[Federal Register Volume 61, Number 204 (Monday, October 21, 1996)]
[Notices]
[Pages 54613-54616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26834]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-412-602]
Certain Forged Steel Crankshafts From the United Kingdom; 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 June 18, 1996, the Department of Commerce (the Department)
published the preliminary results of its administrative review of the
antidumping duty order on certain forged steel crankshafts from the
United Kingdom (61 FR 30854). The review covers one producer/exporter
of this merchandise to the United States for the review period
September 1, 1993 through August 31, 1994.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments and rebuttal
comments received, we have corrected certain clerical errors in the
margin calculations. The final weighted-average dumping margin for the
reviewed firm is listed below in the section entitled ``Final Results
of the Review.''
EFFECTIVE DATE: October 21, 1996.
FOR FURTHER INFORMATION CONTACT: J. David Dirstine or Lyn Johnson,
Office of Antidumping Compliance, 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 AND REGULATIONS: Unless otherwise indicated, all
citations to the statute and to the Department's regulations are
references to the provisions as they existed on December 31, 1994.
SUPPLEMENTARY INFORMATION:
Background
On June 18, 1996, the Department published the preliminary results
of administrative review of the antidumping duty order on certain
forged steel crankshafts from the United Kingdom (61 FR 30854). We gave
interested parties an opportunity to comment on the preliminary
results. There was no request for a hearing. The Department has now
conducted this review in accordance with section 751 of the Tariff Act
of 1930, as amended (the Tariff Act).
Scope of Review
Imports covered by this review are certain forged steel
crankshafts. The term ``crankshafts,'' as used in this review, includes
forged carbon or alloy steel crankshafts with a shipping weight between
40 and 750 pounds, whether machined or unmachined. These products are
currently classifiable under item numbers 8483.10.10.10, 8483.10.10.30,
8483.10.30.10, and 8483.10.30.50 of the Harmonized Tariff Schedule
(HTS). Neither cast crankshafts nor forged crankshafts with shipping
weights of less than 40 pounds or more than 750 pounds are subject to
this review. The HTS item numbers are provided for convenience and
Customs purposes. The written description remains dispositive.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. On July 18, and 25, 1996, we received case and
rebuttal briefs from the petitioner, the Krupp Gerlach Company (KGC),
and the respondent, UES Ltd.--Forgings Division (UEF).
Issues Raised by KGC
Comment 1: KGC argues that the Department improperly used the cost
of production (COP) of UEF's sister company, UES Steels, for the steel
input cost in the calculation of CV. KGC asserts that it was improper
to use UES's COP as a measure of UEF's raw material input costs without
first obtaining the transfer prices charged to UEF by UES to determine
whether they were greater than UES's COP. KGC further claims that the
Department failed to follow its own hierarchy as established in Import
Administration Policy Bulletin Number 94.4 of March 25, 1994 (PB 94.4)
for measuring raw material costs supplied by a related party when
performing a CV analysis. KGC argues that, in accordance with this
hierarchy, the Department may use the related party's COP ``only'' if
it determines that the related party transfer price was below cost. KGC
further argues that, if raw material inputs were supplied at transfer
prices that exceeded the supplier's COP then, in accordance with PB
94.4, the Department should use those transfer prices, in the absence
of any better measure of the market value of those inputs, e.g., arm's
length prices to unrelated parties, KGC states that this is consistent
with numerous determinations including Oil Country Tubular Goods From
Austria, 60 FR 33551 (June 28, 1995), Certain Cold-Rolled Carbon Steel
Flat Products from
[[Page 54614]]
Germany, 60 FR 65264 (December 19, 1995); and Final Results of
Antidumping Duty Administrative Review of Antifriction Bearings from
France and Other Countries, 58 FR 39729 (July 26, 1993), where the
Department used transfer prices rather than the related party's COP.
