[Federal Register Volume 62, Number 116 (Tuesday, June 17, 1997)]
[Notices]
[Pages 32757-32765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15871]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-506]


Porcelain-on-Steel Cooking Ware From the People's Republic of 
China; Final Results of Antidumping Duty Administrative Review

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

ACTION: Notice of final results of Antidumping Administrative Review.

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SUMMARY: On February 3, 1997, the Department of Commerce (the 
Department) published in the Federal Register the preliminary results 
of its administrative review of the antidumping duty order on 
porcelain-on-steel (POS) cooking ware from the People's Republic of 
China (PRC) (62 FR 4979). This review covers shipments of the 
merchandise to the United States during the period December 1, 1994 
through November 30, 1995. Based upon our findings at verification and 
our analysis of the comments received from interested parties, we have 
made certain changes to our preliminary results. These changes are 
addressed in the Facts Available, Export Price and Normal Value 
sections below.

EFFECTIVE DATE: June 17, 1997.

FOR FURTHER INFORMATION CONTACT: Judy Kornfeld or Kelly Parkhill, 
Office of CVD/AD Enforcement VI, Import

[[Page 32758]]

Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C. 
20230; telephone: (202) 482-2786.

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 references 
to the regulations as amended by the Interim Regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

    On December 2, 1986, the Department published in the Federal 
Register (51 FR 43414) the antidumping duty order on POS cooking ware 
from the PRC. On December 4, 1995, the Department published a notice of 
``Opportunity to Request Administrative Review'' (60 FR 62070) of this 
antidumping duty order. We received a timely request for review, and on 
February 1, 1995, we initiated the review, covering the period December 
1, 1994, through November 30, 1995 (61 FR 3670). This review covers one 
manufacturer/exporter of POS cooking ware from the PRC, Clover 
Enamelware Enterprise, Ltd. (Clover) and its third-country reseller in 
Hong Kong, Lucky Enamelware Factory Ltd. (Lucky). Clover and Lucky 
(hereafter Clover/Lucky) are affiliated parties within the meaning of 
section 771(33) of the Act. (See Memorandum from Case Analyst to File, 
dated January 17, 1997, ``POS Cooking Ware from the PRC--Status as 
Affiliated Parties,'' which is a public document on file in the Central 
Records Unit (Room B-099 of the Main Commerce Building).)
    On February 3, 1997, the Department published in the Federal 
Register the preliminary results of its administrative review of the 
antidumping duty order on POS cooking ware from the PRC (62 FR 4979). 
There was no request for a hearing. On March 4, 1997, a case brief was 
timely submitted by Clover/Lucky (respondent).
    We verified the questionnaire response of Clover/Lucky during March 
1997. The results of this verification are outlined in the public 
version of the verification report dated May 8, 1997 (Verification 
Report), which is on file in the Central Records Unit (Room B-099 of 
the Main Commerce Building). We invited interested parties to comment 
on our verification report. On May 11, 1997, Clover/Lucky submitted 
comments and on May 14, 1997, General Housewares Corp. (petitioner) 
submitted comments. On May 19, 1997, respondent submitted rebuttal 
comments. The Department has now completed this review in accordance 
with section 751(a) of the Act.

Scope of the Review

    Imports covered by this review are shipments of POS cooking ware, 
including tea kettles, which do not have self-contained electric 
heating elements. All of the foregoing are constructed of steel and are 
enameled or glazed with vitreous glasses. The merchandise is currently 
classifiable under the HTS item 7323.94.00. HTS items numbers are 
provided for convenience and Customs purposes. The written description 
of the scope remains dispositive.

Separate Rates

    In our preliminary results, we determined that Clover/Lucky was 
entitled to a separate rate 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), as amplified in 
Final Determination of Sales at Less Than Fair Value: Silicon Carbide 
from the People's Republic of China (59 FR 22585; May 2, 1994). During 
the course of verification, we confirmed that export prices for Clover 
are not set by, nor subject to approval of, any government authority. 
This point was supported by the company's sales documentation and 
customer correspondence. We also confirmed, based on examination of 
documents related to sales negotiations, written agreements and other 
correspondence, that respondents have the authority to negotiate and 
sign contracts and other agreements independent of government 
intervention (see Verification Report, pp. 4-5).
    Based on our examination of company records during verification, we 
have determined that Clover had autonomy from the central government in 
making decisions regarding selection of management. We also found no 
involvement by any government entity in the selection of management or 
hiring. The record therefore demonstrates an absence of de facto 
government control over Clover.
    The record similarly demonstrates an absence of de jure government 
control over Clover, for reasons stated in the preliminary results of 
this review. Accordingly, we determine that Clover/Lucky should receive 
a separate rate. (For a further discussion, see Memorandum from Kelly 
Parkhill to Barbara E. Tillman, dated January 17, 1997, ``Assignment of 
Separate Rate for Clover/Lucky in the 1993-1994 and 1994-1995 
Administrative Reviews of POS Cooking Ware from the Peoples Republic of 
China,'' which is a public document on file in the Central Records Unit 
(Room B-099 of the Main Commerce Building).)

