Porcelain-on-Steel Cooking Ware From the People's Republic of China; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-506]

Porcelain-on-Steel Cooking Ware From the People's Republic of

China; 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 29, 1997, the Department of Commerce (the

Department) published in the Federal Register the preliminary results

of its administrative review of the antidumping duty order on

porcelain-on-steel (POS) cooking ware from the People's Republic of

China (PRC) (62 FR 4250). This review covers shipments by two

manufacturers/exporters of this merchandise to the United States during

the period December 1, 1993, through November 30, 1994. We gave

interested parties an opportunity to comment on our preliminary

results. Based upon our analysis of the comments received (see Analysis

of Comments Received section below), these final results of review

remain unchanged from the preliminary results of review.

EFFECTIVE DATE: October 22, 1997.

FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Kelly Parkhill,

Office of CVD/AD Enforcement VI, Import Administration, International

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

Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-

2786.

Applicable Statute and Regulations: Unless otherwise stated, all

citations to the statute and to the Department's regulations are

references to the provisions as they existed on December 31, 1994.

SUPPLEMENTARY INFORMATION:

Background

On December 2, 1986, the Department published, in the Federal

Register, the antidumping duty order on POS cooking ware from the PRC

(51 FR 43414). On December 6, 1994, the Department published, in the

Federal Register, a notice of opportunity to request an administrative

review of this antidumping duty order (59 FR 62710) covering the period

December 1, 1993, through November 30, 1994.

On December 21, 1994, in accordance with 19 C.F.R. 353.22(a)(1), a

U.S. importer, CGS International Inc. (CGS), requested that we conduct

an administrative review of Clover Enamelware Enterprise Ltd. (Clover),

a PRC manufacturer/exporter of the subject merchandise, and its third-

country reseller in Hong Kong, Lucky Enamelware Factory Ltd. (Lucky).

On December 29, 1994, in accordance with 19 C.F.R. 353.22(a),

petitioner, General Housewares Corp. (GHC) requested that we conduct an

administrative review of China National Light Import and Export

Corporation (China Light), Shanghai Branch, through Amerport (H.K.),

Ltd. We published the notice of initiation of this antidumping duty

administrative review covering the period December 1, 1993 through

November 30, 1994, on January 13, 1995 (60 FR 3192).

On February 29, 1997, the Department published in the Federal

Register the preliminary results of this administrative review of the

antidumping duty order on POS cooking ware from the PRC (62 FR 4250).

There was no request for a hearing. The Department has now completed

this review in accordance with section 751(a) of the Act.

Related Parties

Clover is two-thirds owned by Lucky and therefore Lucky holds

controlling interest in Clover. Due to Lucky's ownership interest in

Clover, and the fact that the same individual is the general manager at

both companies, we consider Clover and Lucky (hereafter Clover/Lucky)

to be related pursuant to section 771(13) of the Act. As such, and

consistent with prior reviews of this order, we have calculated only

one rate for both of these companies. For a further discussion of this

issue, see Memorandum from Case Analyst to the File Regarding Status as

Related Parties dated January 17, 1997, which is a public document on

file in the Central Records Unit (room B-099 of the Department of

Commerce).

Scope of Review

Imports covered by this review are shipments of POS cooking ware,

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. The merchandise is currently

classifiable under the HTS item 7323.94.00. HTS item numbers are

provided for convenience and Custom purposes. The written description

remains dispositive.

Best Information Available

In our preliminary results, we determined, in accordance with

sections 776(b) and (c) of the Act, that the use of best information

available (BIA) is appropriate for China Light and Clover/Lucky. (See

``Memorandum for Jeffrey P. Bialos from Barbara E. Tillman Regarding

Use of Best Information Available'' dated January 16, 1997, which is a

public document on file in the Central Records Unit (room B-099 of the

Main Commerce Building).) We received written comments on the

preliminary results of review. Our analysis of the comments submitted

by interested parties has not led us to modify our findings from the

preliminary results.

