Notice of Final Results of Antidumping Duty Administrative Review: Porcelain-on-Steel Cookware From Mexico

DEPARTMENT OF COMMERCE

[A-201-504]

Notice of Final Results of Antidumping Duty Administrative

Review: Porcelain-on-Steel Cookware From Mexico

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice.

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

SUMMARY: On March 6, 1996 the Department of Commerce published the

preliminary results of its administrative review of the antidumping

duty order on porcelain-on-steel (POS) cookware from Mexico. The review

covers shipments of this merchandise to the

[[Page 54617]]

United States during the period December 1, 1991 through November 30,

1992.

Based on our analysis of the comments received and the correction

of certain clerical and computer program errors, we have changed the

preliminary results. The final results are listed below in the section

``Final Results of Review.''

EFFECTIVE DATE: October 21, 1996.

FOR FURTHER INFORMATION CONTACT: Katherine Johnson or James Terpstra,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone, (202) 482-4929 and (202) 482-3965,

respectively.

SUPPLEMENTARY INFORMATION:

Background

On March 6, 1996, the Department of Commerce (the Department)

published in the Federal Register the preliminary results of its

administrative review of the Antidumping Duty Order on Porcelain-on-

Steel Cookware from Mexico (61 FR 8911). The Department has now

completed that administrative review in accordance with section 751 of

the Tariff Act of 1930, as amended (the Act).

Scope of the Review

Imports covered by this review are shipments of porcelain-on-steel

cookware, including tea kettles, that do not have self-contained

electric heating elements. All of the foregoing are constructed of

steel and are enameled or glazed with vitreous glasses. This

merchandise is currently classifiable under Harmonized Tariff Schedule

of the United States (HTSUS) item number 7323.94.00. Kitchenware

currently entering under HTSUS item number 7323.94.00.30 is not subject

to the order. Although the HTSUS subheadings are provided for

convenience and Customs purposes, our written description of the scope

of this proceeding is dispositive.

The review covers two manufacturers/exporters, Acero Porcelanizado,

S.A. de C.V. (APSA) and Cinsa, S.A. de C.V. (Cinsa) of Mexican POS

cookware. The period of review (POR) is December 1, 1991 to November

30, 1992.

Applicable Statute and Regulations

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.

United States Price

A. APSA

We based United States price (USP) on both exporter's sales price

(ESP) and purchase price (PP), in accordance with section 772 of the

Act, because the subject merchandise was sold both before and after

importation into the United States. We based ESP and PP on the packed,

ex-factory price to unrelated purchasers in the United States.

For both PP and ESP sales we made deductions from USP, where

appropriate, for foreign and U.S. inland freight and insurance, Mexican

and U.S. brokerage and U.S. import duties and user fees, in accordance

with section 772(d)(2) of the Act. We also made deductions for

discounts and rebates. We added an amount to account for the

countervailing duty assessment on entries of the subject merchandise

entered during the instant review period. (See, Comment 3).

We made further deductions from ESP, where applicable, for

commissions, credit expenses and indirect selling expenses, pursuant to

section 772(e) (1) and (2) of the Act.

B. Cinsa

We based USP on PP, in accordance with section 772 of the Act,

because the subject merchandise was sold before importation into the

United States. We based PP on the packed, ex-factory price to unrelated

purchasers in the United States.

We made deductions from USP, where appropriate, for foreign and

U.S. inland freight and insurance, Mexican and U.S. brokerage and U.S.

import duties, in accordance with section 772(d)(2) of the Act.

We added to USP the amount of import duties which have been

rebated, or which have not been collected, by reason of the exportation

of the subject merchandise to the United States.

C. Cinsa and APSA

For both Cinsa and APSA we made an adjustment to USP for the value-

added tax (VAT) paid on the comparison sales in Mexico.

In light of the Federal Circuit's decision in Federal Mogul v.

