Notice of Final Results of Antidumping Duty Administrative Review: Extruded Rubber Thread From Malaysia

DEPARTMENT OF COMMERCE

International Trade Administration

[A-557-805]

Notice of Final Results of Antidumping Duty Administrative

Review: Extruded Rubber Thread From Malaysia

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

SUMMARY: On May 20, 1996, the Department of Commerce published the

preliminary results of its administrative review of the antidumping

duty order on extruded rubber thread from Malaysia. The review covers

shipments of this merchandise to the United States during the period

April 2, 1992, through September 30, 1993.

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 22, 1996.

FOR FURTHER INFORMATION CONTACT: Cameron Werker or Shawn Thompson,

Office of Antidumping Investigations, Import Administration,

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

Street and Constitution Avenue, N.W., Washington, D.C. 20230;

telephone, (202) 482-3874 and (202) 482-1776, respectively.

SUPPLEMENTARY INFORMATION:

Background

On May 20, 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 Extruded Rubber

Thread from Malaysia (61 FR 25190). The Department has now completed

that administrative review in accordance with Sec. 751 of the Tariff

Act of 1930, as amended (the Act).

Scope of the Review

The product covered by this review is extruded rubber thread.

Extruded rubber thread is defined as vulcanized rubber thread obtained

by extrusion of stable or concentrated natural rubber latex of any

cross sectional shape, measuring from 0.18 mm, which is 0.007 inch or

140 gauge, to 1.42 mm, which is 0.056 inch or 18 gauge, in diameter.

Extruded rubber thread is currently classified under subheading

4007.00.00 of the Harmonized Tariff Schedule of the United States

(HTSUS). The HTSUS subheadings are provided for convenience and customs

purposes. Our written description of the scope of this review is

dispositive.

This review covers the following producers/exporters of extruded

rubber thread: Heveafil Sdn. Bhd. (``Heveafil'') and Rubberflex Sdn.

Bhd. (``Rubberflex''). The period of review (POR) is April 2, 1992, to

September 30, 1993.

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.

Such or Similar Merchandise Comparisons

In determining similar merchandise comparisons, in accordance with

Section 771(16) of the Act, we considered the following physical

characteristics, which appear in order of importance: (1) Quality

(i.e., first vs. second); (2) size; (3) finish; (4) color; (5) special

qualities; (6) uniformity; (7) elongation; (8) tensile strength; and

(9) modulus.

Fair Value Comparisons

To determine whether sales of extruded rubber thread from Malaysia

to the United States were made at less than fair value, we compared the

United States price (USP) to the foreign market value (FMV) for

Rubberflex and Heveafil, as specified in the ``United States Price''

and ``Foreign Market Value'' sections of this notice.

For both respondents, we disregarded sales to the United States and

third countries which were written off as bad debt because bad debt was

accounted for in respondents' reported indirect selling expenses.

United States Price

For sales by both respondents, we based USP on purchase price, in

accordance with Section 772(b) of the Act, when the subject merchandise

was sold to unrelated purchasers in the United States prior to

importation and when the exporter's sales price (ESP) methodology of

Sec. 772(c) of the Act was not otherwise indicated. In addition, where

sales to the first unrelated purchaser took place after importation

into the United States, we based USP on ESP, in accordance with

Sec. 772(c) of the Act.

A. Heveafil

We removed all sales from the sales database with entry dates after

the POR. We also eliminated certain transactions that we verified were

not subject to the antidumping duty order. Specifically, these

transactions were sales to a U.S. customer that were shipped to Hong

Kong for further manufacturing into non-subject merchandise (see page 7

and exhibit 5 of the Malaysian sales verification report, dated August

30, 1995).

We based purchase price on packed, CIF prices to the first

unrelated purchaser in the United States. We revised Heveafil's data

based on our verification findings. We made deductions from USP, where

appropriate, for rebates. In addition, where appropriate, we made

deductions for foreign inland freight, foreign brokerage and handling,

ocean freight, marine insurance, U.S. customs duty, harbor maintenance

and merchandise processing fees, and U.S. brokerage and handling

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

At verification, we found that Heveafil did not report certain

purchase price sales of extruded rubber thread which entered the United

States during the POR. Because we specifically instructed Heveafil to

report all entries into the United States during the POR

[[Page 54768]]

as well as all sales made during the POR, we based the margin for these

unreported sales on the best information otherwise available (BIA) in

accordance with section 776(c) of the Act. As BIA, we applied the

weighted-average margin found in the less than fair value (LTFV)

investigation, because it is the highest rate ever determined for

Heveafil. 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) (AFBs)).

For sales made from the inventory of the U.S. branch office, we

based USP on ESP, in accordance with section 772(c) of the Act. In

addition, we reclassified certain purchase price sales as ESP sales

because we verified that the sales were canceled by the original

purchaser after shipment and resold after importation into the United

States.

