1726 Federal Register / Vol. 62, No. 8 / Monday, January 13, 1997 / Notices

demonstrates that Multiraya does not

have an exclusive supplier relationship

with its U.S. customer as it attempted to

solicit business from other U.S.

companies (See Multiraya’s July 15,

1996, Supplemental Questionnaire

Response at Exhibit 3). Therefore, we

have determined that the evidence on

the record supports the claim that

Multiraya is not affiliated with its U.S.

customer.

Continuation of Suspension of

Liquidation

In accordance with section 735(c) of

the Act, we are directing the Customs

Service to continue to suspend

liquidation of all entries of MIDPs that

are entered, or withdrawn from

warehouse, for consumption on or after

August 22, 1996, the date of publication

of our preliminary determination in the

Federal Register. We will instruct the

Customs Service to require a cash

deposit or the posting of a bond equal

to the weighted-average amount by

which the NV exceeds the export price,

as indicated in the chart below. This

suspension of liquidation will remain in

effect until further notice.

Exporter/manufacturer

Weightedaverage

margin percentage

P. T. Mayer Crocodile ............... 12.90

P. T. Multi Raya Indah Abah .... 8.10

All Others .................................. 8.10

Pursuant to section 733(d)(1)(A) and

section 735(c)(5) of the Act, the

Department has not included zero, de

minimis weighted-average dumping

margins, and margins determined

entirely under section 776 of the Act, in

the calculation of the ‘‘all others’’ rate.

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the ITC of our

determination. As our final

determination is affirmative, the ITC

will determine, within 45 days, whether

these imports are causing material

injury, or threat of material injury, to an

industry in the United States. If the ITC

determines that material injury, or

threat of material injury, does not exist,

the proceeding will be terminated and

all securities posted will be refunded or

canceled. If the ITC determines that

such injury does exist, the Department

will issue an antidumping duty order

directing Customs officials to assess

antidumping duties on all imports of the

subject merchandise entered, or

withdrawn from warehouse, for

consumption on or after the effective

date of the suspension of liquidation.

This determination is published

pursuant to section 735(d) of the Act.

Dated: January 6, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–753 Filed 1–10–97; 8:45 am]

BILLING CODE 3510–DS–P

[A–583–825]

Notice of Final Determination of Sales

at Less Than Fair Value: Melamine

Institutional Dinnerware Products

From Taiwan

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: January 13, 1997.

FOR FURTHER INFORMATION CONTACT:

Everett Kelly or David J. Goldberger,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW., Washington,

DC 20230; telephone: (202) 482–4194, or

(202) 482–4136, 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 Round

Agreements Act (‘‘URAA’’).

Final Determination

We determine that melamine

institutional dinnerware products

(‘‘MIDPs’’) from Taiwan 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 preliminary determination

in this investigation (Notice of

Preliminary Determination and

Postponement of Final Determination:

Melamine Institutional Dinnerware

Products from Taiwan (61 FR 43341,

August 22, 1996)), the following events

have occurred:

In September and October 1996, we

verified the questionnaire responses of

respondents Yu Cheer Industrial Co.,

Ltd. (Yu Cheer) and Chen Hao Plastic

Industrial Co., Ltd. (Chen Hao Taiwan).

On November 23, 1996, the Department

requested Chen Hao Taiwan to submit

new computer tapes to include data

corrections identified through

verification. This information was

submitted on December 5, 1996.

Petitioner, the American Melamine

Institutional Tableware Association

(‘‘AMITA’’), and respondents submitted

case briefs on November 27, 1996, and

rebuttal briefs on December 3, 1996. The

Department held a public hearing for

this investigation on December 5, 1996.

Scope of Investigation

This investigation covers all items of

dinnerware (e.g., plates, cups, saucers,

bowls, creamers, gravy boats, serving

dishes, platters, and trays) that contain

at least 50 percent melamine by weight

and have a minimum wall thickness of

0.08 inch. This merchandise is

classifiable under subheadings

3924.10.20, 3924.10.30, and 3924.10.50

of the Harmonized Tariff Schedule of

the United States (HTSUS). Excluded

from the scope of investigation are

flatware products (e.g., knives, forks,

and spoons).

Although the HTSUS subheadings are

provided for convenience and customs

purposes, our written description of the

scope of this investigation is dispositive.

Period of Investigation

The POI is January 1, 1995, through

December 31, 1995.

Facts Available

IKEA and Gallant

We did not receive a response to our

questionnaire from either IKEA Trading

Far East Ltd. (IKEA) or Gallant Chemical

Corporation (Gallant). Section 776(a)(2)

of the Act provides that if an interested

party withholds information that has

been requested by the Department, fails

to provide such information in a timely

manner and in the form requested,

significantly impedes a proceeding, or

provides such information but the

information cannot be verified, the

Department shall use the facts otherwise

available in reaching the applicable

determination. Because IKEA and

Gallant failed to submit the information

that the Department specifically

requested, we must base our

determinations for those companies on

the facts available.

Section 776(b) of the Act provides

that adverse inferences may be used

against a party that has failed to

cooperate by not acting to the best of its

ability to comply with a request for

information. IKEA’s and Gallant’s

failure to respond to our questionnaire

demonstrates that IKEA and Gallant

have failed to cooperate to the best of

their abilities in this investigation.

Accordingly, the Department has

determined that, in selecting from

among the facts otherwise available, an

adverse inference is warranted.

Section 776(c) of the Act provides that

where the Department selects from
Federal Register / Vol. 62, No. 8 / Monday, January 13, 1997 / Notices 1727

among the facts otherwise available and

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

accompanying the URAA, H.R. Doc. No.

316, 103d Cong., 2d Sess. (1994)

(hereinafter, the ‘‘SAA’’), states that the

petition is ‘‘secondary information’’ and

that ‘‘corroborate’’ means to determine

that the information used has probative

value. See SAA at 870.

