[Federal Register Volume 61, Number 14 (Monday, January 22, 1996)]
[Notices]
[Pages 1560-1562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-750]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-122-601]


Brass Sheet and Strip from Canada; 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: The Department of Commerce (the Department) has conducted an 
administrative review of the antidumping duty order on brass sheet, and 
strip (BSS) from Canada. The review covers one manufacturer/exporter of 
this merchandise to the United States, and the period January 1, 1993 
through December 31, 1993. The review indicates the existence of 
dumping margins for this period.
    We have preliminarily determined that sales have been made 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: January 22, 1996.

FOR FURTHER INFORMATION CONTACT: Arthur N. DuBois, Karen Park, or 
Thomas F. Futtner, Office of Antidumping Compliance, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW., Washington, D.C. 
20230, telephone: (202) 482-5253.

SUPPLEMENTARY INFORMATION:

Background

    On January 12, 1987, the Department published in the Federal 
Register (52 FR 1217) the antidumping order on BSS from Canada. Based 
on timely requests for review, on February 17, 1994, in accordance with 
19 CFR 353.22(c), we initiated an administrative review of Wolverine 
Tube (Canada) Inc. (Wolverine), for the period January 1, 1993 through 
December 31, 1993 (59 FR 7979).

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 they 
existed on December 31, 1994.

Scope of the Review

    Imports covered by the review are shipments of brass sheet and 
strip, other than leaded and tin brass sheet and strip. The chemical 
composition of the covered products is currently defined in the Copper 
Development Association (C.D.A.) 200 Series or the Unified Numbering 
System (U.N.S.) C2000. Products whose chemical composition is defined 
by other C.D.A. or U.N.S. series are not covered by this order.
    The physical dimensions of the products covered by this review are 
brass sheet and strip of solid rectangular cross section over 0.006 
inches (0.15 millimeters) through 0.188 inches (4.8 millimeters) in 
finished thickness or gauge, regardless of width. Coil, wound-on-reels 
(traverse wound), and cut-to-length products are included. During the 
review such merchandise was classifiable under Harmonized Tariff 
Schedule (HTS) subheadings 7409.21.00 and 7409.29.00. Although the HTS 
subheading is provided for convenience and for Customs purposes, the 
written description of the scope of this order remains dispositive.
    The review covers one Canadian manufacturer/exporter, Wolverine, 
and the period January 1, 1993 through December 31, 1993.

Verification

    As provided in section 776(b) of the Tariff Act, we verified 
information provided by the respondent 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.

United States Price

    We based USP on purchase price, in accordance with section 772 of 
the Act.
    We calculated purchase price based on packed, delivered, duty-paid 
prices. In accordance with section 772(d)(2) of the Act, we made 
deductions for movement expenses and customs duties. Movement expenses 
included fees for brokerage and handling, and U.S. and foreign inland 
freight.
    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 

