[Federal Register Volume 62, Number 204 (Wednesday, October 22, 1997)]
[Notices]
[Pages 54825-54831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27990]



[[Page 54825]]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-506]


Porcelain-on-Steel Cooking Ware From the People's Republic of 
China; 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.

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SUMMARY: On January 29, 1997, the Department of Commerce (the 
Department) published in the Federal Register the preliminary results 
of its administrative review of the antidumping duty order on 
porcelain-on-steel (POS) cooking ware from the People's Republic of 
China (PRC) (62 FR 4250). This review covers shipments by two 
manufacturers/exporters of this merchandise to the United States during 
the period December 1, 1993, through November 30, 1994. We gave 
interested parties an opportunity to comment on our preliminary 
results. Based upon our analysis of the comments received (see Analysis 
of Comments Received section below), these final results of review 
remain unchanged from the preliminary results of review.

EFFECTIVE DATE: October 22, 1997.

FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Kelly Parkhill, 
Office of CVD/AD Enforcement VI, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-
2786.
    Applicable Statute and Regulations: Unless otherwise stated, all 
citations to the statute and to the Department's regulations are 
references to the provisions as they existed on December 31, 1994.

SUPPLEMENTARY INFORMATION:

Background

    On December 2, 1986, the Department published, in the Federal 
Register, the antidumping duty order on POS cooking ware from the PRC 
(51 FR 43414). On December 6, 1994, the Department published, in the 
Federal Register, a notice of opportunity to request an administrative 
review of this antidumping duty order (59 FR 62710) covering the period 
December 1, 1993, through November 30, 1994.
    On December 21, 1994, in accordance with 19 C.F.R. 353.22(a)(1), a 
U.S. importer, CGS International Inc. (CGS), requested that we conduct 
an administrative review of Clover Enamelware Enterprise Ltd. (Clover), 
a PRC manufacturer/exporter of the subject merchandise, and its third-
country reseller in Hong Kong, Lucky Enamelware Factory Ltd. (Lucky). 
On December 29, 1994, in accordance with 19 C.F.R. 353.22(a), 
petitioner, General Housewares Corp. (GHC) requested that we conduct an 
administrative review of China National Light Import and Export 
Corporation (China Light), Shanghai Branch, through Amerport (H.K.), 
Ltd. We published the notice of initiation of this antidumping duty 
administrative review covering the period December 1, 1993 through 
November 30, 1994, on January 13, 1995 (60 FR 3192).
    On February 29, 1997, the Department published in the Federal 
Register the preliminary results of this administrative review of the 
antidumping duty order on POS cooking ware from the PRC (62 FR 4250). 
There was no request for a hearing. The Department has now completed 
this review in accordance with section 751(a) of the Act.

Related Parties

    Clover is two-thirds owned by Lucky and therefore Lucky holds 
controlling interest in Clover. Due to Lucky's ownership interest in 
Clover, and the fact that the same individual is the general manager at 
both companies, we consider Clover and Lucky (hereafter Clover/Lucky) 
to be related pursuant to section 771(13) of the Act. As such, and 
consistent with prior reviews of this order, we have calculated only 
one rate for both of these companies. For a further discussion of this 
issue, see Memorandum from Case Analyst to the File Regarding Status as 
Related Parties dated January 17, 1997, which is a public document on 
file in the Central Records Unit (room B-099 of the Department of 
Commerce).

Scope of Review

    Imports covered by this review are shipments of POS cooking ware, 
including tea kettles, which do not have self-contained electric 
heating elements. All of the foregoing are constructed of steel and are 
enameled or glazed with vitreous glasses. The merchandise is currently 
classifiable under the HTS item 7323.94.00. HTS item numbers are 
provided for convenience and Custom purposes. The written description 
remains dispositive.

