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[Federal Register Volume 63, Number 132 (Friday, July 10, 1998)]
[Notices]
[Pages 37331-37334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18307]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-810]

Mechanical Transfer Presses From Japan; Final Results of 
Antidumping Duty Administrative Review and Revocation of Antidumping 
Duty Administrative Order in Part

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

ACTION: Notice of final results of antidumping duty administrative 
review and revocation of antidumping duty administrative order in part.

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SUMMARY: On March 6, 1998, the Department of Commerce (the Department) 
published in the Federal Register the preliminary results of its 
antidumping duty administrative review of the antidumping duty order on 
mechanical transfer presses (MTPs) from Japan and intent to revoke in 
part with respect to respondent Aida Engineering, Ltd. (Aida) (63 FR 
11211). This review covers two manufacturers/exporters of the subject 
merchandise to the United States and the period of February 1, 1996 
through January 31, 1997. We gave interested parties an opportunity to 
comment on the preliminary results of review. We received comments from 
Aida. We received rebuttal comments from Verson Division of Allied 
Products Corp., the United Autoworkers of America, and the United 
Steelworkers of America (AFL-CIO/CLC) (petitioners). We have not 
changed the results from those presented in the preliminary results of 
review. We have also determined to revoke the order in part, with 
respect to Aida.

EFFECTIVE DATE: July 10, 1998.

FOR FURTHER INFORMATION CONTACT: Lesley Stagliano or Maureen Flannery, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington D.C. 20230; telephone (202) 482-3782, (202) 482-3020.

SUPPLEMENTARY INFORMATION:

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provision 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. In addition, unless otherwise indicated, 
all citations to the Department's regulations are to the provisions 
codified at 19 CFR part 353 (1997).

Background

    On March 6, 1998, the Department of Commerce (the Department) 
published in the Federal Register the preliminary results of the review 
of the antidumping duty order and intent to revoke order in part on 
MTPs from Japan (63 FR 11211). The Department has now completed this 
antidumping duty administrative review in accordance with section 
751(b) of the Tariff Act of 1930, as amended (the Act).

Scope of Review

    Imports covered by this review include MTPs currently classifiable 
under Harmonized Tariff Schedule (HTS) item numbers 8462.99.0035 and 
8466.94.5040. The HTS numbers are provided for convenience and for U.S. 
Customs purposes. The written description remains dispositive of the 
scope of the order.
    The term mechanical transfer presses refers to automatic metal-
forming machine tools with multiple die stations in which the work 
piece is moved from station to station by a transfer mechanism designed 
as an integral part of the press and synchronized with the press 
action, whether imported as machines or parts suitable for use solely 
or principally with these machines. These presses may be imported 
assembled or unassembled. This review does not cover certain parts and 
accessories, which were determined to be outside the scope of the order 
(See ``Final Scope Ruling on Spare and Replacement Parts,'' U.S. 
Department of Commerce, March 20, 1992; and ``Final Scope Ruling on the 
Antidumping Duty Order on Mechanical Transfer Presses (MTPs) from 
Japan: Request by Komatsu, Ltd.,'' U.S. Department of Commerce, October 
1, 1996).
    This review covers two manufacturers of MTPs, and the period 
February 1, 1996 through January 31, 1997.

Analysis of the Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results of review. We received comments from Aida and 
rebuttal comments from petitioners.
    Comment 1: Aida contends that the Department erred in excluding 
below-cost sales in calculating the profit rate for constructed value. 
Aida states that its below-cost sales were not outside the ordinary 
course of trade according to the general definition of ``ordinary 
course of trade'' as it is defined in Section 771(15) of the Act; 
therefore, they should not have been excluded by the Department in its 
calculation of constructed value. Section 771(15) states:

    The term ``ordinary course of trade'' means the conditions and 
practices which, for a reasonable time prior to the exportation of 
the merchandise which is the subject of the investigation, have been 
normal in the trade under consideration with respect to merchandise 
of the same class or kind. The administering authority shall 
consider the following sales and transactions, among others, to be 
outside the ordinary course of trade:
    (A) Sales disregarded under section 773(b)(1)
    (B) Transactions disregarded under section 773(f)(2)

