Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, from the People's Republic of China; Final Results of Antidumping Duty Administrative Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-803]

Heavy Forged Hand Tools, Finished or Unfinished, With or Without

Handles, from the People's Republic of China; Final Results of

Antidumping Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

reviews.

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SUMMARY: On April 20, 1995, the Department of Commerce (the Department)

published the preliminary results of the administrative reviews of the

antidumping duty orders on heavy forged hand tools, finished or

unfinished, with or without handles, (HFHTs) from the People's Republic

of China (PRC). The reviews cover two exporters of the subject

merchandise to the United States and the period February 1, 1992,

through January 31, 1993. We gave interested parties an opportunity to

comment on our preliminary results. Based on our analysis of the

comments received, we have changed the results from those presented in

the preliminary results of reviews.

EFFECTIVE DATE: September 22, 1995.

FOR FURTHER INFORMATION CONTACT: Karin Price or Maureen Flannery,

Office of Antidumping Compliance, Import Administration, International

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

Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)

482-4733.

SUPPLEMENTARY INFORMATION:

Background

On April 20, 1995, the Department published in the Federal Register

(60 FR 19723) the preliminary results of the administrative reviews of

the antidumping duty orders on HFHTs from the PRC (56 FR 6622, February

19, 1991). The Department has now completed these administrative

reviews in accordance with section 751 of the Tariff Act of 1930, as

amended (the Act).

Applicable Statute and Regulations

Unless otherwise stated, all citations to the statute and to the

Department's regulations are references to the provisions as they

existed on December 31, 1994.

Scope of These Reviews

Imports covered by these reviews are shipments of HFHTs from the

PRC comprising the following classes or kinds of merchandise: (1)

hammers and sledges with heads over 1.5 kg. (3.33 pounds) (hammers/

sledges); (2) bars over 18 inches in length, track tools and wedges

(bars and wedges); (3) picks and mattocks (picks/mattocks); and (4)

axes, adzes and similar hewing tools (axes/adzes).

HFHTs include heads for drilling, hammers, sledges, axes, mauls,

picks, and mattocks, which may or may not be painted, which may or may

not be finished, or which may or may not be imported with handles;

assorted bar products and track tools including wrecking bars, digging

bars and tampers; and steel woodsplitting wedges. HFHTs are

manufactured through a hot forge operation in which steel is sheared to

required length, heated to forging temperature and formed to final

shape on forging equipment using dies specific to the desired product

shape and size. Depending on the product, finishing operations may

include shot blasting, grinding, polishing and painting, and the

insertion of handles for handled products. HFHTs are currently provided

for under the following Harmonized Tariff System (HTS) subheadings:

8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically

excluded are hammers and sledges with heads 1.5 kg. (3.33 pounds) in

weight and under, hoes and rakes, and bars 18 inches in length and

under. Although the HTS subheadings are provided for convenience and

customs purposes, our written description of the scope of these

proceedings is dispositive.

These reviews cover two exporters of HFHTs from the PRC, Fujian

Machinery & Equipment Import & Export Corporation (FMEC) and Shandong

Machinery Import & Export Corporation (SMC). The review period is

February 1, 1992, through January 31, 1993.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received joint comments from FMEC, SMC, and

Olympia Industrial Inc., an importer of the subject merchandise,

(together, respondents), and rebuttal comments from Woodings-Verona

Tool Works, Inc., petitioner. At the request of FMEC, SMC, and

petitioner, a hearing was held on June 7, 1995.

Comment 1: Respondents argue that the Indian import statistics for

the period April-December 1992, which the Department used to value

direct materials and packing materials for the preliminary results of

these reviews, are aberrational and should largely be rejected.

Respondents contend that the aberrations in the surrogate values result

from the fact that basket categories were used to value the factor

inputs, that the imports sometimes reflected small import quantities,

and that the import statistics have deviant values. They argue that

other sources for surrogate values should be considered.

According to respondents, although the Department's first choice

for publicly available published information (PAPI) is import

statistics, as import prices theoretically represent the price paid by

producers in the surrogate country, the Department has in past cases

abandoned its reliance on import statistics and PAPI from the primary

surrogate country when they are aberrational and do not fairly

represent the market value of the input. They cite to the Notice of

Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol

from the People's Republic of China (60 FR 22544, May 8, 1995)

(Furfuryl Alcohol), the Notice of Final Determination of Sales at Less

Than Fair Value: Disposable Pocket Lighters from the People's Republic

of China (60 FR

[[Page 49252]]

22359, May 5, 1995) (Lighters), the Final Determination of Sales at

Less Than Fair Value: Coumarin from the People's Republic of China (59

FR 66895, December 28, 1994) (Coumarin), the Notice of Final

Determination of Sales at Less Than Fair Value: Silicon Carbide from

the People's Republic of China (59 FR 22585, May 2, 1994) (Silicon

Carbide), the Notice of Final Determination of Sales at Less Than Fair

Value: Saccharin from the People's Republic of China (59 FR 58818,

November 15, 1994) (Saccharin), and the Notice of Final Determination

of Sales at Less Than Fair Value: Certain Cased Pencils from the

People's Republic of China (59 FR 55625, November 8, 1994) (Pencils).

