[Federal Register Volume 61, Number 139 (Thursday, July 18, 1996)]
[Notices]
[Pages 37443-37445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18260]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-475-031]


Large Power Transformers From Italy; Final Results of Antidumping 
Duty Administrative Review

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

ACTION: Notice of Final Results of Antidumping Duty Administrative 
Review.

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SUMMARY: On October 2, 1995, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
review of the antidumping duty finding on large power transformers 
(LPTs) from Italy. These final results of review cover one 
manufacturer/exporter of this merchandise and the period June 1, 1993, 
through May 31, 1994.
    We gave interested parties an opportunity to comment on the 
preliminary results. Analysis of the comments received resulted in no 
change in the weighted-average margin for these final results.

EFFECTIVE DATE: July 18, 1996.

FOR FURTHER INFORMATION CONTACT: Andrea Chu, Kris Campbell or Michael 
Rill, Office of Antidumping Compliance, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone 
(202) 482-4733.

SUPPLEMENTARY INFORMATION:

Background

    On October 2, 1995, the Department published in the Federal 
Register (60 FR 51455) the preliminary results of its administrative 
review of the antidumping duty finding on LPTs from Italy (37 FR 11772, 
June 14, 1972). We gave interested parties an opportunity to comment on 
our preliminary results. The petitioner, ABB Power T&D Co., Inc. (ABB), 
and the respondent, Tamini Costruzioni Elettromeccaniche S.R.L. 
(Tamini), submitted comments.

Applicable Statute and Regulations

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

Scope of Review

    Imports covered by the review are shipments of large power 
transformers; 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.
    The review covers shipments of transformers by Tamini during the 
period June 1, 1993, through May 31, 1994.

Changes Since the Preliminary Results

    We have made the following changes in these final results.
    1. We changed Tamini's negative net interest expense to zero.
    2. With respect to Tamini's profit calculation, we computed the 
profit ratio by dividing Tamini's profit amount by its cost of 
production (COP), and not by the sales value as used in the preliminary 
results.

Analysis of Comments Received

    Comment 1: Petitioner states that the Department understated the 
constructed values (CV) upon which foreign market value (FMV) was based 
by (1) Including a negative interest expense amount in selling, general 
and administrative (SG&A) expenses as a result of allowing Tamini to 
offset its short-term interest expense with an interest income amount 
greater than the expense, and (2) subtracting home market commission 
expenses as a circumstance-of-sale adjustment to CV without first 
including them in the initial CV calculation.
    With respect to petitioner's claim concerning interest expense, 
Tamini responds that the Department allowed the negative interest 
expense offset adjustment in calculating COP in the

[[Page 37444]]

immediately preceding review and that petitioner did not object to this 
adjustment. Tamini further states that the nature of the large power 
transformer industry involves sales that require substantial lead times 
between order acceptance and shipment and that such sales tend to 
generate substantial interest income. Tamini contends that it is 
appropriate to apply its entire short- term interest income because 
such an analysis not only reflects accurately the company's actual COP, 
but also recognizes costs that Tamini incurred in generating interest 
income.
    With respect to petitioner's argument concerning the omission of 
home market commissions in the calculation of CV, Tamini states that 
the Department did in fact include such commissions in the CV 
calculation before removing them through a circumstance-of-sale 
adjustment.
    Department's Position: We agree with petitioner that short-term 
interest income may only be used to offset the short-term interest 
expense and cannot create a negative interest amount for purposes of 
determining SG&A. The Department's policy is to permit short-term 
interest income related to production as an offset to interest expense 
and not to COP. See Frozen Concentrated Orange Juice From Brazil: Final 
Results of Administrative Review, 55 FR 26721, 26723 (1990); Porcelain-
on-Steel Cooking Ware From Mexico: Final Results of Administrative 
Review, 58 FR 43327 (1993). Therefore, we have set interest expense 
equal to zero for the final results.
    However, we disagree with petitioner concerning its contention that 
CVs were further understated due to the omission of the home market 
commission expense. The Department first added an amount for home 
market direct selling expenses, including the commission expense, in 
calculating CV, then subtracted the same amount as a circumstance of 
sale adjustment. See Comment 5, infra.
    Comment 2: Petitioner contends that the methodology used by Tamini 
to calculate the home market profit ratio is incorrect. Petitioner 
states that Tamini computed its home market profit ratio by dividing 
the amount of its profit by sales value instead of by its COP and that, 
as a result, this methodology inappropriately lowered Tamini's profit 
ratio and its CV.
    Tamini responds that its profit methodology was accepted by the 
Department in the previous review and petitioner did not object to it. 
Tamini further states that this allocation is reasonable because it is 
the manner in which Tamini measures profitability internally.
    Department's Position: We agree with petitioner. The home market 
profit ratio should be calculated by dividing the amount of the 
company's profit by COP and not by sales value, since the per-unit 
profit amount is derived by multiplying the profit ratio by the COP. 
Therefore, we corrected Tamini's home market profit ratio by dividing 
the amount of its total profit for calendar year 1993 by the cost of 
all transformers sold by the company in 1993, as reported in Tamini's 
response.
    Comment 3: Petitioner asserts that the Department improperly 
included in the dumping analysis amounts for both expenses and revenues 
associated with technical services provided in the United States.
    Tamini responds that the Department should include both technical 
service expenses and revenues in the dumping analysis because the 
services Tamini provided were an integral part of the sales 
transactions at issue. Tamini further contends that the fact that such 
services were not included in a lump-sum price for all products and 
services is irrelevant.
    Department's Position: We disagree with petitioner and have 
continued to include both expenses and revenues associated with the 
technical services Tamini provided on the reported sales in our 
analysis. As in the preliminary results, we have included revenue from 
technical services connected with the sales in question in the unit 
price. We have also deducted expenses associated with the provision of 
these services as direct selling expenses. The information regarding 
technical services in Tamini's questionnaire response, and which we 
examined at verification, clearly indicates that the technical service 
expenses and revenues at issue were tied to the sales for which they 
were reported, i.e., these expenses and revenues would not have been 
incurred or earned but for the sales in question. As we noted in our 
sales verification report, Tamini records sales, payment, and direct 
expense information on a transaction-specific basis in its accounting 
records; accordingly, we verified that these technical services were 
accurately reported on a per-unit basis without the use of allocations. 
See Memorandum from Analyst to the File: Sales Verification Report for 
Tamini Costruzioni Elettromeccaniche S.R.L. (October 2, 1995) at 2-5.
    Comment 4: Tamini contends that, for one of the sales under review, 
the Department did not apply the interest expense ratio (total interest 
expense to the total cost of manufacturing) to the cost of 
manfacturing, but instead multiplied this ratio by only the sum of 
direct selling expenses and general and administrative expenses. Tamini 
states that, by doing so, the Department significantly understated the 
interest expenses for the CV calculation and requests that the 
Department correct its calculations.
    Department's Position: Since we have decided to use interest income 
to offset interest expense only up to the amount of interest expense 
incurred in our SG&A calculation (see our response to Comment 1, 
supra), we did not allow any actual interest income amount that is 
greater than interest expense. Tamini's contention, which would simply 
affect the amount of the negative interest expense, is therefore moot.
    Comment 5: Tamini claims that the Department double-counted U.S. 
indirect selling expenses by adding an amount representing U.S. 
indirect selling expenses to CV as a commission offset while failing to 
reduce Tamini's reported general and administrative expenses for a 
portion representing these indirect expenses.
    Petitioner responds that the value of the general and 
administrative expenses claimed by Tamini to represent U.S. indirect 
selling expenses is new information that should not be considered for 
these final results. Petitioner states that the Department verified 
Tamini's general indirect selling expense, and that Tamini's attempt to 
segregate this expense into home market and U.S. portions in its case 
brief does not allow the Department sufficient opportunity to determine 
whether the allocation methodology is correct and deprives petitioner 
of its right to comment on this methodology.
    Department's Position: We disagree with Tamini that the addition of 
U.S. indirect selling expenses to the CV as an offset to the deduction 
of the home market commission results in double-counting of U.S 
indirect selling expenses. Contrary to Tamini's claim, the SG&A portion 
of CV did not include an amount for U.S. indirect selling expenses 
prior to the commission offset adjustment. We requested in our 
questionnaire that Tamini provide indirect selling expenses associated 
with home market sales of the class or kind of merchandise, which we 
would have included as a component of the CV of the merchandise 
involved in the sales at issue. Tamini responded that it was unable to 
segregate indirect selling expenses from general and administrative 
expenses and it was also unable to isolate either indirect selling 
expenses or general and administrative