Aida states that the Department and the courts have consistently held 
that below-cost sales are not per se outside the ``ordinary course of 
trade.'' See, e.g., Federal-Mogul Corp. v. United States, 918 F. Supp. 
386, 402-403 (Ct. Int'l Trade, 1996); Timken Co. v. United States, 930 
F. Supp. 621, 624-625 (Ct. Int'l Trade, 1996); and Torrington Co. v. 
United States, 984 F. Supp. 67, 75 (Ct, Int'l Trade, 1996). Although 
these cases were decided under the definition of ``ordinary course of 
trade'' as it existed prior to the Uruguay Round Agreements Act (URAA), 
Aida maintains that these cases continue to be valid because this 
definition was carried forward with URAA law. Aida asserts that the 
second sentence of section 771(15) only applies to below-cost sales 
that have been disregarded for purposes of normal value comparisons 
under section 773(b) of the Act.
    Aida argues that there were no home market sales ``under 
consideration for the determination of normal value,'' and no sales 
were disregarded under section 773(b)(1). Aida contends that the 
Department based its decision to use constructed value on section 
773(a)(1)(C) when it stated that ``the particular market situation in 
this case, which requires that the subject merchandise be built to each 
customer's specifications, does not permit proper price-to-price 
comparisons in either the home market or third countries.'' 63 FR 
11213. Aida concludes that, since no home market sales were considered 
or disregarded for price comparison under section 773(b)(1), the second 
sentence of section 771(15) was inapplicable, and that Aida's below-
cost sales were not outside the ordinary course of trade.
    Aida argues that the Department's discussion of the below-cost 
sales issue is based on an incorrect interpretation of

[[Page 37332]]

section 773(b)(1) in that the Department equated calculation of 
constructed value profit with ``determination of normal value.'' Aida 
states that, prior to the URAA amendments, the Department consistently 
took the position that section 773(b)(1) did not apply to the 
calculation of constructed value. See Antifriction Bearings . . . and 
Parts Thereof From France, et al., 57 FR 28360, June 24, 1992. Aida 
asserts that the Department's position was upheld by the Court of 
Appeals for the Federal Circuit in Torrington Co. v. United States, 127 
F.3d 1077, 1977, in which the Court stated:

    The requirement in 19 U.S.C. 1677b(b) [Section 773(b) of the 
Act] that Commerce ``shall'' disregard below-cost sales when 
calculating FMV based on actual sales figures does not apply when 
Commerce calculates FMV based on constructed value.

Aida asserts that, although the URAA revised section 773(b)(1), it did 
not change the basic structure of the provision, namely that 
disregarding sales ``in the determination of normal value'' means that 
the sales will not be used to determine price-based normal value, not 
that they will not be used to determine the profit rate for constructed 
value. See SAA at 163, House Rept. 103-316 at 833. Aida states that 
Congress amended the statute to provide for exclusion of certain below-
cost sales from the constructed value profit calculation by adding the 
second sentence to the definition of ``ordinary course of trade'' in 
section 771(15). Aida asserts that in conjunction with the definitions 
of constructed value profit in section 773(e), the amendment determines 
when below-cost sales may be excluded from constructed value profit. 
See 62 FR 27359, supra. See also Final Results of Antidumping Duty 
Review: Color Picture Tubes from Japan, 62 FR 34201, 34209, June 25, 
1997. Aida contends that if sales could be disregarded under section 
773(b)(1) for constructed value purposes there would be no reason for 
the addition of clause (A) to section 771(15), and below-cost sales 
would be excluded without regard to the method of profit calculation. 
Aida argues that sales were not considered for price comparisons under 
section 773(a) and were not disregarded for such purposes pursuant to 
section 773(b)(1); thus, they are not outside the ordinary course of 
trade, and, therefore, do not meet the conditions for exclusion from 
the constructed value profit calculation under section 773(e)(2)(A).
    In addition, Aida states that nothing on the record suggests that 
Aida's below-cost sales fell into any of the ``ordinary course of 
trade'' definitions mentioned in the Statement of Administrative Action 
(SAA), which accompanied the URAA amendments.
    Petitioners contend that, in the 1995-1996 administrative review of 
this order, the Department rejected this same argument stating:

    We conclude, therefore, that in this review it is appropriate to 
exclude these sales from the profit calculation as outside the 
ordinary course of trade, pursuant to Section 771(15) of the Act. 
The fact that we did not ``disregard'' such sales in a price based 
determination of NV as provided in Section 771(15) of the Act does 
not prevent the Department from finding these sales outside the 
ordinary course of trade when we have, in effect, conducted a cost 
test on the sales and found that they have failed. We would have 
disregarded these sales, pursuant to Section 773(b)(1) of the Act if 
we were using price-to-price comparisons, and, as a result, we 
believe that it is appropriate to do so here. Mechanical Transfer 
Presses from Japan: Final Results of Antidumping Duty Administrative 
Review, 62 FR 11850-22, March 17, 1997.

