19026 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

SUPPLEMENTARY INFORMATION:

Title: National Animal Health

Monitoring System.

OMB Number: 0579–0079.

Expiration Date of Approval:

September 30, 1996.

Type of Request: Extension of a

currently approved information

collection.

Abstract: The primary objective of the

National Animal Health Monitoring

System (NAHMS) program of the

Animal and Plant Health Inspection

Service (APHIS) is to deliver

statistically-valid and scientificallysound animal health information to

consumers, animal health officials,

private practitioners, animal industry

groups, policy makers, public health

officials, media, educational

institutions, and others. Information is

derived from data voluntarily collected

on a national basis from producers in

the dairy, beef, poultry, aquaculture,

sheep, swine, and equine industries. In

addition, information may be collected

from individuals or groups with

industry knowledge of the scope,

causes, and public health and/or

economic consequences of new and

emerging animal health issues. The

information collected is used to identify

baseline trends in health management

practices and disease, determine risks

for new and emerging animal health

issues, and assess the economic impact

of animal diseases and management

practices.

The APHIS Strategic Plan formalized

the Agency’s initiative to have in place

a proven national monitoring system

that is capable of defining and certifying

the health and safety status of the

Nation’s animal commodities and

objectively assessing the economic,

environmental, and public health

implications of animal health. The

National Animal Health Monitoring

System is implementing the action plan

by collecting data and disseminating

information that is not available from

other sources on the prevalence and

economic importance of livestock and

poultry health and disease. Emerging

issues and disease outbreaks involving

interrelationships among animal health,

public health, economic productivity,

and global trade are also being

addressed through short-term data

collection, risk assessments, and

situation analyses.

The purpose of this notice is to solicit

comments from the public (as well as

affected agencies) concerning our

information collection. We need this

outside input to help us:

(1) Evaluate whether the proposed

information collection is necessary for

the proper performance of the functions

of the Agency, including whether the

information will have practical utility;

(2) Evaluate the accuracy of our

estimate of the burden of the proposed

collection of information, including the

validity of the methodology and

assumptions used;

(3) Enhance the quality, utility, and

clarity of the information to be

collected; and

(4) Minimize the burden of the

collection of information on those who

choose to respond, through use, as

appropriate, of automated, electronic,

mechanical, and other collection

technologies, e.g., permitting electronic

submission of responses.

Estimate of Burden: Public reporting

burden for this collection of information

is estimated to average 1.46 hours per

response.

Respondents: Animal agriculture

producers, veterinary practitioners,

State and private diagnostic

laboratories, State departments of

agriculture, and animal-related

industries.

Estimated Number of Respondents:

7,110.

Estimated Number of Responses per

Respondent: 1.

Estimated Total Annual Burden on

Respondents: 4,868 hours.

All responses to this notice will be

summarized and included in the request

for Office of Management and Budget

approval of the information collection.

Done in Washington, DC, this 24th day of

April 1996.

Lonnie J. King,

Administrator, Animal and Plant Health

Inspection Service.

[FR Doc. 96–10649 Filed 4–29–96; 8:45 am]

BILLING CODE 3410–34–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–570–843]

Notice of Final Determination of Sales

at Less Than Fair Value: Bicycles From

the People’s Republic of China

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: April 30, 1996.

FOR FURTHER INFORMATION CONTACT:

Katherine Johnson at (202) 482–4929,

Shawn Thompson at (202) 482–1776, or

James Terpstra at (202) 482–3965, Office

of Antidumping Investigations, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 20230.

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the statute are references to

the provisions effective January 1, 1995,

the effective date of the amendments

made to the Tariff Act of 1930 by the

Uruguay Rounds Agreements Act

(URAA).

Final Determination

As explained in the memoranda from

the Assistant Secretary for Import

Administration dated November 22,

1995, and January 11, 1996, the

Department of Commerce (the

Department) has exercised its discretion

to toll all deadlines for the duration of

the partial shutdowns of the Federal

Government from November 15 through

November 21, 1995, and December 16,

1995, through January 6, 1996. Thus, the

deadline for the final determination in

this investigation has been extended by

28 days, i.e., one day for each day (or

partial day) the Department was closed.

As such, the deadline for this final

determination is no later than April 22,

1996.

We determine that bicycles from the

People’s Republic of China (PRC) are

being sold in the United States at less

than fair value (LTFV), as provided in

section 735 of the Tariff Act of 1930, as

amended (the Act). The estimated

margins are shown in the ‘‘Suspension

of Liquidation’’ section of this notice.

Case History

Since the preliminary determination

on November 1, 1995 (60 FR 56575,

November 9, 1995), the following events

have occurred:

On November 6, 1995, Bo An Bike

Co., Ltd. (hereinafter Bo An), CATIC

Bicycle Co., Ltd. (hereinafter CATIC),

Shenzhen China Bicycles Co. (Holdings)

Ltd. (hereinafter CBC), Giant China Co.,

Ltd. (hereinafter Giant), Hua Chin

Bicycle Co., Ltd. (hereinafter Hua Chin),

Merida Industry (Hong Kong) Co., Ltd./

Merida Bicycle Co., Ltd. (hereinafter

Merida), Shenzhen Overlord Bicycle

Co., Ltd. (hereinafter Overlord), and

Universal Cycle Corp. (hereinafter

Universal) requested a postponement of

the final determination pursuant to 19

CFR 353.20. On November 9, 1995,

Chitech Industries, Ltd. (Hong Kong)

(and affiliated parties Tandem

Industries, Ltd. (Hong Kong), Magna

Technology Corp. (Taiwan), Taiwan

Tandem Co., Ltd. (Taiwan), and Shun

Lu Bicycle Co. (aka Shunde Tandem

Bicycle Parts Company) (hereinafter

Chitech) made a similar request.

On November 9 and 20, 1995,

respondents alleged clerical errors in

the preliminary determination. Also, on
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19027

November 20, 1995, petitioners and all

respondents, except Chitech, requested

a hearing. On December 4, 1995, the

Department amended the preliminary

determination and postponed the final

determination. (See, Amendment to

Preliminary Determination of Sales at

Less Than Fair Value and Postponement

of Final Determination: Bicycles from

the People’s Republic of China, 60 FR

64016 (December 13, 1995)).

In December, January, and February,

we verified the respondents’

questionnaire responses. Additional

published information (PI) on surrogate

values was submitted by petitioners and

respondents on March 6, 1996.

Petitioners and respondents submitted

case briefs on March 26, 1996, and

rebuttal briefs on April 2, 1996. A

public hearing was held on April 3,

1996.

On January 31 and February 5, 1996,

Chitech and CBC, respectively,

requested that the Department

reconsider its decision not to publish an

amended preliminary determination

with respect to these two companies. On

February 9, 1996, these requests were

denied.

Finally, the respondents have made

numerous submissions requesting that

the Department rescind the

investigation (See, Comment 7 in the

General Comments section below).

Scope of Investigation

The product covered by this

investigation is bicycles of all types,

whether assembled or unassembled,

complete or incomplete, finished or

unfinished, including industrial

bicycles, tandems, recumbents, and

folding bicycles. For purposes of this

investigation, the following definitions

apply irrespective of any different

definition that may be found in Customs

rulings, U.S. Customs law, or the

Harmonized Tariff Schedule of the

United States (HTSUS): (1) The term

‘‘unassembled’’ means fully or partially

unassembled or disassembled; (2) the

term ‘‘incomplete’’ means lacking one or

more parts or components with which

the complete bicycle is intended to be

equipped; and (3) the term ‘‘unfinished’’

means wholly or partially unpainted or

lacking decals or other essentially

aesthetic material. Specifically, this

investigation is intended to cover: (1)

Any assembled complete bicycle,

whether finished or unfinished; (2) any

unassembled complete bicycle, if

shipped in a single shipment, regardless

of how it is packed and whether it is

finished or unfinished; and (3) any

incomplete bicycle, defined for

purposes of this investigation as a

frame, finished or unfinished, whether

or not assembled together with a fork,

and imported in the same shipment

with any two of the following

components: (a) The rear wheel; (b) the

front wheel; (c) a rear derailleur; (d) a

front derailleur; (e) any one caliper or

cantilever brake; (f) an integrated brake

lever and shifter, or separate brake lever

and click stick lever; (g) crankset; (h)

handlebars, with or without a stem; (i)

chain; (j) pedals; and (k) seat (saddle),

with or without seat post and seat pin.

The scope of this investigation is not

intended to cover bicycle parts except to

the extent that they are attached to or in

the same shipment as an unassembled

complete bicycle or an incomplete

bicycle, as defined above.

Complete bicycles are classifiable

under subheadings 8712.00.15,

8712.00.25, 8712.00.35, 8712.00.44, and

8712.00.48 of the 1995 HTSUS.

Incomplete bicycles, as defined above,

may be classified for tariff purposes

under any of the aforementioned

HTSUS subheadings covering complete

bicycles or under HTSUS subheadings

8714.91.20–8714.99.80, inclusive

(covering various bicycle parts). The

HTSUS subheadings are provided for

convenience and customs purposes. The

written description of the scope of this

investigation is dispositive.

Period of Investigation

The period of investigation is April 1,

1994, through March 31, 1995.

Separate Rates

Four of the responding exporters in

this investigation are located outside the

PRC. They are Merida, Giant, Hua Chin

and Chitech. Further, there is no PRC

ownership of any of these companies.

Therefore, we determine that no

separate rates analysis is required for

these exporters because they are beyond

the jurisdiction of the PRC government.

(See, e.g., Final Determination of Sales

at Less Than Fair Value: Disposable

Pocket Lighters from the People’s

Republic of China, 60 FR 22359, 22361,

(May 5, 1995)).

The remaining five respondents are

either joint ventures between Chinese

and foreign companies or are Chineseowned companies publicly traded on

the Shenzhen stock exchange. They are

CATIC, CBC, Overlord, Universal, and

Bo An. For these respondents, a separate

rates analysis is necessary to determine

whether the exporters are independent

from government control.

To establish whether a firm is

sufficiently independent from

government control to be entitled to a

separate rate, the Department analyzes

each exporting entity under a test

arising out of the Final Determination of

Sales at Less Than Fair Value: Sparklers

from the People’s Republic of China, 56

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

amplified in the Final Determination of

Sales at Less Than Fair Value: Silicon

Carbide from the People’s Republic of

China, 59 FR 22585 (May 2, 1994)

(Silicon Carbide). Under the separate

rates criteria, the Department assigns

separate rates in non-market-economy

cases only if respondents can

demonstrate the absence of both de jure

and de facto governmental control over

export activities.

1. Absence of De Jure Control

The respondent have placed on the

administrative record a number of

documents to demonstrate absence of de

jure control, including laws, regulations,

and provisions enacted by the State

Council of the central government of the

PRC. Respondents have also submitted

documents which establish that

bicylcles are not included on the list of

products that may be subject to central

government export constraints. The

Department has reviewed these and

other enactments in prior cases and has

previously determined that these laws

indicate that the responsibility for

managing state-owned enterprises has

been shifted from the government to the

enterprise itself (See, Silicon Carbide

and Final Determination of Sales at Less

Than Fair Value: Furfuryl Alchohol

from the People’s Republic of China, 60

FR 22544. (May 8, 1995) (Furfuryl

Alcohol)). In addition, as discussed in

the Final Determination of Sales at Less

Than Fair Value: Certain Cased Pencils

from the People’s Republic of China, 59

FR 55625, (November 9, 1994) (Pencils),

the laws governing share companies

have not altered the devolution of

control.

However, as stated in previous cases,

there is some evidence that the PRC

central government enactments have not

been implemented uniformly among

different sectors and/or jurisdictions in

the PRC (See Silicon Carbide and

Furfuryl Alcohol). Therefore, the

Department has determined that an

analysis of de facto control is critical in

determining whether respondents are,

in fact, subject to a degree of

governmental control which would

preclude the Department from assigning

separate rates.

2. Absence of De Facto Control

The Department typically considers

four factors in evaluating whether each

respondent is subject to de facto

governmental control of its export

functions: (1) Whether the export prices

are set by or subject to the approval of

a governmental authority; (2) whether
19028 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

the respondent has authority to

negotiate and sign contracts and other

agreements; (3) whether the respondent

has autonomy from the government in

making decisions regarding the

selection of management; and (4)

whether the respondent retains the

proceeds of its export sales and makes

independent decisions regarding

disposition of profits or financing of

losses (See, Silicon Carbide and Furfuryl

Alcohol).

Each respondent has asserted and we

verified the following: (1) it establishes

its own export prices; (2) it negotiates

contracts, without guidance from any

governmental entities or organizations;

(3) it makes its own personnel

decisions; and (4) it retains the proceeds

of its export sales, uses profits according

to its business needs and has the

authority to sell its assets and to obtain

loans. In addition, respondents’

questionnaire responses indicate that

company-specific pricing during the

POI does not suggest coordination

among exporters. During verification

proceedings, Department officials

viewed such evidence as sales

documents, company correspondence,

and bank statements. Regarding

personnel decisions, we reviewed such

evidence as the discussion of the

selection of the board of directors in

contracts between joint venture

companies and minutes from the board

of director meetings. This information

supports a finding that there is a de

facto absence of governmental control of

export functions. Consequently, we

have determined that the abovementioned respondents have met the

criteria for the application of separate

rates.

China-Wide Rate

Six of the mandatory respondents did

not respond to the questionnaire. Hence,

we are applying a single antidumping

rate to these exporters as well as all

other exporters of PRC-manufactured

bicycles based on our presumption that

the export activities of these

respondents who failed to completely

respond and to establish that they meet

the criteria for a separate rate are

controlled by the PRC government. (See,

Comments 8 and 9 in the General

Comments section below).

Facts Available

Pursuant to sections 776(a) and (b) of

the Act, we have based the China-wide

rate on facts available, using adverse

inferences, because the non-responding

companies have failed to cooperate to

the best of their ability. Given that this

margin involves data contained in the

petition, we are required to corroborate

this data, to the extent practicable,

pursuant to section 776(c) of the Act.

(See, also, Statement of Administrative

Action (SAA) at 200). We have

identified several major items (i.e.,

depreciation, interest, and profit, as well

as the factor values for frames, forks,

and rims) contained in the petition

which individually comprise a

significant portion of the normal value

(NV) calculations. We compared the

data in the petition to secondary data

which includes but is not limited to the

same type of data used as the basis for

the petition and the audited financial

reports of two of the largest Indian

bicycle producers.

As a result of our analysis, we found

that, with the exception noted

immediately below, the secondary

information for these factor values are

comparable to those provided in the

petition. Accordingly, this petition

information has been corroborated.

