[Federal Register Volume 66, Number 219 (Tuesday, November 13, 2001)]
[Notices]
[Pages 56799-56803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-28404]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-504]


Porcelain-On-Steel Cookware From Mexico: Preliminary Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to a request by the petitioner, Columbian Home 
Products, LLC (formerly General Housewares Corporation), the Department 
of Commerce is conducting an administrative review of the antidumping 
duty order on porcelain-on-steel cookware from Mexico. This review 
covers Cinsa, S.A. de C.V. and Esmaltaciones de Norte America, S.A. de 
C.V., manufacturers/exporters of the subject merchandise to the United 
States and the period December 1, 1999, through November 30, 2000 
(fourteenth review period).
    We preliminarily determine that sales have been made below normal 
value. Interested parties are invited to comment on these preliminary 
results. If these preliminary results are adopted in our final results 
of administrative review, we will instruct the Customs Service to 
assess antidumping duties on all appropriate entries.

EFFECTIVE DATE: November 13, 2001.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor, or Katherine Johnson, 
Office 2, AD/CVD Enforcement Group I, Import Administration--Room B099, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-4007 or (202) 482-4929, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to 19 CFR part 351 (April 2000).

Background

    On October 10, 1986, the Department published in the Federal 
Register, 51 FR 36435, the final affirmative antidumping duty 
determination on certain porcelain-on-steel (POS) cookware from Mexico. 
We published an antidumping duty order on December 2, 1986, 51 FR 
43415.
    On December 20, 2000, the Department published in the Federal 
Register a notice advising of the opportunity to request an 
administrative review of this order for the period December 1, 1999, 
through November 30, 2000 (the POR), 65 FR 79802. The Department 
received a request for an administrative review of Cinsa, S.A. de C.V. 
(Cinsa) and Esmaltaciones de Norte America, S.A. de C.V. (ENASA) from 
Columbian Home Products, LLC (CHP), formerly General Housewares 
Corporation (GHC) (hereinafter, the petitioner), and from the 
respondents,

[[Page 56800]]

Cinsa and ENASA. We published a notice of initiation of the review on 
January 31, 2001, 66 FR 8368.
    On February 2, 2001, the Department issued an antidumping duty 
questionnaire to Cinsa and ENASA. We issued supplemental questionnaires 
on May 17, and July 26, 2001. On April 2, June 7, and August 9, 2001, 
we received responses to the original questionnaire and to our two 
supplemental questionnaires. The Department is conducting this review 
in accordance with section 751(a) of the Act.

Scope of the Order

    The products covered by this order are porcelain-on-steel cookware, 
including tea kettles, which do not have self-contained electric 
heating elements. All of the foregoing are constructed of steel and are 
enameled or glazed with vitreous glasses. This merchandise is currently 
classifiable under Harmonized Tariff Schedule of the United States 
(HTSUS) subheading 7323.94.00. Kitchenware currently classifiable under 
HTSUS subheading 7323.94.00.30 is not subject to the order. Although 
the HTSUS subheadings are provided for convenience and customs 
purposes, the written description of the scope of this proceeding is 
dispositive.

Fair Value Comparisons

    To determine whether sales of POS cookware by Cinsa and ENASA to 
the United States were made at less than normal value, we compared 
constructed export price (CEP) to the normal value, as described in the 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice.
    Pursuant to section 777A(d)(2) of the Act, we compared the CEPs of 
individual U.S. transactions to the weighted-average normal value of 
the foreign like product where there were sales made in the ordinary 
course of trade at prices above the cost of production (COP), as 
discussed in the ``Cost of Production Analysis'' section, below.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by Cinsa and ENASA covered by the description in the 
``Scope of the Order'' section, above, to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
We compared U.S. sales to sales made in the home market within the 
contemporaneous window period, which extends from three months prior to 
the U.S. sale until two months after the sale. Where there were no 
sales of identical merchandise in the home market made in the ordinary 
course of trade to compare to U.S. sales, we compared U.S. sales to 
sales of the most similar foreign like product made in the ordinary 
course of trade. In making the product comparisons, we compared 
individual cookware pieces with identical or similar pieces, and 
cookware sets to identical or similar sets. Within these groupings, we 
matched foreign like products based on the physical characteristics 
reported by the respondents in the following order: quality, gauge, 
cookware category, model, shape, wall shape, diameter, width, capacity, 
weight, interior coating, exterior coating, grade of frit (a material 
component of enamel), color, decoration, and cover, if any.

