Professional Electric Cutting Tools from Japan; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-588-823]

Professional Electric Cutting Tools from Japan; Preliminary

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to a request by the respondent, Makita Corporation

and Makita U.S.A. Inc. (Makita), the Department of Commerce (the

Department) is conducting an administrative review of the antidumping

duty order on professional electric cutting tools (PECTs) from Japan.

The review covers shipments of the subject merchandise to the United

States during the period July 1, 1994, through June 30, 1995. The

review indicates the existence of dumping margins during the period of

review.

We have preliminarily determined that sales have been made below

normal value (NV). If these preliminary results are adopted in our

final results of administrative review, we will instruct U.S. Customs

to assess antidumping duties equal to the difference between the

constructed export price (CEP) and NV.

Interested parties are invited to comment on these preliminary

results. Parties who submit arguments are requested to submit with each

argument (1) A statement of the issue and (2) a brief summary of the

argument.

EFFECTIVE DATE: September 4, 1996.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor or Maureen Flannery,

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.

Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act), are references to the provisions effective

January 1, 1995, the effective date of the amendments made to the Act

by the Uruguay Round Agreements Act (URAA). In addition, unless

otherwise indicated, all citations to the Department's regulations are

to the current regulations, as amended by the interim regulations

published in the Federal Register on May 11, 1995 (60 FR 25130).

Background

On July 12, 1993, the Department published in the Federal Register

the antidumping duty order on PECTs from Japan (58 FR 37461). On July

3, 1995, the Department published in the Federal Register a notice of

opportunity to request an administrative review of this antidumping

duty order (60 FR 34511). On July 27, 1995, Makita requested that we

conduct an administrative review in accordance with 19 CFR

353.22(a)(1). We published the notice of initiation of this antidumping

duty administrative review on August 16, 1995 (60 FR 42500).

The Department is conducting this review in accordance with section

751 of the Act.

Scope of the Review

The products covered by this review are PECTs from Japan. PECTs may

be assembled or unassembled and corded or cordless.

The term ``electric'' encompasses electromechanical devices,

including tools with electronic variable speed features. The term

``assembled'' includes unfinished or incomplete articles, which have

the essential characteristics of the finished or complete tool. The

term ``unassembled'' means components, which when taken

[[Page 46625]]

as a whole, can be converted into the finished or unfinished or

incomplete tool through simple assembly operations, (e.g., kits).

PECTs have blades or other cutting devices used for cutting wood,

metal, and other materials. PECTs include chop saws, circular saws, jig

saws, reciprocating saws, miter saws, portable bank saws, cut-off

machines, shears, nibblers, planers, routers, joiners, jointers, metal

cutting saws, and similar cutting tools.

The products subject to this order include all hand-held PECTs and

certain bench-top, hand-operated PECTs. Hand-operated tools are

designed so that only the functional or moving part is held and moved

by hand while in use, the whole being designed to rest on a table top,

bench, or other surface. Bench-top tools are small stationary tools

that can be mounted or placed on a table or bench. They are generally

distinguishable from other stationary tools by size and ease of

movement.

The scope of the order includes only the following bench-top, hand-

operated tools: cut-off saws; PVC saws; chop saws; cut-off machines,

currently classifiable under subheading 8461 of the Harmonized Tariff

Schedule of the United States (HTSUS); all types of miter saws,

including slide compound miter saws and compound miter saws, currently

classifiable under subheading 8465 of the HTSUS; and portable band saws

with detachable bases, also currently classifiable under subheading

8465 of the HTSUS.

This order does not include: professional sanding/grinding tools;

professional electric drilling/fastening tools; lawn and garden tools;

heat guns; paint and wallpaper strippers; and chain saws, currently

classifiable under subheading 8508 of the HTSUS.

Parts or components of PECTs when they are imported as kits, or as

accessories imported together with covered tools, are included within

the scope of this order.

