Ceramic Tile From Mexico; Final Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

[C-201-003]

Ceramic Tile From Mexico; Final Results of Countervailing Duty

Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of countervailing duty administrative

review.

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SUMMARY: On November 10, 1994, the Department of Commerce (the

Department) published in the Federal Register its preliminary results

of administrative review of the countervailing duty order on ceramic

tile from Mexico (59 FR 56057) for the period January 1, 1992 through

December 31, 1992. We have now completed this review and determine the

total bounty or grant to be zero or de minimis for 32 companies, and

2.08 percent ad valorem for all other companies. In accordance with 19

CFR 355.7, any rate less than 0.5 percent ad valorem is de minimis. We

will instruct the U.S. Customs Service to assess countervailing duties

as indicated above.

EFFECTIVE DATE: April 14, 1995.

FOR FURTHER INFORMATION CONTACT: Gayle Longest or Kelly Parkhill,

Office of Countervailing Compliance, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, NW., Washington, DC 20230; telephone:

(202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

On November 10, 1994, the Department published in the Federal

Register (59 FR 56057) the preliminary results of its administrative

review of the countervailing duty order on ceramic tile from Mexico (47

FR 20012; May 10, 1982). The Department has now completed this

administrative review in accordance with section 751 of the Tariff Act

of 1930, as amended (the Act).

We invited interested parties to comment on the preliminary

results. On December 12, 1994, a case brief was submitted by Ceramica

Regiomontana, S.A., a producer of the subject merchandise which

exported ceramic tile to the United States during the review period

(respondent).

The review period is January 1, 1992, through December 31, 1992.

This review involves 33 companies and the following programs:

(1) BANCOMEXT Financing for Exporters;

(2) The Program for Temporary Importation of Products used in the

Production of Exports (PITEX);

(3) Other BANCOMEXT preferential financing;

(4) Other Dollar-Denominated Financing Programs;

(5) Fiscal Promotion Certificates (CEPROFI);

(6) Import duty reductions and exemptions;

(7) State tax incentives;

(8) Article 15 Loans;

(9) NAFINSA FONEI-type financing; and

(10) NAFINSA FOGAIN-type financing.

In accordance with the recent Court of International Trade (CIT)

decision in Ceramica Regiomontana, S.A. et al. v. United States, Slip

Op. 94-74, the Department is changing the rate of 2.55 percent ad

valorem preliminarily assigned to Ceramica Regiomontana to the country-

wide rate of 2.08 percent ad valorem.

Applicable Statute and Regulations

The Department is conducting this administrative review in

accordance with section 751(a) of the Act. Unless otherwise indicated,

all citations to the statute and to the Department's regulations are in

reference to the provisions as they existed on December 31, 1994.

Scope of Review

Imports covered by this review are shipments of Mexican ceramic

tile, including non-mosaic, glazed, and unglazed ceramic floor and wall

tile. During the review period, such merchandise was classifiable under

the Harmonized Tariff Schedule (HTS) item numbers 6907.10.0000,

6907.90.0000, 6908.10.0000, and 6908.90.0000. The HTS item numbers are

provided for convenience and Customs purposes. The written description

remains dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

We calculated the total bounty or grant on a country-wide basis by

first calculating the bounty or grant for each company subject to the

administrative review. We then weight-averaged the rate received by

each company using as the weight its share of total Mexican exports to

the United States of the [[Page 19022]] subject merchandise, including

all companies, even those with de minimis and zero rates. We then

summed the individual companies' weighted-average rate to determine the

total bounty or grant from all programs benefitting exports of the

subject merchandise to the United States.

Since the country-wide rate calculated using this methodology was

above de minimis, as defined by 19 CFR 355.7(1994), we proceeded to the

next step, and examined the total bounty or grant calculated for each

company to determine whether individual company rates differed

significantly from the weighted-average country-wide rate, pursuant to

19 CFR 355.22(d)(3). Thirty-two companies had a significantly different

total bounty or grant during the review period pursuant to 19 CFR

355.22(d)(3). Accordingly, these companies are treated separately for

assessment and cash deposit purposes. All other companies are assigned

the country-wide rate.

