High-Tenacity Rayon Filament Yarn, Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-428-810]

High-Tenacity Rayon Filament Yarn, Preliminary Results of

Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration,

Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to a request by the respondents, Akzo Faser A.G.

and Akzo Fibers, Inc. (Akzo), producers/importers of high-tenacity

rayon filament yarn from Germany, the Department of Commerce (the

Department) has conducted an administrative review of the antidumping

duty order on high-tenacity rayon filament yarn from Germany. The

review period is February 20, 1992 through May 31, 1993. This review

involves one manufacturer/exporter of this merchandise to the United

States, Akzo, and its United States subsidiary/importer.

The review indicates the existence of dumping margins for the

period, and we preliminary determine to assess antidumping duties equal

to the difference between the United States price (USP) and the foreign

market value (FMV).

Interested parties are invited to comment on these preliminary

results of review.

EFFECTIVE DATE: June 22, 1994.

FOR FURTHER INFORMATION CONTACT:

Debra R. Crumbie, Amy S. Wei, or Michael J. Heaney, Office of

Antidumping Compliance, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-

5253.

SUPPLEMENTARY INFORMATION:

Background

On June 30, 1992, the Department published in the Federal Register

the antidumping duty order on high-tenacity rayon filament yarn from

Germany (57 FR 29062). On June 7, 1993, the Department published a

notice in the Federal Register notifying interested parties of the

opportunity to request an administrative review of high-tenacity rayon

filament yarn from Germany (58 FR 31941). On June 29, 1993, Akzo

requested, in accordance with section 353.22(a) of the Commerce

regulations, that we conduct an administrative review for the period

February 20, 1992 through May 31, 1993. We published a notice of

initiation of the antidumping duty administrative review on July 21,

1993 (58 FR 39007).

The Department has now conducted a review for this period in

accordance with section 751 of the Tariff Act of 1930, as amended (the

Act).

Scope of the Review

The product covered by this administrative review is high-tenacity

rayon filament yarn from Germany. During the review period, such

merchandise was classifiable under the Harmonized Tariff Schedule (HTS)

item number 5403.10.30.40. High-tenacity rayon filament yarn is a

multifilament single yarn of viscose rayon with a twist of five turns

or more per meter, having a denier of 1100 or greater, and a tenacity

greater than 35 centinewtons per tex. The HTS item number is provided

for convenience and U.S. Customs purposes. The written description

remains dispositive as to the scope of the product coverage. The review

covers Akzo and the period February 20, 1992 through May 31, 1993

(POR).

United States Price

In calculating USP, the Department treated Akzo's sales as purchase

price (PP), as defined in section 772 of the Act, because the

merchandise was sold to unrelated U.S. purchasers prior to importation.

PP was based on the free-on-board (FOB) price to unrelated purchasers

in the United States. We made adjustments, where applicable, for

foreign brokerage and handling, foreign inland freight, ocean freight,

U.S. duty, U.S. inland freight, foreign inland insurance, and U.S.

brokerage.

We made an addition to USP for taxes which were rebated upon

exportation. On October 7, 1993, the United States Court of

International Trade (CIT), in Federal-Mogul Corporation and The

Torrington Company v. United States, Slip Op. 93-194 (CIT, October 7,

1993), rejected the Department's methodology for calculating an

addition to USP under section 772(d)(1)(C) of the Act to account for

taxes that the exporting country would have assessed on the merchandise

had it been sold in the home market. The CIT held that the addition to

USP under section 772(d)(1)(C) of the Act should be the result of

applying the foreign market tax rate to the price of the U.S.

merchandise at the same point in the chain of commerce that the foreign

market tax was applied to the foreign market sales (see Federal-Mogul,)

Slip Op. 93-194 at 12).

In accordance with the Federal-Mogul decision, the Department added

to USP the result of multiplying the foreign market tax rate by the

U.S. price at the same point in the chain of commerce that the foreign

market tax was applied to foreign market sales. The Department has also

adjusted the USP tax adjustments and the amount of tax included in FMV

to account for expenses that are later deducted from USP and FMV. These

adjustments to the amount of the foreign market tax and the USP tax

adjustment are necessary to prevent our new methodology for calculating

the USP tax adjustment from creating antidumping duty margins where no

margins would exist if not taxes were levied upon foreign market sales.