Constructed Export Price

    We calculated CEP in accordance with section 772(b) of the Act 
because the subject merchandise was first sold by Cinsa's and ENASA's 
affiliated reseller, Cinsa International Co. (CIC), after importation 
into the United States. We based CEP on packed prices to unaffiliated 
purchasers in the United States. We made deductions from the starting 
price, where appropriate, for billing adjustments, rebates, U.S. and 
foreign inland freight, U.S. and Mexican brokerage and handling 
expenses, and U.S. duty in accordance with section 772(c)(2) of the Act 
and 19 CFR 351.402(a). We set certain rebates to zero, as explained in 
our Preliminary Results Calculation Memo, on file in Room B-099 of the 
Commerce Department. We made further deductions, where appropriate, for 
credit, commissions, advertising, and indirect selling expenses that 
were associated with economic activities occurring in the United 
States, pursuant to section 772(d)(1) of the Act and 19 CFR 351.402(b). 
For those sales for which the payment date was not reported, we 
calculated credit based on the average number of days between shipment 
and payment using the sales for which payment information was reported. 
We calculated inventory carrying costs for those sales for which no 
values were reported, using data reported in the questionnaire 
response. We made an adjustment for profit in accordance with section 
772(d)(3) of the Act.

Normal Value

    Based on a comparison of the aggregate quantity of home market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a) of the Act. Therefore, we based 
normal value on the price (exclusive of value-added tax) at which the 
foreign like product was first sold for consumption in the home market, 
in accordance with section 773(a)(1)(B)(i) of the Act.

Cost of Production Analysis

    The Department disregarded certain sales made by Cinsa and ENASA 
for the period December 1, 1998, through November 30, 1999 (the most 
recently completed review of Cinsa and ENASA), pursuant to a finding in 
that review that sales failed the cost test (see Porcelain-on-Steel 
Cookware from Mexico: Final Results of Antidumping Duty Administrative 
Review, 66 FR 12926 (March 1, 2001)). Thus, in accordance with section 
773(b)(2)(A)(ii) of the Act, there are reasonable grounds to believe or 
suspect that respondents Cinsa and ENASA made sales in the home market 
at prices below the cost of producing the merchandise in the current 
review period. As a result, the Department initiated investigations to 
determine whether the respondents made home-market sales during the POR 
at prices below their COP within the meaning of section 773(b) of the 
Act.

A. Calculation of COP

    We calculated the COP on a product-specific basis, based on the 
respective sums of Cinsa's and ENASA's cost of materials and 
fabrication for the foreign like product, plus amounts for home-market 
SG&A and packing costs in accordance with section 773(b)(3) of the Act. 
Because Cinsa's and ENASA's fiscal year is different from the POR by 
only one month, we allowed the respondents to report costs based on 
their fiscal year 2000 costs.
    We relied on COP information submitted by Cinsa and ENASA, except 
in the following instance where it was not appropriately quantified or 
valued: enamel frit prices from an affiliated supplier did not 
approximate fair market value prices; therefore, we increased Cinsa's 
and ENASA's enamel frit prices to account for the portion of the 
reported cost savings to affiliated parties which was not due to 
market-based savings. See the Preliminary Results Calculation Memo for 
further details.

B. Test of Home Market Prices

    We compared the adjusted weighted-average COP figures for the POR 
to home market sales of the foreign like product, as required by 
section 773(b) of the Act, in order to determine whether these sales 
were made at prices below the COP. In determining whether to

[[Page 56801]]

disregard home market sales made at prices below the COP, we examined 
in accordance with sections 773(b)(1)(A) and (B) of the Act, whether 
such sales were made: (1) In substantial quantities within an extended 
period of time, and (2) at prices which did not permit the recovery of 
all costs within a reasonable period of time. On a product-specific 
basis, we compared the COP (net of selling expenses) to the home market 
prices, less any applicable movement charges, rebates, discounts, and 
direct and indirect selling expenses.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C), where less than 20 percent of the 
respondent's sales of a given product during the POR were at prices 
less than the COP, we did not disregard any below-cost sales of that 
product because we determined that the below-cost sales were not made 
in ``substantial quantities.'' Where twenty percent or more of the 
respondent's sales of a given product during the POR were at prices 
less than the COP, we disregarded the below-cost sales where such sales 
were found to be made at prices which would not permit the recovery of 
all costs within a reasonable period of time (in accordance with 
section 773(b)(2)(D) of the Act).
    The results of our cost tests for Cinsa and ENASA indicated for 
certain home market models, less than twenty percent of the sales of 
the model were at prices below COP. We therefore retained all sales of 
these models in our analysis and used them as the basis for determining 
normal value. Our cost tests also indicated that for certain other home 
market models, more than twenty percent of home market sales within an 
extended period of time were at prices below COP and would not permit 
the full recovery of all costs within a reasonable period of time. In 
accordance with section 773(b)(1) of the Act, we therefore excluded the 
below-cost sales of these models from our analysis and used the 
remaining sales as the basis for determining normal value.