[[Page 37445]]

expenses incurred in the home market from those incurred elsewhere. 
Tamini therefore calculated a ratio of worldwide selling, general and 
administrative (SG&A) expenses to worldwide cost of goods sold. Tamini 
then multiplied this ratio by the cost of manufacture of the 
merchandise involved in each U.S. transaction to derive a per-unit 
amount for SG&A expenses.
    While it is true that Tamini's worldwide SG&A expenses (the 
numerator in Tamini's SG&A ratio) include selling expenses incurred on 
sales outside the home market, Tamini's worldwide cost of goods sold 
(the denominator in Tamini's SG&A ratio) includes the costs of goods 
sold outside the home market. Accordingly, the per-unit amount of the 
SG&A expense attributable to indirect selling was not necessarily 
higher than that which would have been applied had Tamini been able to 
isolate and report only its home market expenses, since both the 
numerator and denominator of the ratio used were calculated on the same 
basis. Therefore, reducing CV by an amount that Tamini claims 
represents U.S. indirect selling expenses would understate the SG&A 
element of the CV calculation.
    The SG&A amount that we included in the calculation of CV contained 
an amount for commissions. In accordance with section 353.56 of our 
regulations, we made a circumstance-of-sale adjustment by deducting 
this amount and offsetting this deduction by adding U.S. indirect 
expenses up to the amount of the commission. As explained above, this 
offset does not lead to double-counting of U.S. indirect selling 
expenses, such that an amount for U.S. indirect selling expenses must 
first be subtracted from the SG&A expenses included in CV, because the 
CV only contains an amount for SG&A attributable to home market sales. 
The adjustment is only for the difference, if any, between the 
commission amount in the CV and U.S. indirect selling expenses. It does 
not increase the amount of general expenses used in calculating the CV 
prior to such adjustments.
    Although we are not adjusting CV in the manner suggested by 
respondent, we disagree with petitioner's assertion that information 
submitted by respondent concerning this issue is untimely. Respondent 
submitted the data contained in its case brief in the process of 
responding to our initial and supplemental questionnaires.

Final Results of Review

    As a result of this review, we determine that no dumping margins 
exist for Tamini for the period June 1, 1993, through May 31, 1994.
    The Department will issue appraisement instructions directly to the 
Customs Service.
    Furthermore, the following cash deposit requirements will be 
effective upon publication of these final results for all shipments of 
the subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided for by 
section 751(a)(1) of the Act: (1) the cash deposit rate for Tamini will 
be zero; (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, or the original less-than-fair-
value (LTFV) 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) the cash deposit rate for all 
other manufacturers or exporters will be 92.47 percent.
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.
    This notice also 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 the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning disposition of proprietary information disclosed under APO 
in accordance with 19 CFR 353.34(d). Timely written notification of the 
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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: July 8, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-18260 Filed 7-17-96; 8:45 am]
BILLING CODE 3510-DS-P