[Federal Register Volume 63, Number 196 (Friday, October 9, 1998)]
[Notices]
[Pages 54441-54444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27277]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-823]


Professional Electric Cutting Tools From Japan; 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 June 5, 1998, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order on professional electrical cutting tools (PECTs) 
from Japan. The period of review (POR) covers sales of the subject 
merchandise to the United States during the period July 1, 1996 through 
June 30, 1997.
    We gave interested parties an opportunity to comment on our 
preliminary results. Based on our analysis of the comments received, we 
have changed the results from those presented in the preliminary 
results of the review.

EFFECTIVE DATE: October 9, 1998.

FOR FURTHER INFORMATION CONTACT: Lyn Baranowski, AD/CVD Enforcement 
Group III, Office 9, Import Administration, International Trade 
Administration, U.S. Department of

[[Page 54442]]

Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230; telephone: (202) 482-3208.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are references to the provisions effective 
January 1, 1995, the effective date of the amendments made by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations codified at 19 CFR part 351 (62 FR 27296; May 19, 1997).

Background

    On June 5, 1998, we published in the Federal Register (63 FR 30706) 
the preliminary results of the administrative review of the antidumping 
duty order on PECTs from Japan (58 FR 37461); July 12, 1993. We 
received case briefs from one respondent, Makita Corporation and Makita 
U.S.A., Inc. (Makita) and the petitioner, Black and Decker (U.S.), Inc. 
(Black & Decker) on July 6, 1998. Petitioner and respondent submitted 
rebuttal briefs on July 13, 1998. The Department is conducting this 
review in accordance with section 751 of the Act.

Scope of the Review

    Imports covered by this review are shipments of PECTs from Japan. 
PECTs may be assembled or unassembled, and corded or cordless.
    The term ``electric'' encompasses electromechanical devices, 
including tools with electronic variable speed features. The term 
``assembled'' includes unfinished or incomplete articles, which have 
the essential characteristics of the finished or complete tool. The 
term ``unassembled'' means components which, when taken as a whole, can 
be converted into the finished or unfinished or incomplete tool through 
simple assembly operations (e.g., kits).
    PECTs have blades or other cutting devices used for cutting wood, 
metal, and other materials. PECTs include chop saws, circular saws, jig 
saws, reciprocating saws, miter saws, portable bank saws, cut-off 
machines, shears, nibblers, planers, routers, joiners, jointers, metal 
cutting saws, and similar cutting tools.
    The products subject to this order include all hand-held PECTs and 
certain bench-top, hand-operated PECTs. Hand-operated tools are 
designed so that only the functional or moving part is held and moved 
by hand while in use, the whole being designed to rest on a table top, 
bench, or other surface. Bench-top tools are small stationary tools 
that can be mounted or placed on a table or bench. These are generally 
distinguishable from other stationary tools by size and ease of 
movement.
    The scope of the PECT order includes only the following bench-top, 
hand-operated tools: cut-off saws; PVC saws; chop saws; cut-off 
machines, currently classifiable under subheading 8461 of the 
Harmonized Tariff Schedule of the United States (HTSUS); all types of 
miter saws, including slide compound miter saws and compound miter 
saws, currently classifiable under subheading 8465 of the HTSUS; and 
portable band saws with detachable bases, also currently classifiable 
under subheading 8465 of the HTSUS.
    This order does not include: professional sanding/grinding tools; 
professional electric drilling/fastening tools; lawn and garden tools; 
heat guns; paint and wallpaper strippers; and chain saws, currently 
classifiable under subheading 8508 of the HTSUS.
    Parts or components of PECTs when they are imported as kits, or as 
accessories imported together with covered tools, are included within 
the scope of this order.
    ``Corded'' and ``cordless'' PECTs are included within the scope of 
this order. ``Corded'' PECTs, which are driven by electric current 
passed through a power cord, are, for purposes of this order, defined 
as power tools which have at least five of the following seven 
characteristics:
    1. The predominate use of ball, needle, or roller bearings (i.e., a 
majority or greater number of the bearings in the tool are ball, 
needle, or roller bearings;
    2. Helical, spiral bevel, or worm gearing;
    3. Rubber (or some equivalent material which meets UL's 
specifications S or SJ) jacketed power supply cord with a length of 8 
feet or more;
    4. Power supply cord with a separate cord protector;
    5. Externally accessible motor brushes;
    6. The predominate use of heat treated transmission parts (i.e., a 
majority or greater number of the transmission parts in the tool are 
heat treated); and
    7. The presence of more than one coil per slot armature.
    If only six of the above seven characteristics are applicable to a 
particular ``corded'' tool, then that tool must have at least four of 
the six characteristics to be considered a ``corded'' PECT.
    ``Cordless'' PECTs, for the purposes of this order, consist of 
those cordless electric power tools having a voltage greater than 7.2 
volts and a battery recharge time of one hour or less.
    PECTs are currently classifiable under the following subheadings of 
the HTSUS: 8508.20.00.20, 8508.20.00.70, 8508.20.00.90, 8461.50.00.20, 
8465.91.00.35, 85.80.00.55, 8508.80.00.65 and 8508.80.00.90. Although 
the HTSUS subheading is provided for convenience and customs purposes, 
the written description of the merchandise under review is dispositive.
    This review covers one company, Makita Corporation (Makita), and 
the period July 1, 1996 through June 30, 1997.

