[Federal Register Volume 60, Number 184 (Friday, September 22, 1995)]
[Notices]
[Pages 49251-49258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23580]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-803]


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

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

ACTION: Notice of final results of antidumping duty administrative 
reviews.

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SUMMARY: On April 20, 1995, the Department of Commerce (the Department) 
published the preliminary results of the administrative reviews of the 
antidumping duty orders on heavy forged hand tools, finished or 
unfinished, with or without handles, (HFHTs) from the People's Republic 
of China (PRC). The reviews cover two exporters of the subject 
merchandise to the United States and the period February 1, 1992, 
through January 31, 1993. We gave interested parties an opportunity to 
comment on our preliminary results. Based on our analysis of the 
comments received, we have changed the results from those presented in 
the preliminary results of reviews.

EFFECTIVE DATE: September 22, 1995.

FOR FURTHER INFORMATION CONTACT: Karin Price or Maureen Flannery, 
Office of Antidumping Compliance, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-4733.

SUPPLEMENTARY INFORMATION:

Background

    On April 20, 1995, the Department published in the Federal Register 
(60 FR 19723) the preliminary results of the administrative reviews of 
the antidumping duty orders on HFHTs from the PRC (56 FR 6622, February 
19, 1991). The Department has now completed these administrative 
reviews in accordance with section 751 of the Tariff Act of 1930, as 
amended (the Act).

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the statute and to the 
Department's regulations are references to the provisions as they 
existed on December 31, 1994.

Scope of These Reviews

    Imports covered by these reviews are shipments of HFHTs from the 
PRC comprising the following classes or kinds of merchandise: (1) 
hammers and sledges with heads over 1.5 kg. (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools and wedges 
(bars and wedges); (3) picks and mattocks (picks/mattocks); and (4) 
axes, adzes and similar hewing tools (axes/adzes).
    HFHTs include heads for drilling, hammers, sledges, axes, mauls, 
picks, and mattocks, which may or may not be painted, which may or may 
not be finished, or which may or may not be imported with handles; 
assorted bar products and track tools including wrecking bars, digging 
bars and tampers; and steel woodsplitting wedges. HFHTs are 
manufactured through a hot forge operation in which steel is sheared to 
required length, heated to forging temperature and formed to final 
shape on forging equipment using dies specific to the desired product 
shape and size. Depending on the product, finishing operations may 
include shot blasting, grinding, polishing and painting, and the 
insertion of handles for handled products. HFHTs are currently provided 
for under the following Harmonized Tariff System (HTS) subheadings: 
8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically 
excluded are hammers and sledges with heads 1.5 kg. (3.33 pounds) in 
weight and under, hoes and rakes, and bars 18 inches in length and 
under. Although the HTS subheadings are provided for convenience and 
customs purposes, our written description of the scope of these 
proceedings is dispositive.
    These reviews cover two exporters of HFHTs from the PRC, Fujian 
Machinery & Equipment Import & Export Corporation (FMEC) and Shandong 
Machinery Import & Export Corporation (SMC). The review period is 
February 1, 1992, through January 31, 1993.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received joint comments from FMEC, SMC, and 
Olympia Industrial Inc., an importer of the subject merchandise, 
(together, respondents), and rebuttal comments from Woodings-Verona 
Tool Works, Inc., petitioner. At the request of FMEC, SMC, and 
petitioner, a hearing was held on June 7, 1995.
    Comment 1: Respondents argue that the Indian import statistics for 
the period April-December 1992, which the Department used to value 
direct materials and packing materials for the preliminary results of 
these reviews, are aberrational and should largely be rejected. 
Respondents contend that the aberrations in the surrogate values result 
from the fact that basket categories were used to value the factor 
inputs, that the imports sometimes reflected small import quantities, 
and that the import statistics have deviant values. They argue that 
other sources for surrogate values should be considered.
    According to respondents, although the Department's first choice 
for publicly available published information (PAPI) is import 
statistics, as import prices theoretically represent the price paid by 
producers in the surrogate country, the Department has in past cases 
abandoned its reliance on import statistics and PAPI from the primary 
surrogate country when they are aberrational and do not fairly 
represent the market value of the input. They cite to the Notice of 
Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol 
from the People's Republic of China (60 FR 22544, May 8, 1995) 
(Furfuryl Alcohol), the Notice of Final Determination of Sales at Less 
Than Fair Value: Disposable Pocket Lighters from the People's Republic 
of China (60 FR 

