[Federal Register Volume 61, Number 204 (Monday, October 21, 1996)]
[Notices]
[Pages 54616-54621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26833]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE
[A-201-504]


Notice of Final Results of Antidumping Duty Administrative 
Review: Porcelain-on-Steel Cookware From Mexico

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: On March 6, 1996 the Department of Commerce published the 
preliminary results of its administrative review of the antidumping 
duty order on porcelain-on-steel (POS) cookware from Mexico. The review 
covers shipments of this merchandise to the

[[Page 54617]]

United States during the period December 1, 1991 through November 30, 
1992.
    Based on our analysis of the comments received and the correction 
of certain clerical and computer program errors, we have changed the 
preliminary results. The final results are listed below in the section 
``Final Results of Review.''

EFFECTIVE DATE: October 21, 1996.

FOR FURTHER INFORMATION CONTACT: Katherine Johnson or James Terpstra, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone, (202) 482-4929 and (202) 482-3965, 
respectively.

SUPPLEMENTARY INFORMATION:

Background

    On March 6, 1996, the Department of Commerce (the Department) 
published in the Federal Register the preliminary results of its 
administrative review of the Antidumping Duty Order on Porcelain-on-
Steel Cookware from Mexico (61 FR 8911). The Department has now 
completed that administrative review in accordance with section 751 of 
the Tariff Act of 1930, as amended (the Act).

Scope of the Review

    Imports covered by this review are shipments of porcelain-on-steel 
cookware, including tea kettles, that do not have self-contained 
electric heating elements. All of the foregoing are constructed of 
steel and are enameled or glazed with vitreous glasses. This 
merchandise is currently classifiable under Harmonized Tariff Schedule 
of the United States (HTSUS) item number 7323.94.00. Kitchenware 
currently entering under HTSUS item number 7323.94.00.30 is not subject 
to the order. Although the HTSUS subheadings are provided for 
convenience and Customs purposes, our written description of the scope 
of this proceeding is dispositive.
    The review covers two manufacturers/exporters, Acero Porcelanizado, 
S.A. de C.V. (APSA) and Cinsa, S.A. de C.V. (Cinsa) of Mexican POS 
cookware. The period of review (POR) is December 1, 1991 to November 
30, 1992.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute and to the 
Department's regulations are in reference to the provisions as they 
existed on December 31, 1994.

United States Price

A. APSA

    We based United States price (USP) on both exporter's sales price 
(ESP) and purchase price (PP), in accordance with section 772 of the 
Act, because the subject merchandise was sold both before and after 
importation into the United States. We based ESP and PP on the packed, 
ex-factory price to unrelated purchasers in the United States.
    For both PP and ESP sales we made deductions from USP, where 
appropriate, for foreign and U.S. inland freight and insurance, Mexican 
and U.S. brokerage and U.S. import duties and user fees, in accordance 
with section 772(d)(2) of the Act. We also made deductions for 
discounts and rebates. We added an amount to account for the 
countervailing duty assessment on entries of the subject merchandise 
entered during the instant review period. (See, Comment 3).
    We made further deductions from ESP, where applicable, for 
commissions, credit expenses and indirect selling expenses, pursuant to 
section 772(e) (1) and (2) of the Act.

B. Cinsa

    We based USP on PP, in accordance with section 772 of the Act, 
because the subject merchandise was sold before importation into the 
United States. We based PP on the packed, ex-factory price to unrelated 
purchasers in the United States.
    We made deductions from USP, where appropriate, for foreign and 
U.S. inland freight and insurance, Mexican and U.S. brokerage and U.S. 
import duties, in accordance with section 772(d)(2) of the Act.
    We added to USP the amount of import duties which have been 
rebated, or which have not been collected, by reason of the exportation 
of the subject merchandise to the United States.