``Corded'' and ``cordless'' PECTs are included within the scope of

this order. ``Corded'' PECTs, which are driven by electric current

passed through a power cord, are, for purposes of this order, defined

as power tools which have at least five of the following seven

characteristics:

1. The predominate use of ball, needle, or roller bearings (i.e., a

majority or greater number of the bearings in the tool are ball,

needle, or roller bearings);

2. Helical, spiral bevel, or worm gearing;

3. Rubber (or some equivalent material which meets UL's

specifications S or SJ) jacketed power supply cord with a length of 8

feet or more;

4. Power supply cord with a separate cord protector;

5. Externally accessible motor brushes;

6. The predominate use of heat-treated transmission parts (i.e., a

majority or greater number of the transmission parts in the tool are

heat treated); and

7. The presence of more than one coil per slot armature.

If only six of the above seven characteristics are applicable to a

particular ``corded'' tool, then that tool must have at least four of

the six characteristics to be considered a ``corded'' PECT.

``Cordless'' PECTs, for the purposes of this order, consist of

those cordless electric power tools having a voltage greater than 7.2

volts and a battery recharge time of one hour or less.

PECTs are currently classifiable under the following subheadings of

the HTSUS: 8508.20.00.20, 8508.20.00.70, 8508.20.00.90, 8461.50.00.20,

8465.91.00.35, 85.80.00.55, 8508.80.00.65 and 8508.80.00.90. The HTSUS

subheadings are provided for convenience and Customs purposes only. The

written description remains dispositive as to the scope of the order.

This review covers one manufacturer/exporter of PECTs from Japan,

Makita, and the period July 1, 1994 through June 30, 1995.

Verification

From June 3 through June 12, 1996, the Department conducted

verification of Makita's questionnaire responses, as provided in

section 782(i) of the Act. We used standard verification procedures,

including on-site inspection of the manufacturer's facilities,

examination of relevant accounting, sales, and other financial records,

and selection of original documentation containing relevant

information. Our verification results are outlined in the public

version of the verification report.

Constructed Export Price

In calculating United States price, we used CEP, in accordance with

subsections 772(b), (c), and (d) of the Act, because Makita's sales to

the first unaffiliated purchaser occurred after importation into the

United States. We calculated CEP based on the packed, delivered prices

to the first unrelated purchaser in the United States.

Where appropriate, we made deductions from the starting price for

discounts, rebates, Japanese and U.S. inland freight, ocean freight,

Japanese and U.S. brokerage and handling, and those imputed credit and

warranty expenses that were incurred in the United States. In

accordance with section 772(d)(1) and the Statement of Administrative

Action (SAA) at 823-24, we also deducted those selling expenses that

related to commercial activity in the United States, and added revenues

earned from drop-ship fees and miscellaneous charges, where

appropriate. Finally, we made an adjustment for an amount of profit

allocated to these expenses in accordance with section 772(d)(3) of the

Act.

Normal Value

Based on a comparison of the aggregate quantity of Makita's home-

market and U.S. sales, we determined that the quantity of the foreign

like product Makita sold in Japan was sufficient to permit a proper

comparison to its sales of PECTs to the United States, pursuant to

section 773(a) of the Act. Makita's quantity of home-market sales was

greater than five percent of its sales to the U.S. market. Therefore,

in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on

the prices at which the foreign like products were first sold for

consumption in Japan.

In calculating NV, we disregarded sales to affiliated customers

where we determined that such sales were not made at arm's-length

prices, i.e., at prices comparable to prices at which Makita sold

identical merchandise to unrelated customers.

Based on petitioner's allegation, and in accordance with section

773(b)(2)(A)(i) of the Act, we found reasonable grounds to believe or

suspect that Makita made sales in the home market at prices below the

cost of production (COP). As a result, we initiated a sales-below-cost

investigation. We calculated COP based on the sum of Makita's cost of

materials and fabrication employed in producing the foreign like

product plus amounts for home-market selling, general, and

administrative expenses (SG&A) and packing costs, in accordance with

section 773(b)(3) of the Act. We compared Makita's weighted-average COP

for the review period to home-market sales of the foreign like product

as required under section 773(b) of the Act, in order to determine

whether these sales had been made at below-cost prices within an

extended period of time in substantial quantities, and whether they

were at prices which permit recovery of all costs within a reasonable

period of time. On a product-specific basis, we compared the COP to the

home-market prices, less any applicable movement charges,

[[Page 46626]]

discounts, rebates, and direct and indirect selling expenses.

