47626 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

racks, emergency generators, panels and

consoles (1997 duty rate range: free—

5.2%, ad valorem).

FTZ procedures would exempt MHI

from Customs duty payments on the

foreign components (except steel mill

products) used in export activity (up to

100% of total production). On its

domestic sales, the company would be

able to choose the duty rate that applies

to finished oceangoing vessels (duty

free) for the foreign-origin components

noted above. The manufacturing activity

conducted under FTZ procedures would

be subject to the ‘‘standard shipyard

restriction’’ applicable to foreign-origin

steel mill products (e.g., pipe, plate),

which requires that Customs duties be

paid on such items. The application

indicates that the savings from FTZ

procedures would help improve the

facility’s international competitiveness.

In accordance with the Board’s

regulations, a member of the FTZ Staff

has been designated examiner to

investigate the application and report to

the Board.

Public comment on the application is

invited from interested parties.

Submissions (original and three copies)

shall be addressed to the Board’s

Executive Secretary at the address

below. The closing period for their

receipt is November 10, 1997. Rebuttal

comments in response to material

submitted during the foregoing period

may be submitted during the subsequent

15-day period (to November 24, 1997).

A copy of the application will be

available for public inspection at the

following locations:

U.S. Department of Commerce, Export

Assistance Center, World Trade

Center, Suite 307, 164 Northern

Avenue, Boston, MA 02210

Office of the Executive Secretary,

Foreign-Trade Zones Board, Room

3716, U.S. Department of Commerce,

14th Street & Pennsylvania Avenue,

NW, Washington, DC 20230

Dated: September 4, 1997.

John J. Da Ponte, Jr.,

Executive Secretary.

[FR Doc. 97–23997 Filed 9–9–97; 8:45 am]

BILLING CODE 3510–25–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–201–802]

Preliminary Results of Antidumping

Duty Administrative Review Gray

Portland Cement and Clinker From

Mexico

AGENCY: International Trade

Administration/Import Administration/

Department of Commerce.

ACTION: Notice of preliminary results of

antidumping duty administrative

review.

SUMMARY: In response to requests from

interested parties, the Department of

Commerce is conducting an

administrative review of the

antidumping duty order on gray

portland cement and clinker from

Mexico. The review covers exports of

subject merchandise to the United

States during the period August 1, 1995,

through July 31, 1996, and one firm,

CEMEX, S.A., and its affiliated party

Cementos de Chihuahua, S.A. de C.V.

The results of this review indicate the

existence of dumping margins for the

period.

We invite interested parties to

comment on these preliminary results.

Parties who submit arguments in this

proceeding are requested to submit with

the argument (1) a statement of the

issue, and (2) a brief summary of the

argument.

EFFECTIVE DATE: September 10, 1997.

FOR FURTHER INFORMATION CONTACT:

Steven Presing, Kristen Smith or Kristen

Stevens, Office VII, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, DC 20230;

telephone (202) 482–3793.

SUPPLEMENTARY INFORMATION:

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 are to the

regulations at 19 CFR part 353 (April

1997).

Background

On August 12, 1996, the Department

of Commerce (the Department)

published in the Federal Register a

Notice of Opportunity to Request

Administrative Review of the

antidumping duty order on gray

portland cement and clinker from

Mexico for the above-referenced period

(61 FR 156, August 12, 1996). In

accordance with 19 CFR 353.22,

CEMEX, S.A. (CEMEX) and the

Petitioner, the Southern Tier Cement

Committee, requested a review of

CEMEX. On October 17, 1996, the

Department published a Notice of

Initiation of Antidumping Review (61

FR 181, September 17, 1996). The

Department is now conducting a review

of this Respondent pursuant to section

751 of the Act.

Scope of Review

The products covered by this review

include gray portland cement and

clinker. Gray portland cement is a

hydraulic cement and the primary

component of concrete. Clinker, an

intermediate material product produced

when manufacturing cement, has no use

other than of being ground into finished

cement. Gray portland cement is

currently classifiable under the

Harmonized Tariff Schedule (HTS) item

number 2523.29 and cement clinker is

currently classifiable under number

2523.10. Gray portland cement has also

been entered under number 2523.90 as

‘‘other hydraulic cements.’’ The HTS

subheadings are provided for

convenience and U.S. Customs Service

(the Customs Service) purposes only.

The Department’s written description

remains dispositive as to the scope of

the product coverage.

Verification

As provided in section 782(i) of the

Act, we verified information provided

by the Respondent using standard

verification procedures, including onsite inspection of the manufacturer’s

facilities and the examination of

relevant sales and financial records. Our

verification results are outlined in

verification reports in the official file for

this case (public versions of these

reports are on file in room B–099 of the

Department’s main building).

