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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-504]

Certain Porcelain-on-Steel Cookware From Mexico: Final Results of

Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of Antidumping Duty Administrative

Review.

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SUMMARY: On January 31, 1997, the Department of Commerce (the

Department) published the preliminary results of the administrative

review of the antidumping duty order on certain porcelain-on-steel

cookware from Mexico (62 FR 4723) (preliminary results). The review

covers two manufacturers/exporters of the subject merchandise to the

United States and the period December 1, 1994, through November 30,

1995.

We gave interested parties an opportunity to comment on the

preliminary results. 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: August 7, 1997.

FOR FURTHER INFORMATION CONTACT: Kate Johnson or Dolores Peck, AD/CVD

Enforcement, Group II, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW., Washington, DC 20230, telephone: (202) 482-

4929.

SUPPLEMENTARY INFORMATION:

Background

On January 31, 1997, the Department published in the Federal

Register the preliminary results of the administrative review of the

antidumping duty order on certain porcelain-on-steel (POS) cookware

from Mexico (62 FR 4723). On March 3, 1997, and March 10, 1997, General

Housewares Corp. (petitioner) and, Cinsa and ENASA submitted case and

rebuttal briefs. The Department held a hearing on March 27, 1997.

During June 23-27, 1997, the Department verified respondent's

submissions concerning the issues of Cinsa's and ENASA's cross

manufacturing capability, alleged duty reimbursement and frit purchases

from affiliated suppliers. On July 18, 1997, the Department issued the

verification report and requested comments from interested parties. The

Department has now completed its administrative review in accordance

with section 751 of the Tariff Act of 1930, as amended (the Act).

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

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

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

regulations, codified at 19 CFR part 353 (April 1996).

Scope of the Review

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

cookware, including tea kettles, which 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) subheading 7323.94.00. Kitchenware

currently entering under HTSUS subheading 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.

Changes Since the Preliminary Results

We have made the following changes in these final results:

1. We reclassified ENASA's U.S. sales pursuant to a requirements

contract as constructed export price (CEP) sales. See Comment 5 below.

2. We calculated a return freight figure for merchandise returned

to Yamaka by its unrelated customer using adverse facts available. We

are assuming that all unsold merchandise was returned to the warehouse

in Laredo, Texas. See Comment 7 below.

3. We reclassified Cinsa's and ENASA's home market warehouse

expenses as movement expenses and have deducted the reported amount on

sales made from remote warehouses in Mexico City and Guadalajara. See

Comment 8 below.

4. We deducted the reported indirect selling expenses from USP for

CEP sales made by Cinsa International Corp. (CIC) for both Cinsa and

ENASA. See Comment 9 below.

5. We have not deducted Cinsa's and ENASA's reported Mexican

indirect selling expenses (i.e., indirect selling expenses incurred in

Mexico on U.S. sales) from the CEP calculation. See Comment 10 below.

6. We used the Federal Reserve Bank's actual daily exchange rates

for currency conversion purposes. See Comment 12 below.

7. We increased the frit portion of direct materials costs for

Cinsa and ENASA to reflect only the undocumented portion of costs

savings attributable to volume discounts on purchases from an

affiliated frit supplier.

8. Computer Programming Errors

A. We corrected an error in both the Cinsa and ENASA concordance

programs that incorrectly limited the number of home market sales

included in the concordance.

B. We corrected an error in both the Cinsa and ENASA concordance

and margin programs that incorrectly matched sales within a 90/60 day

window, since during periods of high inflation, we only use home market

sales in the same month as the U.S. sale for comparison purposes.

C. We corrected an error in both the Cinsa and ENASA concordance

programs that incorrectly rounded the averaged, indexed COP and CV.

D. We corrected errors in the margin program for ENASA that

incorrectly omitted weighted average commissions and indirect selling

expenses, causing an incorrect calculation of the commission offset.

E. We calculated an adjustment for CEP profit for both Cinsa and

ENASA in the margin program.

F. We made adjustments for differences in packing expenses for both

Cinsa and ENASA when comparing non-identical merchandise.

Interested Party Comments

Comment 1: Should Cinsa and ENASA be collapsed?

Petitioner argues that the Department should collapse the

affiliated parties Cinsa and ENASA and treat them as a single entity

for purposes of assigning a dumping margin. Petitioner notes that, in

this review, the two companies are controlled by the same board of

directors, the same individuals manage the two companies, and the

companies' plants are situated adjacent to each

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other on the same premises. Therefore, petitioner claims, the

Department should determine, based on the ``totality of the

circumstances,'' that Cinsa and ENASA should be collapsed. In addition,

petitioner contends, citing the July 18, 1997 verification report, that

Cinsa and ENASA did not satisfy their burden of showing that

substantial retooling would be necessary to shift production of medium

gauge (MG) cookware from ENASA to Cinsa or light gauge (LG) cookware

from Cinsa to ENASA.

Petitioner adds that in considering the companies' ability to shift

production, the Department must not discount the companies' ability to

cooperate with each other. Petitioner states that the Department need

not focus its production-shifting analysis on purchase of new

equipment. Instead, petitioner suggests, Cinsa and ENASA could shift

production by simply moving the machinery they currently own from one

adjacent plant to another or sell components produced in one plant to

the other plant, given that they are managed by the same individuals.

Furthermore, petitioner argues that collapsing is necessary to

prevent circumvention in this case. Accordingly, petitioner argues that

the Department should adopt an adverse inference with respect to Cinsa

and ENASA and conclude that production of LG and MG cookware could be

shifted between the companies without substantial retooling.

Cinsa and ENASA maintain that the Department properly classified

them as two separate companies on the grounds that their respective

production facilities were separate and distinct, and that the

machinery used by Cinsa to produce its LG cookware lines and that used

by ENASA to produce its heavy gauge (HG) and MG cookware lines could

not be used interchangeably without undergoing fundamental and

expensive retooling. Cinsa and ENASA argue that petitioner's claim that

they can shift production is not supported by the evidence on the

record, including the July 18, 1997 verification report.

DOC Position: The Department has determined that Cinsa and ENASA

should not be collapsed based on the facts on the record of this

segment of the proceeding. The evidence on the record supporting this

decision includes the July 18, 1997 verification report noting the

differences and similarities between the Cinsa and ENASA production

facilities and the different cookware lines produced by the two

companies. Due to the proprietary nature of the facts obtained at

verification, a more complete analysis of this issue appears in the

July 30, 1997 Memorandum to Louis Apple from The Team.

The Department's current practice, recently codified at 19 CFR

351.401(f), 62 FR 27410 (May 19, 1997), is to treat affiliated

producers as a single entity only when both of two criteria are met:

(1) Those producers have production facilities for similar or identical

products that would not require substantial retooling of either

facility in order to restructure manufacturing priorities and (2) the

Secretary concludes that there is a significant potential for the

manipulation of price or production.

The facts outlined in the verification report indicate that,

although Cinsa and ENASA can both press cookware forms from medium

gauge steel sheets, Cinsa does not have the capability to manufacture

cookware of the quality and styles produced by ENASA and ENASA does not

have the capability to produce cookware of the quality and styles

produced by Cinsa.

Furthermore, in the preliminary results of review, the Department

noted that, although we consider both ENASA's HG and Cinsa's LG

cookware to be subject merchandise, they are not similar products and

therefore cannot be reasonably compared for the purposes of determining

dumping margins. (ENASA's MG cookware, which is essentially a lighter,

less expensive version of the Euro-style cookware ENASA also produces

in HG steel on the same production line, may be comparable to ENASA's

HG Euro-style cookware with a difference in merchandise adjustment.

Because there were no sales of ENASA's MG cookware to the United States

during the POR, we did not need to reach that comparison question in

this review.) See Comment 4.

Because we determined that the physical infrastructures of the two

firms are insufficiently similar to meet the production facility

requirement of the collapsing test, it is not appropriate to treat

these firms as a single entity for the purpose of assigning an

antidumping margin in this administrative review. Further, having made

this determination, we do not need to examine the questions of

significant common ownership and interlocking directors and managers,

because we need not determine whether a significant potential for

manipulation of price or production exists.

With respect to petitioner's argument that any collapsing decision

must be based on the ``totality of the circumstances,'' such that the

absence of overlapping production facilities must be weighed against

the concerns associated with a substantial degree of common control, we

disagree. It is the Department's recent practice (even under the pre-

URAA law) to refrain from collapsing firms when there are differences

in production facilities that would require substantial retooling. See

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

to-Length Carbon Steel Plate From Canada: Preliminary Results of

Antidumping Duty Administrative Review, 60 FR 42511, 42512 (August 16,

1995) ( stating that no one factor is ``determinative,'' but then

determining that two ``related parties'' should not be collapsed

``because the two companies do not make comparable products such that a

shift in production could be accomplished without fundamental and

expensive retooling). In Certain Cold Rolled Carbon Steel Flat Products

From Korea: Preliminary Results of Antidumping Duty Administrative

Review, 60 FR 65284, 65285 (December 19, 1995), the Department

clarified that having common production facilities prong is a necessary

but not sufficient condition for collapsing related firms. ``With

respect to the third factor (common production facilities), the

Department has recently clarified that, although not necessarily

determinative, this factor is essential.'' Id.