C. Cinsa and APSA

    For both Cinsa and APSA we made an adjustment to USP for the value-
added tax (VAT) paid on the comparison sales in Mexico.
    In light of the Federal Circuit's decision in Federal Mogul v. 
United States, CAFC No. 94-1097, the Department has changed its 
treatment of home market consumption taxes. Where merchandise exported 
to the United States is exempt from the consumption tax, the Department 
will add to the USP the absolute amount of such taxes charged on the 
comparison sales in the home market. This is the same methodology that 
the Department adopted following the decision of the Federal Circuit in 
Zenith v. United States, 988 F. 2d 1573, 1582 (1993), and which was 
suggested by that court in footnote 4 of its decision. The Court of 
International Trade (CIT) overturned this methodology in Federal Mogul 
v. United States, 834 F. Supp. 1391 (1993), and the Department 
acquiesced in the CIT's decision. The Department then followed the 
CIT's preferred methodology, which was to calculate the tax to be added 
to USP by multiplying the adjusted USP by the foreign market tax rate; 
the Department made adjustments to this amount so that the tax 
adjustment would not alter a ``zero'' pre-tax dumping assessment.
    The foreign exporters in the Federal Mogul case, however, appealed 
that decision to the Federal Circuit, which reversed the CIT and held 
that the statute did not preclude Commerce from using the ``Zenith 
footnote 4'' methodology to calculate tax-neutral dumping assessments 
(i.e., assessments that are unaffected by the existence or amount of 
home market consumption taxes). Moreover, the Federal Circuit 
recognized that certain international agreements of the United States, 
in particular the General Agreement on Tariffs and Trade (GATT) and the 
Tokyo Round Antidumping Code, required the calculation of tax-neutral 
dumping assessments. The Federal Circuit remanded the case to the CIT 
with instructions to direct Commerce to determine which tax methodology 
it will employ.
    The Department has determined that the ``Zenith footnote 4'' 
methodology should be used. First, as the Department has explained in 
numerous administrative determinations and court filings over the past 
decade, and as the Federal Circuit has now recognized, Article VI of 
the GATT and Article 2 of the Tokyo Round Antidumping Code required 
that dumping assessments be tax-neutral. This requirement continues 
under the new Agreement on Implementation of Article VI of the GATT. 
Second, the Uruguay Round Agreements Act (URAA) explicitly amended the 
antidumping law to remove consumption taxes from the home market price 
and to eliminate the addition of taxes to USP, so that no consumption 
tax is included in the price in either market. The Statement of 
Administrative Action (p. 159) explicitly states that this change was 
intended to result in tax neutrality.
    While the ``Zenith footnote 4'' methodology is slightly different 
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA 
law required that the tax be added to USP rather than subtracted from 
home

[[Page 54618]]

market price, it does result in tax-neutral duty assessments. In sum, 
the Department treats consumption taxes in a manner consistent with its 
longstanding policy of tax-neutrality and with the GATT.
    Also, for both APSA and Cinsa, the Department verified in the 
original investigation and in previous reviews that both companies 
incur the same packing expenses for sales of the subject merchandise in 
the United States and in Mexico. Therefore, as in previous reviews, no 
adjustment was made for packing.

Foreign Market Value

A. APSA

    In calculating foreign market value (FMV), the Department used home 
market price, as defined in section 773 of the Act. Home market price 
was based on the packed, ex-factory price to certain related and 
unrelated purchasers in the home market. In our margin calculations, we 
used sales to related parties which we found were at arm's length. See 
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the 
United Kingdom; Final Results of Antidumping Duty Administrative 
Review, 60 FR 44012 (August 24, 1995).
    We made deductions from the home market price for discounts and 
rebates. For comparison to PP sales, pursuant to section 773(a)(4)(B) 
and 19 CFR 353.56(a)(2), we made a circumstance-of-sale (COS) 
adjustment, where appropriate, for differences in credit expenses. For 
comparison to ESP sales, we also deducted credit expenses from FMV.
    We adjusted for differences in commissions in accordance with 19 
CFR 353.56(a)(2) (1994).
    Regarding indirect selling expenses, APSA calculated inventory 
carrying costs based on sales price. We recalculated these costs based 
on APSA's cost of goods sold.
    We adjusted for VAT in accordance with our practice. (See the 
``United States Price'' section of this notice, above.)
    For three U.S. products, we found no identical home market products 
sold in contemporaneous periods, and APSA did not provide an adjustment 
for differences in merchandise or CV information, as we had repeatedly 
requested. Therefore, we used BIA for these sales pursuant to Section 
776(C) of the Act. As partial BIA, we used the weighted-average dumping 
margin of 8.75 percent from Porcelain-On-Steel Cookware From Mexico; 
Final Results of Antidumping Duty Administrative Review (3rd 
Administrative Review), 58 FR 32095 (June 8, 1993), because it is the 
highest rate ever determined for APSA. This is consistent with the 
Department's general application of partial BIA (see, e.g., Final 
Results of Antidumping Duty Administrative Reviews and Revocation in 
Part of an Antidumping Duty Order; Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From France, et al., 60 FR 
10900, 10907 (February 28, 1995)).

