[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Notices]
[Pages 8911-8914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5257]



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

DEPARTMENT OF COMMERCE
[A-201-504]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review; Porcelain-on-Steel Cookware From Mexico

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

SUMMARY: In response to a request by petitioner, the Department of 
Commerce is conducting an administrative review of the antidumping duty 
order on porcelain-on-steel cookware from Mexico. The review covers 
shipments of this merchandise to the United States during the period 
December 1, 1991 through November 30, 1992. The review indicates the 
existence of dumping margins during the review period. We invite 
interested parties to comment on these preliminary results.

EFFECTIVE DATE: March 6, 1996.

FOR FURTHER INFORMATION CONTACT: Kate Johnson or Dolores Peck, Office 
of Antidumping Investigations, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, D.C. 20230; telephone, (202) 482-
4929.

SUPPLEMENTARY INFORMATION:

Background

    On December 4, 1992, the Department of Commerce (the Department) 
published in the Federal Register a notice of ``Opportunity to Request 
an Administrative Review'' of the Antidumping Duty Order on Porcelain-
on-Steel Cookware from Mexico (57 FR 57419). In accordance with 19 
C.F.R. 353.22(a)(2), on December 16, 1992, General Housewares 
Corporation requested an administrative review of the antidumping order 
covering the period December 1, 1991, through November 30, 1992. We 
initiated the administrative review on February 23, 1993 (58 FR 11026), 
and are conducting it in accordance with section 751 of the Tariff Act 
of 1930, as amended (the Act).

Scope of the Review

    Imports covered by this review are shipments of porcelain-on-steel 
cookware, including tea kettles, which do not have self-contained 
electric heating elements. All of the foregoing are constructed of 
steel and are 

[[Page 8912]]
enameled or glazed with vitreous glasses. This merchandise is currently 
classifiable under Harmonized Tariff Schedule of the United States 
(HTSUS) item number 7323.94.00. Kitchenware currently entering under 
HTS item number 7323.94.00.30 is not subject to the order. Although the 
HTSUS subheadings are provided for convenience and Customs purposes, 
our written description of the scope of this proceeding is dispositive.
    The review covers two manufacturers/exporters, Acero Porcelanizado, 
S.A. de C.V. (APSA) and Cinsa, S.A. de C.V. (CINSA) of Mexican 
porcelain-on-steel cookware. The period of review (POR) is December 1, 
1991 to November 30, 1992.

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.

Product Comparisons

    In accordance with the Department's standard methodology, we first 
compared identical merchandise. Where there were no sales of identical 
merchandise in the home market to compare to U.S. sales, we made 
similar merchandise comparisons on the basis of product type, quality, 
color, and number of enamel coats for CINSA and product type and 
quality for APSA.
    CINSA argued that beginning in the fifth review period (1990-91), 
its home market costs and prices began to differentiate between items 
having different colors and enamel coats. We analyzed the information 
on the record in the sixth review (1991-92) and determined that 
appreciable differences in costs may result from different coats/colors 
for a product otherwise the same which is sold in the same period of 
time. We also noted that CINSA's home market pricing appears to 
differentiate between items having different colors and enamel coats, 
as argued by respondent. Accordingly, in addition to the product type 
and quality criteria, we have also used color and coat as matching 
criteria for CINSA.
    APSA argues that color and coat should not be used in its product 
comparisons since the difference in its cost of producing cookware of 
different colors and coats is insignificant in relation to the total 
cost of production (COP). Moreover, APSA argued that the Department had 
matched only by product and quality in past reviews. As a result of our 
analysis of the information on the record, we concluded that there is 
no evidence indicating that the previous matching criteria are 
inappropriate for purposes of this review for this company. 
Accordingly, for APSA, we have compared products using only the product 
type and quality criteria, as was done in past reviews. (See 
Concurrence Memorandum dated September 13, 1995, for further discussion 
of this issue).
    For those U.S. sales for which we found no contemporaneous sales of 
comparable merchandise sold in the home market and for which there was 
no constructed value (CV) data on the record, we used best information 
available (BIA). (See United States Price section of this notice).