[[Page 49252]]
22359, May 5, 1995) (Lighters), the Final Determination of Sales at 
Less Than Fair Value: Coumarin from the People's Republic of China (59 
FR 66895, December 28, 1994) (Coumarin), the Notice of Final 
Determination of Sales at Less Than Fair Value: Silicon Carbide from 
the People's Republic of China (59 FR 22585, May 2, 1994) (Silicon 
Carbide), the Notice of Final Determination of Sales at Less Than Fair 
Value: Saccharin from the People's Republic of China (59 FR 58818, 
November 15, 1994) (Saccharin), and the Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cased Pencils from the 
People's Republic of China (59 FR 55625, November 8, 1994) (Pencils). 
Respondents contend that, in each of these cases, the Department 
determined that the import values in the surrogate country for certain 
inputs could not be used because the import values were aberrational, 
i.e., too high, when compared to other sources of market value, or 
because the quantity imported was small, and used another source of 
data to determine the surrogate value, such as export statistics or 
price quotations in the surrogate country.
    Respondents argue that the Indian import statistics should not be 
used for several reasons. First, respondents argue that the use of 
import statistics from the period April-December 1992 is arbitrary and 
unfair because the statistics were published in September 1993 and 
therefore not available at the time the merchandise was sold or the 
reviews requested. As a result, respondents complain that the exporters 
and importers did not have any knowledge of or control over the values 
which would be used to determine the margins.
    Second, respondents note that the Indian import statistics do not 
reflect data for the period January-March 1992 and that the Department 
did not make an adjustment to the data to cover that period. 
Respondents argue that, since a significant percentage of the 
production of HFHTs took place outside of the period covered by the 
Indian import statistics, and all production of picks sold by FMEC took 
place in 1991, the Department should use the 1991 Indian import 
statistics and carry the figures forward to reflect the appropriate 
period, if it decides the Indian import statistics should be used as 
the surrogate values. According to respondents, the 1991 statistics 
should be adjusted forward, rather than adjusting the 1992 data 
backwards, since it is impossible to relate future imports to past 
periods.
    Third, respondents argue that including data from December 1992 
does not reflect the production of HFHTs. They contend that, since 
production time is 30-45 days and purchases of raw materials are made 
before production, raw materials for shipments made at the end of 
December 1992 would need to be purchased no later than November 1992.
    Next, respondents contend that the Department's assumption that 
imports occur at prices equal to or just below those in the domestic 
market does not apply to low-value factors. According to respondents, 
since India is a major producer of steel and other HFHT input factors, 
it is more reasonable to assume that India's imports represent those 
products which India does not make, such as specialty steels or 
expensive types of wood. As a result, respondents argue, the basket 
categories which were used to determine the surrogate values and which 
cover a broad range of products, rather than the basic input factors 
used to produce and pack HFHTs, are biased toward higher values.
    Respondents also argue that Yugoslavia was erroneously excluded 
from several Indian import categories on the basis that it is a non-
market-economy (NME) country. They cite to Tapered Roller Bearings and 
Parts Thereof, Finished or Unfinished, from the Republic of Romania; 
Final Results of Antidumping Duty Administrative Review (56 FR 1169, 
January 11, 1991) as evidence that the Department considers Yugoslavia 
to be a market-economy country, and contend that, if Indian import 
prices are used for the final results, imports from Yugoslavia should 
be included in the calculation.
    Last, respondents state that the 1992 Indian import statistics the 
Department used for the preliminary results do not show the month in 
which the imports were made (they note that the December import 
statistics are separately reported). Therefore, respondents contend, 
all of the imports could have taken place in November and December, and 
they argue that the potential that imports could be grouped in a few 
months should cause the Department to disregard those values 
particularly when the import quantities are small.
    Respondents argue that the surrogate values for the following 
factor inputs are aberrational and should be disregarded, and that 
other surrogate values, particularly Indian export statistics, should 
be used: steel, steel pellets, wood for handles, detergent, resin glue, 
paint, varnish, dilution (paint thinner), anti-rust oil, wood for 
pallets, nails, cartons, iron straps, plastic straps, synthetic fiber, 
plastic bags, anti-rust paper, anti-damp paper, iron wire, iron 
buttons, and iron knots. They argue that these values are aberrational 
as a result of the change in the average import value between 1991 and 
1992, the differences between the export and the import figures, and 
the range in quantities and values of imports from various countries.
    Petitioner responds that use of Indian import statistics is 
reasonable and conforms to long-standing Department practice. It notes 
that FMEC and SMC suggested the use of Indian import statistics for a 
variety of factors of production, including steel, prior to the 
issuance of the preliminary results of reviews.
    Petitioner contends that the Department should continue to exclude 
Yugoslavia from its calculation of the average Indian import price. It 
states that it is unclear whether the newly independent states of 
Croatia, Slovenia, and Bosnia-Herzegovina, which were recognized by the 
United States and the European Community in April 1992, were market 
oriented during the period of review.
    Department's Position: As discussed in the Final Determination of 
Sales at less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe 
Fittings from the People's Republic of China (57 FR 21058, May 18, 
1992) (Pipe Fittings), the Department relies on PAPI for surrogate 
values. In determining the most appropriate PAPI to use, the Department 
prefers import data in the selected surrogate country over export data 
because import prices more closely reflect the market price of that 
factor in the surrogate country. See our response to comment 15 in the 
Final Determination of Sales at Less Than Fair Value: Certain Helical 
Spring Lock Washers from the People's Republic of China (58 FR 48833, 
September 20, 1993) (Lock Washers), in which we state that any system 
of priorities in the selection of surrogate values should result in the 
use of import statistics when they are available, and Pencils, in which 
the PAPI selected were average non-export values.
    Prior to the issuance of the preliminary results of these reviews, 
FMEC and SMC suggested the use of Indian import statistics for a number 
of direct inputs and packing materials. They did not suggest any other 
sources of surrogate values for direct inputs or packing materials, 
with the exception of prices for specific imported material inputs. 
Petitioner submitted a price quotation in India as a surrogate value 
for steel, but did not provide any other surrogate values for direct 
inputs or packing materials. The Department selected, for the 
preliminary results, the HTS categories recommended by FMEC 

