[Federal Register Volume 64, Number 68 (Friday, April 9, 1999)]
[Notices]
[Pages 17314-17317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8922]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-810]


Chrome-Plated Lug Nuts From Taiwan; 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.

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

SUMMARY: On October 7, 1998, the Department of Commerce (the 
Department) published the preliminary results of administrative review 
of the antidumping duty order on chrome-plated lug nuts from Taiwan. 
The review covers 18 manufacturers/exporters and the period September 
1, 1996, through August 31, 1997. Based on our analysis of the comments 
received, the dumping margins have not changed from those presented in 
the preliminary results.

EFFECTIVE DATE: April 9, 1999.

FOR FURTHER INFORMATION CONTACT: Ron Trentham or Thomas Futtner, Office 
of AD/CVD 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-
6320 or 482-3814, respectively.

Applicable Statute and Regulations

    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 (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations refer to the 
regulations codified at 19 CFR part 351 (1998).

Background

    On October 7, 1998, the Department published the preliminary 
results (63 FR 53875) of its administrative review of the antidumping 
duty order on chrome-plated lug nuts from Taiwan (September 20, 1991, 
56 FR 47737). The Department has now completed this administrative 
review in accordance with section 751 of the Act.

Scope of the Review

    The merchandise covered by this review is one-piece and two-piece 
chrome-plated lug nuts, finished or unfinished, which are more than 
\11/16\ inches (17.45 millimeters) in height and which have a hexagonal 
(hex) size of at least \3/4\ inches (19.05 millimeters) but not over 
one inch (25.4 millimeters), plus or minus \1/16\ of an inch (1.59 mm). 
The term ``unfinished'' refers to unplated and/or unassembled chrome-
plated lug nuts. The subject merchandise is used for securing wheels to 
cars, vans, trucks, utility vehicles, and trailers. Zinc-plated lug 
nuts, finished or unfinished, and stainless-steel capped lug nuts are 
not within the scope of this review. Chrome-plated lock nuts are also 
not within the scope of this review.
    During the period of review, chrome-plated lug nuts were provided 
for under subheading 7318.16.00.00 of the Harmonized Tariff Schedule 
(HTS). Although the HTS subheading is provided for convenience and 
Customs purposes, our written description of the scope of this review 
is dispositive. This review covers the following firms: Gourmet 
Equipment (Taiwan) Corporation (``Gourmet''), Buxton International 
Corporation (``Buxton''), Chu Fong Metallic Electric Co.(``Chu Fong''), 
San Chien Industrial Works, Ltd. (``San Chien''), Anmax Industrial Co., 
Ltd. (``Anmax)'', Hwen Hsin Enterprises Co., Ltd. (``Hwen Hsin''), San 
Shing Hardware Works Co. (``San Shing''), Trade Union International 
Inc./Top Line (``Trade Union''), Uniauto, Inc. (``Uniauto''), Wing Tang 
Electrical Manufacturing Company (``Wing Tang'') and Multigrand 
Industries Inc. (``Multigrand''), and the period September 1, 1996, 
through August 31, 1997. Buxton, Chu Fong, San Chien, Anmax, Hwen Hsin, 
San Ching, Trade Union, Uniauto, Wing Tang and Multigrand failed to 
completely respond to the Department's questionnaire and therefore were 
assigned an adverse facts available rate of 10.67 percent. 
Questionnaires were sent to Transcend International, Kwan How 
Enterprises Co., Kwan Ta Enterprises Co., Ltd., Everspring Plastic 
Corporation, Gingen Metal Corp., Goldwanate Associates, Inc., Kuang 
Hong Industries Inc., but were returned as undeliverable. These firms 
therefore received the ``all others'' rate of 6.93 percent.

Analysis of Comments Received

    We invited interested parties to comment on the preliminary 
results. We received timely comments from one respondent, Gourmet, and 
rebuttal comments from petitioner, Consolidated International 
Automotive. Based on the comments received, we have not changed our 
determination with respect to Gourmet for the final results.

