[Federal Register Volume 61, Number 151 (Monday, August 5, 1996)]
[Notices]
[Pages 40604-40607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19862]
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DEPARTMENT OF COMMERCE
[A-201-601]
Fresh Cut Flowers From Mexico; 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 September 26, 1995, the Department of Commerce (the
Department) published the preliminary results of its administrative
review of the antidumping duty order on certain fresh cut flowers from
Mexico. The period of review is April 1, 1993 through March 31, 1994.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received,
and due to the correction of a clerical error, we have made certain
changes for the final results.
EFFECTIVE DATE: August 5, 1996.
FOR FURTHER INFORMATION CONTACT: Matthew Blaskovich or Zev Primor,
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-
5253.
SUPPLEMENTARY INFORMATION:
Background
On September 26, 1995, the Department published in the Federal
Register (60 FR 49567) the preliminary results of its administrative
review of the antidumping duty order on certain fresh cut flowers from
Mexico (52 FR 13491 (April 23, 1987)). The preliminary results
indicated that no dumping margins existed for three of the respondents
in this review: Rancho Guacatay (Guacatay), Rancho el Toro (Toro), and
Rancho del Pacifico (Pacifico). Rancho el Aguaje (Aguaje) received a
margin of 1.54 percent. Moreover, we applied dumping margins based on
the best information available (BIA) to Mexipel, S.A. de CV, Tzitzic
Tareta, Rancho Mision el Descanso, Rancho Alisitos, and Las Flores de
Mexico, because they failed to answer the antidumping questionnaire.
Two producers, Visaflor F. de P.R. (Visaflor) and Rancho Daisy (Daisy),
made no shipments to the United States during the period of review.
Applicable Statutes and Regulations
The Department has conducted this review in accordance with section
751 of the Tariff Act of 1930, as amended (the Act).
Unless otherwise stated, all citations to the statutes and to the
Department's regulations are references to the provisions as they
existed on December 31, 1994.
Scope of the Review
The products covered by this review are certain fresh cut flowers,
defined as standard carnations, standard chrysanthemums, and pompon
chrysanthemums. During the period of review (POR), such merchandise was
classifiable under Harmonized Tariff Schedule of the United States
(HTSUS) items 0603.10.7010 (pompon chrysanthemums), 0603.10.7020
(standard chrysanthemums), and 0603.10.7030 (standard carnations). The
HTSUS item numbers are provided for convenience and U.S. Customs
Service (Customs) purposes only. The written description remains
dispositive as to the scope of the order.
This review covers sales of the subject merchandise entered into
the United
[[Page 40605]]
States during the period April 1, 1993 through March 31, 1994.
Analysis of the Comments Received
The Floral Trade Council, the petitioner, and Aguaje submitted case
briefs and rebuttal comments on October 26, 1995, and November 6, 1995,
respectively. We received no other comments on the preliminary results.
Comment 1
Aguaje requests that the Department reallocate its reported
indirect selling expenses for the final results. Aguaje claims that its
reported methodology improperly allocated its indirect selling expenses
solely to the month in which such expenses were incurred. Aguaje argues
that since certain of its indirect selling expenses were unevenly
distributed on a monthly basis, their allocation methodology distorted
the per unit amount reported for one month for which it had unusually
high indirect selling expenses. Aguaje argues further that indirect
selling expenses are general selling expenses which are not related
only to the sales in the particular month in which the expenses were
incurred, but cover the activity over a longer period. Therefore,
Aguaje asserts that its indirect selling expenses should be reallocated
by summing up its total expense amount for the entire POR and
allocating over total sales volume, in order to establish an even
distribution.
The petitioner contends that Aguaje is attempting to reallocate its
expenses due to the realization that its allocation methodology
resulted in unfavorable results for a particular month. The petitioner
asserts that the Department is not obliged to reallocate Aguaje's
indirect selling expenses, because Aguaje had already allocated those
expenses in a manner consistent with our questionnaire, and had ample
opportunity to revise its methodology prior to the preliminary
determination. The petitioner stated that should the Department decide
to reallocate Aguaje's indirect selling expenses, we should be sure to
reallocate those selling expenses based on resale prices to unrelated
parties, rather than transfer prices between Aguaje and its U.S.
subsidiary.