In this proceeding, we considered the

petition as the most appropriate

information on the record to form the

basis for a dumping calculation for these

uncooperative respondents. In

accordance with section 776(c) of the

Act, we sought to corroborate the data

contained in the petition.

The petitioner based its allegation of

both normal value and export price in

the petition on a market research report

which utilized price quotations from a

manufacturer/exporter of MIDPs in

Taiwan. The petitioner also submitted a

published price list of comparable

merchandise sold during the POI in

Taiwan. The Department has

determined that the price list

corroborates normal value used in the

petition.

The export price in the petition is

consistent with export prices reported

by responding companies on the record

of this investigation. Therefore, we

determine that further corroboration of

the facts available margin is

unnecessary.

Fair Value Comparisons

To determine whether sales of the

subject merchandise by Chen Hao

Taiwan and Yu Cheer to the United

States were made at less than fair value,

we compared the Export Price (‘‘EP’’) to

the Normal Value (‘‘NV’’), as described

in the ‘‘Export Price’’ and ‘‘Normal

Value’’ sections of this notice. As set

forth in section 773(a)(1)(B)(i) of the

Act, we calculated NV based on sales at

the same level of trade as the U.S. sale.

In accordance with section

777A(d)(1)(A)(i), we compared POIwide weighted-average EPs to weightedaverage NVs. In determining averaging

groups for comparison purposes, we

considered the appropriateness of such

factors as physical characteristics.

(i) Physical Characteristics

In accordance with section 771(16) of

the Act, we considered all products

covered by the description in the Scope

of Investigation section, above,

produced in Taiwan and sold in the

home market during the POI, to be

foreign like products for purposes of

determining appropriate product

comparisons to U.S. sales. Where there

were no sales of identical merchandise

in the home market to compare to U.S.

sales, we compared U.S. sales to the

next most similar foreign like product

on the basis of the characteristics listed

in the Department’s antidumping

questionnaire. In making the product

comparisons, we relied on the following

criteria (listed in order of preference):

shape type (i.e., flat—e.g., plates, trays,

saucers etc.; or container—e.g., bowls,

cups, etc.), specific shape, diameter

(where applicable), length (where

applicable), capacity (where applicable),

thickness, design (i.e., whether or not a

design is stamped into the piece), and

glazing (i.e., where a design is present,

whether or not it is also glazed).

(ii) Level of Trade

In the preliminary determination, the

Department determined that no

difference in level of trade existed

between home market and U.S. sales for

either Chen Hao Taiwan and Yu Cheer.

Our findings at verification confirmed

that Chen Hao Taiwan and Yu Cheer

performed essentially the same selling

activities for each reported home market

and U.S. marketing stage. Accordingly,

we determine that all price comparisons

are at the same level of trade and an

adjustment pursuant to section

773(a)(7)(A) is unwarranted.

Export Price

We calculated EP, in accordance with

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

where the subject merchandise was sold

directly to the first unaffiliated

purchaser in the United States prior to

importation and where CEP was not

otherwise warranted based on the facts

of record.

We calculated EP for each respondent

based on the same methodology used in

the preliminary determination, with the

following exceptions:

Chen Hao Taiwan

We added an amount to U.S. sales

denominated in U.S. dollars to account

for bank and currency conversion

charges not included in Chen Hao

Taiwan’s reporting, based on

information developed at verification

(see Comment 13).

Yu Cheer

We made the following corrections,

based on our verification findings:

(a) Revised payment dates for certain

U.S. sales, for purposes of calculating

imputed credit; (b) Corrected foreign

inland freight; (c) revised packing labor

expense; and (d) corrected certain

packing material expenses.

In order to reflect the corrected

payment dates for certain U.S. sales, we

recalculated credit for all U.S. sales,

using verified shipment and payment

dates and Yu Cheer’s reported interest

rate. Yu Cheer did not provide

information to weight-average the

different packing material purchase

prices observed at verification.

Accordingly, we applied the highest

price observed at verification for these

materials as facts available. This

approach was also consistent with Yu

Cheer’s reporting methodology for some

of the packing material expenses.

Normal Value

Cost of Production Analysis

In the preliminary determination,

based on the petitioner’s allegation, the

Department found reasonable grounds

to believe or suspect that Chen Hao

Taiwan sales in the home market were

made at prices below the cost of

producing the merchandise. As a result,

the Department initiated an

investigation to determine whether

Chen Hao Taiwan made home market

sales during the POI at prices below

their respective cost of production

within the meaning of section 773(b) of

the Act.

Before making any fair value

comparisons, we conducted the cost of

production (COP) analysis described

below.

A. Calculation of COP

We calculated the COP based on the

sum of Chen Hao Taiwan’s cost of

materials and fabrication for the foreign

like product, plus amounts for home

market selling, general and

administrative expenses (SG&A) and

packing costs in accordance with

section 773(b)(3) of the Act.

We adjusted financial expenses to

exclude foreign exchange gains (see

Comment 10), and to include the

interest expense associated with loans

from affiliated parties (see Comment 9).

We also adjusted factory overhead to

include an amount for pension expenses

(see Comment 11).

B. Test of Home Market Prices

We used Chen Hao Taiwan’s adjusted

weighted-average COP for the POI. We

compared the weighted-average COP

figures to home market sales of the

foreign like product as required under

section 773(b) of the Act in order to

determine whether these sales had been

made at below-cost prices within an

extended period of time in substantial

quantities, and were not at prices which
1728 Federal Register / Vol. 62, No. 8 / Monday, January 13, 1997 / Notices

permit recovery of all costs within a

reasonable period of time. On a modelspecific basis, we compared the COP to

the home market prices, less any

applicable movement charges and direct

selling expenses. We did not deduct

indirect selling expenses from the home

market price because these expenses

were included in the G&A portion of

COP.

