64 FR 17314, April 9, 1999

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-810]

Chrome-Plated Lug Nuts From Taiwan;
Final Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Final Results of Antidumping Duty Administrative
Review.

-----------------------------------------------------------------------

SUMMARY: On October 7, 1998, the Department of Commerce (the
Department) published the preliminary results of administrative review
of the antidumping duty order on chrome-plated lug nuts from Taiwan.
The review covers 18 manufacturers/exporters and the period September
1, 1996, through August 31, 1997. Based on our analysis of the comments
received, the dumping margins have not changed from those presented in
the preliminary results.

EFFECTIVE DATE: April 9, 1999.

FOR FURTHER INFORMATION CONTACT: Ron Trentham or Thomas Futtner, Office
of AD/CVD Enforcement, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
6320 or 482-3814, respectively.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act), by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations refer to the
regulations codified at 19 CFR part 351 (1998).

Background

    On October 7, 1998, the Department published the preliminary
results (63 FR 53875) of its administrative review of the antidumping
duty order on chrome-plated lug nuts from Taiwan (September 20, 1991,
56 FR 47737). The Department has now completed this administrative
review in accordance with section 751 of the Act.

Scope of the Review

    The merchandise covered by this review is one-piece and two-piece
chrome-plated lug nuts, finished or unfinished, which are more than
\11/16\ inches (17.45 millimeters) in height and which have a hexagonal
(hex) size of at least \3/4\ inches (19.05 millimeters) but not over
one inch (25.4 millimeters), plus or minus \1/16\ of an inch (1.59 mm).
The term ``unfinished'' refers to unplated and/or unassembled chrome-
plated lug nuts. The subject merchandise is used for securing wheels to
cars, vans, trucks, utility vehicles, and trailers. Zinc-plated lug
nuts, finished or unfinished, and stainless-steel capped lug nuts are
not within the scope of this review. Chrome-plated lock nuts are also
not within the scope of this review.
    During the period of review, chrome-plated lug nuts were provided
for under subheading 7318.16.00.00 of the Harmonized Tariff Schedule
(HTS). Although the HTS subheading is provided for convenience and
Customs purposes, our written description of the scope of this review
is dispositive. This review covers the following firms: Gourmet
Equipment (Taiwan) Corporation (``Gourmet''), Buxton International
Corporation (``Buxton''), Chu Fong Metallic Electric Co.(``Chu Fong''),
San Chien Industrial Works, Ltd. (``San Chien''), Anmax Industrial Co.,
Ltd. (``Anmax)'', Hwen Hsin Enterprises Co., Ltd. (``Hwen Hsin''), San
Shing Hardware Works Co. (``San Shing''), Trade Union International
Inc./Top Line (``Trade Union''), Uniauto, Inc. (``Uniauto''), Wing Tang
Electrical Manufacturing Company (``Wing Tang'') and Multigrand
Industries Inc. (``Multigrand''), and the period September 1, 1996,
through August 31, 1997. Buxton, Chu Fong, San Chien, Anmax, Hwen Hsin,
San Ching, Trade Union, Uniauto, Wing Tang and Multigrand failed to
completely respond to the Department's questionnaire and therefore were
assigned an adverse facts available rate of 10.67 percent.
Questionnaires were sent to Transcend International, Kwan How
Enterprises Co., Kwan Ta Enterprises Co., Ltd., Everspring Plastic
Corporation, Gingen Metal Corp., Goldwanate Associates, Inc., Kuang
Hong Industries Inc., but were returned as undeliverable. These firms
therefore received the ``all others'' rate of 6.93 percent.

Analysis of Comments Received

    We invited interested parties to comment on the preliminary
results. We received timely comments from one respondent, Gourmet, and
rebuttal comments from petitioner, Consolidated International
Automotive. Based on the comments received, we have not changed our
determination with respect to Gourmet for the final results.