United States Price

A. APSA

    We based United States price (USP) on both exporter's sales price 
(ESP) and purchase price (PP), in accordance with section 772 of the 
Act, because the subject merchandise was sold both before and after 
importation into the United States. We based ESP and PP on the packed, 
ex-factory price to unrelated purchasers in the United States.
    For both PP and ESP sales we made deductions from USP, where 
appropriate, for foreign and U.S. inland freight and insurance, Mexican 
and U.S. brokerage and U.S. import duties and user fees, in accordance 
with section 772(d)(2) of the Act. We also made deductions for 
discounts and rebates.
    We made further deductions from ESP, where applicable, for 
commissions, credit expenses and indirect selling expenses, pursuant to 
section 772(e)(1) and (2) of the Act.
    For three U.S. products, we found no identical home market products 
sold in contemporaneous periods, and APSA did not provide an adjustment 
for differences in merchandise or constructed value information, as we 
had repeatedly requested. Therefore, we used BIA for these sales 
pursuant to Section 776(C) of the Act. As partial BIA, we used the 
weighted-average of 8.75 percent from Porcelain-On-Steel Cookware From 
Mexico; Final Results of Antidumping Duty Administrative Review (3rd 
Administrative Review), 58 FR 32095 (June 8, 1993),because it is the 
highest rate ever determined for APSA. This is consistent with the 
Department's general application of partial BIA (see, e.g., Final 
Results of Antidumping Duty Adminisrative Reviews and Revocation in 
Part of an Antidumping Duty Order; Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From France, et. al.,(AFBs), 
60 FR 10900, 10907 (February 28, 1995)).

B. CINSA

    We based USP on PP, in accordance with section 772 of the Act, 
because the subject merchandise was sold before importation into the 
United States. We based PP on the packed, ex-factory price to unrelated 
purchasers in the United States.
    We made deductions from USP, where appropriate, for foreign and 
U.S. inland freight and insurance, Mexican and U.S. brokerage and U.S. 
import duties, in accordance with section 772(d)(2) of the Act.
    We added to USP the amount of import duties which have been 
rebated, or which not have been collected, by reason of the exportation 
of the subject merchandise to the United States.

C. CINSA and APSA

    For both CINSA and APSA we made an adjustment to USP for the value-
added tax (VAT) paid on the comparison sales in Mexico. 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 

[[Page 8913]]
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 Uruguay Round Agreements 
Act (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.
    Also, for both APSA and CINSA, the Department verified in the 
original investigation and in previous reviews that both companies 
incur the same packing expenses for sales of the subject merchandise in 
the United States and in Mexico. Therefore, as in previous reviews, no 
adjustment was made for packing.

Foreign Market Value

A. APSA

    In calculating foreign market value (FMV), the Department used home 
market price, as defined in section 773 of the Act. Home market price 
was based on the packed, ex-factory price to certain related and 
unrelated purchasers in the home market. In our margin calculations, we 
used sales to related parties which we found were at arm's length. See 
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the 
United Kingdom; Final Results of Antidumping Duty Administrative 
Review, 60 FR 44012 (August 24, 1995).
    We made deductions from the home market price for discounts and 
rebates. For comparison to PP sales, pursuant to section 773(a)(4)(B) 
and 19 C.F.R. 353.56(a)(2), we made a circumstance-of-sale (COS) 
adjustment, where appropriate, for differences in credit expenses. For 
comparison to ESP sales, we also deducted credit expenses from FMV.
    We adjusted for differences in commissions in accordance with 19 
CFR 353.56(a)(2)(1994).
    Regarding indirect selling expenses, APSA calculated inventory 
carrying costs based on sales price. We recalculated these costs based 
on APSA's cost of goods sold.
    We adjusted for VAT in accordance with our practice. (See the 
United States Price section of this notice, above.)

