[Federal Register Volume 65, Number 46 (Wednesday, March 8, 2000)]
[Notices]
[Pages 12202-12209]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5648]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-803]
Heavy Forged Hand Tools, Finished or Unfinished, With or Without
Handles, From the People's Republic of China; Preliminary Results and
Partial Recission of Antidumping Duty Administrative Reviews
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results and partial recission of
antidumping duty administrative reviews of heavy forged hand tools,
finished or unfinished, with or without handles, from the People's
Republic of China.
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SUMMARY: The Department of Commerce (``the Department'') has
preliminarily determined that sales by the respondents in these reviews
covering the period February 1, 1998 through January 31, 1999, have
been made below normal value (``NV''). If these preliminary results are
adopted in our final results of reviews, we will instruct the U.S.
Customs Service to assess antidumping duties on all appropriate
entries.
We invite interested parties to comment on these preliminary
results.
EFFECTIVE DATE: March 8, 2000.
FOR FURTHER INFORMATION CONTACT: Lyman Armstrong or Paul Stolz,
Antidumping/Countervailing Duty Enforcement, Office IV, Group II,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue NW,
Washington, DC 20230; telephone (202) 482-3601 or (202) 482-4474,
respectively.
SUPPLEMENTARY INFORMATION:
Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Act by the Uruguay Round Agreements Act (``URAA''). In addition,
all references to the Department's regulations are to 19 CFR Part 351
(April 1999).
Period of Review
The period of review (``POR'') is February 1, 1998 through January
31, 1999.
Background
On February 19, 1991, the Department published in the Federal
Register (56 FR 6622) the antidumping duty orders on heavy forged hand
tools, finished or unfinished, with or without handles (``certain heavy
forged hand tools'' or ``HFHTs''), from the People's Republic of China
(``PRC''). On February 11, 1999, the Department published in the
Federal Register (64 FR 6878) a notice of opportunity to request
administrative reviews of these antidumping duty orders. On February
25, 1999, four exporters of the subject merchandise requested that the
Department conduct administrative reviews of their exports of the
subject merchandise. Specifically, Fujian Machinery & Equipment Import
& Export Corporation (``FMEC'') requested that the Department conduct
administrative reviews of its exports of HFHTs within the following
classes or kinds or merchandise identified in the scope: Axes/adzes;
hammers/sledges; and picks/mattocks. Shandong Huarong General Group
Corporation (``Shandong Huarong'') requested that the Department
conduct an administrative review of its exports of HFHTs within the
bars/wedges class or kind of merchandise. Liaoning Machinery Import &
Export Corporation (``LMC'') requested that the Department conduct
administrative reviews of its exports of HFHTs within the bars/wedges,
hammers/sledges, and picks/mattocks classes or kinds of merchandise.
Shandong Machinery Import & Export Corporation (``SMC'') requested that
the Department conduct administrative reviews of its exports of HFHTs
within the axes/adzes, bars/wedges, hammers/sledges, and picks/mattocks
classes or kinds or merchandise.
In addition, on March 1, 1999, the petitioner, O. Ames Co.,
requested that the Department conduct administrative reviews of exports
within all four classes of subject merchandise by Tianjin Machinery
Import & Export Corporation (``TMC''), FMEC, Shandong
[[Page 12203]]
Huarong, LMC, and SMC. The Department initiated these reviews on March
19, 1999 (64 FR 14860 (March 29, 1999)).
On October 28, 1999, the Department extended the time limits for
completing the preliminary results in these proceedings until February
28, 2000 (see 64 FR 58034 (October 28, 1999)). The Department is
conducting these administrative reviews in accordance with section 751
of the Act.
Partial Rescission
In its May 28, 1999, Section A questionnaire response, Shandong
Huarong stated that during the POR, it sold only subject merchandise
within the bars/wedges and axes/adzes classes or kinds of merchandise.
Moreover, Shandong Huarong stated that it produced only bars and did
not have access to the information necessary for it to participate in
the review of its sales of HFHTs within the axes/adzes class or kind of
merchandise. Furthermore, Shandong Huarong requested that it be
excluded from the review of the hammers/sledges and picks/mattocks
classes or kinds of merchandise. Based on our review of U.S. import
data obtained from the U.S. Customs Service (``Customs Service''), we
are preliminarily rescinding our review of Shandong Huarong with
respect to sales within the hammers/sledges and picks/mattocks classes
or kinds of merchandise. As noted below, we have relied upon adverse
facts available in determining the preliminary margin for Shandong
Huarong's sales of HFHTs within the axes/adzes class or kind of
merchandise. For details regarding our decision to resort to adverse
facts available see the Adverse Facts Available section of this notice
below.
In its May 28, 1999, Section A questionnaire response, LMC noted
that it sold only HFHTs within the bars/wedges class or kind of
merchandise. Based upon our review of U.S. import data obtained from
the Customs Service, we are preliminarily rescinding our review of LMC
with respect to sales within the axes/adzes, hammers/sledges and picks/
mattocks classes or kinds of merchandise.