We calculated ESP based on packed, delivered prices to unrelated

customers in the United States. We revised the reported data based on

our findings at verification. We made deductions, where appropriate,

for rebates. We also made deductions for foreign inland freight,

foreign brokerage and handling, ocean freight, marine insurance, U.S.

inland freight, U.S. brokerage and handling, U.S. customs duty, harbor

maintenance and merchandise processing fees, and inspection charges. In

accordance with section 772(e)(2) of the Act, we made additional

deductions, where appropriate, for credit and indirect selling

expenses.

B. Rubberflex

We based purchase price on packed, CIF prices to the first

unrelated purchaser in the United States. We made deductions from USP,

where appropriate, for foreign inland freight, foreign brokerage and

handling, containerization expenses, ocean freight, marine insurance,

U.S. customs duties, harbor maintenance and merchandise processing

fees, and U.S. inland freight expenses, in accordance with section

772(d)(2) of the Act. Rubberflex did not report certain movement

charges, although the company reported that it incurred them on all

purchase price transactions. Accordingly, we based the amount of the

unspecified expenses on BIA. As BIA, we used the highest amount

reported in the purchase price sales listing for each specific movement

charge (see, e.g., Chrome-Plated Lug Nuts From the People's Republic of

China; Final Results of Antidumping Administrative Review, 60 FR 48687

(September 20, 1995) and AFBs). We disregarded a rebate which was

erroneously reported for one purchase price sale, because Rubberflex

stated in its questionnaire response that the company did not grant any

U.S. rebates during the POR.

For sales made from the inventory of the U.S. subsidiary, we based

USP on ESP, in accordance with section 772(c) of the Act. We calculated

ESP based on packed, delivered prices to unrelated customers in the

United States. We made deductions, where appropriate, for foreign

inland freight, foreign brokerage and handling, containerization

expenses, ocean freight, marine insurance, U.S. customs duty, harbor

maintenance and merchandise processing fees, and U.S. inland freight.

In accordance with section 772(e)(2) of the Act, we made additional

deductions, where appropriate, for credit and indirect selling

expenses.

Rubberflex did not report complete data for certain ESP sales.

Accordingly, we used BIA to determine these data, as follows. Where

price and/or credit expense data was missing for sales of second

quality merchandise, we used the average price and expense data

reported for other second quality sales. Where the date of sale was

missing and/or the control number was missing, we applied the weighted-

average margin found in the LTFV investigation, because it is the

highest rate ever determined for Rubberflex. This is consistent with

the Department's general application of partial BIA (see, e.g., AFBs).

Foreign Market Value

In order to determine whether the home market was viable during the

POR, we compared the volume of each of the respondent's home market

sales to the volume of its third country sales, in accordance with

section 773(a)(1)(B) of the Act and 19 CFR 353.48. Based on this

comparison, we determined that neither respondent had a viable home

market during the POR. Consequently, we based FMV on third country

sales.

We selected the appropriate third country markets for Heveafil and

Rubberflex. Specifically, we chose, as the appropriate third country

markets, Italy for Heveafil and Hong Kong for Rubberflex, in accordance

with 19 CFR 353.49(b).

Because the Department disregarded third country sales below the

cost of production (COP) for both Heveafil and Rubberflex in the

original investigation (see Final Determination of Sales at Less Than

Fair Value: Extruded Rubber Thread from Malaysia, 57 FR 38465 (August

25, 1992)), in accordance with our standard practice, there were

reasonable grounds to believe or suspect that both Heveafil and

Rubberflex had made third country sales at prices below COP in this

review.

In accordance with section 773(b) of the Act, and longstanding

administrative practice (see, e.g., Final Determination of Sales at

Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip

from Korea, 56 FR 16306 (April 22, 1991) and Final Results of

Administrative Review: Mechanical Transfer Presses from Japan, 59 FR

9958 (March 2, 1994)), if over ninety percent of a respondent's sales

of a given model were at prices above the COP, we did not disregard any

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

not made in substantial quantities. Where we found between ten and

ninety percent of respondent's sales of a given product were at prices

below the COP, and the below cost sales were made over an extended

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

found that more than ninety percent of a respondent's sales were at

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

of time, we disregarded all sales for that product and calculated FMV

based on constructed value (CV), in accordance with section 773(e) of

the Act.

In order to determine whether third country prices were above the

COP, we calculated the COP for each model based on the sum of the

respondent's cost of materials, labor, other fabrication costs, and

general expenses and packing. We calculated CV for each model based on

the sum of the respondent's cost of manufacture (COM), plus general

expenses, profit and U.S. packing. For general expenses, which includes

selling and financial expenses (SG&A), we used the greater of the

reported general expenses or the statutory minimum of ten percent of

the COM. For profit, we used the greater of the weighted-average third

country profit during the POR or the statutory minimum of eight percent

of the COM and SG&A, in accordance with section 773(e)(B) of the Act.