Without the adjustments, margins would be artificially increased

because both the amount of tax included in the price of the foreign

market merchandise and the amount of the USP tax adjustment include

many expenses that are later deducted when calculating USP and FMV.

After deductions are made for these expenses, the amount of tax

included in FMV and the USP tax adjustment still reflects the amounts

of these expenses. Thus, a margin may be created that is not dependent

upon a difference between USP and FMV, but rather is the result of the

price of the U.S. merchandise containing more expenses than the price

of the foreign market merchandise.

The Department's policy of avoiding the creation of artificial

margins is in accordance with court decisions. The United States Court

of Appeals for the Federal Circuit has held that the application of the

USP tax adjustment under section 772(d)(1)(C) of the Act should not

create an antidumping duty margin if pre-tax FMV does not exceed USP

(see Zenith Electronics Corp. v. United States, 988 F.2d 1573, 1581

(Fed. Cir. 1993)). In addition, the CIT has specifically held that an

adjustment should be made to mitigate the impact of expenses that are

deducted from FMV and USP upon the USP tax adjustment and the amount of

tax included in FMV (see Daewoo Electronics Co., Ltd. v. United States,

760 F. Supp. 200, 208 (CIT, 1991)). However, the mechanics of the

Department's adjustments to the USP tax adjustment and the foreign

market tax amount as described above are not identical to those

suggested in Daewoo.

In addition, the Department requested that Akzo submit information

relating to all exporter's sales price (ESP) sales made during the POR.

The Department analyzed data submitted by Akzo and determined that the

ESP sales reported were entered and liquidated prior to the date of the

Department's preliminary determination of sales at less-than-fair-value

(LTFV). Because this merchandise was entered prior to the date of the

preliminary determination, it was not covered by this order (see Notice

of Antidumping Duty Order: High-Tenacity Rayon Filament Yarn from

Germany, 57 FR 29062 (June 30, 1992)). Therefore, we have excluded

these sales from this review.

No other adjustments to USP were claimed or allowed.

Foreign Market Value

Akzo had sufficient home market sales of the subject merchandise

during the POR. Therefore, the sales of high-tenacity rayon filament

yarn in the home market served as a viable basis for calculating FMV.

Based on findings in the LTFV investigation that home market sales

of the subject merchandise were made by Akzo at prices below the cost

of production (COP), the Department conducted a cost investigation for

this administrative review. We examined whether home market sales were

made below cost in substantial quantities over an extended period of

time, and whether such sales were made at prices which permitted

recovery of all costs within a reasonable period of time in the normal

course of trade. We calculated Akzo's COP on a model-specific basis as

the sum of all reported materials costs, labor expenses, factory

overhead, selling expenses, net interest expense, and revised general

and administrative expenses. We reallocated general and administrative

costs as a percentage of cost of goods sold. We compared COP to home

market prices, net of movement charges, third-party payments, packing,

rebates, and discounts. Based upon this comparison, we found that there

were sales below cost.

Where we determined that less than 10 percent of the home market

sales of rayon yarn of a particular model were sold at prices below the

COP, we did not disregard any sales of that model in our calculation of

FMV. If 10 percent or more, but not more than 90 percent, of the home

market sales of a particular model of rayon yarn were below cost, we

excluded the below-cost home market sales prices from our calculation

of FMV, provided that these below-cost home market sales were made over

an extended period of time. For those models where more than 90 percent

of the home market sales were made below cost over an extended period

of time, we disregarded all home market sales of those models from our

calculation of FMV and used the constructed value of those models as

described below.

To determine whether sales below cost were made over an extended

period of time, we compared the number of months in which sales below

cost occurred for a particular model to the number of months in which

that model was sold. If the model was sold in fewer than three months,

we did not disregard below-cost sales unless there were below-cost

sales of that model in each month sold. If a model was sold in three or

more months, we did not disregard below-cost sales unless there were

sales below cost in at least three of the months in which the model was

sold.

Akzo has not submitted information indicating that any of its sales

below cost were made at prices which would have permitted ``recovery of

all costs within a reasonable period of time in the normal course of

trade,'' as required by section 773(b)(2) of the Act. Therefore, we

have no basis for concluding that the costs of production of such sales

have been recovered within a reasonable period of time. As a result of

our investigation, we disregarded Akzo's below-cost sales made over an

extended period of time.

