Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61271

result of the withdrawal of the request

for administrative review by the

importer.

EFFECTIVE DATE: November 17, 1997.

FOR FURTHER INFORMATION CONTACT:

Todd Peterson or Thomas Futtner,

Office of AD/CVD Enforcement, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW., Washington, DC 20230;

telephone (202) 482–4195 or (202) 482–

3814.

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 codified at 19 CFR Part 353

(April 1, 1997).

SUPPLEMENTARY INFORMATION:

Background

The Department of Commerce (the

Department) published an antidumping

duty finding on melamine from Japan

on February 2, 1977 (42 FR 6866). On

February 3, 1997, the Department

published in the Federal Register a

notice of ‘‘Opportunity to Request an

Administrative Review’’ of the

antidumping duty finding on melamine

from Japan (62 FR 4978). On February

7, 1997, an importer, Taiyo America,

Inc., requested an administrative review

of two producers/exporters of the

subject merchandise to the United

States. In accordance with 19 CFR

353.22(c), we initiated the review on

March 18, 1997 (62 FR 12793) covering

the period of February 1, 1996 through

January 31, 1997. On September 2, 1997,

the importer withdrew its request for

administrative review.

Termination of Review

Pursuant to 19 CFR 353.22(a)(5) of the

Department’s regulations, the

Department may allow a party that

requests an administrative review to

withdraw such request not later than 90

days after the date of publication of the

notice of initiation of the administrative

review. The Department may extend

this time limit if the Department decides

it is reasonable to do so.

This request for withdrawal was made

early in the review process and there

were no requests for review from other

interested parties. Therefore, the

Department is terminating this review.

This notice is in accordance with

section 353.22(a)(5) of the Department’s

regulations (19 CFR 353.22(a)(5)).

This notice serves as a reminder to

parties subject to administrative

protective orders (APOs) of their

responsibility concerning disposition of

proprietary information disclosed under

APO in accordance with § 353.34(d) of

the Department’s regulations. Timely

written notification of the return or

destruction of APO materials, or

conversion to judicial protective order,

is hereby requested. Failure to comply

with the regulations and terms of an

APO is a sanctionable violation.

Dated: October 30, 1997.

Richard W. Moreland,

Acting Deputy Assistant Secretary, Group II

Import Administration.

[FR Doc. 97–30145 Filed 11–14–97; 8:45 am]

BILLING CODE 3510–DS–M

DEPARTMENT OF COMMERCE

International Trade Administration

[A–429–601]

Final Results of Antidumping Duty

Administrative Review of Solid Urea

From the Former German Democratic

Republic

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce

ACTION: Notice of final results of

antidumping duty administrative review

SUMMARY: On July 8, 1997, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on solid

urea from the Former German

Democratic Republic (GDR). The review

covers one manufacturer/exporter, SKW

Stickstoffwerke Piesteritz GmbH

(SKWP), and the period July 1, 1995

through June 30, 1996. We gave

interested parties an opportunity to

comment on our preliminary results.

EFFECTIVE DATE: November 17, 1997.

FOR FURTHER INFORMATION CONTACT:

Nithya Nagarajan or Steven Presing,

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 indicated,

all citations to the Department’s

regulations are to the regulations, as

codified at 19 C.F.R. part 353 (1996).

Background

On July 8, 1996, the Department

published in the Federal Register (61

FR 35712) a notice of ‘‘Opportunity to

Request Administrative Review’’ for the

July 1, 1995 through June 30, 1996,

period of review (POR) of the

antidumping duty order on solid urea

from the former GDR. In accordance

with 19 CFR 353.22, the Ad Hoc

Committee of Domestic Nitrogen

Producers (petitioners) requested a

review for the aforementioned period.

On August 15, 1996, the Department

published a notice of initiation of

antidumping review (61 FR 42416,

42417). The Department is conducting a

review of this respondent pursuant to

section 751 of the Act.

On July 8, 1997, the Department

published the preliminary results of

review ( 62 FR 36492). The Department

has now completed the review in

accordance with section 751 of the Act.

Scope of Review

Imports covered by this review are

those of solid urea. At the time of the

publication of the antidumping duty

order, such merchandise was

classifiable under item 480.30 of the

Tariff Schedules of the United States

Annotated (TSUSA). This merchandise

is currently classified under the

Harmonized Tariff Schedule of the

United States (HTS) item number

3102.10.00. These TSUSA and HTS item

numbers are provided for convenience

and Customs purposes only. The

Department’s written description of the

scope remains dispositive for purposes

of the order.