Respondents contend that, in each of these cases, the Department

determined that the import values in the surrogate country for certain

inputs could not be used because the import values were aberrational,

i.e., too high, when compared to other sources of market value, or

because the quantity imported was small, and used another source of

data to determine the surrogate value, such as export statistics or

price quotations in the surrogate country.

Respondents argue that the Indian import statistics should not be

used for several reasons. First, respondents argue that the use of

import statistics from the period April-December 1992 is arbitrary and

unfair because the statistics were published in September 1993 and

therefore not available at the time the merchandise was sold or the

reviews requested. As a result, respondents complain that the exporters

and importers did not have any knowledge of or control over the values

which would be used to determine the margins.

Second, respondents note that the Indian import statistics do not

reflect data for the period January-March 1992 and that the Department

did not make an adjustment to the data to cover that period.

Respondents argue that, since a significant percentage of the

production of HFHTs took place outside of the period covered by the

Indian import statistics, and all production of picks sold by FMEC took

place in 1991, the Department should use the 1991 Indian import

statistics and carry the figures forward to reflect the appropriate

period, if it decides the Indian import statistics should be used as

the surrogate values. According to respondents, the 1991 statistics

should be adjusted forward, rather than adjusting the 1992 data

backwards, since it is impossible to relate future imports to past

periods.

Third, respondents argue that including data from December 1992

does not reflect the production of HFHTs. They contend that, since

production time is 30-45 days and purchases of raw materials are made

before production, raw materials for shipments made at the end of

December 1992 would need to be purchased no later than November 1992.

Next, respondents contend that the Department's assumption that

imports occur at prices equal to or just below those in the domestic

market does not apply to low-value factors. According to respondents,

since India is a major producer of steel and other HFHT input factors,

it is more reasonable to assume that India's imports represent those

products which India does not make, such as specialty steels or

expensive types of wood. As a result, respondents argue, the basket

categories which were used to determine the surrogate values and which

cover a broad range of products, rather than the basic input factors

used to produce and pack HFHTs, are biased toward higher values.

Respondents also argue that Yugoslavia was erroneously excluded

from several Indian import categories on the basis that it is a non-

market-economy (NME) country. They cite to Tapered Roller Bearings and

Parts Thereof, Finished or Unfinished, from the Republic of Romania;

Final Results of Antidumping Duty Administrative Review (56 FR 1169,

January 11, 1991) as evidence that the Department considers Yugoslavia

to be a market-economy country, and contend that, if Indian import

prices are used for the final results, imports from Yugoslavia should

be included in the calculation.

Last, respondents state that the 1992 Indian import statistics the

Department used for the preliminary results do not show the month in

which the imports were made (they note that the December import

statistics are separately reported). Therefore, respondents contend,

all of the imports could have taken place in November and December, and

they argue that the potential that imports could be grouped in a few

months should cause the Department to disregard those values

particularly when the import quantities are small.

Respondents argue that the surrogate values for the following

factor inputs are aberrational and should be disregarded, and that

other surrogate values, particularly Indian export statistics, should

be used: steel, steel pellets, wood for handles, detergent, resin glue,

paint, varnish, dilution (paint thinner), anti-rust oil, wood for

pallets, nails, cartons, iron straps, plastic straps, synthetic fiber,

plastic bags, anti-rust paper, anti-damp paper, iron wire, iron

buttons, and iron knots. They argue that these values are aberrational

as a result of the change in the average import value between 1991 and

1992, the differences between the export and the import figures, and

the range in quantities and values of imports from various countries.

Petitioner responds that use of Indian import statistics is

reasonable and conforms to long-standing Department practice. It notes

that FMEC and SMC suggested the use of Indian import statistics for a

variety of factors of production, including steel, prior to the

issuance of the preliminary results of reviews.

Petitioner contends that the Department should continue to exclude

Yugoslavia from its calculation of the average Indian import price. It

states that it is unclear whether the newly independent states of

Croatia, Slovenia, and Bosnia-Herzegovina, which were recognized by the

United States and the European Community in April 1992, were market

oriented during the period of review.

Department's Position: As discussed in the Final Determination of

Sales at less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe

Fittings from the People's Republic of China (57 FR 21058, May 18,

1992) (Pipe Fittings), the Department relies on PAPI for surrogate

values. In determining the most appropriate PAPI to use, the Department

prefers import data in the selected surrogate country over export data

because import prices more closely reflect the market price of that

factor in the surrogate country. See our response to comment 15 in the

Final Determination of Sales at Less Than Fair Value: Certain Helical

Spring Lock Washers from the People's Republic of China (58 FR 48833,

September 20, 1993) (Lock Washers), in which we state that any system

of priorities in the selection of surrogate values should result in the

use of import statistics when they are available, and Pencils, in which

the PAPI selected were average non-export values.

Prior to the issuance of the preliminary results of these reviews,

FMEC and SMC suggested the use of Indian import statistics for a number

of direct inputs and packing materials. They did not suggest any other

sources of surrogate values for direct inputs or packing materials,

with the exception of prices for specific imported material inputs.

Petitioner submitted a price quotation in India as a surrogate value

for steel, but did not provide any other surrogate values for direct

inputs or packing materials. The Department selected, for the

preliminary results, the HTS categories recommended by FMEC

[[Page 49253]]

and SMC for certain inputs, including steel, and used Indian import

statistics to value all inputs used to produce the subject merchandise,

as well as all packing materials. In its case brief, respondents

submitted new PAPI, which we returned to the respondents as untimely

filed.