Comments

    Respondent argues that it has cooperated fully and that the
Department cannot require it to provide information that is impossible
for Gourmet to provide, or in a form which Gourmet simply does not
have. In such a situation, the Department must consider any other
independent information which is sufficient to substantiate the sales
and other data provided in Gourmet's submissions.
    In this instance, because Gourmet does not have audited financial
statements, Gourmet argues that the Department must rely on other forms
of independent substantiation. Gourmet argues that the Department has a
long-standing practice to accept whatever substantiation is available
to satisfy itself that the data submitted can be relied upon. In this
review, Gourmet submitted bank records as a means to independently
substantiate its response. Gourmet points to the Notice of Final
Determination of Sales at less Than Fair Value: Collated Roofing Nails
from Taiwan, 62 FR 51,427 (October 1, 1997), where the Department
stated that where a respondent submitted sales and cost data based on
unaudited financial statements, verification may be based on the
respondent's ``tax return or any other independent source .''
    Gourmet argues that the use of facts available is not warranted
under section 776(a) of the Act (19 USC1677e(a)) because the necessary
information is on the record. Gourmet has responded to all of the
Department's requests for information with the exception of one
document, audited financial statements, which do not exist and
therefore can not be withheld. Gourmet argues that, unlike the
situation in previous reviews in this review where it stated that its
data was unverifiable, its submitted data can and should be verified.
Gourmet points to Borden, Inc. v. United States, 4 F. Supp. 2d 1221
(Ct. Int'l Trade 1998) (Borden), where the court found that the
Department is required to consider information submitted by a party
even if that information does not precisely conform to the Department's
request, as long as the party has cooperated to the best of its
ability.

[[Page 17315]]

    Gourmet acknowledges that section 776(a) of the Act may apply
because the Department may take the position that Gourmet has failed to
provide the requested information in the form and manner requested.
However, Gourmet disagrees with its applicability for two reasons.
First, while Gourmet failed to provide information in the form of
audited financial statements, it provided the same information in the
form of bank records. Second, the application of facts available
pursuant to section 776(a)(2)(B) of the Act is conditional on an
additional finding that the provisions set out in section 782(e) of the
Act (19 U.S.C. 1677m(e)) have not been met. Gourmet points to Borden,
where the court said section 782(e) of the Act requires that no matter
how unsatisfactory the Department may find the information submitted,
it must still use that information rather than facts available, so long
as the criteria of that provision have been met.
    Gourmet argues that its situation is similar to that in the Notice
of Final Determination of Sales at Less Than Fair Value: Certain
Preserved Mushrooms from Chile, 63 FR 56,613 (October 22, 1998) (Chile
Mushrooms). In that case, the Department concluded that resort to facts
available was not required where independent auditors were unable to
reconcile the respondent's books and records with its financial
statements and were ``otherwise unable to account for significant
assets and liabilities,'' and where the respondent, like Gourmet, was
not legally obligated to have audited financial statements. Gourmet
states that the Department correctly concluded that the law would not
permit rejection of the submitted data in its entirety because the
respondent had met the five conditions of 782(e) of the Act (19 U.S.C.
1677m(e)).
    Because Gourmet has provided such independent substantiation and
has cooperated to the best of its ability, the Department may not
decline to use Gourmet's submitted information in making its
determination. Gourmet maintains that the information was submitted on
time, can be verified, is complete and reliable, can be used without
undue difficulty, and Gourmet has demonstrated that it has acted to the
best of its ability in providing information.
    Even if the Department does decline to use such information and
resorts instead to ``facts available,'' the Department must find that
Gourmet has cooperated to the best of its ability and therefore that an
adverse inference would be unwarranted. Gourmet claims that it has
provided complete responses to all of the Department's questionnaires.
Gourmet undertook extraordinary efforts to produce alternative forms of
