[Federal Register Volume 62, Number 167 (Thursday, August 28, 1997)]
[Notices]
[Pages 45623-45627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22968]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-841]


Notice of Final Determination of Sales at Less Than Fair Value: 
Vector Supercomputers From Japan

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

EFFECTIVE DATE: August 28, 1997.

FOR FURTHER INFORMATION CONTACT: Edward Easton or Sunkyu Kim, Office of 
AD/CVD Enforcement II, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1777 or (202) 482-2613.

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as

[[Page 45624]]

amended (``the Act''), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to those codified at 19 CFR 353 (April 1, 1996).

Final Determination

    We determine that vector supercomputers from Japan are being sold 
in the United States at less than fair value (``LTFV''), as provided in 
section 735(b) of the Act. The estimated margins of sales at LTFV are 
shown in the ``Suspension of Liquidation'' section of this notice.

Case History

    Since the preliminary determination of sales at less than fair 
value in this investigation on March 28, 1997, (62 FR 16544, April 7, 
1997) (``Preliminary Determination''), the following events have 
occurred.
    As discussed in the Preliminary Determination, on January 28, 1997, 
we initiated a sales below the cost of production (``COP'') 
investigation with respect to Fujitsu Ltd.'s (``Fujitsu'') home market 
sales. Section D of the Department's questionnaire requesting COP and 
constructed value (``CV'') data was issued to Fujitsu on February 12, 
1997. Fujitsu submitted its response to Section D of the questionnaire 
on April 14, 1997. Based on our analysis of Fujitsu's response to 
Section D, we issued a supplemental questionnaire on April 28, 1997. 
The response to this supplemental questionnaire was due on May 12, 
1997. On May 7, 1997, at Fujitsu's request, we met with Fujitsu's 
counsel and corporate representative concerning the Department's 
Section D supplemental questionnaire. At the May 7 meeting, Fujitsu 
raised concerns about the scope of the questions and the availability 
of requested information. On May 8, 1997, Fujitsu requested an 
extension of time until May 19, 1997, to submit its response to the 
supplemental questionnaire. In its letter, Fujitsu stated that it would 
file as much of its response as it could prepare by May 12, 1997, and 
file the remainder of its response by May 19, 1997. We granted this 
request on May 9, 1997.
    On May 12, 1997, Fujitsu submitted a portion of its response to the 
supplemental cost questionnaire. Fujitsu, however, failed to submit the 
remainder of its response on May 19, 1997. On May 20, 1997, Fujitsu 
submitted a letter stating that it would no longer participate in the 
Department's investigation and that it would concentrate its opposition 
to the petition in the material injury investigation conducted by the 
International Trade Commission (``ITC''). In this letter, Fujitsu 
stated that it based its decision on the conclusion that it could not 
provide a complete response to the Department's supplemental cost 
questionnaire by the May 19, 1997 deadline and that the company's 
resources would be better served by participating in the ITC's 
investigation. As a result of Fujitsu's decision to not complete its 
response to the Department's supplemental questionnaire, we are 
applying facts otherwise available in our final determination. For a 
further discussion, see ``Facts Available'' section below.
    As requested in the Preliminary Determination, comments on the 
suspension of liquidation instructions were submitted by Fujitsu and 
the petitioner, Cray Research, Inc. (``Cray''), on May 12, 1997. The 
petitioner submitted its responses to Fujitsu's comments on May 19, 
1997. For a further discussion, see Comments 2, 3, and 4, below.
    Both Fujitsu and the petitioner submitted case briefs on July 7, 
1997, and rebuttal briefs on July 11, 1997. At the request of Fujitsu, 
a public hearing was held on July 16, 1997.

