[Federal Register Volume 60, Number 235 (Thursday, December 7, 1995)]
[Notices]
[Pages 62808-62813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29887]



-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE
International Trade Administration
[A-427-030]


Large Power Transformers from France; Final Results of 
Antidumping Administrative Review

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

ACTION: Notice of final results of the antidumping duty administrative 
review; large power transformers from France.

-----------------------------------------------------------------------

SUMMARY: On May 2, 1995, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping finding on large power transformers (LPTs) from France. The 
review covers one manufacturer/exporter and the period June 1, 1993 
through May 31, 1994.
    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 review.

EFFECTIVE DATE: December 7, 1995.

FOR FURTHER INFORMATION CONTACT: Donald Little, Elisabeth Urfer, or 
Maureen Flannery, Office of Antidumping Compliance, 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

    The Treasury Department published in the Federal Register an 
antidumping finding on LPTs from France on June 14, 1972 (37 FR 11772). 
On June 7, 1994, we published in the Federal Register (59 FR 29411) a 
notice of opportunity to request an administrative review of the 
antidumping finding on LPTs from France covering the period June 1, 
1993 through May 31, 1994.
    In accordance with 19 CFR 353.22(a), Jeumont Schneider 
Transformateurs (JST) requested that we conduct an administrative 
review of its sales. We published a notice of initiation of this 
antidumping duty administrative review on July 15, 1994 (59 FR 36160).
    On May 2, 1995, the Department published the preliminary results in 
the Federal Register (60 FR 21499). The Department has now conducted 
the review in accordance with section 751 of the Tariff Act of 1930, as 
amended (the Tariff Act).

Scope of the Review

    Imports covered by the review are shipments of LPTs; that is, all 
types of transformers rated 10,000 kVA (kilovolt-amperes) or above, by 
whatever name designated, used in the generation, transmission, 
distribution, and utilization of electric power. The term 
``transformers'' includes, but is not limited to, shunt reactors, 
autotransformers, rectifier transformers, and power rectifier 
transformers. Not included are combination units, commonly known as 
rectiformers, if the entire integrated assembly is imported in the same 
shipment and entered on the same entry and the assembly has been 
ordered and invoiced as a unit, without a separate price for the 
transformer portion of the assembly. This merchandise is currently 
classifiable under the Harmonized Tariff Schedule (HTS) item numbers 
8504.22.00, 8504.23.00, 8504.34.33, 8504.40.00, and 8504.50.00. The HTS 
item numbers are provided for convenience and Customs purposes. The 
written description remains dispositive.
    This review covers one manufacturer/exporter of transformers, JST, 
and the period June 1, 1993, through May 31, 1994.

Applicable Statute and Regulations

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

Analysis of the Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results of review. We received comments from JST and 
petitioner, ABB Power T&D Co. Inc. We received rebuttal briefs from JST 
and petitioner.
    Comment 1: Petitioner argues that the dumping margin should be 
calculated in U.S. dollars, and that the Department's regulations 
require conversion of foreign currency into U.S. dollars based on the 
exchange rate prevailing on the date of sale. Petitioner cites 19 CFR 
353.60(a) (1994), which states that the Department is to convert ``a 
foreign currency into the equivalent amount of United States currency 
at the rates in effect on the dates described in * * * 353.50.'' 
Petitioner also cites 19 CFR 353.50, arguing that this section 
indicates the time for calculating constructed value, and thus 
determining the currency conversion rate, is the date of sale.
    Petitioner argues that the Department, in calculating constructed 
value and making adjustments to U.S. price and foreign market value, 
improperly converted several costs JST incurred in U.S. dollars into 
French francs. Petitioner argues that the instructions in the 
Department's questionnaire clearly state that JST was to report its 
expenses in the currency in which those expenses were incurred. 
Petitioner further argues that the U.S. Department of Commerce, 
International Trade Administration, Antidumping Manual instructs the 
Department to convert any expenses not incurred in U.S. dollars into 
their dollar-denominated equivalent. Petitioner states that the 
Department's regulations prescribe the rate to be used to accomplish 
this conversion under 19 CFR 353.60(a).
    JST argues that neither the antidumping statute nor the 
Department's regulations require that dumping analysis be dollar-
denominated. JST argues that section 772 of the Tariff Act defines U.S. 
price, but does not state that U.S. price is to be a dollar-denominated 
price, and thus no statutory provision compels, or addresses, the 
question of whether the Department must convert prices or costs stated 
in foreign currency into U.S. dollars. JST further argues that 19 CFR 
353.60(a) similarly prescribes a method for converting foreign currency 
into dollars, but does not require dollar-denominated calculations.
    JST argues that a calculation of U.S. price in a foreign currency 
is unusual, but not unlawful, and that, given the facts of this case, a 
French franc-denominated analysis is the best way of determining the 
degree to which either of JST's U.S. sales was sold at less than 
foreign market value. JST argues that the methodology is consistent 
with the basic rule that governs the Department's antidumping analysis, 
i.e., that a foreign 

