[Federal Register Volume 64, Number 238 (Monday, December 13, 1999)]
[Notices]
[Pages 69481-69487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32223]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-549-813]


Notice of Final Results and Partial Rescission of Antidumping 
Duty Administrative Review: Canned Pineapple Fruit From Thailand

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

SUMMARY: On June 8, 1999, the Department of Commerce published the 
preliminary results of its administrative review of the antidumping 
duty order on canned pineapple fruit from Thailand. This review covers 
five producers/exporters of the subject merchandise. The period of 
review is July 1, 1997, through June 30, 1998. Based on our analysis of 
comments received, these final results differ from the preliminary 
results. The final results are listed below in the ``Final Results of 
Review'' section.

EFFECTIVE DATE: December 13, 1999.

FOR FURTHER INFORMATION CONTACT: David Layton or Charles Riggle, Office 
5, AD/CVD Enforcement, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0371 and (202) 482-0650, respectively.

SUPPLEMENTARY INFORMATION:

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 Department of

[[Page 69482]]

Commerce (the Department) regulations are to the regulations codified 
at 19 CFR Part 351 (April 1998).

Background

    This review covers the following producers/exporters of merchandise 
subject to the antidumping duty order on canned pineapple fruit from 
Thailand: Siam Food Products Public Co., Ltd. (SFP); The Thai Pineapple 
Public Co., Ltd. (TIPCO); Siam Fruit Canning (1988) Co., Ltd. (SIFCO); 
Kuiburi Fruit Canning Co., Ltd. (KFC); and Vita Food Factory (1989) 
Ltd. (Vita). We also received review requests from Malee Sampran Public 
Co., Ltd. (Malee) and Dole Food Company, Inc., Dole Packaged Foods 
Company, and Dole Thailand, Ltd. (collectively, Dole). For the reason 
noted below, we are rescinding the review with respect to Malee and 
Dole. On June 8, 1999, the Department published the preliminary results 
of this review. See Notice of Preliminary Results and Partial 
Rescission of Antidumping Duty Administrative Review: Canned Pineapple 
Fruit From Thailand, 64 FR 30476 (Preliminary Results). On July 8 and 
15, 1999, we received case briefs and rebuttal briefs, respectively, 
from Maui Pineapple Co., Ltd. and the International Longshoremen's and 
Warehousemen's Union (jointly, the petitioners), TIPCO, and SFP.

Scope of Review

    The product covered by this review is canned pineapple fruit (CPF). 
CPF is defined as pineapple processed and/or prepared into various 
product forms, including rings, pieces, chunks, tidbits, and crushed 
pineapple, that is packed and cooked in metal cans with either 
pineapple juice or sugar syrup added. CPF is currently classifiable 
under subheadings 2008.20.0010 and 2008.20.0090 of the Harmonized 
Tariff Schedule of the United States (HTSUS). HTSUS 2008.20.0010 covers 
CPF packed in a sugar-based syrup; HTSUS 2008.20.0090 covers CPF packed 
without added sugar (i.e., juice-packed). Although these HTSUS 
subheadings are provided for convenience and for customs purposes, our 
written description of the scope is dispositive.

Partial Rescission of Antidumping Duty Administrative Review

    On August 27, 1998, and October 30, 1998, Malee and Dole, 
respectively, timely filed to withdraw their requests for review. 
Because there were no other requests for review of either company, we 
have rescinded the review with respect to both Malee and Dole in 
accordance with 19 CFR 351.213(d)(1).

Fair Value Comparisons

    We calculated export price (EP) and normal value (NV) based on the 
same methodology used in the preliminary results. We corrected clerical 
errors with respect to the calculation of SIFCO's normal value. See 
SIFCO's analysis memorandum dated December 6, 1999.

Cost of Production

    We calculated the COP based on the same methodology used in the 
preliminary results. We corrected clerical errors with respect to SFP's 
and SIFCO's total manufacturing costs. See the respective companies' 
analysis memoranda dated December 6, 1999.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. As noted above, we received comments and rebuttal 
comments from the petitioners and two of the respondents (SFP and 
TIPCO).

