[Federal Register Volume 64, Number 220 (Tuesday, November 16, 1999)]
[Notices]
[Pages 62169-62175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29905]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-484-801]
Electrolytic Manganese Dioxide From Greece: 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 May 10, 1999, the Department of Commerce published the
preliminary results of the administrative review of the antidumping
duty order on electrolytic manganese dioxide from Greece. The review
covers one producer/exporter, Tosoh Hellas A.I.C., during the period of
review April 1, 1997, through March 31, 1998.
We gave interested parties an opportunity to comment on the
preliminary results. After our analysis of the comments received, we
made no changes for the final results.
EFFECTIVE DATE: November 16, 1999.
FOR FURTHER INFORMATION CONTACT: Hermes Pinilla or Richard Rimlinger,
Import Administration, International Trade Administration, U.S.
Department of Commerce, Washington, DC 20230; telephone: (202) 482-3477
or (202) 482-4477, respectively.
SUPPLEMENTARY INFORMATION:
The 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, as amended (the
Act), by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all citations to the Department of Commerce's (the
Department's) regulations are to 19 CFR part 351 (1998).
Background
On May 10, 1999, we published in the Federal Register the
preliminary results of the administrative review of the antidumping
duty order on electrolytic manganese dioxide (EMD) from Greece.
Preliminary Results of Antidumping Duty Administrative Review:
Electrolytic Manganese Dioxide from Greece, 64 FR 25008 (preliminary
results). Kerr-McGee Chemical LLC and Chemetals, Inc. (collectively the
petitioners), submitted their case brief on August 10, 1999. Tosoh
Hellas A.I.C. (Tosoh), the sole respondent in this review, did not
submit a case brief. Tosoh submitted its rebuttal brief on August 17,
1999. The Department has conducted this administrative review in
accordance with section 751(a) of the Act.
Scope of Review
Imports covered by this review are shipments of EMD from Greece.
EMD is manganese dioxide (MnO2) that has been refined in an
electrolysis process. The subject merchandise is an intermediate
product used in the production of dry-cell batteries. EMD is sold in
three physical forms, powder, chip, or plate, and two grades, alkaline
and zinc-chloride. EMD in all three forms and both grades is included
in the scope of the order. This merchandise is currently classifiable
under item number 2820.10.0000 of the Harmonized Tariff Schedule (HTS)
of the United States. The HTS number is provided for convenience and
customs purposes. It is not determinative of the products subject to
the order. The written product description remains dispositive.
[[Page 62170]]
Selection of Comparison Market
Prior to the issuance of the preliminary results, the petitioners
alleged that, although viable, Tosoh's home market is not a suitable
market in which to establish normal value. The petitioners also alleged
that the EMD grade Tosoh sold in the home market is not a foreign like
product as set forth in section 771(16)(B) of the Act and that a
particular market situation exists which warrants the rejection of home
market sales for consumption as the basis for normal value.
For our preliminary results we determined that Tosoh's home market
was appropriate to use in the determination of normal value. In the
interest of full consideration, however, we requested additional
information from Tosoh to determine whether the two products in
question are commercially comparable. See preliminary results. Our
analysis and conclusions with regard to these issues have been
addressed below.
Analysis of Comments Received
Issues raised in the briefs by the petitioners and Tosoh are
addressed below.
Comment 1: Foreign Like Product--Like in Component Material
The petitioners argue that the EMD (i.e., zinc-chloride-grade EMD)
Tosoh sold in the home market is not a foreign like product as defined
in section 771(16)(B) of the Act because it is not ``like the exported
product in component material or materials.'' The petitioners assert
that the raw materials used in the manufacture of the home market
product are unlike the raw materials used in the manufacture of the
merchandise sold to the United States. They argue that the difference
arises because Tosoh includes the cost of a certain item (the identity
of which is proprietary information) in its home market variable cost
of manufacture whereas it does not include the cost of a corresponding
item in its U.S. variable cost of manufacture. The petitioners contend
that the Department's 20-percent difference-in-merchandise test will
not address the differences in materials adequately. In sum, they argue
that the difference in component materials is such that the merchandise
is not ``like in component materials'' as required under section
771(16)(B)(ii) of the Act.
Tosoh argues that the two types of EMD are ``like'' in component
materials since they have the same physical structure, are manufactured
using the same component materials, and meet the same minimum chemical-
property specifications. In addition, according to Tosoh, both types of
EMD are produced using the same basic production process on the same
production line. Furthermore, Tosoh contends that the item of concern
to the petitioners is not a component material and has very little
bearing on the cost of production of EMD, as demonstrated by the fact
that the difference in cost of the two EMD types at issue here is well
within the Department's 20-percent difference-in-merchandise standard.