UEF argues that, since UES Steels and UEF are both unincorporated
operating divisions within a single legal entity, UES Ltd., they are
parts of the same company and share a common steel COP. UEF maintains
that, although UEF and UES Steels use transfer prices as a bookkeeping
convention for internal management purposes, steel provided by UES
Steels to UEF is recorded in UES Ltd.'s books at actual cost. UEF also
argues that PB 94.4 does not provide a strict hierarchy that the
Department must follow in determining whether or not to use transfer
prices for related party transactions for the calculation of CV, but
instead constitutes a set of discretionary guidelines for calculating
CV.
Department's Position: Although respondent describes UEF and UES as
``related'' in various sections of their questionnaire response, the
weight of record evidence (e.g., corporate structure charts and audited
financial statements) indicate that they are divisions of the same
corporation, UES Holdings Limited. The Department has determined that
section 773(e)(2) does not apply in such situations:
Since NSC's steel was manufactured internally by another
division of the same company, section 773(e) of the Act is
inapplicable. Section 773(e)(2) directs the disregarding, in certain
instances, of ``a transaction directly or indirectly between
[related] persons.'' A single corporation is not two or more
persons; it is legally one. Thus, we have used NSC's actual verified
costs rather than Japanese market prices for steel.
Offshore Platform Jackets and Piles From Japan: Final Determination
of Sales at Less Than Fair Value, 51 FR 11788, 11791 (Apr. 7, 1986).
Because UEF and UES Steels are divisions of the same corporation, UEF's
steel cost for producing crankshafts is the COP of the steel
manufactured by UES Steels. Sections 773(e)(2) and 773(e)(4), as well
as the cases cited by KGC, do not apply. Therefore, we used the COP
data provided by UEF in calculating CV.
Comment 2: KGC argues that UEF understated the fixed costs of the
crankshafts under review by improperly allocating fixed costs on the
basis of weight, as opposed to value. Based on its analysis of UEF's
financial statements, KGC maintains that the fixed costs that UEF has
reported for individual crankshaft models are disproportionately small
compared to UEF's general fixed cost experience. Furthermore, KGC
argues that UEF's allocation of fixed costs to the individual
crankshaft models in question is inherently suspect because of its
reliance on what is designated as an ``Actual Costs System'' (ACS). KGC
contends that the ACS does not supply the actual cost data in UEF's
accounting system, but only a reconstruction of that cost data for each
model. KGC asserts that UEF has not only failed to explain its cost
allocation methodology, but has not provided adequate support for its
methodology. Finally, KGC argues that UEF not only incorrectly used
weight to allocate certain end-of-year accounting adjustments, but also
made no effort to quantify or describe these adjustments.
In rebuttal, UEF asserts that its fixed cost allocation methodology
was described to, and accepted by, the Department in its Cost
Verification Memorandum of August 12, 1993 which was included at
Appendix H of UEF's April 11, 1996, submission. UEF also argues that
KGC's contention that the fixed cost data for individual crankshafts do
not accurately reflect the total fixed and variable costs reported for
UEF's forging facilities is completely false in that KGC ignored the
fixed costs that UEF identified as general and administrative expenses
(G&A) in its calculations. UEF contends that once the fixed costs
identified by UEF as G&A are included in these calculations, the total
fixed costs are consistent with those reported in UEF's submissions.
UEF states that its ACS, which was developed to allocate costs in
response to the Department's CV questionnaire and which was verified in
previous reviews, properly accounts for all fixed costs. Lastly,
regarding minimal end-of-year accounting adjustments, UEF argues that,
consistent with its practice in prior reviews, it uses weight to
allocate these costs among merchandise produced at its forging sites
because this method is as effective as any with respect to such
incidental costs.
Department's Position: We agree with UEF. KGC's argument that UEF
understated its fixed costs is incorrect, because KGC's allegation
failed to include the fixed costs that were reported as part of UEF's
G&A expenses. Moreover, there are a number of reasonable methods of
allocating costs, and allocation bases can vary from cost center to
cost center. Examples of this are the cost centers for the heat
treatment operation and the press operations. In the heat treatment
cost center, costs are incurred as a direct result of weight, because
heat treatment costs increase as weight (and size) increases.