We used constructed value (CV) as FMV for those U.S. sales for

which there were insufficient sales of the comparison home-market model

at or above the COP. We calculated CV in accordance with section 773(e)

of the Act. We made an adjustment to general and administrative

expenses based on our finding that Akzo had allocated general and

administrative costs to different product groups based on specific

allocation methodologies. The costs reported were general in nature and

related to all operations, and we allocated them to all of Akzo's

product lines. In addition, we summed the cost of materials, indirect

selling expenses, direct selling expenses, revised general and

administrative expenses, net interest expenses, and imputed credit. In

our calculation of the selling, general, and administrative expenses

(SG&A), where the sum of the actual selling expenses and the revised

general and administrative expenses was less than the statutory minimum

of 10 percent of the cost of manufacturing (COM), we calculated SG&A as

10 percent of the COM. Where the actual profits were less than the

statutory minimum of 8 percent of COM plus SG&A, we calculated profit

as 8 percent of the sum of COM plus SG&A. We adjusted CV for selling,

credit, and packing expenses.

For those models that had sufficient above-cost sales, the

Department calculated FMV using home market prices based on the FOB

price to unrelated purchasers. Where applicable, we made adjustments

for inland freight (post-sale), inland insurance, packing, discounts,

other discounts, interest revenue, rebates, and third party payments.

We made adjustments for differences in technical services expenses and

credit. We also made adjustments for differences in the physical

characteristics of merchandise. The Department also made an adjustment

to the amount of consumption taxes included in FMV in accordance with

the Department's aforementioned tax adjustment methodology.

Preliminary Results

As a result of our review, we preliminarily determine the dumping

margin to be:

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Margin

Manufacturer/Exporter Time period (percent)

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Akzo Faser A.G........................... 2/20/92-5/31/93 1.11

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Parties to this proceeding may request disclosure within 5 days of

publication of this notice and any interested party may request a

hearing within 10 days of publication. Any hearing, if requested, will

be held 44 days after the date of publication, or the first workday

thereafter. Interested parties may submit case briefs and/or written

comments not later than 30 days after the date of publication. Rebuttal

briefs and rebuttals to written comments, limited to issues raised in

such briefs or comments, may be filed not later than 37 days after the

date of publication. The Department will publish a notice of the final

results of this administrative review, which will include the results

of its analysis of issues raised in any such briefs or comments.

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between USP and FMV may vary from the percentage stated

above. The Department will issue appraisement instructions directly to

the U.S. Customs Service.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of high-tenacity rayon filament yarn from Germany

entered, or withdrawn from warehouse, for consumption on or after the

publication date of the final results of this administrative review, as

provided by section 751(a) of the Act: (1) The cash deposit rate for

Akzo will be that established in the final results of this review; (2)

for merchandise exported by manufacturers or exporters not covered in

this review but covered in the original LTFV investigation, the cash

deposit will continue to be the rate published in the final

determination for which the manufacturer or exporter received a

company-specific rate; (3) if the exporter is not a firm covered in

this review, or the original investigation, but the manufacturer is,

the cash deposit rate will be that established for the manufacturer of

the merchandise in the final results of this review, or the original

investigation; (4) if neither the exporter nor the manufacturer is a

firm covered in this or any previous review, the cash deposit rate will

be the ``all others rate'' from the LTFV investigation.

On May 25, 1993, the CIT in Floral Trade Council v. United States,

822 F. Supp. 766 (1993), and Federal-Mogul Corporation and the

Torrington Company v. United States, 822 F. Supp. 782 (1993), decided

that once an ``all others'' rate is established for a company, it can

only be changed through an administrative review. The Department has

determined that in order to implement these decisions, it is

appropriate to reinstate the original ``all others'' rate from the LTFV

investigation (or that rate as amended for correction for clerical

errors or as a result of litigation) in proceedings governed by

antidumping duty orders for the purposes of establishing cash deposits

in all current and future administrative reviews. Thus, the ``all

others'' rate for the purposes of this review will be 24.58 percent,

the ``all others'' rate established in the final notice of LTFV

investigation by the Department (57 FR 21770).

This notice also 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 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: June 15, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-15182 Filed 6-21-94; 8:45 am]

BILLING CODE 3510-DS-M