Therefore, according to Tosoh, the Department concluded correctly that
the two EMD types are ``like'' in component materials.
Department's Position: We continue to find, as we stated in our
April 29, 1999, Memorandum (see Memorandum to Richard W. Moreland,
available in our Central Records Unit, Room B-099 (April 29
Memorandum)), that the product sold in the home market is a foreign
like product on which we can base normal value under section 771(16)(B)
of the Act. First of all, the most important component materials (i.e.,
manganese ore, heavy oil, sulfuric acid, etc.) of the U.S. and home
market products are the same.
Further, the difference identified by the petitioners is not a
difference in component materials but rather a difference in the
equipment used in the manufacturing processes. Although Tosoh listed
the equipment as a ``raw material,'' this designation was solely for
accounting purposes because the useful life of the equipment is less
than one year.
Finally, our difference-in-merchandise adjustment is based on
actual physical differences in the products and is calculated on the
basis of variable manufacturing costs. We include the cost of
materials, labor, and variable factory overhead as direct manufacturing
costs in our difference-in-merchandise adjustment, and any distinction
in such costs between the subject merchandise and the foreign like
product will be subject to our 20-percent difference-in-merchandise
test. See Import Administration Policy Bulletin, No. 92.2 (July 29,
1992). The differences in direct manufacturing cost of the two products
at issue here, zinc-chloride-grade and alkaline-grade EMD, meet our 20-
percent guideline.
In conclusion, for these reasons, we find that the subject
merchandise sold in the home market meets the foreign-like-product
criterion at section 771(16)(B)(ii) of the Act.
Comment 2: Foreign Like Product--Purposes for Which Used
The petitioners contend that the home market product is not a
foreign like product as defined in section 771(16)(B) of the Act
because it is not ``like in the purposes for which used.'' According to
the petitioners, the Department made two fundamental errors in
addressing this question in its April 29 Memorandum.
First, the petitioners assert, the Department erred by considering
the relevant use to be the common use of the home market product rather
than the use of particular sales. In this case, the petitioners claim,
the EMD sold in the home market was used as an additive in battery
cells in which natural manganese dioxide (NMD) is the principal cathode
material. According to the petitioners, in this application, the EMD
does not act as the principal cathode material but as an enriching
agent to improve the performance of NMD in these old-fashioned cells.
Therefore, according to the petitioners, the EMD Tosoh sold in the home
market is of a lower quality and sells for a lower price than the EMD
exported by Tosoh to the United States, and was not sold for the same
purposes for which the EMD sold to the United States was used.
The petitioners assert that the Department's second error was in
considering any use as a cathode material in battery applications to be
sufficient to establish that the exported and home market products are
alike in the purposes for which used. The petitioners argue that the
April 29 Memorandum cites no evidential basis or rationale for this
finding. According to the petitioners, it is the difference in the ways
in which the types of EMD are used in battery cathodes that
substantially affects their commercial value.
Tosoh argues that the petitioners' assertion that the home market
EMD type is used as an additive to the cathode material and that the
U.S. EMD type is used unadulterated as the cathode material is
inaccurate and also irrelevant. Tosoh asserts that, in its
questionnaire, the Department describes the product covered simply as
an intermediate product used in the production of dry-cell batteries.
According to Tosoh, this is how customers use the EMD it sells both in
the United States and in the home market. In addition, Tosoh asserts
that, on April 6, 1999, it submitted a letter from its home market
customer confirming that it used the home market EMD type as 100
percent of the cathode material in several types of batteries it
[[Page 62171]]
produces. According to Tosoh, even if EMD sold in the home market were
never used as 100 percent of the cathode material, that would still not
suffice to demonstrate that the two EMD grades are not ``like'' in the
``purposes for which used.'' Citing Koyo Seiko v. United States, 66
F.3d 1204, 1210 (Fed. Cir. 1995), Tosoh asserts that the court held
unequivocally that ``it is not necessary to ensure that home market
models are technically substitutable, purchased by the same type of
customers, or applied to the same end use as the U.S. model.'' In this
case, according to Tosoh, its home market customer uses Tosoh's EMD in
the cathode mixture of dry-cell batteries, either as 100 percent of the
cathode or as a component of the cathode mixture. Tosoh asserts that
the EMD performs essentially the same function in both types of
batteries. In closing, Tosoh contends that the petitioners have offered
nothing to undermine the Department's decision in the preliminary
results that the two types of EMD have like uses.