However, after analyzing the figure

contained in the petition for

depreciation, interest and profit, we

found, as did both petitioners and

respondents, that this figure does not

reflect usual cost and profit in the

Indonesian bicycle industry.

Specifically, the 1992 figure of 57.91

percent provided in the petition does

not correspond with the 1993 figure of

22.84 percent and the 1991 figure of 22

percent provided by respondents on

September 19 and 25, 1995. (For further

discussion see Memorandum to Barbara

R. Stafford re: Factors Valuation dated

November 1, 1995). Therefore, we find

that the 57.91 percent figure is not

corroborated (i.e., has no probative

value in determining depreciation,

interest, and profit).

We have used the 1991 figure for

depreciation, profit, and interest in

recalculating the margins in the

petition. We did not use the more

current 1993 figure because the study

containing it was issued only in draft

form.

Fair Value Comparisons

To determine whether sales of

bicycles from the PRC to the United

States were made at LTFV, we

compared Export Price (EP) and/or

Constructed Export Price (CEP) to the

NV, as specified in the ‘‘United States

Price’’ and ‘‘Normal Value’’ sections of

this notice.

United States Price

For all responding exporters, with the

exception of CATIC, which had only

CEP sales, we based United States Price

(USP) on EP in accordance with section

772(a) of the Act, as the subject

merchandise was sold directly to the

first unaffiliated purchaser in the United

States prior to importation and CEP

methodology was not otherwise

indicated.

In addition, for Giant, CBC, CATIC,

and Chitech, where sales to the first

unaffiliated purchaser took place after

importation into the United States, we

based USP on CEP, in accordance with

section 772(b) of the Act.

We corrected respondents’ data for

errors and omissions found at

verification. See, Concurrence

Memorandum and company-specific

calculation memoranda for details. In

addition, we made company-specific

adjustments as follows:

1. Bo An

We calculated EP based on packed,

FOB Hong Kong port prices to

unaffiliated purchasers in the United

States. We made deductions from the

starting price, where appropriate, for

foreign inland freight and brokerage and

handling (which includes

containerization, documentation fees,

the Hong Kong terminal handling charge

and PRC brokerage costs) and Hong

Kong duty. As all foreign inland freight

and brokerage and handling were

provided by PRC suppliers, these

services were valued in India.

2. CBC

We calculated EP and CEP based on

packed, delivered prices to unaffiliated

customers. Where appropriate, we made

deductions from the starting price for

discounts and rebates and credit notes.

We also made deductions, where

appropriate, for foreign inland freight,

foreign brokerage and handling, Hong

Kong duty, U.S. freight and

warehousing expenses, ocean freight

and marine insurance, and U.S. duty

and harbor fees. With the exception of

foreign inland freight, movement

charges were provided by marketeconomy suppliers and paid for in

market-economy currency. Regarding

foreign inland freight, this service was

provided by a PRC supplier.

Accordingly, we valued this expense in

India.

Further, we made additions to CEP for

interest revenue received from the

unaffiliated customers. In accordance

with section 772(d)(1) of the Act, we

deducted from CEP the following

expenses that related to economic

activity in the United States:

commissions, direct selling expenses,

including advertising, warranties, and

credit expenses, and indirect selling

expenses, including inventory carrying

costs. Finally, we made an adjustment

for CEP profit in accordance with

section 772(d)(3) of the Act. (See,
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19029

Comments 1 and 2 in the General

Comments section below.)

3. CATIC

We calculated CEP based on packed,

FOB U.S. warehouse prices, or delivered

prices, to unaffiliated customers. We

made deductions from the starting price

for discounts, where appropriate. We

also made deductions for foreign

brokerage and handling, freight

expenses, ocean freight and marine

insurance, U.S. brokerage and handling,

and U.S. duty and harbor fees. We

deducted from CEP the following

expenses that related to economic

activity in the United States:

commissions, direct selling expenses,

including advertising, warranty, credit,

and repacking, and indirect selling

expenses, including inventory carrying

costs. Finally, we made an adjustment

for CEP profit in accordance with

section 772(d)(3) of the Act. (See,

Comments 1 and 2 in the General

Comments section below.)

4. Giant

We calculated EP and CEP based on

packed, FOB PRC port or CIF U.S. port

or delivered prices to unaffiliated

purchasers. We made deductions from

the starting price, where appropriate, for

the following: foreign brokerage and

handling, U.S. brokerage, international

freight (which includes U.S. inland

freight), U.S. duty, loading and

containerization, and marine insurance

(which also includes U.S. inland

insurance, harbor maintenance fees and

merchandise processing fees). All of the

above expenses were provided by

market-economy carriers and paid for in

market-economy currencies. We also

deducted an amount for foreign inland

freight but since this service was

provided by a PRC supplier, we valued

this expense in India. We also deducted

from the starting price, where

appropriate, discounts and rebates.

In accordance with section 772(d)(1)

of the Act, we deducted from CEP the

following expenses that related to

economic activity in the United States:

direct selling expenses, including

warranties, advertising, and credit

expenses, and indirect selling expenses,

including inventory carrying costs.

Finally, we made an adjustment for CEP

profit in accordance with section

772(d)(3) of the Act. (See, Comments 1

and 2 in the General Comments section

below.)

5. Hua Chin

We calculated EP based on packed,

FOB Hong Kong port prices to

unaffiliated purchasers in the United

States. We made deductions from the

starting price, where appropriate, for

foreign inland freight and Hong Kong

terminal handling fees. As all foreign

inland freight and handling fees were

provided by PRC suppliers, these

services were valued in India.

6. Merida

We calculated EP based on packed,

FOB Hong Kong port prices to

unaffiliated purchasers in the United

States. We made deductions from the

starting price, where appropriate, for

foreign inland freight and brokerage and

handling (which includes

containerization, documentation fees,

the Hong Kong terminal handling charge

and PRC brokerage costs) and Hong

Kong duty. As all foreign inland freight

and brokerage and handling were

provided by PRC suppliers, these

services were valued in India.

7. Overlord

We calculated EP based on packed.

FOB Hong Kong port prices to

unaffiliated purchasers in the United

States. We made deductions from the

starting price, where appropriate, for

foreign inland freight, brokerage and

handling and Hong Kong duty. As all

foreign inland freight and brokerage and

handling were provided by PRC

suppliers, these services were valued in

India.

8. Chitech

We calculated EP based on packed.

FOB Hong Kong prices and CEP based

on packed, duty-paid, FOB U.S.

warehouse prices to unaffiliated

customers. Were appropriate, we made

deductions from the starting price for

various discounts. We also made

deductions for foreign brokerage and

handling, freight, Hong Kong import

and export fees, terminal handling fees,

ocean freight and marine insurance,

U.S. brokerage and handling, and U.S.

duty and harbor fees.

In accordance with section 772(d)(1)

of the Act, we deducted from CEP the

following expenses that related to

economic activity in the United States:

commissions, direct selling expenses,

including advertising, warranties, and

credit expenses, and indirect selling

expenses, including inventory carrying

costs. Finally, we made an adjustment

for CEP profit in accordance with

section 772(d)(3) of the Act. (See,

Comments 1 and 2 in the General

Comments section below.)

9. Universal

We calculated EP based on packed,

FOB Hong Kong or FOB Huangpu port

prices to unaffiliated purchasers in the

United States. We made deductions

from the starting prices for foreign

inland freight, which was provided by

a PRC supplier and therefore was valued

using Indian surrogate values. In

addition, we deducted from the FOB

Hong Kong prices terminal handling

charges, document fees, import/export

declaration fees, handling fees and

courier fees.

Normal Value

In accordance with section 773(c) of

the Act, we calculated NV based on

factors of production reported by the

responding exporters. Where an input

was sourced from a market economy

and paid for in market-economy

currency, we have used the actual price

paid for the input to calculate NV, when

possible, in accordance with

Department practice. See, Lasko Metal

Products v. United States, 437.3d 1442,

1443 (Fed. Cir. 1994) (Lasko).

In instances where inputs were

sourced domestically, we valued the

factors using PI from India where

possible. Where appropriate Indian

values were not available, we used PI

from Indonesia.

Valuation of Bicycle Parts and

Components

As in our preliminary determination,

we valued certain parts and components

purchased by some respondents in the

PRC, using the average market-economy

prices reported by other respondents for

the same part or component, as

discussed below. However, unlike in

our preliminary determination, we used

the average actual market-economy

price reported by the other respondents

rather than the ranged public version of

those prices. We did this because we

determined that the manner in which

the actual prices were ranged, i.e., either

higher or lower, could potentially

introduce distortion into the

calculation. (See, Comment 3 in the

General Comments section below).

The nine responding exporters

reported that they purchased a large

number of different components (e.g.,

brake sets) and sub-components (e.g.

brake arms) for use in assembling

finished bicycles. The vast majority of

these purchased inputs are subcomponents. These inputs, both

components and sub-components, vary

in terms of material composition (e.g.,

carbon steel versus aluminum), size,

design (e.g., cantilever versus side-pull

brakes), and other relevant physical

characteristics.

Some inputs were purchased from

market-economy suppliers and paid for

in convertible currency. Following our

normal practice, we used the actual

price paid for these inputs, where
19030 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

possible. However, where the input was

not purchased from a market-economy

supplier and paid for in a marketeconomy currency, it was necessary to

develop a surrogate value.

For certain components and subcomponents, differences in material

content and design result in large price

differentials. For example, there is a

substantial difference in the price of a

frame tube made from high-tensile steel

versus one made with chromemolybdenum; therefore, using a

surrogate value for a frame tube of hightensile steel would unreasonably distort

the calculation of NV for a bicycle with

a chrome-molybdenum frame. In reality,

for certain components, a specific

design or material composition can

result in a distinctly different input.

With respect to the factors of

production methodology, the Court of

Appeals has noted that ‘‘there is much

in the statute that supports the notion

that it is Commerce’s duty to calculate

margins as accurately as possible and to

use the best information in doing so.’’

See, Lasko. Therefore, to minimize

distortions and ensure the most accurate

margin calculation possible, we

developed a hierarchy for selection of

surrogate values for parts and

components based on the need for

specificity with respect to design or

material composition or both. Our first

choice under that hierarchy is to use

data from India (e.g., the component

prices from the Delhi Market Report) or

Indonesia (e.g., the average unit values

from the Indonesian study) if it is

specific with respect to design and

material composition or if we could not

determine, based on the evidence,

whether significant variations in the

price data stemmed from design or

material composition. Where design or

material composition appeared to have

a significant impact on price but design

or material-specific data was not

available in a surrogate country, we

used the average actual market-economy

prices from market-economy suppliers

to the PRC. However, we used this data

strictly as a second alternative to designor material-specific data from India or

Indonesia, where available.

In one instance, a respondent reported

factors of production for a number of

piece-parts produced by its affiliated

supplier, e.g., fork arms. We did not

value those subcomponents because we

had no factor values for fork arms.

Instead, we valued the smallest

component that incorporated these subcomponents, e.g., completed fork set.

Other Factor Valuations

Where possible, we used public

information for the surrogate values.

The selection of the surrogate values

was based on the quality and

contemporaneity of the data. Where

possible, we attempted to value material

inputs on the basis of tax-exclusive

domestic prices. As appropriate, we

adjusted input prices to make them

delivered prices. For those values not

contemporaneous with the POI, we

adjusted for inflation using wholesale

price indices or, in the case of labor

rates, consumer price indices, published

in the International Monetary Fund’s

International Financial Statistics. For a

complete analysis of surrogate values,

see the Factors Calculation

Memorandum to Barbara R. Stafford

from the team, dated April 22, 1996.

To value caustic soda, methylene

dichloride, zinc hydroxide, oxalic acid,

sulfuric acid, nitric acid, chromic nitric

acid, tartaric acid, and sodium

carbonate we used public information

from POI issues of the Indian

publication Chemical Weekly. For

chromic anhydride, various phosphates,

various chromates, sodium bichromate,

dimethyl benzene, and acetylene and

carbon dioxide, we relied on POI import

prices contained in Monthly Statistics.

Regarding sodium bichromate,

sodium chromate, and potassium

chromate, we could not find POI prices

for these exact inputs. Therefore, we

used a POI import price based on a

basket category containing chromates

and dichromates in Monthly Statistics to

value these inputs. For dimethyl

benzene, we obtained a price for a

similar chemical from Monthly

Statistics.

To value argon gas and oxygen, we

relied on 1994 Indonesian price data in

the Statistical Bulletin because we could

not locate a price from Indian

publications.

With regard to hydrochloric acid, we

relied on a 1993 Indian export price

quote from Chemical Weekly because

the prices for this input in other known

Indian publications are based on an

Indian import category that is not

exclusive to hydrochloric acid (See,

Final Determination of Sales at Less

Than Fair Value: Coumarin from the

People’s Republic of China, 59 FR 66895

(December 28, 1995.))

We valued degreaser using

information from the only known Indian

publication which contained such a

price, The Analyst’s Import Reference

1993, Chemical & Pharmaceutical

Products (The Analyst).

We valued paint using Indian price

data from Monthly Statistics. We could

not find a material price for solvent

(thinner) from publicly available

information. Therefore, we used Indian

price data from Monthly Statistics for a

similar chemical, which also dilutes

paint.

To value diesel fuel, we used a POI

Indian price from the publication AP

Worldstream. To value liquefied

petroleum gas, we used a POI price from

the periodical Financial Times of India.

For the valuation of electricity, we

used an average 1992 industrial rate

from the publication Current Energy

Scene in India because this publication

contained data more contemporaneous

to the POI than other known

publications.

With regard to labor, we used data

from the United Nations’ publication

Yearbook of Labor Statistics. Following

the method established in the Final

Determination of Sales at Less Than

Fair Value: Polyvinyl Alcohol from the

PRC, 61 FR 14062 (March 29, 1996)

(PVA), we find no basis to assume the

skill level of the surrogate value, nor do

we have agreement among parties

regarding use of this labor rate for

skilled and unskilled labor rate

assumptions. Thus, we applied a single

labor value to all reported labor factors,

including indirect labor (See Comment

18 below for further discussion).

To value scrap metal, we relied on

Indian data from Monthly Statistics. We

treated the scrap metal as a by-product

and deducted its value from the cost of

manufacture (COM) for CBC, Chitech,

Giant, Merida, and Overlord. This

adjustment was not appropriate for the

remaining respondents.

For nuts and bolts and screws, we

used product-specific published prices

contained from the Indonesian

publication Indonesian Foreign Trade

Statistics for Imports (See Comment 17

below for further discussion).

For certain subcomponents we had no

published prices or publicly ranged

market prices from which to choose.

Therefore, we valued these specific

components based on the content of

material (e.g., steel , plastic or rubber).

To value components made of steel, we

used an average tax-exclusive 1994

domestic steel price from the Indian

publication Statistics for Iron and Steel.

