[Federal Register Volume 60, Number 11 (Wednesday, January 18, 1995)]
[Notices]
[Pages 3617-3624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1215]
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DEPARTMENT OF COMMERCE
[A-401-601]
Brass Sheet and Strip From Sweden; Final Results of Antidumping
Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On March 23, 1994, the Department of Commerce (the Department)
published the preliminary results of its 1991-92 administrative review
of brass sheet and strip from Sweden. The review covers exports of this
merchandise to the United States by one manufacturer/exporter,
Outokumpu Copper Rolled Products AB (OAB), during the period March 1,
1991 through February 29, 1992. The review indicates the existence of
dumping margins for this period.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have adjusted OAB's margin for these final results.
EFFECTIVE DATE: January 18, 1995.
FOR FURTHER INFORMATION CONTACT: Valerie Turoscy, Chip Hayes, or John
Kugelman, Office of Antidumping Compliance, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW., Washington, DC 20230; telephone:
(202) 482-5253.
SUPPLEMENTARY INFORMATION:
Background
On March 23, 1994, the Department published in the Federal Register
the preliminary results of its 1991-92 administrative review of the
antidumping duty order on brass sheet and strip from Sweden (59 FR
13698). The Department has now completed this administrative review in
accordance with section 751 of the Tariff Act of 1930, as amended (the
Act).
Scope of the Review
Imports covered by this review are sales or entries of brass sheet
and strip, other than leaded and tinned brass sheet and strip, from
Sweden. The chemical composition of the products under review is
currently defined in the Copper Development Association (C.D.A.) 200
Series or the Unified Numbering System (U.N.S.) C20000 series. This
review does not cover products the chemical compositions of which are
defined by other C.D.A. or U.N.S. series. The merchandise is currently
classified under Harmonized Tariff Schedule (HTS) item numbers
7409.21.00 and 7409.29.20. The HTS item numbers are provided for
convenience and Customs purposes. The written description remains
dispositive.
The review period is March 1, 1991 through February 29, 1992. The
review involves one manufacturer/exporter, OAB.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. At the request of OAB, we held a hearing on May 9,
1994. We received case and rebuttal briefs from OAB and from the
petitioners, Hussey Copper, Ltd., The Miller Company, Olin Corporation-
Brass Group, and Revere Copper Products, Inc.
Comments are addressed in the following order:
1. Value Added Tax (VAT) Adjustment Methodology
2. Unpaid U.S. Sales
3. Model Match Methodology
4. Clerical and/or Programming Errors
VAT Adjustment Methodology
Comment 1: OAB argues that the Department's current VAT adjustment
methodology, in which the Department, in its calculation of United
States price (USP), applies the home market ad valorem VAT rate to USP,
results in a ``multiplier effect'' which serves to artificially inflate
the respondent's antidumping margin. OAB requests that the Department
alter its methodology for the final results of review in accordance
with footnote 4 of the United States Court of Appeals for the Federal
Circuit's (Federal Circuit) decision in Zenith Electronics Corp. v.
United States, 988 F.2d 1573, 1577 (Fed. Cir. 1993) (Zenith) and the
Court of International Trade's (CIT) decision in Hyster Co. v. United
States, CIT Slip Op. 94-34, Court No. 93-03-00133 (March 1, 1994) at 11
(Hyster), and eliminate the ``multiplier effect'' by applying the
actual home market VAT amount rather than the ad valorem home market
VAT rate to USP. Citing Zenith, OAB claims that the Federal Circuit, in
footnote 4 of this decision, clearly indicated that the Department is
free to eliminate the multiplier effect by applying to USP the actual
home market VAT amount. Furthermore, OAB points out that such a
methodology has also been recognized in Hyster, in which the CIT,
relying on footnote 4 of Zenith, upheld the Department's earlier
application of the actual home market VAT amount to USP. OAB also
contends that while the CIT in Federal-Mogul Corporation and the
Torrington Company v. United States, 813 F. Supp. 856 (October 7, 1993)
(Federal-Mogul), elected to disregard the position of the Federal
Circuit in footnote 4 of Zenith, the Federal-Mogul decision has been
appealed, and, absent any final statement by the Federal Circuit on
this issue, the Federal-Mogul view of footnote 4 is entitled to little,
if any, weight (Federal-Mogul Corp. v. United States, Court No. 94-1097
(Federal Circuit), and Federal-Mogul Corp. v. United States, Court No.
94-1104 (Federal Circuit)).
Next, OAB argues that because the Department's current VAT
methodology serves to artificially inflate the respondent's antidumping
margin, it violates the Department's obligation under section
722(d)(1)(c) of the Act to protect against the creation or inflation of
dumping margins due to taxes assessed on home market sales but forgiven
on export sales, and the Department's obligation to calculate fair and
accurate margins (see Koyo Seiko, Ltd. v. United States, 14 CIT 680,
746 F. Supp. 1108, 1110 (1990), and Oscillating Ceiling Fans from the
People's Republic of China, 56 FR 55271, 55275). Finally, OAB contends
that because the Department's VAT methodology subjects countries with
[[Page 3618]] higher VATs, such as Sweden, to disproportionately and
artificially higher dumping margins than countries with lower VATs, the
methodology is clearly discriminatory, and, as such, constitutes a
violation of the Department's obligation pursuant to Articles I and VI
of the General Agreement on Tariffs and Trade (GATT) to collect
antidumping duties on a non-discriminatory basis.