Comments on General Issues

Comment 1--Exchange Rate Methodology

    SFP objects to the exchange rate methodology used in the 
calculation of the preliminary results, arguing that it deviates from 
the Department's standard methodology as described in Policy Bulletin 
96.1 (Policy Bulletin). See 61 FR 9434 (March 8, 1996). Contending that 
this methodology had no precedent at the time of the devaluation of the 
Thai baht, SFP says it was impossible for the company to anticipate the 
exchange rate to be used in the preliminary results and, therefore, it 
could not adjust its prices accordingly. SFP argues that one of the 
stated objectives in the Policy Bulletin is that a measure of 
predictability must exist, and that its preliminary dumping margin 
would have been much lower had the Department applied its standard 
exchange rate methodology.
    Moreover, SFP appears to argue that the Department applied a 
special averaging period in this review. It acknowledges that the 
Department used a similar methodology in the final determinations of 
three recent antidumping investigations involving South 
Korea,1 but contends that the 40-percent drop in the value 
of the Korean won at the end of 1997 greatly exceeds the 18-percent 
fall of the Thai baht in July 1997. SFP believes that the drop in the 
baht is not large enough to be classified as ``precipitous'' nor merit 
special treatment in the margin calculation.
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    \1\ See Emulsion Styrene-Butadiene Rubber from the Republic of 
Korea, 64 FR 14865 (March 29, 1999) (Rubber from Korea), Stainless 
Steel Plate in Coils from the Republic of Korea, 64 FR 15444 (March 
31, 1999) (SSP from Korea), and Stainless Steel Round Wire from 
Korea, 64 FR 17342 (April 9, 1999) (SSRW from Korea)
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    Furthermore, SFP contends that the legal basis for the special 
averaging period used in Rubber from Korea, SSP from Korea and SSRW 
from Korea applies only to investigations, that section 777A(d)(1)(B) 
of the Act limits the comparison periods of administrative reviews to 
the corresponding calendar month, and that the Department cited no 
authority from the statute, the regulations, or prior cases as a basis 
for the methodology applied in the preliminary results.
    For these reasons, SFP argues that for the final results, the 
Department should not adopt the method used in the preliminary results, 
but should use either the normal 40-day moving average or actual daily 
rates.
    The petitioners also object to the exchange rate methodology used 
in the preliminary results, and request that the Department use the 
methodology outlined in the Policy Bulletin when calculating the final 
results.
    First, the petitioners reiterate the need for predictability in the 
exchange rate methodology. Second, they argue, the Department's 
decision to deviate from its ``normal'' methodology in the preliminary 
results was improper because the Department's threshold for finding a 
drop in the value of a foreign currency to be ``precipitous'' has been 
much higher in other cases. Specifically, the petitioners point to the 
Department's recent finding that the 20-percent decline in the value of 
the New Taiwan dollar over the course of a 12-month period--a decline 
of a similar magnitude to that of the baht--was not large enough to 
justify any special action. (See Notice of Final Determination of Sales 
at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils from 
Taiwan, 64 FR 30592 (June 8, 1999) (SSSS from Taiwan).)
    The petitioners also argue that in the preliminary results, the 
Department focused on a very narrow time period when examining the 
decrease in the value of the currency, i.e, the Department found that 
the baht declined 18 percent over a one-day period. If studied from a 
longer time perspective, they contend that it becomes clear that the 
decline took the form of a steady progression rather than a precipitous 
drop and, as such, the Department has no reason to adopt a special 
methodology. For the same reason, the petitioners disagree with SFP's 
proposal that the Department consider using the actual daily exchange

[[Page 69483]]