Scope of Investigation

    The products covered by this investigation are all vector 
supercomputers, whether new or used, and whether in assembled or 
unassembled form, as well as vector supercomputer spare parts, repair 
parts, upgrades, and system software, shipped to fulfill the 
requirements of a contract entered into on or after April 7, 1997, for 
the sale and, if included, maintenance of a vector supercomputer. A 
vector supercomputer is any computer with a vector hardware unit as an 
integral part of its central processing unit boards.
    In general, the vector supercomputers imported from Japan, whether 
assembled or unassembled, covered in this investigation are classified 
under heading 8471 of the Harmonized Tariff Schedules of the United 
States (``HTS''). Merchandise properly classifiable under HTS Number 
8471.10 and 8471.30, however, is excluded from the scope of this 
investigation. These references to the HTS are provided for convenience 
and customs purposes. Our written description of the scope of this 
investigation is dispositive.
    This scope language has been modified from that issued in our 
preliminary determination. The reason for the modification is discussed 
in Comment 3, below.

Period of Investigation

    The period of investigation (``POI'') is July 1, 1995 through June 
30, 1996.

Facts Available

    Section 776(a)(2) of the Act provides that if an interested party 
(1) withholds information that has been requested by the Department, 
(2) fails to provide such information in a timely manner or in the form 
or manner requested, (3) significantly impedes an antidumping 
investigation, or (4) provides such information but the information 
cannot be verified, the Department is required to use facts otherwise 
available (subject to subsections 782(c)(1) and (e)) to make its 
determination. Section 776(b) of the Act provides that adverse 
inferences may be used against an interested party if that party failed 
to cooperate by not acting to the best of its ability to comply with 
requests for information. See also ``Statement of Administrative 
Action'' accompanying the URAA, H.R. Rep. No. 316, 103rd Cong., 2d 
Sess. 870 (SAA). Fujitsu's decision not to respond fully to the 
Department's supplemental cost questionnaire or to other requests for 
information by the Department demonstrates that it failed to act to the 
best of its ability in this investigation. Therefore, the Department 
has determined that an adverse inference is appropriate. In addition, 
for the reasons described in the Preliminary Determination, we find 
that the application of adverse facts available is appropriate for NEC 
as well. Consistent with Departmental practice in cases where 
respondents refuse to participate, as facts otherwise available, we 
have considered assigning a margin stated in the petition.
A. Fujitsu
    In its petition, Cray alleged that Fujitsu had delivered a four 
processor vector supercomputer system to a U.S. customer, Western 
Geophysical Co., for petroleum industry modeling applications. Cray 
alleged also that the U.S. customer had not paid for or contracted to 
purchase the system and, consequently, was unable to calculate an 
estimated dumping margin for this Fujitsu sale. (The only calculated 
estimated dumping margin in the petition concerned vector supercomputer 
systems offered to a different U.S. customer by NEC Corporation.) After 
the initiation of this investigation, the petitioner contacted the 
Department to report that Cray's allegation that Fujitsu had not been 
paid by Western Geophysical Co. for this sale

[[Page 45625]]

