63 FR 54441, October 9, 1998

DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-823]


Professional Electric Cutting Tools From Japan; 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 June 5, 1998, the Department of Commerce (the Department)
published the preliminary results of its administrative review of the
antidumping duty order on professional electrical cutting tools (PECTs)
from Japan. The period of review (POR) covers sales of the subject
merchandise to the United States during the period July 1, 1996 through
June 30, 1997.
    We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have changed the results from those presented in the preliminary
results of the review.

EFFECTIVE DATE: October 9, 1998.

FOR FURTHER INFORMATION CONTACT: Lyn Baranowski, AD/CVD Enforcement
Group III, Office 9, Import Administration, International Trade
Administration, U.S. Department of

[[Page 54442]]

Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230; telephone: (202) 482-3208.

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 by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
regulations codified at 19 CFR part 351 (62 FR 27296; May 19, 1997).

Background

    On June 5, 1998, we published in the Federal Register (63 FR 30706)
the preliminary results of the administrative review of the antidumping
duty order on PECTs from Japan (58 FR 37461); July 12, 1993. We
received case briefs from one respondent, Makita Corporation and Makita
U.S.A., Inc. (Makita) and the petitioner, Black and Decker (U.S.), Inc.
(Black & Decker) on July 6, 1998. Petitioner and respondent submitted
rebuttal briefs on July 13, 1998. The Department is conducting this
review in accordance with section 751 of the Act.

Scope of the Review

    Imports covered by this review are shipments of PECTs from Japan.
PECTs may be assembled or unassembled, and corded or cordless.
    The term ``electric'' encompasses electromechanical devices,
including tools with electronic variable speed features. The term
``assembled'' includes unfinished or incomplete articles, which have
the essential characteristics of the finished or complete tool. The
term ``unassembled'' means components which, when taken as a whole, can
be converted into the finished or unfinished or incomplete tool through
simple assembly operations (e.g., kits).
    PECTs have blades or other cutting devices used for cutting wood,
metal, and other materials. PECTs include chop saws, circular saws, jig
saws, reciprocating saws, miter saws, portable bank saws, cut-off
machines, shears, nibblers, planers, routers, joiners, jointers, metal
cutting saws, and similar cutting tools.
    The products subject to this order include all hand-held PECTs and
certain bench-top, hand-operated PECTs. Hand-operated tools are
designed so that only the functional or moving part is held and moved
by hand while in use, the whole being designed to rest on a table top,
bench, or other surface. Bench-top tools are small stationary tools
that can be mounted or placed on a table or bench. These are generally
distinguishable from other stationary tools by size and ease of
movement.
    The scope of the PECT order includes only the following bench-top,
hand-operated tools: cut-off saws; PVC saws; chop saws; cut-off
machines, currently classifiable under subheading 8461 of the
Harmonized Tariff Schedule of the United States (HTSUS); all types of
miter saws, including slide compound miter saws and compound miter
saws, currently classifiable under subheading 8465 of the HTSUS; and
portable band saws with detachable bases, also currently classifiable
under subheading 8465 of the HTSUS.
    This order does not include: professional sanding/grinding tools;
professional electric drilling/fastening tools; lawn and garden tools;
heat guns; paint and wallpaper strippers; and chain saws, currently
classifiable under subheading 8508 of the HTSUS.
    Parts or components of PECTs when they are imported as kits, or as
accessories imported together with covered tools, are included within
the scope of this order.
    ``Corded'' and ``cordless'' PECTs are included within the scope of
this order. ``Corded'' PECTs, which are driven by electric current
passed through a power cord, are, for purposes of this order, defined
as power tools which have at least five of the following seven
characteristics:
    1. The predominate use of ball, needle, or roller bearings (i.e., a
majority or greater number of the bearings in the tool are ball,
needle, or roller bearings;
    2. Helical, spiral bevel, or worm gearing;
    3. Rubber (or some equivalent material which meets UL's
specifications S or SJ) jacketed power supply cord with a length of 8
feet or more;
    4. Power supply cord with a separate cord protector;
    5. Externally accessible motor brushes;
    6. The predominate use of heat treated transmission parts (i.e., a
majority or greater number of the transmission parts in the tool are
heat treated); and
    7. The presence of more than one coil per slot armature.
    If only six of the above seven characteristics are applicable to a
particular ``corded'' tool, then that tool must have at least four of
the six characteristics to be considered a ``corded'' PECT.
    ``Cordless'' PECTs, for the purposes of this order, consist of
those cordless electric power tools having a voltage greater than 7.2
volts and a battery recharge time of one hour or less.
    PECTs are currently classifiable under the following subheadings of
the HTSUS: 8508.20.00.20, 8508.20.00.70, 8508.20.00.90, 8461.50.00.20,
8465.91.00.35, 85.80.00.55, 8508.80.00.65 and 8508.80.00.90. Although
the HTSUS subheading is provided for convenience and customs purposes,
the written description of the merchandise under review is dispositive.
    This review covers one company, Makita Corporation (Makita), and
the period July 1, 1996 through June 30, 1997.

