Brass Sheet and Strip from Canada; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-601]

Brass Sheet and Strip from Canada; 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: The Department of Commerce (the Department) has conducted an

administrative review of the antidumping duty order on brass sheet, and

strip (BSS) from Canada. The review covers one manufacturer/exporter of

this merchandise to the United States, and the period January 1, 1993

through December 31, 1993. The review indicates the existence of

dumping margins for this period.

We have preliminarily determined that sales have been made below

the foreign market value (FMV). 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 United States price (USP) and FMV.

Interested parties are invited to comment on these preliminary

results. Parties who submit argument in this proceeding are requested

to submit with the argument (1) a statement of the issue and (2) a

brief summary of the argument.

EFFECTIVE DATE: January 22, 1996.

FOR FURTHER INFORMATION CONTACT: Arthur N. DuBois, Karen Park, or

Thomas F. Futtner, Office of Antidumping Compliance, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue NW., Washington, D.C.

20230, telephone: (202) 482-5253.

SUPPLEMENTARY INFORMATION:

Background

On January 12, 1987, the Department published in the Federal

Register (52 FR 1217) the antidumping order on BSS from Canada. Based

on timely requests for review, on February 17, 1994, in accordance with

19 CFR 353.22(c), we initiated an administrative review of Wolverine

Tube (Canada) Inc. (Wolverine), for the period January 1, 1993 through

December 31, 1993 (59 FR 7979).

Applicable Statute and Regulations

The Department has conducted this administrative review in

accordance with section 751 of the Tariff Action 1930, as amended (the

Tariff Act). Unless otherwise indicated, all citations to the statute

and to the Department's regulations refer to the provisions as they

existed on December 31, 1994.

Scope of the Review

Imports covered by the review are shipments of brass sheet and

strip, other than leaded and tin brass sheet and strip. The chemical

composition of the covered products is currently defined in the Copper

Development Association (C.D.A.) 200 Series or the Unified Numbering

System (U.N.S.) C2000. Products whose chemical composition is defined

by other C.D.A. or U.N.S. series are not covered by this order.

The physical dimensions of the products covered by this review are

brass sheet and strip of solid rectangular cross section over 0.006

inches (0.15 millimeters) through 0.188 inches (4.8 millimeters) in

finished thickness or gauge, regardless of width. Coil, wound-on-reels

(traverse wound), and cut-to-length products are included. During the

review such merchandise was classifiable under Harmonized Tariff

Schedule (HTS) subheadings 7409.21.00 and 7409.29.00. Although the HTS

subheading is provided for convenience and for Customs purposes, the

written description of the scope of this order remains dispositive.

The review covers one Canadian manufacturer/exporter, Wolverine,

and the period January 1, 1993 through December 31, 1993.

Verification

As provided in section 776(b) of the Tariff Act, we verified

information provided by the respondent by using standard verification

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

facilities, the examination of relevant sales and financial records,

and selection of original documentation containing relevant

information. Our verification results are outlined in the public

versions of the verification report.

United States Price

We based USP on purchase price, in accordance with section 772 of

the Act.

We calculated purchase price based on packed, delivered, duty-paid

prices. In accordance with section 772(d)(2) of the Act, we made

deductions for movement expenses and customs duties. Movement expenses

included fees for brokerage and handling, and U.S. and foreign inland

freight.

In addition, we adjusted USP for taxes in accordance with our

practice outlined in the following section on Value-Added Taxes.

No other adjustments were claimed or allowed.

Value-Added Taxes

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 U.S. price 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 U.S. price by multiplying the adjusted U.S. price 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

[[Page 1561]]

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 General Agreement on

Tariffs and Trade. Second, the URAA explicitly amended the antidumping

law to remove consumption taxes from the home market price and to

eliminate the addition of taxes to U.S. price, 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 United States price rather than

subtracted from home market price, it does result in tax-neutral duty

assessments. In sum, the Department has elected to treat consumption

taxes in a manner consistent with its longstanding policy of tax-

neutrality and with the GATT.

Cost of Production Analysis

Due to the existence of sales below the cost of production (COP) in

the last completed review of Wolverine, the Department has reasonable

grounds to believe or suspect that sales below the COP may have

occurred during this review. See Carbon Steel Butt Weld Pipe Fittings

from Taiwan; Preliminary Results of Administrative Review, 59 FR 66001

(December 22, 1994). Therefore, pursuant to section 773(b) of the Act,

in this review we initiated a cost of production (COP) investigation of

Wolverine.

In accordance with 19 CFR 353.51(c) we calculated COP based on the

cost of materials, fabrication, and general expense, but excluding

profit, incurred in producing such or similar merchandise. The

Department relied on submitted COP and constructed value (CV)

information except in the following instances where the costs were not

appropriately quantified or valued:

1. We added the cost of subcontracted labor to the total direct

labor pool to reflect the total labor costs associated with the

production of the subject merchandise.

