9160 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

1 The respondents in the brake drums case are:

(1) China North Industries Guangzhou Corporation

(CNIGC); (2) Qingdao Metal, Minerals & Machinery

Import & Export Corporation (Qingdao); (3) China

National Machinery Import & Export Corporation

(CMC); (4) Beijing Xinchangyuan Automobile

Fittings Corporation, Ltd. (Xinchangyuan); and (5)

Yantai Import/Export Corporation (Yantai).

The respondents in the brake rotors case are:

China National Automotive Industry Import &

Export Corporation (CAIEC), Shandong Laizhou

CAPCO Industry (Laizhou CAPCO) and their U.S.

affiliate CAPCO International USA (CAPCO

USA)(collectively CAIEC/Laizhou CAPCO); CNIGC;

China North Industries Dalian Corporation (Dalian);

Shenyang Honbase Machinery Co., Ltd., Lai Zhou

Luyuan Automobile Fitting Co., Ltd. (collectively

Shenyang/Laizhou) and their U.S. affiliates MAT

Automotive, Inc., and Midwest Air Technologies,

Inc. (MAT); Southwest Technical Import & Export

Corporation, Yangtze Machinery Corporation

(collectively Southwest), and its U.S. affiliate MMB

International, Inc. (MMB); China National

Machinery and Equipment Import & Export

(Xinjiang) Corporation, Ltd. (Xinjiang); and Yantai.

foreign materials. The HTSUS categories

and duty rates for the finished products

are as follows:

Product HTSUS No. Duty rate

DBD ...... 2930.90.2600 duty-free.

6PPD .... 2921.59.8090 15.1% + $0.017/

kg.

CBS ...... 2934.20.8000 13.3% + $0.026/

kg.

DCBS ... 2934.20.2500 duty-free.

The HTSUS categories and duty rates

for the primary foreign-sourced inputs

are as follows:

Input HTSUS No. Duty rate

Benzoyl

chloride.

2916.32.2000 7.1%.

4ADPA ..... 2921.51.5000 15.1% +

$0.017/kg.

Sodium

MBT.

2934.20.2000 10.7% +

$0.006/kg.

Dicyclohexylamine.2921.30.3000 13.7% +

$0.026/kg.

Foreign materials account for some 20

to 40 percent of the value of the final

products. The application indicates that

the savings from zone procedures will

help improve the international

competitiveness of the Bayer plant and

will help increase exports.

In accordance with the Board’s

regulations, a member of the FTZ Staff

has been designated examiner to

investigate the application and report to

the Board.

Public comment is invited from

interested parties. Submissions (original

and 3 copies) shall be addressed to the

Board’s Executive Secretary at the

address below. The closing period for

their receipt is April 29, 1997. Rebuttal

comments in response to material

submitted during the foregoing period

may be submitted during the subsequent

15-day period (to May 14, 1997).

A copy of the application and

accompanying exhibits will be available

for public inspection at each of the

following locations:

U.S. Department of Commerce Export

Assistance Center, 81 Mary St.,

Charleston, South Carolina 29403

Office of the Executive Secretary,

Foreign-Trade Zones Board, U.S.

Department of Commerce, Room

3716, 14th & Pennsylvania Avenue,

NW., Washington, DC 20230

Dated: February 21, 1997.

John J. Da Ponte, Jr.,

Executive Secretary.

[FR Doc. 97–5031 Filed 2–27–97; 8:45 am]

BILLING CODE 3510–DS–P

International Trade Administration

[A–570–845, A–570–846]

Notice of Final Determinations of Sales

at Less Than Fair Value: Brake Drums

and Brake Rotors From the People’s

Republic of China

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce

EFFECTIVE DATE: February 28, 1997.

FOR FURTHER INFORMATION CONTACT:

Brian C. Smith or Michelle A. Frederick,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–1766 and (202) 482–0186,

respectively.

THE APPLICABLE STATUTE: Unless

otherwise indicated, all citations to the

Tariff Act of 1930, as amended (the Act)

are references to the provisions effective

January 1, 1995, the effective date of the

amendments made to the Act by the

Uruguay Rounds Agreements Act

(URAA).

FINAL DETERMINATIONS: We determine

that brake drums and brake rotors from

the People’s Republic of China (PRC) are

being, or are likely to be, sold in the

United States at less than fair value

(LTFV), as provided in section 735 of

the Act.

Case History

Since the amended preliminary

determination in the brake drum

investigation (Amended Preliminary

Determination of Sales at Less Than Fair

Value: Brake Drums from the People’s

Republic of China, 61 FR 60682

(November 29, 1996)), the following

events have occurred:

The petitioner, the Coalition for the

Preservation of American Brake Drum

and Rotor Aftermarket Manufacturers,

and all of the respondents 1 requested a

hearing.

From October 1996 through January

1997, we verified the questionnaire

responses of the selected respondents.

In January 1997, we issued our

verification reports.

Interested parties submitted

additional information on surrogate

values on January 9 and 10, 1997, for

consideration in the final

determinations. Also in January 1997, at

the Department’s request, we received

revised computer tapes incorporating

data corrections identified at the

verifications from the following

respondents: CAIEC, Dalian, Qingdao,

Shenyang/Laizhou, Southwest,

Xinchangyuan and Xinjiang.

The petitioner and all of the

respondents submitted case briefs on

January 21, 1997, and rebuttal briefs on

January 27, 1997. The Department held

a public hearing for these investigations

on January 29, 1997.

Scope of the Investigations

The products covered by these two

investigations are (1) certain brake

drums and (2) certain brake rotors.

Brake Drums

Brake drums are made of gray cast

iron, whether finished, semifinished, or

unfinished, ranging in diameter from 8

to 16 inches (20.32 to 40.64 centimeters)

and in weight from 8 to 45 pounds (3.63

to 20.41 kilograms). The size parameters

(weight and dimension) of the brake

drums limit their use to the following

types of motor vehicles: automobiles,

all-terrain vehicles, vans and

recreational vehicles under ‘‘one ton

and a half,’’ and light trucks designated

as ‘‘one ton and a half.’’

Finished brake drums are those that

are ready for sale and installation

without any further operations. Semifinished drums are those on which the

surface is not entirely smooth, and has

undergone some drilling. Unfinished

drums are those which have undergone

some grinding or turning.

These brake drums are for motor

vehicles, and do not contain in the

casting a logo of an original equipment

manufacturer (OEM) which produces

vehicles sold in the United States (e.g.,

General Motors, Ford, Chrysler, Honda,

Toyota, Volvo). Brake drums covered in

this investigation are not certified by

OEM producers of vehicles sold in the

United States. The scope also includes

composite brake drums that are made of

gray cast iron, which contain a steel
Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9161

plate, but otherwise meet the above

criteria.

Brake drums are classifiable under

subheading 8708.39.5010 of the

Harmonized Tariff Schedule of the

United States (HTSUS). Although the

HTSUS subheading is provided for

convenience and Customs purposes, our

written description of the scope of this

investigation is dispositive.

Brake Rotors:

Brake rotors are made of gray cast

iron, whether finished, semifinished, or

unfinished, ranging in diameter from 8

to 16 inches (20.32 to 40.64 centimeters)

and in weight from 8 to 45 pounds (3.63

to 20.41 kilograms). The size parameters

(weight and dimension) of the brake

rotors limit their use to the following

types of motor vehicles: automobiles,

all-terrain vehicles, vans and

recreational vehicles under ‘‘one ton

and a half,’’ and light trucks designated

as ‘‘one ton and a half.’’

Finished brake rotors are those that

are ready for sale and installation

without any further operations. Semifinished rotors are those on which the

surface is not entirely smooth, and has

undergone some drilling. Unfinished

rotors are those which have undergone

some grinding or turning.

These brake rotors are for motor

vehicles, and do not contain in the

casting a logo of an original equipment

manufacturer (OEM) which produces

vehicles sold in the United States (e.g.,

General Motors, Ford, Chrysler, Honda,

Toyota, Volvo). Brake rotors covered in

this investigation are not certified by

OEM producers of vehicles sold in the

United States. The scope also includes

composite brake rotors that are made of

gray cast iron, which contain a steel

plate, but otherwise meet the above

criteria.

Brake rotors are classifiable under

subheading 8708.39.5010 of the HTSUS.

Although the HTSUS subheading is

provided for convenience and Customs

purposes, our written description of the

scope of this investigation is dispositive.

Period of Investigations

The period of these investigations

(POI) comprises each exporter’s two

most recent fiscal quarters prior to the

filing of the petition. For Southwest, the

POI is June 1995–December 1995. For

all other respondents, the POI is July

1995–December 1995.

Separate Rates

Each of the participating respondents

in these investigations claim to be

eligible for individual dumping

margins. Of those, CAIEC/Laizhou

CAPCO, CMC, CNIGC, Dalian, Qingdao,

Southwest, Xinjiang and Yantai claim to

be owned by ‘‘all the people.’’

The ownership structure of the

remaining respondents is as follows:

(1) Shenyang/Laizhou are affiliated

parties. Shenyang is owned entirely by

GRI Honbase, a Hong Kong company

which is U.S. owned. Laizhou is a joint

venture between GRI Honbase and ‘‘all

the people.’’ The share in Laizhou

owned by ‘‘all the people’’ is a minority

share.

(2) Xinchangyuan is a joint venture

between a U.S. company and a PRC

company, Beijing Changyuan

Automotive Parts Factory. The PRC

company is the majority shareholder

and is owned by ‘‘all the people.’’

As stated in the Final Determination

of Sales at Less than Fair Value: Silicon

Carbide from the People’s Republic of

China, 59 FR 22585, 22586 (May 2,

1994) (Silicon Carbide) and in the Final

Determination of Sales at Less than Fair

Value: Furfuryl Alcohol from the

People’s Republic of China, 60 FR 22544

(May 8, 1995) (Furfuryl Alcohol),

ownership of a company by ‘‘all the

people’’ does not require the application

of a single rate. Accordingly, each of

these respondents is eligible for separate

rate consideration.

To establish whether a firm is

sufficiently independent from

government control to be entitled to a

separate rate, the Department analyzes

each exporting entity under a test

arising out of the Final Determination of

Sales at Less Than Fair Value: Sparklers

from the People’s Republic of China, 56

FR 20588 (May 6, 1991) (Sparklers) and

amplified in Silicon Carbide. Under the

separate rates criteria, the Department

assigns separate rates in nonmarket

economy cases only if the respondents

can demonstrate the absence of both de

jure and de facto governmental control

over export activities.

1. Absence of De Jure Control

Each of the respondents has placed on

the administrative record a number of

documents to demonstrate absence of de

jure control, including laws, regulations

and provisions enacted by the State

Council of the central government of the

PRC. Each has also submitted

documents which establish that brake

drums and brake rotors are not included

on the list of products that may be

subject to central government export

constraints. In addition, the respondents

Xinchangyuan and Laizhou each

submitted the ‘‘Law of the People’s

Republic of China on Chinese-Foreign

Contractual Joint Ventures’’ (April 13,

1988). The articles of this law authorize

joint venture companies to make their

own operational and managerial

decisions.

In prior cases, the Department has

analyzed the laws which the

respondents have submitted in this

record and found that they establish an

absence of de jure control. See Notice of

Final Determination of Sales at Less

Than Fair Value: Certain PartialExtension Steel Drawer Slides With

Rollers From the People’s Republic of

China, 60 FR 54472 (October 24, 1995)

(Drawer Slides); see also Furfuryl

Alcohol. We have no new information

in these proceedings which would cause

us to reconsider this determination.

However, as in previous cases, there

is some evidence that the PRC central

government enactments have not been

implemented uniformly among different

sectors and/or jurisdictions in the PRC.

(See Silicon Carbide and Furfuryl

Alcohol.) Therefore, the Department has

determined that an analysis of de facto

control is critical in determining

whether respondents are, in fact, subject

to a degree of governmental control

which would preclude the Department

from assigning separate rates.

