[Federal Register Volume 61, Number 205 (Tuesday, October 22, 1996)]
[Notices]
[Pages 54767-54773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27056]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-557-805]


Notice of Final Results of Antidumping Duty Administrative 
Review: Extruded Rubber Thread From Malaysia

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

SUMMARY: On May 20, 1996, the Department of Commerce published the 
preliminary results of its administrative review of the antidumping 
duty order on extruded rubber thread from Malaysia. The review covers 
shipments of this merchandise to the United States during the period 
April 2, 1992, through September 30, 1993.
    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 22, 1996.

FOR FURTHER INFORMATION CONTACT: Cameron Werker or Shawn Thompson, 
Office of Antidumping Investigations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone, (202) 482-3874 and (202) 482-1776, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On May 20, 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 Extruded Rubber 
Thread from Malaysia (61 FR 25190). The Department has now completed 
that administrative review in accordance with Sec. 751 of the Tariff 
Act of 1930, as amended (the Act).

Scope of the Review

    The product covered by this review is extruded rubber thread. 
Extruded rubber thread is defined as vulcanized rubber thread obtained 
by extrusion of stable or concentrated natural rubber latex of any 
cross sectional shape, measuring from 0.18 mm, which is 0.007 inch or 
140 gauge, to 1.42 mm, which is 0.056 inch or 18 gauge, in diameter. 
Extruded rubber thread is currently classified under subheading 
4007.00.00 of the Harmonized Tariff Schedule of the United States 
(HTSUS). The HTSUS subheadings are provided for convenience and customs 
purposes. Our written description of the scope of this review is 
dispositive.
    This review covers the following producers/exporters of extruded 
rubber thread: Heveafil Sdn. Bhd. (``Heveafil'') and Rubberflex Sdn. 
Bhd. (``Rubberflex''). The period of review (POR) is April 2, 1992, to 
September 30, 1993.

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.

Such or Similar Merchandise Comparisons

    In determining similar merchandise comparisons, in accordance with 
Section 771(16) of the Act, we considered the following physical 
characteristics, which appear in order of importance: (1) Quality 
(i.e., first vs. second); (2) size; (3) finish; (4) color; (5) special 
qualities; (6) uniformity; (7) elongation; (8) tensile strength; and 
(9) modulus.

Fair Value Comparisons

    To determine whether sales of extruded rubber thread from Malaysia 
to the United States were made at less than fair value, we compared the 
United States price (USP) to the foreign market value (FMV) for 
Rubberflex and Heveafil, as specified in the ``United States Price'' 
and ``Foreign Market Value'' sections of this notice.
    For both respondents, we disregarded sales to the United States and 
third countries which were written off as bad debt because bad debt was 
accounted for in respondents' reported indirect selling expenses.

United States Price

    For sales by both respondents, we based USP on purchase price, in 
accordance with Section 772(b) of the Act, when the subject merchandise 
was sold to unrelated purchasers in the United States prior to 
importation and when the exporter's sales price (ESP) methodology of 
Sec. 772(c) of the Act was not otherwise indicated. In addition, where 
sales to the first unrelated purchaser took place after importation 
into the United States, we based USP on ESP, in accordance with 
Sec. 772(c) of the Act.

A. Heveafil

    We removed all sales from the sales database with entry dates after 
the POR. We also eliminated certain transactions that we verified were 
not subject to the antidumping duty order. Specifically, these 
transactions were sales to a U.S. customer that were shipped to Hong 
Kong for further manufacturing into non-subject merchandise (see page 7 
and exhibit 5 of the Malaysian sales verification report, dated August 
30, 1995).
    We based purchase price on packed, CIF prices to the first 
unrelated purchaser in the United States. We revised Heveafil's data 
based on our verification findings. We made deductions from USP, where 
appropriate, for rebates. In addition, where appropriate, we made 
deductions for foreign inland freight, foreign brokerage and handling, 
ocean freight, marine insurance, U.S. customs duty, harbor maintenance 
and merchandise processing fees, and U.S. brokerage and handling 
expenses, in accordance with section 772(d)(2) of the Act.
    At verification, we found that Heveafil did not report certain 
purchase price sales of extruded rubber thread which entered the United 
States during the POR. Because we specifically instructed Heveafil to 
report all entries into the United States during the POR

[[Page 54768]]

as well as all sales made during the POR, we based the margin for these 
unreported sales on the best information otherwise available (BIA) in 
accordance with section 776(c) of the Act. As BIA, we applied the 
weighted-average margin found in the less than fair value (LTFV) 
investigation, because it is the highest rate ever determined for 
Heveafil. 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) (AFBs)).
    For sales made from the inventory of the U.S. branch office, we 
based USP on ESP, in accordance with section 772(c) of the Act. In 
addition, we reclassified certain purchase price sales as ESP sales 
because we verified that the sales were canceled by the original 
purchaser after shipment and resold after importation into the United 
States.
    We calculated ESP based on packed, delivered prices to unrelated 
customers in the United States. We revised the reported data based on 
our findings at verification. We made deductions, where appropriate, 
for rebates. We also made deductions for foreign inland freight, 
foreign brokerage and handling, ocean freight, marine insurance, U.S. 
inland freight, U.S. brokerage and handling, U.S. customs duty, harbor 
maintenance and merchandise processing fees, and inspection charges. In 
accordance with section 772(e)(2) of the Act, we made additional 
deductions, where appropriate, for credit and indirect selling 
expenses.

