs through May
31, 1992. The Department has conducted this review in accordance with
section 751 of the Tariff Act of 1930, as amended (the Act).
Analysis of Comments Received
We invited interested parties to comment on the preliminary results
of this administrative review. At the request of petitioners and one
respondent, we held a public hearing on September 2, 1994. We received
timely comments from petitioners and all respondents.
General Comments
Comment 1
Petitioners argue that respondents' reported costs for recycled PET
film chip or pellet are not accurate and understate the true costs of
producing PET film from recycled or reclaimed chip. Petitioners argue
that respondents' cost accounting methodologies for recycled PET pellet
are inconsistent with the Federal Circuit decision in IPSCO v. United
States, 965 F.2d 1056, 1059-1061 (Fed. Cir. 1992) (Ipsco Appeal).
Petitioners have also argued that respondents' cost methodology for
recycled PET chips permits possible manipulation of product costs to
the advantage of respondents. Petitioners allege that this could occur
by respondents' use of fewer recycled chips to produce film types that
are not comparison candidates in the administrative review and more
recycled chips to produce film types destined for the U.S. market and
those comparable to the U.S.-destined merchandise. Under this scenario,
according to petitioners, the low cost of recycled PET chips relative
to virgin chips would reduce the cost of the U.S. product and its home
market comparator. Petitioners allege that such cost shifting would
reduce the probability of finding sales in the home market at prices
below the cost of production (COP) and, where no contemporaneous sales
of such or similar merchandise are available for comparison, use of
lower constructed values.
In addition, petitioners allege that Cheil's use of the net
realizable value for recycled PET chips is inaccurate because the
market for recycled PET chips is not a real or significant market.
Petitioners contend that very little recycled PET chip is sold on the
open market and that it is not sold for use in PET film production.
Petitioners argue that respondents violated the Ipsco Appeal
decision which requires that the total actual cost of merchandise
subject to an antidumping duty order be included in the reported cost
of such merchandise. Specifically, petitioners claim that respondents'
reported costs do not capture the costs of production using recycled
chip for the following reasons:
Cheil: Petitioners assert that Cheil's reported cost of recycled
chip on the net realizable value (NRV) of PET pellets is inconsistent
with Korean GAAP. Moreover, petitioners argue, this method results in
the understatement of the true cost of recycled chip. Petitioners argue
that Cheil should base
[[Page 42836]]
the cost of recycled chip on the cost of purchase of replacement virgin
PET chip.
Cheil states that the Department has consistently permitted value-
based costing methodologies for by-products. Cheil argues that its use
of NRV to cost recycled PET chips is consistent with both Korean and
U.S. GAAP. Cheil also argues that the Department is already on record
with the Court of International Trade (CIT) as supporting Cheil's NRV
methodology for costing recycled pellets. Cheil also argues that the
Ipsco Appeal decision deals solely with the questions of how to
allocate costs between joint products, one made to specification and
one which is off-specification, when both products are under
investigation. Respondent claims that recycled pellets are by-products
that are not subject to the COP investigation, and have nothing to do
with the Ipsco Appeal decision.
SKC: Petitioners argue that SKC has understated the cost of
recycled PET pellet by undervaluing the cost of these chips.
Petitioners argue that the Department should require SKC to base
material costs of recycled pellet on the market value of equivalent
volumes of raw, virgin PET chip.
SKC argues that its cost accounting methodology for recycled chip
fully captures all costs associated with recycled chip by valuing
recycled chip based on its actual COP. Respondent states that the
finished film bears the cost of all raw materials consumed in the film
production process, including the cost of raw materials later reclaimed
to produce recycled chip. SKC also argues that its costing of recycled
chip has been found to be reasonable and acceptable by both the
Department and the CIT.
Kolon: Petitioners argue that Kolon has undervalued the cost of
recycled PET film chip by improperly accounting for the fabrication
costs of these chips.
Kolon argues that its methodology for costing recycled chip
properly assigns the full amount of fabrication costs through a work-
in-progress system which captures all costs associated with reclaimed
PET chip. Kolon also argues that the Department's normal practice is to
accept a respondent's cost accounting methodology if the system is
reasonable and does not distort production costs.
DOC Position
While petitioners' argument may have merit, there is no indication
on the record that such cost shifting has occurred. Based on the
evidence in the record, the Department has determined that the Ipsco
Appeal decision does not apply because recycled PET chips are not ``co-
products'' because they do not have a relatively high sales value
compared to the prime product. Nonetheless, because cost shifting is
possible, we will examine this issue in future reviews of PET film from
Korea. On a company-specific basis, we disagree with petitioners for
the following reasons:
Cheil: The above notwithstanding, we believe in this review segment
that Cheil's use of NRV to cost recycled PET film pellets is a
reasonable costing methodology. We agree at this time with Cheil's
characterization of recycled PET film pellets as by-products,
identifiable by their relatively insignificant sales value (see
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination: Sebacic Acid from the People's
Republic of China, 59 FR 565, January 5, 1994). The Department has, in
the past, permitted the use of NRV to value recycled material inputs to
the production process (see Final Determination of Sales at Less Than
Fair Value, Polyethylene Terepthalate Film, Sheet, and Strip from the
Republic of Korea, 56 FR 16305, June 5, 1991). Finally, the Department
is satisfied that Cheil's use of NRV reasonably reflects the cost of
producing subject merchandise and is in accordance with Korean and U.S.
GAAP.
SKC: The above notwithstanding, we agree in this review segment
with SKC's costing methodology to account for the cost of recycled PET
film pellets. SKC used its normal cost accounting system for purposes
of this review. This system accounts for the actual cost of recycled
chips by aggregating all direct and indirect costs associated with the
production of recycled chips. Raw materials are used exclusively for
the production of virgin chips; the recycled chips are produced
entirely from scrap film without input of additional raw materials.
Therefore, we are satisfied that the costs of producing the recycled
chip have been fully captured in the cost accounting for the production
of virgin PET film chip.
Kolon: Notwithstanding the above, we agree in this review segment
with Kolon that the costing methodology it reported for reclaimed PET
film pellets is reasonable and not distortive of production costs.
Petitioners themselves have argued in support of Kolon's classification
of reclaimed chips as work-in-process inventory. Petitioners' argument
that reclaimed chips should bear the entire cost of all the stages of
the production process is erroneous; the reclaimed chips do not
normally pass through all phases of the production process (e.g., final
packaging), and thus should not bear the full cost of virgin chips in
the film production process.
In conclusion, for these results of review, we have accepted all
four respondents' costing methodology. In future reviews, however, we
will examine specifically the issue of cost shifting.