B. Cinsa

    We also used home market price for Cinsa, when sufficient 
quantities of such or similar merchandise were sold in the home market, 
at or above the COP, to provide a basis for comparison (See COP section 
of this notice). Home market price was based on the packed, delivered 
and ex-factory price to certain related and unrelated purchasers in the 
home market. In our margin calculations, we used sales to related 
parties which we found were at arm's length. We made deductions from 
home market price for discounts, where applicable.
    In light of the Court of Appeals for the Federal Circuit's decision 
in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. 
United States, 13 F.3d 398 (Fed. Cir. 1994), the Department no longer 
can deduct home market movement charges from FMV pursuant to its 
inherent power to fill in gaps in the antidumping statute. Instead, we 
adjust for those expenses under the COS provision of 19 CFR 353.56(a). 
Accordingly, in the present case, we adjusted for post-sale home market 
inland freight charges under the COS provision of 19 CFR 353.56(a). We 
did not deduct pre-sale inland freight charges because, as in the fifth 
administrative review, Cinsa did not demonstrate to the Department's 
satisfaction that these expenses are directly related to sales of the 
subject merchandise. Because Cinsa did not report warehousing as a 
direct selling expense, we concluded that Cinsa's inland freight to the 
warehouse is also not directly related to sales. See Final 
Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit 
from Thailand, 60 FR 29553, 29563 (June 5, 1995) for a complete 
discussion on the Department's policy concerning pre-sale movement 
charges.
    Pursuant to section 773(a)(4)(B) and 19 CFR 353.56(a)(2), we made a 
COS adjustment, where appropriate, for differences in credit expenses. 
We recalculated home market credit using the revised interest rate 
reported in the May 2, 1994, supplemental response. Also, we did not 
calculate credit expenses for sales in the home market that were 
missing pay dates. Furthermore, we determined that the bank fees 
associated with the letter of credit transactions for certain U.S. 
customers are a direct selling expense and have made a COS adjustment 
for these fees. We deducted home market commissions and added U.S. 
indirect selling expenses capped by the amount of home market 
commissions.
    We adjusted for VAT in accordance with our practice. (See the 
``United States Price'' section of this notice, above.)

Cost of Production

    With regard to Cinsa, we disregarded sales below cost in the most 
recent administrative review. Therefore, in accordance with Department 
practice, we determined that there were reasonable grounds to believe 
or suspect sales below cost in the current review period. In order to 
determine whether home market prices were below COP within the meaning 
of section 773(b) of the Act, we performed a product-specific cost 
test, in which we examined whether each home market product sold during 
the POR was priced below the COP of that product. For Cinsa's models 
for which there were insufficient home market sales at or above the 
COP, we compared USP to CV.
    Regarding APSA, petitioner's June 18, 1993, letter requested an 
extension for filing a sales below cost allegation; however, no such 
allegation was filed with the Department. Therefore, we did not perform 
a sales below cost analysis of APSA.

A. Calculation of COP

    We calculated COP based on the sum of respondent's cost of 
materials, fabrication, general expenses and packing costs, in 
accordance with 19 C.F. R. 353.51(c). In our COP analysis, we relied on 
COP information submitted by Cinsa, except in the following instances 
where COP was not appropriately quantified or valued: (1) We included 
expenses related to employee profit sharing in the cost of manufacture; 
(2) we revised Cinsa's submitted interest costs to exclude the 
calculation of negative interest expense; and (3) we increased 
depreciation expense to account for the revaluation of its fixed 
assets.