B. Rubberflex

    We based purchase price on packed, CIF prices to the first 
unrelated purchaser in the United States. We made deductions from USP, 
where appropriate, for foreign inland freight, foreign brokerage and 
handling, containerization expenses, ocean freight, marine insurance, 
U.S. customs duties, harbor maintenance and merchandise processing 
fees, and U.S. inland freight expenses, in accordance with section 
772(d)(2) of the Act. Rubberflex did not report certain movement 
charges, although the company reported that it incurred them on all 
purchase price transactions. Accordingly, we based the amount of the 
unspecified expenses on BIA. As BIA, we used the highest amount 
reported in the purchase price sales listing for each specific movement 
charge (see, e.g., Chrome-Plated Lug Nuts From the People's Republic of 
China; Final Results of Antidumping Administrative Review, 60 FR 48687 
(September 20, 1995) and AFBs). We disregarded a rebate which was 
erroneously reported for one purchase price sale, because Rubberflex 
stated in its questionnaire response that the company did not grant any 
U.S. rebates during the POR.
    For sales made from the inventory of the U.S. subsidiary, we based 
USP on ESP, in accordance with section 772(c) of the Act. We calculated 
ESP based on packed, delivered prices to unrelated customers in the 
United States. We made deductions, where appropriate, for foreign 
inland freight, foreign brokerage and handling, containerization 
expenses, ocean freight, marine insurance, U.S. customs duty, harbor 
maintenance and merchandise processing fees, and U.S. inland freight. 
In accordance with section 772(e)(2) of the Act, we made additional 
deductions, where appropriate, for credit and indirect selling 
expenses.
    Rubberflex did not report complete data for certain ESP sales. 
Accordingly, we used BIA to determine these data, as follows. Where 
price and/or credit expense data was missing for sales of second 
quality merchandise, we used the average price and expense data 
reported for other second quality sales. Where the date of sale was 
missing and/or the control number was missing, we applied the weighted-
average margin found in the LTFV investigation, because it is the 
highest rate ever determined for Rubberflex. This is consistent with 
the Department's general application of partial BIA (see, e.g., AFBs).

Foreign Market Value

    In order to determine whether the home market was viable during the 
POR, we compared the volume of each of the respondent's home market 
sales to the volume of its third country sales, in accordance with 
section 773(a)(1)(B) of the Act and 19 CFR 353.48. Based on this 
comparison, we determined that neither respondent had a viable home 
market during the POR. Consequently, we based FMV on third country 
sales.
    We selected the appropriate third country markets for Heveafil and 
Rubberflex. Specifically, we chose, as the appropriate third country 
markets, Italy for Heveafil and Hong Kong for Rubberflex, in accordance 
with 19 CFR 353.49(b).
    Because the Department disregarded third country sales below the 
cost of production (COP) for both Heveafil and Rubberflex in the 
original investigation (see Final Determination of Sales at Less Than 
Fair Value: Extruded Rubber Thread from Malaysia, 57 FR 38465 (August 
25, 1992)), in accordance with our standard practice, there were 
reasonable grounds to believe or suspect that both Heveafil and 
Rubberflex had made third country sales at prices below COP in this 
review.
    In accordance with section 773(b) of the Act, and longstanding 
administrative practice (see, e.g., Final Determination of Sales at 
Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip 
from Korea, 56 FR 16306 (April 22, 1991) and Final Results of 
Administrative Review: Mechanical Transfer Presses from Japan, 59 FR 
9958 (March 2, 1994)), if over ninety percent of a respondent's sales 
of a given model were at prices above the COP, we did not disregard any 
below-cost sales because we determined that the below-cost sales were 
not made in substantial quantities. Where we found between ten and 
ninety percent of respondent's sales of a given product were at prices 
below the COP, and the below cost sales were made over an extended 
period of time, we disregarded only the below-cost sales. Where we 
found that more than ninety percent of a respondent's sales were at 
prices below the COP, and the sales were made over an extended period 
of time, we disregarded all sales for that product and calculated FMV 
based on constructed value (CV), in accordance with section 773(e) of 
the Act.
    In order to determine whether third country prices were above the 
COP, we calculated the COP for each model based on the sum of the 
respondent's cost of materials, labor, other fabrication costs, and 
general expenses and packing. We calculated CV for each model based on 
the sum of the respondent's cost of manufacture (COM), plus general 
expenses, profit and U.S. packing. For general expenses, which includes 
selling and financial expenses (SG&A), we used the greater of the 
reported general expenses or the statutory minimum of ten percent of 
the COM. For profit, we used the greater of the weighted-average third 
country profit during the POR or the statutory minimum of eight percent 
of the COM and SG&A, in accordance with section 773(e)(B) of the Act.
    For Heveafil, we made the following adjustments to the COP and CV 
data used in the preliminary results. We recomputed Heveafil's general 
and administrative (G&A) and interest expenses by adjusting the cost of 
goods sold figure used as the denominator for clerical errors (see 
comment 5 below). For further discussion of these

[[Page 54769]]

adjustments, see also the cost calculation memorandum from Stan Bowen, 
accountant in the Office of Accounting, to Christian Marsh, Director of 
the Office of Accounting, dated August 22, 1996.
    For Rubberflex, we made the following adjustments to the reported 
COP and CV data. We recalculated G&A and interest expenses using data 
contained in Rubberflex's audited financial statements. For further 
discussion of these adjustments, see the cost calculation memorandum 
from Elizabeth Lofgren, accountant in the Office of Accounting, to 
Christian Marsh, Director of the Office of Accounting, dated April 30, 
1996.