Best Information Available

    In our preliminary results, we determined, in accordance with 
sections 776(b) and (c) of the Act, that the use of best information 
available (BIA) is appropriate for China Light and Clover/Lucky. (See 
``Memorandum for Jeffrey P. Bialos from Barbara E. Tillman Regarding 
Use of Best Information Available'' dated January 16, 1997, which is a 
public document on file in the Central Records Unit (room B-099 of the 
Main Commerce Building).) We received written comments on the 
preliminary results of review. Our analysis of the comments submitted 
by interested parties has not led us to modify our findings from the 
preliminary results.
    Section 776(b) of the Act states that the Department shall use BIA 
whenever it is unable to verify the information submitted. Section 
776(c) of the Act states that the Department shall use BIA whenever a 
company refuses or is unable to produce information in a timely manner 
and in the form required, or significantly impedes an investigation or 
review.
    In deciding what to use as BIA, section 353.37(b) of the 
Department's regulations provide that the Department may take into 
account whether a party refuses to provide requested information or 
impedes a proceeding. Thus, the Department determines on a case-by-case 
basis what is BIA. The Department uses a two-tiered approach in its 
choice of BIA. When a company refuses to provide the information 
requested in the form required or otherwise significantly impedes the 
Department's review (first tier), the Department will normally assign 
to that company the higher of (1) the highest rate found for any firm 
in the less-than-fair-value (LTFV) investigation or a prior 
administrative review; or (2) the highest rate found in the current 
review for any firm. When a company has cooperated with the 
Department's request for information but fails to provide information 
requested in a timely manner or in the form required such that margins 
for certain sales cannot be calculated (second tier), the Department 
will normally assign to those sales the higher of (1) the highest rate 
applicable to that company for the same class or kind of merchandise 
from any previous review or the original investigation; or (2) the 
highest calculated margin for any respondent in the current review. See 
Final Results of Antidumping Duty Administrative Reviews and Revocation 
in Part of An Antidumping Duty Order: Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof from France, et. al., 58 FR 
39729 (July 26, 1993). This practice has been upheld in Allied-Signal 
Aerospace Co. v. United States, 996 F.2d 1185

[[Page 54826]]