rates as an alternative to its 40-day moving average benchmark 
methodology. The petitioners believe that the only justification for 
using the actual daily exchange rates would be if the Department 
determined that the Thai inflation rate was significant during the POR 
and, therefore, that it would be appropriate to apply the significant 
inflation margin methodology (see the comment on significant inflation, 
below).
    TIPCO rejects the assertion that the Department erroneously 
deviated from its established exchange rate methodology in the 
preliminary results. The company argues that the 18-percent fall in the 
value of the baht was indeed a ``precipitous decline'' because of the 
magnitude of the drop, the short time period over which it occurred, 
and the fact that the baht did not rebound in any significant way. 
TIPCO rejects the petitioners' comparison with SSSS from Taiwan, 
stating that the 20-percent decline in the New Taiwan dollar was 
gradual and took place over a prolonged period of time. The 
Department's decision not to treat the fall of the New Taiwan dollar as 
precipitous is, therefore, not relevant for the present case, TIPCO 
says.
    TIPCO also defends the Department's use of a stationary average as 
the benchmark during the ``post-precipitous period.'' According to 
TIPCO, this is simply an application of a modified benchmark similar to 
what was used in Rubber from Korea and Notice of Final Determination of 
Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils 
From the Republic of Korea, 64 FR 30664 (June 8, 1999). TIPCO believes 
that the Department correctly applied its exchange rate methodology as 
outlined in the Policy Bulletin. Although the Bulletin does not specify 
how the benchmark should be calculated after a precipitous decline of a 
currency, TIPCO argues that the use of a modified benchmark is fully 
consistent with the spirit of the Policy Bulletin.
    Department's Position: Contrary to the arguments put forth by SFP 
and the petitioners, we believe that the methodology employed in the 
preliminary results was consistent with our exchange rate methodology 
used when a country's currency has experienced a ``precipitous drop.'' 
This methodology is outlined in Policy Bulletin 96.1, and in following 
our prescribed methodology, we ensured predictability in the exchange 
rates used in the preliminary results. We also note that we did not 
apply a special averaging period, as SFP has suggested. Furthermore, 
because we continue to find that the July 2, 1997, decline of the baht 
was ``precipitous and large'' within the meaning of the Policy 
Bulletin, we disagree with SFP's and the petitioners' suggestion that 
we should apply an exchange rate methodology using a 40-day moving 
average benchmark throughout the POR in the calculation of the final 
results of this review. However, as discussed below, we have modified 
our exchange rate methodology consistent with Final Results of 
Antidumping Duty Administrative Review; Certain Welded Carbon Steel 
Pipes and Tubes from Thailand, 64 FR 56759 (October 21, 1999) (Pipes 
and Tubes from Thailand).
    As stated in the preliminary results, we made currency conversions 
into U.S. dollars in accordance with section 773A of the Act, based on 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank. Section 773A(a) of the Act directs the 
Department to use a daily exchange rate in order to convert foreign 
currencies into U.S. dollars unless the daily rate involves a 
fluctuation. It is the Department's practice to find that a fluctuation 
exists when the daily exchange rate differs from the benchmark rate by 
2.25 percent or more. The benchmark is defined as the moving average of 
rates for the past 40 business days. When we determine a fluctuation to 
have existed, we substitute the benchmark rate for the daily rate, in 
accordance with established practice. See Policy Bulletin; Preliminary 
Results 64 FR at 30480; and Preliminary Results of Antidumping Duty 
Administrative Review; Aramid Fiber Formed of Poly Para-Phenylene 
Terephthalamide From the Netherlands, 64 FR 36841, 36843 (July 8, 
1999).
    As discussed in Pipes and Tubes from Thailand (64 FR at 56763), we 
continue to find that the drop of more than 18 percent in the dollar-
baht exchange rate on July 2, 1997, from the previous day's rate, 
constitutes a ``large and precipitous'' decline. However, we do not 
find that the gradual decline of the baht that occurred over nearly 
seven months, from July 2, 1997, to January 31, 1998, qualifies as a 
``large and precipitous'' drop for purposes of our exchange rate 
methodology.
    In the preliminary results, we determined that, because a large and 
precipitous drop occurred on July 2, 1997, it was appropriate simply to 
begin on that day to use a new benchmark in order to avoid using daily 
rates from before the precipitous drop in calculating the benchmark for 
daily rates after the precipitous drop. Accordingly, for exchange rates 
between July 2 and August 27, 1997, for the preliminary results, we 
relied on the standard exchange rate model, but used as the benchmark 
rate a stationary average of the daily rates over this period. For 
these final results, however, we have changed the methodology applied 
to the period following July 2, 1997, using the methodology set forth 
in Pipes and Tubes from Thailand.
    The gradual decline in the value of the baht over several months 
after July 2 was not so large and precipitous as to reasonably preclude 
the possibility that the exchange rate fluctuated from time to time 
during that period. Therefore, it is appropriate for the Department to 
use its standard methodology so as to ``ignore'' those fluctuations in 
accordance with section 773A of the Act. However, we also recognize 
that, following a large and precipitous decline in the value of a 
currency, a period may exist during which exchange rate expectations 
are revised, and it is unclear whether further declines are a 
continuation of the large and precipitous decline or merely 
fluctuations. Under the circumstances of this case, such uncertainty 
may have existed following the large, precipitous drop on July 2, 1997. 
Thus, we devised a simple test for identifying a point following a 
precipitous drop at which it is reasonable to think that exchange rate 
expectations have been sufficiently revised that it is appropriate to 
resume using the normal methodology. Beginning on July 2, 1997, we used 
only actual daily rates until the daily rates were not more than 2.25 
percent below the average of the 20 previous daily rates for five 
consecutive days. At that point, we determined that the pattern of 
daily rates no longer reasonably precluded the possibility that they 
were merely ``fluctuating.'' (Using a 20-day average for this purpose 
provides a reasonable indication that it is no longer necessary to 
refrain from using the normal methodology, while avoiding the use of 
daily rates exclusively for an excessive period of time.) Accordingly, 
from the first of these five days, we resumed classifying daily rates 
as ``fluctuating'' or ``normal'' in accordance with our standard 
practice, except that we began with a 20-day benchmark and on each 
succeeding day added a daily rate to the average until the normal 40-
day average was restored as the benchmark.
    Applying this methodology in the instant case, we used daily rates 
from July 2, 1997, through August 4, 1997. We then resumed the use of 
our normal methodology through the end of the POR, starting with a 
benchmark based on the average of the previous 20 reported daily rates 
on August 5.