Facts Available

    Section 776(a)(2) of the Act states that, if an interested party 
withholds information that has been requested or provides such 
information but the information cannot be verified as provided in 
section 782(i), the Department shall also use the facts otherwise 
available in reaching the applicable determination. Section 776(b) of 
the Act authorizes the Department to use, as facts otherwise available, 
information derived from the petition, the final determination, a 
previous review, or other information placed on the record. We 
determine, in accordance with section 776(a)(2) of the Act, that the 
use of partial facts available as the basis for calculating certain 
constructed values is appropriate in this case, as discussed below. 
(See Memorandum to Jeffrey Bialos from Barbara E. Tillman ``Use of 
Facts Available'' dated May 30, 1997 (Facts Available Memorandum), 
which is on file in the Central Records Unit (Room B-099 of the Main 
Commerce Building).)
    At verification, we were unable to tie reported labor hours to 
supporting attendance and payroll documents. In addition, we discovered 
that the labor hours reported on certain supporting documents were 
altered for purposes of this antidumping proceeding; company officials 
admitted to altering certain source documents in order to reconcile 
them with the figures reported in the questionnaires responses. Because 
Clover/Lucky did not act to the best of its ability in responding to 
our request for this information pursuant to section 782(e)(4) of the 
Act, we have drawn an adverse inference under the authority provided by 
section 776(b) of the Act. As facts available, we are using the highest 
labor cost for an individual piece of cooking ware from the information 
submitted by Clover/Lucky. See, e.g., Notice of Final Results of 
Antidumping Duty Administrative Review: Welded Carbon Steel Pipe from 
Turkey (61 FR 69067, 69073; December 31, 1996).
    Also at verification, we discovered certain information which had 
not been previously reported in Clover/Lucky's

[[Page 32759]]

questionnaire responses. The company did not report three steel 
invoices, certain minor chemicals used in the production of POS cooking 
ware, well water consumed for industrial use and two insignificant 
brokerage and handling fees. We verified and collected this new 
information, which has been placed on the record as verification 
exhibits. Nevertheless, because Clover/Lucky failed to provide this 
information by the deadline for submission of information, in 
accordance with section 776(a) of the Act, the Department must use 
facts available. However, because Clover/Lucky was fully cooperative in 
complying with our request for this information at verification, the 
Department has determined that, in selecting among the facts available 
to apply to these unreported expenses, no adverse inference is 
warranted. Consequently, as facts available, we have used this new 
information now on the record in determining these final results. See 
Notice of Final Determination of Sales at Less Than Fair Value; Brake 
Drums and Brake Rotors from the People's Republic of China; 62 FR at 
99160, 99167 (February 28, 1997). (See also Facts Available Memorandum 
for a further discussion.)

Export Price

    As described in the preliminary results, the Department used export 
price (EP) for sales made by Clover/Lucky, in accordance with section 
772(a) of the Act. Pursuant to findings at verification, as discussed 
in the Facts Available section above and Facts Available Memorandum, we 
made minor adjustments to movement expenses to include import and 
export declaration fees found at verification, which were not reported 
in Clover/Lucky's questionnaire responses. (See Memorandum from Case 
Analyst to the File, ``Analysis for the Final Results of the 1994-1995 
Administrative Review of POS Cooking Ware from the PRC--Clover/Lucky'' 
dated May 30, 1997 (Calculation Memorandum), on file in the Central 
Records Unit (Room B-099 of the Main Commerce Building).)

Normal Value

    As stated in the preliminary results, in accordance with section 
773(c)(3) of the Act, we calculated normal value (NV) by valuing 
factors of production, except with respect to the factors of steel, 
percolators and packing materials purchased by Lucky. For these 
factors, which were paid for in market economy currencies, we used the 
actual prices paid for the factors to calculate the factor-based NV in 
accordance with our practice. See e.g., Lasko Metal Products v. United 
States, 437 F. 3d 1442, 1443 (Fed. Cir. 1994). We calculated NV for 
these final results as discussed in the preliminary results, making 
adjustments for specific verification findings and certain revisions to 
surrogate values, discussed below (for a fuller discussion see 
Calculation Memorandum).
     At verification, we discovered three steel invoices from 
the period of review (POR) that were not reported in Clover/Lucky's 
questionnaire responses. (See Facts Available section above.) As a 
result, we are adjusting the average price paid for steel inputs to 
include these three purchases.
     At verification, we discovered five chemicals used in the 
production of POS cooking ware during the POR which were not reported 
in Clover/Lucky's questionnaire responses. (See Facts Available section 
above.) We valued these chemical factors of production, which included 
bentonite, antimony trioxide, potassium chloride, titanium dioxide and 
sodium nitrite, by using the consumption amounts collected at 
verification and surrogate per kilogram values obtained from the 
Foreign Trade Statistical Bulletin-Imports, November 1995, from 
Indonesia (Indonesian Import Statistics), which is public information.
     At verification, we discovered that certain packing 
materials purchased by Clover were paid for in renminbi, instead of 
Hong Kong dollars, as reported in Clover/Lucky's questionnaire 
response. However, because there is no other information on the record 
that can be used to construct a value for these packing materials and 
because these materials were invoiced in Hong Kong dollars, as facts 
available, we have continued to use the actual prices charged in Hong 
Kong dollars to Clover to value these materials.
     In our preliminary results, we used a surrogate overhead 
rate which included energy and indirect labor. Thus, we did not include 
Clover/Lucky's reported energy factors. However, at verification we 
discovered that water, one of the reported energy/utility factors, is 
not only an indirect material input falling under factory overhead, but 
also a direct material input in the production of cooking ware. In 
addition, we discovered that well water is consumed for industrial use, 
but, as the company does not pay for the well water, it was not 
previously reported. (See Facts Available section above.) As described 
above, we collected information at verification regarding the total 
amount of water consumed for industrial use and calculated a cost for 
water consumed in the production of POS cooking ware by using 
Indonesian water rates reported in the ADB, Water Utilities Data Book 
for the Asian Pacific Region for 1993, which is public information. We 
adjusted these water rates to reflect yearly inflation using wholesale 
price indices, excluding petroleum, obtained from the International 
Financial Statistics published by the International Monetary Fund.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results as well as the verification report. We received a 
case brief from respondent and comments on the verification report from 
respondent and petitioner.
    Comment 1: In the preliminary results, the Department found that 
Clover/Lucky did not report some or all factors of production data for 
three models sold in the United States during the POR. Respondent 
claims that two model numbers were inadvertently omitted from one 
exhibit in the questionnaire response and the other model number 
involved a typographical error. The company corrected these 
discrepancies and submitted the revised information. Along with these 
corrections, respondent also submitted changes to the local color oxide 
consumption and scrap steel percentage reported in its response.
    Department's Position: Because the information and minor 
clarifications were submitted to the Department prior to verification 
and because we were able to establish the accuracy of the information 
at verification, we accepted them and have adjusted our final results 
accordingly.
    Comment 2: Respondent claims that the import and export declaration 
fees paid in Hong Kong dollars during the POR were insignificant when 
compared to the total sales to the United States during the POR. 
Therefore, the company claims that it omitted these amounts and treated 
them as indirect selling expenses.
    Department's Position: Although we agree with respondent that these 
fees are small relative to total sales to the United States during the 
POR, we disagree that these fees should be classified as indirect 
selling expenses. As discussed in the verification report, these fees 
are charged for the preparation of import and export declarations for 
each shipment the company arranges. These fees are directly tied to 
each sale and should have been reported separately or included in 
brokerage and handling expenses. We have therefore treated them as 
direct selling expenses, specifically brokerage and handling