Department's Position: As we stated in our April 29 Memorandum,
Tosoh's customers use both types of EMD grades as a cathode material,
which provides the electric charge needed for a battery to perform. The
petitioners have not brought forth any substantial evidence to
contradict this fact. Whether Tosoh's home market customer uses its EMD
in the cathode mixture of dry-cell batteries as 100 percent of the
cathode or as a component of the cathode mixture is irrelevant. The
fact still remains that the EMD produced by Tosoh for sale in the home
market is an intermediate product used in the production of dry-cell
batteries. Specifically, both products are used as a cathode material
in dry-cell batteries. See United States International Trade
Commission's Determination of Electrolytic Manganese Dioxide from
Greece and Japan, USITC Pub. 2177 (April 1989) at page 3.
In addition, there is no evidence on the record, nor do the
petitioners cite to any evidence, that suggests that EMD as a cathode
material can only have one particular use in battery applications.
Therefore, our rationale in this regard conforms with the express
language of section 771(16)(B)(ii) of the Act, and we find that, based
on the reasons set forth above, the home market product meets the
foreign-like-product criterion at section 771(16)(B)(ii) of the Act.
Comment 3: Foreign Like Product--Commercial Value Criterion
The petitioners argue that the home market product is not a foreign
like product under section 771(16)(B) of the Act because it is not
``approximately equal in commercial value to'' the exported product.
The petitioners argue first that the Department should find that the
home market product is not approximately equal in commercial value to
the exported product as facts available because Tosoh did not respond
fully to the Department's request for information regarding its sales
of all alkaline-grade and all zinc-chloride-grade EMD in the three
largest markets in which it sold both grades of EMD. According to the
petitioners, Tosoh interpreted the Department's request too narrowly in
its May 5, 1999, submission by not including the three largest third-
country markets to which it sold both any type of zinc-chloride-grade
EMD and any type of alkaline-grade EMD. The petitioners contend that
Tosoh reported only one third-country market in which it sold one
particular type of alkaline-grade EMD and one particular type of zinc-
chloride-grade EMD. According to the petitioners, Tosoh manufactures
several types of both zinc-chloride-grade EMD and alkaline-grade EMD.
The petitioners assert that, in view of the limited number of battery
producers, the chances of there being markets in which Tosoh sold any
one of its alkaline-grade EMD and any one of its zinc-chloride-grade
EMD are much higher than the chances of there being markets in which
Tosoh sold any two specific designations (i.e., EMD sub-grades) of its
EMD. Therefore, according to the petitioners, because Tosoh did not
respond adequately to the Department's request, the Department should
use as facts available the petitioners' information, which, the
petitioners claim, demonstrates that zinc-chloride-grade EMD is not
approximately equal to alkaline-grade EMD in commercial value.
Second, the petitioners contend that, even if the Department
accepts Tosoh's May 5, 1999, response, the record demonstrates that the
two products in question are not ``approximately equal in commercial
value.'' According to the petitioners, the record demonstrates that the
particular type of zinc-chloride-grade EMD Tosoh sold to its third-
country customer is not sold for use as the cathode in dry-cell
batteries. The petitioners contend that this is significant to the
Department's assessment of the evidence of the third-country sales
information Tosoh provided.
Tosoh argues that it has supplied the Department with conclusive
evidence that the two types of EMD at issue here, when sold in a third-
country market, are equal in commercial value. Tosoh argues that the
petitioners' complaint regarding its submission of third-country price
information is unfounded. According to Tosoh, the Department addressed
the petitioners' assertions fully and correctly in its July 27, 1999,
Memorandum, in which the Department reaffirmed its preliminary decision
that the two types of EMD at issue here ``are commercially comparable''
and stated that the information Tosoh submitted on May 5, 1999,
supports the Department's preliminary results.
In addition, Tosoh contends that the petitioners have attempted to
read the Department's third-country sales information request more
broadly than it was written, asserting that the Department's request
should be read to ask for sales data for countries in which any
combination of Tosoh's grades of EMD are sold. According to Tosoh, such
a reading flatly contradicts the Department's and the petitioners' own
stated intention in requesting third-country sales information, which
was to determine the price comparability of the type of EMD sold to the
United States vis-a-vis the home market, which the petitioners were
questioning with respect to the sales in Greece and the United States
during the review period. Tosoh asserts that the Department requested
information regarding ``both types of grades'', which refers to the
types of EMD grades sold in the U.S. and home markets during the review
period. Morever, Tosoh contends that no other types of EMD are really
relevant from the standpoint of testing whether the types of EMD sold
in Greece and to the United States during the review period are
``approximately equal in commercial value.''