A. Heveafil

    Where FMV was based on third country sales, as in the original 
investigation, we based FMV on CIF prices to unrelated Italian 
customers in comparable channels of trade as the U.S. customer. 
Specifically, FMV was based on direct sales from Malaysia to Italy for 
purchase price sales comparisons, and on sales from the inventory of 
Heveafil's Italian branch office for ESP sales comparisons, in 
accordance with section 773(a)(1)(B) of the Act. We made adjustments to 
Heveafil's reported sales data based on our findings at verification. 
We made no adjustment to FMV for credits issued by the Italian branch 
office based on our finding at verification that they were incorrectly 
reported (see the Italian Branch's sales verification report, dated 
August 30, 1995).
    For third country price-to-purchase price comparisons, we made 
deductions, where appropriate, for rebates. We also deducted post-sale 
home market movement charges from FMV under the circumstance of sale 
provision of section 773(a)(4)(B) of the Act and 19 CFR 353.56. This 
adjustment included Malaysian foreign inland freight, brokerage and 
handling, ocean freight, marine insurance, Italian brokerage and 
handling, and Italian inland freight to Heveafil's unrelated customers 
in Italy, where appropriate. Pursuant to 19 CFR 353.56(a)(2), we made 
circumstance of sale adjustments, where appropriate, for differences in 
credit expenses.
    For third country price-to-ESP comparisons, where appropriate, we 
made deductions for rebates and credit expenses. We deducted the third 
country market indirect selling expenses, including inventory carrying 
costs, pre-sale freight (i.e., foreign inland freight, brokerage and 
handling, ocean freight, marine insurance, Italian brokerage and 
handling, and Italian freight to Heveafil's warehouse) and other 
indirect selling expenses, up to the amount of indirect selling 
expenses incurred on U.S. sales, in accordance with 19 CFR 
353.56(b)(2).
    For all price-to-price comparisons, we deducted third country 
packing costs and added U.S. packing costs, in accordance with 
section773(a)(1) of the Act. At verification, we found that Heveafil 
had incorrectly reported its third country and U.S. packing material 
expenses. Therefore, we based the adjustment for packing materials on 
BIA. As BIA, we used the lowest packing material expense reported for 
any Italian sale and the highest packing expense reported for any U.S. 
sale (see Concurrence Memorandum to Barbara R. Stafford from Team, 
dated April 30, 1996). In addition, where appropriate, we made 
adjustments to FMV to account for differences in physical 
characteristics of the merchandise, in accordance with section 
773(a)(4)(C) of the Act and 19 CFR 353.57.
    For CV-to-purchase price comparisons, we made circumstance of sale 
adjustments, where appropriate, for credit expenses in accordance with 
section 773(a)(4)(B) and 19 CFR 353.56.
    For CV-to-ESP comparisons, we made deductions, where appropriate, 
for credit expenses. We also deducted the third country market indirect 
selling expenses, including inventory carrying costs and other indirect 
selling expenses, up to the amount of indirect selling expenses 
incurred on U.S. sales, in accordance with 19 CFR 353.56(b)(2).
    For all CV-to-price comparisons, we added U.S. packing expenses as 
specified above, in accordance with section 773(e)(1)(C) of the Act.