[[Page 69484]]

    With respect to the petitioners' comment regarding SSSS from 
Taiwan, we note that in that case, unlike in the instant case, we found 
that changes in the exchange rate were moderate, and that while the 
value of the New Taiwan dollar relative to the U.S. dollar declined 
steadily, the overall decline was less than 20 percent over the entire 
period of investigation. In the instant case, the value of the baht 
declined a comparable amount in one day. Such a large decline over an 
extremely short period of time leads us to determine that the decline 
in the baht was ``precipitous.''

Comment 2--Significant Inflation

    Referring to comments they submitted to the Department on May 10, 
1999, the petitioners maintain that the inflation rate in Thailand was 
significant during the POR. On this basis, they urge the Department to 
apply its ``significant inflation calculation methodology'' by 
requiring the respondents to report their costs on a monthly basis, and 
by making price comparisons within the same calendar month rather than 
within the 90/60-day contemporaneity window. The petitioners claim that 
during most months of the POR, the monthly inflation rate in Thailand 
exceeded the monthly rate (i.e., 1.87 percent) which, when compounded 
over a 12-month period, would yield an annual inflation rate of 25 
percent, the Department's standard threshold for finding significant 
inflation. As further evidence of significant inflation, the 
petitioners point to the sharp drop in the value of the baht during the 
POR and the 85-percent increase in the price of tin, an input product 
for the canned fruit industry.
    SFP and TIPCO reject the petitioners' argument, contending that 
Thailand's inflation rate did not exceed the Department's standard 
threshold rate of 25 percent during the POR. These two respondents 
argue that the Department, therefore, has no reason to change the 
calculation methodology used in the preliminary results.\2\
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    \2\ SFP's and TIPCO's rebuttal of the petitioners' comments is 
largely a restatement of the arguments submitted in their joint May 
14, 1999, letter to the Department. On May 26, 1999, the Department 
also received a letter from KFC, objecting to the petitioners' May 
10, 1999, comments.
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    Furthermore, SFP points out that in the preliminary determination 
in Stainless Steel Sheet and Strip in Coils from South Korea, 64 FR 137 
(January 4, 1999), the Department rejected an inflation analysis 
similar to the one proposed by the petitioners in this review. Finally, 
SFP dismisses the petitioners' argument regarding the increase in tin 
prices as being overly simplistic. Department's Position: Generally, 
when the annual inflation rate in the country under investigation 
exceeds 25 percent, the Department considers the inflation to be 
significant and uses a modified methodology. See, e.g., Import 
Administration Antidumping Manual, Chapter 8, Section 15 (January 
1998). Based on this practice, in a May 28, 1999, memorandum, we 
rejected the petitioners' request that cost data be reported on a 
monthly basis because we found that the rate of inflation in Thailand 
during the POR was not at a level such that it would warrant a special 
calculation methodology (see May 28, 1999, memorandum addressing this 
issue). Accordingly, we did not require the respondents to report their 
costs on a monthly basis for purposes of the preliminary results. We 
have continued to apply our standard methodology for the final results 
of this review because we have not received any new facts which would 
lead us to change our preliminary findings.
    All parties filing case briefs made other arguments on the 
calculation of COP in the presence of significant inflation, in the 
event the Department would find that there was significant inflation 
during the POR. However, these comments are now moot as we have not 
found that significant inflation existed during the POR.

