[Federal Register Volume 62, Number 204 (Wednesday, October 22, 1997)]
[Notices]
[Pages 54825-54831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27990]
[[Page 54825]]
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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 duty administrative
review.
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SUMMARY: On January 29, 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 4250). This review covers shipments by two
manufacturers/exporters of this merchandise to the United States during
the period December 1, 1993, through November 30, 1994. We gave
interested parties an opportunity to comment on our preliminary
results. Based upon our analysis of the comments received (see Analysis
of Comments Received section below), these final results of review
remain unchanged from the preliminary results of review.
EFFECTIVE DATE: October 22, 1997.
FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Kelly Parkhill,
Office of CVD/AD Enforcement VI, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-
2786.
Applicable Statute and Regulations: Unless otherwise stated, all
citations to the statute and to the Department's regulations are
references to the provisions as they existed on December 31, 1994.
SUPPLEMENTARY INFORMATION:
Background
On December 2, 1986, the Department published, in the Federal
Register, the antidumping duty order on POS cooking ware from the PRC
(51 FR 43414). On December 6, 1994, the Department published, in the
Federal Register, a notice of opportunity to request an administrative
review of this antidumping duty order (59 FR 62710) covering the period
December 1, 1993, through November 30, 1994.
On December 21, 1994, in accordance with 19 C.F.R. 353.22(a)(1), a
U.S. importer, CGS International Inc. (CGS), requested that we conduct
an administrative review of Clover Enamelware Enterprise Ltd. (Clover),
a PRC manufacturer/exporter of the subject merchandise, and its third-
country reseller in Hong Kong, Lucky Enamelware Factory Ltd. (Lucky).
On December 29, 1994, in accordance with 19 C.F.R. 353.22(a),
petitioner, General Housewares Corp. (GHC) requested that we conduct an
administrative review of China National Light Import and Export
Corporation (China Light), Shanghai Branch, through Amerport (H.K.),
Ltd. We published the notice of initiation of this antidumping duty
administrative review covering the period December 1, 1993 through
November 30, 1994, on January 13, 1995 (60 FR 3192).
On February 29, 1997, the Department published in the Federal
Register the preliminary results of this administrative review of the
antidumping duty order on POS cooking ware from the PRC (62 FR 4250).
There was no request for a hearing. The Department has now completed
this review in accordance with section 751(a) of the Act.
Related Parties
Clover is two-thirds owned by Lucky and therefore Lucky holds
controlling interest in Clover. Due to Lucky's ownership interest in
Clover, and the fact that the same individual is the general manager at
both companies, we consider Clover and Lucky (hereafter Clover/Lucky)
to be related pursuant to section 771(13) of the Act. As such, and
consistent with prior reviews of this order, we have calculated only
one rate for both of these companies. For a further discussion of this
issue, see Memorandum from Case Analyst to the File Regarding Status as
Related Parties dated January 17, 1997, which is a public document on
file in the Central Records Unit (room B-099 of the Department of
Commerce).
Scope of 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 item numbers are
provided for convenience and Custom purposes. The written description
remains dispositive.
Best Information Available
In our preliminary results, we determined, in accordance with
sections 776(b) and (c) of the Act, that the use of best information
available (BIA) is appropriate for China Light and Clover/Lucky. (See
``Memorandum for Jeffrey P. Bialos from Barbara E. Tillman Regarding
Use of Best Information Available'' dated January 16, 1997, which is a
public document on file in the Central Records Unit (room B-099 of the
Main Commerce Building).) We received written comments on the
preliminary results of review. Our analysis of the comments submitted
by interested parties has not led us to modify our findings from the
preliminary results.
Section 776(b) of the Act states that the Department shall use BIA
whenever it is unable to verify the information submitted. Section
776(c) of the Act states that the Department shall use BIA whenever a
company refuses or is unable to produce information in a timely manner
and in the form required, or significantly impedes an investigation or
review.