Pursuant to section 773(b)(2)(C), where less than 20 percent of

respondent's sales of a given product were at prices less than the COP,

we did not disregard any below-cost sales of that product because we

determined that the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of a respondent's sales during

the review period of a given product were at prices less than the COP,

we disregarded the below-cost sales because we determined that the

below-cost sales were made within an extended period of time in

``substantial quantities'' in accordance with section 773(b)(2)(B) and

(C) of the Act, and because we determined that the below-cost sales of

the product were at prices which would not permit recovery of all costs

within a reasonable period of time, in accordance with section

773(b)(2)(D) of the Act. Where all sales of a specific model were at

prices below the COP, we disregarded all sales of that model, and

calculated NV based on CV, in accordance with section 773(b)(1) of the

Act.

Home-market prices were based on the packed, delivered prices to

affiliated or unaffiliated purchasers in the home market. Where

applicable, we made adjustments for differences in packing and for

movement expenses in accordance with section 773(a)(6)(A) and (B) of

the Act. We also made adjustments for discounts and rebates, and

differences in cost attributable to differences in physical

characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii)

of the Act and for differences in circumstances of sale (COS) in

accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 353.56.

If appropriate, we made COS adjustments by deducting home-market direct

selling expenses and adding U.S. direct selling expenses, except those

deducted from the starting price in calculating CEP pursuant to section

772(d) of the Act.

In accordance with section 773(a)(1)(B)(i) of the Act, to the

extent practicable, we based NV on sales at the same level of trade as

the CEP sales. If NV was calculated at a different level of trade, we

made an adjustment, if appropriate, and if possible, in accordance with

section 773(a)(7) of the Act. This adjustment is discussed further in

the Level of Trade section below.

In accordance with section 773(a)(4) of the Act, we used CV as the

basis for NV when there were no usable sales of the foreign like

product in the comparison market. We calculated CV in accordance with

section 773(e) of the Act. We included the cost of materials and

fabrication, SG&A expenses, profit, and U.S. packing. In accordance

with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit

on the amounts incurred and realized by the respondent in connection

with the production and sale of the foreign like product in the

ordinary course of trade for consumption in the foreign country. For

selling expenses, we used the weighted-average home-market selling

expenses. We calculated CV by level of trade, using the selling

expenses and profit determined for each level of trade in the

comparison market.

Where appropriate, we made adjustments to CV in accordance with

section 773(a)(8) of the Act and 19 CFR 353.56 for COS differences and

level-of-trade differences. We made COS adjustments by deducting home-

market direct selling expenses and adding U.S. direct selling expenses

except those deducted from the starting price in calculating CEP

pursuant to section 772(d) of the Act.

Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Act and in the SAA

accompanying the URAA at 829-831, to the extent practicable, the

Department will calculate NV based on sales at the same level of trade

as the U.S. sale. When the Department is unable to find sale(s) in the

comparison market at the same level of trade as the U.S. sale(s), the

Department may compare U.S. sales to comparison market sales at a

different level of trade.

In accordance with section 773(a)(7)(A) of the Act, if sales at

allegedly different levels of trade are compared, the Department will

adjust the NV to account for the difference in level of trade if two

conditions are met. First, there must be differences between the actual

selling activities performed by the exporter at the level of trade of

the U.S. sale and the level of trade of the comparison-market sales

used to determine NV. In making this determination, we consider all

selling functions and activities performed by the exporter. The fact

that there is some overlap in selling functions and activities does not

preclude us from finding that sales were made at different levels of

trade. Where selling functions and activities are substantially the

same, however, we normally will consider sales to have been made at the

same level of trade. See, Notice of Proposed Rulemaking and Request for

Public Comments, 61 FR 7348 (February 27, 1996).

Second, pursuant to section 773(a)(7)(A), the differences must

affect price comparability as evidenced by a pattern of consistent

price differences between sales at the different levels of trade in the

market in which NV is determined.

Makita reported two levels of trade in the home market and one

level of trade in the United States. We reviewed and verified the

selling functions and activities associated with each claimed level of

trade. Because Makita's sales to the United States were all CEP sales

made by an affiliated company, we considered only the parent company's

selling activities reflected in the price after the deduction of

expenses and profit, pursuant to section 772(d) of the Act. In

examining all of Makita's selling functions and activities, we found

that no single selling function or activity was sufficient to warrant

distinguishing separate levels of trade.