Scope of Reviews
Imports covered by these reviews are shipments of HFHTs from the
PRC comprising the following classes or kinds of merchandise: (1)
hammers and sledges with heads over 1.5 kg (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools and wedges
(bars/wedges); (3) picks/mattocks; and (4) axes/adzes.
HFHTs include heads for drilling, hammers, sledges, axes, mauls,
picks, and mattocks, which may or may not be painted, which may or may
not be finished, or which may or may not be imported with handles;
assorted bar products and track tools including wrecking bars, digging
bars and tampers; and steel wood splitting wedges. HFHTs are
manufactured through a hot forge operation in which steel is sheared to
required length, heated to forging temperature, and formed to final
shape on forging equipment using dies specific to the desired product
shape and size. Depending on the product, finishing operations may
include shot-blasting, grinding, polishing and painting, and the
insertion of handles for handled products. HFHTs are currently
classifiable under the following Harmonized Tariff Schedule (HTS)
subheadings: 8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60.
Specifically excluded are hammers and sledges with heads 1.5 kg (3.33
pounds) in weight and under, hoes and rakes, and bars 18 inches in
length and under. Although the HTS subheadings are provided for
convenience and Customs purposes, our written description of the scope
of these orders is dispositive.
Verification
As provided in section 782(i) of the Act, we conducted
verifications of the information provided by the trading companies SMC
and TMC, as well as the information provided by their suppliers (the
manufacturers of the subject merchandise). We used standard
verification procedures including; on-site inspection of the
manufacturers' facilities, examination of relevant sales and financial
records, and selection of relevant source documentation as exhibits.
Our verification findings are detailed in the memoranda dated February
28, 2000, the public versions of which are on file in the Central
Records Unit, Room B099 of the Main Commerce building (CRU-Public
File).
Adverse Facts Available
In accordance with section 776(a)(2) of the Act, the Department has
determined that the use of adverse facts available is appropriate for
purposes of determining the preliminary antidumping duty margins for
one or more classes or kinds of subject merchandise sold by SMC, FMEC
and Shandong Huarong. Section 776(a)(2) of the Act provides that;
If an interested party or any other person (A) withholds
information that has been requested by the administering authority
or the Commission under this title; (B) fails to provide such
information by the deadlines for the submission of the information
or in the form and manner requested, subject to subsections (c)(1)
and (e) of section 782; (C) significantly impedes a proceeding under
this title; or (D) provides such information but the information
cannot be verified as provided in section 782(i), the administering
authority and the Commission shall, subject to section 782(d), use
the facts otherwise available in reaching the applicable
determination under this title.
Moreover, section 776(b) of the Act provides that;
If the administering authority or the Commission (as the case
may be) finds that an interested party has failed to cooperate by
not acting to the best of its ability to comply with a request for
information from the administering authority or the Commission, the
administering authority or the Commission (as the case may be), in
reaching the applicable determination under this title, may use an
inference that is adverse to the interests of that party in
selecting from among the facts otherwise available.
In the instant review, SMC, FMEC and Shandong Huarong failed to
provide certain information that was requested by the Department. In
addition, the information that SMC provided regarding its sales of
hammers/sledges could not be verified. For the reasons set forth in the
following sections, we have determined that these failures warrant the
use of adverse facts available.
SMC
Failure To Provide Requested Information
Pursuant to requests for review by SMC and the petitioner, the
Department requested that SMC provide sales and factors of production
information regarding its sales of axes/adzes, bars/wedges, hammers/
sledges, and picks/mattocks. In its section A questionnaire response,
SMC reported quantity and value information for hammers/sledges, axes/
adzes, and bars/wedges while making no mention of picks/mattocks.
However, in its section C questionnaire response, SMC reported only
sales of hammers/sledges. Moreover, in its December 13, 1999
supplemental questionnaire response, SMC stated that it was not
supplying financial statements for one of its suppliers because that
supplier produced bars, but SMC was ``only participating in the review
on hammers.'' On December 28, 1999, SMC submitted additional
information which included a chart identifying the quantity and value
of its U.S. sales of bars/wedges and axes/adzes. The company did not
provide any explanation as to why it included sales of these classes or
kinds of merchandise in the chart. At the
[[Page 12204]]
verification of SMC, the Department's verifiers found that, during the
POR, SMC had, in fact, sold HFHTs to the United States within the axes/
adzes, bars/wedges, and picks/mattocks classes or kinds of merchandise,
but failed to report these sales to the Department. Company officials
told the verifiers that they were aware that these sales had not been
reported and that the Department would resort to facts available in
determining the margin for such sales. See the memorandum to The File,
Verification of Shandong Machinery Import & Export Corporation's Sales
Questionnaire Responses, dated February 28, 2000 (``SMC Sales
Verification Report'').