The Department's Position
We agree with Aguaje and therefore have reallocated its total
indirect selling expenses incurred during the POR over total quantity
of sales made to unrelated parties during the POR. We agree with
Aguaje's contention that indirect selling expenses are period costs
which help maintain sales operations over the entire POR. Aguaje's
revised methodology is in line with this reasoning and previous
determinations made by the Department. See e.g., Canned Pineapple Fruit
from Thailand (Final Determination), 60 FR 29553, 29567, June 5, 1995;
and Certain Electrical Conductor Aluminum Redraw Rod from Venezuela
(Preliminary Determination), 53 FR 3614, February 8, 1988.
We agree with petitioners that we are not obliged to accept
Aguaje's reallocation methodology. However, because the revised
methodology uses previously submitted data, provides for a more
representative distribution of indirect selling expenses, and is
consistent with previous determinations made by the Department (see
above), we have accepted the revised methodology and allocated total
POR indirect selling expenses over total quantity of sales made to
unrelated parties for these final results.
Comment 2
The petitioner claims that the Department overstated exporter's
sales prices (ESP) by failing to deduct commissions paid to related
parties. The petitioner states that the statute and the Department's
regulations require the Department to deduct U.S. commissions and
indirect selling expenses, regardless of whether the consignment agent
is a related party. For this reason, the petitioner argues, the
Department should reconsider its treatment of related party commissions
in this case and as articulated in Fresh Cut Roses from Colombia and
Fresh Cut Roses from Ecuador, 60 FR 6980, 7019 (Feb. 6, 1995) (Roses).
The petitioner argues that, in Roses, the Department erroneously
distinguished between commissions paid to related and unrelated
parties, while the statute, which makes no such distinction, simply
requires that commissions be deducted from ESP. The petitioner states
that the Department's treatment of related party commissions in Roses
is irrational, and it is inconsistent with Timken Co. v. United States,
630 F. Supp. 1327, 1341 (CIT 1986) (Timken). The petitioner asserts
that, in Timken, the Court supported the Department's rationale for not
deducting related party profits because they were not commissions,
while, in Roses, the Department refused to deduct commissions because
they are profits. The petitioner points out that, in the 1989-1990
administrative review of Certain Fresh Cut Flowers from Mexico, the
Department deducted related party commissions found to be at arm's
length (57 FR 7732 (March 4, 1992)).
Finally, the petitioner states that, even assuming that commissions
need not always be deducted under section 772(e)(1) of the Act, the
Department must deduct from ESP all direct selling expenses incurred at
arm's length as circumstance-of-sale adjustments.
The Department's Position
We disagree with the petitioner. Since the Department published its
final results in the 1989-1990 administrative review of this order, we
have established the practice of collapsing exporters and their related
consignment agents in ESP situations. 57 FR at 7732. The petitioner's
arguments do not persuade us to deviate from this practice. As fully
explained in Roses, the Department considers commissions paid to
related parties to be intracompany transfers of funds, which are not
deductible from ESP. See also Furfuryl Alcohol From South Africa; Final
Determination of Sales at Less Than Fair Value 60 FR 22551 (May 8,
1995). Further, we do not consider such a transfer of funds to be a
direct selling expense. Instead of making a deduction for commissions,
the Department deducts the amount of the related importer's U.S. direct
and indirect selling expenses pursuant to section 772(e)(2) of the Act.
This methodology avoids double-counting the direct and indirect selling
expense component of the related party commission, and avoids deducting
any of the related importer's profit, as the Court affirmed in Timken
Co. v. United States, 630 F. Supp. 1327, 1341 (CIT 1986) (Timken).
Comment 3
The petitioner claims that the Department should confirm that the
respondents' reported credit costs account for the time between receipt
of payment and deposit into the respondents' bank accounts, as the
Department did in the 1989-1990 administrative review.