C. Results of COP Test

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

Act, where less than 20 percent of a

respondent’s home market sales for a

model are at prices less than the COP,

we do not disregard any below-cost

sales of that model because we

determine that the below-cost sales were

not made within an extended period of

time in ‘‘substantial quantities.’’ Where

20 percent or more of a respondent’s

home market sales of a given model

during the POI are at prices less than

COP, we disregard the below-cost sales

because they are (1) made within an

extended period of time in substantial

quantities in accordance with sections

773(b)(2) (B) and (C) of the Act, and (2)

based on comparisons of prices to

weighted-average COPs for the POI,

were at prices which would not permit

the recovery of all costs within a

reasonable period of time in accordance

with section 773(b)(2)(D) of the Act. The

results of our cost test for Chen Hao

Taiwan indicated that for certain home

market models less than 20 percent of

the sales of the model were at prices

below COP. We therefore retained all

sales of the model in our analysis and

used them as the basis for determining

NV. Our cost test for Chen Hao Taiwan

also indicated that within an extended

period of time (one year, in accordance

with section 773(b)(2)(B) of the Act), for

certain home market models more than

20 percent of the home market sales

were sold at prices below COP. In

accordance with section 773(b)(1) of the

Act, we therefore excluded these belowcost sales from our analysis and used

the remaining above-cost sales as the

basis for determining NV.

In this case, we found that some

models had no above-cost sales

available for matching purposes.

Accordingly, export prices that would

have been compared to home market

prices for these models were instead

compared to constructed value (CV).

D. Calculation of CV

In accordance with section 773(e) of

the Act, we calculated CV based on the

sum of a respondent’s cost of materials,

fabrication, selling, general, and

administrative expenses (‘‘SG&A’’),

profit and U.S. packing costs as reported

in the U.S. sales databases. In

accordance with section 773(e)(2)(A) of

the Act, we based SG&A and profit on

the amounts incurred and realized by

Chen Hao Taiwan in connection with

the production and sale of the foreign

like product in the ordinary course of

trade for consumption in the foreign

country. Where appropriate, we

calculated Chen Hao Taiwan’s CV based

on the methodology described in the

calculation of COP above. We made the

same adjustments to Chen Hao Taiwan’s

reported CV as we described above for

COP.

Price to Price Comparisons

Adjustments to Normal Value

We based normal value on the same

methodology used in the preliminary

determination, with the following

exceptions:

Chen Hao Taiwan

For one of several packing materials

used by Chen Hao Taiwan, we found a

slight discrepancy between the reported

consumption and costs, and the verified

consumption and costs. This

discrepancy, however, affects only a

small part of the overall packing

material cost and would have an ad

valorem effect of less than .33 percent.

Consistent with 19 CFR 353.59(a),

which permits the Department to

disregard insignificant adjustments, we

have not adjusted the reported packing

materials cost in our fair value

comparisons for Chen Hao Taiwan.

Yu Cheer

We revised packing labor and certain

packing material expenses, based on

verification findings. Yu Cheer did not

provide information to weight-average

the different packing material purchase

prices observed at verification.

Accordingly, we applied the highest

price observed at verification for these

materials as facts available. This

approach was also consistent with Yu

Cheer’s reporting methodology for some

of the packing material expenses.

Price to CV Comparisons

Where we compared Chen Hao

Taiwan’s CV to Chen Hao Taiwan’s

export prices, we deducted from CV the

weighted-average home market direct

selling expenses and added the

weighted-average U.S. product-specific

direct selling expenses (where

appropriate) in accordance with section

773(a)(8) of the Act.

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, except if 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 in order to minimize its

exposure to exchange rate losses, 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, see

Change in Policy Regarding 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 New

Taiwan dollar did not undergo a

sustained movement, nor were there

currency fluctuations during the POI.

Verification

As provided in section 782(i) of the

Act, we verified the information

submitted by the respondents for use in

our final determination. We used

standard verification procedures,

including examination of relevant

accounting and production records and

original source documents provided by

respondents.

Interested Party Comments

Comment 1: Scope of Investigation

Respondents argue that the scope of

investigation should be revised to

exclude melamine dinnerware that
Federal Register / Vol. 62, No. 8 / Monday, January 13, 1997 / Notices 1729

exceeds a thickness of 0.08 inch and is

intended for retail markets when such

products are accompanied by

appropriate certifications presented

upon importation to the United States.

Petitioner objects to respondents’

scope revision proposal because, it

believes, it has no legal or factual basis

and would result in an order that would

be very difficult to administer.

Petitioner further contends that

antidumping orders based on importer

certifications of use, such as the

proposal advocated by respondents, are

difficult to administer and should be

avoided where possible. Petitioner

argues that if respondents want to

produce merchandise for the retail

market that presents no scope issue,

respondents can produce merchandise

of a thinner wall thickness that falls

outside of the scope.

DOC Position. We agree with

petitioner. Petitioner has specifically

identified which merchandise is to be

covered by this proceeding, and the

scope reflects petitioner’s definition. As

we stated in Final Determination of

Sales at Less Than Fair Value: Carbon

and Alloy Steel Wire Rod from Brazil

(59 FR 5984, February 9, 1994),

[p]etitioners’ scope definition is

afforded great weight because

petitioners can best determine from

what products they require relief. The

Department generally does not alter the

petitioner’s scope definition except to

clarify ambiguities in the language or

address administrability problems.

These circumstances are not present

here.

The petitioner has used a thickness of

more than 0.08 inch, not end use, to

define melamine ‘‘institutional’’

dinnerware. The physical description in

the petition is clear, administrable and

not overly broad. Thus, we agree with

petitioner that there is no basis for

redefining the scope based on intended

channel of distribution or end use, as

respondents propose.

Comment 2: Acceptance of Chen Hao

Taiwan Questionnaire Responses

Petitioner argues that the Department

should reject Chen Hao Taiwan’s

questionnaire responses because the

extensive, fundamental changes to the

responses submitted during the course

of the investigation render its data

unreliable. In particular, petitioner

objects to Chen Hao Taiwan’s

submission of allegedly ‘‘minor

corrections’’ at the beginning of

verification and submitted for the record

on October 8, 1996. Petitioner claims

that this information is untimely under

19 CFR 353.31 as it contains new

information, which may not be accepted

at verification, and should therefore be

(wholly or, at a minimum, partially)

rejected for use in the final

determination following the precedent

in Final Results of Administrative

Review: Titanium Sponge from the

Russian Federation (61 FR 58525,

November 15, 1996) (Titanium Sponge).