We agree with respondents that prices which are aberrational should

not be used to value the factors of production, and we have in past

cases, such as Saccharin, turned to sources other than import

statistics from the selected surrogate country when certain surrogate

values have been found to be aberrational. Therefore, for these final

results, where we have other sources of market value such as Indonesian

import statistics or U.S. import statistics, we have compared the

Indian import statistics to these sources of market value to determine

whether the Indian import values are aberrational, i.e., too high or

too low. We have also compared the average import values to other

sources of market values if the total quantity imported under a

specific category was small, and, if the value was found to be

aberrational, i.e., too high or too low, we have chosen another

surrogate value.

For these final results, we have continued to use Indian import

statistics for all direct inputs and packing materials, except for the

iron wire, and we have selected the basket categories which most

closely correspond to the inputs being valued. For certain factors, we

have chosen a different HTS category than was used for the preliminary

results. For iron wire, we have found that the Indian import statistics

are aberrational, and have used Indonesian import statistics for the

surrogate values for this factor. Specific factor inputs are discussed

in the following comments.

With respect to respondents' complaint that the ranges of

quantities and values of imports into India result in aberrational

values, we note that imports into any country will reflect imports from

a variety of countries in varying quantities and with varying prices.

This does not mean that the average value derived from those imports is

aberrational. Moreover, there is no basis for rejecting import values

simply because the values are too high or too low. See Lock Washers.

Therefore, we have used the Indian import statistics unless we have

found that the values are aberrational by comparison to other sources

of market value. However, where the quantity imported from a specific

country was insignificant, we have eliminated imports from that country

from the calculation of the surrogate value.

We disagree with respondents' arguments that use of import

statistics from the April-December 1992 period is unfair because they

were not available when the merchandise was sold or the reviews

requested. It is the Department's standard practice to use surrogate

values from a time period which is contemporaneous to the period of

investigation or the period of review. See, e.g., Furfuryl Alcohol, in

which the surrogate value for furfuryl was selected because it was more

contemporaneous than other sources, and the Preliminary Determination

of Sales at Less Than Fair Value: Manganese Metal from the People's

Republic of China (60 FR 31282, June 14, 1995), in which surrogate

values within the period of investigation, or most contemporaneous with

the period of investigation, were selected.

With respect to respondents' arguments that the surrogate values do

not reflect the period January-March 1992 and were not adjusted to

reflect that period, and that production of the subject merchandise

took place prior to the period covered by the import statistics, we

have changed our calculations for the final results to use 1991

surrogate values for production which occurred in 1991, and 1992

surrogate values for production which occurred in 1992.

With regard to respondents' argument that data from December 1992

does not reflect the production of HFHTs, we note that the period of

review covers the period through January 1993. Therefore, for shipments

which occurred in the last month of the period, raw materials purchases

could have taken place in December 1992, since the average production

time is 30-45 days. It is thus appropriate to include imports in this

month in the calculation of the surrogate values. In the event that

there might not have been shipments during January 1993, it would still

be appropriate to include statistics from December 1992 since that

month is in the period of review.

The Department has consistently used basket categories under the

HTS to value factor inputs. In Pipe Fittings, we state that basket

import statistics that closely correspond to the factor input more

accurately reflect the market price of that factor than other sources

of surrogate data. In these reviews, there is no information on the

record regarding more specific sources of surrogate values, with the

exception of the prices of imported materials from market economy

countries for specific factors. We have discussed the use of import

prices in comments 2 and 8 below. Further, there is no evidence on the

record to indicate that any of the factors being valued are of low

value compared to other items in the basket categories, thus biasing

the statistics toward higher values. The Department has selected the

HTS categories which most closely represent the factors being valued,

and, for certain factors, has selected HTS categories other than those

selected in the preliminary results, as discussed in the following

comments.

We agree with respondents that imports from Yugoslavia should not

have been excluded from the calculation of the surrogate values since

Yugoslavia has been treated as a market economy country in past

investigations and reviews. Therefore, for these final results, we have

included imports from Yugoslavia in our calculations of the surrogate

values.

We disagree with respondents that the potential that imports could

be grouped in a few months should cause the Department to disregard

certain import statistics. When it uses import statistics, the

Department bases the surrogate values on imports over a certain period,

and does not perform an analysis of when those imports occurred.

However, we agree with respondents' concern about small import

quantities, and have, when the import volume is small, compared the

import value to other sources of surrogate values to determine whether

the value is aberrational.

Comment 2: Respondents argue that the import statistics used to

determine the surrogate value for steel do not provide a statistically

valid basis on which to calculate an average value because of the small

quantity of imports during the time period. According to respondents,

the small quantity of steel imported for that HTS category, 7213.49.09,

makes the statistics vulnerable to distortion because a shift of the

product mix within the HTS category could have a dramatic effect on the

per-unit calculations. Moreover, respondents contend that the Indian

import statistics for this category have experienced tremendous shifts

over different periods, resulting in significant changes in the average

value between 1991 and 1992 and demonstrating that the average values

are unreliable and aberrational. They note that the average import

value in 1991 was less than half the average import value in 1992.