Tosoh asserts further that, because it has provided complete and
accurate information in response to the Department's requests regarding
the sole market in which both types of EMD grades were sold during the
review period, there is no basis for the application of facts available
in this case. Furthermore, Tosoh contends that, because it has
cooperated fully with the Department's information requests, there is
also no basis for the application of an adverse inference in this case.
Department's Position: We continue to find, as we stated in our
July 27, 1999, Memorandum (see Memorandum to Richard W. Moreland,
available in our Central Records Unit, Room B-099 (July 27
Memorandum)), that the two EMD grades (i.e., alkaline and zinc-
chloride) are ``approximately equal in commercial value'' as set forth
in section 771(16)(B)(iii) of the Act. We find that Tosoh responded
appropriately
[[Page 62172]]
to our April 28, 1999, request concerning whether the two products
(i.e., alkaline-grade and zinc-chloride-grade EMD) are commercially
comparable. Per our request, Tosoh provided us with information
concerning the quantity and value of two specific EMD grade types sold
in one third-country market. The two specific EMD grade types are
identical to the EMD grade types sold in the U.S. and home markets
during the review period. Therefore, since the two EMD grades types
reported by Tosoh are relevant for our purpose in considering whether
the two products in question are commercially comparable, we did not
request additional information. See July 27 Memorandum. Moreover, given
the fact that, in this review, we were addressing the issue of whether
these two specific EMD grades were commercially comparable, we find
that Tosoh's response to our request was reasonable. Thus, we find that
Tosoh complied fully with our request for third-country information. In
addition, since Tosoh complied with our request, we find no reason to
apply facts available in this regard.
Moreover, we are not persuaded by the petitioners' assertion and
evidence that Tosoh's zinc-chloride-grade EMD sales to its third-
country customer were not used as a cathode mixture in the production
of dry-cell batteries. As we stated in our July 27 Memorandum, Tosoh
provided an affidavit from its Director of Sales in which he states
that, during the review period, Tosoh's third-country customer
purchased EMD from Tosoh for use as a cathode mixture in the
manufacture of primary (i.e., non-rechargeable) dry-cell batteries.
In addition, the information Tosoh submitted on May 5, 1999, in
response to our questions indicates that the prices of the two products
are comparable and therefore are approximately equal in commercial
value. See July 27 Memorandum. For these reasons, we find that the home
market product meets the foreign-like-product criterion at section
771(16)(B)(iii) of the Act.
Comment 4: Home Market Viability/Particular Market Situation
The petitioners argue that the five-percent viability test should
not be regarded as conclusive of home market viability in this case
because of the very small volume of U.S. sales in the review period.
The petitioners assert that, in reflexively applying the five-percent
test without further analysis in these circumstances, the Department
ignored its own regulations and the Statement of Administrative Action
(SAA), H. Doc. 103-316, vol. 1, 103d Cong., 2d sess., 822 (1994), both
of which state that the five-percent test is not conclusive in every
case. According to the petitioners, the SAA states that use of the
five-percent viability test is particularly inappropriate where there
are ``thin'' home market sales. The petitioners argue that, for the
final results, the Department must address the following
considerations: the Department cannot apply the difference-in-
merchandise test as contemplated by the statute to adjust for
differences in the physical characteristics of the product sold in
Greece; the home market sales involve sales of EMD for an unusual use;
Tosoh's home market is so small that sales in the market can have no
material effect on the company's profitability and therefore are
incidental to Tosoh. These facts, according to the petitioners, coupled
with the export orientation of Tosoh, provide another basis for finding
a particular market situation and relying on third-country sales in the
determination of normal value.
Citing the Department's decision to use third-country sales in the
Final Determination of Sales at Less Than Fair Value; Fresh Salmon From
Chile, 63 FR 31418 (June 9, 1998) (Salmon from Chile), the petitioners
contend that, like the Chilean salmon producers, Tosoh was established
to make export sales and, as the Department found of the Chilean salmon
industry, Tosoh's growth has been almost entirely export driven.
According to the petitioners, the Department did not address this
consideration in its April 29 Memorandum. Furthermore, the petitioners
contend that the record demonstrates that the home market sales are in
fact not representative and not an appropriate basis for determining
normal value because they consist of a very small percentage of Tosoh's
reported production volume and sales volume. According to the
petitioners, this sales base is too small to constitute a viable home
market.
Finally, according to the petitioners, the SAA notes that the
change in the viability test from a comparison between home market
sales volume and third-country sales volume to a comparison between
home market sales volume and the U.S. sales volume was made to prevent
the use of ``thin'' home markets as the basis for identifying dumping.