Further, petitioner claims it was

deprived of its ability to comment on

this data prior to verification.

Chen Hao Taiwan responds that, by

focusing on the absolute number of

corrections made, petitioner ignores the

fact that the changes were made to

ensure that the most complete and

accurate responses were submitted for

the record and properly verified.

According to Chen Hao Taiwan, its

revisions corrected typographical and

data entry errors; the corrections related

to misreported items, rather than

unreported items. Chen Hao Taiwan

adds that this situation is different from

Titanium Sponge, where the rejected

submission related to previously

unreported items of which the

Department was not alerted, while in

this proceeding, Chen Hao Taiwan

properly advised the Department of its

corrections. Chen Hao Taiwan states

that it responded to the best of its ability

in this proceeding and, thus, there is no

basis to apply facts available.

DOC Position. We disagree with

petitioner’s description of Chen Hao

Taiwan’s October 8 submission as an

extensive and entirely new cost

submission. Chen Hao Taiwan corrected

elements of its labor and factory

overhead data, which resulted in

revised figures for these components of

its COP and CV calculations. Although

the labor and overhead expenses for

some specific products changed

substantially, the effect on the total COP

and CV was relatively insignificant.

Chen Hao Taiwan did not revise its

methodology for calculating these

expenses. The corrections submitted by

Chen Hao Taiwan prior to verification

did not include new methodologies or

expense claims; there was no new area

of the response in which the petitioner

did not have the opportunity to

comment. In short, the corrections

submitted by Chen Hao Taiwan were

typical of the minor corrections

routinely accepted by the Department at

the commencement of verification.

We agree with Chen Hao Taiwan that

the submission of these corrections is

not comparable with the Titanium

Sponge example, where the Department,

rather than the respondent, identified

the information in the course of

verification, and the information

discovered was a new issue, not

previously discussed in the proceeding.

Chen Hao Taiwan fully apprised the

Department of all revisions at the

commencement of verification. Its

revisions corrected data already on the

record and did not introduce new issues

not previously reported on the record.

Accordingly, we determine that

resorting to facts available is

unwarranted in this particular case. The

Department’s use of facts available is

subject to section 782(d) of the Act.

Under section 782(d), the Department

may disregard all or part of a

respondent’s questionnaire responses

when the response is not satisfactory or

it is not submitted in a timely manner.

The Department has determined that

neither of these conditions apply. The

Department was able to verify the

response, thus rendering it satisfactory,

and the types of revisions submitted by

Chen Hao Taiwan met the deadline for

such changes. Under section 782(e), the

Department shall not decline to

consider information that is 1) timely, 2)

verifiable, 3) sufficiently complete that

it serves as a reliable basis for a

determination, 4) demonstrated to be

provided based on the best of the

respondent’s ability, and 5) can be used

without undue difficulties. In general,

Chen Hao Taiwan has met these

conditions.

Accordingly, we find no basis to reject

Chen Hao Taiwan’s response, and thus,

no basis to rely on the facts otherwise

available for our final determination.

Comment 3: Yield Rate

Petitioner claims that Chen Hao

Taiwan improperly reported overall

yield information for its COP and CV

data when it had more accurate,

product-specific data available.

Petitioner alleges that the verification

exhibits establish that Chen Hao Taiwan

maintains product-specific yield

information and, therefore, could have

reported its costs on this basis, rather

than an overall yield figure applied to

all of its products. Petitioner claims that

by reporting overall yield figures, Chen

Hao Taiwan may be attempting to mask

dumping margins generated by sharply

different yields among products, which

is the experience of the U.S. industry.

Since Chen Hao Taiwan allegedly chose

instead to report less accurate

production data, petitioner contends

that the Department should reject Chen

Hao Taiwan’s data as submitted and

adjust the yield rate by applying the

reported yield factor to each additional

production step that each product

undergoes.

Chen Hao Taiwan disputes

petitioner’s analysis of its production

records and states that the Department

verified that Chen Hao Taiwan does not
1730 Federal Register / Vol. 62, No. 8 / Monday, January 13, 1997 / Notices

maintain records in its normal course of

business that would permit it to report

product-specific yield. Chen Hao

Taiwan maintains that the verification

exhibit cited by petitioner does not

support petitioner’s contention that

Chen Hao Taiwan was able to report

product-specific yield data. Chen Hao

Taiwan argues that while petitioner may

maintain product-specific yield

information, it does not mean that the

Department must also assume that

respondent must also maintain the same

information. Chen Hao Taiwan asserts

that the Department cannot penalize a

respondent with facts available for

failure to provide information which

does not exist.

DOC Position. We agree with Chen

Hao Taiwan. The Department’s

preference is to use product specific

cost data, including product-specific

yield results, for calculating COP and

CV. The Department uses the most

specific and reasonable allocation

methods available, given a respondent’s

normal record keeping system (see Final

Determination of Sales at Less than Fair

Value: Welded Stainless Steel Pipe from

Malaysia, 59 FR 4023, 4027, January 28,

1994). In this instance, Chen Hao

Taiwan reported its costs based on

overall yield information because it

claimed that its records do not permit it

to calculate cost data on a more specific

basis. Our verification revealed nothing

to contradict Chen Hao Taiwan’s claim

that it does not maintain productspecific yield data in its normal course

of business. We also verified that Chen

Hao Taiwan was not able to calculate

yields for the POI on a more specific

basis than the yield rate which was

reported. The accounting records

identified by petitioner could arguably

be used to calculate an average yield for

each specific order; however, Chen Hao

Taiwan does not retain production

batch records in its normal course of

business beyond a short period of time.