Price-To-Price Comparisons

    For both respondents, we calculated normal value based on the 
value-added tax-exclusive, home market gross unit price and deducted, 
where appropriate, inland freight and rebates in accordance with 
section 773(a)(6) of the Act and 19 CFR 351.401. We made a deduction 
for credit expenses, where appropriate, pursuant to section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We also deducted 
commissions and the lesser of comparison-market indirect selling 
expenses and the indirect selling expenses deducted from CEP (the CEP 
offset) pursuant to section 773(a)(7)(B) of the Act and 19 CFR 
351.412(f). For those comparison-market sales for which the payment 
date was not reported, we calculated credit based on the average number 
of days between shipment and payment using the sales for which payment 
information was reported. For those sales for which no inventory 
carrying costs were reported, we calculated inventory carrying costs 
based on information contained in the questionnaire response. We made 
no adjustment for packing expenses, because respondents reported that 
these expenses are identical in both markets, and the databases did not 
contain values in the packing data fields for all sales. We made 
adjustments to normal value, where appropriate, for differences in 
costs attributable to differences in the physical characteristics of 
the merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act and 19 
CFR 351.411. See the Preliminary Results Calculation Memo for further 
details of our calculations.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine normal value based on sales in the comparison 
market at the same level of trade (LOT) as the export price or CEP 
transaction. The normal value LOT is that of the starting-price sales 
in the comparison market or, when normal value is based on constructed 
value, that of the sales from which we derive selling, general and 
administrative (SG&A) expenses and profit. For export price, the U.S. 
LOT is also the level of the starting-price sale, which is usually from 
the exporter to an unaffiliated U.S. customer. For CEP, it is the level 
of the constructed sale from the exporter to an affiliated importer, 
after the deductions required under section 772(d) of the Act. See 
Micron Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 
(Fed. Cir. 2001). To determine whether normal value sales are at a LOT 
different from export price or CEP, we examine stages in the marketing 
process and selling functions along the chain of distribution between 
the producer and the unaffiliated customer. If the comparison-market 
sales are at a different LOT, and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which normal value is based and 
comparison-market sales at the LOT of the export transaction, we make a 
LOT adjustment under section 773(a)(7)(A) of the Act. For CEP sales, if 
the normal value level is more remote from the factory than the CEP 
level, and there is no basis for determining whether the difference in 
the levels between normal value and CEP affects price comparability, we 
adjust normal value under section 773(a)(7)(B) of the Act (the CEP 
offset provision). See Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South 
Africa, 62 FR 61731 (November 19, 1997).
    In this review, Cinsa and ENASA had only CEP sales. They reported 
that comparison-market and CEP sales were made at different LOTs, and 
that comparison-market sales were made at a more advanced LOT than were 
sales to CIC in the United States. The respondents requested that the 
Department make a CEP offset in lieu of a LOT adjustment, as they were 
unable to quantify the price differences related to sales made at the 
different LOTs.
    Cinsa and ENASA reported four channels of distribution in the home 
market: (1) Direct sales to customers from the Saltillo plant; (2) 
sales shipped from their Mexico City warehouse; (3) sales to Pacific 
zone customers; and (4) sales shipped to supermarkets and discount 
stores. In analyzing the data in the home market sales listing by 
distribution channel and sales function, we found that the four home 
market channels are all handled by Cinsa's and ENASA's affiliated 
distributer, COMESCO, and did not differ significantly with respect to 
selling functions. Similar services were offered to all or some portion 
of customers in each channel. Based on this analysis, we find that the 
four home market channels of distribution comprise a single LOT.
    All CEP sales were made through the same distribution channel: by 
the Mexican exporter to CIC, the U.S. affiliated reseller, which then 
sold the merchandise directly to unaffiliated purchasers in the United 
States. The same selling functions/services were provided by Cinsa and 
ENASA to all customers in this distribution channel. Therefore, we 
preliminarily determine that all CEP sales constitute a single LOT in 
the United States.
    To determine whether sales in the comparison market were at a 
different LOT than CEP sales, we examined the selling functions 
performed at the CEP level, after making the appropriate deductions 
under section 772(d) of the Act, and compared those selling functions 
to the selling functions performed in the home-market LOT.
    In the comparison market, Cinsa and ENASA sold subject merchandise 
to their affiliated distributor, COMESCO, which then resold the POS 
product to unaffiliated customers. In the United

[[Page 56802]]