According to the petitioners, such a ``thin'' home market clearly
exists in this case and it should not be used as the basis for
determining normal value. Therefore, the petitioners request that the
Department find that Tosoh's home market sales in the review period are
not viable, in spite of meeting the five-percent test.
Tosoh asserts that the petitioners' argument that the Department
should depart from its statutory test and instead judge the viability
of the home market based on the size of the Greek market relative to
sales to third countries is incorrect under current law. Tosoh argues
that the petitioners' citation of the SAA at 821 is misplaced.
According to Tosoh, contrary to the petitioners' assertion, the SAA
makes clear that it is precisely the new law's requirement of using
U.S. sales as the viability benchmark that will prevent the use of
``thin'' home markets as the basis for identifying dumping. Moreover,
Tosoh contends that the ``thinness'' discussed in the SAA refers to a
situation where a high volume or value of home market sales compared to
third-country sales would, under the old law, lead to a finding of
viability even though home market sales were very small relative to
U.S. sales and thus could interfere with a reasonable comparison of
U.S. prices to home market prices. Thus, according to Tosoh, the SAA
makes clear that the shift to U.S. sales as the viability benchmark
solves the ``thinness'' problem the petitioners suggest in this case.
According to Tosoh, contrary to the petitioners' assertions, no
such unusual situation is present in this case. In addition, Tosoh
argues that the vast number of cases in which a single U.S. sale forms
the basis for an administrative review indicates that there is nothing
unusual about the size of the U.S. sale here that would justify a
departure from the normal statutory test. Tosoh contends that the
petitioners have not cited a single case in which the Department
determined that a small volume of U.S. sales warranted rejection of an
otherwise viable home market.
In addition, Tosoh argues that there is nothing unusual or
extraordinary about the Greek market that does not permit a proper
price comparison. Tosoh asserts that the petitioners have not provided
any evidence that a particular market situation exists in this case to
warrant rejecting its viable home market. Tosoh argues further that the
petitioners raise no concerns regarding the difference-in-merchandise
adjustment, the home market uses of EMD, or the size and nature of home
market sales that establish a particular market situation in this case.
For these reasons, Tosoh requests that the Department disregard the
petitioners' request that the five-percent home market viability test
be abandoned in this administrative review.
Department's Position: We continue to find, as we stated in our
preliminary results, that there is no particular
[[Page 62173]]
market situation within the meaning of section 773(a)(1)(C)(iii) of the
Act which would prevent a proper price comparison nor is there any
situation which warrants a departure from the normal statutory five-
percent viability test. The petitioners have conflated two separate
issues: (1) Whether the normal five-percent threshold is the proper
test in this case, and (2) whether there is a particular market
situation that justifies rejecting the home market even though it meets
the five-percent threshold. Under section 773(a)(1)(C)(ii) of the Act,
the five-percent benchmark shall be applied in ``normal'' situations.
As noted in the SAA, ``(i)n unusual situations, however, home market
sales constituting less than five-percent of sales to the United States
could be considered viable and home market sales constituting more than
five-percent of sales to the United States could be considered not
viable.'' SAA at 821. While we agree with the petitioners' assertion
that our five-percent viability test is not conclusive in every case,
we find that in this case there is no unusual situation which makes
application of our normal statutory five-percent viability test
inappropriate. See SAA at 821. Nor have we found any evidence of a
particular market situation that would prevent a proper comparison with
export price or constructed export price. See section 773(a)(1)(C)(iii)
of the Act. As we stated in our April 29 Memorandum, pursuant to
section 773(a) of the Act, we will use sales in the home market as the
basis for calculating normal value unless one of the conditions in
section 773(a)(1)(C) of the Act applies, in which case we may use
third-country sales as a basis for normal value. We have not found that
any one of the conditions stipulated in section 773(a)(1)(C) of the Act
applies in this case.
In addition, we are not persuaded by the petitioners' argument that
Tosoh's home market consists of a very small percentage of the total
volume and value of Tosoh's sales. The petitioners' argument relies on
the old statutory viability test, comparing home market to third-
country sales, despite the fact that Congress eliminated this language
from the new statute. Under the new statute, for viability purposes,
the relevant comparison is between home market and U.S. sales. Because
Congress removed the old test, it would make no sense to allow the
petitioners to revive it merely by using the language of ``particular
market situation.'' Such a reading would be inconsistent with the
express language of the SAA and the statute. See SAA at 821 and section
773(a)(1)(C) of the Act.