(Fed. Cir. 1993), and Krupp Stahl AG et al. v. United States, 822 F. 
Supp. 789 (CIT 1993).
    As mentioned above, China Light did not respond to our 
questionnaire. As non-cooperative, first-tier BIA, and in accordance 
with section 776(c) of the Act, we have applied the highest margin from 
the LTFV investigation, prior administrative reviews, or in this 
review, which is 66.65 percent. Further, China Light was not found 
eligible for a separate rate in this review. Consequently, China Light 
is part of the single NME entity in this review, which has been 
assigned the PRC country-wide rate (see, e.g., Heavy Forged Hand Tools, 
Finished or Unfinished, With or Without Handles, from the People's 
Republic of China; Preliminary Results of Antidumping Duty 
Administrative Review; 61 FR 15218, 15221 (April 5, 1996), and Heavy 
Forged Hand Tools, Finished or Unfinished, With or Without Handles, 
from the People's Republic of China; Final Results of Antidumping Duty 
Administrative Review; 61 FR 15269 (October 1, 1996).
    Clover/Lucky cooperated with our requests for information and 
agreed to undergo verification. From July 17 through July 29, 1995, the 
Department attempted verification of the company's questionnaire 
response at Lucky's sales offices in Hong Kong and Clover's factory in 
Shenzhen, PRC. As a result of these verification efforts with respect 
to Clover's questionnaire response, we discovered significant 
discrepancies and were unable to verify substantial sections of the 
questionnaire response, including statutorily required factors of 
production information, such as the number of labor hours worked and 
the per unit quantities consumed of primary material inputs. These 
discrepancies are detailed in the Department's verification report 
concerning Clover, dated January 13, 1997.
    As a result, the Department has determined that the data the 
company submitted is unverifiable. Therefore, in accordance with 
section 776(b) of the Act, there is no basis to accept the integrity of 
the factors of production information submitted in the questionnaire 
response, constituting a verification failure. See Notice of Final 
Determination of Sales at Less Than Fair Value: Melamine Institutional 
Dinnerware Products from the People's Republic of China, 61 FR 1708 
(January 13, 1997). Because the respondent failed verification, the 
Department must use BIA. Since Clover/Lucky was cooperative, we have 
applied second-tier BIA. The second-tier BIA rate is the highest rate 
applicable to the company from a previous review or the original LTFV 
investigation, which in this case is 66.65 percent, the rate Clover/
Lucky received in the 1990/91 administrative review.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received a case brief from Clover/Lucky 
(respondent) and a rebuttal brief from General Housewares (petitioner).
    Comment 1: Clover/Lucky alleges that the Department's decision to 
consider verification a failure is unwarranted. According to 
respondent, the problems at verification were due to: (1) The brevity 
of the verification at Clover's factory in the PRC; and (2) the 
Department's failure to explore alternative methods of 
verification.<SUP>1</SUP> Clover/Lucky claims that had the Department 
spent more time at Clover, the Department would have been able to 
verify much of the allegedly unverified information. According to 
Clover/Lucky, it is the Department's obligation to allow itself the 
time necessary to verify the responses and find alternative methods of 
verification of information, if needed.
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    \1\ Clover/Lucky suggests the following alternative methods for 
some portions of the response that could not be verified: (1) The 
verifiers could have timed the products going through the production 
process in order to verify the piece rate tables used to calculate 
the workers' wages; (2) 1995 (post-POR) time cards could be examined 
to verify the 1993/94 labor hours and piece rates reported in the 
