20216 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices

review. (2) For previously reviewed or

investigated companies not listed above,

the cash deposit rate will continue to be

the company-specific rate published for

the most recent period. (3) If the

exporter is not a firm covered in this

review, a prior review, or the original

less-than-fair-value (LTFV)

investigation, but the manufacturer is,

the cash deposit rate will be the rate

established for the most recent period

for the manufacturer of the

merchandise. (4) If neither the

manufacturer nor the exporter is a firm

covered in this or any previous review,

the cash deposit rate will be 8.87

percent, the ‘‘all others’’ rate established

in the LTFV investigation. These

deposit requirements, when imposed,

shall remain in effect until publication

of the final results of the next

administrative review.

This notice serves as a preliminary

reminder to importers of their

responsibility under 19 CFR § 353.26 to

file a certificate regarding the

reimbursement of antidumping duties

prior to liquidation of the relevant

entries during this review period.

Failure to comply with this requirement

could result in the Secretary’s

presumption that reimbursement of

antidumping duties occurred and the

subsequent assessment of double

antidumping duties.

This administrative review and this

notice are in accordance with section

751(a)(1) of the Act (19 U.S.C.

1675(a)(1)) and 19 CFR 353.22.

Dated: April 26, 1996.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 96–11122 Filed 5–3–96; 8:45 am]

BILLING CODE 3510–DS–P

[A–580–812]

Dynamic Random Access Memory

Semiconductors of One Megabit or

Above From the Republic of Korea;

Final Results of Antidumping Duty

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of

Antidumping Duty Administrative

Review.

SUMMARY: On September 11, 1995, the

Department of Commerce (the

Department) published the preliminary

results of administrative review of the

antidumping duty order on dynamic

random access memory semiconductors

(DRAMS) of one megabit or above from

the Republic of Korea. The review

covers two manufacturers/exporters of

the subject merchandise to the United

States for the period October 29, 1992

through April 30, 1994. These

manufacturers/exporters are LG

Semicon Co., Ltd. (LGS, formerly

Goldstar Electron Co., Ltd.) and

Hyundai Electronics Industries, Inc.

(HEI/Hyundai).

As a result of comments we received,

the antidumping margins have changed

from those we presented in our

preliminary results.

EFFECTIVE DATE: May 6, 1996.

FOR FURTHER INFORMATION CONTACT:

Thomas F. Futtner, Office of

Antidumping Compliance, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

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

telephone: (202) 482–3814.

SUPPLEMENTARY INFORMATION:

Background

On September 11, 1995, the

Department published the preliminary

results (60 FR 47149) of administrative

review of the antidumping duty order

on DRAMS of one megabit or above

from the Republic of Korea. We received

timely comments from the petitioner

and both respondents. At the request of

the petitioner, we held a hearing on

October 26, 1995.

Scope of the Review

Imports covered by the review are

shipments of DRAMS of one megabit

and above from the Republic of Korea

(Korea). For purposes of this review,

DRAMS are all one megabit and above,

whether assembled or unassembled.

Assembled DRAMS include all package

types. Unassembled DRAMS include

processed wafers, uncut die and cut die.

Processed wafers produced in Korea,

but packaged, or assembled into

memory modules in a third country, are

included in the scope; wafers produced

in a third country and assembled or

packaged in Korea are not included in

the scope of this review.

The scope of this review includes

memory modules. A memory module is

a collection of DRAMS, the sole

function of which is memory. Modules

include single in-line processing

modules (SIPs), single in-line memory

modules (SIMMs), or other collections

of DRAMS, whether unmounted or

mounted on a circuit board. Modules

that contain other parts that are needed

to support the function of memory are

covered. Only those modules which

contain additional items which alter the

function of the module to something

other than memory, such as video

graphics adapter (VGA) boards and

cards, are not included in the scope.

The scope of this review also includes

video random access memory

semiconductors (VRAMS), as well as

any future packaging and assembling of

DRAMS.

The scope of this review also includes

removable memory modules placed on

motherboards, with or without a central

processing unit (CPU), unless the

importer of motherboards certifies with

the Customs Service that neither it, nor

a party related to it or under contract to

it, will remove the modules from the

motherboards after importation. The

scope of this review does not include

DRAMS or memory modules that are

reimported for repair or replacement.

The DRAMS subject to this review are

classifiable under subheadings

8542.11.0001, 8542.11.0024,

8542.11.0026, and 8542.11.0034 of the

Harmonized Tariff Schedule of the

United States (HTSUS). Also included

in the scope are those removable Korean

DRAMS contained on or within

products classifiable under subheadings

8471.91.0000 and 8473.30.4000 of the

HTSUS. Although the HTSUS

subheadings are provides for

convenience and customs purposes, the

written description of the scope of this

review remains dispositive.

The period of review (POR) covers

from October 29, 1992 through April 30,

1994 for all respondents.

Applicable Statute and Regulations

The Department has conducted this

administrative review in accordance

with section 751 of the Tariff Action

1930, as amended (the Tariff Act).

Unless otherwise indicated, all citations

to the statute and to the Department’s

regulations refer to the provisions as

they existed on December 31, 1994.

United States Price

We calculated U.S. price according to

the methodology described in our

preliminary results, except for the

adjustment of value-added taxes (VAT),

as described below.