Comment 3--Treatment of Certain Tax Certificate Revenues

    SFP and TIPCO object to the Department's preliminary decision not 
to adjust for the value of certain tax certificate revenues in the 
calculation of the COP. The two respondents state that upon exportation 
they received the tax certificates as a refund of an internal Thai tax 
imposed on materials. They assert that in the past, the Court of 
International Trade (CIT) and the Department, on remand, have 
determined that similar tax certificate programs constitute refunds 
upon exportation within the meaning of the statute (see Camargo Correa 
Metais, S.A. v. United States, No. 98-152, Slip. Op. at 5 (CIT 1998) 
(Camargo)). SFP and TIPCO maintain that the tax certificates are a 
result of the two companies' export activities and that the Department 
should adjust the COP for the value of these certificates as taxes 
remitted or refunded at the time of exportation.
    SFP and TIPCO note that the Department requires that there be a 
sufficient link between the refund and the cost of materials before a 
cost adjustment is permitted (see, e.g., Stainless Steel Round Wire 
From India; Final Determination of Sales at Less Than Fair Value, 64 FR 
17319 (April 9, 1999) (Round Wire from India)). According to the two 
respondents, there is sufficient evidence on the record of this 
proceeding that the calculation of the value of the tax certificates is 
based on the cost of material inputs. They argue that the Department's 
preliminary finding in this review--that the tax certificates are not 
sufficiently linked to material costs--is inconsistent with its 
determinations in the investigation and prior reviews of this case in 
which an adjustment of the COP by the value of the tax certificates was 
allowed.
    According to SFP and TIPCO, the Department's preliminary finding is 
also inconsistent with its analysis of the tax program in several 
countervailing duty proceedings. Specifically, they point to Certain 
Apparel from Thailand: Preliminary Results of Countervailing Duty 
Administrative Review, 62 FR 46475 (September 3, 1997), in which the 
Department found that all inputs for which the respondents received 
duty drawback were physically incorporated in the exported product. SFP 
and TIPCO also note that in past cases, the Department has verified 
that the calculation of the rebate is tied to material inputs. They 
argue that the Department cannot have it both ways: denying a cost 
adjustment in an antidumping proceeding because the refund is ``not 
related to cost of production'' while at the same time, in a 
countervailing duty proceeding, finding that the tax certificate 
program includes only physically incorporated inputs. On this basis, 
both respondents urge the Department to change its preliminary results 
and allow an adjustment of COP by the value of the tax certificates 
they received during the POR.
    The petitioners respond that while the statute may allow an 
adjustment to the COP for internal taxes on raw materials that are 
refunded upon exportation, such authority does not relate to the refund 
situation in this review. They note that at verification, the 
Department found no evidence that the revenue from the tax certificates 
is tied to a duty drawback scheme. The petitioners point out that the 
Department also verified that the value of the tax certificates is 
based simply on a percentage of a company's export revenue. On this 
basis, the petitioners argue, the Department was correct in not 
allowing any adjustments for the tax certificates.
    Regarding Round Wire from India, the petitioners argue that this 
determination squarely supports the Department's decision to reject an 
offset to cost and an increase in U.S. price because in

[[Page 69485]]