[[Page 62809]]
producer's U.S. price and foreign market value are to be determined 
using data in the books and records of that producer, kept in the 
normal course of trade, as long as such data do not distort the 
producer's actual prices or costs.
    Department's Position: We disagree with both parties, in part. 
There is no requirement, in either the statute or the regulations, that 
the dumping margin be calculated in U.S. dollars. Nevertheless, when 
certain elements of the dumping calculation were paid in U.S. dollars, 
and other elements in a foreign currency or currencies, it is the 
Department's longstanding practice to convert foreign currency amounts 
into U.S. dollars before calculating dumping margins, in accordance 
with the rates established in 19 CFR 353.60(a). In this case, prices 
were set, and paid, in U.S. dollars. Therefore, for these final 
results, we have used the U.S. dollar price paid by the U.S. customer 
as the basis of U.S. price, and converted expenses incurred in French 
francs to U.S. dollars on the date of the U.S. sale. We have used the 
date of sale, i.e., the date on which the terms of the sale were set, 
as the date on which we have converted all foreign currency 
transactions.
    Comment 2: Petitioner claims that the use of JST's exchange rate 
guarantees in calculating a dumping margin is not in accordance with 
law. Petitioner argues that the Court of International Trade has held 
that gains from exchange contracts cannot be used to increase U.S. 
price, and at best a respondent may treat those gains or expenses 
solely as indirect selling expenses on its U.S. sales. Petitioner cites 
Thyssen Stahl AG v. United States, Slip Op. 95-78 (Ct. Int'l Trade 
April 27, 1995) (Thyssen), where the court reversed the Department's 
determination to treat gains from an exchange rate contract as a 
circumstance-of-sale adjustment. Petitioner states that the court noted 
that the antidumping statute did not provide for such an adjustment and 
the Department's implementing regulations ``did not contemplate 
currency hedging,'' and that the court rejected the respondent's theory 
that the antidumping law is designed to compare a respondent's overall 
return or profit between its U.S. and foreign market sales. Petitioner 
notes that, instead, the court in Thyssen held that exchange rate gains 
and losses could be considered indirect selling expenses.
    Petitioner notes that the Thyssen court relied heavily on 
Torrington Co. v. United States, 832 F.Supp. 379, 391-92 (Ct. Int'l 
Trade 1993) (Torrington), in which the court reversed the Department's 
adjustment to U.S. price to take into account a currency guarantee.
    JST states that the petitioner has misread the Torrington and 
Thyssen decisions. JST argues that the court's finding in Torrington 
was clearly limited to the conclusion that the respondent's currency 
hedging expenses were not directly related to the specific sales under 
review. JST argues that the court similarly found that Thyssen had 
failed to demonstrate the requisite direct relationship to the U.S. 
sales under consideration. JST concludes that neither the Torrington 
nor the Thyssen decision limits the Department's ability to treat any 
difference between JST's transaction-specific exchange rate guarantees 
and the exchange rate on the date of sale as a direct selling credit 
for which an adjustment to foreign market value must be made.
    JST argues that the production and sale of LPTs varies from most 
other merchandise that is subject to antidumping orders. JST explains 
that producers bid to supply transformers more than a year before the 
transformers will be delivered. Because the bid is a firm commitment to 
supply a high-cost transformer at a specific price, JST states that it 
always arranges for a project-specific exchange rate guarantee before 
it bids on a contract to supply an LPT to a U.S. customer. JST states 