Comment 2
Respondents argue that the Department should add home market value-
added taxes (VAT) only to U.S. price (USP), asserting that legislative
history supports the proposition that taxes should not be added to
Foreign Market Value (FMV). Consequently, respondents maintain, the
Department must follow the language of the statute which does not
explicitly require the addition of taxes to home market price, third-
country price, or CV, but does require the addition of these taxes to
USP. Alternatively, respondents argue the Department should adopt the
tax-neutral methodology authorized by the Federal Circuit in Zenith
Electronics Corp. v. United States, 988 F 2nd 1573, 1580-82
(Fed.Cir.1993), and add the actual amount of the VAT to USP.
DOC Position
We disagree with respondents. In Federal-Mogul Corporation and The
Torrington Company v. United States, 834 F. Supp. 1391 (CIT 1993)
(Federal-Mogul), the CIT rejected the Department's past 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, 834 F. Supp. at 1397).
The Department has changed its methodology in accordance with the
Federal-Mogul decision and has applied the new methodology in the final
results of this review. 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 deduct the portions of the
foreign market tax and the USP tax adjustment
[[Page 42837]]
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 present 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 making these deductions, 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 adjusted USP and FMV, but is the result of differences between
the expenses in the United States and the home market that were
deducted through adjustments. The Department's policy to avoid the
margin-creation effect is in accordance with the United States Court of
Appeals' holding that the application of the USP tax adjustment under
section 772(d)(1)(C) (19 U.S.C., section 1677a(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.
Comment 3
Petitioners argue that the Department should postpone the final
results of this administrative review until the CIT issues its final
decision in the remand determination of the investigation of PET film
from Korea, which is currently pending before the court (Final Remand
Determination Pursuant to Court Remand, E.I. DuPont de Nemours & Co.,
Inc. v. United States, Court No. 91-07-00487 (December 6, 1993)).
DOC Position
We disagree with petitioners. The Department has a longstanding
practice of issuing final results of administrative review in cases
where litigation is pending in the court system. Delaying the
publication of final results in reviews in which earlier, separate and
distinct segments of the proceeding are subject to pending litigation
would create an unacceptable backlog of administrative reviews and
frustrate efforts to complete reviews on an annual basis.
Comment 4
Petitioners allege that respondents may have improperly avoided
suspension of liquidation on quantities of subject merchandise in
possible circumvention of the antidumping duty order on PET film from
Korea. Petitioners cite an alleged discrepancy between U.S. Customs
Service data on antidumping cash deposits collected in 1993 and the
total sales value reported by respondents for the POR as evidence that
some portion of Korean PET film imports into the United States have not
been entered properly. Respondents deny any evasion of antidumping
duties on subject merchandise.
DOC Position
We disagree with petitioners that there is any credible evidence
that respondents have improperly avoided suspension of liquidation of
entries of subject merchandise. We have confirmed that the sales
information reported by all respondents in this review closely
approximates entry data we have obtained from the U.S. Customs Service.
In addition, petitioners' allegation appears to be based upon a
clerical error in the Department's preliminary calculations for STC
Corporation, which petitioners themselves brought to the Department's
attention. We corrected this clerical error in our final calculations
which resolves the discrepancy between the U.S. Customs data and the
total value of sales reported by respondents for this review.
Company-Specific Comments
Cheil
Comment 5
Petitioners argue that, because Cheil notified the Department that
a commercial dispute regarding one U.S. sale of PET film had been
resolved which required revisions to respondent's U.S. sales database
for that sale, the Department should require respondent to certify that
no other reported U.S. sale is now or has been the subject of a
commercial dispute. Furthermore, petitioners urge the Department to
seek additional information on the one disputed transaction reported to
the Department.
Cheil argues that its candor in reporting the disputed transaction
to the Department indicates respondent's good faith and should not
result in respondent being penalized with burdensome additional
reporting requirements.
DOC Position
We agree with Cheil. It made its timely submission to the
Department of the revisions for the one disputed U.S. sale without
urging from either the Department or petitioners. These data appear
complete. Therefore, we see no need to require Cheil to provide any
additional information on this transaction or to provide any type of
certification that other reported U.S. sales have not been the subject
of commercial disputes.
Comment 6
Petitioners argue that the Department improperly included the
Korean VAT in Cheil's net home market price before conducting the COP
test. Petitioners argue that the Department should have subtracted the
VAT from the net home market price prior to the COP test.
Cheil agrees with petitioners that the Department should deduct
Korean VAT before conducting the COP test. Additionally, Cheil argues
that the Department mistakenly subtracted respondent's home market
credit expense and home market packing expense from the reported net
home market price. Cheil contends that this distorted the COP test,
because the net home market price without packing and credit expense
was compared to a COP which included these expenses.
DOC Position
We agree with petitioners and Cheil. Accordingly, we have revised
the calculations for Cheil to ensure that, in conducting the COP test,
we compared home market prices which did not include Korean VAT, home
market credit, and home market packing expenses with COPs which were
also net of these expenses.
Comment 7
Petitioners assert that the Department may not have analyzed all of
Cheil's U.S. purchase price sales, contending that the number of
transactions in the calculations were fewer than Cheil reported. Cheil
also contends that the Department's analysis of U.S. purchase price
sales may be incomplete.
[[Page 42838]]
DOC Position
We agree with petitioners and respondent. We have ensured that our
calculations include all of Cheil's purchase price transactions during
the POR.
Comment 8
Cheil contends that the Department included direct selling expenses
in total general expenses for purposes of calculating constructed value
(CV) while deducting direct selling expenses to derive USP. Cheil
argues that an adjustment should be made to ensure ``apples-to-apples''
comparisons when calculating FMV based upon CV.
DOC Position
We agree with Cheil that, in cases where we used CV as the basis of
comparison, we did not accurately adjust CV to ensure an apples-to-
apples comparison. In these final results we have adjusted CV by
deducting direct selling expenses to ensure proper comparisons with USP
when FMV is based upon CV in accordance with section 773(a)(1) of the
Act.
Comment 9
Cheil argues that the Department should deduct home market
inventory carrying costs from net home market price calculations
because the Department deducted U.S. inventory costs from USP.
DOC Position
We agree with respondent. Because Cheil incurred inventory carrying
costs in the home market appropriate for deduction, and the Department
had deducted U.S. inventory carrying costs from USP, we have deducted
home market inventory carrying costs from the net home market price
calculations.
Comment 10
Petitioners argue that Cheil incurred post-sale warehouse expenses
for U.S. sales which it did not report. Cheil responds that it has
reported all post-sale warehousing expenses and inventory carrying
costs which it incurred during the POR.
DOC Position
We agree with Cheil. There is no evidence that there are additional
post-sale warehousing expenses or inventory carrying costs which Cheil
did not report.
SKC
Comment 11
SKC contends that the Department should offset interest income it
earned on sales of PET film pursuant to a written arrangement with
Anacomp, Inc. (Anacomp) against imputed credit expenses because the
interest income reduces SKC's cost of extending credit to its
customers. Citing Certain Hot-Rolled Carbon Steel, Certain Cold-Rolled
Carbon Steel Flat Products from Japan, 58 FR 37154 (July 9, 1993)
(Certain Hot-Rolled Carbon Steel), SKC asserts that this has been the
Department's practice. Petitioners argue that the precedent SKC cites
is not relevant to SKC's relationship with Anacomp and that the
Department was correct in rejecting SKC's interest income offset.
