[Federal Register Volume 61, Number 172 (Wednesday, September 4, 1996)]
[Notices]
[Pages 46624-46627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22521]


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DEPARTMENT OF COMMERCE
[A-588-823]


Professional Electric Cutting Tools from Japan; Preliminary 
Results of Antidumping Duty Administrative Review

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

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

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SUMMARY: In response to a request by the respondent, Makita Corporation 
and Makita U.S.A. Inc. (Makita), the Department of Commerce (the 
Department) is conducting an administrative review of the antidumping 
duty order on professional electric cutting tools (PECTs) from Japan. 
The review covers shipments of the subject merchandise to the United 
States during the period July 1, 1994, through June 30, 1995. The 
review indicates the existence of dumping margins during the period of 
review.
    We have preliminarily determined that sales have been made below 
normal value (NV). If these preliminary results are adopted in our 
final results of administrative review, we will instruct U.S. Customs 
to assess antidumping duties equal to the difference between the 
constructed export price (CEP) and NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments are requested to submit with each 
argument (1) A statement of the issue and (2) a brief summary of the 
argument.

EFFECTIVE DATE: September 4, 1996.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor 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 Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to 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).

Background

    On July 12, 1993, the Department published in the Federal Register 
the antidumping duty order on PECTs from Japan (58 FR 37461). On July 
3, 1995, the Department published in the Federal Register a notice of 
opportunity to request an administrative review of this antidumping 
duty order (60 FR 34511). On July 27, 1995, Makita requested that we 
conduct an administrative review in accordance with 19 CFR 
353.22(a)(1). We published the notice of initiation of this antidumping 
duty administrative review on August 16, 1995 (60 FR 42500).
    The Department is conducting this review in accordance with section 
751 of the Act.

Scope of the Review

    The products covered by this review are PECTs from Japan. PECTs may 
be assembled or unassembled and corded or cordless.
    The term ``electric'' encompasses electromechanical devices, 
including tools with electronic variable speed features. The term 
``assembled'' includes unfinished or incomplete articles, which have 
the essential characteristics of the finished or complete tool. The 
term ``unassembled'' means components, which when taken

[[Page 46625]]

as a whole, can be converted into the finished or unfinished or 
incomplete tool through simple assembly operations, (e.g., kits).
    PECTs have blades or other cutting devices used for cutting wood, 
metal, and other materials. PECTs include chop saws, circular saws, jig 
saws, reciprocating saws, miter saws, portable bank saws, cut-off 
machines, shears, nibblers, planers, routers, joiners, jointers, metal 
cutting saws, and similar cutting tools.
    The products subject to this order include all hand-held PECTs and 
certain bench-top, hand-operated PECTs. Hand-operated tools are 
designed so that only the functional or moving part is held and moved 
by hand while in use, the whole being designed to rest on a table top, 
bench, or other surface. Bench-top tools are small stationary tools 
that can be mounted or placed on a table or bench. They are generally 
distinguishable from other stationary tools by size and ease of 
movement.
    The scope of the order includes only the following bench-top, hand-
operated tools: cut-off saws; PVC saws; chop saws; cut-off machines, 
currently classifiable under subheading 8461 of the Harmonized Tariff 
Schedule of the United States (HTSUS); all types of miter saws, 
including slide compound miter saws and compound miter saws, currently 
classifiable under subheading 8465 of the HTSUS; and portable band saws 
with detachable bases, also currently classifiable under subheading 
8465 of the HTSUS.
    This order does not include: professional sanding/grinding tools; 
professional electric drilling/fastening tools; lawn and garden tools; 
heat guns; paint and wallpaper strippers; and chain saws, currently 
classifiable under subheading 8508 of the HTSUS.
    Parts or components of PECTs when they are imported as kits, or as 
accessories imported together with covered tools, are included within 
the scope of this order.
    ``Corded'' and ``cordless'' PECTs are included within the scope of 
this order. ``Corded'' PECTs, which are driven by electric current 
passed through a power cord, are, for purposes of this order, defined 
as power tools which have at least five of the following seven 
characteristics:
    1. The predominate use of ball, needle, or roller bearings (i.e., a 
majority or greater number of the bearings in the tool are ball, 
needle, or roller bearings);
    2. Helical, spiral bevel, or worm gearing;
    3. Rubber (or some equivalent material which meets UL's 
specifications S or SJ) jacketed power supply cord with a length of 8 
feet or more;
    4. Power supply cord with a separate cord protector;
    5. Externally accessible motor brushes;
    6. The predominate use of heat-treated transmission parts (i.e., a 
majority or greater number of the transmission parts in the tool are 
heat treated); and
    7. The presence of more than one coil per slot armature.
    If only six of the above seven characteristics are applicable to a 
particular ``corded'' tool, then that tool must have at least four of 
the six characteristics to be considered a ``corded'' PECT.
    ``Cordless'' PECTs, for the purposes of this order, consist of 
those cordless electric power tools having a voltage greater than 7.2 
volts and a battery recharge time of one hour or less.
    PECTs are currently classifiable under the following subheadings of 
the HTSUS: 8508.20.00.20, 8508.20.00.70, 8508.20.00.90, 8461.50.00.20, 
8465.91.00.35, 85.80.00.55, 8508.80.00.65 and 8508.80.00.90. The HTSUS 
subheadings are provided for convenience and Customs purposes only. The 
written description remains dispositive as to the scope of the order.
    This review covers one manufacturer/exporter of PECTs from Japan, 
Makita, and the period July 1, 1994 through June 30, 1995.