that the transaction-specific exchange rate guarantees that it secured 
on its review-period sales to the United States are different from 
general currency hedges. JST argues that the exchange rate guarantees 
at issue transform JST's review-period sales to the United States into 
French franc-denominated sales against which the company could control 
the French franc costs that it incurred during the design, production, 
test and delivery cycle. JST states that the Department verified that 
JST maintains detailed transaction-specific French franc-denominated 
accounts for both the revenues and costs associated with each of its 
LPT sales. JST argues that a standard dumping calculation based on 
dollar-denominated U.S. sales would grossly distort the Department's 
antidumping analysis if the currency conversion were at a rate that 
differed significantly from the guaranteed rate of exchange that JST 
secured for each of its U.S. sales, because it would understate the 
amount actually expected and received by JST. JST cites to the Uruguay 
Round Agreements Act, Statement of Administrative Action at 172, to 
argue that it is current Department practice, where a company 
demonstrates that a sale of foreign currency on forward markets is 
directly linked to a particular export sale, to use the rate of 
exchange in the forward currency sale agreement.
    JST argues that, if the Department decides to treat its exports as 
dollar-denominated sales and decides to convert the French franc-
denominated constructed value to dollars at the Federal Reserve 
exchange rate in effect on the date of sale, the Department must make 
an adjustment to foreign market value for direct selling credit. JST 
argues that the result of the credit adjustment is the same as treating 
the transaction as a foreign currency sale at the guaranteed exchange 
rate.
    Department's Position: We disagree with both parties, in part. The 
court's decisions in Thyssen and Torrington do not disallow the use of 
a circumstance-of-sale adjustment in this case. The court in both 
Thyssen and Torrington stated that the respondents could not link the 
sales in question to specific exchange rate guarantee contracts. The 
facts of this case differ because there is a specific guarantee for 
each sale to the United States. JST has placed on the record evidence 
that there was an exchange rate guarantee directly associated with each 
of its sales to the United States. (See JST's questionnaire response at 
tabs A-2 and B-2.) At verification, we examined the price in the 
contract in U.S. dollars, the price the customer paid in U.S. dollars, 
and the amount JST received from its bank in French francs. (See 
verification exhibit Sales-4.) While the price to be paid in U.S. 
dollars by the customer remained constant, JST used an exchange rate 
guarantee to secure a certain exchange rate for each of its sales. 
Because the price paid by the customer was set and paid in U.S. 
dollars, for these final results we have used the price paid in U.S. 
dollars for purposes of calculating U.S. price. Because of the gain JST 
earned on these U.S. sales due to exchange rate guarantees, which were 
directly linked to specific sales of LPTs, we have made a circumstance-
of-sale adjustment to foreign market value to account for that gain.
    Comment 3: Petitioner argues that the Department understated JST's 
profit on its home market sales. Petitioner argues that JST improperly 
excluded data from a certain type of transformer from its home market 
sales and the Department based its home market profit calculation on 
the data that excluded transformers of this type. Petitioner states 
that the transformers in question are within the scope of the finding 
and JST has provided no scope-related information to explain why this 
type of transformer should be excluded.
    JST stated that the home market and the U.S. sales of LPTs, other 
than the 