We issued to SMC a supplemental questionnaire notifying SMC of the
deficiencies in its submissions and providing it with an opportunity to
remedy these deficiencies. See the letter to SMC dated November 19,
1999, transmitting the supplemental questionnaire. SMC failed to
correct these deficiencies. After reviewing the record in this review,
we have determined that the information submitted by SMC regarding
axes/adzes and bars/wedges is so incomplete as to be unusable for
calculating a margin. Accordingly, notwithstanding section 782(e) of
the Act, as described below, pursuant to 776(a) of the Act, we are
using the facts available to determine SMC's margins with respect to
axes/adzes and bars/wedges. Furthermore, SMC's failure to report its
sales of picks/mattocks warrants the use of facts available.
Verification Failure
On January 17, 18, 19, and 22, 2000, the Department conducted a
verification of SMC's questionnaire response at the company's
headquarters in Qingdao, China. At the verification, the Department's
verifiers required SMC to reconcile the total reported quantity and
value of its U.S. sales to its financial records and to demonstrate the
completeness of its reported U.S. sales. The Department notified SMC of
these requirements in its verification agenda dated January 7, 2000. In
that agenda, the Department requested that SMC prepare specific
worksheets and have available certain records which the verifiers
intended to use in order to ensure that SMC properly reported all of
its U.S. sales of subject merchandise. See the Department's letter to
TMC and SMC, dated January 7, 2000, transmitting the verification
outline. However, prior to the start of the verification, SMC failed to
prepare any of the material requested by the Department. Moreover,
other than providing source documents, such as invoices, prior to the
commencement of the verification, company officials had not prepared
any other supporting documentation to demonstrate how the total
reported quantity and value of sales reconciled to the company's
records. Nevertheless, during the verification, the verifiers afforded
SMC officials an opportunity to prepare worksheets reconciling the
total reported quantity and value of the company's U.S. sales of
hammers/sledges to its financial records \1\. However, the verifiers'
efforts to work with company officials were seriously impaired for the
following reasons: (1) They discovered that company accountants made
unorthodox accounting entries that made it difficult to tie sales
invoices to the monthly sales journal (for a detailed discussion of
this topic, see the proprietary version of the SMC Sales Verification
Report); (2) they found that for some U.S. sales, SMC had misreported
the date of sale; and (3) at the verification, SMC failed to provide
certain documentation requested by the verifiers. The verifiers'
efforts to work with company officials and the difficulties that they
encountered are detailed below.
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\1\ SMC reported only U.S. sales of HFHTs within the hammers/
sledges class or kind of merchandise.
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After discussions with company officials, the verifiers requested
that the officials create three charts in order to reconcile total
quantity and value: (1) a chart reconciling the sales revenue shown on
the financial statements to the cumulative sales revenue listed for all
of SMC's departments; (2) a chart listing the total sales revenue, by
product, for the Hardware and Tools Department No. 2 (``HTD2''); and
(3) a chart listing sales of both subject and non-subject hammers by
HTD2 (the third chart was based on information from SMC's sales
journal). However, the charts that company officials provided in
response to this request failed to reconcile the total reported
quantity and value of SMC's U.S. sales to its records. Company
officials explained that the accountants routinely made certain monthly
adjustments (the nature of which is proprietary) to the sales records
of HTD2 which rendered the verifiers' attempts to reconcile total
reported quantity and value unworkable (for a detailed discussion of
this topic, see the proprietary version of the SMC Sales Verification
Report). Furthermore, because some of these adjustments pertained to
extended periods, it was not possible to isolate the portion of the
adjustments that pertained solely to the POR; nor could the verifiers
tie adjusted sales figures to SMC's questionnaire response. After it
became apparent that SMC could not use the prepared charts to reconcile
the total reported quantity and value to its financial statements, the
verifiers attempted additional procedures to test the completeness and
accuracy of SMC's reported U.S. sales using the books and records that
were available.
Specifically, the verifiers requested that company officials
prepare a chart, similar to the third chart described above, except
that it was to be based on SMC's inventory journal for HTD2. After
affording company officials with ample time to respond to this request,
officials provided a new quantity and value chart and attempted to
demonstrate how it could be tied to SMC's reported sales by making
certain adjustments. Officials offered no explanation as to why they
did not provide the specific chart that the verifiers requested. The
attempt to reconcile total reported quantity and value using the new
chart was unsuccessful.
Additionally, the attempts to reconcile total reported quantity and
value were complicated by the fact that SMC inaccurately reported its
date of sale methodology. In its questionnaire responses, SMC reported
that it used the invoice date as the date of sale. However, at the
verification, the verifiers found that SMC had, in fact, used both the
invoice and, in some cases, a projected U.S. customs entry date, as the
date of sale for reporting purposes.
As a result of the difficulties outlined above, SMC was unable to
demonstrate that it properly reported all of its U.S. sales of hammers/
sledges. The Department's antidumping analysis is based fundamentally
on an evaluation of a respondent's U.S. selling practices. Thus, a
complete and accurate reporting of U.S. sales is central to determining
accurate dumping margins. Because SMC could not establish the
completeness of its reported U.S. sales, we consider SMC to have failed
verification.