Analysis of the Comments Received

Comment 1

    Makita argues that the Department should revise its CEP profit 
calculations to reflect the profit from the entire foreign like 
product, not just the profit from the home market models that are the 
closest matches to the U.S. models. Makita states that the statute and 
the Department's regulations (see 19 U.S.C. section 1677a(d)(3) and 
1677b(e)(2)(A), and 19 CFR 351.402(d) and 351.405(b)) require the 
Department to base its CEP profit calculation on the entire home market 
sales database reported by Makita. According to Makita, the Department 
has conclusively stated that a calculation of CV and CEP should be 
based on sales of the ``foreign like product'' which includes all home 
market sales during the POR (see Antifriction Bearings (Other than 
Tapered Roller Bearings) and Parts Thereof from France, Germany, Italy, 
Japan, Romania, Singapore, Sweden, and the United Kingdom: Final 
Results of Antidumping Duty Administrative Reviews, 63 FR 33320, 33323 
(June 18, 1998); Color Picture Tubes from Japan: Final Results of 
Antidumping Duty Administrative Review, 62 FR 34201 (June 25, 1997); 
Antifriction Bearings (Other than Tapered Roller Bearings) and Parts 
Thereof from France, Germany, Italy, Japan, Romania, Singapore, Sweden, 
and the United Kingdom: Final Results of Antidumping Duty 
Administrative Reviews, 62 FR 54043, (October 17, 1997); and Certain 
Internal-Combustion Industrial Forklift Trucks from Japan: Final 
Results of Antidumping Duty Administrative Reviews, 62 FR 5592 
(February 6, 1997). Makita claims that in a previous administrative 
review of this proceeding, the Department erred in incorrectly limiting 
the home market database to those models used as matches for U.S. sales 
for the purposes

[[Page 54443]]

of calculating CV and CEP profit in the preliminary results. This error 
was corrected for the final results of that review (see Professional 
Electric Cutting Tools from Japan: Final Results of Antidumping Duty 
Administrative Review, 62 FR 386, 388 (January 3, 1997) (PECT 94/95 
Final). Makita thus urges the Department to revise its calculation of 
CEP profit for the final results of this review and use the profit 
resulting from sales of all products in the home market database to 
calculate CEP profit.
    Petitioner agrees that the Department should calculate the profit 
for purposes of the CEP sale on the basis of the foreign like product. 
However, it disagrees with Makita in its definition of the term 
``foreign like product.'' In its interpretation, petitioner claims that 
the term ``foreign like product'' is defined by the statute as the 
sales used as a basis of comparison with sales to the United States (19 
U.S.C. section 1677b(a)). Petitioner notes that 19 U.S.C. section 
1677(16)(A), (B), and (C) requires the Department to select as the 
foreign like product merchandise that is, in the first instance, 
identical to that sold in the United States. If identical merchandise 
does not exist, the Department may select merchandise similar to the 
foreign like product, the objective being to develop a pool of 
comparable products, the prices of which are used to calculate NV. 
Petitioner cites Koyo Seiko Co., Ltd. versus United States, 66 F.3d 
1204, 1209 (Fed. Cir. 1995) (Koyo Seiko) in support of its contention 
that the pool of matched models is the foreign like products from which 
the home market portion of the CEP profit is derived.
    Petitioner concludes that if the foreign like product is expanded 
beyond the pool of matched models to include all similar products, as 
respondent requests, the resulting profit figure would be 
unrepresentative of the products that were used to determine NV.