Analysis of the Comments Received

Comment 1

    Makita argues that the Department should revise its CEP profit
calculations to reflect the profit from the entire foreign like
product, not just the profit from the home market models that are the
closest matches to the U.S. models. Makita states that the statute and
the Department's regulations (see 19 U.S.C. section 1677a(d)(3) and
1677b(e)(2)(A), and 19 CFR 351.402(d) and 351.405(b)) require the
Department to base its CEP profit calculation on the entire home market
sales database reported by Makita. According to Makita, the Department
has conclusively stated that a calculation of CV and CEP should be
based on sales of the ``foreign like product'' which includes all home
market sales during the POR (see Antifriction Bearings (Other than
Tapered Roller Bearings) and Parts Thereof from France, Germany, Italy,
Japan, Romania, Singapore, Sweden, and the United Kingdom: Final
Results of Antidumping Duty Administrative Reviews, 63 FR 33320, 33323
(June 18, 1998); Color Picture Tubes from Japan: Final Results of
Antidumping Duty Administrative Review, 62 FR 34201 (June 25, 1997);
Antifriction Bearings (Other than Tapered Roller Bearings) and Parts
Thereof from France, Germany, Italy, Japan, Romania, Singapore, Sweden,
and the United Kingdom: Final Results of Antidumping Duty
Administrative Reviews, 62 FR 54043, (October 17, 1997); and Certain
Internal-Combustion Industrial Forklift Trucks from Japan: Final
Results of Antidumping Duty Administrative Reviews, 62 FR 5592
(February 6, 1997). Makita claims that in a previous administrative
review of this proceeding, the Department erred in incorrectly limiting
the home market database to those models used as matches for U.S. sales
for the purposes

[[Page 54443]]

of calculating CV and CEP profit in the preliminary results. This error
was corrected for the final results of that review (see Professional
Electric Cutting Tools from Japan: Final Results of Antidumping Duty
Administrative Review, 62 FR 386, 388 (January 3, 1997) (PECT 94/95
Final). Makita thus urges the Department to revise its calculation of
CEP profit for the final results of this review and use the profit
resulting from sales of all products in the home market database to
calculate CEP profit.
    Petitioner agrees that the Department should calculate the profit
for purposes of the CEP sale on the basis of the foreign like product.
However, it disagrees with Makita in its definition of the term
``foreign like product.'' In its interpretation, petitioner claims that
the term ``foreign like product'' is defined by the statute as the
sales used as a basis of comparison with sales to the United States (19
U.S.C. section 1677b(a)). Petitioner notes that 19 U.S.C. section
1677(16)(A), (B), and (C) requires the Department to select as the
foreign like product merchandise that is, in the first instance,
identical to that sold in the United States. If identical merchandise
does not exist, the Department may select merchandise similar to the
foreign like product, the objective being to develop a pool of
comparable products, the prices of which are used to calculate NV.
Petitioner cites Koyo Seiko Co., Ltd. versus United States, 66 F.3d
1204, 1209 (Fed. Cir. 1995) (Koyo Seiko) in support of its contention
that the pool of matched models is the foreign like products from which
the home market portion of the CEP profit is derived.
    Petitioner concludes that if the foreign like product is expanded
beyond the pool of matched models to include all similar products, as
respondent requests, the resulting profit figure would be
unrepresentative of the products that were used to determine NV.