Round Wire from India, the Department found that the refunds were 
unrelated to the customs duties paid to purchase raw materials for the 
manufacture of the subject merchandise.
    The petitioners also argue that the respondents' reliance on 
Camargo is misplaced. They state that the decision in Camargo was that 
a tax credit, which constitutes a refund, should be deducted from a 
respondent's constructed value (CV). However, as determined in Round 
Wire from India, the import duties at issue in that case were not 
refunded upon exportation because the refunds were not directly based 
upon import duties paid on raw materials. Rather, they were based on 
the f.o.b. export price. The petitioners state that the facts in the 
current review are similar to those in Round Wire from India and that 
the Department, therefore, should reject the respondent's proposed 
offset to cost.
    With regard to TIPCO's duty drawback claim, the petitioners state 
that this respondent has not made any effort to satisfy the 
Department's long-standing two-pronged test for duty drawback 
adjustments. The petitioners note that in order to add the duty 
drawback to U.S. price, the Department requires that a company show 
that the import duty and the rebate are directly linked to one another 
and, also, that there were sufficient imports to account for the duty 
drawback received for the export of the manufactured product. The 
petitioners argue that TIPCO has failed to show a direct link between 
any import duties and the rebate amount and that the Department, 
therefore, was correct in rejecting the company's duty drawback claim.
    Department's Position: In determining whether a respondent can 
reduce its reported cost of manufacture by the amount of tax rebates it 
receives, the Department requires that the respondent show there is a 
link between claimed rebates and its cost of manufacture. See Round 
Wire from India, 64 FR at 17321. We acknowledge that we had accepted 
the respondents' claimed adjustment in previous segments of this 
proceeding, and had also examined this program in the context of 
several countervailing duty reviews, finding a link in those instances. 
However, based on information concerning the tax rebate program 
gathered during the verification of another respondent, Vita, and 
placed on the record of the instant review, we found no link between 
the tax rebates and the respondents' cost of manufacture that would 
allow us to treat this factor as a cost adjustment. Instead, the 
information we obtained at verification showed that the tax rebate is 
linked not to the cost of manufacture, but to exports, at a rate 
determined by the government and applicable to all companies that 
export. Based on this information, we issued a supplemental 
questionnaire to TIPCO, asking the company to provide us with 
information that would establish the requisite link. TIPCO failed to 
provide us with specific documentary evidence establishing this link. 
Further, SFP has not submitted any evidence for the record that 
establishes such a link. Accordingly, for the preliminary results we 
changed our previous treatment of this tax rebate program and 
disallowed it as a cost adjustment.
    Although TIPCO and SFP continue to hold that such a link can be 
established, neither respondent has submitted evidence which 
demonstrates that the tax rebates can be tied to its cost of 
manufacture in a way that would permit us to apply the rebates as cost 
offsets. In fact, TIPCO has stated that it ``does not import directly 
any raw materials and does not pay directly any import duties in 
connection with its raw material purchases.'' (See TIPCO submission of 
April 22, 1999, page 1.) Based on the information on the record that we 
obtained at verification showing that the tax rebate is linked to 
exports and not to the cost of manufacture, and absent any record 
information in the instant review showing that such a link exists, we 
have continued to disallow the respondents' reported cost adjustment 
for these final results. Additionally, given that TIPCO has not shown 
that a link exists between the rebate program and any import duties it 
paid, it has failed the first prong of the Department's two-prong test 
for duty drawback adjustments and, thus, we have not made any 
adjustment to TIPCO's U.S. price.