Petitioners assert that the Department maintained that it was 
appropriate to exclude below-cost sales from CV profit, as sales made 
outside the ordinary course of trade in Large Newspaper Printing 
Presses from Japan; Final Determination of Sales at less Than Fair 
Value, 61 FR 38139-45, July 23, 1996; and Certain Welded Carbon Steel 
Pipes from Thailand; Final Results of Antidumping Duty Administrative 
Review, 61 FR 56515-18, November 1, 1996. Petitioners argue that 
although the Department does not treat below-cost sales as per se 
outside the ordinary course of trade in price-to-price cases, the 
Department has a per se rule with respect to below-cost sales made in a 
case where normal value is based on CV from the outset due to the 
unique nature of the product involved. Petitioners state that, in such 
situations, the Department performs a cost test on a sale-by-sale basis 
``because each MTP is custom-built, differs significantly in 
specifications, and is essentially a discrete model.'' Preliminary 
Results at 11213.
    Petitioners state that in the only ``new'' law case cited by Aida, 
the Department did not disregard below-cost sales because the 
Department based normal value on price-to-price comparisons, and the 
specific models found to be below-cost did not exceed the Department's 
``20 percent'' test. See Final Results of Antidumping Duty Review: 
Color Picture Tubes from Japan, 62 FR 34209. Petitioners point out that 
Aida states in its case brief that the Department referenced Mechanical 
Transfer Presses from Japan in Color Picture Tubes from Japan, and 
indicates that, while a per se rule may not attain in price-to-price 
cases, below-cost sales are properly excluded from CV profit when 
normal value is based on CV. Accordingly, petitioners argue that the 
Department should continue to disregard below-cost sales in its CV 
profit calculation for the final results, consistent with its 
determination in the preliminary results and the other cited cases.
    Department's Position: Aida's argument that no sales were 
disregarded under section 773(b)(1), and therefore none can be 
considered outside the ordinary course of trade reflects an overly-
restrictive interpretation of the Act, and raises form over substance. 
Because the Department found below-cost sales in the previous review, 
the Department had ``reasonable grounds to believe or suspect'' that 
home market sales were made at prices which were below the cost of 
production under section 773(b)(2)(A)(ii), and therefore was required 
to initiate a cost investigation under section 773(b)(1). Moreover, as 
the Department explained in the prior review, there are reasonable 
grounds to believe that below-cost sales were made where actual costs 
demonstrate as much, as they do in the present case. MTPs from Japan, 
62 FR at 11822.
    Furthermore, the facts of this case closely resemble those of 
LNPPs, in which the Department explained, ``the unique cost reporting 
aspects of this case were such that, in effect, [we] conducted a cost 
investigation. . .'' 61 FR at 38145.
    The Department also explained in LNPPs that, the Department has 
sufficient flexibility under section 771(15) to conclude, in the 
present circumstances, that sales below the cost of production should 
be disregarded as outside the ordinary course of trade. Id. This 
position has been upheld by the CIT in Mitsubishi Heavy Industries v. 
U.S., Slip Op. 98-82. at 41-42 (CIT June 23, 1998). Section 771(15) 
makes clear on its face that the circumstances listed are only two 
``among others'' in which sales should be considered to have been made 
outside the ordinary course of trade. See also URAA Statement of 
Administrative Action (SAA), H.R. Doc. 103-316, 103d Cong., 2d Sess, 
Vol. 1 at 834. Thus, even taking AIDA's view that the Department is not 
acting under section 773(b), the Department has the authority to find, 
in the present circumstances, that sales which it finds to be below 
cost, and which it would disregard under section 773(b), are outside 
the ordinary course of trade.
    Finally, Aida's overly-rigid reading of the statute must be 
rejected because it

[[Page 37333]]

would mean that in cases such as the present one and LNPPs, where the 
complexity of the product makes resort to CV almost inevitable, the 
Department would be unreasonably precluded from computing actual profit 
under section 773(e)(2)(A), the preferred method of determining CV 
profit, since sales outside the ordinary course of trade may not be 
used in the calculation of profit under that method. Moreover, the SAA, 
at 840, indicates that under this provision ``in most cases Commerce 
would use profitable sales as the basis for calculating profit.'' Thus, 
Aida's interpretation of the statute undermines Congress' preference 
for the calculation of actual profit for purposes of CV.
    Comment 2: Aida contends that the Department should use the 
Japanese short-term interest rate to calculate credit expenses for 
Aida's U.S. sales #1-4 which were made in yen. Aida originally reported 
the credit expenses for U.S. sales #1-4 based on the Japanese yen 
short-term prime interest rate, but later revised their calculations in 
accordance with the Department's supplemental questionnaire. Aida cites 
both Sodium Azide from Japan, 61 FR 42585, 42588, August 16, 1996, and 
Engineered Process Gas Turbo-Compressor Systems * * * from Japan, 62 FR 
24394, 24408, May 5, 1997, which state:

    [W]hen sales are made in, and future payments are expected in a 
given currency, the measure of the company's extension of credit 
should be based on an interest rate tied to the currency in which 
its receivables are denominated.