Comments

    Respondent argues that it has cooperated fully and that the 
Department cannot require it to provide information that is impossible 
for Gourmet to provide, or in a form which Gourmet simply does not 
have. In such a situation, the Department must consider any other 
independent information which is sufficient to substantiate the sales 
and other data provided in Gourmet's submissions.
    In this instance, because Gourmet does not have audited financial 
statements, Gourmet argues that the Department must rely on other forms 
of independent substantiation. Gourmet argues that the Department has a 
long-standing practice to accept whatever substantiation is available 
to satisfy itself that the data submitted can be relied upon. In this 
review, Gourmet submitted bank records as a means to independently 
substantiate its response. Gourmet points to the Notice of Final 
Determination of Sales at less Than Fair Value: Collated Roofing Nails 
from Taiwan, 62 FR 51,427 (October 1, 1997), where the Department 
stated that where a respondent submitted sales and cost data based on 
unaudited financial statements, verification may be based on the 
respondent's ``tax return or any other independent source .''
    Gourmet argues that the use of facts available is not warranted 
under section 776(a) of the Act (19 USC1677e(a)) because the necessary 
information is on the record. Gourmet has responded to all of the 
Department's requests for information with the exception of one 
document, audited financial statements, which do not exist and 
therefore can not be withheld. Gourmet argues that, unlike the 
situation in previous reviews in this review where it stated that its 
data was unverifiable, its submitted data can and should be verified. 
Gourmet points to Borden, Inc. v. United States, 4 F. Supp. 2d 1221 
(Ct. Int'l Trade 1998) (Borden), where the court found that the 
Department is required to consider information submitted by a party 
even if that information does not precisely conform to the Department's 
request, as long as the party has cooperated to the best of its 
ability.

[[Page 17315]]

    Gourmet acknowledges that section 776(a) of the Act may apply 
because the Department may take the position that Gourmet has failed to 
provide the requested information in the form and manner requested. 
However, Gourmet disagrees with its applicability for two reasons. 
First, while Gourmet failed to provide information in the form of 
audited financial statements, it provided the same information in the 
form of bank records. Second, the application of facts available 
pursuant to section 776(a)(2)(B) of the Act is conditional on an 
additional finding that the provisions set out in section 782(e) of the 
Act (19 U.S.C. 1677m(e)) have not been met. Gourmet points to Borden, 
where the court said section 782(e) of the Act requires that no matter 
how unsatisfactory the Department may find the information submitted, 
it must still use that information rather than facts available, so long 
as the criteria of that provision have been met.
    Gourmet argues that its situation is similar to that in the Notice 
of Final Determination of Sales at Less Than Fair Value: Certain 
Preserved Mushrooms from Chile, 63 FR 56,613 (October 22, 1998) (Chile 
Mushrooms). In that case, the Department concluded that resort to facts 
available was not required where independent auditors were unable to 
reconcile the respondent's books and records with its financial 
statements and were ``otherwise unable to account for significant 
assets and liabilities,'' and where the respondent, like Gourmet, was 
not legally obligated to have audited financial statements. Gourmet 
states that the Department correctly concluded that the law would not 
permit rejection of the submitted data in its entirety because the 
respondent had met the five conditions of 782(e) of the Act (19 U.S.C. 
1677m(e)).
    Because Gourmet has provided such independent substantiation and 
has cooperated to the best of its ability, the Department may not 
decline to use Gourmet's submitted information in making its 
determination. Gourmet maintains that the information was submitted on 
time, can be verified, is complete and reliable, can be used without 
undue difficulty, and Gourmet has demonstrated that it has acted to the 
best of its ability in providing information.
    Even if the Department does decline to use such information and 
resorts instead to ``facts available,'' the Department must find that 
Gourmet has cooperated to the best of its ability and therefore that an 
adverse inference would be unwarranted. Gourmet claims that it has 
provided complete responses to all of the Department's questionnaires. 
Gourmet undertook extraordinary efforts to produce alternative forms of 
