Gray Portland Cement and Clinker From Japan; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-815]

Gray Portland Cement and Clinker From Japan; 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.

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SUMMARY: In response to a request from the Ad Hoc Committee of Southern

California Producers of Gray Portland Cement (the petitioner), the

Department of Commerce (the Department) is conducting an administrative

review of the antidumping duty order on gray portland cement and

clinker from Japan. The review covers one manufacturer/exporter, Onoda

Cement Co., Ltd. (Onoda), and the period May 1, 1992, through April 30,

1993. The review indicates the existence of dumping margins during this

period.

As a result of the review, the Department has preliminarily

determined to assess antidumping duties equal to the difference between

the United States price (USP) and foreign market value (FMV).

Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE: February 11, 1994.

FOR FURTHER INFORMATION CONTACT: David Genovese or Michael Heaney,

Office of Antidumping Compliance, International Trade Administration,

U.S. Department of Commerce, Washington, DC 20230; telephone (202)482-

5254.

SUPPLEMENTARY INFORMATION:

Background

On April 28, 1993, the Department published a notice of

``Opportunity to Request an Administrative Review'' (58 FR 25802) of

the antidumping duty order on gray portland cement and clinker from

Japan (56 FR 21658, May 10, 1991). On May 3, 1993, the petitioner

requested that the Department conduct an administrative review of the

antidumping duty order on gray portland cement and clinker from Japan

for Onoda. We initiated the review, covering the period May 1, 1992,

through April 30, 1993, on June 25, 1993 (58 FR 34414). The Department

is conducting this review in accordance with section 751 of the Tariff

Act of 1930, as amended (the Act).

Scope of the Review

The products covered by this review are gray portland cement and

clinker from Japan. Gray portland cement is a hydraulic cement and the

primary component of concrete. Clinker, an intermediate material

produced when manufacturing cement, has no use other than grinding into

finished cement. Microfine cement was specifically excluded from the

antidumping duty order. Gray portland cement is currently classifiable

under the Harmonized Tariff Schedule (HTS) item number 2523.29, and

clinker is currently classifiable under HTS item number 2523.10. Gray

portland cement has also been entered under item number 2523.90 as

``other hydraulic cements''.

The HTS item numbers are provided for convenience and Customs

purposes. The written product description remains dispositive as to the

scope of the product coverage.

This review covers Onoda and the period May 1, 1992, through April

30, 1993.

Product Comparisons

Product comparisons were made on the basis of standards established

by the American Society for Testing and Materials (ASTM standards). All

of the cement sold in the United States fell within two ASTM standards:

Type I and Type II. Onoda sold thirteen kinds of cement in the home

market during the period of review. Onoda provided documents indicating

the chemical composition, technical specifications, and uses for each

cement type sold in the home market during the period of review.

Based on information submitted on the record, the Department's

finding in the 1983 investigation (see Final Determination of Sales at

Less Than Fair Value: Portland Hydraulic Cement from Japan, 48 FR

41049, September 13, 1983), and our own research, we have determined

that Type N cement is the closest comparable model to Type I cement and

Type M Cement is the closest comparable model to Type II cement.

Onoda made no sales of clinker in the United States during the

period of review.

United States Price

In calculating USP, the Department used purchase price (PP) or

exporter's sales price (ESP), as defined in sections 772(b) and (c) of

the Act. We made deductions, where appropriate, for loading costs,

ocean freight, marine insurance, U.S. duty, unloading costs, all U.S.

freight and insurance, terminal expenses, discounts, credit,

commissions, and credit memoranda. We also deducted indirect selling

expenses where appropriate, which included Onoda's reported indirect

selling expenses, plus technical services, advertising, bad debt,

quality control expenses, dispatcher expenses, foreign inspection

costs, general and administrative expenses, inventory carrying costs,

and product liability expenses. We added to the USP the interest

charged to late-paying customers.

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 United States merchandise at the

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

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

12).

The Department has changed its methodology in accordance with the

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

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

sold in the United States 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. These adjustments deducted 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 holding of the United States

Court of Appeals for the Federal Circuit 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

(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 (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 to the aforementioned deductions, we deducted value

added in the United States pursuant to section 772(e)(3) of the Act for

ESP sales involving further manufacture in the United States. We have

determined that further manufacturing costs include: (1) The cost of

manufacture; (2) movement charges; and (3) general expenses, including

selling, general, and administrative expenses. The value added consists

of the further manufacturing costs incurred in converting the cement

into a ready mix product, and a proportional amount of profit or loss

related to the value added. We calculated profit or loss by deducting

from the sales price of the ready mix: (1) The production cost of the

cement; (2) the finishing costs incurred in the United States; and (3)

all expenses incurred in transporting the cement into the United

States.