Furthermore, respondents contend that there is a huge disparity

between the Indian import and export statistics for steel, stating that

a comparison between the import and export prices shows that the import

statistics are aberrational.

[[Page 49254]]

Instead of the Indian import statistics, respondents have suggested

the following alternative surrogate values which they claim fall within

a range of prices which are reasonably comparable with each other: the

prices of imported steel used by the HFHT factories, Indian export

values, Indonesian export values, world steel prices (such as Japanese

export prices to the PRC), and lastly, if the Department continues to

use Indian import statistics to value steel, Indian imports of HTS

category 7214.50, which respondents claim is the HTS category best

covering the steel used to produce HFHTs.

Petitioner notes that, in their supplemental questionnaire

responses, FMEC and SMC urged the use of steel import values, and

contends that they are now attempting to pick the best surrogate values

from around the world. Petitioner argues that the official Indian

import statistics for steel are reasonable, and that the data submitted

by petitioner on actual steel prices for the specific type and grade of

steel used for manufacturing HFHTs closely correspond to the import

values. Petitioner cites to Coumarin, where the Department noted its

strong preference for using surrogate country import statistics as the

best PAPI, despite the fact that, in that case, the Department rejected

import statistics in favor of more specific and reliable price

quotations. Petitioner notes that, in this case, the Indian import

prices used by the Department in the preliminary results are consistent

with the price quotations submitted by petitioner to the record of

these reviews, covering the specific categories of steel used to

produce HFHTs. According to petitioner, these price quotations are the

next best surrogate data after the Indian import statistics.

Petitioner contends that all other possible surrogate values

offered by respondents should be rejected. Petitioner argues that the

import prices should not be used because there was no evidence on the

record regarding which products were produced from imported steel and

which were produced from domestically-produced steel. Moreover, it

notes that only one factory used imported steel in its production.

Also, according to petitioner, Indian export values are unreliable

because they do not represent home market consumption in India and the

vast majority of these exports are to countries not at a level of

economic development comparable to the PRC. Petitioner also argues that

Indonesian export prices should be rejected as Indonesia is the last of

the five countries selected by the Department as possible surrogate

countries. Petitioner rejects the use of world market prices as

reported in the American Metal Market, arguing that the prices

contained therein vary significantly by grade and type and, therefore,

have no relation to the type of steel used to produce HFHTs. Petitioner

also rejects the use of Japanese prices. Finally, petitioner argues

that the Department used the proper tariff heading, HTS category

7213.49.09, in valuing steel, and that the HTS category suggested by

respondents, 7214.50, is incorrect because it includes bars already

forged, noting that respondents perform the forging in the production

of HFHTs. Petitioner states that there is no evidence to show that HTS

category 7213.49.09 covers steel in wound coil form which is more

expensive than the bar steel used to produce HFHTs.

Department's Position: For the preliminary results of reviews, we

used HTS category 7213.49.09, bars and rods containing more than 0.25

percent but less than 0.60 percent carbon in wound coils, to value the

steel bars used to produce HFHTs, as suggested by FMEC, SMC, and

petitioner. However, we have determined that, since this category

covers steel in wound coils, it does not cover the cut-to-length steel

bars used to produce HFHTs. Instead, for the final results, we have

used Indian import statistics and HTS category 7214.50, forged bars and

rods containing more than 0.25 percent carbon but less than 0.60

percent carbon, to determine the surrogate value for steel. We have

determined that this HTS category is more specific to the cut-to-length

steel bars used to produce the subject merchandise.

Because the quantities imported into India under HTS category

7214.50 were not large in 1991 and 1992, we compared the steel values

against other sources of market value, i.e., Indonesian import values

and U.S. import values, to determine whether they were aberrational. We

found that the 1992 Indian import value is not aberrational, and have

used this value in our final results. We found that the 1991 value is

aberrational by comparison to Indonesian and U.S. import statistics.

Therefore, for the final results, for the 1991 surrogate value for

steel, we have deflated the 1992 value to 1991 using wholesale price

indices published by the International Monetary Fund. Because we have

been able to use Indian import values in our analysis, we have not

considered the other sources of surrogate values suggested by

respondents.

We did not use the prices of steel imported by the factories

because we do not know what models were produced using the imported

steel or the portion of steel used by the factories which was imported.

Comment 3: Respondents argue that detergent used for cleaning and

pellets used to remove the oxidation from the surface of the tool heads

are considered by the factories, and should be considered by the

Department, to be part of factory overhead, as these items are not

physically incorporated into the finished product. They also note that

the pellets are recycled until they are pulverized. Respondents cite to

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

Certain Paper Clips From the People's Republic of China (59 FR 51168,

October 7, 1994) (Paper Clips) as evidence for their position.

Respondents contend that, if the Department determines that the steel

pellets are a direct factor input, the steel pellets should be valued

as scrap, as the pellets are made from scrap steel bought locally.

Department's Position: We agree with respondents that pellets and

detergent should be considered as factory overhead, and have changed

our analysis accordingly. These items are used for the purposes of

removing oxidation from the tool heads and for cleaning the tool heads,

and are not physically incorporated into the subject merchandise. As

such, they should not be valued as direct material inputs in the

production of the subject merchandise. This is consistent with the

Department's position in Paper Clips, in which the Department valued

certain inputs as direct materials because they were physically

incorporated into, and became part of, the subject merchandise.

