[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Notices]
[Pages 40403-40406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19727]


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DEPARTMENT OF COMMERCE
[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 antidumping duty administrative 
review; Large power transformers from France.

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SUMMARY: On April 8, 1996, 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, 1994 
through May 31, 1995.
    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: August 2, 1996.

FOR FURTHER INFORMATION CONTACT: Elisabeth Urfer or Maureen Flannery, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4733.

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations, as amended by the interim regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

[[Page 40404]]

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 6, 1995, we published in the Federal Register (60 FR 29821) a 
notice of opportunity to request an administrative review of the 
antidumping finding on LPTs from France covering the period June 1, 
1994 through May 31, 1995.
    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 14, 1995 (60 FR 36260).
    On April 8, 1996, the Department published the preliminary results 
in the Federal Register (61 FR 15461). The Department has now completed 
the review in accordance with section 751 of the 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, 1994, through May 31, 1995.

Analysis of the Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results of review. We received comments from JST.
    Comment 1: JST asserts that the Department should average its SG&A 
and profit over a three-year period. JST notes that the Department in 
its preliminary results used JST's actual SG&A expenses for sales of 
LPTs in France, but ignored the actual profit margin associated with 
those sales. JST argues that the decision to ignore JST's actual profit 
was apparently the result of the Department's conclusion that JST's 
home market sales were not in the normal course of trade. JST notes 
that the URAA amended Section 773(e) of the Act to instruct the 
Department to include in its constructed value calculation the actual 
SG&A and profit realized by a foreign producer.
    JST argues that, at the very least, there must be symmetry in the 
Department's treatment of SG&A and profit, and that the ``ordinary 
course of trade'' requirement of Section 773(e)(2)(A) of the statute 
applies to the derivation of amounts for both profit and SG&A expense. 
JST argues that, where the Department concludes that it cannot use SG&A 
actually incurred, or profits actually realized, by the producer of 
exported merchandise on its review period sales in the home market, the 
statute provides three alternative methodologies for calculating the 
SG&A and profit components of constructed value. JST contends that, 
given this flexibility, there is no excuse for using amounts for SG&A 
and profit that are not reasonable approximations of JST's normal 
experience.
    JST notes that the first statutory alternative is to calculate SG&A 
and profit incurred by the producer on sales of merchandise of the same 
general type as the exports in question. JST argues that there is no 
requirement that these sales be ``in the normal course of trade.'' JST 
also argues that this alternative would not prevent the Department from 
applying JST's actual profit realized on its home market sales of LPTs.
    JST notes that the second statutory alternative is the average SG&A 
and profit for other producers of the foreign like product. JST states 
that this option is not available in this case, as it is the only 
producer of LPTs subject to review.
    JST argues that the third alternative gives the Department the 
latitude to rely on any other reasonable method, thereby allowing the 
Department to calculate average amounts for SG&A and profit from data 
on JST's operations over a representative period. JST argues that 
average SG&A and profit from 1992-1994 are representative of JST's 
profit and SG&A experience during the period of review, are reasonable 
proxies for JST's actual 1994 results, and fully satisfy the 
requirements of the antidumping statute. JST cites to a Department 
memorandum from Holly A. Kuga, Director of the Office of Antidumping 
Compliance, to Joseph A. Spetrini, Deputy Assistant Secretary for 
Compliance, dated March 29, 1996, ``Large Power Transformers from 
France--Additional Proprietary Discussion of Profit for the Preliminary 
Results of Review,'' that discusses the profit calculation. JST argues 
that the Department, in this memorandum, indicated that it had an 
interest in evaluating JST's SG&A and profit experience in ``a 
historical context.''
    JST argues that, if the Department does not use SG&A and profit for 
the 1992-1994 period, it should continue to use the profit figure used 
in the preliminary results, which is the profit margin calculated for 
JST's parent company, Schneider S.A. JST states that this figure is 
reasonable insofar as (1) the source is a company that is related to 
JST, and (2) it is lower than the profits that JST has reported on its 
home market sales in years in which its domestic sales were strong. 
However, JST also argues that use of this figure is troubling in two 
respects. JST states that its operations are a minor factor in the 
consolidated financials of Schneider S.A. and that JST operates 
independently of Schneider S.A. On balance, though, JST concludes that 
the methodology used in the preliminary analysis is acceptable because 
it produces a result that avoids the sort of gross distortion that 
would be created by the imputation of a high profit margin to sales 
during a period of depressed demand.
    Department's Position: We agree with JST, in part. Section 
773(e)(2)(B) sets forth three alternatives for computing profit without 
establishing a hierarchy or preference among these alternative methods. 
We did not have the necessary cost data for methods one (calculating 
SG&A and profit incurred by the producer on sales of merchandise of the 
same general type as the exports in question) or two (averaging SG&A 
and profit for other producers of the foreign like product). The third 
alternative (section 773(e)(2)(B)(iii)) is any other reasonable method, 
capped by the amount normally realized on sales in the foreign country 
of the general category of products. The Statement of Administrative 
Action (SAA) states that, if Commerce does not have the data to 
determine amounts for profit under alternatives one and two or a profit 
cap under alternative three, it may apply alternative three on the 
basis of ``the facts available.'' Accordingly, although we did not have 
data to determine the profit cap, for the preliminary determination we 
used an alternative method pursuant to section 773(e)(2)(B)(iii) on the 
basis of facts