was mistaken. See, Memorandum to the File from the Case Analysts, dated 
August 11, 1997.
    Section 776(c) provides that if the Department relies upon 
secondary information, such as the petition, when resorting to facts 
otherwise available, it must, to the extent practicable, corroborate 
that information using independent sources that are reasonably at its 
disposal. To corroborate the information the petitioner asserted with 
respect to Fujitsu's U.S. sale, the Department conducted a computerized 
search of published documents. See, Memorandum to the File, from the 
Case Analysts, dated August 12, 1997. This search disclosed that the 
October 23, 1995 issue of the Japan Economic Journal discussed 
Fujitsu's sale of a four-processor supercomputer to Western Geophysical 
Co. for a price of $2 million. The search also disclosed that the 
November 1, 1995 issue of Japan Economic Institute Report (``JEI 
Report'') discussed the Fujitsu sale of a four-processor supercomputer 
to Western Geophysical Co. The JEI Report stated that the Fujitsu 
supercomputer had a list price of $2 million. Both the Japan Economic 
Journal and JEI Report reported that the sale was made by Fujitsu; 
neither publication referred to the participation of a systems 
integrator. On the basis of this information, the Department adjusted 
the petition margin calculated for NEC to determine a margin for 
Fujitsu based on facts otherwise available.
    For the export price, we used Fujitsu's $2 million price for the 
four-processor supercomputer sold to Western Geophysical Co. as the 
starting price. We adjusted this starting price to account for the 
absence of a systems integrator in the Western Geophysical Co. sale. We 
compared this export price to the CV of a vector supercomputer system 
calculated in the petition. We adjusted the petition CV to account for 
the number of processors in Fujitsu's sale to Western Geophysical Co. 
The resulting dumping margin of 173.08 percent was assigned to Fujitsu 
as facts otherwise available. See, Memorandum to the File from the Case 
Analyst, dated August 13, 1997.
B. NEC Corporation
    As discussed in the Preliminary Determination, NEC Corporation 
(``NEC'') failed to answer the Department's questionnaire. Accordingly, 
the Department assigned to NEC the margin stated in the petition, 454 
percent, as facts otherwise available. At the preliminary 
determination, the Department corroborated the information contained in 
the petition within the meaning of section 776(c) of the Act and found 
the information to have probative value; i.e., it is both relevant and 
reliable. Since the preliminary determination, no party (including NEC) 
has presented to the Department any information to challenge the 
appropriateness of the information contained in the petition as the 
basis for a facts available margin for NEC. Accordingly, for the final 
determination, we continue to assign NEC the margin stated in the 
petition, 454 percent.
C. The All Others Rate
    This investigation has the unusual circumstance of both foreign 
manufacturer/exporters being assigned dumping margins on the basis of 
facts otherwise available. NEC and Fujitsu are the only Japanese 
manufacturers of the subject merchandise which have made competing bids 
for sales to the United States. Section 735(c)(5) of the Act provides 
that where the dumping margins established for all exporters and 
exporters and producers individually investigated are determined 
entirely under section 776, the Department ``* * * may use any 
reasonable method to establish the estimated all-others rate for 
exporters and producers not individually investigated, including 
averaging the estimated weighted average dumping margins determined for 
the exporters and producers individually investigated.'' This provision 
contemplates that we weight-average the facts-available margins to 
establish the all others rate. Where the data is not available to 
weight-average the facts available rates, the SAA, at 873, provides 
that we may use other reasonable methods.
    Inasmuch as we do not have the data necessary to weight average the 
NEC and Fujitsu facts-available margins, we have taken the simple 
average of these margins to apply as the all others rate. This 
calculation establishes an all others rate of 313.54 percent.

Interested Party Comments

Comment 1  Use of Facts Available for Fujitsu
    The petitioner argues that Fujitsu's decision to end its 
participation in the Department's investigation gives the Department no 
option but to assign to Fujitsu a dumping margin based on facts 
available. Further, the petitioner asserts that Fujitsu has not 
cooperated with the Department in this investigation and that adverse 
inferences are appropriate in assigning a facts available margin to 
Fujitsu.
    In choosing the appropriate adverse facts available margin, the 
petitioner notes that although a facts available margin based solely on 
the information contained in the petition would be consistent with both 
the statute and Department practice, an alternative approach based on 
certain data submitted by Fujitsu and adjusted by the petitioner would 
be more accurate and, therefore, preferred. Using certain data from 
Fujitsu's questionnaire responses, the petitioner calculated a facts 
available dumping margin of 388.74 percent. This margin is based on a 
comparison of an export price and constructed value for Fujitsu's 
single U.S. sale made during the POI. In calculating the export price, 
the petitioner made several adjustments to the export price information 
submitted by Fujitsu. These adjustments include (1) an estimate of U.S. 
indirect selling expenses based on SG&A expenses reported by Fujitsu's 
U.S. subsidiary, Fujitsu America, Inc.'s (``FAI'') Supercomputer Group; 
(2) use of a gross U.S. price which includes service revenues for a 
shorter period of time than that used by Fujitsu; and (3) a 
recalculation of freight charges, imputed credit, and inventory 
carrying costs. In calculating the CV for Fujitsu's U.S. sale, the 
petitioner calculated a value based on adjusted amounts for the cost of 
manufacture, research and development, general and selling expenses and 
profit.
    Fujitsu acknowledges that the incompleteness of its unverified 
information on the record in this investigation requires that the 
Department establish a dumping margin on the basis of facts otherwise 
available. Fujitsu asserts that the Department has a great deal of 
discretion within which to assign a margin and requests that the 
Department either assign the dumping margin calculated for the 
preliminary determination or adjust the calculation in the petition 
that was used to determine an alleged dumping margin for NEC.