Comment 4: Respondents contend that HTS category 3814, selected for

dilution (paint thinner) for the preliminary results, is too broad, and

argue that the narrower HTS category 3814.00.09 should be selected for

this input.

Department's Position: We agree with respondents. The HTS category

selected for dilution (paint thinner) for the preliminary results, HTS

3814, includes both ``composite solvents and thinners for varnishes and

similar products'' and ``solvents for printing.'' The HTS category

3814.00.09 is specific to solvents and thinners and has been used for

the final results.

Comment 5: Respondents state that the wedges are made by the HFHT

factories from scrap steel generated from the production of the tool

heads, rather than from steel bars. Therefore, respondents argue that

the Department should value the wedges using the HTS category selected

for scrap, rather than

[[Page 49255]]

the HTS category selected for steel. Further, respondents contend that,

since the wedges are produced at the factories, there should be no

adjustment for transportation for this input.

Department's Position: We agree with respondents. The record

indicates that scrap steel resulting from the production process is

used to produce other products which require small pieces. Therefore,

we have adjusted the calculations so that wedges are valued with the

value for scrap. Since these items are made at the factory, we have not

made an adjustment for freight costs for this input.

Comment 6: Respondents argue that the packing costs determined by

the Department are too high and clearly do not represent reasonable

packing costs. According to respondents, the materials used to pack

HFHTs are generally low-value items which are discarded once the

shipments reach the importer's site. Respondents contend that deriving

the cost of packing from surrogate values leads to erroneous results

and that the use of basket categories biases the values toward high

average values.

Respondents note that, in comparable cases, packing rates were 1-2

percent of production costs. Respondents cite as evidence Chrome-Plated

Lug Nuts from the People's Republic of China; Preliminary Results of

Antidumping Duty Administrative Review (60 FR 19719, April 20, 1995)

(Lug Nuts I), where a rate of 1 percent of production costs was used as

the best information available (BIA), and Lock Washers, in which the

petitioner stated that its packing costs were 2 percent of its

production costs.

Petitioner responds that there is no support on the record to show

that the purportedly high packing costs result from surrogate country

data which are unreliable because the packing materials are low-value

inputs. Petitioner also states that it is irrelevant that packing costs

are lower in the two cases cited by respondents because each case is

fact specific. Moreover, petitioner argues that the supposed

aberrations in the Indian import data do not justify rejecting valid

data published by the Indian government.

Department's Position: We disagree with respondents that we should

not use surrogate values to calculate packing costs. It is the

Department's standard practice to use surrogate values to value packing

costs. See, e.g., the Notice of Preliminary Determination of Sales at

Less Than Fair Value and Postponement of Final Determination: Certain

Partial-Extension Steel Drawer Slides With Rollers from the People's

Republic of China (60 FR 29571, June 5, 1995) and Pencils, for which

Indian import statistics were used to value packing materials.

Moreover, in Lock Washers, the Department valued packing materials

using Indian import statistics. We further note that, in the

administrative review of lug nuts from the PRC subsequent to that cited

by respondents, factors data for packing were on the record of the

review and were used to determine packing costs (Chrome-Plated Lug Nuts

from the People's Republic of China; Preliminary Results of Antidumping

Duty Administrative Review (60 FR 42504, August 16, 1995) (Lug Nuts

II).

For these reviews, unlike Lug Nuts I, the information needed to

calculate packing costs using surrogate values is on the record.

Therefore, for the final results, we have continued to value these

packing inputs using surrogate values. However, as discussed in our

response to comment 1 above, and in our responses to comments 7-11

below, we have made adjustments in the valuation of packing materials

for the final results.

See our response to comment 1 regarding respondents' complaint

about the use of basket categories.

Comment 7: Respondents argue that the Department should abandon its

factor methodology for valuing the pallets based on the costs of the

wood and the nails used to construct the pallets, and, instead, should

determine a separate price for pallets. Respondents argue that the cost

of a pallet as calculated by the Department is much higher than the

cost to purchase a pallet in the United States.

Petitioner responds that the fact that the Department calculated a

pallet cost which is substantially more than the cost of a wood pallet

in the United States is irrelevant to the price of pallets in India or

the PRC.

Department's Position: We agree with respondents that we should

value the pallets separately, rather than valuing both the wood and the

nails used to make the pallets. To value the pallets, we have used

Indian import statistics and HTS category 4415.10, packing cases,

boxes, crates, drums, and similar packings of wood, which was suggested

by FMEC and SMC in their supplemental questionnaire responses prior to

the preliminary results.

Comment 8: Respondents argue that the HTS category selected to

value the cartons is too broad a category to determine a specific value

for the cartons, and that a more specific price should be used. They

note that two of the HFHT factories used imported cartons, and that the

Department used the price of the imported cartons to value cartons for

only one of those factories. They further state that the surrogate

value is roughly three times higher than the value of the imported

cartons, and argue that the price of the imported cartons should be

used as a benchmark.

Department's Position: We disagree with respondents. We have

continued to use for the final results the HTS category selected for

the preliminary results of these reviews, HTS category 4819.10. There

is no information on the record to indicate that either of the two

narrower HTS categories, 4819.10.01, boxes of corrugated paper and

paperboard, or 4819.10.09, cartons and cases of corrugated paper and

paperboard, are more specific to this input. Therefore, we have valued

the cartons using the broader HTS category 4819.10.