DOC Position
We believe that the situation in Certain Hot-Rolled Carbon Steel
was different from the situation existing between SKC and Anacomp. In
Certain Hot-Rolled Carbon Steel the situation involved ``opportunity
benefits'' derived from pre-payments, while Anacomp's payments to SKC
are deferred. However, we agree with respondent that interest income
which SKC received from Anacomp reduces SKC's cost of extending credit
to its U.S. customers and should be offset against SKC's U.S. credit
expense (see Certain Internal-Combustion, Industrial Forklift Trucks
from Japan, 57 FR 3167 (January 28, 1992)(Forklifts from Japan)).
Consistent with our practice in Forklifts from Japan, failure to adjust
SKC's imputed U.S. credit expense for interest income received from
Anacomp would overstate SKC's U.S. credit expense and distort our
dumping analysis.
Comment 12
Petitioners argue that SKC's reporting methodology concerning sales
to one of its U.S. customers, Anacomp, was incorrect in several
respects. First, petitioners assert that SKC reported the wrong date of
sale for these sales.
Second, petitioners contend that SKC's sales to Anacomp may not be
at arm's-length prices. If these sales are not at arm's-length prices,
petitioners argue that respondent reported USP incorrectly.
Third, petitioners assert that SKC's reported imputed credit
expense was incorrect because it was based on wrong dates of payment
and on an inaccurate short-term borrowing rate. Petitioners argue that
the reported payment date is incorrect because of certain invoices on
which payment was outstanding. Petitioners argue that, because SKC
based its reported short-term borrowing rate in part on the Euro-dollar
rate, it is inappropriate for use in calculating U.S. interest expense.
Petitioners also allege that SKC may have inaccurately reported the
actual sale price of subject merchandise to Anacomp. Petitioners allege
that respondent overstated USP for these sales by calculating USP on
rolls of PET film based on nominal weight instead of actual weight.
Finally, petitioners argue that SKC may have classified certain
models of PET film sold in the home market as identical which are not
truly identical. As evidence for this assertion, petitioners note that
certain models of prime- and off-grade film are priced the same.
SKC argues that petitioners' allegations regarding its U.S. sales
to Anacomp are unfounded for the following reasons: (1) it reported the
proper date of sale for these transactions, (2) it has a commercial,
arm's-length relationship with Anacomp, (3) it properly reported credit
expenses and interest revenues associated with these sales, (4) it
reported accurate, actual prices for these sales, and (5) it correctly
identified home market sales of comparable merchandise.
DOC Position:
Regarding the date of sale for Anacomp sales, we disagree with
petitioners. It is our long-standing policy for our date-of-sale
analysis to set the ``date of sale'' as the date upon which price and
quantity terms are established as set forth in our questionnaire
instructions (see Certain Forged Steel Crankshafts from the United
Kingdom, Final Determination of Sales Below Fair Value, 52 FR 32951
(September 1, 1987)). In the case of purchase agreements or contracts,
that date is routinely the date of execution of the sales agreement
(see Comment 3 (Date of Sale) in Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof from the Federal Republic of
Germany, 54 FR 18992 (May 3, 1989)). In this case, the date SKC
reported was the first date the basic terms of the sale, such as price
and quantity, were determined. Thus, we are satisfied that the date of
sale SKC reported is correct and needs no modification.
Regarding SKC's relationship with Anacomp, we disagree with
petitioners. There is nothing on the record in this review which
indicates any relationship between Anacomp and respondent other than a
commercial, arm's-length relationship. Indeed, the agreement between
Anacomp and SKC which SKC included in its April 19, 1993, supplemental
sales questionnaire response clearly indicates that the
[[Page 42839]]
relationship is at arm's-length. Lacking any credible evidence to the
contrary, we consider Anacomp to be an unrelated U.S. customer in
accordance with section 771(13) of the Act. This section of the Act
defines a related party as (1) an agent of the manufacturer, (2) a
party which owns or controls interest in the manufacturer, (3) a party
which is owned or controlled by the manufacturer, or (4) a party which
owns or controls 20 percent or more of the manufacturer. There is
nothing on the record which indicates that these conditions apply to
the relationship between Anacomp and SKC.
We agree with petitioners that SKC's reported date of payment for
unpaid invoices should be changed. SKC reported an arbitrary date as
the date of payment for certain invoices in calculating imputed credit
expense on U.S. sales to Anacomp. The date which SKC reported as the
date of payment was not the actual payment date for these sales because
these sales had still not been paid. The dates of payment SKC reported
for these sales were the last dates of payment on the record prior to
responding to our supplemental questionnaire. Because these data were
incomplete, we have determined for these final results, in accordance
with section 776(c) of the Act, that the application of best
information available to the payment date of these sales is warranted.
Based upon the record in this review, we have identified the date we
received SKC's response to our supplemental questionnaire, April 19,
1993, as the last day we can determine with any certainty that these
sales were still unpaid. Therefore, we have used SKC's supplemental
questionnaire response date as the date of payment for these sales (see
Brass Sheet and Strip from Sweden, Final Results of Antidumping Review,
60 FR 3617, 3620-21, Comment 4 (January 18, 1995)).
We disagree with petitioners' allegation that SKC's reported short-
term interest rate for sales to Anacomp was incorrect. The loans SKC
classified as ``Eurodollar loans'' used to calculate its short-term
borrowing rate were short-term loans from U.S. banks denominated in
U.S. dollars, the interest rate of which is set by the bank using the
Eurodollar market as a benchmark. In essence, therefore, these loans
are U.S. loans from a U.S. bank used to finance U.S. operations. Thus,
we do not believe that they are distortive of short-term borrowing
rates in the United States.
Regarding the sale price of merchandise SKC sold to Anacomp, we
disagree with petitioners. There is no evidence on the record to
support petitioners' allegation that SKC's reported prices on sales to
Anacomp may be overstated based on the formula used to determine the
weight of particular rolls of PET film. Petitioners' calculations
purporting an inaccurate weight for certain rolls of subject
merchandise are apparently based upon incorrect roll lengths. Once the
proper roll lengths are substituted for the inaccurate lengths, the
petitioners' alleged discrepancy disappears. In addition, petitioners'
allegation that SKC sold film to Anacomp at widths different from those
reported to the Department is without any supporting evidence.
We disagree with petitioners on the identification of identical
merchandise sold in the home market. Petitioners' argument that
respondent sold off-specification PET film to home market customers as
prime-grade film is without any supporting evidence on the record of
this review. Although petitioners cite as evidence that the price of
one particular prime-grade film is the same as the price of a certain
off-grade film, the Department finds this comparison to be meaningless
unless one takes into consideration the relative thickness of the film
in question. In general, the thinner the film, whether prime- or off-
grade, the more expensive it is. The two models of film petitioners
used in their argument are not of comparable thickness. When films of
comparable thickness are compared, SKC's price for prime-grade film is
significantly higher than its price for off-grade film.