United States, CAFC No. 94-1097, the Department has changed its

treatment of home market consumption taxes. Where merchandise exported

to the United States is exempt from the consumption tax, the Department

will add to the USP the absolute amount of such taxes charged on the

comparison sales in the home market. This is the same methodology that

the Department adopted following the decision of the Federal Circuit in

Zenith v. United States, 988 F. 2d 1573, 1582 (1993), and which was

suggested by that court in footnote 4 of its decision. The Court of

International Trade (CIT) overturned this methodology in Federal Mogul

v. United States, 834 F. Supp. 1391 (1993), and the Department

acquiesced in the CIT's decision. The Department then followed the

CIT's preferred methodology, which was to calculate the tax to be added

to USP by multiplying the adjusted USP by the foreign market tax rate;

the Department made adjustments to this amount so that the tax

adjustment would not alter a ``zero'' pre-tax dumping assessment.

The foreign exporters in the Federal Mogul case, however, appealed

that decision to the Federal Circuit, which reversed the CIT and held

that the statute did not preclude Commerce from using the ``Zenith

footnote 4'' methodology to calculate tax-neutral dumping assessments

(i.e., assessments that are unaffected by the existence or amount of

home market consumption taxes). Moreover, the Federal Circuit

recognized that certain international agreements of the United States,

in particular the General Agreement on Tariffs and Trade (GATT) and the

Tokyo Round Antidumping Code, required the calculation of tax-neutral

dumping assessments. The Federal Circuit remanded the case to the CIT

with instructions to direct Commerce to determine which tax methodology

it will employ.

The Department has determined that the ``Zenith footnote 4''

methodology should be used. First, as the Department has explained in

numerous administrative determinations and court filings over the past

decade, and as the Federal Circuit has now recognized, Article VI of

the GATT and Article 2 of the Tokyo Round Antidumping Code required

that dumping assessments be tax-neutral. This requirement continues

under the new Agreement on Implementation of Article VI of the GATT.

Second, the Uruguay Round Agreements Act (URAA) explicitly amended the

antidumping law to remove consumption taxes from the home market price

and to eliminate the addition of taxes to USP, so that no consumption

tax is included in the price in either market. The Statement of

Administrative Action (p. 159) explicitly states that this change was

intended to result in tax neutrality.

While the ``Zenith footnote 4'' methodology is slightly different

from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA

law required that the tax be added to USP rather than subtracted from

home

[[Page 54618]]

market price, it does result in tax-neutral duty assessments. In sum,

the Department treats consumption taxes in a manner consistent with its

longstanding policy of tax-neutrality and with the GATT.

Also, for both APSA and Cinsa, the Department verified in the

original investigation and in previous reviews that both companies

incur the same packing expenses for sales of the subject merchandise in

the United States and in Mexico. Therefore, as in previous reviews, no

adjustment was made for packing.

Foreign Market Value

A. APSA

In calculating foreign market value (FMV), the Department used home

market price, as defined in section 773 of the Act. Home market price

was based on the packed, ex-factory price to certain related and

unrelated purchasers in the home market. In our margin calculations, we

used sales to related parties which we found were at arm's length. See

Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the

United Kingdom; Final Results of Antidumping Duty Administrative

Review, 60 FR 44012 (August 24, 1995).

We made deductions from the home market price for discounts and

rebates. For comparison to PP sales, pursuant to section 773(a)(4)(B)

and 19 CFR 353.56(a)(2), we made a circumstance-of-sale (COS)

adjustment, where appropriate, for differences in credit expenses. For

comparison to ESP sales, we also deducted credit expenses from FMV.

We adjusted for differences in commissions in accordance with 19

CFR 353.56(a)(2) (1994).

Regarding indirect selling expenses, APSA calculated inventory

carrying costs based on sales price. We recalculated these costs based

on APSA's cost of goods sold.

We adjusted for VAT in accordance with our practice. (See the

``United States Price'' section of this notice, above.)

For three U.S. products, we found no identical home market products

sold in contemporaneous periods, and APSA did not provide an adjustment

for differences in merchandise or CV information, as we had repeatedly

requested. Therefore, we used BIA for these sales pursuant to Section

776(C) of the Act. As partial BIA, we used the weighted-average dumping

margin of 8.75 percent from Porcelain-On-Steel Cookware From Mexico;

Final Results of Antidumping Duty Administrative Review (3rd

Administrative Review), 58 FR 32095 (June 8, 1993), because it is the

highest rate ever determined for APSA. This is consistent with the

Department's general application of partial BIA (see, e.g., Final

Results of Antidumping Duty Administrative Reviews and Revocation in

Part of an Antidumping Duty Order; Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof From France, et al., 60 FR

10900, 10907 (February 28, 1995)).