[[Page 62810]]
type in question, were sold and manufactured, and the revenue 
associated with them was booked, on a comparable time frame, normally a 
year or more after the ``sale'' was made. JST states the sales of the 
transformer type in question were not only sold, but were manufactured 
and delivered five years before the review period. JST argues that the 
profit realized on these sales has nothing to do with market conditions 
at any time during the period in which the LPTs under review were sold, 
manufactured or delivered.
    Department's Position: We agree with JST. The profit the Department 
calculates for constructed value should be based on the profit the 
respondent experiences on comparable sales reasonably contemporaneous 
to the sales of subject merchandise under review. The transformers 
excluded from the profit calculation were sold significantly before the 
sales to the United States. Although the profit was realized during the 
period of review, the market conditions and expected return on those 
sales are not relevant to the market conditions during the time the LPT 
sales under review were made, because so much time had elapsed since 
the sale of the home market LPTs in question. Therefore, we are 
continuing to exclude the data on the transformers in question in our 
profit calculation.
    Comment 4: Petitioner argues that JST understated the actual amount 
of its pre-bid expenses for purposes of calculating cost of 
manufacture. Petitioner points out that JST calculated its pre-bid 
expenses by taking its total annual pre-bid expenses and allocating 
those expenses on a per-unit basis across all its sales for that year. 
Petitioner questions whether the denominator is accurate, given that at 
verification the Department found that JST had misreported the number 
of LPTs sold during the period of review. Petitioner also questions 
whether the pre-bid expenses for each of the units are identical across 
markets and asserts that, because JST's sales in its home market are 
far more regular than its export sales, it is possible that JST could 
have no pre-bid expenses for its home market sales. Petitioner contends 
that the best method for allocating these pre-bid expenses is on the 
basis of design hours. Petitioner argues that, because the export units 
are custom-designed, they would require more design hours, and thus 
likely more costs, to develop a bid.
    JST contends that it properly reported, and the Department properly 
calculated, pre-bid expense. JST contends that at verification the 
Department reviewed the quantity of transformers that it produced 
during each year involved in the review period (i.e., 1992, 1993, and 
1994), and that these data were provided in JST's ``final test'' log 
for each calendar year, which reconciled with JST's annual financial 
statements. JST further contends that even though there were problems 
with the sales volume and value data, there is no reason to question 
the validity of the final test data which were verified and used to 
allocate pre-bid expenses.
    JST asserts that petitioner misunderstands the pre-bid expenses 
that it incurs. JST states that it incurs in the aggregate more pre-bid 
expenses on business that it loses than on business that it wins, and 
that each transformer that is sold must absorb an allocated portion of 
total pre-bid expenses, including those on failed bids. Regarding 
petitioner's assertion that pre-bid expenses should be allocated based 
on design costs incurred after the bid has been won, JST argues that 
petitioner ignores the ``bid-but-not-won'' problem, and assumes a 
correlation between design costs or transformer size and pre-bid 
expenses where none exists.
    Department's Position: We disagree in part with both petitioner and 
JST. As petitioner noted, at verification we encountered considerable 
difficulties in verifying JST's sales volume and value. However, as 
stated in the verification report, JST allocated its pre-bid expenses 
based on the number of units tested during the year, a figure we did 
verify, finding no discrepancies. The sales volume and value data 
differ from the testing report data. The sales volume and value data 
cover only subject merchandise sold during the period of review, while 
the testing reports cover all transformers which were completed during 
the years during which the subject merchandise was produced.
    We agree with petitioner that pre-bid expenses might not be 
identical across markets. However, there is insufficient data on the 
record to determine whether more pre-bid expenses are incurred on home 
market or export sales. We disagree with petitioner that allocating by 
design hours would most accurately capture pre-bid expense, because 
there is not a clear correlation between design hours and pre-bid 
expense. As we found at verification, pre-bid expenses include other 
expenses associated with bids (see Verification Report at p. 15), and, 
therefore, are not necessarily incurred relative to design hours. 
Furthermore, as JST pointed out, a substantial portion of its pre-bid 
expenses are incurred for failed bids, and must be allocated to other 
LPTS. Because there is no correlation between pre-bid expenses and 
sales, we have determined that the most reasonable way to allocate pre-
bid expenses is on the cost of sales, since it avoids distortions which 
could be created by allocating pre-bid expenses on number of units or 
design hours.
    Comment 5: JST argues that, in calculating the profit ratio on home 
market sales, the Department understated the cost of manufacture 
incurred by JST on its home market sales because it did not include 
pre-bid expenses associated with these sales. As a result, JST claims, 
the Department overstated the profit ratio on its home market sales, 
which in turn led to an overstatement of profit for constructed value. 
JST states that, in its normal accounting, it treats pre-bid expenses 
as an indirect selling expense. However, in submitting costs for the 
LPTs sold in the United States, JST treated pre-bid expenses as a cost 
of manufacture in accordance with Department practice. JST argues there 
must be a consistency between the way cost of manufacture is calculated 
for U.S. sales and for home market sales, and that pre-bid expenses 
should therefore be included in the home market cost of manufacture. 
JST argues that the Department should allocate pre-bid expenses on a 
per unit basis.
    Petitioner states that JST has failed to submit sufficient 
information to make the adjustment to cost of manufacture for home 
market pre-bid expenses for purposes of the profit calculation. 
Petitioner argues that the suggested adjustment to pre-bid expenses 
implies that pre-bid expenses for home market and export sales are the 
same. Petitioner states that pre-bid expenses also include ``exchange 
rate guaranty premiums,'' which would be incurred only on export sales. 
Petitioner claims that, because JST did not provide export-related pre-
bid expenses separately from home market-related pre-bid expenses, an 
accurate calculation of home market pre-bid expenses cannot be made.
    Department's Position: JST's comment indicates a misunderstanding 
of the Department's calculation of profit. The Department calculates 
profit for constructed value by multiplying the cost of production 
(cost of manufacture plus selling, general, and administrative expenses 
(SG&A)) of the U.S. sale by a ratio of home market profit to the cost 
of production of home market sales. The home market SG&A includes 
indirect selling expenses, which is where JST normally includes pre-bid 
expenses. However, for the preliminary results we inadvertently did not 
include an amount for pre-bid expense in either cost of manufacture or 
SG&A expenses for purposes of our profit calculation. We do agree that, 
in order not to 