Comment 13
Petitioners argue that SKC's reported costs for producing subject
merchandise are not reliable. Petitioners contend that respondent
incorrectly used product-specific costs instead of the average costs in
SKC's own cost accounting system. Petitioners urge the Department to
reject SKC's reported product-specific costs and use average costs
until the Department is able to verify the accuracy of the reported
product-specific costs.
SKC argues that its reported costs are accurate and it has not
changed its cost methodology since the Department verified its COP data
in the original LTFV investigation.
DOC Position
We disagree with petitioners. SKC's normal cost accounting system
calculates a single, average COP for all models of PET film. SKC
derived the reported product-specific costs in order to comply with the
Department's instructions in the COP/CV questionnaire. When petitioners
challenged the Department's acceptance in the LTFV investigation of
SKC's cost methodology before the CIT, the Department explained its
acceptance of respondent's methodology, stating that ``there is no
basis to doubt the reliability of SKC's product specific cost
accounting methodology'' (Defendant's Memorandum In Opposition to
Plaintiffs' Motion for Judgement Upon the Administrative Record, April
2, 1992, at 58, E.I. DuPont de Nemours & Co., Inc. v. United States,
Court No. 91-07-00487). Moreover, petitioners' contention that the
Department must verify respondent's cost data is erroneous. The
Department determined, pursuant to 19 C.F.R. section 353.36(a)(v), that
no verification of SKC was necessary in this present administrative
review because SKC was verified in the original investigation.
Furthermore, we considered the following factors in evaluating SKC's
costing methodology: (1) SKC's methodology is unchanged from the
original investigation, (2) the Department thoroughly verified the
accuracy of SKC's information in the original investigation, and (3)
there is no evidence on the record of this review which would indicate
that SKC's reported product-specific costs are inaccurate. Thus, we
have accepted SKC's product-specific costs.
Comment 14
Petitioners argue that SKC's cost methodology undervalues the costs
of off-specification PET film. Petitioners assert that SKC has
manipulated the allocation of materials cost for PET film in such a way
that assigns a lower cost for off-grade film than for prime-grade film.
They argue that such manipulation of costs contravenes the Federal
Circuit's decision in Ipsco Appeal, which reversed a lower court ruling
requiring the Department to allocate shared processing costs between
prime and off-grade merchandise based on the relative sales value.
Petitioners contend that the Federal Circuit ruling means that the
costs for prime and off-grade PET film must be the same. As evidence
for the allegation of SKC's manipulation of costs, petitioners allege
that SKC's cost of one particular model of off-grade PET film is lower
than the average cost of manufacture for all types of film, whether
prime- or off-grade.
SKC argues that it has applied a cost methodology that assigns
equal costs to the prime- and off-grade PET film in accordance with the
Ipsco Appeal.
[[Page 42840]]
DOC Position
We disagree with petitioners. SKC changed its cost methodology for
purposes of this administrative review, reportedly to conform to the
Federal Circuit's ruling in the Ipsco Appeal. Evidence on the record
indicates that SKC properly reported the full cost of manufacturing
off-grade PET film without any allocation of costs between prime- and
off-grade PET film.
According to its questionnaire response, SKC does not allocate
shared processing costs between prime- and off-grade film at any point.
Petitioners' example of one model of off-grade film is not helpful
because there are numerous models of prime- and off-grade film which
SKC sold during the POR. Due to the numerous models of PET film SKC
sold of both grades, other models exist with costs above the average,
as well as models with costs below the average. Thus, we believe that
SKC's one off-grade film model with costs below the average cited by
petitioners is not indicative of SKC's undervaluation of other off-
grade film models. Therefore, we have accepted SKC's cost methodology.
Comment 15
SKC contends that the Department erred in deducting direct U.S.
selling expenses directly from USP on exporter's sale price (ESP)
sales. Respondent argues that the Department should treat these
expenses as circumstance-of-sale adjustments to the FMV, citing Koyo
Seiko Co. v. United States, 819 F. Supp. 1096 (CIT 1993), NTN Bearing
Corp. of America v. United States, 747 F. Supp. 726 (CIT 1990), and
Timken Co. v. United States, 673 F. Supp. 495 (CIT 1987).
DOC Position
We disagree with SKC. Our deduction of direct selling expenses from
USP in an ESP situation is consistent with our longstanding
administrative practice, is in accordance with section 353.41(e)(2) of
our regulations, and has been upheld by the Court of Appeals for the
Federal Circuit in Koyo Seiko Co., Ltd. v. United States, 36 F. 3d 1565
(Fed. Cir. 1994) (Koyo Seiko).
Comment 16
SKC argues that the Department made several clerical errors in the
difference-in-merchandise adjustment and model match sections of the
calculations.
DOC Position
The Department agrees with SKC's allegations and has revised the
calculations accordingly for the final results of review.
Comment 17
SKC argues that the Department improperly compared a COP which
includes home market packing and interest expenses to home market sales
prices which were net of these expenses.
DOC Position
We agree with respondent and have revised our calculations
accordingly.
Comment 18
SKC comments that the Department failed to subtract U.S. movement
costs, packing, and selling expenses from the calculation of profit for
further-manufactured sales. According to SKC, this failure resulted in
overstated total profit and profit attributable to further
manufacturing.
DOC Position
We agree with respondent and have revised our calculations
accordingly.
Comment 19
SKC argues that the Department failed to adjust CV for direct and
indirect selling expenses, imputed credit, and commissions.
DOC Position
We agree with respondent and have adjusted the calculations
accordingly.
Kolon
Comment 20
Petitioners argue that the Department's methodology failed to
capture all costs associated with Kolon's inventory carrying costs and
warehousing costs for ESP sales. Petitioners allege that Kolon's
reported inventory carrying costs and warehousing costs are not
accurate, due, in part, to an improper accounting of these costs
associated with merchandise which entered the United States prior to
the POR. Petitioners also allege that Kolon did not report warehousing
expense and inventory carrying costs for some ESP sales. Kolon counters
that its reported inventory and warehousing cost figures accurately
capture all costs associated with its ESP sales.
DOC Position
We disagree with petitioner. Kolon reported inventory carrying
costs and warehousing costs based on the total costs its U.S.
subsidiary incurred during the POR. Kolon reported these costs based on
POR expenses and allocated the total POR expenses over the total value
of sales during the POR. Because Kolon based its methodology on the
total expenses and invoices during the POR, its calculations were not
affected by the inclusion or exclusion of merchandise that entered the
United States prior to the POR.