For components made of plastic and/or

rubber, we used Indian price data from

Monthly Statistics.

To value factory overhead, SG&A, and

profit, we calculated simple average

percentages based on the data from the

four financial statements of Indian

surrogate producers which are

contemporaneous with the POI, i.e.,

Atlas, Hero, Gujurat and TI. We made

certain adjustments to the percentages

calculated as a result of reclassifying
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19031

expenses contained in the financial

reports. We calculated a simple average

of the profit ratios for the three Indian

surrogate producers which were

profitable during the POI. We also

included the profit ratio of a fourth

company; however, we set this

additional profit ratio to zero because

this company was not profitable during

the POI (See Comment 15 below for

further discussion).

Finally, to value the packing

materials, corrugated cartons,

uncorrugated cartons, bubble wrap/foam

paper, staples, adhesive tape, rope,

packing paper, polypropylene,

polyethylene, recycled plastic cups,

inner recycled paper boxes, and plastic

bags, we relied on Indian data from

Monthly Statistics. To value glue, we

used an average price based on Indian

price data for two types of glue products

from the publication Chemical Weekly.

Critical Circumstances

For purposes of the preliminary

determination, we determined that

critical circumstances existed only with

respect to Hua Chin. However, the

margin for Hua Chin in the amended

preliminary determination was de

minimis; in effect, making this issue

moot for Hua Chin. Since this amended

determination we have not received any

information which would cause us to

reconsider our analysis. Because Hua

Chin’s final margin is also de minimis,

this issue continues to be moot.

Verification

As provided in section 782(i) of the

Act, we verified the information

submitted by 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

General Comments

Comment 1: CEP Deductions and COS

Adjustments

According to petitioners, the plain

language of Section 772(d) of the Act

requires the deduction of all selling

expenses from CEP in the calculation of

USP. Petitioners assert that the CEP

deduction is not contingent upon

whether circumstance of sale (COS)

adjustments or an offset to NV can be

made. Moreover, petitioners note that

CEP offsets are no longer automatic

under the new law. In line with this

argument, petitioners claim that no level

of trade (LOT) adjustment or CEP offset

is warranted in the instant investigation

because the record does not demonstrate

that NV is at a more advanced LOT than

CEP. However, should the Department

decide to make an adjustment,

petitioners provide their own

calculation showing that this should

equal 0.096 percent of COM.

Furthermore, petitioners contend that

the Department should make COS

adjustments for EP sales, and assert that

the Department can differentiate

between direct and indirect selling

expenses in both the United States and

surrogate data if certain assumptions are

made. However, petitioners maintain

that, if the Department believes that it

is difficult to segregate all direct from

indirect expenses for EP sales, at a

minimum the Department should adjust

for U.S. commissions.

Respondents argue that no deduction

for CEP selling expenses should be

made. Respondents state that such a

deduction would blatantly disregard the

Department’s stated policy concerning

selling expenses in non-marketeconomy (NME) cases. Specifically,

respondents contend that, as in past

cases, the financial statements used to

determine surrogate SG&A do not

distinguish between direct and indirect

selling expenses. Consequently,

respondents assert that any adjustment

made for purposes of calculating an

offset would require an arbitrary

division of these expenses among direct

and indirect selling, G&A, and

manufacturing expenses. As precedent

on this issue, respondents cite Final

Determination of Sales at Less Than

Fair Value: Oscillating Fans and Ceiling

Fans from the People’s Republic of

China, 56 FR 55271, (October 25, 1991);

Final Determination of Sales at Less

Than Fair Value: Refined Antimony

Trioxide From the People’s Republic of

China, 57 FR 6801 (Feb. 28, 1992); and

Final Determination of Sales at Less

Than Fair Value: Certain Helical Spring

Lock Washers From the People’s

Republic of China, 58 FR 48833 (Sept.

20, 1993).

However, respondents state that, if a

CEP deduction is made, the Department

should not add selling expenses to NV.

Respondents maintain that the

Department has the authority to

disregard selling expenses because the

language of the NME provision of the

statute only requires an addition for

general expenses. Nonetheless,

respondents maintain that, if selling

expenses are added to NV, the

Department should make a

corresponding offset, capped by the

amount of the CEP deductions.

Finally, for the same reasons that the

data on the record of this case is not

suitable for calculating adjustments to

NV, respondents contend that this data

is likewise unusable for purposes of

making COS adjustments.

DOC Position: Regarding the necessity

of making CEP deductions, we have

reevaluated our practice in this area and

have concluded that CEP deductions are

required by the plain language of the

statute, which states in section

772(c)(2)(d) that CEP ‘‘shall be reduced’’

by the selling expenses associated with

economic activity in the United States.

The statute provides no exception for

cases involving non-market-economy

countries. Consequently, we have made

deductions to CEP for all selling

expenses associated with economic

activity in the United States, in

accordance with our practice. (See, e.g.,

Preliminary Determination of Sales at

Less Than Fair Value and Postponement

of Final Determination: Certain Pasta

from Italy, 61 FR 1344, (January 19,

1996)) (Pasta). However, we disagree

with petitioners that we should deduct

those U.S. selling expenses incurred in

third country markets which are not

associated with selling activity

occurring in the United States. The SAA

makes it clear that we only adjust for

selling expenses associated with

economic activity in the United States.

SAA at 153.

Regarding making an offset to NV, we

disagree with respondents that an offset

to NV is required in this case. While the

statute requires certain adjustments to

USP, corresponding adjustments to NV

are only required upon a sufficient

showing that differences exist justifying

the adjustment. See section 773(a)(7). In

this case, the only information we have

about selling expenses is the financial

statements of the Indian producers.

These do not specify whether Indian

home market sales are at any particular

LOT or include any particular selling

expenses. Therefore, we do not have any

basis upon which to determine whether

any adjustment to the surrogate

expenses is appropriate.

We disagree with petitioners’

argument that COS adjustments are

required by the statute. Rather, section

773(a)(6)(C) allows NV to be increased

or decreased for differences in

circumstances of sale as long as ‘‘it has

been established to the satisfaction of

the administering authority’’ that such

adjustments are warranted. Given the

imprecise nature of the information

about selling expenses in the record in

this case, we have no basis to conclude

that such adjustments are warranted in

this case.

Finally, regarding respondents’

argument that we should not add selling

expenses to NV because the statute only

references general expenses, we

disagree. We have always interpreted
19032 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

1According to the ITC approach, generally, it

would not be feasible for any one company to

determine the actual price as long as three or more

respondents purchase the same component from

market-economy suppliers. However, in situations

where one respondent accounts for 75 percent of

the quantity of a given component, the data is

considered proprietary. In addition, in situations

where two respondents account for 90 percent of

the quantity of a given component, that data is

considered proprietary. See, memo from analyst to

file regarding this practice dated April 8, 1996.

the term general expenses to refer to

selling, general, and administrative

expenses. Accordingly, we included

selling expenses in NV, as is our normal

practice.

Comment 2: Profit Deduction from CEP

Sales

In addition to deducting selling

expenses from CEP, petitioners contend

that the plain language in section 772(d)

of the Act also requires that profit be

deducted from CEP. Petitioners suggest

that this deduction be based on the

profit of the surrogate producers and the

ratio of CEP deductions to total U.S.

expenses.

The record of this investigation does

not contain sufficient information to

calculate actual total profit because,

according to respondents, there is no

information on actual manufacturing

costs and overhead. Accordingly,

respondents argue that no deduction for

profit should be made.

DOC Position: We agree with

petitioners. Section 772(d) of the Act

requires the Department to make a

deduction for profit associated with CEP

selling expenses. Section 772(f) of the

Act specifies that, in general, this

calculation involves both U.S. and home

market total sales, costs, and expenses.

In making this calculation in marketeconomy cases, we have included

respondent’s home market sales, cost,

and expense data in this calculation,

See, e.g., Pasta. However, in this case

we have no home market sales upon

which to base this calculation. Instead,

we only have usable financial

statements of four Indian surrogate

producers. In attempting to perform this

calculation, we found that there were

numerous difficulties in accurately

combining the total sales, total cost, and

total expense data from these financial

statements. This is because these data

are expressed in different ways on each

financial statement, making any attempt

to combine them problematic. Given

these difficulties, we determined that

petitioners’ approach is the most

reliable and consistent with the manner

in which this calculation is performed

in market-economy cases. This

approach avoids the difficulties in

combining data from the financial

statements because the variables are

consistently and readily identifiable

across the four financial statements. See

also ‘‘Concurrence Memo’’ for a

complete discussion of this issue.

Comment 3: Publicly Ranged MarketEconomy Prices

Petitioners agree with the basic

methodology used by the Department in

the preliminary determination for

valuing bicycle components. However,

petitioners maintain that the

Department’s use of average publiclyranged market-economy prices had the

effect of allowing respondents to

introduce ‘‘distortions’’ into the factor

values in the manner in which the

prices were ranged. Petitioners argue

that the Department should use prices

for valuing bicycle components that

allow the most accurate margin

calculation possible. Petitioners

maintain that no proprietary

information will be disclosed as long as

the Department releases margin

calculations under administrative

protective order (APO), as was done for

the preliminary determination.

Chitech argues that an adjustment to

the publicly ranged market-economy

prices would violate confidentiality.

The other respondents argue that

petitioners’ suggestion would violate 19

CFR 353.32(f) because it would result in

the unauthorized release of data to

companies that did not submit that

information. Respondents further argue

that parties would be denied their right

to disclosure because the Department

could not disclose such information to

them.

Moreover, respondents contend that

the current publicly-ranged marketeconomy prices used by the Department

already penalizes companies.

Respondents assert that some

companies would purchase a

component from a domestic source,

rather than a market-economy source, if

the domestic source offered the

identical component at a lower price.

However, for these domestic purchases,

the Department, by assigning such

prices, i.e., the public versions of

presumably higher market-economy

prices, as used in the preliminary

determination, ascribes to that

component a higher price than the

companies may actually incur.

Respondents maintain that using

petitioners suggestion to value Chinesesourced components would only

increase this penalty.

In addition, respondents state that the

Department has developed a preference

for using PI to derive factor prices.

Respondents maintain that they have

submitted publicly ranged versions of

their proprietary factors of production

databases in accordance with the

Department’s instructions and 19 CFR

353.32(b)(1). Finally, respondents argue

that neither the Department nor

petitioners claimed that the publiclyranged prices did not conform to the

regulations.

DOC Position: We agree with

petitioners that the use of respondents—

publicly-ranged prices allows the

possibility of distortions caused by the

manner in which respondents ranged

these prices. Respondents were aware of

our intention to use the public versions

of these prices in our factor valuations

prior to the preliminary determination.

We discussed this issue with them

when explaining the requirements of

our additional request for information

related to the special coding

instructions for parts and components.

We agree with petitioners that it is

appropriate to use actual average prices

for the margin calculations. However,

before determining whether the average

of the actual prices could be released

publicly, we analyzed the data sources

to satisfy ourselves that no proprietary

information would be released.

For each input price under analysis,

we considered the number of companies

reporting a price for that input and

whether one or two companies’ relative

volume of market-economy purchases

were significant. These factors allowed

us to determine to our satisfaction

whether any one company could derive

the actual prices reported by other

respondents (i.e., proprietary data). In

performing this analysis, we considered,

among other things, the approach to this

issue employed by the International

Trade Commission (ITC).1 However, we

modified this approach to fit the unique

circumstances of this investigation. We

took this approach because there are

instances in which proprietary data

would be divulged and it would be too

burdensome to make public versions of

all documents which incorporate the

proprietary prices. Accordingly, we

classified all the average marketeconomy price data as proprietary and

will release it to the appropriate parties

under APO.

Comment 4: Transfer Prices

At verification we discovered that

three respondents, Hua Chin, Universal

and Overlord, had reported the transfer

prices of their affiliates (which included

a markup for freight, expenses, and

profit) instead of the price paid to the

unrelated supplier. Respondents

contend that because the transfer prices

were always higher then the prices paid

to the unrelated supplier, it follows that

these prices must be considered by the
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19033

Department to have been made at arm’s

length and should not be adjusted.

Although three respondents reported

transfer prices, petitioners only

addressed Overlord. Petitioners argue

that the component prices reported by

Overlord do not include those general

and administrative expenses incurred

by Overlord Taiwan and NaiYu, its

other affiliate, in purchasing the same

components. As such, petitioners

maintain that Overlord understated the

actual costs of components from these

suppliers by not accounting for these

expenses. Therefore, petitioners argue

that the Department should not adjust

these prices downward to account for

the mark-up.

DOC Position: We agree with both

petitioners and respondents. Hua Chin,

Universal, and Overlord each reported

the price paid to an affiliate which had

purchased certain parts from

unaffiliated suppliers. Regarding Hua

Chin, it pays its Taiwan affiliate a

service fee for certain component

purchases to cover freight, expenses,

and profit. However, company officials

were unable to provide separate freight

invoices showing how much of the

service fee was attributable to freight,

other expenses, or profit. Regarding

Universal and Overlord, we found at

verification that the prices reported by

both companies were conservative, in

that they cover the price from the

unaffiliated supplier plus the affiliated

supplier’s freight costs and profit, if

applicable. However, we do not know

the exact amount of the price that is

applicable to freight costs, expenses,

and profit. Therefore, we made no

adjustment to the transfer prices

reported by Hua Chin, Universal, and

Overlord, and have used them in our

margin calculations.

Comment 5: Third Country Selling,

General, and Administrative Expenses

(SG&A)

Regarding the SG&A expenses

incurred by the Hong Kong and Taiwan

affiliates of respondents, petitioners

argue that such expenses cannot be used

to build NV because their use would

result in an understatement of these

expenses. Petitioners argue that the

respondents also incur significant

expenses selling at the factory in the

PRC. Because such expenses are

incurred in RMB, they cannot be

combined with market-economy

currency expenses incurred by the

affiliates. If the Department used the

affiliates’ SG&A, it could not also use

the PRC-incurred selling expenses.

Therefore, petitioners argue that the

Department must use the SG&A

expenses of the Indian surrogate

producers. However, petitioners argue

that COS adjustments must be made for

particular line items in affiliates’

financial statements, such as

commissions, which they argue should

be considered as direct selling expenses.

Chitech argues that the Department

cannot lawfully use the SG&A expenses

of the offshore affiliates because these

do not fit into the statutory scheme.

Chitech argues that the statute requires

the Department to value SG&A in a

surrogate country.

DOC Position: We agree that the

SG&A expenses of the offshore affiliates

should not be used for calculating NV.

In non-market-economy cases our

practice is to value factors of production

using the prices actually paid by a

respondent for inputs purchased from a

market-economy producer and paid for

in a market-economy currency. This

practice has been used primarily to

value material inputs. However, at the

outset of this investigation, we

considered using the ‘‘actual’’ marketeconomy expenses of the Hong Kong

and Taiwan affiliates to calculate NV.