Department's Position

    We agree with respondents that we erred in limiting the home market
database to those models used as matches for U.S. sales for purposes of
calculating CEP profit in the preliminary results. For the final
results, we have used all sales of the foreign like product for the
purposes of calculating CEP profit.
    19 CFR 351.402(d)(1) specifically states that the Department
``normally will use the aggregate of expenses and profit for...all
foreign like products sold in the exporting country . . .'' As the
Department stated in PECT 94/95 Final, for purposes of calculating CV
and CEP profit, we interpret the term ``foreign like product'' to be
inclusive of all merchandise sold in the home market which is in the
same general class or kind of merchandise as that under consideration.
We have continued to follow this practice in this review.

Comment 2

    Petitioner asserts that the Department incorrectly granted Makita a
Constructed Export Price (``CEP'') offset. As argument, they
incorporated their rebuttal brief from the third administrative review
of this proceeding. See the relevant portion of Comment 1 from the
Final Results of the 95/96 Review of this proceeding (Professional
Electrical Cutting Tools from Japan: Final Results of Antidumping Duty
Administrative Review, 63 FR 6891 (February 11, 1998) (PECT 95/96
Final). Petitioner asserts that Makita has not established that sales
to wholesalers in Japan were made at a different stage of marketing
compared to its wholesaler in the United States.
    Petitioner contends that even if the Department were correct that a
CEP offset is appropriate, this methodology has been invalidated by the
Court of International Trade in the case of Borden, Inc. et al. versus
United States, 1988 WL 178722, Slip Op. 98-36 (CIT 1998) (Borden).
Petitioner maintains that, in Borden, the Court held that Commerce's
methodology in determining level of trade (``LOT'') adjustments and CEP
offsets is contrary to the clear terms of the governing statute. The
Court stated that Commerce should only make price adjustments to the
starting prices of CEP sales after comparing those sales to home market
sales in the LOT analysis.
    According to petitioner, the Department applied the methodology for
adjusting and calculating CEP that the Court rejected in Borden, and
consequently should correct this error in the final results of this
administrative review.
    Makita argues that the Department was correct in granting Makita a
CEP offset as the Department has a complete, fully documented and
verified level of trade (LOT) analysis for the record of this review
supporting the granting of this offset. Specifically, Makita responds
that the Department has found ``vast (and verified) differences in
selling functions and stages of marketing'' between Makita's HM sales
and its CEP sales. Makita states that this analysis resulted in a fair
pricing comparison and that, as a result, the Department's analysis is
in full accordance with the law.
    Makita further contends that the remand guidelines established in
Borden do not invalidate the Department's LOT methodology, claiming
that the LOT analysis performed by the Department meets all of the
requirements set forth in Borden, and provides for a fair comparison of
home market and U.S. prices. Makita maintains that the Court concedes
that the statutory LOT adjustments to which the Court refers could
bring about the same result created by the automatic deduction of
expenses under 19 U.S.C. section 1677a(d) (``section (d) expenses'').
As a result, Makita argues, there is no evidence that the Department's
prior deduction of expenses and profit under 19 U.S.C. section 1677a(d)
in any way affects the integrity, objectivity, or completeness of its
LOT analysis, or that it results in unfair price comparisons. In fact,
Makita asserts that the Department considered all relevant selling
functions in its level of trade analysis, not just those relating to
deductible expenses.
    Makita asserts that if the Borden guidelines are interpreted as
establishing the relevant U.S. LOT at the unadjusted CEP level, and
therefore not allowing the deductions of section (d) expenses at any
time, then these guidelines are contrary to the law. According to
Makita, under this broad view of Borden, the relevant U.S. LOT would be
the starting price (the unadjusted CEP level), the LOT would never
change over the course of the Department's entire LOT inquiry, and
section (d) expenses would never be deducted. Makita believes this
methodology to be inconsistent with the Court's view that a
determination of the proper LOT is the very purpose of the Department's
LOT inquiry, and completely ignores the fact that the statutory offset
remedy is, by its very terms, designed to correct for differences in
the foreign parent company's indirect selling expenses (under 19 U.S.C.
section 1677b(7)(B)). Makita asserts that section (d) expenses, which
are incurred by the U.S. affiliate, have no bearing on these indirect
selling expenses.
    Respondent continues that the starting price is, by definition,
never equal to the CEP level of sales. If the Court does not allow any
changes to the LOT at the starting price, or does not allow adjustments
to CEP even where this is required to allow for a fair comparison of
home market and U.S. pricing, then the Court is depriving litigants of
access to procedures which guarantee fair results.
    In respondents' view, the Department has been consistently clear in
stating