The examples from the verification are

from the time of verification, October

1996—well beyond the POI. Moreover,

Chen Hao Taiwan’s financial accounting

documents, including inventory and

production ledgers, do not track

production information on a productspecific basis. For these reasons, we

have accepted Chen Hao Taiwan’s

reported average yield rate calculation,

which was adequately analyzed at

verification.

Comment 4: Home Market Freight

Expenses

Petitioner claims that Chen Hao

Taiwan improperly allocated home

market freight expenses across all

products and all customers during the

POI. Petitioner states that, based on

information contained in the

verification report, Chen Hao Taiwan

should be able to report freight expenses

on a customer-specific basis. Petitioner

asserts that Chen Hao Taiwan’s

allocation methodology masks

differences in freight expenses that may

result in a larger freight expense

deduction for subject merchandise sales

than if freight expenses had been

reported on a more specific basis.

Therefore, petitioner contends that the

Department should deny Chen Hao

Taiwan’s claimed freight adjustment.

Chen Hao Taiwan argues that

verification indicated that Chen Hao

Taiwan’s freight expense records did

not permit reporting on a more specific

basis.

DOC Position. The Department’s

preference is that, wherever possible,

freight adjustments should be reported

on a sale-by-sale basis rather than an

overall basis (see, e.g., Final Results of

Antidumping Duty Administrative

Review: Replacement Parts for SelfPropelled Bituminous Paving

Equipment from Canada, 56 FR 47451,

47455, September 19, 1991). If a

respondent does not maintain its

records to enable freight expense

reporting at this level, then our

preference is to apply an allocation

methodology at the most specific level

permitted by a respondent’s records.

Chen Hao Taiwan allocated all home

market freight expenses incurred on

subject merchandise by weight over all

home market sales, as demonstrated in

the sample calculation submitted in the

July 19, 1996, supplemental

questionnaire response. However, as we

noted in our verification report, ‘‘we

observed that Chen Hao may be able to

total the amount charged to each

customer during the POI, and divide

that amount by the total shipments to

that customer.’’ This method is

preferable to the method used by Chen

Hao Taiwan.

Nevertheless, we note that Chen Hao

Taiwan allocated home market freight

expenses between subject and nonsubject merchandise using a weightbased methodology, in compliance with

the Department’s supplemental

questionnaire request. The Department

did not specifically request Chen Hao

Taiwan to provide a customer-specific

allocation. Although Chen Hao Taiwan

had the means to allocate home market

freight expenses on a more specific

basis, its failure to do so does not

mandate the application of adverse facts

available in this case because Chen Hao

Taiwan has been responsive to the

Department’s requests. The principal

advantage of a customer-specific freight

allocation would be to take into account

the freight distance to the customer,

since distance is a component of the

expense incurred by Chen Hao Taiwan.

Given the distribution of Chen Hao

Taiwan’s home market customers, as

identified in the verification report, and

the location of Chen Hao Taiwan’s

principal home market MIDP customer,

we find that Chen Hao Taiwan’s

reported home market freight

methodology is sufficient. In similar

circumstances, we have accepted a

respondent’s methodology if it is

representative and non-distortive of

transaction-specific sales information

(see Final Determination of Sales at Less

than Fair Value: Oil Country Tubular

Goods from Korea, 60 FR 33561, June

28, 1995). Chen Hao Taiwan’s

methodology meets these criteria.

Consequently, we have accepted Chen

Hao Taiwan’s reported home market

freight expenses.

Comment 5: Allocation of Melamine

Powder Rebate

Petitioner argues that Chen Hao

Taiwan improperly allocated melamine

powder rebates between its internal

consumption and the material

transferred to Chen Hao Xiamen.

Petitioner claims that by assigning the

entire amount of the rebate to melamine

powder used for Taiwan consumption,

Chen Hao Taiwan undervalued its raw

material costs. Petitioner contends that

Chen Hao Taiwan’s melamine powder

costs for COP and CV calculations

should be recalculated to remove the

amount of the rebate attributable to

Chen Hao Xiamen transfers.

Chen Hao Taiwan responds that

petitioner is incorrect and that, in fact,

the Department verified that the

melamine powder rebates were

allocated equally over all melamine

powder purchases.

DOC Position. We agree with Chen

Hao Taiwan. We verified that Chen Hao

Taiwan properly allocated the melamine

powder rebate over all its purchases

during the POI and thus the per-unit

melamine powder cost for Chen Hao

Taiwan’s COP and CV calculations

properly accounts for the rebate.

However, as we stated in the Chen Hao

Taiwan verification report, ‘‘[t]he values

reported for Chen Hao Xiamen’s

melamine powder consumption do not

include an adjustment for the rebate.’’

(Emphasis added.) Chen Hao Taiwan’s

melamine powder costs are not in

question.

Comment 6: Import Duties on Melamine

Powder Costs

Petitioner contends that evidence on

the record demonstrates that Chen Hao
Federal Register / Vol. 62, No. 8 / Monday, January 13, 1997 / Notices 1731

1Chen Hao Taiwan has cited Final Results of

Administrative Review: Fresh Cut Flowers from

Colombia (61 FR 42833, August 19, 1996) in

support of its position; however this case is not on

point. In that instance, the item in question was

interest income, whereas here, the item is interest

expense.

Taiwan incurred duties on some

imported raw materials, but did not

report these duty amounts in its cost

response. Petitioner thus argues that the

Department should assume that all raw

materials are imported and increase the

costs of materials to include import

duties and related costs.

Chen Hao Taiwan states that the

Department verified that Chen Hao

Taiwan correctly accounted for duties in

reporting the unit prices of melamine

powder purchased during the POI and

that petitioner’s allegation is incorrect.

Chen Hao Taiwan further states that the

verification exhibits confirm that the

reported costs include the import duties

paid on melamine powder purchased

outside of Taiwan.