We also considered using the selling

portion of the affiliates’ SG&A to make

COS adjustments to NV in both CEP and

EP situations. On September 28, 1995,

prior to the preliminary determination,

we issued supplemental SG&A

questionnaires to the respondents and

subsequently verified the information

contained in the responses. After

analyzing and verifying this SG&A

information, we have identified several

problems, discussed below, which cause

us to conclude that use of such data

would not enhance the accuracy or

fairness of our calculations.

The first problem involves double

counting SG&A. Each of the nine

respondents incur SG&A expenses at

their factories in the PRC. Therefore, in

addition to using the affiliates’ marketeconomy SG&A expenses to construct

NV, we would also have to use surrogate

data to value the portion of SG&A

incurred in the PRC. To do so, we

would have to determine the

appropriate portion of the surrogate

SG&A ratio to use (i.e., that portion

concerning the PRC factory incurred

selling expenses) to avoid over-valuing

the SG&A element in NV. Although we

can identify both the SG&A ‘‘activities’’

performed at the respondents’ factories

and the SG&A ‘‘activities’’ performed by

the respondents’ affiliates, we are not

able to use this information to identify

the portion of total surrogate SG&A

expenses that should be used to value

SG&A expenses incurred at the

factories.

The second problem is in finding the

appropriate cost of sales over which to

allocate SG&A. The Department’s

practice is to express the SG&A element

in NV as a percentage of the cost of

sales. In order to derive this percentage

from the affiliates, we used the affiliates’

cost of goods sold. However, we

encountered several problems with this

methodology. We were not able to

compute an SG&A ratio for one of the

affiliates because it did not report any

product costs (cost of sales) in its

financial statement. In addition, the

product costs of the other affiliates

include both costs incurred to purchase

the product from the factory in China

(costs generally denominated in RMB)

and costs incurred in market economies.

Thus, the SG&A ratios derived from the

affiliates are not ratios solely of marketeconomy expenses and, therefore, it

may not be appropriate to use these

ratios.

The Department uses actual marketeconomy inputs wherever possible in

NME cases because we believe this

enhances the accuracy of our

calculations. Given the numerous

difficulties described above, we do not

believe the use of these expenses would

enhance the accuracy of our

calculations in this case. Therefore, we

did not use the affiliates’ SG&A

information to construct NV, and

instead, used the Indian producers’

surrogate data. In addition, we find that

the affiliates’ data is also not usable for

making COS adjustments as suggested

by petitioners, for the same reasons

discussed above (See, Comment 1

above. See, also, Concurrence

Memorandum, dated April 22, 1996, for

further discussion.)

Comment 6: Price Averaging

Respondents state that the

Department’s preliminary determination

limited averaging to an inappropriately

narrow range of products. Respondents

claim that the illustration cited in the

SAA regarding averaging NVs for ‘‘each

size of television...’’ demonstrates that

the Department’s use of control numbers

for averaging NV was too narrow of a

basis. The Department should calculate

average prices over ‘‘comparable

merchandise’’ as defined by bicycles of

identical type, wheel size, and number

of gear speeds. Respondents claim that

these factors were identified by the ITC

as the most important determinants of

price differences among bicycles.

Respondents further state that

petitioners used the above factors to

segregate different classes of bicycles for

purposes of alleging dumping margins.

Furthermore, respondents argue that

control numbers are not an acceptable

method for determining ‘‘comparable

merchandise’’ for purposes of averaging
19034 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

because of the many working

components contained on a bicycle.

Respondents state that using control

numbers to define ‘‘comparable

merchandise’’ nullifies the intent of the

averaging provision because it limits its

application to instances in which prices

would not vary in the first place.

Petitioners contend that the SAA

language cited by respondents actually

expresses concern that televisions of

different physical characteristics not be

subject to a single average, but rather, be

averaged separately. Petitioners state

that the proposed regulations identify

averaging groups as consisting of

‘‘subject merchandise that is identical or

virtually identical in all physical

characteristics....’’ Petitioners state that,

for the preliminary determination, the

Department followed the approach

described by the proposed regulations,

the statute, and the SAA in averaging

products by control numbers.

Further, petitioners suggest that the

Department narrow the averaging

categories even further for the final

determination. Petitioners state that the

mass merchandisers should be

segregated from the independent bicycle

dealers (IBDs) in the averaging groups,

based on the customer codes set forth in

the computer program, in order to

ensure that the sales with the same

physical characteristics and same class

of customer are averaged together.

However, petitioners also state that, by

averaging U.S. prices based on a number

of discrete, physical characteristics, the

Department has to a large extent

ensured that it is also comparing

bicycles in the same customer class

because bicycles sold to mass

merchandisers often will be of lower

specifications than bicycles sold to

IBDs.

DOC Position: We agree with

petitioners. It has been long-standing

Department practice to average NV

using as specific a basis as available

(i.e., control numbers). See, Final

Determination of Sales at Less Than

Fair Value: Polyvinyl Alcohol from

Taiwan, 61 FR 14065 (March 29, 1996)

and Pasta. Respondents’ argument is

that we should ignore differences in

material composition and/or quality

level of components. Respondents

would have us average the prices of a

21-inch bicycle with a chromemolybdenum frame with the same size

bicycle with a carbon steel frame.

Similarly, respondents would have us

average the price of a bike with an

expensive, sophisticated Shimano

derailleur with a bike with an

inexpensive derailleur. Clearly, the

different costs associated with frame

material composition and componentry

are important to consider in price

averaging. Furthermore, we are unable

to confirm petitioners’ assertion that

there is more than one LOT or class of

customer due to lack of evidence on the

record. Therefore, we averaged NV by

control number, as in the preliminary

determination.

Comment 7: Initiation of This

Investigation

In previous submissions to the

Department, respondents’ claim that

petitioners had access to Indian data

and information on export prices of

bicycles which was more accurate than

the Indonesian data and U.S. retail

pricing data provided in the petition. As

such, they claim that, pursuant to

instructions of the U.S. Court of

International Trade, the Department was

told to ‘‘continue to explore’’ whether

the initiation of this investigation was

proper and to develop ‘‘a final

reviewable record’’ on this issue.

Respondents state that the

Department failed to develop a complete

administrative record of the

circumstances surrounding the

initiation of this antidumping

investigation as directed by the U.S.

Court of International Trade instructions

in China Bicycle Co. (Holdings) Ltd., et.

al. v. United States, et. al. (Ct. No. 95–

11–01426). Specifically, respondents

state that the Department should have

reexamined the retail price calculations

alleged in the petition as well as the

export price information in the

possession of petitioners at the time the

petition was filed.

DOC Position: We disagree with

respondents. Respondents’ requests for

termination of this investigation is

based on a fundamental

misunderstanding of the initiation

process in the context of the overall

antidumping statutory scheme. The

evidentiary standard for initiation is

‘‘information reasonably available to the

petitioner supporting those allegations.’’

19 U.S.C. 1673a(b)(1)(1995). Inherent in

this standard is the understanding that

petitioners generally will have very

limited access to foreign firms’ pricing

practices. As a result, petitioners will

not usually be in a position to determine

if foreign firms, on an overall weightaveraged basis, are dumping. Pursuant

to the statute and regulations,

petitioners merely have to support their

dumping allegations with evidence that

any sale is dumped in order for the

Department to initiate an investigation.

The statute assigns the task of

performing the overall weight-averaged

dumping calculations to the

Department. The Department has the

authority, pursuant to the statute, to

request and analyze respondent’s actual

data to determine if the respondents are

dumping. Respondents, in turn, have

the opportunity to provide their

information to demonstrate that on a

weight-averaged basis they are not

dumping.

This does not mean, however, that

petitioners need merely allege dumping

in order for the Department to initiate

an antidumping duty investigation. The

Department’s regulations state that the

petition shall contain ‘‘[a]ll factual

information (particularly documentary

evidence) relevant to the calculation of

the United States price of the

merchandise and for the foreign market

value of such or similar merchandise.’’

19 C.F.R. 353.12(b)(7). We interpret this

regulation consistent with the

evidentiary standards in the statute, i.e.,

the petition must contain evidence

reasonably available in support of the

allegation. Thus, all information

‘‘relevant to the calculation of USP and

NV’’ is interpreted to mean evidence

supporting each element of the

calculation in the petition. This

regulation is not interpreted as imposing

a stricter evidentiary standard than is

provided for in the statute. As discussed

below, the petition met that statutory

standard. In this case, the Department

determined that the information in the

petition constituted a reasonable basis

upon which to initiate. Moreover, the

Department carefully examined

respondents’ subsequent challenges to

the petition data and, as a result, has

made some adjustments to the petition

calculations. However, none of the

respondents’ allegations justified

termination of the investigation on the

basis that the petition was inadequate.

In calculating the export prices

contained in the petition, petitioners

obtained U.S. retail prices and made

adjustments for retailer’s gross margin,

importer selling expense, and

movement charges, to estimate an exfactory price. Respondents have not

provided, and the Department has not

encountered, any evidence to indicate

that any of the retail prices and

subsequent adjustments were in anyway

flawed or inaccurate.

Instead, respondents’ challenge rests

on the fact that petitioners did not

include in the petition the actual export

price for one of the petitioner’s few

purchases of Chinese bikes. However, as

discussed above, the fact that some sales

may not have been sold at LTFV does

not invalidate the petition evidence that

other sales were. In addition, these

purchases were not of the same types of

bikes upon which the petition

calculations were based and, therefore,
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19035

do not challenge the data upon which

the dumping allegation was based.

Respondents’ further argument that

certain FOB Hong Kong prices

contained in the petition should have

been used instead of the retail price

information is not persuasive. As

petitioners point out in their

submissions, there are significant

problems with these figures, not the

least of which is that the record does not

indicate the models with which those

prices are associated.

On the NV side of the margin

allegation, the Department examined

respondents’ allegations that the factors

of production were improperly valued.

Respondents argued that petitioners

should and could have reasonably

provided data from India instead of

Indonesia because the Indian data was

reasonably available, and in

respondent’s view, India was a more

appropriate surrogate. Once again,

respondents’ argument is unpersuasive.

The statute does not require petitioners

to investigate and supply in the petition

all possible surrogate data from all

potential surrogate countries. Petitioners

are required to base their factors of

production analysis on values in an

appropriate surrogate country as defined

by the statute. Petitioners selected

Indonesia as the primary surrogate

based on their analysis that Indonesia

was economically comparable and a

significant producer of bikes. The

Department reviewed their analysis and

determined that Indonesia was an

appropriate surrogate country for the

basis of a petition. In fact, when the

Department conducted its own surrogate

country analysis, it determined that

both Indonesia and India were

appropriate surrogate countries.

Although the Department did ultimately

select India as the primary surrogate

(see, Factors Valuation Memo dated

November 1, 1995), that does not

invalidate Indonesia as an appropriate

surrogate. Indeed, in this final

determination, as in the preliminary

determination, the Department resorted

to Indonesian values when Indian

values were not available.

Respondents also challenged the

validity of certain factor values,

including the Indonesian depreciation,

interest, and profit (value added)

figures. During the course of the

investigation, updated information

demonstrated that the Indonesian

depreciation, interest and profit

percentage used in the petition was

aberrant and, as a result, the Department

adjusted these Indonesian figures. The

original depreciation, interest, and

profit figures in the petition was

substantiated by a 1992 Indonesian

Survey of the Indonesian bike industry.

The updated figures for 1993, which

demonstrated that the 1992 figure was

aberrational, were not available at the

time of filing. Thus, the 1992 figure was

relevant information reasonably

available to the petitioner at the time of

filing and provided a valid basis upon

which to initiate. We further note that

the adjustment to the depreciation,

interest and profit figures did not

eliminate the petition margins. The

Department was able to corroborate the

other petition data challenged by the

respondents and, thus, made no

adjustment to them. See, Facts

Available section above.

Finally, contrary to respondents’

argument, the Department’s actions

have been consistent with its statutory

obligations as noted by the Court during

the hearing for respondents’

interlocutory appeal of the initiation

issue. In reaching its final

determination, the Department has

examined all of the submissions of both

respondents and petitioners on this

subject and determined that none of the

information or arguments submitted by

respondents provide a basis upon which

the Department should initiate a further

investigation of the petition or terminate

the investigation.

Comment 8: China-Wide Rate—Adverse

Facts Available

Respondents argue that the

Department resorted to sampling in this

investigation and, therefore, the

Department should apply the provisions

of Section 735(c)(5) of Act to calculate

an antidumping duty rate for all

uninvestigated firms. Section 735(c)(5)

of the Act, ‘‘Method for determining all

other rate,’’ provides that this rate

should be the weighted average of

margins established for exporters and

producers investigated individually,

excluding margins that are de minimis

and margins that are based on ‘‘facts

available.’’ Respondents assert that the

law precludes the Department from

applying punitive rates to

uninvestigated firms, except in certain

limited circumstances that are not

applicable in this investigation.

According to respondents, the

Department’s preliminary determination

violated Section 735(c) of the Act

because it based the ‘‘all others’’ rate for

uninvestigated firms on adverse

information from the petition.

Furthermore, respondents contend

that the fact that this investigation

involves a non-market economy does

not change the prohibition against the

use of punitive rates for uninvestigated

firms. Respondents argue that the

Department has never informed the

Chinese government, industry

representatives or any uninvestigated

exporters that they have failed to

cooperate. According to respondents,

uninvestigated firms in non-marketeconomy cases are entitled to the same

fair treatment as uninvestigated firms in

market-economy cases. Respondents

state that neither the sampling provision

of the Act nor Section 735(c) provides

an exception for non-market economies.

Moreover, respondents argue that the

Court of International Trade has

directed in UCF America, Inc. v. United

States (No. 92–01–00049, Feb. 27, 1996)

(UCF) that the ‘‘all others’’ calculation

be applied without distinction to market

or non-market-economy investigations.

Petitioners argue that, contrary to

respondents’ claim, the Department did

not apply an ‘‘all others’’ rate. Rather,

petitioners note that the Department

applied a ‘‘China-wide’’ rate, in

accordance with its well-established

methodology in NME cases, including

basing the rate on adverse facts

available.

DOC Position: We disagree with

respondents. Respondents’ statement

with respect to the Department’s

method of respondent selection is

incorrect. As noted in the respondent

selection memorandum (see the June 30,

1995, Memorandum to Barbara R.

Stafford), the Department did not resort

to sampling when choosing mandatory

respondents for this investigation.

Accordingly, the sampling provision of

the Act regarding uninvestigated firms

does not apply here.