Furthermore, as we stated in our April 29 Memorandum, unlike our
findings in Salmon from Chile, the record in this case does not
demonstrate that the EMD which Tosoh sold in its home market has severe
defects or is of poor quality. In addition, in Salmon from Chile, the
Department found that the home market producers sold the salmon
directly from the factory on an ``as available'' basis; in other words,
there was not a regular market for the ``off-quality'' salmon in Chile.
See Salmon From Chile, 63 FR 31418 (June 9, 1998). That situation
simply does not exist in this case, where both zinc-chloride-grade and
alkaline-grade EMD are sold through similar channels of distribution
and are used exclusively in dry-cell batteries. Moreover, Tosoh
guarantees the quality of its products, regardless of EMD grade, and
EMD grades meet the general specifications customers require.
Therefore, we continue to find no evidence to suggest that the home
market sales are incidental to Tosoh.
Regarding the petitioners' assertion that we are unable to rely on
our difference-in-merchandise adjustment because of differences between
the products, see our response to comment 1. With respect to the
petitioners' assertion that the home market product has an unusual use,
see our response to comment 2.
In conclusion, based on the reasons set forth above, we find that
the market for EMD in Greece is viable within the meaning of section
773(a)(1)(C)(ii) of the Act. In addition, we find that there is no
particular market situation within the meaning of section
773(a)(1)(C)(iii) of the Act which warrants a departure from our normal
statutory five-percent viability test.
Comment 6: U.S. Price
The petitioners assert that Tosoh has not provided the amount of a
post-sale rebate contemplated by the sales contract with the
unaffiliated U.S. purchaser. According to the petitioners, the amount
the Department deducted as a price adjustment in its preliminary
calculation is not an amount provided by Tosoh and it assumes that no
change in the dumping margin will be made in the final results or as a
result of any court's review of the final results. Moreover, the
petitioners argue that the Department cannot base its determination on
such an assumption, which pre-judges the results of the Department's
proceedings and the court's review. According to the petitioners,
Tosoh's pricing provision is designed to allow a subsequent price
change that would not be considered in the calculation of the dumping
margin and therefore is designed to subvert the antidumping law. The
petitioners contend that the Department must find that the U.S. price
in the review period is indeterminate and that it therefore must use
facts available to determine the dumping margin. The petitioners
suggest that the Department use the margin it established in the
underlying antidumping investigation as facts available for this
review.
Tosoh argues that the petitioners' assertion that the U.S. sales
price is ``indeterminate'' and that the Department should therefore use
facts available to determine the dumping margin is erroneous. Tosoh
contends that it has submitted all the information necessary for the
Department to calculate the U.S. sales price. Tosoh argues further that
the petitioners have distorted the clear meaning of the express terms
of the U.S. sale in this case. According to Tosoh, under those terms,
the U.S. customer retains the right to a refund of the antidumping duty
deposit up to the amount by which the net U.S. price is determined in
this review to exceed normal value but in no event in an amount greater
than the deposit itself. According to Tosoh, the contract provision
ensures that, after any refund is paid, the transaction will be
completed at a non-dumped price.
Tosoh asserts that, in reaching the preliminary results, the
Department simply reduced the U.S. sales price by the maximum possible
antidumping duty deposit refund amount, treating the reduction as a
price adjustment. Thus, according to Tosoh, the U.S. sales price is
final and determinate and there is no basis for resorting to facts
available as the petitioners suggest.
Department's Position: Using the information Tosoh submitted on
July 7, 1998, and on September 14, 1998, we established Tosoh's U.S.
price to the unaffiliated U.S. purchaser. In addition, since we also
identified the maximum antidumping duty amount Tosoh agreed to refund
the U.S. purchaser, we reduced Tosoh's U.S. price by this amount in our
calculations to arrive at a U.S. price net of any adjustments. Since we
deducted the maximum possible refundable antidumping duty amount
stipulated in the contract from the U.S. gross unit price, our
calculation reflects the most conservative approach in deriving U.S.
price. Therefore, we find that the U.S. price is not an
``indeterminate'' price as the petitioners contend.
In addition, since Tosoh has reported all the necessary information
needed to calculate U.S. price accurately and
[[Page 62174]]
cooperated fully with our requests for information, we find no reason
to apply facts available in this regard.
Comment 8: Sample U.S. Transaction
The petitioners claim that Tosoh did not provide the Department
with information regarding the consideration paid with respect to a
U.S. sample transaction. According to the petitioners, the record
demonstrates that the purchaser made payments to Tosoh or its related
trading company in connection with a sample transaction. The
petitioners assert that, because Tosoh did not provide information
regarding the payments made in connection with this transaction, the
Department should use the margin found in the original investigation as
facts available to establish the dumping margin on this shipment.