records to satisfy the Department's requirement for independent 
substantiation of submitted information.
    Gourmet asserts that the Department incorrectly concluded that its 
submissions could not be reconciled to its financial statements in this 
review, as it did in the fourth administrative review even though the 
facts are different. In this review, unlike the fourth, Gourmet does 
not admit its submission cannot be reconciled. On the contrary, Gourmet 
has submitted detailed reconciliation statements to its tax return and 
bank statements. Furthermore, the Department's requirements for 
verifiable submissions as discussed in a Memorandum from Thomas Futtner 
to Holly Kuga, Aug. 20, 1998, does not mandate the submission of 
audited financial statements.
    If the Department finds the information that Gourmet submitted to 
be unverifiable, it does not follow that Gourmet has not acted to the 
best of its ability. The Department has failed to articulate any basis 
for finding that Gourmet failed to cooperate. In Allied-Signal 
Aerospace Co. v. United States, 996 F.2d 1185 (Fed. Cir. 1993) (Allied-
Signal), the court held that where a respondent ``supplied as much of 
the requested information as it could and offered to provide the 
remaining information in a simplified form, . . . [i]t was unreasonable 
for the ITA to have characterized respondent's behavior as a refusal to 
cooperate.'' The court went on to say that ``the respondent failed to 
provide a complete response to the requested information because it was 
unable to, not because it refused to.'' The court made a similar 
distinction in Borden where it stated ``Commerce has articulated no 
reason for finding the respondent's failure was an unwillingness, 
rather than simply an inability, to cooperate, other than vague hints 
that respondent was cooking the books.''
    Petitioner disagrees. As in previous reviews, Gourmet failed to 
submit verifiable information that would allow Commerce to tie the 
company's questionnaire response with its financial data. Petitioner 
argues that the problem is not simply the form of information, but 
rather its substance. Gourmet has been subject to previous reviews and 
has been well aware of the deficiencies in its previous submissions, 
yet Gourmet has made no showing of inability to prepare the requested 
information. Petitioner argues that Commerce was correct to apply facts 
available to Gourmet when it submitted information that had already 
been found to be deficient.
    Petitioner argues that the deficiencies in Gourmet's response 
justify the application of facts available under the statute. Under 
section 776(a)(2)(B) of the Act, Gourmet failed to provide requested 
information, not simply the form of the information, but the substance 
of the information. In terms of the statute, Gourmet's information is 
so incomplete that it cannot serve as a reliable basis for determining 
constructed value since Gourmet's financial information can not be 
reconciled with its questionnaire response and is, therefore, 
unverifiable.
    Petitioner argues that Gourmet did not act to the best of its 
ability in providing the information and meeting the Department's 
requirements. Gourmet had participated in previous reviews where it 
provided similarly deficient information and was sanctioned for doing 
so. Petitioner argues that Gourmet could have corrected these 
deficiencies but rather chose to submit the same substantively 
incomplete and formally, nonconforming information.
    Petitioner argues that Borden does not support Gourmet's position. 
Borden does not address the applicability of section 776(a)(2)(D) of 
the Act (19 U.S.C. 1677e(a)(2)(D)) to the deficient information 
provided; by contrast in this review, Commerce has found that the 
information submitted by Gourmet cannot be verified. Borden does not 
preclude Commerce from applying facts available to the deficient 
response, rather Borden requires Commerce to make the additional 
finding that the respondent failed to act to the best of its ability. 
This deficiency is not present in this review since Commerce expressly 
stated ``that Gourmet has failed to cooperate by not acting to the best 
of its ability.'' In Borden, the court noted that the respondent had 
changed accounting methods and amended its questionnaire responses in 
attempting to respond to the questionnaires. This situation is 
plausible in an investigation, but not the sixth administrative review.
    Petitioner also argues that Allied-Signal does not support 
Gourmet's position. Unlike the facts in Allied-Signal, Gourmet has not 
shown that it cannot provide the required information or that it would 
be unable to prepare the necessary information.