[[Page 62811]]
overstate profit, we must include an amount for pre-bid expense in home 
market cost of production. As noted in our response to Comment 4, 
above, JST did not provide sufficient information to differentiate 
between home market-related and export-related pre-bid expenses. 
Therefore, we have allocated pre-bid expense to home market cost of 
manufacture based on cost of sales.
    Comment 6:  Petitioner contends that the Department made an error 
in calculating JST's credit expense. Petitioner states that the 
Department based JST's credit expense on the time between the invoice 
date and payment date and that this is inconsistent with Department 
practice of using the time period between shipment date and payment 
date.
    Department's Position: We agree with the petitioner, and have 
recalculated the credit expense for the LPT sales to the United States 
to reflect the time period between shipment and payment.
    Comment 7: Petitioner asserts that the use of JST's economic report 
to derive the cost of materials for Sale 1 understates cost of 
materials for this unit since this report may not reconcile exactly to 
the cost accounting system. Petitioner argues the Department should 
derive a cost of materials figure using the total cost of materials 
from the cost accounting system.
    JST argues that it keeps economic reports for each transformer, 
while the cost accounting system is specific to individual orders, 
which may include costs for more than one transformer. JST argues that, 
when the accounting records for an order do not provide the detailed 
costs for each transformer covered by the order, the detail is 
available from the economic reports. JST argues that the economic 
report does in fact reconcile to the cost accounting system ``to within 
very few French francs.'' JST argues the information it supplied to the 
Department yields a fully reconciled materials cost. JST states that 
the differences in materials cost between the economic report and the 
cost accounting system were explained during verification.
    Department's Position: We agree with JST. During the verification, 
we examined the economic report and its relationship to the cost 
accounting system. We determined that using the economic report was the 
most reasonable method of deriving the cost of materials for this sale 
because the economic report is transformer-specific, and the 
differences between costs reflected in the economic report and the 
actual material costs for the specific transformer were minimal. (For 
further details, see proprietary memorandum to the file dated June 30, 
1995.)
    Comment 8: JST argues that the Department did not correct an error 
regarding JST's calculation of home market cost of sales, which was 
discovered at verification. As a result, JST asserts that the actual 
manufacturing cost incurred on home market sales is understated, 
thereby causing the calculation of profit to be overstated. JST argues 
that the verification report mistakenly notes that the error did not 
affect JST's cost of home market sales.
    Petitioner contends that JST's claim for an adjustment to home 
market cost of sales for this additional expense should be rejected. 
Petitioner argues that there is no information about this expense on 
the record. Petitioner argues that, without such information, the 
Department cannot legally determine that the expense relates to home 
market sales. Petitioner also argues that this information was untimely 
submitted.
    Department's Position: We agree with JST. At verification we asked 
JST to show us how it had arrived at the figures used in its profit 
calculation. In response to our request, JST prepared a worksheet 
showing how the figures in its questionnaire responses traced to the 
cost system. JST stated that, after it made adjustments for 
depreciation and labor, and excluded a certain type of transformer, it 
arrived at a figure different from what it had reported in the 
questionnaire response. It showed the amount of this difference on the 
profit worksheet, labeling it as an ``Other Adjustment.'' Therefore, 
while we noted in the verification report that the ``Other Adjustment'' 
amount ``should have been an expense,'' it is more accurate to 
characterize the amount as a correction of an error in the response. 
Correction of such errors can be the result of verification and is not 
untimely information as the petitioner asserts.
    As explained in the verification report, we verified the total home 
market costs and adjustments to those costs, as presented on the home 
market profit worksheet at verification. (See verification exhibit 
cost-18.) We were satisfied as to the accuracy of the corrected cost of 
sales calculation, as shown on the home market profit worksheet. 
Therefore, we have accepted respondent's correction of its original 
calculation of cost of sales.
    Comment 9: Petitioner argues that JST has not demonstrated that its 
related-party purchases have been made at arm's length, and as a result 
the Department should rely on best information otherwise available 
(BIA) to derive the cost of materials for JST's related-party materials 
purchases. Petitioner notes that at verification the Department 
reviewed JST's related-party purchases of two parts for one of its 
sales. Petitioner argues that, for the first of these parts, the 
Department compared related-party prices with price quotations from 
other companies, but JST did not demonstrate that the parts shown on 
these quotations met specifications similar to those of the part 
purchased from the related party. Petitioner also points out that the 
second part had been purchased from a party also related to JST. 
Petitioner states that the Department should use, as BIA, the ratio of 
all of JST's purchases from related parties to total purchases, 
multiplied by the total cost of materials, with an added amount for 
profit. For profit, petitioner suggests the Department use the 
percentage petitioner calculated for JST's home market profit.
    JST contends that its purchases of components from related parties 
were made at arm's length. With regard to the first part, JST argues 
that petitioner has produced no information to cast any doubt that this 
part was not purchased at arm's length, and that petitioner's claim 
that this part may be different from those purchased from unrelated 
suppliers is only speculation. With regard to the second part, JST 
contends that the purchase is insignificant. JST argues that the 
evidence that is available supports an ``arm's-length'' conclusion, and 
there is no reason to believe that the price paid was not an arm's-
length price.
    Department's Position: We agree with JST. At verification we 
examined two parts purchased by JST from related parties. With regard 
to the first part we examined detailed price quotations from JST's 
suppliers, which clearly showed that the part had been purchased at 
arm's length. We agree with petitioner that the comparison parts were 
not identical; however, we found that the parts from related and 
unrelated suppliers were comparable for purposes of the arm's length 
test. With regard to the second part, because custom work was done on 
the part in question, thereby making a benchmark unavailable, we could 
not determine whether the part was sold at arm's length. However, we 
found this part to be of insignificant value. Therefore, because JST 
demonstrated that either the sale of the part was made at arm's length, 
or the value was insignificant, we find that the purchase prices for 
both of these parts are suitable for use in our calculation of the 
foreign market value. (See Antifiction Bearings (Other Than 