The Department acknowledges a

recent decision of the Court of

International Trade, UCF America Inc.

v. United States, Slip Op. 96–42 (CIT

February 27, 1996), in which the Court

affirmed the Department’s remand

results for reinstatement of the relevant

cash deposit rate, but expressed

disagreement with use of the ‘‘PRCwide’’ rate as the underlying basis for

reinstatement.

The Court suggested that the

Department lacks authority for applying

a ‘‘PRC-wide’’ rate in lieu of an ‘‘all

others’’ rate. We note, however, that

section 777(A)(c) requires the

Department to determine individual

dumping margins for each known

exporter or producer. Pursuant to this

authority, the Department implements a

policy in NME cases whereby all

exporters or producers are rebuttably

presumed to comprise a single exporter

under common government control, the

‘‘NME entity.’’ The Court has upheld

our NME policy in previous cases. See

e.g., UCF America, Inc. v. United States,

870 F. Supp. 1120, 1126 (CIT 1994);

Sigma Corp. V. United States, 841 F.
19036 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

Supp. 1255, 1266–67 (CIT 1993); Tianjin

Machinery Import & Export Corp. V.

United States, 806 F. Supp. 1008, 1013–

15 (CIT 1992).

The ‘‘NME-wide’’ rate is consistent

with section 735(c)(1)(B)(i)(I). This

provision directs the agency to assign a

dumping margin for each exporter or

producer individually investigated. As

discussed above, in NME cases, all

producers and exporters comprise a

single exporter. Thus, we assign a single

NME rate to the NME entity just as we

assign a single rate to exporters or

producer in a market economy that are

deemed to comprise a single enterprise.

Also, as in all cases in which multiple

exporters are treated as a single entity,

the response normally must include

data for all companies that comprise the

collapsed entity. If any company fails to

respond, the entire entity receives a rate

based on facts available.

To qualify for a separate rate, an NME

exporter or producer must provide a

complete questionnaire response,

including evidence showing both de

jure and de facto absence of government

control. See Silicon Carbide. Until such

evidence is presented, a company is

presumed to be part of the NME entity

and receives the ‘‘NME-wide’’ rate.

Consequently, whenever the NME

enterprise has been investigated or

reviewed, calculation of an ‘‘all others’’

rate under section 735(c)(1)(B)(i)(II) is

unnecessary because all exporters or

producers either qualify for a separate

company-specific rate, or are part of the

NME enterprise, and receive the ‘‘NMEwide’’ rate. Thus, normally in an NME

case, there can be no exporters or

producers who have not been

investigated or reviewed. Only when the

respondents in an investigation account

for all exports and all respondents

qualify for a separate rate is an ‘‘all

others’’ rate required. See PVA. Under

those circumstances, the NME entity has

not been investigated and, pursuant to

the statute, would be entitled to an ‘‘all

others rate.’’

Application of our NME policy to the

instant investigation is consistent with

the Department’s standard practice in

NME cases. The official copy of the

questionnaire was sent to MOFTEC, an

agency of the PRC government. The

cover letter of the questionnaire stated

our long-standing policy that the

Department presumes that a single

antidumping margin is appropriate for

all exporters in an NME country.

However, because of the large number of

companies potentially comprising the

NME entity, we requested that the

response include only the nine largest

companies. We issued the questionnaire

to those nine largest exporters. We also

notified the government that we might

be able to investigate a limited number

of voluntary respondents wishing to

claim separate rates treatment, but only

if they submitted complete

questionnaire responses. We provided

courtesy copies of the questionnaire to

law firms and companies who contacted

us. In addition, the cover letter also laid

out our policy on voluntary respondents

(see below), and we enclosed with the

questionnaire a copy of our respondentselection memorandum.

Regarding our position on voluntary

respondents, the Department informed

respondents at the onset of this

investigation that due to a lack of

resources, we would only be able to

investigate nine individual producers/

exporters. We addressed the issue of

voluntary responses in our respondentselection memorandum, stating we

would investigate and verify voluntary

responses on a ‘‘space available’’ basis,

up to the number of any non-responding

firms from the list of the nine

mandatory respondents. We further

indicated that if the number of

voluntary respondents was larger than

the Department could investigate, we

would select randomly from the pool of

voluntary respondents the additional

exporters to be investigated.

On August 7, we received responses

from only three of the nine exporters

named as mandatory respondents. We

also received only six full voluntary

questionnaire responses. All of the

participating companies established that

they qualified for separate rates and

have received their own dumping

margins for purposes of the final

determination. Because the six nonresponding mandatory respondents are

presumed to be part of the single NME

enterprise, that entire NME enterprise is

deemed to be uncooperative and it

received a rate based on adverse facts

available. Any company that did not

submit a full questionnaire response,

including information establishing

entitlement to a separate rate, is also

deemed to be part of the NME enterprise

and, therefore, is subject to that rate.

Comment 9: China-Wide Rate—

Submission of Section A by Exporters

Respondents contend that, even if the

Department finds that the amendment of

Section 735(c) of the Act does not

change the Department’s practice in

NME cases, the presumption of control

has been rebutted successfully by a

group of 12 uninvestigated Chinese

exporters. They argue that these 12

exporters have cooperated with the

Department, and have expressed their

intention to provide any information the

Department requires in order to

determine a separate rate for them.

Respondents believe that it would be

unfair and contrary to law for the

Department to apply punitive margins

against the 12 uninvestigated

companies.

In addition, respondents argue that

the Department should accept as timely

submissions made by the 12 exporters

showing their entitlement to a separate

rate. According to respondents, these

submissions were timely because the

Department did not establish any

specific deadline for the submissions

and, therefore, the general deadlines of

19 C.F.R.353.31 should apply.

Even assuming the 12 exporters’

voluntary submissions were untimely,

respondents argue that the Department

has no grounds to use adverse

information against these companies.

Respondents assert that Section

735(c)(5) of the Act does not require a

company to request to be a voluntary

respondent in order to avoid the

application of an adverse rate.

Furthermore, respondents argue that

Section 735(c) of the Act and the Court’s

ruling in UCF require that these

exporters receive a rate based on the

weighted-average margin of investigated

companies.

Finally, respondents argue that the

lack of guidance in this investigation

stands in contrast to the instructions

issued in the antidumping duty

investigation on honey from the PRC

(see, Preliminary Determination of Sales

at Less Than Fair Value: Honey from the

PRC, 60 FR 14725, March 20, 1995,

(Honey)) where the Department

requested MOFTEC to transmit the

questionnaire to ‘‘all companies that

process honey for export to the United

States and to all companies that were

engaged in exporting honey to the

United States during the period of

investigation. . . .’’ Respondents claim

that the Department did not issue these

instructions in the instant investigation.

Petitioners assert that, contrary to

respondents’ claim, the 12 exporters

have not cooperated in this

investigation because they ignored the

Department’s clear directive and

submitted only partial and untimely

questionnaire responses. In addition,

petitioners assert that respondents have

mischaracterized the Court’s decision in

UCF, stating that the Court in that case

did not rule on the issue of whether the

Department is allowed to use an adverse

‘‘PRC-wide’’ rate in an investigation, but

rather whether, in the course of an

administrative review, the Department

was required to apply to unreviewed

PRC exporters the ‘‘all others’’ rate

established in the original investigation.

In addition, petitioners note that UCF
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19037

concerned pre-URAA law. Petitioners

assert that under the URAA, the

Department may apply a China-wide

rate to companies that have not

established their entitlement to separate

rates in an investigation.

DOC Position: We disagree with

respondents. The information submitted

by the 12 exporters at issue was not a

sufficient basis upon which the

Department could determine that these

companies should receive rates separate

from the China-wide rate. The

companies merely provided volume and

value data through a China Chamber of

Commerce. This submission did not

include a request for separate rates

treatment from any of these exporters,

nor did it provide information sufficient

to demonstrate that they were entitled to

separate rates. Moreover, although these

exporters subsequently filed full Section

A questionnaire responses which

included explicit claims for separate

rates treatment, these Section A

responses were submitted two months

late. The cover letter to the

questionnaire clearly identified the

deadline for submission of section A

responses from any party wishing to

participate in the investigation as

August 7, 1995. Because no request for

extension of this deadline was made by

these parties, their Section A responses

were untimely under 19 C.F.R. 353.31.

Furthermore, in order to perform a

separate rates analysis, the Department

needs to have not only the Section A

separate rates questionnaire response

but also complete pricing data from

each exporter. The separate rates

analysis focuses on the relationships

between exporters and the government,

export prices and who sets them, and

control over export revenue. While the

Section A response may contain

information on the ownership and

control structures of the entities being

examined, the Department must also

have complete pricing data in order to

analyze whether export pricing and

business decisions of a NME exporter

are being made at the direction of the

NME government. As we stated above,

the Department has never granted a

separate rate to any exporter without

first receiving a full questionnaire

response. See e.g., Honey.

Therefore, by not submitting complete

questionnaire responses in a timely

manner, these exporters failed to

provide the Department with the

information necessary to perform a

separate rates analysis. In addition, by

not placing the necessary pricing

information on the record, petitioners

were denied the opportunity to examine

the responses and comment on whether

it was appropriate for these exporters to

obtain separate rates. As a result, the 12

companies at issue do not qualify for

separate rates and therefore are

considered to be part of the single NME

enterprise.

Similarly, the exporters’ argument

that the Department should base their

margin on a weighted-average of the

margins calculated for the responding

companies is without merit. See

Comment 8. The only situation where

the Department would apply a

weighted-average margin to an NME

exporter not specifically investigated is

one in which the exporter provides a

complete questionnaire response and

makes a claim, and establishes

eligibility, for separate rates. (See e.g.,

Honey.) In Honey, unlike in this case,

the Department received 28 complete

questionnaire responses. The

Department only had the resources to

fully analyze and verify four of those

companies selected from the pool of

exporters which submitted complete

responses. Thus, petitioners had the

opportunity to comment on all 28

responses. The Department applied the

weighted-average rate calculated for the

four selected respondents to the other

24 exporters which the Department did

not have the resources to fully

investigate. The Department explained

that:

This change in methodology was

necessitated by the particular circumstances

of this case. The parties who responded but

were not analyzed have applied for separate

rates, and provided materials for the

Department to consider in this request.

Although the Department is unable, due to

administrative constraints, to consider the

request for separate rates status, and to

calculate a separate rate for each of these

named parties, there has been no failure on

the part of these firms to provide requested

information. Because it would not be

appropriate for the Department to refuse to

consider an affirmative documented request

for an examination of whether these

companies were independent of any nonrespondent firms and then assign to the

cooperative firms the rate for the

noncooperative firms, which in this case is

an adverse margin based on best information

available, the Department has assigned a

special single rate for these firms.’’ See,

Honey at 14729.

In this case, as discussed above, the

12 companies at issue did not provide

complete questionnaire responses and

therefore do not qualify for separate

rates.

Regarding the exporters’ arguments

that the Department did not provide

sufficient guidance on this issue, we

find that this argument is contrary to the

evidence in the record. In the cover

letter to the questionnaire and

respondent selection memorandum, we

stated explicitly the Department’s longstanding practice of treating all NME

exporters or producers as part of the

NME government unless otherwise

demonstrated. In addition, all

communications from the Department to

the PRC government and counsel for

respondents clearly states all deadlines

and instructs respondents to contact the

Department if they have any questions

regarding deadlines or any data

requested. Courtesy copies of the

questionnaire, the cover letter, and the

respondent selection memorandum

were provided to counsel for the 12

exporters. The Department, with the

Honey case in mind, further indicated in

the respondent selection memorandum

that, even though we did not have the

resources to investigate more than nine

companies, if mandatory respondents

did not respond we would be able to

examine additional exporters randomly

selected from the voluntary responses

received. In the respondent selection

memorandum we clearly stated that if

we received more responses than we

could reasonably investigate and verify

we would have to address the issue of

what rate to apply to the responses we

were unable to investigate. However, in

this case, we were able to investigate

and verify all of the responses received

and, accordingly, did not have to

address this issue.

By not providing complete

questionnaire responses, the 12

exporters did not make themselves

available for analysis in the event that

a mandatory respondent did not

respond. It was not reasonable for those

exporters at issue to assume that they

should receive special treatment

separate from other companies

presumed to be part of the NME entity

when the record demonstrates that they

were informed of the consequences of

not requesting a separate rate in a timely

manner.

Finally, the exporters’ assertion that

they provided all the information

requested by the Department and thus

qualify for a rate other than the countrywide rate misinterprets the

Department’s non-market economy

single entity presumption. As explained

above, the Department assumes that all

companies are part of the NME entity

unless the companies satisfy the

Department that they qualify for a

separate rate. The burden is on the

exporters to come forward and

demonstrate that they are entitled to

separate rates. It is not incumbent upon

the Department to ask for separate rates

responses, as these exporters’ arguments

seem to suggest. It is up to each

company to decide whether it wishes to

seek a separate rate. In this case, these
19038 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

companies did not submit a separate

rates claim until well after the deadline

for doing so had passed. Based on the

above analysis, we are treating these

exporters as part of the government

controlled entity.

Comment 10: Calculation of

Antidumping Rate for Uninvestigated

Exporters on Facts Available in the

Petition

If the Department bases the

antidumping rate for uninvestigated

exporters on facts available in the

petition, respondents assert it should

use only Indian surrogate values for

overhead, SG&A, and profit.

Respondents argue that the Department

should not use any of the Indonesian

surrogate values used in the petition

because the Department has rejected

Indonesian in favor of Indian surrogate

values. Respondents argue that the

Department had no justification for

using the rejected Indonesian

information for these cooperating

exporters, and that for purposes of the

final determination the Department

should apply the most recent Indian

data in any calculations based on facts

available for other uninvestigated

shippers.

Petitioners agree with respondents

that in the event the Department does

apply facts available to these exporters,

it should use only Indian surrogate

values for overhead, SG&A, and profit.

DOC Position: As discussed above in

the Facts Available section, Indonesia is

an appropriate surrogate and, with the

exception of depreciation, interest and

profit, the Indonesian factor values in

the petition have been corroborated.

Therefore, the petition rate, as adjusted,

is appropriate for use as adverse facts

available.

Comment 11: Business Taxes Paid on

Exports

At verification, we found that Tandem

Hong Kong (Tandem HK), Chitech’s

Hong Kong affiliate, pays a fee to the

Shunde government for operating

within the Shunde township. This fee is

based on a percentage of the value of all

sales.

According to petitioners, this fee

should be considered an export tax and

deducted from USP, in accordance with

772(a)(2)(B) of the Act.

Chitech maintains that the

Department should make no adjustment

for this fee because the statute requires

the Department to disregard the costs of

goods and services provided by NME

suppliers. In addition, Chitech points

out that the Department has never

treated payments to the PRC

government as selling expenses.