Collapsing

On May 19, 1997, the Department

published new regulations (62 FR

27296, May 19, 1997). Although this

proceeding is not governed by those

regulations, they are instructive where

they describe current Department

practice and policy. Section 351.401(f)

of the new regulations, 62 FR at 27410,

describes the Department’s current

policy regarding when it will treat two

or more producers as a single entity (i.e.,

‘‘collapse’’ the firms) for purposes of

calculating a dumping margin. See also
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47627

Gray Portland Cement and Clinker from

Mexico; Final Results of Antidumping

Duty Administrative Review (62 FR

17148, 17154, April 9, 1997). The

regulations provide that the Department

will treat two or more producers as a

single entity where (1) the producers are

affiliated; (2) the producers have

production facilities that are sufficiently

similar so that a shift in production

would not require substantial retooling;

and (3) there is a significant potential

for the manipulation of price. For this

last criterion, the Department may

consider (a) the level of common

ownership; (b) whether managerial

employees or board members of one of

the affiliated producers sit on the board

of the other affiliated producer; and (c)

whether operations are intertwined,

such as through the sharing of sales

information, involvement in production

and pricing decisions, the sharing of

facilities or employees, or significant

transactions between affiliated

producers. In the current review,

CEMEX had equity ownership of over 5

percent in Cementos de Chihuahua, S.A.

de C.V. (CDC); therefore, we have

preliminarily found that the two parties

are affiliated. In addition, CDC and

CEMEX have similar production

processes and facilities. Therefore, a

shift in production would not require

substantial retooling. Finally, in regards

to the last criterion, the Department

reviewed levels of common ownership,

shared board members, and intertwined

business relations, and found a

significant potential for the

manipulation of price. As a result, the

Department has preliminarily

concluded that these affiliated

producers should be treated as a single

entity and that a single, weightedaverage margin should be calculated for

these companies. (A complete analysis

of this issue is contained in a

memorandum from Roland L.

MacDonald to Joseph A. Spetrini, dated

September 2, 1997, located in the

official file of this case.)

Duty Absorption

On September 30, 1996, Petitioner

requested that the Department

determine whether Respondent had

absorbed antidumping duties during the

POR. Section 751(a)(4) of the Act

provides for the Department, if

requested, to determine during an

administrative review initiated two or

four years after the publication of the

order, whether antidumping duties have

been absorbed by a foreign producer or

exporter. The Department’s interim

regulations do not address this

provision of the Act.

For transition orders as defined in

section 751(c)(6)(C) of the Act, i.e.,

orders in effect as of January 1, 1995,

section 351.213(j)(2) of the Department’s

new antidumping regulations provides

that the Department will make a dutyabsorption determination, if requested,

for any administrative review initiated

in 1996 or 1998. See 62 FR 27394 (May

19, 1997). Because the antidumping

duty order on Mexican cement has been

in effect since 1990, this order is a

transition order in accordance with

section 751(c)(6)(C) of the Act. (See

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from France, et. al,: Preliminary

Results of Antidumping Administrative

Review (62 FR 31568, June 10, 1997).

The preamble to the new antidumping

regulations explains that reviews

initiated in 1996 will be considered

initiated in the second year, and reviews

initiated in 1998 will be considered

initiated in the fourth year (62 FR

27317, May 19, 1997). This approach

ensures that interested parties will have

the opportunity to request a dutyabsorption determination prior to the

time for a sunset review of the order

under section 751(c) of the Act on

entries for which the second and fourth

years following an order have already

passed. Since this review was initiated

in 1996, and a request was made for a

determination, we are making a dutyabsorption determination as part of this

administrative review.

The statute provides for a

determination on duty absorption if the

subject merchandise is sold in the

United States through an affiliated

importer. In this case, Respondent sold

through importers that are affiliated

within the meaning of section 751(a)(4)

of the Act. Furthermore, we have

preliminarily determined that CEMEX

has margins on 92.59 percent of its U.S.

sales.

We presume that duties will be

absorbed for sales which were dumped.

See Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from France, et.al,: Preliminary

Results of Antidumping Administrative

Review (62 FR 31568, June 10, 1997).

Our duty-absorption presumption can

be rebutted with evidence that the

unaffiliated purchasers in the United

States will pay the ultimately assessed

duty. However, there is no such

evidence on the record. Under these

circumstances, we preliminarily find

that antidumping duties have been

absorbed by CEMEX on the percentage

of U.S. sales indicated.

Transactions Reviewed

In accordance with section 751 of the

Act, the Department is required to

determine the normal value (NV) and

export price (EP) or constructed export

price (CEP) of each entry of subject

merchandise. Because there can be a

significant lag between entry date and

sale date for CEP sales, it has been the

Department’s practice to examine U.S.

CEP sales during the period of review.

See Gray Portland Cement and Clinker

from Japan; Final Results of

Antidumping Duty Administrative

Review (58 FR 48826, 1993)

(Department did not consider ESP (now

CEP) entries which were sold after the

POR). The Court of International Trade

has upheld the Department’s practice in

this regard. See The Ad Hoc Committee

of Southern California Producers of

Gray Portland Cement v. United States,

Slip Op. 95–195 (CIT 1995.)

Fair Value Comparisons

To determine whether sales of gray

portland cement by Respondent to the

United States were made at less than

fair value, we compared the EP or CEP

to the NV as described in the ‘‘Export

Price and Constructed Export Price’’ and

‘‘Normal Value’’ sections of this notice.

In accordance with section 777A(d)(2),

we calculated monthly weightedaverage prices for NV and compared

these to individual U.S. transactions,

during the same month and at the same

level of trade.