Finally, petitioner's arguments concerning the alleged ease with

which respondents could physically shift machinery from one plant to

the other are misplaced. The Department's current test examines, rather

than assumes, the current ability of the affiliated firms to shift

production. In order to evaluate the ability of two affiliated

companies to cross-manufacture, the Department takes as a point of

departure the existence of separate corporate entities with separately-

owned physical plants. From that point of departure, it analyzes the

expense and difficulty involved in physically shifting production

between the plant owned by one company and the plant owned by another,

affiliated, company. The verification report examines the cost of

retooling Cinsa's plant to produce one model, conical frying pans, from

ENASA's entire line of medium gauge, Euro-style cookware, despite the

fact that, during the POR, ENASA sold only sets (which would require

even more retooling in order to shift production) in the home market.

The verification report describes the different production

processes at Cinsa and ENASA as processes developed to accommodate the

ranch-style and Euro-style cookware, respectively. Because the

technical requirements of these two cookware types are different, the

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retooling-potential exercise at verification involved retooling each of

Cinsa's production operations to the corresponding operation necessary

to produce ENASA's Euro-style cookware, and vice versa. Based on the

close examination of this issue at verification, the Department has

concluded that it would require extensive and expensive infrastructure

changes for Cinsa and ENASA to shift production between them.

Finally, Petitioner now suggests that, in view of the high degree

to which Cinsa and ENASA are affiliated and cooperate with each other,

the Department should also consider Cinsa's physical assets to be

ENASA's physical assets, and vice versa, such that one firm could

simply take, without compensation, the other firm's assets, thus

permitting production of the cookware that required such machines

without the cost of purchasing new machines. Adding an entire

production line of large expensive multistage integrated production

equipment would inherently constitute ``substantial retooling.''

Petitioner's suggestion that Cinsa and ENASA could simply move the

machinery from one plant to another is, in effect, an admission that

different machinery, not merely retooling, would be needed to produce

ranch-style cookware at ENASA or Euro-style cookware at Cinsa. The

suggestion that the affiliated firms could avoid the need for retooling

by purchasing components from each other likewise fails to recognize

the fundamental incompatibility of the two production lines.

With regard to petitioner's concerns about circumvention, the

Department has determined that Cinsa and ENASA are affiliated firms.

Thus, sales between them (unless shown to be at arm's length) would be

disregarded and future antidumping margins for each company calculated

based on the sale to the first unaffiliated parties in both the United

States and Mexico. Dumping margins on any sales to the United States

would therefore be based on the extent of price discrimination found to

exist for those U.S. sales.

Comment 2: Reporting of production capabilities.

Petitioner asserts that the Department should use total, adverse

facts available in calculating a margin for Cinsa and ENASA because,

they claim, Cinsa and ENASA significantly impeded the review by

misleading the Department with regard to each affiliate's cross

production capability. Specifically, petitioner states that, for

example, the Department has now confirmed that Cinsa and ENASA can each

stamp and form medium-gauge cookware; furthermore, petitioner notes

that the estimated cost to shift production from ENASA to Cinsa

provided at verification was far less than that provided in Cinsa and

ENASA's June 16, 1997 submission. Therefore, petitioner urges that the

Department should find that Cinsa and ENASA did not act to the best of

their ability in reporting production capability information, and that

failure to do so justifies the use of an adverse inference with respect

to the collapsing determination, i.e., the Department should determine

that Cinsa and ENASA should be collapsed.

Cinsa and ENASA state that petitioner's allegations are misleading

in that they fail to reflect the fact that in their June 16, 1997,

supplemental questionnaire response Cinsa and ENASA were responding to

the Department's questionnaire regarding Cinsa's ability to stamp the

steel forms for the entire range of ENASA ``Euro-style'' products.

Citing to petitioner's June 10, 1997, Affidavit of Dean Samford,

respondents note that petitioner's own expert admitted that Cinsa's

presses did not have enough power to stamp the thickest gauges of steel

used by ENASA to manufacture its HG ``Euro-style'' cookware. Moreover,

respondents argue that Cinsa's ability to produce ``Euro-style''

cookware was not limited to the inability of stamping thicker gauges of

metal, but was also based on the necessity of employing different

tooling and machinery, which Cinsa does not currently possess. Finally,

respondents maintain that the apparent discrepancy between respondents'

June 16, 1997, cost estimate for shifting production and the amount of

the production-shifting estimate in the verification report represents

the differences between the Department's supplemental questionnaire

request to provide costs to retool Cinsa to produce the entire ENASA

line of medium and heavy gauge ``Euro-Style cookware'' and the

Department's more conservative request at verification to estimate the

cost to retool Cinsa to produce one item, an ENASA medium gauge conical

frying pan, so as to arrive at the lowest possible estimate of

conversion costs. Accordingly, Cinsa and ENASA argue that because they

complied with all information requests with regard to production

capabilities, there is no legal or factual basis to resort to total

adverse facts available.

DOC Position: We agree with the respondents. The facts on the

record of this segment of the proceeding show that the respondents

answered to the best of their ability the Department's supplemental

questions regarding production capabilities. In addition, the

production-shifting estimate in the verification report responds to the

Department's new request, at verification, that respondents calculate

only the cost of retooling Cinsa to produce one article from the range

of ENASA products. This further inquiry was pursued as a means of

determining, in response to petitioner's concerns regarding this issue,

whether production-shifting might be possible for less than an entire

line of cookware. At verification, it became apparent that although

parties had previously referred to the cookware types in terms of

gauge, many other, interrelated, factors were intrinsic to the issue of

whether production could be shifted. Thus, earlier references to

Cinsa's inability to produce medium gauge cookware referred not to an

inability to stamp and form the thinnest gauge of medium sheet but to

Cinsa's inability to stamp and form the full range of gauges used by

ENASA and its inability to continue the process so as to produce the

type of medium gauge cookware produced by ENASA (i.e., Euro-style

cookware). See Memorandum to Louis Apple from Eric Warga, dated July

30, 1997.

Comment 3. Class or kind of merchandise.

Cinsa and ENASA argue that the Department should determine that LG

and HG cookware are distinct classes or kinds of merchandise. Moreover,

Cinsa and ENASA claim that, for purposes of the preliminary results,

the Department did not consider all of the relevant criteria set forth

in Diversified Products v. United States, 572 F. Supp 883 (CIT 1983)

(Diversified Products), and failed to take into account all relevant

information in the administrative record. Cinsa and ENASA contend that

the Department should analyze the class or kind issue with the same

amount of detail that was provided in other areas of the Department's

preliminary results.

Petitioner supports the Department's preliminary determination that

LG and HG cookware are the same class or kind of merchandise and should

be assigned the same dumping margin. However petitioner disagrees that

it is appropriate to conduct a Diversified Products analysis since the

Department does not have the authority under the statute to change the

scope of the antidumping duty order.

DOC Position: We agree with petitioner that LG and HG merchandise

are within the class or kind of merchandise subject to the order. The

order on POS cookware from Mexico (51 FR 43415, December 2, 1986) is

not limited to cookware of a particular

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gauge, and Cinsa has not requested a scope inquiry to determine whether

HG cookware is outside the scope of this order. Indeed, by asking for a

separate margin for HG cookware, Cinsa concedes that such merchandise

is within the scope. There are a few cases in which the Department has

assigned separate margins to subclasses of products under the same

antidumping order (e.g., Antifriction Bearings (Other Than Tapered

Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan,

and the United Kingdom, 54 FR 20900 (May 15, 1989))--but such

exceptions occur only under very special circumstances. In the instant

review, the record does not reflect any of the extraordinary

circumstances that call for creation of a sub-class.

Furthermore, the Diversified Products criteria cited by Cinsa are

usually used to clarify whether or not a product is in scope when this

is unclear from the language of the ITA and ITC final determinations

and the order. In this case, it is undisputed that HG is within the

scope of the order. Based on our findings at verification and on the

rationale provided in our December 16, 1996 Issues Memorandum, pursuant

to 771(16)(C)(iii) we determine that although the LG cookware produced

by Cinsa and the HG cookware produced by ENASA fall within the same

class or kind of merchandise, these product types (see verification

report for details as to these product lines, which are not limited to

gauge differences) cannot reasonably be compared for purposes of

determining antidumping margins. In sum, the scope of the order is not

limited in terms of cookware gauge or limited to the cookware type

produced in LG steel by Cinsa, and because the Cinsa and ENASA products

at issue all belong to the same class/kind (POS cookware), sales of all

cookware, of whatever gauge, will be assigned a single, company-

specific margin. However, because HG Euro-style cookware and LG ranch-

style do not constitute the same ``foreign like product,'' as defined

in 19 U.S.C. 1677(16), the Department will not compare sales of LG

ranch-style cookware to sales of HG Euro-style cookware for purposes of

calculating the weighted average margin.

Comment 4: Reporting of Medium-gauge cookware production data.

Petitioner asserts that the Department should use total, adverse

facts available in calculating a margin for Cinsa and ENASA because, it

claims, Cinsa and ENASA significantly impeded the review by: (1) Not

reporting the production of MG cookware until eight months after

initiation of the review, and (2) not reporting the cost of production

(COP) for MG cookware. According to petitioner, in other cases in which

a respondent has attempted to manipulate an administrative review by

misleading the Department, the Department found that the respondent

impeded the review and used total adverse facts available or best

information available. See, e.g., Final Results of Antidumping Duty

Administrative Review: Fresh Cut Flowers from Mexico, 60 FR 49569

(September 26, 1995).

Furthermore, petitioner argues that ENASA's reported costs of

production for HG cookware are unreliable and unusable because ENASA

failed to isolate and quantify the costs of producing MG cookware from

the reported costs of producing HG cookware. Petitioner contends that

if costs associated with MG cookware were not captured in a separate

cost center, it is unclear how costs common to MG and HG cookware were

allocated. Furthermore, according to petitioner, there is no evidence

of how the differences in production efficiencies were allocated

between the unreported MG cookware and the reported HG cookware.