Thus, Aida argues that since U.S. sales #1-4 were made in yen and 
payment was received in yen, the yen short-term interest rate should be 
used to calculate credit expense for these sales.
    Department's Position: The Department agrees with respondents, in 
that, credit for U.S. sales # 1-4 should be denominated in Japanese 
yen. The Department has used a short-term interest rate tied to the 
currency in which the sales are denominated. We based this interest 
rate on the respondent's weighted-average short-term borrowing 
experience in the currency of the transaction. Thus, we have calculated 
credit for U.S. sales #1-4 based on Japanese yen since these sales were 
denominated in yen.
    Comment 3: Aida argues that the Department should reduce expenses 
in U.S. sale #2 on a pro-rata basis to adjust for the removal of the 
destack feeder from the sales price. In its preliminary determination, 
the Department removed the destack feeder from sale #2 by subtracting 
from the reported gross unit price the line item price set forth for 
the destack feeder in a price quotation that had preceded the contract. 
Aida argues that having done so, the Department should have subtracted 
the amount of expense attributable to the destack feeder from the 
movement expenses, warranty expense, credit expense, and service fee to 
reflect the removal of the destack feeder from the sale.
    Department's Position: The Department agrees with Aida in that 
expenses in U.S. sale #2 should be reduced on a pro rata basis 
corresponding to the subtraction of the destack feeder from the sales 
price. The Department has revised the U.S. sales summary to reflect 
these changes.
    Comment 4: Aida asserts that the Department should deduct 
transportation expense from the sales price in calculating profit on 
home market sales. Aida states that its cost accounting includes 
transportation cost in its manufacturing cost. Aida Section D Response, 
pp. D-34, D-35. Since the Department treats transportation cost as a 
movement expense, Aida deducted transportation cost from manufacturing 
cost in calculating cost of manufacture cost (MANCOST), and it 
subtracted transportation cost as a separate line item in calculating 
the home market profit rate. Aida Supplemental Response Exhibit S-10. 
Since it is a cost incurred by Aida on the sales, Aida maintains that 
transportation cost must be subtracted from revenue in calculating 
profit. Aida contends that when the Department recalculated Aida's home 
market profit rate, it failed to deduct transportation expense, thus, 
overstating home market profit.
    Department's Position: The Department agrees with Aida. 
Transportation expense should be deducted from the sales price when 
calculating the home market profit rate. To ensure that home market 
profit is calculated correctly it is necessary to deduct the 
transportation expense from both the sales price and the COM.

Final Results of the Review

    We determine that the following dumping margins exist:

------------------------------------------------------------------------
                                                                Margin  
          Manufacturer/exporter              Time Period      (percent) 
------------------------------------------------------------------------
    Aida Engineering, Ltd...............     2/1/96-1/31/97         0.00
    Hitachi-Zosen.......................     2/1/96-1/31/97         0.00
------------------------------------------------------------------------

    We further determine that Aida sold MTPs at not less than NV for 
three consecutive review periods, including this review period, and it 
is not likely that Aida will in the future sell subject merchandise at 
less than NV. Additionally, Aida has submitted the required 
certifications, and has agreed to its immediate reinstatement in the 
antidumping duty order, as long as any firm is subject to the order, if 
the Department concludes under 19 CFR 353.22(f) that, subsequent to 
revocation, it sold the subject merchandise at less than NV. 
Furthermore, we received no comments from any interested party 
contesting the revocation. For these reasons we are revoking the order 
on MTPs from Japan with respect to Aida in accordance with section 
751(d) of the Act and 19 CFR 353.25(a)(2). In accordance with the 
regulations, the Department will take seriously any credible evidence 
that, subsequent to the revocation, Aida sold the merchandise at less 
than NV.
    This revocation applies to all entries of the subject merchandise 
from Aida entered, or withdrawn from warehouse, for consumption on or 
after February 1, 1997. The Department will order suspension of 
liquidation ended for all such entries and will instruct the Customs 
Service to release any cash deposits or bonds. The Department will 
further instruct the Customs Service to refund with interest any cash 
deposits on entries made on or after February 1, 1997.
    The following deposit requirements will be effective upon 
publication of this notice of final results of administrative review 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date as provided 
by section 751(a)(2)(c) of the Act: (1) The cash deposit rate for 
Hitachi Zosen will be the rate stated above; (2) if the exporter is not 
a firm covered in this review, a prior review, or the original less 
than fair value (LTFV) investigation, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacturer of

[[Page 37334]]

the merchandise; and (3) the cash deposit rate for all other 
manufacturers or exporters will be the rate established in the 
investigation of sales at less than fair value, which is 14.51 percent. 
These deposit requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and subsequent assessment 
of double antidumping duties.

Notification to Interested Parties

    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 353.22(f).

    Dated: July 2, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-18307 Filed 7-9-98; 8:45 am]
BILLING CODE 3510-DS-P
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