Citing section 722(d)(1)(c) of the Act, the petitioners state that
the plain language of this section requires that the amount of taxes to
be added to USP is the amount of taxes that would be imposed upon the
exported merchandise, not the home market merchandise. Furthermore, the
petitioners argue that OAB has misinterpreted both Zenith and Hyster.
The petitioners claim that the Federal Circuit, in Zenith, despite
footnote 4, clearly recognized that the legislative intent of the
statute was not to eliminate the multiplier effect. Rather, the
multiplier effect was recognized by the Federal Circuit to be the
direct result of Congress' intent that the USP tax adjustment was to be
based on the amount of taxes forgiven on the exported merchandise.
Petitioners also contend that not only did the CIT correctly determine
that footnote 4 of Zenith was contrary to the statute, but the CIT, in
Hyster, did not uphold a tax methodology based on footnote 4 of Zenith.
Rather, petitioners state that the CIT only remanded the VAT issue to
the Department, which on remand applied the same VAT methodology used
in the preliminary results for this administrative review (see the
Department's April 11, 1994, Remand Results in Hyster Co. v. United
States, Court No. 92-03-00133). Petitioners contend that in another
case, Avesta Sheffield, Inc. v. United States, 18 CIT ________, Slip
Op. 94-53 (March 31, 1994) (Avesta), the CIT speaks more clearly to the
VAT issue. The CIT, as in Hyster, remanded the VAT issue to the
Department, but in Avesta the CIT directly instructed the Department to
apply to USP the home market VAT rate rather than the actual amount of
home market tax. The petitioners comment that, on remand, the
Department complied with these instructions and again applied the same
methodology as used in the preliminary results for this administrative
review (see Avesta Sheffield, Inc. v. United States, 17 CIT ________,
838 F. Supp. 608, 615 (1993) and Avesta at 2). Petitioners argue that
the Department's application of the ad valorem home market VAT rate is
therefore lawful and in direct accord with the language and legislative
intent of section 722(d)(1)(c) of the Act. As a result, the Department
should not alter its VAT adjustment methodology for the final results
of review, but rather should rely on its current methodology in
accordance with Federal-Mogul, Avesta, and the body of the Zenith
decision.
Department's Position: We agree with the petitioners. In addressing
the treatment of taxes under existing U.S. law, the CIT in Federal-
Mogul rejected the Department's VAT methodology of adding the actual
home market VAT amount to USP and held that the adjustment to USP for
imputed tax should be calculated by applying the foreign market tax
rate to USP (see Federal-Mogul at 12). In addition, the CIT explicitly
rejected a VAT-adjustment methodology based on adding the actual amount
of the home market tax to USP stating that such an approach ``is
clearly at odds with the body of Zenith and the language of the
statute.'' The Department has conformed its current practice to the
CIT's decision in Federal-Mogul, and the CIT has upheld this approach
in Torrington Co. v. United States, 854 F. Supp. 446 (1994),
Independent Radionic Workers of America v. United States, Slip Op. 94-
144 (CIT 1994), Zenith Electronics Corp. v. United States, Slip Op. 94-
148 (CIT 1994), Samsung Electronics Co., Ltd. v. United States, Slip
Op. 94-146 (CIT 1994), and Zenith Electronics Corp. v. United States,
Slip Op. 94-146 (CIT 1994).
In accordance with the CIT's decision in Federal-Mogul, we have
multiplied the foreign market tax rate by the price of the U.S.
merchandise at the same point in the chain of commerce that the foreign
market tax was applied to foreign market sales, and have added the
product to USP. In order to prevent our methodology from creating
dumping margins where no margins would exist if no taxes were levied
upon foreign market sales, we have also deducted from the USP and FMV
those portions of the respective home market tax and USP tax
adjustments attributable to expenses included in the foreign market and
U.S. bases of tax if we deduct those expenses later to calculate FMV
and USP.
This margin creation effect is due to the fact that the bases for
calculating both the amount of tax included on the price of the foreign
market merchandise and the amount of the USP tax adjustment include
many expenses which are later deducted when calculating USP and FMV.
After these deductions are made, the amount of tax included in FMV and
the USP tax adjustment still reflects the amounts of these expenses.
Thus a margin may be created that is not dependent upon a difference
between adjusted USP and FMV, but is the result of differences between
the expenses in the United States and the home market that were
deducted through expenses. The Department's policy to avoid the margin
creation effect is in acccordance with the Federal Circuit's statement
that the USP tax adjustment should not create an antidumping margin if
pre-tax FMV does not exceed USP. (See Zenith at 1,581.) In addition,
the CIT has specifically held that an adjustment should be made to
mitigate the impact of the expenses that are deducted from FMV and USP
upon the USP tax adjustment and the amount of tax included in FMV. (See
Daewoo Electronics Co., Ltd. v. United States, 760 F. Supp. 200, 208
(CIT 1991) (Daewoo).) However, the mechanics of our adjustment to the
USP tax adjustment and the foreign market tax amount as described above
is not identical to those suggested in Daewoo.
In sum, we believe that the application of the home market VAT rate
to USP and the subsequent adjustment of expenses addresses the concerns
of the courts regarding the adjustment of USP for VAT under section
772(d)(1)(C) of the Act.