In light of the Federal Circuit’s

decision in Federal Mogul v. United

States, 63 F. 3d 1572 (Fed. Cir. 1995),

the Department has changed its

treatment of home market consumption

taxes. Where merchandise exported to

the United States is exempt from the

consumption tax, the Department will

add to the U.S. price the absolute

amount of such taxes charged on the

comparison sales in the home market.

This is the same methodology that the

Department adopted following the

decision of the Federal Circuit in Zenith
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices 20217

v. United States, 988 F. 2d 1573, 1582

(1993), and which was suggested by that

court in footnote 4 of its decision. The

Court of International Trade (CIT)

overturned this methodology in Federal

Mogul v. United States, 834 F. Supp.

1391 (1993), and the Department

acquiesced in the CIT’s decision. The

Department then followed the CIT’s

preferred methodology, which was to

calculate the tax to be added to U.S.

price by multiplying the adjusted U.S.

price by the foreign market tax rate; the

Department made adjustments to this

amount so that the tax adjustment

would not alter a ‘‘zero’’ pre-tax

dumping assessment.

The foreign exporters in the Federal

Mogul case, however, appealed that

decision to the Federal Circuit, which

reversed the CIT and held that the

statute did not preclude Commerce from

using the ‘‘Zenith footnote 4’’

methodology to calculate tax-neutral

dumping assessments (i.e., assessments

that are unaffected by the existence or

amount of home market consumption

taxes). Moreover, the Federal Circuit

recognized that certain international

agreements of the United States, in

particular the General Agreement on

Tariffs and Trade (GATT) and the Tokyo

Round Antidumping Code, required the

calculation of tax-neutral dumping

assessments. The Federal Circuit

remanded the case to the CIT with

instructions to direct Commerce to

determine which tax methodology it

will employ.

The Department has determined that

the ‘‘Zenith footnote 4’’ methodology

should be used. First, as the Department

has explained in numerous

administrative determinations and court

filings over the past decade, and as the

Federal Circuit has recognized, Article

VI of the GATT and Article 2 of the

Tokyo Round Antidumping Code

required that dumping assessments be

tax-neutral. This requirement continues

under the new Agreement on

Implementation of Article VI of the

GATT. Secondly, the Uruguay Round

Agreements Act (URAA) explicitly

amended the antidumping law to

remove consumption taxes from the

home market price and to eliminate the

addition of taxes to U.S. price, so that

no consumption tax is included in the

price in either market. The Statement of

Administrative Action (p. 159)

explicitly states that this change was

intended to result in tax neutrality.

While the ‘‘Zenith footnote 4’’

methodology is slightly different from

the URAA methodology, in that section

772(d)(1)(C) of the pre-URAA law

required that the tax be added to U.S.

price rather than subtracted from home

market price, it does result in taxneutral duty assessments. In sum, the

Department has elected to treat

consumption taxes in a manner

consistent with its longstanding policy

of tax-neutrality and with the GATT.

Foreign Market Value

With the exception noted above for

VAT, we calculated FMV according to

the methodology described in our

preliminary results.

Analysis of Comments Received

We invited interested parties to

comment on the preliminary results of

this administrative review. At the

request of the petitioner, we held a

public hearing on October 26, 1995. We

received timely comments from the

petitioner and both respondents.

General Comments

Comment 1: The petitioner argues that

Hyundai and LGS erred in preparing

their antidumping questionnaire

responses by misallocating corporate

indirect selling expenses. Specifically,

the petitioner argues that Hyundai’s

U.S. subsidiary, Hyundai Electronics

America, Inc. (HEA), and LGS each

mistakenly allocated corporate U.S.

indirect selling expenses among their

various manufacturing divisions on

bases other than relative sales value.

The petitioner maintains that allocation

on the basis of relative sales value is the

standard allocation methodology for all

indirect selling expenses. The petitioner

argues that HEA and LGS’s allocation

method is incorrect because both

respondents under-allocated the proper

amount of administrative expenses to

their respective semiconductor

divisions.

Hyundai argues that the Department’s

questionnaire did not instruct Hyundai

to allocate indirect selling expenses on

the basis of sales value, and that the

Department routinely accepts allocation

bases other than relative sales value,

provided that the methodology is

reasonable. Hyundai also notes that the

Department verified HEA’s allocation

methodology during its U.S. sales

verification of HEA.

LGS argues that the current allocation

methodology for indirect selling

expenses has been twice verified and

accepted by the Department. Moreover,

LGS argues that it has been the

Department’s policy to accept

reasonable, verified allocation

methodologies of indirect selling

expenses.

DOC Position: We agree with Hyundai

and LGS. It is not our policy to require

allocation of indirect selling expenses

based upon relative sales value in every

instance (see Antifriction Bearings

(Other Than Tapered Roller Bearings)

and Parts Thereof from France, et al.,

Final Results of Antidumping Duty

Reviews, Partial Termination of

Administrative Reviews, and Revocation

in Part of Antidumping Duty Orders, 60

FR 10900 (February 28, 1995) (AFBs

1995). More specifically, in the final

results of the less-than-fair-value

investigation we clearly noted that we

would accept an allocation basis other

than relative sales value provided the

methodology was reasonable. See

Dynamic Random Access Memory

Semiconductors of One Megabit and

Above, from the Republic of Korea, 58

FR 15467, 15477 (March 23, 1993)

(DRAMS LTFV Final 1993).