B. Cinsa

We also used home market price for Cinsa, when sufficient

quantities of such or similar merchandise were sold in the home market,

at or above the COP, to provide a basis for comparison (See COP section

of this notice). Home market price was based on the packed, delivered

and ex-factory price to certain related and unrelated purchasers in the

home market. In our margin calculations, we used sales to related

parties which we found were at arm's length. We made deductions from

home market price for discounts, where applicable.

In light of the Court of Appeals for the Federal Circuit's decision

in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v.

United States, 13 F.3d 398 (Fed. Cir. 1994), the Department no longer

can deduct home market movement charges from FMV pursuant to its

inherent power to fill in gaps in the antidumping statute. Instead, we

adjust for those expenses under the COS provision of 19 CFR 353.56(a).

Accordingly, in the present case, we adjusted for post-sale home market

inland freight charges under the COS provision of 19 CFR 353.56(a). We

did not deduct pre-sale inland freight charges because, as in the fifth

administrative review, Cinsa did not demonstrate to the Department's

satisfaction that these expenses are directly related to sales of the

subject merchandise. Because Cinsa did not report warehousing as a

direct selling expense, we concluded that Cinsa's inland freight to the

warehouse is also not directly related to sales. See Final

Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit

from Thailand, 60 FR 29553, 29563 (June 5, 1995) for a complete

discussion on the Department's policy concerning pre-sale movement

charges.

Pursuant to section 773(a)(4)(B) and 19 CFR 353.56(a)(2), we made a

COS adjustment, where appropriate, for differences in credit expenses.

We recalculated home market credit using the revised interest rate

reported in the May 2, 1994, supplemental response. Also, we did not

calculate credit expenses for sales in the home market that were

missing pay dates. Furthermore, we determined that the bank fees

associated with the letter of credit transactions for certain U.S.

customers are a direct selling expense and have made a COS adjustment

for these fees. We deducted home market commissions and added U.S.

indirect selling expenses capped by the amount of home market

commissions.

We adjusted for VAT in accordance with our practice. (See the

``United States Price'' section of this notice, above.)

Cost of Production

With regard to Cinsa, we disregarded sales below cost in the most

recent administrative review. Therefore, in accordance with Department

practice, we determined that there were reasonable grounds to believe

or suspect sales below cost in the current review period. In order to

determine whether home market prices were below COP within the meaning

of section 773(b) of the Act, we performed a product-specific cost

test, in which we examined whether each home market product sold during

the POR was priced below the COP of that product. For Cinsa's models

for which there were insufficient home market sales at or above the

COP, we compared USP to CV.

Regarding APSA, petitioner's June 18, 1993, letter requested an

extension for filing a sales below cost allegation; however, no such

allegation was filed with the Department. Therefore, we did not perform

a sales below cost analysis of APSA.

A. Calculation of COP

We calculated COP based on the sum of respondent's cost of

materials, fabrication, general expenses and packing costs, in

accordance with 19 C.F. R. 353.51(c). In our COP analysis, we relied on

COP information submitted by Cinsa, except in the following instances

where COP was not appropriately quantified or valued: (1) We included

expenses related to employee profit sharing in the cost of manufacture;

(2) we revised Cinsa's submitted interest costs to exclude the

calculation of negative interest expense; and (3) we increased

depreciation expense to account for the revaluation of its fixed

assets.

B. Test of Home Market Sales Prices

As required by section 773(b) of the Act, we tested whether a

substantial quantity of respondent's home market sales of subject

merchandise was made at prices below COP over an extended period of

time. We also tested whether

[[Page 54619]]

such sales were made at prices which permit recovery of all costs

within a reasonable period of time in the normal course of trade. On a

product-specific basis, we compared the COP (net of selling expenses)

to the reported home market prices, less any applicable movement

charges, rebates, and direct and indirect selling expenses. To satisfy

the requirement of section 773(b)(1) of the Act that below-cost sales

be disregarded only if made in substantial quantities, we applied the

following methodology. If over 90 percent of the respondent's sales of

a given product were at prices equal to or greater 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.'' If between 10 and 90 percent of the respondent's sales of

a given product were at prices equal to or greater than the COP, and

sales of that product were also found to be made over an extended

period of time, we disregarded only the below-cost sales. Where we

found that more than 90 percent of the respondent's sales of a product

were at prices below the COP, and the sales were made over an extended

period of time, we disregarded all sales of that product, and

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

Act.

