[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]
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