[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
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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