In accordance with section 773(b)(1) of the Act, in order to

determine whether below-cost sales had been made over an extended

period of time, we compared the number of months in which below-cost

sales occurred for each product to the number of months in the POR in

which that product was sold. If a product was sold in three or more

months of the POR, we do not exclude below-cost sales unless there were

below-cost sales in at least three months during the POR. When we found

that sales of a product only occurred in one or two months, the number

of months in which the sales occurred constituted the extended period

of time, i.e., where sales of a product were made in only two months,

the extended period of time was two months; where sales of a product

were made in only one month, the extended period of time was one month.

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

Carbon Steel Butt-Weld Pipe Fittings from the United Kingdom, 60 FR

10558, 10560 (February 27, 1995).

C. Results of COP Test

We found that for certain products, between 10 and 90 percent of

Cinsa's home market sales were sold at below COP prices over an

extended period of time. Because Cinsa provided no indication that the

disregarded sales were at prices that would permit recovery of all

costs within a reasonable period of time in the normal course of trade,

in accordance with section 773(b) of the Act, we based FMV on CV for

all U.S. sales left without a home market sales match as a result of

our application of the COP test.

D. Calculation of CV

In accordance with section 773(e)(1) of the Act, we calculated CV

based on the sum of respondent's cost of materials, fabrication,

general expenses, packing costs, and profit. In accordance with section

773(e)(1)(B) (i) and (ii), we used: (1) The actual amount of general

expenses because those amounts were greater than the statutory minimum

of ten percent and (2) the actual amount of profit where it exceeded

the statutory minimum of eight percent.

We recalculated the respondent's CV based on the methodology

described in the calculation of COP above. In addition, we revised CV

profit based upon the calculation provided by Cinsa.

Price-to-CV Comparisons

Where we made CV to PP comparisons, we made a COS adjustment for

direct selling expenses.

Interested Party Comments

Comment 1: Inclusion of Revalued Depreciation in the Calculation of

Cinsa's COP and CV

Petitioner asserts that Cinsa's revalued depreciation expense, as

reported on the Company's audited financial statements, must be

included in COP and CV. Petitioner contends that failure to use Cinsa's

revalued depreciation in COP and CV would significantly understate and

distort Cinsa's actual costs. Furthermore, the petitioner states that

the inclusion of the revalued depreciation expense is consistent with

the final results of Cinsa's fourth and fifth administrative reviews.

(See, Final Results of Antidumping Duty Administrative Review:

Porcelain-On-Steel Cooking Ware From Mexico, 60 FR, 2378, 2378 (January

9, 1995) and 58 FR, 43327, 43331 (August 16, 1993), respectively.)

Cinsa contends that increasing the Company's depreciation expense

for the effects of the revaluation of its assets is contrary to law

because it distorts the actual COP of the subject merchandise. Cinsa

argues that the revaluation of its assets has no fiscal effect on the

Company and is only required for financial statement purposes. Thus,

the inclusion of revalued depreciation overstates the actual

depreciation expense incurred in producing subject merchandise.

However, Cinsa points out that the submitted cost database provided the

necessary information to revalue the Company's depreciation expense.

DOC Position: We agree with petitioner and included Cinsa's

revalued depreciation expense in the Company's COP and CV. We disagree

with Cinsa's assertion that this inclusion distorts the actual

production costs of subject merchandise. It is the Department's policy

to adhere to the home market Generally Accepted Accounting Principles

(GAAP) as long as they reflect actual costs. In this case, we find the

use of revalued depreciation reasonably reflects Cinsa's actual costs.