We also determined that Makita's selling functions with respect to

the channels of distribution for wholesalers and retailers in the home

market are sufficiently dissimilar to conclude that two separate levels

of trade exist in the home market. Further, we determined that Makita's

aggregate selling functions and activities in the United States were

substantially the same as those it performs in Japan at the wholesaler

channel of distribution. Thus, we concluded that sales to the United

States and sales in the home market at the wholesaler channel of

distribution were made at the same level of trade.

When we were unable to find sales of the foreign like product in

the home market at the same level of trade as the U.S. sale, we

examined whether a level of trade adjustment was appropriate. We will

make this adjustment when it is demonstrated that a difference in level

of trade has an effect on price comparability. This is the case when it

is established that, with respect to sales used to calculate NV, there

is a pattern of consistent price differences between sales made at the

two different levels of trade. To make this determination, we compared

the weighted average of Makita's NV prices of sales made in the

ordinary course of trade at the two levels of trade for models sold at

both levels, after making any other adjustments required under section

773(a)(6). If the weighted-average prices were higher at one of the

levels of trade for a preponderance of the models, we considered this

to demonstrate a pattern of consistent price differences. We also

considered whether the weighted-average prices were higher at one of

the levels of trade for a preponderance of sales, based on the

quantities of each

[[Page 46627]]

model sold, in making this determination. See Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof from France, et

al.: Preliminary Results of Antidumping Duty Administrative Reviews, 61

FR 35713 (July 8, 1996). As a result of our analysis, we found that

there was a pattern of consistent price differences between the two

levels of trade in the home market. Thus, we made an adjustment to NV

for the differences in levels of trade.

We calculated the level of trade adjustment based on home-market

sales made in the ordinary course of trade and on prices net of

movement expenses, discounts, rebates, direct selling expenses and

packing expenses. For each model sold at both levels of trade in the

home market, we calculated the difference between the weighted-average

prices at the two levels of trade as a percentage of the weighted-

average price at the comparison level of trade. We then calculated a

weighted average of these model-specific percentage differences. We

calculated the amount of the level-of-trade adjustment by applying this

weighted-average percentage price difference to the NV determined at

the different level of trade.

The level of trade methodology employed in these preliminary

results of review is based on the facts particular to this review. We

will continue to examine our policy for making level-of-trade

comparisons and adjustments for the final results of review.

Preliminary Results of the Review

As a result of our review, we preliminarily determine that the

following margins exist:

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

Margin

Manufacturer/exporter Time period (percent)

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

Makita Corporation................. 7/1/94- 6.34

6/30/95

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

Parties to the proceeding may request disclosure within five days

of the date of publication of this notice. Any interested party may

request a hearing within ten days of publication. Any hearing, if

requested, will be held 44 days after the publication of this notice,

or the first workday thereafter. Interested parties may submit case

briefs within 30 days of the date of publication of this notice.

Rebuttal briefs, which must be limited to issues raised in the case

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

publication. Parties who submit comments are requested to submit with

their comments (1) A statement of the issue and (2) a brief summary of

the comment. The Department will publish a notice of final results of

this administrative review, which will include the results of its

analysis of issues raised in any such comments. The Department will

issue the final results of this review within 180 days of publication

of these preliminary results.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between CEP and NV may vary from the percentage stated

above. Upon completion of this review, the Department will issue

appraisement instructions directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of the final results of this administrative review for

all shipments of PECTs from Japan entered, or withdrawn from warehouse,

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

section 751(a)(2)(c) of the Act: (1) The cash deposit rate for Makita

will be the rate we determine in the final results of review; (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 less-than-fair-

value (LTFV) investigation, but the manufacturer is, the cash deposit

rate shall be the rate established for the most recent period for the

manufacturer of the merchandise; and (4) if neither the exporter nor

the manufacturer is a firm covered in this or any previous review, the

cash deposit rate will be 54.52 percent, the all others rate

established in the LTFV investigation.

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 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 administrative review and notice are in accordance with

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

Dated: August 27, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-22521 Filed 9-3-96; 8:45 am]

BILLING CODE 3510-DS-P