Porcelain-on-Steel Cooking Ware From Mexico; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-201-504]

Porcelain-on-Steel Cooking Ware From Mexico; Preliminary Results

of Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

-----------------------------------------------------------------------

SUMMARY: In response to a request by petitioner, the Department of

Commerce is conducting an administrative review of the antidumping duty

order on porcelain-on-steel cooking ware from Mexico. The review covers

shipments of this merchandise to the United States during the period

December 1, 1990 through November 30, 1991. The review indicates the

existence of dumping margins during the review period. We invite

interested parties to comment on these preliminary results.

EFFECTIVE DATE: February 11, 1994.

FOR FURTHER INFORMATION CONTACT:

Lorenza Olivas or Richard Herring, Office of Countervailing Compliance,

International Trade Administration, U.S. Department of Commerce,

Washington, DC 20230; telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

On December 2, 1991, the Department of Commerce (the Department)

published in the Federal Register a notice of ``Opportunity to Request

Administrative Review'' (56 FR 61228) of the antidumping duty order on

porcelain-on-steel cooking ware from Mexico for the period December 1,

1990 through November 30, 1991. On December 12, 1991, petitioner

General Housewares Corporation requested an administrative review. We

initiated the review on January 23, 1992 (57 FR 2704). The Department

is conducting the administrative review in accordance with section 751

of the Tariff Act of 1930, as amended (the Tariff Act).

Scope of Review

Imports covered by this review are shipments of porcelain-on-steel

cooking ware, including tea kettles, which do not have self-contained

electric heating elements. All of the foregoing are constructed of

steel and are enameled or glazed with vitreous glasses. This

merchandise is currently classifiable under Harmonized Tariff Schedule

(HTS) item number 7323.94.00. Kitchenware currently entering under HTS

item number 7323.94.00.30 is not subject to the order. The HTS item

numbers are provided for convenience and Customs purposes. The written

description remains dispositive.

The review covers two manufacturers/exporters, APSA and CINSA, of

Mexican porcelain-on-steel cooking ware.

United States Price

In calculating U.S. price, the Department used purchase price and

exporter's sales price, as defined in section 772 of the Tariff Act.

For those sales made directly to unrelated parties prior to importation

into the United States, we based the United States price on purchase

price, in accordance with section 772(b) of the Act. In those cases

where sales were made through a related sales agent in the United

States to an unrelated purchaser prior to the date of importation, we

also used purchase price as the basis for determining U.S. price. For

the latter sales, the Department determined that purchase price was the

appropriate determinant of United States price because the merchandise

was shipped directly from the manufacturer to the unrelated buyers,

without being introduced into the inventory of the related selling

agent. Moreover, direct shipment from the manufacturers to the

unrelated buyers was the customary commercial channel for sales of this

merchandise between the parties involved. Finally, the related selling

agent located in the United States acted only as a processor of sales-

related documentation and a communication link with the unrelated U.S.

buyers.

Where all the above elements are met, we regard, the routine

selling functions of the exporter as merely having been relocated

geographically from the country of exportation to the United States,

where the sales agent performs them. Whether these functions take place

in the United States or abroad does not change the substance of the

transactions or the functions themselves.

Where sales to the first unrelated purchaser occurred after

importation into the United States, we based U.S. price on exporter's

sales price, in accordance with section 772(c) of the Tariff Act.

Purchase price and exporter's sales price (ESP) were based on the

packed, f.o.b. price to unrelated purchasers in the United States. We

made deductions from purchase price and ESP, where applicable, for

brokerage, foreign inland freight and insurance and U.S. import duties,

in accordance with section 772(d)(2) of the Act. We also made

deductions for discounts and rebates. We made further deductions from

ESP, where applicable, for commissions, credit expenses and indirect

selling expenses, pursuant to sections 772(e)(1) and (2) of the Act.

In addition, we made adjustments for the value added tax. On

October 7, 1993, the United States Court of International Trade (CIT),

in Federal-Mogul Corp. and the Torrington Co. 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 Tariff 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 Tariff Act should be the result of applying the

foreign market tax rate to the price of the United States merchandise

at the same point in the chain of commerce that the foreign market tax

was applied to foreign market sales. Federal-Mogul, Slip Op. 93-194 at

12.

The Department has changed its methodology in accordance with the

Federal-Mogul decisions. The Department added to USP the result of

multiplying the foreign market tax rate by the price of the United

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

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

also adjusted the USP tax adjustment and the amount of tax included in

FMV. These adjustments deduct the portions of the foreign market tax

and the USP tax adjustment that are the result of expenses that are

included in the foreign market price used to calculate foreign market

tax and are included in the United States merchandise price used to

calculate the USP tax adjustment and that are later deducted to

calculate FMV and USP. 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 no taxes were

levied upon foreign market sales.

This margin creation effect is due to the fact that the bases for

calculating 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 these deductions are made, 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 is the result of the price of the United

States merchandise containing more expenses than the price of the

foreign market merchandise. The Department's policy to avoid the margin

creation effect is in accordance with the United States court of

Appeals' holding that the application of the USP tax adjustment under

section 772(d)(c) of the Tariff Act should not create an antidumping

duty margin if pre-tax FMV does not exceed USP. 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 form FMV and

USP upon the USP tax adjustment and the amount of tax included in FMV.

Daewoo Electronics Co., Ltd. v. United States (Daewoo), 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.

Sales or merchandise manufactured by APSA which entered the United

States between December 1, 1990 and December 31, 1991, have been

assessed countervailing duties; therefore, they are entitled to an

upward adjustment to the U.S. price pursuant to section 772(d)(1)(D) of

the Tariff Act. As a result, we have increased APSA's U.S. price by the

amount of the export subsidies found in the countervailing duty order

on porcelain-on-steel cooking ware from Mexico.