Analysis of Comments

Comment 1. As in past reviews, Ceramica Regiomontana contends that

the Department does not have the legal authority to assess

countervailing duties on ceramic tile from Mexico and must terminate

the review. Effective April 23, 1985, the date of the ``Understanding

Between the United States and Mexico regarding Subsidies and

Countervailing Duties'' (the Understanding), Mexico became a ``country

under the Agreement.'' Therefore, Ceramica Regiomontana argues that 19

U.S.C. 1671 requires an affirmative injury determination as a

prerequisite to the imposition of countervailing duties on any Mexican

merchandise imported on or after April 23, 1985. Furthermore, Ceramica

Regiomontana argues that the only applicable statutory authority for

this review would be 19 U.S.C. 1303; however, because Mexico became a

country under the Agreement, the provisions of section 1303 could no

longer apply. Therefore, Ceramica Regiomontana maintains the Department

has no authority to conduct this review and the review should be

terminated.

Department's Position. We fully addressed this issue in a previous

administrative review of this countervailing duty order. See Ceramic

Tile from Mexico; Final Results of Countervailing Duty Administrative

Review (55 FR 50744; December 10, 1990). The CIT and the U.S. Court of

Appeals for the Federal Circuit (Federal Circuit) have sustained the

Department's legal position that Mexican imports subject to an

outstanding countervailing duty order already in effect when Mexico

entered into the Understanding are not entitled to an injury test

pursuant to section 701 of the Act and paragraph 5 of the Understanding

(Ceramica Regiomontana, S.A., et. al v. United States, Slip Op. 96-78,

Court No. 89-06-00323 (May 5, 1994) (Ceramica Regiomontana''); Cementos

Anajuac del Golfo, S.A. v. U.S., 879 F.2d 847 (Fed. Cir. 1989), cert.

denied, 110 S.CT. 1318 (1989)). The countervailing duty order on

ceramic tile from Mexico was published prior to Mexico's entering into

the Understanding and, therefore, imports of ceramic tile are not

entitled to an injury test pursuant to section 701 of the Act.

Comment 2. Ceramica Regiomontana argues that the Department failed

to include zero or de minimis companies in calculating the country-wide

subsidy rate. Ceramica Regiomontana maintains that the Federal Circuit

has ruled on this issue in Ipsco, Inc. v. United States (Ipsco), 899

F.2d 1192, 1197 (Fed. Cir. 1990), and the Department is required to

follow this ruling. According to Ceramica Regiomontana, the Federal

Circuit's interpretation of Ipsco is that ``the country-wide

countervailing duty rate calculation should be made inclusive of those

companies receiving no benefit or de minimis in instances where such

methodology would result in a zero or de minimis rate as well as in

instances where the country-wide countervailing duty rate is greater

than de minimis.'' Ceramica Regiomontana also argues that the CIT has

recently affirmed the Ipsco decision in Ceramica Regiomontana, and that

the Department should follow the CIT's holdings by including de minimis

and zero companies in the calculation of the country-wide rate.

Department's Position. We agree that, pursuant to the CIT's holding

in Ceramica Regiomontana, de minimis and zero rate companies should be

included in the calculation of the country-wide rate. Accordingly, all

33 companies covered by this administrative review have been included

in the calculation of the country-wide rate as stated in the above

section of this notice concerning calculation methodology for

assessment and cash deposit purposes. In accordance with the recent CIT

decision in Ceramica Regiomontana, we are thus assigning the country-

wide rate of 2.08 percent ad valorem to Ceramica Regiomontana.

Comment 3. As in past administrative reviews, Ceramica Regiomontana

contends that the Department incorrectly treated the benefit from the

PITEX program as a grant. According to Ceramica Regiomontana, PITEX

benefits should be calculated as interest-free loans similar to the

Department's treatment of loan duty deferrals under a Peruvian program

in Cotton Sheeting and Sateen from Peru; Final Results of

Administrative Review of Countervailing Duty Order (49 FR 34542).

Ceramica Regiomontana contends that the Department provides no

legal justification for refusing to treat PITEX as an interest-free

loan rather than a grant in Certain Textile Mill Products from Mexico;

Final Results of Countervailing Duty Administrative Review (56 FR

50858). Furthermore, Ceramica Regiomontana argues that the Department

``bases its refusal to calculate PITEX as an interest-free loan on the

difficulty of doing the calculation.'' Ceramica Regiomontana maintains

that although there is no certainty whether a company will ultimately

be exempt from payment of all or a portion of the duty, the deferral

should be treated as a loan rather than a grant in accordance with

legal requirements.