Export Price and Constructed Export

Price

We used EP, in accordance with

subsections 772 (a) and (c) of the Act,

where the subject merchandise was sold

directly or indirectly to the first

unaffiliated purchaser in the United

States prior to importation and CEP was

not otherwise warranted based on the

facts of the record. In addition, we used

CEP in accordance with subsections 772

(b), (c), and (d) of the Act, for those sales

to the first unaffiliated purchaser that

took place after importation into the

United States.

We calculated EP based on delivered

prices to unaffiliated customers in the

United States. Where appropriate, we

made adjustments from the starting

price for early payment discounts,

foreign inland freight, foreign brokerage

and handling, international freight, U.S.

inland freight, U.S. brokerage and

handling, and U.S. customs duties. We

also adjusted the starting price for

billing adjustments to the invoice price.

We calculated CEP based on delivered

prices to unaffiliated customers. Where

appropriate, we made adjustments for
47628 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

early payment discounts and corrections

for billing errors. We deducted direct

and indirect selling expenses, including

imputed credit expenses and inventory

carrying costs, that related to

commercial activity in the United States

in accordance with section 772(d) of the

Act. We also made deductions for

foreign brokerage and handling, foreign

inland freight, international freight, U.S.

inland freight, U.S. brokerage and

handling, and U.S. duty in accordance

with section 772(c)(2) of the Act.

Finally, we made an adjustment for CEP

profit in accordance with section 772

(d)(3) of the Act.

Further Manufacturing

With respect to subject merchandise

to which value was added in the United

States prior to sale to unaffiliated U.S.

customers (e.g., cement that was

imported and further processed into

finished concrete by U.S. affiliates of

foreign exporters), we determined that

the special rule for merchandise with

value added after importation under

section 772(e) of the Act was applicable.

Section 772(e) of the Act provides

that, where the subject merchandise is

imported by an affiliated person and the

value added in the United States by the

affiliated person is likely to exceed

substantially the value of the subject

merchandise, we shall determine the

CEP for such merchandise using the

price of identical or other subject

merchandise if there is a sufficient

quantity of sales to provide a reasonable

basis for comparison and we determine

that the use of such sales is appropriate.

If there is not a sufficient quantity of

such sales or if we determine that using

the price of identical or other subject

merchandise is not appropriate, we may

use any other reasonable basis to

determine the CEP.

To determine whether the value

added is likely to exceed substantially

the value of the subject merchandise, we

estimated the value added based on the

difference between the averages of the

prices charged to the first unaffiliated

purchaser for the merchandise as sold in

the United States and the averages of the

prices paid for subject merchandise by

the affiliated person. Based on this

analysis, we estimated that the value

added was at least 65 percent of the

price charged to the first unaffiliated

purchaser for the merchandise as sold in

the United States. Therefore, we

preliminarily determine the value added

is likely to exceed substantially the

value of the subject merchandise. In

addition, sales of identical and other

subject merchandise were made in

sufficient quantities to serve as a basis

for comparison. Accordingly, for

purposes of determining dumping

margins for these sales, we have used

the weighted-average CEP calculated on

sales of identical or other subject

merchandise sold to unaffiliated

persons.

No other adjustments to EP or CEP

were claimed or allowed.

Normal Value

In order to determine whether there

was a sufficient volume of sales in the

home market to serve as a viable basis

for calculating NV, we compared

Respondent’s volume of home market

sales of the foreign like product to the

volume of U.S. sales of the subject

merchandise in accordance with section

773(a)(1)(C) of the Act. Since

Respondent’s aggregate volume of home

market sales of the foreign like product

was greater than five percent of its

aggregate volume of U.S. sales for the

subject merchandise, we determined the

home market was viable. Therefore, we

have based NV on home market sales.

In particular, we based NV on home

market sales of Type I cement by

CEMEX and CDC. The statute expresses

a preference for matching U.S. sales to

identical merchandise in the home

market. However, in situations where

identical product types cannot be

matched, the statute expresses a

preference for basing NV on sales of

similar merchandise. See section

773(a)(1)(B) and 771(16) of the Act. The

history of this order demonstrates (and

no party disputes) that, of the various

types of cement subject to the order on

Mexican cement, Type I cement is most

similar to Type II and Type V cement,

and pozzolanic cement is the least

similar.

During the POR, CDC only sold one

type of cement in Mexico subject to the

antidumping order-Type I cement.

CEMEX, on the other hand, sold four

basic types of cement in Mexico during

the POR—Type I, Type II, Type V and

pozzolanic. However, at verification the

Department discovered that all of the

merchandise produced at the Yaqui and

Campana plants was either Type V or

pozzolanic. In other words, cement sold

as Type I and Type II from these plants

was actually Type V. Since we received

this information at such a late date, the

Department was not able to determine

whether these sales of Type I cement

provide an appropriate basis for

calculating NV. For example, the

Department does not know whether

these sales were made above cost or

within the ordinary course of trade. In

short, our sales and cost data base for

these sales of Type I cement (produced

at either Yaqui or Campana) is

extremely flawed. Therefore, as facts

available, the Department finds these

sales to be an inappropriate basis for NV

and is excluding them from its

calculations.