Department's Position

    We agree with respondents that we erred in limiting the home market 
database to those models used as matches for U.S. sales for purposes of 
calculating CEP profit in the preliminary results. For the final 
results, we have used all sales of the foreign like product for the 
purposes of calculating CEP profit.
    19 CFR 351.402(d)(1) specifically states that the Department 
``normally will use the aggregate of expenses and profit for...all 
foreign like products sold in the exporting country . . .'' As the 
Department stated in PECT 94/95 Final, for purposes of calculating CV 
and CEP profit, we interpret the term ``foreign like product'' to be 
inclusive of all merchandise sold in the home market which is in the 
same general class or kind of merchandise as that under consideration. 
We have continued to follow this practice in this review.

Comment 2

    Petitioner asserts that the Department incorrectly granted Makita a 
Constructed Export Price (``CEP'') offset. As argument, they 
incorporated their rebuttal brief from the third administrative review 
of this proceeding. See the relevant portion of Comment 1 from the 
Final Results of the 95/96 Review of this proceeding (Professional 
Electrical Cutting Tools from Japan: Final Results of Antidumping Duty 
Administrative Review, 63 FR 6891 (February 11, 1998) (PECT 95/96 
Final). Petitioner asserts that Makita has not established that sales 
to wholesalers in Japan were made at a different stage of marketing 
compared to its wholesaler in the United States.
    Petitioner contends that even if the Department were correct that a 
CEP offset is appropriate, this methodology has been invalidated by the 
Court of International Trade in the case of Borden, Inc. et al. versus 
United States, 1988 WL 178722, Slip Op. 98-36 (CIT 1998) (Borden). 
Petitioner maintains that, in Borden, the Court held that Commerce's 
methodology in determining level of trade (``LOT'') adjustments and CEP 
offsets is contrary to the clear terms of the governing statute. The 
Court stated that Commerce should only make price adjustments to the 
starting prices of CEP sales after comparing those sales to home market 
sales in the LOT analysis.
    According to petitioner, the Department applied the methodology for 
adjusting and calculating CEP that the Court rejected in Borden, and 
consequently should correct this error in the final results of this 
administrative review.
    Makita argues that the Department was correct in granting Makita a 
CEP offset as the Department has a complete, fully documented and 
verified level of trade (LOT) analysis for the record of this review 
supporting the granting of this offset. Specifically, Makita responds 
that the Department has found ``vast (and verified) differences in 
selling functions and stages of marketing'' between Makita's HM sales 
and its CEP sales. Makita states that this analysis resulted in a fair 
pricing comparison and that, as a result, the Department's analysis is 
in full accordance with the law.
    Makita further contends that the remand guidelines established in 
Borden do not invalidate the Department's LOT methodology, claiming 
that the LOT analysis performed by the Department meets all of the 
requirements set forth in Borden, and provides for a fair comparison of 
home market and U.S. prices. Makita maintains that the Court concedes 
that the statutory LOT adjustments to which the Court refers could 
bring about the same result created by the automatic deduction of 
expenses under 19 U.S.C. section 1677a(d) (``section (d) expenses''). 
As a result, Makita argues, there is no evidence that the Department's 
prior deduction of expenses and profit under 19 U.S.C. section 1677a(d) 
in any way affects the integrity, objectivity, or completeness of its 
LOT analysis, or that it results in unfair price comparisons. In fact, 
Makita asserts that the Department considered all relevant selling 
functions in its level of trade analysis, not just those relating to 
deductible expenses.
    Makita asserts that if the Borden guidelines are interpreted as 
establishing the relevant U.S. LOT at the unadjusted CEP level, and 
therefore not allowing the deductions of section (d) expenses at any 
time, then these guidelines are contrary to the law. According to 
Makita, under this broad view of Borden, the relevant U.S. LOT would be 
the starting price (the unadjusted CEP level), the LOT would never 
change over the course of the Department's entire LOT inquiry, and 
section (d) expenses would never be deducted. Makita believes this 
methodology to be inconsistent with the Court's view that a 
determination of the proper LOT is the very purpose of the Department's 
LOT inquiry, and completely ignores the fact that the statutory offset 
remedy is, by its very terms, designed to correct for differences in 
the foreign parent company's indirect selling expenses (under 19 U.S.C. 
section 1677b(7)(B)). Makita asserts that section (d) expenses, which 
are incurred by the U.S. affiliate, have no bearing on these indirect 
selling expenses.
    Respondent continues that the starting price is, by definition, 
never equal to the CEP level of sales. If the Court does not allow any 
changes to the LOT at the starting price, or does not allow adjustments 
to CEP even where this is required to allow for a fair comparison of 
home market and U.S. pricing, then the Court is depriving litigants of 
access to procedures which guarantee fair results.
    In respondents' view, the Department has been consistently clear in 
stating

