[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