records to satisfy the Department's requirement for independent
substantiation of submitted information.
    Gourmet asserts that the Department incorrectly concluded that its
submissions could not be reconciled to its financial statements in this
review, as it did in the fourth administrative review even though the
facts are different. In this review, unlike the fourth, Gourmet does
not admit its submission cannot be reconciled. On the contrary, Gourmet
has submitted detailed reconciliation statements to its tax return and
bank statements. Furthermore, the Department's requirements for
verifiable submissions as discussed in a Memorandum from Thomas Futtner
to Holly Kuga, Aug. 20, 1998, does not mandate the submission of
audited financial statements.
    If the Department finds the information that Gourmet submitted to
be unverifiable, it does not follow that Gourmet has not acted to the
best of its ability. The Department has failed to articulate any basis
for finding that Gourmet failed to cooperate. In Allied-Signal
Aerospace Co. v. United States, 996 F.2d 1185 (Fed. Cir. 1993) (Allied-
Signal), the court held that where a respondent ``supplied as much of
the requested information as it could and offered to provide the
remaining information in a simplified form, . . . [i]t was unreasonable
for the ITA to have characterized respondent's behavior as a refusal to
cooperate.'' The court went on to say that ``the respondent failed to
provide a complete response to the requested information because it was
unable to, not because it refused to.'' The court made a similar
distinction in Borden where it stated ``Commerce has articulated no
reason for finding the respondent's failure was an unwillingness,
rather than simply an inability, to cooperate, other than vague hints
that respondent was cooking the books.''
    Petitioner disagrees. As in previous reviews, Gourmet failed to
submit verifiable information that would allow Commerce to tie the
company's questionnaire response with its financial data. Petitioner
argues that the problem is not simply the form of information, but
rather its substance. Gourmet has been subject to previous reviews and
has been well aware of the deficiencies in its previous submissions,
yet Gourmet has made no showing of inability to prepare the requested
information. Petitioner argues that Commerce was correct to apply facts
available to Gourmet when it submitted information that had already
been found to be deficient.
    Petitioner argues that the deficiencies in Gourmet's response
justify the application of facts available under the statute. Under
section 776(a)(2)(B) of the Act, Gourmet failed to provide requested
information, not simply the form of the information, but the substance
of the information. In terms of the statute, Gourmet's information is
so incomplete that it cannot serve as a reliable basis for determining
constructed value since Gourmet's financial information can not be
reconciled with its questionnaire response and is, therefore,
unverifiable.
    Petitioner argues that Gourmet did not act to the best of its
ability in providing the information and meeting the Department's
requirements. Gourmet had participated in previous reviews where it
provided similarly deficient information and was sanctioned for doing
so. Petitioner argues that Gourmet could have corrected these
deficiencies but rather chose to submit the same substantively
incomplete and formally, nonconforming information.
    Petitioner argues that Borden does not support Gourmet's position.
Borden does not address the applicability of section 776(a)(2)(D) of
the Act (19 U.S.C. 1677e(a)(2)(D)) to the deficient information
provided; by contrast in this review, Commerce has found that the
information submitted by Gourmet cannot be verified. Borden does not
preclude Commerce from applying facts available to the deficient
response, rather Borden requires Commerce to make the additional
finding that the respondent failed to act to the best of its ability.
This deficiency is not present in this review since Commerce expressly
stated ``that Gourmet has failed to cooperate by not acting to the best
of its ability.'' In Borden, the court noted that the respondent had
changed accounting methods and amended its questionnaire responses in
attempting to respond to the questionnaires. This situation is
plausible in an investigation, but not the sixth administrative review.
    Petitioner also argues that Allied-Signal does not support
Gourmet's position. Unlike the facts in Allied-Signal, Gourmet has not
shown that it cannot provide the required information or that it would
be unable to prepare the necessary information.