Lastly, petitioner asserts that because Cinsa and ENASA failed to

include MG cookware in the calculation of variable overhead, ENASA's

variable overhead costs are understated and unusable.

Cinsa and ENASA state that ENASA provided the COP of MG cookware in

its April 22, 1996, response. Cinsa and ENASA state that neither

company sold MG cookware to the United States during the POR, and

further claim that the Department never required ENASA to provide

complete sales and cost information for MG POS cookware. Moreover,

Cinsa and ENASA contend that MG cookware is not relevant to this

administrative review because the statute would not permit the

Department to use home market sales of MG cookware to compare to either

LG or HG cookware since they are not considered similar merchandise.

Accordingly, Cinsa and ENASA argue that because they complied with all

information requests with regard to MG cookware, there is no legal or

factual basis to resort to total adverse facts available.

DOC Position: The facts on the record of this proceeding show that

all sales by Cinsa and ENASA to the United States during the relevant

period of review were of first quality HG or LG open stock cookware.

Identical and similar first and second quality HG and LG cookware

products were sold in the home market. All sales of open stock MG

cookware in the home market were of second quality merchandise. The

Department did not require ENASA to report sales and cost data for MG

cookware because there were no corresponding sales of MG cookware in

the U. S. during the POR and because the Department had an adequate

pool of identical and similar home market sales and cost data for first

and second quality LG and HG open stock cookware with which to compare

first quality LG and HG open stock cookware products sold in the United

States. Contrary to Cinsa's and ENASA's contention, the Department's

decision not to require Cinsa and ENASA to report home market sales and

costs for MG cookware was not because MG cookware could not be compared

to LG and HG cookware. It did not request this information because it

was not necessary for the margin calculation in this review. The

Department did not need to request home market sales of open stock MG

cookware because second quality merchandise would not be considered an

appropriate basis for calculating normal value (NV) until the

Department had exhausted its supply of comparable first quality open

stock cookware. Therefore, the Department did not need to determine,

for purposes of this review, whether it would be appropriate to match

sales of MG open stock cookware to sales of LG or HG open stock

cookware.

Furthermore, because we did not need MG sales reported, Cinsa's and

ENASA's failure in their original questionnaire response to report MG

sales did not significantly impede the review. Therefore, the use of

total adverse facts available is not warranted.

Finally, with respect to petitioner's claim that ENASA's failure to

identify and justify a cost breakdown between HG and MG products makes

the cost portion of the response unusable, we note that Cinsa and ENASA

indicated in their October 1, 1996, Section D supplemental response

that their standard cost system distinguishes between different grades

of steel in the normal course of business. Because ENASA relied on this

cost system in preparing its submission, the cost values for HG and MG

products should reflect the cost difference for different grades. The

Department made a similar determination in the Final Results of

Antidumping Duty Administrative Review: Certain Corrosion-Resistant

Carbon Steel Flat Products from Korea, 61 FR, 18547, 18560 (April 26,

1996) where we accepted a respondent's model specific costs and found

that the cost data were allocated to a sufficient

[[Page 42500]]

level of product detail following the Department's model match

instructions.

Comment 5: Cinsa's and ENASA's classification of certain U.S. sales

as Export Price (EP) rather than Constructed Export Price (CEP).

Petitioner argues that the Department should reclassify all of

Cinsa's and ENASA's EP sales as CEP. Petitioner contends that Cinsa's

and ENASA's primary U.S. affiliate, CIC, incurred selling expenses in

connection with U.S. sales of subject merchandise during the POR, and

that CIC's level of activity is far beyond what would be undertaken by

a mere ``processor of sales documentation.'' Furthermore, petitioner

contends that the volume and value of sales out of inventory in the

United States is too high for the ``indirect'' EP sales channel to be

considered ``customary.''

In addition, petitioner argues that sales to the United States

pursuant to the requirements contract between ENASA's affiliated

reseller Yamaka China Co., Inc. (``Yamaka'') and Yamaka's U.S. customer

should be classified as CEP sales. Petitioner claims that the record

evidence indicates that Yamaka's role was central, and the sales could

not have been made without Yamaka's involvement.

Cinsa and ENASA argue that petitioner's suggestion that all of

Cinsa's and ENASA's sales should be classified as CEP sales is

incorrect because it ignores prior determinations made by the

Department on this issue in the original investigation and in all

previous administrative reviews of this proceeding. Cinsa and ENASA

make the following arguments: (1) Petitioner overestimates the amount

of selling expenses CIC incurred during the POR; (2) petitioner's claim

that CIC set the price for EP sales is incorrect; and (3) petitioner

incorrectly assumes that certain repackaging was done in the United

States and that sales reported as EP sales were made from CIC

inventory; and (4) Cinsa provided information regarding the expenses of

its export sales department which demonstrate that Cinsa contacted U.S.

customers from Mexico in executing the reported EP sales. Cinsa and

ENASA maintain that for the foregoing reasons, petitioner's attempt to

show that, with respect to the sales they have designated as EP sales,

CIC did more than process documentation and communicate with the

unrelated buyer is misplaced.

For its part, ENASA argues that all of its U.S. sales were made

prior to the date of importation, and the merchandise was shipped

directly from ENASA to the U.S. customer without entering Yamaka's

inventory. Accordingly, ENASA believes that the Department correctly

classified ENASA's sales as EP sales.

DOC Position: We agree with the petitioner with regard to ENASA's

sales and have reclassified these sales as CEP sales. We agree with the

respondents with regard to the classification of Cinsa's sales.

Cinsa and ENASA both state that sales to the U.S. are made on both

an EP and a CEP basis. With respect to Cinsa, the facts on the record

of this review do not contradict the reported classifications. Pursuant

to section 772(b) of the Act, an EP sale is a sale of merchandise for

export to the United States made prior to importation. A CEP sale is a

sale made in the United States prior to or after importation. Because

Cinsa and ENASA sold the merchandise to related parties who resold it

in the United States, these sales will be considered CEP sales unless

the Department determines that the sole role of the related parties was

sufficiently limited that they can be considered ``mere processors of

sales documentation.''

In its March 11, 1996, Section A questionnaire response Cinsa

states that affiliated parties Global Imports, Inc. (Global) and CIC

purchase LG and HG cookware from Cinsa and ENASA and resell it in the

United States. Although the date of sale reported by Cinsa and ENASA

for all such sales is the date of the Global or CIC invoice, not the

Cinsa or ENASA invoice, the record in this review indicates that both

invoices are issued within a short time of each other. Cinsa notes in

its response that the price for EP sales is agreed upon at the time the

U.S. customer places a purchase order with the Cinsa export sales

department in Mexico. Cinsa's response states that the precise quantity

of product is not determined until the packing list is prepared for the

shipment from Mexico, and CIC or Global issues the invoice to the U.S.

customer. Thus, Cinsa and ENASA consider the date of sale to be the

date of the Global or CIC invoice. Cinsa indicates that the sales

categorized as EP sales are not warehoused by Global or CIC after they

cross the border, and the sales data corresponding to these sales show

that these sales are made on FOB Laredo terms. According to Cinsa, the

duties performed by CIC and Global with respect to the FOB Laredo sales

relate primarily to sales processing: issuing payment invoices,

accepting payment and forwarding it to Mexico, posting antidumping duty

deposits, and clearing products through customs for sales to unrelated

customers in the United States. Therefore, for the purposes of this

review we will continue to consider sales made through Global and Cinsa

as EP sales when the products do not enter the inventory of Global or

CIC.

However, the Department has reclassified as CEP sales the sales

ENASA claims as EP sales. We have reviewed evidence on the record of

this review with regard to Yamaka's sales in the United States,

pursuant to a requirements contract, of merchandise produced by and

purchased from ENASA. Contrary to the Department's position in the

preliminary results of review, we have now determined that these sales

to the United States through Yamaka are more appropriately categorized

as CEP sales. The facts on the record in this review show that Yamaka

had a high degree of involvement with regard to requirements contract

sales to its U.S. customer. The record shows that Yamaka negotiated the

contract, signed the contract, established an advertising allowance,

arranged for re-packing and re-shipment of unsold merchandise, retained

returned merchandise in its warehouse and authorized payment of a

refund to the customer for unsold products. Because the sale to the

first unaffiliated customer was made by Yamaka in the United States and

because Yamaka's role in the transaction chain cannot be characterized

as that of ``mere processor of sales related documentation'' we have

reclassified the sales made pursuant to this requirements contract as

CEP sales.

Comment 6: Movement expenses.

Petitioner contends that the Department should deny any claim for

home market inland freight adjustments since Cinsa and ENASA did not

adequately demonstrate the accuracy of their allocations of home market

movement expenses to the subject merchandise. Petitioner claims that

Cinsa and ENASA allocated the same amount of freight expense to in-

scope and out-of-scope products of the same weight, regardless of the

amount of freight expenses actually incurred to ship the merchandise.

In addition, petitioner argues that Cinsa's and ENASA's freight

calculation does not account for distance shipped, although Cinsa and

ENASA reported that unaffiliated carriers charge different freight

rates depending on the destination of the merchandise.