Analysis of Comments Received

Comment 1: Affiliation. Petitioners

argue that the Department must adjust

SKWP’s cost of production to reflect an

appropriate amount for depreciation of

production equipment transferred to

SKWP by Stickstoffwerke AG

Wittenberg-Piesteritz (STAG).

Petitioners contend that STAG is under

the ‘‘control’’ of SKWP and that in

accordance with section 771(33) of the

Act, the Department must find SKWP

and STAG to be ‘‘affiliated’’ persons.

According to petitioners, the

Department is required by sections

773(f)(2) and (3) of the Act to disregard

STAG’s ‘‘transfer’’ price to SKWP of the

production equipment and substitute, in
61272 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

its place, the higher of market value or

cost.

Respondent insists that there is no

evidence of affiliation between SKWP

and STAG. Respondent maintains that

the production equipment was

purchased at a market price and that the

Department verified SKWP’s reported

depreciation expense. Respondent adds

that the purchase transaction between

SKWP and STAG was scrutinized by the

German government and independent

auditors, and found to be properly

valued through arm’s-length

negotiations.

Department’s Position: We disagree

with petitioners’ contention that the

purchase of the production equipment

was a transaction between affiliated

persons. Consequently, for the final

results of this review, we have not

adjusted SKWP’s reported depreciation

expense pursuant to sections 773(f)(2)

and (3) of the Act.

In 1993, SKWP and STAG concluded

an agreement whereby SKWP purchased

certain assets from STAG. These assets

consisted largely of the accounts

receivable, inventories, and production

equipment from a nitrogen production

facility owned by STAG. As part of this

contractual arrangement, SKWP also

assumed responsibility for certain debts

and other obligations of STAG’s

nitrogen facility, including accounts

payable and costs associated with old,

environmentally hazardous sites

formerly owned by STAG. In

accordance with German generally

accepted accounting principles (GAAP),

the total purchase price paid by SKWP

determined the cost of the assets

acquired by the company. Because the

degree of convertibility to cash was

taken into consideration in allocating

the purchase price, much of that price

was allocated to accounts receivable and

other liquid assets with very little of the

price allocated to the capital equipment

acquired in the transaction.

In addition to the nitrogen facilities,

SKWP also acquired from STAG as part

of the purchase transaction, a five

percent interest in VCE

Vertriebsgesellschaft fur Chemische

Erzeugnisse Piesteritz GmbH (VCE), a

distributor of STAG’s (now SKWP’s)

urea products. STAG continued to hold

the remaining 95 percent of VCE’s

shares. At the same time, SKWP and

STAG entered into a five-year agreement

under which VCE became the exclusive

distributor of SKWP’s urea products and

each company agreed to share in the

profits or losses of VCE in accordance

with their respective interests in the

distributor. As part of this contractual

arrangement, STAG also agreed that

SKWP would assume complete

operational control over VCE, providing

all management and sales personnel as

well as accounting, management and

support staff. Further, SKWP assumed

absolute control over all pricing and

production decisions at VCE. Thus,

STAG has, by contract, given up

whatever control over VCE it would

otherwise have by virtue of its

ownership interest.

Petitioners cite, as evidence of

affiliation between SKWP and STAG,

the profit and loss sharing arrangement

and SKWP’s operational control over

VCE. Indeed, petitioners assert, ‘‘STAG

is wholly ‘reliant’ upon SKWP for

income (through VCE), and STAG’s

pricing of assets sold to SKWP have

affected the cost of the subject

merchandise, as well as future income,

to STAG.’’

For the following reasons, we cannot

agree with petitioners. First, the

temporary profit and loss agreement

between SKWP and STAG is part of a

larger asset purchase arrangement

between two companies. It is part of the

consideration that STAG received from

SKWP for the assets. Therefore, as

discussed in greater detail in response

to Comment 2, below, we consider any

profits accruing to STAG under the

agreement to be part of the arm’s-length

purchase price paid by SKWP for the

assets it acquired.

Second, petitioners do not allege (and

nothing in the record suggests) that

SKWP and STAG were affiliated at the

time of the sale of the assets. STAG may

be dependent upon SKWP to act in good

faith and to pay whatever additional

monies are owed for the assets, but that

does not mean STAG and SKWP are

‘‘affiliated’’ within the meaning of the

statute. STAG did not have to sell its

equipment and other assets to SKWP.