As for CEMEX’s home market sales of

Type II and Type V cement during the

POR, the Department has preliminarily

determined that they are outside the

ordinary course of trade. As more fully

described in the ‘‘Ordinary Course of

Trade’’ section of this notice, these sales

are not representative of CEMEX’s home

market sales.

Where appropriate, we adjusted home

market sales of Type I cement for

discounts, credit expenses, inland

freight, and inland insurance. We also

adjusted the starting price for billing

adjustments to the invoice price. In

addition, in accordance with section

773(a)(6), we deducted home market

packing costs and added U.S. packing

costs.

We made adjustments, where

appropriate, for physical differences in

merchandise (DIFMER) in accordance

with section 773 (a)(6)(C)(ii) of the Act.

For CDC’s sales, we calculated a

DIFMER adjustment using plant specific

cost data reported by CDC. For sales

made by CEMEX, we preliminarily

determine, in accordance with section

776 of the Act, that the use of partial

facts available for a DIFMER adjustment

is appropriate, and that such partial

facts available should be based on an

adverse inference. Accordingly, we have

applied a twenty percent upward

adjustment (the maximum usually

permitted by the Department) as adverse

facts available.

Section 776(a) of the Act requires that

the Department use facts otherwise

available when necessary information is

not on the record, or an interested party

withholds requested information, fails

to provide such information in a timely

manner, significantly impedes a

proceeding, or provides information that

cannot be verified. Section 776(b) of the

Act authorizes the Department to use an

adverse inference in determining the

facts otherwise available whenever an

interested party has failed to cooperate

with the Department by not acting to the

best of its ability to comply with

requests for information. Section 776(b)

authorizes the Department to base

adverse facts available on information

derived from the petition, the final

determination in the investigation, a

previous administrative review, or other

information placed on the record.

At verification, the Department found

that the DIFMER reported by CEMEX

was based not on physical differences,

but an allocation of costs between Type

I and Type II cement sales for what was

in fact the same physical product—Type
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47629

V cement (see below). This information

could not be used for purposes of the

DIFMER calculation, and other

information on the record is not

appropriate for this purpose. Thus,

pursuant to section 776(b) and 782(e) of

the Act, the Department had to rely on

facts available for the DIFMER

adjustment. In addition, we determined

that CEMEX significantly impeded the

review by not informing the Department

until verification that there were no

physical differences in any cement

(other than pozzolanic) produced at

Yaqui. As explained below, this failure

prevented the Department from

collecting and analyzing other

information that could have been used

to calculate the DIFMER adjustment.

The Department first requested

DIFMER information from CEMEX on

September 23, 1996. CEMEX was asked

to base its DIFMER calculations on

differences in physical characteristics

between Type I cement sold in Mexico

and the type of cement being exported

to the United States. CEMEX did not

supply DIFMER information in response

to this request. On December 24, 1996,

in a supplemental questionnaire, the

Department requested for the second

time that CEMEX submit DIFMER

information. On February 14, 1997,

CEMEX reported variable cost

information for Type I cement at 11

plants, including the Yaqui facility, and

information for Type II cement for the

Campana and Yaqui facilities. On March

10, 1997 the Department sent another

supplemental questionnaire requesting

that CEMEX quantify the DIFMER. In

response, CEMEX stated that

‘‘differences in VCOM (variable cost of

manufacturing) reflect differences in

physical characteristics for Type I and

Type II cement.’’ In other words,

CEMEX asserted that the Campana and

Yaqui facilities produced different types

of cement (Type I and Type II at Yaqui

and Type II and Type V at Campana),

each having different physical

characteristics. At verification, the

Department found that the VCOM

reported by CEMEX for the Yaqui and

Campana facilities was based on sales

allocations, not physical differences. In

fact, only one type of cement (other than

pozzolanic) is produced at these

plants—Type V. Although CEMEX

produces only Type V at Yaqui, it sells

this Type V cement sometimes as Type

I and sometimes as Type II. In other

words, CEMEX sold Type V cement to

customers only requiring Type I or Type

II cement. These facts rendered the

reported DIFMER data unusable.

Furthermore, it is not appropriate to

use other information on the record as

a basis for a DIFMER adjustment. We

determined in the last administrative

review that it is not appropriate to use

the weighted-average VCOM of all

plants producing Type I and the VCOM

of the U.S. merchandise due to

efficiency differences between plants.

Thus, we relied in that review on the

purported VCOM differences for

merchandise produced at Yaqui.

Because we did not learn until

verification in the instant review that in

fact only one type of cement was

produced at Yaqui and thus there were

no cost differences, we were precluded

from properly considering other

appropriate alternatives for a DIFMER

adjustment. For example, we did not

have an opportunity to solicit comments

and obtain information about

differences in production processes,

plant efficiencies, and material inputs

that may have provided an appropriate

basis for a DIFMER adjustment.

Therefore, we have applied to CDC’s

home market sales a calculated DIFMER

based upon plant-specific reported data,

and as adverse facts available, applied a

twenty percent upward adjustment for

CEMEX’s sales in the home market. See

CEMEX S.A. v. United States, Slip Op.

96–132 at 9 (CIT 1996), appeal pending,

Appeal No. 97–1151 (Fed. Cir.)

(upholding the use of 20% adverse

DIFMER under similar circumstances).