Comment 21
Petitioners argue that Kolon should have reported warehousing costs
for certain ESP sales as direct selling expenses instead of labeling
them as indirect selling expenses. Petitioners maintain that Kolon
incurred ``after-sale'' warehousing expenses on those ESP sales where
the date of sale preceded the date of shipment. Kolon argues that it
properly reported its warehousing expenses as indirect selling expenses
because it did not necessarily incur post-sale warehousing expenses on
these types of sales and it could not link directly any additional
warehousing costs to specific sales.
DOC Position
We disagree with petitioners. Petitioners have not demonstrated
that Kolon incurred post-sale warehousing expenses for ESP sales whose
date of sale preceded the date of shipment. In addition, Kolon
maintained a general inventory during the POR. Therefore, in cases
where Kolon stored subject merchandise in public warehouses, its
warehousing costs were fixed and could not be identified with specific
sales or invoices. We are satisfied that Kolon reported these expenses
properly as indirect selling expenses.
Comment 22
Petitioners maintain that the Department may have used a database
with the incorrect number of Kolon's home market sales during the POR.
DOC Position
We agree with petitioners. We have ensured that our calculations
for Kolon rely on the correct number of transactions.
Comment 23
Petitioners argue that the Department incorrectly performed its
sales-below-cost test by comparing the COP for each model of PET film
which excluded VAT to a net home market sales price which included VAT.
Kolon agrees with petitioners and also maintains that the
Department incorrectly subtracted home market credit expense from the
home market price prior to the COP test.
DOC Position
We agree with petitioners and Kolon. We have revised our
calculations accordingly.
[[Page 42841]]
Comment 24
Petitioners argue that Kolon impermissibly, and without the consent
of the Department, limited its reported home market sales to only those
which it claimed were identical to U.S. sales. Petitioners argue that
this contravenes the Department's questionnaire instructions and
interferes with the Department's ability to conduct its own product
comparisons.
Kolon argues that it consulted with Department officials with
regard to reporting only identical home market sales and received
permission to do so. Kolon also notes that the revised home market
sales listing it submitted to the Department included both identical
and similar merchandise.
DOC Position
We disagree with petitioners. The questionnaire instructions in
this review stated clearly that respondents may not be required to
report all home market sales if they made contemporaneous sales of
identical merchandise in the home market during the POR. Kolon properly
requested permission from the Department to report only home market
sales of identical merchandise, and the Department granted permission
to do so in a letter dated July 15, 1993. Furthermore, petitioners'
arguments ignore the fact that the Department ultimately required
respondent to revise the submitted home market database to include all
home market sales of identical and similar merchandise.
Comment 25
Petitioners argue that the Department erroneously accepted Kolon's
reported eight percent statutory minimum profit for purposes of
calculating CV. Petitioners maintain that Kolon's profit percentage was
higher than the statutory minimum and that the Department should use
petitioners' estimate of Kolon's profit as best information available
(BIA).
Kolon argues that it properly reported the statutory eight percent
profit in accordance with the Department's regulations because its
profit listed on its audited financial statements, and verified by the
Department, was less than eight percent.
DOC Position
We disagree with petitioners. During verification of respondent's
COP/CV data in Korea, we checked that Kolon had properly reported the
statutory minimum for profit, in accordance with section
773(e)(1)(B)(ii) of the Act and 19 CFR 353.50(a)(2), given the
company's records on profit from sales of subject merchandise. We
believe that petitioners' assertion that Kolon's profit is higher than
the statutory minimum is based on insufficient evidence.
Furthermore, Kolon had contemporaneous home market matches for all
of its U.S. sales during the POR and none of Kolon's home market sales
were found to have been made below the COP. Thus, in our analysis of
respondent's response, there was no need to use CV (see section
773(b)(2) of the Act).
Comment 26
Petitioners argue that Kolon reported its direct and indirect
selling expenses for CV/COP in a manner contradictory to the provisions
of 19 CFR 353.50. Petitioners maintain that Kolon's reporting of
average home market selling expenses does not conform to the
regulation's requirement that such information be based on the selling
expenses for the class or kind of subject merchandise sold in the home
market.
Kolon argues that it complied with the Department's regulations by
basing its reported selling expenses on the home market sales of each
model of PET film sold during the POR.
DOC Position
We disagree with petitioners. The section of the Department's
regulations petitioners cite states that CV shall include general
expenses ``. . . usually reflected in the sales of merchandise of the
same class or kind . . .'' (emphasis added). See 19 CFR 353.50(a)(2).
It is clear that the wording of this regulatory provision leaves some
discretion to the Department in determining whether a respondent's
reported selling expenses for CV are reasonable. Based upon a
successful and thorough verification of Kolon's selling expenses in
Korea, we are satisfied that the general, selling, and administrative
expenses reflect the expenses for the class or kind of merchandise.
Moreover, we note that this section of the regulations pertains
only to CV, not COP. The questionnaire instructions in this review
clearly indicated that selling expenses reported for COP should be
based on the actual expenses for each model of subject merchandise.
Finally, Kolon based its reported selling expense for each sale on
the average expense rate of the home market sales departments involved
in the sales. Thus, we are satisfied that the selling expenses Kolon
reported represent average expenses for all home market sales of
subject merchandise.
Comment 27
Petitioners argue that the Department should reexamine Kolon's
characterization and reporting of U.S. sample sales. Petitioners allege
that Kolon has not demonstrated that samples it gave to U.S. customers
free of charge are properly exempted from being reported in the U.S.
sales listings. Petitioners also questioned the appropriateness of
Kolon's reporting the cost of free samples as indirect selling
expenses.
Kolon argues that its treatment of sample sales was consistent with
past Department practice and that it properly excluded samples it gave
to U.S. customers at no charge from its sales listing, and included
their costs in Kolon's reported indirect selling expenses in accordance
with Departmental practice set forth in Granular Polytetrafluroethylene
Resin from Japan, 58 FR 50343, 50345 (September 27, 1993) (Granular
PTFE from Japan).
DOC Position
We agree with petitioners. As set forth in Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From France, et.
al; Final Results of Antidumping Duty Administrative Reviews, Partial
Termination of Administrative Reviews, and Revocation in Part of
Antidumping Duty Orders, 60 FR 10900 (February 28, 1995), there is
neither a statutory nor a regulatory basis for excluding any U.S. sales
from review. The statute requires the Department to analyze all U.S.
sales within the POR (see 19 U.S.C. 1675(a)(2)(A)).
The Department does, however, have the authority to omit certain
zero-price samples from our analysis if it can be determined that these
samples were not used for commercial consumption (see Granular PTFE
from Japan). We believe that Granular PTFE from Japan is not applicable
in this case. In that case the sample goods were provided for testing.