2. Absence of De Facto Control

The Department typically considers

four factors in evaluating whether each

respondent is subject to de facto

governmental control of its export

functions: (1) Whether the export prices

are set by or subject to the approval of

a governmental authority; (2) whether

the respondent has authority to

negotiate and sign contracts and other

agreements; (3) whether the respondent

has autonomy from the government in

making decisions regarding the

selection of management; and (4)

whether the respondent retains the

proceeds of its export sales and makes

independent decisions regarding

disposition of profits or financing of

losses (see Silicon Carbide and Furfuryl

Alcohol). These factors are not

necessarily exhaustive and other

relevant indicia of government control

may be considered.

CAIEC/Laizhou CAPCO, CMC,

Qingdao, Shenyang/Laizhou,

Southwest, Xinchangyuan, Xinjiang,

and Yantai asserted, and we verified,

the following: (1) They establish their

own export prices; (2) they negotiate

contracts, without guidance from any

governmental entities or organizations;

(3) they make their own personnel

decisions; and (4) they retain the

proceeds of their export sales, use

profits according to their business needs

and have the authority to sell their

assets and to obtain loans. In addition,

the questionnaire responses submitted

by the above-referenced respondents
9162 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

indicate company-specific pricing

during the POI which does not suggest

coordination among exporters. During

the verification proceedings,

Department officials viewed such

evidence as sales documents, company

correspondence, and bank statements.

This information supports a finding that

there is a de facto absence of

government control of the export

functions of these companies.

Consequently, we have determined that

these exporters have met the criteria for

the application of separate rates.

CNIGC and Dalian also claimed

separate rates and provided additional

documentation at verification in support

of their claims that there is a de facto

absence of government control of the

export functions of their companies.

However, for the final determinations,

we have denied these respondents

separate rates. Since the preliminary

determinations, we have collected

additional information which indicates

that CNIGC and Dalian are still branches

of the national corporation, China North

Industries Corporation (NORINCO),

which is controlled by the PRC

government (see Comment 1 for further

discussion).

China-Wide Rate

U.S. import statistics indicate that the

total quantity and value of U.S. imports

of brake drums and brake rotors from

the PRC is substantially greater than the

total quantity and value of brake drums

and brake rotors reported by all PRC

companies that submitted responses in

both the brake drums and brake rotors

cases. Given these significant

discrepancies, we have no choice but to

conclude that not all exporters of PRC

brake drums and brake rotors responded

to our questionnaire. Accordingly, we

are applying in each investigation a

single antidumping deposit rate—the

China-wide rate—to all exporters in the

PRC (other than those named above and

those exporters which cooperated with

our investigations but which were not

selected as respondents and received

separate rates), based on our

presumption that those respondents

who failed to show that they are entitled

to separate rates are under common

control by the PRC government. See,

e.g., Final Determination of Sales at Less

Than Fair Value: Bicycles from the

People’s Republic of China, 61 FR 19026

(April 30, 1996) (Bicycles).

Facts Available

The China-wide antidumping rate is

based on adverse facts available. Section

776(a)(2) of the Act provides that ‘‘if an

interested party or any other person—

(A) withholds information that has been

requested by the administering

authority; (B) fails to provide such

information by the deadlines for the

submission of the information or in the

form and manner requested, subject to

subsections (c)(1) and (e) of section 782;

(C) significantly impedes a proceeding

under this title; or (D) provides such

information but the information cannot

be verified as provided in section 782(i),

the administering authority * * * shall,

subject to section 782(d), use the facts

otherwise available in reaching the

applicable determination under this

title.’

In addition, section 776(b) of the Act

provides that, if the Department finds

that an interested party ‘‘has failed to

cooperate by not acting to the best of its

ability to comply with a request for

information,’’ the Department may use

information that is adverse to the

interests of that party as the facts

otherwise available. The statute also

provides that such an adverse inference

may be based on secondary information,

including information drawn from the

petition.

When multiple companies are treated

as a single enterprise, the enterprise

must submit a complete, consolidated

response. If it fails to do so, the

Department may base the margin

calculation for the enterprise on the

facts available. Additionally, as

discussed above, those PRC exporters

that have not qualified for a separate

rate have been treated as a single

enterprise. Because some exporters of

the single enterprise failed to respond to

the Department’s requests for

information, that single enterprise is

considered to have failed to cooperate to

the best of its ability. Accordingly,

consistent with section 776(b)(1) of the

Act, we have applied in each

investigation the higher of the

applicable margin from the petition or

the highest rate calculated for a

respondent in each proceeding as total

adverse facts available. In both cases,

based on our comparison of the

calculated margins for the other

respondents in these proceedings to the

estimated margins in the petitions, we

have concluded that the petition is the

most appropriate record information on

which to form the basis for the Chinawide rate in the brake drums and brake

rotors investigations.

Section 776(c) of the Act provides that

where the Department relies on

‘‘secondary information,’’ the

Department shall, to the extent

practicable, corroborate that information

from independent sources reasonably at

the Department’s disposal. The

Statement of Administrative Action

(SAA), accompanying the URAA

clarifies that the petition is ‘‘secondary

information.’’ See SAA at 870. The SAA

also clarifies that ‘‘corroborate’’ means

to determine that the information used

has probative value. Id. However, where

corroboration is not practicable, the

Department may use uncorroborated

information.

In accordance with section 776(c) of

the Act, we corroborate the margins in

the petition to the extent practicable.

The petitioner based export prices on

prices charged by U.S. distributors of

brake drums and brake rotors and

deducted from these prices a distributor

mark-up. We compared the starting

prices used by the petitioner to prices

derived from U.S. import statistics and

found that the similarity to the import

statistics corroborated the starting prices

in the petition. See Notice of Final

Determination of Sales at Less Than Fair

Value: Circular Welded Non-Alloy Steel

Pipe from South Africa, 61 FR 24271

(May 14, 1996). We found that the

deduction for the distributor mark-up

was sufficiently documented for

purposes of corroboration by examining

affidavits submitted by industry experts.

The normal value (NV) was based on

factors of production employed by the

petitioner to produce brake drums and

brake rotors, and to the extent possible,

surrogate factor values which were

obtained from Indian publicly available

information. When analyzing the

petition, the Department examined and

confirmed the accuracy of the NV data

as provided in the petition by

comparing the values used in the

petition with values obtained from

publicly available information collected

in these and previous non-market

economy (NME) investigations.

However, in examining the factors

which served as the basis for NVs

calculated in the petition, the

Department found that petitioner treated

certain factory overhead items as direct

materials. Therefore, we have

recalculated NV in the petition by

treating these items as part of factory

overhead. In addition, we assigned an

Indian surrogate value to one material

for which a value based on a U.S. price

was assigned previously in our NV

calculations (See Margin Corroboration

Memorandum from the team to Gary

Taverman, dated February 12, 1997).

Thus, the highest revised petition rate

for brake drums is 86.02 percent. The

highest revised petition rate for brake

rotors is 43.32 percent.

Fair Value Comparisons

To determine if the brake drums and

brake rotors from the PRC sold to the

United States by the PRC exporters

receiving separate rates were sold at less
Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9163

than fair value, we compared the

‘‘United States Price’’ (USP) to NV, as

specified in the ‘‘United States Price’’

and ‘‘Normal Value’’ sections of this

notice.

United States Price

We based USP on export price (EP) in

accordance with section 772(a) of the

Act, when the brake drums or brake

rotors were sold directly to the first

unaffiliated purchaser in the United

States prior to importation and when

constructed export price (CEP)

methodology was not otherwise

appropriate. In accordance with section

777A(d)(1)(A)(i) of the Act, we

compared POI-wide weighted-average

EPs to the factors of production.

Shenyang/Laizhou/MAT and

Southwest/MMB both claimed that their

sales are EP, not CEP, transactions and

that the Department should treat their

sales accordingly. However, the

Department has determined that the

sales of these two companies are CEP

transactions (see Comment 14 for

Shenyang/Laizhou/MAT and Comment

16 for Southwest/MMB).

We corrected the respondents’ data

for errors and minor omissions found at

verification. For CMC, Xinjiang and

Yantai, we calculated EP in accordance

with our preliminary determinations. In

addition, we made company-specific

adjustments as follows:

1. CAIEC/Laizhou CAPCO

We calculated EP and CEP in

accordance with our preliminary

calculations, except that we (a)

corrected credit expenses, inland

freight, repacking, indirect selling

expenses, and inventory carrying

expenses; (b) removed credit returns

from CAPCO’s U.S. sales database; (c)

recalculated commissions based on the

verified commission rates; (d) revised

brokerage and handling expenses; and

(e) deducted from the U.S. price of

certain sales an inspection charge based

on information obtained at verification.

2. Qingdao

We calculated EP in accordance with

our preliminary calculations except that

we excluded U.S. sales of one product

that was found to be outside the scope

of the investigation.

3. Shenyang/Laizhou/MAT

We calculated EP and CEP in

accordance with our preliminary

calculations except that we have

recalculated credit and indirect selling

expenses based on information obtained

at verification.

4. Southwest/MMB

We calculated EP and CEP in

accordance with our preliminary

calculations except that we have

adjusted the gross unit price for certain

U.S. sales where the price was

incorrectly reported. We then

recalculated the credit and indirect

selling expenses to take into account

revised prices.

5. Xinchangyuan

We calculated EP in accordance with

our preliminary calculations except that

we did not deduct foreign brokerage and

handling expenses based on information

derived at verification (see Comment 21

below). In addition, we excluded U.S.

sales of three products that were found

to be outside the scope of the

investigation.

Normal Value

A. Factors of Production

In accordance with section 773(c) of

the Act, we calculated NV based on

factors of production reported by the

factories in the PRC which produced

brake drums and/or brake rotors for the

exporters. Where an input was sourced

from a market economy and paid for in

market economy currency, we used the

actual price paid for the input to

calculate the factors-based NV in

accordance with our practice. See Lasko

Metal Products v. United States, 437 F.

3d 1442, 1443 (Fed. Cir. 1994). We

valued the remaining factors using

publicly available information from

India where possible. Where

appropriate Indian values were not

available, we used publicly available

information from Indonesia.

B. Factor Valuations

The selection of the surrogate values

was based on the quality and

contemporaneity of the data. Where

possible, we attempted to value material

inputs on the basis of tax-exclusive

domestic prices. Where we were not

able to rely on domestic prices, we used

import prices to value factors. As

appropriate, we adjusted input prices to

make them delivered prices. For those

values not contemporaneous with the

POI, we adjusted for inflation using

wholesale price indices or, in the case

of labor rates, consumer price indices,

published in the International Monetary

Fund’s International Financial

Statistics. For a complete analysis of

surrogate values, see the Preliminary

Determinations Factors Memorandum,

dated October 3, 1996, and the Final

Determinations Factors Memorandum,

(Final Factors Memorandum) dated

February 24, 1997. We have noted

changes to surrogate valuation since the

preliminary determinations as follows:

To value unfinished castings used in

producing rotors, we used a purchase

price for unfinished castings contained

in the 1995–96 financial report of the

Indian producer, Jayaswals Neco

Limited (Jayaswals), because only this

producer’s financial report contained a

POI purchase value for unfinished

castings used to produce brake rotors

that are within the scope of our

investigation (see Comment 15).

To value copper, copper powder,

ferromanganese, ferrosilicon, other

ferrosilicon, ferrochromium, manganese,

limestone, lubrication oil, adhesive

tape, corrugated cartons, nails,

polyethylene, fiberboard, steel angles,

steel stamp, steel straps, printed and

unprinted labels, instruction sheets,

wood brackets, wood pallets and wood

crates, we used import prices for

months contemporaneous with the POI

for which such data were available from

Monthly Statistics of the Foreign Trade

of India (Monthly Statistics). Where

submitted data encompassed part of the

POI but also encompassed months

outside the POI, we limited our use of

such data to the portion

contemporaneous with the POI.