Foreign Market Value

In calculating foreign market value, the Department used home

market price, as defined in section 773 of the Tariff Act, for APSA. We

also used home market price for CINSA, when sufficient quantities of

such or similar merchandise were sold in the home market, at or above

the cost of production, to provide a basis for comparison. Home market

price was based on the packed, ex-factory or delivered price to related

and unrelated purchasers in the home market. In our margin

calculations, we used related and unrelated party sales because we

found that the prices were comparable. Where applicable, we made

deductions from the home market price for inland freight and insurance,

discounts, rebates and home market packaging. We made an adjustment to

home market price, where appropriate, for physical differences in the

merchandise, in accordance with 19 CFR 353.57.

For comparisons involving both purchase price and exporter's sales

price, we included in the foreign market value, the amount of value

added tax collected in the home market. We also calculated the amount

of the tax that was due solely to the inclusion of price deductions in

the original tax base (i.e., the tax rate times the sum of any

adjustments, expenses, charges, and offsets that were deducted from the

tax base). This amount was deducted from the amount of value added tax

collected in the home market. By making this additional tax adjustment,

we avoid a distortion that would cause the creation of a dumping margin

even when pre-tax dumping is zero.

For comparisons to purchase price, pursuant to section 773(a)(4)(B)

and 19 CFR 353.56(a)(2), we made a circumstances-of-sale adjustment,

where appropriate, for differences in credit expenses.

For comparisons involving ESP transactions, we made further

deductions from home market price, where appropriate, for credit

expenses and commissions, and we made an adjustment to home market

price for indirect selling expenses, in accordance with 19 CFR

353.56(b). In addition, we calculated a re-adjustment of the amount of

tax on the U.S. direct selling expenses added to foreign market value

by applying the tax rate to those expenses. This re-adjustment amount

was also added to foreign market value.

For CINSA's home market models for which there were insufficient

sales at or above the cost of production (COP), we used constructed

value. (See, Office of Accounting COP analysis memorandum dated

November 5, 1993 (OA memorandum)). Constructed value consists of the

sum of materials, fabrication, overhead, general expenses, profit, and

U.S. packing. In accordance with section 773(e)(1)(B) (i) and (ii), we

used: (1) The actual amount of general expenses because those amounts

were more than the statutory minimum of ten percent and (2) the actual

amount of profit where it exceeded the statutory minimum of eight

percent.

In our COP analysis, we have relied on COP information submitted by

CINSA, except in instances where it was not appropriately quantified or

valued. More notable, we recalculated direct labor expenses to account

for expenses related to employee profit sharing. Also, because CINSA

failed to provide requested information on depreciation based upon the

revaluation of assets in accordance with the Department's normal

practice (See, e.g., Gray Portland Cement and Cylinder from Mexico;

Final Results of Antidumping Administrative Review (58 FR 25803; April

28, 1993) and Final Results of Antidumping Administrative Review;

Porcelain on Steel Cooking Ware from Mexico (58 FR 43327; August 16,

1993)), we have recalculated depreciation expenses using best

information available (BIA) based on information submitted in CINSA's

response to the Department's supplemental questionnaire. Accordingly,

we increased the reported fixed overhead expenses (which includes

depreciation expenses). See OA memorandum of November 5, 1993.

Preliminary Results of the Review

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

following margins exist for the period December 1, 1990 through

November 30, 1991:

As a result of our review, we determine the margins to be:

------------------------------------------------------------------------

Margin

Manufacturer/exporter (percent)

------------------------------------------------------------------------

APSA....................................................... 8.71

CINSA...................................................... 45.59

All others................................................. 29.52

------------------------------------------------------------------------

Parties to the proceeding may request disclosure within 5 days of

the date of publication of this notice. Representatives of parties to

the proceeding may request disclosure of proprietary information under

administrative protective order no later than 10 days after the

representative's client or employer becomes a party to the proceeding,

but in no event later than the date the case briefs are due. Any

interested party may request a hearing not later than 10 days after

publication of this notice. Any hearing, if requested, will be held no

later than seven days after the scheduled date for submission of

rebuttal briefs. Persons interested in attending the hearing should

ascertain with the Department the date and time of the hearing. Copies

of case briefs and rebuttal briefs must be served on interested parties

in accordance with 19 CFR 353.38(e). Interested parties may submit

written arguments in case briefs within 30 days of the date of

publication. Rebuttal briefs, limited to arguments raised in case

briefs, may be submitted seven days after the time limit for filing the

case brief.

The Department will publish the final results of the administrative

review, including the results of its analysis of issues raised in any

case or rebuttal brief or at a hearing.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between United States price and foreign market value may

vary from the percentages stated above. The Department will issue

appraisement instructions directly to the Customs Service.

Further, the following deposit requirements will be effective upon

publication of the final results of this administrative review for all

shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication date, as

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

rates for the reviewed companies will be those rates established in the

final results of this administrative 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

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) the cash deposit rate for all other

manufacturers or exporters will be the ``all others'' rate established

in the final notice of the less-than-fair value investigation in this

case (51 FR 36435 October 10, 1986), in accordance with the Court of

International Trade's decision in Floral Trade Council v. United

States, Slip Op. 93-79, and Federal Mogul Corporation v. United States,

Slip Op. 93-83. The ``all others'' rate is 29.52 percent.

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a preliminary reminder to importers of their

responsibility under 190 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and subsequent assessment

of double antidumping duties.

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.

Dated: February 4, 1994.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-3182 Filed 2-10-94; 8:45 am]

BILLING CODE 3510-DS-P-M