Tosoh argues that, to the best of its knowledge, the merchandise
involved in the sample shipment was destroyed in its entirety during
testing by the customer and, as reported in Tosoh's July 7, 1998,
questionnaire response, the gross unit price for this transaction was
zero. Citing NSK, Ltd. v. United States, 115 F. 3d 965 (Fed. Cir.
1997), Tosoh argues that such a transaction is considered a sample sale
under existing law and therefore is not included in the calculation of
U.S. price. Tosoh argues further that it has provided the Department
with full, accurate, and certified information regarding these
transactions, including a description of the transaction process and
documentation of the terms of the transaction. Therefore, according to
Tosoh, there is no basis for the Department to apply facts available or
make any adverse inference in its final results of review with regard
to this transaction.
Department's Position: Based on the information Tosoh provided in
its responses, we have determined that no consideration was provided
for Tosoh's reported U.S. zero-priced transaction. Although the
customer was required to pay the cost of certain services related to
the sample transaction in question (the nature of these services is
proprietary information), this does not constitute consideration with
respect to the subject merchandise itself. In addition, the small
quantity involved and the fact that Tosoh's sample transaction was used
for testing purposes and destroyed in the process supports Tosoh's
claim that this was a sample transaction. Therefore, because Tosoh
responded fully to our supplemental questions regarding a zero-priced
sample transaction and we find no reason to apply facts available to
this shipment, we did not calculate a margin on the U.S. sale which
Tosoh designated as a zero-priced sample.
Comment 9: Credit Expense
The petitioners argue that Tosoh did not provide a credit expense
calculation using the number of days between date of shipment to the
customer and date of payment as directed by the Department in its
questionnaire. According to the petitioners, the calculation Tosoh
provided takes into account only the number of days from the date of
entry into the United States to the date of payment. Therefore,
according to the petitioners, the Department should recalculate the
reported credit expense, adding to the reported credit days the number
of days from shipment from Greece to date of entry.
Tosoh argues that the petitioners' proposed methodology for
calculating credit expenses should be rejected because it would count
certain imputed expenses that are not associated with commercial
activity in the United States (i.e., the expense associated with the
time between date of shipment from Greece and the date of entry into
the United States) and, therefore, result in an improper calculation.
Department's Position: In this case, the record indicates that the
invoice date postdates the date of shipment of the merchandise from
Greece to the unaffiliated U.S. customer. Consistent with our decision
in Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat
Products from Korea; Final Results of Antidumping Duty Administrative
Reviews, 64 FR 12927, 12935, March 16, 1999 (Steel from Korea), we have
used the date of shipment as the date of sale. Furthermore, we have
calculated credit expense based on the time between date of shipment
and payment by the unaffiliated U.S. customer (see Steel from Korea).
Comment 10: Inventory Carrying Costs
The petitioners argue that, in its preliminary results, the
Department accounted for Tosoh's inventory carrying costs in
calculating normal value but disregarded those same costs in
calculating CEP. According to the petitioners, the result of this
disparate treatment is an unbalanced comparison and they request that
the Department treat inventory carrying costs the same in both markets
for the final results of this review.
Tosoh responds that the petitioners' assertion that the Department
should deduct from the U.S. price the inventory carrying costs incurred
in Greece is incorrect as a matter of law since the regulations state
that only those expenses associated with commercial activities
occurring in the United States are deducted from the U.S. price. Tosoh
argues that the expenses to which the petitioners refer (i.e.,
inventory carrying costs incurred in Greece) were not associated with
economic activities occurring in the United States and thus the
Department determined properly not to deduct such expenses from the
U.S. price. Tosoh argues further that all indirect selling expenses
associated with home market sales, including inventory carrying costs,
were deducted from normal value correctly as part of the CEP offset.
Department's Position: As we stated in our response to comment 9,
section 351.402(b) of the regulations directs us to make adjustments to
CEP for expenses associated with commercial activities in the United
States that relate to the sale to an unaffiliated purchaser, no matter
where or when paid. It also states that we will not make an adjustment
for any expense that is related solely to the sale to an affiliated
importer in the United States. Therefore, since this expense (i.e.,
inventory carrying costs incurred in Greece) was not associated with
commercial activities in the United States, we did not deduct it from
U.S. price.