To value pig iron, steel scrap and iron

scrap, we used the input-specific prices

contained in the 1995–96 financial

report of the Indian producer, Shivaji

Works Limited (Shivaji) because Shivaji

produces goods which are in the same

general category as the subject

merchandise (e.g., products similar to

what the respondents produce) and

because we find that the separate lineitem values for pig iron, steel scrap and

iron scrap contained in Shivaji’s report

are more specific than the prices for

these same inputs contained in the

Indian publication Steel Authority of

India Limited (SAIL) or in Monthly

Statistics (see Comment 7).

To value steel sheet, steel strip and

steel wire rod, we used POI prices from

SAIL and not from Monthly Statistics

(see Comment 7).

To value scrap wood, we have used a

price from a 1990 U.S. government

publication, Marketing Opportunities

for Social Forestry Produce in Uttar

Pradesh, because the price is more

specific to the input than the value

previously obtained from Monthly

Statistics.

We could not obtain a productspecific price from India to value lug

nuts for PRC companies which

purchased this input from non-market

economies (NME). Therefore, we used

Indonesian import data covering July

through November 1995 from
9164 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

Indonesian Foreign Trade Statistical

Bulletin (see Bicycles).

To value barge rates, we relied on

information from an August 1993 cable

from the U.S. consulate in India. Since

the preliminary determinations, the

respondents submitted new prices for

coke, ball bearings and LPG gas for

consideration in the final

determinations. However, we have

continued to rely on the values assigned

to these inputs in the preliminary

determinations for our final

determinations (see Comment 7 and

Final Factors Memorandum for further

discussion).

To value factory overhead, SG&A, and

profit in the brake drums and brake

rotors cases, we calculated a simple

average using the financial reports of

Jayaswals, Kalyani Brakes Limited

(Kalyani), Krishna Engineering Works

(Krishna), Nagpur Alloy Castings

Limited (Nagpur), and Rico Auto

Industries Limited (Rico) because these

companies produced both brake drums

and brake rotors within the scope of

these investigations during the POI. We

did not use the financial reports of

Ennore Foundaries Limited (Ennore),

Electrosteel Castings Limited

(Electrosteel), Bhagwati Autocast

Limited (Bhagwati), or Shivaji in the

surrogate factory overhead, SG&A, and

profit percentage calculations because

there was no indication in the reports or

any corroborating publicly available

information showing that these

companies produced brake drums or

brake rotors within the scope of these

investigations during the POI (see

Comment 5).

Where appropriate, we have removed

from the surrogate overhead and SG&A

calculations the excise duty amount

listed in the financial reports (see

Bicycles, 61 FR 19039). We also made

certain adjustments to the percentages

calculated as a result of reclassifying

expenses contained in the financial

reports.

For the Indian companies, we treated

the line item labeled ‘‘stores and spares

consumed’’ as part of factory overhead

where possible and not part of materials

consumed because stores and spares are

not direct materials consumed in the

production process. Publicly available

information examined in the

preliminary determination indicates

that Indian accounting practices require

Indian companies to record molding

inputs (i.e., all types of sand, bentonite,

lead powder, steel pellets (if used for

sand cores or molding), coal powder

and waste oil) under ‘‘stores and spares

consumed.’’ Therefore, we are

considering these molding inputs as

indirect materials (i.e., a part of factory

overhead), and are not valuing them as

materials. In addition to the molding

materials mentioned above, based on

our verification findings, we find that

additional materials previously valued

as direct inputs such as dextrin, parting

spray, rust inhibitor, antirust, steel shot,

cutting oil, cleaning agent, and

dehydration oil, are in fact indirect

materials not incorporated into the final

product. Therefore, we have also

considered these additional materials

part of factory overhead (see Comment

8). We have continued to treat

rustproofing oil, limestone and firewood

as direct materials and valued them

accordingly (see Comment 8).

We have considered the line item

labeled ‘‘raw materials consumed’’ to

include direct materials such as pig

iron, steel scrap, and steel inputs, and

non-steel direct inputs and not included

them in factory overhead. The

designation of these items is consistent

with standard accounting procedures

and recent determinations (see Final

Determination of Sales at Less Than Fair

Value: Polyvinyl Alcohol from the

People’s Republic of China, 61 FR 14062

(March 29, 1996) (PVA) and Bicycles).

We based our factory overhead

calculation on the cost of goods

manufactured rather than on the cost of

goods sold. We also included interest

and/or financial expenses in the SG&A

calculation. In addition, we only

reduced interest and financial expenses

by amounts for interest income if the

Indian financial report noted that the

income was short-term in nature (see

Comment 6). Where a company did not

distinguish interest income as a line

item within total ‘‘other income’’ we

used the relative ratio of interest income

to total other income as reported for the

Indian metals industry in the Reserve

Bank of India Bulletin. (For a further

discussion of other adjustments made,

see Final Factors Memorandum).

Verification

As provided in section 782(i) of the

Act, we verified the information

submitted by all selected respondents

for use in our final determinations. We

used standard verification procedures,

including examination of relevant

accounting and production records and

original source documents provided by

the respondents.

Critical Circumstances

Section 735(a)(3) of the Act provides

that, in a final determination, the

Department will determine whether:

(A)(i) there is a history of dumping

and material injury by reason of

dumped imports in the United States or

elsewhere of the subject merchandise, or

(ii) the person by whom, or for whose

account, the merchandise was imported

knew or should have known that the

exporter was selling the subject

merchandise at less than its fair value

and that there would be material injury

by reason of such sales, and

(B) there have been massive imports

of the subject merchandise over a

relatively short period.

Because there is no history of

dumping and material injury by reason

of dumped imports for either brake

drums or brake rotors, we conducted

our analysis under section

735(a)(3)(A)(ii) of the Act (importer

knowledge of dumping and material

injury).

1. Importer Knowledge of Material

Injury

Pursuant to the URAA, and in

conformance with the WTO

Antidumping Agreement, the statute

now includes a provision requiring the

Department to determine, when relying

upon section 735(a)(3)(A)(ii) to

determine whether critical

circumstances exist, whether the

importer knew or should have known

that there would be material injury by

reason of the less than fair value sales.

In this respect, the preliminary finding

of the International Trade Commission

(ITC) is instructive, especially because

the general public, including importers,

is deemed to have notice of that finding

as published in the Federal Register.

Thus, the Department has determined

that a preliminary ITC finding of a

reasonable indication of present

material injury to the U.S. industry,

when coupled with massive imports

and a high rate of dumping by a given

exporter (see Importer Knowledge of

Dumping section, below) permits the

conclusion that importers of the subject

merchandise from such exporters knew

or should have known that such imports

would cause injury to the domestic

industry. When the ITC has

preliminarily found no reasonable

indication that a U.S. industry is

experiencing present material injury by

reason of the dumped subject

merchandise, but only a threat of such

injury, the Department has determined

that it is not reasonable to conclude that

an importer knew or should have

known that its imports would cause

material injury. (See Decision

Memorandum Regarding Imputed

Knowledge of Material Injury.)

Because the ITC preliminarily

determined that there is no reasonable

indication that the U.S. brake drums

industry is experiencing present

material injury, but only a reasonable

indication of threat of material injury,
Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9165

we find that the ‘‘importer knowledge of

material injury’’ prong is not met with

respect to brake drums. Therefore, we

find that critical circumstances do not

exist with respect to brake drums, and

it is not necessary to examine the other

critical circumstances criteria for this

product. Because the ITC preliminarily

determined that there is a reasonable

indication that the U.S. brake rotors

industry is, in contrast, experiencing

present material injury, we determine

that critical circumstances exist with

respect to those exporters of brake rotors

which we have determined are

responsible for massive imports and

high dumping margins, as described

below.

2. Importer Knowledge of Dumping

In determining whether an importer

knew or should have known that the

exporter was selling the subject

merchandise at less than fair value, the

Department normally consider margins

of 15 percent and 25 percent or more

sufficient to impute knowledge of

dumping for CEP sales and EP sales

respectively.

Since the company-specific margins

in the final determinations for brake

drums and brake rotors are below 15

percent for CEP sales (with the

exception of brake rotors sales made by

Southwest) and below 25 percent for EP

sales, we have not imputed importer

knowledge of dumping and injury with

respect to any firms except Southwest in

the brake rotors investigation. Therefore,

we have only analyzed the brake rotor

shipment data of Southwest.

3. Massive Imports

When examining the volume and

value of trade flow data, the Department

typically compares the export volume

for equal periods immediately preceding

and following the filing of the petition.

Pursuant to 19 CFR 353.16(f)(2), unless

the imports in the comparison period

have increased by at least 15 percent

over the imports during the base period,

we will not consider the imports to have

been ‘‘massive.’’ In order to determine

whether there have been massive

imports of brake rotors for the

companies for which we have

determined that there is knowledge of

dumping and material injury, we

compared sales from August 1995 to

February 1996 (the comparison period)

to sales from March 1996 to September

1996 (the base period).

In determining whether imports have

been ‘‘massive,’’ pursuant to 19 CFR

353.16(f), we will normally consider, in

addition to the volume and value of

imports, any seasonal trends affecting

the merchandise and the share of

domestic consumption accounted for by

the imports. There is no indication on

the record that brake rotors are a

seasonal product. Also, we were unable

to consider the share of U.S.

consumption represented by the

selected respondents, because we have

insufficient information with regard to

the selected respondents’’ market share

of domestic consumption. Based on our

analysis of Southwest, we determine

that the increase in imports was less

than 15 percent with respect to that

firm. Because imports from Southwest

have not been massive, we determine

that critical circumstances do not exist

with respect to imports of subject

merchandise from this company.

4. Unexamined Respondents/ChinaWide Entity

As indicated in Preliminary Critical

Circumstances Determinations, 61 FR

55269 (October 25, 1996), and in the

Preliminary Determinations, 61 FR

53190 (October 10, 1996), the

Department does not believe it is

appropriate to find critical

circumstances with respect to

respondents whose individual data have

not been analyzed due to the

Department’s own administrative

constraints. Therefore, we do not

consider critical circumstances to exist

with regard to the non-analyzed

cooperative respondents in the brake

rotors case.

With respect to the China-wide entity,

we are imputing knowledge of dumping,

based on the China-wide dumping rate.

As noted above, we have determined

that importers knew or should have

known that there would be material

injury to the U.S. brake rotors industry

based on the ITC’s preliminary

determination of a reasonable indication

of present material injury for brake

rotors. In the absence of shipment data

for the China-wide entity, we have

determined based on the facts available,

and making the adverse inference

permitted under section 776(b) of the

Act because this entity did not provide

an adequate response to our

questionnaire, that there were massive

imports of brake rotors. See Preliminary

Critical Circumstances Determinations,

61 FR at 55269. Furthermore, we note

that the record indicates a post filing

surge in U.S. brake rotor imports from

the PRC which is not accounted for by

the cooperating respondents. Therefore,

for the China-wide entity, we determine

that critical circumstances exist with

respect to imports of brake rotors.

5. Conclusion

With regard to brake rotors, we find

that critical circumstances exist only for

companies subject to the China-wide

rate.

With regard to brake drums, we find

that critical circumstances do not exist.

Interested Party Comments

General Comments

Comment 1: Separate Rates—CNIGC and

Dalian

The petitioner maintains that there is

sufficient evidence on the record to

deny CNIGC and Dalian separate rates

in these cases. It points out that these

respondents failed to demonstrate at

verification that they were (1) not part

of NORINCO, a trading company which

is monitored, if not controlled, by the

PRC government; (2) not part of the

NORINCO Group, an organization

controlled by the People’s Liberation

Army (PLA); and (3) independent from

the Ministry of Foreign Trade and

Economic Cooperation (MOFTEC),

because they withheld all information

concerning their relationship with

MOFTEC. The petitioner further

contends that the PRC government

deliberately withheld information

which might have revealed that CNIGC

and Dalian were part of the NORINCO

Group.