Use of Adverse Facts Available
As noted above, the record in this review demonstrates that SMC
failed to report sales and factors of production information regarding
its sales of axes/adzes, bars/wedges, and picks/mattocks and that it
provided information regarding its sales of hammers/sledges that could
not be verified. Therefore, pursuant to section 776(a)(2)(A) & (D) of
the Act, we have relied upon facts available in reaching our
preliminary results for SMC. Moreover, the fact that SMC was aware of
its sales of HFHTs
[[Page 12205]]
within the axes/adzes, bars/wedges, and picks/mattocks classes or kinds
of subject merchandise and that the Department readily obtained general
information regarding the existence of such sales at the verification,
supports our determination that SMC did not act to the best of its
ability to report sales and factors of production information for such
transactions. Furthermore, SMC failed to act to the best of its ability
during the course of these reviews by failing to demonstrate the
accuracy of its reported U.S. sales of hammers/sledges at the
verification. Therefore, pursuant to section 776(b) of the Act, we have
used an adverse inference in selecting facts available margins for SMC.
Specifically, we have based SMC's preliminary margin on the highest
margin from this or any prior segment of this proceeding. See Ferro
Union v. United States 44 F. Supp. 2 1310 (CIT 1999) (Ferro Union).
FMEC
Failure to Provide Requested Information
Pursuant to requests for review by FMEC and the petitioner, the
Department requested that FMEC provide sales and factors of production
information regarding its sales of axes/adzes, bars/wedges, hammers/
sledges, and picks/mattocks. FMEC submitted its responses to section A
and to sections C and D of the Department's questionnaire on May 28,
1999, and June 21, 1999, respectively. In order for the Department to
adequately analyze FMEC's selling practices and accurately calculate
margins for the company, we requested additional information from FMEC
in a supplemental questionnaire dated November 19, 1999. FMEC did not
submit a response to the Department's supplemental questionnaire. On
December 15, 1999, FMEC informed the Department that it would not
participate further in these administrative reviews.
After reviewing the record in this review, we have determined that
the information submitted by FMEC regarding axes/adzes, bars/wedges,
hammers/sledges and picks/mattocks is so incomplete as to be unusable
for calculating a margin. Accordingly, notwithstanding section 782(e)
of the Act, as described below, pursuant to 776(a) of the Act, we are
using the facts available to determine FMEC's margins with respect to
all four classes or kinds or merchandise.
Use of Adverse Facts Available
In accordance with section 776(a)(2)(A) of the Act, we have
determined that FMEC's failure to respond to the Department's
supplemental questionnaire warrants the use of facts available.
Moreover, FMEC's failure to make any attempt to respond to the
Department's supplemental questionnaire and its intentional withdrawal
from this review, supports our determination that FMEC did not act to
the best of its ability to comply with requests for information.
Therefore, pursuant to section 776(b) of the Act, we preliminarily
determine that FMEC is not entitled to a separate rate and will be
subject to the PRC country-wide rates, which are based on adverse facts
available. For further details, see the Separate Rates Determination,
and the Adverse Facts Available and the Country-Wide Rates sections of
this notice below.
Shandong Huarong
Failure to Provide Requested Information
Pursuant to requests for review by Shandong Huarong and the
petitioner, the Department requested that Shandong Huarong provide
sales and factors of production information regarding its sales of
axes/adzes, bars/wedges, hammers/sledges, and picks/mattocks. In its
section A questionnaire response, Shandong Huarong stated that although
it sold axes within the scope of the antidumping duty order, it ``does
not have access to the required information to participate in the
review on axes.'' Shandong Huarong never provided the Department with
any sales or factors of production information with respect to its
sales of axes. Moreover, Shandong Huarong never explained why it did
not have access to information regarding axes.
We issued to Shandong Huarong a supplemental questionnaire
notifying Shandong Huarong of the deficiencies in its submissions and
providing it with an opportunity to remedy these deficiencies. See the
letter to Shandong Huarong, dated November 19, 1999, transmitting the
supplemental questionnaire. Shandong Huarong failed to correct these
deficiencies. After reviewing the record in this review, we have
determined that the information submitted by Shandong Huarong regarding
axes/adzes is so incomplete as to be unusable for calculating a margin.
Accordingly, notwithstanding section 782(e) of the Act, as described
below, pursuant to 776(a) of the Act, we are using the facts available
to determine Shandong Huarong's margins with respect to axes/adzes.
Use of Adverse Facts Available
As noted above, the record in this review shows that Shandong
Huarong did not provide sales and factors of production information
regarding its sales of axes/adzes. Although Shandong Huarong stated
that it did not have access to this information, it never explained why
this was the case. Therefore, pursuant to section 776(a)(2)(A) of the
Act, we have relied upon facts available in reaching our preliminary
results with respect to Shandong Huarong's sales of axes. Moreover, the
fact that Shandong Huarong provided no evidence that it ever attempted
to obtain from its suppliers any factors of production information
regarding axes/adzes, supports our determination that Shandong Huarong
did not act to the best of its ability to report information regarding
axes/adzes. Therefore, pursuant to section 776(b) of the Act, we have
used an adverse inference in selecting a facts available margin with
respect to HFHT sales by Shandong Huarong within the axes/adzes class
of kind of merchandise. Specifically, we have based Shandong Huarong's
preliminary margin for axes/adzes on the highest margin from this or
any prior segment of this proceeding. See Ferro Union.