[[Page 49253]]
and SMC for certain inputs, including steel, and used Indian import 
statistics to value all inputs used to produce the subject merchandise, 
as well as all packing materials. In its case brief, respondents 
submitted new PAPI, which we returned to the respondents as untimely 
filed.
    We agree with respondents that prices which are aberrational should 
not be used to value the factors of production, and we have in past 
cases, such as Saccharin, turned to sources other than import 
statistics from the selected surrogate country when certain surrogate 
values have been found to be aberrational. Therefore, for these final 
results, where we have other sources of market value such as Indonesian 
import statistics or U.S. import statistics, we have compared the 
Indian import statistics to these sources of market value to determine 
whether the Indian import values are aberrational, i.e., too high or 
too low. We have also compared the average import values to other 
sources of market values if the total quantity imported under a 
specific category was small, and, if the value was found to be 
aberrational, i.e., too high or too low, we have chosen another 
surrogate value.
    For these final results, we have continued to use Indian import 
statistics for all direct inputs and packing materials, except for the 
iron wire, and we have selected the basket categories which most 
closely correspond to the inputs being valued. For certain factors, we 
have chosen a different HTS category than was used for the preliminary 
results. For iron wire, we have found that the Indian import statistics 
are aberrational, and have used Indonesian import statistics for the 
surrogate values for this factor. Specific factor inputs are discussed 
in the following comments.
    With respect to respondents' complaint that the ranges of 
quantities and values of imports into India result in aberrational 
values, we note that imports into any country will reflect imports from 
a variety of countries in varying quantities and with varying prices. 
This does not mean that the average value derived from those imports is 
aberrational. Moreover, there is no basis for rejecting import values 
simply because the values are too high or too low. See Lock Washers. 
Therefore, we have used the Indian import statistics unless we have 
found that the values are aberrational by comparison to other sources 
of market value. However, where the quantity imported from a specific 
country was insignificant, we have eliminated imports from that country 
from the calculation of the surrogate value.
    We disagree with respondents' arguments that use of import 
statistics from the April-December 1992 period is unfair because they 
were not available when the merchandise was sold or the reviews 
requested. It is the Department's standard practice to use surrogate 
values from a time period which is contemporaneous to the period of 
investigation or the period of review. See, e.g., Furfuryl Alcohol, in 
which the surrogate value for furfuryl was selected because it was more 
contemporaneous than other sources, and the Preliminary Determination 
of Sales at Less Than Fair Value: Manganese Metal from the People's 
Republic of China (60 FR 31282, June 14, 1995), in which surrogate 
values within the period of investigation, or most contemporaneous with 
the period of investigation, were selected.
    With respect to respondents' arguments that the surrogate values do 
not reflect the period January-March 1992 and were not adjusted to 
reflect that period, and that production of the subject merchandise 
took place prior to the period covered by the import statistics, we 
have changed our calculations for the final results to use 1991 
surrogate values for production which occurred in 1991, and 1992 
surrogate values for production which occurred in 1992.
    With regard to respondents' argument that data from December 1992 
does not reflect the production of HFHTs, we note that the period of 
review covers the period through January 1993. Therefore, for shipments 
which occurred in the last month of the period, raw materials purchases 
could have taken place in December 1992, since the average production 
time is 30-45 days. It is thus appropriate to include imports in this 
month in the calculation of the surrogate values. In the event that 
there might not have been shipments during January 1993, it would still 
be appropriate to include statistics from December 1992 since that 
month is in the period of review.
    The Department has consistently used basket categories under the 
HTS to value factor inputs. In Pipe Fittings, we state that basket 
import statistics that closely correspond to the factor input more 
accurately reflect the market price of that factor than other sources 
of surrogate data. In these reviews, there is no information on the 
record regarding more specific sources of surrogate values, with the 
exception of the prices of imported materials from market economy 
countries for specific factors. We have discussed the use of import 
prices in comments 2 and 8 below. Further, there is no evidence on the 
record to indicate that any of the factors being valued are of low 
value compared to other items in the basket categories, thus biasing 
the statistics toward higher values. The Department has selected the 
HTS categories which most closely represent the factors being valued, 
and, for certain factors, has selected HTS categories other than those 
selected in the preliminary results, as discussed in the following 
comments.
    We agree with respondents that imports from Yugoslavia should not 
have been excluded from the calculation of the surrogate values since 
Yugoslavia has been treated as a market economy country in past 
investigations and reviews. Therefore, for these final results, we have 
included imports from Yugoslavia in our calculations of the surrogate 
values.
    We disagree with respondents that the potential that imports could 
be grouped in a few months should cause the Department to disregard 
certain import statistics. When it uses import statistics, the 
Department bases the surrogate values on imports over a certain period, 
and does not perform an analysis of when those imports occurred. 
However, we agree with respondents' concern about small import 
quantities, and have, when the import volume is small, compared the 
import value to other sources of surrogate values to determine whether 
the value is aberrational.
    Comment 2: Respondents argue that the import statistics used to 
determine the surrogate value for steel do not provide a statistically 
valid basis on which to calculate an average value because of the small 
quantity of imports during the time period. According to respondents, 
the small quantity of steel imported for that HTS category, 7213.49.09, 
makes the statistics vulnerable to distortion because a shift of the 
product mix within the HTS category could have a dramatic effect on the 
per-unit calculations. Moreover, respondents contend that the Indian 
import statistics for this category have experienced tremendous shifts 
over different periods, resulting in significant changes in the average 
value between 1991 and 1992 and demonstrating that the average values 
are unreliable and aberrational. They note that the average import 
value in 1991 was less than half the average import value in 1992.
    Furthermore, respondents contend that there is a huge disparity 
between the Indian import and export statistics for steel, stating that 
a comparison between the import and export prices shows that the import 
statistics are aberrational. 