For Heveafil, we made the following adjustments to the COP and CV

data used in the preliminary results. We recomputed Heveafil's general

and administrative (G&A) and interest expenses by adjusting the cost of

goods sold figure used as the denominator for clerical errors (see

comment 5 below). For further discussion of these

[[Page 54769]]

adjustments, see also the cost calculation memorandum from Stan Bowen,

accountant in the Office of Accounting, to Christian Marsh, Director of

the Office of Accounting, dated August 22, 1996.

For Rubberflex, we made the following adjustments to the reported

COP and CV data. We recalculated G&A and interest expenses using data

contained in Rubberflex's audited financial statements. For further

discussion of these adjustments, see the cost calculation memorandum

from Elizabeth Lofgren, accountant in the Office of Accounting, to

Christian Marsh, Director of the Office of Accounting, dated April 30,

1996.

A. Heveafil

Where FMV was based on third country sales, as in the original

investigation, we based FMV on CIF prices to unrelated Italian

customers in comparable channels of trade as the U.S. customer.

Specifically, FMV was based on direct sales from Malaysia to Italy for

purchase price sales comparisons, and on sales from the inventory of

Heveafil's Italian branch office for ESP sales comparisons, in

accordance with section 773(a)(1)(B) of the Act. We made adjustments to

Heveafil's reported sales data based on our findings at verification.

We made no adjustment to FMV for credits issued by the Italian branch

office based on our finding at verification that they were incorrectly

reported (see the Italian Branch's sales verification report, dated

August 30, 1995).

For third country price-to-purchase price comparisons, we made

deductions, where appropriate, for rebates. We also deducted post-sale

home market movement charges from FMV under the circumstance of sale

provision of section 773(a)(4)(B) of the Act and 19 CFR 353.56. This

adjustment included Malaysian foreign inland freight, brokerage and

handling, ocean freight, marine insurance, Italian brokerage and

handling, and Italian inland freight to Heveafil's unrelated customers

in Italy, where appropriate. Pursuant to 19 CFR 353.56(a)(2), we made

circumstance of sale adjustments, where appropriate, for differences in

credit expenses.

For third country price-to-ESP comparisons, where appropriate, we

made deductions for rebates and credit expenses. We deducted the third

country market indirect selling expenses, including inventory carrying

costs, pre-sale freight (i.e., foreign inland freight, brokerage and

handling, ocean freight, marine insurance, Italian brokerage and

handling, and Italian freight to Heveafil's warehouse) and other

indirect selling expenses, up to the amount of indirect selling

expenses incurred on U.S. sales, in accordance with 19 CFR

353.56(b)(2).

For all price-to-price comparisons, we deducted third country

packing costs and added U.S. packing costs, in accordance with

section773(a)(1) of the Act. At verification, we found that Heveafil

had incorrectly reported its third country and U.S. packing material

expenses. Therefore, we based the adjustment for packing materials on

BIA. As BIA, we used the lowest packing material expense reported for

any Italian sale and the highest packing expense reported for any U.S.

sale (see Concurrence Memorandum to Barbara R. Stafford from Team,

dated April 30, 1996). In addition, where appropriate, we made

adjustments to FMV to account for differences in physical

characteristics of the merchandise, in accordance with section

773(a)(4)(C) of the Act and 19 CFR 353.57.

For CV-to-purchase price comparisons, we made circumstance of sale

adjustments, where appropriate, for credit expenses in accordance with

section 773(a)(4)(B) and 19 CFR 353.56.

For CV-to-ESP comparisons, we made deductions, where appropriate,

for credit expenses. We also deducted the third country market indirect

selling expenses, including inventory carrying costs and other indirect

selling expenses, up to the amount of indirect selling expenses

incurred on U.S. sales, in accordance with 19 CFR 353.56(b)(2).

For all CV-to-price comparisons, we added U.S. packing expenses as

specified above, in accordance with section 773(e)(1)(C) of the Act.

B. Rubberflex

Where FMV was based on third country sales, as in the original

investigation, we based FMV on CIF prices to unrelated Hong Kong

customers in comparable channels of trade as the U.S. customer.

Specifically, FMV was based on direct sales from Malaysia to Hong Kong

for purchase price sales comparisons, and on sales from the inventory

of Rubberflex's Hong Kong subsidiary for ESP sales comparisons.

For third country price-to-purchase price comparisons, we made

deductions, where appropriate, for rebates. We also deducted post-sale

home market movement charges from FMV under the circumstance of sale

provision of 19 CFR 353.56. This adjustment included Malaysian foreign

inland freight, brokerage and handling charges, containerization, ocean

freight, and marine insurance. Pursuant to section 773(a)(4)(B) of the

Act and 19 CFR 353.56(a)(2), we also made circumstance of sale

adjustments, where appropriate, for differences in credit expenses.

For third country price-to-ESP comparisons, we made deductions for

rebates, where appropriate. We also made deductions for credit

expenses.