DOC Position

    The Department has assigned a margin based on facts otherwise 
available for Fujitsu because Fujitsu refused to cooperate in our 
investigation and prevented our making an accurate margin calculation. 
We rejected Fujitsu's request to assign the dumping margin calculated 
for the preliminary determination as facts available. This preliminary 
margin was calculated before the Department had received Fujitsu's 
responses to the cost-of-production and constructed value section of 
our antidumping

[[Page 45626]]

questionnaire. For this final determination, the Department relied upon 
information in the petition, with appropriate adjustments, which 
Fujitsu suggested as an alternative to the preliminary determination 
margin. However, we did not accept adjustments to the petition 
information that Fujitsu made in its recalculation of the petition 
margin where we were unable to corroborate the adjustment or verify the 
data relied upon.
    The Department also rejected the petitioner's estimated dumping 
margin for Fujitsu. The petitioner's estimate relied on unverified 
submissions as well as several of its own assumptions and adverse 
inferences. Although the petitioner asserts that its calculation is 
more accurate than relying on information in the petition, we believe 
that its approach is speculative.
Comment 2  Entries to be Used in the United States Exclusively by 
Fujitsu
    Fujitsu asserts that the Department should not order the suspension 
of liquidation on entries of covered merchandise for the exclusive use 
of Fujitsu in the United States. Alternatively, Fujitsu suggests that 
liquidation be suspended for such entries and that the cash deposit 
rate for these entries be set at zero. Fujitsu argues that collecting 
deposits on these entries is unreasonable inasmuch as they will never 
be sold. The company cites to several Department determinations which 
excluded certain products from the scope of an investigation on the 
basis of end-use certificates.
    The petitioner asserts that suspension of liquidation must be 
ordered for these entries. Without suspension of liquidation, the 
merchandise will enter the United States without the Department or the 
U.S. Customs Service being in a position to verify that they were used 
exclusively by Fujitsu. Similarly, the petitioner asserts that cash 
deposits in the amount of the assigned antidumping duty margin be 
collected to ensure that the merchandise is not sold after it's used by 
Fujitsu. The petitioner would have the cash deposits returned to 
Fujitsu only after the merchandise were reexported or destroyed under 
the supervision of the Customs Service.

DOC Position

    The Department agrees with the petitioner that liquidation of these 
entries must be suspended because the merchandise is covered by the 
scope of the investigation and will enter the customs territory of the 
United States. In the event that merchandise were to be sold after 
entry, the suspension of liquidation would safeguard the government's 
ability to collect antidumping duties. With respect to the collection 
of cash deposits, the Department is not authorized to order the 
suspension of liquidation but then to set the cash deposit rate at zero 
in circumstances where the entered merchandise is clearly covered by 
the scope of the antidumping duty investigation.
    We have examined the citations offered by Fujitsu. They are 
concerned with investigations in which the scope was defined by the use 
of the product and other uses were not covered by the scope of 
investigation. In this investigation, Fujitsu is claiming that vector 
supercomputer systems that it imports into the United States for its 
own use ought to be exempt from cash deposits from the order because a 
related company will be using the covered merchandise exclusively. This 
is not the situation where certain uses of a vector supercomputer were 
excluded from the scope of the investigation.
Comment 3  Contracts Entered Into Prior to Suspension of Liquidation
    Fujitsu requests that the Department clarify that the suspension of 
liquidation instructions do not apply to ``follow on'' importations 
pursuant to contracts for the sale of vector supercomputers entered 
into prior to the date of suspension of liquidation in this 
investigation, April 7, 1997.
    Although the petitioner did not address Fujitsu's request in its 
pre-hearing submissions, it objected to this request at the hearing.