Corroboration
Section 776(c) of the Act provides that when the Department selects
from among the facts otherwise available and relies on ``secondary
information,'' the Department shall, to the extent practicable,
corroborate that information from independent sources reasonably at the
Department's disposal. The Statement of Administrative Action (SAA)
(H.R. Doc. 103-316 (2nd Sess. 1994) states that ``corroborate'' means
to determine that the information used has probative value. See SAA at
870. To corroborate secondary information, the Department will, to the
extent practicable, examine the reliability and relevance of the
information to be 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
administrative determinations. 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 for that time
period. See Grain-Oriented Electrical Steel From Italy; Preliminary
Results of
[[Page 12206]]
Antidumping Duty Administrative Review, 61 FR 36551, 36552 (July 11,
1996). With respect to the relevance aspect of corroboration, however,
the Department will consider information reasonably at its disposal to
determine whether a margin continues to have relevance. Where
circumstances indicate that the selected margin is not appropriate as
adverse facts available, the Department will disregard the margin and
determine an appropriate margin. For example, in Fresh Cut Flowers from
Mexico: Final Results of Antidumping Administrative Review, 61 FR 6812
(February 22, 1996), the Department disregarded the highest margin in
that case as adverse best information available (the predecessor to
facts available) because the margin was based on another company's
uncharacteristic business expense resulting in an unusually high
margin. Similarly, the Department does not apply a margin that has been
discredited. See D & L Supply Co. v. United States, 113 F.3d 1220, 1221
(Fed. Cir. 1997) (the Department will not use a margin that has been
judicially invalidated); see also Borden Inc. v. United States, 4 F
Supp 2d 1221, 1246-48 (CIT 1998) (the Department may not use an
uncorroborated petition margin that is high when compared to calculated
margins for the period of review). None of these unusual circumstances
are present here. Accordingly, for each class or kind of HFHTs for
which we have resorted to adverse facts available, we have used the
highest margin from this or any prior segment of the proceeding as the
margin for these preliminary results because there is no evidence on
the record indicating that such margins are not appropriate as adverse
facts available.
Separate Rates Determination
To establish whether a company operating in a non-market economy
(``NME'') is sufficiently independent to be entitled to a separate
rate, the Department analyzes each exporting entity under the test
established in the Final Determination of Sales at Less Than Fair
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May
6, 1991) (``Sparklers''), as amplified by the Final Determination of
Sales at Less Than Fair Value: Silicon Carbide from the People's
Republic of China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide'').
Under this test, NMEs are entitled to separate, company-specific
margins when they can demonstrate an absence of government control,
both in law and in fact, with respect to export activities. Evidence
supporting, though not requiring, a finding of de jure absence of
government control over export activities includes: (1) an absence of
restrictive stipulations associated with the individual exporter's
business and export licenses; (2) any legislative enactments
decentralizing control of companies; and (3) any other formal measures
by the government decentralizing control of companies. De facto absence
of government control over exports is based on four factors: (1)
whether each exporter sets its own export prices independent of the
government and without the approval of a government authority; (2)
whether each exporter retains the proceeds from its sales and makes
independent decisions regarding the disposition of profits or financing
of losses; (3) whether each exporter has the authority to negotiate and
sign contracts and other agreements; and (4) whether each exporter has
autonomy from the government regarding the selection of management.
See, Silicon Carbide, 59 FR at 22587 and Sparklers, 56 FR at 20589.
In the final results of the 1997-1998 reviews of HFHTs, the
Department granted separate rates to Shandong Huarong, LMC, and TMC.
See Heavy Forged Hand Tools From the People's Republic of China; Final
Results and Partial Recission of Antidumping Duty Administrative
Reviews, 64 FR 43659 (August 11, 1999) (``Hand Tools''). While these
three companies received separate rates in several previous segments of
these proceedings, it is the Department's policy to evaluate separate
rates questionnaire responses each time a respondent makes a separate
rates claim, regardless of any separate rate the respondent received in
the past. See Manganese Metal From the People's Republic of China,
Final Results and Partial Recission of Antidumping Duty Administrative
Review, 63 FR 12441 (March 13, 1998). In the instant reviews, these
companies submitted complete responses to the separate rates section of
the Department's questionnaire. The evidence submitted in these reviews
by Shandong Huarong, LMC, and TMC included government laws and
regulations on corporate ownership, business licences, and narrative
information regarding the companies' operations and selection of
management. This evidence is consistent with the Department's findings
in previous reviews and supports a finding that control of companies in
the PRC has been decentralized and that the respondent companies'
operations are, in fact, autonomous from the PRC government. We
therefore preliminarily determine that these companies continue to be
entitled to separate rates.