CNIGC and Dalian maintain that they

demonstrated at verification the absence

of both de jure and de facto government

control over their export activities and

that they have established through

documentation that they are separate

from NORINCO and are entitled to a

separate rate. In addition, they argue

that there is no information on the

record that supports the claim that they

are affiliated with the PRC government.

Moreover, the two respondents contend

that the PRC government did not fail to

cooperate with the Department because

they answered the Department’s

questions to the extent possible.

However, if the Department decides that

the PRC government was uncooperative,

then they maintain that the Department

cannot impute this lack of cooperation

to CNIGC or Dalian. They cite to Notice

of Court Decision; Exclusion From the

Application of the Antidumping Duty

Order, in Part; Termination of

Administrative Review in Part; and

Amended Final Determination: Certain

Compact Ductile Iron Waterworks

Fittings and Glands from the People’s

Republic of China, 60 FR 2078 (January

6, 1995) and Final Determination of

Sales at Less Than Fair Value: Certain

Helical Spring Lock Washers from the

People’s Republic or China, 58 FR

48833 (September 20, 1993) in support

of their arguments.
9166 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

DOC Position

The Department’s NME separate rates

policy is based upon a rebuttable

presumption that NME entities operate

under government control and do not

merit separate rates. This presumption

can only be overcome by a respondent’s

affirmative showing that it operates

without de jure or de facto government

control.

CNIGC and Dalian have met their

affirmative evidentiary burden with

respect to the Department’s criteria of de

jure control, insofar as they have

provided copies of business licenses

and applicable government statute

granting them the right to operate as

independent trading companies.

These two respondents have also

provided evidence that purportedly

demonstrates absence of de facto

control. However, other evidence

supports a conclusion that Dalian and

CNIGC remain under the control of the

national corporation, NORINCO. Dalian

and CNIGC were, until 1988 and 1991,

respectively, legal and operational

subsidiaries of NORINCO. Although

PRC law and regulations mandated the

legal and operational separation of these

branches from their parent, evidence on

the record suggests that the two

respondents have only partially severed

their ties to NORINCO, and are still

recognized in the PRC and overseas as

branches of NORINCO.

At the Department’s visit to

NORINCO’s Beijing office, we obtained

a NORINCO brochure which identifies

CNIGC and Dalian as branches of

NORINCO. The brochure continued to

be distributed to the public as of the

time of verification in late 1996. See

exhibit 3 of the NORINCO verification

report, dated January 8, 1997. This is

consistent with the verification finding

that NORINCO still maintains an office

within the headquarters of CNIGC. See

CNIGC verification report dated January

8, 1997, at 6. It is also consistent with

1995 information obtained from the U.S.

Department of Defense which states that

‘‘Norinco Guangzhou [CNIGC] is a

leading branch of NORINCO,’’ and with

a 1996 Company Intelligence

International article indicating that

CNIGC is a branch of NORINCO. Thus,

it appears that the de facto relationship

between government-controlled

NORINCO and its branches, including

Guangzhou and Dalian, has not been

entirely severed.

We note that in the instant

investigation, NORINCO has not made a

claim of independence from government

control. Furthermore, there is evidence

on the record that NORINCO is

controlled by the PRC government. See,

e.g., organizational chart submitted to

the file on October 3, 1996, describing

NORINCO as under the control of the

PRC’s State Council, and Foreign

Broadcast Information Service reports.

In view of CNIGC’s and Dalian’s

continuing ties to NORINCO, and in the

absence of a showing that NORINCO is

independent from government control,

the two respondents fail to overcome

the presumption of de facto government

control. Thus, we have not assigned

separate rates to these companies.

Comment 2: Treatment of Non-Selected

Respondents

The petitioner maintains that the

Department had sufficient resources to

investigate all of the responding PRC

companies in these investigations. The

petitioner further states that the

Department should, at a minimum,

request shipment data from nonselected respondents in order to

determine whether critical

circumstances exist for those

companies, especially since U.S. import

statistics indicate that massive imports

of one product type (i.e., brake rotors)

has occurred. The petitioner cites to

Bicycles in support of its argument.

Eight respondents (i.e., the ten

respondents except for Shenyang/

Laizhou and Southwest) (hereafter

referred to as ‘‘the eight respondents’’)

state that the Department’s sampling

methodology is not contrary to law.

However, the eight respondents claim

that the Department should not impute

knowledge of likelihood of material

injury to U.S. importers merely because

of the existence of dumping,

maintaining that there is no inherent

causal relationship between dumping

and injury. Therefore, the eight

respondents argue that the Department

should find critical circumstances exist

only if it determines that importers

knew or should have known that there

was likely to be material injury because

of sales of brake drums and brake rotors

at less than fair value.

DOC Position

We disagree in part with the

petitioner and the respondents. In

accordance with section 777A(c)(2) of

the Act, given our limited resources, we

had to limit the number of respondents

examined in these cases in order to

lessen the administrative burden on the

Department, and we did so by choosing

the largest exporters to the United States

(see Honey and Bicycles). As for

requesting shipment data from the nonselected respondents which have

cooperated in these investigations, we

did not do so due to the Department’s

own administrative constraints, which

limited our ability to examine

questionnaire responses or request

shipment data for analysis. With respect

to importer knowledge of material

injury by reason of sales at less than fair

value, the Department’s position has

changed since the preliminary

determination. This decision is now

based on the ITC’s preliminary

determination, in conjunction with

massive imports and a high level of

dumping. (See ‘‘Importer Knowledge of

Material Injury’’ section of this notice

and Decision Memorandum from the

team to Richard W. Moreland, dated

February 24, 1997).

Comment 3: Facts Available

The petitioner argues that the

Department should resort to facts

available and deny all of the

respondents separate rates. According to

the petitioner, throughout these

proceedings the respondents have

submitted to the Department ‘‘boiler

plate’’ answers in response to the

antidumping questionnaire,

significantly revised their responses

during the course of the proceedings,

and requested numerous extensions of

time to submit their incorrect data. In

addition, the petitioner claims that the

Department found a large number of

errors at verification for the respondents

and lists both general and respondentspecific instances upon which the

Department should base an adverse facts

available determination (see the

petitioner’s January 21, 1997, case brief,

at 13–20.)

The petitioner also contends that the

Department should deny separate rates

to the companies under investigation

because they withheld information

regarding their relationship with

MOFTEC, and because it could not be

determined from a meeting at the

Ministry of Machinery Industry and

letters sent to MOFTEC whether the

respondents have any relationship with

any level of the PRC government. The

petitioner further urges the Department

to assign the China-wide rate to all of

the respondents, claiming that not doing

so may cause a massive diversion of

shipments of the subject merchandise

between PRC companies, with exports

being shifted to companies assigned

lower rates.

The eight respondents first contend

that the petitioner erroneously equates

‘‘facts available’’ with ‘‘adverse

assumptions.’’ They argue that the Act

has been amended so that the

Department cannot automatically make

an adverse inference when applying

facts available, but rather must consider

all evidence on the record in
Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9167

determining whether adverse inferences

are warranted.

The eight respondents and Southwest

argue that there is no instance in these

proceedings that would justify the

Department resorting to adverse

inferences or resorting to facts available.

They state that (1) there were no

instances in any of the verifications in

which the Department was unable to

verify particular information; (2) the

errors described by petitioner often were

adverse to the respondents; and (3)

when the Department did find errors,

the Department was able to obtain and

verify the correct information.

Moreover, they maintain that there is no

evidence that they failed to cooperate by

not acting to the best of their ability to

comply with Departmental requests for

information or that the errors discovered

during verification undermined the

validity of any responses.

With respect to separate rates, all of

the respondents stated that they had

made adequate showings of

independence.

Respondent Shenyang/Laizhou states

that the Department may use facts

available in making its determination if

necessary information is not on the

record or if a respondent: (1) Withholds

requested information, (2) fails to

provide requested information by the

deadlines for the submission of the

information, or in the form and manner

requested, (3) significantly impedes an

investigation, or (4) provides

unverifiable information. (See Section

776 of the Act). Information that is

adverse to a respondent may be used by

the Department when the respondent

‘‘has failed to cooperate by not acting to

the best of its ability to comply with a

request for information.’’ (See Section

776(b) of the Act). Shenyang/Laizhou

notes that none of these conditions are

present in its case and that although a

few discrepancies were noted at

verification, they were resolved during

verification.

Furthermore, all respondents urge the

Department to make those corrections to

the corresponding databases which were

brought to the attention of the

Department prior to and during

verification.

Lastly, all respondents address the list

of verification errors noted by the

petitioner as reason for facts available,

arguing that while the Department

verified every factor input, for those that

were in error, the corrections were

clerical and minor in nature. They

further assert that with respect to the

areas affected by these errors, there are

alternative verified data on the record

that allow for recalculation of the

relevant factors.

DOC Position

We agree with all respondents that

neither an across-the-board denial of

separate rates nor an across-the-board

recourse to ‘‘total’’ facts available is

warranted in these investigations. First,

regarding the petitioner’s concern over

the massive diversion of shipments of

brake drums and rotors between

exporters if the Department does not

assign the China-wide rate to all

exporters, the Department has

established that the companies receiving

separate rates in these investigations

operate independently of each other and

of government entities with respect to

their exports of the subject merchandise.

Thus, these respondents have been

assigned rates based on their different

cost and pricing structures. It would be

a normal phenomenon that respondents

with lower dumping margins would

experience an increase in sales of the

subject merchandise as a result of an

increase in customers’ demand for

products with lower duty margins.

Second, we disagree with the

petitioner that the other companies (i.e.,

not including CNIGC and Dalian) in

these investigations should be denied

separate rates based on the facts

available. The information submitted on

the record by each of these companies,

as well as the Department’s verification

findings, show that these respondents

under investigation have met the

qualifying criteria for separate rates (see

‘‘Separate Rates’’ section for further

discussion). The records in these

investigations affirmatively indicate the

absence of de jure and de facto control

by government entities over those

responding companies’ operations with

respect to the products under

investigation. In its verification, the

Department found no evidence that

these respondents are controlled by

MOFTEC or the Ministry of Machinery

Industry, or any level of the PRC

government.

Third, we disagree with the

petitioners depiction of the

respondents’’ ‘‘numerous’’ extension

requests and errors. In this instance, the

number of extensions granted was not

extraordinary, nor did these extensions

prevent the petitioner from commenting

on the responses or the Department

from making its preliminary

determinations.

Lastly, with respect to the errors listed

by the petitioner, a review of the

respondents’ response revisions

indicates that such revisions were not

unduly extensive. We do not believe

that failure to initially submit an errorfree response, or the correction of these

errors, should result in the use of facts

available because we found no basis to

conclude that these errors affect the

overall integrity of the response.

Moreover, in an antidumping

investigation, it is not unusual to

encounter errors throughout the

proceeding up to the commencement of

verification.

As described in Ferrosilicon from

Brazil: Final Results of Antidumping

Duty Administrative Review, 61 FR

59407 (November 22, 1996), errors that

are not substantial do not affect the

integrity of the response. In addition,

the errors in question do not warrant

wholesale rejection of the reported data

since all such deficiencies can be

corrected using verified data on the

record.

Comment 4: CEP Deductions and

Circumstance-of-Sale (COS)

Adjustments

Southwest argues that the Department

should not make adjustments to CEP

transactions for indirect selling

expenses, credit and profit because

making an adjustment to one side of the

equation without making a comparable

adjustment to the other results in an

unfair calculation. Alternatively,

Southwest suggests that if the

Department makes these adjustments to

the U.S. price then the Department

should make similar adjustments to NV.

The petitioner states that section

772(c)(2)(D) of the Act requires the

Department to reduce CEP by the selling

expenses associated with economic

activity in the United States, and that

the Act provides no exception for cases

involving NMEs. As for making COS

adjustments, the petitioner states that

section 773(a)(6)(C) of the Act does not

require the Department to make COS

adjustments to NV unless it has been

established to the satisfaction of the

administering authority that such

adjustments are warranted.