[[Page 40405]]

available. In the preliminary determination, we used a worldwide profit 
amount calculated for JST's parent company, Schneider S.A. and invited 
comment on this issue.
    Based on additional information now on the record, we have 
determined that the most appropriate methodology for calculating SG&A 
and profit in this case is to use the three-year average home market 
profit submitted by JST. The expenses incurred, and the resulting 
profit realized coincide with the period during which costs were 
incurred for the production of the subject merchandise by JST. 
Furthermore, this methodology relies on data specific to JST's LPT 
production and sales. Therefore, for these final results we have 
calculated SG&A and profit using data for the years 1992-1994.
    Comment 2: JST argues that the Department improperly calculated net 
interest expense by applying to JST's manufacturing costs the ratio of 
interest expense to the cost of manufacture that appears in Schneider 
S.A.'s 1994 income statement. JST argues that Schneider S.A.'s interest 
expense was in no way related to JST's production or sales of LPTs.
    JST asserts that in the last administrative review of this finding, 
the same financing cost issue arose. JST argues that the Department 
should follow its own precedent in this review and rely on JST's actual 
net interest expense in calculating the constructed value for its 
review period exports. JST argues that to do otherwise would be to 
disregard the emphasis placed on a producers' actual costs by the URAA 
and its accompanying SAA. JST quotes the SAA at 834-835, which says:

    Consistent with existing practice * * * Commerce normally will 
calculate cost on the basis of the records kept by the exporter or 
producer of the merchandise, provided such costs are kept in 
accordance with generally accepted accounting principles * * * and 
reasonably reflect the costs associated with the production and sale 
of the merchandise.

JST argues that Schneider S.A. did not fund JST's operations through 
loans, equity infusions or any other means, and imputing a cost that 
does not exist simply because one company is related to the other 
violates the actual cost standard of the Agreement on Implementation of 
Article VI of the General Agreements on Tariffs and Trade 1994 (1994 
GATT agreement) and the URAA.
    Department's Position: We disagree with JST. It is our longstanding 
practice to base interest expense on an amount derived from audited 
consolidated financial statements and to calculate interest as a 
percentage of cost. For example, see Certain Corrosion-Resistant Carbon 
Steel Flat Products From Korea: Final Results of Antidumping Duty 
Administrative Review, 61 FR 18547 (April 26, 1996), and Certain Cut-
To-Length Carbon Steel Plate From Finland: Final Results of Antidumping 
Duty Administrative Review, 61 FR 2792 (January 29, 1996).
    We also disagree with JST that applying Schneider S.A.'s interest 
expense violates the actual cost standard of the 1994 GATT agreement 
and the URAA. Schneider S.A.'s ownership interest in JST places the 
parent in a position to influence JST's borrowing and lending as well 
as JST's overall capital structure. There is no evidence on the record 
to indicate that JST's operations are independent of Schneider S.A. to 
the extent that we should ignore our normal practice of imputing 
interest. (See memorandum from Elisabeth Urfer, Case Analyst, to the 
File, ``Large Power Transformers from France--Additional Proprietary 
Discussion of Net Interest Expense for the Final Results of Review.'') 
Therefore, for these final results we have continued to apply Schneider 
S.A.'s interest expense to cost of manufacture ratio to JST's 
manufacturing costs to calculate JST's interest expense.
    Comment 3: JST asserts that the Department miscalculated JST's 
credit expense on its review-period sale. JST argues that the 
Department should have used information submitted in JST's supplemental 
questionnaire response that showed that payment had been received in 
two installments to JST, rather than based its calculation on the 
assumption of a single payment-in-full after a certain number of days 
from shipment that was reported elsewhere in JSTs questionnaire 
response. JST states that, with its supplemental questionnaire 
response, it submitted bank advices showing payment that establish 
payment date and sales price.
    Department's Position: We agree with JST and have revised the 
credit calculation accordingly. The bank advices submitted with JST's 
supplemental questionnaire response demonstrate that payment was 
received as JST outlines above.

Final Results of Review

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

------------------------------------------------------------------------
                                                   Period of     Margin 
              Manufacturer/exporter                  review    (percent)
------------------------------------------------------------------------
Jeumont Schneider Transformateurs...............    06/01/94-           
                                                     05/31/95      0.00 
------------------------------------------------------------------------

The Department shall determine, and the Customs Service shall assess, 
antidumping duties on all appropriate entries. Individual differences 
between export price and normal 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 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 
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

[[Page 40406]]

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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: July 29, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-19727 Filed 8-1-96; 8:45 am]
BILLING CODE 3510-DS-P