[[Page 32760]]

expenses, for purposes of these final results.
    Comment 3: With respect to the Department's discovery at 
verification of three missing steel invoices, respondent claims that 
these unreported invoices resulted in minimal changes to the average 
steel prices paid for each thickness of steel. Respondent further 
claims they did not have any significant effect on the computation of 
the factors for steel usage.
    Department's Position: The effect on the average steel price is 
only one consideration in evaluating the significance of the three 
missing steel purchases. The significance is also determined by the 
proportion of the unreported purchases to total purchases during the 
POR. Respondent failed to report approximately 18 percent of the POR 
purchases of steel. However, because we collected the invoices as part 
of our completeness check at verification, and they are now on the 
record, as facts available we are including these three invoices in 
calculating the average price paid for steel during the POR. See Facts 
Available section above and Facts Available Memorandum.
    Comment 4: With respect to its reporting of theoretical weights for 
each product, respondent states that the reported theoretical weights 
were generally greater than the actual weights for selected items at 
verification, and therefore the steel usage overstatement, which had 
the effect of increasing the normal value, was not an error in favor of 
Clover. As to the frying pan, the actual weight again was shown to be 
less than either the true theoretical weight or the incorrectly 
calculated theoretical weight reported in the submission.
    Department's Position: We have accepted respondent's methodology 
for calculating theoretical weights as reported in its response because 
we find it to be reasonable and not distortive for purposes of 
performing the antidumping analysis. See, e.g., Gray Portland Cement 
and Clinker from Mexico; Final Results of Antidumping Duty 
Administrative Review (62 FR 17148, 17163; April 9, 1997). In our 
Verification Report, we noted that the reported length of the handle 
portion of the frying pan was incorrect, and, therefore, the 
theoretical weight for the frying pan was miscalculated. We adjusted 
the theoretical weight for the frying pan in calculating our final 
results.
    Comment 5: With respect to the five missing chemicals discovered at 
verification by Department officials, respondent claims that these 
chemicals were not omitted from the response altogether, but were 
included in calculating the ``chemical 2'' factor input reported in its 
response. Further, respondent understood that it was required to 
provide actual quantities purchased during the POR that were delivered 
to Clover.
    Department's Position: Respondent included the quantity of the five 
chemicals in an aggregate consumption figure in its response. However, 
it did not identify these chemicals in the breakdown of that aggregate 
figure. An aggregate figure alone is insufficient for reporting 
purposes if the chemicals which make up this quantity are not properly 
identified.
    In order for the Department to properly calculate a factor value 
for each input, it must have the exact breakdown of each chemical used. 
The Department uses these reported inputs, along with appropriate 
prices from a chosen surrogate country, to arrive at the normal value 
of the subject merchandise in non-market economy cases. For that 
reason, the Factors of Production questionnaire asks for each factor of 
production used to produce one unit of the subject merchandise. As 
mentioned earlier, we verified and collected the new information and 
used surrogate per kilogram values obtained from the Indonesian Import 
Statistics, which is public information.
    Comment 6: With respect to the labor factor of production, and 
specifically usage of the piece rate table, respondent states that this 
table is based upon years of experience from performing the same 
process over a period of 30 years on the same equipment as well as 
historical data derived from the original Hong Kong factory. Moreover, 
respondent claims the piece rate table is revised when needed based on 
the changes in the production process and the changes in the efficiency 
pattern of the workers. According to respondent, the table, which it 
regards as its list of standard labor hours, includes the people 
required to produce each piece or set, the time it takes to dip, clean 
and hang each piece at each phase of the production process, the 
technical specification for each machine, and the conveyer speed. 
Respondent claims that no separate documentation exists or was 
prepared, such as time and motion studies, to support the figures in 
the piece-rate table because the piece rate table was regarded as 
accurate and salaries were based upon this table.
    Further, the workers are paid following the piece rate table based 
upon the discretion of the supervisor who calculates the work/hour 
credit for the quantities produced. The discretion is based upon the 
knowledge and experience of the supervisor of the manufacturing 
process.
    Department's Position: Our findings at verification corroborate 
respondent's description of how the standard hours in the piece rate 
table were derived.

    Company officials explained that the piece rate table is based 
on estimates, many of which date back to when Lucky began producing 
enamelware in Hong Kong 30 years ago. The table is updated 
periodically to add standard times for new products. No time-in-
motion studies or timing of production process was [sic] done in 
coming up with either the original Hong Kong standards or the 
standards for new enamelware products. All standards were created 
based on experience of those involved in creating the tables as to 
how long the process should take to produce a given item. Since 
these hours were based solely on the individuals' estimates, there 
was no documentation available to support any of these figures.