[[Page 62812]]
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 10925, February 28, 1995.)
    Comment 10: Petitioner states that the Department should reject 
JST's home market direct warranty expense claim and treat warranty as 
an indirect selling expense. Petitioner cites the verification report, 
which states that JST calculated its reported home market warranty 
expense claim based on its warranty experience for both subject and 
non-subject merchandise. Petitioner argues that, because warranty 
expenses can vary significantly by product, JST's warranty expense 
allocation methodology may result in the overstatement of the company's 
actual home market LPT warranty expense.
    JST argues that, at verification, the Department was given detailed 
warranty expense information by year and by transformer type. JST 
states that it did report actual warranty expenses incurred on the 
subject merchandise and distinguished warranty expenses incurred on 
LPTs sold in the home market from warranty expenses sold on exports.
    Department's Position: JST reported warranty expense on home market 
sales which included both subject and non-subject merchandise. At 
verification, we were able to separate warranty expense into three 
categories: subject merchandise, non-subject merchandise, and export 
sales. We agree with petitioner that we should calculate warranties 
based only on subject merchandise. We disagree with petitioner that 
warranty expense should be considered an indirect selling expense 
because, as we found at verification, warranty expenses are associated 
with specific sales. We have thus recalculated warranty expense on home 
market subject merchandise and have continued to treat it as a direct 
selling expense adjustment to foreign market value.
    Comment 11: Petitioner argues that JST improperly allocated shared 
production expenses for 1993 by allocating a portion of these expenses 
to off-site production labor hours.
    JST stated that, because its off-site production was LPT-related, 
it properly allocated shared production expenses.
    Department's Position: We agree with JST. Shared production 
expenses for 1993 were properly allocated to all its production because 
(1) the off-site production performed by JST was LPT-related, and (2) 
of the nature of the shared production expenses. (See proprietary 
memorandum to the file dated June 30, 1995.)
    Comment 12: Petitioner argues that the Department improperly 
included insurance in SG&A, rather than treating it as a movement 
charge on JST's U.S. sales.
    JST states that the insurance associated with freight was included 
in JST's movement charges, and that the general insurance covering 
plant and inventory was included in the SG&A charge that JST reported 
in its questionnaire response. JST asserts that the Department properly 
included both sets of insurance costs in its preliminary dumping 
calculation.
    Department's Position: We agree with JST. At verification, in our 
examination of JST's internal cost sheets, which listed all of JST's 
expenses, we found that insurance had not been specifically listed. In 
our examination of freight documents, we found that the freight 
companies that JST used for shipping transformers to the United States 
included, in their charges, amounts for insurance. Therefore, JST 
properly reported freight insurance as a movement expense. In our 
examination of insurance reported as SG&A, we found that JST had been 
charged an amount for all its sales in the year we used to calculate 
SG&A. Based on the above information, we conclude that JST has properly 
reported insurance as a movement expense or an SG&A expense, depending 
on the nature of the insurance.
    Comment 13: Petitioner states that the Department correctly 
determined that only two entries were covered by this administrative 
review. Petitioner notes that during the period of review two JST units 
entered into the United States; however, JST requested the Department 
review a third unit which JST sold during the period of review. 
Petitioner argues that, while the Department has based certain 
administrative reviews on sales rather than entries, it has not mixed 
entry- and sale-based analyses in the same review, nor has it varied 
its methodology from review to review. Petitioner also notes that, at 
verification, the Department found that several important components of 
the margin calculation for this third sale could not be quantified 
because they had not yet been incurred. Petitioner contends that for 
its final results the Department should reaffirm its decision to 
exclude this unit from this review.
    Department's Position: We agree that this sale should not be 
included in this administrative review. At verification we examined 
this sale in detail; however, we could not verify receipt of payment 
for the transformer, or payment of movement expenses and commissions. 
In addition, we found that material cost could change due to 
adjustments that had not yet been made to materials removed from stock. 
Further, our general practice, in purchase price situations, is to 
review sales corresponding to shipments or entries made during the 
period of review. We have, therefore, not included this sale in our 
analysis.