Department's Position

    We agree with petitioner. The Department finds that the use of
facts available is warranted under section 776(a) of the Act because
the information in Gourmet's questionnaire

[[Page 17316]]

response cannot be verified. Moreover, we have used an adverse
inference in applying the facts available, in accordance with section
776(b) of the Act, because Gourmet has failed to cooperate by not
acting to the best of its ability in this case. For a more complete
explanation of Gourmet's deficiencies (which include proprietary
information) see Memorandum from Thomas Futtner to Holly Kuga, August
20, 1998 (Futtner Memo).
    Gourmet has failed to demonstrate that the information which it
placed on the record accurately reflects all of the relevant sales made
by the company during the period of review and its cost of production.
While Gourmet did possess relevant financial statements, it was not
able to demonstrate that the information it reported to the Department
agrees with those financial statements. Nor did it provide any evidence
of factors beyond its control which caused such discrepancies or any
reasonable basis for the Department to determine that its questionnaire
response was accurate despite these discrepancies. Gourmet has been
aware of, but has not corrected, deficiencies in its accounting system
even though these deficiencies caused the Department to use facts
available for the last several administrative reviews.
    The Department does not reject questionnaire responses simply
because the respondent does not have an audited financial statement. In
such situations, the Department looks to other financial records,
prepared for purposes independent of the antidumping proceeding, such
as tax statements, which attest to the veracity of a respondent's
accounting system and information submitted to the Department. (see,
e.g., Collated Roofing Nails from Taiwan). In this case, Gourmet
possesses relevant (albeit unaudited) financial statements. As Gourmet
has acknowledged, however, the financial statements conflict with, and
hence do not support, its questionnaire response. See Futtner Memo.
    Borden does not support Gourmet's contention. Although in Borden
the court noted that the Department must consider submitted information
if that information meets the requirements of section 782(e) of the
Act, Gourmet's information does not meet those requirements. Gourmet's
submissions are not verifiable and therefore do not meet the
requirements of section 782(e)(2). While these submissions are for the
most part in the form requested by the Department, their content is
unreliable. See Futtner Memo. Moreover, in Borden, the court approved
the Department's use of adverse facts available in that case.
    Further, Allied-Signal is not relevant to this case. In Allied-
Signal, where the Court held that the respondent had ``supplied as much
of the requested information as it could and offered to provide the
remaining information in a simplified form,...[i]t was unreasonable for
the ITA to have characterized respondent's behavior as a refusal to
cooperate.'' That case did not involve evidence on the record
indicating a fundamental discrepancy between information in the
questionnaire response and the respondent's financial statements.
Although Gourmet has participated in several antidumping administrative
reviews and is thoroughly familiar with the Department's requirements,
it has consistently failed to comply with the Department's standards by
continuing to provide unverifiable data.
    In addition, Gourmet's reliance on Chile Mushrooms is misplaced.
Chile Mushrooms did not involve a fundamental disagreement between the
questionnaire response and the respondent's financial records. Rather
certain issues were raised by the findings of an independent audit of
the respondent's records. We determined that these findings were either
irrelevant for our purposes or could be adequately addressed by
adjustments and the use of partial FA. In this case, we are not dealing
the results of an independent audit or with information that may be
rendered useful by the application of partial facts available.
    Gourmet is incorrect that the Department is basing its facts
available decision on the findings in previous reviews, where Gourmet
admitted that its submissions could not be reconciled. The Department
treats each administrative review separately. Based on the information
on the record in the instant review, we have determined that Gourmet's
accounting system and the information submitted to the Department are
unreliable. Id.. Reliance on the accounting system used for the
preparation of the financial statements is a key and vital part of the
Department's determination that a company's sales and constructed value
data are credible. Section 776(a)(2)(D) of the Act states that the
Department ``shall, subject to section 782(d), use the facts otherwise
available in reaching the applicable determination under this title''
if an interested party or any other person provides information but the
information cannot be verified. Because Gourmet's submissions are not
reconcilable to its financial statements and Gourmet has provided no
acceptable explanation and no reasonable alternative support for its
submission, it is unverifiable.
    Despite the admitted discrepancies between its financial statements
and its questionnaire response, Gourmet argued that its questionnaire
response nonetheless could be verified using other information, such as
bank records. In attempting to demonstrate this, however, it became
clear that the records that it was attempting to rely on could not
adequately substantiate its response without requiring the Department
essentially to perform a complete audit of Gourmet's financial records.
This is not the purpose of a verification, which is fundamentally a
spot check of selected data--not a detailed examination of a
respondent's entire accounting system. We believe that Gourmet has had
sufficient notice of the Department's requirements for verifiable
submissions and ample opportunity to provide information that is
amenable to verification. Yet Gourmet has continued to provide
unverifiable data. Therefore, we determine that Gourmet has failed to
cooperate by not acting to the best of its ability, and thus we are
using an adverse inference in our application of facts available.
    Section 776(b) of the Act provides that, in selecting from the
facts available, adverse inferences may be used when an interested
party fails to cooperate by not acting to the best of its ability to
comply with requests for information. See also Statement of
Administrative Action (``SAA'') accompanying the URAA, H.R. Doc. No.
316, 103d Cong., 2d Sess. 870 (1994). Section 776(b) of the Act
authorizes the Department to use as adverse facts available information
derived from the petition, the final determination from the less than
fair value (LTFV) investigation, a previous administrative review, or
any other information placed on the record.
    Section 776(c) of the Act requires the Department to corroborate,
to the extent practicable, secondary information used as FA. Secondary
information is described in the Statement of Administrative Action
(SAA) (at 870) as ``[i]nformation derived from the petition that gave
rise to the investigation or review, the final determination concerning
the subject merchandise, or any previous review under section 751
concerning the subject merchandise.''
    The SAA further provides that ``corroborate'' means simply that the
Department will satisfy itself that the secondary information to be
used has probative value (see SAA at 870). Thus, to corroborate
secondary information, the Department will, to the extent