SKWP was not in a position to dictate

the terms of the sale. Rather, each

company was pursuing its own

economic interests and those interests

were in no way mutual. STAG’s interest

was to obtain the highest price possible

for its assets at the time of the sale. Of

its own choosing, it accepted an initial

payment and the potential of additional

payments over a five-year period.

Nothing about this transaction put

SKWP in a position to ‘‘legally or

operationally * * * exercise restraint or

direction’’ over STAG when it came to

the price paid for the production

equipment.

Third, there is no evidence on the

record to suggest, as petitioners

contend, that STAG would understate

the value of the capital equipment that

it sold SKWP in the hopes that SKWP,

which controls the price and volume of

urea products sold through VCE, would

obtain greater profits on sales made by

VCE. In fact, contrary to petitioners’

assertions, STAG’s pricing of the assets

sold to SKWP does not affect directly

the level of VCE’s profits since VCE’s

costs (and thus its’ profits) are

determined based on the price SKWP

charges VCE for urea and not on

SKWP’s production costs.

Petitioners also rely on two other

points to advance their argument that

SKWP and STAG are affiliated persons.

First, petitioners note that VCE’s

financial results are consolidated with

those of SKWP. According to

petitioners, this would only be possible

if STAG’s 95 percent interest was

indistinguishable from SKWP’s interest.

Second, petitioners consider STAG’s

agreement to absorb certain personnel

costs associated with the purchase of its

assets to be an indication of affiliation

between STAG and SKWP.

In response to the first point, the

consolidation of financial statements is

done for accounting purposes when a

parent company controls the operations

of a subsidiary entity. In the present

case, the consolidation of VCE’s

financial statements into SKWP’s is

merely an indication that SKWP

controls VCE, not that SKWP controls

STAG (or that both companies control

VCE). As explained above, STAG

contracted away its right to control VCE

as part of the five-year distribution

agreement.

In response to the second point,

STAG’s commitment to absorb certain

personnel costs resulted from the arm’slength negotiations that took place

between the parties. Stated differently,

absorption of these costs was part of the

quid pro quo that enabled STAG to

obtain the highest price possible for its

assets at the time of sale.

In conclusion, the Department finds

no evidence to consider STAG and

SKWP to be affiliated within the

meaning of section 771(33) of the Act,

and for purposes of these final results,

will continue to treat them as parties to

an arm’s-length transaction in relation

to the sale and acquisition of SKWP’s

production equipment.

Comment 2: Profit Adjustment.

Petitioners argue that even if the

Department were to find STAG and

SKWP unaffiliated, we should account

for STAG’s share of VCE’s profit or loss

as compensation for the assets

transferred to SKWP, and add the value

of these profits and losses to the

reported costs of production.

Respondents counter that there is no

statutory authority to add profit to a

COP calculation, and these profits and

losses are properly excluded from the

reported costs.
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61273

Department Position: We agree, in

principle, with petitioners that any

profits that accrue to STAG under its

profit and loss sharing arrangement with

SKWP should be considered part of the

purchase price of the assets acquired by

SKWP from STAG. As discussed in our

response to comment 1, above, the fiveyear arrangement between STAG and

SKWP to share in the profits and losses

of VCE, a distributor of SKWP’s urea

products, was concluded as an integral

part of the asset purchase agreement

between the two companies. Under the

arrangement, SKWP agreed to forego its

share of VCE’s earnings from urea sales

as part of the compensation it paid to

STAG for the assets acquired. As such,

any profits paid to STAG under the

arrangement can reasonably be viewed

as part of the purchase price for the

assets.

We note, however, that evidence on

the record shows that from 1993 to 1996

(the first three years of the arrangement),

VCE incurred only losses on its sales of

SKWP’s urea products. Thus, as of the

POR, STAG has not received any

additional compensation for the assets it

sold beyond that paid by SKWP at the

time the agreement was concluded. In

addition, we note that, were VCE to earn

profits in the final two years of the

agreement, such profits would first be

netted against VCE’s accumulated losses

(in accordance with the arrangement)

before distribution to STAG.

Finally, as a theoretical matter, we

disagree with petitioners that all profits

paid to STAG under the arrangement

should go to increase the value of the

production equipment purchased by

SKWP. Rather, consistent with SKWP’s

GAAP accounting for all of the assets it

acquired from STAG, any additional

compensation in the form of VCE profits

paid to STAG would first be applied to

other, more liquid assets to reduce any

remaining difference between their

value at the time of purchase and the

amount of the purchase price allocated

to them.