Finally, while the GATT requires that we treat all member countries
equally in trade matters, there is no requirement under the GATT that
the results of our actions affect each country equally. Since the
adoption of this VAT adjustment methodology, we have applied the same
methodology in each case regardless of the country or respondent
involved. Therefore, our methodology is not discriminatory but rather
is applied equally to all antidumping duty administrative review
proceedings (see, e.g., Color Television Receivers from the People's
Republic of Korea; Final Results of Antidumping Administrative Review,
59 FR 13701 (March 23, 1994)).
Comment 2: OAB contends that the Department's recent change in its
VAT adjustment methodology is premature and in violation of the
Administrative Procedure Act (APA) (5 U.S.C. 551). OAB argues that
before making such a fundamental change to an established practice, the
Department must conduct a rule-making procedure in accordance with the
APA (see Carlisle Tire and Rubber Co. v. United States, 634 F. Supp.
419 (CIT 1986) (Carlisle), and IPSCO, Inc. v. United States, 687 F.
Supp. 614 (CIT 1988) (IPSCO)). OAB further contends that because the
Department's new VAT rule is clearly subject to the requirements of 5
U.S.C. [[Page 3619]] 533 (b) and (c), and because it does not
constitute an ``interpretive rule'' or ``general statement of policy,''
both of which constitute exceptions to the APA's rule-making
procedures, the Department should have published in the Federal
Register an advance notice of its proposed VAT methodology and should
have given interested parties an opportunity to comment. OAB argues
that by not doing so, the Department has violated 5 U.S.C. 533 and
should postpone issuance of final results of this administrative review
pending completion of the APA rule-making procedures.
Petitioners state that, contrary to OAB's arguments, the
Department's method for adjusting for VAT constitutes an interpretive
policy designed to implement and interpret section 722(d)(1)(c) of the
Act. Petitioners contend that Carlisle and IPSCO represent two cases in
which the Department, for administrative purposes, created rules that
had no basis in the statute. As a result, rule-making procedures were
in order. Petitioners claim that the Department's VAT adjustment
methodology was developed specifically to implement section
722(d)(1)(c) of the Act, and, as a result, is an interpretive rule
which serves to clarify or explain existing law, rather than create new
law, rights, or duties (see Timken Co. v. United States, 11 CIT 786,
673 F. Supp. 495, 514 (1987) (Timken), citing Cabia v. Egger, 690 F.2d
234, 238 (D.C. Cir. 1982)). As such, it constitutes an exception to the
APA's rule-making procedures. Petitioners argue that the Department is,
therefore, not in violation of 5 U.S.C. 533 and that APA rule-making
procedures are unwarranted in this case.
Department's Position: We agree with the petitioners. The
Department's VAT adjustment methodology was developed in accordance
with the CIT's decision in Federal-Mogul in which the CIT held that the
addition to USP under section 772(d)(1)(c) of the Act should be the
result of applying the foreign market tax rate to the price of the U.S.
merchandise. As a result, our VAT methodology represents a methodology
developed by the Department for the purpose of implementing section
722(d)(1)(c) of the Act in accordance with the CIT's decision in
Federal-Mogul. Unlike the methodologies contested in Carlisle and
IPSCO, our VAT adjustment methodology does not create a new rule,
right, duty, law, or standard. Rather, our VAT methodology, because it
interprets the law, is not subject to the APA (Cf. Timken, 11 CIT at
514, agreeing with the Department that its 10-90-10 sales- below-cost
methodology was not subject to the APA since it interpreted current law
rather than made new law). The Department's methodology is the means by
which we interpret, implement, and administer section 722(d)(1)(c) of
the Act, not a new rule or law.
Comment 3: OAB contends that, if the Department does not alter its
VAT methodology, it should change the way in which it determines the
amount of antidumping duties to be assessed on merchandise subject to
this administrative review. Respondent argues that when assessing
duties on imports of brass sheet and strip from Sweden, the Department,
rather than relying on its current assessment methodology, should apply
the ad valorem margin to the actual entered value, which is not
inflated by the VAT. OAB points out that not only is there no case law
prohibiting such an assessment approach, but this approach would also
eliminate the artificial inflation of respondent's margins caused by
the Department's current VAT methodology. OAB concludes by stating that
the Department would thereby meet its fundamental obligation to
calculate fair and accurate margins.
Petitioners argue that the assessment methodology proposed by the
respondent is simply another method by which the multiplier effect can
be eliminated from the Department's margin calculations and by which
tax neutrality can be achieved. As such, this assessment approach would
be in violation of section 722(d)(1)(c) of the Act and contrary to both
Zenith and Federal-Mogul for the same basic reasons as argued in
Comment 1. Petitioners contend that the Department should, therefore,
reject OAB's argument and not alter its assessment methodology.
Department's Position: We disagree with the OAB's contention that
if we do not alter our VAT adjustment methodology, we should then
ensure that our assessment methodology eliminates the multiplier
effect. As explained by the Federal Circuit in Zenith, it was not the
intent of Congress to eliminate the multiplier effect or for the
Department to seek tax neutrality. Rather, the exporters themselves, by
engaging in dumping, are responsible for any artificial inflation of
their dumping margins due to the operation of section 722(d)(1)(c) of
the Act. Therefore, as the Federal Circuit has held in Zenith, the
elimination of the multiplier effect is not necessary. The Federal
Circuit's holding in Zenith is just as applicable to our assessment
methodology as it is to our VAT adjustment methodology or to any other
methodology used in our analysis that can potentially be manipulated to
eliminate the multiplier effect. Therefore, we will not adopt an
assessment policy, or any other methodology, for the sole purpose of
eliminating any multiplier effect caused by the application of our VAT
adjustment methodology.