See Verification Report, p. 21.
    However, in speaking with company officials and in our examination 
of the piece rate tables at verification, there was no indication that 
the piece rate tables were revised on any basis other than the periodic 
update described above; no mention was made of making changes to the 
tables to reflect changes in the production process or worker 
efficiency. Also, other than a brief description of the process, or the 
machine used in a process, we saw nothing in the piece rate tables that 
indicated technical specifications for machinery or conveyer speeds.
    The accuracy of information submitted to the Department for use in 
its determinations must be verifiable. The figures from the piece rate 
table submitted by respondent in lieu of actual labor hours (as 
requested by the Department in its original and supplemental 
questionnaires) are not. No supporting documentation for these rates 
exists. Statements by company officials that the rates are accurate and 
reflect actual labor hours are not sufficient for the Department to 
consider the reported figures to have been verified, particularly in 
light of the fact that many of the standard times are 30 years old and 
are based on the experience and production of workers at the original 
plant located outside the PRC. As such, we continue to find that the 
reported ``labor'' factor of production was not supported by source 
documents at verification. Therefore, we have drawn an adverse 
inference under the authority provided by section 776(b) of the Act. 
For a further discussion of our decision to use adverse facts available 
for this factor, see the Facts

[[Page 32761]]

Available section of this notice and the Facts Available memorandum.
    Comment 7: With respect to the labor factor of production, 
respondent also claims that the majority of Clover's production workers 
were paid on a piece rate basis during the POR. Respondent additionally 
states that the ``floating workers'' labor hours, which are only in the 
Enameling Department, are tied to the labor hours of the ``fixed post 
worker'' which are calculated from the piece rate table. Probationary 
workers are not paid based on the piece rate table inasmuch as they 
have not developed the skills to handle the work. Therefore, respondent 
claims, the piece rate table accurately reflects the actual labor hours 
used to produce the subject merchandise.
    Department's Position: We disagree with respondent. In trying to 
ascertain whether the reported hours from the piece rate table 
accurately reflected the actual hours worked by Clover production 
workers, the Department verifiers found that a large number of workers 
were not paid based on the piece rate table. This includes the metal 
shearer, any worker assigned to assist him, probationary employees, 
workers in the Milling Department and ``floating workers,'' the latter 
constituting approximately half of the workers in the Enameling 
Department. In addition, even those workers whose pay is based on the 
piece rate table, may have significant portions of their pay calculated 
on a non-piece rate basis. For example, adjustments are made to working 
hours for certain duties, equipment set-up, equipment down time and 
assignment to unfamiliar machines.
    Further, the Department was unable to reconcile the reported per 
unit labor hours from the piece rate tables with the company's payroll 
and attendance records. At verification, the Department selected three 
cooking ware items for verification. Numerous errors and discrepancies 
were found in our examination of these items. In one instance, we 
discovered that the supervisor had made up the hours on certain 
supporting documents. In another, we found that workers were paid for 
days on which they were absent, and not paid for days on which they 
worked. For two of the three cooking ware items, company officials 
could not account for the discrepancies between the reported 
information on labor and the source documents. As a result, none of the 
reported labor hours for these items could be verified.
    Together or separately, the significant number of workers paid on a 
non-piece rate basis, the numerous adjustments to working hours, the 
errors and discrepancies found at verification, and the inability to 
reconcile the piece rate table with the company's payroll and 
attendance records demonstrates that the per unit labor hours submitted 
by respondent in the questionnaire response based on the piece rate 
table cannot be relied upon for purposes of these final results. We 
have therefore drawn an adverse inference under the authority provided 
by section 776(b) of the Act. For a further discussion of our decision 
to use adverse facts available for the labor factor of production, see 
the Facts Available section of this notice and the Facts Available 
Memorandum.
    Comment 8: With respect to supporting documents relating to the 
labor factor of production, respondent claims that because the volume 
of items going through the Metal Cleaning Department is so large, and 
varies throughout the day, the supervisor listed some of the figures 
for the computed labor hours based on his estimation. Respondent claims 
that computing labor hours in this department is complicated and 
mistakes are easily made. The fictitious hours initially recorded by 
the supervisor on the supporting documentation was not done for 
purposes of responding to the Department. As to the fictitious entries 
in the revised document, respondent claims that the supervisor 
understood he was to support the payment of days worked against the 
days actually paid, and therefore prepared the records on this basis, 
not as a method to create fictitious documents to provide to the 
Department. In any case, respondent believes that the incorrect 
documents provided in two transactions does not invalidate the total 
payment procedures.
    Department's Position: The Department found numerous instances of 
errors and discrepancies in its verification of respondent's reported 
labor hours. These errors and discrepancies were not limited to two 
instances; errors, discrepancies and/or deviations from the reported 
labor hours and piece rate based pay were found in every department and 
every cooking ware item the Department examined. In addition, many of 
the errors or discrepancies affected more than one employee. In some 
cases, respondent was able to account for or provide an explanation for 
the error, discrepancy or deviation; however, in several instances, the 
information submitted in the response could not be reconciled with the 
company's attendance and payroll records (see Verification Report, pp. 
20-24; and Facts Available Memorandum). Further, at verification, a 
company official admitted to altering two supporting payroll documents 
in an effort to support the figures reported in the response while 
another official stated that he made up the labor hours recorded on 
certain attendance/payroll documents (see Verification Report, p. 22, 
23).
    For these reasons, and for the reasons discussed in the 
Department's Position on Comments 6 and 7, we find that the information 
submitted by respondent with respect to the labor factor of production 
cannot be relied upon. Therefore, with respect to this factor, the 
Department must rely upon facts otherwise available. Further, because 
respondent did not act to the best of its ability in responding to our 
request for such information pursuant to section 782(e)(4) of the Act, 
as demonstrated by its alteration of source documents and inability to 
reconcile the submitted labor hours in response with the company's 
actual labor hours as recorded in its attendance and payroll records, 
we have drawn an adverse inference under the authority provided by 
section 776(b) of the Act. For a further discussion of our decision to 
use adverse facts available for this factor, see the Facts Available 
section of this notice and the Facts Available Memorandum.
    Comment 9: Respondent states that it now has an explanation for a 
discrepancy that could not be resolved at verification. While reviewing 
time cards and the Monthly Attendance Summary, the Department found a 
worker who worked 13 days during the month of May but was paid for 18 
days. Company officials now believe that the figure ``13 days'' was 
actually overlooked when the payment records were created, and that the 
worker was mistakenly paid for 18 days.
    Department's Position: Respondent's comment addresses yet another 
discrepancy discovered while the Department attempted to verify 
reported labor hours. At verification, company officials could not 
explain this discrepancy. It is not clear what respondent now means by 
``overlooked;'' however, at this point, the explanation does not 
override our findings at verification or our results in this review. 
The purpose of verification is to verify the accuracy of the response 
through examination of source documents, not to recreate supporting 
source documentation that respondent has failed to maintain. See 
Belmont Industries v. United States, 733 F. Supp. 1507, 1508 (CIT 
1990). As stated above, with respect to labor hours, the Department is 
relying upon facts otherwise available and we have drawn an adverse 
inference under the authority

