[Federal Register Volume 60, Number 226 (Friday, November 24, 1995)]
[Notices]
[Pages 58044-58046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28732]
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DEPARTMENT OF COMMERCE
[A-201-504]
Porcelain-on-Steel Cooking Ware From Mexico; Preliminary Results
of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: In response to requests from two manufacturers/exporters,
Esmaltaciones San Ignacio, S.A. (San Ignacio), and Cinsa, S.A. de C.V.
(Cinsa), the Department of Commerce (the Department) initiated an
administrative review of the antidumping duty order on porcelain-on-
steel cooking ware (POS cooking ware) from Mexico on January 13, 1995
(60 FR 3192). San Ignacio has withdrawn its request for review and we
have published a notice of termination in-part separately. The
Department has conducted a review of Cinsa for the period December 1,
1993 through November 30, 1994.
We have preliminarily determined that Cinsa has made sales below
the foreign market value (FMV). If these preliminary results are
adopted in our final results of administrative review, we will instruct
U.S. Customs to assess antidumping duties equal to the difference
between the United States price (USP) and FMV.
Interested parties are invited to comment on these preliminary
results. Parties who submit argument in this proceeding are requested
to submit with the argument (1) a statement of the issue and (2) a
brief summary of the argument.
EFFECTIVE DATE: November 24, 1995.
FOR FURTHER INFORMATION CONTACT: Arthur N. DuBois, 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) 482-6312/3814.
SUPPLEMENTARY INFORMATION:
Background
On December 6, 1994, the Department published a notice of
``Opportunity to Request an Administrative Review'' (59 FR 62710) of
the antidumping duty order on POS cooking ware (51 FR 43415, December
2, 1986). On December 28, 1994, the petitioner requested an
administrative review of Cinsa and San Ignacio. On December 30, 1994,
Cinsa also requested an administrative review. We initiated an
administrative review of Cinsa, covering December 1, 1993, through
November 30, 1994, on January 13, 1995 (60 FR 3192). San Ignacio has
withdrawn its request for review and we have published a notice of
termination in-part separately.
Applicable Statute and Regulations
The Department has conducted this administrative review in
accordance with section 751 of the Tariff Action 1930, as amended (the
Tariff Act). Unless otherwise indicated, all citations to the statute
and to the Department's regulations refer to the provisions as the
existed on December 31, 1994.
Scope of the Review
Imports covered by the review are shipments of POS cooking ware,
including tea kettles, which do not have self-contained electric
heating elements. All of the foregoing are constructed of steel and are
enameled or glazed with vitreous glasses.
This merchandise is currently classifiable under Harmonized Tariff
Schedule (HTS) item number 7323.94.00. Kitchenware currently entering
under HTS item number 7323.94.00.30 is not subject to the order. The
HTS item number is provided for convenience and Customs purposes. The
written description remains dispositive.
Verification
As provided in section 776(b) of the Tariff Act, we verified
information provided by the respondent, Cinsa, by using standard
verification procedures, including on-site inspection of the
manufacturer's facilities, the examination of relevant sales and
financial records, and selection of original documentation containing
relevant information. Our verification results are outlined in the
public versions of the verification report.
Depreciation and Employee's Profit Sharing
As we did in the 1990-1991 review, we calculated depreciation on a
revalued basis. We also treated employee's profit sharing as a direct
labor expense. See Porcelain-on-Steel Cooking Ware From Mexico; Final
Results of Antidumping Duty Administrative Review. (January 9, 1995, 60
FR 2378).
Related Parties
We have found that another company which produces subject
merchandise, Esmaltaciones de Norte America, S.A. de C.V. (ENASA), was
related to Cinsa during the period of review (POR).
The Department will apply a single antidumping duty margin to two
or more related companies where those companies have production
facilities for similar or identical products that would not require
retooling at either facility to implement a decision to restructure
manufacturing priorities, and where the Secretary concludes that there
is a strong potential for price or production manipulation. In
identifying a strong potential for price or production manipulation,
the factors the Secretary may consider include:
(i) the level of common ownership;
(ii) whether managerial employees or board members of one sit on
the board of directors of the related company; and
(iii) whether operations are intertwined, such as through sharing
of sales information, involvement in production and pricing decisions,
sharing of facilities or employees, or significant transactions between
the related parties.
In our verification the Department determined that ENASA produces only
heavy-gauge cooking ware while Cinsa produces only light-gauge cooking
ware because both kinds of cooking ware cannot be produced using the
same machinery. A shift in production from light-gauge to heavy-gauge
or vice-versa could not be accomplished without fundamental and
expensive retooling. Therefore, we determined that although Cinsa and
ENASA are related parties, Cinsa and ENASA should not be collapsed
because the two companies do not have production facilities that can
make similar merchandise without fundamental and expensive retooling.
Product Matching
Cinsa changed the product codes from those used in 1990/1991 and
earlier reviews. In this review the product code also incorporates
color. Cinsa reported and we verified cost of production and
constructed value data for every product sold in the United States.