DOC Position

We agree with the petitioner. Section

772(d)(1) of the Act requires the

Department to reduce CEP by the selling

expenses associated with economic

activity in the United States (see SAA at

153, Final Determination of Sales at

Less Than Fair Value: Certain Pasta

from Italy, 61 FR 30326 (June 14, 1996),

and Bicycles at 19031. Moreover,

section 772(d)(3) of the Act requires us

to make a deduction for profit

associated with CEP selling expenses

(see SAA at 154, and Bicycles, at

19032). As for COS adjustments to NV,

given the imprecise nature of the

information about direct and indirect

selling expenses in the record in these

cases (e.g., the financial reports of
9168 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

Indian producers), we have no basis to

conclude that such adjustments are

warranted in these cases (see Bicycles at

19031).

Comment 5: Indian Producer Financial

Statements

The respondents, except for

Southwest, argue that the Department

should only use data from financial

statements of Indian producers of brake

drums and brake rotors to calculate

factory overhead, SG&A and profit

percentages in respective investigations.

In addition, the respondents maintain

that the Department should only

consider using data from the financial

statements of Ennore, Jayaswals,

Kalyani, Krishna, Nagpur, and Rico

because these Indian companies

produce the subject merchandise. The

respondents claim that the financial

reports of Electrosteel and Shivaji

should not be used to derive the

percentages because neither company

produces the subject merchandise.

Alternatively, if the Department uses

financial data from Shivaji’s report, then

the eight respondents claim that the

Department must also use Electrosteel’s

financial data because both companies

produce grey iron castings which are

similar to the subject merchandise. The

respondents cite to the Notice of Final

Determination of Sales at Less Than Fair

Value: Melamine Institutional

Dinnerware Products From the People’s

Republic of China, 62 FR 1708 (January

13, 1997) (Melamine), Notice of Final

Determination of Sales at Less Than Fair

Value: Tapered Roller Bearings and

Parts Thereof, Finished or Unfinished,

from the Hungarian People’s Republic,

52 FR 17428 (May 8, 1987), and Bicycles

in support of their arguments.

The respondent Southwest maintains

that all but Ennore’s financial report

should be used to calculate the

percentages because there is no publicly

available information indicating that

Ennore produced the subject

merchandise during the POI. It argues

that a letter from Ennore (submitted on

the record by other respondents) that

stated that this company produces brake

drum castings should be rejected as

‘‘private information.’’

The petitioner states that the

Department should use the financial

reports of Ennore, Jayaswals, Kalyani,

Krishna, Nagpur, Rico and Shivaji to

calculate percentages for both

investigations and that the Department

should calculate the percentages based

on the petitioner’s calculations of the

data as shown in its case brief.

DOC Position

The Department disagrees with

certain of the respondent’s specific

statements, while agreeing in general,

that the companies selected for

calculation of factory overhead, SG&A,

and profit should reflect the

Department’s preference for ‘‘the most

product-specific information possible

from the surrogate market’’ as noted in

Melamine. Based on publicly available

information, we find that Jayaswals,

Kalyani, Krishna, Nagpur and Rico

produced both brake drums and brake

rotors within the scope of these

investigations and sold during the POI.

Therefore, we are using these Indian

producers’ financial reports to calculate

surrogate percentages for use in both

investigations. We are not using the

financial data of Electrosteel or Ennore

because we have no publicly available

information which indicates that these

companies produced subject

merchandise during the POI. Although

the eight respondents submitted a letter

from Ennore which stated that it

produces brake drums, we have relied

on publicly available information

instead of the private correspondence as

the basis for our decision because we

normally prefer to rely on publicly

available information and consider the

contents of the correspondence files of

a company, by nature, not to be publicly

available information. We are not using

Shivaji’s financial report for these

calculations because publicly available

information, along with information

from the U.S. consulate in India,

establishes that Shivaji did not produce

subject merchandise during the POI.

Comment 6: Adjustments to Indian

Financial Reports’ Data

The eight respondents argue that,

when calculating SG&A, the Department

should offset the interest and financial

expenses by the amount of financial

gains (i.e., items such as ‘‘operating

income, miscellaneous receipts,

miscellaneous income, and other

interest income’’) when calculating

SG&A. They contend that adding the

financial expenses to SG&A without

reducing those amounts by any

corresponding operating income results

in imprecise and overstated selling

expenses. They cite to the Notice of

Final Results of Antidumping Duty

Administrative Review: Frozen

Concentrated Orange Juice from Brazil

(Orange Juice), 55 FR 26721 (June 29,

1990) (Comment 8) in which the

Department offset financial expenses

with short-term operating income.

The petitioner argues that the

Department should not offset financial

expenses against financial gains, citing

Bicycles, and claims that section

773(a)(7) of the Act states that an offset

to NV is only required upon sufficient

showing that differences exist justifying

the adjustment.

DOC Position

We agree with the respondents that

we should offset interest expense by the

amount of short-term interest income

when calculating G&A, as in Orange

Juice and in accordance with

Departmental practice. However, we

disagree that operating income or all of

miscellaneous receipts should be in the

offset. We do not include in our offset

long-term interest income nor shortterm income from activities such as

rental. Thus, we reduced interest

expenses by amounts for interest

income for those items identified in the

financial reports as being related to

short-term interest, and utilized the

April 1995 Indian Reserve Bank Bulletin

to allocate a portion of ‘‘other income’’

or ‘‘miscellaneous receipts’’ as shortterm interest income for those

companies which did not specify a

breakdown of their non-operating

income.

The petitioner’s reliance on section

773(a)(7) of the Act and Bicycles is

misplaced. Section 773(a)(7) deals with

level of trade adjustments. The

comment in Bicycles to which the

petitioner refers deals with a

circumstance-of-sale (COS) adjustment.

61 FR at 19031 (Comment 1). This

adjustment is not a COS adjustment but

simply a reduction in the total amount

of SG&A expenses based on short-term

income received by the Indian producer.

Comment 7: Surrogate Values for

Certain Material Inputs

The petitioner asserts that the

Department should value pig iron, steel

sheet, steel wire rod and steel scrap

using POI import prices from the Indian

publication Monthly Statistics rather

than the POI domestic prices from the

Indian publication SAIL or from the

financial reports of certain Indian

producers because the prices in

Monthly Statistics are exclusive of taxes

and duties whereas the prices in SAIL

and in the financial reports are not. If

the Department elects not to use pig iron

prices from Monthly Statistics, then the

petitioner urges the Department to use

Indian Iron & Steel Company Limited

(IISCO) prices rather than SAIL prices

for the same reason noted above. The

petitioner claims that the Department

should not value ball bearing cups by

using prices from Indian Customs Daily

Lists provided by International Data

Services (IDS) because IDS data is of
Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9169

inferior quality and is therefore

unreliable. For coke, the petitioner

maintains that the article containing

domestic prices submitted by all of the

respondents on January 10, 1997,

indicates that the prices are controlled

by the Indian government and therefore

should not be considered.

The eight respondents maintain that

in past NME cases the Department has

expressed a clear preference for using

tax-exclusive domestic prices rather

than import prices when valuing factors

of production. In addition, they state

that in previous NME cases, the

Department has used SAIL data when

the specificity of the steel product has

been most important in valuing the

factor. They cite to Drawer Slides and to

the Notice of Final Results of

Administrative Review: Certain Helical

Spring Lock Washers from the People’s

Republic of China, 61 FR 41994, 41997

(August 13, 1996) in support of their

argument. For ball bearing cups, the

respondents maintain that the IDS data

is publicly available information and is

more specific to imports of ball bearing

cups than the category of ‘‘other ball/

roller bearing parts’’ listed in Monthly

Statistics. For coke, they state that the

data from Economic Times of Mumbai

provide prices for coke which are

contemporaneous with the POI and

specific to Indian foundry industries.

DOC Position

We disagree in part with both the

petitioner and the respondents. The fact

that domestic prices may include taxes

is not determinative when deciding

which prices are preferable for use in

valuing the factors of production. For

pig iron, steel scrap and iron scrap, we

find that the separated line item prices

for each of these inputs in Shivaji’s

1995–96 report are more specific than

the prices contained in SAIL, Monthly

Statistics or IISCO. Therefore, the prices

in Shivaji’s report are more reflective of

prices paid for inputs used by domestic

producers of castings (i.e., products of

the same general category as the subject

merchandise). We have also removed,

where possible, any taxes included in

the prices obtained from Shivaji’s

report.

The Department normally prefers to

use prices that are representative of

prices in effect during the POI. For ball

bearing cups, we find that the IDS data

is less representative of prices in effect

during the POI than the prices

contained in Monthly Statistics because

the IDS data, selected by the

respondents, consist of a single

transaction at a single port for a single

customer and do not appear to be more

product-specific than the Monthly

Statistics data. Therefore, we have

valued this input using prices from

Monthly Statistics.

For coke, though the prices from

Economic Times of Mumbai are POI

prices, we find that these prices are

clearly government administered. Since

we have a POI coke value from Monthly

Statistics in these investigations which

is not government administered, we

have used these prices to value this

input.

Comment 8: Treatment of Indirect

Materials

All of the respondents urge that, in

calculating NV, the Department should

continue to consider molding inputs as

indirect materials and part of factory

overhead, rather than as materials

consumed. In addition, Southwest

maintains that the Department should

also treat dextrin, steel shot, antirust,

cutting oil, cleaning agent, dehydrating

oil, and rustproofing oil as indirect

materials and part of factory overhead.

In order for a material to be considered

a direct material, Southwest argues that

the material must be physically

incorporated into the finished product,

citing the Compendium of Statements

and Standards published by the

Institute of Chartered Accountants of

India. Finally, Shenyang/Laizhou claims

that limestone and firewood should be

treated as indirect materials because

they are not physically incorporated

into the final product.

The petitioner did not comment on

this issue.

DOC Position

We have continued to treat molding

materials listed in the ‘‘Factors of

Production’’ section of this notice as

indirect materials because although

these inputs are used to produce the

subject merchandise, these inputs are

not incorporated into the final product

and are also categorized as ‘‘stores and

spares consumed’’ based on Indian

accounting standards. According to the

Compendium of Statements and

Standards, in order for a material to be

considered as part of factory overhead,

it must ‘‘assist the manufacturing

process, but * * * not enter physically

into the composition of the finished

product.’’ We agree that dextrin, steel

shot, antirust, cutting oil, cleaning agent

and dehydrating oil are indirect

materials and should be treated as part

of factory overhead, because the

function of these materials is to ‘‘assist’’

in the manufacturing process and do not

enter physically into the composition of

the finished product. With respect to

rustproofing oil, we find that this input

is a direct material because it is used as

a packaging material. As for limestone

and firewood, we find that limestone is

a direct material which is consumed

during the smelting process as flux (i.e.,

a material resulting from the production

process which removes undesirable

substances, like sand, from the metal

bath) and that firewood is an energy

input used in the production process.

Comment 9: Surrogate Value for

Rustproofing Oil

Southwest claims that if the

Department treats rustproofing oil as a

direct material, then the Department

should value it using the value of

lubrication oil because other

respondents, such as CAIEC/Laizhou

CAPCO, use rustproofing oil for the

same process. Thus, the Department

should use the same surrogate value for

all respondents (i.e., lubrication oil).

The petitioner did not comment on

this issue.

DOC Position

We disagree with Southwest. We

found at the verification of Southwest’s

factory that it used a rustproofing oil,

not lubrication oil, to coat its finished

brake rotors for packaging. In contrast,

although we found that CAIEC/Laizhou

CAPCO used an oil to protect its brake

rotors before packaging, it is clear that

CAIEC/Laizhou CAPCO uses lubrication

oil and not rustproofing oil. However,

given that we could not obtain a

surrogate value for rustproofing oil, we

have used the value of lubrication oil to

value this input for all respondents.