Comment 3: Renovation Project.

Petitioners argue that the Department

should increase SKWP’s cost of

production to account for amounts

received from the German government

to offset expenses associated with an

ongoing renovation project at its

nitrogen facility. According to

petitioners, the Department routinely

considers renovation costs to be part of

the cost of production. In this regard,

petitioners highlight the fact that SKWP

has accounted for costs associated with

the project as part of the company’s

operating costs. Citing Certain Iron

Metal Castings from India, 46 FR 28463

(1981), petitioners contend that it is the

Department’s long-standing practice not

to reduce costs to reflect the benefits

received from government subsidies.

SKWP argues that, because it did not

incur the renovation costs for which the

subsidies were granted, these costs

could not be part of the company’s cost

of production.

Department’s Position: We disagree

with petitioners. Costs associated with

the renovation of SKWP’s production

facility were not incurred by SKWP. The

costs in question were funded by the

German government through

reimbursement which was recorded in

the audited financial statements of

SKWP.

Contrary to petitioners’ apparent

belief, the Department’s long-standing

practice is to base COP upon a

producer’s actual costs and not to

restate such costs to exclude

government payments, linked to specific

costs. See, e.g., Red Raspberries from

Canada; Final Determination of Sales at

Less Than Fair Value, 50 FR 19768

(1985); Certain Iron Construction

Castings from India; Final

Determination of Sales at Less Than Fair

Value, 51 FR 9486, 9488 (1986). This

practice has been upheld by the courts

on many occasions. See, e.g., United

States v. European Trading Company,

27 CCPA 289, C.A.D. 103 (1940);

Washington Red. Raspberry Comm. v.

United States, 657 F. Supp. 537 (CIT

1987); Alhambra Foundry Co., Ltd. v.

United States, 685 F. Supp. 1252 (CIT

1988). Indeed, in the one case cited by

petitioners, the very practice at issue

was upheld by the court. See Al Tech

Specialty Steel Corp. v. United States,

10 CIT 743, 751, 651 F. Supp. 1421

(1986) (court refused to overturn

calculation of ‘‘fixed costs merely

because the adjustment is based on

subsidies’’).

Comment 4: Special Depreciation.

Petitioners argue that the Department

should increase SKWP’s reported

depreciation expense to account for

‘‘special’’ depreciation excluded from

COP and CV by the company.

Petitioners maintain that the

Department has a consistent practice of

including special depreciation items in

its calculation of respondent’s costs and

there is no justification for departing

from that practice in this instance.

SKWP insists that it properly

excluded special depreciation from the

COP and CV figures it submitted to the

Department. SKWP notes that the

special depreciation in question relates

to tax-basis depreciation granted by the

German government to companies

operating in the former GDR and, thus,

represents no real additional cost to the

company and should not be included in

the cost of production. SKWP adds that

actual depreciation (i.e., not tax-related

depreciation) is included in SKWP’s

fully-absorbed cost of production.

Department’s Position: We disagree

with SKWP in that, for purpose of

computing COP and CV, we cannot

simply ignore the amount that the

company recorded as ‘‘special’’

depreciation expense during the POR.

Each year in its accounting books and

records, SKWP recognizes what it

maintains is ‘‘normal’’ depreciation

expense for the year. In addition,

because SKWP operates in the former

GDR, German tax law allows the

company to recognize a ‘‘special’’

depreciation expense in the year in

which an asset is purchased. Like

normal depreciation, the amount of the

special depreciation taken during the

year of acquisition reduces the

depreciable basis of the assets. Thus,

while the special tax depreciation may

be stated on an accelerated basis which

may or may not reflect the underlying

economic useful lives of the assets

purchased by SKWP, to ignore the

expense altogether, as SKWP suggests,

fails to recognize as a cost that portion

of each asset’s depreciable basis that is

written off as special depreciation in the

year of acquisition. SKWP has not

provided us with any alternative

method of recognizing an appropriate

amount for depreciation expense that is

based on the economic useful lives of

the assets purchased by the company.

Rather, SKWP’s position is that the

Department must exclude special

depreciation costs from COP and CV

because the amounts at issue do not

reflect what it calls ‘‘real’’ costs.