[[Page 54444]]

that where a level of trade comparison is warranted and possible, the 
level of trade for CEP sales will be evaluated based on the price after 
adjustments are made under section 772(d) of the Act. See Static Random 
Access Memory Semiconductors from Taiwan: Final Determination of Sales 
at Less Than Fair Value, 63 FR 8909, 8918-8920 (February 23, 1998); and 
Large Newspaper Printing Presses and Components Thereof, Whether 
Assembled of Unassembled from Japan: Final Determination of Sales at 
Less Than Fair Value, 61 FR 38139, 38143 (July 23, 1996). Makita 
believes that this practice represents a reasonable interpretation of 
the statute and should continue to be applied in this review.
    Finally, Makita claims that, assuming that the Department's LOT 
analysis does not comport with Borden, the guidelines are still not 
binding on the Department because (1) Borden's applicability is limited 
to its facts, and (2) the remand is not a ``final decision'' because 
the Department has indicated that it plans to appeal Borden.

Department's Position

    We agree with respondents that we correctly granted Makita a CEP 
offset in this case. We concluded, based on factual evidence, that (1) 
significant differences exist in the selling functions associated with 
each of the two home market levels of trade and the CEP level of trade; 
(2) the CEP level of trade is at a less advanced stage of distribution 
than either home market level of trade; and (3) the data available do 
not provide an appropriate basis for a level of trade adjustment for 
any comparisons to CEP. Therefore, the Department has granted Makita a 
CEP offset for the final results.
    The Department is continuing its practice, articulated in section 
351.412(c) of its regulations, of making level of trade comparisons for 
CEP sales on the basis of the CEP after adjustments provided for in 
section 772(d) of the statute. As stated in Certain Stainless Steel 
Wire Rods from France: Final Results of Antidumping Duty Administrative 
Review, 63 FR 30185 (June 3, 1998), we recognize that the Department's 
practice has been criticized by the Court of International Trade in 
Borden. However, the decision in Borden is not final, and we believe 
our practice to be in full compliance with the statute and the 
regulations. Thus, we will continue to apply the methodology 
articulated in the regulations at section 351.412.

Final Results of Review

    As a result of our review, we determine that the following 
weighted-average dumping margin exists for the period June 30, 1996, 
through July 1, 1997:

------------------------------------------------------------------------
           Manufacturer/Exporter                  Margin (percent)
------------------------------------------------------------------------
Makita Corporation........................  0.05 (de minimis)
------------------------------------------------------------------------

    The Department will determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and normal value may vary from the 
percentages stated above. The Department will issue appraisement 
instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of these final results for all shipments of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the publication date provided by section 
751(a)(1) of the Act: (1) No cash deposit will be required for the 
reviewed company as the rate stated above is de minimis, i.e., less 
than 0.5 percent; (2) if the exporter is not a firm covered in this 
review, a prior review, or the original less than fair value (LTFV) 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (3) the cash deposit rate for all other 
manufacturers or exporters will continue to be the ``all others'' rate 
of 54.52 percent, the all others rate established in the LTFV 
investigation. These deposit requirements, when imposed, shall remain 
in effect until publication of the final results of the next 
administrative review.
    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) 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 the 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), that continues to govern 
business proprietary information in this segment of the proceeding. 
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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: October 5, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-27277 Filed 10-8-98; 8:45 am]
BILLING CODE 3510-DS-P