B. Rubberflex

    Where FMV was based on third country sales, as in the original 
investigation, we based FMV on CIF prices to unrelated Hong Kong 
customers in comparable channels of trade as the U.S. customer. 
Specifically, FMV was based on direct sales from Malaysia to Hong Kong 
for purchase price sales comparisons, and on sales from the inventory 
of Rubberflex's Hong Kong subsidiary for ESP sales comparisons.
    For third country price-to-purchase price comparisons, we made 
deductions, where appropriate, for rebates. We also deducted post-sale 
home market movement charges from FMV under the circumstance of sale 
provision of 19 CFR 353.56. This adjustment included Malaysian foreign 
inland freight, brokerage and handling charges, containerization, ocean 
freight, and marine insurance. Pursuant to section 773(a)(4)(B) of the 
Act and 19 CFR 353.56(a)(2), we also made circumstance of sale 
adjustments, where appropriate, for differences in credit expenses.
    For third country price-to-ESP comparisons, we made deductions for 
rebates, where appropriate. We also made deductions for credit 
expenses.
    We deducted the third country market indirect selling expenses, 
including inventory carrying costs, bank charges, pre-sale freight 
expenses (i.e., foreign inland freight, brokerage and handling charges, 
containerization, ocean freight, marine insurance, Hong Kong duty and 
brokerage expenses, and freight from the port in Hong Kong to 
Rubberflex's warehouse), and other indirect selling expenses, up to the 
amount of indirect selling expenses incurred on U.S. sales, in 
accordance with 19 CFR 353.56(b)(2).
    Regarding Hong Kong duties, Rubberflex reported a combined amount 
for document declaration fees, terminal handling charges, and bank 
charges. Because the Department's practice is to treat bank charges as 
a selling expense (rather than a movement charge), we reclassified bank 
charges as selling expenses and recalculated Hong Kong duties 
accordingly (see, e.g., Final Determination of Sales at Less Than Fair 
Value; Oil Country Tubular Goods from Korea, 60 FR 33561, 33562 (June 
28, 1995) and Final Determination of Sales at Less Than Fair Value; 
Dynamic Random Access Memory Semiconductors of One Megabit and Above 
from Korea, 58 FR 15467, 15467-70 (March 23, 1993)).
    For all price-to-price comparisons, we deducted third country 
packing costs and added U.S. packing costs, in accordance with section 
773(a)(1) of the Act. In addition, where appropriate, we made 
adjustments to FMV to account for differences in physical 
characteristics of the merchandise, in accordance with section 
773(a)(4)(C) of the Act and 19 CFR 353.57.
    For CV-to-purchase price comparisons, we made circumstance of sale 
adjustments, where appropriate, for credit expenses, in accordance with 
section 773(a)(4)(B) of the Act and 19 CFR 353.56.
    For CV-to-ESP comparisons, we made deductions, where appropriate, 
for credit expenses. We also deducted third country market indirect 
selling expenses, including inventory carrying costs, bank charges, and 
other indirect selling expenses, up to the amount of indirect selling 
expenses incurred on U.S. sales, in accordance with 19 CFR 
353.56(b)(2).
    For all CV-to-price comparisons, we added U.S. packing expenses, in

[[Page 54770]]

accordance with section 773(e)(1)(C) of the Act.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments from both petitioner and 
respondents. We received rebuttal comments from Rubberflex only.

Comment 1: Treatment of Countervailing Duties

    Respondents assert that, where FMV is based on CV, the Department 
should adjust USP for certain countervailing duties paid, in accordance 
with section 772(d)(1)(D) of the Act. Specifically, respondents assert 
that the Department should increase USP by the amount of the 
countervailing duties attributable to all income tax holidays and tax 
abatement programs.
    According to respondents, the Department's assumption that export 
subsidies are reflected in a company's production costs is not correct 
when the benefit conferred is in the form of income tax holidays or 
abatements, because income taxes are not an element of COP. Therefore, 
respondents maintain, it is impossible for any benefit relating to 
income taxes to be reflected in either COP or CV, although these 
benefits are included in USP.

DOC Position

    In this case, each of the countervailable programs identified by 
respondents (i.e., Pioneer Status, Abatement of Income Tax Based on the 
Ratio of Export Sales to Total Sales, Abatement of Five Percent of the 
Value of Indigenous Malaysian Materials Used in Exports, Industrial 
Building Allowance, and Double Deduction for Export Promotion Expenses) 
were classified as export subsidies in the Final Affirmative 
Countervailing Duty Determination and Countervailing Duty Order; 
Extruded Rubber Thread from Malaysia, 57 FR 38472 (August 25, 1992). 
However, we disagree with respondents that U.S. price should be 
increased by the amount of the countervailing duties imposed in 
connection with these subsidies in the first and second administrative 
reviews of the countervailing duty order on extruded rubber thread from 
Malaysia.
    In accordance with section 772(d)(1)(D) of the Act, we normally 
increase U.S. price by ``the amount of any countervailing duty imposed 
on the [subject] merchandise to offset an export subsidy.'' The purpose 
of this adjustment is to avoid double-counting when compensating for 
the same situation of dumping or export subsidization (i.e., once in 
the form of antidumping duties and once in the form of countervailing 
duties). For example, we assume that U.S. price reflects the benefit of 
export subsidies (i.e., it is lower than it would be were there no 
subsidies). However, FMV normally does not reflect the same benefit, 
because FMV normally is not based on an export price, but instead on 
the sales price in the home market. Under this scenario, all other 
factors being equal, comparison of U.S. price to FMV would yield a 
dumping margin equal to the export subsidy. Therefore, if no upward 
adjustment were made to U.S. price to offset the subsidy, the benefit 
from the subsidy would be double-counted.
    On the other hand, we do not increase U.S. price under 
Sec. 772(d)(1)(D) of the Act when, like the U.S. price, the foreign 
market value already reflects the benefit of the export subsidies. See, 
e.g., Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Carbon Steel Butt-Weld Pipe Fittings from India, 60 FR 10545, 
10550 (February 27, 1996). As in the Antidumping Duty Order and 
Amendment to Final Determination of Sales at Less Than Fair Value: 
Extruded Rubber Thread from Malaysia, 57 FR 46150 (October 7, 1992), 
foreign market value for both Rubberflex and Heveafil was based on 
third country sales and CV. With respect to exports to third country 
markets, respondents receive the same benefits from export subsidies as 
with exports to the United States. Therefore, the benefits from the 
export subsidies were reflected in both the U.S. price and the foreign 
market value and no adjustment was made to U.S. price. For those sales 
where CV was used as the basis for foreign market value, we used third 
country SG&A expenses, as well as third country profit in determining 
CV for both companies. Since third country SG&A and profit reflect the 
benefits from the export subsidies, we have similarly made no 
adjustment to U.S. price for the benefits from export subsidies.