Comment 10: Foreign Inland Freight

The eight respondents maintain that

the Department should not deduct an

amount for foreign inland freight from

EP or CEP because that expense was

incurred by the factories and not by the

trading companies. According to these

respondents, the original places of

shipment were the seaports where the

suppliers delivered the merchandise for

shipment to the United States. Citing

Notice of Final Results of Antidumping

Duty Administrative Review: Titanium

Sponge from the Russian Federation, 61

FR 58525 (November 15, 1996),

(Titanium Sponge from Russia), they

claim that the Department should

consider the seaports from which the

subject merchandise was shipped to be

the original places of shipment and to

deduct only the movement charges

incurred in transporting the

merchandise from the PRC to the U.S.

customers from EP and CEP.

Alternatively, they maintain that if the

Department does deduct the foreign

inland freight from the factories to the

seaports from EP and CEP, then the
9170 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

Department should, at a minimum,

ensure that a similar amount is

excluded from the overhead and selling

expense ratios calculated for building

normal value. They contend that if the

overhead and selling expense ratios are

derived from Indian producer financial

statements wherein overhead and/or

SG&A contain delivery expenses, the

inclusion of such expenses in normal

value with the simultaneous exclusion

of such expenses from EP and CEP

would constitute double-counting.

The petitioner did not comment on

this issue.

DOC Position

The Department disagrees with the

respondents’’ implied conclusion that in

these investigations, the cost of

transporting the subject merchandise

from the factory to the PRC port of

exportation should be treated as a

component of the factories’’ total costs

(i.e., as a factor in the construction of

normal value) instead of as a deduction

from the price to the U.S. customer.

While it is true that, in Titanium Sponge

from Russia, the Department did not

deduct factory-to-port movement

charges from the U.S. starting price, and

instead included ‘‘in normal value an

amount for the inland freight,’’ the

circumstances in that particular case

were very different from those of the

instant investigations. Our normal

methodology is to strip all movement

charges, including all foreign inland

freight, from the U.S. price being

compared to NME normal value based

on factors of production. The facts in

these instant investigations differ from

those in Titanium from the Russian

Federation, wherein (1) the subject

merchandise produced in an NME

country was sold to an exporter located

in a market economy without

knowledge on the part of the producer

of the United States as the ultimate

destination and (2) the exporter took

physical possession of the subject

merchandise. Since neither of these

conditions apply to these instant

investigations, the comparison to

Titanium from the Russian Federation is

misplaced, and the Department has

followed its normal methodology.

The respondents in these

investigations are either (1) PRC selfexporting producers, such as

Xinchangyuan or (2) PRC trading

companies, such as CMC, which

purchased subject merchandise from

PRC producers. We are therefore

deducting the surrogate value for the

cost of transporting the subject

merchandise from the factories to the

port of exportation from the U.S. price,

whether EP or CEP, in keeping with our

past practice. See Bicycles. As to the

respondents’’ claim that the overhead

and/or SG&A rates applied in

calculating normal value may already

contain the cost of transporting the

merchandise to the port as a selling

expense, and that the deduction of

foreign inland freight charges from the

U.S. price constitutes a double-counting

of expenses, we have ensured that any

expense line-item which refers to

‘‘freight,’’ ‘‘movement,’’ ‘‘carriage,’’ or

‘‘transportation’’ of goods, as well as the

portion of ‘‘vehicle maintenance’’ and

‘‘vehicle depreciation’’ expenses

applicable to product delivery, have

been removed from the total SG&A costs

and total overhead costs contained in

the financial statements of Indian

companies used in calculating NV.

Comment 11: Use of Exchange Rates

The eight respondents maintain that

when calculating the exchange rate used

in converting Indian surrogate values

into U.S. dollars, the Department should

use the buying exchange rates for U.S.

dollars contained in Federal Exchange

Bulletin, because the issue here is not

how many dollars it takes to purchase

one Indian rupee, but rather how many

rupees are required to purchase one U.S.

dollar.

The petitioner argues that the

Department should not reject its use of

daily Indian rupee-U.S. dollar exchange

rates from the Federal Reserve Bank of

Chicago and argues that there is no

merit in respondents’ request for the

Department to abandon the use of these

exchange rates in favor of simple

average rates in the Federal Exchange

Bulletin.

DOC Position

We agree with the petitioner. Based

on Policy Bulletin 96–1: Import

Administration Exchange Rate

Methodology, we have used daily noon

buying rates to establish the Indian

rupee exchange rates used in these

investigations. The daily noon buying

rates are based on the rates in New York

for cable transfers, which are certified

by the New York Federal Reserve Bank

for customs purposes, as required by

section 522 of the Act. This information

has been downloaded from an electronic

bulletin board maintained by the

Chicago Federal Reserve Bank. (See

‘‘Currency Conversion’’ section of this

notice for further discussion).

Comment 12: Currency Conversion

The eight respondents urge the

Department to round to the nearest onethousandth of a dollar when converting

Indian rupee values to U.S. dollars,

because rounding to the nearest onehundredth of a dollar often can cause

significant distortions.

The petitioner did not comment on

this issue.

DOC Position

We disagree with the respondents. In

converting values from Indian rupees to

U.S. dollars, we have derived U.S.

values and rounded those values to the

nearest one-hundredth, not onethousandth, of a dollar because we do

not find their use to have a significant

effect on the margins.

Company-Specific Issues

Qingdao

Comment 13: Calculation of Total

Material Cost

The petitioner claims that the

Department did not include the cost of

wire rod scrap when it calculated the

total material cost for each model in the

factors of production database for

Changzhi Automobile Parts Factory

(Changzhi), Qingdao’s supplier. The

petitioner urges the Department to

include this factor in its calculation of

total material cost.

Changzhi states that the Department

correctly did not separately value wire

rod scrap.

DOC Position

We agree with the petitioner. We

verified that Changzhi reported a

separate factor amount for wire rod

scrap in the factors of production

database. Therefore, for the final

determination, we have valued this

factor accordingly.

Shenyang/Laizhou/MAT

Comment 14: EP vs. CEP Sales

Classification

Shenyang/Laizhou maintains that the

Department incorrectly classified U.S.

sales made prior to importation through

its U.S. affiliate, MAT, as CEP

transactions, and requests that the sales

be reclassified as EP transactions.

The petitioner maintains that the

Department should continue to treat

these sales as CEP transactions.

DOC Position

We agree with the petitioner that

these sales are properly treated as CEP

sales. With respect to EP sales, section

772 (a) of the Act states that:

The term ‘‘export price’’ means the price at

which the subject merchandise is first sold

(or agreed to be sold) before the date of

importation by the producer or exporter of

the subject merchandise outside of the

United States to an unaffiliated purchaser in

the United States or to an unaffiliated

purchaser for exportation to the United States

. . .
Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9171

Based on Department practice, we

examine several criteria for determining

whether sales made prior to importation

through an affiliated sales agent to an

unaffiliated customer in the United

States are EP sales, including: (1)

Whether the merchandise was shipped

directly from the manufacturer to the

unaffiliated U.S. customer; (2) whether

the sales follow customary commercial

channels between the parties involved;

and (3) whether the function of the U.S.

selling agent is limited to that of a

‘‘processor of sales-related

documentation’’ and a

‘‘communications link’’ with the

unrelated U.S. buyer. Where all criteria

are met, the Department has regarded

the routine selling functions of the

exporter as ‘‘merely having been

relocated geographically from the

country of exportation to the United

States,’’ and has determined the sales to

be EP sales. Where all conditions are not

met, the Department has classified the

sales in question as CEP sales. See, e.g.,

Final Determination of Sales at Less

Than Fair Value: Large Newspaper

Printing Presses and Components

Thereof, Whether Assembled or

Unassembled, from Germany (LNPP

from Germany), 61 FR 38166, 38174

(July 23, 1996).

In this case, the sales through MAT

meet the first two criteria described

above. However, with respect to the

third criterion, the record evidence in

this case indicates that MAT is not

merely a processor of sales-related

documentation nor a ministerial

communication link between the

factories and their unaffiliated

customers. On the contrary, MAT is

instrumental in determining the terms

of sale. In the questionnaire responses

and at verification, company officials

repeatedly stated that the U.S.-based

president of MAT and owner of the

Shenyang and Laizhou factories is

solely responsible for all production,

distribution, and sales decisions.

Indeed, the case brief submitted by

Shenyang/Laizhou concedes that

instructions regarding pricing are sent

from MAT’s office in the United States.

See case brief at 20. We are not

persuaded by the argument that the

U.S.-based president of MAT directs

sales activities in his role as owner of

the factories rather than as president of

MAT, nor by the argument that his U.S.

sales activities are ‘‘simply the

consequence of (the U.S.-based

president of MAT) being a U.S. citizen

and resident.’’ Id. The fact is that the

U.S.-based president of MAT

operationally controls both the factories

and MAT from his U.S. office, with the

result that MAT directs the factories, not

the opposite. Therefore, the sales

through MAT are properly classified as

CEP sales.

Comment 15: Surrogate Value for

Purchased Unfinished Castings

Shenyang/Laizhou argues that the

Department should use Laizhou’s

casting-related factors of production to

calculate a surrogate value for castings

purchased by Shenyang from

unaffiliated PRC suppliers because

Laizhou’s valued factors for castings are

more reflective of Shenyang’s costs for

castings if it had produced the castings

itself. Alternatively, the respondent

argues that the Department should

derive a casting value based on the

financial statements of Indian casting

producers Nagpur and Jayaswals.

According to the respondent, these

financial statements are the only sources

on the record that provide data for

purchases or consumption of unfinished

gray cast iron castings by producers of

brake rotors.

The petitioner maintains that the

Department should not value castings

using the Laizhou factors of production

given that there is reliable public

information on the record regarding the

price of input castings in India. The

petitioner requests that the Department

continue to use the inventory value for

castings in Shivaji’s financial statements

as it did in the preliminary

determination.

DOC Position

We disagree with the respondent that

the unfinished castings purchased by

Shenyang should be valued using the

casting-related factors of production

reported by Laizhou because, in NME

cases, we value a respondent’s factors

based on its actual production

experience during the POI. In this case,

Shenyang purchased its unfinished

castings during the POI and did not

produce them, and thus we have valued

these factors accordingly (see Notice of

Final Determination of Sales at Less

Than Fair Value: Coumarin from the

People’s Republic of China (PRC), 59 FR

66895, (Comments 4 and 5) (December

28, 1994). The Department values inputs

purchased in an NME using surrogate

values derived from publicly available

information in a market economy of a

similar stage of development. The

record of this investigation includes

financial statements of Indian producers

of brake rotors which provide reliable

surrogate values for the purchase price

of input castings, and there is therefore

no need to build up a casting purchase

value using the factors of production

reported by Laizhou.

In identifying appropriate Indian

financial statements for valuation of

castings, we have excluded the

statements of producers which did not

manufacture rotors during the POI,

since castings for rotors may have

significantly different prices from

castings for other products. Also, we

have sought data on purchases of

castings from casting suppliers, since it

is reasonable to assume that such

castings are unfinished or at most semifinished. We believe that purchased

casting data are more reliable than

casting inventoried values, which may

reflect large quantities of finished

castings, and also more reliable than

casting consumption values, which may

include large quantities of castings

produced internally rather than

purchased from outside suppliers.

Given these criteria, the Jayaswals

financial statements provide the only

appropriate Indian surrogate value for

unfinished castings on the record, and

we have relied on that value. For a more

extensive discussion of our valuation of

unfinished castings, please refer to the

final factors valuation memorandum.

Southwest/MMB

Comment 16: EP vs. CEP Sales

Classification

The respondent maintains that sales

made by its U.S. affiliate (MMB) should

be considered EP and not CEP

transactions because (1) the price of the

merchandise is set by Southwest, not by

MMB, prior to importation; (2) the

customary commercial channel is to

ship the merchandise directly to the

customer; and (3) MMB maintains no

inventory in the United States.