States, Cinsa sold its and ENASA's subject merchandise to its 
affiliate, CIC, which then resold the subject merchandise directly to 
unaffiliated purchasers. Therefore, we compared the selling functions 
and the level of activity associated with Cinsa's sales to CIC with the 
sales by COMESCO to unaffiliated purchasers in the Mexican market. We 
found that several of the functions performed in making the starting-
price sale in the comparison market either were not performed in 
connection with sales to CIC (e.g., market research, order 
solicitation, after sale services/warranties, and advertising), or were 
only performed to a small degree in connection with sales to CIC (e.g., 
inventory maintenance), thus supporting respondents' contention that 
different LOTs exist between comparison-market and CEP sales.
    These differences also support the respondents' assertion that the 
comparison-market merchandise is sold at a more advanced LOT (see the 
Preamble to the Department's Regulations, 62 FR 27295, 27371 (May 19, 
1997) (``Each more remote level must be characterized by an additional 
layer of selling activities, amounting in the aggregate to a 
substantially different selling function.'') Furthermore, many of the 
same selling functions that are performed at the comparison-market LOT 
are performed, not at the CEP LOT, but by the respondents' U.S. 
affiliate. Based on this analysis, we preliminarily conclude that the 
comparison-market and CEP channels of distribution are sufficiently 
different to determine that two different LOTs exist, and that the 
comparison-market sales are made at a more advanced LOT than are the 
CEP sales.
    Because there is only one LOT in the home market, it is not 
possible to determine if there is a pattern of consistent price 
differences between the sales on which normal value is based and 
comparison market (i.e., home market) sales at the LOT of the export 
transaction. Accordingly, because the data available do not form an 
appropriate basis for making a level of trade adjustment, but the level 
of trade in the home market is at a more advanced stage of distribution 
than the level of trade of the CEP, we have made a CEP offset to normal 
value in accordance with section 773(a)(7)(B) of the Act. The CEP 
offset is calculated as the lesser of:
    1. The indirect selling expenses on the comparison-market sale, or
    2. The indirect selling expenses deducted from the starting price 
in calculating CEP.

Currency Conversion

    We made currency conversions in accordance with section 773A of the 
Act based on the official exchange rates in effect on the dates of the 
U.S. sales as certified by the Federal Reserve Bank of New York.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
weighted-average dumping margins for the period December 1, 1999, 
through November 30, 2000, are as follows:

------------------------------------------------------------------------
                                                                Margin
        Manufacturer/exporter                 Period          [percent]
------------------------------------------------------------------------
Cinsa................................     12/1/99--11/30/00        16.42
ENASA................................     12/1/99--11/30/00        15.66
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of publication. See 19 CFR 351.310(c). If 
requested, a hearing will be held 44 days after the publication of this 
notice, or the first workday thereafter.
    Issues raised in the hearing will be limited to those raised in the 
respective case briefs and rebuttal briefs. Case briefs from interested 
parties and rebuttal briefs, limited to the issues raised in the 
respective case briefs, may be submitted not later than 30 days and 37 
days, respectively, from the date of publication of these preliminary 
results. See 19 CFR 351.309(c) and (d). Parties who submit case briefs 
or rebuttal briefs in this proceeding are requested to submit with each 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. Parties are also encouraged to provide a summary of the 
arguments not to exceed five pages and a table of statutes, 
regulations, and cases cited.
    The Department will issue the final results of this administrative 
review, including the results of its analysis of issues raised in any 
written briefs, not later than 120 days after the date of publication 
of this notice.
    Interested parties who wish to request a hearing or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, within 30 days of the 
date of publication of this notice. Requests should contain: (1) The 
party's name, address and telephone number; (2) the number of 
participants; and (3) a list of issues to be discussed. See 19 CFR 
351.310(c).

Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. The Department 
will issue appropriate appraisement instructions directly to the 
Customs Service upon completion of this review. The final results of 
this review shall be the basis for the assessment of antidumping duties 
on entries of merchandise covered by the final results of this review 
and for future deposits of estimated duties. We will instruct the 
Customs Service to assess antidumping duties on all appropriate entries 
covered by this review if any importer-specific assessment rate 
calculated in the final results of this review is above de minimis. For 
assessment purposes, we intend to calculate importer-specific 
assessment rates for the subject merchandise by aggregating the dumping 
margins calculated for all U.S. sales examined and dividing this amount 
by the total entered value of the sales examined.

Cash Deposit Requirements

    The following cash deposit requirements will be effective for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rates for the reviewed 
companies will be those established in the final results of this 
review; (2) for previously reviewed or investigated companies not 
listed above, the cash deposit rate will continue to be the company-
specific rate published for the most recent period; (3) if the exporter 
is not a firm covered in this review, a prior review, or 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) the cash

[[Page 56803]]

deposit rate for all other manufacturers or exporters will continue to 
be 29.52 percent, the ``All Others'' rate made effective by the LTFV 
investigation. These requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.

Notification to Importers

    This notice also serves as a preliminary 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 administrative review and notice is published in accordance 
with section 751(a)(1) of the Act and 19 CFR 351.221.

    Dated: November 2, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-28404 Filed 11-9-01; 8:45 am]
BILLING CODE 3510-DS-P