As discussed above in our response to comment 2, we have used

import prices where we knew the percentage of the imported material to

the total material purchased. Therefore, for one factory, we were able

to use the price of the imported cartons to value the cartons. As

mentioned by respondents, another factory also used imported cartons.

Since the price paid by this factory for the imported cartons was in

Chinese currency, we were unable to use this price.

Comment 9: Respondents argue that the categories selected to value

the iron straps and the plastic straps are too broad and the variations

in the Indian import statistics for these categories too great to

reflect reasonable values for these factor inputs, and contend that an

alternative source of valuation must be found. Further, according to

respondents, imports from Yugoslavia were incorrectly excluded from the

calculation of the average import value.

Department's Position: We agree with respondents that imports from

Yugoslavia were incorrectly excluded from the calculation of the

plastic strap, and have included such imports in our calculation of the

surrogate value for the final results. We note, however, that

respondents have not suggested an alternative HTS category or source

for valuing the plastic strap, and, for the final results, we have

continued to use the value selected for the plastic strap for the

preliminary results.

Prior to the preliminary results, FMEC and SMC suggested HTS

categories 7216.21.00 and 7216.60.01, angles, shapes and sections of

hot-rolled steel and of cold-rolled steel to value the iron straps; the

Department selected HTS category 7216.90.01, other angles, shapes and

sections, as the appropriate category for iron straps for the

[[Page 49256]]

preliminary results. There is no information on the record to indicate

which of these categories better covers the iron straps. Since

respondents have not provided evidence to indicate that the HTS

categories FMEC and SMC suggested are more appropriate, and since their

brief simply indicates that an alternative source of valuation must be

found since the category selected is too broad, without identifying an

alternative source, we have continued to use the same category we

selected for the preliminary results for the iron strap. Moreover,

there is no indication that the HTS categories suggested by FMEC and

SMC would be any less broad than that selected by the Department.

Comment 10: Respondents argue that the Department made significant

errors in valuing the synthetic fiber (PVC bags) by inaccurately

determining the weight of the bags, and contend that the calculation

should be corrected.

Petitioner asserts that the respondents have not alleged that the

information on which the Department based its calculation was wrong,

but merely that the Department reached a different conclusion from

respondents.

Department's Position: We agree with respondents, and have

reweighed the synthetic fiber and adjusted the calculations

accordingly.

Comment 11: Respondents argue that six materials used to pack HFHTs

are incidental items and that their collective values are extremely

small or de minimis. These materials are plastic bags, anti-rust paper,

anti-damp paper, iron wire, iron buttons, and iron knots. Respondents

argue that the use of basket categories to value these items makes

their individual and collective values significant.

Respondents further argue that the anti-damp paper and the anti-

rust paper are de minimis items which should be eliminated from the

Department's calculations. Although they do not disagree with the HTS

categories selected, they note that the aberrational values for these

HTS categories indicate that the HTS categories include many items

other than those being valued.

Respondents contend that the Department selected too broad a

category for the plastic bags, inaccurately determined the weight of

the plastic bags, and incorrectly excluded imports from Yugoslavia from

the calculation.

Furthermore, according to respondents, the HTS category selected

for the iron wire is too broad, and the iron wire was inaccurately

weighed for the preliminary results. They also argue that the HTS

categories selected for the iron knots and the iron buttons are too

broad.

Petitioner responds that the record shows that anti-damp paper and

anti-rust paper are not de minimis factors in India. Petitioner also

states that it is impossible to reweigh the plastic bags at this point

in the process, and that FMEC and SMC should have provided additional

information regarding the weights of these items with their

questionnaire responses or at verification.

Department's Position: We disagree with respondents that certain

factor inputs should be eliminated from the analysis because of their

small value. The items identified by respondents as being incidental

items are all materials used to pack the subject merchandise, and, as

such, they should be valued.

We agree with respondents that the HTS categories selected for the

plastics bags and the iron wire were incorrect. We have used, for the

final results, the categories suggested by the respondents, HTS

category 3923.21 for the plastic bags and HTS category 7217.90 for the

iron wire. However, we have found that the Indian import statistics for

the iron wire are aberrational, and have used Indonesian import

statistics to determine the surrogate values for the iron wire for

these final results. Moreover, as samples of these items were provided

to the Department prior to the issuance of the preliminary results of

reviews, we have reweighed these items and have adjusted our

calculations accordingly. We also agree that imports from Yugoslavia

should be included in the calculation of the average import values;

however, we note that there were no imports into India from Yugoslavia

in 1991 or 1992 under the HTS category for plastic bags selected for

the final results.

We have continued to use the same HTS categories selected for the

preliminary results for the anti-damp paper, the anti-rust paper, the

iron buttons and the iron knots. We note that we used the categories

suggested by the respondents prior to the preliminary results for the

anti-damp paper and the anti-rust paper, and that respondents did not

suggest a category for the iron buttons. For the iron knots, we have

selected HTS category 8309.90.09, other packing accessories of base

metal, rather than the HTS category suggested by respondents,

7326.90.09, other articles of iron or steel, because it is more

specific to the packing input being valued.