Mexican GAAP require Cinsa to use revalued depreciation in its

financial statements. Thus, Mexican GAAP recognizes the effect of

inflation upon the value of assets and requires companies to revalue

assets to compensate for the change. Depreciation enables companies to

spread large expenditures on purchases of machinery and equipment over

the expected useful lives of these assets. Not adjusting for the

deflation of currency due to inflation results in the depreciation

deferred to future years being understated in constant currency terms,

and therefore, distorts the Department's COP and CV calculations. Thus,

in light of the rate of inflation in Mexico, it would be distortive to

use historical depreciation in this case.

The Department's determination to use revalued rather than

historical depreciation in accordance with home market GAAP was most

recently upheld by the Court of International Trade in Laclede Steel

Co. v. United States Slip op. 91-160 at 29 (October 12, 1994). In

Laclede Steel, the Court found that depreciation expense based on the

historical method rather than depreciation expense based on the

revalued method would distort the production costs of the company

because such a methodology would overlook the significant impact that

revaluing the assets had on the company. We find the Court's analysis

in Laclede Steel instructive with respect to the instant review. Due to

the revaluation of assets as reflected on Cinsa's financial statements,

Cinsa would enjoy an increase to its equity values reflected on the

Company's balance sheet, a potentially enhanced stock value resulting

from greater equity, and an improved ability to borrow or acquire

capital. Therefore, the Department followed Mexican GAAP and adjusted

CINSA's COP data to

[[Page 54620]]

reflect the revalued depreciation. We note, although it is not binding

precedent, a NAFTA Panel has affirmed the Department's use of revalued

depreciation for Cinsa in the fifth administrative review in In the

Matter of Porcelain-on-Steel Cookware From Mexico, USA-95-1904-01

(April 30, 1996) (POS Cookware), at 31.

Comment 2: Inclusion of Home Market Sales of Second-Quality Merchandise

in the Cost Test

Petitioner argues that the Department's exclusion of sales of

second-quality merchandise from the preliminary cost test was

inappropriate, and that such sales should be included in the cost test

for purposes of the final results. Petitioner contends that the

Department's preliminary results in this regard are inconsistent with

its standard practice, including its previous practice in reviews of

imports subject to this order. In addition, petitioner argues that the

exclusion of second-quality cookware from the cost test had a

significant impact on the number of home market products the Department

preliminarily found to be sold below cost in significant quantities

over an extended period of time. Finally, according to petitioner,

because there is no evidence on the record of this review to support

the Department's exclusion of these sales, they should be included in

the cost test for the final results.

Cinsa argues that the Department properly limited the cost test to

first quality merchandise. Cinsa asserts that the practice of comparing

U.S. sales of first quality POS cookware to an FMV based on home market

sales of first quality POS cookware dates from the original

investigation. According to respondent, because the product matching

criteria used by the Department already excluded second quality

merchandise from the pool of home market sales upon which FMV could be

based, the cost test was properly applied to those sales eligible for

inclusion in the calculation of FMV (i.e., first quality home market

sales). Moreover, Cinsa contends that petitioner would have the

Department include Cinsa's home market sales of second quality

merchandise only for purposes of the cost test, but would continue to

insist that the Department exclude such sales from the FMV calculation,

even if these sales pass the cost test.

DOC Position: We agree with petitioner that all home market sales

of both first and second quality merchandise should be included in the

cost test. However, we disagree with both petitioner and respondent

that the Department failed to include these sales in the cost test

performed in the preliminary results. The cost test covered all home

market sales of such or similar merchandise covered by the scope of the

order (i.e., both first and second quality merchandise). Petitioner and

respondent apparently misinterpreted the computer program the

Department used for the preliminary results. See, Memorandum from

Analyst to The File dated May 20, 1996, for a more detailed discussion

of this issue.

Cinsa is correct in its assertion that the Department's margin

program compared U.S. sales of first quality cookware to home market

sales of first quality cookware, as was done in the original

investigation as well as in previous reviews. As we stated in the

fourth review of Porcelain-on-Steel Cooking Ware From Mexico: Final

Results of Antidumping Duty Administrative Review, 58 FR 43327 (August

16, 1993), ``We agree that we should compare first quality merchandise

sold in the U.S. market with only first quality merchandise sold in the

home market . . .'' We did not compare sales of second quality

merchandise in the instant review because there were no sales of second

quality merchandise in the United States, unlike in the fourth review

where second quality merchandise sold in the United States was compared

with second quality merchandise sold in the home market.