In deciding what to use as BIA, section 353.37(b) of the
Department's regulations provide that the Department may take into
account whether a party refuses to provide requested information or
impedes a proceeding. Thus, the Department determines on a case-by-case
basis what is BIA. The Department uses a two-tiered approach in its
choice of BIA. When a company refuses to provide the information
requested in the form required or otherwise significantly impedes the
Department's review (first tier), the Department will normally assign
to that company the higher of (1) the highest rate found for any firm
in the less-than-fair-value (LTFV) investigation or a prior
administrative review; or (2) the highest rate found in the current
review for any firm. When a company has cooperated with the
Department's request for information but fails to provide information
requested in a timely manner or in the form required such that margins
for certain sales cannot be calculated (second tier), the Department
will normally assign to those sales the higher of (1) the highest rate
applicable to that company for the same class or kind of merchandise
from any previous review or the original investigation; or (2) the
highest calculated margin for any respondent in the current review. See
Final Results of Antidumping Duty Administrative Reviews and Revocation
in Part of An Antidumping Duty Order: Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof from France, et. al., 58 FR
39729 (July 26, 1993). This practice has been upheld in Allied-Signal
Aerospace Co. v. United States, 996 F.2d 1185
[[Page 54826]]
(Fed. Cir. 1993), and Krupp Stahl AG et al. v. United States, 822 F.
Supp. 789 (CIT 1993).
As mentioned above, China Light did not respond to our
questionnaire. As non-cooperative, first-tier BIA, and in accordance
with section 776(c) of the Act, we have applied the highest margin from
the LTFV investigation, prior administrative reviews, or in this
review, which is 66.65 percent. Further, China Light was not found
eligible for a separate rate in this review. Consequently, China Light
is part of the single NME entity in this review, which has been
assigned the PRC country-wide rate (see, e.g., Heavy Forged Hand Tools,
Finished or Unfinished, With or Without Handles, from the People's
Republic of China; Preliminary Results of Antidumping Duty
Administrative Review; 61 FR 15218, 15221 (April 5, 1996), and Heavy
Forged Hand Tools, Finished or Unfinished, With or Without Handles,
from the People's Republic of China; Final Results of Antidumping Duty
Administrative Review; 61 FR 15269 (October 1, 1996).
Clover/Lucky cooperated with our requests for information and
agreed to undergo verification. From July 17 through July 29, 1995, the
Department attempted verification of the company's questionnaire
response at Lucky's sales offices in Hong Kong and Clover's factory in
Shenzhen, PRC. As a result of these verification efforts with respect
to Clover's questionnaire response, we discovered significant
discrepancies and were unable to verify substantial sections of the
questionnaire response, including statutorily required factors of
production information, such as the number of labor hours worked and
the per unit quantities consumed of primary material inputs. These
discrepancies are detailed in the Department's verification report
concerning Clover, dated January 13, 1997.
As a result, the Department has determined that the data the
company submitted is unverifiable. Therefore, in accordance with
section 776(b) of the Act, there is no basis to accept the integrity of
the factors of production information submitted in the questionnaire
response, constituting a verification failure. See Notice of Final
Determination of Sales at Less Than Fair Value: Melamine Institutional
Dinnerware Products from the People's Republic of China, 61 FR 1708
(January 13, 1997). Because the respondent failed verification, the
Department must use BIA. Since Clover/Lucky was cooperative, we have
applied second-tier BIA. The second-tier BIA rate is the highest rate
applicable to the company from a previous review or the original LTFV
investigation, which in this case is 66.65 percent, the rate Clover/
Lucky received in the 1990/91 administrative review.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received a case brief from Clover/Lucky
(respondent) and a rebuttal brief from General Housewares (petitioner).
Comment 1: Clover/Lucky alleges that the Department's decision to
consider verification a failure is unwarranted. According to
respondent, the problems at verification were due to: (1) The brevity
of the verification at Clover's factory in the PRC; and (2) the
Department's failure to explore alternative methods of
verification.1 Clover/Lucky claims that had the Department
spent more time at Clover, the Department would have been able to
verify much of the allegedly unverified information. According to
Clover/Lucky, it is the Department's obligation to allow itself the
time necessary to verify the responses and find alternative methods of
verification of information, if needed.
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\1\ Clover/Lucky suggests the following alternative methods for
some portions of the response that could not be verified: (1) The
verifiers could have timed the products going through the production
process in order to verify the piece rate tables used to calculate
the workers' wages; (2) 1995 (post-POR) time cards could be examined
to verify the 1993/94 labor hours and piece rates reported in the
response; (3) uncoated semi-finished steel blanks, steel blanks with
the initial ground coat, steel blanks with the cover coat, double-
coated steel blanks and finished goods for selected products could
have been shipped to the United States for further examination and
weighing in order to verify the reported enamel consumption; and (4)
loan documents identifying ownership of machinery between Lucky and
Clover could be examined, in conjunction with on-site identification
of molds and equipment by knowledgeable floor supervisors, in order
to verify the depreciation information included in the response that
could not be verified through the depreciation cards.
