[Federal Register Volume 61, Number 216 (Wednesday, November 6, 1996)]
[Notices]
[Pages 57384-57387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28555]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-803]


Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, From the People's Republic of China; Preliminary Results and 
Termination in Part of Antidumping Duty Administrative Reviews

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

ACTION: Notice of preliminary results and termination in part of 
antidumping duty administrative reviews.

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SUMMARY: In response to requests by the petitioner and three exporters 
of the subject merchandise, the Department of Commerce (the Department) 
is conducting administrative reviews of the antidumping duty orders on 
heavy forged hand tools, finished or unfinished, with or without 
handles, (HFHTs) from the People's Republic of China (PRC). These 
reviews cover three exporters of subject merchandise to the United 
States and the period February 1, 1995 through January 31, 1996. The 
reviews indicate the existence of dumping margins during the period of 
review.
    We have preliminarily determined that sales have been made below 
normal value (NV). If these preliminary results are adopted in our 
final results, we will instruct the U.S. Customs Service to assess 
antidumping duties on appropriate entries.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit argument are requested to submit with each 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

EFFECTIVE DATE: November 6, 1996.

FOR FURTHER INFORMATION CONTACT: Daniel Singer or Maureen Flannery, AD/
CVD Enforcement, 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 stated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations, as amended by the interim regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

    On February 19, 1991, the Department published in the Federal 
Register (56 FR 6622) the antidumping duty orders on HFHTs from the 
PRC. On February 9, 1996, the Department published in the Federal 
Register (61 FR 4956) a notice of opportunity to request administrative 
reviews of these antidumping duty orders. On February 29, 1996, in 
accordance with 19 CFR 353.22(a), three exporters of the subject 
merchandise to the United States, Fujian Machinery & Equipment Import & 
Export Corporation (FMEC), Shandong Machinery Import & Export 
Corporation (SMC), and Tianjin Machinery Import & Export Corporation 
(TMC), requested that the Department conduct administrative reviews of 
their exports of axes/adzes; bars/wedges; hammers/sledges; and picks/
mattocks to the United States. Also on February 29, 1996, the 
petitioner, Woodings-Verona Tool Works, Inc., requested that the 
Department conduct administrative reviews of FMEC's and SMC's exports 
of axes/adzes; bars/wedges; hammers/sledges; and picks/mattocks.
    We published the notice of initiation of these reviews on March 19, 
1996 (61 FR 11184). The notice of initiation was amended on April 25, 
1996 (61 FR 18378). The Department is conducting these administrative 
reviews in accordance with section 751 of the Act.

Termination in Part of Antidumping Duty Administrative Reviews

    On April 19, 1996, TMC withdrew its request for reviews of the 
orders with respect to bars/wedges and picks/mattocks. This request was 
received within 90 days of publication of the notice of initiation of 
these reviews. We are hereby terminating the reviews of the orders on 
bars/wedges and picks/mattocks with respect to TMC, in accordance with 
section 353.22(a)(5) of our regulations.

Scope of Reviews

    Imports covered by these reviews are shipments of HFHTs from the 
PRC comprising the following classes or kinds of merchandise: (1) 
Hammers and sledges with heads over 1.5 kg (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools and wedges 
(bars/wedges); (3) picks/mattocks; and (4) axes/adzes.
    HFHTs include heads for drilling, hammers, sledges, axes, mauls, 
picks, and mattocks, which may or may not be painted, which may or may 
not be finished, or which may or may not be imported with handles; 
assorted bar products and track tools including wrecking bars, digging 
bars and tampers; and steel wood splitting wedges. HFHTs are 
manufactured through a hot forge operation in which steel is sheared to 
required length, heated to forging temperature, and formed to final 
shape on forging equipment using dies specific to the desired product 
shape and size. Depending on the product, finishing operations may 
include shot-blasting, grinding, polishing and painting, and the 
insertion of handles for handled products. HFHTs are currently provided 
for under the following Harmonized Tariff System (HTS) subheadings: 
8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically 
excluded are hammers and sledges with heads 1.5 kg (3.33 pounds) in 
weight and under, hoes and rakes, and bars 18 inches in length and 
under. Although the HTS

[[Page 57385]]

subheadings are provided for convenience and customs purposes, our 
written description of the scope of these orders is dispositive.
    These reviews cover three exporters of HFHTs from the PRC, FMEC, 
SMC, and TMC. The review period is February 1, 1995 through January 31, 
1996.