Furthermore, our policy is to base assessment on the entered value
of sales, and when we do not have the entered value of sales, we will
base assessment on the total calculated USP. Because we do not have
entered value of sales information for this review, we will base the
duties to be assessed on imports of Swedish brass sheet and strip on
the total USP calculated from OAB's response.
Unpaid U.S. Sales
Comment 4: Petitioners claim that during verification the
Department discovered that, due to financial difficulties, one of OAB's
U.S. customers has yet to pay OAB for merchandise it purchased during
the review period and took delivery for, and that OAB has left its
books open for these unpaid sales. In addition, the petitioners point
out that when the Department requested that OAB identify these unpaid
U.S. sales, OAB stated that it would be too difficult to accomplish
during the verification (see the Department's Home Market Verification
Report for OAB (March 9, 1994) (Verification Report)). Petitioners
contend that because the Department was unable to completely verify
these sales, because at verification these sales had not yet been paid
for, and because there is no evidence on the record that OAB has since
received payment for this merchandise, the Department should not rely
on OAB's reported invoice prices for these unpaid sales. Rather,
because OAB failed in its questionnaire responses to report that there
were problems with these sales and failed to identify these sales at
verification, petitioners urge the Department to follow its past
practice in similar circumstances. Specifically, the petitioners argue
that, as complete BIA for these unpaid U.S. sales, the Department
should use the highest calculated margin for an individual sale subject
to the administrative review, as it did in Certain Stainless Steel
Cooking Ware from the Republic of Korea; Final Results of Antidumping
Duty Administrative Review, 56 FR 38114 (1991) (SS Cooking Ware).
Petitioners also contend that if the Department decides to base USP
on OAB's reported invoice prices for its unpaid U.S. sales, then the
Department [[Page 3620]] should not rely on OAB's reported fictional
payment dates and fictional payment periods and should reject the
credit expense amounts OAB claimed for its unpaid U.S. sales.
Petitioners argue that the Department should follow its past practice
and recalculate OAB's credit expense for these unpaid sales using as
partial BIA the date of the notice of the final results for this
administrative review as the date of payment (see Certain Hot-Rolled
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat
Products, and Certain Cut-to-Length Carbon Steel Plate from Belgium;
Final Determinations of Sales at Less than Fair Value, 58 FR 37083,
37087 (July 9, 1993) (Belgian Steel), and Certain Stainless Steel Wire
Rods from France; Final Determination of Sales at Less than Fair Value,
58 FR 68865, 68871 (December 29, 1993) (SS Wire Rods)).
OAB contends that there is no justification for the application of
either complete or partial BIA to these unpaid sales. First, OAB argues
that because the cases cited by petitioners involve entirely different
facts than those in the case at hand, they are inappropriate
precedents. Not only did SS Cooking Ware, Belgian Steel, and SS Wire
Rod not involve sales to bankrupt customers, but in all three cases
respondents either failed to report any data whatsoever regarding
unpaid sales or they failed to provide an explanation as to why payment
had not been received on those sales. OAB contends that it has
responded to all information requests regarding U.S. sales, has
reported invoice prices which were successfully verified by the
Department, and has provided a clear explanation why its sales to a
certain U.S. customer are still unpaid. Furthermore, OAB points out
that SS Cooking Ware involved unpaid sales which constituted an entire
market, whereas the unpaid sales in this case only represent a limited
number of sales to a single customer, not sales to an entire market.
Furthermore, OAB argues that the prerequisites for the use of BIA, as
outlined in sections 776 (b) and (c) of the Act and the Department's
regulations implementing section 776 (b) and (c), do not exist in this
case, as they did in the others cited by the petitioners. Therefore,
OAB contends that the Department should not reject the invoice prices,
payment periods, or credit expenses OAB reported for its unpaid U.S.
sales. Rather, citing various decisions, OAB urges the Department to
act in accordance with its prior practice in a variety of cases where a
customer failed to pay a respondent for merchandise it purchased,
accept the reported invoice prices, and calculate credit expenses for
the unpaid sales using an average credit period based on similar sales
or some other non-punitive measure (see, e.g., New Minivans from Japan;
Final Determination of Sales at Less than Fair Value, 57 FR 21937,
21945 (May 26, 1992)).
The respondent argues that the Department's use of the date of the
final results notice as the payment date for unpaid sales in both the
Belgian Steel and SS Wire Rod original investigations was not punitive,
whereas such a decision in this review would be punitive. OAB explains
that both of these cases were original investigations, which, unlike
administrative reviews, were of a shorter duration and subject to
stricter statutory deadlines. Because this proceeding is not only an
administrative review, but an administrative review that has taken
longer than normal to complete, a decision by the Department to use the
date of the notice of the final results of review as the payment date
for these sales would create some payment periods in excess of three
years, and as such would result in an extremely unwarranted punitive
outcome.
Finally, the respondent contends that, in accordance with the
Federal Circuit's decision in Olympic Adhesives v. United States, 899
F.2d 1573 (Fed. Cir. 1990) (Olympic Adhesives), to the extent that the
actual payment dates for these unpaid sales do not exist, the
Department may not penalize OAB by using as BIA payment dates which
would grossly distort any reasonable credit calculation.