We deducted the third country market indirect selling expenses,

including inventory carrying costs, bank charges, pre-sale freight

expenses (i.e., foreign inland freight, brokerage and handling charges,

containerization, ocean freight, marine insurance, Hong Kong duty and

brokerage expenses, and freight from the port in Hong Kong to

Rubberflex's warehouse), and other indirect selling expenses, up to the

amount of indirect selling expenses incurred on U.S. sales, in

accordance with 19 CFR 353.56(b)(2).

Regarding Hong Kong duties, Rubberflex reported a combined amount

for document declaration fees, terminal handling charges, and bank

charges. Because the Department's practice is to treat bank charges as

a selling expense (rather than a movement charge), we reclassified bank

charges as selling expenses and recalculated Hong Kong duties

accordingly (see, e.g., Final Determination of Sales at Less Than Fair

Value; Oil Country Tubular Goods from Korea, 60 FR 33561, 33562 (June

28, 1995) and Final Determination of Sales at Less Than Fair Value;

Dynamic Random Access Memory Semiconductors of One Megabit and Above

from Korea, 58 FR 15467, 15467-70 (March 23, 1993)).

For all price-to-price comparisons, we deducted third country

packing costs and added U.S. packing costs, in accordance with section

773(a)(1) of the Act. In addition, where appropriate, we made

adjustments to FMV to account for differences in physical

characteristics of the merchandise, in accordance with section

773(a)(4)(C) of the Act and 19 CFR 353.57.

For CV-to-purchase price comparisons, we made circumstance of sale

adjustments, where appropriate, for credit expenses, in accordance with

section 773(a)(4)(B) of the Act and 19 CFR 353.56.

For CV-to-ESP comparisons, we made deductions, where appropriate,

for credit expenses. We also deducted third country market indirect

selling expenses, including inventory carrying costs, bank charges, and

other indirect selling expenses, up to the amount of indirect selling

expenses incurred on U.S. sales, in accordance with 19 CFR

353.56(b)(2).

For all CV-to-price comparisons, we added U.S. packing expenses, in

[[Page 54770]]

accordance with section 773(e)(1)(C) of the Act.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received comments from both petitioner and

respondents. We received rebuttal comments from Rubberflex only.

Comment 1: Treatment of Countervailing Duties

Respondents assert that, where FMV is based on CV, the Department

should adjust USP for certain countervailing duties paid, in accordance

with section 772(d)(1)(D) of the Act. Specifically, respondents assert

that the Department should increase USP by the amount of the

countervailing duties attributable to all income tax holidays and tax

abatement programs.

According to respondents, the Department's assumption that export

subsidies are reflected in a company's production costs is not correct

when the benefit conferred is in the form of income tax holidays or

abatements, because income taxes are not an element of COP. Therefore,

respondents maintain, it is impossible for any benefit relating to

income taxes to be reflected in either COP or CV, although these

benefits are included in USP.

DOC Position

In this case, each of the countervailable programs identified by

respondents (i.e., Pioneer Status, Abatement of Income Tax Based on the

Ratio of Export Sales to Total Sales, Abatement of Five Percent of the

Value of Indigenous Malaysian Materials Used in Exports, Industrial

Building Allowance, and Double Deduction for Export Promotion Expenses)

were classified as export subsidies in the Final Affirmative

Countervailing Duty Determination and Countervailing Duty Order;

Extruded Rubber Thread from Malaysia, 57 FR 38472 (August 25, 1992).

However, we disagree with respondents that U.S. price should be

increased by the amount of the countervailing duties imposed in

connection with these subsidies in the first and second administrative

reviews of the countervailing duty order on extruded rubber thread from

Malaysia.

In accordance with section 772(d)(1)(D) of the Act, we normally

increase U.S. price by ``the amount of any countervailing duty imposed

on the [subject] merchandise to offset an export subsidy.'' The purpose

of this adjustment is to avoid double-counting when compensating for

the same situation of dumping or export subsidization (i.e., once in

the form of antidumping duties and once in the form of countervailing

duties). For example, we assume that U.S. price reflects the benefit of

export subsidies (i.e., it is lower than it would be were there no

subsidies). However, FMV normally does not reflect the same benefit,

because FMV normally is not based on an export price, but instead on

the sales price in the home market. Under this scenario, all other

factors being equal, comparison of U.S. price to FMV would yield a

dumping margin equal to the export subsidy. Therefore, if no upward

adjustment were made to U.S. price to offset the subsidy, the benefit

from the subsidy would be double-counted.