Furthermore, petitioner claims that Cinsa and ENASA failed to

report U.S. inland freight for LG cookware sales made by CIC from its

San Antonio warehouse and thus, as facts available, the Department

should use the cost of freight reported for HG cookware from Laredo to

the U.S. customer, which is the only U.S. inland freight expense

[[Page 42501]]

factor on the record in this review. In addition, petitioner claims

that the denominator in Cinsa's factor calculation of post-sale freight

expenses for LG CEP sales understates that expense. Petitioner requests

that the Department recalculate the factor using the weight reported on

the sales tape for Cinsa's CEP sales as the denominator.

Cinsa and ENASA argue that it was not feasible for them to report

transaction-specific movement expenses because Cinsa was not billed for

freight (for both Cinsa and ENASA) on a transaction-specific or

invoice-specific basis, but rather on a monthly basis for amounts

shipped the previous month. In addition, Cinsa argues that in the

original investigation and in each subsequent review the Department has

not required Cinsa to report transaction-specific freight expenses.

Also, Cinsa and ENASA argue that: (1) They used a weight-based freight

allocation methodology that accurately attributed total freight

expenses to the subject merchandise; (2) the allocation was calculated

using the most specific level permitted by company records; and (3) the

calculated freight factors were only applied to those sales that were

subject to freight charges.

Furthermore, Cinsa argues that there is nothing contradictory about

the fact that it reported its freight expenses from two different

warehouses during the POR, because it used two warehouses at different

times during the POR. Moreover, contrary to petitioner's assertion,

Cinsa and ENASA contend that pre-sale freight expenses on CIC's U.S.

sales were reported, although in different fields from other movement

expenses.

Finally, with regard to petitioner's argument that U.S. freight

expenses are under reported, Cinsa asserts that both the expenses and

the sales values used in the CIC freight factor include all LG POS

products, some of which were not on the sales tape (i.e., POS tableware

and POS kitchenware).

DOC Position: We have accepted respondents' methodology for the

calculation of freight expenses. The Department's preference is that,

wherever possible, freight adjustments should be reported on a sale-by-

sale basis rather than allocated over all sales. See Final Results of

Antidumping Duty Administrative Review: Replacement Parts for Self-

Propelled Bituminous Paving Equipment from Canada, 56 FR 47451

(September 19, 1991). If the respondent does not maintain freight

records on a sale-by-sale basis, then our preference is to apply an

allocation methodology at the most specific level permitted by the

respondent's records kept in the normal course of business.

Cinsa states in its April 22, 1996, questionnaire response that it

does not maintain freight records on a sale-by-sale basis, but rather

was billed on a monthly basis by unaffiliated trucking companies

according to the weight shipped per truckload. Although Cinsa's sales

department handles the freight for ENASA's home market sales, it bills

ENASA for this service on the basis of the weight of all ENASA

merchandise shipped. Furthermore, Cinsa stated that only sales made to

the Monterrey region incurred post-sale freight expenses.

Our analysis of the questionnaire responses confirms that freight

charges are based on weight, and that the shipping company factors in

distance in calculating the weight-based rate which varies by

destination. Although Cinsa and ENASA allocated freight expenses based

on shipments of subject and non-subject merchandise, we found the per-

unit expense to be virtually the same when we re-allocated the expense

based solely on subject merchandise. Accordingly, we accepted Cinsa's

and ENASA's freight calculations as submitted in their sales database

as reasonable and non-distortive.

In addition, we do not agree with petitioner's claims that Cinsa

and ENASA failed to report U.S. inland freight costs for LG cookware

incurred by CIC on products shipped from its San Antonio warehouse.

This information is included in the April 22, 1996, questionnaire

response.

Comment 7: Returned merchandise.

Petitioner argues that the Department should adjust all of ENASA's

movement expenses (namely, pre-sale warehouse expenses, foreign inland

freight, Mexican brokerage, U.S. brokerage, and U.S. duty), to reflect

the freight expenses from the unaffiliated customer to the U.S.

warehouse on returned merchandise, and that these adjusted movement

expense should be deducted from gross unit price. In addition,

petitioner contends that Cinsa and ENASA did not adequately explain

what happened to the merchandise that one U.S. customer did not sell to

retail buyers and that Yamaka agreed to repurchase. Accordingly,

petitioner argues that the Department should adopt an inference adverse

to ENASA and conclude, as the facts otherwise available, that the

merchandise was returned to ENASA's warehouse in Mexico.

Alternatively, petitioner argues that the Department should

determine that Yamaka's return movement expenses are direct selling

expenses, because the amount of expense varied with the quantity sold

and the expenses were directly related to sales under the same

contract. See Final Determination of Sales at Less Than Fair Value:

Bicycles from the People's Republic of China, 61 FR 19026, 19043-44

(April 30, 1996), and Final Determination of Sales at Less Than Fair

Value: Foam Extruded PVC and Polystyrene Framing Stock from the United

Kingdom, 61 FR 51411, 51416-17 (October 2, 1996).

A third option, according to petitioner, would be to treat the

outbound and return freight expenses at issue in this review as sales

promotion expenses, which are treated as a direct selling expense when

they are directed at the customer's customer.

ENASA argues that, for purposes of its EP calculation, the

Department improperly deducted movement expenses attributable to

returned merchandise not sold during the POR. ENASA argues that when

the merchandise is resold in a future review, the Department will be

required to account for all movement expenses in that future review.

Moreover, ENASA contends that the Department's action is contrary to

the statute because the return charges incurred by Yamaka are charges

beyond the place of delivery attributable to merchandise not purchased

by ``the customer'' and therefore outside the scope of review.

In addition, ENASA argues that in the cases cited by petitioner,

the returned merchandise was actually purchased by the customer and the

customer was returning previously purchased merchandise. In the instant

case, according to ENASA, the merchandise re-shipped to Yamaka was

never purchased by ``the customer'' and was not being returned pursuant

to a warranty or guarantee provision.

Finally, ENASA disagrees that all movement expenses should be

adjusted by an amount greater than that used in the preliminary

results. It argues that change would overstate the movement expenses

attributable to HG cookware.

ENASA argues that no deduction should be made to account for

transportation expenses incurred by Yamaka attributable to merchandise

which was returned in connection with the promotion program.

DOC Position: We agree with the petitioner. The merchandise at

issue is sold to Yamaka's customer under a contract that calls for

Yamaka to ``repurchase'' cookware that Yamaka's customer does not sell

to its own retail customers during a promotion. Thus, it is clear that

the merchandise is purchased by Yamaka's customer. The return freight

expenses are direct selling expenses incurred by Yamaka because

[[Page 42502]]

the contract governing all sales in connection with the promotion

explicitly states that Yamaka will incur freight expenses to return the

merchandise that Yamaka's customer was unable to sell. Because Yamaka

incurs the return freight expenses pursuant to the single contract made

in connection with the promotion, we have associated an amount for

total return freight to that contract and allocated the return freight

expenses across the total sales made pursuant to that contract.

On September 10, 1996, the Department requested information on the

return freight destination or destinations associated with these

returns. In its October 1, 1996, supplemental response, ENASA simply

stated that returned merchandise was often resold to the same customer

for another store. Because ENASA failed to respond fully to our

question, we do not know to what location or locations cookware not

sold in the promotion was returned. Therefore, because ENASA did not

adequately explain the disposition of the returned merchandise and

because Yamaka is the party assuming the contractual responsibility for

the returned merchandise, as adverse facts available, we are assuming

that all unsold merchandise was returned to the Yamaka warehouse in

Laredo, Texas. We calculated return freight as a percentage of the

original freight from Laredo to Yamaka, based on the percentage of

original items returned. There is nothing on the record of this case

which supports petitioner's argument that we assume the merchandise was

returned to ENASA's warehouse in Mexico. For example, the record

contains no comparable contract calling for ENASA to repurchase

returned merchandise from Yamaka.

ENASA's claims that these expenses are related to goods not

purchased by ``the customer'' are misleading. While the merchandise in

question was not purchased by the ultimate retail customers, it was all

purchased by Yamaka's wholesale customer. Finally, with respect to

ENASA's argument that the return freight should be associated with

future sales of the returned merchandise, we note that, whereas the

record reflects the amount of retail-unsold goods that were repurchased

and returned to Yamaka in connection with the post-promotion

reconciliation called for in the promotion-sale contract, it would be

very difficult to trace the earlier history of various lots of

merchandise resold in subsequent lots. Indeed, if the merchandise re-

enters Yamaka's inventory, it would become indistinguishable from

merchandise shipped directly from ENASA's factory. Further, pursuant to

section 772(c)(2)(A) of the Act, freight charges for later sales would

begin at the point of shipment associated with the later sale. Although

the statute refers to inclusion of costs back to the original point of

shipment in the exporting country, it also only includes costs actually

incurred and included in the cost of the merchandise. If, pursuant to a

later re-sale by Yamaka, merchandise returned pursuant to the promotion

sale covered in this review is shipped from some point other than the

factory, only freight from the actual shipping point will be included

in cost; thus, only freight from the actual shipping point (e.g.,

Yamaka's warehouse) will be removed.

Comment 8: Home market warehouse expenses.

Petitioner argues that Cinsa's and ENASA's home market warehouse

expense allocation are distortive because total warehouse expenses are

allocated to both subject and non-subject merchandise. Accordingly,

petitioner believes that the Department should deny Cinsa's and ENASA's

claims for this adjustment.

Furthermore, petitioner asserts that Cinsa and ENASA did not report

pre-sale warehouse expenses incurred in the United States on CEP sales

of both LG and HG cookware and did not report pre-sale warehouse

expenses incurred in Mexico on CEP sales of both LG and HG cookware.