Department's Position: We agree in part with both the respondent
and the petitioners. Prior to verification OAB had not indicated in its
original questionnaire response or its subsequent supplemental
responses that it had not yet received payment for certain of its U.S.
sales to a particular customer. Nor did OAB indicate that it had
reported estimated payment dates and corresponding payment periods for
these unpaid sales, which it knew when it submitted its questionnaire
response were not actual payment dates and periods. It was only because
one of the sales we selected in the sales trace portion of our
verification happened to be an unpaid U.S. sale that we discovered at
verification (1) that OAB had unpaid U.S. sales, (2) that OAB had
reported estimated payment dates for these sales and that these dates
had already passed without payment, (3) that OAB had left its books
open on these sales, and (4) that one of OAB's U.S. customers had been
unable to pay OAB for merchandise it purchased during the review period
due to financial difficulties (i.e., bankruptcy). When we asked the
respondent at verification to identify all of its unpaid U.S. sales,
OAB indicated that only a few sales to this bankrupt customer were
unpaid, and explained that it would be too difficult to isolate these
sales in the time allotted for verification. As a result, because we
were only first aware of the nature of these sales at verification and
because the respondent was unable to identify these unpaid sales at
verification, we were unable to verify the extent of these unpaid sales
and unable to verify the accuracy of OAB's explanation why the sales
were unpaid. However, by means of our sales traces, we were able to
verify some limited information concerning sales to the U.S. customer,
such as the invoice prices OAB reported for them. After verification we
conducted our own analysis of OAB's sales to this U.S. customer and
discovered that only one sale did not have an estimated payment date
and corresponding estimated payment period. As a result, we determined
that all but one of OAB's sales to this customer were unpaid. Based on
these facts, we disagree with the respondent's contention that the
prerequisites for the application of BIA do not exist in this instance
and that, based on Olympic Adhesives, we cannot use BIA for information
that simply does not exist. Although we recognize that OAB included
these sales in its original U.S. sales listing, the fact remains that
OAB failed to inform us of the nature of these sales, and failed to
inform us that the ``estimated'' payment dates and payment periods it
reported were not actual payment dates and periods. This, along with
the fact that OAB was unable to identify these sales at verification
and only first offered at verification any explanation why these sales
were unpaid, impeded our ability to accurately and completely verify
these sales. Therefore, because OAB provided incomplete and inaccurate
information concerning the nature of these sales, and because at
verification we were able to verify only a limited amount of
information concerning these sales, we have determined for these final
results, in accordance with section 776(b) and 776(c) of the Act, that
the application of BIA to these sales is warranted. Furthermore,
Olympic Adhesives is not applicable in this case because the Department
is not applying BIA because OAB failed to provide non-existent payment
dates. Rather, we are applying BIA because the payment information OAB
provided in its questionnaire responses was incomplete
[[Page 3621]] and inaccurate and because we were unable to verify the
extent of these unpaid sales.
Although we have determined that BIA is warranted in this case, we
do not agree with the petitioners' contention that we should reject the
invoice prices OAB reported for these sales and apply as BIA the
highest calculated margin for any sale in the review. At verification
we were able to verify that the invoice prices OAB reported for these
sales matched those on pro forma invoices, on ``call-off'' invoices,
and in OAB's ledgers. Because we are satisfied that the prices reported
and the prices we observed are the same prices agreed to by OAB and its
customer, we have no reason to question the accuracy of these prices.
As a result, for these final results we have accepted OAB's reported
invoice prices. In accordance with our policy, we have determined that
partial BIA, based on a recalculation of the payment periods and credit
expenses OAB reported for its unpaid U.S. sales, is more appropriate
and more in accordance with the facts in this case.
Due to the differences in duration and statutory deadlines between
the investigative and administrative review processes, we disagree with
the petitioners' contention that we should use the date of the notice
of the final results of review as the date of payment. Rather, because
of the extended passage of time between the actual sales being reviewed
and the conclusion of the administrative review process, as compared to
the original investigative process, we have determined that the use of
the last day of our verification as the payment date for OAB's unpaid
sales is reasonable. Based on the record for this review, the last day
of verification is the last day that we can determine with any
certainty that these sales were still unpaid and that OAB was still
extending credit to this customer. Therefore, for these final results
we have determined to use for the payment period for each unpaid U.S.
sale the time elapsed from the date of shipment reported by OAB to the
last day of verification. Accordingly, we have also recalculated the
credit expenses OAB reported for these unpaid U.S. sales, based upon
this payment period.
Model Match Methodology
Comment 5: Petitioners contend that length is the most important
distinguishing characteristic between brass sheet and brass strip, and
that if the length of the merchandise sold is in excess of 10 feet, the
merchandise is brass strip rather than brass sheet, and should be
identified accordingly. Petitioners argue that because OAB has not
submitted any information regarding the length of the merchandise it
sold, but instead has relied solely on width to distinguish between
sheet and strip, the Department cannot be certain that OAB properly
identified the form of its sales as brass sheet or brass strip.
Petitioners claim that the Department should require OAB to
substantiate its claim that all of its U.S. sales were of brass sheet.
Petitioners argue that this is especially important for this
administrative review because (1) the Department, accepting OAB's
assertion that all of its U.S. sales were of sheet, in this review
based its model matches on only two criteria, alloy and gauge, rather
than on the four criteria, alloy, gauge, width, and form, that it used
in previous administrative reviews of this order, and (2) based on one
of the pro forma invoices contained in exhibit 2 of the Department's
verification report, it appears that OAB has misidentified a U.S. strip
sale as a sheet sale in its U.S. sales listing. Therefore, petitioners
infer that by not using width and form, the Department risks comparing
sales of sheet to sales of strip.