Section 776(b) of the Act states that the Department shall use BIA

whenever it is unable to verify the information submitted. Section

776(c) of the Act states that the Department shall use BIA whenever a

company refuses or is unable to produce information in a timely manner

and in the form required, or significantly impedes an investigation or

review.

In deciding what to use as BIA, section 353.37(b) of the

Department's regulations provide that the Department may take into

account whether a party refuses to provide requested information or

impedes a proceeding. Thus, the Department determines on a case-by-case

basis what is BIA. The Department uses a two-tiered approach in its

choice of BIA. When a company refuses to provide the information

requested in the form required or otherwise significantly impedes the

Department's review (first tier), the Department will normally assign

to that company the higher of (1) the highest rate found for any firm

in the less-than-fair-value (LTFV) investigation or a prior

administrative review; or (2) the highest rate found in the current

review for any firm. When a company has cooperated with the

Department's request for information but fails to provide information

requested in a timely manner or in the form required such that margins

for certain sales cannot be calculated (second tier), the Department

will normally assign to those sales the higher of (1) the highest rate

applicable to that company for the same class or kind of merchandise

from any previous review or the original investigation; or (2) the

highest calculated margin for any respondent in the current review. See

Final Results of Antidumping Duty Administrative Reviews and Revocation

in Part of An Antidumping Duty Order: Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof from France, et. al., 58 FR

39729 (July 26, 1993). This practice has been upheld in Allied-Signal

Aerospace Co. v. United States, 996 F.2d 1185

[[Page 54826]]

(Fed. Cir. 1993), and Krupp Stahl AG et al. v. United States, 822 F.

Supp. 789 (CIT 1993).

As mentioned above, China Light did not respond to our

questionnaire. As non-cooperative, first-tier BIA, and in accordance

with section 776(c) of the Act, we have applied the highest margin from

the LTFV investigation, prior administrative reviews, or in this

review, which is 66.65 percent. Further, China Light was not found

eligible for a separate rate in this review. Consequently, China Light

is part of the single NME entity in this review, which has been

assigned the PRC country-wide rate (see, e.g., Heavy Forged Hand Tools,

Finished or Unfinished, With or Without Handles, from the People's

Republic of China; Preliminary Results of Antidumping Duty

Administrative Review; 61 FR 15218, 15221 (April 5, 1996), and Heavy

Forged Hand Tools, Finished or Unfinished, With or Without Handles,

from the People's Republic of China; Final Results of Antidumping Duty

Administrative Review; 61 FR 15269 (October 1, 1996).

Clover/Lucky cooperated with our requests for information and

agreed to undergo verification. From July 17 through July 29, 1995, the

Department attempted verification of the company's questionnaire

response at Lucky's sales offices in Hong Kong and Clover's factory in

Shenzhen, PRC. As a result of these verification efforts with respect

to Clover's questionnaire response, we discovered significant

discrepancies and were unable to verify substantial sections of the

questionnaire response, including statutorily required factors of

production information, such as the number of labor hours worked and

the per unit quantities consumed of primary material inputs. These

discrepancies are detailed in the Department's verification report

concerning Clover, dated January 13, 1997.

As a result, the Department has determined that the data the

company submitted is unverifiable. Therefore, in accordance with

section 776(b) of the Act, there is no basis to accept the integrity of

the factors of production information submitted in the questionnaire

response, constituting a verification failure. See Notice of Final

Determination of Sales at Less Than Fair Value: Melamine Institutional

Dinnerware Products from the People's Republic of China, 61 FR 1708

(January 13, 1997). Because the respondent failed verification, the

Department must use BIA. Since Clover/Lucky was cooperative, we have

applied second-tier BIA. The second-tier BIA rate is the highest rate

applicable to the company from a previous review or the original LTFV

investigation, which in this case is 66.65 percent, the rate Clover/

Lucky received in the 1990/91 administrative review.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received a case brief from Clover/Lucky

(respondent) and a rebuttal brief from General Housewares (petitioner).