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Petitioner argues that Clover/Lucky provided no evidence
demonstrating that the Department's verification procedures to verify
Clover/Lucky were unfair or unreasonable.
Department's Position: We disagree with respondent. The on-site
verification at Clover's factory in the PRC was but one portion of the
ten-day verification of Clover/Lucky's questionnaire response. Ten days
to verify a questionnaire response is well within the normal time
period allotted for such verifications. In addition, as Clover/Lucky
noted in its case brief, the verification team was willing to, and did,
work overtime to allow the company the opportunity to demonstrate the
accuracy of the submitted information. Further, upon leaving Clover's
factory in the PRC, the team gave Clover the opportunity to send any
missing supporting documentation to Lucky's offices in Hong Kong, which
the team would then verify at that location. Despite this opportunity,
Clover sent no such information.
As we stated in Antifriction Bearings (Other than Tapered Roller
Bearings) and Parts Thereof from France, et. al.; Final Results of
Antidumping Duty Administrative Reviews and Partial Termination of
Administrative Reviews, 61 FR 66481, 66482 ( December 17,1996), ``It is
incumbent on the respondent to establish the accuracy of the
information it submits during the time period allotted for
verification.'' This position is supported by the U.S. Court of
International Trade (CIT) which stated, ``There is no statutory mandate
as to how long the process of verification must last, . . . . [The
Department] is afforded discretion when conducting a verification
pursuant to 19 U.S.C. 1677e(b).'' Persico Pizzamiglio, S.A. v. United
States, 18 CIT 229, 307 (1994) (holding that a three-day overseas
verification was reasonable). See also Ceramica Regiomontana, S.A. v.
United States, 10 CIT 399, 406, 636 F. Supp. 961, 967 (1986) (held that
the Department has wide latitude in determining the time to be spent
and the procedures to be used to conduct verification).
We also disagree with Clover/Lucky's contention that it is the
Department's obligation to explore alternative approaches to verifying
information. As petitioner points out in its rebuttal brief, it is the
responsibility of the respondent, and not of the Department, to create
a sufficient record in the administrative review. Tatung Co., v. United
States, 18 CIT 1137, 1140 (1994). The purpose of verification is to
verify the accuracy of the response, not to collect information or
recreate the response in order to address its errors or deficiencies.
See Belmont Industries v. United States, 733 F. Supp. 1507, 1508 (CIT
1990) (``verification is like an audit, the purpose of which is to test
information provided by a party for accuracy and completeness. Normally
an audit entails selective examination rather than testing of an entire
universe''); see also Monsanto Co. v. United States, 698 F. Supp. 275,
281 (CIT 1988) (``verification is a spot check and is not intended to
be an exhaustive examination of the respondent's business''). To
accomplish this, the Department uses standard verification methods, and
among other things, examines the source documents that respondents
claim were used to
[[Page 54827]]
compile the information contained in their questionnaire response.
To assist respondents in preparing for verification, the Department
issues an outline of the verification to respondents prior to the
arrival of the verifiers. Prior to verification in this case, the
Department sent an outline of the verification procedures to Clover/
Lucky. The outline identified the information in the response that the
Department intended to verify and the types of source documents that
would be examined by the Department when conducting the verification.
The outline also indicated that it was not exhaustive, and that the
Department might request relevant additional material necessary for a
complete verification.
As discussed above, the Department does not have an unlimited
amount of time in which to conduct a verification. As characterized by
the CIT itself, verification under these conditions is, by its very
nature, a spot check rather than a complete audit. As such, it is
crucial that the information reported in the questionnaire response can
be readily verified if selected for examination. Given the time limits
of verification, the Department is unable to await, let alone accept,
numerous clarifications or corrections to responses at verification,
nor can it explore all conceivable verification methods suggested by a
respondent in the hope that one of them might conceivably result in the
information being verified at some indefinite point in the future.