Accordingly, as facts available for the U.S.-incurred expenses,

petitioner argues that the Department should make a deduction from CEP

in the amount of the highest per-sale warehouse expense reported by

Cinsa and ENASA on any home market sale of LG cookware. With regard to

the expenses incurred in Mexico, petitioner argues that the Department

should apply the same factor reported for EP sales of LG cookware to

CEP sales of both LG and HG cookware.

Cinsa and ENASA argue that, as with freight expenses, because in

scope and out of scope merchandise received similar warehouse

treatment, a weight based allocation was not distortive. In addition,

Cinsa and ENASA assert that the Department's preliminary results

improperly classified both companies' home market pre-sale warehousing

expenses as indirect selling expenses rather than movement expenses.

Cinsa and ENASA argue that movement expenses necessarily include

warehousing expenses since warehousing is integrated within the process

of moving merchandise from the place of production to the place of

delivery.

Cinsa and ENASA also argue that, contrary to petitioner's

assertion, U.S. pre-sale warehousing expenses were included in CIC's

reported indirect selling expenses. Cinsa and ENASA argue that, because

CIC established that it had reported all its indirect selling expenses,

including its pre-sale warehousing expenses, the Department should

continue to use the information provided by CIC in the final results.

Finally, Cinsa and ENASA state that with regard to LG cookware, the

subject merchandise did not enter the finished goods warehouse in

Saltillo prior to shipment to the United States, contrary to

petitioner's claim. Moreover, with regard to HG cookware, ENASA claims

that it is made to order, and is loaded directly onto trucks without

entering the finished goods warehouse.

DOC Position: We agree with Cinsa and ENASA that the use of a

weight based factor is a reasonable allocation methodology for the

calculation of home market warehouse expenses. See Comment 5 above.

With regard to Cinsa's and ENASA's argument that we improperly

classified home market warehouse expenses as indirect selling expenses,

we agree that warehouse expenses for sales made from the remote

warehouses in Mexico City and Guadalajara should be considered movement

expenses in accordance with section 773(a)(6) of the Act. However, with

respect to the warehouse expenses for direct sales to customers from

the Saltillo plant, we have continued to treat these expenses as

indirect selling expenses because they are not incurred at the plant

immediately after production and are associated with the movement

process.

In addition, we have continued to use Cinsa's and ENASA's U.S. pre-

sale warehousing expenses as reported. We are satisfied that these

expenses were included under the category ``leases'', as Cinsa and

ENASA claim, as the reported indirect selling expenses tie directly

into CIC's internal income statement. Finally, with respect to Mexican

export warehousing, we disagree with petitioner that the use of facts

available is appropriate. With regard to LG cookware, Cinsa reported

these expenses for both EP and CEP sales in the April 22, 1996,

submission. With regard to HG cookware, ENASA's merchandise is made to

order, upon completion it is sent immediately to the customer, without

entering the finished goods warehouse. Accordingly, we have accepted

Cinsa's and ENASA's home market warehouse expense calculations.

Comment 9: Calculation of indirect selling expenses.

Petitioner contends that the Department should recalculate Cinsa's

indirect selling expenses for CEP sales

[[Page 42503]]

of LG cookware to include all selling, general and administrative

(SG&A) expenses as reported in the U.S. affiliate CIC's financial

statement. Petitioner argues that a comparison of Cinsa and ENASA's

supplemental response and CIC's financial statement demonstrates that

only a fraction of the SG&A overhead expenses incurred by CIC was

reported and included in the Department's results. Furthermore,

petitioner believes that if the Department reclassifies Yamaka's sales

of HG cookware as CEP sales, it should reject ENASA's argument that

U.S. affiliate Yamaka's selling expenses are irrelevant, and deduct

indirect selling expenses from CEP sales of HG cookware made by Yamaka.

Cinsa disagrees with petitioner's claim that it understated CIC

indirect selling expenses by not including ``variable selling

expenses'' in CIC's reported indirect selling expenses. Cinsa argues

that indirect selling expenses should only include fixed selling

expenses as reported by Cinsa and that it properly reported all direct

(or variable) selling expenses incurred by CIC in its CEP sales data

set. Furthermore, Cinsa states that petitioner's figure for indirect

selling expenses already includes CIC's direct selling expenses which

have been deducted from CEP. Thus, use of the suggested figure would

improperly include direct expense amounts in the expense pool.

Accordingly, Cinsa argues that for CEP sales made by CIC, the

Department should deduct the reported indirect selling expenses from

USP.

DOC Position: We agree with Cinsa and ENASA that the Department

should deduct the reported indirect selling expenses from USP for CEP

sales made by CIC. We further agree with Cinsa and ENASA that

petitioner misread the exhibit pertaining to indirect selling expenses.

There was no revision of CIC's reported indirect selling expenses. Both

pages of the exhibit are required to obtain the POR selling expenses.

With regard to Yamaka's selling expenses, we agree with petitioner

that, because we are considering Yamaka's HG cookware sales as CEP

sales, these expenses are appropriately deducted from CEP.

Comment 10: Deduction of reported U.S. indirect selling expenses

incurred in Mexico from CEP.

Cinsa argues that the Department improperly deducted indirect

selling expenses from CEP that were incurred by Cinsa's export

department in Mexico. According to Cinsa and ENASA, these expenses are

not expenses associated with selling activity occurring in the United

States, but are limited to selling activities associated with the sale

of merchandise in Mexico to the affiliated party, CIC. Respondents

contend that the preamble to the Department's proposed and interim

regulations establishes that only indirect selling expenses incurred in

Mexico on behalf of the unaffiliated purchaser in the United States may

be deducted from the CEP calculation and that indirect selling expenses

incurred in Mexico on the sale to the affiliated purchaser would not be

deducted from the CEP calculation. Accordingly, respondents argue that

the final results should not include a deduction of these indirect

selling expenses from CEP because they are not in any way associated

with U.S. selling activity.

Petitioner argues that Cinsa's and ENASA's reported U.S. indirect

selling expenses incurred in Mexico should be deducted from CEP because

they are associated with economic activities occurring in the United

States. Petitioner further argues that the statute does not restrict

the covered expenses to those incurred in the United States.

DOC Position: We agree with Cinsa. The Department's current

practice, as indicated by the preamble to the Department's regulations

recently published at 62 FR 27296-27424 (May 19, 1997), is to deduct

only indirect selling expenses incurred in Mexico in connection with

the sales to the unaffiliated purchaser in the United States from the

CEP calculation, and not to deduct indirect selling expenses incurred

in Mexico on the sale to the affiliated purchaser from the CEP

calculation. Accordingly, because Cinsa and ENASA reported that certain

indirect selling expenses incurred in Mexico are not associated with

selling activity occurring in the United States, but are limited to

selling activities associated with the sale of merchandise in Mexico to

the related affiliated party, CIC, we have not deducted Mexican

indirect selling expenses (i.e., indirect selling expenses incurred in

Mexico on U.S. sales) from the CEP calculation.

Comment 11: CEP offset adjustment.

Although Cinsa does not contest the Department's determination in

the preliminary results of review that, on the basis of selling

functions performed in both markets, all sales in the home market and

the U.S. were made at the same level of trade, it nonetheless claims it

was improper for the Department to deny its claimed CEP offset on the

basis that it was not entitled to a level of trade adjustment. Cinsa

asserts that the statute authorizes the Department to deduct from NV a

CEP offset equal to the amount of indirect selling expenses incurred in

the home country but not to exceed the amount of indirect selling

expenses deducted from USP.

Petitioner contends that Cinsa has not established entitlement to a

CEP offset adjustment because it did not show that its home market and

CEP sales are at different levels of trade. Accordingly, petitioner

argues that the Department correctly denied Cinsa's claim for a CEP

offset adjustment and should continue to do so in the final results.

DOC Position: We agree with petitioner. Section 773(a)(1)(B) of the

Act requires that Commerce establish NV based on home market sales at

the same level of trade as the CEP or the EP sale. The SAA notes that

if the Department is able to compare sales at the same level of trade,

it will not make any level of trade adjustment or CEP offset in lieu of

a level of trade adjustment. Further, section 773(a)(7) expressly

requires a difference in level of trade between the U.S. and home

market sales as a prerequisite to a CEP offset. Specifically, sales in

the home market must be at a more advanced stage of distribution.

As we stated in the preliminary results, in their questionnaire

responses, Cinsa and ENASA stated that there are no differences in

selling activities by customer categories within each market. We

reviewed Cinsa and ENASA's questionnaire responses in order to confirm

that the marketing stages and selling functions did not differ

significantly in the United States and home market. Cinsa and ENASA

sold to multiple customers both in the United States and home markets.

In their April 22, 1996, questionnaire responses, both Cinsa and ENASA

indicated that they do not differentiate pricing, sales terms or

delivery terms by type of customer. They also stated in their request

for a CEP offset adjustment that sales support activities for both

markets were generally the same. Thus, our analysis of the

questionnaire responses leads us to conclude that sales within each

market and between markets are not made at different levels of trade.

In their case brief, Cinsa and ENASA have agreed with our preliminary

determination that home market and U.S. sales are made at the same

level of trade. Accordingly, we can compare sales in the home market

and the U.S. market at the same level of trade. Therefore, a CEP offset

is not warranted.

Comment 12: Use of daily exchange rates.