The petitioners state that because the Department has the authority
under 19 C.F.R. 353.31(b)(1) to request information even after the
preliminary results of a review, the Department should obtain
information regarding the length of all products sold by OAB during the
review period. In this way the Department would be able to determine
with certainty whether all of OAB's U.S. sales were indeed sales of
brass sheet. The petitioners argue that, based on the information the
Department receives from OAB regarding product lengths, the Department
should then reexamine its model matches to ensure that U.S. and home
market sales are properly matched.
The respondent argues that there is nothing on the record to
substantiate the petitioners' claim that length is the most important
distinguishing characteristic between brass sheet and strip or that
products in excess of 10 feet in length are by definition strip and not
sheet. OAB contends that it has correctly identified its sales as strip
or sheet based on the recognized industry standard of whether the
merchandise was sold as cut-to-length or coiled. OAB argues that as a
result the Department has properly relied on alloy and gauge in its
model matches, since only these characteristics are necessary for
comparing sales of sheet. Because all of OAB's U.S. sales were of
sheet, the Department correctly used only home market sheet sales in
its analysis. Thus, all sales were already matched as to form prior to
any further comparisons by the Department. Furthermore, because the
Department has already collected all of the data necessary to develop
an appropriate model-match methodology and because it has applied an
appropriate model-match methodology in this review, there is no reason
for the Department to reopen the issue by obtaining information
regarding length of the products sold, or to re-examine its model-match
methodology.
Department's Position: We agree with OAB. The Department's
understanding in this review, as it has been in all previous reviews of
this order, is that form is the distinguishing factor between brass
sheet and brass strip. While brass sheet is sold flat and cut-to-length
and is packed and shipped in this form, brass strip is sold coiled or
traverse-wound and is packed and shipped in its coiled form. In past
reviews we did not include the length of the merchandise as a model-
match criterion or as a defining characteristic between strip and
sheet. In this review the petitioners have provided insufficient
evidence for us to make a determination that length is a reliable
criterion upon which to distinguish sheet from strip, or that length
should be included as a model-match criterion or should replace the
form criterion in our model-match methodology. As a result, for this
review, as in all past reviews, we have based the difference between
brass sheet and brass strip on the form of the merchandise, not its
length.
We disagree with the petitioners' contention that we excluded the
form and width criteria from our product comparisons in this review and
did not adhere to our established model-match methodology. As in all
past reviews, we have again included the form and width criteria in our
analysis. However, for several reasons, it was not necessary for us to
explicitly include these criteria in the model-match portion of our
computer program. For example, upon determining that all of OAB's U.S.
sales were sheet sales, we excluded from our analysis all home market
strip sales as a means to ensure proper product comparisons. As a
result, because only sheet sales remained (meaning that all home market
and U.S. sales were of the same form), it was not necessary for us to
specifically include the form criterion in the model-match portion of
our computer program.
We specifically used width as a criterion in all past reviews
because our analysis addressed sales of both brass strip and brass
sheet. Due to the additional costs associated with cutting
[[Page 3622]] strip to meet a specific width requirement, width is
extremely relevant when comparing one strip sale to another strip sale.
However, because there are no additional costs associated with
variations in the width of sheet, width is irrelevant when one sheet
sale is compared to another sheet sale. As previously stated, based on
our determination that all of OAB's U.S. sales were of sheet, only
sheet sales were subject to our product comparisons. As a result,
although we considered the width criterion in our methodology, it
became irrelevant to our analysis and unnecessary for the model-match
portion of our computer program.
After excluding all home market strip sales from our analysis we
also excluded all home market sheet sales which were under 15 inches in
width. In doing so we did not intend to create width groups (sheet over
and under 15 inches in width), or distinguish between the widths of
sheet sales. As OAB explained in its response, during the review
period, it produced all subject merchandise in two different mills, one
of which was a more modern, state-of-the-art mill. Because of the way
OAB casts and rolls its sheet in the more modern mill, all sheet
produced in this mill is always greater than 15 inches in width. As a
result, due to the modern mill's production process, differentiation
according to the width of the merchandise corresponds to
differentiation of the merchandise according to form. Because all of
OAB's U.S. sales (which OAB identified, based on form, as all sheet
sales) and nearly all of OAB's home market sheet sales were produced in
the more modern mill, all of OAB's U.S. sales and nearly all of its
home market sheet sales also happen to be over 15 inches in width. Our
preliminary results revealed 1) that the small quantity of home market
sheet sales which were produced in OAB's older mill (under 15 inches in
width) were all of the 1063 alloy, and 2) that when we compared OAB's
U.S. sheet sales of alloy 1063 (which were all produced in the modern
mill) to home market sheet sales for contemporaneous such or similar
matches, every one of OAB's U.S. 1063 sheet sales matched to a
contemporaneous such or similar home market sheet sale which was also
produced in the modern mill. In other words, although OAB had home
market sheet sales of the 1063 alloy produced in the older mill, none
of these sales were contemporaneous to OAB's U.S. sheet sales of the
1063 alloy. As a result, we determined that it was unnecessary to
include home market sheet sales produced in the older mill in our
analysis. Because home market sheet sales produced in the older mill
are under 15 inches in width, we used width to identify these sales and
eliminate them from our analysis.