The alternative methods of verification suggested by Clover/Lucky
would have required significant amounts of additional time to
undertake. In this case, such time was no longer available because of
the difficulties encountered in verifying the information in the
response using standard verification procedures as set forth in the
verification outline that was sent to Clover/Lucky. For example, with
respect to timing the processing steps on the factory floor as an
alternative method of verifying labor hours, respondent noted in its
comments that Clover's POS cookware production process is a complicated
one. According to Clover/Lucky, the simplest piece of enamelware, a
plate, involves seven processes while a teakettle (a covered cookware
item) involves 48 processes. Some of these processes (e.g., enameling)
involve considerable time between steps. Given the need to take several
readings per processing step being examined in order to calculate a
meaningful average, this method would require considerable time and
effort to verify even one cookware item, much less a meaningful sample
of the approximately 45 cookware items under review. Further, Clover
manufactures over 450 different enamelware items, only a portion of
which are cookware items sold in the United States. Therefore, it is
highly unlikely that the Department would be able to randomly select a
cookware item from the piece rate table (a table listing the standard
amounts of time required to complete individual processing steps for
each enamelware item produced by the company) and find that it is being
produced that day on the shop floor.
In addition, two of the suggested alternatives, the use of 1995
(post-POR) source documents to verify 1993/94 data and the post-
verification shipment of finished and semi-finished cookware products
to the United States for examination by the Department are simply not
reasonable verification alternatives. The Department cannot accept
unrelated information from a future review period to substitute for
source documents from the period under review. The comparison of 1995
time cards to 1993/94 labor records and piece rate tables will not
result in any meaningful determination as to the accuracy of the
submitted 1993/94 information. As to the submission of selected pieces
of finished and semi-finished cookware to the Department for
examination and weighing, the purpose of on-site verification is to
enable the Department not only to check certain factual information but
also to be able to further verify the accuracy of the submitted
information through questions to, and clarifying statements from, those
individuals that either prepared the response, are involved in the
manufacture and exportation of the merchandise under review or are
responsible for maintaining the company's books and records. This is
not possible under Clover/Lucky's suggested alternative methods of
verification.
Comment 2: Clover/Lucky alleges that it should not be penalized for
failing to maintain the source documentation needed to support its
reported labor hours/record retention. Neither the questionnaire nor
the outline specifically stated that time cards needed to be retained
for verification. Further, these records are not required to be kept by
local tax authorities.
Department's Position: Contrary to respondent's characterization
that its failure to maintain source documentation for reported labor
hours was the cause of the failed verification, in this review, labor
hours were among the many items that Clover/Lucky was unable to tie to
or support with source documentation.
In addition, we disagree with respondent's claim that it should not
be penalized for failing to maintain certain source documents because
the Department did not specifically identify these source documents in
its questionnaire or outline. Both the questionnaire and the
verification outline make it clear that the information submitted in
the response may be subject to verification. Because responses
submitted in an administrative review may be subject to verification,
it is incumbent upon a respondent to retain the source documentation
which it used to prepare the questionnaire response. The verification
outline further notes that we will be tying the information reported in
the response to the company's source documents that support that
information. The outline provides examples of the type of documents we
examine and clearly states that we may require any additional
documentation necessary for a complete verification. Time cards are
among the documents that support a company's payroll. That the
Department might request to examine these time cards can hardly be
considered outside the realm of possibility in a verification of
reported labor hours. Section 773(c)(3) of the Act, which enumerates
the specific factors of production that the Department examines in NME
cases, lists as the very first factor ``hours of labor required''
(section 773(c)(3)(A)).
The record keeping requirements of local tax authorities are not
germane to the records that need to be maintained for verification of
the questionnaire response in an antidumping administrative review. See
Krupp Stahl A.G. v. United States, 17 CIT 450; 822 F. Supp. 789, 791-92
(1993) (holding that the fact that a foreign government did not require
retention of business records did not absolve the respondent from its
obligation or responsibility to respond to the Department's
questionnaire response in an antidumping proceeding. The court upheld
the Department's use of BIA.) See also Antifriction Bearings (Other
Than Tapered Roller Bearings) and Parts Thereof From France, et al.;
Final Results of Antidumping Duty Administrative Reviews, Partial
Termination of Administrative Reviews, and Revocation in Part of
Antidumping Duty Orders, 60 FR 10900, 10990 (February 28, 1995).