[[Page 1561]]
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

    Due to the existence of sales below the cost of production (COP) in 
the last completed review of Wolverine, the Department has reasonable 
grounds to believe or suspect that sales below the COP may have 
occurred during this review. See Carbon Steel Butt Weld Pipe Fittings 
from Taiwan; Preliminary Results of Administrative Review, 59 FR 66001 
(December 22, 1994). Therefore, pursuant to section 773(b) of the Act, 
in this review we initiated a cost of production (COP) investigation of 
Wolverine.
    In accordance with 19 CFR 353.51(c) we calculated COP based on the 
cost of materials, fabrication, and general expense, but excluding 
profit, incurred in producing such or similar merchandise. The 
Department relied on submitted COP and constructed value (CV) 
information except in the following instances where the costs were not 
appropriately quantified or valued:
    1. We added the cost of subcontracted labor to the total direct 
labor pool to reflect the total labor costs associated with the 
production of the subject merchandise.
    2. We reclassified certain general and administrative (G&A) 
expenses to fixed overhead cost to allocate the appropriate G&A 
expenses incurred for the production of subject merchandise.
    After computing COP, we compared it to the reported home market 
prices net of movement charges and discounts. In accordance with 
section 773(b) of the Tariff Act and 19 CFR 353.51(a), 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.
    In accordance with Section 773(b)(1) of the Tariff Act, to 
determine whether sales below cost had been 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 that were made at 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 the merchandise's COP, we excluded 
from the calculation of FMV those home market sales priced below the 
merchandise's COP, provided that they were made over an extended period 
of time. For each model for which 90 percent or 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 
Final Results of Antidumping Duty Administrative Review; Tapered Roller 
Bearings Four Inches or Less in Outside Diameter, and Certain 
Components Thereof, 56 FR 26054, 26060 (June 6, 1991).
    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 during the 
POR in which that model was sold. If a model was sold in fewer than 
three months during the POR, we did not exclude the below cost sale 
unless there were below cost sales in each month of sale. If a model 
was sold in three or more months during the POR, we did not exclude 
below-cost sales unless there were sales below cost in at least three 
of the months in which the model was sold. See Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Carbon Steel 
Butt Weld Pipe Fitting from Thailand, 60 FR 10552, 10554 (February 27, 
1995).
    The Department determined that Wolverine provided no evidence that 
its below COP prices would permit recovery of all costs within a 
reasonable period time in the normal course of trade. Therefore, in 
accordance with Section 773(b) we disregarded these below cost sales in 
our FMV calculations.

Foreign Market Value

    The Department used home market price to calculate FMV, as defined 
in section 773 of the Act. Because the home market was viable as 
defined by 19 CFR 353.48(a), we compared U.S. sales with sales of such 
or similar merchandise sold in the home market.
    FMV was based on packed, delivered prices to unrelated home market 
purchasers. In accordance with 19 CFR 353.56 we made adjustments for 
bona fide difference in the circumstances of the sales compared, where 
applicable, for home market credit, post-sale inland freight, and U.S. 
credit cost. We made no adjustment for differences in packing costs.
    We calculated FMV using monthly weighted-average prices of brass 
sheet and strip having the same characteristics with respect to alloy, 
gauge, width, temper and form.
    We adjusted for Canadian consumption tax as mentioned above.
    No other adjustments were claimed or allowed.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period January 1, 1993, through 
December 31, 1993:

                                                                        
------------------------------------------------------------------------
                                                                Margin  
               Manufacturer/producer/exporter                   percent 
------------------------------------------------------------------------
Wolverine...................................................        1.39
------------------------------------------------------------------------

    Interested parties may request disclosure within 5 days of the date 
of publication of this notice and may request a hearing within 10 days 
of publication, Any hearing, if requested, will be held as early as 
convenient for the parties but not later than 44 days after the date of 
publication or the first business day thereafter. Case briefs and/or 
written comments from interested parties may be submitted no later than 
30 days after the date of publication of this notice. Rebuttal briefs 
and rebuttal comments, limited to issues raised in the case briefs, may 
be filed not later 

[[Page 1562]]
than 37 days after the date of publication of this notice. The 
Department will publish the final results of this administrative 
review, including the results of its analysis of issues raised in any 
such written comments or at a hearing.
    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. Upon completion of the final results in this review the 
Department will issue appropriate appraisement instructions directly to 
the U.S. Customs Service.
    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 the 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 the rate 
established in the final results of this review;
    (2) for previously reviewed or investigated companies not listed 
above, the cash deposit rate will continue to be the company-specific 
rate published in 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 (LTFV) investigation, but 
the manufacturer is, the cash deposit rate will be the rate established 
in the most recent period for the manufacturer of the merchandise; and
    (4) if neither the exporter nor the manufacturer is a firm covered 
in this or any previous review conducted by the Department, the cash 
deposit rate will be 8.10 percent, the all others rate established in 
the LTFV investigation (51 FR 44319).
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.
    This notice also 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 (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: December 14, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-750 Filed 1-19-96; 8:45 am]
BILLING CODE 3510-DS-P