[Federal Register Volume 62, Number 67 (Tuesday, April 8, 1997)]
[Notices]
[Pages 16768-16771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8954]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-412-602]


Certain Forged Steel Crankshafts From the United Kingdom; Final 
Results of Antidumping Duty Administrative Review and Revocation of 
Antidumping Duty Order

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

ACTION: Notice of Final Results of Antidumping Duty Administrative 
Review and Revocation of Antidumping Duty Order.

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SUMMARY: On December 3, 1996, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
review of the antidumping duty order on certain forged steel 
crankshafts from the United Kingdom (61 FR 64055). This review covers 
shipments of this merchandise to the United States during the period 
September 1, 1994 through August 31, 1995.
    We gave interested parties an opportunity to comment on our 
preliminary results. Based on our analysis of the comments and rebuttal 
comments received, we have corrected certain clerical errors in the 
margin calculations. The final weighted-average dumping margin for the 
reviewed firm is listed below in the section entitled ``Final Results 
of the Review.''

EFFECTIVE DATE: April 8, 1997.

FOR FURTHER INFORMATION CONTACT: David Dirstine, Lyn Johnson, or 
Richard Rimlinger, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW,

[[Page 16769]]

Washington D.C. 20230; telephone (202) 482-4733.

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations, as amended by the interim regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

    On December 3, 1996, the Department published the preliminary 
results of its administrative review of the antidumping duty order on 
certain forged steel crankshafts from the United Kingdom (61 FR 64055). 
This review covers shipments of this merchandise to the United States 
during the period September 1, 1994 through August 31, 1995.
    We gave interested parties an opportunity to comment on our 
preliminary results. At the request of petitioner, the Krupp Gerlach 
Company (KGC), we held a public hearing on January 21, 1997. The 
Department has now conducted this administrative review in accordance 
with section 751 of the Act.

Scope of Review

    Imports covered by this review are certain forged steel 
crankshafts. The term ``crankshafts,'' as used in this review, includes 
forged carbon or alloy steel crankshafts with a shipping weight between 
40 and 750 pounds, whether machined or unmachined. These products are 
currently classifiable under item numbers 8483.10.10.10, 8483.10.10.30, 
8483.10.30.10, and 8483.10.30.50 of the Harmonized Tariff Schedule 
(HTS). Neither cast crankshafts nor forged crankshafts with shipping 
weights of less than 40 pounds or more than 750 pounds are subject to 
this review. The HTS item numbers are provided for convenience and 
Customs purposes. The written description remains dispositive of the 
scope of the order.
    This review covers one manufacturer/exporter of crankshafts, 
British Steel Forgings (BSF), and the period September 1, 1994 through 
August 31, 1995.