Comment 4--Methodology for Allocating Fruit Costs

    SFP and TIPCO contend that the Department improperly used a net 
realizable value (NRV) methodology to allocate fruit costs for purposes 
of calculating COP and CV. The respondents state, first, that the Court 
of Appeals for the Federal Circuit (CAFC) ruled in IPSCO, Inc. v. 
United States, 965 F.2d 1056 (Fed. Cir. 1992) (IPSCO), that value-based 
allocations of costs shared by co-products are not allowed under the 
antidumping law. Second, the respondents argue that the IPSCO ruling 
was applied specifically to this case by the Court of International 
Trade in Thai Pineapple Public Co., Ltd. v. United States, 946 F. Supp. 
11 (CIT 1996) (TIPCO), where the CIT ruled in an appeal of the 
Department's final determination in the underlying investigation of 
this case that IPSCO applies to the allocation of fruit costs.
    Regarding the specific cost allocation methodology to be used in 
place of the NRV methodology, these respondents argue that the 
Department should rely upon the weight-based fruit cost allocations 
submitted in their questionnaire responses. SFP and TIPCO maintain that 
their allocation methodologies are consistent with those reported by 
certain mandatory respondents in the original investigation and which 
were later adopted by the Department in the remand proceedings stemming 
from the less-than-fair-value investigation.
    The petitioners reject the respondents' argument that NRV is not 
allowable in this case because of the CIT's decision in TIPCO. They 
support the Department's position that an NRV allocation methodology is 
both lawful and correct in order to allocate joint costs properly. The 
petitioners also state that the CIT decision is being reviewed by the 
CAFC and argue that the Department should, therefore, continue to use 
the NRV methodology.
    Department's Position: Consistent with past segments of this 
proceeding, we have continued to allocate raw fruit costs incurred by 
the respondents using an NRV methodology which reasonably reflects the 
qualitative differences that exist between the joint raw materials used 
to produce CPF and other pineapple products, e.g., pineapple juice. See 
Preliminary Results, 64 FR at 30478. We disagree with SFP's and TIPCO's 
contention that a weight-based methodology would be appropriate. As we 
stated in the final determination of the underlying investigation of 
this case, ``[w]e believe * * * that allocating the cost of pineapple 
evenly over the weight is not supportable. Using weight alone as the 
allocation criteria sets up the illogical supposition that a load of 
shells, cores, and ends costs just as much as an equal weight of 
trimmed and cored pineapple cylinders. Significantly, the use of 
physical weighting for allocation of joint costs, i.e., in this case 
the cost of pineapple fruit, may have no relationship to the revenue-
producing power of the individual products.'' See Final Determination 
of Sales at Less Than Fair Value: Canned Pineapple Fruit from Thailand, 
60 FR 29553, 29560 (June 5, 1995) (Final Determination). Because the 
parts of the pineapple are not interchangeable when it comes to CPF 
versus juice production, it would be unreasonable to value all parts 
equally by using a weight-based allocation methodology. Instead, as we

[[Page 69486]]

detailed in our Preliminary Results, we have used an NRV methodology 
for allocating fruit costs. This methodology compares historical cost 
and sales data for pineapple fruit products over a period encompassing 
several years prior to the antidumping proceeding and also includes 
data for markets where allegations of dumping have not been lodged. Id. 
Because NRV is commonly defined as the predicted selling price in the 
ordinary course of business less reasonably predictable costs of 
completion and disposal, we believe this methodology takes into account 
the qualitative differences between pineapple parts in the production 
process.
    Furthermore, on July 28, 1999, the CAFC, while not ruling on the 
merits of the NRV methodology, gave deference to the Department in 
selecting and developing proper methodologies. See the Thai Pineapple 
Public Co. v. United States, 187 F. 3d 1362, 1366-67 (Fed. Cir., July 
28, 1999) (Thai Pineapple). In this ruling, the CAFC reversed the CIT's 
decision in TIPCO to remand the case to the Department for 
recalculation of the antidumping duty margins using either a weight-
based or a non-output price-based cost allocation methodology, and 
instead held that the Department's rejection of the respondents' 
weight-based methodology, in favor of the allocation methodology 
employed by the respondents in their books and records, was reasonable 
and supported by substantial evidence. See Thai Pineapple at 1367.
    With respect to the respondents' reliance on IPSCO, the Department 
has consistently held throughout this proceeding that IPSCO is not 
controlling in this case. See, e.g., Notice of Final Results of 
Antidumping Duty Administrative Review: Canned Pineapple Fruit From 
Thailand, 63 FR 7392, 7398 (February 13, 1998). In Thai Pineapple, the 
CAFC recognized that there are important differences between IPSCO and 
the present case. The CAFC held that:

    [P]ineapple fruit is not a homogeneous raw material like the raw 
material used to make the pipe in [IPSCO], and the production 
process is entirely different for the various pineapple products 
produced. The whole pineapple must be reduced to its various 
components--cored cylinders, cores, shells and ends--prior to 
entering the production processes for canned pineapple fruit and 
juice. Although the raw material was purchased as a whole, for a set 
price per unit of weight, the parts of the pineapple differ in their 
usefulness and value.

Thai Pineapple at 1369. On this basis, the CAFC concluded that the CIT 
improperly held that IPSCO is controlling precedent in this case. The 
Department, therefore, rejects the respondents' argument that IPSCO 
would prevent us from applying our NRV methodology in this case.