Department's Position. We fully addressed this issue in the

previous administrative review of this case. See Ceramic Tile from

Mexico; Final Results of Countervailing Duty Administrative Review (57

FR 24247; June 8, 1992). Under PITEX, an exporter may temporarily

import machinery for five years. At the end of five years, the exporter

can renew the temporary stay on an annual basis indefinitely. Since

payment of import duties upon conversion to permanent import status is

based on the depreciated value of the equipment at the time it is

converted to permanent import status, the exporter can continue the

temporary import status until the depreciated value of the equipment is

zero and no import duties are owed. Therefore, duty exemptions under

PITEX are properly treated as grants, and we expensed them in full at

the time of importation, when the exporters otherwise would have paid

duties on the imported machinery. Id.; Final Negative Countervailing

Duty Determination; Silicon Metal From Brazil (56 FR 26988). Ceramica

Regiomontana has presented us with no new evidence or arguments on this

issue.

Comment 4. Ceramica Regiomontana argues that the calculation of the

PITEX net subsidy is incorrect, because the Department improperly

divided the PITEX benefit by each company's total exports. Ceramica

Regiomontana contends that since the machinery imported under the PITEX

program may be used to produce products for both the

[[Page 19023]] export and domestic markets, the benefits from the

program should be divided by total sales rather than by total exports.

Furthermore, Ceramica Regiomontana argues that the program does not

limit the use of imported machinery to production for export products

only. According to Ceramica Regiomontana, machinery imported by the

company is used for production of merchandise for both export and

domestic markets. Ceramica Regiomontana claims that the Department's

allocation method in PITEX is incorrect because it does not measure the

benefit of the subsidy to the recipient and the proper method of

allocation would be based on total sales.

Department's Position. We disagree. In order to meet the

eligibility criteria for the PITEX program, a company is required to

have a proven export record, and to use the imported merchandise (both

raw materials and equipment) in the production of goods for export.

Since receipt of benefits under PITEX is tied to the company's exports,

thereby making the program an export subsidy, the proper basis for

allocation of these benefits is total exports, as opposed to total

sales. See Certain Textile Mill Products from Mexico; Final Results of

Countervailing Duty Administrative Review (56 FR 12175, 12178; March

22, 1991).

Final Results of Review

As a result of our review, we determine the total bounty or grant

to be zero or de minimis for the following 32 companies during the 1992

review period and 2.08 percent ad valorem for all other companies. In

accordance with 19 CFR 355.7, any rate less than 0.5 percent ad valorem

is de minimis.

(1) Adrian Sifuentes Jimenez.

(2) Agustin Cedillo Ruiz.

(3) Alejandro Estrada Silva.

(4) Apolonio Arias Vasquez.

(5) Arturo Leija Lucio.

(6) Aurelio Cedillo Ruiz.

(7) Azuelejos Decorativos Carrillo, S.A.

(8) Efrain Medina Carrillo.

(9) Emilio Pacheco.

(10) Faustino Nuncio Silva.

(11) Ima Regiomontana, S.A. de C.V.

(12) Industrias Intercontinental, S.A. de C.V.

(13) Internacional de Ceramica, S.A. de C.V.

(14) Javier Leija Lucio.

(15) Jesus Gallegos Loivares.

(16) Jesus Jimenez Lucio.

(17) Jose Arellano Valdez.

(18) Jose Dolores Hernandez.

(19) Jose Silva Romero.

(20) Juan Cortez Coronel.

(21) Leopoldo Montiel Rincon.

(22) Luis Najera Flores.

(23) Luis Paulino Flores.

(24) Norberto Cuellar Zuniga.

(25) O.H. Internacional, S.A. de C.V.

(26) Pedro Lopez Alonso.

(27) Raul Leija.

(28) Recubrimientos Mezquital, S.A. de C.V.

(29) Ricardo Berrones.

(30) Taller de Azuelejos Coloniales.

(31) Vicente Jalomo Reyna.

(32) Zenon Cortez Coronel.

Therefore, the Department will instruct the Customs Service to

liquidate, without regard to countervailing duties, entries of the

subject merchandise from Mexico exported by the 32 companies listed

above for the period on or after January 1, 1992, and on or before

December 31, 1992, and to assess countervailing duties of 2.08 percent

of the f.o.b. invoice price of shipments from all other companies for

the same period.

The Department will instruct the Customs Service to collect cash

deposits of zero estimated countervailing duties for the 32 companies

listed above and 2.08 percent ad valorem estimated countervailing

duties, as provided by section 751(a)(1) of the Act, on shipments of

this merchandise from all other companies entered, or withdrawn from

warehouse, for consumption on or after the date of publication of this

notice. This deposit requirement shall remain in effect until

publication of the final results of the next administrative review.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19 CFR 355.22 and

19 CFR 355.25.

Dated: April 7, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-9275 Filed 4-13-95; 8:45 am]

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