Notice of Final Determination of Sales at Less Than Fair Value: Defrost Timers From Japan

DEPARTMENT OF COMMERCE

[A-588-829]

Notice of Final Determination of Sales at Less Than Fair Value:

Defrost Timers From Japan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: January 13, 1994.

FOR FURTHER INFORMATION CONTACT: Bill Crow, Office of Antidumping

Investigations, Import Administration, International Trade

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

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

0116.

FINAL DETERMINATION: We determine that defrost timers from Japan are

being, or are likely to be, sold in the United States at less than fair

value, as provided in section 735 of the Tariff Act of 1930, as amended

(the Act). The estimated margin is shown in the ``Suspension of

Liquidation'' section of this notice.

Case History

Since the preliminary determination of sales at less than fair

value and the postponement of the final determination in this

investigation on August 24, 1993 (58 FR 44655, August 24, 1993), the

following events have occurred. On September 15, 1993, Sankyo Seiki

Manufacturing Co. Ltd. (Sankyo) submitted its response to the

Department's second deficiency letter. On September 30, 1993, the

Department sent Sankyo the agenda outlining the format of the

Department's verification of Sankyo's responses. From October 18

through October 22, 1993, the Department conducted the verification of

Sankyo's questionnaire response in Japan. On November 26, 1993,

petitioner submitted its case brief in this investigation. On December

2, 1993, Sankyo submitted its rebuttal brief in this investigation.

Scope of Investigation

For purposes of this investigation, defrost timers are electro-

mechanical and electronic defrost timers for residential refrigerators.

Electro-mechanical defrost timers are comprised of several components

that make or break electric circuits by activating two sets of

electrical contact points--one to disconnect the compressor (the

cooling mechanism) and the other to connect the defrost heater. The

articles are equipped with a synchronous or subsynchronous motor. The

defrost timer disconnects the compressor by opening an electrical

circuit after the compressor itself has run for a length of time

predetermined by the manufacturer depending on the specifications of

the model. Upon completion of the compressor run cycle (and

simultaneously with the compressor's disconnection) the defrost heater

is activated and runs for a preset time (again depending on the model),

as predetermined by the manufacturer. Electronic defrost timers have a

similar function but operate with greater efficiency. This is because a

microprocessor in the device uses information gathered during the

defrost cycle to adjust the compressor run time. This system defrosts

only when needed, thereby improving the efficiency of the refrigerator.

The defrost timers subject to this investigation are currently

classifiable under subheading 9107.00.4000 of the Harmonized Tariff

Schedule of the United States (HTSUS). The HTSUS subheadings are

provided for convenience and customs purposes. The written description

of the scope of this investigation is dispositive.

Period of Investigation (POI)

We initiated this investigation using a six-month POI from July 1,

1992, through December 30, 1992. In order to capture U.S. sales made

pursuant to long-term contracts, we expanded the POI to include two

additional six-month periods (i.e., April 30-September 30, 1991, and

October 1, 1991-March 31, 1992). Respondent reported home market sales

in these periods to correspond to U.S. sales contracted in July 1991

and January 1992, respectively (see memorandum from Richard Moreland to

Barbara Stafford dated June 4, 1993).

Best Information Available

We have determined, in accordance with section 776(b) and 776(c) of

the Act, that the use of best information available (BIA) is

appropriate for sales of subject merchandise in this investigation. In

deciding whether to use BIA, section 776(b) provides that the

Department shall use BIA if it is unable to verify the accuracy of the

information submitted. Further, section 776(c) provides that the

Department may take into account whether the respondent was able to

produce information requested in a timely manner and in the form

required. In this case, Sankyo did not do so.

The Department also took into consideration whether or not the

respondent cooperated with the Department. In this case, while its

submissions contained significant deficiencies, and could not be

completely verified, the respondent was cooperative. As BIA for Sankyo,

we are assigning the average margin contained in the petition, in

accordance with the two-tiered BIA methodology under which the

Department imposes a less adverse rate upon those respondents that

cooperate in the proceeding. The Department's two-tier methodology for

assigning BIA based on the degree of respondents' cooperation has been

upheld by the U.S. Court of Appeals for the Federal Circuit. (See

Allied-Signal Aerospace Co. v. the United States, Appeal No. 93-1049

(Fed. Cir. June 22, 1993); see also Krupp Stahl AG. et al v. the United

States, 822 F. Supp. 789 (CIT May 26, 1993).) The average of the

margins contained in the petition is 83.67 percent. For a more detailed

discussion of the Department's decision to use BIA in this case, see

the December 16, 1993, memorandum from David Binder to Barbara

Stafford.