Based on our verification, we disagree with the petitioners that
OAB based its determination of a sale as sheet or strip on width. We
verified that OAB clearly relied on the form of the merchandise (i.e.,
whether it was flat and cut-to-length or whether it was coiled or
traverse-wound) when identifying its sales as either sheet or strip in
its response. As noted above, because of the way OAB casts and rolls
its sheet in the more modern mill, all sheet produced in this mill is
always greater than 15 inches in width. As a result, due to the modern
mill's production process, differentiation according to the width of
the merchandise corresponds to differentiation of the merchandise
according to form. Because all of OAB's U.S. sales (which OAB
identified, based on form, as all sheet sales) and nearly all of OAB's
home market sheet sales were produced in the more modern mill, all of
OAB's U.S. sales and nearly all of its home market sheet sales also
happen to be over 15 inches in width. Therefore, OAB did not use width
as a means to define its merchandise, nor did it use width as a
distinguishing characteristic. Rather, in this review, the width of
nearly all of OAB's sheet sales correlates to the form of the
merchandise.
We agree with petitioners that there is a discrepancy concerning
one of OAB's U.S. sales. We re-examined the invoice for this sale
contained in exhibit 2 of our verification report and the invoice
describes the merchandise sold as brass strip, whereas OAB reported
this sale as a sheet sale in its U.S. sales listing. For the purposes
of this review, we have determined that this is a sheet sale and we
have treated it accordingly in our analysis. Our determination that
this sale is a sheet rather than a strip sale is based on the fact that
the merchandise sold was over 20 inches in width. Although we have
clearly stated that width is not a defining characteristic, the fact
remains that, for Customs' purposes, brass sheet is subject merchandise
over 20 inches in width while brass strip is subject merchandise under
20 inches. This is evident in the HTS where a distinction is made
between subject merchandise over 500 mm in width and under 500 mm in
width. As a result, due to the fact that the width of the merchandise
sold, as reflected on the pro forma invoice for this sale, was over 20
inches, this merchandise was entered as sheet. Therefore, we have
determined that because this sale was entered as a sheet sale, it
should be treated as such in our analysis. For these final results of
review, we have thus used the same methodology as in our preliminary
results of review in that our analysis of OAB's U.S. sales is based on
our determination that all of these sales were of brass sheet.
Comment 6: The petitioners argue that when the Department was
unable to find an identical home market match for U.S. sales of alloy
1085, it correctly searched for contemporaneous home market sales of
the most similar alloy 1080, but incorrectly also searched for
contemporaneous home market sales of the less similar home market alloy
1070. Petitioners contend that because home market alloy 1090 is
clearly more similar in copper content to the U.S. 1085 alloy than the
home market 1070 alloy, the Department should use home market sales of
alloy 1090 rather than alloy 1070 for the purpose of comparison. As a
result, petitioners urge the Department to change its model-match
methodology to ensure that when it is unable to find an identical home
market match for a U.S. sale of alloy 1085, the U.S. sale of alloy 1085
should be matched to a contemporaneous home market sale of alloy 1080
or alloy 1090.
OAB argues that because its home market sales of alloy 1090 were of
unique and very expensive merchandise and, therefore, wholly
inappropriate candidates for price comparisons to U.S. sales, the
Department, when unable to find an identical home market match to U.S.
sales of alloy 1085, correctly searched for contemporaneous matches of
home market alloy 1080 and alloy 1070 sales. Respondent further argues
that the petitioners' contention that the Department should match U.S.
sales of alloy 1085 to contemporaneous home market sales of alloy 1090
rather than alloy 1070 only reflects the petitioners' preference which
is unsupported by any evidence on the record. Since the Department has
broad discretion in designing its model-match methodology and has
already developed an appropriate methodology for this review, OAB
argues that the Department should not allow the petitioners to
determine what constitutes most similar merchandise (see NTN Bearing
Corp. of America v. United States, 747 F. Supp. 726, 736 (CIT 1990),
Ceramica Regiomontana S.A. v. United States, 636 F. Supp. 961, 966 (CIT
1986), and Timken Co. v. United States, 630 F. Supp. 1338 (CIT 1986)).
Rather, the Department should use the same methodology in its final
results as it did in its preliminary results and match U.S. sales of
alloy 1085 to [[Page 3623]] contemporaneous home market sales of alloy
1080 or alloy 1070.
Department's Position: In the model matches for our preliminary
results of review, because all of the sales we analyzed were in the
same form and because the width criterion was irrelevant in this
review, for each U.S. sheet sale, we first searched for a
contemporaneous home market sheet sale of merchandise identical to each
U.S. product based on an identical alloy and an identical gauge. If we
found no match of identical merchandise, we then searched for a
contemporaneous home market sale of merchandise that was most similar
to the U.S. product based on an identical alloy but a different gauge.
If we were still unable to find a match, we then searched for a
contemporaneous home market sale based on a different alloy but an
identical gauge. At this stage in the model matching we determined that
the two home market alloys that were most similar to the U.S. 1085
alloy were the home market 1080 and 1070 alloys. As a result, for those
U.S. sales of the 1085 alloy for which we were unable to find a
contemporaneous home market match based on an identical alloy and
gauge, or a contemporaneous home market match based on an identical
alloy but a different gauge, we then searched for a contemporaneous
home market sale of the 1080 alloy and of the same gauge. If at this
point we were still unable to match the U.S. 1085 sale to a
contemporaneous home market sale, we searched for a contemporaneous
home market sale of the 1070 alloy and the same gauge.
Based on comments from both the respondent and the petitioners and
our reexamination of the respondent's arguments against including home
market 1090 alloy sales in our analysis, we determined that for these
final results, when we were unable to match a U.S. 1085 alloy sale to a
home market sheet sale of identical merchandise, to a home market sheet
sale of an identical alloy but a different gauge, or a home market
sheet sale of the 1080 alloy and the same gauge, we would search for a
contemporaneous home market sheet sale of the 1090 rather than the 1070
alloy.