B. CINSA

    We also used home market price for CINSA, 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 for 
comparison.
    Home market price was based on the packed, delivered and ex-factory 
price to certain related and unrelated purchasers in the home market. 
In our margin calculations, we used sales to related parties which we 
found were at arm's length. We made deductions from home market price 
for discounts, where applicable.
    In light of the Court of Appeals for the Federal Circuit's decision 
in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. 
United States, 13 F.3d 398 (Fed. Cir. 1994), the Department no longer 
can deduct home market movement charges from FMV pursuant to its 
inherent power to fill in gaps in the antidumping statute. Instead, we 
adjust for those expenses under the COS provision of 19 CFR 353.56(a). 
Accordingly, in the present case, we adjusted for post-sale home market 
inland freight charges under the COS provision of 19 CFR 353.56(a). We 
did not deduct pre-sale inland freight charges because, as in the fifth 
administrative review, CINSA did not demonstrate to the Department's 
satisfaction that these expenses are directly related to sales of the 
subject merchandise. Because CINSA did not report warehousing as a 
direct selling expense, it is reasonable to assume that freight to the 
warehouse also is not directly related to sales. See Final 
Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit 
from Thailand, 60 FR 29553, 29563 (June 5, 1995) for a complete 
discussion on the Department's policy concerning pre-sale movement 
charges.
    Pursuant to section 773(a)(4)(B) and 19 C.F.R. 353.56(a)(2), we 
made a COS adjustment, where appropriate, for differences in credit 
expenses. We recalculated home market credit using the revised interest 
rate reported in the May 2, 1994, supplemental response. Also, as 
stated in this response, we did not calculate credit expenses for sales 
in the home market where there were missing pay dates. We determined 
that the bank fees associated with the letter of credit transactions 
for certain U.S. customers are a direct selling expense and have added 
these fees to FMV. We deducted home market commissions and added U.S. 
indirect selling expenses capped by the amount of home market 
commissions.
    We adjusted for VAT in accordance with our practice. (See the 
``United States Price'' section of this notice, above.)

Cost of Production

    With regard to CINSA, there is a history of sales below the COP. In 
order to determine whether home market prices were below COP within the 
meaning of section 773(b) of the Act, we performed a product-specific 
cost test, in which we examined whether each home market product sold 
during the POR was priced below the COP of that product. For CINSA's 
home market models for which there were insufficient sales at or above 
the COP, we used CV.
    Regarding APSA, petitioner's June 18, 1993, letter requested an 
extension for filing a sales below cost allegation, however, no such 
allegation was filed with the Department. Therefore, we did not perform 
a sales below cost analysis of APSA.

A. Calculation of COP

    We calculated COP based on the sum of respondent's cost of 
materials, fabrication, general expenses and packing costs, in 
accordance with 19 CFR 353.51(c). In our COP analysis, we have relied 
on COP information submitted by CINSA, except in the following 
instances where it was not appropriately quantified or valued: 1) We 
included expenses related to employee profit sharing in the cost of 
manufacture; 2) We revised CINSA's submitted interest costs to exclude 
the calculation of negative interest expense; and adjusted the VAT 
amount included in COP. 

[[Page 8914]]