The Department's Position
We disagree with the petitioner. For the purposes of calculating
imputed credit costs, it is our practice to calculate the number of
credit days based on the number of days between the date of shipment
and the date of payment. If actual payment dates are not readily
accessible, we normally allow respondents to base the number of credit
days on the average age of accounts receivables. See, e.g., Color
Television Receivers from the Republic of Korea; Final Results of
Antidumping Duty Administrative Review, 56 FR 12701, 12708 (Comment
28)(March 27, 1991).
The Department calculated respondents' credit expenses for the
[[Page 40606]]
1989-1990 review period based on observations made during verification
of that review. However, the Department more recently verified the
1992-1993 review which immediately precedes this review. Based on the
findings of this more recent verification, the Department determined
that respondents' use of the average age of accounts receivables to
calculate credit expenses is reasonable (Fresh Cut Flowers from Mexico;
Final Results of Antidumping Duty Administrative Review, 61 FR 6812
(Comment 2) (February 22, 1996)). Although no verification was
conducted for this review period, we have determined, consistent with
the final results of the 1992-1993 review, to rely on respondents' use
of their average age of accounts receivables to calculate credit
expenses. We therefore have accepted respondents' reported credit
expenses for these final results.
Comment 4
The petitioner contends that since Lizebeth (Aguaje's subsidiary)
does not track sales of the subject merchandise by country of origin,
Lizebeth is indiscriminately allocating a portion of its box and
freight revenue to Aguaje's sales. The petitioner also contends that,
absent evidence that box and freight revenue has been remitted to
Aguaje, the Department should reduce Aguaje's U.S. price accordingly.
The Department's Position
We disagree with petitioner and accept Aguaje's addition of freight
and box revenue to U.S. price. As Aguaje and Lizebeth are related
parties, it is unnecessary to trace the disposition of the freight and
box revenue, because such a remission merely represents a transfer of
intercorporate funds. Since Lizebeth's accounting system does not track
particular sales of the subject merchandise by country of origin, we
accept Aguaje's methodology of allocating its box and freight revenue
based on the ratio of Lizebeth's acquisition cost of Aguaje flowers
sold to the total acquisition cost of all flowers sold.
The Department maintains that box and freight revenue earned by a
related party represents additional revenue. Therefore, it is the
Department's determination to add box charges and freight revenues
earned by Lizebeth to U.S. price. See, e.g., Certain Fresh Cut Flowers
from Ecuador, 52 FR 2128 (January 20, 1987).
Comment 5
The petitioner contends that Aguaje incorrectly classified its U.S.
repacking costs as an indirect selling expense. Although Aguaje claims
that Lizebeth's accounting system does not permit a precise segregation
of repacking expenses, the petitioner argues that packing expenses are
not selling expenses and cannot be included in the ESP offset cap.
Therefore, the petitioner requests that the Department reduce Aguaje's
U.S. price for U.S. repacking expenses.
The Department's Position
It is the Department's policy to deduct U.S. repacking expenses
from the U.S. price. See, e.g., Final Determination of Sales at Less
Than Fair Value: Fresh Cut Roses from Colombia, 60 FR 6980 (February 6,
1995). However, given the fact that Aguaje's subsidiary does not
maintain records which precisely quantify the cost incurred for U.S.
packing, we determine that it is sufficient to deduct from U.S. price
Aguaje's indirect selling expenses which included the cost of U.S.
repacking.
Aguaje's indirect selling expenses consist of numerous expense
categories, a small increase or decrease in a particular category would
not produce a noticeable effect in total indirect selling expenses for
the POR. Therefore, we are making no deductions from the ESP offset cap
for U.S. repacking costs.
Comment 6
The petitioner states that the Department should describe the
manner in which it confirmed that Visaflor and Daisy made no shipments
of the subject merchandise during the review period.
The Department's Position
To determine whether Visaflor and Daisy made shipments of the
subject merchandise to the United States during the review period, the
Department followed its standard practice of issuing a request to
Customs field personnel to notify the Department whether any subject
merchandise exported by Visaflor or Daisy entered the United States
during the review period. A copy of this message is on file in Room
B099 of the Commerce Department. We received no information from
Customs that Visaflor and Daisy had shipments of the subject
merchandise during the POR.