[[Page 49254]]

    Instead of the Indian import statistics, respondents have suggested 
the following alternative surrogate values which they claim fall within 
a range of prices which are reasonably comparable with each other: the 
prices of imported steel used by the HFHT factories, Indian export 
values, Indonesian export values, world steel prices (such as Japanese 
export prices to the PRC), and lastly, if the Department continues to 
use Indian import statistics to value steel, Indian imports of HTS 
category 7214.50, which respondents claim is the HTS category best 
covering the steel used to produce HFHTs.
    Petitioner notes that, in their supplemental questionnaire 
responses, FMEC and SMC urged the use of steel import values, and 
contends that they are now attempting to pick the best surrogate values 
from around the world. Petitioner argues that the official Indian 
import statistics for steel are reasonable, and that the data submitted 
by petitioner on actual steel prices for the specific type and grade of 
steel used for manufacturing HFHTs closely correspond to the import 
values. Petitioner cites to Coumarin, where the Department noted its 
strong preference for using surrogate country import statistics as the 
best PAPI, despite the fact that, in that case, the Department rejected 
import statistics in favor of more specific and reliable price 
quotations. Petitioner notes that, in this case, the Indian import 
prices used by the Department in the preliminary results are consistent 
with the price quotations submitted by petitioner to the record of 
these reviews, covering the specific categories of steel used to 
produce HFHTs. According to petitioner, these price quotations are the 
next best surrogate data after the Indian import statistics.
    Petitioner contends that all other possible surrogate values 
offered by respondents should be rejected. Petitioner argues that the 
import prices should not be used because there was no evidence on the 
record regarding which products were produced from imported steel and 
which were produced from domestically-produced steel. Moreover, it 
notes that only one factory used imported steel in its production. 
Also, according to petitioner, Indian export values are unreliable 
because they do not represent home market consumption in India and the 
vast majority of these exports are to countries not at a level of 
economic development comparable to the PRC. Petitioner also argues that 
Indonesian export prices should be rejected as Indonesia is the last of 
the five countries selected by the Department as possible surrogate 
countries. Petitioner rejects the use of world market prices as 
reported in the American Metal Market, arguing that the prices 
contained therein vary significantly by grade and type and, therefore, 
have no relation to the type of steel used to produce HFHTs. Petitioner 
also rejects the use of Japanese prices. Finally, petitioner argues 
that the Department used the proper tariff heading, HTS category 
7213.49.09, in valuing steel, and that the HTS category suggested by 
respondents, 7214.50, is incorrect because it includes bars already 
forged, noting that respondents perform the forging in the production 
of HFHTs. Petitioner states that there is no evidence to show that HTS 
category 7213.49.09 covers steel in wound coil form which is more 
expensive than the bar steel used to produce HFHTs.
    Department's Position: For the preliminary results of reviews, we 
used HTS category 7213.49.09, bars and rods containing more than 0.25 
percent but less than 0.60 percent carbon in wound coils, to value the 
steel bars used to produce HFHTs, as suggested by FMEC, SMC, and 
petitioner. However, we have determined that, since this category 
covers steel in wound coils, it does not cover the cut-to-length steel 
bars used to produce HFHTs. Instead, for the final results, we have 
used Indian import statistics and HTS category 7214.50, forged bars and 
rods containing more than 0.25 percent carbon but less than 0.60 
percent carbon, to determine the surrogate value for steel. We have 
determined that this HTS category is more specific to the cut-to-length 
steel bars used to produce the subject merchandise.
    Because the quantities imported into India under HTS category 
7214.50 were not large in 1991 and 1992, we compared the steel values 
against other sources of market value, i.e., Indonesian import values 
and U.S. import values, to determine whether they were aberrational. We 
found that the 1992 Indian import value is not aberrational, and have 
used this value in our final results. We found that the 1991 value is 
aberrational by comparison to Indonesian and U.S. import statistics. 
Therefore, for the final results, for the 1991 surrogate value for 
steel, we have deflated the 1992 value to 1991 using wholesale price 
indices published by the International Monetary Fund. Because we have 
been able to use Indian import values in our analysis, we have not 
considered the other sources of surrogate values suggested by 
respondents.
    We did not use the prices of steel imported by the factories 
because we do not know what models were produced using the imported 
steel or the portion of steel used by the factories which was imported.
    Comment 3: Respondents argue that detergent used for cleaning and 
pellets used to remove the oxidation from the surface of the tool heads 
are considered by the factories, and should be considered by the 
Department, to be part of factory overhead, as these items are not 
physically incorporated into the finished product. They also note that 
the pellets are recycled until they are pulverized. Respondents cite to 
the Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Paper Clips From the People's Republic of China (59 FR 51168, 
October 7, 1994) (Paper Clips) as evidence for their position. 
Respondents contend that, if the Department determines that the steel 
pellets are a direct factor input, the steel pellets should be valued 
as scrap, as the pellets are made from scrap steel bought locally.
    Department's Position: We agree with respondents that pellets and 
detergent should be considered as factory overhead, and have changed 
our analysis accordingly. These items are used for the purposes of 
removing oxidation from the tool heads and for cleaning the tool heads, 
and are not physically incorporated into the subject merchandise. As 
such, they should not be valued as direct material inputs in the 
production of the subject merchandise. This is consistent with the 
Department's position in Paper Clips, in which the Department valued 
certain inputs as direct materials because they were physically 
incorporated into, and became part of, the subject merchandise.
    Comment 4: Respondents contend that HTS category 3814, selected for 
dilution (paint thinner) for the preliminary results, is too broad, and 
argue that the narrower HTS category 3814.00.09 should be selected for 
this input.
    Department's Position: We agree with respondents. The HTS category 
selected for dilution (paint thinner) for the preliminary results, HTS 
3814, includes both ``composite solvents and thinners for varnishes and 
similar products'' and ``solvents for printing.'' The HTS category 
3814.00.09 is specific to solvents and thinners and has been used for 
the final results.
    Comment 5: Respondents state that the wedges are made by the HFHT 
factories from scrap steel generated from the production of the tool 
heads, rather than from steel bars. Therefore, respondents argue that 
the Department should value the wedges using the HTS category selected 
for scrap, rather than 