However, as described above, the

special depreciation expense amounts

recorded by SKWP do reflect actual

depreciation costs on an accelerated

basis. Therefore, absent any other

information on the record from which to

derive an alternative measure of

depreciation expense, we have included

SKWP’s special depreciation expense in

the company’s COP and CV.

Comment 5: Other Expenses Excluded

from SKWP’s Submitted Costs.

Petitioners claim that the Department

should include in SKWP’s COP and CV

figures certain costs reported by the

company in its financial statements.

Specifically, petitioners contend that

the Department should increase SKWP’s

reported costs for three expense items:

amounts incurred by the company for

environmental damages relating to

SKWP’s 100% owned affiliate,

Agrochemie Handelsgesellschaft GmbH

(Agrochemie); amounts incurred for the

demolition of certain plant facilities;
61274 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

and, costs relating to worker severance

pay.

SKWP argues that the amounts

reported in its financial statements for

environmental damages and demolition

costs were properly excluded from the

costs reported to the Department.

According to SKWP, expenses relating

to environmental damages caused by

Agrochemie were paid for by the

German government and, therefore, no

costs were actually incurred by the

company. With respect to amounts

reported for plant demolition, SKWP

contends that the facilities at issue were

not involved in the production of urea

and that these amounts, too, were paid

for by the German government.

Department’s Position: We agree with

petitioners and have adjusted SKWP’s

reported COP and CV figures to include

amounts for Agrochemie’s

environmental damages, demolition of

certain SKWP facilities, and worker

severance pay as reported in the

company’s financial statements. As part

of our cost verification, we reconciled

the total amount of costs reported by

SKWP in response to our antidumping

questionnaire to the costs reported in

the company’s audited financial

statements. Our reconciliation showed

that SKWP had excluded from its COP

and CV figures specific income

statement items relating to reserves

established for each of the three expense

items described above. Although the

record of this case shows that SKWP

received funds from the German

government to offset costs incurred by

the company for certain plant

renovations and for environmental

clean-up at its nitrogen facility, SKWP

failed to show that the receipt of these

funds was specifically related to either

the environmental damages caused by

Agrochemie or to the demolition costs at

issue. As petitioners note in their briefs,

in past cases, the Department has

accounted for expenses associated with

environmental clean-up by respondents

as part of the cost of production where,

as in this case, such expenses are

included in respondent’s financial

statements and reflect costs incurred

during the period of investigation or

review. See Final Determination of Sales

at Less Than Fair Value: Stainless Steel

Wire Rod from France, 58 FR 68865

(1993). With respect to SKWP’s

argument that the demolition costs

relate to non-urea facilities, our

understanding based on the evidence in

the record is that the amounts incurred

relate to the destruction of factory assets

for discontinued operations. As such,

we consider these costs to be related to

SKWP’s general operations and have

therefore included them in COP and CV.

Comment 6: Reported Costs.

Petitioners contend that SKWP has

reported the costs for only one type of

urea product and that a second, more

costly type of urea referred to as ‘‘konf.’’

in the verification exhibits, was

manufactured by SKWP during the POR.

Petitioners maintain that cost

verification exhibits do not support

SKWP’s contention that ‘‘konf.’’ urea is

actually bagged urea since these exhibits

show an amount for packing costs in the

cost center report for what SKWP claims

is bulk urea. Petitioners argue that the

Department must increase SKWP’s

reported COP and CV to reflect the

weighted-average cost for the two types

of urea produced by the company.

SKWP maintains that ‘‘konf.’’ urea is,

in fact, bagged urea, and that the

Department verified packing costs

associated with bagged urea as part of

its sales verification. SKWP adds that

the Department has factored the

company’s reported packing costs for

bagged urea into its COP analysis.

Department’s Position: We disagree

with petitioners that SKWP failed to

report the costs of a second type of urea

that it produced during the POR. SKWP

manufactures and sells urea in both

bulk form, called ‘‘lager lose,’’ and in

bagged form, or ‘‘konf.’’ In response to

the Department’s cost questionnaire,

SKWP reported the cost of urea in bulk

form only. The company reported the

additional packing costs it incurred for

bagged urea on a transaction-specific

basis in response to the Department’s

sales questionnaire. In performing our

COP test of SKWP’s home market sales,

we adjusted for the packing costs

associated with bagged urea by

deducting the reported amount from the

home market sales price before

comparing that price to the COP for bulk

urea. Thus, to compute a single

weighted-average cost for both bulk and

bagged urea, as petitioners advocate,

would result in an overstatement of

costs.