Southwest cites to The Final

Determination of Sales at Less Than Fair

Value: Certain Stainless Steel Rod from

France, 58 FR 68865 (December 29,

1993) (Stainless Steel Rod) in support of

its argument.

The petitioner asserts that the

Department should continue to treat

these sales as CEP.

DOC Position

We disagree with Southwest. Our

verification findings indicate that

Southwest’s sales through MMB were

properly classified as CEP sales. When

we requested at verification evidence

that Southwest sets U.S. prices, rather

than MMB, Southwest was only able to

provide negotiation and sales

correspondence for one customer

purchase order (which covered an

insufficient number of the total POI

invoices of subject merchandise).

Further, the only documentation

Southwest provided at verification to
9172 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

support its claim was documentation

that it had been requested to prepare

prior to verification. We find this failure

to be significant, especially given that

the respondent originally stated in its

response that MMB is ‘‘not a mere

conduit of sales by Southwest’’ and that

MMB’s salesman ‘‘negotiates the final

prices with MMB’s customers.’’ (see

Southwest’s supplementary sales

response, dated August 27, 1996, at A–

2). With regard to Southwest’s reference

to Stainless Steel Rod, we note that

unlike the U.S. affiliate in that case,

MMB’s sales of brake rotors do not

involve a situation in which the U.S.

affiliate had no flexibility to set the

price (i.e., price is set by the parent

company). Therefore, we find no

compelling evidence in Southwest’s

responses or in our verification findings

to treat these sales as EP sales.

Comment 17: Treatment of Bartered

Scrap

The petitioner argues that no

adjustment for bartered steel scrap

should be made because the respondent

did not provide a surrogate value to the

Department.

Yangtze, Southwest’s supplier, claims

that the Department should grant it a

credit for the scrap (i.e., turnings and

shavings) sold or bartered by it and that

a surrogate value for steel scrap is

already on the record.

DOC Position

We agree with Yangtze. It is

Department practice to subtract the sales

revenue of by-products such as steel

scrap from the production costs of the

subject merchandise (see Notice of Final

Determination of Sales at Less Than Fair

Value: Sebacic Acid from the People’s

Republic of China, 59 FR 28053 (May

31, 1994). Moreover, we have a

surrogate value for steel scrap on the

record. Therefore, we have granted

Yangtze a credit for the turnings and

shavings it sold or bartered during the

POI.

Comment 18: Credit Expense

Southwest maintains that if credit

expenses are deducted from CEP, then

the Department should use the date of

the U.S. affiliate’s invoice and not the

date when Southwest shipped the

subject merchandise from the PRC.

The petitioner maintains that the

Department should use the PRC date of

shipment to calculate this expense.

DOC Position

We disagree with Southwest that the

Department should use the date of the

U.S. affiliate’s invoice to calculate credit

expenses. When merchandise produced

by the foreign-based exporter’s affiliated

factory (Yangtze) is shipped from the

factory through the foreign-based

exporter (Southwest) and then directly

to an unaffiliated U.S. customer without

entering the inventory of a U.S. affiliate

(MMB), then it is the Department’s

standard practice to calculate credit

expenses based on the date of shipment

from the factory to the U.S. customer.

Therefore, we have based credit

expenses for this respondent on the

number of days between the date of

shipment to the U.S. customer and the

date of payment. See Final

Determination of Sales at Less Than Fair

Value: Hot-Rolled Carbon Steel Flat

Products from Italy, 58 FR 37152 (July

9, 1993).

Comment 19: Misreported Weights for

Unfinished Castings

The petitioner maintains that Yangtze

incorrectly reported the weights for all

of its unfinished casting models listed

in the sales and factors of production

databases, and the factors for those

unfinished castings.

The respondent maintains that it did

not misreport the weights of its

unfinished castings in the factors of

production database. The respondent

argues that the Department should use

the reported standard weights for

unfinished castings rather than the

actual weights because the reported

weights are reflected in its accounting

records and those weights were used to

allocate raw materials used in making

all castings (i.e., unfinished castings and

finished castings). Respondent further

maintains that using the actual weights

rather than the standard weights would

be distortive because they overstate the

constructed value for each unfinished

casting. Respondent cites To Notice of

Final Determination of Sales at Less

Than Fair Value: Minivans from Japan,

57 FR 21937 (1992) in support of its

argument.

DOC Position

We disagree with the respondent. At

verification, we found that the

difference in weight of an unfinished

casting compared to a finished casting

for the same model is large in

magnitude. We know that using the

standard weights for allocating inputs

for unfinished castings from Yangtze’s

accounting records distorts the actual

production costs of the subject

merchandise. Using the standard

weights will also undervalue the factors

used to produce unfinished castings and

distort the actual production cost of the

brake rotors, because the standard

weights are lower than the actual

weights. Therefore, the reasons for using

standard weights in the Minivans case

do not apply in this case.

If we do not take into account the

actual weight of the unfinished brake

rotor, then we would not be considering

that there is a yield loss between a

finished and unfinished product.

However, in actuality, the yield loss is

not as high for an unfinished product as

a finished product, and therefore, the

cost allocations are inaccurate as

reported. Yangtze has not offered any

alternative allocation methodology to

account for these distortions.

Furthermore, Yangtze did not even

realize that its reported weights for

unfinished brake rotors were based on

its standard accounting system until

Department officials found that the

weights for unfinished brake rotors were

incorrectly reported at verification.

In sum, in light of the distortive

effects which would result from using

Yangtze’s theoretical standard weights,

which bear no resemblance to the actual

weights of unfinished castings, we are

using the actual weights as the basis for

allocation for those castings.

Comment 20: Welfare Fund

The petitioner alleges that Southwest

failed to establish an absence of de facto

or de jure government control because

verification demonstrated that

Southwest places a portion of its profits

in a fund called ‘‘the public welfare

fund’’ and claims that this fund is set up

for payment of profits to the PRC

government. For these reasons, the

petitioner urges the Department to resort

to facts available and deny Southwest a

separate rate.

Southwest maintains that the

Department found at verification that

‘‘the public welfare fund’’ is an

employee welfare fund retained by the

respondent.

DOC Position

We disagree with the petitioner.

Southwest, like all the other

respondents, is required to maintain an

accounting system based on current PRC

accounting standards. Included in the

standard chart of accounts is an account

entitled ‘‘public welfare fund.’’ We

examined the activity in this account

during the POI and found that no

payments were made to the PRC

government. In addition, Southwest has

demonstrated both a de jure and de

facto absence of government control.

(See ‘‘Separate Rates’’ section, above).

Therefore, the Department sees no

reason to deny Southwest a separate

rate.
Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9173

Yantai

Comment 21: Misreported Factors

The petitioner maintains that Laizhou

Magnetic Iron Powder (MIP) Factory

incorrectly reported its usage of five

packing material factors for all models

in the factors of production database. As

a result of these errors, the petitioner

urges the Department to resort to facts

available for these materials.

Respondent maintains that the

petitioner’s request for use of facts

available for Laizhou MIP’s packing

costs is misplaced. According to the

respondent, of the six types of packing

materials used by Laizhou MIP, the

factory consistently and conservatively

over-reported usage for five of the

materials. For the sixth material, plastic

bags, Laizhou MIP maintains that the

magnitude of its under-reporting was

less than one gram per bag.

DOC Position

We disagree for the most part with the

petitioner’s request that the Department

utilize facts available in determining

Laizhou MIP’s usage of packing

materials. For five of the six materials in

question—cartons, nails, steel strap,

pallet wood, and tape—the usages

reported were found to be significantly

overstated by the respondent. With

respect to one packing material, plastic

bags, the samples examined at

verification indicate that Laizhou MIP

did underreport usage by a relatively

minor amount. We have corrected all of

these usages using the verification

findings as non-adverse facts available.

Currency Conversion

We made currency conversions into

U.S. dollars based on the official

exchange rates in effect on the dates of

the U.S. sales as certified by the Federal

Reserve Bank.

Section 773A(a) of the Act directs the

Department to convert foreign

currencies based on the dollar exchange

rate in effect on the date of sale of the

subject merchandise, unless it is

established that a currency transaction

on forward markets is directly linked to

an export sale. When a company

demonstrates that a sale on forward

markets is directly linked to a particular

export sale, the Department will use the

rate of exchange in the forward currency

sale agreement.

Section 773A(a) also directs the

Department to use a daily exchange rate

in order to convert foreign currencies

into U.S. dollars unless the daily rate

involves a fluctuation. It is the

Department’s practice to find that a

fluctuation exists when the daily

exchange rate differs from the

benchmark rate by 2.25 percent. The

benchmark is defined as the moving

average of rates for the past 40 business

days. When we determine a fluctuation

to have existed, we substitute the

benchmark rate for the daily rate, in

accordance with established practice.

Further, section 773A(b) directs the

Department to allow a 60-day

adjustment period when a currency has

undergone a sustained movement. A

sustained movement has occurred when

the weekly average of actual daily rates

exceeds the weekly average of

benchmark rates by more than five

percent for eight consecutive weeks.

(For an explanation of this method, see

Policy Bulletin 96–1: Currency

Conversions, 61 FR 9434 (March 8,

1996).) Such an adjustment period is

required only when a foreign currency

is appreciating against the U.S. dollar.

The use of an adjustment period was not

warranted in this case because the

Indian rupee did not undergo a

sustained movement.

Continuation, and Termination in Part,

of Suspension of Liquidation

Brake Drums

In accordance with section 735(c) of

the Act, we are directing the Customs

Service to continue to suspend

liquidation of all entries of brake drums

from the PRC, except for the exporter/

producer combinations listed below,

that are entered, or withdrawn from

warehouse, for consumption on or after

October 10, 1996, which is the date of

publication of our notice of preliminary

determination in the Federal Register:

Exporter(s) Producer(s)

CMC .......................... Xinchangyuan

Qingdao ..................... Changzhi

Xinchangyuan ............ Xinchangyuan

Yantai ........................ Longkou Bohai;

Laizhou MIP.

With respect to the above companies,

the suspension of liquidation ordered

on or after October 10, 1996, will be

terminated and any cash deposit or

bonds will be released.

Under the Department’s NME

methodology, the zero rate for each

exporter is based on a comparison of the

exporter’s U.S. price and NV based on

the factors of production of a specific

producer (which may be a different

party). Therefore, the exclusion of the

above-mentioned companies from an

antidumping duty order (should one be

issued) applies only to subject

merchandise sold through the exporter/

producer combinations noted above.

Merchandise that is sold by an abovementioned exporter but manufactured

by producers not noted above for that

exporter will be subject to the order, if

one is issued (see Notice of Final

Determination of Sales At Less Than

Fair Value: Cased Pencils from the

People’s Republic of China, 59 FR 55625

(November 8, 1994) and Drawer Slides).

Entries of such merchandise will be

subject to the ‘‘China-wide’’ rate.

For imports of brake drums that are

sold by CAIEC/Laizhou CAPCO, Hebei

Metals and Machinery Import & Export

Corporation, Jiuyang Enterprise

Corporation, Longjing Walking Tractor

Works Foreign Trade Import & Export

Corporation and Shanxi Machinery and

Equipment Import & Export

Corporation, we are directing the

Customs Service to suspend liquidation

at a rate indicated below.

As stated in the preliminary

determination, it would be

inappropriate to assign these fully

cooperative respondents a rate based on

‘‘facts available’’ that would also apply

to PRC exporters who refused to

cooperate. However, for this final

determination, all of the rates

determined for the selected brake drum

respondents were either zero or entirely

based on facts available.

We note that the Act is silent with

respect to a situation in an NME

investigation in which all of the rates

determined for the selected respondents

are either zero, de minimis or based on

facts available. However, section

735(c)(5)(B) of the Act, which deals with

the analogous ‘‘all others’’

determination, allows us to ‘‘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.’’ The SAA at 873 explicitly

recognizes that if the latter approach

‘‘results in an average that would not be

reasonably reflective of potential

dumping margins for non-investigated

exporters or producers, Commerce may

use other reasonable methods.’’ CNIGC,

the only one of the five examined

companies which did not receive a de

minimis or zero rate, became subject to

a rate based on facts available because

it was found not to be entitled to a

separate rate, rather than due to a failure

to provide data on its sales practices.