Due to the nature of the product, once tested, the sample could not be
returned. Although a transfer of ownership had occurred, the product
had not been used for commercial consumption, and thus could not be
said to have been ``sold.'' In this case, there is no evidence on the
record that Kolon's U.S. samples are destroyed or rendered unusable, as
in Granular PTFE from Japan. In addition, based upon the evidence on
the record, we are not convinced that these zero-priced samples were
commercially insignificant. Accordingly, we have deducted the cost of
these samples from Kolon's indirect selling expenses and included the
sample rates in our analysis for the final results of review (see also
Tapered Roller Bearings, Four
[[Page 42842]]
Inches or Less in Diameter, and Components Thereof from Japan, 59 FR
56035).
Comment 28
Petitioners note a typographical error in the Department's computer
program which affected the calculation of Kolon's COP for home market
sales. Petitioners note clerical errors in the computer program for
Kolon's ESP sales. As a result, petitioners assert that the Department
did not analyze a small number of respondent's ESP sales properly and
the Department did not deduct Kolon's export selling expenses from USP.
Finally, Kolon notes that the Department used the incorrect variable
for interest expense in calculating CV.
DOC Position
We agree with petitioners and Kolon. The variable name for Kolon's
total cost of manufacture in our purchase price computer program should
be ``TOTCOM'' instead of ``OTCOM.'' We have corrected this
typographical error for these final results. We have also corrected the
ESP calculations and ensured that all of Kolon's ESP sales were
analyzed for the final results of review. Finally, we have revised our
calculations using Kolon's correct interest expense variable in
calculating CV.
STC
Comment 29
STC argues that the Department should exclude U.S. sales of
damaged, obsolete and B-grade merchandise from its margin analysis
because they are unrepresentative of STC's usual PET film sales and
arbitrarily distort the margin analysis.
In support of its claim that the Department should exclude one sale
of damaged merchandise from analysis, STC cites past Department
practice where sales of secondary quality, scrap, or damaged
merchandise have been excluded from the margin analysis. STC also notes
that the Department determined, at verification, that STC's sale of
damaged film was aberrant in nature. Alternatively, STC argues the
Department should exclude this sale as outside the scope of the
antidumping duty order, because the film was damaged in transit and
entered into the United States as PET film scrap, and not as A-grade
film subject to the antidumping duty order. STC also argues that if the
Department does not exclude the sale from the scope of the order or
from its analysis, the Department should adjust expenses upward to
reflect insurance reimbursement for in-transit damage. In addition, STC
argues that the damaged film should not be compared to CV, as was done
in the preliminary results, but instead to the home market model which
is identical in all respects except for the damage.
Similarly, STC maintains that the Department should exclude STC's
U.S. sale of obsolete merchandise from its margin analysis. STC claims
that because this pre-production lot of PET film had quality problems
and was, as a result, warehoused for three years, STC was ultimately
forced to sell this film as scrap. Accordingly, STC argues that this
sale is unrepresentative of its sales in the United States. STC also
notes that this sale in the United States constituted only a small
percentage of its U.S. sales and cites previous Department practice
where sales which account for a very small percentage of U.S. sales by
volume have been disregarded. Alternatively, STC argues that the
Department should exclude this sale because this merchandise entered
the United States before the antidumping duty order went into effect.
Finally, STC argues that its three U.S. sales of B-grade film
should also be excluded from the margin analysis for several reasons:
(1) they constitute only a small percentage of STC's total sales
(excluding value-added sales); (2) B-grade film is not normally sold in
the U.S. market; and (3) these sales were made only at the customers'
request.
DOC Position
We disagree with STC. There is no provision in the antidumping
statute or regulations which provides for the exclusion of sales when
determining dumping margins. The CIT, in IPSCO v. United States, 687 F.
Supp. 633, 640 (CIT 1988), stated that ``. . . if Congress intended to
require the administering authority to exclude all sales made outside
the `ordinary course of trade' from its determination of the United
States price it could have provided for such an exclusion in the
definition of United States price, as it has in the definition of
foreign market value. It has not done so.''
Additionally, it is longstanding Department practice to include all
U.S. sales in its dumping calculations except in instances where title
does not transfer or in the case of statistical sampling (see Color
Television Receivers from the Republic of Korea, 58 FR 50333 (1993)).
We also disagree with STC's request that, in the event we do not
exclude the sale of damaged film, we adjust its USP to reflect
insurance reimbursement. The antidumping statute clearly permits
additions to USP in only four instances, none of which apply to the
insurance reimbursement additions sought by STC (see section 772(d)(1)
of the Act). These four instances set forth in the statute allow
additions to USP for U.S. packing/shipping expenses, rebated or
uncollected import duties, rebated or uncollected taxes, and
countervailing duties imposed on the merchandise. The Department has a
consistent practice of strictly interpreting these provisions and
denying requests for upward adjustments to USP (see Oil Country Tubular
Goods from Israel, 52 FR 1511 (1987)).
Finally, we disagree with STC's assertion that the sale of obsolete
films should not be included in our dumping analysis because the
merchandise entered prior to the POR. In accordance with our
questionnaire instructions and longstanding practice, the Department
bases its ESP calculations on sales of subject merchandise, regardless
of entry date. The sale in question occurred in May 1992, during the
POR. In addition, there is nothing on the record which proves that this
sale entered before the effective date of the antidumping duty order or
as anything other than PET film. Therefore, we have included this sale
in our dumping analysis.
Comment 30
STC claims that the Department substantially overstated STC's COP
and CV. First, STC claims that the Department failed to revise STC's
1992 fixed overhead costs based on verified data. According to STC,
this revision was necessary due to the result of a change in the method
by which STC computed depreciation. STC explains that, in 1992, it
switched from an accelerated (i.e., declining balance) to a straight-
line method of depreciation. Although documentation supporting this
change was included in STC's COP questionnaire response, STC
acknowledges that it failed to report its fixed overhead costs using
the straight-line method. STC argues that it identified this clerical
error and the Department verified it on the first day of verification.
Second, STC argues that the Department's decision to adjust labor
cannot be reconciled with the evidence it verified. STC claims that the
Department successfully verified the completeness and accuracy of STC's
reporting and allocation of labor expenses incurred by a wholly-owned
subsidiary in the production of PET film. However, STC asserts, the
Department readjusted reported labor costs to include labor costs
actually reported in STC's general ledger in the preliminary results
with no explanation.
[[Page 42843]]
STC requests that the Department use STC's labor costs as reported in
its questionnaire response in its calculations without adjustment.
DOC Position
We agree with STC concerning its revisions to STC's reported fixed
overhead costs. STC submitted corrected data at the beginning of
verification for its reported fixed overhead costs resulting from STC's
change in methodology in calculating its depreciation costs from a
declining balance to a straight-line method in 1992. Accordingly, we
have revised our calculations to include the correct amount for
depreciation costs in our calculations.
