[Federal Register Volume 63, Number 49 (Friday, March 13, 1998)]
[Notices]
[Pages 12449-12451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6550]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-501]


Natural Bristle Paintbrushes and Brush Heads From the People's 
Republic of China; Final Results of Antidumping Duty Administrative 
Review

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

ACTION: Notice of final results of the antidumping duty administrative 
review of natural bristle paintbrushes and brush heads from the 
People's Republic of China.

-----------------------------------------------------------------------

SUMMARY: On November 7, 1997, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
review of the antidumping order on natural bristle paint brushes and 
brush heads (paint brushes) from the People's Republic of China (PRC). 
The review covers two exporters of the subject merchandise and the 
period February 1, 1996 through January 31, 1997.
    We gave interested parties an opportunity to comment on our 
preliminary results. We received comments from Hunan Provincial Native 
Produce and Animal By-Product Import and Export Corporation (Hunan). We 
did not receive rebuttal comments. After considering these comments, we 
have not changed the final results from those presented in the 
preliminary results of review and have determined that sales have not 
been made below normal value (NV), as explained below.

EFFECTIVE DATE: March 13, 1998.

FOR FURTHER INFORMATION CONTACT: Eric Scheier or Maureen Flannery, 
Antidumping/Countervailing Duty Enforcement, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington D.C. 20230; telephone 
(202) 482-4733.

[[Page 12450]]

Applicable Statute

    Unless otherwise indicated, 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. In addition, unless otherwise indicated, 
all citations to the Department's regulations are to the provisions 
codified at 19 CFR part 353, as of April 1, 1996.

Background

    On November 7, 1997, the Department published the preliminary 
results of review (62 FR 60228). The Department has now completed this 
administrative review in accordance with section 751 of the Act.

Scope of Review

    Imports covered by this review are shipments of natural bristle 
paint brushes and brush heads from the PRC. Excluded from the order are 
paint brushes with a blend of 40 percent natural bristles and 60 
percent synthetic filaments. The merchandise under review is currently 
classifiable under item 9603.40.40.40 of the Harmonized Tariff Schedule 
of the United States (HTSUS). Although the HTSUS subheading is provided 
for convenience and Customs purposes, the written description of the 
merchandise is dispositive.
    This review covers the period February 1, 1996 through January 31, 
1997.

Interested Party Comments

    We gave interested parties an opportunity to comment on the 
preliminary results of review. We received comments from Hunan. We did 
not receive rebuttal comments from any party.

Comment 1

    Hunan argues that the Department should correct the calculation of 
the surrogate overhead rate to avoid double-counting certain overhead 
expenses. While Hunan notes that all parties agree on the use of 
Indonesia's Large and Medium Manufacturing Statistics: 1995, Volume II 
as the source of information to be used in calculating a surrogate 
factory overhead rate, Hunan disagrees with the Department's 
methodology using these data to calculate the surrogate overhead rate. 
Hunan states that it was inappropriate for the Department to add ``new 
purchases,'' ``second-hand purchases,'' and ``constructions major 
repairs and improvements'' to the expenses included for total factory 
overhead. Hunan claims that ``new purchases,'' ``second-hand 
purchases'' and ``constructions major repairs and improvements'' are 
incorrectly classified as fixed overhead items, and maintains that 
these items are properly classified as capital expenditures, which are 
charged to asset accounts and are included only as a balance sheet 
item.
    Secondly, Hunan states that its own proposed methodology for 
valuing factory overhead already includes fixed overhead expenses of 
``repairs and industrial services received'' and ``rent of building, 
machinery and equipment.'' Hunan alleges that the classification of 
``repairs and industrial services received'' and ``rent of building, 
machinery and equipment'' as variable overhead expenses is incorrect 
because neither expense varies in proportion to the number of units 
produced.
    Furthermore, Hunan disagrees with the use of new and second-hand 
purchases as a proxy for depreciation, which had not been accounted for 
in Indonesia's Large and Medium Manufacturing Statistics: 1995, Volume 
II. Hunan states that new and second-hand purchases and construction, 
major repairs and improvements are capital expenses partially expensed 
through depreciation, and are booked as assets on the balance sheet. 
The value of fixed assets, Hunan states, is depreciated over time.
    Hunan submits that, while the exclusion of depreciation from 
overhead may artificially depress the surrogate overhead rate, it will 
artificially inflate the surrogate profit rate calculated as the total 
value for gross value added output less the amount for total 
expenditures. Hunan states that, should the Department continue to use 
the methodology it used in the preliminary results for the final 
results, an adjustment must be made to the profit calculation to 
compensate for the exclusion of depreciation from total expenditures.
    Lastly, Hunan notes that the methodology proposed by Hunan for the 
calculation of factory overhead, the SG&A rate, and the profit rate was 
used previously by the Department in Notice of Final Determination of 
Sales at Less than Fair Value: Collated Roofing Nails from the People's 
Republic of China 62 FR 51410 (Oct. 1, 1997) (Roofing Nails). Hunan 
further notes that in the initiation of the antidumping investigation 
on Bicycles from the People's Republic of China 60 FR 21065 (May 1, 
1995) (Bicycles), the Department accepted this same data source and 
acknowledged that new purchases, second-hand purchases and 
constructions, major repairs and improvements were capital expenditures 
that should not be included in factory overhead.