2. We reclassified certain general and administrative (G&A)

expenses to fixed overhead cost to allocate the appropriate G&A

expenses incurred for the production of subject merchandise.

After computing COP, we compared it to the reported home market

prices net of movement charges and discounts. In accordance with

section 773(b) of the Tariff Act and 19 CFR 353.51(a), in determining

whether to disregard home market sales made at prices below the COP, we

examined whether such sales were made in substantial quantities over an

extended period of time, and whether such sales were made at prices

which permitted recovery of all costs within a reasonable period of

time in the normal course of trade.

In accordance with Section 773(b)(1) of the Tariff Act, to

determine whether sales below cost had been made in substantial

quantities, we applied the following methodology. For each model for

which less than 10 percent, by quantity, of the home market sales

during the POR that were made at prices below COP, we included all

sales of that model in the computation of FMV. For each model for which

10 percent or more, but less than 90 percent, of the home market sales

during the POR were priced below the merchandise's COP, we excluded

from the calculation of FMV those home market sales priced below the

merchandise's COP, provided that they were made over an extended period

of time. For each model for which 90 percent or more of the home market

sales during the POR were priced below COP and made over an extended

period of time, we disregarded all sales of that model in our

calculation and, in accordance with 773(b) of the Tariff Act, we used

the constructed value (CV) of those models, as described below. See

Final Results of Antidumping Duty Administrative Review; Tapered Roller

Bearings Four Inches or Less in Outside Diameter, and Certain

Components Thereof, 56 FR 26054, 26060 (June 6, 1991).

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

determine whether sales below cost had been made over an extended

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

cost occurred for a particular model to the number of months during the

POR in which that model was sold. If a model was sold in fewer than

three months during the POR, we did not exclude the below cost sale

unless there were below cost sales in each month of sale. If a model

was sold in three or more months during the POR, we did not exclude

below-cost sales unless there were sales below cost in at least three

of the months in which the model was sold. See Notice of Final

Determination of Sales at Less Than Fair Value: Certain Carbon Steel

Butt Weld Pipe Fitting from Thailand, 60 FR 10552, 10554 (February 27,

1995).

The Department determined that Wolverine provided no evidence that

its below COP prices would permit recovery of all costs within a

reasonable period time in the normal course of trade. Therefore, in

accordance with Section 773(b) we disregarded these below cost sales in

our FMV calculations.

Foreign Market Value

The Department used home market price to calculate FMV, as defined

in section 773 of the Act. Because the home market was viable as

defined by 19 CFR 353.48(a), we compared U.S. sales with sales of such

or similar merchandise sold in the home market.

FMV was based on packed, delivered prices to unrelated home market

purchasers. In accordance with 19 CFR 353.56 we made adjustments for

bona fide difference in the circumstances of the sales compared, where

applicable, for home market credit, post-sale inland freight, and U.S.

credit cost. We made no adjustment for differences in packing costs.

We calculated FMV using monthly weighted-average prices of brass

sheet and strip having the same characteristics with respect to alloy,

gauge, width, temper and form.

We adjusted for Canadian consumption tax as mentioned above.

No other adjustments were claimed or allowed.

Preliminary Results of the Review

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

following margin exists for the period January 1, 1993, through

December 31, 1993:

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Margin

Manufacturer/producer/exporter percent

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Wolverine................................................... 1.39

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Interested parties may request disclosure within 5 days of the date

of publication of this notice and may request a hearing within 10 days

of publication, Any hearing, if requested, will be held as early as

convenient for the parties but not later than 44 days after the date of

publication or the first business day thereafter. Case briefs and/or

written comments from interested parties may be submitted no later than

30 days after the date of publication of this notice. Rebuttal briefs

and rebuttal comments, limited to issues raised in the case briefs, may

be filed not later

[[Page 1562]]

than 37 days after the date of publication of this notice. The

Department will publish the final results of this administrative

review, including the results of its analysis of issues raised in any

such written comments or at a hearing.

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. Upon completion of the final results in this review the

Department will issue appropriate appraisement instructions directly to

the U.S. Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of our final results of review for all shipments of

the subject merchandise 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

Act:

(1) The cash deposit rate for the reviewed company will be the rate

established in the final results of this review;

(2) for previously reviewed or investigated companies not listed

above, the cash deposit rate will continue to be the company-specific

rate published in 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 will be the rate established

in 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 conducted by the Department, the cash

deposit rate will be 8.10 percent, the all others rate established in

the LTFV investigation (51 FR 44319).

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

This notice also serves as a preliminary 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 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: December 14, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 96-750 Filed 1-19-96; 8:45 am]

BILLING CODE 3510-DS-P