Comment 2: Assessment of Antidumping Duties

    Respondents assert that, in accordance with section 737(a) of the 
Act, the Department should instruct Customs to ``cap'' their 
antidumping duty liability for entries made between the time of the 
preliminary determination in the less-than-fair-value investigation and 
the final injury determination by the International Trade Commission 
(ITC) at the amount collected as security. Respondents assert that the 
cap should apply regardless of whether security was provided in the 
form of cash or a bond. In support of this position, respondents rely 
on Daewoo Electronics Co., Ltd. v. United States, 6 F.3d 1511 (Fed. 
Cir. 1993).

DOC Position

    We agree with respondents that Heveafil's and Rubberflex's 
antidumping duty liability for entries made between the Department's 
preliminary determination and the ITC's final injury determination in 
this case should be ``capped'' at the amount collected as security for 
antidumping duties, and the Department will instruct the U.S. Customs 
Service accordingly. Section 737(a)(1) of the Act [19 U.S.C. 
1673f(a)(1)] provides:

    (a) Deposit of Estimated Antidumping Duties Under 
Sec. 733(d)(2).--If the amount of a cash deposit collected as 
security for an estimated antidumping duty under section 733(d)(2) 
is different from the amount of the antidumping duty determined 
under an antidumping duty order issued under section 736, then the 
difference for entries of merchandise entered, or withdrawn from 
warehouse, for consumption before notice of the affirmative 
determination of the Commission under section 735(b) is published 
shall be--
    (1) disregarded, to the extent that the cash deposit collected 
is lower than the duty under the order
* * * * *
    Section 737(a)(1) of the Act, known as the ``provisional measures 
deposit cap,'' operates to cap (i.e., limit) the assessment rate at the 
amount provided as security for estimated antidumping duty liability at 
the time the subject merchandise is entered into U.S. commerce. See, 
e.g., AOC International, Inc. v. United States, 721 F. Supp. 314, 322-
323 (CIT 1989) (``AOC International''), Daewoo Electronics v. United 
States, 6 F.3d 1511, 1520-22 (Fed. Cir. 1993) (``Daewoo''), and 
Torrington Co. v. United States, 903 F. Supp. 79, 88 (CIT 1995).
    Moreover, the Department's regulation implementing section 
737(a)(1) of the Act makes clear that the provisional measures deposit 
cap applies whether the security for antidumping duty liability is 
provided by cash deposit or bond. The relevant regulation, 19 CFR 
section 353.23, provides in relevant part:

    This section applies to the merchandise entered, or withdrawn 
from warehouse, for consumption before the date of publication of 
the Commission's notice of affirmative final determination. If the 
cash deposit or bond required under the Secretary's affirmative 
preliminary determination or affirmative final determination is 
different from the dumping margin * * *, the Secretary will instruct 
the Customs Service to disregard the

[[Page 54771]]

difference to the extent that the cash deposit or bond is less than 
the dumping margin * * *. (emphasis supplied)

    Thus, the provisional measures deposit cap that limits the amount 
of assessment at the amount collected as security on the subject 
merchandise as entered before the ITC's final injury determination 
applies whether that security is provided in the form of a cash deposit 
or a bond. The courts have repeatedly upheld the Department's practice 
in this regard. See, e.g., Daewoo, 6 F.3d at 1521 and AOC 
International, 721 F. Supp at 723.
    In the instant case, there are four provisional measures deposit 
caps. From the period of April 2, 1992 to April 28, 1992, the amount of 
security required for both respondents' entries was zero. See 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Extruded Rubber Thread From 
Malaysia, 64 FR 12287, 12290 (April 2, 1992) (``Preliminary 
Determination''). From the period of April 28, 1992 to August 25, 1992, 
the amount of security required was 2.62 percent and 2.22 percent for 
Heveafil and Rubberflex, respectively. Id. From the period of August 
25, 1992 to October 7, 1992, the amount of security required was 10.68 
percent and 22.00 percent for Heveafil and Rubberflex, respectively. 
See Final Determination of Sales at Less Than Fair Value: Extruded 
Rubber Thread from Malaysia 57 FR 38465 (August 25, 1992). From the 
period of October 7, 1992 to October 15, 1992 (i.e., the date of 
publication of the International Trade Commission's final 
determination), the amount of security required was 10.68 percent and 
20.38 percent for Heveafil and Rubberflex, respectively. See Final 
Determination: Extruded Rubber Thread from Malaysia 57 FR 47351 
(October 15, 1992).
    Accordingly, we will instruct the U.S. Customs Service to cap 
respondents' dumping liability on the entries in question at the amount 
collected as security.