response; (3) uncoated semi-finished steel blanks, steel blanks with 
the initial ground coat, steel blanks with the cover coat, double-
coated steel blanks and finished goods for selected products could 
have been shipped to the United States for further examination and 
weighing in order to verify the reported enamel consumption; and (4) 
loan documents identifying ownership of machinery between Lucky and 
Clover could be examined, in conjunction with on-site identification 
of molds and equipment by knowledgeable floor supervisors, in order 
to verify the depreciation information included in the response that 
could not be verified through the depreciation cards.
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    Petitioner argues that Clover/Lucky provided no evidence 
demonstrating that the Department's verification procedures to verify 
Clover/Lucky were unfair or unreasonable.
    Department's Position: We disagree with respondent. The on-site 
verification at Clover's factory in the PRC was but one portion of the 
ten-day verification of Clover/Lucky's questionnaire response. Ten days 
to verify a questionnaire response is well within the normal time 
period allotted for such verifications. In addition, as Clover/Lucky 
noted in its case brief, the verification team was willing to, and did, 
work overtime to allow the company the opportunity to demonstrate the 
accuracy of the submitted information. Further, upon leaving Clover's 
factory in the PRC, the team gave Clover the opportunity to send any 
missing supporting documentation to Lucky's offices in Hong Kong, which 
the team would then verify at that location. Despite this opportunity, 
Clover sent no such information.
    As we stated in Antifriction Bearings (Other than Tapered Roller 
Bearings) and Parts Thereof from France, et. al.; Final Results of 
Antidumping Duty Administrative Reviews and Partial Termination of 
Administrative Reviews, 61 FR 66481, 66482 ( December 17,1996), ``It is 
incumbent on the respondent to establish the accuracy of the 
information it submits during the time period allotted for 
verification.'' This position is supported by the U.S. Court of 
International Trade (CIT) which stated, ``There is no statutory mandate 
as to how long the process of verification must last, . . . . [The 
Department] is afforded discretion when conducting a verification 
pursuant to 19 U.S.C. 1677e(b).'' Persico Pizzamiglio, S.A. v. United 
States, 18 CIT 229, 307 (1994) (holding that a three-day overseas 
verification was reasonable). See also Ceramica Regiomontana, S.A. v. 
United States, 10 CIT 399, 406, 636 F. Supp. 961, 967 (1986) (held that 
the Department has wide latitude in determining the time to be spent 
and the procedures to be used to conduct verification).
    We also disagree with Clover/Lucky's contention that it is the 
Department's obligation to explore alternative approaches to verifying 
information. As petitioner points out in its rebuttal brief, it is the 
responsibility of the respondent, and not of the Department, to create 
a sufficient record in the administrative review. Tatung Co., v. United 
States, 18 CIT 1137, 1140 (1994). The purpose of verification is to 
verify the accuracy of the response, not to collect information or 
recreate the response in order to address its errors or deficiencies. 
See Belmont Industries v. United States, 733 F. Supp. 1507, 1508 (CIT 
1990) (``verification is like an audit, the purpose of which is to test 
information provided by a party for accuracy and completeness. Normally 
an audit entails selective examination rather than testing of an entire 
universe''); see also Monsanto Co. v. United States, 698 F. Supp. 275, 
281 (CIT 1988) (``verification is a spot check and is not intended to 
be an exhaustive examination of the respondent's business''). To 
accomplish this, the Department uses standard verification methods, and 
among other things, examines the source documents that respondents 
claim were used to

[[Page 54827]]