Therefore, it is reasonable to allocate heat treatment cost center
expenses by weight. In the press cost center, fixed costs are
determined on the basis of production time, because costs are incurred
in relation to the time it takes to produce a given crankshaft. Other
elements in this cost center, such as fuel, are calculated on the basis
of production tons, because costs are incurred in relation to the
amount of fuel consumed in heating the metal before it is pressed. The
Department examined UEF's cost allocation methodology in a prior review
and found no discrepancies. Accordingly, we find nothing inherently
wrong in allocating certain fixed costs on the basis of weight.
Moreover, in some circumstances, it would be inappropriate to
allocate costs on the basis of value. For example, as discussed above,
heat treatment costs relate to weight and size, not to value. Small,
high-value crankshafts incur lower heat treatment costs than large,
low-value crankshafts.
In summary, since we find UEF's fixed cost allocation methodology
in this review to be accurate and consistent with the methodology
verified and accepted in the previous review, we have continued to
accept it for this review.
Comment 3: KGC argues that the Department abused its discretion by
declining to initiate a below-cost investigation based on KGC's
allegation that reasonable grounds existed to believe or suspect that
UEF had engaged in sales below cost in its home market during the POR.
According to KGC, the Department's conclusion that KGC's allegation was
unrepresentative of the crankshaft models sold by UEF in its home
market is inconsistent with the Act, which requires only that there
exist reasonable grounds to believe or suspect that sales below cost
have been made in the home market. Moreover, KGC argues that the
Department's policy for initiating a below-cost investigation of home
market sales requires only that the examples used in an allegation be
representative of the broader range of foreign models which may be used
to determine FMV, not of the home market sales in general. KGC argues
that its allegation was representative of the former in that the only
home market comparators used for price-to-price comparisons in this
review were subjects of KGC's below-cost allegations. KGC concludes
that use of these models for comparison purposes improperly skews the
review results and that the Department should rectify this by using CV
for these comparisons.
[[Page 54615]]
In rebuttal, UEF contends that the Department has broad discretion
in determining whether to begin a COP investigation and that the
Department properly declined to initiate a below-cost investigation of
UEF's home market sales in this case.
Department's Position: We agree with the respondent. In general,
the Department will initiate a cost investigation whenever it has
reasonable grounds to believe or suspect that sales in the HM or third
country, if appropriate, have been made at prices below the COP. 19
U.S.C. 1677b(b). An allegation by petitioner of sales below cost will
be deemed to have provided reasonable grounds if: (1) a reasonable
methodology is used in the calculation of the COP including the use of
respondent's data if available or, if not available, the petitioner's
own data adjusted for any known differences; (2) using this
methodology, sales are shown to be made at prices below COP; and (3)
the sales allegedly made at prices below COP are representative of a
broader range of models that may be used as a basis for foreign market
value (FMV) (see Import Administration Policy Bulletin Number 94.1 of
March 25, 1994 (PB 94.1)).
UEF sold both machined and unmachined crankshafts in the U.S. and
HM during the POR. Accordingly, both types of crankshaft were subject
to review in this case. As petitioners note, however, the Department
does not match machined crankshafts to unmachined crankshafts, or vice-
versa. Therefore, only HM sales of machined crankshafts can be compared
to U.S. sales of machined crankshafts.
Thus, for a COP allegation to be representative it must address
both machined and unmachined crankshafts. If it does not, then the
Department will not initiate a COP inquiry, unless the allegation is
model-specific. As the Department explained in its policy bulletin,
``[i]f the allegation examples are not representative, then we would
not have reasonable grounds to conclude other models might be sold
below cost, and ought not to initiate the inquiry, unless the
allegation specifically requests a cost investigation of specific
models.'' See PB 94.1 at 3 (emphasis added).