B. Test of Home Market Sales Prices

    As required by section 773(b) of the Act, we tested whether a 
substantial quantity of respondent's home market sales of subject 
merchandise was made at prices below COP over an extended period of 
time. We also tested whether

[[Page 54619]]

such sales were made at prices which permit recovery of all costs 
within a reasonable period of time in the normal course of trade. On a 
product-specific basis, we compared the COP (net of selling expenses) 
to the reported home market prices, less any applicable movement 
charges, rebates, and direct and indirect selling expenses. To satisfy 
the requirement of section 773(b)(1) of the Act that below-cost sales 
be disregarded only if made in substantial quantities, we applied the 
following methodology. If over 90 percent of the respondent's sales of 
a given product were at prices equal to or greater 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.'' If between 10 and 90 percent of the respondent's sales of 
a given product were at prices equal to or greater than the COP, and 
sales of that product were also found to be made over an extended 
period of time, we disregarded only the below-cost sales. Where we 
found that more than 90 percent of the respondent's sales of a product 
were at prices below the COP, and the sales were made over an extended 
period of time, we disregarded all sales of that product, and 
calculated FMV based on CV, in accordance with section 773(b) of the 
Act.
    In accordance with section 773(b)(1) of the Act, in order to 
determine whether below-cost sales had been made over an extended 
period of time, we compared the number of months in which below-cost 
sales occurred for each product to the number of months in the POR in 
which that product was sold. If a product was sold in three or more 
months of the POR, we do not exclude below-cost sales unless there were 
below-cost sales in at least three months during the POR. When we found 
that sales of a product only occurred in one or two months, the number 
of months in which the sales occurred constituted the extended period 
of time, i.e., where sales of a product were made in only two months, 
the extended period of time was two months; where sales of a product 
were made in only one month, the extended period of time was one month. 
See Final Determination of Sales at Less Than Fair Value: Certain 
Carbon Steel Butt-Weld Pipe Fittings from the United Kingdom, 60 FR 
10558, 10560 (February 27, 1995).

C. Results of COP Test

    We found that for certain products, between 10 and 90 percent of 
Cinsa's home market sales were sold at below COP prices over an 
extended period of time. Because Cinsa provided no indication that the 
disregarded sales were at prices that would permit recovery of all 
costs within a reasonable period of time in the normal course of trade, 
in accordance with section 773(b) of the Act, we based FMV on CV for 
all U.S. sales left without a home market sales match as a result of 
our application of the COP test.

D. Calculation of CV

    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of respondent's cost of materials, fabrication, 
general expenses, packing costs, and profit. In accordance with section 
773(e)(1)(B) (i) and (ii), we used: (1) The actual amount of general 
expenses because those amounts were greater than the statutory minimum 
of ten percent and (2) the actual amount of profit where it exceeded 
the statutory minimum of eight percent.
    We recalculated the respondent's CV based on the methodology 
described in the calculation of COP above. In addition, we revised CV 
profit based upon the calculation provided by Cinsa.

Price-to-CV Comparisons

    Where we made CV to PP comparisons, we made a COS adjustment for 