[[Page 32762]]

provided by section 776(b) of the Act. For a further discussion of our 
decision to use adverse facts available for this factor, see the Facts 
Available section of this notice and the Facts Available Memorandum.
    Comment 10: Respondent claims that its purchases of packaging 
materials from a PRC supplier during the POR was based upon quotations 
and acceptances in Hong Kong dollars. Therefore, it reported these 
purchases in Hong Kong dollars. The payment in renminbi at the market 
rate of exchange was a manner of facilitating this payment.
    Department's Position: At verification, Department officials 
discovered that certain packing materials, reported in Hong Kong 
dollars, were actually purchased from a PRC supplier in renminbi. 
However, because the supplier originally charged Clover for these goods 
in Hong Kong dollars, we are using the reported Hong Kong dollar prices 
in our calculations, as was done in our preliminary results. See Normal 
Value section above.
    Comment 11: Respondent states that the Department's well water 
consumption calculation is incorrect because it is based on a 365-day 
period. The company claims that the figure should be based on the 
number of working days during the POR, which was 282 days based on 
Clover's payroll records.
    Department's Position: We disagree with respondent. At 
verification, the Department asked company officials to shut off the 
well water to the plant and record the city water consumed over a 
several day period. This period ran from Saturday through Monday. As 
the sample period included both working and non-working days, it is 
proper to estimate the annual water consumption on a 365-day basis 
rather than the number of work days during the POR. In addition, the 
282 day figure referred to by respondent in its comments was never 
reported in its submission and, thus, not verified by the Department.
    Comment 12: Respondent suggests a number of changes to the language 
in the verification report which it claims are needed to address 
alleged inaccuracies or omissions.
    Department's Position: We have addressed respondent's suggested 
changes in a memorandum to the file. See Memorandum to Barbara E. 
Tillman from the Team ``Response to Respondent's Suggested Changes to 
Language in the Verification Report'' dated May 30, 1997, which is on 
file in the Central Records Unit (Room B-099 of the Main Commerce 
Building).
    Comment 13: Petitioner asserts that the Department should not 
accept and use any of the data reported in Clover/Lucky's response. 
Instead, the Department should reject Clover/Lucky's response in its 
entirety and resort to total facts otherwise available to calculate 
Clover/Lucky's dumping margin. According to petitioner, this margin 
should be based on the highest rate ever calculated for any respondent 
in the history of this proceeding, which is 66.65 percent.
    Petitioner claims that it is the Department's practice to reject a 
response in its entirety and resort to total facts available when it 
discovers that information contained in the response was fabricated by 
the respondent for purposes of the investigation or review. In the 
Final Determination of Sales at Less than Fair Value; Sulfanilic Acid 
From the Republic of Hungary (58 FR 8256, 8257; February 12, 1993) 
(Sulfanilic Acid from Hungary), the Department discovered at 
verification that a relevant portion of the respondent's questionnaire 
response may have been fabricated, and the Department rejected the 
respondent's entire response and used best information available (BIA). 
Petitioner claims that this policy applies with even greater force 
when, as in this review, the Department discovers direct evidence and/
or the respondent admits that it knowingly fabricated information 
submitted to the Department.
    Respondent claims that petitioner's statement that information 
submitted in the response was knowingly false and fabricated by Clover/
Lucky is a mischaracterization of the verification report. At no time 
did the company officials who prepared the final questionnaire 
responses intend to mislead the Department or fabricate information for 
the purposes of the questionnaire response. Source documents altered by 
a Clover employee were not discovered by company officials until the 
verification visit. Thus, the alteration made by the employee was not 
known by the company officials at the time the questionnaire responses 
were drafted. Petitioner also failed to mention that after the altered 
source documents were returned to their original state, and a 
transcribing error was accounted for, the source documents, worksheet 
and information reported in the response tied to one another.
    In regard to petitioner's assertion that the supervisor of the 
Metal Fabrication department ``made up'' data on which Clover/Lucky 
based its calculation of hours worked submitted in its responses, 
respondent claims that these were only minor discrepancies and that, 
further, the lasagna pan was discussed in the Department's verification 
report without any reference to ``made up'' data. Moreover, the 
allegedly ``made up'' information was initially compiled by the 
supervisor for an internal report, not for the questionnaire response. 
Again, the company officials who prepared the responses were unaware of 
the fact that the supervisor in this department may have made up the 
labor hour figures.
    Department's Position: We disagree with petitioner that the use of 
total facts available is appropriate in this review. The decision to 
totally reject the response and use best information available in the 
case cited by petitioner, Sulfanilic Acid from Hungary, was based on 
the antidumping law as it existed prior to the Uruguay Round Agreements 
Act (URAA). In deciding whether to reject Clover/Lucky's response and 
use total facts otherwise available in this review, the Department must 
examine the facts of the case in light of the new statutory guidelines 
that exist under the Act, as amended by the URAA.
    Section 782(e) of the Act states that:

    In reaching a determination under section * * * 751 * * * the 
administering authority * * * shall not decline to consider 
information that is submitted by an interested party and is 
necessary to the determination but does not meet all the applicable 
requirements established by the administering authority * * *, if--
    (1) The information is submitted by the deadline established for 
its submission,
    (2) The information can be verified,
    (3) The information is not so incomplete that it cannot serve as 
a reliable basis for reaching the applicable determination,
    (4) The interested party has demonstrated that it acted to the 
best of its ability in providing the information and meeting the 
requirements established by the administering authority * * * with 
respect to the information, and
    (5) The information can be used without undue difficulties.

    Clover/Lucky's sales response and its response for the factors of 
production, other than labor, meet each of the above criteria. For 
those miscellaneous items where the information did not meet the second 
criterion, i.e., it could not be verified, the Department obtained the 
necessary accurate information during the course of verification. This 
information is being used as facts otherwise available in the 
Department's calculations. (See Facts Available section and Facts 
Available Memorandum.) Although the Department encountered some 
difficulties in its verification of Clover/Lucky's response, many of 
the errors in

[[Page 32763]]

the response and discrepancies between it and the company's books and 
records were resolved at verification. The information now on the 
record pertaining to the non-labor portions of Clover/Lucky's response, 
including exhibits taken at verification, has been verified, is 
sufficiently complete to be reliable, and can be used without undue 
difficulties.
    Further, the Statement of Administrative Action (SAA) provides 
guidance concerning the use of facts available to the Department in 
evaluating whether submitted information should be considered or 
rejected under the new Act. It states:

    Commerce * * * may take into account the circumstances of the 
party, including (but not limited to) the party's size, its 
accounting systems, and computer capabilities, as well as the prior 
success of the same firm, or other similar firms, in providing 
requested information in antidumping and countervailing duty 
proceedings. SAA, H. R. Doc. 316, 103d Cong., 2d Sess. 865 (1994).

    In NME cases, it is quite common for the Department to encounter 
difficulties in obtaining complete and accurate information regarding 
factors of production. See, e.g., Notice of Final Determination of 
Sales at less Than Fair Value; Certain Cased Pencils from the People's 
Republic of China (59 FR 55625, 55630; Nov. 8, 1994). The information 
provided by Clover/Lucky in the non-labor portions of the response was 
similar to and in many ways more accurate than information the 
Department typically receives in responses provided by similarly 
situated companies in the PRC or other NME countries. Therefore, the 
Department considers that, with respect to the non-labor portion of 
Clover/Lucky's response, the company has acted to the best of its 
ability in providing the information and meeting the requirements 
established by the administering authority.
    As the Department has noted above, the same determination cannot be 
made with respect to the company's submitted labor hours. In trying to 
reconcile the company's reported labor hours to source documents, the 
Department found a considerable number of errors and discrepancies as 
well as numerous deviations from the piece rate table standards that 
respondent used as the basis for its reported hours and which it 
claimed reflected the actual working hours of its employees. In 
addition, the Department discovered that, in one production department, 
a supervisor recorded fictitious information on supporting payroll/
attendance documents while, in another department, payroll and 
attendance records indicated that employees were either paid for days 
they did not work or not paid for days they did (see Verification 
Report, pp. 23-24).
    Many of the discovered errors or discrepancies affected more than 
one employee, indeed more than one category of employees. Although in a 
few instances, respondent was able to account for or provide an 
explanation for the error, discrepancy or deviation, in most instances, 
the information submitted in the response could not be reconciled with 
the company's attendance and payroll records (see Verification Report, 
pp. 20-24; and Facts Available Memorandum).
    Clover/Lucky's response with respect to labor does not meet the 
criteria listed under section 782(e) of the Act. The information could 
not be verified, nor can it serve as a reliable basis for reaching the 
applicable determination. Further, due to the significant number of 
errors and discrepancies, the information cannot be used by the 
Department without undue difficulties.
    More importantly, however, is the fact that, at verification, a 
company official admitted to altering two supporting payroll documents 
in an effort to support the figures reported in the response (see 
Verification Report, p. 22). Regardless of the inability of the 
Department to reconcile significant portions of the labor response with 
the company's books and records, the alteration of supporting source 
documents, on its own, is sufficient grounds for rejecting the 
submitted labor hours and using facts otherwise available as it calls 
into question the reliability of all submitted information with respect 
to the labor factor of production.
    For all of the above reasons, we find that the information 
submitted by respondent with respect to the labor factor of production 
cannot be relied upon. Therefore, with respect to this factor, the 
Department has relied upon facts otherwise available. Further, because 
respondent did not act to the best of its ability in responding to our 
request for such information pursuant to section 782(e)(4) of the Act, 
as demonstrated by its alteration of source documents and the numerous 
errors and discrepancies discovered during the course of the 
verification, we have drawn an adverse inference under the authority 
provided by section 776(b) of the Act. For a further discussion of our 
decision to use adverse facts available for this factor, see the Facts 
Available section of this notice and the Facts Available Memorandum.
    The Department has considered petitioner's argument that the 
alteration of source documents and recording of fictitious information 
on certain supporting payroll documents calls into question the 
reliability of the entire response, not just that portion pertaining to 
labor. During our verification of the other portions of Clover/Lucky's 
response, we did not find any indication that other source documents 
had been altered or contained fictitious information. In many cases, 
our verification of these other items was complete, in that the 
reported figures for the entire year were checked and cross-checked to 
all relevant source documents and records.
    In addition, there was no indication that the company officials 
preparing the response knew of the altered source documents or payroll 
documents containing fictitious information prior to verification. 
Further, these company officials were forthcoming about the documents 
in question. When questions first arose about these source documents, 
they spoke with the employees that had originally compiled the 
information and immediately reported to the Department verifiers that, 
in the first instance, the source documents had been altered, and in 
the second instance, the information recorded on certain supporting 
payroll documents had been made up. Finally, we found no evidence that 
the company officials responsible for altering certain source documents 
and reporting fictitious information on certain supporting payroll 
records participated in compiling the information for the response 
outside of their respective departments.
    Based on the above, the Department does not consider the non-labor 
information submitted by Clover/Lucky as it now appears on the record 
to be unreliable. Therefore, as discussed above, and in accordance with 
the mandate of section 782(e) of the Act, the Department cannot reject 
the response in its entirety and use total facts otherwise available in 
determining Clover/Lucky's antidumping margin.
    The Department would like to clarify its position with respect to 
two statements in respondent's rebuttal comments on this issue. First, 
the verification report in no way suggests that the actions taken by 
the Clover employee who altered the documents were ``clarified to the 
satisfaction of the ITA.'' The Department does not condone the 
alteration of source documents for purposes of the proceeding; it is 
not possible for respondent to clarify this to our satisfaction. 
Respondent quotes the verification report out of context; the statement 
cited by respondent is merely