On the other hand, we do not increase U.S. price under

Sec. 772(d)(1)(D) of the Act when, like the U.S. price, the foreign

market value already reflects the benefit of the export subsidies. See,

e.g., Notice of Final Determination of Sales at Less Than Fair Value:

Certain Carbon Steel Butt-Weld Pipe Fittings from India, 60 FR 10545,

10550 (February 27, 1996). As in the Antidumping Duty Order and

Amendment to Final Determination of Sales at Less Than Fair Value:

Extruded Rubber Thread from Malaysia, 57 FR 46150 (October 7, 1992),

foreign market value for both Rubberflex and Heveafil was based on

third country sales and CV. With respect to exports to third country

markets, respondents receive the same benefits from export subsidies as

with exports to the United States. Therefore, the benefits from the

export subsidies were reflected in both the U.S. price and the foreign

market value and no adjustment was made to U.S. price. For those sales

where CV was used as the basis for foreign market value, we used third

country SG&A expenses, as well as third country profit in determining

CV for both companies. Since third country SG&A and profit reflect the

benefits from the export subsidies, we have similarly made no

adjustment to U.S. price for the benefits from export subsidies.

Comment 2: Assessment of Antidumping Duties

Respondents assert that, in accordance with section 737(a) of the

Act, the Department should instruct Customs to ``cap'' their

antidumping duty liability for entries made between the time of the

preliminary determination in the less-than-fair-value investigation and

the final injury determination by the International Trade Commission

(ITC) at the amount collected as security. Respondents assert that the

cap should apply regardless of whether security was provided in the

form of cash or a bond. In support of this position, respondents rely

on Daewoo Electronics Co., Ltd. v. United States, 6 F.3d 1511 (Fed.

Cir. 1993).

DOC Position

We agree with respondents that Heveafil's and Rubberflex's

antidumping duty liability for entries made between the Department's

preliminary determination and the ITC's final injury determination in

this case should be ``capped'' at the amount collected as security for

antidumping duties, and the Department will instruct the U.S. Customs

Service accordingly. Section 737(a)(1) of the Act [19 U.S.C.

1673f(a)(1)] provides:

(a) Deposit of Estimated Antidumping Duties Under

Sec. 733(d)(2).--If the amount of a cash deposit collected as

security for an estimated antidumping duty under section 733(d)(2)

is different from the amount of the antidumping duty determined

under an antidumping duty order issued under section 736, then the

difference for entries of merchandise entered, or withdrawn from

warehouse, for consumption before notice of the affirmative

determination of the Commission under section 735(b) is published

shall be--

(1) disregarded, to the extent that the cash deposit collected

is lower than the duty under the order

* * * * *

Section 737(a)(1) of the Act, known as the ``provisional measures

deposit cap,'' operates to cap (i.e., limit) the assessment rate at the

amount provided as security for estimated antidumping duty liability at

the time the subject merchandise is entered into U.S. commerce. See,

e.g., AOC International, Inc. v. United States, 721 F. Supp. 314, 322-

323 (CIT 1989) (``AOC International''), Daewoo Electronics v. United

States, 6 F.3d 1511, 1520-22 (Fed. Cir. 1993) (``Daewoo''), and

Torrington Co. v. United States, 903 F. Supp. 79, 88 (CIT 1995).

Moreover, the Department's regulation implementing section

737(a)(1) of the Act makes clear that the provisional measures deposit

cap applies whether the security for antidumping duty liability is

provided by cash deposit or bond. The relevant regulation, 19 CFR

section 353.23, provides in relevant part:

This section applies to the merchandise entered, or withdrawn

from warehouse, for consumption before the date of publication of

the Commission's notice of affirmative final determination. If the

cash deposit or bond required under the Secretary's affirmative

preliminary determination or affirmative final determination is

different from the dumping margin * * *, the Secretary will instruct

the Customs Service to disregard the

[[Page 54771]]

difference to the extent that the cash deposit or bond is less than

the dumping margin * * *. (emphasis supplied)

Thus, the provisional measures deposit cap that limits the amount

of assessment at the amount collected as security on the subject

merchandise as entered before the ITC's final injury determination

applies whether that security is provided in the form of a cash deposit

or a bond. The courts have repeatedly upheld the Department's practice

in this regard. See, e.g., Daewoo, 6 F.3d at 1521 and AOC

International, 721 F. Supp at 723.

In the instant case, there are four provisional measures deposit

caps. From the period of April 2, 1992 to April 28, 1992, the amount of

security required for both respondents' entries was zero. See

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Extruded Rubber Thread From

Malaysia, 64 FR 12287, 12290 (April 2, 1992) (``Preliminary

Determination''). From the period of April 28, 1992 to August 25, 1992,

the amount of security required was 2.62 percent and 2.22 percent for

Heveafil and Rubberflex, respectively. Id. From the period of August

25, 1992 to October 7, 1992, the amount of security required was 10.68

percent and 22.00 percent for Heveafil and Rubberflex, respectively.

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

Rubber Thread from Malaysia 57 FR 38465 (August 25, 1992). From the

period of October 7, 1992 to October 15, 1992 (i.e., the date of

publication of the International Trade Commission's final

determination), the amount of security required was 10.68 percent and

20.38 percent for Heveafil and Rubberflex, respectively. See Final

Determination: Extruded Rubber Thread from Malaysia 57 FR 47351

(October 15, 1992).

Accordingly, we will instruct the U.S. Customs Service to cap

respondents' dumping liability on the entries in question at the amount

collected as security.