compile the information contained in their questionnaire response.
    To assist respondents in preparing for verification, the Department 
issues an outline of the verification to respondents prior to the 
arrival of the verifiers. Prior to verification in this case, the 
Department sent an outline of the verification procedures to Clover/
Lucky. The outline identified the information in the response that the 
Department intended to verify and the types of source documents that 
would be examined by the Department when conducting the verification. 
The outline also indicated that it was not exhaustive, and that the 
Department might request relevant additional material necessary for a 
complete verification.
    As discussed above, the Department does not have an unlimited 
amount of time in which to conduct a verification. As characterized by 
the CIT itself, verification under these conditions is, by its very 
nature, a spot check rather than a complete audit. As such, it is 
crucial that the information reported in the questionnaire response can 
be readily verified if selected for examination. Given the time limits 
of verification, the Department is unable to await, let alone accept, 
numerous clarifications or corrections to responses at verification, 
nor can it explore all conceivable verification methods suggested by a 
respondent in the hope that one of them might conceivably result in the 
information being verified at some indefinite point in the future.
    The alternative methods of verification suggested by Clover/Lucky 
would have required significant amounts of additional time to 
undertake. In this case, such time was no longer available because of 
the difficulties encountered in verifying the information in the 
response using standard verification procedures as set forth in the 
verification outline that was sent to Clover/Lucky. For example, with 
respect to timing the processing steps on the factory floor as an 
alternative method of verifying labor hours, respondent noted in its 
comments that Clover's POS cookware production process is a complicated 
one. According to Clover/Lucky, the simplest piece of enamelware, a 
plate, involves seven processes while a teakettle (a covered cookware 
item) involves 48 processes. Some of these processes (e.g., enameling) 
involve considerable time between steps. Given the need to take several 
readings per processing step being examined in order to calculate a 
meaningful average, this method would require considerable time and 
effort to verify even one cookware item, much less a meaningful sample 
of the approximately 45 cookware items under review. Further, Clover 
manufactures over 450 different enamelware items, only a portion of 
which are cookware items sold in the United States. Therefore, it is 
highly unlikely that the Department would be able to randomly select a 
cookware item from the piece rate table (a table listing the standard 
amounts of time required to complete individual processing steps for 
each enamelware item produced by the company) and find that it is being 
produced that day on the shop floor.
    In addition, two of the suggested alternatives, the use of 1995 
(post-POR) source documents to verify 1993/94 data and the post-
verification shipment of finished and semi-finished cookware products 
to the United States for examination by the Department are simply not 
reasonable verification alternatives. The Department cannot accept 
unrelated information from a future review period to substitute for 
source documents from the period under review. The comparison of 1995 
time cards to 1993/94 labor records and piece rate tables will not 
result in any meaningful determination as to the accuracy of the 
submitted 1993/94 information. As to the submission of selected pieces 
of finished and semi-finished cookware to the Department for 
examination and weighing, the purpose of on-site verification is to 
enable the Department not only to check certain factual information but 
also to be able to further verify the accuracy of the submitted 
information through questions to, and clarifying statements from, those 
individuals that either prepared the response, are involved in the 
manufacture and exportation of the merchandise under review or are 
responsible for maintaining the company's books and records. This is 
not possible under Clover/Lucky's suggested alternative methods of 
verification.
    Comment 2: Clover/Lucky alleges that it should not be penalized for 
failing to maintain the source documentation needed to support its 
reported labor hours/record retention. Neither the questionnaire nor 
the outline specifically stated that time cards needed to be retained 
for verification. Further, these records are not required to be kept by 
local tax authorities.
    Department's Position: Contrary to respondent's characterization 
that its failure to maintain source documentation for reported labor 
hours was the cause of the failed verification, in this review, labor 
hours were among the many items that Clover/Lucky was unable to tie to 
or support with source documentation.
    In addition, we disagree with respondent's claim that it should not 
be penalized for failing to maintain certain source documents because 
the Department did not specifically identify these source documents in 
its questionnaire or outline. Both the questionnaire and the 
verification outline make it clear that the information submitted in 
the response may be subject to verification. Because responses 
submitted in an administrative review may be subject to verification, 
it is incumbent upon a respondent to retain the source documentation 
which it used to prepare the questionnaire response. The verification 
outline further notes that we will be tying the information reported in 
the response to the company's source documents that support that 
information. The outline provides examples of the type of documents we 
examine and clearly states that we may require any additional 
documentation necessary for a complete verification. Time cards are 
among the documents that support a company's payroll. That the 
Department might request to examine these time cards can hardly be 
considered outside the realm of possibility in a verification of 
reported labor hours. Section 773(c)(3) of the Act, which enumerates 
the specific factors of production that the Department examines in NME 
cases, lists as the very first factor ``hours of labor required'' 
(section 773(c)(3)(A)).
    The record keeping requirements of local tax authorities are not 
germane to the records that need to be maintained for verification of 
the questionnaire response in an antidumping administrative review. See 
Krupp Stahl A.G. v. United States, 17 CIT 450; 822 F. Supp. 789, 791-92 
(1993) (holding that the fact that a foreign government did not require 
retention of business records did not absolve the respondent from its 
obligation or responsibility to respond to the Department's 
questionnaire response in an antidumping proceeding. The court upheld 
the Department's use of BIA.) See also Antifriction Bearings (Other 
Than Tapered Roller Bearings) and Parts Thereof From France, et al.; 
Final Results of Antidumping Duty Administrative Reviews, Partial 
Termination of Administrative Reviews, and Revocation in Part of 
Antidumping Duty Orders, 60 FR 10900, 10990 (February 28, 1995).
    Comment 3: Clover/Lucky claims that the Department's conclusion 
that Clover was unable to document its per-unit enamel consumption 
figure is