Comment 7
The petitioner agrees with the Department's decision to assign non-
responding companies a margin based on BIA; however, the petitioner
states that the Department should not have assigned these companies the
second-highest rate found for any respondent. By doing so, the
petitioner argues, the Department unnecessarily and unfairly departed
from its practice of assigning non-responding companies the highest
available margin.
The petitioner states that, although the Department did not use the
highest rate as BIA in prior reviews, the respondents in those reviews
had, at least, submitted partial or complete questionnaire responses.
The petitioner argues that the Department has no evidence that the
highest margin is unrepresentative, since the parties failed to respond
to the questionnaire. Furthermore, the petitioner states, the
respondents are presumed to be aware of the highest possible margin
when they decided not to respond to the antidumping questionnaire,
citing Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed.
Cir. 1990).
The Department's Position
We disagree with the petitioner. Prior to 1993 and the CIT's
decisions in The Floral Trade Council v. United States, 822 F.Supp. 766
(CIT 1993), and Federal Mogul Corporation and the Torrington Company v.
United States, 839 F.Supp. 864 (CIT 1993), the Department determined an
``all others'' or ``new shippers'' rate during the course of each
administrative review. In the 1989-1990 review of this order, the
Department did not include Florex's rate of 264.43 percent in its
determination of the updated ``all others'' rate. The CIT supported the
Department's position, stating that, ``Florex's accumulated interest
expenses from a separate line of business that never began operations
skewed its cost of production figures and should not have been included
in the review analysis.'' The Floral Trade Council v. the United
States, 799 F. Supp. 116 (CIT 1992).
The Court recognized that Florex's rate was unrepresentative of the
other companies in that review, and by extension, of the entire flower
industry because: (1) it was an out of proportion rate explained by
factors unassociated with the overall industry, and (2) Florex
represented only a small fraction of the industry. The Court concluded
that ``ITA did not err in finding it would be punitive to maintain
Florex's rate as the ``all other'' rate. Id. at 119. Although we
received no information from the non-responding companies, we maintain
that the Florex rate is unrepresentative of the Mexican fresh cut
flower industry, and unsuitable to be applied to the non-responding
companies as BIA. Therefore, we assigned Tzitzic Tareta, Rancho Mision
el Descanso, Rancho Alisitos, Las Flores de Mexico, and Mexipel, S.A.
de CV a BIA rate of 39.95 percent, which is the highest
[[Page 40607]]
representative rate of the Mexican fresh cut flower industry.
Final Results of Review
We determine that the following dumping margins exist for the
period April 1, 1993, through March 31, 1994:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Rancho el Aguaje............................................. 0.00
Rancho Guacatay.............................................. 0.00
Rancho el Toro............................................... 0.00
Rancho del Pacifico.......................................... 0.00
Rancho Daisy................................................. *0.00
Visaflor..................................................... *0.00
Tzitzic Tareta............................................... 39.95
Rancho Mision el Descanso.................................... 39.95
Rancho Alisitos.............................................. 39.95
Las Flores de Mexico......................................... 39.95
Mexipel, S.A. de CV.......................................... 39.95
All others................................................... 18.20
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*No shipments subject to this review. Rate is from the last relevant
segment of the proceeding in which the firm had shipments.
The following deposit requirements shall be effective for all
shipments of the subject merchandise that are entered or withdrawn from
warehouse, for consumption on or after the publication date of these
final results, as provided by section 751(a)(1) of the Act: (1) the
cash deposit rates for the reviewed companies shall be the above rates;
(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 (LTFV) investigation, but the manufacturer is, the cash deposit
rate shall 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, the
cash deposit rate will be 18.28 percent, the all others rate
established in the LTFV investigation. 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 the subsequent
assessment of double antidumping duties.
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 with 19 CFR 353.34(d) or 355.34(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 section 353.22
of the Department's regulations.
Dated: July 29, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-19862 Filed 8-2-96; 8:45 am]
BILLING CODE 3510-DS-P