Changes Since the Preliminary Results

    Based on our analysis of comments received, we have made some 
changes in the final results in our calculations for the preliminary 
results of review, we inadvertently did not take into account credit 
expense adjustments that respondent reported prior to verification for 
certain U.S. models when making circumstance-of-sale adjustments. We 
have included the correct credit costs in our final calculations. We 
also improperly converted amounts stated in Pounds Sterling to U.S. 
dollars by multiplying amounts stated in Pounds Sterling by the 
applicable-exchange-rate-conversion factors when, in fact, the Pounds 
Sterling amounts should have been divided by those conversion factors. 
We have converted currencies correctly in our final calculations. We 
incorrectly made deductions from, rather than additions to, home market 
(HM) sales for certain supplemental charges. We made the appropriate 
corrections for these final results. Finally, we inadvertently omitted 
supplemental charges related to U.S. sales which resulted in 
understated U.S. prices. We added these supplemental charges to the 
relevant U.S. sales for these final results.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. On January 2, and January 9, 1997, we received 
case and rebuttal briefs from KGC and BSF.
    Comment 1: KGC argues that the Department incorrectly calculated 
constructed value (CV) because it computed a simple-average profit 
figure using only the profit margins of the BSF crankshaft forging and 
machining facilities and did not include the profit realized by British 
Steels Engineering Steels (BSES), the division that supplies the steel 
for producing crankshafts. KGC argues that, because the Department 
considers BSF and BSES to be divisions of the same corporation for 
purposes of determining raw material costs, they also must be treated 
as a single corporate entity for purposes of determining the profits 
generated by their combined activities.
    KGC further argues that the Department incorrectly included in its 
calculations the loss realized by one of the four crankshaft forging 
and machining facilities. KGC argues that, as stated in 
Sec. 773(e)(2)(A) of the Act, as amended by the URAA, CV must be based 
on profits (i.e., not losses) realized in the ordinary course of trade. 
Therefore, KGC contends, the Department should not have allowed this 
loss to reduce average profit used for CV.
    In rebuttal, BSF states that the Department correctly calculated 
the profit percentage used in the calculation of CV. BSF contends that 
it properly determined profit by referring to the management reports 
that it uses to prepare the consolidated financial statements at the 
level of reporting which most specifically relates to the sale of 
crankshafts in the United Kingdom, i.e., the facilities which produce 
and sell crankshafts for consumption in the United Kingdom and 
reflected in the financial records of those facilities. BSF argues 
that, when BSES ships steel to BSF (another division of the same 
company) for processing into crankshafts, there is no sale involved; 
rather, BSF asserts, it is making an interdivisional transfer of raw 
materials within the same company. BSF further argues that BSES's 
profit on sales of a full range of products including downstream steel 
products to customers outside of the company has nothing to do with 
BSF's profit on sales on crankshafts. BSF contends that, contrary to 
KGC's interpretation, nowhere in the URAA or the Statement of 
Administrative Action (SAA) is it ever suggested that, in computing the 
level of profit, the Department should ignore facilities at which 
expenses exceeded revenue.
    Department's Position: As in the previous review, we continue to 
consider BSF and BSES to be divisions of the same corporate entity. See 
Certain Forged Steel Crankshafts from the United Kingdom, 61 FR 54613 
(October 21, 1996) (Crankshafts V). However, this does not necessarily 
mean that the combined profits and losses of these two sister divisions 
of the same corporate entity should be used as the profit reflective of 
crankshaft sales. First, we do not consider the transfer of the raw 
material, i.e., steel from one division to another division within the 
same company, to be a transaction in this case, so there is no profit 
present in that transaction. Second, there is no connection between 
crankshafts and the profit that BSES realizes on its wide line of steel 
products, many of which have no relationship whatsoever with 
crankshafts.
    We note that for the preliminary results we used the combined 
profit of BSF's four crankshaft-forging and machining facilities but 
incorrectly stated to interested parties that we had used a simple 
average profit figure for these facilities. For these final results we 
have used a profit figure based on the combination of the weighted-
average profit rates for each of the four

[[Page 16770]]