With respect to FMEC, since it terminated its participation in this
review and we were not able to verify the information the company
submitted, we preliminarily determine that FMEC did not establish its
entitlement to a separate rate.
SMC failed verification in the 1997-1998 administrative review and
did not establish its entitlement to a separate rate in that review.
See Hand Tools at 64 FR 43659. Although, as noted above, we were unable
to verify SMC's U.S. sales information, in this review we were able to
verify SMC's separate rates information. At the verification of SMC, we
examined SMC's complete separate rates questionnaire response including
provincial government documents regarding SMC's relationship with the
PRC government, SMC's export licence, and records regarding SMC's
owners, management selection process, price setting practices,
disposition of corporate profits, and use of foreign currency receipts.
We found no evidence of de facto government control. See SMC Sales
Verification Report. Thus, based on this finding and record evidence of
no de jure government control of export activities, we preliminarily
determine that SMC is entitled to a separate rate.
Adverse Facts Available and the Country-Wide Rates
The Department has determined that the use of facts available is
appropriate for purposes of establishing the country-wide rate for
these preliminary results of reviews, pursuant to section 776(a)(2)(B)
of the Act. The Act provides that the administering authority shall use
facts otherwise available when an interested party ``fails to provide
such information by the deadlines for the submission of the information
or in the form and manner requested.'' On April 19, 1999, the
Department sent a questionnaire to the Ministry of Foreign Trade and
Economic Cooperation (``MOFTEC'') in order to collect information
relevant to the calculation of the PRC-wide rate. MOFTEC did not
respond to our questionnaire.
Section 776(b) of the Act authorizes the Department to use adverse
facts available whenever it finds that an interested party has failed
to cooperate by not acting to the best of its ability to comply with
the Department's requests for information. Because MOFTEC did not
respond to our questionnaire or direct us to send the questionnaire to
any other party, and because FMEC
[[Page 12207]]
terminated its participation in this review, we determine that the PRC-
wide entity did not cooperate to the best of its ability with our
requests for information. Because of the failure of MOFTEC to respond
to our questionnaire and FMEC's failure to respond fully to our
questionnaire, we lack data necessary to calculate a PRC-wide rate.
Therefore, pursuant to section 776(b) of the Act, we are relying on
adverse facts available to determine the margin for the PRC-wide
entity, which includes FMEC. As outlined in section 776(b) of the Act,
adverse facts available may include reliance on information derived
from: (1) the petition; (2) a final determination in the investigation;
(3) any previous review under section 751 of the Act or determination
under section 753 of the Act; or (4) any other information placed on
the record. When applicable, for each segment of these proceedings we
have used as adverse facts available for the PRC-wide rate the highest
rate from the current or previous segments of these proceedings. The
PRC-wide rates from the most recently completed review are the highest
rates from any segment of these proceedings for bars/wedges (47.88
percent) and hammers/sledges (27.71 percent). The calculated rates from
these current reviews are the highest rates from any segment of these
proceedings for axes/adzes (51.52 percent) and picks/mattocks (138.78
percent). As noted under the Corroboration section above, we have
determined that these margins are appropriate to use as adverse facts
available.
Export Price
In accordance with section 772(a) of the Act, the Department
calculated an export price (``EP'') for sales to the United States
because the first sale was made before the date of importation and the
use of constructed export price was not otherwise warranted. When
appropriate, we made deductions from the selling price to unaffiliated
parties for ocean freight, marine insurance, foreign brokerage and
handling, and foreign inland freight. Each of these services, with one
exception, was either provided by a NME vendor or paid for using a NME
currency. Thus, we based the deduction for these movement charges on
surrogate values (see the discussion regarding companies located in NME
countries and the Department's selection of a surrogate country in the
Normal Value section of this notice). The one exception referred to
above concerns TMC and LMC, which reported that a market economy vendor
provided ocean freight for a small portion of their U.S. sales and that
they paid for this service using a market economy currency. Therefore,
for these sales, we used the reported market economy ocean freight
expense in calculating EP.
For TMC's and LMC's other sales, and for the other respondents, we
valued ocean freight using the official tariff rates published for hand
tools by the Federal Maritime Commission. When possible, we used the
rates for 20 and 40 foot container shipments between the ports reported
in the respondents' Bills of Lading. If port-specific rates were not
available, we used the regional rates calculated in the Final
Determination of Sales at Less Than Fair Value: Brake Drums and Brake
Rotors From the People's Republic of China, 62 FR 9160 (February 28,
1997) (``Brake Drums and Brake Rotors''). In order to use these rates
in our calculations, it was necessary to convert the per-container
rates into per-metric ton rates by dividing the container rate by 18
metric tons. This conversion factor was used in the two most recently
completed reviews of HFHTs. We valued marine insurance using the rate
in effect in India which was reported in the public version of the
questionnaire response placed on the record in Stainless Steel Wire Rod
From India; Final Results of Administrative Review, 63 FR 48184
(September 9, 1998) (``India Wire Rod''). We valued foreign brokerage
and handling using the rate reported in the questionnaire response in
India Wire Rod. The sources used to value foreign inland freight are
identified below in the Normal Value section of this notice.