Verification

    From June 3 through June 12, 1996, the Department conducted 
verification of Makita's questionnaire responses, as provided in 
section 782(i) of the Act. We used standard verification procedures, 
including on-site inspection of the manufacturer's facilities, 
examination of relevant accounting, sales, and other financial records, 
and selection of original documentation containing relevant 
information. Our verification results are outlined in the public 
version of the verification report.

Constructed Export Price

    In calculating United States price, we used CEP, in accordance with 
subsections 772(b), (c), and (d) of the Act, because Makita's sales to 
the first unaffiliated purchaser occurred after importation into the 
United States. We calculated CEP based on the packed, delivered prices 
to the first unrelated purchaser in the United States.
    Where appropriate, we made deductions from the starting price for 
discounts, rebates, Japanese and U.S. inland freight, ocean freight, 
Japanese and U.S. brokerage and handling, and those imputed credit and 
warranty expenses that were incurred in the United States. In 
accordance with section 772(d)(1) and the Statement of Administrative 
Action (SAA) at 823-24, we also deducted those selling expenses that 
related to commercial activity in the United States, and added revenues 
earned from drop-ship fees and miscellaneous charges, where 
appropriate. Finally, we made an adjustment for an amount of profit 
allocated to these expenses in accordance with section 772(d)(3) of the 
Act.

Normal Value

    Based on a comparison of the aggregate quantity of Makita's home-
market and U.S. sales, we determined that the quantity of the foreign 
like product Makita sold in Japan was sufficient to permit a proper 
comparison to its sales of PECTs to the United States, pursuant to 
section 773(a) of the Act. Makita's quantity of home-market sales was 
greater than five percent of its sales to the U.S. market. Therefore, 
in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on 
the prices at which the foreign like products were first sold for 
consumption in Japan.
    In calculating NV, we disregarded sales to affiliated customers 
where we determined that such sales were not made at arm's-length 
prices, i.e., at prices comparable to prices at which Makita sold 
identical merchandise to unrelated customers.
    Based on petitioner's allegation, and in accordance with section 
773(b)(2)(A)(i) of the Act, we found reasonable grounds to believe or 
suspect that Makita made sales in the home market at prices below the 
cost of production (COP). As a result, we initiated a sales-below-cost 
investigation. We calculated COP based on the sum of Makita's cost of 
materials and fabrication employed in producing the foreign like 
product plus amounts for home-market selling, general, and 
administrative expenses (SG&A) and packing costs, in accordance with 
section 773(b)(3) of the Act. We compared Makita's weighted-average COP 
for the review period to home-market sales of the foreign like product 
as required under section 773(b) of the Act, in order to determine 
whether these sales had been made at below-cost prices within an 
extended period of time in substantial quantities, and whether they 
were at prices which permit recovery of all costs within a reasonable 
period of time. On a product-specific basis, we compared the COP to the 
home-market prices, less any applicable movement charges,