Comment 12: Respondents contend that the labor rates and the fringe

benefit and bonus rates used by the Department in its preliminary

results, collected from the Business International Corporation (BIC)

report IL&T India, released November 1992, appear to reflect wage rates

in urban areas, while the Chinese HFHT factories are located in rural

areas. They note that the BIC is a non-government organization which

provides estimates of Indian labor rates based on available data. The

respondents state that they do not contest the estimated wage rates

used by the Department in its preliminary results, as they believe that

they are comparable to those used by the Department in other cases,

such as Lighters and Furfuryl Alcohol, but argue that the adjustment

for fringe benefits and bonuses should be reduced to those required by

Indian law.

Petitioner responds that the respondents' assertion that the labor

rates reported in IL&T India appear to reflect wages in urban areas is

without citation or support, and that there is no evidence on the

record to suggest that these data are inappropriate for valuing labor.

It contends that the respondents' suggested bonus rates are based

solely on the mandatory statutory bonus rates and do not reflect any

amounts for fringe benefits paid in India or any benefits privately

negotiated between employers and employees. It notes that there could

easily be benefit levels beyond the statutory minimum requirements.

Petitioner further notes that respondents do not contest the use of

wage rates from the same publication from which these fringe benefit

and bonus rates were obtained. Petitioner further contends that the

wage rates used in Lighters and Furfuryl Alcohol are irrelevant to this

case because these industries are not comparable to the HFHT industry

and because the surrogate country used in those cases was Indonesia.

Department's Position: We disagree with respondents. Respondents

have not placed any information on the record to demonstrate that the

labor rates used in our preliminary results reflect wage rates in

urban, rather than rural, areas. Moreover, we agree with petitioner

that there could be benefit levels beyond what is statutorily required.

The data provided by the BIC with respect to fringe benefits and

bonuses provide an estimate of what is actually paid, and is therefore

more indicative of actual fringe benefits and bonuses paid to workers

in India than the minimum requirements of Indian law. Since the

surrogate values should reflect actual costs in the surrogate country,

we have continued to use the wage rates and the fringe benefit and

bonus rates used in the preliminary results, rather than the

[[Page 49257]]

minimum requirements of Indian law, as suggested by respondents.

Comment 13: Respondents argue that the surrogate values for

electricity and coal should be adjusted to account for the period

during which picks sold by FMEC were produced.

Department's Position: We agree with respondents. As discussed

above in our response to comment 1, we have valued production occurring

in 1991 using 1991 values, and production occurring in 1992 using 1992

values. Accordingly, all inputs for merchandise produced in 1991 have

been valued using 1991 values, not just coal and electricity.

Comment 14: Respondents argue that the Department erred in

determining the amounts of scrap and waste which were sold, and should

recalculate these amounts. According to respondents, the amounts

reported in the questionnaire responses as total scrap and waste

collected were verified and represent scrap sold.

Department's Position: We agree with respondents. As discussed in

FMEC's and SMC's questionnaire responses, the amounts reported as scrap

and waste collected are the amounts of salable scrap. We have adjusted

our calculations to reflect these reported amounts of salable scrap.

Comment 15: According to respondents, the Department should

determine the steel input factor according to the methodology applied

in Lock Washers. Respondents contend that, in that case, the Department

determined the steel input factor by disregarding the scrap and valuing

the steel factor based on the net weight of the finished product plus

the waste. According to respondents, the Department would not have to

determine scrap values with this methodology.

Department's Position: We disagree with respondents. In order to

determine the costs of materials to a producer, we multiply the gross

amounts of the materials used in the production process by the

surrogate values. If the producer sells scrap resulting from the

production process, we allow revenue resulting from that sale as an

offset to the materials costs. Since the value of the scrap which is

sold is less than the value of the material input purchased by the

manufacturer, we calculate the revenue from the sale of scrap by

multiplying the amount of scrap sold by the value of the scrap, and

subtracting that result from the materials costs. Using respondents'

methodology would mean that the scrap is valued at the original input

cost, which would overstate the scrap value.

Comment 16: Respondents recommend that the Department use the rail

rate reported in Doing Business in India--An Economic Profile,

published by the Director, Economic Coordination Unit, Ministry of

External Affairs. According to respondents, this information should be

used because it is official Indian government data, is more current

than the data used for the preliminary results of reviews, and provides

a specific rate on a per-kilometer basis, rather than for a range of

kilometers.

Petitioner responds that the Department should reject the freight

rate suggested by the respondents as it is less detailed than the cable

data used in the preliminary results of these reviews, as well as other

investigations and reviews.

Department's Position: We disagree with respondents. The rail

freight rate suggested by the respondents was submitted to the record

of these reviews after the preliminary results were issued, and

therefore was returned as untimely filed pursuant to section

353.31(a)(3) of the Department's regulations.

Comment 17: Respondents argue that, in those instances where the

distance between a factory and one of its suppliers is not supplied,

the Department should use a simple average of the distances which were

provided, rather than applying the longest distance as BIA. Respondents

contend using the longest distance imposes a burden on small, rural

factories to keep records beyond their abilities and unfairly adds to

the input costs.

Moreover, as mentioned in Comment 5, respondents contend that the

Department should not adjust the factor input for wedges for

transportation as the wedges were made at the factory site from scrap.