Comment on Company-Specific Issue

Comment 5--Calculation of TIPCO's Interest Expense Ratio

    TIPCO requests that the Department recalculate the company's 
interest expense ratio for purposes of the final results of this 
review. In the preliminary results, the Department calculated this 
ratio by first subtracting TIPCO's interest income from its total 
interest expense, using data from the company's consolidated financial 
statements. Next, the Department divided the resulting net interest 
expense by the total cost of goods sold and applied this ratio to the 
cost of manufacturing. TIPCO argues that, in addition to interest 
income, the Department should also subtract dividend income that the 
company received during the POR from an associated company. TIPCO 
believes that this additional offset is justified because the 
associated company is not consolidated with TIPCO and, moreover, the 
dividend income is short-term in nature because TIPCO is not required 
to maintain its holdings in the associated company for any specific 
length of time.
    The petitioners argue that, under the Department's practice, 
dividend income is not an allowable offset to interest expenses, which 
may be reduced only by interest income earned on short-term investments 
of working capital. The petitioners contend that in previous cases, the 
Department has not allowed companies to offset their financial expenses 
with income earned on investments such as dividend income (see Silicon 
Metal from Brazil: Notice of Final Results of Antidumping Duty 
Administrative Review, 64 FR 6305 (February 9, 1999) and Antifriction 
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From 
The Federal Republic of Germany; Final Results of Antidumping Duty 
Administrative Review, 56 FR 31734 (July 11, 1991)).
    Department's Position: We agree with the petitioners. As stated in 
the above-mentioned cases, the Department includes only short-term 
interest income as an offset to interest expenses. This practice was 
upheld by the CIT in Gulf States Tube Division of Quanex Corp. v. 
United States, 981 F. Supp. 630 (CIT 1997) and NTN Bearing Corp. v. 
United States, 905 F. Supp. 1083, 1097 (CIT 1995) in which the CIT held 
that, to qualify for an offset, interest income must be related to the 
``ordinary operations of the company.'' As the Department stated in the 
Final Determination of Sales at Less Than Fair Value: Certain Preserved 
Mushrooms from India, 63 FR 72246, 72252 (December 31, 1998), it allows 
a company to offset its financial expense with the short-term interest 
income earned on working capital accounts maintained to support its 
daily cash requirements (e.g., payroll, suppliers, etc.). However, the 
Department does not allow a company to offset its financial expense 
with the income earned from investment activities (e.g., long-term 
interest income, capital gains, dividend income).

Final Results of Review

    As a result of our review, we determine that the following 
percentage weighted-average margins exist for the period July 1, 1997, 
through June 30, 1998:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
TIPCO......................................................         9.87
SFP........................................................         3.25
Vita.......................................................        17.53
KFC........................................................         3.57
SIFCO......................................................         3.32
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b)(1), we have calculated importer-specific 
assessment rates by dividing the dumping margin found on the subject 
merchandise examined by the entered value of such merchandise. We will 
direct the Customs Service to assess antidumping duties by applying the 
assessment rate to the entered value of the merchandise.
    Furthermore, the following 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 by section 751(a) 
of the Act: (1) For the companies named above, the cash deposit rate 
will be the rate listed above, (2) for merchandise exported by 
manufacturers or exporters not covered in this review but covered in a 
previous segment of this proceeding, the cash deposit rate will 
continue to be the company-specific rate published in the most recent 
final results in which that manufacturer or exporter participated; (3) 
if the exporter is not a firm covered in this review or in any previous 
segment of this proceeding, but the manufacturer is, the cash deposit 
rate

[[Page 69487]]

will be that established for the manufacturer of the merchandise in 
these final results of review or in the most recent segment of the 
proceeding in which that manufacturer participated; and (4) if neither 
the exporter nor the manufacturer is a firm covered in this review or 
in any previous segment of this proceeding, the cash deposit rate will 
be 24.64 percent, the all others rate established in the less-than-
fair-value investigation. These deposit requirements 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 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 in the subsequent assessment of double antidumping 
duties.
    This notice also is the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the return/destruction or conversion to judicial protective 
order of proprietary information disclosed under APO in accordance with 
19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: December 6, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-32223 Filed 12-10-99; 8:45 am]
BILLING CODE 3510-DS-P