Department's Position

    We agree with petitioner. The Department finds that the use of 
facts available is warranted under section 776(a) of the Act because 
the information in Gourmet's questionnaire

[[Page 17316]]

response cannot be verified. Moreover, we have used an adverse 
inference in applying the facts available, in accordance with section 
776(b) of the Act, because Gourmet has failed to cooperate by not 
acting to the best of its ability in this case. For a more complete 
explanation of Gourmet's deficiencies (which include proprietary 
information) see Memorandum from Thomas Futtner to Holly Kuga, August 
20, 1998 (Futtner Memo).
    Gourmet has failed to demonstrate that the information which it 
placed on the record accurately reflects all of the relevant sales made 
by the company during the period of review and its cost of production. 
While Gourmet did possess relevant financial statements, it was not 
able to demonstrate that the information it reported to the Department 
agrees with those financial statements. Nor did it provide any evidence 
of factors beyond its control which caused such discrepancies or any 
reasonable basis for the Department to determine that its questionnaire 
response was accurate despite these discrepancies. Gourmet has been 
aware of, but has not corrected, deficiencies in its accounting system 
even though these deficiencies caused the Department to use facts 
available for the last several administrative reviews.
    The Department does not reject questionnaire responses simply 
because the respondent does not have an audited financial statement. In 
such situations, the Department looks to other financial records, 
prepared for purposes independent of the antidumping proceeding, such 
as tax statements, which attest to the veracity of a respondent's 
accounting system and information submitted to the Department. (see, 
e.g., Collated Roofing Nails from Taiwan). In this case, Gourmet 
possesses relevant (albeit unaudited) financial statements. As Gourmet 
has acknowledged, however, the financial statements conflict with, and 
hence do not support, its questionnaire response. See Futtner Memo.
    Borden does not support Gourmet's contention. Although in Borden 
the court noted that the Department must consider submitted information 
if that information meets the requirements of section 782(e) of the 
Act, Gourmet's information does not meet those requirements. Gourmet's 
submissions are not verifiable and therefore do not meet the 
requirements of section 782(e)(2). While these submissions are for the 
most part in the form requested by the Department, their content is 
unreliable. See Futtner Memo. Moreover, in Borden, the court approved 
the Department's use of adverse facts available in that case.
    Further, Allied-Signal is not relevant to this case. In Allied-
Signal, where the Court held that the respondent had ``supplied as much 
of the requested information as it could and offered to provide the 
remaining information in a simplified form,...[i]t was unreasonable for 
the ITA to have characterized respondent's behavior as a refusal to 
cooperate.'' That case did not involve evidence on the record 
indicating a fundamental discrepancy between information in the 
questionnaire response and the respondent's financial statements. 
Although Gourmet has participated in several antidumping administrative 
reviews and is thoroughly familiar with the Department's requirements, 
it has consistently failed to comply with the Department's standards by 
continuing to provide unverifiable data.
    In addition, Gourmet's reliance on Chile Mushrooms is misplaced. 
Chile Mushrooms did not involve a fundamental disagreement between the 
questionnaire response and the respondent's financial records. Rather 
certain issues were raised by the findings of an independent audit of 
the respondent's records. We determined that these findings were either 
irrelevant for our purposes or could be adequately addressed by 
adjustments and the use of partial FA. In this case, we are not dealing 
the results of an independent audit or with information that may be 
rendered useful by the application of partial facts available.
    Gourmet is incorrect that the Department is basing its facts 
available decision on the findings in previous reviews, where Gourmet 
admitted that its submissions could not be reconciled. The Department 
treats each administrative review separately. Based on the information 
on the record in the instant review, we have determined that Gourmet's 
accounting system and the information submitted to the Department are 
unreliable. Id.. Reliance on the accounting system used for the 
preparation of the financial statements is a key and vital part of the 
Department's determination that a company's sales and constructed value 
data are credible. Section 776(a)(2)(D) of the Act states that the 
Department ``shall, subject to section 782(d), use the facts otherwise 
available in reaching the applicable determination under this title'' 
if an interested party or any other person provides information but the 
information cannot be verified. Because Gourmet's submissions are not 
reconcilable to its financial statements and Gourmet has provided no 
acceptable explanation and no reasonable alternative support for its 
submission, it is unverifiable.
    Despite the admitted discrepancies between its financial statements 
and its questionnaire response, Gourmet argued that its questionnaire 
response nonetheless could be verified using other information, such as 
bank records. In attempting to demonstrate this, however, it became 
clear that the records that it was attempting to rely on could not 
adequately substantiate its response without requiring the Department 
essentially to perform a complete audit of Gourmet's financial records. 
This is not the purpose of a verification, which is fundamentally a 
spot check of selected data--not a detailed examination of a 
respondent's entire accounting system. We believe that Gourmet has had 
sufficient notice of the Department's requirements for verifiable 
submissions and ample opportunity to provide information that is 
amenable to verification. Yet Gourmet has continued to provide 
unverifiable data. Therefore, we determine that Gourmet has failed to 
cooperate by not acting to the best of its ability, and thus we are 
using an adverse inference in our application of facts available.
    Section 776(b) of the Act provides that, in selecting from the 
facts available, adverse inferences may be used when an interested 
party fails to cooperate by not acting to the best of its ability to 
comply with requests for information. See also Statement of 
Administrative Action (``SAA'') accompanying the URAA, H.R. Doc. No. 
316, 103d Cong., 2d Sess. 870 (1994). Section 776(b) of the Act 
authorizes the Department to use as adverse facts available information 
derived from the petition, the final determination from the less than 
fair value (LTFV) investigation, a previous administrative review, or 
any other information placed on the record.
    Section 776(c) of the Act requires the Department to corroborate, 
to the extent practicable, secondary information used as FA. Secondary 
information is described in the Statement of Administrative Action 
(SAA) (at 870) as ``[i]nformation derived from the petition that gave 
rise to the investigation or review, the final determination concerning 
the subject merchandise, or any previous review under section 751 
concerning the subject merchandise.''
    The SAA further provides that ``corroborate'' means simply that the 
Department will satisfy itself that the secondary information to be 
used has probative value (see SAA at 870). Thus, to corroborate 
secondary information, the Department will, to the extent