DOC Position. We agree with Chen

Hao Taiwan. We verified that the

reported costs for these inputs included

all applicable expenses, including

import duties. Support documentation

for Chen Hao Taiwan’s melamine

powder costs, such as the operating

statement and journal entries included

in the verification exhibits,

demonstrates that import duties, when

incurred, are part of the total cost

reported to the Department, and are

included in the cost of materials used in

our COP and CV calculations.

Comment 7: Unreconciled Cost

Differences

Petitioner claims that Chen Hao

Taiwan’s cost of manufacturing data

shows an unreconciled difference

between the components of operating

costs and the total operating costs.

Because Chen Hao Taiwan has not

provided an explanation for this

discrepancy, petitioner argues that the

cost of manufacturing should be

increased to reflect this unreconciled

cost difference.

Chen Hao Taiwan states that

petitioner is incorrect because it

misread a portion of a verification

exhibit and thus erroneously arrived at

its total. Accordingly, Chen Hao Taiwan

states that its operating costs reconcile

and no adjustment is needed.

DOC Position. We agree with Chen

Hao Taiwan. We verified that Chen Hao

Taiwan’s operating costs reconciled, as

indicated in the operating statement and

trial balance included in the verification

exhibits, and no adjustment is required.

As Chen Hao Taiwan has noted,

petitioner has misread the verification

exhibit in question and arrived at an

incorrect operating costs total.

Comment 8: Sales of Finished Goods in

Cost of Materials Calculation

Based on its analysis of verification

exhibits, petitioner claims that Chen

Hao Taiwan included purchases of

finished goods that it re-sold without

further processing in its finished goods

inventory, thus including these items in

calculating its yield rate. Petitioner

asserts that the yield rate used in COP

and CV calculations must be adjusted to

remove the accounting for these

finished goods.

Chen Hao Taiwan contends that

petitioner misread the relevant

verification exhibit and that these items

were not included in its cost of

manufacturing calculation. Accordingly,

Chen Hao Taiwan maintains that no

adjustment is necessary.

DOC Position. We agree with Chen

Hao Taiwan. We verified that the resold

items were properly excluded from the

cost of manufacturing calculation, as

indicated in the cost of operations

statement included in the verification

exhibits, and that no adjustment is

required.

Comment 9: Arm’s-Length Pricing of

Loans

Petitioner claims that Chen Hao

Taiwan failed to demonstrate that

interest free loans from affiliated parties

are made at arm’s length. Accordingly,

petitioner argues that Chen Hao

Taiwan’s financial interest expense ratio

for COP and CV calculations should be

adjusted by adding an estimated market

value for these loans based on the

highest interest rate experienced by

Chen Hao Taiwan.

Chen Hao Taiwan contends that these

loans from related parties served as

capital infusion. According to Chen Hao

Taiwan, the transactions in question

were additional investments from the

owners of Chen Hao Taiwan of their

own money into the company, with

these funds labeled as ‘‘loans’’ for

purposes of the financial statement.

Chen Hao Taiwan argues that the

Department’s practice is to disregard

such intracompany transfers, thus any

resulting loan interest expense should

be disregarded in the final

determination.

DOC Position. Although Chen Hao

Taiwan may consider the transactions in

question to serve as equity capital

infusions, its audited financial

statement classifies them as long-term

loans. Other than Chen Hao Taiwan’s

assertions,1, we have no basis on the

record to reclassify these amounts as

equity. In such circumstances, the

Department considers the amounts to be

long-term loans, consistent with

treatment in the respondent’s financial

statement (see, Final Results of

Administrative Review: Shop Towels

from Bangladesh, 60 FR 48966, 48967,

September 21, 1995, and Final

Determination of Sales at Less than Fair

Value: Fresh Cut Roses from Ecuador,

60 FR 7019, 7039, February 6, 1995).

Accordingly, we have recalculated Chen

Hao Taiwan’s interest expenses to

include an interest expense based on the

long-term interest rate experienced by

Chen Hao Taiwan during the POI, as

identified in the financial statement.

Comment 10: Exchange Gains in

Financial Expenses

Petitioner contends that the financial

expenses for Chen Hao Taiwan’s COP

and CV calculations include foreign

exchange gains on export sales, which

should be disallowed. Therefore,

petitioner states that the financial

expenses should be increased

accordingly.

Chen Hao Taiwan does not object to

this adjustment but states that the

revised percentage identified in the

verification report is incorrect; thus a

corrected adjustment should be used.

DOC Position. We agree with

petitioner and have adjusted financial

expenses to exclude foreign exchange

gains on export sales. We also agree

with Chen Hao Taiwan that the

adjustment percentage identified in the

verification report contains a

typographical error; we applied the

correct percentage in our recalculation.

Comment 11: Pension Allowance

Petitioner states that verification

revealed that Chen Hao improperly

excluded a pension allowance in its

costs.

Chen Hao Taiwan argues that, as the

Department verified that no actual

accrual for the pension allowance was

made during the POI, costs should not

be adjusted for a theoretically intended

amount.

DOC Position. We agree with

petitioner. We verified that Chen Hao

Taiwan contributed to its employee

retirement fund in the two years prior

to the POI. It did not make the

contribution during the POI and could

not provide any satisfactory explanation

for this omission. However, Chen Hao

Taiwan reported that it made payments

from the retirement fund during the

POI. Based on these facts, we consider

that Chen Hao Taiwan incurred an

obligation for its pension plan during

the POI. Accordingly, we have included

the pension expense in our COP and CV

calculations.
1732 Federal Register / Vol. 62, No. 8 / Monday, January 13, 1997 / Notices

Comment 12: Certain Credit Expense

Adjustments

Petitioner claims that Chen Hao

Taiwan reported certain adjustments to

its credit expenses for some U.S. sales.

Petitioner asserts that the Department

does not permit these adjustments and

thus the credit expense for these sales

should be disallowed.

Chen Hao Taiwan argues that it

properly made these credit adjustments.