We disagree with STC concerning our decision to adjust STC's
reported labor costs. STC's wholly-owned subsidiary produces only PET
film subject to this review. We verified that labor expenses were
incurred by the subsidiary. However, in its questionnaire response, STC
allocated a portion of these expenses away from the production of PET
film, claiming that some of the subsidiary's workers performed other
work for STC. We could not verify that any of these allocated labor
expenses were billed by the subsidiary to STC. Nor could we verify that
any of the subsidiary's laborers performed production tasks for STC. We
used the labor expenses as incurred by the subsidiary and recorded in
its financial statements. Therefore, we used in our calculations only
those labor costs we were able to verify.
Comment 31
STC argues that the Department's test for sales made at prices
below the COP is fundamentally flawed. First, STC claims that, in
accordance with the Department's practice and judicial precedent, the
Department should have allowed an adjustment for start-up costs. STC
cites previous Departmental practice in Fresh Kiwifruit from New
Zealand; Preliminary Results of Antidumping Administrative Review, 59
FR 23691 (May 6, 1994) (Kiwifruit), where the Department accounted for
start-up costs because they were justified, supported, and quantified.
STC disputes the Department's decision in the preliminary results of
review to deny this adjustment because these costs were not actually
reflected in STC's financial records. STC notes that cost data reported
to the Department often differs from the type of data maintained in the
ordinary course of trade, citing product-specific, as opposed to
average costs and adjustments, for imputed credit costs as examples.
STC also notes that its start-up cost allocation is consistent with
GAAP in that only costs incurred above expected per unit overhead costs
were capitalized up to the point that STC was able to reach its normal
production volume. Finally, STC notes the Department's past practice,
which has been upheld by the courts, of amortizing start-up costs even
where the respondent companies have expensed their pre-production
costs.
STC also argues that the Department's decision to apply its
standard test for sales made at below-cost prices for an extended
period of time is arbitrary and unjustified in light of STC's
protracted start-up difficulties. STC claims its only option was to
sell at the prevailing market price despite its high start-up costs
until its costs decreased and sales increased to a point where it could
recover earlier start-up costs. STC maintains that using the
Department's standard measure for an extended period of time in a
competitive market is patently unfair to new entrants, particularly to
one facing the unusual circumstances that confronted STC.
Finally, STC argues that the Department failed to consider whether
STC could recover all costs of production over a ``reasonable period of
time,'' in spite of recent court decisions requiring the Department to
consider factors such as: (1) How far below cost the sales are; (2) how
much, if at all, costs of production are expected to decline; (3) the
period of time over which they are expected to decline; and (4) the
reasons why, based on record evidence, these costs will not be
recovered over time. In light of STC's claim that it expects to recover
all of its costs within one year, STC urges the Department to
reconsider its determination in the preliminary results and allow STC
an adjustment to COP for start-up costs.
DOC Position
We disagree that an adjustment for STC's start-up costs must be
allowed for the final results and believe that STC's cite in its
comments to the preliminary results in Kiwifruit is misplaced. In the
case of Kiwifruit we adjusted for set-up rather than start-up costs.
The set-up cost adjustment accounted for the historical development
cost of the kiwifruit orchard which had been expensed as incurred. We
captured these costs so that they could be properly amortized over the
productive life of the orchard. Adjusting for start-up costs refers to
capitalizing excessive current costs and amortizing them over future
production. Further, STC's cites to judicial precedent do not refer to
start-up costs, specifically, but to the basis of certain adjustments.
In addition, STC's reported start-up costs could not be documented by
actual company records because the calculations for these costs were
based upon a theoretical one-hundred percent capacity utilization rate.
Therefore, we have not accepted STC's claim for a start-up cost
adjustment.
With regard to our test for sales made below cost for an extended
period of time, we disagree with STC. It is our longstanding practice
to define an extended period of time as three months. However, due to a
clerical error, the number of months in our preliminary calculations
was incorrect. For the final results, we have corrected the test to
consider three months to be an extended period of time, as is our
standard practice.
We also disagree with STC's assertion that, because STC maintains
that it will recover all costs within one year, the Department should
include home market sales of subject merchandise found to have been
made below the COP. The CIT, in Toho Titanium v. United States, 670 F.
Supp. 1019, 1021 (1987), clearly stated that the Department must be
able to demonstrate that the prices which are below cost during the POR
are at such a level that those prices would permit not only sufficient
revenue to cover future costs, but also exceed future costs to a degree
which permits the recovery of past losses. The simple line graphs STC
submitted in its questionnaire response, purporting to show increasing
capacity utilization and decreasing costs, are not adequate in detail
or documentation to make a definite conclusion which satisfies the
statute. In addition, we were unable to test the validity of the charts
STC submitted, because STC did not clarity the assumptions on which the
graphs were based. This evidence does not justify including STC's
below-cost sales in our dumping analysis. Therefore, we excluded STC's
below-cost sales for the final results of review.
Comment 32
STC argues that the Department must apply the provisional measures
deposit cap and, if STC's dumping margin is greater than the cash
deposit or bond rate for entries between the Department's preliminary
and final determinations in the LTFV investigation, the Department must
instruct the Customs Service to disregard the difference.
DOC Position
We agree. Although we changed our policy concerning the provisional
[[Page 42844]]
measures deposit cap in October 1992 to apply only to cash deposits
associated with antidumping duty orders, our policy affected only those
entries which were subject to a preliminary determination of sales-at-
less-than-fair-value published after July 29, 1991. Therefore, because
the preliminary determination in this case was published on November
30, 1990, and in accordance with 19 CFR 353.23, if the cash deposit or
bond required between the affirmative preliminary and final
determination is different from the dumping margin in the
administrative review, we will instruct the Customs Service to
disregard the difference to the extent that the cash deposit or bond is
less than the dumping margin, and to assess antidumping duties equal to
the dumping margin calculated in this administrative review if the cash
deposit or bond is more than the dumping margin for entries during the
period between the preliminary and final determination in the original
investigation.
Comment 33
STC argues that the Department should adhere to the court's
numerous rulings and add U.S. direct selling expenses to FMV, not
deduct U.S. direct selling expenses from USP, as was done in the
preliminary results of review.
DOC Position
We disagree with respondent. See our response to Comment 15.
Comment 34
Petitioners argue that the Department overstated the value of U.S.
sales for STC's further-processed imports which results in an
understatement of the percentage margin of dumping as published in the
preliminary results.
DOC Position
We agree. The overstatement of the value for further-manufactured
sales was due to an improper conversion which we have corrected for the
final results. See our response to Comment 42 for further information
on this conversion error.
Comment 35
STC argues that the Department should not have subtracted imputed
expenses in conducting its COP test. STC, citing previous Department
practice, claims that the Department's test for calculating sales made
at prices below COP does not typically subtract imputed expenses, such
as credit expenses, in conducting its sales-below-cost comparison of
home market sales and cost of production.
DOC Position
We agree and have conducted the COP test without subtracting
imputed expenses for the final results of review (see Color Television
Receivers from Taiwan; Final Results of Administrative Review, 56 FR
65218 (December 16, 1991)).