Comment 3: Assessment of Antidumping Duties More Than 120 Days After

the Department's Preliminary Determination and Before Publication of

the ITC's Final Injury Determination

Relying on Article 10.3 of the Antidumping Code of the General

Agreement on Tariffs and Trade (GATT), respondents assert that the

Department does not have the authority in an antidumping investigation

to impose provisional measures for more than 120 days after the

Department's preliminary determination and, therefore, does not have

the authority to assess antidumping duties on entries made on August 1,

1992, through September 26, 1992. Accordingly, respondents argue that

these entries should be liquidated without regard to antidumping

duties.

DOC Position

We disagree with respondents that no provisional measures could be

imposed, and no dumping duties can be assessed, on entries made during

the period August 1, 1992, through September 26, 1992.

In the Preliminary Determination, we stated:

``Effective April 28, 1992, however, the Department will

terminate the suspension of liquidation and the deposit of estimated

countervailing duties in the countervailing duty investigation,

because, in accordance with Sec. 705 of the Act, and article 5,

paragraph 3 of the Subsidies Code, provisional measures may remain

in effect no longer than 120 days. Consequently, the adjustment to

the United States price for countervailing duties imposed will not

be made for entries made on or after this date. Therefore, by virtue

of this antidumping determination, on April 28, 1992, we will also

direct the U.S. Customs Service to suspend liquidation of all

entries of extruded rubber thread from Malaysia, as defined in the

``Scope of the Investigation'' section of this notice, that are

entered, or withdrawn from warehouse, for consumption on or after

April 28, 1992. In addition, the U.S. Customs Service shall require

a cash deposit or posting of a bond on these entries equal to the

estimated preliminary dumping margins shown above. This suspension

of liquidation, when imposed, will remain in effect until further

notice.'' Preliminary Determination, 60 FR at 11290.

Article 10.3 of the GATT Antidumping Code specifically states that the

imposition of provisional measures for antidumping duty liability

purposes may extend beyond four months (i.e., 120 days) to six months

(i.e., 180 days). Article 5.3 of the GATT Subsidies Code (unlike

Article 10.3 of the GATT Antidumping Code) does not contain a similar

provision for the extension of provisional measures. Therefore, in a

countervailing duty case, we do not impose provisional measures beyond

the 120 days, as stated in the Preliminary Determination. Thus, in the

Preliminary Determination, the Department did not terminate the

imposition of provisional measures for antidumping liability purposes

after 120 days as it did with respect to the imposition of provisional

measures for countervailing duty liability. Indeed, the Preliminary

Determination states that ``[t]his [AD] suspension of liquidation * * *

will remain in effect until further notice.'' Preliminary

Determination, 60 FR at 11290. The Department's differing treatment of

provisional measures in the antidumping and countervailing duty cases

is consistent with our GATT obligations.

Furthermore, there is no requirement in the statute that there be a

request for an extension of provisional measures. In fact, it is the

Department's practice (see, e.g., Notice of Final Determination of

Sales at Less Than Fair Value: Certain Pasta from Italy, 61 FR 30326

(June 14, 1996)) to infer a request for the extension of the

provisional measures period when, as in this case, exporters request an

extension of the final determination pursuant to Sec. 735(a)(2) of the

Act. This practice is consistent with our new statute, which expressly

incorporates the GATT provisions. Therefore, because provisional

measures for antidumping duty liability purposes were properly imposed

on entries made beyond the 120 days, the Department will instruct the

U.S. Customs Service to assess antidumping liability on entries made

during the period August 1, 1992, through September 26, 1992.

Comment 4: Contemporaneous Product Comparisons

According to Heveafil, the concordance program used in calculating

the preliminary results does not limit the sales chosen as the ``most

similar'' merchandise to U.S. sales to contemporaneous third-country

sales. Heveafil argues that the Department should revise its product

concordance programs to ensure that matches are made using only

contemporaneous sales.

DOC Position

We agree and have revised our product concordances for Heveafil

accordingly. Moreover, although this issue was not raised with respect

to Rubberflex, it also applies to the comparisons selected for this

respondent. Consequently, we have also revised the product concordances

for Rubberflex to take contemporaneity into account in selecting the

most similar merchandise.

Comment 5: Alleged Clerical Errors in the Margin Calculations for

Heveafil

Heveafil argues that the Department made the following clerical

errors in the calculation of its margin for purposes of the preliminary

results: (1) The Department failed to adjust third country price for

packing material expenses; (2) The Department deducted from USP the per

kilogram cost of certain movement expenses, rather than the per pound

cost; (3) the Department did not include certain sales reclassified as

ESP sales in its ESP concordance; (4)

[[Page 54772]]

the Department double-counted effluent treatment costs in the

calculation of COP and CV; and (5) G&A and financial expenses included

in COP and CV were overstated because Heveafil's cost of sales stated

on the income statement did not include fixed overhead. Heveafil

requests that the Department correct these errors for purposes of the

final results.

