Color Television Receivers From the Republic of Korea; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-580-008]

Color Television Receivers From the Republic of Korea; Final

Results of Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration/

Department of Commerce.

ACTION: Notice of Final Results of Antidumping Duty Administrative

Review.

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SUMMARY: On October 7, 1993, the Department of Commerce published in

the Federal Register the preliminary results of its administrative

review of the antidumping duty order on color television receivers from

the Republic of Korea (58 FR 52262). The period of review covers seven

manufacturers/exporters and the period April 1, 1991, through March 31,

1992.

We gave interested parties an opportunity to comment on our

preliminary results. We did not hold a public hearing on these results,

as the result for a public hearing was withdrawn.

Based on our analysis of the comments received and the correction

of certain clerical errors, we have revised the preliminary results.

The final dumping margins range from zero to 16.57 percent.

EFFECTIVE DATE: March 23, 1994.

FOR FURTHER INFORMATION CONTACT:

Zev Primor or Wendy Frankel, 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 October 7, 1993, the Department of Commerce (the Department

published in the Federal Register the preliminary results (58 FR 52262)

of its administrative review of the antidumping duty order on color

television receivers (CTVs) from the Republic of Korea (ROK) (49 FR

18336, April 30, 1984). The Department has now completed this

administrative review in accordance with section 751 of the Tariff Act

of 1930, as amended (the Tariff Act), and 19 CFR 353.22 (1993).

Scope of the Review

The products covered by this review include color television

receivers, complete and incomplete, from the ROK. The order covers all

CTVs regardless of tariff classification. During the period of review

(POR), the subject merchandise was classified under Harmonized Tariff

Schedule (HTS) item numbers 8528.10.60, 85.29.90.15, 8529.90.20 and

8540.11.00. The HTS item numbers are provided for convenience and

Customs purposes only. The written description remains dispositive as

to the scope of the product coverage.

The review covers seven manufacturers/exporters and the POR April

1, 1991, through March 31, 1992.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received case briefs and rebuttal briefs from

the Independent Radionic Workers of America, the United Electrical

Workers of America, the International Brotherhood of Electrical

Workers, the International Union of Electronic, Electrical, Salaried,

Machine and Furniture Workers, AFL-CIO, and Industrial Union

Department, AFL-CIO (the Unions), the petitioners in this proceeding,

and three respondents, Goldstar Co., Ltd. (Goldstar), Daewoo

Electronics Co., Ltd. (Daewoo), and Samwon Electronics, Inc. (Samwon).

Two companies, Tongkook General Electronics, Inc., and Cosmos

Electronics Manufacturing Korea, Ltd., did not respond to our requests

for information. When a company fails to provide the information

requested in a timely manner, the Department considers the company

uncooperative and generally assigns to that company the higher of (a)

the highest rate assigned to any company in any previous review,

including the less-than-fair-value (LTFV) investigation, or (b) the

highest rate for a responding company with shipments during the POR.

Therefore, we have used the highest rate from the LTFV investigation as

the best information available (BIA) in determining the margins for

these two companies for this review, because this rate is higher than

the highest rate in the current review. See Allied-Signal Aerospace Co.

v. United States, Appeal No. 93-1049 (Fed. Cir. June 22, 1993). See

also Krupp Stahl AG et al v. United States, 822 F. Supp 789 (CIT May

26, 1993). Two other companies, Samsung Electronics Co. Ltd., and

Quantronics Manufacturing Korea, Ltd., responded to the Department that

they had no sales during the POR.

Petitioners' Comments

Comment 1: Petitioners argue that in the preliminary results of

this review, the Department failed to measure the home market tax

incidence in Korea. Although petitioners admit that the United States

Court of Appeals for the Federal Circuit (CAFC) has recently held that

no measurement of tax incidence is required under the statute,

petitioners argue that the Department should not implement that

approach in light of a petition for ``rehearing and suggestion for

rehearing in banc that has been submitted by petitioners and is yet

pending.''

Respondents argue that the recent CAFC decision (Daewoo Elec. Corp.

v. United States, Slip Op. 92-1558-1562 (Fed. Cir. Sept. 30, 1993)

(Daewoo)), clearly affirmed the Department's longstanding

interpretation of the governing statute, i.e., no requirement to

measure the amount of the pass-through taxes to the Korean consumers.

Consequently, respondents request that the Department retain the same

methodology in the final results of the review.

Department's Position: We disagree with petitioners. The question

of whether the Department was required to measure the Korean home

market tax incidence or ``pass-through'' tax was conclusively resolved

by the CAFC in the Daewoo decision. In that decision, the CAFC rules

that ``the statute does not speak to tax incidence, shifting burdens,

or pass-through, nor does it contain any hint that an econometric

analysis must be performed'' (Daewoo, Slip Op. at 12). Consequently,

the Department has retained its policy of not measuring the pass-

through tax in this review.