Comment 3: Assessment of Antidumping Duties More Than 120 Days After 
the Department's Preliminary Determination and Before Publication of 
the ITC's Final Injury Determination

    Relying on Article 10.3 of the Antidumping Code of the General 
Agreement on Tariffs and Trade (GATT), respondents assert that the 
Department does not have the authority in an antidumping investigation 
to impose provisional measures for more than 120 days after the 
Department's preliminary determination and, therefore, does not have 
the authority to assess antidumping duties on entries made on August 1, 
1992, through September 26, 1992. Accordingly, respondents argue that 
these entries should be liquidated without regard to antidumping 
duties.

DOC Position

    We disagree with respondents that no provisional measures could be 
imposed, and no dumping duties can be assessed, on entries made during 
the period August 1, 1992, through September 26, 1992.

    In the Preliminary Determination, we stated:
    ``Effective April 28, 1992, however, the Department will 
terminate the suspension of liquidation and the deposit of estimated 
countervailing duties in the countervailing duty investigation, 
because, in accordance with Sec. 705 of the Act, and article 5, 
paragraph 3 of the Subsidies Code, provisional measures may remain 
in effect no longer than 120 days. Consequently, the adjustment to 
the United States price for countervailing duties imposed will not 
be made for entries made on or after this date. Therefore, by virtue 
of this antidumping determination, on April 28, 1992, we will also 
direct the U.S. Customs Service to suspend liquidation of all 
entries of extruded rubber thread from Malaysia, as defined in the 
``Scope of the Investigation'' section of this notice, that are 
entered, or withdrawn from warehouse, for consumption on or after 
April 28, 1992. In addition, the U.S. Customs Service shall require 
a cash deposit or posting of a bond on these entries equal to the 
estimated preliminary dumping margins shown above. This suspension 
of liquidation, when imposed, will remain in effect until further 
notice.'' Preliminary Determination, 60 FR at 11290.

Article 10.3 of the GATT Antidumping Code specifically states that the 
imposition of provisional measures for antidumping duty liability 
purposes may extend beyond four months (i.e., 120 days) to six months 
(i.e., 180 days). Article 5.3 of the GATT Subsidies Code (unlike 
Article 10.3 of the GATT Antidumping Code) does not contain a similar 
provision for the extension of provisional measures. Therefore, in a 
countervailing duty case, we do not impose provisional measures beyond 
the 120 days, as stated in the Preliminary Determination. Thus, in the 
Preliminary Determination, the Department did not terminate the 
imposition of provisional measures for antidumping liability purposes 
after 120 days as it did with respect to the imposition of provisional 
measures for countervailing duty liability. Indeed, the Preliminary 
Determination states that ``[t]his [AD] suspension of liquidation * * * 
will remain in effect until further notice.'' Preliminary 
Determination, 60 FR at 11290. The Department's differing treatment of 
provisional measures in the antidumping and countervailing duty cases 
is consistent with our GATT obligations.
    Furthermore, there is no requirement in the statute that there be a 
request for an extension of provisional measures. In fact, it is the 
Department's practice (see, e.g., Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Pasta from Italy, 61 FR 30326 
(June 14, 1996)) to infer a request for the extension of the 
provisional measures period when, as in this case, exporters request an 
extension of the final determination pursuant to Sec. 735(a)(2) of the 
Act. This practice is consistent with our new statute, which expressly 
incorporates the GATT provisions. Therefore, because provisional 
measures for antidumping duty liability purposes were properly imposed 
on entries made beyond the 120 days, the Department will instruct the 
U.S. Customs Service to assess antidumping liability on entries made 
during the period August 1, 1992, through September 26, 1992.

Comment 4: Contemporaneous Product Comparisons

    According to Heveafil, the concordance program used in calculating 
the preliminary results does not limit the sales chosen as the ``most 
similar'' merchandise to U.S. sales to contemporaneous third-country 
sales. Heveafil argues that the Department should revise its product 
concordance programs to ensure that matches are made using only 
contemporaneous sales.

DOC Position

    We agree and have revised our product concordances for Heveafil 
accordingly. Moreover, although this issue was not raised with respect 
to Rubberflex, it also applies to the comparisons selected for this 
respondent. Consequently, we have also revised the product concordances 
for Rubberflex to take contemporaneity into account in selecting the 
most similar merchandise.

Comment 5: Alleged Clerical Errors in the Margin Calculations for 
Heveafil

    Heveafil argues that the Department made the following clerical 
errors in the calculation of its margin for purposes of the preliminary 
results: (1) The Department failed to adjust third country price for 
packing material expenses; (2) The Department deducted from USP the per 
kilogram cost of certain movement expenses, rather than the per pound 
cost; (3) the Department did not include certain sales reclassified as 
ESP sales in its ESP concordance; (4)

[[Page 54772]]

the Department double-counted effluent treatment costs in the 
calculation of COP and CV; and (5) G&A and financial expenses included 
in COP and CV were overstated because Heveafil's cost of sales stated 
on the income statement did not include fixed overhead. Heveafil 
requests that the Department correct these errors for purposes of the 
final results.