A. Arm’s-Length Sales

Sales to affiliated customers in the

home market not made at arm’s length

were excluded from our analysis. To test

whether these sales were made at arm’s

length, we compared the starting prices

of sales to affiliated and unaffiliated

customers, net of all movement charges,

direct and indirect selling expenses,

discounts and packing. Where the price

to the affiliated party was on average

99.5 percent or more of the price to the

unaffiliated parties, we determined that

the sales made to the affiliated party

were at arm’s length.

B. Cost of Production Analysis

Petitioner alleged, on December 12,

1996, that CEMEX and its affiliate, CDC,

sold gray portland cement and clinker

in the home market at prices below their

cost of production (COP.) Based on

these allegations, the Department

determined, on January 3, 1997, that it

had reasonable grounds to believe or

suspect that CEMEX had sold the

subject merchandise in the home market

at prices below the COP. Therefore,

pursuant to section 773(b)(1) of the Act,

we initiated a COP investigation in

order to determine whether CEMEX and

CDC made home market sales during the

POR at prices below their COP.

In accordance with section 773(b)(3)

of the Act, we calculated an average

monthly COP based on the sum of the

costs of materials and fabrication

employed in producing the foreign like

product plus selling, general and

administrative (SG&A) expenses and all

costs and expenses incidental to placing

the foreign like product in condition

ready for shipment. In our COP analysis,

we used the home market sales and COP

information provided by the

Respondent in its questionnaire

responses.

After calculating an average monthly

COP, we tested whether home market

sales of cement were made at prices

below COP within an extended period

of time in substantial quantities and

whether such prices permit recovery of

all costs within a reasonable period of

time. We compared model-specific

average monthly COPs to the reported

home market prices less any applicable

movement charges, discounts and

rebates. In determining whether to

disregard home market sales made at

prices below the average COP, we

examined (1) whether, within an

extended period of time, such sales

were made in substantial quantities, and

(2) whether such sales were made at

prices which permitted the recovery of

all costs within a reasonable period of

time in the normal course of trade.

Pursuant to section 773(b)(2)(C) of the

Act, because less than 20 percent of the

Respondent’s sales of the foreign like

product under consideration for the

determination of NV were at prices less

than COP, we did not disregard any

below-cost sales of the product.

C. Inflation

Mexico experienced significant

inflation during the POR, as measured

by the consumer price index published

in International Financial Statistics and

the consumer price index from the Bank

of Mexico. This data indicated that the

annual inflation rate in Mexico during

the POR exceeded 40 percent. In

accordance with our practice, to avoid

the distortions caused by the effects of

this level of inflation in prices, we

limited our comparisons to sales in the

same month. See Notice of Final

Determination of Sales at Less Than Fair

Value: Certain Steel Concrete

Reinforcing Bars from Turkey ( 62 FR

9738, March 4, 1997). When the rate of

home market inflation is significant, as

it is in this case, it is important that we

use as a basis for NV home market

prices that are as contemporaneous as

possible with the date of the U.S. sale.

This is to minimize the extent to which

calculated dumping margins are

overstated or understated solely due to
47630 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

price inflation that occurred in the

intervening time period between the

U.S. and home market sales. We have

also used monthly cost of production

data for this reason.

D. Currency Conversion

The Department’s preferred source for

daily exchange rates is the Federal

Reserve Bank. For purposes of the

preliminary results, we made currency

conversions based on the official

exchange rates in effect on the dates of

the U.S. sales as certified by the Federal

Reserve Bank of New York pursuant to

section 773(a) of the Act.

Section 773A(a) directs the

Department to use a daily exchange rate

in order to convert foreign currencies

into U.S. dollars, ignoring any

‘‘fluctuations.’’ We determine that a

fluctuation exists when the daily

exchange rate differs from a bench mark

rate by 2.25 percent or more. The

benchmark rate is defined as the rolling

average of the rates for the past 40

business days as reported by the Federal

Reserve Bank of New York. When we

determine that a fluctuation existed, we

substitute the benchmark rate for the

daily rate. For a complete discussion of

the Department’s exchange rate

methodology, see ‘‘Change in Policy

Regarding Currency Conversions’’ (61

FR 9434, March 8, 1996).

E. Ordinary Course of Trade

Section 773(a)(1)(B) of the Act

requires the Department to base NV on

‘‘the price at which the foreign like

product is first sold (or in the absence

of sales, offered for sale) for

consumption in the exporting country,

in the usual commercial quantities and

in the ordinary course of trade.’’

Ordinary course of trade is defined as

‘‘the conditions and practices which, for

a reasonable time prior to the

exportation of the subject merchandise,

have been normal in the trade under

consideration with respect to

merchandise of the same class or kind.’’

The purpose of the ordinary course of

trade provision ‘‘is to prevent dumping

margins from being based on sales

which are not representative’’ of the

home market. Monsanto Co. v. United

States, 698 F. Supp. 275, 278 (CIT

1988). By basing the determination of

NV upon representative sales, the

provision helps to ensure that the

comparison between NV and U.S. sales

is done on an ‘‘apples to apples’’ basis.