crankshaft-forging and machining facilities. This rate is appropriate 
because, as a combined rate, it is directly related to the production 
and sale of the subject merchandise.
    With respect to petitioner's argument that for the profit 
calculation we must exclude losses by one of BSF's facilities, we 
disagree. Contrary to our statement in the preliminary results of this 
review, we did not base profit for CV on the methodology set forth in 
Sec. 773(e)(2)(A) of the statute. Rather, the Department was unable to 
calculate the actual amounts of profit realized in connection with the 
production and sale of the foreign like product because the information 
to calculate a profit on that basis was not available. Accordingly, as 
facts available, we used the actual amounts of profit realized by BSF 
in connection with the production and sale of merchandise that is in 
the same general category of products as the subject merchandise, the 
alternative methodology set forth in Sec. 773(e)(2)(B)(i) of the 
statute. This alternative method does not require that all sales used 
to determine the profit amount be within the ordinary course of trade. 
Therefore, we calculated the weighted-average profit based upon the 
profit experience of each of BSF's manufacturing plants that produce 
crankshafts (i.e., the same general category of products as the subject 
merchandise).
    Moreover, the profit and loss experience of the four plants is 
relevant to the overall profit determination for the foreign like 
product because those facilities each produce subject merchandise (or 
foreign like product).
    Comment 2: KGC argues that, unless the Department uses the profit 
of both BSES and BSF in its computation of profit for CV, it must use 
transfer prices between BSES and BSF rather than cost of production 
(COP) as the measure of BSF's raw material cost of steel. In rebuttal, 
BSF contends that KGC essentially repeats its arguments that it made 
during the fifth administrative review and which the Department 
rejected.
    Department's Position: We have addressed the issue of profit in 
response to the previous comment. Regarding the cost of steel, because 
BSF and BSES are divisions of the same corporation, BSF's steel cost 
for producing crankshafts is the COP of the steel manufactured by BSES. 
Therefore, we used the COP data provided by BSF, which we verified, in 
calculating CV. See Crankshafts V at 54614.
    Comment 3: KGC argues that the Department incorrectly calculated 
normal value (NV) for a HM crankshaft model which was used for price-
to-price comparisons to two crankshaft models sold in the United States 
and provides calculations it conducted. KGC contends that the 
Department's calculations understate the true NV of the HM model by 
more than ten percent.
    BSF notes that certain supplemental charges were incorrectly 
subtracted from, rather than added to, HM models.
    Department's Position: We agree with petitioner in part. We 
inadvertently deducted two supplemental charges applicable to HM sales 
from, rather than added to, HM price for the preliminary results. We 
have corrected this error for these final results. In addition, as a 
result of verification, we recalculated the first supplemental charge 
and used the recalculated value in the preliminary results. However, in 
its calculations for its case brief, KGC used the pre-verification 
value for the first supplemental charge rather than the recalculated 
amount. Moreover, KGC applied the highest reported expenses for 
shipments of the comparator model in its calculations as opposed to a 
weighted-average expense amount which we used in our preliminary 
calculations. Therefore, KGC's calculation of NV does not reflect the 
information on the record and our practice.
    Comment 4: KGC argues that the Department should apply as ``best 
information available'' (i.e., facts available) a 9.77 percent margin 
to partially machined crankshafts which is the BIA rate that the 
Department applied to this merchandise in the third administrative 
review because the record of this review does not provide an adequate 
basis to assess the accuracy of the information BSF has provided with 
regard to its partially machined crankshafts.
    Specifically, KGC argues that the record in this review does not 
provide adequate information to ensure that the Department calculated 
NV for BSF's partially machined crankshafts properly. KGC first claims 
that BSF failed to describe in its response the rudimentary machining 
processes that it applied to its partially machined crankshafts and the 
costs associated with each such process. Second, KGC claims that there 
is no explanation on the record as to why the total costs BSF reported 
in its supplemental questionnaire response for these partially machined 
crankshafts do not tie to the sum of the forging costs and machining 
costs reported by BSF in its initial questionnaire response. Third, KGC 
notes that the Department did not address partially machined 
crankshafts in its verification report.
    In response, BSF states that petitioner never argues that the 
information on the record is incorrect but only that information which 
was not supplied was never verified. BSF argues that the total costs 
for the partially machined crankshafts which it submitted in its 
supplemental response are correct. BSF further contends that it 
described in detail the rudimentary machining processes involved in the 
production of its partially machined crankshafts in its initial 
questionnaire response and in its supplemental questionnaire response. 
BSF suggests that KGC's confusion and inability to tie total costs 
submitted for partially machined crankshafts to the sum of the forging 
and machining costs separately submitted by BSF is the result of KGC 
erroneously considering COP and transfer-price data of steel that BSF 
uses to make crankshafts as submitted in a table in BSF's initial 
questionnaire response to be costs of forging. BSF notes that the 
Department never requested that it report separately the costs of 
forging for partially machined crankshafts and, therefore, it never 
submitted such data. However, BSF contends that the total costs of the 
partially machined crankshafts which it did submit are nonetheless 
accurate and could still be verified by the Department if necessary. 
The Department, according to BSF, should reject KGC's claim that BIA 
should be applied to partially-machined crankshafts.
    Department's Position: We are satisfied with BSF's comprehensive 
description of the process of manufacturing partially machined 
crankshafts. Our analysis of the record evidence and our findings at 
verification give us no reason to believe that the total cost data 
submitted for partially machined crankshafts was inaccurate. The 
Department's regulations provide for significant flexibility in 
conducting verifications by permitting the verification of a sample of 
data that the Department considers relevant to factual information 
submitted. Recognizing that it is administratively impossible for us to 
verify every topic, we purposefully selected those items to examine in 
detail that we considered to reflect the universe of subject 
merchandise in this proceeding., i.e., a complete examination of the 
costs of the one HM model alleged to have been sold below cost, a 
complete examination of the CV methodology and calculation for a 
selected model sold in the United States, and a complete examination of 
the machining costs for a machined crankshaft. Other than the 
corrections and recalculations as noted in our verification report and 
analysis

[[Page 16771]]