Moreover, we note that Hyundai and

LGS used three separate bases of

allocation for different selling expenses,

one of which was relative sales value. In

addition, Hyundai used manpower

hours in allocating labor expenses and

the number of invoices in allocating

accounting department expenses. LGS

used a similar methodology to allocate

its indirect selling expenses that were

not identified by subdivision. We

believe that it is more appropriate to

allocate human resource and accounting

department expenses on the basis of

manpower and number of invoices than

on the basis of sales value because

human resource expense is a function of

the number of employees, and

accounting department expense is a

function of the volume of invoices

prepared. Thus, we believe that these

allocation bases are reasonable and have

continued to accept them for purposes

of these final results of review.

Furthermore, we verified HEA and

LGS’s allocation bases for its indirect

selling expenses during our U.S. sales

verifications and found no

discrepancies or inaccuracies in

Hyundai or LGS’s allocation

methodology. See Verification Report of

Home Market Sales Questionnaire

Response of Hyundai Electronic

Industries, Inc., April 27, 1995 (HEI

Home Market Sales Verification Report)

at page pp. 12–13, and Verification

Report of Home Market Sales

Questionnaire Response of LG Semicon,

Ltd., April 13, 1995 (LGS Home Market

Verification Report) at page 13.

Comment 2: LGS maintains that the

Department should not include research

and development expenses (R&D) of

non-DRAM products in the DRAM R&D.

LGS alleges that the product-specific

R&D expenses, which were specifically

identified in its accounting system, were

fully quantified and verified by

Department officials. LGS argues that

the Department’s decision to include
20218 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices

non-DRAM R&D is inconsistent with the

decision of the U.S. Court of

International Trade regarding the LTFV

investigation which remanded the final

determination back to the Department,

and, in part, ordered the Department to

calculate R&D expense on a productspecific basis. See Micron Technology,

Inc. v. Unites States, 893 F. Supp. 21

(CIT 1995) (Micron Technology).

The petitioner argues that a product

specific accounting categorization of

projects does not prove that R&D

conducted for one type of

semiconductor cannot benefit the

development of another type of

semiconductor (i.e., cross-fertilization).

Therefore, the petitioner maintains that

the Department’s treatment of R&D

expenses in the preliminary

determination was appropriate.

DOC Position: We agree with the

petitioner. At verification, we confirmed

that each R&D project is accounted for

separately in each of the respondent’s

respective books and records. Separate

accounting, however, does not

necessarily mean that cross fertilization

of scientific ideas does not occur.

Moreover, the CIT specifically stated in

Micron Technology that the Department

did not ‘‘direct the court to any record

evidence of R&D cross-fertilization in

the semiconductor industry.’’ Micron

Technology, 893 F. Supp., at 27. In this

review, the Department has provided

such information. See Memorandum

from Karen Park to Holly Kuga

regarding Cross Fertilization of R&D for

DRAMS, August 14, 1995 (cross

fertilization memo). The cross

fertilization memo includes pages from

verification exhibits, a memorandum

from a non-partisan expert from the

semiconductor industry, as well as

information from certain articles widely

read by experts in the DRAM R&D field

demonstrating the existence of crossfertilization of R&D in the DRAM

industry.

Comment 3: The petitioner argues that

the fees paid by HEI and LGS for the

services of their respective trading

companies were understated in their

questionnaire response (QR). The

petitioner maintains that the fees

reported by HEI did not reflect the true

cost of the services provided by HEI’s

trading company. The petitioner urges

the Department to quantify the real cost

of the services provided by HEI’s trading

company by resorting to best

information available (BIA), using the

petitioner’s estimate of the trading

company’s costs as derived from the

public information of another

respondent in this review.

Hyundai argues that the Department

should reject the petitioner’s assertion

because the trading company in

question is unrelated to HEI and the

Department verified the fee reported.

Hyundai states that the fees reported

fully reflect the services provided by the

trading company to HEI.

The petitioner alleges that despite the

number of services provided by LGS’

trading company, LGS acknowledged no

costs associated with these services. The

petitioner argues that a circumstance of

sale adjustment should be made to U.S.

price to capture the selling expenses

associated with this trading company.

LGS argues that the Department has

verified that LGS does not incur any

additional expenses through the use of

the trading company’s name as the

exporter of record for some of LGS’

exports of subject merchandise to the

United States. LGS maintains that its

trading company did not provide any

service for LGS in its sales transactions.

DOC Position: We agree with the

respondents. We agree that the trading

companies in question are unrelated to

HEI and LGS. We verified this during

our home market sales verification in

Korea. See HEI Cost-of-Production/

Constructed Value (COP/CV)

Verification Report at page 5, LGS COP/

CV Verification Report at page 6.

Furthermore, we examined the fees paid

to HEI’s unrelated trading company by

HEI and found no discrepancies in the

fee amounts reported. (HEI Home

Market Sales Verification Report, p. 16).

Despite the petitioner’s assertion that

these fees do not reflect the actual cost

of services provided to HEI, there is no

evidence on the record to suggest that

this is the case.

We also examined LGS’s relationship

with its trading company. See LGS

Home Market Sales Verification Report,

pp. 18–19. We verified that LGS did not

incur any costs for the use of its trading

company’s name. Moreover, we verified

that this trading company did not

provide any services related to sales of

subject merchandise to LGS.

Comment 4: The petitioner urges the

Department to impute costs for loan fees

borne by certain companies. The

petitioner maintains that the fees

reported by Hyundai and LGS do not

include the risk and cost by certain

firms. The petitioner urges the

Department to increase HEI and LGS’s

financing costs by a percentage derived

from HEI and LGS’s financial

statements.