Comment 3: Addition of Countervailing Duties to APSA's USP

Respondent argues that for purposes of the final results, the

Department should recalculate APSA's USP and margin calculations to

include the countervailing duty (CVD) assessments as required by law,

because the future CVD assessment on entries of the subject merchandise

entered during the instant review period has already been determined.

Accordingly, respondent contends that for the final results APSA's USP

should be increased by the amount of CVD that will be assessed once

these entries are subject to liquidation.

DOC Position: We agree with respondent and have increased APSA's

USP by the amount of these CVD, in accordance with section 772(d)(1)(D)

of the Act. See, ``United States Price'' section of this notice.

Comment 4: Inclusion of Profit Sharing Payments in Cinsa's COP and CV

Cinsa asserts that the inclusion of employee profit-sharing

payments as a direct labor expense is contrary to law because the

Department's regulations expressly exclude profit-based expenses from

the calculation of COP (19 CFR, 353.51(c)). According to Cinsa, this

payment is similar to dividend distributions or income tax payments

which are not included in COP and CV. Cinsa also asserts that the

Company's profit-sharing expense is derived from the Company's profits.

Therefore, including the profit-sharing expense results in the double

counting of profit because profit is already included in CV.

Petitioner contends that the Department should include profit-

sharing expenses in Cinsa's COP and CV. Petitioner points out that

Cinsa cites no case in which the Department has treated profit sharing

expenses as anything other than labor costs and included these expenses

in COP and CV. Petitioner also contends that profit-sharing expenses do

relate to production and that the inclusion of these expenses in the

calculation of CV does not double count profit.

DOC Position: We disagree with respondent and have included Cinsa's

profit-sharing expense in COP and CV because it relates to the

compensation of direct labor, a factor of production. We treat profit-

sharing distributions to employees in a manner similar to bonuses.

Furthermore, we disagree with Cinsa's argument that the profit-sharing

expense is similar to profit, dividends, and income tax.

Profit-sharing is not profit because it is an expense which is a

reduction to profit. Therefore, profit-sharing is not explicitly

excluded from COP calculations under 19 CFR 353.51 (c). As for Cinsa's

concern that we doubled counted profit in its CV, we note that profit-

sharing expense is not part of the Company's ``profit'' included in CV.

The ``profit'' that is included in Cinsa's CV represents the amount

that remains after reductions to income, such as the profit-sharing

expense.

Cinsa's profit-sharing expense is distinct from dividends in two

key respects. First, Cinsa's profit-sharing payments represent a legal

obligation to a productive factor in the manufacturing process and not

a distribution of profits to the owners of Cinsa. Second, the right to

participate in profit-sharing conveys no ownership rights in Cinsa.

Cinsa's profit-sharing expense is unlike an income tax because it

is paid to labor. Thus, unlike income taxes paid to the government,

profit sharing payments flow directly to a factor of production. Also,

Cinsa's income tax is based on taxable income that is net of Cinsa's

profit-sharing expense.

We note that, although it is not binding precedent, a NAFTA Panel

has

[[Page 54621]]

affirmed the Department's inclusion of Cinsa's profit-sharing in COP

and CV in the fifth administrative review. See POS Cookware, at 37-39.

Comment 5: Calculation of Cinsa's Profit Sharing Expense

Cinsa states the Department's computer program mistakenly

overstated the Company's profit-sharing expense in calculating COP and

CV.

Petitioner agrees with Cinsa.

DOC Position: We agree with both Cinsa and petitioner and have

corrected our calculation of Cinsa's COP and CV for the final results.

Comment 6: Inclusion of the Full Amount of Short-term Interest Income

Earned by Cinsa's Corporate Parent in COP and CV

Cinsa contends that the Department's practice of allowing short-

term interest income only up to the amount of reported interest

expenses is subjective because there is no difference between the

short-term interest that was recognized and that which was disregarded.

Cinsa further argues that this methodology distorts the actual

financial position of the parent and does not reflect the economic

reality of the information on the financial statements.