memorandum, we found the data submitted by BSF to be accurate and we 
have no reason to disregard the other portions of its response (e.g., 
BSF's data regarding partially machined crankshafts).
    Comment 5: Based on a press release and newspaper article 
announcing that BSF's parent sold the respondent's forging facilities 
to a new company, KGC argues that, given the uncertainty about the 
future ownership and potential business plans of BSF, the Department 
cannot reasonably reach the conclusion, required under 19 CFR 
Sec. 353.25(a)(1)(ii)), that BSF or its successor is not likely to 
export crankshafts to the United States in the future at less than NV. 
KGC urges the Department to continue the existing order until the 
Department can reasonably determine that BSF's future U.S. pricing 
practices will not result in less-than-NV sales.
    In rebuttal, BSF argues that KGC provides no legal basis to support 
its contention that the Department should not revoke the existing order 
as it cannot reasonably determine that BSF is unlikely to make sales at 
less than NV. BSF further argues that the lack of precedent to support 
KGC's argument is not surprising; BSF has not discovered any instance 
in which the Department has decided not to revoke an order because of a 
change in ownership. Citing Toshiba Corp. v. United States, 15 CIT 597, 
600 (1991) (Toshiba), BSF argues that the Department's policy in a 
revocation proceeding is to examine only the information integral to 
its antidumping investigation and not to gather all economic or 
financial information about a company regardless of its relevance or 
credibility. BSF further argues that, in light of Toshiba, KGC's 
assertion that the proposed sale of BSF in some way affects the 
Department's revocation determination is incorrect. BSF concludes that 
its record of three years without dumping margins provides abundant 
evidence that sales of crankshafts by BSF compete fairly in the United 
States. BSF urges the Department to continue its practice of revoking 
orders after three years of de minimis margins.
    Department's Position: Pursuant to the Department's revocation 
requirements under 19 CFR Sec. 353.25(a), respondent in this case filed 
a timely request for revocation under Sec. 353.25(b), certified that 
sales in the current review period were made at not less than normal 
value under Sec. 353.25(b)(1), and has established the requisite three 
consecutive years of de minimis margins under Sec. 353.25(a)(2)(i). 
With respect to the issue of likelihood of resumption of dumping under 
Sec. 353.25(a)(2)(ii), no evidence was submitted on the record of this 
case in support of the contention that BSF is likely to resume dumping 
after revocation of the order. Petitioner has instead argued that the 
most recent change in the company's ownership by itself provides a 
basis for the Department to deny revocation in this case because ``the 
Department cannot reasonably reach the conclusion, required under 19 
CFR Sec. 353.25(a)(1)(ii), that BSF or its successor is unlikely to 
export crankshafts to the United States in the future at less than 
NV.'' KGC January 2, 1997 submission at 22.
    We disagree. Petitioner has failed to establish any relationship 
between the reported change in ownership and the likelihood of 
resumption of dumping by BSF. Petitioner's argument amounts to mere 
speculation, particularly where, as here, the company under review has 
changed ownership in the past without a corresponding effect on the 
company's pricing behavior sufficient to generate a margin of dumping 
greater than de minimis. Indeed, the company's previous change of 
ownership combined with its continued pricing practices indicates that, 
for this product, changes in corporate ownership are not likely to 
affect pricing of subject merchandise sufficient to warrant denial of 
revocation. Contrary to petitioner's contention, the continuation of de 
minimis margins following the previous change in ownership tends to 
support revocation in this case because it indicates that such a change 
by itself does not have a meaningful effect on pricing in the 
crankshaft market.
    In sum, there is no evidence on the record to substantiate 
petitioner's concern that BSF is likely to resume sales at dumped 
prices. Because BSF has made sales at not less than NV for three 
consecutive reviews and because there is no evidence on the record to 
indicate the likelihood of resumption of sales at dumped prices, we are 
revoking the antidumping duty order with respect to BSF. See Final 
Results of Antidumping Duty Administrative Review and Revocation In 
Part; Pressure Sensitive Plastic Tape From Italy, (55 FR 6031, 6032; 
February 21, 1990). Further, since BSF is the only company covered by 
the antidumping duty order on crankshafts from the United Kingdom, this 
action constitutes a revocation of the order.

Final Results of Review

    As a result of our review, we determine that the following 
weighted-average margin exists for the period September 1, 1994 through 
August 31, 1995.

------------------------------------------------------------------------
                                                                 Margin 
                     Manufacturer/Exporter                       percent
------------------------------------------------------------------------
BSF...........................................................      0.31
------------------------------------------------------------------------

    As stated in our response to comment number 5 above, we have 
determined that BSF has met the requirements for revocation set forth 
in 19 CFR Sec. 353.25(a) of our regulations. We are therefore revoking 
the order with respect to crankshafts from the United Kingdom, based on 
our determination that BSF is the only known producer of crankshafts.
    This revocation applies to all entries of the subject merchandise 
entered, or withdrawn from warehouse, for consumption on or after 
August 31, 1995. The Department will order the suspension of 
liquidation ended for all such entries and will instruct the Customs 
Service to release any cash deposit or bonds. The Department will 
further instruct Customs to refund with interest any cash deposits on 
entries made on or after August 31, 1995. In addition, the Department 
will terminate the review covering shipments of subject merchandise 
from the United Kingdom during the period September 1, 1995 through 
August 31, 1996, which was initiated on October 17, 1996 (61 FR 54154).
    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR Sec. 353.26 to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
Sec. 353.22.

    Dated: April 2, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-8954 Filed 4-7-97; 8:45 am]
BILLING CODE 3510-DS-P