Our decision to alter our model-match program and to replace home
market 1070 sales with home market 1090 alloy sales is based on the
following reasons. First, due to the fact that all of OAB's U.S. sales
were of brass sheet over 15 inches in width, we used only home market
sales of sheet over 15 inches in width for our analysis and based the
computer program portion of the model match on only the alloy and gauge
criteria. Of these two criteria, we determined that alloy was the most
important criterion upon which to base our determination of home market
such or similar merchandise. We also determined that when selecting the
two home market alloys most similar to the U.S. 1085 and 1090 alloys,
the only two U.S. alloys for which sufficient such or similar matches
were not available, we would base our choice on similarity of alloy
compositions. In our preliminary results we determined that, due to
their similarity in copper content, the home market 1085 and 1080
alloys were the two most similar alloys to the U.S. 1090 alloy.
Likewise, we determined that the two home market alloys most similar to
the U.S. 1085 alloy were the 1080 and 1070 alloys. However, because we
agree with petitioners that the home market 1090 alloy is closer in
copper content to the U.S. 1085 alloy than is the home market 1070
alloy, we have determined for these final results that the ranking of
home market 1090 alloy sales over home market 1070 alloy sales is more
appropriate.
Furthermore, we disagree with the respondent's argument in its
questionnaire response and its preliminary results comments that
because OAB's home market 1090 alloy sales entailed only a few, small
quantity sales of expensive, unique merchandise to only a limited
number of customers, these sales are not in the ordinary course of
trade and are inappropriate for price-to-price comparisons. After
examining OAB's home market sales of sheet over 15 inches in width, we
discovered that OAB's sales of other alloys at certain gauges were made
in even smaller quantities and constituted even fewer transactions than
OAB's 1090 alloy home market sales. In addition, we also discovered
that OAB's weighted-average home market prices of other alloys were
similar to the weighted-average home market price for OAB's 1090 sales,
and one home market alloy was sold at a weighted-average price that
even exceeded that of the 1090 alloy. As a result, we have determined
that not only is there no evidence on the record that OAB's home market
1090 alloy sales were outside the ordinary course of trade, but that
the evidence on the record refutes OAB's original claims that its home
market sales of the 1090 alloy were smaller in quantity, less frequent,
and more expensive. Therefore, because we have determined that OAB's
home market 1090 alloy sales should not be excluded from such or
similar merchandise comparisons, and because it would be neither
distortive nor unreasonable to use the 1090 alloy, we have changed our
model matches for U.S. 1085 alloy sales and have relied on 1080 and
1090 alloy sales as similar comparisons where home market 1085 sales
are not available for comparison.
Clerical and Programming Errors
Comment 7: OAB states that because the Department has determined
for this review that OAB paid commissions in the U.S. market but not in
the home market, the Department should grant OAB a commission offset
and deduct from FMV home market indirect selling expenses up to the
amount of the U.S. commission. OAB contends that while the Department
correctly applied the offset to certain sales, it did not apply the
offset to an overwhelming number of sales. As a result, OAB requests
that the Department re-examine its preliminary calculations and correct
this error.
Department's Position: We agree with the respondent. Because we
inadvertently omitted certain programming language in a portion of our
preliminary results computer program, a majority of the values OAB
reported for its home market indirect selling expense variable were not
retained in our calculation of FMV. As a result, when we applied the
commission offset, we used missing values rather than actual home
market indirect selling expense values. For these final results we
added programming language which prevents the creation of missing
values and ensures that the commission offset is properly applied to
all appropriate sales.
Final Results of Review
As a result of our analysis of the comments received, we determine
that the following margin exists for OAB for the period March 1, 1991,
through February 29, 1992:
------------------------------------------------------------------------
Percent
Manufacturer/exporter margin
------------------------------------------------------------------------
Outokumpu Copper Rolled Products AB (OAB)..................... 8.60
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between the USP and FMV may vary from the percentage stated
above. The Department will issue appraisement instructions directly to
the Customs Service.
Furthermore, the following deposit requirements will be effective
for all shipments of subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the [[Page 3624]] publication
date of these final results, as provided for by section 751(a)(1) of
the Act:
(1) The cash deposit rates for OAB will be the rate outlined above;
(2) For previously reviewed or investigated companies not listed
above, the cash deposit rate will continue to be the company-specific
rate published for the most recent period;
(3) If the exporter is not a firm covered in this review, a prior
review, or the original less-than-fair-value (LTFV) investigation, but
the manufacturer is, the cash deposit rate will be the rate established
for the most recent period for the manufacturer of the merchandise; and
(4) If neither the exporter nor the manufacturer is a firm covered
in this or any previous review conducted by the Department, the cash
deposit rate will be the ``all others'' rate of 11.96 percent
established in the LTFV investigation.
All U.S imports of subject merchandise by the respondent will be
subject to the deposit rate found in this proceeding. The cash deposit
rates have been determined on the basis of the selling price to the
first unrelated customer in the United States. The Department will use
the total value of USP calculated from OAB's response to determine the
appraisement rate.
This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during the review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d). Timely written notification of
the return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and terms of an APO is a sanctionable violation.
This administrative review and this notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: January 9, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-1215 Filed 1-17-95; 8:45 am]
BILLING CODE 3510-DS-P