Based on that data, we determined that color caused a difference in the
cost of manufacture. Therefore, we used Cinsa's product codes for
product matching.
United States Price (USP)
We calculated the USP based on purchase price for Cinsa as all U.S.
sales were made to unrelated parties prior to importation into the
United States, in accordance with section 772(b) of the Act.
[[Page 58045]]
We calculated purchase price based on packed f.o.b. port or
delivered prices to unrelated purchasers in the United States. We made
deductions, where appropriate, for U.S. and foreign brokerage, bank
charges, U.S. duty, foreign inland freight, credit costs, and rebates
in accordance with section 772(d)(2) of the Act.
In addition, we adjusted USP for taxes in accordance with our
practice outlined in the following section on Value Added Taxes.
No other adjustments were claimed or allowed.
Value Added Taxes
In light of the Federal Circuit's decision in Federal Mogul v.
United States, CAFC No. 94-1097, the Department has changed its
treatment of home market consumption taxes. Where merchandise exported
to the United States is exempt from the consumption tax, the Department
will add to the U.S. price the absolute amount of such taxes charged on
the comparison sales in the home market. This is the same methodology
that the Department adopted following the decision of the Federal
Circuit in Zenith v. United States, 988 F. 2d 1573, 1582 (1993), and
which was suggested by that court in footnote 4 of its decision. The
Court of International Trade (CIT) overturned this methodology in
Federal Mogul v. United States, 834 F. Supp. 1391 (1993), and the
Department acquiesced in the CIT's decision. The Department then
followed the CIT's preferred methodology, which was to calculate the
tax to be added to U.S. price by multiplying the adjusted U.S. price by
the foreign market tax rate; the Department made adjustments to this
amount so that the tax adjustment would not alter a ``zero'' pre-tax
dumping assessment.
The foreign exporters in the Federal Mogul case, however, appealed
that decision to the Federal Circuit, which reversed the CIT and held
that the statute did not preclude Commerce from using the ``Zenith
footnote 4'' methodology to calculate tax-neutral dumping assessments
(i.e., assessments that are unaffected by the existence or amount of
home market consumption taxes). Moreover, the Federal Circuit
recognized that certain international agreements of the United States,
in particular the General Agreement on Tariffs and Trade (GATT) and the
Tokyo Round Antidumping Code, required the calculation of tax-neutral
dumping assessments. The Federal Circuit remanded the case to the CIT
with instructions to direct Commerce to determine which tax methodology
it will employ.
The Department has determined that the ``Zenith footnote 4''
methodology should be used. First, as the Department has explained in
numerous administrative determinations and court filings over the past
decade, and as the Federal Circuit has now recognized, Article VI of
the GATT and Article 2 of the Tokyo Round Antidumping Code required
that dumping assessments be tax-neutral. This requirement continues
under the new Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade. Second, the URAA explicitly amended the
antidumping law to remove consumption taxes from the home market price
and to eliminate the addition of taxes to U.S. price, so that no
consumption tax is included in the price in either market. The
Statement of Administrative Action (p. 159) explicitly states that this
change was intended to result in tax neutrality.
While the ``Zenith footnote 4'' methodology is slightly different
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA
law required that the tax be added to United States price rather than
subtracted from home market price, it does result in tax-neutral duty
assessments. In sum, the Department has elected to treat consumption
taxes in a manner consistent with its longstanding policy of tax-
neutrality and with the GATT.
Cost of Production Analysis
In the most recent review of Cinsa we disregarded below cost sales
in the home market. Therefore, the Department had reasonable grounds to
believe or suspect that sales below the COP may have occurred during
this review. Accordingly, in this review we also initiated a cost of
production (COP) analysis.
After computing COP, we compared it to the VAT-neutral reported
home market prices net of movement charges and discounts. In accordance
with section 773(b) of the Tariff Act, in determining whether to
disregard home market sales made at prices below the COP, we examined
whether such sales were made in substantial quantities over an extended
period of time, and whether such sales were made at prices which
permitted recovery of all costs within a reasonable period of time in
the normal course of trade.
To satisfy the requirement of Section 773(b)(1) that below cost
sales be disregarded only if made in substantial quantities, we applied
the following methodology. For each model for which less than 10
percent, by quantity, of the home market sales during the POR were made
a prices below COP, we included all sales of that model in the
computation of FMV. For each model for which 10 percent or more, but
less than 90 percent, of the home market sales during the POR were
priced below COP, we excluded those sales priced below COP, provided
that they were made over an extended period of time. For each model for
which 90 percent of more of the home market sales during the POR were
priced below COP and made over an extended period of time, we
disregarded all sales of that model in our calculation and, in
accordance with 773(b) of the Tariff Act, we used the constructed value
(CV) of those models, as described below. See e.g., Mechanical Transfer
Presses from Japan, Final Results Antidumping Duty Administrative
Review, 59 FR 9958 (March 2, 1994).