DOC Position: We disagree with

petitioners that this fee should be

considered an export tax or that it

should be deducted. In fact, our analysis

of Chitech’s questionnaire response and

review of this expense at verification

suggests that this fee is more analogous

to a business license fee or an income

tax, rather than a tax levied solely on

exports. We do not adjust for intra-NME

transfers.

Factor Valuations

Comment 12: Indian Producer Financial

Statements

Petitioners argue that the Department

should not use the financial reports of

Hero or Atlas because, according to the

publication Cycle Press, Hero and Atlas

produce primarily roadster-type

bicycles rather than the MTB and ATB

bicycles which PRC producers ship

overwhelmingly to the United States. In

addition, Hero and Atlas only export 10

and 13 percent of their production,

respectively. Petitioners point out that

under the Statute and Department’s

proposed antidumping regulations, the

Department is required to use surrogate

value data from only those marketeconomy firms that are significant

producers of merchandise that is

identical or the most similar to that

produced by the respondents under

investigation. Therefore, petitioners

maintain that the Department should

use only the financial reports of Gujarat,

TI Cycles (TI) and Roadmaster because

these companies are largely exportoriented companies and predominately

manufacture MTB and ATB bicycles.

Respondents maintain that the

Department should use the combined

financial reports of Hero, Atlas and

Gujurat. Respondents point out that the

Department cannot use the financial

data of Gujurat without using the data

of Hero and Atlas because Gujurat (1) is

considered a ‘‘sick industrial’’ company

by the Indian government; (2) receives

subsidies from the Indian government;

and (3) is not representative of the

Indian industry as a whole.

Respondents contend that the

Department should reject TI’s financial

report because TI only receives 50

percent of its income from the sale of

bicycles and because it produces a wide

range of other products, notably steel

tubes. Respondents also maintain that

the Department should not rely on

Roadmaster’s financial report because

the report is not contemporaneous with

the POI and because the Department has

financial reports it can use which are

contemporaneous with the POI.

Respondents also argue that the

Department should ignore the submitted

statement of a Hero company official

because (1) it is not public information;

(2) it lacks credibility; and (3) it is selfserving.

DOC Position: We disagree with

respondents and petitioners and have

used the financial statements of the four

Indian producers which are

contemporaneous with the POI—Atlas,

Hero, Gujurat, and TI. This case is

unique in that there is a wealth of highquality surrogate data, particularly with

respect to factory overhead, SG&A and

profit. The parties have argued, for a

variety of reasons, that we should reject

certain companies’ from consideration.

However, we find that on balance, the

financial statements of four of the India

surrogate producers are usable for our

factor valuations. We rejected the fifth

company’s report, Roadmaster, because

it was not contemporaneous with the

POI and because we already have four

good sources which contain data within

the POI.

Regarding similarity of the

merchandise produced by the Indian

producers to that of the PRC

respondents, we find insufficient

evidence that any producer clearly

produces the most comparable

merchandise. It is possible that the

Hero, Atlas and Gujurat models shown

in Bicycle Guide may not be of as high

a quality as those models produced by

TI (as alleged by petitioners). However,

these models do contain basic

components, designs and features

associated with BMX and ATB models

which resemble, or are exactly the same,

as those in the PRC models produced by

respondents. Therefore, based on data in

Cycle Press and Bicycle Guide, we

conclude that all five companies to

some extent manufacture the type and

quality of bicycles produced by the

respondents during the POI.

With regard to the issue of who

exports the highest percentage of its

merchandise, we disagree with

petitioners that the amount of exported

production of each Indian producer is a

clear indication of which company is a

significant producer of the merchandise

under investigation. The information in

Cycle Press does not allow the

identification of the specific quantity of

bicycle types exported by each Indian

producer for overseas sale. However, we

can establish from this publication that

each of the five companies exports its

full line of products to foreign markets.

Although we do not know for certain

whether these companies export all of

the BMX, ATB, and/or MTB bicycles

that they produce, it is reasonable to

conclude that these models produced in

India are designed primarily and/or

exclusively for export markets and that

the number of these bicycles sold in
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19039

India’s domestic market is minimal.

Therefore, there is no basis in the record

to conclude that one company produces

more comparable merchandise. As such,

this data is not relevant to our choice of

surrogate values.

With regard to the financial condition

of the companies, Gujurat was not

profitable during the POI based on its

financial report. We know that the other

Indian producers were profitable based

on their financial reports. Whether or

not a company is profitable, however, is

not necessarily a reason for rejecting

that company’s data for purposes of

surrogate valuations for factory

overhead and SG&A expenses. See, also

Comment 16.

In addition, we disagree with

respondents that TI’s data is unusable

because it produces some non-subject

merchandise. The other Indian

producers also produce non-subject

merchandise, albeit to a lesser extent.

Most Indian producers, like TI, produce

steel tubes (a bicycle input). Given these

facts, we cannot conclude that the use

of TI’s data is inappropriate.

Based on the above analysis, we have

used the 1994–1995 financial data of

Hero, Atlas, TI, and Gujurat. We have

excluded from our analysis

Roadmaster’s data because it is not

contemporaneous with the POI and

other contemporaneous data is

available.

Comment 13: Average Method for

Calculating Surrogate Percentages

Respondents claim that the

Department should calculate a

weighted-average factory overhead,

SG&A and profit of each Indian

producer. Respondents contend that,

unlike in PVA, there is a clear

correlation between the costs and

production quantities for all of the

Indian bicycle producers.

Petitioners maintain that using a

weighted- average method would imply

that the production experience of larger

producers like Hero and Atlas would be

more relevant than that of smaller

producers like Gujurat or Roadmaster.

Instead, petitioners claim that it is the

experience of the smaller producers that

is more representative of, and better

reflects, the factors of production for the

products made by the PRC respondents.

Petitioners also point out that in PVA,

the Department found no indication that

one factor (i.e., sales volume or

production) was so important that it

would require the use of weightedaverage methodology.

DOC Position: We agree in part with

petitioners. The use of production

quantities from the financial data to

derive weighted-average percentages

will take into account the differences

between the production capacity and

sales associated with the largest Indian

producers (Hero, Atlas and TI) and the

capacity and sales of significantly

smaller operations such as Gujurat. The

respondents show data suggesting the

factory overhead percentages for the

largest producers, Hero and Atlas, are

measurably lower than the percentages

for the significantly smaller producer

(Gujurat) and that there may be inverse

relationship between the factory

overhead, SG&A and profit ratios and

production. However, a myriad of other

factors could also be affecting these

ratios. For example, the age of the

factory, the quality of the merchandise

being produced, and the relative capital

intensivity of the manufacturing process

could all affect the ratios under

consideration. Moreover, not all of the

PRC respondents are large-scale

producers like the Indian producers

Hero and Atlas. In fact, we find that the

total production of the largest PRC

producer is significantly less than the

total production amount of either Hero

or Atlas.

Finally, we do not know the relative

amount of MTB or ATB production

included in each Indian producer’s total

bicycle production, as compared with

the production of utilitarian roadsters.

This is important because the PRC

respondents produce predominantly

MTB or ATB bicycles for export to the

United States.

Given these facts, there is no basis to

conclude that a weighted-average

calculation would be a more accurate

measure of the costs of Indian surrogate

producers of comparable merchandise.

Therefore, we used a simple average of

these financial statements consistent

with our normal practice because,

barring evidence to the contrary, we

assume that all of these surrogate values

are equally representative of the

surrogate experience.

Comment 14: Calculating Surrogate

Percentages from TI’s Financial Data

Respondents maintain that the

Department should exclude from TI’s

financial report the expense data

separately reported for two TI

subsidiaries which do not produce

bicycles and which are consolidated

into TI’s report. Alternatively,

respondents argue that the Department

should use a ratio based on the amount

of bicycle sales in terms of total sales to

determine the allocable factory

overhead, SG&A, and profit associated

with bicycles exclusively. Finally,

respondents urge the Department to

remove the excise duty amounts from

TI’s SG&A expense calculation because

the tax is a neutral item, bicycles are

exempt from the tax, and Indian law

allows any Indian producer to recover

this duty amount.

Petitioners maintain that TI’s

financial data reasonably reflects the

performance of its bicycle division and

is corroborated by the similar financial

experience of other Indian producers

such as Gujurat and Roadmaster.

Moreover, petitioners maintain that the

Department should not make an

adjustment to the expense data in TI’s

financial report because TI’s report is

unconsolidated and therefore does not

include expense data from its two

subsidiaries. Finally, petitioners

maintain that the Department should

not exclude the excise duty from the

factory overhead or SG&A calculation

because TI records this expense in its

financial report as an expense and that

other Indian producers such as Hero,

Roadmaster and Gujurat account for the

excise duty liability in their financial

reports by treating the duty as an

expense.

DOC Position: Respondents’ claim

that we should deduct the ‘‘separately

reported’’ expenses of TI’s subsidiaries

is unsupported. We examined the

financial statements for TI’s two

subsidiaries and found that expenses of

TI’s subsidiaries are not provided

separately. In addition, there is no

evidence establishing that TI’s report is

a consolidated statement that includes

the subsidiaries. Indian Generally

Accepted Accounting Principles

(GAAP) do not require Indian

companies to consolidate financial

reports. Moreover, it appears from PI we

obtained that, in general, Indian

companies do not prepare consolidated

financial statements (See World

Accounting (1995) (page 44) and

International Accounting Summaries

(1993) (page 5)). Therefore, we are using

the data in TI’s financial report without

any adjustment for the subsidiaries’

expenses.

Regarding the excise tax amount, we

are removing the duty and/or tax

amount listed in TI’s financial report

when calculating its surrogate

percentages because it is the

Department’s practice to use, if possible,

tax exclusive values as surrogates in

NME cases (See, Final Determination of

Sales At Less Than Fair Value:

Disposable Pocket Lighters from the

PRC, 60 FR 22359 (May 5,1995) and

Final Determination of Sales At Less

Than Fair Value: Sebacic Acid from the

PRC, 59 FR 280053 (May 31, 1994)).

Moreover, we have found in previous

cases involving products from India that

excise duties and/or taxes paid by

Indian producers were refundable to the
19040 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

producer by the Indian government

(See, Final Determination of Sales at

Less Than Fair Value: Stainless Steel

Bar from India, 59 FR 66915 (December

28, 1994)). Therefore, we have not only

removed the amount of excise duty and/

or tax from TI’s financial data, but also

from the financial data of the other

Indian producers, where possible,

which we have used to calculate

surrogate percentages.

Comment 15: Gujurat’s Profit Percentage

Petitioners maintain that the

Department should not use the profit

percentage derived from Gujurat’s

financial data in the overall profit

percentage calculation because Gujurat’s

profit percentage is negative.

Respondents assert that the

Department should calculate a weighted

average profit percentage using

Gujurat’s actual financial data.

DOC Position: Consistent with how

constructed value (CV) is calculated in

market-economy cases, we conclude

that in selecting a surrogate value for

profit under section 773(c)(1), it is

inappropriate to use data from sales

made below the cost of production.

Gujurat’s negative profit indicates that

the company may be selling its product

below the cost of production. Therefore,

we have treated Gujurat’s negative profit

ratio as zero, but have included the zero

amount when calculating the overall

surrogate profit average.

Comment 16: Treatment of Pre-Painting

Chemicals

In the preliminary determination, we

valued all chemicals used to produce

the subject merchandise because we

considered such materials to be direct

inputs and not part of factory overhead.

Respondents argue that the chemicals it

uses to pre-treat parts prior to painting

are not material inputs, but rather

factory overhead costs (i.e.,

consumables). Respondents point out

that it is Department practice to treat

such chemicals, which act as a cleaning

detergent, as part of factory overhead

because these chemicals are not

physically incorporated into the subject

merchandise (see Final Results of

Administrative Review: Heavy Forged

Handtools, Finished or Unfinished,

With or Without Handles, from the

People’s Republic of China, 60 FR 49251

(September 22, 1995)(Hand Tools).

Alternatively, respondents state that an

amount for ‘‘consumables’’ is noted in

the financial reports of the Indian

producers used to calculate percentages

for factory overhead, SG&A and profit

and that if the Department includes the

‘‘consumables’’ amount in its factory

overhead calculation, then the

Department should not value the

chemical inputs reported in the Section

D database because it would be doublecounting.

Petitioners maintain that the

chemicals the respondents use are not

detergents applied to the parts to

remove oxidation or dirt but chemicals

used to pre-treat parts prior to painting

which are incorporated into the subject

merchandise. Therefore, petitioners

maintain that these chemicals are direct

materials and should be valued

accordingly. Petitioners are silent on

whether valuing the chemicals would be

double-counting if the Department

included in its factory overhead

calculation an amount for

‘‘consumables.’’

DOC Position: We agree with

petitioners. We examined all of the

respondents’ production processes at

verification and found that the

chemicals in question are essential for

producing the finished product and are

incorporated into the product (i.e., in

pre-treating the components, the

chemicals permeate the components

and are not completely washed off).

These chemicals appear to be significant

inputs into the manufacturing process

rather than miscellaneous or

occasionally used materials, i.e.,

cleaning supplies which might normally

be included in consumables. Moreover,

the chemicals which we would be

valuing are chemicals such as

hydrochloric acid, sulfuric acid, and

caustic soda (to name a few) which we

have routinely valued in prior NME

cases involving the production of nonchemical finished products (e.g., lockwashers). Therefore, we treated these

chemicals as direct material inputs. We

considered that such significant

material inputs would not normally be

considered consumables and, therefore,

no double counting would occur.

Comment 17: Fasteners and Chainguard

Screws

In the preliminary determination, we

valued fasteners and chainguard screws

using an average import value from the

HTS subcategory ‘‘other screws and

bolts with nuts or washers threaded’’

from Monthly Statistics (April 1993–

March 1994).

Respondents claim that the average

value we used from Monthly Statistics

was aberrational as it is based on a

basket category of import statistics

which includes other products.

Therefore, respondents urge the

Department to use Indonesian surrogate

values for nuts and bolts. The

respondents cite Final Determination of

Sales at Less Than Fair Value: Certain

Partial-Extension Steel Drawer Slides

with Rollers From the People’s Republic

of China, 60 FR 54472, 54477 (October

24, 1995) (Drawer Slides) and the Final

Determination of Sales at Less Than

Fair Value: Sulfur Dyes, Including

Sulfur Vat Dyes, from the PRC, 58 FR

7537, 7540 (1993) in support of their

argument.

Petitioners claim that the respondents

have not demonstrated that the average

value the Department used from

Monthly Statistics is aberrational, or

why the statistical category for ‘‘other

screws and bolts with nuts or washers

threaded’’ is not the best information

available. Moreover, petitioners assert

that the per kilogram average price of

the material to value the chainguard

screws and fasteners should not be used

without accounting for the labor,

overhead, and other costs necessary to

produce the finished part, e.g., a screw.