Final Results of Review

    As a result of our review, we determine that the following 
weighted-average margin exists:

----------------------------------------------------------------------------------------------------------------
                                                                                                        Margin  
                            Manufacturer/exporter                                Period of review     (percent) 
----------------------------------------------------------------------------------------------------------------
Jeumont Schneider Transformateurs............................................     06/01/93-05/31/94         1.50
----------------------------------------------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and foreign market value may vary from 
the percentage stated above. The Department will issue appraisement 
instructions on each exporter directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of review for all 
shipments of LPTs from France entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(1) of the Tariff Act: (1) The cash deposit rate for the reviewed 
company will be the rate listed above; (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 the original less-than-fair-value investigation, but 

[[Page 62813]]
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) for all other producers and/or exporters of this merchandise, the 
cash deposit rate shall be 24 percent, the rate established in the 
first notice of final results of administrative review published by the 
Department (47 FR 10268, March 10, 1982). These deposit requirements 
shall remain in effect until publication of the final results of the 
next administrative review.
    This notice serves as a 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 subsequent assessment 
of double antidumping duties.

Notification to Interested Parties

    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 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.
    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: November 30, 1995.
Paul L. Joffe,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 95-29887 Filed 12-6-95; 8:45 am]
BILLING CODE 3510-DS-P