Cinsa and ENASA claim that, for purposes of the preliminary

results, the Department applied the 40-day rolling average benchmark

rate in all instances, regardless of whether any daily

[[Page 42504]]

fluctuation in exchange rates existed. Cinsa and ENASA submit that,

because the Department determined that the Mexican economy experienced

high inflation during the POR, the Department's exchange rate model

should not have been used. Accordingly, Cinsa and ENASA contend that

the Federal Reserve certified daily exchange rates should be used in

all instances.

DOC Position: We agree with the respondents. In this review, we

have determined that Mexico experienced significant inflation during

the POR, as measured by the consumer price index published in

International Financial Statistics and the consumer price index from

the Bank of Mexico. Therefore, we believe that it is more appropriate

in this case to use the Federal Reserve Bank's actual daily exchange

rates for currency conversion purposes. As noted in Policy Bulletin 96-

1: Currency Conversions, 61 FR 9434 (March 8, 1996), the Department is

continuing to examine the appropriateness of the currency conversion

policy in situations where the foreign currency depreciates

substantially against the dollar over the POR. In those situations, it

may be appropriate to rely on daily exchange rates. When the rate of

domestic price inflation is significant, as it is in this case, it is

important that we use as a basis for NV home market prices that are as

contemporaneous as possible with the date of the U.S. sale. This

methodology serves to minimize the extent to which calculated dumping

margins are overstated or understated due solely to price inflation

that incurred in the intervening time period between the U.S. and home

market sales. See Notice of Final Determination of Sales at less Than

Fair Value: Certain Pasta from Turkey, 61 FR 30309 (June 14, 1996). For

this reason, as noted in the Fair Value Comparisons section of the

preliminary results of this review, we calculated EPs and NVs on a

monthly average basis. This need for a high degree of contemporaneity

applies not only to home market sales, but to the exchange rate as

well, since the dollar value of cookware that Cinsa and ENASA sell in

their home market--upon which the calculated margins ultimately rest--

depends on the peso price of the product, and the dollar price of the

peso. Since the dollar value of the peso tends to fall over time--when

the rate of domestic price inflation is significant--it is just as

important to use contemporaneous exchange rates as it is to use

contemporaneous (peso-denominated) home market prices. For this reason,

we have used the daily exchange rates for currency conversion purposes.

Accordingly, to avoid the distortions caused by the effects of this

level of inflation on prices, for this review we have used price to

price and price to CV comparisons that are as contemporaneous as

possible, and we have also used contemporaneous exchange rates.

Comment 13: Possible reimbursement of U.S. affiliates for

antidumping duties.

Petitioner claims that the fact that Cinsa's itemized list of

selling expenses includes an amount for ``dumping expenses'' incurred

in Mexico constitutes direct evidence that it reimbursed its U.S.

affiliates for antidumping duties. Furthermore, petitioner claims that

Cinsa and ENASA pay antidumping duty deposits for their U.S. affiliates

and that the respondents have not supported their assertion that funds

provided to U.S. affiliates for payment of antidumping duty deposits

are ``loans'' which must be repaid with interest based on an arm's-

length interest rate. Petitioner argues that there is no evidence that

these payments are anything but grants to enable the U.S. affiliates to

pay antidumping duties, and the U.S. affiliates themselves did not

account for these intra-company transfers as loans. Finally, petitioner

placed on the record of this review, the 9th POR, a copy of

respondents' public supplemental comments from a subsequent review, the

10th POR, in which respondents state that GISSA, importer CIC's

corporate parent, made a capital infusion to allow CIC to post

antidumping duty deposits and pay antidumping duty liquidation

assessments. Petitioner contends that based on this evidence, the

Department should determine that Cinsa and ENASA are reimbursing the

U.S. affiliates for antidumping duties and instruct Customs to assess

double the calculated rate of duties upon liquidation of the entries.

Cinsa and ENASA assert that there is no evidence on the record to

support petitioner's claim that they are reimbursing the affiliated

U.S. parties for antidumping duties. Furthermore, Cinsa and ENASA claim

that petitioner's arguments are speculative, since the Customs Service

has not assessed dumping duties on any entries made by CIC, and to date

CIC has made only deposits on entries for the 9th POR.

Moreover, Cinsa argues that, although it has an agreement with CIC

whereby Cinsa loans CIC funds to pay the antidumping duty deposits,

once the final amount of dumping duties is determined and assessed, CIC

is required to repay Cinsa for such loans, with penalty interest

accruing for late payment. Finally, Cinsa contends that the Department

has consistently held that the existence of intra-company transfers of

funds or loans between affiliated parties does not require the

Department to initiate a reimbursement inquiry.

DOC Position: We agree with the respondent. Petitioner has two

bases for its reimbursement claim: (1) That the loans made by Cinsa to

its affiliated importer constitute reimbursement, and (2) that the

GISSA capital contribution in the 10th POR provides sufficient cause

for finding a ``pattern or practice of reimbursement.''

Pursuant to its regulations, the Department will deduct from export

price ``the amount of any antidumping duty which the producer or

reseller: (1) Paid directly on behalf of the importer; or (2)

reimbursed to the importer.'' 19 CFR 353.26(a).

With respect to the loans, we observed at verification that Cinsa

did make loans to CIC and its predecessor Global to cover antidumping

duty deposits. However, we also noted that these loans were interest-

bearing loans supported by promissory notes, with penalty provisions

for late payment, that the financial records of both CIC and Cinsa

properly accounted for these loans, and that there was a history of

repayment of such loans. Thus, petitioner's claim that these transfers

should be considered reimbursement, rather than bona fide loans, is

contradicted by the findings on the record. See Memorandum dated July

30, 1997, regarding reimbursement (``Reimbursement Memo'') for

additional analysis regarding the reimbursement issue.

With respect to capital contributions, we noted at verification

that since its founding in March of 1995, affiliated importer CIC has

received two cash transfers in the form of capital contributions. The

first transfer constituted start-up funds and was not explicitly tied

to antidumping duty deposits or assessments. In a public submission to

the record of the 10th review, which petitioner has added to the record

to this 9th review, respondents Cinsa and ENASA specifically stated

that a second capital contribution made in April 1997, by CIC's

affiliate GISSA Holding USA, was provided to ensure that CIC would have

enough funds to cover anticipated dumping duties and assessment

liability subsequent to the liquidation of 5th and 7th POR entries

during the 10th POR. These facts are not tantamount to the ``producer

or reseller'' reimbursing the affiliated importer for antidumping

[[Page 42505]]

duties. See 19 CFR 353.26(a). Although CIC, Cinsa, ENASA and GISSA

share a common ultimate parent, GIS, there is no evidence that the

source of this capital contribution was either a producer or reseller

of POS cookware. All that is shown by these facts is that the

importer's parent made a cash infusion to cover antidumping

liabilities, which is not in itself inconsistent with the reimbursement

regulation. Because the record in this review does not support a

finding that either producer (i.e., Cinsa or ENASA) was in fact the

ultimate source of these funds, we do not find reimbursement within the

meaning of 19 CFR 353.26(a) in this review. However, we will examine

this possibility further in the context of future reviews of POS

cookware from Mexico. Because many of the details associated with this

issue are proprietary, refer to the Reimbursement Memo.

Comment 14: Revocation of order with respect to tea kettles.

Cinsa and ENASA argue that the order on POS cookware from Mexico

should be revoked as to tea kettles either in the final results of this

administrative review or in a separate changed circumstances review, if

the order against POS cookware from Taiwan is revoked as to tea

kettles. Cinsa and ENASA contend that it would be inappropriate for the

Department to alter the scope of only one of these antidumping orders,

since the orders against POS cookware from Taiwan and Mexico were

initiated on the basis of a single petition, and were issued pursuant

to a single injury determination made on a cumulated basis. Cinsa and

ENASA further argue that because petitioner has no production of tea

kettles, it is incongruous that it has no interest in an order covering

tea kettles from Taiwan, yet allegedly continues to have an interest in

having companion case orders cover tea kettles from Mexico and the

People's Republic of China. In the alternative, Cinsa and ENASA submit

that the Department should investigate whether tea kettles constitute a

distinct class or kind of merchandise from the POS cookware covered by

the order underlying this case.

Petitioner argues that the Department should deny Cinsa's and

ENASA's request to revoke the order, in part, as to tea kettles, in the

final results. Petitioner contends that if Cinsa and ENASA wish to have

the order revoked as to tea kettles, they are entitled to request a

changed circumstances review, in accordance with the Department's

regulations.

DOC Position: We agree with petitioner. The orders on POS cookware

from Mexico, Taiwan, and the People's Republic of China are separate

and distinct even though the proceedings were initiated pursuant to a

single petition. Petitioner has not indicated that it has no further

interest in maintaining the Mexican order with regard to tea kettles.

Further, there is no requirement that petitioner must produce every

model of the subject merchandise covered by a given order. Thus, it

would not be appropriate to grant Cinsa's and ENASA's request for

partial revocation of the order in the context of this administrative

review pursuant to section 751(a) of the Act. Similarly, there is no

evidence on the record of this case supporting Cinsa's and ENASA's

claim that tea kettles constitute a distinct class or kind of

merchandise within POS cookware.

Comment 15: Reporting of cost data for Cinsa and ENASA.