To account for inflation or deflation between the time period that
the freight, brokerage, and insurance rates were in effect and the POR,
we adjusted the rates using the wholesale price indices (``WPI'') for
India as published in the International Monetary Fund's (``IMF'')
publication, International Financial Statistics. For further discussion
of the surrogate values used in these reviews, see Memorandum From the
Team Regarding Surrogate Values Used for the Preliminary Results of the
Eighth Administrative Reviews of Certain Heavy Forged Hand Tools From
the People's Republic of China, (February 28, 2000), (``Surrogate Value
Memorandum''), which is on file in the CRU-Public File.
Normal Value
For exports from NMEs, section 773(c)(1) of the Act provides that
the Department shall determine NV using a factors of production
methodology if (1) the subject merchandise is exported from an NME
country, and (2) available information does not permit the calculation
of NV using home-market prices, third-country prices, or constructed
value. Section 351.408 of the Department's regulations sets forth the
Department's methodology for calculating the NV of merchandise from NME
countries. In every case conducted by the Department involving the PRC,
the PRC has been treated as an NME. Since none of the parties to these
proceedings contested such treatment in these reviews, we calculated NV
in accordance with section 773(c) of the Act and section 351.408 of the
Department's regulations.
In accordance with section 773(c)(3) of the Act, the factors of
production (``FOP'') utilized in producing HFHTs \2\ include, but are
not limited to: (A) hours of labor required; (B) quantities of raw
materials employed; (C) amounts of energy and other utilities consumed;
and (D) representative capital costs, including depreciation. In
accordance with section 773(c)(4) of the Act, the Department valued the
FOP, to the extent possible, using the costs of the FOP in a market
economy that is (A) at a level of economic development comparable to
the PRC, and (B) a significant producer of comparable merchandise. We
determined that India is comparable to the PRC in terms of per capita
gross national product, the growth rate in per capita income, and the
national distribution of labor. Furthermore, India is a significant
producer of comparable merchandise. For further discussion of the
Department's selection of India as the surrogate country, see the
Memorandum From Jeff May, Director, Office of Policy, to Thomas
Futtner, Acting Office Director, AD/CVD Enforcement Group II, dated
December 8, 1999, which is on file in the CRU-Public File.
---------------------------------------------------------------------------
\2\ We adjusted the reported factors based on verification
findings, see Calculation Memo.
---------------------------------------------------------------------------
In accordance with section 773(c)(1) of the Act, for purposes of
calculating NV, when possible, we valued FOP using surrogate values
that were in effect during the POR. Surrogate values that were in
effect during periods other than the POR were adjusted, as appropriate,
to account for inflation or deflation between the effective period and
the POR. We calculated the inflation or deflation adjustments for all
factor values, except labor, using the wholesale price indices for
India that were reported in the IMF's publication, International
Financial Statistics. We valued the FOP as follows:
(1) We valued direct materials used to produce HFHTs (i.e., steel,
steel scrap, paint, and anti-rust oil) and the steel scrap generated
from the production of
[[Page 12208]]
HFHTs using the rupee per metric ton or rupee per kilogram value of
imports that entered India during the period February through August
1998 as published in the Monthly Statistics of the Foreign Trade of
India, Volume II-- Imports (``Indian Import Statistics'').
(2) We valued labor using a regression-based wage rate, in
accordance with 19 CFR 351.408(c)(3). This rate is identified on the
Import Administration's web site (See www.ita.doc.gov/import__admin/
records/).
(3) We derived ratios for factory overhead, selling, general and
administrative (``SG&A'') expenses, and profit using information
reported for 1992-1993 in the January 1997 Reserve Bank of India
Bulletin. From this information, we were able to calculate factory
overhead as a percentage of direct materials, labor, and energy
expenses; SG&A expenses as a percentage of the total cost of
manufacturing; and profit as a percentage of the sum of the total cost
of manufacturing and SG&A expenses.
(4) We valued packing materials, including cartons, pallets, iron
straps, anti-damp paper, anti-rust paper, plastic strips, iron knots,
plastic bags, iron wire, and metal clips, using the rupee per metric
ton or rupee per kilogram value of imports that entered India during
the period February through August 1998 as published in Indian Import
Statistics. We valued hessian cloth (a packing material) using the
rupee per kilogram value of imports that entered India during the
period April through July 1998 as published in Indian Import
Statistics.
(5) We valued coal using the price of steam coal in India in 1996
as reported in the International Energy Agency's publication, Energy
Prices and Taxes, Second Quarter 1999 (``EPT'').
(6) We valued electricity using the 1997 Indian electricity prices
for industrial use as reported in EPT.