[[Page 54828]]

unfounded. At verification, the company explained the sampling 
procedure it used to estimate the per-unit consumption. By weighing 
three to five samples of each model throughout the various coating and 
drying processes, it calculated a per-unit weighted-average of enamel 
consumption. Clover/Lucky contends that, based on this procedure, the 
company prepared the table used to report per-unit enamel consumption 
in its response. As respondent itself states, because enamel coating is 
a hand-dipped process, the difference between the actual weight of an 
individual item may be quite different from the consumption figure 
calculated in the sample. However, since the consumption figures were 
derived from actual figures, respondent claims it was not necessary for 
the company to maintain the underlying source documents.
    Department's Position: We disagree with respondent. The 
verification report does not support Clover/Lucky's contention that it 
was able to document the per-unit enamel consumption. As stated by 
Clover/Lucky itself in its case brief, the company did not retain any 
of the original worksheets or underlying source documents of the per-
unit enamel consumption after conducting its sample weighing.
    As discussed previously, it is the responsibility of the 
respondent, and not of the Department, to create a sufficient record in 
the administrative review. Tatung Co., v. United States, 18 CIT 1137, 
1140 (1994). The purpose of verification is to verify the accuracy of 
the response through examination of source documentation, not to 
collect information or recreate supporting source documentation that 
respondent has failed to maintain. Further, as discussed previously, we 
reject Clover's suggestion that the Department allow it to ship, after 
verification, selected samples of finished and semi-finished cookware 
products to the Department in order that the Department could further 
test the accuracy of the reported figures. For further information 
regarding the Department's position on this, see Department's Position 
to Comment 1.
    Comment 4: Clover/Lucky argues that it should not be penalized for 
failing to report the quantities of water, electricity and fuel 
consumed in the production process because the Department did not 
specifically ask the company to report quantities of indirect materials 
in its factors of production questionnaire. Rather, as stated in 
Clover/Lucky's case brief, the Department only requested factor inputs 
for the following: (A) Direct Materials; (B) Direct Labor; (C) Factory 
Overhead; (D) Selling, General and Administrative Expenses; (E) Other; 
and (F) Packing. Therefore, the Department cannot not fault Clover for 
failing to report information that was not fairly requested, citing 
Koyo Seiko Company, Ltd. and Koyo Corporation of U.S.A. v. The United 
States, 92 F.3rd 1162, 1168 (Fed. Cir. 1986). Clover/Lucky argues 
further that since the Department verified Clover's total value of 
electricity and fuel consumption against financial statements and 
vouchers which contained both quantities and values of electricity and 
fuel consumption, it could just as well have compiled the total 
quantities of energy used.
    Department's Position: We disagree with respondent. Because the 
prices of materials and inputs in an NME are not considered valid for 
calculation purposes, the Department requires respondents to report the 
amount, rather than the value, of materials consumed in the production 
process. Although the questionnaire did not specifically include 
``indirect materials'' or ``energy'' in the list of factor input 
categories, it is clear that such items are covered by the Department's 
questionnaire. The list of requested information, with respect to the 
factors of production, is broad and all-inclusive--it includes all the 
major categories involved in production as well as a catch-all category 
(i.e., ``Other''). Indirect materials and energy consumed in the 
production process normally fall under Factory Overhead, the very 
category Clover/Lucky used when reporting its expenses for electricity, 
water and fuel (rather than the requested quantities for these same 
three items). However, these inputs could have just as easily been 
categorized as Other, or in certain cases, if applicable, Direct 
Materials. All three of these categories were listed by the Department 
in its questionnaire. Therefore, it cannot be construed that the 
information asked for at verification was unfairly requested.
    As to whether the Department could have gathered the information at 
verification from financial documents or invoices, again, respondent is 
asking the Department to take on the responsibility of creating the 
company's response at verification. As discussed previously, it is the 
responsibility of the respondent, and not of the Department, to create 
a sufficient record in the administrative review. Tianjin Machinery I/E 
Corp. v. United States, 806 F. Supp. 1008, 1015 (CIT 1992). The Court 
has held that the Department ``is not required to . . . recalculate a 
respondent's submission to develop an accurate response.'' Tatung Co., 
v. United States, 18 CIT at 1142 n.3, citing Chinsung Indus. Co. v. 
United States, 705 F. Supp. 598, 601-02 (1989).
    Comment 5: Clover/Lucky contests the Department's statement in the 
verification report that there was an extremely large number of 
typographical errors in the reported quantities of steel purchases. 
Clover/Lucky also claims that the statements in the verification report 
that the company was unable to reconcile the quantity of steel 
requisitioned for production with inventory withdrawals, and that it 
was also unable to substantiate its reported per unit quantities of 
steel, are incorrect. The company claims that much of the steel 
information was verified and that those items that did not verify were 
not substantial and would not materially affect the company's response.
    Department's Position: We disagree with respondent. At 
verification, we found a number of discrepancies with respect to both 
steel purchases and steel consumption. From a small sample of selected 
invoices, the Department discovered typographical errors resulting in 
the under reporting of individual steel purchases in two cases by 22 
and 43 percent, the over reporting of individual steel purchases by 222 
percent in another, and the misclassification of one purchase's steel 
thickness. Because at verification the Department is only able to 
verify information through spot-checking, where we find discrepancies 
in the subset that is actually tested, we must judge the effect of such 
discrepancies that are randomly revealed on the unexamined portion of 
the response. See, e.g., Antifriction Bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof From France, et. al.; Final Results 
of Antidumping Duty Administrative Review, 62 FR 2081 (January 15, 
1997).
    Further, Clover/Lucky incorrectly concludes that the reported net 
discrepancy is inconsequential because it is small when compared to 
total reported steel purchases. In fact, the figure in the verification 
report was based on an examination of only a small portion of the steel 
purchases (those with a thickness of 4 mm), not all steel purchases and 
includes errors in both directions. Because at verification we examined 
a subset of steel purchases and found discrepancies in the reporting 
with respect to this subset, the Department must attribute to all of 
the steel purchases these same discrepancies. See Belmont Industries v. 
United States, 733 F. Supp. 1507, 1508 (CIT 1990); see also Monsanto 
Co. v. United States, 698 F. Supp. 275, 281 (CIT 1988). Therefore, the 
figure understates the impact of the