[[Page 49255]]
the HTS category selected for steel. Further, respondents contend that, 
since the wedges are produced at the factories, there should be no 
adjustment for transportation for this input.
    Department's Position: We agree with respondents. The record 
indicates that scrap steel resulting from the production process is 
used to produce other products which require small pieces. Therefore, 
we have adjusted the calculations so that wedges are valued with the 
value for scrap. Since these items are made at the factory, we have not 
made an adjustment for freight costs for this input.
    Comment 6: Respondents argue that the packing costs determined by 
the Department are too high and clearly do not represent reasonable 
packing costs. According to respondents, the materials used to pack 
HFHTs are generally low-value items which are discarded once the 
shipments reach the importer's site. Respondents contend that deriving 
the cost of packing from surrogate values leads to erroneous results 
and that the use of basket categories biases the values toward high 
average values.
    Respondents note that, in comparable cases, packing rates were 1-2 
percent of production costs. Respondents cite as evidence Chrome-Plated 
Lug Nuts from the People's Republic of China; Preliminary Results of 
Antidumping Duty Administrative Review (60 FR 19719, April 20, 1995) 
(Lug Nuts I), where a rate of 1 percent of production costs was used as 
the best information available (BIA), and Lock Washers, in which the 
petitioner stated that its packing costs were 2 percent of its 
production costs.
    Petitioner responds that there is no support on the record to show 
that the purportedly high packing costs result from surrogate country 
data which are unreliable because the packing materials are low-value 
inputs. Petitioner also states that it is irrelevant that packing costs 
are lower in the two cases cited by respondents because each case is 
fact specific. Moreover, petitioner argues that the supposed 
aberrations in the Indian import data do not justify rejecting valid 
data published by the Indian government.
    Department's Position: We disagree with respondents that we should 
not use surrogate values to calculate packing costs. It is the 
Department's standard practice to use surrogate values to value packing 
costs. See, e.g., the Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination: Certain 
Partial-Extension Steel Drawer Slides With Rollers from the People's 
Republic of China (60 FR 29571, June 5, 1995) and Pencils, for which 
Indian import statistics were used to value packing materials. 
Moreover, in Lock Washers, the Department valued packing materials 
using Indian import statistics. We further note that, in the 
administrative review of lug nuts from the PRC subsequent to that cited 
by respondents, factors data for packing were on the record of the 
review and were used to determine packing costs (Chrome-Plated Lug Nuts 
from the People's Republic of China; Preliminary Results of Antidumping 
Duty Administrative Review (60 FR 42504, August 16, 1995) (Lug Nuts 
II).
    For these reviews, unlike Lug Nuts I, the information needed to 
calculate packing costs using surrogate values is on the record. 
Therefore, for the final results, we have continued to value these 
packing inputs using surrogate values. However, as discussed in our 
response to comment 1 above, and in our responses to comments 7-11 
below, we have made adjustments in the valuation of packing materials 
for the final results.
    See our response to comment 1 regarding respondents' complaint 
about the use of basket categories.
    Comment 7: Respondents argue that the Department should abandon its 
factor methodology for valuing the pallets based on the costs of the 
wood and the nails used to construct the pallets, and, instead, should 
determine a separate price for pallets. Respondents argue that the cost 
of a pallet as calculated by the Department is much higher than the 
cost to purchase a pallet in the United States.
    Petitioner responds that the fact that the Department calculated a 
pallet cost which is substantially more than the cost of a wood pallet 
in the United States is irrelevant to the price of pallets in India or 
the PRC.
    Department's Position: We agree with respondents that we should 
value the pallets separately, rather than valuing both the wood and the 
nails used to make the pallets. To value the pallets, we have used 
Indian import statistics and HTS category 4415.10, packing cases, 
boxes, crates, drums, and similar packings of wood, which was suggested 
by FMEC and SMC in their supplemental questionnaire responses prior to 
the preliminary results.
    Comment 8: Respondents argue that the HTS category selected to 
value the cartons is too broad a category to determine a specific value 
for the cartons, and that a more specific price should be used. They 
note that two of the HFHT factories used imported cartons, and that the 
Department used the price of the imported cartons to value cartons for 
only one of those factories. They further state that the surrogate 
value is roughly three times higher than the value of the imported 
cartons, and argue that the price of the imported cartons should be 
used as a benchmark.
    Department's Position: We disagree with respondents. We have 
continued to use for the final results the HTS category selected for 
the preliminary results of these reviews, HTS category 4819.10. There 
is no information on the record to indicate that either of the two 
narrower HTS categories, 4819.10.01, boxes of corrugated paper and 
paperboard, or 4819.10.09, cartons and cases of corrugated paper and 
paperboard, are more specific to this input. Therefore, we have valued 
the cartons using the broader HTS category 4819.10.
    As discussed above in our response to comment 2, we have used 
import prices where we knew the percentage of the imported material to 
the total material purchased. Therefore, for one factory, we were able 
to use the price of the imported cartons to value the cartons. As 
mentioned by respondents, another factory also used imported cartons. 
Since the price paid by this factory for the imported cartons was in 
Chinese currency, we were unable to use this price.
    Comment 9: Respondents argue that the categories selected to value 
the iron straps and the plastic straps are too broad and the variations 
in the Indian import statistics for these categories too great to 
reflect reasonable values for these factor inputs, and contend that an 
alternative source of valuation must be found. Further, according to 
respondents, imports from Yugoslavia were incorrectly excluded from the 
calculation of the average import value.
    Department's Position: We agree with respondents that imports from 
Yugoslavia were incorrectly excluded from the calculation of the 
plastic strap, and have included such imports in our calculation of the 
surrogate value for the final results. We note, however, that 
respondents have not suggested an alternative HTS category or source 
for valuing the plastic strap, and, for the final results, we have 
continued to use the value selected for the plastic strap for the 
preliminary results.
    Prior to the preliminary results, FMEC and SMC suggested HTS 
categories 7216.21.00 and 7216.60.01, angles, shapes and sections of 
hot-rolled steel and of cold-rolled steel to value the iron straps; the 
Department selected HTS category 7216.90.01, other angles, shapes and 
sections, as the appropriate category for iron straps for the 