Comment 3: Clover/Lucky claims that the Department's conclusion
that Clover was unable to document its per-unit enamel consumption
figure is
[[Page 54828]]
unfounded. At verification, the company explained the sampling
procedure it used to estimate the per-unit consumption. By weighing
three to five samples of each model throughout the various coating and
drying processes, it calculated a per-unit weighted-average of enamel
consumption. Clover/Lucky contends that, based on this procedure, the
company prepared the table used to report per-unit enamel consumption
in its response. As respondent itself states, because enamel coating is
a hand-dipped process, the difference between the actual weight of an
individual item may be quite different from the consumption figure
calculated in the sample. However, since the consumption figures were
derived from actual figures, respondent claims it was not necessary for
the company to maintain the underlying source documents.
Department's Position: We disagree with respondent. The
verification report does not support Clover/Lucky's contention that it
was able to document the per-unit enamel consumption. As stated by
Clover/Lucky itself in its case brief, the company did not retain any
of the original worksheets or underlying source documents of the per-
unit enamel consumption after conducting its sample weighing.
As discussed previously, it is the responsibility of the
respondent, and not of the Department, to create a sufficient record in
the administrative review. Tatung Co., v. United States, 18 CIT 1137,
1140 (1994). The purpose of verification is to verify the accuracy of
the response through examination of source documentation, not to
collect information or recreate supporting source documentation that
respondent has failed to maintain. Further, as discussed previously, we
reject Clover's suggestion that the Department allow it to ship, after
verification, selected samples of finished and semi-finished cookware
products to the Department in order that the Department could further
test the accuracy of the reported figures. For further information
regarding the Department's position on this, see Department's Position
to Comment 1.
Comment 4: Clover/Lucky argues that it should not be penalized for
failing to report the quantities of water, electricity and fuel
consumed in the production process because the Department did not
specifically ask the company to report quantities of indirect materials
in its factors of production questionnaire. Rather, as stated in
Clover/Lucky's case brief, the Department only requested factor inputs
for the following: (A) Direct Materials; (B) Direct Labor; (C) Factory
Overhead; (D) Selling, General and Administrative Expenses; (E) Other;
and (F) Packing. Therefore, the Department cannot not fault Clover for
failing to report information that was not fairly requested, citing
Koyo Seiko Company, Ltd. and Koyo Corporation of U.S.A. v. The United
States, 92 F.3rd 1162, 1168 (Fed. Cir. 1986). Clover/Lucky argues
further that since the Department verified Clover's total value of
electricity and fuel consumption against financial statements and
vouchers which contained both quantities and values of electricity and
fuel consumption, it could just as well have compiled the total
quantities of energy used.
Department's Position: We disagree with respondent. Because the
prices of materials and inputs in an NME are not considered valid for
calculation purposes, the Department requires respondents to report the
amount, rather than the value, of materials consumed in the production
process. Although the questionnaire did not specifically include
``indirect materials'' or ``energy'' in the list of factor input
categories, it is clear that such items are covered by the Department's
questionnaire. The list of requested information, with respect to the
factors of production, is broad and all-inclusive--it includes all the
major categories involved in production as well as a catch-all category
(i.e., ``Other''). Indirect materials and energy consumed in the
production process normally fall under Factory Overhead, the very
category Clover/Lucky used when reporting its expenses for electricity,
water and fuel (rather than the requested quantities for these same
three items). However, these inputs could have just as easily been
categorized as Other, or in certain cases, if applicable, Direct
Materials. All three of these categories were listed by the Department
in its questionnaire. Therefore, it cannot be construed that the
information asked for at verification was unfairly requested.
As to whether the Department could have gathered the information at
verification from financial documents or invoices, again, respondent is
asking the Department to take on the responsibility of creating the
company's response at verification. As discussed previously, it is the
responsibility of the respondent, and not of the Department, to create
a sufficient record in the administrative review. Tianjin Machinery I/E
Corp. v. United States, 806 F. Supp. 1008, 1015 (CIT 1992). The Court
has held that the Department ``is not required to . . . recalculate a
respondent's submission to develop an accurate response.'' Tatung Co.,
v. United States, 18 CIT at 1142 n.3, citing Chinsung Indus. Co. v.
United States, 705 F. Supp. 598, 601-02 (1989).