In this case, KGC's COP allegation neither contained data for
machined crankshafts, nor explained how the unmachined models it did
contain data for were representative of machined crankshafts. Moreover,
KGC did not request a cost investigation of specific models, although
it could have done so (as PB 94.1 suggests). Similarly, KGC did not
request that the Department's cost investigation be limited to
unmachined crankshafts. Rather, KGC requested ``a COP investigation
that covers all crankshaft models sold by UEF in its home market, at
least to the extent that those home market models may potentially be
considered as matches for the U.S. sales that are the subject of this
review.'' See Feb. 10, 1995 COP allegation at 14 (emphasis in
original). Because UEF sold both machined and unmachined crankshafts in
the U.S. and HM during the POR, both types could have been potential
matches for UEF's U.S. sales. Thus, KGC's request, by its plain terms,
applied to both types.
KGC's allegation, which only contained data for unmachined
crankshafts, was not representative of the HM database as a whole.
Therefore, it did not provide reasonable grounds for the Department to
believe or suspect that HM sales of machined and unmachined crankshafts
had been made at prices below the COP. Accordingly, we did not initiate
a COP investigation in this review.
Issues Raised by UEF
Comment 4: UEF claims that it made a clerical error by reporting a
shipment of crankshafts using the wrong model number. UEF contends that
when the first shipment of a new replacement model was made, its
computer system was not set up to recognize the new model number.
Therefore, when the shipment data for the new model entered the
computer system, it was erroneously recorded under the model number of
the crankshaft it replaced. UEF contends that information on the record
verifies that the shipment reported is in fact a shipment of the new
model number and submitted additional documentation to support its
claim. UEF requests that the Department correct this clerical error for
the final results.
KGC argues that UEF does not provide sufficient documentation to
support its claim that the alleged error is clerical. Petitioner argues
that the documentation provided by respondent contains handwritten
notes and the Department has no way to verify when those notes were
written. KGC also argues that since the payment date for the shipment
in question approximates the payment dates for other shipments of the
old model number, the record suggests that it was a shipment of the old
model rather than of the new replacement model. KGC further argues that
because there were at least five other shipments of the old model after
the shipment in question, the record again suggests that it was a
shipment of the old model rather than of the new replacement model.
Department's Position: We agree with respondent. In the final
results on certain fresh cut flowers from Ecuador, we established our
policy for correcting clerical errors of respondents. See Certain Fresh
Cut Flowers From Ecuador: Final Results of Antidumping Duty
Administrative Review, 61 FR 37044, 37047 (July 16, 1996) (Ecuadorian
Flowers). As stated in Ecuadorian Flowers, we will accept clerical
errors under the following conditions: (1) the error in question must
be demonstrated to be a clerical error, not a methodological error, an
error in judgment, or a substantive error; (2) the Department must be
satisfied that the corrective documentation provided in support of the
clerical error allegation is reliable; (3) the respondent must have
availed itself of the earliest reasonable opportunity to correct the
error; (4) the clerical error allegation, and any corrective
documentation, must be submitted to the Department no later than the
due date for the respondent's administrative case brief; (5) the
clerical error must not entail a substantial revision of the response;
and (6) the respondent's corrective documentation must not contradict
information previously determined to be accurate at verification. We
reviewed UEF's alleged clerical error and evaluated it using the above
six criteria from Ecuadorian Flowers with the following results: (1)
Upon examination of UEF's data, we find that the mixup in model numbers
was not an error in method, judgment, or substance, since UEF's
computer system was not set up to recognize the replacement (new) model
number at the time the data for the first shipment of the new model was
entered into its computer system. This resulted in the first shipment
of the new model being recorded under the old model number. (2)
Although the invoice for this shipment indicates that the new customer
part number and new model number were entered into the system under the
old customer part and UEF model numbers, the invoice contains
information, e.g., the cast number, which ties to the cast record. The
cast record (which records the production data for the batch of the
steel alloy used to produce the new replacement model) corresponds with
the cast number on the invoice as well as the new model number. In
addition, a letter from UEF's customer, included in UEF's original
submission, stated that UEF was authorized to produce the new model
starting with the next scheduled shipment. The letter was dated October
[[Page 54616]]
27, 1993, which was two weeks before the date on the cast record, and
four weeks before the shipment date on the invoice for the first
shipment of the new model. The letter referenced the part and model
numbers and the steel alloy to be used to produce the new model.