Verification

    From August 24 through August 30, 1996, the Department conducted 
verification of the questionnaire responses submitted by TMC, as 
provided in section 782(i) of the Act. We used standard verification 
procedures, including on-site inspection of the manufacturers' 
facilities, the examination of relevant accounting, sales, and other 
financial records, and selection of original documentation containing 
relevant information. Our verification results are outlined in the 
public version of the verification report.

Separate Rates

    To establish whether a company operating in a state-controlled 
economy is sufficiently independent to be entitled to a separate rate, 
the Department analyzes each exporting entity under the test 
established in the Final Determination of Sales at Less Than Fair 
Value: Sparklers from the People's Republic of China (56 FR 20588, May 
6, 1991) (Sparklers), as amplified in the Final Determination of Sales 
at Less Than Fair Value: Silicon Carbide from the People's Republic of 
China (59 FR 22585 May 2,1994) (Silicon Carbide). Under this policy, 
exporters in non-market-economy (NME) countries are entitled to 
separate, company-specific margins when they can demonstrate an absence 
of government control, both in law (de jure) and in fact (de facto), 
with respect to exports. Evidence supporting, though not requiring, a 
finding of de jure absence of government control includes: (1) An 
absence of restrictive stipulations associated with an individual 
exporter's business and export licenses; (2) any legislative enactments 
decentralizing control of companies; and (3) any other formal measures 
by the government decentralizing control of companies. De facto absence 
of government control with respect to exports is based on four 
criteria: (1) Whether the export prices are set by or subject to the 
approval of a government authority; (2) whether each exporter retains 
the proceeds from its sales and makes independent decisions regarding 
the disposition of profits and financing of losses; (3) whether each 
exporter has autonomy in making decisions regarding the selection of 
management; and (4) whether each exporter has the authority to 
negotiate and sign contracts. See Silicon Carbide, 59 FR at 22587.
    In our final results of review for the 1992-1993 reviews of these 
orders, the Department determined that FMEC and SMC warranted company-
specific dumping margins according to the criteria identified in 
Sparklers and Silicon Carbide. See Heavy Forged Hand Tools, Finished or 
Unfinished, With or Without Handles, from the People's Republic of 
China; Final Results of Antidumping Duty Administrative Reviews (60 FR 
49251, September 22, 1995). Because no new information has been 
submitted in these reviews to warrant reconsideration of this finding, 
we preliminarily determine that these two companies continue to be 
entitled to separate rates.
    TMC responded to the Department's request for information regarding 
separate rates. We have found that the evidence on the record 
demonstrates an absence of government control, both in law and in fact, 
with respect to TMC's export activities according to the criteria 
identified in Sparklers and Silicon Carbide for this period of review, 
and have assigned a separate rate to TMC. For further discussion of 
this finding, see Decision Memorandum to Joseph A. Spetrini, Deputy 
Assistant Secretary, Enforcement Group III, dated October 23, 1996, 
``Assignment of a separate rate for Tianjin Machinery Import & Export 
Corporation in the 1995/1996 administrative review of certain heavy 
forged hand tools from the People's Republic of China,'' which is on 
file in the Central Records Unit (room B-099 of the Main Commerce 
Building).

Export Price

    The Department used export price (EP), in accordance with section 
772(a) of the Act. We made deductions from EP, where appropriate, for 
brokerage and handling, foreign inland freight, ocean freight, and 
marine insurance. Ocean freight services were provided by both PRC-
owned and non-PRC owned companies. Where the company providing ocean 
freight services was not a PRC-owned company, we used the actual rates 
charged; for ocean freight services provided by PRC-owned companies, we 
applied a weighted-average ocean freight rate derived from those sales 
for which we used actual ocean freight rates. Since marine insurance 
services were provided by PRC-owned companies, we based the deduction 
for marine insurance on surrogate values. We also used surrogate data 
to value foreign inland freight and brokerage and handling.