DOC Position

We agree with Heveafil on all items noted above and have made the

appropriate corrections for purposes of the final results.

Comment 6: Consolidated G&A and Financial Expenses

Heveafil argues that the Department should not include any costs of

its holding company, Perbadanan Nasional Berhad (PNB), in calculating

G&A and financial expenses for purposes of computing COP and CV.

Heveafil asserts that the Department does not collapse subsidiaries

with entities which do nothing more than hold stock in the subsidiary.

In support of this contention, Heveafil cites Silicon Metal from

Argentina: Final Results of Antidumping Administrative Review (58 FR

65336, Dec. 14, 1993) (Silicon Metal). According to Heveafil, because

PNB is merely a holding company, it is not actively involved in running

Heveafil's business.

Moreover, regarding G&A, Heveafil contends that any management

services provided by PNB (e.g., participation on the Board of

Directors) are paid for by Heveafil and, thus, are already reflected in

the reported G&A expenses. Finally, Heveafil asserts that any internal

audits performed by PNB are not for the benefit of Heveafil, but rather

for PNB's shareholders. Therefore, Heveafil contends that these costs

are not part of the cost of producing rubber thread.

DOC Position

We disagree with Heveafil that a portion of PNB's G&A and interest

expenses should not be allocated to Heveafil. For G&A, it is the

Department's long-standing practice to require the respondent to report

not only its own G&A expenses, but also a proportional share of an

affiliated party's G&A expense incurred on the reporting entity's

behalf. (See, e.g., Final Determination of Sales at Less than Fair

Value: Certain Carbon Steel Butt-Weld Pipe Fittings from the United

Kingdom, (60 FR 10558, 10561, February 27, 1995); Final Determination

of Sales at Less than Fair Value: Certain Hot-Rolled Carbon Steel Flat

Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain

Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-

length Carbon Steel Plate from Canada, (58 FR 37082, 37114, July 9,

1993); and, Final Determination of Sales at Less Than Fair Value:

Ferrosilicon from Venezuela, (58 FR 27524, May 10, 1993). Furthermore,

the transactions that did occur between PNB and Heveafil clearly

demonstrated that PNB's involvement was more than that of a passive

investor. For example, PNB accountants performed internal audits on

Heveafil's accounting records which resulted in changes to Heveafil's

internal accounting controls and operating procedures. Further,

Heveafil's reliance on Silicon Metal is misplaced because it is

contrary to the facts of the instant review. In that determination, the

Department found that the company in question was privately owned by

seven Argentine citizens and that no corporate transactions occurred

between the parties. As for Heveafil's concern that our G&A adjustment

may double count some reimbursed general expenses (e.g., Board of

Director fees), we corrected our calculation for the final results to

avoid double counting the reimbursed G&A expenses.

It is also the Department's long-standing practice to calculate

interest expense for COP/CV purposes based on the borrowing costs

incurred by the consolidated group. (See, e.g., Small Diameter Circular

Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from

Italy, (60 FR 31981, 31990, June 19, 1995).) This methodology, which

has been upheld by the CIT in Camargo Correa Metals, S.A. v. U.S., 17

CIT 897, Slip Op. 93-163, at 12-13 (CIT 1993), is based on the fact

that the consolidated group's controlling entity has the power to

determine the capital structure of each member of the group. In this

case, the controlling entity has such power because it owns a

substantial majority of Heveafil.

Comment 7: Inclusion of a Write-Off of Idle Equipment in Heveafil's G&A

Heveafil argues that the Department inappropriately increased its

G&A expenses by including an extraordinary loss related to idle plant

equipment. Heveafil maintains that, while this loss appeared in its

draft financial statements, it was removed from the final financial

statements issued by Heveafil's independent auditors. Heveafil further

maintains that it provided copies of the final audited statements at

verification, although these copies were not taken as verification

exhibits. Heveafil notes, however, that the working trial balance

associated with the final financial statement is included in the record

of this administrative review as cost verification exhibit three, which

demonstrates that the assets are still recorded on the books.

DOC Position

We disagree with Heveafil that the write-off of idle manufacturing

equipment should not be included in the COP and CV. In 1993, company

officials deemed this manufacturing equipment worthless. Heveafil's

write-off is documented in footnote six of Filmax Sendirian Berhad's (a

subsidiary of Heveafil's) 1993 audited financial statements provided as

a supplemental section D exhibit. These financial statements are signed

and dated by the company's independent auditors, they contain signed

declarations of accuracy by the Chairman and Director of the company,

and they contain the official dated regulatory seal of the Malaysian

Commissioner for Oaths. As for Heveafil's concern that the 1993 working

trial balance taken as cost verification exhibit three shows that it

still owns these assets, this does not change the fact that this

manufacturing equipment was considered worthless, unusable, and no

longer depreciable by company officials during the POR.