DOC Position

    We agree with Heveafil on all items noted above and have made the 
appropriate corrections for purposes of the final results.

Comment 6: Consolidated G&A and Financial Expenses

    Heveafil argues that the Department should not include any costs of 
its holding company, Perbadanan Nasional Berhad (PNB), in calculating 
G&A and financial expenses for purposes of computing COP and CV. 
Heveafil asserts that the Department does not collapse subsidiaries 
with entities which do nothing more than hold stock in the subsidiary. 
In support of this contention, Heveafil cites Silicon Metal from 
Argentina: Final Results of Antidumping Administrative Review (58 FR 
65336, Dec. 14, 1993) (Silicon Metal). According to Heveafil, because 
PNB is merely a holding company, it is not actively involved in running 
Heveafil's business.
    Moreover, regarding G&A, Heveafil contends that any management 
services provided by PNB (e.g., participation on the Board of 
Directors) are paid for by Heveafil and, thus, are already reflected in 
the reported G&A expenses. Finally, Heveafil asserts that any internal 
audits performed by PNB are not for the benefit of Heveafil, but rather 
for PNB's shareholders. Therefore, Heveafil contends that these costs 
are not part of the cost of producing rubber thread.

DOC Position

    We disagree with Heveafil that a portion of PNB's G&A and interest 
expenses should not be allocated to Heveafil. For G&A, it is the 
Department's long-standing practice to require the respondent to report 
not only its own G&A expenses, but also a proportional share of an 
affiliated party's G&A expense incurred on the reporting entity's 
behalf. (See, e.g., Final Determination of Sales at Less than Fair 
Value: Certain Carbon Steel Butt-Weld Pipe Fittings from the United 
Kingdom, (60 FR 10558, 10561, February 27, 1995); Final Determination 
of Sales at Less than Fair Value: Certain Hot-Rolled Carbon Steel Flat 
Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain 
Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-
length Carbon Steel Plate from Canada, (58 FR 37082, 37114, July 9, 
1993); and, Final Determination of Sales at Less Than Fair Value: 
Ferrosilicon from Venezuela, (58 FR 27524, May 10, 1993). Furthermore, 
the transactions that did occur between PNB and Heveafil clearly 
demonstrated that PNB's involvement was more than that of a passive 
investor. For example, PNB accountants performed internal audits on 
Heveafil's accounting records which resulted in changes to Heveafil's 
internal accounting controls and operating procedures. Further, 
Heveafil's reliance on Silicon Metal is misplaced because it is 
contrary to the facts of the instant review. In that determination, the 
Department found that the company in question was privately owned by 
seven Argentine citizens and that no corporate transactions occurred 
between the parties. As for Heveafil's concern that our G&A adjustment 
may double count some reimbursed general expenses (e.g., Board of 
Director fees), we corrected our calculation for the final results to 
avoid double counting the reimbursed G&A expenses.
    It is also the Department's long-standing practice to calculate 
interest expense for COP/CV purposes based on the borrowing costs 
incurred by the consolidated group. (See, e.g., Small Diameter Circular 
Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from 
Italy, (60 FR 31981, 31990, June 19, 1995).) This methodology, which 
has been upheld by the CIT in Camargo Correa Metals, S.A. v. U.S., 17 
CIT 897, Slip Op. 93-163, at 12-13 (CIT 1993), is based on the fact 
that the consolidated group's controlling entity has the power to 
determine the capital structure of each member of the group. In this 
case, the controlling entity has such power because it owns a 
substantial majority of Heveafil.

Comment 7: Inclusion of a Write-Off of Idle Equipment in Heveafil's G&A

    Heveafil argues that the Department inappropriately increased its 
G&A expenses by including an extraordinary loss related to idle plant 
equipment. Heveafil maintains that, while this loss appeared in its 
draft financial statements, it was removed from the final financial 
statements issued by Heveafil's independent auditors. Heveafil further 
maintains that it provided copies of the final audited statements at 
verification, although these copies were not taken as verification 
exhibits. Heveafil notes, however, that the working trial balance 
associated with the final financial statement is included in the record 
of this administrative review as cost verification exhibit three, which 
demonstrates that the assets are still recorded on the books.