[[Page 46626]]

discounts, rebates, and direct and indirect selling expenses.
    Pursuant to section 773(b)(2)(C), where less than 20 percent of 
respondent's sales of a given product were at prices less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of a respondent's sales during 
the review period of a given product were at prices less than the COP, 
we disregarded the below-cost sales because we determined that the 
below-cost sales were made within an extended period of time in 
``substantial quantities'' in accordance with section 773(b)(2)(B) and 
(C) of the Act, and because we determined that the below-cost sales of 
the product were at prices which would not permit recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Act. Where all sales of a specific model were at 
prices below the COP, we disregarded all sales of that model, and 
calculated NV based on CV, in accordance with section 773(b)(1) of the 
Act.
    Home-market prices were based on the packed, delivered prices to 
affiliated or unaffiliated purchasers in the home market. Where 
applicable, we made adjustments for differences in packing and for 
movement expenses in accordance with section 773(a)(6)(A) and (B) of 
the Act. We also made adjustments for discounts and rebates, and 
differences in cost attributable to differences in physical 
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) 
of the Act and for differences in circumstances of sale (COS) in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 353.56. 
If appropriate, we made COS adjustments by deducting home-market direct 
selling expenses and adding U.S. direct selling expenses, except those 
deducted from the starting price in calculating CEP pursuant to section 
772(d) of the Act.
    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we based NV on sales at the same level of trade as 
the CEP sales. If NV was calculated at a different level of trade, we 
made an adjustment, if appropriate, and if possible, in accordance with 
section 773(a)(7) of the Act. This adjustment is discussed further in 
the Level of Trade section below.
    In accordance with section 773(a)(4) of the Act, we used CV as the 
basis for NV when there were no usable sales of the foreign like 
product in the comparison market. We calculated CV in accordance with 
section 773(e) of the Act. We included the cost of materials and 
fabrication, SG&A expenses, profit, and U.S. packing. In accordance 
with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit 
on the amounts incurred and realized by the respondent in connection 
with the production and sale of the foreign like product in the 
ordinary course of trade for consumption in the foreign country. For 
selling expenses, we used the weighted-average home-market selling 
expenses. We calculated CV by level of trade, using the selling 
expenses and profit determined for each level of trade in the 
comparison market.
    Where appropriate, we made adjustments to CV in accordance with 
section 773(a)(8) of the Act and 19 CFR 353.56 for COS differences and 
level-of-trade differences. We made COS adjustments by deducting home-
market direct selling expenses and adding U.S. direct selling expenses 
except those deducted from the starting price in calculating CEP 
pursuant to section 772(d) of the Act.