With respect to petitioners

observation that SKWP’s cost center

report for bulk urea shows an amount

for packing costs, we note the fact that

these amounts represent insignificant

costs of less than one DEM per metric

ton that are associated with packing

bulk urea for sale. SKWP included these

costs in its reported COP and CV

amounts for bulk urea.

Comment 7: Labor Costs. Petitioners

contend that a substantial portion of

costs associated with SKWP’s labor

force are unaccounted for in the

company’s reported COP. In support of

their claim, petitioners point to an

agreement by SKWP to employ a

minimum number of the workers

formerly employed by STAG.

Petitioners note the fact that, during the

POR, the actual number of workers

employed by SKWP exceeded the

company’s commitment level.

According to petitioners, because SKWP

developed its accounting systems

subsequent to the date of the

antidumping duty order, the company

may have inappropriately assigned (or

absorbed) excess personnel costs in

areas responsible for producing nonsubject merchandise, thereby artificially

understating labor costs for urea.

As further evidence of their claim that

SKWP may have understated its labor

costs for the subject merchandise,

petitioners assert that ammonia

production reports obtained by the

Department during its cost verification

show what petitioners believe is a small

percentage of the company’s total

workforce assigned to production of the

input, and that there is no other

evidence on the record to show the

number of urea production workers.

SKWP argues that the Department

thoroughly verified the company’s cost

centers and found that all labor costs

had been appropriately allocated and

accounted for. SKWP maintains that it

is puzzled by petitioners’ claim with

respect to the number of workers in its

ammonia production facility, noting

that such facilities are not laborintensive operations. SKWP also points

out petitioners’ own admission that

personnel expenses are also accounted

for through factory overhead and

general and administrative (G&A)

expenses.

Department’s Position: We disagree

with petitioners assertion that the

analysis contained in their brief

provides any basis for us to believe that

SKWP may have understated its labor

costs for urea. Rather, based on the

results of our verification, we find that

SKWP properly accounted for all labor

costs incurred to produce the subject

merchandise. Thus, for the final results

of this review, we have not adjusted

SKWP’s labor costs as argued by

petitioners. In a pre-verification letter to

the Department dated April 2, 1997,

petitioners expressed their concern that,

in light of SKWP’s commitment to

employ a minimum number of former

STAG employees, the variable overhead

figure reported by SKWP appeared low.

Based on this, petitioners requested

that, as part of verification, ‘‘SKWP

should explain how it has accounted for

all labor costs.’’ During verification,

SKWP did, in fact, provide a full

explanation of the methodology it used

in its normal books and records to

account for labor costs incurred to

produce both subject and non-subject
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61275

merchandise. Moreover, SKWP

personnel demonstrated how that

methodology was used to calculate the

COP and CV data submitted to the

Department. As described in SKWP’s

cost response and in the Department’s

cost verification report, SKWP charges

labor costs, as well as other production

costs, to a series of cost centers by cost

type. The amounts charged to each ‘‘cost

type-cost center’’ are then distributed in

a multi-stage allocation to ‘‘process-cost

centers’’ maintained by SKWP for both

subject and non-subject merchandise.

As explained in the Department’s cost

verification report, Department verifiers

examined how production costs

incurred within each of the various cost

type-cost centers were allocated to the

various process-cost centers under

SKWP’s accounting system. See Cost

Verification Report at page 21.

In their case brief, petitioners cite to

a list of participants at the cost

verification as evidence that the

Department verifiers examined only the

labor costs incurred by SKWP in the

production of ammonia and urea, and

neglected to review the labor allocations

to non-subject merchandise. Moreover,

petitioners argue that verification

exhibits collected by the Department

show only the number of workers

employed by SKWP at its ammonia

production facility. While we do not

believe that the participants list cited by

petitioners provides any indication of

the testing performed during

verification, the Department’s cost

verification report does explain that the

verifiers examined carefully amounts

charged to, and allocated from, the

various cost type-cost centers, including

amounts incurred for labor costs. With

respect to the ammonia production

reports cited by petitioners, the

verification report makes clear that

these documents represent examples of

the supporting documentation reviewed

by the verifiers as part of their testing of

SKWP’s cost type-cost centers. As stated

in the report, although the Department

verifiers reviewed costs recorded in, and

charged from, each category of cost

type-cost center (including those in

which SKWP recorded its labor costs),

they did not collect as verification

exhibits copies of all cost center reports.