DOC Position. We agree with Chen

Hao Taiwan. In such instances as those

identified by parties in the proprietary

versions of their submissions, the

Department has added the imputed

benefit to the price. (See, e.g., Final

Results of Antidumping Administrative

Review: Mechanical Transfer Presses

from Japan (61 FR 52910, October 9,

1996), where, at Comment 5, we stated

that ‘‘[b]ecause payment was made prior

to shipment, [respondent] should

receive an imputed benefit for credit.’’)

Comment 13: Unreported U.S. Dollar

Charges

Petitioner contends that, as identified

in verification documents, Chen Hao

Taiwan did not report charges such as

currency brokerage and bank fees for

U.S. sales denominated in U.S. dollars.

Accordingly, petitioner argues that a

percentage based on the observed

charges should be added to all U.S.

dollar sales.

Chen Hao Taiwan states that it has

accounted for all charges and fees.

Citing the verification report, Chen Hao

Taiwan asserts that the Department

verified that the sales value for all U.S.

sales was correctly reported, and no

discrepancies apart from those

identified in the verification report were

found.

DOC Position. We agree with

petitioner that Chen Hao Taiwan did not

include certain bank fees incurred on

U.S. dollar denominated sales in its

sales reporting. Based on the

verification documents, we have

calculated a percentage for these charges

and included the result as a

circumstance of sales adjustment.

Comment 14: Payment Period on U.S.

Sales

Petitioner contends that, based on its

analysis of a set of verification exhibits,

Chen Hao Taiwan incorrectly reported

the payment date on U.S. sales by

reporting the date that it closed the

account receivable entry in its records,

rather than the date the payment was

actually made. Accordingly, petitioner

argues that the payment date for all U.S.

sales should be adjusted to reflect the

actual payment period, based on

information obtained at verification.

Chen Hao Taiwan responds that

petitioner misread the documents in the

sales verification exhibit, and that the

payment situation described by

petitioner referred to Chen Hao

Taiwan’s payment to its freight

company, not payment from the U.S.

customer. Accordingly, Chen Hao

Taiwan states that it has correctly

reported its payment dates and no

adjustments are required.

DOC Position. We agree with Chen

Hao Taiwan. The payment, accounts

receivable, and accounts payable

documents included in the verification

exhibit for this transaction confirm that

the payment identified by petitioner

does not apply to customer payment,

but rather to the freight expense paid to

Chen Hao Taiwan’s freight company.

Comment 15: Allocation of Home

Market Royalty Expenses

Petitioner alleges that Chen Hao

Taiwan misreported royalty expenses

incurred on certain home market sales

because it had not properly accounted

for advances paid on royalty expenses

owed. Petitioner contends that the

royalty advance payments should be

treated as indirect selling expenses for

purposes of the COP test because these

expenses were fixed costs and were

incurred regardless of the quantity sold.

Chen Hao Taiwan states that the

Department verified the actual royalty

amount paid and the actual amount of

sales subject to royalty during the POI.

In addition, Chen Hao Taiwan states

that the Department verified that

royalties applied only to certain

products. Accordingly, Chen Hao

Taiwan contends that the Department

should continue to treat royalties as a

direct expense and use the verified

amount for royalty amounts to calculate

the actual per-unit royalty expense paid

during the POI.

DOC Position. The Department has

normally treated royalty expenses as

direct expenses when a respondent

incurs this expense upon the sale of a

product covered under a royalty

agreement (see, e.g., Final Results of

Antidumping Duty Administrative

Review: Industrial Belts and

Components and Parts Thereof,

Whether Cured or Uncured, From Japan,

58 FR 30018, May 25, 1993). Consistent

with the royalty agreement on the

record, Chen Hao Taiwan incurred a

royalty expense liability for home

market sales of the specific type of

merchandise covered under the

agreement, as discussed in the

verification report. Chen Hao Taiwan

entered into the royalty agreement at the

beginning of the POI. Under the terms

of the agreement, which are on the

record, certain advance payments were

required during the POI. In order to

comply with the terms of the agreement,

Chen Hao Taiwan paid these amounts

even though its sales of the covered

products were not at the level at which

it would pay the same amount based on

royalty percentages in the agreement.

However, the agreement states that

future royalty expenses incurred may be

offset against this advance. Although we

verified that Chen Hao Taiwan does not

account for these potential future

offsets, we verified that Chen Hao was

in full compliance with the terms of the

agreement. It is clear that the royalty

agreement only applies to certain home

market sales and that, after this initial

‘‘startup’’ period, its actual royalty

expenses will tie directly to the covered

sales. Therefore, this expense is

properly classified as a direct expense.

Allocating POI expenses over POI

sales is not appropriate because, in

effect, a portion of the POI expenses is

attributable to future sales. The most

appropriate allocation of the expenses is

to apply the royalty percentage in the

agreement, which is how Chen Hao

Taiwan reported the expenses, because

it reflects the amount of the expense

incurred by a particular sale, after taking

into account the eventual offset of all

advances. In this instance, we are

allocating expenses based on the

expected eventual royalty expense

liability.

Comment 16: Value Added Tax (VAT)

on CV Material Costs

Petitioner argues that Chen Hao

Taiwan failed to include a 5 percent

VAT on its Taiwan material purchases,

thus understating the constructed value

of each product. Therefore, petitioner

contends that CV materials costs should

be increased to reflect the VAT.

Chen Hao Taiwan states that it

followed the Department’s

questionnaire instructions and properly

reported its material costs exclusive of

VAT. Therefore, Chen Hao Taiwan

maintains that CV materials costs

should not be increased by the VAT

amount.