In the case of pellets, respondents argue that the Department should

recognize that the pellets were sourced locally and make the adjustment

for transportation accordingly, if the Department does not include

pellets in factory overhead.

Lastly, respondents contend that the factories used their own

trucks to pick up materials from the rail yards, and that expenses

associated with these trucks are considered as overhead by the

factories. Accordingly, they contend that where factory trucks are

used, no adjustment for transportation costs should be made.

Respondents cite to Lock Washers as evidence for their position.

Petitioner responds that use of the longest reported distance

between a factory and one of its suppliers in those instances where no

distances have been reported is reasonable and consistent with past

Department practice.

Department's Position: We disagree with respondents. We have

applied as BIA the longest distance in two situations: first, when the

distance between a factory and its supplier was not reported; and

second, when several suppliers supplied a factory with the input and

the percentage of material purchased from each supplier was not

reported. In their questionnaire responses, FMEC and SMC did not

indicate that they could not provide such information for all factors.

As petitioner states, it is the Department's practice to use the

longest distance in such instances. See, e.g., Pencils and Saccharin,

where the most expensive distance/mode of transportation was used when

a respondent had failed to provide information regarding transportation

between factories and suppliers.

As discussed in our response to comment 12, we agree with

respondents that wedges were made at the factory and have not made an

adjustment for transportation for this input.

We disagree with respondents that certain truck costs should be

considered as factory overhead. There is nothing on the record to

indicate that factory trucks are used to pick up merchandise from the

rail yards.

Comment 18: Respondents argue that, in calculating the average

ocean freight rates for FMEC and SMC for shipments made by non-PRC-

owned ocean freight companies, which have been applied to those sales

for which ocean freight services were provided by PRC-owned companies,

the Department omitted several non-PRC-owned company shipments.

According to respondents, the calculation of the average ocean freight

rates should be revised to include these shipments.

Department's Position: We agree with respondents that there is

additional information on the record regarding ocean freight shipments

provided by non-PRC-owned carriers which was not included in our

preliminary calculation of the average ocean freight rates. Therefore,

for these final results, we have recalculated the average ocean freight

rates using the additional shipments.

Comment 19: According to respondents, the Department should have

calculated the average ocean freight rates for shipments supplied by

non-PRC-owned companies on a weight basis, by dividing the reported

per-piece ocean freight charge by the weight per piece.

Department's Position: We disagree with respondents. We calculated

the

[[Page 49258]]

average ocean freight rate by dividing the ocean freight charge for

each shipment by non-PRC-owned companies by the weight of the finished

product; then, the results were summed for those shipments, and the

total divided by the total number of pieces shipped by non-PRC-owned

companies. This methodology is more accurate than respondents'

methodology because it allocates the weight of each shipment to the

charge for that shipment. Conversely, respondents' methodology, by

which the total of the ocean freight charges for shipments by non-PRC-

owned companies would be divided by the total weight of those

shipments, allocates the weight of each shipment over all ocean freight

charges. Therefore, we have not changed our calculation of the average

ocean freight rates, except to include the additional shipments, as

discussed in our response to comment 18.

Final Results of Reviews

As a result of our reviews, we have determined that the following

margins exist:

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

Margin

Manufacturer/exporter Time period (percent)

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

Fujian Machinery & Equipment Import & Export Corporation

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

Axes/Adzes.............................. 2/1/92-1/31/93 21.92

Bars/Wedges............................. 2/1/92-1/31/93 66.32

Hammers/Sledges......................... 2/1/92-1/31/93 44.41

Picks/Mattocks.......................... 2/1/92-1/31/93 108.20

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

Shandong Machinery Import & Export Corporation

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

Axes/Adzes.............................. 2/1/92-1/31/93 21.92

Bars/Wedges............................. 2/1/92-1/31/93 49.69

Hammers/Sledges......................... 2/1/92-1/31/93 35.57

Picks/Mattocks.......................... 2/1/92-1/31/93 49.64

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

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.

Furthermore, the following deposit requirements will be effective

upon publication of this notice of final results of reviews for all

shipments of HFHTs from the PRC entered, or withdrawn from warehouse,

for consumption on or after the publication date, as provided for by

section 751(a)(1) of the Act: (1) the cash deposit rates for the

reviewed companies named above which have separate rates will be the

rates for those firms as stated above; (2) for all other PRC exporters,

the cash deposit rates will be the rates established in the less-than-

fair-value (LTFV) investigations; and (3) the cash deposit rates for

non-PRC exporters of the subject merchandise from the PRC will be the

rate applicable to the PRC supplier of that exporter. The rates

established in the LTFV investigations are 45.42 percent for hammers/

sledges, 31.76 percent for bars/wedges, 50.81 percent for picks/

mattocks, and 15.02 percent for axes/adzes. These deposit requirements,

when imposed, shall remain in effect until publication of the final

results of the next administrative reviews.

This notice serves as a final reminder to importers of their

responsibility under section 353.26 of the Department's regulations 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 order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with section 353.34(d) of the Department's

regulations. Timely notification of 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.

These administrative reviews and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22

of the Department's regulations.

Dated: September 13, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-23580 Filed 9-21-95; 8:45 am]

BILLING CODE 3510-DS-P