In fact, to have collected copies of all

documents examined during

verification would have placed an

extreme and unnecessary burden on the

respondent in this case.

Comment 8: Factory Overhead.

Petitioners note that SKWP’s reported

factory overhead costs contain an

adjustment that reduces a portion of

those costs. Petitioners contend that

there is no evidence on the record

concerning the nature of this

adjustment. According to petitioners, if,

upon re-examining the record of this

case, the Department finds that the

amount of the adjustment is not

justified, it should increase SKWP’s

factory overhead costs accordingly.

SKWP asserts that petitioners are

overreaching when they request that the

Department adjust the company’s

factory overhead costs for an offset that

is included among thousands of other

numbers contained in the record of this

case. SKWP argues that its factory

overhead costs should be accepted as

reported since those amounts were

verified by the Department.

Department’s Position: For the final

results of this review, we have not

adjusted SKWP’s factory overhead costs

for the offset. The offset represents

miscellaneous income earned by

SKWP’s Cunnersdorf research facility

for projects conducted on behalf of

outside parties. We did not describe the

offset in our cost verification report

simply because, relative to the

production costs at issue in this case

and the complexity of SKWP’s cost

accounting system, it is insignificant.

Technically, because the work

conducted was not so significant as to

represent a separate line of business

(and, thus, be excluded from COP and

CV altogether), both the revenues from

the projects and the associated R&D

costs would more appropriately be

considered part of G&A expense.

However, in this instance,

reclassification of these amounts would

have little, if any, effect on SKWP’s

submitted costs. Thus, as noted above,

we have not made any adjustments to

SKWP’s reported factory overhead costs.

Comment 9: Sales Reporting.

Petitioners argue that SKWP only

provided sales information on certain

types of urea without consulting the

Department. Petitioners insist that the

Department should affirm in the final

determination the inappropriateness of

this unilateral modification.

Respondent argues that they reported

all home market sales of identical

merchandise rather than sales of the

foreign like product. They claim that

they did this in accordance with the

statute at Section 773(a)(1) and Section

771(16)(A). Respondent also argues that

the Department implicitly

acknowledged this requirement when it

advised SKWP that its omission of sales

of non-identical merchandise may result

in the use of facts available. Due to the

fact that the Department’s analysis

indicates that only sales of identical

merchandise were necessary for

comparison purposes, petitioners’

concerns are not justified.

Department’s Position: During the

review, SKWP only provided home

market sales information of identical

merchandise. In an October 30, 1996,

letter to the respondent, the Department

notified SKWP that failure to report the

entire universe of the foreign like

product may result in the Department

using facts available, particularly if the

Department determined after further

analysis and verification of all relevant

data that the omitted sales were

necessary for comparison purposes. As

evidenced by the preliminary results of

review, the reported home market sales

database of identical merchandise was

adequate for making comparisons to the

U.S. sales database and the omitted

sales were not necessary for comparison

purposes.

Comment 10: Model Match.

Petitioners argue that SKWP

inappropriately added a product

characteristic in the model matching

section and has not justified this

modification. Petitioners argue that

although there is no difference in the

material costs of the two products, there

is a difference in selling price.

Additionally, petitioners argue that due

to the fact that the U.S. sale is of one

particular type of urea, SKWP’s

reporting methodology would cause the

Department to select only certain home

market sales for comparison purposes.

Therefore, the Department should reject

SKWP’s reporting methodology.

Alternatively, petitioners argue that if

the Department accepts this SKWP’s

reporting methodology then it should

adjust the cost for the second type of

urea to ensure that all costs for all

models are properly accounted for.

Respondent rebuts petitioners’

argument by stating that the

Department’s questionnaire allows for

the modification of the product

characteristics if necessary. Respondent

also objects to petitioners claim that the

modification of the physical

characteristics resulted in the

comparison of U.S. sales to home

market sales of similar merchandise.

Respondent argues that due to the fact

the record demonstrates that both types

of urea are physically different

products, comparison of one with the

other is inappropriate.

Department’s Position: The

Department agrees with respondent. The

Department’s model match allows for

respondent to report additional product

characteristics if necessary. As

evidenced by the preliminary results of

review, the Department was able to

compare the U.S. sale to the most

comparable home market sale(s) and

ensure that there were no distortions in

the analysis. Based on the fact that there
61276 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

is no evidence on the record to show

that the product characteristics reported

resulted in a distortive comparison, the

Department has continued to use the

model matching criteria set forth in the

preliminary results of review.