We then allocated proportionately the total profit or loss to the

imported cement and the ready mix based on the proportion of the total

cost of production to the cost of production attributable to the

further manufacturing cost in the United States. We deducted only the

profit or loss attributable to the U.S. value added.

Foreign Market Value

In calculating FMV, we used home market price, as defined in

section 773(a) of the Act. Home market price was based on ex-factory,

CIF terminal, or delivered prices to related and unrelated customers in

the home market. The Department has not excluded sales to related

parties because the Department has determined for this review that

prices to related parties are comparable to prices to unrelated parties

and, as a result, are at arm's-length.

Due to the existence of sales below the cost of production (COP) in

the first administrative review, the Department had reasonable grounds

to believe or suspect that sales below the COP may have occurred during

this review. Accordingly, the Department initiated a COP investigation

for this review. We calculated COP based on Onoda's cost of materials,

fabrications, and general expenses. The results of our cost test showed

that more than ten percent but less than ninety percent of home market

sales were below the COP and therefore, sales below the COP were made

in substantial quantities. We determined that these below-cost sales

were made over an extended period of time because they were made in

more than two months of the review period. Furthermore, no evidence was

presented to indicate that below-cost COP prices would permit the

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

course of trade. Thus, we dropped from our calculations of FMV all home

market sales that were made below the COP.

In calculating the FMV used in the dumping calculation, we made

deductions, where appropriate, for post-sale transportation costs,

credit, packing, commissions, all freight costs, and all rebates and

discounts. We made an upward adjustment to the home market sales price

for interest Onoda charged to late-paying customers.

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.

For comparison to PP sales, pursuant to 19 CFR 353.56 (1993) of the

Department's regulations, we made a circumstance-of-sale adjustment,

where appropriate, for differences in credit. In addition, the

Department did not deduct pre-sale transportation costs in accordance

with the United States Court of Appeals for the Federal Circuit's

ruling in The Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray

Portland Cement v. United States, Slip Op. 93-1239 (CAFC, January 5,

1994).

For comparisons to ESP sales, we made further deductions for home

market indirect selling expenses, which were comprised of pre-sale

transportation costs, general indirect selling expenses, technical

services, advertising, quality control cost, and expenses incurred for

the scrapping of distribution terminals and the disposal of obsolete

equipment. We limited the amount we deducted as home market indirect

selling expenses to the amount of indirect selling expenses incurred on

sales in the U.S. market, in accordance with Sec. 353.56(b)(2) of the

Department's regulations.

Where appropriate, we made further adjustments to FMV to account

for differences in physical characteristics of the merchandise, in

accordance with Sec. 353.57 of the Department's regulations.

Preliminary Results of Review

As a result of our comparison of USP to FMV, the Department

preliminarily determines that a margin of 8.22 percent exists for Onoda

for the period May 1, 1992, through April 30, 1993.

Parties to the proceeding may request disclosure within 5 days of

the date 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 of this

notice, or the first workday thereafter and will be limited to those

issues raised in the case briefs and/or written comment. Case briefs

and/or written comments from interested parties may be submitted not

later than 30 days after the date of publication. Rebuttal briefs and

rebuttals to written comments, limited to the issues raised in the case

briefs and comments, may be filed not later than 37 days after the date

of publication. The Department will publish the final results of this

administrative review, including the results of its analysis of any

written comments or case briefs.

The Department shall determine, and the 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 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 the

final results of this administrative review, as provided by section

751(a)(1) of the Act: (1) The cash deposit rate for the reviewed

company will be that rate established in the final results of this

administrative review; (2) for merchandise exported by manufacturers or

exporters not covered in this review but covered in a previous review

or the original less-than-fair-value (LTFV) investigation, the cash

deposit rate will continue to be the rate published in the most recent

final results or determination for which the manufacturer or exporter

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

covered in this review, earlier reviews, or the original investigation,

but the manufacturer is, the cash deposit rate will be that established

for the manufacturer of the merchandise in these final results of

review, earlier reviews, or the original investigation, whichever is

the most recent; and (4) the ``all others'' rate will be 63.73 percent.

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

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: February 4, 1994.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-3274 Filed 2-10-94; 8:45 am]

BILLING CODE 3510-DS-P