Therefore, petitioners contend that the

Department should continue to use the

value from Monthly Statistics to value

chainguard screws and fasteners.

DOC Position: We agree with

respondents that the value used in the

preliminary determination was a basket

category. We have recently found two

sources of Indonesian PI which are more

specific to these two different inputs,

fasteners and screws. These sources are

contemporaneous with the POI and are

more specific to the factor inputs we are

trying to value. Accordingly, we used

these sources to value fasteners and

screws for purposes of the final

determination. See, Factor Valuation

Memo dated April 22, 1996.

Comment 18: Labor

In the preliminary determination, we

used a 1990 labor rate applicable for

laborers working in the Indian transport

equipment sector noted in Yearbook of

Labor Statistics (YLS) to value skilled,

unskilled and indirect labor.

Respondents claim that the Department

should use instead the labor rate

applicable for Indian laborers working

in the sector called ‘‘manufacture of

fabricated metal products, except

machinery and equipment.’’

DOC Position: We disagree with

respondents. We have no reason to

believe that the Indian transport

equipment sector does not include

bicycle production and, therefore, that

the rate we used in the preliminary

determination does not capture the

wages paid to the laborers in the Indian

bicycle industry.

Fabricated metal products could

include a host of products other than

bicycles. Moreover, since the

respondents have not provided concrete

evidence that bicycle production is

included in the fabricated metal
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19041

products sector or not included in the

transport equipment sector, there is no

basis to change our calculation.

Common Company-Specific Comments

Unreported Sales

Comment 19: Unreported EP Sales—

CBC

At verification, we discovered that

CBC failed to report a small number of

EP sales to the United States. Petitioners

argue that the Department should base

the final margin for these sales on facts

available. They state that CBC had

sufficient time to amend the U.S. sales

listing, but did not do so. As facts

available, they advocate using the

highest reported amounts for charges

and expenses contained in CBC’s EP

sales listing. (The price information is

contained in a verification exhibit.)

CBC agrees that the Department

should apply facts available to these

sales. However, CBC maintains that the

Department should use the average,

rather than the highest, amount for

charges and expenses that CBC reported

for its other EP sales. CBC states that the

sales in question were omitted from the

sales listing because the company had to

file its response prior to their shipment.

Therefore, CBC characterizes this

omission as attributable more to the

company’s attempt to comply with the

response deadline rather than as a

deliberate failure to respond to a

Departmental request.

DOC Position: We disagree with both

parties. In an investigation, the

Department is not required to examine

every sale made during the POI. In this

case, the sales at issue represent an

insignificant portion of CBC’s total sales

by volume and value. Consequently, we

have excluded them for purposes of our

final determination.

Comment 20: Unreported EP Sales—

Chitech

The petitioners argue that the

Department should assign the highest

margins to EP sales not included in the

sales database because of Chitech’s date

of sale methodology. The petitioners

argue that these unreported sales are

subject to this investigation because

even though the invoice date is outside

the POI, the sales were actually

confirmed and booked during the POI.

The respondent points out that it

consistently applied its date of sale

methodology to report its POI sales of

subject merchandise. In addition, the

respondent points to its submissions

showing where the terms of sale

changed from the order up to the

invoice. Respondents note that the

alternative date of sale proposed by the

petitioners is merely the date that the

respondent receives payment from its

bank.

DOC Position: We disagree with

petitioners that there were any

unreported EP sales. Chitech

consistently applied our date of sale

methodology for reporting its U.S. sales

of subject merchandise during the POI.

Chitech used the invoice date to report

its POI sales because the terms of sale

can and do change up to the invoice

date. We examined Chitech’s date of

sale methodology at verification and

found no discrepancies.

Comment 21: Unreported CEP Sales—

Dynacraft

The petitioners argue that Dynacraft

should not be rewarded for its failure to

report these sales and suggest that these

sales should be based on adverse facts

available.

The respondent points out that the

Department’s practice is to generally

disregard an inadvertent omission of a

minor amount of sales. Alternatively, if

the Department elects to calculate

margins on these sales, the Department

has all of the required information

(except for credit expenses) to calculate

margins using actual and verified

expense data for these sales.

DOC Position: Dynacraft inadvertently

omitted these sales from its U.S. sales

database because it had incorrectly

considered this group of sales as being

non-subject merchandise produced in

Taiwan. We did not collect the sales

invoices for these unreported sales at

verification. The sales were all for one

specific model sold at the same price.

This model also happens to be one of

the higher priced models reported by

Chitech. We determined that including

these sales in our calculations would

have no effect, or a negligible effect, on

the margin calculated for Chitech.

Moreover, this situation does not appear

to warrant the use of adverse facts

available. Therefore, we have not

included these sales in our analysis.

Warranty and Bad Debt Expenses

Comment 22: Accrued vs. Actual

Warranty and Bad Debt Expenses

Giant USA (GUSA) sets aside a

budgeted amount for warranty and bad

debt expenses each fiscal year and

reported the actual amount in its section

C database. The petitioners argue that

the Department should use these

accrued amounts as the basis for

calculating these expenses rather than

the actual expenses GUSA incurred in

warranty and bad debt expenses during

the POI because the accrued amounts

are based on the historical experience of

the company and are not influenced by

distortions such as fluctuations in

volumes of sales.

Giant argues it is Department practice

to deduct actual, rather than accrued,

expenses from USP. The respondent

cites to Final Results of Administrative

Review: AFBs (Other Than TRBs) and

Parts Thereof From France, 60 FR

10900, 10917 (February 28, 1995) and

Final Results of Administrative Reviews:

Roller Chain, Other Than Bicycle, From

Japan, 57 FR 46535 (October 9, 1992) in

support of its argument. In addition,

respondent contends that the

Department should treat GUSA’s bad

debt expenses as indirect selling

expenses, in accordance with its normal

practice. In support, respondent cites

Certain Cut-to-Length Carbon Steel Plate

From Germany; Final Results of

Antidumping Administrative Review, 61

FR 13834 (Mar. 28, 1996).

DOC Position: With respect to

warranty expenses, we disagree with

respondents that we always use actual

expenses. Our practice is normally to

use historical expenses unless our

analysis of the actual expenses suggests

that historical expenses are

inappropriate. (See, Final Determination

of Sales at Less Than Fair Value: Color

Picture Tubes from Japan, 52 FR 44171

(November 18, 1987)). Giant’s accrued

amounts are reflective of historical

experience. As such, we used the

accrued amounts. The actual POI

amounts only reflected a short period of

GUSA’s warranty experience, whereas

the accrued expenses were reflective of

Giant’s actual historical experience.

Regarding the issue of whether bad debt

should be classified as a direct or

indirect expense, we agree with

respondent. Accordingly, we have

classified bad debt as an indirect selling

expense and have treated it as such for

purposes of the final determination.

Comment 23: Warranty Expenses

Petitioners argue that the Department

should use the historical average

warranty costs incurred by Motiv,

CATIC’s affiliated reseller in the United

States, rather than the reported POI

costs as the basis for its warranty

expense adjustment. Petitioners assert

that Motiv’s POI warranty costs may be

aberrational and historical warranty

costs take into account fluctuations in

sales volume.

Respondent argues that because

petitioners use a historical average

warranty amount reported as a dollar

amount per bicycle, and the reported

POI warranty costs are reported as a

percentage of each gross sales dollar,

they are making an apples to oranges

comparison. Respondent states that,
19042 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

although Motiv’s total warranty costs

change from year to year, there is

nothing on the record to suggest that

there is any fluctuation in Motiv’s

historical warranty costs as a percentage

of gross sales dollars. Moreover,

respondent argues that to impute to

each bicycle the same per-unit cost

would create distortions because

Motiv’s other expenses are allocated by

value, not by volume.

DOC Position: We agree with

petitioners. Our examination of Motiv’s

historical warranty costs indicate that

the reported POI warranty costs may not

be reflective of what Motiv’s true

warranty expenses will be on its POI

sales. Accordingly, we used the

historical warranty expenses.

Findings at Verification

Comment 24: Discrepancies in Weights

and Distances

At verification, we found a number of

discrepancies in the weights and

distances reported by Overlord and used

in the calculation of surrogate freight on

components. Petitioners assert that the

Department should correct the reported

data, based on the findings at

verification. In addition, petitioners

argue that the Department should

impute these findings to all of

Overlord’s components not examined at

verification by adjusting the reported

weights and distances by the average

percentage difference observed at

verification.

Overlord maintains that the

Department should only correct for the

errors found at verification.

DOC Position: We agree with

respondent. At verification, we found

no consistent pattern of underreporting. For example, we found that

the weight differences ranged from an

over-reporting of 200 percent to an

under-reporting of 23 percent. Given the

wide range of observed differences,

adjusting the weights and distances of

unexamined components would only

affect the margin several points to the

right of the decimal. Consequently, we

corrected Overlord’s database to account

only for errors found at verification.

Comment 25: Unreported MarketEconomy Movement Expenses

Petitioners maintain that Universal

was not forthcoming in providing to the

Department prior to verification a clear

picture of how it incurred its movement

expenses in Hong Kong. Because these

expenses were not reported, the

petitioners insist that the Department

should now assign adverse amounts to

each of the Hong Kong incurred

movement expenses rather than rely on

the actual expense data noted in the

verification report. Petitioners

recommend that the Department use the

highest rates found for any respondent

for each movement expense or use the

highest rates from the data examined at

verification and apply them on a

container basis, using the lowest

quantity figure per container provided

by Universal.

Respondent claims that the

Department’s practice is to not use the

movement expenses incurred by a PRC

respondent if it sourced its

transportation services from a company

that was located in the PRC and

affiliated with a Hong Kong company.

The respondent cites to Drawer Slides

and Final Determination of Sales at Less

Than Fair Value: Ferrovanadium and

Nitrided Vanadium from the Russian

Federation, 60 FR 27957, 27962 (May

26, 1995) (Ferrovanadium) in support of

its argument. In addition, the

respondent states that if the Department

intends to use expenses incurred in

Hong Kong, then the Department should

not apply adverse facts available in this

situation because it has the actual

expenses.

DOC Position: At verification, we

found that Universal pays its customs

broker in Hong Kong, in Hong Kong

dollars, for five services: (1) terminal

handling charges; (2) handling fees; (3)

document fees; (4) courier fees; and (5)

import and export fees. Universal did

not report these expenses because the

Hong Kong broker is a subsidiary of a

PRC company. Universal assumed that

this data could not be used by

Department. The NME questionnaire

requests a respondent to report all

movement expenses paid to a marketeconomy supplier.

We used the average rates established

at verification for each expense noted

above and the quantity amounts per

container for each U.S. model provided

in the October 2, 1995, submission to

calculate the Hong Kong incurred

model-specific expenses for those

expenses that are incurred on a

container basis. For Hong Kong import

& export fees, we used the rate found

among the other respondents. The fact

that Universal failed to report these

expenses is not a basis for adverse

inference because Universal’s

interpretation of the questionnaire

instructions, although in error, was not

unreasonable.

Other Company-Specific Comments

Petitioners made several arguments

that certain expenses incurred by the

Hong Kong and Taiwan affiliates of the

PRC bike producers should be treated as

direct selling expenses and be subject to

COS adjustments. Because we are not

making COS adjustments in this case,

these issues are moot. See Comment 1

in General Comments section above.

Bo An

Comment 26: Market-Economy Based

Movement Charges

Petitioners have stated that the

Department should assign adverse facts

available to Bo An’s movement charges

because Bo An has been less than

forthcoming concerning movement

charges purchased from marketeconomy suppliers and paid for in

market-economy currency. Moreover,

according to petitioners, the verification

exhibits contradict Bo An’s statement in

its Section C response that ‘‘Bo An did

not use any market-economy suppliers

for shipment of the goods.’’ Petitioners

agree that this information should

clearly have been reported earlier in the

investigation and that the Department

should now assume that Bo An made

full use of all potential market-economy

based movement and handling services

between the PRC factory and the loading

of the ocean-going vessel in Hong Kong.

Accordingly, the Department should

apply the highest calculated freight rates

found for any respondent in this

investigation to all Bo An’s movement

and handling expenses.

Bo An contends that the Department

should not assign market-economy

values to goods and services obtained

through a non-market-economy

transaction. Bo An points out that it has

already certified for the record that it

arranges for transportation through the

PRC affiliates of Hong Kong

transportation companies and that the

Department found no evidence at

verification to contradict this

information. Finally, respondent cites

Drawer Slides and Ferrovanadium as

evidence that the Department’s practice

has been to determine whether a good

or service obtained through a marketeconomy transaction is sourced from a

market economy rather than merely

purchased in it.

DOC Position: We agree with

respondent. Because these movement

and handling services were provided by

a company located in the PRC, we

conclude that these charges do not

reflect a market-economy based price.

Therefore, in our final determination we

have continued to apply a surrogate

country cost to value these charges.

CBC

Comment 27: Brokerage and Handling

Expenses

Petitioners argue that the Department

should base brokerage and handling
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19043

expenses for CBC’s CEP sales on facts

available because CBC failed to provide

any support for its claimed amount at

verification. As facts available,

petitioners assert that the Department

should use the amount that it calculated

during verification based on an

examination of CBC’s sales information.

DOC Position: We agree. Accordingly,

we have based brokerage and handling

for CEP sales on the information

reviewed at verification.

Comment 28: Interest Expense and

Interest Revenue

At verification, we found that CBC

received interest revenue on EP sales

although it did not report this revenue

in its sales listing. In addition, we also

noted that CBC incurred sales-specific

interest expenses, which likewise had

not been reported. CBC requests that the

Department add interest revenue to its

USPs. Moreover, CBC argues that the

Department should ignore the interest

expenses observed at verification

because they represent affiliated party

transactions, as evidenced by intracompany invoices between CBC and its

Hong Kong affiliate.

Contrary to CBC’s assertions,

petitioners maintain that the interest

expenses in question are similar to

movement expenses because they were

actually paid by CBC on every sale.

They state that CBC failed to provide

any credible evidence supporting its

claim that these payments are intracompany transfers. Moreover, they state

that failure to report these expenses

should lead to the application of

adverse inferences against CBC.

Specifically, they argue that the

Department should subtract from CBC’s

reported EP sales prices interest

expenses equal to the highest expenses

(as a percentage of invoice price)

observed during verification. Regarding

interest revenue, petitioners state that

the Department should ignore the

amounts collected at verification

because CBC failed to provide complete

information in a timely fashion.