direct selling expenses.

Interested Party Comments

Comment 1: Inclusion of Revalued Depreciation in the Calculation of 
Cinsa's COP and CV
    Petitioner asserts that Cinsa's revalued depreciation expense, as 
reported on the Company's audited financial statements, must be 
included in COP and CV. Petitioner contends that failure to use Cinsa's 
revalued depreciation in COP and CV would significantly understate and 
distort Cinsa's actual costs. Furthermore, the petitioner states that 
the inclusion of the revalued depreciation expense is consistent with 
the final results of Cinsa's fourth and fifth administrative reviews. 
(See, Final Results of Antidumping Duty Administrative Review: 
Porcelain-On-Steel Cooking Ware From Mexico, 60 FR, 2378, 2378 (January 
9, 1995) and 58 FR, 43327, 43331 (August 16, 1993), respectively.)
    Cinsa contends that increasing the Company's depreciation expense 
for the effects of the revaluation of its assets is contrary to law 
because it distorts the actual COP of the subject merchandise. Cinsa 
argues that the revaluation of its assets has no fiscal effect on the 
Company and is only required for financial statement purposes. Thus, 
the inclusion of revalued depreciation overstates the actual 
depreciation expense incurred in producing subject merchandise. 
However, Cinsa points out that the submitted cost database provided the 
necessary information to revalue the Company's depreciation expense.
    DOC Position: We agree with petitioner and included Cinsa's 
revalued depreciation expense in the Company's COP and CV. We disagree 
with Cinsa's assertion that this inclusion distorts the actual 
production costs of subject merchandise. It is the Department's policy 
to adhere to the home market Generally Accepted Accounting Principles 
(GAAP) as long as they reflect actual costs. In this case, we find the 
use of revalued depreciation reasonably reflects Cinsa's actual costs. 
Mexican GAAP require Cinsa to use revalued depreciation in its 
financial statements. Thus, Mexican GAAP recognizes the effect of 
inflation upon the value of assets and requires companies to revalue 
assets to compensate for the change. Depreciation enables companies to 
spread large expenditures on purchases of machinery and equipment over 
the expected useful lives of these assets. Not adjusting for the 
deflation of currency due to inflation results in the depreciation 
deferred to future years being understated in constant currency terms, 
and therefore, distorts the Department's COP and CV calculations. Thus, 
in light of the rate of inflation in Mexico, it would be distortive to 
use historical depreciation in this case.
    The Department's determination to use revalued rather than 
historical depreciation in accordance with home market GAAP was most 
recently upheld by the Court of International Trade in Laclede Steel 
Co. v. United States Slip op. 91-160 at 29 (October 12, 1994). In 
Laclede Steel, the Court found that depreciation expense based on the 
historical method rather than depreciation expense based on the 
revalued method would distort the production costs of the company 
because such a methodology would overlook the significant impact that 
revaluing the assets had on the company. We find the Court's analysis 
in Laclede Steel instructive with respect to the instant review. Due to 
the revaluation of assets as reflected on Cinsa's financial statements, 
Cinsa would enjoy an increase to its equity values reflected on the 
Company's balance sheet, a potentially enhanced stock value resulting 
from greater equity, and an improved ability to borrow or acquire 
capital. Therefore, the Department followed Mexican GAAP and adjusted 
CINSA's COP data to