Apart from identifying certain sales

that are below cost (Section 773(b)(1)) or

between affiliated persons (section

773(f)(2)), Congress has not specified

any criteria that the Department should

use in determining the appropriate

‘‘conditions and practices’’ which are

‘‘normal in the trade under

consideration.’’ Therefore, ‘‘Commerce,

in its discretion, chooses how best to

analyze the many factors involved in a

determination of whether sales are made

within the ordinary course of trade.’’

Thai Pineapple Public Co. v. United

States, 946 F. Supp. 11, 14–17 (CIT

1996).

The Department’s ordinary course-of

trade inquiry is far-reaching. It evaluates

not just ‘‘ ‘one factor taken in isolation

but rather . . . all the circumstances

particular to the sales in question.’ ’’

Murata Mfg. Co. v. United States, 820 F.

Supp. 603, 607 (CIT 1993). In short, we

examine the totality of the facts in each

case to determine if sales are being

made for ‘‘unusual reasons’’ or under

‘‘unusual circumstances.’’ Electrolytic

Manganese Dioxide from Japan; Final

Results of Antidumping Duty

Administrative Review (58 FR 28551,

28552, 1993).

In the second administrative review of

this order, the Department determined

that CEMEX’s sales of Type II and Type

V cement were outside the ordinary

course of trade and, therefore, could not

be used in the calculation of NV (then

referred to as ‘‘foreign market value’’).

See Gray Portland Cement and Clinker

from Mexico: Final Results of

Antidumping Duty Administrative

Review (58 FR 47253, 27254, Sept. 8,

1993). In making this determination, the

Department considered, inter alia,

shipping distances and costs, sales

volume, profit levels, sales history,

home market demand and the

promotional aspect of sales. See

Decision Memorandum to Joseph A.

Spetrini, August 31, 1994; see also

Memorandum from Holly A. Kuga to

Joseph A Spetrini, August 31, 1993

(public versions of these memoranda are

on file in Room B–099 of the

Department’s main building). Based

upon similar facts and using a similar

analysis, the Department reached the

same conclusion in the final results of

the fifth administrative review for

certain sales of Type II cement by

CEMEX in Mexico. Gray Portland

Cement and Clinker from Mexico: Final

Results of Antidumping Duty

Administrative Review (62 FR 17148,

17151, April 9 1997).

In the instant review, Petitioner

alleged, as it did in the second review,

that CEMEX’s sales of Type II cement in

Mexico were outside the ordinary

course of trade. Based on this allegation

and the relevant findings in the prior

review, the Department determined that

it had reasonable grounds to believe or

suspect that CEMEX’s home market

sales of Type II cement were outside the

ordinary course of trade. Therefore,

pursuant to section 773(a)(1)(B) of the

Act, the Department has examined the

totality of the circumstances

surrounding CEMEX’s sales of cement

in Mexico that are marketed as Type II

cement (which are identical in physical

characteristics to the cement that

CEMEX sells in the United States).

A full discussion of our preliminary

conclusions, requiring reference to

proprietary information, is contained in

a Departmental memorandum in the

official file for this case (a public

version of this memorandum is on file

in room B–099 of the Department’s main

building). Generally, however, we have

found: (i) The volume of Type II home

market sales is extremely small

compared to sales of other cement types,

(ii) the number and type of customers

purchasing Type II cement is

substantially different from other

cement types, (iii) shipping distances

and freight costs for Type II home

market sales is significantly greater than

for sales of other cement types, and (iv)

CEMEX’s profit on Type II sales is small

in comparison to its profits on all

cement types.

There are two other factors, historical

sales trends and the ‘‘promotional

quality’’ of Type II cement sales, which

were considered in the second review

ordinary-course-of-trade analysis. On

March 10, 1997, the Department issued

a questionnaire requesting CEMEX to

support its position that home market

sales of Type II cement were in the

ordinary course of trade by addressing,

among other things, ‘‘historical sales

trends’’ and ‘‘marketing reasons for sales

other than profit.’’ CEMEX’s response

(copies of its submission from the fifth

administrative review), failed to address

these two items. Thus, as facts available,

the Department finds that the facts

regarding these items have not changed

since the second review and that: (i)

CEMEX did not sell Type II cement

until it began production for export in

the mid-eighties, despite the fact that a

small domestic demand for such existed

prior to that time; and, (ii) sales of Type

II cement continue to exhibit a

promotional quality that is not

evidenced in CEMEX’s ordinary sales of

cement (see memorandum from Holy A.

Kuga to Joseph A. Spetrini, dated

August 31, 1993). (A public version of

this memorandum is on file in room B–

099 of the Department’s main building.)

For the reasons stated above, the

Department has preliminarily

determined that CEMEX’s home market

sales of Type II cement during the

review period were outside the ordinary

course of trade. We note that the facts

established in the record of this review
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47631

are very similar to the facts which led

the Department to determine in the

second and fifth reviews that home

market sales of Type II cement were

outside the ordinary course of trade.

The determination involving the second

review, as noted above, was affirmed by

the CIT in the CEMEX case. Slip Op. 95–

72 at 14.