Petitioner contends that the magnitude of Cinsa's and ENASA's

production cost variances, which are based on system-wide costs as

opposed to model-specific costs, means that these costs are in reality

only average costs, the use of which would be contrary to the

Department's standard practice. Without usable cost data, petitioner

argues that the Department cannot use Cinsa's and ENASA's home market

sales data because it cannot determine whether home market sales were

at prices above the COP, and it cannot determine the appropriate amount

of any difference-in-merchandise adjustment. Therefore, petitioner

argues that the Department should determine that Cinsa and ENASA were

uncooperative and should base Cinsa's and ENASA's margin on total

adverse facts available, using the highest rate calculated for any

respondent in the original investigation (58.73 percent), due to their

refusal to report replacement costs. Alternatively, petitioner believes

that the Department should, at a minimum, increase all material costs

by the average increase in inflation between the time Cinsa and ENASA

purchased raw materials and the time it consumed such materials in

production.

In addition, petitioner argues that, because Cinsa and ENASA

refused to comply with the Department's requests for certain cost

information in this review, there are fundamental problems with the COP

data. First, petitioner argues that despite an annualized inflation

rate of greater than 50 percent during the POR (based on the producer

price index or ``PPI''), the Department apparently concluded that the

Mexican economy was not hyperinflationary during the POR, and thus

preliminarily accepted Cinsa's and ENASA's reported costs,

notwithstanding what they term respondents' refusal to report

replacement costs.

Cinsa and ENASA argue that the November 19, 1996, supplemental

response provided COP and CV data using monthly revaluation of costs to

current price levels, which conforms precisely to the monthly valuation

of inputs required under the Department's inflation methodology.

Furthermore, Cinsa and ENASA argue that the Mexican producer price

index that petitioner used to calculate inflation rates is not

appropriate because the generally accepted benchmark for use in price

adjustments by the Mexican accounting profession and for financial

analysis in Mexico is the National Consumer Price Index, which has also

been used by the Department for inflation index adjustments in previous

Mexican cases.

In addition, Cinsa and ENASA state that the costs reported to the

Department reflect product specific costs. Cinsa and ENASA claim that

in the normal course of business, the amounts of all production

variances are calculated each month, but are not applied to specific

products. For the purposes of reporting monthly unit costs to the

Department, these variances were converted into ratios and applied to

the standard cost of inputs for individual products. Moreover, Cinsa

and ENASA state that the size of variance ratios in this instance is a

clear reflection of the fact that, although standard costs are fixed

once per year, price levels for production inputs increase throughout

the year. Cinsa and ENASA explain that, because monthly costs of

production inputs are based on the replacement unit costs of the

respective inputs consumed, and the prices of those inputs underwent a

rapid increase during 1995 due to the presence of high inflation, it is

natural for variance ratios to be larger than observed in previous POS

cookware reviews for periods that were not subject to high inflation.

Finally, according to Cinsa and ENASA, regardless of whether variances

are large or small, the relative standard costs of individual products

provide the means of distributing actual shared costs among the

products manufactured. Accordingly, Cinsa and ENASA believe that they

properly reported cost of manufacturing (``COM'').

DOC Position: We disagree with petitioner that Cinsa's and ENASA's

submitted production costs do not reflect current costs (i.e.,

replacement

[[Page 42506]]

costs). In the instant review, we determined that the Mexican economy

was undergoing a high rate of inflation in 1995 and therefore we

calculated monthly COP and CV for Cinsa and ENASA. For the Department

to calculate COP and CV, Cinsa and ENASA computed a monthly COM for

each product based on the merchandise's specific standard costs of

manufacturing adjusted by its monthly variance. We reviewed Cinsa's and

ENASA's method of calculating submitted COM along with other assertions

made on the record by these companies. The information on the record we

reviewed (i.e., Section D narrative and worksheets) indicates that

Cinsa's and ENASA's COP and CV data reflect the current costs as

requested by the Department. We also note that Cinsa and ENASA

submitted timely responses to all our Section D questionnaires.

Therefore, we relied on Cinsa's and ENASA's submitted COMs as the basis

of deriving COP and CV for the final results.

As for petitioner's concern that the Department should use facts

available because of the magnitude of Cinsa's reported variances, we

again disagree. Cinsa's and ENASA's standard cost accounting systems

record traditional purchase price variances (i.e., standard price

adjusted to reflect current purchase price) and consumption variances

(i.e., standard usage adjusted to actual usage) monthly. We reviewed

Cinsa's and ENASA's submitted worksheets that demonstrate the company's

calculation of monthly variances. These worksheets indicate that Cinsa

and ENASA had relatively stable consumption variances and escalating

price variances. Given that Cinsa and ENASA establish a standard price

at the beginning of a calendar year for materials, one would expect an

escalating price variance in a high inflation economy because a

standard value is always being compared with a value that is constantly

increasing. Furthermore, we determined that Cinsa's and ENASA's

reported variances related only to POS cookware production and,

accordingly, were allocated to a sufficient level of product specific

detail in accordance with the Department's questionnaire instructions.

With regard to calculating the inflation index, our normal practice

is to generally adhere to the financial reporting requirements

prescribed by the accounting and auditing regulatory bodies of the

respondent's home market. See, Final Determination of Sales at Less

Than Fair Value: Certain Steel Concrete Reinforcing Bars From Turkey,

62 FR 9737, 9743 (March 4, 1997). In this instance, the Mexican

Accounting Principle Commission (``CPC'') requires that the financial

statements and accounting records of Mexican companies be restated to

account for the effects of inflation using the Consumer Price Index

(CPI) published by the Bank of Mexico. As noted in their audited

financial statements, Cinsa and ENASA complied with this regulation and

restated their financial statements using the CPI. Because the

respondent and all other enterprises that report in the currency of

Mexico adhere to the same index in the normal course of business and

the reliance on this index does not distort the cost of producing POS

merchandise, we have accepted the use of the CPI.

Comment 16: Enamel frit cost.

Petitioner maintains that, in the preliminary determination, the

Department correctly adjusted Cinsa's and ENASA's reported cost of

enamel frit upward to reflect market value because the reported

transfer prices for frit paid by Cinsa and ENASA to its affiliated

supplier, ESVIMEX, S.A. de C.V. (``ESVIMEX''), were lower than prices

paid for the identical merchandise by the supplier's unaffiliated

customers and thus not arm's length prices. Petitioner also contends

that the verification report indicates that ESVIMEX's discount to Cinsa

and ENASA is not justified by any alleged cost savings.

Cinsa and ENASA claim that the evidence in the record of this

review establishes that Cinsa's and ENASA's purchases from ESVIMEX were

made at a level above ESVIMEX's COP. In addition, Cinsa and ENASA claim

that the transfer prices represent fair market value because (1) Cinsa,

ENASA and ESVIMEX's unrelated customers purchased enamel frit from the

same price list (although unrelated customers received smaller

discounts from list price than Cinsa and ENASA, or no discounts at

all), and because (2) the lower prices paid by Cinsa and ENASA were

attributable to larger volume sales and savings in transportation,

storage, packing, warehousing and selling expenses. Cinsa also claims

that the record does not reflect changes in the circumstances

surrounding Cinsa's purchases from ESVIMEX during the first three

reviews of this order (ENASA was not then a respondent), in which the

Department accepted the transfer prices as being at arm's length.

Finally, Cinsa states that the verification report shows that the

quantified cost savings relating to the sale of the frit have nothing

to do with additional production cost savings attributable to volume

purchases of enamel frit by affiliated parties. Accordingly, Cinsa and

ENASA argue that the Department should rely on the reported enamel frit

costs, which are the actual production costs of ESVIMEX.

DOC Position: We agree with the respondents and the petitioner in

part. In its November 19, 1996, second supplemental responses Cinsa and

ENASA provided a schedule of the monthly COPs, transfer prices, and

``fair value'' (i.e. prices to unrelated buyers) of all frit purchased

from ESVIMEX during the POR. In the preliminary results of review, we

did not accept respondent's unsupported claimed cost savings and

increased the frit portion of the reported direct materials cost to

reflect the fact that frit purchased from an affiliated supplier did

not reflect fair market value. We have examined respondent's claimed

costs savings at verification, and as a result, in the final

determination we have accepted all cost savings claimed by respondents

and supported by documentation in the verification report. We have,

however, increased the frit portion of the direct materials cost in

respondent's reported cost database to account for the undocumented

portion of the reported cost savings as discussed in the verification

report dated July 18, 1997. See also Memorandum dated July 30, 1997,

regarding recalculation of the increase to materials cost (Frit Memo).

Although provisions of the Department's new regulations

1 do not, as petitioner implies, apply to this case, we

agree with petitioners that they are relevant as statements of the

Department's current practice in areas, such as evaluation of whether

affiliated party transactions constitute arm's length transactions, in

which there are no explicit provisions in the regulations applicable to

this review. The ``99.5%'' arm's length test cited by petitioner is

currently used in determining whether sales of subject merchandise to

an affiliated party are an appropriate basis for use as prices for

purposes of determining normal value. The portion of the preamble to

the Department's new regulations cited by petitioner commenting on the

use of this test refers to 19 CFR 351.403. However, the portion of the

preamble that deals with transactions involving the sale of inputs

between affiliated parties, Sec. 351.407, explicitly states that

``instead of implementing a single arm's length test applicable to all

situations involving affiliated party inputs, we think it is

[[Page 42507]]

important that the Department consider the facts of each case in order

to determine the appropriate level of scrutiny it will give to

affiliated party transactions.'' May 1997 Final Rule, 62 FR at 27362.

Although petitioner seeks to imply that the ``99.5%'' test is a

``standard arm's length test'' referred to at 62 FR 27362, this is not

the case. While the preamble at 62 FR 27362 states that the Department

intends to continue ``its normal practice of comparing actual

affiliated party prices with prices to or from unaffiliated parties,''

the above citation clarifies that, when dealing with inputs, there is

no set percentage within which these must agree, and that the

Department's decisions must take into account the facts of each case.