Information on the record indicates that this alloy would not have been
used for making the old crankshaft model. The payment date for the
shipment corresponds with payment dates for other shipments of the new
model. We find this documentation to be supportive and reliable. (3)
and (4) The respondent notified the Department and submitted corrective
documentation no later than the due date for its case brief. (5)
Correcting the alleged error does not entail a substantial revision of
the response. (6) Since we did not conduct a verification, the
information does not contradict verified information. Therefore, we
have made this correction for our final results of review.
We disagree with the petitioner that UEF has not substantiated its
clerical error claim. The fact that the shipment in question occurred
four weeks before the next shipment of that model indicates only that
it was the first shipment of the new model. Similarly, KGC's
observation that there were five shipments of the old model after the
first shipment of the new model suggests that UEF was shipping the
remaining balance of the orders for the old model. Significantly, the
October 27, 1993 letter did not instruct UEF to cease production of the
old model, only that it was authorized to begin production of the new
model. Moreover, petitioner's observation that the payment date for the
shipment in question corresponds with the payment date for the old
models does not defeat UEF's claim, because there is no evidence
suggesting that these old models had been phased out of production.
Finally, the last payment for the old model took place approximately
three weeks before the payment date for the shipment in question.
Comment 5: UEF alleges that, as a result of a data input error, it
reported an incorrect value for imputed credit. KGC does not contest
UEF's assertion.
Department's Position: We agree with the respondent. UEF's data
input error was clerical, not methodological, and its questionnaire
response supports its clerical error claim. Therefore, we have made
this change for our final results of review.
Comment 6: UEF contends that it made a clerical error in
calculating the cost of manufacturing (COM) for one of its models.
Instead of actual number of units produced from a die, UEF argues that
it used the standard number of units produced from a die to calculate
the allocated, per-unit die cost for making this model. Because UEF
planned to terminate production of this particular model during the
POR, it produced substantially more than the standard number of units
from the die. Respondent contends that the use of actual rather than
the standard cost for computing COM in this situation would be in
accordance with the Department's preference.
KGC argues that respondent's request is not clerical but
methodological. KGC also argues that UEF does not provide documentary
evidence to support its claim.
Department's Position: We agree with petitioner. UEF has not met
either criterion one or two of our established policy regarding the
correction of clerical errors. First, this is a substantive allegation
that is based on information that was not submitted until after the
Department's preliminary determination. Second, the respondent has
provided no documentation to support its allegation. Therefore, we have
not made this change for our final results of review.
Final Results of Review
As a result of our review, we determine that the following
weighted-average margin exists for the period September 1, 1993 through
August 31, 1994:
------------------------------------------------------------------------
Margin
Producer/exporter (percent)
------------------------------------------------------------------------
UEF........................................................ 0.48
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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 percentage 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 the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date of the
final results of this administrative review, as provided for by section
751(a)(1) of the Tariff Act: (1) the cash deposit rate for the reviewed
company will be zero because the margin for this company is de minimis,
i.e., less than 0.5 percent); (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 LTFV 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 6.55 percent, the ``all others'' rate from 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 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 return or destruction of proprietary information
disclosed under APO in accordance with 19 CFR 353.34(d). Failure to
comply is a violation of the APO.
This administrative review and notice is in accordance with section
751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and section 353.22
of the Department's regulations (19 CFR 353.22(c)(5)).
Dated: October 11, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-26834 Filed 10-18-96; 8:45 am]
BILLING CODE 3510-DS-P