[[Page 54829]]

discrepancies, even when properly compared to 4mm steel purchases.
    Problems also arose with respect to the verification of steel 
consumption. The Department was unable to verify the reported ratio for 
steel scrap, which, because of its significance in the manufacture of 
POS cookware, is an important factor in determining total steel 
consumption. The spot check of departmental steel requisitions to 
inventory withdrawals showed a discrepancy of approximately seven 
percent that the company was unable to account for.
    The Department faced similar problems in its verification of the 
per unit quantities of steel used in the production of cooking ware 
that were reported in the response. The company submitted theoretical 
quantities based on an equation it developed using the specific density 
of steel. As to the statement in the verification report which noted no 
discrepancies between the reported per unit steel amounts and the 
method used by the company to calculate these amounts (cited by 
respondent as support for their conclusion that the problems in this 
area were insignificant), the only conclusion that can be drawn from 
that statement is that the company did not make any mathematical errors 
in its calculations, nor any transcription errors when typing this 
figure in the response. As such, the Department's statement in its 
verification report that it found no discrepancies between the reported 
per unit steel amounts and the method respondent used to calculate 
these reported figures has no bearing on either the accuracy of the 
method the company chose to estimate its per unit steel consumption or 
the figures in its response. The fact remains that the company could 
not corroborate the calculated theoretical per unit figures with 
sampled actual weight readings or support the figures used in the per 
unit calculations with the measurements from the technical drawings 
that the company claimed as supporting documentation.
    The discrepancies, the errors in reporting and the inability to 
reconcile the figures reported in the response with supporting 
documentation, demonstrate that the company's response with respect to, 
not only its purchases, but also its consumption of steel, the primary 
material input in the POS production process, cannot be relied upon.
    Comment 6: With respect to depreciation expenses regarding certain 
fixed assets, Clover/Lucky argues it did not create ``fixed asset 
cards'' (instead of a fixed-asset ledger, Clover records all its asset-
related information on fixed asset cards) for its equipment at the time 
they were installed because the cards are only required to be created 
during the first fiscal year period. Further, although Clover admits 
that it had no system in place to show ownership of the molds,\2\ it 
contends that the Department could have examined loan documents to 
determine the identity of the fixed assets in question. Moreover, 
Clover/Lucky claims that its technicians know the identity of the asset 
by merely looking at it. According to respondent, the Department could 
have reviewed the loan documents and successfully verified this section 
of the response if it had allowed sufficient time for verification.
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    \2\ Certain molds were among the fixed assets which the 
Department selected for verification of depreciation expenses.
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    Department's Position: The Department examined depreciation 
expenses in this case because of Clover/Lucky's claim that the POS 
cooking ware industry constituted a market-oriented industry (MOI). 
Since the Department found that the POS cooking ware industry does not 
constitute an MOI (see Department's position to Comment 9), the issue 
raised by respondent is moot.
    Comment 7: Clover/Lucky argues that even if the Department rejects 
Clover's factors of production information in this case, it should 
determine the foreign market value (FMV) based on Lucky's home market 
(Hong Kong) sales or third country sales.
    Petitioner disputes Clover/Lucky's argument, claiming that Clover/
Lucky is, in effect, challenging the Department's preliminary finding 
that the POS cooking ware industry does not constitute a market-
oriented industry. Petitioner points out that Clover has provided no 
information that prices for significant inputs are not controlled by 
the PRC government. Petitioner argues that the Department must, 
therefore, calculate FMV using the factors of production methodology.
    Department's Position: We disagree with respondent that FMV in this 
case can be determined on the basis of Lucky's home market or third 
country sales. In order for FMV to be based on Lucky's home market or 
third country prices (which respondent, in its case brief, now requests 
for the first time in this proceeding), Lucky would have had to allege 
and demonstrate that it had third-country reseller status. Further, it 
would have to meet the requirements of section 773(f) of the Act in 
order to have its sales, either home market or third country, used as 
the basis for FMV. Lucky made no such claim in this proceeding. 
Moreover, issues of relatedness aside, since Clover knows at the time 
of the sale the final destination of the merchandise, Lucky does not 
qualify as a reseller from an intermediate country in any event. (See 
Clover/Lucky's June 20, 1995 Questionnaire Response (Public Version) 
which, at page 20, states that ``Clover is aware of the ultimate 
destination of the POS cookware because the destination is indicated on 
the outer carton.'') Moreover, given the relationship between Lucky and 
Clover, we do not consider that there exists a ``purchase'' from the 
PRC production facility by Lucky within the meaning of section 773(f). 
(See Preliminary Determination of Sales at Less than Fair Value: 
Disposable Pocket Lighters From the People's Republic of China, 59 FR 
64191, 64194 (December 13, 1994)). Thus, even had Lucky made a proper 
claim that it was a third country reseller within the meaning of 
section 773(f) of the Act, the record evidence of this case would not 
support such a determination. Therefore, Lucky's prices to customers in 
Hong Kong or third countries could not be used as the basis for FMV--
only Clover's factors of production information could form the basis of 
FMV, the method selected by the Department in this case. Moreover, had 
we considered using Lucky's prices in Hong Kong or to third countries, 
we would normally compare those prices to the cost of the merchandise 
based on factors of production, because the merchandise was produced in 
an NME country. We could not have performed this test, because we could 
not verify the factors of production. As stated previously, as a result 
of the failure of verification with respect to Clover's factors of 
production information, the Department had to resort to the best 
information available in this case under section 776(b) of the Act.
    With respect to petitioner's rebuttal to respondent's claim, 
petitioner mistakenly frames respondent's claim as one of advocating 
the use of PRC prices to determine FMV (i.e., petitioner raises the 
market-oriented industry discussion). Respondent, however, is not 
arguing that the Department use Clover's price, but, instead, that the 
Department use Lucky's home market or third country prices to determine 
FMV. As respondent itself states on page 19 of its case brief, ``Lucky 
and Clover are not requesting that Commerce use Clover's prices.''
    Comment 8: Clover/Lucky argues that the Department should conduct a 
supplemental verification and reexamine the information submitted in

[[Page 54830]]