We have also preliminarily

determined that home market sales of

Type V cement by CEMEX during the

POR are also outside the ordinary

course of trade. As more fully described

in the above-mentioned agency

memorandum, these sales share many

attributes with CEMEX’s sales of Type II

cement. First, the volume of these sales,

either individually or in combination

with sales of Type II cement, is

extremely small compared to sales of

Type I cement. Second, shipping

distances and freight costs for sales of

Type V cement are significantly greater

than for sales of Type I. Third, the

number and type of customers

purchasing Type V cement is

substantially different from those

purchasing Type I.

As part of this analysis, we have also

determined, based upon the facts

otherwise available, that: (i) CEMEX did

not sell Type V cement in Mexico until

it began production for export in the

mid-eighties, despite the fact that a

small domestic demand for such existed

prior to that time; and, (ii) sales of Type

V cement continue to exhibit (as they

did in the second review) a promotional

quality that is not evidenced in

CEMEX’s ordinary sales of cement. We

believe that this use of facts available is

warranted and appropriate. First, the

Department did not learn until

verification that these sales of Type V

involved cement physically identical to

the cement that CEMEX sold in Mexico

(and the United States) as Type II. Had

Respondent disclosed this fact earlier in

the review, we could have expanded our

ordinary-course-of-trade inquiry for

Type II sales, including the scope of

verification and our questionnaires, to

include home market sales of the

physically identical Type V cement.

Second, as noted above, the Type V and

Type II sales involve physically

identical merchandise marketed under

similar conditions and circumstances

(e.g., low sales volume shipped

unusually long distances). Therefore, it

is reasonable, as facts available, to

extend the results of our inquiry

concerning the history of Type II sales

and their promotional nature to the

Type V sales as well. We also note that

those results are consistent with our

findings in the second review

concerning sales of Type V cement.

In conclusion, the decision to exclude

sales of Type II and Type V cement from

the calculation of NV centers around the

unusual nature and characteristics of

these sales compared to the vast

majority of CEMEX’s other home market

sales. Based upon these differences, the

Department has preliminarily

determined that they are not

representative of CEMEX’s home market

sales. Stated differently, these sales

were not within CEMEX’s ordinary

course of trade.

F. Fictitious Market

Petitioner has also claimed that

CEMEX established a fictitious market

in Mexico for its sales of ‘‘Type II’’

cement. Since the sales in question have

preliminarily been found to be outside

the ordinary course of trade and,

accordingly, will not be used in the

calculation of NV, it is not necessary for

us to address this issue for these

preliminary results.

G. Level of Trade

To the extent practicable, we

determine NV for sales at the same level

of trade as the U.S. sales (either EP or

CEP). When there are no sales at the

same level of trade, we compare U.S.

sales to home market (or, if appropriate,

third-country) sales at a different level

of trade. The NV level of trade is that

of the starting price sales in the home

market. When NV is based on

constructed value (CV), the level of

trade is that of the sales from which we

derive selling, general, and

administrative expenses (SG&A) and

profit.

For both EP and CEP, the relevant

transaction for the level of trade analysis

is the sale (or constructed sale) from the

exporter to the importer. While the

starting price for CEP is that of a

subsequent resale to an unaffiliated

buyer, the construction of the CEP

results in a price that would have been

charged if the importer had not been

affiliated. We calculate the CEP by

removing from the first resale to an

independent U.S. customer the

expenses under section 772(d) of the

Act and the profit associated with these

expenses. These expenses represent

activities undertaken by the affiliated

importer. Because the expenses

deducted under section 772(d) represent

selling activities in the United States,

the deduction of these expenses

normally yields a different level of trade

for CEP than for the later resale (which

we use for the starting price). Movement

charges, duties and taxes deducted

under section 772(c) do not represent

activities of the affiliated importer, and

we do not remove them to obtain the

CEP level of trade.

To determine whether home market

sales are at a different level of trade than

U.S. sales, we examine whether the

home market sales are at different stages

in the marketing process than the U.S.

sales. The marketing process in both

markets begins with goods being sold by

the producer and extends to the sale to

the final user, regardless of whether the

final user is an individual consumer or

an industrial user. The chain of

distribution between the producer and

the final user may have many or few

links, and each respondent’s sales occur

somewhere along this chain. In the

United States, the respondent’s sales are

generally to an importer, whether

independent or affiliated. We review

and compare the distribution systems in

the home market and U.S. export

markets, including selling functions,

class of customer, and the extent and

level of selling expenses for each

claimed level of trade. Customer

categories such as distributor, original

equipment manufacturer (OEM) or

wholesaler are commonly used by

respondents to describe levels of trade,

but, without substantiation, they are

insufficient to establish that a claimed

level of trade is valid. An analysis of the

chain of distribution and of the selling

functions substantiates or invalidates

the claimed levels of trade. Different

levels of trade necessarily involve

differences in selling functions, but

differences in selling functions, even

substantial ones, are not alone sufficient

to establish a difference in the levels of

trade. Different levels of trade are

characterized by purchasers at different

stages in the chain of distribution and

sellers performing qualitatively or

quantitatively different functions in

selling to them.

When we compare U.S. sales to home

market sales at a different level of trade,

we make a level-of-trade adjustment if

the difference in levels of trade affects

price comparability. We determine any

effect on price comparability by

examining sales at different levels of

trade in a single market, the home

market. Any price effect must be

manifested in a pattern of consistent

price differences between home market

sales used for comparison and sales at

the equivalent level of trade of the

export transaction. To quantify the price

differences, we calculate the difference

in the average of the net prices of the

same models sold at different levels of

trade. We use the average difference in

net prices to adjust NV when NV is

based on a level of trade different from

that of the export sale. If there is a

pattern of no price differences, the
47632 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

difference in levels of trade does not

have a price effect and, therefore, no

adjustment is necessary.