[[Page 32764]]

repeating the company's explanation of its resolution of the error, 
including the alteration of source documents. As discussed above, the 
Department considers the alteration of source documents by this 
employee to be sufficient grounds not only for finding the affected 
labor hours to have failed verification, but also for finding the 
entire portion of the response with respect to labor to be not 
verifiable.
    Second, the production departments examined with respect to the 
lasagna pan and round pie plate were not the same, as claimed by 
respondent in its rebuttal brief. The two departments were, 
respectively, the Metal Fabrication Department and the Metal Cleaning 
Department (the latter department being the department in which the 
supervisor made up the information on certain supporting payroll 
documents) (see Verification Report, p. 22). Since the production 
departments examined during the course of the verification were not the 
same as claimed by respondent in its rebuttal comments, the conclusions 
drawn by respondent are fundamentally incorrect and, therefore, cannot 
be addressed further by the Department.
    Comment 14: Petitioner states that if the submission of false 
information alone does not render Clover/Lucky's response unusable, the 
numerous additional discrepancies found by the Department's verifiers 
should still require use of total facts available. In the eighth 
administrative review, the Department preliminarily rejected Clover/
Lucky's response in its entirety and used total BIA based on Clover/
Lucky's failure of verification for information submitted to the 
Department. Petitioner believes that the verification report in this 
review addresses more numerous and extensive discrepancies than those 
found in the eighth administrative review. Petitioner cites Silicon 
Metal From Brazil; Final Results of Antidumping Duty Administrative 
Review and Determination Not to Revoke in Part (62 FR 1954, 1969; 
January 14, 1997) as support for using total, rather than partial facts 
available.
    Moreover, even if the Department determined that all of Clover/
Lucky's data except those relating to the labor factor of production 
could be used, use of total facts available would still be necessary 
because there is no reliable facts available information that can be 
used as a surrogate for the flawed labor data. Petitioner cites Certain 
Cut-To-Length Carbon Steel Plate From Sweden; Final Results of 
Antidumping Duty Administrative Review (62 FR 18,396, 18,401; April 15, 
1997) as support for this argument.
    Respondent asserts in its rebuttal comments that there is clearly 
no justification for rejection of its responses in their entirety. In 
Final Determination of Sales at Less Than Fair Value; Paint Filters and 
Strainers From Brazil (52 FR 19181, 19183; May 21, 1987), the 
Department stated that finding omissions or errors in responses is 
common during verification. A review of the petitioner's allegations, 
compared with the overall accuracy of information submitted by Clover/
Lucky demonstrates that the errors and omissions found at verification 
are not sufficient in themselves to invalidate or discredit Clover/
Lucky's response for the POR. Respondent also asserts that the 
responses for each administrative review should be judged on their own 
merits.
    Respondent finally claims that the other discrepancies were 
explained in its previously submitted comments, discussed above, and 
should be regarded as verifiable after review of these explanations, as 
the information submitted was not materially deficient. In addition, 
the balance of the information reported in the responses was determined 
to be correct.
    Department's Position: We disagree with petitioner that the use of 
total facts otherwise available is warranted in this review. As 
explained above, the Department must evaluate whether to apply total 
facts otherwise available in this review under section 782 (e) of the 
Act.
    Clover/Lucky's sales response and its response for the factors of 
production, except with respect to labor, meet each of the criteria in 
section 782(e). That aside, we also disagree that the errors found at 
this verification, with respect to the non-labor portions of the 
response, were more numerous or more serious than those found in the 
previous administrative review where the Department decided that the 
use of total best information available was appropriate. See Porcelain-
on-Steel Cooking Ware from the People's Republic of China; Preliminary 
Results of Antidumping Duty Administrative Review (62 FR 4250; January 
29, 1997).
    The record in the two proceedings clearly shows that the Department 
encountered far greater problems in verifying the non-labor portion of 
the questionnaire responses in the earlier review. For example, in the 
prior review, with respect to steel purchases from market economy 
suppliers and steel consumption, the Department found numerous errors 
in the reporting of steel purchases, was unable to tie steel 
requisitions to inventory withdrawals, and could not corroborate the 
submitted theoretical per-unit steel consumption figures with actual 
readings or tie them to measurements in the technical drawings. See 
Memorandum from Case Analyst to the File, dated May 28, 1997, 
``Submission of the Verification Report (Public Version) from the 1993-
1994 Antidumping Administrative Review Proceeding of POS Cooking Ware 
from the PRC to the Record for the 1994-1995 Antidumping Administrative 
Review Proceeding of This Case'' (1993-1994 Verification Report), which 
is on file in the Central Records Unit (Room B-099 of the Main Commerce 
Building), pp. 2-8. Therefore, the Department determined that the 
information regarding the price and quantity of steel, the major 
material input into POS cooking ware was not sufficiently complete or 
reliable to use in its calculations.
    In the instant review, the Department was able to verify all 
aspects of steel consumption, including the scrap rate, inventory 
withdrawals, and the reported per unit steel consumption figures (see 
Verification Report, pp. 15-17). Although the Department discovered 
three unreported steel purchases, during the course of verification, it 
obtained the missing invoices, determined that there were no other 
unreported steel purchases, and confirmed the accuracy of the remaining 
reported purchases (see Verification Report, p. 16). The missing 
invoices are on the record and the Department has used the price 
information contained in these invoices as facts otherwise available 
for the unreported purchases (see Facts Available section and Facts 
Available Memorandum). Therefore, unlike the prior review, the 
information available to the Department regarding the price and 
quantity of steel is sufficiently complete and reliable to use in its 
margin calculations.
    In the prior review, the Department was unable to verify the 
consumption of enamel frit, another significant material input in the 
POS cooking ware production process (see 1993-1994 Verification Report, 
p. 8). In this review, following a correction to remove certain 
quantities of clay and quartz from the reported enamel frit figure, the 
Department was able to tie the reported amount of enamel frit consumed 
to the company's books and records (see Verification Report, pp. 17-
18).
    Also, in the prior review, respondent failed to report the quantity 
of various energy inputs (fuel, water and electricity) consumed by 
Clover/Lucky and there was no verifiable information