[[Page 49256]]
preliminary results. There is no information on the record to indicate 
which of these categories better covers the iron straps. Since 
respondents have not provided evidence to indicate that the HTS 
categories FMEC and SMC suggested are more appropriate, and since their 
brief simply indicates that an alternative source of valuation must be 
found since the category selected is too broad, without identifying an 
alternative source, we have continued to use the same category we 
selected for the preliminary results for the iron strap. Moreover, 
there is no indication that the HTS categories suggested by FMEC and 
SMC would be any less broad than that selected by the Department.
    Comment 10: Respondents argue that the Department made significant 
errors in valuing the synthetic fiber (PVC bags) by inaccurately 
determining the weight of the bags, and contend that the calculation 
should be corrected.
    Petitioner asserts that the respondents have not alleged that the 
information on which the Department based its calculation was wrong, 
but merely that the Department reached a different conclusion from 
respondents.
    Department's Position: We agree with respondents, and have 
reweighed the synthetic fiber and adjusted the calculations 
accordingly.
    Comment 11: Respondents argue that six materials used to pack HFHTs 
are incidental items and that their collective values are extremely 
small or de minimis. These materials are plastic bags, anti-rust paper, 
anti-damp paper, iron wire, iron buttons, and iron knots. Respondents 
argue that the use of basket categories to value these items makes 
their individual and collective values significant.
    Respondents further argue that the anti-damp paper and the anti-
rust paper are de minimis items which should be eliminated from the 
Department's calculations. Although they do not disagree with the HTS 
categories selected, they note that the aberrational values for these 
HTS categories indicate that the HTS categories include many items 
other than those being valued.
    Respondents contend that the Department selected too broad a 
category for the plastic bags, inaccurately determined the weight of 
the plastic bags, and incorrectly excluded imports from Yugoslavia from 
the calculation.
    Furthermore, according to respondents, the HTS category selected 
for the iron wire is too broad, and the iron wire was inaccurately 
weighed for the preliminary results. They also argue that the HTS 
categories selected for the iron knots and the iron buttons are too 
broad.
    Petitioner responds that the record shows that anti-damp paper and 
anti-rust paper are not de minimis factors in India. Petitioner also 
states that it is impossible to reweigh the plastic bags at this point 
in the process, and that FMEC and SMC should have provided additional 
information regarding the weights of these items with their 
questionnaire responses or at verification.
    Department's Position: We disagree with respondents that certain 
factor inputs should be eliminated from the analysis because of their 
small value. The items identified by respondents as being incidental 
items are all materials used to pack the subject merchandise, and, as 
such, they should be valued.
    We agree with respondents that the HTS categories selected for the 
plastics bags and the iron wire were incorrect. We have used, for the 
final results, the categories suggested by the respondents, HTS 
category 3923.21 for the plastic bags and HTS category 7217.90 for the 
iron wire. However, we have found that the Indian import statistics for 
the iron wire are aberrational, and have used Indonesian import 
statistics to determine the surrogate values for the iron wire for 
these final results. Moreover, as samples of these items were provided 
to the Department prior to the issuance of the preliminary results of 
reviews, we have reweighed these items and have adjusted our 
calculations accordingly. We also agree that imports from Yugoslavia 
should be included in the calculation of the average import values; 
however, we note that there were no imports into India from Yugoslavia 
in 1991 or 1992 under the HTS category for plastic bags selected for 
the final results.
    We have continued to use the same HTS categories selected for the 
preliminary results for the anti-damp paper, the anti-rust paper, the 
iron buttons and the iron knots. We note that we used the categories 
suggested by the respondents prior to the preliminary results for the 
anti-damp paper and the anti-rust paper, and that respondents did not 
suggest a category for the iron buttons. For the iron knots, we have 
selected HTS category 8309.90.09, other packing accessories of base 
metal, rather than the HTS category suggested by respondents, 
7326.90.09, other articles of iron or steel, because it is more 
specific to the packing input being valued.
    Comment 12: Respondents contend that the labor rates and the fringe 
benefit and bonus rates used by the Department in its preliminary 
results, collected from the Business International Corporation (BIC) 
report IL&T India, released November 1992, appear to reflect wage rates 
in urban areas, while the Chinese HFHT factories are located in rural 
areas. They note that the BIC is a non-government organization which 
provides estimates of Indian labor rates based on available data. The 
respondents state that they do not contest the estimated wage rates 
used by the Department in its preliminary results, as they believe that 
they are comparable to those used by the Department in other cases, 
such as Lighters and Furfuryl Alcohol, but argue that the adjustment 
for fringe benefits and bonuses should be reduced to those required by 
Indian law.
    Petitioner responds that the respondents' assertion that the labor 
rates reported in IL&T India appear to reflect wages in urban areas is 
without citation or support, and that there is no evidence on the 
record to suggest that these data are inappropriate for valuing labor. 
It contends that the respondents' suggested bonus rates are based 
solely on the mandatory statutory bonus rates and do not reflect any 
amounts for fringe benefits paid in India or any benefits privately 
negotiated between employers and employees. It notes that there could 
easily be benefit levels beyond the statutory minimum requirements. 
Petitioner further notes that respondents do not contest the use of 
wage rates from the same publication from which these fringe benefit 
and bonus rates were obtained. Petitioner further contends that the 
wage rates used in Lighters and Furfuryl Alcohol are irrelevant to this 
case because these industries are not comparable to the HFHT industry 
and because the surrogate country used in those cases was Indonesia.
    Department's Position: We disagree with respondents. Respondents 
have not placed any information on the record to demonstrate that the 
labor rates used in our preliminary results reflect wage rates in 
urban, rather than rural, areas. Moreover, we agree with petitioner 
that there could be benefit levels beyond what is statutorily required. 
The data provided by the BIC with respect to fringe benefits and 
bonuses provide an estimate of what is actually paid, and is therefore 
more indicative of actual fringe benefits and bonuses paid to workers 
in India than the minimum requirements of Indian law. Since the 
surrogate values should reflect actual costs in the surrogate country, 
we have continued to use the wage rates and the fringe benefit and 
bonus rates used in the preliminary results, rather than the 