B. Test of Home Market Sales Prices

    As required by section 773(b) of the Act, we tested whether a 
substantial quantity of respondent's home market sales of subject 
merchandise were made at prices below COP over an extended period of 
time. We also tested whether such sales were made at prices which 
permit recovery of all costs within a reasonable period of time in the 
normal course of trade. On a product-specific basis, we compared the 
COP (net of selling expenses) to the reported home market prices, less 
any applicable movement charges, rebates, and direct and indirect 
selling expenses. To satisfy the requirement of section 773(b)(1) of 
the Act that below-cost sales be disregarded only if made in 
substantial quantities, we applied the following methodology. If over 
90 percent of the respondent's sales of a given product were at prices 
equal to or greater than the COP, we did not disregard any below-cost 
sales of that product because we determined that the below-cost sales 
were not made in ``substantial quantities.'' If between 10 and 90 
percent of the respondent's sales of a given product were at prices 
equal to or greater than the COP, and sales of that product were also 
found to be made over an extended period of time, we disregarded only 
the below-cost sales. Where we found that more than 90 percent of the 
respondent's sales of a product were at prices below the COP, and the 
sales were made over an extended period of time, we disregarded all 
sales of that product, and calculated FMV based on CV, in accordance 
with section 773(b) of the Act.
    In accordance with section 773(b)(1) of the Act, in order to 
determine whether below-cost sales had been made over an extended 
period of time, we compared the number of months in which below-cost 
sales occurred for each product to the number of months in the POR in 
which that product was sold. If a product was sold in three or more 
months of the POR, we do not exclude below-cost sales unless there were 
below-cost sales in at least three months during the POR. When we found 
that sales of a product only occurred in one or two months, the number 
of months in which the sales occurred constituted the extended period 
of time, i.e., where sales of a product were made in only two months, 
the extended period of time was two months; where sales of a product 
were made in only one month, the extended period of time was one month. 
See Final Determination of Sales at Less Than Fair Value: Certain 
Carbon Steel Butt-Weld Pipe Fittings from the United Kingdom, 60 FR 
10558, 10560 (February 27, 1995).

C. Results of COP Test

    We found that for certain products, between 10 and 90 percent of 
CINSA's home market sales were sold at below COP prices over an 
extended period of time. Because CINSA provided no indication that the 
disregarded sales were at prices that would permit recovery of all 
costs within a reasonable period of time in the normal course of trade, 
in accordance with section 773(b) of the Act, we based FMV on CV for 
all U.S. sales left without a home market sales match as a result of 
our application of the COP test.

D. Calculation of CV

    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of respondent's cost of materials, fabrication, 
general expenses and packing costs. In accordance with section 
773(e)(1)(B) (i) and (ii), we used: (1) The actual amount of general 
expenses because those amounts were greater than the statutory minimum 
of ten percent and (2) the actual amount of profit where it exceeded 
the statutory minimum of eight percent.
    We recalculated the respondent's CV based on the methodology 
described in the calculation of COP above, with the exception of the 
VAT adjustment. In addition, we revised CV profit based upon the 
calculation provided by CINSA.

Price-to-CV Comparisons

    Where we made CV to PP comparisons, we made a COS adjustment for 
direct selling expenses.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following margins exist for the period December 1, 1991, through 
November 30, 1992:

------------------------------------------------------------------------
                                                                 Margin 
          Manufacturer/exporter               Review period    (percent)
------------------------------------------------------------------------
APSA.....................................    12/1/91-11/30/92       1.65
CINSA....................................    12/1/91-11/30/92       4.93
------------------------------------------------------------------------

    Interested parties may request a disclosure within 5 days of 
publication of this notice and may request a hearing within 10 days of 
the date of publication. Any hearing, if requested, will be held no 
later than seven days after the scheduled date for submission of 
rebuttal briefs. Case briefs will be due on April 22, 1996, and 
rebuttal briefs, limited to issues raised in the case briefs, will be 
due on April 29, 1996. We will publish a notice of the final results of 
this administrative review, which will include the results of its 
analysis of issues raised in any such case briefs.
    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 appraisement instructions directly to 
the Customs Service.
    Furthermore, the following deposit requirement will be effective 
for all shipments of subject merchandise from Mexico 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 Tariff Act: (1) the cash deposit rates for the 
reviewed companies will be those rates 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 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 the manufacturer is, 
the cash deposit rate will be the rate established for the most recent 
period for the manufacturer of the merchandise; and (4) if neither the 
exporter nor the manufacturer is a firm covered in this or any previous 
review conducted by the Department, the cash deposit rate will be the 
``all others'' rate of 29.52 percent from the original investigation.
    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 Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: February 29, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-5257 Filed 3-5-96; 8:45 am]
BILLING CODE 3510-DS-P