[[Page 17317]]

practicable, examine the reliability and relevance of the information 
used. However, unlike other types of information, such as input costs 
or selling expenses, there are no independent sources for calculated 
dumping margins. The only source for margins is an administrative 
determination. Thus, in an administrative review, if the Department 
chooses as total adverse facts available a calculated dumping margin 
from a prior segment of the proceeding, it is not necessary to question 
the reliability of the margin from that time period (i.e., the 
Department can normally be satisfied that the information has probative 
value and that it has complied with the corroboration requirements of 
section 776(c) of the Act). See, e.g., Elemental Sulphur from Canada: 
Preliminary Results of Antidumping Duty Administrative Review, 62 FR at 
971 (January 7, 1997) and Antifriction Bearings (Other than Tapered 
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, 
Singapore, and the United Kingdom 62 FR 2801 ( January 15,1997) (AFBs 
1997).
    As to the relevance of the margin used for adverse FA, the 
Department stated in Tapered Roller Bearings from Japan; Final Results 
of Antidumping Duty Administrative Review, 62 FR 47454 (September 9, 
1997), that it will consider information reasonably at its disposal as 
to whether there are circumstances that would render a margin 
irrelevant. Where circumstances indicate that the selected margin is 
not appropriate as adverse FA, the Department will disregard the margin 
and determine an appropriate margin. See also Fresh Cut Flowers from 
Mexico; Preliminary Results of Antidumping Duty Administrative Review, 
60 FR 49567 (September 26, 1995). We have determined that there is no 
evidence on the record that would indicate that the 10.67 percent rate, 
a rate calculated from the LTFV investigation, is irrelevant or 
inappropriate as an adverse facts available rate for the respondent in 
the instant review. Therefore, we have applied, as adverse FA, the 
highest margin for any firm in any segment of this proceeding, 10.67 
percent, as the rate for Gourmet.

Final Results of Review

    As a result of this review, we have determined that the following 
margins exist for the period September 1, 1996, through August 31, 
1997.

------------------------------------------------------------------------
                                                                Percent
                    Manufacturer/exporter                        margin
------------------------------------------------------------------------
Gourmet Equipment (Taiwan) Corporation.......................      10.67
Buxton International/Uniauto.................................      10.67
Chu Fong Metallic Electric Co................................       6.93
Transcend International......................................       6.93
San Chien Industrial Works, Ltd..............................      10.67
Anmax Industrial Co., Ltd....................................      10.67
Everspring Plastic Corp......................................       6.93
Gingen Metal Corp............................................       6.93
Goldwanate Associates, Inc...................................       6.93
Hwen Hsin Enterprises Co., Ltd...............................      10.67
Kwan How Enterprises Co., Ltd................................       6.93
Kwan Ta Enterprises Co., Ltd.................................       6.93
Kuang Hong Industries Ltd....................................       6.93
Multigrand Industries Inc....................................       6.93
San Shing Hardware Works Co., Ltd............................      10.67
Trade Union International Inc./Top Line......................      10.67
Uniauto, Inc.................................................      10.67
Wing Tang Electrical Manufacturing Company...................      10.67
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. The Department 
will issue appraisement instructions concerning all respondents 
directly to the U.S. Customs Service.
    We will assess antidumping duties on the above firms' entries at 
the same rate as their above stated dumping margins since the margins 
are not calculated rates, but are rates based upon facts available 
pursuant to section 776 of the Act.
    Further, the following cash deposit requirements will be effective 
for all shipments of the subject merchandise, entered, or withdrawn 
from warehouse, for consumption on or after the publication date of 
these final results of administrative review, as provided for by 
section 751(a)(1) of the Act: (1) the cash deposit rate for the 
reviewed firms will be the rates indicated above; (2) for previously 
reviewed or investigated companies not listed above, the cash deposit 
rate will continue to be the company-specific rate published for the 
most recent period; (3) if the exporter is not a firm covered in this 
review, a prior review, or in the original 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 (4) 
if neither the exporter nor the manufacturer is a firm covered in this 
or any previous review or the original investigation, the cash deposit 
rate will be 6.93%, the all others rate established in the LTFV 
investigation.
    These deposit requirements 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 351.402(f) 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 order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO. Timely written notification or conversion to judicial protective 
order is hereby requested. Failure to comply with the regulations and 
the terms of the APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1)(B) and 777(i)(1)of the Act.

    Dated: April 5, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-8922 Filed 4-8-99; 8:45 am]
BILLING CODE 3510-DS-P