Comment 36
STC argues that the Department understated STC's actual home market
credit expenses by assigning a much shorter average period for
outstanding credit than that which STC experienced and by using an
artificially low home market interest rate. STC requests that the
Department use the payment periods it reported in the questionnaire
response.
DOC Position
We disagree with STC. Although STC claimed, in its November 3,
1992, questionnaire response, that it provided a longer credit period
to unrelated end-users in the home market of subject merchandise, we
determined at the home market sales verification that the actual credit
period was significantly shorter (see Verification Report of the
Questionnaire Responses of STC Corporation in the First Antidumping
Administrative Review of Polyethylene Terephthalate (PET) Film from the
Republic of Korea, at 10-11 (April 21, 1994) (STC Verification
Report)). We verified the shorter credit period by tracing home market
sales. Accordingly, we adjusted our calculations to reflect this
actual, shorter credit period.
In addition, STC claimed a higher home market interest rate than we
were able to document during our home market sales verification. STC
company officials claimed that the higher rate reflected the added
expense of its lenders' requirements that STC borrow compensatory funds
deposited at a zero or low rate of interest. However, because STC was
unable to provide documentation during verification on the calculation
method it used to arrive at the higher interest rate, we used in our
calculations the actual interest rates we were able to verify (see STC
Verification Report at 10-11).
Comment 37
STC claims that the Department did not use the corrected figures
for average days in inventory in its calculations of STC's home market
inventory carrying expense which STC provided to the Department during
the home market sales verification in Korea.
DOC Position
We agree with respondent. Accordingly, we have revised our
calculations for the final results of review to include the correct
home market inventory carrying costs.
Comment 38
STC argues that the Department did not adjust the home market price
for indirect selling expenses incurred in the home market. STC asserts
that, because further-manufactured sales are ESP sales, the Department
should make an offset to FMV for STC's home market indirect selling
expenses up to the amount of STC's U.S. indirect selling expenses and
commissions on STC's further-manufactured sales as well as regular ESP
sales.
DOC Position
We agree with respondent that we should have allowed an ESP offset
to FMV for U.S. further-manufactured sales (see Certain Internal-
Combustion Forklift Trucks from Japan, 53 FR 12552 (April 15, 1988))
and we have revised our calculations accordingly.
Comment 39
STC argues that the Department mistakenly did not subtract credit
expenses from FMV when based on CV. STC argues that the Department
should correct this oversight by deducting credit expenses from CV.
DOC Position
We disagree with STC. Even though STC did report credit expenses
separately from its reported total CV in answering the questionnaire
response, we did not include these expenses in our calculation of CV.
Therefore, no adjustments to CV are necessary for the final results of
this review.
Comment 40
STC requests that the Department correct the following clerical
errors: (1) STC asserts that the Department neglected to convert STC's
FMV from a per-kilogram to a per-pound basis for comparisons to its
purchase price sales, (2) STC discovered, and presented during
verification, that its duty drawback figures should have been higher
than previously reported in its U.S. sales listing and requested that
the Department use the revised duty drawback figures in its analysis,
(3) STC argues that the Department neglected to use the correct
interest rate when calculating its U.S. subsidiary's (STCA) interest
expense (STC claims that the Department used the old reported rate and
did not use the revised rate presented by STC during verification),
[[Page 42845]]
and (4) STC maintains that the Department used STC's erroneously
reported pre-sale warehousing expense instead of the correct expense.
STC acknowledged that it originally reported a pre-sale warehousing
expense which was incorrect by one decimal space.
DOC Position
We agree that clerical errors were made in all four instances and
have revised our calculations accordingly.
Comment 41
STC asserts that the Department inappropriately treated STCA's pre-
sale U.S. warehousing expenses as a direct selling expense. Because
these expenses are incurred prior to the sale of the merchandise to
unrelated parties and cannot be linked to any particular sale, STC
maintains that they should be treated as indirect expenses.
DOC Position
We agree with STC. Because these expenses were incurred prior to
STC's sale of the merchandise and cannot be directly linked to
individual sales, we have treated STCA's pre-sale U.S. warehousing
expense as indirect selling expenses for the final results of review.
Comment 42
STC argues that the Department incorrectly calculated the net price
for STC's further-manufactured sales by neglecting to apply the value-
added ratio to the net USP and U.S. price adjustments. STC claims that,
in calculating the net USP for further-manufactured sales, the
Department failed to convert USP and U.S. price adjustments from a per-
roll basis to a per-PET film pound equivalent basis. In addition, STC
asserts that the Department subtracted the entire profit amount from
the price of the further-manufactured sales, instead of only that
portion of profit attributable to the further-manufacturing process.
Finally, STC argues that the Department neglected to add duty drawback
to USP for further manufactured sales. STC requests that the Department
modify its calculations accordingly.
DOC Position
We agree with STC. We have applied the value-added ratio to net USP
and to the U.S. price adjustments for further-manufactured sales of
subject merchandise. We also included calculations to convert net USP
for further-manufactured sales and U.S. price adjustments to a per-
pound basis. We also recalculated profit and deducted only that portion
attributable to the further-manufacturing process. Finally, we added
duty drawback to USP for the final results of review.
Final Results of Review
Upon review of the comments submitted, the Department has
determined that the following margins exist for the periods indicated:
------------------------------------------------------------------------
Percent
Manufacturer/exporter margin
------------------------------------------------------------------------
November 30, 1990 through May 31, 1992:
SKC Limited................................................ 0.80
Kolon Industries........................................... 0.94
STC Corporation............................................ 16.87
April 22, 1991 through May 31, 1992:
Cheil Synthetics........................................... 0.06
------------------------------------------------------------------------
The Customs Service shall assess antidumping duties on all
appropriate entries. Individual differences between USP and FMV may
vary from the percentages stated above. The Department will issue
appraisement instructions concerning each respondent directly to the
U.S. 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
these final results of administrative review, as provided for by
section 751(a)(1) of the Tariff Act: (1) The cash deposit rate for the
reviewed firms will be the rates outlined above, except for Cheil,
which, because its weighted-average margin is de minimis, the cash
deposit rate will be zero percent; (2) for previously reviewed or
investigated companies not listed above, the cash deposit rate will
continue to be the company-specific rate published for the most recent
period; (3) if the exporter is not a firm covered in this review, a
prior review, or in the original LTFV investigation, but the
manufacturer is, the cash deposit rate will be the rate established for
the most recent period for the manufacturer of the merchandise; and (4)
if neither the exporter nor the manufacturer is a firm covered in this
or any previous review conducted by the Department, the cash deposit
rate will be 4.82%, the all others rate established in the LTFV
investigation.
These deposit requirements shall remain in effect until publication
of the final results of the next administrative review.
This notice serves as the final 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 notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d). Timely written notification or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of the APO is a sanctionable
violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: August 10, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-20436 Filed 8-16-95; 8:45 am]
BILLING CODE 3510-DS-P