[[Page 54620]]

reflect the revalued depreciation. We note, although it is not binding 
precedent, a NAFTA Panel has affirmed the Department's use of revalued 
depreciation for Cinsa in the fifth administrative review in In the 
Matter of Porcelain-on-Steel Cookware From Mexico, USA-95-1904-01 
(April 30, 1996) (POS Cookware), at 31.
Comment 2: Inclusion of Home Market Sales of Second-Quality Merchandise 
in the Cost Test
    Petitioner argues that the Department's exclusion of sales of 
second-quality merchandise from the preliminary cost test was 
inappropriate, and that such sales should be included in the cost test 
for purposes of the final results. Petitioner contends that the 
Department's preliminary results in this regard are inconsistent with 
its standard practice, including its previous practice in reviews of 
imports subject to this order. In addition, petitioner argues that the 
exclusion of second-quality cookware from the cost test had a 
significant impact on the number of home market products the Department 
preliminarily found to be sold below cost in significant quantities 
over an extended period of time. Finally, according to petitioner, 
because there is no evidence on the record of this review to support 
the Department's exclusion of these sales, they should be included in 
the cost test for the final results.
    Cinsa argues that the Department properly limited the cost test to 
first quality merchandise. Cinsa asserts that the practice of comparing 
U.S. sales of first quality POS cookware to an FMV based on home market 
sales of first quality POS cookware dates from the original 
investigation. According to respondent, because the product matching 
criteria used by the Department already excluded second quality 
merchandise from the pool of home market sales upon which FMV could be 
based, the cost test was properly applied to those sales eligible for 
inclusion in the calculation of FMV (i.e., first quality home market 
sales). Moreover, Cinsa contends that petitioner would have the 
Department include Cinsa's home market sales of second quality 
merchandise only for purposes of the cost test, but would continue to 
insist that the Department exclude such sales from the FMV calculation, 
even if these sales pass the cost test.
    DOC Position: We agree with petitioner that all home market sales 
of both first and second quality merchandise should be included in the 
cost test. However, we disagree with both petitioner and respondent 
that the Department failed to include these sales in the cost test 
performed in the preliminary results. The cost test covered all home 
market sales of such or similar merchandise covered by the scope of the 
order (i.e., both first and second quality merchandise). Petitioner and 
respondent apparently misinterpreted the computer program the 
Department used for the preliminary results. See, Memorandum from 
Analyst to The File dated May 20, 1996, for a more detailed discussion 
of this issue.
    Cinsa is correct in its assertion that the Department's margin 
program compared U.S. sales of first quality cookware to home market 
sales of first quality cookware, as was done in the original 
investigation as well as in previous reviews. As we stated in the 
fourth review of Porcelain-on-Steel Cooking Ware From Mexico: Final 
Results of Antidumping Duty Administrative Review, 58 FR 43327 (August 
16, 1993), ``We agree that we should compare first quality merchandise 
sold in the U.S. market with only first quality merchandise sold in the 
home market . . .'' We did not compare sales of second quality 
merchandise in the instant review because there were no sales of second 
quality merchandise in the United States, unlike in the fourth review 
where second quality merchandise sold in the United States was compared 
with second quality merchandise sold in the home market.
Comment 3: Addition of Countervailing Duties to APSA's USP
    Respondent argues that for purposes of the final results, the 
Department should recalculate APSA's USP and margin calculations to 
include the countervailing duty (CVD) assessments as required by law, 
because the future CVD assessment on entries of the subject merchandise 
entered during the instant review period has already been determined. 
Accordingly, respondent contends that for the final results APSA's USP 
should be increased by the amount of CVD that will be assessed once 
these entries are subject to liquidation.
    DOC Position: We agree with respondent and have increased APSA's 
USP by the amount of these CVD, in accordance with section 772(d)(1)(D) 
of the Act. See, ``United States Price'' section of this notice.
Comment 4: Inclusion of Profit Sharing Payments in Cinsa's COP and CV
    Cinsa asserts that the inclusion of employee profit-sharing 
payments as a direct labor expense is contrary to law because the 
Department's regulations expressly exclude profit-based expenses from 
the calculation of COP (19 CFR, 353.51(c)). According to Cinsa, this 
payment is similar to dividend distributions or income tax payments 
which are not included in COP and CV. Cinsa also asserts that the 
Company's profit-sharing expense is derived from the Company's profits. 
Therefore, including the profit-sharing expense results in the double 
counting of profit because profit is already included in CV.
    Petitioner contends that the Department should include profit-
sharing expenses in Cinsa's COP and CV. Petitioner points out that 
Cinsa cites no case in which the Department has treated profit sharing 
expenses as anything other than labor costs and included these expenses 
in COP and CV. Petitioner also contends that profit-sharing expenses do 
relate to production and that the inclusion of these expenses in the 
calculation of CV does not double count profit.
    DOC Position: We disagree with respondent and have included Cinsa's 
profit-sharing expense in COP and CV because it relates to the 
compensation of direct labor, a factor of production. We treat profit-
sharing distributions to employees in a manner similar to bonuses. 
Furthermore, we disagree with Cinsa's argument that the profit-sharing 
expense is similar to profit, dividends, and income tax.
    Profit-sharing is not profit because it is an expense which is a 
reduction to profit. Therefore, profit-sharing is not explicitly 
excluded from COP calculations under 19 CFR 353.51 (c). As for Cinsa's 
concern that we doubled counted profit in its CV, we note that profit-
sharing expense is not part of the Company's ``profit'' included in CV. 
The ``profit'' that is included in Cinsa's CV represents the amount 
that remains after reductions to income, such as the profit-sharing 
expense.
    Cinsa's profit-sharing expense is distinct from dividends in two 
key respects. First, Cinsa's profit-sharing payments represent a legal 
obligation to a productive factor in the manufacturing process and not 
a distribution of profits to the owners of Cinsa. Second, the right to 
participate in profit-sharing conveys no ownership rights in Cinsa.
    Cinsa's profit-sharing expense is unlike an income tax because it 
is paid to labor. Thus, unlike income taxes paid to the government, 
profit sharing payments flow directly to a factor of production. Also, 
Cinsa's income tax is based on taxable income that is net of Cinsa's 
profit-sharing expense.
    We note that, although it is not binding precedent, a NAFTA Panel 
has

[[Page 54621]]