Level of Trade

    As set forth in section 773(a)(1)(B)(i) of the Act and in the SAA 
accompanying the URAA at 829-831, to the extent practicable, the 
Department will calculate NV based on sales at the same level of trade 
as the U.S. sale. When the Department is unable to find sale(s) in the 
comparison market at the same level of trade as the U.S. sale(s), the 
Department may compare U.S. sales to comparison market sales at a 
different level of trade.
    In accordance with section 773(a)(7)(A) of the Act, if sales at 
allegedly different levels of trade are compared, the Department will 
adjust the NV to account for the difference in level of trade if two 
conditions are met. First, there must be differences between the actual 
selling activities performed by the exporter at the level of trade of 
the U.S. sale and the level of trade of the comparison-market sales 
used to determine NV. In making this determination, we consider all 
selling functions and activities performed by the exporter. The fact 
that there is some overlap in selling functions and activities does not 
preclude us from finding that sales were made at different levels of 
trade. Where selling functions and activities are substantially the 
same, however, we normally will consider sales to have been made at the 
same level of trade. See, Notice of Proposed Rulemaking and Request for 
Public Comments, 61 FR 7348 (February 27, 1996).
    Second, pursuant to section 773(a)(7)(A), the differences must 
affect price comparability as evidenced by a pattern of consistent 
price differences between sales at the different levels of trade in the 
market in which NV is determined.
    Makita reported two levels of trade in the home market and one 
level of trade in the United States. We reviewed and verified the 
selling functions and activities associated with each claimed level of 
trade. Because Makita's sales to the United States were all CEP sales 
made by an affiliated company, we considered only the parent company's 
selling activities reflected in the price after the deduction of 
expenses and profit, pursuant to section 772(d) of the Act. In 
examining all of Makita's selling functions and activities, we found 
that no single selling function or activity was sufficient to warrant 
distinguishing separate levels of trade.
    We also determined that Makita's selling functions with respect to 
the channels of distribution for wholesalers and retailers in the home 
market are sufficiently dissimilar to conclude that two separate levels 
of trade exist in the home market. Further, we determined that Makita's 
aggregate selling functions and activities in the United States were 
substantially the same as those it performs in Japan at the wholesaler 
channel of distribution. Thus, we concluded that sales to the United 
States and sales in the home market at the wholesaler channel of 
distribution were made at the same level of trade.
    When we were unable to find sales of the foreign like product in 
the home market at the same level of trade as the U.S. sale, we 
examined whether a level of trade adjustment was appropriate. We will 
make this adjustment when it is demonstrated that a difference in level 
of trade has an effect on price comparability. This is the case when it 
is established that, with respect to sales used to calculate NV, there 
is a pattern of consistent price differences between sales made at the 
two different levels of trade. To make this determination, we compared 
the weighted average of Makita's NV prices of sales made in the 
ordinary course of trade at the two levels of trade for models sold at 
both levels, after making any other adjustments required under section 
773(a)(6). If the weighted-average prices were higher at one of the 
levels of trade for a preponderance of the models, we considered this 
to demonstrate a pattern of consistent price differences. We also 
considered whether the weighted-average prices were higher at one of 
the levels of trade for a preponderance of sales, based on the 
quantities of each

[[Page 46627]]

model sold, in making this determination. See Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof from France, et 
al.: Preliminary Results of Antidumping Duty Administrative Reviews, 61 
FR 35713 (July 8, 1996). As a result of our analysis, we found that 
there was a pattern of consistent price differences between the two 
levels of trade in the home market. Thus, we made an adjustment to NV 
for the differences in levels of trade.
    We calculated the level of trade adjustment based on home-market 
sales made in the ordinary course of trade and on prices net of 
movement expenses, discounts, rebates, direct selling expenses and 
packing expenses. For each model sold at both levels of trade in the 
home market, we calculated the difference between the weighted-average 
prices at the two levels of trade as a percentage of the weighted-
average price at the comparison level of trade. We then calculated a 
weighted average of these model-specific percentage differences. We 
calculated the amount of the level-of-trade adjustment by applying this 
weighted-average percentage price difference to the NV determined at 
the different level of trade.
    The level of trade methodology employed in these preliminary 
results of review is based on the facts particular to this review. We 
will continue to examine our policy for making level-of-trade 
comparisons and adjustments for the final results of review.

Preliminary Results of the Review

    As a result of our review, we preliminarily determine that the 
following margins exist:

------------------------------------------------------------------------
                                                                Margin  
       Manufacturer/exporter               Time period        (percent) 
------------------------------------------------------------------------
Makita Corporation.................  7/1/94-                        6.34
                                     6/30/95                            
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within ten days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. Parties who submit comments are requested to submit with 
their comments (1) A statement of the issue and (2) a brief summary of 
the comment. The Department will publish a notice of final results of 
this administrative review, which will include the results of its 
analysis of issues raised in any such comments. The Department will 
issue the final results of this review within 180 days of publication 
of these preliminary results.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between CEP and NV may vary from the percentage stated 
above. Upon completion of this review, the Department will issue 
appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this administrative review for 
all shipments of PECTs from Japan entered, or withdrawn from warehouse, 
for consumption on or after the publication date, as provided for by 
section 751(a)(2)(c) of the Act: (1) The cash deposit rate for Makita 
will be the rate we determine in the final results of review; (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 54.52 percent, the all others rate 
established in the LTFV investigation.
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 353.26 of the Department's regulations 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 administrative review and notice are in accordance with 
section 751(a)(1) of the Act and 19 CFR 353.22.

    Dated: August 27, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-22521 Filed 9-3-96; 8:45 am]
BILLING CODE 3510-DS-P