its questionnaire response. This would allow the Department sufficient 
time to explore the alternative verification methods enumerated by 
Clover/Lucky in its comments.
    Petitioner, however, contends that there is no basis to conduct a 
re-verification, since Clover/Lucky provided no evidence that 
Department's verification was flawed. Petitioner points out that the 
CIT ruled that the Department ``is not required to re-verify 
information submitted after verification, or recalculate a submission 
to develop an accurate response.'' Tatung Co. v. United States, 18 CIT 
at 1142 n.3, citing Chinsung Indus. Co. v. United States, 705 F. Supp., 
at 601-02.
    Department's Position: We disagree with respondent. Conducting a 
second verification, particularly after a company fails its first 
verification, would be an extraordinary action. To do so would signal 
to respondents that a failed verification can be overcome, which would 
undermine both our ability to obtain complete and accurate information 
from Clover/Lucky in time to conduct proper verifications and to 
complete reviews in a timely manner as required by the Act. As in the 
case cited by petitioner, the Department is not required to conduct a 
supplemental verification. The CIT has ruled that ``Due to stringent 
time deadlines and the significant limitations on Commerce's resources 
it is vital that accurate information be provided promptly to allow the 
agency sufficient time for review.'' Ceramica Regiomontana, S.A. v. 
United States, 10 CIT 399, 406, 636 F. Supp, 961, 967 (1986).
    Although the Department has conducted supplemental verifications in 
the past (See, e.g., Cyanuric Acid and its Chlorinated Derivatives from 
Japan; Final Results of Antidumping Duty Administrative Review, 51 FR 
45495, 45496 (December 19, 1986); Cell Site Transceivers from Japan; 
Final Determination of Sales at Less Than Fair Value, 49 FR 43080, 
43084 (October 26, 1984); High Power Microwave Amplifiers and 
Components Thereof from Japan, 47 FR 22134 (May 21, 1982) (final 
determination of sales at less than fair value), and; Fireplace Mesh 
Panels from Taiwan; Final Determination of Sales at Less Than Fair 
Value, 47 FR 15393, 15395 (April 9, 1982)), in each of these cases, re-
verification was conducted pursuant to requests for additional 
information requested by the Department, or due to a particular 
emergency that arose in the case. In contrast, Lucky/Clover's request 
is based primarily on general time constraints, constraints which must 
always be imposed on a verification. There is simply no reason for the 
Department to take the extraordinary measure in this case of conducting 
a supplemental verification.
    Comment 9: Clover/Lucky also argues that the Department should 
conduct a supplemental verification to redetermine that the POS 
cookware industry constitutes a market-oriented industry. Respondent 
claims that, at verification, the Department could verify that the 
company pays market prices for both labor and the PRC-sourced direct 
and indirect materials it uses in the production of cooking ware.
    Department's Position: We disagree with respondent. As discussed 
above, in determining whether an industry under examination constitutes 
a market-oriented industry, the Department examines the industry as a 
whole, not just the practices of the company or companies under 
investigation or review. (See Notice of Final Determination of Less 
Than Fair Value; Furfuryl Alcohol from the People's Republic of China, 
60 FR 22544 (May 8, 1995).) Clover/Lucky has not demonstrated that the 
POS cooking ware industry constitutes a market-oriented industry in the 
PRC, and we have adopted our preliminary determination with respect to 
this issue for these final results. The examination of Clover's 
purchases from its non-market suppliers and the wages it pays its 
employees is insufficient to conclude that the POS cooking ware 
industry as a whole is a market-oriented industry.
    For a more detailed discussion of the Department's preliminary 
determination that the POS cooking ware industry does not constitute a 
market-oriented industry, see Memorandum to Barbara E. Tillman, 
Director of the Office of CVD/AD Enforcement VI, dated January 17, 
1997, ``Market-Oriented Industry Request in the 1993-1994 
Administrative Review of POS Cooking Ware from the People's Republic of 
China,''which is a public document on file in the Central Records Unit 
(room B-099 of the Main Commerce Building).

Final Results of Review

    Based on our analysis of comments from interested parties, we 
determine that no changes to the preliminary results are warranted for 
purposes of these final results. The dumping margins for each company 
under review are:

------------------------------------------------------------------------
                  Manufacturer/Exporter                    Rate(percent)
------------------------------------------------------------------------
Clover/Lucky.............................................       66.65   
PRC-Wide Rate (including China Light)....................       66.65   
------------------------------------------------------------------------

    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between United States price and FMV may vary from the 
percentages stated above. The Department will issue appraisement 
instructions directly to the U.S. Customs Service.
    Since the final results for the more recent review period, December 
1, 1994 through November 30, 1995 (1995 review period) were published 
on June 17, 1997 (62 FR 3275), the cash deposit instructions contained 
in that notice will apply to all shipments to the United States of 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after June 17, 1997. The dumping margins established 
for the period December 1, 1993 through November 30, 1994 period will 
have no effect on the cash deposit rate for any firm except for the 
company China Light. For China Light, which did not respond to our 
questionnaire, and was not subject to the 1995 review, the cash deposit 
rate will be the PRC-wide rate for the 1993-1994 period.
    These deposit rates shall remain in effect until publication of the 
final results of the next administrative review.

Notification to Interested Parties

    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d)(1). 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 administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.


[[Page 54831]]


    Dated: October 16, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-27990 Filed 10-21-97; 8:45 am]
BILLING CODE 3510-DS-P