[[Page 54444]]

that where a level of trade comparison is warranted and possible, the
level of trade for CEP sales will be evaluated based on the price after
adjustments are made under section 772(d) of the Act. See Static Random
Access Memory Semiconductors from Taiwan: Final Determination of Sales
at Less Than Fair Value, 63 FR 8909, 8918-8920 (February 23, 1998); and
Large Newspaper Printing Presses and Components Thereof, Whether
Assembled of Unassembled from Japan: Final Determination of Sales at
Less Than Fair Value, 61 FR 38139, 38143 (July 23, 1996). Makita
believes that this practice represents a reasonable interpretation of
the statute and should continue to be applied in this review.
    Finally, Makita claims that, assuming that the Department's LOT
analysis does not comport with Borden, the guidelines are still not
binding on the Department because (1) Borden's applicability is limited
to its facts, and (2) the remand is not a ``final decision'' because
the Department has indicated that it plans to appeal Borden.

Department's Position

    We agree with respondents that we correctly granted Makita a CEP
offset in this case. We concluded, based on factual evidence, that (1)
significant differences exist in the selling functions associated with
each of the two home market levels of trade and the CEP level of trade;
(2) the CEP level of trade is at a less advanced stage of distribution
than either home market level of trade; and (3) the data available do
not provide an appropriate basis for a level of trade adjustment for
any comparisons to CEP. Therefore, the Department has granted Makita a
CEP offset for the final results.
    The Department is continuing its practice, articulated in section
351.412(c) of its regulations, of making level of trade comparisons for
CEP sales on the basis of the CEP after adjustments provided for in
section 772(d) of the statute. As stated in Certain Stainless Steel
Wire Rods from France: Final Results of Antidumping Duty Administrative
Review, 63 FR 30185 (June 3, 1998), we recognize that the Department's
practice has been criticized by the Court of International Trade in
Borden. However, the decision in Borden is not final, and we believe
our practice to be in full compliance with the statute and the
regulations. Thus, we will continue to apply the methodology
articulated in the regulations at section 351.412.

Final Results of Review

    As a result of our review, we determine that the following
weighted-average dumping margin exists for the period June 30, 1996,
through July 1, 1997:

------------------------------------------------------------------------
           Manufacturer/Exporter                  Margin (percent)
------------------------------------------------------------------------
Makita Corporation........................  0.05 (de minimis)
------------------------------------------------------------------------

    The Department will determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between U.S. price and normal value may vary from the
percentages stated above. The Department will issue appraisement
instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective
upon publication of these final results for all shipments of the
subject merchandise entered, or withdrawn from warehouse, for
consumption on or after the publication date provided by section
751(a)(1) of the Act: (1) No cash deposit will be required for the
reviewed company as the rate stated above is de minimis, i.e., less
than 0.5 percent; (2) 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 (3) the cash deposit rate for all other
manufacturers or exporters will continue to be the ``all others'' rate
of 54.52 percent, the all others rate established in the LTFV
investigation. These deposit requirements, when imposed, shall remain
in effect until publication of the final results of the next
administrative review.
    This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 351.402(f)(2) 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 the 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)(1), that continues to govern
business proprietary information in this segment of the proceeding.
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 the terms of an APO is a
sanctionable violation.
    This determination is issued and published in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: October 5, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-27277 Filed 10-8-98; 8:45 am]
BILLING CODE 3510-DS-P