[[Page 49257]]
minimum requirements of Indian law, as suggested by respondents.
    Comment 13: Respondents argue that the surrogate values for 
electricity and coal should be adjusted to account for the period 
during which picks sold by FMEC were produced.
    Department's Position: We agree with respondents. As discussed 
above in our response to comment 1, we have valued production occurring 
in 1991 using 1991 values, and production occurring in 1992 using 1992 
values. Accordingly, all inputs for merchandise produced in 1991 have 
been valued using 1991 values, not just coal and electricity.
    Comment 14: Respondents argue that the Department erred in 
determining the amounts of scrap and waste which were sold, and should 
recalculate these amounts. According to respondents, the amounts 
reported in the questionnaire responses as total scrap and waste 
collected were verified and represent scrap sold.
    Department's Position: We agree with respondents. As discussed in 
FMEC's and SMC's questionnaire responses, the amounts reported as scrap 
and waste collected are the amounts of salable scrap. We have adjusted 
our calculations to reflect these reported amounts of salable scrap.
    Comment 15: According to respondents, the Department should 
determine the steel input factor according to the methodology applied 
in Lock Washers. Respondents contend that, in that case, the Department 
determined the steel input factor by disregarding the scrap and valuing 
the steel factor based on the net weight of the finished product plus 
the waste. According to respondents, the Department would not have to 
determine scrap values with this methodology.
    Department's Position: We disagree with respondents. In order to 
determine the costs of materials to a producer, we multiply the gross 
amounts of the materials used in the production process by the 
surrogate values. If the producer sells scrap resulting from the 
production process, we allow revenue resulting from that sale as an 
offset to the materials costs. Since the value of the scrap which is 
sold is less than the value of the material input purchased by the 
manufacturer, we calculate the revenue from the sale of scrap by 
multiplying the amount of scrap sold by the value of the scrap, and 
subtracting that result from the materials costs. Using respondents' 
methodology would mean that the scrap is valued at the original input 
cost, which would overstate the scrap value.
    Comment 16: Respondents recommend that the Department use the rail 
rate reported in Doing Business in India--An Economic Profile, 
published by the Director, Economic Coordination Unit, Ministry of 
External Affairs. According to respondents, this information should be 
used because it is official Indian government data, is more current 
than the data used for the preliminary results of reviews, and provides 
a specific rate on a per-kilometer basis, rather than for a range of 
kilometers.
    Petitioner responds that the Department should reject the freight 
rate suggested by the respondents as it is less detailed than the cable 
data used in the preliminary results of these reviews, as well as other 
investigations and reviews.
    Department's Position: We disagree with respondents. The rail 
freight rate suggested by the respondents was submitted to the record 
of these reviews after the preliminary results were issued, and 
therefore was returned as untimely filed pursuant to section 
353.31(a)(3) of the Department's regulations.
    Comment 17: Respondents argue that, in those instances where the 
distance between a factory and one of its suppliers is not supplied, 
the Department should use a simple average of the distances which were 
provided, rather than applying the longest distance as BIA. Respondents 
contend using the longest distance imposes a burden on small, rural 
factories to keep records beyond their abilities and unfairly adds to 
the input costs.
    Moreover, as mentioned in Comment 5, respondents contend that the 
Department should not adjust the factor input for wedges for 
transportation as the wedges were made at the factory site from scrap. 
In the case of pellets, respondents argue that the Department should 
recognize that the pellets were sourced locally and make the adjustment 
for transportation accordingly, if the Department does not include 
pellets in factory overhead.
    Lastly, respondents contend that the factories used their own 
trucks to pick up materials from the rail yards, and that expenses 
associated with these trucks are considered as overhead by the 
factories. Accordingly, they contend that where factory trucks are 
used, no adjustment for transportation costs should be made. 
Respondents cite to Lock Washers as evidence for their position.
    Petitioner responds that use of the longest reported distance 
between a factory and one of its suppliers in those instances where no 
distances have been reported is reasonable and consistent with past 
Department practice.
    Department's Position: We disagree with respondents. We have 
applied as BIA the longest distance in two situations: first, when the 
distance between a factory and its supplier was not reported; and 
second, when several suppliers supplied a factory with the input and 
the percentage of material purchased from each supplier was not 
reported. In their questionnaire responses, FMEC and SMC did not 
indicate that they could not provide such information for all factors. 
As petitioner states, it is the Department's practice to use the 
longest distance in such instances. See, e.g., Pencils and Saccharin, 
where the most expensive distance/mode of transportation was used when 
a respondent had failed to provide information regarding transportation 
between factories and suppliers.
    As discussed in our response to comment 12, we agree with 
respondents that wedges were made at the factory and have not made an 
adjustment for transportation for this input.
    We disagree with respondents that certain truck costs should be 
considered as factory overhead. There is nothing on the record to 
indicate that factory trucks are used to pick up merchandise from the 
rail yards.
    Comment 18: Respondents argue that, in calculating the average 
ocean freight rates for FMEC and SMC for shipments made by non-PRC-
owned ocean freight companies, which have been applied to those sales 
for which ocean freight services were provided by PRC-owned companies, 
the Department omitted several non-PRC-owned company shipments. 
According to respondents, the calculation of the average ocean freight 
rates should be revised to include these shipments.
    Department's Position: We agree with respondents that there is 
additional information on the record regarding ocean freight shipments 
provided by non-PRC-owned carriers which was not included in our 
preliminary calculation of the average ocean freight rates. Therefore, 
for these final results, we have recalculated the average ocean freight 
rates using the additional shipments.
    Comment 19: According to respondents, the Department should have 
calculated the average ocean freight rates for shipments supplied by 
non-PRC-owned companies on a weight basis, by dividing the reported 
per-piece ocean freight charge by the weight per piece.
    Department's Position: We disagree with respondents. We calculated 
the 