Hyundai counters that the petitioner’s

argument is without merit because the

Department thoroughly verified all

financing fees incurred by HEI during

the POR. Hyundai further explains that

the petitioner ignored the evidence on

the record that because Hyundai’s fixed

assets are used as loan collateral, that

the full risk and cost of the loans were

accurately reported.

LGS argues that no payment was

made related to the loan guarantees.

Moreover, LGS notes that the Korean

law does not require the guarantor to

charge for related party guarantees

unless there is a default.

DOC Position: We agree with Hyundai

and LGS. During our COP verification of

HEI and LGS, we examined HEI’s and

LGS’s financial expenses and

specifically addressed the issue of loan

fees. See Report on the Verification of

the Cost of Production Questionnaire

Response of Hyundai Electronic

Industries, Inc., April 17, 1995 (HEI

COP/CV Verification Report) at pp. 26–

27 and Verification of the Cost of

Production Questionnaire Response of

Goldstar Electron Company, Ltd.

(GSEN), July 26, 1996, (LGS COP/CV

Verification Report), at page 9. Because

our COP verification indicates that HEI

and LGS accurately reported all loan

fees, there is no reason to impute a cost

for such expenses.

Company-Specific Comments

LGS

Comment 5: The petitioner alleges

that certain royalty agreements require a

different percentage payment of royalty

expenses depending on whether the

covered merchandise is sold in the U.S.

or elsewhere. Therefore, the royalty

agreements constitute a difference in

circumstance of sale, directly related to

sales. LGS claims that the petitioner’s

allegation is factually incorrect. The

royalty agreements in question require

the same payment for merchandise sold

in the U.S. or elsewhere. Moreover, LGS

claims that it is the Department’s

standard practice to treat royalties as a

cost of manufacturing.

DOC Position: The royalty agreements

in question do not require a different

percentage payment depending on

whether the covered merchandise is

sold in the U.S. or elsewhere. See LGS’s

October 19, 1994 response to the

Department’s supplemental sales

questionnaire. The petitioner is

referencing information that was

submitted in the original questionnaire

response which was later revised by the

respondent in its supplemental

questionnaire response to the

Department.

Moreover, it has been the

Department’s longstanding practice to

treat royalty payments for production

technology as cost of manufacturing,

even in circumstances where the royalty

payments were based on sales revenue.

See Extruded Rubber Thread from
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices 20219

Malaysia, 57 FR 38465 (August 25,

1992) and Certain Hot-Rolled Carbon

Steel Flat Products, etc. from Canada,

58 FR 37099, 37118 (July 9, 1993).

Comment 6: LGS asserts that the

Department should accept amortization

of purchased R&D amounts over the

relevant contract period. LGS argues

that the Department’s decision in the

preliminary determination to expense

purchased R&D in the year incurred is

inconsistent with the CIT decision in

the less-than-fair-value investigation.

See Micron Technology. LGS asserts that

the Micron decision requires the

Department to amortize R&D expenses

over the life cycle of the product.

The petitioner argues that LGS’s own

financial statements expensed the

purchased R&D in the year incurred.

Therefore, all payments related to the

purchased R&D should be

acknowledged in the year in which they

were incurred, since this is how the

expenses were recorded in the

company’s books and records.

DOC Position: We agree with the

petitioner that LGS’s purchased R&D

expenses should be acknowledged in

the year in which they were incurred,

since this is how the expenses were

recorded in the company’s books and

records. See LGS COP/CV Verification

Report of July 26, 1995 at page 8.

Moreover, the Micron decision requires

the Department to allow the allocation

of R&D expenses over time, when the

allocation is made in accordance with

the generally accepted accounting

practices in effect in the home country,

and when Commerce is satisfied that

those principles reasonably reflect all of

the costs associated with the production

of the subject merchandise. In this case,

although the Korean GAAP may allow

LGS to amortize its purchased R&D over

a given period, LGS did not do so.

Rather, LGS expensed purchased R&D

for its financial statements, and

amortized it over a longer period for the

antidumping response. In these

calculations, the Department relied on

LGS’s accounting system to determine

the total R&D figure applicable to the

analysis: it amortized any R&D expenses

that LGS amortized in its own books

and records and it expensed any R&D

expenses that LGS expensed. As a

result, the Department is not taking a

position contrary to the CIT decision,

nor is it rejecting the Korean GAAP

which allows parties the option of

expensing or allocating such costs. Due

to the proprietary nature of LGS’s

internal accounting system, see the LGS

COP/CV Verification Report for further

information.

Comment 7: LGS noted the following

clerical errors in the Department’s

computer program: (1) LGS notes that

the Department did not apply the

correct exchange rate to the home

market letter of credit sales; (2) LGS

notes clerical errors for duty drawback

adjustment; (3) LGS argues that the

computer program does not use the

actual home market sales quantity in the

cost test; (4) LGS notes that the

Department’s computer program

inadvertently disregards the submitted

data in the model match; (5) LGS argues

that the Department’s computer program

does not correctly read the module cost

of production data; and (6) LGS noted

that the Department’s computer program

reads the wrong variable in the

submitted information which affects the

total cost of production calculation.

DOC Position: We agree with LGS on

each of these points and have revised

our calculations accordingly.

Hyundai

Comment 8: Hyundai maintains that

the Department made a clerical error in

its final calculations by incorrectly

comparing all of its furthermanufactured sales of memory modules

to the CV of the imported merchandise.