[[Page 32765]]

on the record regarding the consumption of these energy factors (see 
1993-1994 Verification Report, pp. 1, 13-14). In this review, 
respondent supplied these consumption figures. The Department found no 
discrepancies in its verification of fuel consumption in this review 
(see Verification Report, p. 26). The Department was also able to 
verify electricity and city water consumption once the company had 
revised their figures to reflect the actual rather provisional invoices 
(see Verification Report, pp. 24-25). Further, the Department was able 
to obtain an accurate estimation of industrial well water consumption, 
which it had not been able to do in the previous review (see 
Verification Report, p. 25).
    Respondent's submitted figures for depreciation could not be 
verified in the previous review. The Department selected the smallest 
production department for verification because of the unwieldiness of 
the company's records, yet the company was still unable to support the 
depreciation expenses for a significant portion of the selected 
department. The company was also unable to explain or demonstrate that 
it kept track and could distinguish between molds and dies owned by 
Clover, the PRC factory, and those on loan from Lucky, the parent 
company located in Hong Kong (see 1993-1994 Verification Report, pp. 
11-13). In this review, the Department was able to verify depreciation 
expenses (see Verification Report, p. 26). Further, the company 
demonstrated that it was able to distinguish between the molds and dies 
owned by Clover and those on loan from Lucky, and the Department 
confirmed that Clover's reported depreciation expenses did not include 
depreciation expenses associated with the Lucky's molds and dies.
    With respect to chemical inputs, the Department did discover that 
respondent failed to identify five minor chemicals used in the 
production process of POS cookware in this review (see Verification 
Report, p. 18). These chemicals were part of an aggregate mixture of 
chemicals described in the response as ``Chemical 2;'' the aggregate 
figure included the quantities of these five chemicals but, because 
they were not identified, these quantities were incorrectly allocated 
to other chemicals in the mix. During the course of the verification, 
we obtained an accurate breakdown of Chemical 2 and, as explained 
above, have used this information as facts otherwise available in our 
calculations (see Facts Available section and Facts Available 
Memorandum).
    Unlike the prior review, there is sufficient information on the 
record of this proceeding, with respect to the non-labor portions of 
the response, to serve as a reliable basis for our calculations. 
Further, as explained above, the Department is rejecting the 
information submitted by respondent with respect to labor and using 
adverse facts otherwise available in its calculations (see Department's 
Position on Comment 8, as well as the Facts Available section above and 
the Facts Available Memorandum). We consider the information selected, 
the highest labor cost for an individual piece of cooking ware from the 
information submitted by Clover/Lucky, to be sufficiently adverse for 
use in our calculations.

Final Results of Review

    As a result of the comments received and our findings at 
verification, we have changed the results from those presented in our 
preliminary results of review. Therefore, we determine that the 
following margins exist as a result of our review:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
Clover Enamelware Enterprise/Lucky Enamelware Factory......        57.56
PRC-Wide Rate..............................................        66.65
------------------------------------------------------------------------

    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between United States price and NV may vary from the 
percentages stated above. The Department will issue appraisement 
instructions directly to the U.S. Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of these final results for all shipments of POS cooking 
ware 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) For Clover/Lucky, which has a separate rate, the cash 
deposit rate will be the company-specific rate stated above; (2) for 
all other PRC exporters, the cash deposit rate will be the PRC-wide 
rate stated above; (3) for non-PRC exporters of subject merchandise 
from the PRC, the cash deposit rate will be the rate applicable to the 
PRC supplier of that exporter.
    These deposit rates shall remain in effect until publication of the 
final results of the next administrative review.

Notification to Interested Parties

    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 a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification 
of the return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an 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)), section 777(i) of 
the Act (19 U.S.C. 1677f(i), and 19 CFR 353.22.

    Dated: June 3, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-15871 Filed 6-16-97; 8:45 am]
BILLING CODE 3510-DS-P