affirmed the Department's inclusion of Cinsa's profit-sharing in COP 
and CV in the fifth administrative review. See POS Cookware, at 37-39.
Comment 5: Calculation of Cinsa's Profit Sharing Expense
    Cinsa states the Department's computer program mistakenly 
overstated the Company's profit-sharing expense in calculating COP and 
CV.
    Petitioner agrees with Cinsa.
    DOC Position: We agree with both Cinsa and petitioner and have 
corrected our calculation of Cinsa's COP and CV for the final results.
Comment 6: Inclusion of the Full Amount of Short-term Interest Income 
Earned by Cinsa's Corporate Parent in COP and CV
    Cinsa contends that the Department's practice of allowing short-
term interest income only up to the amount of reported interest 
expenses is subjective because there is no difference between the 
short-term interest that was recognized and that which was disregarded. 
Cinsa further argues that this methodology distorts the actual 
financial position of the parent and does not reflect the economic 
reality of the information on the financial statements.
    Petitioner argues that it is correct to limit Cinsa's short-term 
interest income to the amount of interest expense. Petitioner states 
that interest income in excess of interest expense does not reduce 
production cost because it is unrelated to a company's operating costs. 
(See e.g., Final Results of Antidumping Administrative Review: 
Porcelain-On-Steel Cooking Ware From Mexico, 60 FR 2378, 2379, (January 
9, 1995); Final Results of Antidumping Administrative Review: 
Porcelain-On-Steel Cooking Ware From Mexico, 58 FR 43327, 43332, 
(August 16,1993); Final Determination of Sales at Less Than Fair Value: 
Steel Wire Rope from Korea, 58 FR, 11029, 11038 (February 23, 1993).)
    DOC Position: We agree with petitioner. It is the Department's 
normal practice to allow short-term interest income to offset financing 
costs only up to the amount of such financing costs. (See, Final 
Results of Antidumping Administrative Review: Porcelain-On-Steel 
Cooking Ware From Mexico, 60 FR 2378, 2379, (January 9, 1995); Final 
Results of Antidumping Administrative Review Porcelain-On-Steel Cooking 
Ware From Mexico, 58 FR 43327, 43332, (August 16,1993); Final 
Determination of Sales at Less Than Fair Value: Steel Wire Rope from 
Korea, 58 FR, 11029, 11038 (February 23, 1993); Final Results of 
Antidumping Administrative Review Frozen Concentrated Orange Juice from 
Brazil; 55 FR 26721 (June 29, 1990); Final Results of Antidumping 
Administrative Review: Brass Sheet and Strip from Canada, (55 FR, 
31414, (August 2, 1990); and, Final Determination of Sales at less than 
Fair Market Value; Sweaters from Taiwan, 55 FR, 34585, (August 23, 
1990).) The Department reduces interest expense by the amount of short-
term income to the extent finance costs are included in COP. Using 
total short-term interest income to reduce production cost, as 
suggested by Cinsa, would permit companies with large short-term 
investment activity to sell their products below the COP. The 
application of excess interest income to production costs would distort 
a company's actual costs. Interest income does not lessen the burden of 
other costs, regardless of how much excess interest income there is; 
labor will still have its cost, as will materials and factory overhead. 
Accordingly, we limited the amount of the offset to the amount of the 
expense from the related activity.
    We note that, although it is not binding precedent, a NAFTA Panel 
has affirmed the Department's calculation of interest expense in COP 
and CV in the fifth administrative review. See POS Cookware, at 42-45.

Final Results of Review

    As a result of our review, we determine that the following margins 
exist for the period December 1, 1991, through November 30, 1992:

------------------------------------------------------------------------
                                                                Margin  
          Manufacturer/exporter             Review period     (percent) 
------------------------------------------------------------------------
APSA....................................   12/1/91-11/30/92         1.44
Cinsa...................................   12/1/91-11/30/92         5.40
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between USP and FMV may vary from the percentages stated 
above. The Department will issue appraisement instructions directly to 
the Customs Service.
    Furthermore, the following deposit requirement will be effective 
for all shipments of subject merchandise from Mexico entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided by 
section 751(a)(1) of the Tariff Act: (1) the cash deposit rate for the 
reviewed companies will be as outlined above; (2) for merchandise 
exported by manufacturers or exporters not covered in this review but 
covered in previous reviews or the original less-than-fair-value (LTFV) 
investigation, the cash deposit rate will continue to be the rate 
published in the most recent final results or determination for which 
the manufacturer or exporter received a company-specific rate; (3) if 
the exporter is not a firm covered in this review, an earlier review, 
or the LTFV investigation, but the manufacturer is, the cash deposit 
rate will be that established for the manufacturer of the merchandise 
in the final results of this review, earlier reviews, or the LTFV 
investigation, whichever is the most recent; (4) the cash deposit rate 
for all other manufacturers or exporters will be 29.52 percent, the 
``all others'' rate established in the original LTFV investigation by 
the Department.
    These cash deposit requirements, when imposed, 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 the only 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). 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 terms of the APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: October 9, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-26833 Filed 10-18-96; 8:45 am]
BILLING CODE 3510-DS-P