Comment 2: Petitioners object to the Department's methodology of

making a circumstance-of-sale (COS) adjustment for differences between

home market and hypothetical U.S. taxes by adding the full amount of

the Korean home market tax to United States price (USP). Citing the

recent Court of International Trade (CIT) decision, Federal-Mogul Corp.

v. United States, 17 CIT--, Slip Op. 93-194 (Oct. 7, 1993) (Federal-

Mogul), petitioners request the Department to recalculate the commodity

tax adjustment to USP.

Goldstar urges the Department to continue to adhere to the CAFC's

decision in Zenith Elec. Corp. v. United States, 988 F. 2d 1573 (Fed.

Cir. 1993) (Zenith), i.e., by adding to USP the absolute amount of home

market taxes, Goldstar claims that the recent Federal-Mogul decision

failed to recognize the critical distinction between the Zenith holding

that the Department may not adjust the foreign market value (FMV) to

neutralize tax amounts, and the separate issue of how the adjustment to

USP for commodity taxes shall be performed. Goldstar further claims

that in the Zenith decision, the Department used an ad valorem

methodology to calculate the adjustment to USP. This methodology,

according to Goldstar, resulted in a multiplier effect on the

underlying dumping margin, a result that the Department had argued

justified making a tax-neutralizing adjustment to FMV. Goldstar notes

that the CAFC held that the express terms of the statute preclude such

an adjustment to FMV. However, Goldstar argues that in footnote four of

that decision, the CAFC indicated that the Department may lawfully

avoid the multiplier effect by performing the adjustment to USP on an

absolute basis rather than on an ad valorem basis.

Daewoo concurs with Goldstar and adds that the Department should

not implement the Federal-Mogul decision unless and until it is

sustained by the CAFC.

Department's Position: We agree with petitioners. The CIT in

Federal-Mogul rejected the practice of making COS adjustments for

differences in tax amounts in USP and FMV. Consequently, we have

revised our methodology and adjusted USP for tax by multiplying the USP

by the home market tax rate at the point in the chain of commerce of

the U.S. merchandise that is analogous to the point in the home market

chain of commerce at which the foreign government applies the home

market consumption tax. In this case we multiplied the U.S. tax base

(gross unit price less discounts) by the Korean VAT rate. This product,

the U.S. tax adjustment, was then added to the net USP.

With regard to the tax treatment in the home market, we included in

the FMV the amount of Korean consumption tax collected in the home

market by multipling the tax base (home market gross unit price) by the

Korean VAT rate.

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.,

multiplying VAT rate by the sum of total deductions and additions). The

total amount of U.S. movement and selling expenses was multiplied by

the Korean VAT rate and subtracted from the net USP to determine the

final USP. Similarly, a total amount of all adjustments in the home

market was multiplied by the Korean VAT and deducted from FMV after all

other adjustments had been made.

These adjustments are necessary to prevent our new methodology for

calculating the USP tax adjustment from crating antidumping duty

margins where no margins would exist if no taxes were levied upon

foreign market sales.

Comment 3: Petitioners argue that since Goldstar, in the

preliminary results, a zero margin, it may suggest that no dumping

margin will be found in the final results of review. In that event,

petitioners request that the Department should not count this POR for

the purposes of an antidumping order revocation because the quantity of

the CTVs shipped by Goldstar to the United States during this review

was ``de minimis.'' Petitioners further state that ``a de minimis

volume of shipments is also no indication of the absence of price

discrimination, because any producer seeking to dump its product would

find it advantageous and a simple task to sell a de minimis volume of a

product fair at fair value in the short-term so as to obtain revocation

and then be freed to dump its product in the future.''

Goldstar rebuts this allegation by claiming that: (1) There is no

request for revocation in this review, therefore, the issue is

irrelevant; and (2) the Department should not grant ``advisory

opinions'' on issues not relevant to this review.

Department's Position: We agree with respondent. No request for

revocation has been made and, therefore, this issue is not revelant.

Comment 4: Petitioners allege that respondents under-reported their

U.S. sales during the POR and claim a discrepancy between the reported

U.S. sales and entries of the subject merchandise made during the POR.

Daewoo rejects petitioners' allegations, pointing out the

Department's extensive verification of its sales and the cost of

production (COP) data. Respondents maintain that such a thorough

verification would have revealed any discrepancies.

Department's Position: We disagree with petitioners. The factual

information alleging unreported entries was submitted to the Department

after more than 180 days from the initiation of the review. As such, it

is untimely and cannot be used during the current POR. See 19 CFR

353.31(a)(1). Finally, all sales information and their respective

entries pertaining to the current POR have been verified. We found no

discrepancies between the reported sales volume and the source

documents.