In accordance with section 773(b)(1) of the Tariff Act, to
determine whether sales below cost had been made over an extended
period of time, we compared the number of months in which sales below
cost occurred for a particular model to the number of months which that
model was sold. If a model was sold in three or more months, we did not
disregard below-cost sales unless there were sales below cost in at
least three of the months in which the model was sold. See Tapered
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter,
and Components Thereof, From Japan; Final Results of Antidumping Duty
Administrative Review, 58 FR 64720, 64729 (December 8, 1993).
Because Cinsa provided no indication that its below-cost sales were
at prices that would permit recovery of all costs within a reasonable
period time and in the normal course of trade, we disregarded those
sales of models within the ``10 to 90 percent'' category which were
made below cost over an extended period of time. In addition, we based
FMV on CV for all U.S. sales for which there were insufficient sales of
the home market model at or above COP.
Foreign Market Value
In calculating foreign market value (FMV) for Cinsa, the Department
used home market price, as defined in section 773 of the Tariff Act,
when sufficient quantities of such or similar merchandise were sold in
the home market, at or above the cost of production (COP), to provide a
basis of comparison. Home market price was based on the packed, ex-
factory or
[[Page 58046]]
delivered price to unrelated purchasers in the home market.
We made deductions, where appropriate, for discounts, freight, and
direct selling expenses. Since packing expenses were the same in both
market we made no adjustments for packing. We also made a circumstance-
of-sale adjustment, where appropriate, for differences in credit
expenses and commissions.
We made difference-in-merchandise adjustments, where appropriate,
based on differences in the variable cost of manufacture. Finally, we
adjusted for Mexican consumption taxes in accordance with our decision
in Silicomanganese from Venezuela, Preliminary Determination of Sales
at Less Than Fair Value, 59 FR 31204, June 17, 1994.
No other adjustments were claimed or allowed.
We used constructed value for models for which there were
insufficient home market sales at or above the COP. Constructed value
consisted of the sum of materials, fabrication, overhead, general
expenses, profit, and U.S. packing. In accordance with section
773(e)(1)(B), we used the actual amount of general expenses because
these amounts were more than the statutory minimum of ten percent. We
used eight percent for profit because Cinsa's profit was less than the
statutory minimum of eight percent.
Preliminary Results of the Review
As a result of this review, we preliminarily determine that the
following margins exist for the period December 1, 1993, through
November 30, 1994:
------------------------------------------------------------------------
Margin
Manufacturer/Producer/Exporter Percent
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Cinsa........................................................ 6.36
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Parties to the proceeding may request disclosure within 5 days and
interested parties may request a hearing not later than 10 days after
publication of this notice. Interested parties may submit written
arguments in case briefs on these preliminary results within 30 days of
the date of publication of this notice. Rebuttal briefs, limited to
issues raised in the case briefs, may be filed not later than 7 days
after the time limit for filing case briefs. Any hearing, if requested,
will be held 7 days after the scheduled date for submission of rebuttal
briefs. Copies of case briefs and rebuttal briefs must be served on
interested parties in accordance with 19 CFR 353.38(e). Representatives
of parties to the proceeding may request disclosure of proprietary
information under administrative protective order no later than 10 days
after the representative's client or employer becomes a party to the
proceeding, but in any event not later than the date the case briefs,
under 19 CFR 353.38(c), are due. The Department will publish the final
results of its analysis of issues raised in a case or rebuttal brief or
at a hearing.
Upon completion of the final results in this review, the Department
shall determine, and 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 appropriate appraisement instructions directly to the Customs
Service upon completion of this review.
Furthermore, the following deposit requirements will be effective
upon publication of our final results of review for all shipments of
the subject merchandise entered, or withdrawn from warehouse, for
consumption on or after that publication date of the final results of
this administrative review, as provided by section 751(a)(1) of the
Act:
(1) The cash deposit rate for the reviewed company will be those
rates established in the final results of this review;
(2) The cash deposit rate for subject merchandise exported by
manufacturers or exporters not covered in this review, but covered in
previous reviews or in the original LTFV investigation, will be based
upon the most recently published rate in a final result or
determination for which the manufacturer or exporter received a
company-specific rate;
(3) The cash deposit rate for subject merchandise exported by an
exporter not covered in this review, a prior review, or the original
investigation, but where the manufacturer of the merchandise has been
covered by this or a prior final results or determination, will be
based upon the most recently published company-specific rate for that
manufacturer; and
(4) The cash deposit rate for merchandise exported by all other
manufacturers and exporters, who are not covered by these or any
previous administrative review conducted by the Department, will be the
``all others'' rate established in the less than fair value
investigation.
Because this proceeding is governed by an antidumping duty order,
the ``all others'' rate will be 29.52 percent, the ``all others'' rate
established in the LTFV investigation.
These deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
This notice serves as a preliminary 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 administrative review, and notice are in accordance with
section 751(a)(1) of the Act and 19 CFR 353.22.
Dated: November 9, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-28732 Filed 11-22-95; 8:45 am]
BILLING CODE 3510-DS-P