The statute also provides for an

adjustment to NV when NV is based on

a level of trade different from that of the

CEP if the NV is more remote from the

factory than the CEP and if we are

unable to determine whether the

difference in levels of trade between

CEP level and NV level affects the

comparability of their prices. This latter

situation can occur where there is no

home market level of trade equivalent to

the U.S. sales level or where there is an

equivalent home market level but the

data are insufficient to support a

conclusion on price effect. This

adjustment, the ‘‘CEP offset,’’ is

identified in section 773(a)(7)(B) of the

Act and is the lower of the following:

• The indirect selling expenses on the

home market sale, or

• The indirect selling expenses

deducted from the starting price used to

calculate CEP.

The CEP offset is not automatic each

time we use CEP. The CEP offset is

made only when the level of trade of the

home market sale is more advanced

than the level of trade of the U.S. (CEP)

sale and there is not an appropriate

basis for determining whether there is

an effect on price comparability.

To determine whether an level-oftrade adjustment was appropriate, in

accordance with the principles

discussed above, we examined

information regarding the distribution

systems in both the United States and

the Mexican markets, including the

selling functions, classes of customer,

and selling expenses for CEMEX and

CDC. Upon consideration of these

factors, the Department determined that

there is one level-of-trade in the home

market—sales of cement shipped to endusers and ready-mixers in bulk and

bagged form—and a different level-oftrade in the U.S. market—sales to

affiliated importers. Because there was

only one level of trade in the home

market, we were unable to perform the

analysis for a level of trade adjustment.

We further determined that

Respondent’s sales to end users and

ready-mixers in the home market are at

a more advanced level of trade than

sales to affiliated importers in the

United States because CEMEX and CDC

perform more selling functions for sales

to end-users and ready-mixers in the

home market than for sales to affiliated

importers in the United States. As a

result, the Department has preliminarily

determined to grant Respondent an

adjustment to normal value in the form

of a CEP offset.

Preliminary Results of Review

As a result of our review, we

preliminarily determine the dumping

margin for CEMEX for the period

August 1, 1995, through July 31, 1996,

to be 35.88 percent.

Interested parties may request

disclosure within five days of the date

of publication of this notice. Any

interested party may request a hearing

within 10 days of publication. Any

hearing, if requested, will be held 44

days after the date of publication or the

first business day thereafter. Case briefs

and/or other written comments from

interested parties may be submitted not

later than 30 days after the date of

publication. Rebuttal briefs and

rebuttals to written comments, limited

to issues raised in those comments, may

be filed not later than 37 days after the

date of publication of this notice. The

Department will publish its final results

of this administrative review, including

its analysis of issues raised in any

written comments or at a hearing, not

later than 180 days after the date of

publication of this notice.

Upon completion of this review, the

Department shall determine, and the

Customs Service shall assess,

antidumping duties on all appropriate

entries.

The Department will issue

appropriate appraisement instructions

directly to the Customs Service upon

completion of this review.

Furthermore, the following deposit

requirements will be effective for all

shipments of the subject merchandise

entered, or withdrawn from warehouse,

for consumption on or after the

publication date of the final results of

review, as provided by section 751(a)(1)

of the Act: (1) The cash deposit rate for

the reviewed company will be the rate

determined in the final results of

review; (2) for previously reviewed or

investigated companies not mentioned

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 manufacture of the

merchandise; and (4) the cash deposit

rate for all other manufacturers or

exporters will be 61.85 percent, the all

others rate from 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

preliminary 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 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

dumping duties.

This administrative review and notice

are in accordance with the Act (19

U.S.C. 1675 (a)(1)) and 19 CFR 353.22.

Dated: September 2, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–24000 Filed 9–9–97; 8:45 am]

BILLING CODE 3510–25–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–533–502]

Certain Welded Carbon Standard Steel

Pipes and Tubes From India; Final

Results of New Shippers Antidumping

Duty Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of new

shippers antidumping duty

administrative review.

SUMMARY: On May 1, 1997, the

Department of Commerce published the

preliminary results of a new shippers

administrative review of the

antidumping duty order on certain

welded carbon steel standard pipes and

tubes from India. The review covers two

manufacturers/exporters. The period of

review is May 1, 1995 through April 30,

1996.

Based on our analysis of the

comments received, we have made

changes, including corrections of certain

inadvertent programming and clerical

errors, in the margin calculations for

Rajinder Pipes Ltd. and Lloyd’s Metals

& Engineers Ltd. The final weightedaverage dumping margins for the

reviewed firms are listed below in the

section entitled ‘‘Final Results of

Review.’’

EFFECTIVE DATE: September 10, 1997.

FOR FURTHER INFORMATION CONTACT:

Davina Hashmi or Kristie Strecker, at

Import Administration, International

Trade Administration, U.S. Department

of Commerce, Washington, D.C. 20230;

Telephone: (202) 482–4733.