Comment 5: Clover/Lucky contests the Department's statement in the
verification report that there was an extremely large number of
typographical errors in the reported quantities of steel purchases.
Clover/Lucky also claims that the statements in the verification report
that the company was unable to reconcile the quantity of steel
requisitioned for production with inventory withdrawals, and that it
was also unable to substantiate its reported per unit quantities of
steel, are incorrect. The company claims that much of the steel
information was verified and that those items that did not verify were
not substantial and would not materially affect the company's response.
Department's Position: We disagree with respondent. At
verification, we found a number of discrepancies with respect to both
steel purchases and steel consumption. From a small sample of selected
invoices, the Department discovered typographical errors resulting in
the under reporting of individual steel purchases in two cases by 22
and 43 percent, the over reporting of individual steel purchases by 222
percent in another, and the misclassification of one purchase's steel
thickness. Because at verification the Department is only able to
verify information through spot-checking, where we find discrepancies
in the subset that is actually tested, we must judge the effect of such
discrepancies that are randomly revealed on the unexamined portion of
the response. See, e.g., Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof From France, et. al.; Final Results
of Antidumping Duty Administrative Review, 62 FR 2081 (January 15,
1997).
Further, Clover/Lucky incorrectly concludes that the reported net
discrepancy is inconsequential because it is small when compared to
total reported steel purchases. In fact, the figure in the verification
report was based on an examination of only a small portion of the steel
purchases (those with a thickness of 4 mm), not all steel purchases and
includes errors in both directions. Because at verification we examined
a subset of steel purchases and found discrepancies in the reporting
with respect to this subset, the Department must attribute to all of
the steel purchases these same discrepancies. See Belmont Industries v.
United States, 733 F. Supp. 1507, 1508 (CIT 1990); see also Monsanto
Co. v. United States, 698 F. Supp. 275, 281 (CIT 1988). Therefore, the
figure understates the impact of the
[[Page 54829]]
discrepancies, even when properly compared to 4mm steel purchases.
Problems also arose with respect to the verification of steel
consumption. The Department was unable to verify the reported ratio for
steel scrap, which, because of its significance in the manufacture of
POS cookware, is an important factor in determining total steel
consumption. The spot check of departmental steel requisitions to
inventory withdrawals showed a discrepancy of approximately seven
percent that the company was unable to account for.
The Department faced similar problems in its verification of the
per unit quantities of steel used in the production of cooking ware
that were reported in the response. The company submitted theoretical
quantities based on an equation it developed using the specific density
of steel. As to the statement in the verification report which noted no
discrepancies between the reported per unit steel amounts and the
method used by the company to calculate these amounts (cited by
respondent as support for their conclusion that the problems in this
area were insignificant), the only conclusion that can be drawn from
that statement is that the company did not make any mathematical errors
in its calculations, nor any transcription errors when typing this
figure in the response. As such, the Department's statement in its
verification report that it found no discrepancies between the reported
per unit steel amounts and the method respondent used to calculate
these reported figures has no bearing on either the accuracy of the
method the company chose to estimate its per unit steel consumption or
the figures in its response. The fact remains that the company could
not corroborate the calculated theoretical per unit figures with
sampled actual weight readings or support the figures used in the per
unit calculations with the measurements from the technical drawings
that the company claimed as supporting documentation.
The discrepancies, the errors in reporting and the inability to
reconcile the figures reported in the response with supporting
documentation, demonstrate that the company's response with respect to,
not only its purchases, but also its consumption of steel, the primary
material input in the POS production process, cannot be relied upon.
Comment 6: With respect to depreciation expenses regarding certain
fixed assets, Clover/Lucky argues it did not create ``fixed asset
cards'' (instead of a fixed-asset ledger, Clover records all its asset-
related information on fixed asset cards) for its equipment at the time
they were installed because the cards are only required to be created
during the first fiscal year period. Further, although Clover admits
that it had no system in place to show ownership of the molds,\2\ it
contends that the Department could have examined loan documents to
determine the identity of the fixed assets in question. Moreover,
Clover/Lucky claims that its technicians know the identity of the asset
by merely looking at it. According to respondent, the Department could
have reviewed the loan documents and successfully verified this section
of the response if it had allowed sufficient time for verification.
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\2\ Certain molds were among the fixed assets which the
Department selected for verification of depreciation expenses.
