[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
------------------------------------------------------------------------

    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