DOC Position: Regarding interest

expenses, we disagree with CBC that

these expenses represent affiliated party

transactions. At verification, we

reviewed actual payment advices issued

by the unaffiliated bank. These payment

advices showed that interest expenses

were actually charged by the bank on

each transaction, independent of any

affiliated party transfers that may have

occurred. However, we have not made

an adjustment for these expenses,

because we are not making COS

adjustments on EP sales. See, Comment

1 in General Comments section above.

Regarding interest revenue, we found

at verification that CBC charged this

revenue in order to cover the actual

interest expenses that it incurred on

each sale. Therefore, adjusting for

interest revenue without making the

corresponding adjustment for interest

expenses would result in an EP that is

overstated. Accordingly, we also have

made no adjustment for interest revenue

for purposes of the final determination.

Comment 29: Freight Rebates

At verification, we found that Western

States Importers (WSI), CBC’s U.S.

affiliate, did not use the eligibility

criteria specified in its freight rebate

program when calculating the freight

rebates reported in its CEP sales listing.

According to petitioners, the

Department should recalculate these

rebates by applying the eligibility

criteria set forth in WSI’s program

brochures.

According to CBC, no adjustment is

warranted. CBC states that these rebates

operate as a customer-specific price

allowance and as a general expense to

WSI, as evidenced by the fact that WSI’s

accounting system does not track freight

rebates on a transaction-specific basis.

CBC asserts that, indeed, given the

limitations of WSI’s accounting system,

reporting freight rebates on a customerspecific basis was the only feasible way

to capture these costs. Moreover, CBC

argues that there is no evidence on the

record to support the contention that

allocating these rebates on a customerspecific basis is distortive.

DOC Position: We do not have

sufficient information on the record to

reallocate WSI’s freight rebates

according to the eligibility criteria

specified in the rebate program

brochures, as requested by petitioners.

Moreover, we agree with CBC that it

would not be distortive to allow these

rebates on a customer-specific basis,

based on our finding at verification that

they operate as a customer-specific price

allowance, rather than as a transactionspecific expense. Therefore, we have

accepted the expenses as reported for

purposes of the final determination.

Comment 30: Different Control Numbers

for Identical Products

At verification, we found CBC had

assigned different control numbers to a

small number of products which

appeared to have identical physical

characteristics; however, CBC reported

different factors of production for these

products. In addition, we found that

CBC assigned the same control number

(and same factors of production) to a

small number of products which

appeared to be physically different.

Petitioners assert that the Department

should resort to facts available to

calculate the factors of production for

each of the products in question. As

facts available for the physically

identical products, petitioners maintain

that we should use the highest COM

calculated for any of the products which

are within the identical grouping. As

facts available for the non-identical

products, petitioners assert that the

Department should calculate separate

production costs using ratios derived

from the different prices reported for the

different models.

According to CBC, the Department

should not make adverse inferences as

to the COM of the bicycles in question.

CBC states that it explained all of the

discrepancies at verification and that it

documented most of these explanations.

DOC Position: Regarding the different

control numbers reported for physically

identical products, we agree with

petitioners. Contrary to its assertion, at

verification CBC could not explain why

the factors of production for these

models differed. Moreover, it is difficult

to imagine how models sharing the

same control number could have

different production costs. Because CBC

failed to report its data in a consistent

fashion, we find that applying an

adverse inference to facts available is

reasonable and appropriate in this case.

Therefore, we have used the highest

COM calculated for any of the products

which are within the identical grouping

to the products in question.

Regarding the same control numbers

reported for potentially non-identical

products, we agree with CBC. The

documents reviewed at verification

support CBC’s assertion that the control

numbers in question were assigned

correctly to identical products.

Accordingly, we find no basis to adjust

the costs reported for these products, as

suggested by petitioners.

Comment 31: Component Sourcing

At verification, we found that CBC

sourced certain components in both a

market and non-market economy.

Petitioners argue that the Department

should rely exclusively on the prices

paid to the market-economy suppliers.

DOC Position: We agree and we have

made the appropriate corrections for

purposes of the final determination.

CATIC

Comment 32: Treatment of handling

charges incurred by Motiv and

classification of Motiv’s selling

expenses

Petitioners argue that the Department

should treat handling charges incurred
19044 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

by Motiv for returns of bicycles during

the POI as a direct selling expense. At

verification we found that Motiv did not

report handling charges incurred for

bicycles that were returned by a certain

customer. Petitioners argue that this

expense is a direct selling expenses

because it was incurred to return subject

merchandise during the POI, and that

the Department should treat it as such

for purposes of the final determination.

Respondent claims that this expense

is properly categorized as indirect

because there were no sales associated

with the returns.

Petitioners also argue that certain

advertising, after-market telephone

support, and bad debt expenses reported

by Motiv as indirect selling expenses

should be classified as direct selling

expenses.

Respondent contends that each of

those expenses were properly classified

as indirect selling expenses.

DOC Position: These expenses has

been deducted from U.S. price as part of

the CEP deductions. Because we are not

making a corresponding CEP offset (See,

Comment 1), the classification of these

expenses as direct or indirect is moot.

Comment 33: Commission Expenses

Petitioners urge the Department to

ensure that the commission expense

adjustment includes all payments by

Motiv to outside sales representatives

during the POI. Motiv’s questionnaire

responses state that its independent

sales representatives perform various

functions in facilitating customer orders

for Motiv. Petitioners state that the

record is unclear as to whether Motiv’s

reported commission amounts cover its

payments for all the services provided

by its outside sales representatives.

Respondent did not comment on this

issue.

DOC Position: We verified that the

payments to Motiv’s outside sales

representatives covered all services

performed by these sales

representatives.

Comment 34: Finance Expense

Petitioners use information from

Motiv’s and CATIC’s financial

statements to demonstrate that CATIC

may have incurred a certain finance

expense on behalf of Motiv. Petitioners

contend that the Department should

either include this finance expense in

Motiv’s U.S. selling expenses or should

add the expense to the NV for bicycles

produced by CATIC.

Respondent claims that imputing this

finance expense is at odds with the

Department’s established practice and

would result in double-counting.

Respondent states that since CATIC and

Motiv are affiliated companies, any

interest expense would be an intracompany charge. Respondent cites to

Frozen Concentrated Orange Juice from

Brazil: Final Determination of Sales at

Less Than Fair Value, 52 Fed. Reg. 8324

(March 17, 1987) and Certain Tapered

Journal Roller Bearings and Parts

Thereof from Japan: Final

Determination of Sales at Less Than

Fair Value, 49 Fed. Reg. 2285 (January

19, 1984) as cases in which the

Department excluded intra-company

interest expenses from the margin

calculations. Respondent also states that

the Department already will have

accounted for the costs of financing

inventory and receivables in its imputed

calculations of inventory carrying costs

and credit costs.

DOC Position: We agree with

respondent. The expense identified by

petitioners is an intra-company expense

and should not be included in our

calculations.

Giant

Comment 35: Interest Charge Giant USA

Pays its Taiwan Affiliate

The respondent maintains that the

fees GUSA pays its Taiwan parent GMC

to cover interest charges on letters of

credit opened by GMC to finance

GUSA’s purchases from GMC should

not be deducted from USP if the

Department also deducts inventory

carrying expenses and imputed credit

costs. The respondent states that

deducting both the actual fees and the

imputed expenses would double-count

the expenses associated with financing

shipment, inventory and receivables on

U.S. sales.

The petitioners argue that the

Department’s verification report makes

no mention that the letter of credit fees

are actual interest expenses or the

nature of the fees. Therefore, the

petitioners maintain that there in

insufficient evidence to support Giant’s

claim that its interest expenses will be

double-counted if both letter of credit

fees and imputed credit expenses are

deducted from the USP. Moreover, the

petitioners state that the letter of credit

fees appear to be indirect rather than

direct selling expenses, since these fees

were first paid by GMC in opening bank

accounts from which GUSA could draw

funds to finance inventory and accounts

receivables. As such, the petitioners

argue that the Department should revise

GUSA’s reported indirect selling

expenses by including the amount of

letter of credit fees.

DOC Position: We did not separately

deduct the interest expense from the

USP because deducting both the actual

fees and the imputed costs (which

include these fees) would be doublecounting. In addition, we did not treat

the letter of credit fees as indirect

selling expenses since they have been

accounted for in the calculation of

inventory carrying expenses.

Comment 36: Errors in Giant’s Data

Petitioners argue that the Department

should apply facts available to Giant in

its final margin analysis. Petitioners

assert that the Department found

numerous errors in Giant’s data during

verification which company officials

were unable to explain. Petitioners cite

examples related to the price and usage

data reported for Giant’s factors of

production, as well as discounts

reported for CEP sales.

Giant asserts that the Department

should use its data for purposes of the

final determination, after correcting it

for errors discovered at verification.

Respondent argues that petitioners

misunderstood both the verification

reports and Giant’s responses, leading to

a number of incorrect assumptions

regarding the significance of the errors

found.

DOC Position: We agree with Giant.

The majority of the errors discovered at

verification resulted from data input

problems or calculation errors. Because

these errors were minor in nature, we

find that the use of facts available is not

warranted. Therefore, we have corrected

the errors found at verification and used

the data reported by Giant for purposes

of the final determination.

Comment 37: Interest Revenue

Petitioners argue that the Department

should deny Giant’s claim for interest

revenue for purposes of the final

determination. According to petitioners,

Giant did not collect all of the interest

revenue that it actually invoiced. In

addition, petitioners assert that Giant

misapplied these revenues in its sales

listing because it reported revenue for

sales for which the customer paid on a

timely basis and for which no revenue

was due.

Respondent asserts that the

Department should allow the revenue

amounts reported in its sales listing.

Respondent notes that petitioners do not

dispute the fact that the company

received interest revenue, but rather

disagree with the methodology used to

allocate this revenue to specific sales.

Respondent maintains that, not only is

its allocation methodology consistent

with the methodology used to allocate

other adjustments (e.g., credit expenses),

but also petitioners failed to object to

this methodology prior to the

submission of their case brief. Moreover,
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19045

respondent asserts that its allocation

methodology is not distortive or

inaccurate. Finally, respondent notes

that the Department reviewed Giant’s

interest revenue calculation at

verification and found no discrepancies.

DOC Position: We found that Giant’s

record keeping system does not readily

allow Giant’s to report transactionspecific interest revenue. Therefore, we

are allocating interest revenue only to

those sales with no early payment

discounts. Regarding bad debt expense,

we agree with respondents that it was

correctly reported as an indirect selling

expense. We recommend making no

adjustment to bad debt.

Overlord

Comment 38: Declaration Fees

At verification, we found that

Overlord under-reported declaration

fees paid to the Hong Kong government

on U.S. shipments of bicycles through

Hong Kong. Petitioners contend that the

Department should increase the

reported expenses by the average

percentage by which the fees were

under-reported.

DOC Position: We agree and have

made the appropriate calculations for

purposes of the final determination.

Universal

Comment 39: Methodology for

Reporting Prices of Market-Economy

Inputs

According to the petitioners,

Universal’s price reporting methodology

is unacceptable. Based on Universal’s

unwillingness to provide information

prior to the verification regarding the

methodology it used to derive marketeconomy prices, and the inaccuracies

discovered during the Department’s

price variation tests and component

traces, the petitioners propose that, as

facts available, the Department increase

prices for all market-sourced

components by the greatest disparity

between reported and verified prices in

the price variation tests.

Universal argues that the Department

should not increase the prices reported

for market-economy inputs because the

majority of the input prices examined

by the Department were accurately

reported and the few discrepancies

noted by the Department were only

minor errors. Additionally, Universal

contends that its reported prices are

already overstated because these prices

are charged by Universal’s affiliated

supplier. Universal maintains the

Department verified that reported

component prices, which are charged by

Universal’s affiliated supplier, are more

than the prices the affiliated supplier

pays to purchase those components

from unrelated suppliers.

DOC Position: Universal failed to

report the weight-average price of

market-economy inputs purchased

during the POI. Rather, Universal

reported market-economy prices based

on selected invoices which company

officials considered to be representative

of the prices paid during the POI.

According to Universal officials, the

company employed this reporting

methodology because during the POI

prices for most components remained

stable. We tested ten components and

found that four were under-reported by

a small percentage. We disagree with

petitioners that we should increase all

of Universal’s prices by the largest

observed variation. This situation does

not warrant the use of adverse acts

available. Rather, as facts available, we

applied the average variance to all

purchases. See, Concurrence Memo for

Final Determination.

Continuation of Suspension of

Liquidation

For Bo An, Giant, Hua Chin, and

Overlord, we calculated a zero or de

minimis margin. Consistent the with

Pencils, merchandise that is sold by

these producers but manufactured by

other producers will not receive the zero

margin. Instead, such entries will be

subject to the ‘‘PRC-wide’’ margin.

In accordance with section 733(d)(1)

of the Act and 735(c)(1), we are

directing the Customs Service to

continue to suspend liquidation of all

entries of bicycles from the PRC, that are

entered, or withdrawn from warehouse

for consumption, on or after the date of

publication of this notice in the Federal

Register. The Customs Service shall

require a cash deposit or posting of a

bond equal to the estimated amount by

which the NV exceeds the export price

as shown below. These suspension of

liquidation instructions will remain in

effect until May 7, 1996. The weightedaverage dumping margins are as follows:

Manufacturer/producer/exporter Margin

percentage

Bo An ........................................ 0.00

CBC .......................................... 3.25

CATIC ....................................... 13.67

Giant ......................................... 0.97

Hua Chin ................................... 0.00

Merida ....................................... 7.44

Overlord .................................... 0.00

Chitech ...................................... 2.05

Universal ................................... 11.06

PRC-wide rate .......................... 61.67

PRC-Wide Rate

The PRC-Wide rate applies to all

entries of subject merchandise except

for entries from exporters that are

identified individually above.

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, within 45 days, determine whether

these imports are materially injuring, or

threaten material injury to, the U.S.

industry. 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 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: April 22, 1996.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 96–10555 Filed 4–29–96; 8:45 am]

BILLING CODE 3510–DS–P

Intent To Revoke Countervailing Duty

Order

AGENCY: Import Administration,

International Trade Administration,

Commerce.

ACTION: Notice of intent to revoke

countervailing duty order.

SUMMARY: The Department of Commerce

(the Department) is notifying the public

of its intent to revoke the countervailing

duty order listed below. Domestic

interested parties who object to

revocation of this order must submit

their comments in writing not later than

the last day of May 1996.

EFFECTIVE DATE: April 30, 1996.

FOR FURTHER INFORMATION CONTACT:

Brian Albright or Cameron Cardozo,

Office of Countervailing Compliance,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–2786.

SUPPLEMENTARY INFORMATION:

Background

The Department may revoke a

countervailing duty order if the

Secretary of Commerce concludes that it

is no longer of interest to interested