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

\1\ Antidumping Duties; Countervailing Duties; Final Rule,

(``May 1997 Final Rule'') 62 FR 27292, 27 355 (May 19, 1997).

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

In this case, respondents have placed on the record indications

that there are a number of market factors that are responsible for at

least some portion of the price differences between affiliated and

unaffiliated purchasers of frit from ESVIMEX. The Court of

International Trade, commenting on determination of the acceptability

of frit transfer prices in the 4th review of this order, has recently

stated that ``providing Commerce with third party sales information is

not the only means by which to prove arm's length transfer prices.''

Cinsa, S.A. de C.V. v. United States, Slip Op. 97-41 (April 4, 1997).

Because Cinsa and ENASA have provided adequate evidentiary support for

their claims regarding the market factors specified on the cost

analysis provided to the Department, the Department must consider those

factors in evaluating the extent to which the reported transfer prices

can be considered representative of market values.

Our evaluation of the facts in this case show that we should

continue to adjust Cinsa's and ENASA's reported cost of enamel frit to

reflect market value. We do not agree with Cinsa's and ENASA's argument

that the Department must accept ESVIMEX's frit transfer prices as

reported on the theory that the transfer price sales were made at a

fair market value. Pursuant to section 773(f)(2)of the Act, a

transaction between affiliated parties is considered an appropriate

source of ascertaining the value of an input if it fairly represents

the amount usually reflected in sales of subject merchandise in the

relevant market. Cf. 19 CFR 353.45(a), which requires that sales of

subject merchandise to certain related parties be disregarded for

purposes of calculating foreign market value unless the Secretary is

satisfied that the transfer price is comparable to the price at which

the producer or reseller sold [the merchandise] to a person not related

to the seller. In their April 22, 1996, questionnaire response, Cinsa

and ENASA provided information to the Department showing that ESVIMEX

sells frit to Cinsa and ENASA at substantially less than the purchase

price offered to unaffiliated purchasers of enamel frit, which they

claim reflects cost savings to ESVIMEX attributable to transportation,

storage, packing and selling costs. See Frit memo. However, neither

their submissions nor the exhibits provided at verification supports

the extent of the cost savings associated with the alleged ``volume

discount.'' In this case, we specifically requested that Cinsa and

ENASA submit a schedule comparing the transfer price and fair market

value for frit purchases from the affiliated supplier with the

supplier's COP and the supplier's prices to unaffiliated customers. In

addition, we asked Cinsa and ENASA to submit supporting documentation

for the fair market value amounts reported for frit (see question 4 of

the supplemental section D questionnaire dated October 25, 1996).

At verification, we again examined this issue. Specifically, we

requested that Cinsa and ENASA support their claim that the differences

between the discounts accorded affiliated parties and the discounts

accorded unrelated parties were fully accounted for by the cost

efficiencies listed in their submission. Respondents provided data

supporting the cost differential underlying part of the difference,

stating that the balance could be attributed to ``volume discounts.''

Based on the documents examined at verification, we have determined

that respondents adequately supported their claim with respect to the

all cost efficiencies listed on the schedule submitted at verification,

except for a portion that respondents' claimed as savings due to volume

discounts. We noted that no empirical support was provided for the

differences attributable to volume discounts. See Verification Report

dated July 18, 1997 page 4, and 23-26, and Verification Exhibit 6.

Furthermore, the savings attributable to making sales in large volumes

would appear to already be embodied in the cost savings in ``selling

expenses,'' which we have already taken into account.

The Department, in accordance with its longstanding policy of

considering that transactions between affiliated parties are not at

arm's length in the absence of sufficient evidence to the contrary, the

Department reasonably determined that this standard had not been met

with respect to ESVIMEX's frit prices to Cinsa and ENASA. Cf. Outokumpu

Copper Rolled Products AB v. United States, 850 F. Supp. 16 (CIT 1994)

(Department operates under the assumption that commission payments to

related parties are not made at arm's length). Because no support was

provided for the portion of the difference attributed to ``volume

discounts,'' we have increased the frit portion of the cost of direct

materials (since respondents adjusted their actual enamel frit costs to

reflect the affiliated supplier's COP) by that undocumented amount to

approximate an actual market price under the circumstances associated

with ESVIMEX's sales to its affiliates in this POR. See the July 18,

1997, Verification Report, pages 23-26, and the Memorandum dated July

30, 1997, regarding Collapsing of Affiliated Parties (Collapsing memo).

Furthermore, we do not agree with the respondents that it is

sufficient to show that ESVIMEX's frit prices to affiliates are above

COP. Because Cinsa and ESVIMEX are affiliated within the definition of

section 771(33) of the Act, we have determined that the treatment of

the enamel frit transactions is governed by sections 773(f)(2) and (3)

of the Act. In accordance with sections 773(f)(2) and (3) of the Act,

respectively, the Department compared ESVIMEX's transfer price first to

comparison market prices for sales of frit between unaffiliated parties

and then to ESVIMEX's COP. The Department made a similar determination

in the Final Results of Antidumping Administrative Review: Antifriction

Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from

France, Germany, Italy, Japan, Singapore, and the United Kingdom, 62 FR

2081, 2115 (January 15, 1997). In that review, the Department found

that in the case of a transaction between affiliated persons involving

a major input, we will use the highest of the transfer price between

the affiliated parties, the market price between unaffiliated parties,

or the affiliated supplier's cost of producing the major input. Cinsa's

and ENASA's argument that it is sufficient to show that ESVIMEX's

transfer price is above cost ignores the provisions of section

773(f)(2) of the Act, which requires a comparison of transfer price and

market price when the latter is available. Thus, we used ESVIMEX's

actual cost to produce the frit and compared it to prices charged to

unaffiliated customers in order to determine fair market value. We

noted that the prices charged to unaffiliated customers were greater

than both the affiliated transfer price and the actual costs incurred

to produce the frit supplied to Cinsa and ENASA.

Finally, we note that, although the Department determined at

verification

[[Page 42508]]

of the first review of this order that the transfer prices at issue

were at arm's length, and continued to accept the transfer prices in

the second and third reviews, we have scrutinized these prices more

closely in more recent reviews. Thus, in the fourth review, we rejected

the transfer prices because Cinsa had not documented its claims that

these were arm's length prices. (Although the CIT has recently held, in

Cinsa S.A. de C.V. v. United States, Slip. Op. 97-41 (April 4, 1997),

that our determination in that respect was insufficiently supported,

the results of remand in that review did indicate that even at the time

of the 4th review, it was no longer the Department's policy to accept

Cinsa's unsupported assertion that the full extent of the discounts it

received beyond those given to unrelated customers was accounted for by

any cost efficiencies involved in differences in the terms of sale.)

Therefore, Cinsa cannot claim that precedent requires the Department to

accept their unmodified transfer prices, in this ninth review, as being

at arm's length. The Department must make its determination in each

review based on the facts on the record of that segment of the

proceeding. Therefore, in this review, we have accepted Cinsa and

ENASA's submitted frit values only to the degree that they are

supported as embodying market based elements.

Comment 17. Petitioner argues that certain pages of Verification

Exhibit 6, (the nature of which is proprietary), are untimely and

should be stricken from the record. Petitioner states that moreover,

the documents are irrelevant, because they reflect transactions that

occurred outside the period of review.

Respondents maintain that although the documents involve assertions

that were made outside the 9th POR, these documents establish the

validity of Clause 12 of the Agreement between the joint venture

partners of ESVIMEX (governing the conditions for purchases by

affiliated parties of non-ESVIMEX frit).

DOC Position: We agree with the respondent. At verification, we

requested the documentation to which petitioners refer, in order to

verify an issue relating to a frit-purchase agreement in effect during

the POR. Because any supporting documentation which the Department

requests at verification is properly part of the record, there is no

reason to strike this document from the record. Because the same

agreement was in effect at the time of the affected frit purchases from

the unrelated party, the documentation in question is relevant to the

interpretation of the terms of that agreement, as is clear from the

proprietary version of the July 18, 1997, verification report.

Final Results of Review

As a result of this review, we have determined that the following

margins exist for the period December 1, 1994 through November 30,

1995:

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

Margin

Manufacturer/exporter (percent)

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

Cinsa........................................................ 6.90

ENASA........................................................ 2.74

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

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

assess, antidumping duties on all appropriate entries. The Department

shall issue appraisement instructions directly to the Customs Service.

Furthermore, the following deposit requirements shall be effective,

upon publication of this notice of final results of administrative

review, for all shipments of the subject merchandise from Mexico that

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

the publication date, as provided for by section 751(a)(1) of the

Tariff Act: (1) The cash deposit rates for Cinsa and ENASA will be the

rates established above; (2) for previously investigated companies not

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

specific rate published for the most recent period; (3) if the exporter

is not a firm covered in this review, or the original investigation,

but the manufacturer is, the cash deposit rate will be the rate

established for the most recent period for the manufacturer of the

merchandise; and (4) the cash deposit rate for all other manufacturers

or exporters of this merchandise will continue to be 29.52 percent, the

all others rate established in the final results of the less than fair

value investigation (51 FR 36435, October 10, 1986).

The deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice 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 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

regulation and the terms of an APO is a sanctionable violation.

This administrative review and notice are in accordance with

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

Dated: July 30, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-20735 Filed 8-6-97; 8:45 am]

BILLING CODE 3510-DS-P