Department's Position

    While we agree with Hunan that new and second-hand purchases and 
construction, major repairs and improvements are generally considered 
capital assets rather than overhead items, the fact that, in the data 
used, they are not recognized as assets and depreciated indicates that 
they are being recognized in the year in which the expense was 
incurred, and therefore are appropriately considered overhead expenses. 
Therefore, we have continued to include these items as overhead 
expenses. Hunan's assertion that certain items characterized as 
variable overhead items in our preliminary results are actually fixed 
overhead items is moot, because for these final results we have not 
differentiated fixed and variable overhead.
    We disagree with Hunan's assertion that the Department must make an 
adjustment to the profit calculation to compensate for the exclusion of 
depreciation from total expenditures. As noted above, depreciation was 
not one of the expense items reported on the income statement, however, 
the income statement did include a line items for capital assets 
expensed. These capital assets were expensed during the period rather 
than capitalized and depreciated. Therefore, it is not appropriate to 
include an additional amount for depreciation in total expenditures. 
Furthermore, while we note that the absence of depreciation from 
factory overhead would cause the factory overhead percentage to be less 
and profit to be greater than if depreciation existed on the income 
statement in question, we disagree that we should arbitrarily assign an 
amount of depreciation to be deducted from profit when depreciation is 
not recognized on the income statement, nor identified elsewhere.
    Finally, we disagree with Hunan that because we used or accepted a 
certain methodology in Roofing Nails and Bicycles, we should continue 
to do so in this review. We have reviewed the methodology used in 
Roofing Nails and Bicycles, and have more closely examined the 
components from which factory overhead was constructed for the current 
preliminary results. As discussed above, we have determined that ``new 
purchases,'' ``second-hand purchases'' and ``constructions major 
repairs and improvements'' are overhead items in that they were 
recognized in the year in which the expenses were incurred and, as 
stated in

[[Page 12451]]

the preliminary results, represent part of the costs incurred to 
produce the subject merchandise. Therefore, we have determined that the 
methodology used for the preliminary results, which includes these 
items in factory overhead, is the most appropriate for the surrogate 
data in question. Based on the foregoing we have not changed the 
calculations for these final results.

Final Results of Review

    We determine that the following dumping margins exist:

------------------------------------------------------------------------
                                                                Margin  
          Manufacturer/exporter              Time period      (percent) 
------------------------------------------------------------------------
Hunan Provincial Native Produce & Animal                                
 By-Products I/E Corp...................     2/1/96-1/31/97         0.01
PRC-Wide rate...........................     2/1/96-1/31/97       351.92
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and NV may vary from the percentage 
stated above for Hunan. The Department will issue appraisement 
instructions on each exporter directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of this notice of final results of review for all shipments 
of paint brushes from the PRC entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided for by 
section 751(a)(2)(c) of the Act: (1) for Hunan, which was found to 
merit a separate rate for the final results of this review, the cash 
deposit rate will be zero, because the company-specific rate 
established in the final results of this administrative review is, in 
accordance with 19 CFR 353.6, de minimis, i.e., less than 0.5 percent; 
(2) for all other PRC exporters, the cash deposit rate will be the PRC-
wide rate, which is 351.92 percent; (3) for previously reviewed non-PRC 
exporters, the cash deposit rate will be the rate established in the 
most recent segment of the proceeding; and (4) for all other 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, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice 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 subsequent assessment 
of double antidumping duties.

Notification to Interested Parties

    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and 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.

    Dated: March 9, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-6550 Filed 3-12-98; 8:45 am]
BILLING CODE 3510-DS-P