Comment 11: Level of Trade
The petitioners argue that no level-of-trade adjustment is
appropriate in this case because the CEP deductions do not remove all
the selling functions related to the sale in the U.S. market. The
petitioners assert that, because Tosoh did not report selling functions
provided by its parent company in Japan, the Department cannot make a
level-of-trade adjustment in this case.
Tosoh argues that it reported all appropriate selling expenses.
According to Tosoh, its parent company in Japan did not incur any
direct selling expenses associated with Tosoh's sale of EMD in the
United States during the review period.
Tosoh argues further that any involvement by its parent company in
Japan in price discussions would be reported as indirect selling
expenses, which the Department would disregard in the margin
calculation. For these reasons, according to Tosoh, the Department
should disregard the petitioners' assertions regarding level of trade.
Department's Position: We find no indication that Tosoh did not
report all the selling expenses it incurred during the review period
properly. Any selling functions which Tosoh's parent company in Japan
may have provided
[[Page 62175]]
were reported as indirect selling expenses incurred in the country of
manufacture and not related to commercial activities for sales made in
the United States. In addition, we did not make a level-of-trade
adjustment in our calculations as the petitioners contend. As we stated
in our analysis memorandum for the preliminary results, since Tosoh's
CEP sales constitute a different level of trade from its home market
level of trade, we could not match Tosoh's CEP sales to the same level
of trade in the home market nor could we determine a level-of-trade
adjustment based on Tosoh's home market sales of merchandise under
review. Furthermore, since we have no other information that provides
an appropriate basis for determining a level-of-trade adjustment, we
made a CEP offset adjustment to normal value. The CEP offset was the
sum of indirect selling expenses incurred on the home market sales up
to the amount of indirect selling expenses deducted from the U.S. sale
under section 772(a)(1)(D) of the Act. See Analysis Memorandum dated
April 29, 1999.
Comment 12: Direct Selling Expenses
The petitioners contend that Tosoh has not reported all the direct
selling expenses related to the U.S. sale. According to the
petitioners, the Department has not made the necessary inquiries to
determine all the direct selling expenses that relate to the sale
concerned.
Tosoh argues that the petitioners' speculation that it has not
reported all selling activities is without merit. Tosoh contends that
it has reported all applicable expenses to the best of its ability.
Therefore, according to Tosoh, no further inquiry by the Department is
necessary.
Department's Position: We find no indication to suggest that Tosoh
did not report all the direct selling expenses it incurred during the
review period properly. In addition, the petitioners have not provided
any evidence to suggest otherwise. Therefore, we have accepted Tosoh's
reported direct selling expenses.
Comment 13: Indirect Selling Expenses
The petitioners argue that the Department should make deductions
from U.S. price for expenses incurred by Tosoh's affiliated parties in
Japan that are not deductible as direct selling expenses.
Tosoh argues that the petitioners' assertion that the Department
should deduct indirect selling expenses from CEP is incorrect.
According to Tosoh, the petitioners' suggested methodology would
require the deduction of indirect expenses not associated with
commercial activity in the United States and, therefore, is
impermissible under the Department's practice.
Department's Position: As we stated in our response to comment 9,
section 351.402(b) of the regulations directs us to make adjustments
for expenses associated with commercial activities in the United States
that relate to the sale to an unaffiliated purchaser, no matter where
or when paid. It also states that we will not make an adjustment for
any expense that is related solely to the sale to an affiliated
importer in the United States. Therefore, since this expense (i.e.,
indirect selling expenses incurred by affiliated parties in Japan) was
not associated with commercial activities in the United States, we did
not deduct it from U.S. price under section 772(a)(1) of the Act.
Final Results of Review
As a result of our analysis of the comments received, we determine
a weighted-average margin of 0.00 percent for Tosoh for the period
April 1, 1997, through March 31, 1998. The Department will issue
appraisement instructions directly to the Customs Service.
Furthermore, the following deposit requirements shall be effective
upon publication of this notice of final results of review for all
shipments of EMD from Greece, entered, or withdrawn from warehouse, for
consumption on or after the publication date, as provided for by
section 751(a)(1) of the Act: (1) The cash-deposit rate for Tosoh will
be 0.00 percent; (2) for previously investigated or reviewed 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 or any previous reviews 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 (4)
if neither the exporter nor the manufacturer is a firm covered in this
review, the cash-deposit rate will continue to be 36.72 percent, the
``all-others'' rate established in the LTFV investigation (54 FR 15243,
April 17, 1989).
The 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 in accordance with 19 CFR 351.305. Timely 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.
We are issuing and publishing this determination in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: November 8, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-29905 Filed 11-15-99; 8:45 am]
BILLING CODE 3510-DS-P