Furthermore, this company’s volume of

sales of brake drums to the U.S. market

is one of the largest in the investigation.

Given the unique circumstances of this

case, we do not consider that a

weighted-average which includes that

company’s adverse facts available rate is

reasonably reflective of potential
9174 Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices

dumping margins for cooperative noninvestigated exporters or producers who

submitted full questionnaire responses.

Therefore, in order not to give undue

weight to CNIGC in determining a rate

for non-examined companies which is

reasonably reflective of potential

dumping margins, we have assigned to

these companies a rate which is the

simple average of the dumping margins

determined for the exporters and

producers individually investigated.

We are also directing the Customs

Service to continue to suspend

liquidation of entries sold by the PRC

brake drum companies subject to the

China-wide rate, that are entered, or

withdrawn from warehouse, for

consumption on or after October 10,

1996.

The Customs Service will require a

cash deposit or posting of a bond equal

to the estimated duty margins by which

the normal value exceeds the USP, as

shown below. These suspension of

liquidation instructions will remain in

effect until further notice.

The weighted-average dumping

margins are as follows:

BRAKE DRUMS

Manufacturer/Producer/ExporterWeighted-average

margin percentage

CMC/Xinchangyuan .. 0.00 (Excluded).

Qingdao/Changzhi .... 0.00 (Excluded).

Xinchangyuan/

Xinchangyuan.

0.00 (Excluded).

Yantai/Longkou Botai

Machinery Company or Laizhou

MIP.

0.00 (Excluded).

CAIEC/Laizhou

CAPCO.

17.20.*

Hebei Metals and

Machinery Import &

Export Corporation.

17.20.*

Jiuyang Enterprise

Corporation.

17.20.*

Longjing Walking

Tractor Works Foreign Trade.

17.20.*

Import & Export Corporation Shanxi

Machinery and

Equipment Import

& Export Corporation.

17.20.*

China-Wide Rate ...... 86.02.

* Rate is based on the simple average of

rates determined for the selected respondents.

Brake Rotors

In accordance with section 735(c) of

the Act, we are directing the Customs

Service to continue to suspend

liquidation of all entries of brake rotors

from the PRC except for the exporter/

producer combinations listed below,

that are entered, or withdrawn from

warehouse, for consumption on or after

October 10, 1996:

Exporter(s) Producer(s)

CAIEC or Laizhou

CAPCO.

Laizhou CAPCO.

Shenyang or Laizhou Shenyang or Laizhou.

Xinjiang ...................... Zibo Botai Manufacturing Co., Ltd.

With respect to the above companies,

the suspension of liquidation ordered

on or after October 10, 1996, is to be

terminated and any cash deposit or

bonds are to be released. However, if

any of the above-referenced companies

sell subject merchandise which is not

manufactured by the producers noted

above for those companies, then those

entries will be subject to the ‘‘Chinawide’’ rate (for a full explanation, see

the ‘‘Brake Drums’’ section above).

For imports of brake rotors that are

sold by Hebei Metals and Machinery

Import & Export Corporation, Jilin

Provincial Machinery & Equipment

Import & Export Corporation, Jiuyang

Enterprise Corporation, Longjing

Walking Tractor Works Foreign Trade

Import & Export Corporation, Qingdao

Metals, Minerals & Machinery Import &

Export Corporation, Shanxi Machinery

and Equipment Import & Export

Corporation, Xianghe Zichen Casting

Corporation and Yenhere Corporation,

we have assigned these companies a

weighted-average dumping margin

based on the calculated margins of the

selected brake rotors respondents,

excluding margins which were zero, de

minimis or based on facts available (see

Preliminary Determinations).

Because we have determined that

critical circumstances exist with respect

to the PRC brake rotor companies which

have received the China-wide rate, we

are directing the Customs Service to

continue to suspend liquidation of

entries sold by these companies, that are

entered, or withdrawn from warehouse,

for consumption on or after July 12,

1996, which is 90 days prior to the date

of publication of our notice of

preliminary determination in the

Federal Register.

The Customs Service will require a

cash deposit or posting of a bond equal

to the estimated duty margins by which

the normal value exceeds the USP, as

shown below. These suspension of

liquidation instructions will remain in

effect until further notice.

The weighted-average dumping

margins are as follows:

BRAKE ROTORS

Manufacturer/producer/exporterWeighted-average

margin percentage

CAIEC and Laizhou

CAPCO/Laizhou

CAPCO.

0.00 (Excluded).

Shenyang and

Laizhou/Shenyang

or Laizhou.

0.00 (Excluded).

Xinjiang/Zibo Botai

Manufacturing Co.

Ltd.

0.00 (Excluded).

Yantai Import & Export Corporation.3.56.

Southwest Technical

Import & Export

Corporation,

Yangtze Machinery

Corporation, and

MMB International,

Inc.

16.35.

...................................

Hebei Metals and

Machinery Import &

Export Corporation.

8.63.*

Jilin Provincial Machinery & Equipment Import & Export Corp.8.63.*

Jiuyang Enterprise

Corporation.

8.63.*

Longjing Walking

Tractor Works Foreign Trade Import

& Export Corporation.

8.63.*

Qingdao Metals, Minerals & Machinery

Import & Export

Corp..

8.63.*

Shanxi Machinery

and Equipment Import & Export Corporation.

8.63.*

Xianghe Zichen Casting Corporation.8.63.*

Yenhere Corporation 8.63.*

China-Wide Rate ...... 43.32.

* Rate is based on the weighted-average of

calculated rates that are not zero or based on

facts available.

China-Wide Rate

China-Wide Rates have been assigned

to brake drums and brake rotors

exporters based on the revised highest

petition rates. The China-Wide rate

applies to all entries of subject

merchandise except for entries from

exporters/factories that are identified

individually above under each product

type.

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the ITC of our

determinations. As our final

determinations are affirmative, the ITC

will determine, within 45 days, whether

these imports are causing material

injury, or threat of material injury, to an
Federal Register / Vol. 62, No. 40 / Friday, February 28, 1997 / Notices 9175

industry in the United States. If the ITC

determines that material injury, or

threat of material injury, does not exist,

for one or both proceedings, that

proceeding or both proceedings will be

terminated and all securities posted will

be refunded or canceled. If the ITC

determines that such injury does exist

in both proceedings, the Department

will issue antidumping duty orders

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.

These determinations are published

pursuant to section 735(d) of the Act.

Dated: February 24, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–5029 Filed 2–27–97; 8:45 am]

BILLING CODE 3510–DS–P

[A–301–602]

Certain Fresh Cut Flowers From

Colombia; Notice of Final Court

Decision and Amended Final Results

of Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final court decision

and amended final results of

administrative review.

SUMMARY: On September 28, 1995, the

U.S. Court of Appeals for the Federal

Circuit upheld the Department of

Commerce’s (the Department’s) use of

constructed value (CV) instead of thirdcountry prices, for the purpose of

determining foreign market value, and

the Department’s use of monthly

average U.S. prices (USPs), instead of

annual average USPs for the purpose of

determining dumping margins. See

Floral Trade Council v. United States,

Slip Op., Ct. Nos. 94–1019, 94–1020

(Fed. Cir. Sept. 28, 1995). As there is

now a final and conclusive court

decision in this action, we are amending

our final results of review in this matter

and we will subsequently instruct the

U.S. Customs Service to liquidate

entries subject to this review.

EFFECTIVE DATE: February 28, 1997.

FOR FURTHER INFORMATION CONTACT:

Mark Ross or Richard Rimlinger, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW., Washington, DC 20230;

telephone (202) 482–4733.

SUPPLEMENTARY INFORMATION:

Background

On May 17, 1990, the Department

published its final results of

administrative review of certain fresh

cut flowers from Colombia for the

period March 1, 1988 through February

28, 1989. See Certain Fresh Cut Flowers

From Colombia; Final Results of

Antidumping Duty Administrative

Review, 55 FR 20491 (May 17, 1990).

Subsequently, a domestic association

and a number of reviewed companies

filed lawsuits with the United States

Court of International Trade (CIT)

challenging the final results. Thereafter,

the CIT issued an order and opinion,

remanding several issues to the

Department. See Floral Trade Council v.

United States, 775 F. Supp. 1492 (CIT

1991). The CIT instructed the

Department to: (1) Collect actual cost

data from eleven companies for which

the Department had not previously

requested cost data for purpose of

calculating CV; (2) make a credit

adjustment to CV for five companies; (3)

include street vendor sales in the inland

freight calculation for Floral Ltda.

Exportaciones Bochica; (4) adjust USP

for Dianticola Colombiana to include

revenues deposited by the firm’s

consignment agent into a United States

bank on Dianticola Colombiana’s behalf;

(5) correct a clerical error concerning

calculation of CV for Flores el Trentino,

and (6) normalize costs to account for

low yields suffered by Florandia/

Herrera-Camacho. The Department filed

its remand results on May 5, 1992.

On April 22, 1993, the CIT issued a

second remand to the Department to

allow preproduction expenses incurred

by Flores Condor de Colombia to be

amortized. See Floral Trade Council v.

United States, Slip Op. 93–57 (CIT Apr.

23, 1993). The Department filed the

results of this second remand on June

14, 1993. On July 22, 1993, the CIT

rendered its final judgment. See Floral

Trade Council v. United States, Slip Op.

93–135 (CIT July 23, 1993).

Subsequently, appeals were filed by

both domestic and foreign parties.

On September 28, 1995, the U.S.

Court of Appeals for the Federal Circuit

upheld the Department’s use of CV,

instead of third-country prices, for

purpose of determining foreign market

value, and the Department’s use of

monthly average USPs, instead of

annual average USPs, for purpose of

determining antidumping margins. See

Floral Trade Council v. United States,

Slip Op., Ct. Nos. 94–1019, 94–1020

(Fed. Cir. Sept. 28, 1995).

As there is now a final and conclusive

court decision in this action, we are

amending our final results of review in

this matter and we will subsequently

instruct the U.S. Customs Service to

liquidate entries subject to this review.

Amendment to Final Result of Review

Pursuant to 19 U.S.C. 1516a(e), we are

now amending the final results of

administrative review for certain fresh

cut flowers from Colombia for the

period March 1, 1988 through February

28, 1989. The revised weighted-average

margins are as follows:

Company Margin (percent)

Agricola Los Arboles ................. 0.38

Claveles Colombianos .............. 0.20

Combiflor ................................... 0.19

Dianticola Colombiana .............. 2.47

Floral Ltda./Exportaciones

Bochica .................................. 0.13

Florania/Herrera-Camacho ....... 12.51

Flores Bachue ........................... 7.97

Flores Colombianas .................. 0.13

Flores Condor de Colombia ..... 0.00

Flores dos Hectareas ............... 3.90

Flores el Puente ....................... 0.70

Flores de Serrezuela ................ 0.48

Flores el Trentino ...................... 6.53

Flores la Valvanera ................... 8.71

Jardines del Muna .................... 16.85

Pompones Limitada .................. 0.11

Universal Flowers ..................... 0.53

The above rates affected the weightedaverage sample group margin, which

will be applied to the one hundred

twenty-nine firms requested only by the

domestic interested party and not

selected in the random sample. The new

sample group rate is 3.50 percent.

Accordingly, the Department will

determine and the Customs Service will

assess appropriate antidumping duties

on entries of the subject merchandise

made by firms covered by this review of

the period March 1, 1988 through

February 28, 1989. Individual

differences between USP and foreign

market value may vary from the

percentages listed above. The

Department will issue appraisement

instructions directly to the Customs

Service.

Dated: February 20, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–5033 Filed 2–27–97; 8:45 am]

BILLING CODE 3510–DS–M