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Department's Position: The Department examined depreciation
expenses in this case because of Clover/Lucky's claim that the POS
cooking ware industry constituted a market-oriented industry (MOI).
Since the Department found that the POS cooking ware industry does not
constitute an MOI (see Department's position to Comment 9), the issue
raised by respondent is moot.
Comment 7: Clover/Lucky argues that even if the Department rejects
Clover's factors of production information in this case, it should
determine the foreign market value (FMV) based on Lucky's home market
(Hong Kong) sales or third country sales.
Petitioner disputes Clover/Lucky's argument, claiming that Clover/
Lucky is, in effect, challenging the Department's preliminary finding
that the POS cooking ware industry does not constitute a market-
oriented industry. Petitioner points out that Clover has provided no
information that prices for significant inputs are not controlled by
the PRC government. Petitioner argues that the Department must,
therefore, calculate FMV using the factors of production methodology.
Department's Position: We disagree with respondent that FMV in this
case can be determined on the basis of Lucky's home market or third
country sales. In order for FMV to be based on Lucky's home market or
third country prices (which respondent, in its case brief, now requests
for the first time in this proceeding), Lucky would have had to allege
and demonstrate that it had third-country reseller status. Further, it
would have to meet the requirements of section 773(f) of the Act in
order to have its sales, either home market or third country, used as
the basis for FMV. Lucky made no such claim in this proceeding.
Moreover, issues of relatedness aside, since Clover knows at the time
of the sale the final destination of the merchandise, Lucky does not
qualify as a reseller from an intermediate country in any event. (See
Clover/Lucky's June 20, 1995 Questionnaire Response (Public Version)
which, at page 20, states that ``Clover is aware of the ultimate
destination of the POS cookware because the destination is indicated on
the outer carton.'') Moreover, given the relationship between Lucky and
Clover, we do not consider that there exists a ``purchase'' from the
PRC production facility by Lucky within the meaning of section 773(f).
(See Preliminary Determination of Sales at Less than Fair Value:
Disposable Pocket Lighters From the People's Republic of China, 59 FR
64191, 64194 (December 13, 1994)). Thus, even had Lucky made a proper
claim that it was a third country reseller within the meaning of
section 773(f) of the Act, the record evidence of this case would not
support such a determination. Therefore, Lucky's prices to customers in
Hong Kong or third countries could not be used as the basis for FMV--
only Clover's factors of production information could form the basis of
FMV, the method selected by the Department in this case. Moreover, had
we considered using Lucky's prices in Hong Kong or to third countries,
we would normally compare those prices to the cost of the merchandise
based on factors of production, because the merchandise was produced in
an NME country. We could not have performed this test, because we could
not verify the factors of production. As stated previously, as a result
of the failure of verification with respect to Clover's factors of
production information, the Department had to resort to the best
information available in this case under section 776(b) of the Act.
With respect to petitioner's rebuttal to respondent's claim,
petitioner mistakenly frames respondent's claim as one of advocating
the use of PRC prices to determine FMV (i.e., petitioner raises the
market-oriented industry discussion). Respondent, however, is not
arguing that the Department use Clover's price, but, instead, that the
Department use Lucky's home market or third country prices to determine
FMV. As respondent itself states on page 19 of its case brief, ``Lucky
and Clover are not requesting that Commerce use Clover's prices.''
Comment 8: Clover/Lucky argues that the Department should conduct a
supplemental verification and reexamine the information submitted in
[[Page 54830]]
its questionnaire response. This would allow the Department sufficient
time to explore the alternative verification methods enumerated by
Clover/Lucky in its comments.
Petitioner, however, contends that there is no basis to conduct a
re-verification, since Clover/Lucky provided no evidence that
Department's verification was flawed. Petitioner points out that the
CIT ruled that the Department ``is not required to re-verify
information submitted after verification, or recalculate a submission
to develop an accurate response.'' Tatung Co. v. United States, 18 CIT
at 1142 n.3, citing Chinsung Indus. Co. v. United States, 705 F. Supp.,
at 601-02.