[[Page 49258]]
average ocean freight rate by dividing the ocean freight charge for 
each shipment by non-PRC-owned companies by the weight of the finished 
product; then, the results were summed for those shipments, and the 
total divided by the total number of pieces shipped by non-PRC-owned 
companies. This methodology is more accurate than respondents' 
methodology because it allocates the weight of each shipment to the 
charge for that shipment. Conversely, respondents' methodology, by 
which the total of the ocean freight charges for shipments by non-PRC-
owned companies would be divided by the total weight of those 
shipments, allocates the weight of each shipment over all ocean freight 
charges. Therefore, we have not changed our calculation of the average 
ocean freight rates, except to include the additional shipments, as 
discussed in our response to comment 18.

Final Results of Reviews

    As a result of our reviews, we have determined that the following 
margins exist:

------------------------------------------------------------------------
                                                                Margin  
          Manufacturer/exporter              Time period      (percent) 
------------------------------------------------------------------------
        Fujian Machinery & Equipment Import & Export Corporation        
                                                                        
------------------------------------------------------------------------
Axes/Adzes..............................     2/1/92-1/31/93        21.92
Bars/Wedges.............................     2/1/92-1/31/93        66.32
Hammers/Sledges.........................     2/1/92-1/31/93        44.41
Picks/Mattocks..........................     2/1/92-1/31/93       108.20
                                                                        
------------------------------------------------------------------------
              Shandong Machinery Import & Export Corporation            
                                                                        
------------------------------------------------------------------------
Axes/Adzes..............................     2/1/92-1/31/93        21.92
Bars/Wedges.............................     2/1/92-1/31/93        49.69
Hammers/Sledges.........................     2/1/92-1/31/93        35.57
Picks/Mattocks..........................     2/1/92-1/31/93        49.64
------------------------------------------------------------------------

    The Department shall determine, and the Customs service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between United States price and foreign market value may 
vary from the percentages stated above. The Department will issue 
appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of reviews for all 
shipments of HFHTs from the PRC entered, or withdrawn from warehouse, 
for consumption on or after the publication date, as provided for by 
section 751(a)(1) of the Act: (1) the cash deposit rates for the 
reviewed companies named above which have separate rates will be the 
rates for those firms as stated above; (2) for all other PRC exporters, 
the cash deposit rates will be the rates established in the less-than-
fair-value (LTFV) investigations; and (3) the cash deposit rates for 
non-PRC exporters of the subject merchandise from the PRC will be the 
rate applicable to the PRC supplier of that exporter. The rates 
established in the LTFV investigations are 45.42 percent for hammers/
sledges, 31.76 percent for bars/wedges, 50.81 percent for picks/
mattocks, and 15.02 percent for axes/adzes. These deposit requirements, 
when imposed, shall remain in effect until publication of the final 
results of the next administrative reviews.
    This notice serves as a final reminder to importers of their 
responsibility under section 353.26 of the Department's regulations to 
file a certificate regarding the reimbursement of antidumping duties 
prior to liquidation of the relevant entries during this review period. 
Failure to comply with this requirement could result in the Secretary's 
presumption that reimbursement of antidumping duties occurred and the 
subsequent assessment of double antidumping duties.
    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 section 353.34(d) of the Department's 
regulations. Timely notification of return/destruction of APO materials 
or conversion to judicial protective order is hereby requested. Failure 
to comply with the regulations and the terms of an APO is a 
sanctionable violation.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22 
of the Department's regulations.

    Dated: September 13, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-23580 Filed 9-21-95; 8:45 am]
BILLING CODE 3510-DS-P