DOC Position. In accordance with

section 773(e) the Department’s policy

is to include in its calculation of CV

internal taxes paid on materials unless

such taxes are remitted or refunded

upon exportation of the finished

product into which the material is

incorporated (see e.g. Final

Determination of Sales at Less Than

Fair Value: Certain Carbon Steel ButtWeld Pipe Fittings from Thailand, 60 FR

10552, February 27, 1995). In this case,

we observed that Taiwan MIDP

companies are able to credit VAT paid
Federal Register / Vol. 62, No. 8 / Monday, January 13, 1997 / Notices 1733

on inputs (whether used for

domestically sold or exported MIDPs)

against what they owe to the Taiwan

government as a result of VAT collected

on domestic sales. More importantly,

however, where VAT owed was less

than VAT paid because exports out

paced domestic sales, the companies

received from the government a refund

of VAT paid on materials incorporated

into exported finished products. As

discussed in the Chen Hao Xiamen

verification report in the concurrent

MIDPs from PRC investigation:

Chen Hao [Taiwan] paid VAT on its

Taiwan purchases, which included such

items as melamine powder from the principal

supplier. Chen Hao also incurred a VAT

liability on sales made in Taiwan. Export

sales were excluded from this liability, which

included the re-sale of the melamine powder

to [an affiliated party]. . . . Chen Hao

[Taiwan] paid the difference of VAT

collected from its Taiwan sales and VAT paid

on Taiwan purchases. (November 18, 1996,

verification report at pages 8–9, and included

on this record in a December 20, 1996,

Memorandum to the File.)

Thus, VAT paid on materials

incorporated into exported products is

refunded by reason of export and

therefore is not appropriately included

in CV. Accordingly, we have not added

VAT to the CV calculation.

Comment 17: Matching of Certain

Products

Petitioner claims that Chen Hao

Taiwan assigned certain identical

products different control numbers used

for model matching. In turn, petitioner

contends, the Department’s model

matching program improperly treated

these identical products as different

products. Petitioner thus argues that the

Department should either revise its

computer program to ignore Chen Hao

Taiwan’s control numbers or re-code

these products with identical control

numbers.

Chen Hao Taiwan responds that the

control numbers in question relate to

physically different products because

some differ in color from the others.

Thus, Chen Hao Taiwan contends that

the Department should continue to treat

the products as different products with

unique control numbers.

DOC Position. Petitioner is incorrect

with regard to its description of the

Department’s model matching program.

The program does, in fact, ignore

control numbers to determine identical

or most similar products. Color is not a

matching criterion in this investigation;

thus, it is appropriate to treat these

products, if otherwise identical, as

identical products for purposes of

model matching. In one instance cited

by petitioner, we note that the

Department properly compared home

market sales of both products in

question to the U.S. sales of this

product. In the other instance cited by

petitioner, we did not match the U.S.

sales to the second model identified by

petitioner because the difference in

merchandise adjustment for that

comparison exceeded the Department’s

20 percent threshold.

Comment 18: Yu Cheer Credit Expenses

Petitioner contends that Yu Cheer

incorrectly reported payment dates on

U.S. sales because, until verification, it

did not indicate that it had received

payment for at least some sales on

multiple dates. Petitioner states that the

record contains no explanation of the

multiple payment date procedure and

no information on how often Yu Cheer’s

customers use this payment approach.

In addition, petitioner alleges that Yu

Cheer has also misreported shipment

dates, used to calculate credit expenses,

because Yu Cheer stated at verification

that it sometimes revises shipping

documents after shipment, thus calling

into question the reliability of its

reported information. Therefore,

petitioner argues that the home market

credit adjustment should be rejected

and the U.S. credit expense should be

based on the longest credit period for

any reported sale as facts available.

Yu Cheer states that its payment and

shipment dates were correctly reported,

as noted in the verification report.

Further, Yu Cheer states that the

verification report indicates that the

shipment revisions did not affect Yu

Cheer’s reported shipment dates.

Therefore, Yu Cheer contends that the

discrepancies cited by petitioner fail to

provide any reasonable basis for

rejecting Yu Cheer’s claimed credit

expenses.

DOC Position. We agree with Yu

Cheer. Yu Cheer properly reported the

elements of its imputed credit expenses

and thus we have accepted its claimed

imputed credit expenses. As we stated

in the verification report, Yu Cheer’s

shipment revisions do not affect the

reported shipment dates. Where

appropriate, we have recalculated the

credit expense using the corrected

payment information obtained at

verification.

Continuation of Suspension of

Liquidation

In accordance with section 735(c) of

the Act, we are directing the Customs

Service to continue to suspend

liquidation of all entries of MIDPs—

with the exception of those

manufactured/exported by Yu Cheer—

that are entered, or withdrawn from

warehouse, for consumption on or after

August 22, 1996, the date of publication

of our preliminary determination in the

Federal Register. We will instruct the

Customs Service to require a cash

deposit or the posting of a bond equal

to the weighted-average amount by

which the NV exceeds the export price,

as indicated in the chart below. This

suspension of liquidation will remain in

effect until further notice.

Exporter/manufacturer

Weighted-average margin percentage

Chen Hao Taiwan ......................... 3.25

Yu Cheer ....................................... 0.00

IKEA .............................................. 53.13

Gallant ........................................... 53.13

All Others ...................................... 3.25

Pursuant to section 733(d)(1)(A) and

section 735(c)(5) of the Act, the

Department has not included zero, de

minimis weighted-average dumping

margins, or margins determined entirely

under section 776 of the Act, in the

calculation of the ‘‘all others’’ rate.

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the ITC of our

determination. As our final

determination is affirmative, the ITC

will determine, within 45 days, whether

these imports are causing material

injury, or threat of material injury, to an

industry in the United States. If the ITC

determines that material injury, or

threat of material injury, does not exist,

the proceeding will be terminated and

all securities posted will be refunded or

canceled. If the ITC determines that

such injury does exist, the Department

will issue an antidumping duty order

directing Customs officials to assess

antidumping duties on all imports of the

subject merchandise entered, or

withdrawn from warehouse, for

consumption on or after the effective

date of the suspension of liquidation.

This determination is published

pursuant to section 735(d) of the Act.

Dated: January 6, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–754 Filed 1–10–97; 8:45 am]

BILLING CODE 3510–DS–P