Department's Position: We disagree with respondent. Conducting a
second verification, particularly after a company fails its first
verification, would be an extraordinary action. To do so would signal
to respondents that a failed verification can be overcome, which would
undermine both our ability to obtain complete and accurate information
from Clover/Lucky in time to conduct proper verifications and to
complete reviews in a timely manner as required by the Act. As in the
case cited by petitioner, the Department is not required to conduct a
supplemental verification. The CIT has ruled that ``Due to stringent
time deadlines and the significant limitations on Commerce's resources
it is vital that accurate information be provided promptly to allow the
agency sufficient time for review.'' Ceramica Regiomontana, S.A. v.
United States, 10 CIT 399, 406, 636 F. Supp, 961, 967 (1986).
Although the Department has conducted supplemental verifications in
the past (See, e.g., Cyanuric Acid and its Chlorinated Derivatives from
Japan; Final Results of Antidumping Duty Administrative Review, 51 FR
45495, 45496 (December 19, 1986); Cell Site Transceivers from Japan;
Final Determination of Sales at Less Than Fair Value, 49 FR 43080,
43084 (October 26, 1984); High Power Microwave Amplifiers and
Components Thereof from Japan, 47 FR 22134 (May 21, 1982) (final
determination of sales at less than fair value), and; Fireplace Mesh
Panels from Taiwan; Final Determination of Sales at Less Than Fair
Value, 47 FR 15393, 15395 (April 9, 1982)), in each of these cases, re-
verification was conducted pursuant to requests for additional
information requested by the Department, or due to a particular
emergency that arose in the case. In contrast, Lucky/Clover's request
is based primarily on general time constraints, constraints which must
always be imposed on a verification. There is simply no reason for the
Department to take the extraordinary measure in this case of conducting
a supplemental verification.
Comment 9: Clover/Lucky also argues that the Department should
conduct a supplemental verification to redetermine that the POS
cookware industry constitutes a market-oriented industry. Respondent
claims that, at verification, the Department could verify that the
company pays market prices for both labor and the PRC-sourced direct
and indirect materials it uses in the production of cooking ware.
Department's Position: We disagree with respondent. As discussed
above, in determining whether an industry under examination constitutes
a market-oriented industry, the Department examines the industry as a
whole, not just the practices of the company or companies under
investigation or review. (See Notice of Final Determination of Less
Than Fair Value; Furfuryl Alcohol from the People's Republic of China,
60 FR 22544 (May 8, 1995).) Clover/Lucky has not demonstrated that the
POS cooking ware industry constitutes a market-oriented industry in the
PRC, and we have adopted our preliminary determination with respect to
this issue for these final results. The examination of Clover's
purchases from its non-market suppliers and the wages it pays its
employees is insufficient to conclude that the POS cooking ware
industry as a whole is a market-oriented industry.
For a more detailed discussion of the Department's preliminary
determination that the POS cooking ware industry does not constitute a
market-oriented industry, see Memorandum to Barbara E. Tillman,
Director of the Office of CVD/AD Enforcement VI, dated January 17,
1997, ``Market-Oriented Industry Request in the 1993-1994
Administrative Review of POS Cooking Ware from the People's Republic of
China,''which is a public document on file in the Central Records Unit
(room B-099 of the Main Commerce Building).
Final Results of Review
Based on our analysis of comments from interested parties, we
determine that no changes to the preliminary results are warranted for
purposes of these final results. The dumping margins for each company
under review are:
------------------------------------------------------------------------
Manufacturer/Exporter Rate(percent)
------------------------------------------------------------------------
Clover/Lucky............................................. 66.65
PRC-Wide Rate (including China Light).................... 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 FMV may vary from the
percentages stated above. The Department will issue appraisement
instructions directly to the U.S. Customs Service.
Since the final results for the more recent review period, December
1, 1994 through November 30, 1995 (1995 review period) were published
on June 17, 1997 (62 FR 3275), the cash deposit instructions contained
in that notice will apply to all shipments to the United States of
subject merchandise entered, or withdrawn from warehouse, for
consumption on or after June 17, 1997. The dumping margins established
for the period December 1, 1993 through November 30, 1994 period will
have no effect on the cash deposit rate for any firm except for the
company China Light. For China Light, which did not respond to our
questionnaire, and was not subject to the 1995 review, the cash deposit
rate will be the PRC-wide rate for the 1993-1994 period.
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)) and 19 CFR 353.22.
[[Page 54831]]
Dated: October 16, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-27990 Filed 10-21-97; 8:45 am]
BILLING CODE 3510-DS-P