Normal Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine NV using a factors of 
production methodology if (1) the subject merchandise is exported from 
an NME country, and (2) available information does not permit the 
calculation of NV using home-market prices, third-country prices, or 
constructed value, in accordance with 773(a) of the Act.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. Since none of the parties to 
these proceedings contested such treatment in these reviews, we 
calculated NV in accordance with section 773(c) of the Act and section 
353.52 of the Department's regulations.
    In accordance with section 773(c)(3) of the Act, the factors of 
production utilized in producing HFHTs include, but are not limited 
to--(A) Hours of labor required, (B) quantities of raw materials 
employed, (C) amounts of energy and other utilities consumed, and (D) 
representative capital cost, including depreciation. In accordance with 
section 773(c)(4) of the Act, the Department valued the factors of 
production to the extent possible, using the prices or cost of factors 
of production in a market economy that is--(A) At a level of economic 
development comparable to the PRC, and (B) a significant producer of 
comparable merchandise. We determined that India is comparable to the 
PRC in terms of per capita gross national product, the growth rate in 
per capita income, and the national distribution of labor. Furthermore, 
India is a significant producer of comparable merchandise. For a 
further discussion of the Department's selection of India as the 
surrogate country, see Memorandum from David Mueller, Director, Office 
of Policy, to Laurie Parkhill, Director, Office 3, AD/CVD Enforcement 
Group 1, dated July 5, 1996, ``Certain Heavy Forged Hand Tools 
(`HFHTs') from the People's Republic of China (PRC): Nonmarket Economy 
Status and Surrogate Country Selection,'' and File Memorandum from Case 
Analyst, dated October 29, 1996, ``India as a significant producer of 
comparable merchandise in the 1995/1996 administrative review of heavy 
forged hand tools from the People's Republic of China,'' which are on 
file in Room B-099 of the Commerce Department.
    In accordance with section 773(c)(1) of the Act, for purposes of 
calculating NV, we valued PRC factors of

[[Page 57386]]

production based on data for the period of review (POR). Where 
appropriate, we applied inflators (deflators) to surrogate prices we 
obtained to reflect prices during the POR. These inflators (deflators) 
were derived from wholesale price indices (WPI) and consumer price 
indices (CPI) obtained from International Financial Statistics, 
published by the International Monetary Fund (IMF). We valued PRC 
factors of production as follows:
     To value all direct materials used in the production of 
HFHTs, including steel, resin glue, paint, varnish, wood for handles, 
iron wedges, anti-rust oil, scrap steel, and dilution, we used the 
rupee per metric ton, per kilogram, or per cubic meter value of imports 
into India in February 1995 and between April 1995 and July 1995 
obtained from the February 1995 and July 1995 volumes of the Monthly 
Statistics of the Foreign Trade of India, Volume II--Imports (Indian 
Import Statistics). We adjusted direct material values to reflect 
inflation, using WPI of India as published in International Financial 
Statistics by the IMF.
     For direct labor, we used the labor rates reported in the 
International Labor Organization's Yearbook of Labor Statistics, 
released in January 1995 by the International Labor Organization. This 
source is based on actual wage rates. We adjusted the value of direct 
labor to reflect inflation, using the CPI for India, as published by 
the IMF.
     For factory overhead, we used information reported in the 
April 1995 Reserve Bank of India Bulletin. From this information, we 
were able to determine factory overhead as a percentage of total cost 
of manufacture. We included steel pellets used to remove oxidization 
from the tool heads in factory overhead as these materials are not 
physically incorporated into the subject merchandise.
     For selling, general and administrative (SG&A) expenses, 
we used information obtained from the April 1995 Reserve Bank of India 
Bulletin. We calculated an SG&A rate by dividing SG&A expenses by the 
cost of manufacture.
     To calculate a profit rate, we used information obtained 
from the April 1995 Reserve Bank of India Bulletin. We calculated a 
profit rate by dividing the before-tax profit by the sum of those 
components pertaining to the cost of manufacturing plus SG&A.
     To value the packing materials, including cartons, 
pallets, anti-rust paper, anti-damp paper, plastic and iron straps, 
plastic bags, iron buttons and knots, synthetic fiber, and iron wire, 
we used the rupee per metric ton, per kilogram, or per cubic meter 
value of imports into India in February 1995 and between April 1995 and 
July 1995, obtained from the February 1995 and July 1995 volumes of the 
Indian Import Statistics. We adjusted these values to include freight 
costs incurred between the suppliers and the HFHT factories. We also 
adjusted packing material values to reflect inflation, using the WPI 
published by the IMF.
     To value coal, we used the price of steam coal reported 
for 1990 in the International Energy Agency publication Energy Prices 
and Taxes, 2nd Quarter 1995. We adjusted the value of coal to reflect 
inflation, using the WPI published by the IMF.
     To value electricity, we used the price of electricity on 
March 1, 1995 reported in Current Energy Scene in India, July 1995, 
published by the Centre for Monitoring the Indian Economy.
     To value truck freight, we used the rates reported in an 
August 1993 embassy cable from the U.S. Embassy in India submitted for 
the Final Determination of Sales at Less Than Fair Value: Certain 
Helical Spring Lock Washers from the People's Republic of China (58 FR 
48833, September 20, 1993). We adjusted truck freight rates to reflect 
inflation, using the WPI published by the IMF.
     To value rail freight, we used the price reported in a 
December 1989 cable from the U.S. Embassy in India submitted for the 
Final Results of Antidumping Duty Administrative Review: Shop Towels of 
Cotton from the People's Republic of China (56 FR 4040, February 1, 
1991). We adjusted rail freight rates to reflect inflation, using the 
WPI published by the IMF.