(7) We used the following sources to value truck and rail freight
services incurred to transport direct materials, packing materials, and
coal from the suppliers of the inputs to the factories producing HFHTs:
Truck Freight: If a respondent used its own trucks to transport
material or subject merchandise, we valued freight services using the
average cost of operating a truck, which we calculated from information
published in The Times of India on April 24, 1994. If a respondent did
not use its own trucks or the respondent did not state that it used its
own trucks, we valued freight services using the rates reported in an
August 1993 cable from the U.S. Embassy in India to the Department. See
Final Determination of Sales at Less Than Fair Value: Certain Helical
Spring Lock Washers from the People's Republic of China, 58 FR 48833
(September 20, 1993).
Rail Freight: We valued rail freight services using the April, 1995
rates published by the Indian Railway Conference Association. These
rates were used in Brake Drums and Brake Rotors. For further discussion
of the surrogate values used in these reviews, see Surrogate Value
Memorandum, dated February 28, 2000, which is on file in the CRU-Public
File.
Preliminary Results of the Reviews
As a result of our reviews, we preliminarily determine that the
following margins exist for the period February 1, 1998 through January
31, 1999:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Shandong Huarong General Group Corporation:
Axes/Adzes............................................... 51.52
Bars/Wedges.............................................. 27.29
Liaoning Machinery Import & Export Corporation: Bars/Wedges.. 20.23
Tianjin Machinery Import & Export Corporation:
Axes/Adzes............................................... 51.52
Bars/Wedges.............................................. 43.99
Hammers/Sledges.......................................... 26.38
Picks/Mattocks........................................... 138.78
Shandong Machinery Import & Export Corporation:
Axes/Adzes............................................... 51.52
Bars/Wedges.............................................. 47.88
Hammers/Sledges.......................................... 27.71
Picks/Mattocks........................................... 138.78
PRC-wide rates:
Axes/Adzes............................................... 51.52
Bars/Wedges.............................................. 47.88
Hammers/Sledges.......................................... 27.71
Picks/Mattocks........................................... 138.78
------------------------------------------------------------------------
Parties to the proceeding may request disclosure within 10 days of
the date of announcement of these preliminary results, in accordance
with 19 CFR 351.224. Any interested party may request a hearing within
30 days of publication of this notice, in accordance with 19 CFR
351.310(c). Any hearing, if requested, will be held 37 days after the
publication of this notice, or the first workday thereafter. Interested
parties may submit written comments (case briefs) within 30 days of the
date of publication of this notice, in accordance with 19 CFR
351.309(c)(1)(ii). Rebuttal comments (rebuttal briefs), which must be
limited to issues raised in the case briefs, may be filed not later
than 35 days after the date of publication of this notice. The
Department will publish a notice of the final results of these
administrative reviews, which will include the results of its analysis
of issues raised by the parties, within 120 days of publication of
these preliminary results.
The final results of these reviews shall be the basis for the
assessment of antidumping duties on entries of merchandise covered by
these reviews and for future deposits of estimated duties.
Duty Assessment Rates
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Pursuant to 19
CFR 351.212(b)(1), we have calculated importer-specific ad valorem duty
assessment rates based on the ratio of the total amount of the dumping
margins calculated for the examined sales to the total entered value of
those same sales. In order to estimate the entered value, we subtracted
international movement expenses from the gross sales value. For those
respondents or classes or kinds of merchandise with margins based on
facts available, we based the importer-specific assessment rates on the
facts available margin percentages. These importer-specific rates will
be assessed uniformly on all entries of each importer that were made
during the POR. In accordance with 19 CFR 351.106(c)(2), we will
instruct the Customs Service to liquidate without regard to antidumping
duties any entries for which the assessment rate is de minimis, i.e.,
less than 0.5 percent. The Department will issue appraisement
instructions directly to the Customs Service.
Cash Deposit Requirements
The following deposit requirements will be effective upon
publication of the final results of these administrative reviews for
all shipments of HFHTs from the PRC entered, or withdrawn from
warehouse, for consumption on or after the publication date of this
notice, as provided for by section 751(a)(1) of the Act: (1) The cash
deposit rates for the reviewed companies named above which have
separate rates (Shandong Huarong, LMC, SMC and TMC) will be the rates
for those firms established in the final results of these
administrative reviews for the classes or kinds of merchandise listed
above; (2) for any previously reviewed PRC or non-PRC exporter with a
separate rate, the cash deposit rates will be the company-specific
rates established for the most recent period; (3) for all other PRC
exporters, the cash deposit rates will be the PRC-wide rates
established in the
[[Page 12209]]
final results of these reviews; and (4) the cash deposit rates for non-
PRC exporters of subject merchandise from the PRC will be the rates
applicable to the PRC supplier of that exporter. These deposit
requirements, when imposed, shall remain in effect until publication of
the final results of the next administrative reviews.
Notification of Interested Parties
This notice serves as a preliminary reminder to importers of their
responsibility under section 351.402(f)(2) of the Department's
regulations 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.
We are issuing and publishing this determination in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: February 28, 2000.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-5648 Filed 3-7-00; 8:45 am]
BILLING CODE 3510-DS-P