DOC Position

    We disagree with Heveafil that the write-off of idle manufacturing 
equipment should not be included in the COP and CV. In 1993, company 
officials deemed this manufacturing equipment worthless. Heveafil's 
write-off is documented in footnote six of Filmax Sendirian Berhad's (a 
subsidiary of Heveafil's) 1993 audited financial statements provided as 
a supplemental section D exhibit. These financial statements are signed 
and dated by the company's independent auditors, they contain signed 
declarations of accuracy by the Chairman and Director of the company, 
and they contain the official dated regulatory seal of the Malaysian 
Commissioner for Oaths. As for Heveafil's concern that the 1993 working 
trial balance taken as cost verification exhibit three shows that it 
still owns these assets, this does not change the fact that this 
manufacturing equipment was considered worthless, unusable, and no 
longer depreciable by company officials during the POR.
    There is nothing unusual about a company's writing off 
manufacturing plants or equipment. Accordingly, we do not consider 
write-offs to be a type of extraordinary expense that we exclude from 
the cost of producing subject merchandise. The Department has in the 
past included similar equipment write-offs in the calculation of COP 
and CV. (See, e.g., Final Determination of Sales at Less Than Fair 
Value: Small Diameter Circular Seamless Carbon and Alloy Steel, 
Standard, Line and Pressure Pipe from Italy, 60 FR 31981, 31990 ( June 
19, 1995); Final Results of Antidumping Duty Administrative Review: 
Certain Cut-To-Length Carbon Steel Plate from Germany, 61 FR 13834, 
13836 (March 28, 1996); and Final Results of Antidumping Duty 
Administrative Review: High-Tenacity Rayon Filament Yarn from Germany, 
59 FR 15897, 15899 (March 28, 1995).)
    Finally, although Heveafil attempted to defer this write-off based 
on the contents of revised 1993 audited financial statements, these 
revised financial statements were properly rejected and returned to the 
respondent because they constituted new factual information that was 
untimely submitted within the meaning of 19 CFR 353.31(a)(3). See 
Letter from Louis Apple, Acting Office Director, Group II,

[[Page 54773]]

Office of AD/CVD Enforcement, to White & Case, dated August 21, 1996.

Comment 8: Alleged Clerical Errors in the Margin Calculations for 
Rubberflex

    Petitioner alleges that the Department made two clerical errors in 
the calculation of Rubberflex's margin for purposes of the preliminary 
results. First, petitioner claims that the Department did not deduct 
certain movement expenses denominated in Hong Kong dollars (e.g., 
warehousing in Hong Kong and Hong Kong import duties) from the net 
price used in the cost test. In addition, petitioner maintains that the 
Department converted CV into pounds by dividing by 2.2046 twice.
    Rubberflex disagrees. Regarding the question of movement expenses, 
Rubberflex notes that (1) it did not incur the types of expenses cited 
by petitioner on its purchase price sales, and (2) the Department 
properly deducted all movement expenses on its ESP sales. Regarding the 
calculation of CV, Rubberflex states that petitioner clearly misread 
the computer programs used in the preliminary results. Specifically, 
Rubberflex notes that petitioner's allegation is based on the computer 
language for the calculation of FMV for price-to-price comparisons, 
rather than the CV calculation language.

DOC Position

    We agree with Rubberflex. Upon review of our computer programs, we 
find that the movement expenses referenced by petitioner were 
appropriately deducted from net price for ESP sales (see lines 1184, 
1186, and 1190 of the computer program created for purposes of the 
preliminary results). Regarding purchase price transactions, we note 
that Rubberflex did not incur the expenses referenced in petitioner's 
brief. Because these expenses did not exist, they were not deducted 
from net price.
    Regarding CV, we also agree with Rubberflex that we properly 
converted the per kilogram costs into pounds (see lines 1979 and 2008 
in the ESP preliminary program and lines 1679 and 1704 in the purchase 
price preliminary program). Accordingly, we have made no changes to the 
movement expense or CV calculations performed for Rubberflex for 
purposes of the final results.

Comment 9: Matching Criteria for Diaper Grade Thread

    Petitioner claims that the Department placed an undue importance on 
the matching criterion of color when matching sales of diaper grade 
thread. Specifically, petitioner maintains that diaper grade thread is 
differentiated from other types of rubber thread by color only. 
Therefore, because Rubberflex's control numbers included a designation 
for grade of thread (i.e., diaper- vs. non-diaper grade), the 
Department counted color twice in its matching methodology.
    Rubberflex maintains that the Department's matching methodology was 
not only appropriate, but it was also based on the characteristics 
identified in the questionnaire. Moreover, Rubberflex asserts that the 
company's differentiation of diaper grade in its control numbers had no 
bearing on the results of the model matching because control numbers 
were not used in determining the most similar merchandise.

DOC Position

    We agree with Rubberflex. All matches involving non-identical 
products were based solely on the model matching criteria identified in 
the questionnaire and not on the control numbers. As such, contrary to 
petitioner's assertion, we made no distinction between diaper and non-
diaper grades when making non-identical comparisons. Because neither 
petitioner nor respondents have contested the matching hierarchy 
established at the beginning of the review, nor has any interested 
party provided valid reasons to depart from this hierarchy, we have 
continued to use it for purposes of the final results.

Final Results of Review

    As a result of our review, we determine that the following margins 
exist for the period April 2, 1992, through September 30, 1993:

------------------------------------------------------------------------
                                                                 Margin 
      Manufacturer/ exporter              Review period        (percent)
------------------------------------------------------------------------
Heveafil.........................  4/2/92-9/30/93............     10.65 
Rubberflex.......................  4/2/92-9/30/93............      1.88 
------------------------------------------------------------------------

    The Department shall determine, and the U.S. 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 U.S. Customs Service.
    Furthermore, the following deposit requirement will be effective 
for all shipments of subject merchandise from Malaysia entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided by 
Sec. 751(a)(1) of the 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 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; and, (4) the cash deposit rate for all other manufacturers 
or exporters will be 15.16 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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: October 16, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-27056 Filed 10-21-96; 8:45 am]
BILLING CODE 3510-DS-P