Preliminary Results of the Reviews

    As a result of our reviews, we preliminarily determine that the 
following margins exist for the period February 1, 1995 through January 
31, 1996:

------------------------------------------------------------------------
                                                                Margin  
    Manufacturer/exporter               Time period           (percent) 
------------------------------------------------------------------------
Fujian Machinery & Equipment                                            
 Import & Export Corporation:                                           
    Axes/Adzes...............  2/1/95-1/31/96..............        33.38
    Bars/Wedges..............  2/1/95-1/31/96..............        57.08
    Hammers/Sledges..........  2/1/95-1/31/96..............        33.84
    Picks/Mattocks...........  2/1/95-1/31/96..............       124.04
Shandong Machinery Import &                                             
 Export Corporation:                                                    
    Bars/Wedges..............  2/1/95-1/31/96..............        57.90
    Hammers/Sledges..........  2/1/95-1/31/96..............        12.99
    Picks/Mattocks...........  2/1/95-1/31/96..............        84.24
Tianjin Machinery Import &                                              
 Export Corporation:                                                    
    Axes/Adzes...............  2/1/95-1/31/96..............        10.72
    Hammers/Sledges..........  2/1/95-1/31/96..............        33.84
------------------------------------------------------------------------

    Parties to the proceedings may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. Parties who submit argument in these proceedings are 
requested to submit with the argument (1) a statement of the issue and 
(2) a brief summary of the argument. The Department will publish a 
notice of final results of these administrative reviews, which will 
include the results of its analysis of issues raised in any such 
comments.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and NV may vary from the percentages 
stated above. The Department shall issue appraisement instructions 
directly to the Customs Service.

[[Page 57387]]

    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of these administrative reviews 
for all shipments of HFHTs from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(1) of the Act: (1) the cash deposit 
rates for the reviewed companies named above which have separate rates 
(FMEC, SMC, and TMC) will be the rates for those firms established in 
the final results of these administrative reviews for the classes or 
kinds listed above; (2) for all other PRC exporters, the cash deposit 
rates will be the PRC-wide rates established in the final results of 
the previous administrative reviews; and (3) the cash deposit rates for 
non-PRC exporters of subject merchandise from the PRC will be the rates 
applicable to the PRC supplier of that exporter. The PRC-wide rates 
are: 21.92 percent for axes/adzes; 66.32 percent for bars/wedges; 44.41 
percent for hammers/sledges; and 108.20 percent for picks/mattocks. 
These deposit requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative reviews.

Notification of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 353.26 of the Department's regulations to 
file a certificate regarding the reimbursement of antidumping duties 
prior to liquidation of the relevant entries during this review period. 
Failure to comply with this requirement could result in the Secretary's 
presumption that reimbursement of antidumping duties occurred and the 
subsequent assessment of double antidumping duties.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22 
of the Department's regulations.

    Dated: October 30, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-28555 Filed 11-05-96; 8:45 am]
BILLING CODE 3510-DS-P