Hyundai argues that it is the

Department’s practice to resort to CV

only in instances where there are

insufficient home market sales above

COP or insufficient home market sales

during a contemporaneous period to be

used with comparison to U.S. sales.

Hyundai urges the Department to revise

its final results calculations to include

price-to-price comparisons for sales of

further-manufactured products and

suggests two possible methodologies as

discussed below.

The petitioner maintains that the

Department was correct in comparing

respondents’ further-manufactured U.S.

sales to CV. The petitioner argues that

the complexity of determining the basis

on which to allocate the U.S. module

price net of further-manufactured costs

to the different types of DRAMS in the

modules made CV a reasonable choice

of comparison methodology. The

petitioner urges the Department to

adhere to its comparison methodology

for further-manufactured U.S. sales as

contained in its preliminary results of

review.

DOC Position: We agree that it is

generally the Department’s policy to

calculate the foreign market value for

the U.S. sales of further-processed

merchandise on the basis of products in

the condition as imported, not as in the

condition sold.

The prices for the furthermanufactured modules were an

inadequate basis for comparison

because there are no comparable home

market sales for U.S. sales of memory

modules with specific collections of

different types of DRAMS assembled

together in particular configurations for

specific applications. The configuration

and application of mixed memory

modules are critical factors in

determining the foreign market value

(FMV) of these modules. Therefore, we

resorted to CV in accordance with

section 1677b(a)(2) of the Tariff Act. We

calculated the FMV for the modules

sold in the United States using the

Department’s traditional methodology.

To obtain the FMV, we have summed

the cost of production for each DRAM

included on each type of module to

obtain the cost of all the imported

components included on the module.

We then developed the FMV by

applying the appropriate selling, general

and administrative expenses, and home

market profit to arrive at the CV of the

imported components of the module.

We then compared the CV of the

imported parts to the USP of the module

sold in the United States, less

appropriate amounts for selling

expenses, freight, further manufacturing

and profit. We believe that this is the

most reasonable comparison

methodology for these types of sales

given the circumstances mentioned

above. We disagree that in this instance

either proposed method would lead to

an accurate determination of FMV

because both would require adjustments

to the USP for the purposes of matching

the FMV of the product sold in the

home market.

In respondent’s first proposed

method, the Department would derive

an FMV by summing the FMVs of

DRAMS sold in Korea in the same

number and combination as they appear

on the modules sold in the United

States. However, we note that this new

‘‘bundled FMV’’ would represent an

FMV for a product that is not sold in the

home market, and as such, represents

the cost of a hybrid and a hypothetical

product. Furthermore, there is no

indication that the resultant ‘‘bundled

FMV’’ would be comparable to the price

of the product sold in the United States.

In respondent’s second proposed

method, the Department would strip the

United States price (USP) of the

modules sold in the United States down

to the price of each of its component

parts. Then the Department would make

adjustments for the total number of the

individual DRAMS sold in the United

States, and compare the results with the

FMVs otherwise developed for home

market sales. We rejected this

methodology because it would require

adjustments to the USP for matching
20220 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices

purposes and would not guarantee an

accurate comparison.

Comment 9: The petitioner maintains

that Hyundai failed to provide the

Department with the necessary sales

information in its August 29, 1995,

questionnaire response on sales of

DRAMS contained in personal

computers and computer workstations

sold by HEA’s ISD and Axil divisions.

The petitioner urges the Department to

reject Hyundai’s entire questionnaire

response for failure to report complete

information on sales of subject

merchandise during the POR and apply

total BIA. Alternately, if the Department

decides not to apply total BIA to

Hyundai’s entire questionnaire

response, the petitioner urges the

Department to use BIA in calculating

the U.S. price of the value-added

products in accordance with the

petitioner’s methodology contained in

the petitioner’s October 11, 1995 case

brief.

Hyundai argues that it reported

complete sales information on

computers and workstations which were

sold with the memory modules

separately invoiced (option sales) and

all reasonably available information on

sales of computers and workstations

which were sold without separately

invoiced memory modules (embedded

sales). Hyundai maintains that it would

have been unreasonable to require

complete sales information on

embedded sales by ISD and Axil due to

the extreme complexity of the valueadded calculations. According to

Hyundai, this type of calculation would

have required an additional complete

COP calculation and verification for all

input products in the computers and

workstations (e.g., computer monitors).

Hyundai argues, that because embedded

sales by Axil and ISD constituted an

extremely small portion of HEA’s U.S.

sales of DRAMS, it would have been

unreasonable to require full sales

information on the embedded sales of

subject merchandise.

Hyundai further asserts that total BIA

is unwarranted, as Hyundai cooperated

fully with the Department during the

course of the first administrative review

including the sales and COP

verifications. Hyundai urges the

Department to calculate the dumping

margins on embedded sales by applying

one of the following three margins to

these sales: (1) the weighted-average

margin found for the remainder of

HEA’s sales, (2) the margin calculated

for Axil and ISD’s option sales, or (3)

the weighted-average margin from the

original LTFV investigation.

DOC Position: We agree with the

petitioner that Hyundai should have

provided complete information on

embedded sales of DRAMS by HEA’s

two computer divisions during the POR.

There is neither a statutory nor a

regulatory basis for excluding any U.S.

sales of subject merchandise from

review regardless of the complexity of

the required calculations. See AFBs

1995. The statute requires the

Department to analyze all U.S. sales

within the POR. See section (a)(2)(A)

(1994) of the Tariff Act.