There is nothing unusual about a company's writing off

manufacturing plants or equipment. Accordingly, we do not consider

write-offs to be a type of extraordinary expense that we exclude from

the cost of producing subject merchandise. The Department has in the

past included similar equipment write-offs in the calculation of COP

and CV. (See, e.g., Final Determination of Sales at Less Than Fair

Value: Small Diameter Circular Seamless Carbon and Alloy Steel,

Standard, Line and Pressure Pipe from Italy, 60 FR 31981, 31990 ( June

19, 1995); Final Results of Antidumping Duty Administrative Review:

Certain Cut-To-Length Carbon Steel Plate from Germany, 61 FR 13834,

13836 (March 28, 1996); and Final Results of Antidumping Duty

Administrative Review: High-Tenacity Rayon Filament Yarn from Germany,

59 FR 15897, 15899 (March 28, 1995).)

Finally, although Heveafil attempted to defer this write-off based

on the contents of revised 1993 audited financial statements, these

revised financial statements were properly rejected and returned to the

respondent because they constituted new factual information that was

untimely submitted within the meaning of 19 CFR 353.31(a)(3). See

Letter from Louis Apple, Acting Office Director, Group II,

[[Page 54773]]

Office of AD/CVD Enforcement, to White & Case, dated August 21, 1996.

Comment 8: Alleged Clerical Errors in the Margin Calculations for

Rubberflex

Petitioner alleges that the Department made two clerical errors in

the calculation of Rubberflex's margin for purposes of the preliminary

results. First, petitioner claims that the Department did not deduct

certain movement expenses denominated in Hong Kong dollars (e.g.,

warehousing in Hong Kong and Hong Kong import duties) from the net

price used in the cost test. In addition, petitioner maintains that the

Department converted CV into pounds by dividing by 2.2046 twice.

Rubberflex disagrees. Regarding the question of movement expenses,

Rubberflex notes that (1) it did not incur the types of expenses cited

by petitioner on its purchase price sales, and (2) the Department

properly deducted all movement expenses on its ESP sales. Regarding the

calculation of CV, Rubberflex states that petitioner clearly misread

the computer programs used in the preliminary results. Specifically,

Rubberflex notes that petitioner's allegation is based on the computer

language for the calculation of FMV for price-to-price comparisons,

rather than the CV calculation language.

DOC Position

We agree with Rubberflex. Upon review of our computer programs, we

find that the movement expenses referenced by petitioner were

appropriately deducted from net price for ESP sales (see lines 1184,

1186, and 1190 of the computer program created for purposes of the

preliminary results). Regarding purchase price transactions, we note

that Rubberflex did not incur the expenses referenced in petitioner's

brief. Because these expenses did not exist, they were not deducted

from net price.

Regarding CV, we also agree with Rubberflex that we properly

converted the per kilogram costs into pounds (see lines 1979 and 2008

in the ESP preliminary program and lines 1679 and 1704 in the purchase

price preliminary program). Accordingly, we have made no changes to the

movement expense or CV calculations performed for Rubberflex for

purposes of the final results.

Comment 9: Matching Criteria for Diaper Grade Thread

Petitioner claims that the Department placed an undue importance on

the matching criterion of color when matching sales of diaper grade

thread. Specifically, petitioner maintains that diaper grade thread is

differentiated from other types of rubber thread by color only.

Therefore, because Rubberflex's control numbers included a designation

for grade of thread (i.e., diaper- vs. non-diaper grade), the

Department counted color twice in its matching methodology.

Rubberflex maintains that the Department's matching methodology was

not only appropriate, but it was also based on the characteristics

identified in the questionnaire. Moreover, Rubberflex asserts that the

company's differentiation of diaper grade in its control numbers had no

bearing on the results of the model matching because control numbers

were not used in determining the most similar merchandise.

DOC Position

We agree with Rubberflex. All matches involving non-identical

products were based solely on the model matching criteria identified in

the questionnaire and not on the control numbers. As such, contrary to

petitioner's assertion, we made no distinction between diaper and non-

diaper grades when making non-identical comparisons. Because neither

petitioner nor respondents have contested the matching hierarchy

established at the beginning of the review, nor has any interested

party provided valid reasons to depart from this hierarchy, we have

continued to use it for purposes of the final results.

Final Results of Review

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

exist for the period April 2, 1992, through September 30, 1993:

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

Margin

Manufacturer/ exporter Review period (percent)

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

Heveafil......................... 4/2/92-9/30/93............ 10.65

Rubberflex....................... 4/2/92-9/30/93............ 1.88

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

The Department shall determine, and the U.S. 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 U.S. Customs Service.

Furthermore, the following deposit requirement will be effective

for all shipments of subject merchandise from Malaysia entered, or

withdrawn from warehouse, for consumption on or after the publication

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

Sec. 751(a)(1) of the 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 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; and, (4) the cash deposit rate for all other manufacturers

or exporters will be 15.16 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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: October 16, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-27056 Filed 10-21-96; 8:45 am]

BILLING CODE 3510-DS-P