Interested Party Comments

Comment 1: Petitioner argues that due to the various discrepancies

and deficiencies discovered by the Department at verification, the

Department should use the dumping margins calculated in the petition as

BIA. Petitioner bases its request for the use of BIA on the portion of

home market sales omitted from respondent's sales listing, the improper

matching of certain U.S. and home market models, the unverifiable

assembly costs included in the difference in merchandise (difmer)

adjustment, the unverifiable warranty expenses, and the pattern of

contracting which existed for home market sales and which called into

question respondent's reported home market sales.

Respondent, on the other hand, argues that the Department should

reject petitioner's request for the use of BIA across the board because

respondent has cooperated in the investigation and because the large

majority of its response has been verified as complete. Therefore,

respondent requests that the Department limit the use of BIA only to

those instances where deficiencies or discrepancies were found during

verification.

DOC Position: We agree with petitioner. We learned at verification

of home market sales which respondent omitted from its reported

database. In addition, we discovered that respondent had eliminated

many sales because it believed them not to be subject to the

investigation based on the channel of trade and/or ultimate use of the

timer models in question; however, respondent had not disclosed these

eliminations in its responses to the Department's questionnaire.

Because of these late revelations, the Department was not able to

structure verification to scrutinize thoroughly these unreported sales.

We also established that a pattern of contracting existed for home

market sales which raises questions as to the validity of respondent's

determination of home market date of sale. The use of contract dates in

the home market, rather than the reported order entry dates, would

change completely the selection of transactions used to calculate

foreign market value. In combination with other discrepancies, these

problems call into question the reliability of the home market

database.

We also learned at verification that a very significant portion of

U.S. products representing a majority of U.S. sales had not been

matched correctly to home market models in accordance with the

instructions contained in Appendix V of the Department's questionnaire.

The Department cannot be responsible for rematching this large

percentage of the total data base. Further, the mismatched U.S. models

could only be re-matched to a limited set of similar home market sales

for which no difmer information had been provided by respondent.

Therefore, the majority of U.S. sales would be subject to some form of

BIA. In combination with other discrepancies, these problems call into

question the reliability of the entire U.S. database. Due to the number

and extent of the discrepancies discovered at the verification, the

Department is basing the final determination in this investigation on

BIA.

In spite of the outcome at verification, we find that the

respondent cooperated in this investigation. The numerous mistakes,

omissions and deficiencies which were not corrected, clarified or

amplified in a timely manner require the use of BIA. While some of

these deficiencies, by themselves, may not have led to the use of total

BIA, the collective discrepancies and deficiencies discovered at

verification undermine the basic reliability of the submitted

information.

Given the Department's use of BIA, other comments submitted by the

parties in their briefs in this investigation are moot, and will not be

addressed in this notice.

Continuation of Suspension of Liquidation

In accordance with section 735 of the Act, we are directing the

Customs Service to continue to suspend liquidation of all entries of

defrost timers produced or exported from Japan, that are entered, or

withdrawn from warehouse, for consumption on or after August 24, 1993.

The Customs Service shall require a cash deposit or posting of a bond

equal to the estimated final dumping margin, as shown below. The

suspension of liquidation will remain in effect until further notice.

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

Margin

Manufacturer/producer/exporter percentage

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

Sankyo Seiki Manufacturing Co. Ltd.......................... 83.67

All others.................................................. 83.67

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

International Trade Commission Notification

In accordance with section 735(d) of the Act, we have notified the

International Trade Commission (ITC) of our determination.

Notification to Interested Parties

This notice also serves as the only reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the return or destruction of proprietary information

disclosed under APO in accordance with 19 CFR 353.34(d). Failure to

comply is a violation of the APO.

This determination is published pursuant to section 735(d) of the

Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).

Dated: January 6, 1994.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-891 Filed 1-12-94; 8:45 am]

BILLING CODE 3510-DS-P