[[Page 17317]]

practicable, examine the reliability and relevance of the information
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 an administrative
determination. 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 from that time period (i.e., the
Department can normally be satisfied that the information has probative
value and that it has complied with the corroboration requirements of
section 776(c) of the Act). See, e.g., Elemental Sulphur from Canada:
Preliminary Results of Antidumping Duty Administrative Review, 62 FR at
971 (January 7, 1997) and Antifriction Bearings (Other than Tapered
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan,
Singapore, and the United Kingdom 62 FR 2801 ( January 15,1997) (AFBs
1997).
    As to the relevance of the margin used for adverse FA, the
Department stated in Tapered Roller Bearings from Japan; Final Results
of Antidumping Duty Administrative Review, 62 FR 47454 (September 9,
1997), that it will consider information reasonably at its disposal as
to whether there are circumstances that would render a margin
irrelevant. Where circumstances indicate that the selected margin is
not appropriate as adverse FA, the Department will disregard the margin
and determine an appropriate margin. See also Fresh Cut Flowers from
Mexico; Preliminary Results of Antidumping Duty Administrative Review,
60 FR 49567 (September 26, 1995). We have determined that there is no
evidence on the record that would indicate that the 10.67 percent rate,
a rate calculated from the LTFV investigation, is irrelevant or
inappropriate as an adverse facts available rate for the respondent in
the instant review. Therefore, we have applied, as adverse FA, the
highest margin for any firm in any segment of this proceeding, 10.67
percent, as the rate for Gourmet.

Final Results of Review

    As a result of this review, we have determined that the following
margins exist for the period September 1, 1996, through August 31,
1997.

------------------------------------------------------------------------
                                                                Percent
                    Manufacturer/exporter                        margin
------------------------------------------------------------------------
Gourmet Equipment (Taiwan) Corporation.......................      10.67
Buxton International/Uniauto.................................      10.67
Chu Fong Metallic Electric Co................................       6.93
Transcend International......................................       6.93
San Chien Industrial Works, Ltd..............................      10.67
Anmax Industrial Co., Ltd....................................      10.67
Everspring Plastic Corp......................................       6.93
Gingen Metal Corp............................................       6.93
Goldwanate Associates, Inc...................................       6.93
Hwen Hsin Enterprises Co., Ltd...............................      10.67
Kwan How Enterprises Co., Ltd................................       6.93
Kwan Ta Enterprises Co., Ltd.................................       6.93
Kuang Hong Industries Ltd....................................       6.93
Multigrand Industries Inc....................................       6.93
San Shing Hardware Works Co., Ltd............................      10.67
Trade Union International Inc./Top Line......................      10.67
Uniauto, Inc.................................................      10.67
Wing Tang Electrical Manufacturing Company...................      10.67
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. The Department
will issue appraisement instructions concerning all respondents
directly to the U.S. Customs Service.
    We will assess antidumping duties on the above firms' entries at
the same rate as their above stated dumping margins since the margins
are not calculated rates, but are rates based upon facts available
pursuant to section 776 of the Act.
    Further, 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
these final results of administrative review, as provided for by
section 751(a)(1) of the Act: (1) the cash deposit rate for the
reviewed firms will be the rates indicated 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 in the original 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 or the original investigation, the cash deposit
rate will be 6.93%, the all others rate established in the LTFV
investigation.
    These deposit requirements shall remain in effect until publication
of the final results of the next administrative review.
    This notice serves as a final reminder to importers of their
responsibility under 19 CFR 351.402(f) to file a certificate regarding
the reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO. Timely written notification or conversion to judicial protective
order is hereby requested. Failure to comply with the regulations and
the terms of the APO is a sanctionable violation.
    This administrative review and notice are in accordance with
section 751(a)(1)(B) and 777(i)(1)of the Act.

    Dated: April 5, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-8922 Filed 4-8-99; 8:45 am]
BILLING CODE 3510-DS-P