However, we disagree that total BIA is

warranted in this case. In cases where

the respondent has substantially

cooperated with the Department, as

Hyundai has in this case, we do not

typically apply total BIA, but rather

apply partial BIA to the particular

deficiencies in a respondent’s

questionnaire response. See Industrial

Nitrocellulose from the United Kingdo

DOC Position: m, Final Results of

Antidumping Duty Administrative

Review, 59 FR 66902, 66903 (December

28, 1994), and Antifriction Bearings

(Other Than Tapered Roller Bearings)

and Parts Thereof, from France, et al.,

Final Results of Antidumping Duty

Administrative Reviews and Revocation

in Part, 58 FR 39729, 39739–40 (July 26,

1993).

In deciding what to use as BIA, the

Department’s regulations provide that

the Department may take into account

whether a party refuses to provide

requested information (19 CFR

353.37(b)). Thus, the Department

determines, on a case-by-case basis,

what constitutes BIA. For the purposes

of these final results, we applied the

following two-tier BIA analysis where

we were unable to use a company’s

response for purposes of determining a

dumping margin (see Final Results of

Antidumping Duty Administrative

review of Antifriction Bearings and

Parts Thereof from France, et al., 58 FR

39739, July 26, 1993):

1. When a company refuses to cooperate

with the Department or otherwise

significantly impedes these proceedings, we

used as BIA the higher of (1) the highest of

the rates found for any firm for the same class

or kind of merchandise in the same country

of origin in the less than fair value

investigation (LTFV) or prior administrative

reviews; or (2) the highest rate found in this

review for any firm for the same class or kind

of merchandise in the same country of origin.

2. When a company substantially

cooperates with our requests for information

and, substantially cooperates in verification,

but fails to provide the information requested

in a timely manner or in the form required

or was unable to substantiate it, we used as

BIA the higher of (1) the highest rate ever

applicable to the firm for the same class or

kind of merchandise from either the LTFV

investigation or a prior administrative review

or if the firm has never before been

investigated or reviewed, the all others rate

from the LTFV investigation; or (2) the

highest calculated rate in this review for the

class or kind of merchandise for any firm

from the same country of origin.

Hyundai, although it failed to report full

cost data for its sales of embedded

DRAMS in the United States,

cooperated substantially with our

requests for information and our sales

and cost verifications. Accordingly, we

applied the second-tier BIA rate of 11.16

percent to HEA’s sales of embedded

DRAMS. This rate represents the highest

rate ever applicable to Hyundai.

We found petitioner’s methodology in

calculating partial BIA to be

inappropriate because it recalculated

prices for memory modules whose

actual prices were obtained from the

separate invoices prepared for these

products. See Mechanical Transfer

Presses from Japan, 55 FR 335, 337

(January 4, 1990).

Comment 10: The petitioner

maintains that, based upon information

contained in certain U.S. sales

verification exhibits, there are large

unaccounted for quantities of DRAMS

transferred from HEA to its computer

divisions ISD and Axil. The petitioner

maintains that there is no correlation

between the total quantity of DRAMS

transferred to ISD and Axil during the

POR and the total quantity of DRAMS

sold by these two divisions during the

POR. The petitioner urges the

Department to account for the alleged

‘‘loose’’ DRAMS by assigning a USP of

zero to all DRAMS imported by HEA

during the POR and including them in

the dumping analysis.

Hyundai maintains that the petitioner

used incorrect numbers in making the

above assertion and that there is not

necessarily a correlation between the

quantity of DRAMS transferred to ISD

and Axil and the quantity of DRAMS

sold by these two divisions during the

POR. Hyundai argues that the petitioner

failed to consider that a significant

percentage of ISD and Axil sales were

exported and that the Department fully

verified total quantity and value of

DRAMS sold in the United States.

DOC Position: We agree with

Hyundai. We believe that the

petitioner’s assertion that a correlation

must exist between the total quantity of

DRAMS imported and sold during the

POR is unfounded. The petitioner

ignores the number of DRAMS and

memory modules exported to third

countries and, in their October 11, 1995

Case Brief, base part of their argument

on an assumption that computer

assemblers can only use DRAMS

mounted on SIMMs boards. There is no
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices 20221

evidence on the record of this

proceeding to support such an assertion.

In addition, we thoroughly verified total

quantity and value of all U.S. sales of

subject merchandise during our U.S.

sales verification of HEA, including

sales by ISD and Axil, and found no

discrepancies. See Verification of the

U.S. Sales Questionnaire Response of

Hyundai Electronics America, Inc. In

the First Antidumping Administrative

Review of Dynamic Random Access

Memory Semiconductors from Korea,

December 12–15, 1994. HEA U.S. Sales

Verification Report, pp. 4–10.

Comment 11: The petitioner

maintains that Hyundai misclassified its

reported advertising expenses in the

home and U.S. markets. As evidence for

this assertion, the petitioner points out

that Hyundai classified a trade journal

ad in the home market for future

products under development but not

commercially available as direct but

classified a magazine ad for an existent

product in the United States as indirect.

The petitioner claims that it is

inconsistent to classify an existent

product as indirect while classifying a

future product as direct. The petitioner

urges the Department to reclassify all of

Hyundai’s U.S. advertising expenses as

direct expenses and all of Hyundai’s

home market advertising expenses as

indirect expenses.