Comment 5: Petitioners submitted comments concerning three computer

programming/clerical errors in the Department's preliminary results

analysis of Daewoo's response.

Department's Position: We agree with the petitioners and have made

the following corrections to the appropriate programs in our final

results calculations for Daewoo: (1) We replaced the gross commission

expense with the net commission expense in the exporter's sales price

(ESP) cap; (2) we did not adjust USP for home market tax when we

compared USP to a constructed value (CV) in both the purchase price

(PP) and ESP sales; and (3) we corrected the cost of manufacturer value

in model DTB-1404PW when it is used in the CV application.

Daewoo's Comment

Comment 6: Daewoo asserts that the Department incorrectly used CV

for a home market model DTB-1404PW when the ``90/60'' day matching

procedure revealed that there were not enough matching sales in every

month of the POR. Instead, Daewoo requests the use of another model in

the home market which, allegedly, can be qualified as similar

merchandise and has sales in every month of the POR.

Petitioners object to the use of another model in the matching

procedure because it does not meet the physical criteria necessary to

qualify as similar merchandise.

Department's Position: We disagree with Daewoo. Prior to

determining FMV under section 773(a)(1) of the Tariff Act, the

department must first select the most similar merchandise. Section

771(16) of the Tariff Act defines such or similar merchandise and

provides a hierarchy of preferences for determining which merchandise

sold in the foreign market is most similar to the merchandise sold in

the United States. Section 771(16) also expresses a preference for the

use identical over similar merchandise. The cost test is not conducted

until after the most similar model match is found under section

771(16).

Moreover, section 771(16) directs us only to ``the first of the

following categories * * *'' and not to the next category when the

first match is below the COP. If this were not the case, the COP test

would inappropriately become part of the basis for determining what

constitutes such or similar merchandise, which is clearly not the

purpose of the COP test. Consequently, it appears that the statute

directs us to the use of CV when the most similar model is sold below

the cost.

In this case, as a result of the COP test, we discarded sales of

the most similar home market model. In conducting the 90/60 day

contemporaneity test, we found no remaining sales of the most similar

model. Therefore, we relied on CV as the basis of FMV (see Tubeless

Steel Disc Wheels from Brazil, 52 FR 6947 (March 20, 1987), see, also,

Import Administration Policy Bulletin, Dec. 15, 1993).

Comment 7: Citing AOC International v. United States, 721 F. Supp.

314, 316 (CIT 1989) (AOC), Daewoo claims that the Department

erroneously excluded from direct warranty costs in the home market the

salaries and benefits of employees in the aftersale service centers.

According to the respondent, the Department's approach is distortive

because it treats all U.S. warranty expenses, incurred in the form of

payments to unrelated parties, as direct selling expenses, while

classifying similar expenses in the home market as indirect selling

expenses simply because the warranty services are provided by the

respondent's own service departments. Because the expenses incurred in

both markets are identical in nature, respondent contends that the

Department should treat such expenses in the same manner in both

markets.

Department's Position: We disagree with Daewoo. According to our

established practice, we consider the home market warranty expenses at

issue to be fixed costs that do not qualify as direct selling expenses.

This is because the respondent would have incurred such costs

regardless of whether they made any sales of the subject merchandise.

In the U.S. market, however, Daewoo's warranty repairs are performed by

the independent service firms which are paid on a per unit basis, as

expense clearly linked to units sold. Consequently, the U.S. warranty

expenses are correctly treated as direct selling expenses. Further, we

note that the decision in AOC is not final, and may yet be reversed.

Therefore, we have continued to treat the home market fixed warranty

expenses as indirect selling expenses for these final results (see

Color Television Receivers from the Republic of Korea, 58 FR 50,333

(Sept. 27, 1993), Comment 16 (Eighth Review), and Color Television

Receivers from the Republic of Korea, 56 FR 12,701 (March 27, 1991),

Comment 20 (Fifth Review)).

Goldstar's Comments

Comment 8: Goldstar submitted comments concerning three computer

programming/clerical errors in the Department's preliminary results

analysis of Goldstar's response.

Petitioners objected to one of the clerical error allegations,

i.e., the inclusion of the U.S. commissions in the ESP ``cap,'' on the

grounds that there are no commissions, for comparable sales, in the

home market.

Department's Position: We agree with Goldstar and have made the

following corrections to the appropriate program in our final results

calculations for Goldstar: (1) We included the warranty, technical

expenses, royalties and promotional fees directly related to the CTV

sales in the home market pool of direct selling expenses; (2) we

included the U.S. indirect warranty, U.S. indirect advertising and U.S.

commission expenses in the ESP cap; and (3) we corrected the amount of

commodity taxes in the home market, however, the correction was made

according to the new methodology explained above (see Comment 2).