Comment 11: Downstream Sales.

Petitioners argue that sales from

Agrochemie were not reported to the

Department. Petitioners contend that

SKWP has not indicated that it is

otherwise justified in its reporting

methodology, therefore, there exists the

strong possibility for SKWP to avoid

reporting less favorable home market

sales to end-users by manipulating the

transfer price to Agrochemie. Petitioners

argue that the Department must increase

normal value to reflect Agrochemie’s

profits on the resale of urea through its

reseller. Because there is no evidence of

Agrochemie’s sales prices on the record,

petitioners argue that the Department

should use facts available regarding

VCE’s profit level to determine the

selling price to Agrochemie’s final

customer.

Respondent argues that petitioners’

request is without merit. Respondent

asserts that the purpose of the arm’s

length test is to determine if the prices

for sales between affiliated parties may

have been manipulated to lower normal

value. However, due to the fact that the

Department found that sales to

Agrochemie were at arm’s length it

would be inappropriate to penalize

SKWP for avoiding the burden of

reporting downstream sales that the

Department did not require for its

analysis.

Department’s Position:. The

Department agrees with respondent.

During the review, SKWP did not report

sales made from Agrochemie to

unaffiliated customers in the home

market. In an October 30, 1996, letter to

the respondent, the Department notified

SKWP that failure to report the

Agrochemie sales to the first unaffiliated

party may result in the Department

using facts available, particularly if the

Department determined after further

analysis and verification of all relevant

data, that these omitted sales were

necessary for comparison purposes. As

evidenced by the preliminary results of

review, the Department found that

SKWP’s sales to Agrochemie were at

arm’s length and these omitted sales

were not necessary for comparison

purposes.

Final Results of Review

As a result of our review, we

determine that the following weightedaverage margin exists:

Manufacturer/exporter Margin

(percent)

SKW Piesteritz .......................... 0.00

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Individual differences between

export price and normal value may vary

from the percentage stated above. The

Department will issue appraisment

instructions on each exporter directly to

the Customs Service.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of review for all shipments of subject

merchandise entered, or withdrawn

from warehouse, for consumption on or

after the publication date, as provided

by section 751 (a)(1) of the Act: (1) The

cash deposit rate for the reviewed

company will be the rate listed above;

(2) for previously reviewed or

investigated companies not listed above,

the cash deposit rate will continue to be

the company-specific rate published for

the most recent period; (3) if the

exporter is not a firm covered in this

review, a prior review, or the original

LTFV investigation, but the

manufacturer is, the cash deposit rate

will be the rate established for the most

recent period for the manufacturer of

the merchandise; and (4) for all other

producers and/or exporters, as indicated

in the preliminary results of this review,

the cash deposit rate shall be 44.80

percent, the ‘‘all others’’ rate established

in the LTFV investigation (53 FR 2636).

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

review. In addition, we are terminating

suspension of liquidation for shipments

of solid urea produced by other firms in

Germany.

This notice 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 subsequent assessment of

double antidumping duties.

Notification to Interested Parties

This notice also serves as a reminder

to parties subject to administrative

protective order (APO) of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with 19 CFR 353.34(d). Timely written

notification of 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 USC 1675(a)(1)) and 19

CFR 353.22.

Dated: November 5, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–30144 Filed 11–14–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–570–601]

Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished,

From the People’s Republic of China;

Final Results of Antidumping

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative review

of tapered roller bearings and parts

thereof, finished and unfinished, from

the People’s Republic of China.

SUMMARY: On July 9, 1997, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on tapered

roller bearings (TRBs) and parts thereof,

finished and unfinished, from the

People’s Republic of China (PRC). The

period of review (POR) is June 1, 1995,

through May 31, 1996.

Based on our analysis of comments

received, we have made changes to the

margin calculations, including

corrections of certain clerical errors.

Therefore, the final results differ from

the preliminary results. The final

weighted-average dumping margins are

listed below in the section entitled Final

Results of Review.

We have determined that sales have

been made below normal value (NV)

during the POR. Accordingly, we will

instruct the U.S. Customs Service to

assess antidumping duties based on the

difference between export price (EP) or

constructed export price (CEP) and NV.

EFFECTIVE DATE: November 17, 1997.

FOR FURTHER INFORMATION CONTACT:

Robin Gray or the appropriate case

analyst, for the various respondent firms