Hyundai argues that its advertising

classification is correct and that the

petitioner ignores the type of customer

to which the advertisement is targeted

and the type of publication in which it

is published. Hyundai maintains that

the advertisements for future generation

products were printed in a publication

directed at end-users of Hyundai’s

DRAMS and is properly classified as a

direct expense. Hyundai also argues that

advertising expenses for future

generation products are not inherently

indirect as the scope of the review

covers future generation products.

Finally, Hyundai maintains that the

petitioner ignored the fact that the

majority of Hyundai’s home market

advertising expenses consisted of

television advertisements, which are

clearly direct expenses since they are

aimed at the end-user.

DOC Position We agree with Hyundai.

Hyundai’s classification of its home

market and U.S. advertising expenses is

consistent with our policy. As stated on

page V–13 of our instructions in our

antidumping questionnaire, the

classification of an advertising expense

as direct or indirect depends upon to

whom the advertisement is directed. It

is our policy to classify advertising

expenses directed to a respondent’s enduser as direct while advertising directed

toward the respondent’s intermediary’s

customers as indirect. See Antifriction

(Other Than Tapered Roller Bearings)

Bearings from the France, et. Al.; Final

Results of Antidumping Duty

Administrative Reviews; Partial

Termination of Administrative Reviews,

and Revocation in Part of Antidumping

Duty Orders, 60 FR 10909 (February 28,

1995) and Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof from the Republic of

Germany, et al., Final Results of

Antidumping Duty Administrative

Review, 54 FR 18992, 19507 (May 3,

1989). For the one sample U.S.

advertisement mentioned by the

petitioner, it is clear from our U.S. sales

verification that this advertisement was

directed to original equipment

manufacturers (OEMs), not the

distributors’ customers. Thus the U.S.

magazine ad was properly classified as

an indirect expense. See HEA U.S. Sales

Verification Report. Regarding the one

home market advertisement concerning

a product under development, we agree

that certain costs for these products are

properly included in the scope of this

review. See DRAMS LTFV Final 1993.

Finally, we do not believe that two

advertisements constitute sufficient

evidence for questioning respondent’s

advertising expenses, especially in light

of the thorough home market and U.S.

sales verifications conducted by the

Department. See Pure and Alloy

Magnesium from Norway, 57 FR 30942

(July 13, 1992).

Comment 12: The petitioner argues

that the Department should revise

Hyundai’s reported U.S. inventory

carrying costs for further-manufactured

products by including the time during

which the further-manufactured

products are undergoing certain

processing to the time the product was

in inventory.

Hyundai maintains that its inventory

carrying cost methodology is in

accordance with previous Departmental

precedents, including the final results of

the original investigation. Hyundai

argues that the Department should only

make an inventory carrying cost

adjustment to U.S. price for finished,

not unfinished merchandise held in

inventory.

DOC Position: We agree with Hyundai

that an inventory carrying cost

adjustment to U.S. price should only be

made for finished goods in inventory

and should not include unfinished

goods, because unfinished goods

represent production expenses rather

than U.S. selling expenses. See DRAMS

LTFV Final 1993 at 15476 (Comment 32)

and Roller Chain, Other Than Bicycle,

from Japan, Final Results of

Antidumping Administrative Review, 58

FR 30769 (May 27, 1993).

Comment 13: The petitioner

maintains that Hyundai’s purchase of

construction services from a related

company may not be at arms-length. As

evidence for this assertion, the

petitioner cites certain COP verification

exhibits which the petitioner purports

demonstrate that the related

construction firm earned a lower profit

on sales to HEI than on sales to other

companies. The petitioner maintains

that these exhibits also show that sales

of construction services to HEI by the

related party were made at prices below

COP. The petitioner urges the

Department to presume that all

construction services were provided to

HEI at prices below COP and calculate

a BIA rate on these services by

increasing the acquisition and

depreciation costs claimed by HEI to

reflect market-based values.

Hyundai contends that the record of

this proceeding does not support the

petitioner’s assertion that certain

construction services purchased by HEI

from a related party were not at armslength prices. Hyundai argues that the

petitioner misread the related party’s

financial statements contained in the

COP verification exhibits and that the

services were provided at prices

comparable to those charged other

companies.

DOC Position: We agree with

Hyundai. During our home market sales

and COP verifications of Hyundai in

Korea, we examined the issue of related

parties to determine whether

transactions between these parties and

HEI were at arms-length. We specifically

examined the transactions between HEI

and a related party which provided

construction services during the POR.

We determined that, based upon prices

charged to other companies for

construction services, the services

purchased by HEI were at arms-length.

See page 5 and Exhibit 33 of the Report

on the Verification of the Cost of

Production Questionnaire Response of

Hyundai Electronic Industries, Inc.,

April 17, 1995 (HEI COP/CV

Verification Report).

Comment 14: The petitioner

maintains that the Department made a

clerical error in its assignation of BIA to

certain sales due to an incorrect decimal

point in the BIA rate of 11.16 percent.

The petitioner also maintains that the

Department made a clerical error in the

final calculations by failing to test all of

HEI’s reported profit figures to check

that the larger of the actual profit

amount or the statutory eight percent is

used in the calculation of CV.
20222 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices

DOC Position: We agree with the

petitioner and have revised our final

calculations accordingly.