With regard to petitioners' concerns regarding the inclusion of the

U.S. commissions in the ESP cap, our regulations state that where there

is a commission paid in one market and none in the other market, we

offset the commission with indirect selling expenses incurred in the

other market to the extent of the lesser of the commission or the

selling expenses (see 19 CFR 353.56(b), see, also, Antidumping Manual,

Import Administration, International Trade Administration, Chapter 8,

p. 31).

Comment 9: Goldstar requests that the Department conform its COS

adjustments in the ESP price comparisons to the methodology ordered by

the CIT in Timken Co. v. United States, 673 F. Supp. 495 (CIT 1987)

(Timken) and in a number of other cases. In Timken, the CIT held that,

in ESP situations, the COS adjustments for U.S. direct selling expenses

should be added to FMV rather than deducted from USP.

Department's Position: We disagree with Goldstar. Section 772(e)(2)

of the Tariff Act states that ESP sales shall be adjusted by being

reduced by the amount of ``expenses generally incurred by or for the

account of the exporter in the United States in selling identical or

substantially identical merchandise'' (emphasis added). Therefore, we

make COS adjustments in ESP comparisons by deducting all selling

expenses from ESP, rather than retaining them in ESP and adding the

relevant amounts to FMV. The litigation in Timken was withdrawn and

there was no conclusive decision in the case. Further, because the

issue of deducting direct selling expenses from USP or adding them to

FMV is currently on appeal before the CAFC, we have followed our

longstanding practice of making COS adjustments in ESP comparisons by

deducting all selling expenses from the ESP for these final results.

See our positions in the Fifth Review, Comment 33, and Eighth Review,

Comment 17.

Samwon's Comments

Comment 10: Samwon argues that the Department erred by excluding

two U.S. sales which occurred outside the POR. Although Samwon

acknowledges that, traditionally, the Department uses the sales date as

a basis for a review, Samwon notes that the products covered by these

sales entered the United States within the POR. Additionally, Samwon

points out that it did not participate in the prior (eighth review);

thus there is no risk of analyzing certain transactions twice.

Petitioners object to the inclusion of sales that fall outside the

POR. They point out the Samwon could have participated in the prior

review but decided against it. Additionally, petitioners urge the

Department to continue its traditional policy of including sales within

the POR using the date of sale and not the date of entry.

Department's Position: We disagree with Samwon. Samwon voluntarily

chose not to participate in the eighth administrative review and,

therefore, forfeited the opportunity to have those sales reviewed.

Because the use of date of sale, rather than date of entry, as a basis

for inclusion in a POR has been the Department's longstanding policy in

this case, we have retained this methodology in these final results

(see Color Picture Tubes from Republic of Korea, 52 FR 44186 (Nov. 18,

1987)).

Final Results of Review

Based on our analysis of comments received, and the correction of

certain clerical errors, we have revised our preliminary results. We

determine the final margins for the period April 1, 1991, through March

31, 1992, to be:

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

Margin

Manufacturer/Exporter percentage

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

Daewoo Electronics Co., Ltd................................. 1.23

Goldstar Electronics Co., Ltd............................... 0.00

Samwon Electronics, Inc..................................... 0.53

Cosmos Electronics Manufacturing Korea...................... 16.57

Quantronics Manufacturing Korea, Ltd........................ \1\3.63

Samsung Electronics Co., Ltd................................ \1\0.37

Tangkook General Electronics, Inc........................... 16.57

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

\1\No shipments; rate from previous review.

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 percentages stated

above. The Department will issue appropriate appraisement instructions

directly to 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 Tariff Act: (1) The cash deposit rate for the reviewed

companies will be as outlined above except for Samsung, which will have

a cash deposit of zero percent, since its rate is de minimis; (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 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.

On March 25, 1993, the Court of International Trade (CIT), in

Floral Trade Council v. United States, Slip Op. 93-79, and Federal-

Mogul Corporation v. United States, Slip Op. 93-83, 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 of clerical errors or as a

result of litigation) in proceedings governed by antidumping duty

orders.

Because this proceeding is governed by an antidumping duty order,

the ``all others'' rate for the purposes of this review will be 13.90

percent, the ``all others'' rate established in the LTFV investigation

(49 FR 7620, March 1, 1984).

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

This notice also serves as a 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 orders (APOs) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34.(d). Timely written notification

of the return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

This administrative review and notice are in accordance with

section 751(a)(1) of the Tariff Act and 19 CFR 353.22.

Dated: March 17, 1994.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-6844 Filed 3-22-94; 8:45 am]

BILLING CODE 3510-DS-M