DOC Position

    The Department agrees with Fujitsu. We had intended that the 
suspension of liquidation instructions in our Preliminary Determination 
would apply to entries pursuant to any contract for the sale of a 
vector supercomputer system on or after the date of its their 
publication in the Federal Register.
Comment 4  Reporting Requirements
    Both the petitioner and Fujitsu commented on the Department's 
requirements set forth in the Preliminary Determination for reporting 
information to the U.S. Customs Service and the Department on entry of 
the subject merchandise.
    This information included copies of the contracts pursuant to which 
the entries were being made, a description of the merchandise being 
entered, the actual or estimated price of the complete vector 
supercomputer system, and a schedule of all future shipments to be made 
pursuant to the contract. Both parties were concerned that much of the 
information requested by the Department in the Preliminary 
Determination was not necessary.

DOC Position

    On the basis of these comments and consultations with the U.S. 
Customs Service, the Department is requiring only that the U.S. 
importer submit with its entry summary a detailed description of the 
merchandise included in the entry with documentation that identifies 
the contract pursuant to which the merchandise is being imported. After 
examining this documentation for consistency with the entry summary, 
the Customs Service will forward the documentation to the Department. 
Detailed descriptions of entries and the identification of the relevant 
sales contracts are necessary for the Department to be apprised of 
entries subject to the order independent of administrative reviews and 
scope inquiries. We expect, also, that the petitioner will inform the 
Department when it becomes aware of U.S. vector supercomputer contracts 
being awarded to Japanese manufacturers.

Continuation of Suspension of Liquidation

    In accordance with section 735(c)(4)(A) of the Act, we are 
directing the Customs Service to continue to suspend liquidation of all 
entries of vector supercomputers from Japan, as defined in the ``Scope 
of Investigation'' section of this notice, that are entered, or 
withdrawn from warehouse, for consumption on or after April 7, 1997, 
the date of publication of our preliminary determination in the Federal 
Register. For these entries, the Customs Service will require a cash 
deposit or posting of a bond equal to the estimated amount by which the 
normal value exceeds the export price as shown below.

------------------------------------------------------------------------
                                                                Margin  
                   MFR/producer exporter                      percentage
------------------------------------------------------------------------
Fujitsu Ltd................................................       173.08
NEC Corp...................................................       454.00
All Others.................................................       313.54
------------------------------------------------------------------------

    Entry summaries covering merchandise within the scope of this 
investigation must be accompanied by documentation provided by the U.S. 
importer which identifies the vector supercomputer contract pursuant to 
which the merchandise is imported and describes in detail the 
merchandise included in the entry. After examining this documentation 
for consistency with

[[Page 45627]]

the entry summary, the Customs Service will forward the documentation 
to the Department.

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. As our final determination is affirmative, 
the ITC will determine whether these imports are causing material 
injury, or threat of material injury, to the industry within 45 days of 
its receipt of this notification.
    If the ITC determines that material injury, or threat of material 
injury, does not exist, the proceeding will be terminated and all 
securities posted will be refunded or canceled. If the ITC determines 
that such injury does exist, the Department will issue an antidumping 
duty order directing Customs officials to assess antidumping duties on 
all imports of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the effective date of the 
suspension of liquidation.
    This determination is published pursuant to section 735(d) of the 
Act.

    Dated: August 20, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-22968 Filed 8-27-97; 8:45 am]
BILLING CODE 3510-DS-P