Petitioner argues that it is correct to limit Cinsa's short-term

interest income to the amount of interest expense. Petitioner states

that interest income in excess of interest expense does not reduce

production cost because it is unrelated to a company's operating costs.

(See e.g., Final Results of Antidumping Administrative Review:

Porcelain-On-Steel Cooking Ware From Mexico, 60 FR 2378, 2379, (January

9, 1995); Final Results of Antidumping Administrative Review:

Porcelain-On-Steel Cooking Ware From Mexico, 58 FR 43327, 43332,

(August 16,1993); Final Determination of Sales at Less Than Fair Value:

Steel Wire Rope from Korea, 58 FR, 11029, 11038 (February 23, 1993).)

DOC Position: We agree with petitioner. It is the Department's

normal practice to allow short-term interest income to offset financing

costs only up to the amount of such financing costs. (See, Final

Results of Antidumping Administrative Review: Porcelain-On-Steel

Cooking Ware From Mexico, 60 FR 2378, 2379, (January 9, 1995); Final

Results of Antidumping Administrative Review Porcelain-On-Steel Cooking

Ware From Mexico, 58 FR 43327, 43332, (August 16,1993); Final

Determination of Sales at Less Than Fair Value: Steel Wire Rope from

Korea, 58 FR, 11029, 11038 (February 23, 1993); Final Results of

Antidumping Administrative Review Frozen Concentrated Orange Juice from

Brazil; 55 FR 26721 (June 29, 1990); Final Results of Antidumping

Administrative Review: Brass Sheet and Strip from Canada, (55 FR,

31414, (August 2, 1990); and, Final Determination of Sales at less than

Fair Market Value; Sweaters from Taiwan, 55 FR, 34585, (August 23,

1990).) The Department reduces interest expense by the amount of short-

term income to the extent finance costs are included in COP. Using

total short-term interest income to reduce production cost, as

suggested by Cinsa, would permit companies with large short-term

investment activity to sell their products below the COP. The

application of excess interest income to production costs would distort

a company's actual costs. Interest income does not lessen the burden of

other costs, regardless of how much excess interest income there is;

labor will still have its cost, as will materials and factory overhead.

Accordingly, we limited the amount of the offset to the amount of the

expense from the related activity.

We note that, although it is not binding precedent, a NAFTA Panel

has affirmed the Department's calculation of interest expense in COP

and CV in the fifth administrative review. See POS Cookware, at 42-45.

Final Results of Review

As a result of our review, we determine that the following margins

exist for the period December 1, 1991, through November 30, 1992:

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

Margin

Manufacturer/exporter Review period (percent)

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

APSA.................................... 12/1/91-11/30/92 1.44

Cinsa................................... 12/1/91-11/30/92 5.40

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

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between USP and FMV may vary from the percentages stated

above. The Department will issue appraisement instructions directly to

the Customs Service.

Furthermore, the following deposit requirement will be effective

for all shipments of subject merchandise from Mexico entered, or

withdrawn from warehouse, for consumption on or after the publication

date of the final results of this administrative review, as provided by

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

reviewed companies will be as outlined above; (2) for merchandise

exported by manufacturers or exporters not covered in this review but

covered in previous reviews or the original less-than-fair-value (LTFV)

investigation, the cash deposit rate will continue to be the rate

published in the most recent final results or determination for which

the manufacturer or exporter received a company-specific rate; (3) if

the exporter is not a firm covered in this review, an earlier review,

or the LTFV investigation, but the manufacturer is, the cash deposit

rate will be that established for the manufacturer of the merchandise

in the final results of this review, earlier reviews, or the LTFV

investigation, whichever is the most recent; (4) the cash deposit rate

for all other manufacturers or exporters will be 29.52 percent, the

``all others'' rate established in the original LTFV investigation by

the Department.

These cash deposit requirements, when imposed, shall remain in

effect until publication of the final results of the next

administrative review.

This notice also serves as a final reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

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

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

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

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and terms of the APO is a sanctionable violation.

This administrative review and notice are in accordance with

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

353.22.

Dated: October 9, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-26833 Filed 10-18-96; 8:45 am]

BILLING CODE 3510-DS-P