Comment 15: Hyundai maintains that

three clerical errors are contained in the

Department’s model matching section of

the preliminary calculations. Hyundai

argues that these errors are as follows:

(1) the calculations did not identify

similar products where there was not an

identical home market match for a U.S.

sale, (2) the model matching

calculations fail to include the 90/60

day rule for identifying

contemporaneous matches, and (3) the

calculations’ matching hierarchy

mistakenly ranks the month of sale

above the level of trade.

DOC Position: We agree with Hyundai

and have corrected the model matching

of our calculations accordingly for the

final results of review.

Comment 16: Hyundai maintains that

the Department’s preliminary

calculations mistakenly double count

certain U.S. sales due to a clerical error.

DOC Position: We agree and have

revised our final calculations

accordingly.

Comment 17: Hyundai maintains that

the Department’s preliminary

calculations contained a clerical error in

its calculation of Hyundai’s ESP offset

cap. Hyundai maintains that the

preliminary calculations failed to

include U.S. commissions in the ESP

offset cap.

DOC Position: We agree and have

revised the ESP offset cap portion of our

final calculations to include U.S.

commissions.

Comment 18: Hyundai and the

petitioner maintain that the

Department’s preliminary calculations

contained a clerical error in its

calculation of profit for CV. Hyundai

argues that the Department failed to

recompute Hyundai’s profit to account

for the revisions the Department made

to Hyundai’s reported COP data for the

preliminary results of review. The

petitioner argues that the preliminary

calculations automatically applied the

statutory minimum profit percentage of

eight percent for all sales of DRAMS

without first testing to determine

whether the actual profit was less then

eight percent.

DOC Position: We agree and have

recomputed Hyundai’s profit for CV in

our final calculations to reflect the

increase in Hyundai’s COP. We also

revised the preliminary calculations to

compare Hyundai’s actual profit to the

statutory minimum of eight percent in

calculating CV for the non-further

manufactured sales where this did not

occur. For our final calculations, we

used the statutory minimum in cases

where Hyundai’s actual profit was

below the statutory minimum.

Comment 19: Hyundai maintains that

the Department’s preliminary

calculations contained a clerical error in

the calculation of U.S. price. Hyundai

argues that the Department failed to add

duty drawback to USP in its net price

calculations.

DOC Position: We agree and have

revised our final results calculations

accordingly.

Comment 20: Hyundai maintains that

the Department’s preliminary results

calculations contained three clerical

errors in its calculation of FMV.

Hyundai maintains that these clerical

errors were as follows: (1) the

calculations failed to convert home

market selling expenses incurred in U.S.

dollars into Korean won, (2) the

Department mistakenly added U.S.

repacking expense to HEI’s reported

home market price, and (3) the

Department failed to deduct indirect

selling expenses form FMV for furthermanufactured sales.

DOC Position: We agree and have

revised our final results calculations

accordingly.

Final Results of Review

Upon review of the comments

submitted, the Department has

determined that the following margins

exist for the companies for the period

October 29, 1992 through April 30,

1994:

Manufacturer/exporter Percent

margin

LG Semicon Co., Ltd ................ 0.00

Hyundai Electronic Industries,

Inc .......................................... 0.06

The Customs Service shall assess

antidumping duties on all appropriate

entries. Individual differences between

USP and FMV may vary from the

percentages stated above. The

Department will issue appraisement

instructions concerning each

respondent directly to the U.S. Customs

Service.

Furthermore, the following deposit

requirements will be effective for all

shipments of the subject merchandise,

entered, or withdrawn from warehouse,

for consumption on or after the

publication date of these final results of

administrative review, as provided for

by section 751(a)(1) of the Tariff Act: (1)

The cash deposit rate for the reviewed

firms will be zero percent; (2) for

previously reviewed or investigated

companies not listed above, the cash

deposit rate will continue to be the

company-specific rate published for the

most recent period; (3) if the exporter is

not a firm covered in this review, a prior

review, or in the original LTFV

investigation, but the manufacturer is,

the cash deposit rate will be the rate

established for the most recent period

for the manufacturer of the

merchandise; and (4) if neither the

exporter nor the manufacturer is a firm

covered in this or any previous review

conducted by the Department, the cash

deposit rate will be 3.85%, the all others

rate established in the LTFV

investigation. Samsung Electronics Co.,

Ltd. (Samsung), formerly a respondent

in this administrative review, was

excluded from the antidumping duty

order on DRAMS from Korea on

February 8, 1996. See Final Court

Decision and Partial Amended Final

Determination: Dynamic Random

Access Memory Semiconductors of One

Megabit and Above From the Republic

of Korea, 61 FR 4765 (February 8, 1996).

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

review.

This notice serves as the final

reminder to importers of their

responsibility under 19 CFR 353.26 to

file a certificate regarding the

reimbursement of antidumping duties

prior to liquidation of the relevant

entries during this review period.

Failure to comply with this requirement

could result in the Secretary’s

presumption that reimbursement of

antidumping duties occurred and the

subsequent assessment of double

antidumping duties.

This notice also serves as a reminder

to parties subject to administrative

protective order (APO) of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with 19 CFR 353.34(d). Timely written

notification or conversion to judicial

protective order is hereby requested.

Failure to comply with the regulations

and the terms of the APO is a

sanctionable violation.

This administrative review and notice

are in accordance with section 751(a)(1)

of the Tariff Act (19 U.S.C. 1675(a)(1))

and 19 CFR 353.22.

Date: April 26, 1996.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 96–11246 Filed 5–3–96; 8:45 am]

BILLING CODE 3510–DS–P