Comment 1: Clover/Lucky alleges that the Department's decision to

consider verification a failure is unwarranted. According to

respondent, the problems at verification were due to: (1) The brevity

of the verification at Clover's factory in the PRC; and (2) the

Department's failure to explore alternative methods of

verification.1 Clover/Lucky claims that had the Department

spent more time at Clover, the Department would have been able to

verify much of the allegedly unverified information. According to

Clover/Lucky, it is the Department's obligation to allow itself the

time necessary to verify the responses and find alternative methods of

verification of information, if needed.

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\1\ Clover/Lucky suggests the following alternative methods for

some portions of the response that could not be verified: (1) The

verifiers could have timed the products going through the production

process in order to verify the piece rate tables used to calculate

the workers' wages; (2) 1995 (post-POR) time cards could be examined

to verify the 1993/94 labor hours and piece rates reported in the

response; (3) uncoated semi-finished steel blanks, steel blanks with

the initial ground coat, steel blanks with the cover coat, double-

coated steel blanks and finished goods for selected products could

have been shipped to the United States for further examination and

weighing in order to verify the reported enamel consumption; and (4)

loan documents identifying ownership of machinery between Lucky and

Clover could be examined, in conjunction with on-site identification

of molds and equipment by knowledgeable floor supervisors, in order

to verify the depreciation information included in the response that

could not be verified through the depreciation cards.

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Petitioner argues that Clover/Lucky provided no evidence

demonstrating that the Department's verification procedures to verify

Clover/Lucky were unfair or unreasonable.

Department's Position: We disagree with respondent. The on-site

verification at Clover's factory in the PRC was but one portion of the

ten-day verification of Clover/Lucky's questionnaire response. Ten days

to verify a questionnaire response is well within the normal time

period allotted for such verifications. In addition, as Clover/Lucky

noted in its case brief, the verification team was willing to, and did,

work overtime to allow the company the opportunity to demonstrate the

accuracy of the submitted information. Further, upon leaving Clover's

factory in the PRC, the team gave Clover the opportunity to send any

missing supporting documentation to Lucky's offices in Hong Kong, which

the team would then verify at that location. Despite this opportunity,

Clover sent no such information.

As we stated in Antifriction Bearings (Other than Tapered Roller

Bearings) and Parts Thereof from France, et. al.; Final Results of

Antidumping Duty Administrative Reviews and Partial Termination of

Administrative Reviews, 61 FR 66481, 66482 ( December 17,1996), ``It is

incumbent on the respondent to establish the accuracy of the

information it submits during the time period allotted for

verification.'' This position is supported by the U.S. Court of

International Trade (CIT) which stated, ``There is no statutory mandate

as to how long the process of verification must last, . . . . [The

Department] is afforded discretion when conducting a verification

pursuant to 19 U.S.C. 1677e(b).'' Persico Pizzamiglio, S.A. v. United

States, 18 CIT 229, 307 (1994) (holding that a three-day overseas

verification was reasonable). See also Ceramica Regiomontana, S.A. v.

United States, 10 CIT 399, 406, 636 F. Supp. 961, 967 (1986) (held that

the Department has wide latitude in determining the time to be spent

and the procedures to be used to conduct verification).

We also disagree with Clover/Lucky's contention that it is the

Department's obligation to explore alternative approaches to verifying

information. As petitioner points out in its rebuttal brief, it is the

responsibility of the respondent, and not of the Department, to create

a sufficient record in the administrative review. Tatung Co., v. United

States, 18 CIT 1137, 1140 (1994). The purpose of verification is to

verify the accuracy of the response, not to collect information or

recreate the response in order to address its errors or deficiencies.

See Belmont Industries v. United States, 733 F. Supp. 1507, 1508 (CIT

1990) (``verification is like an audit, the purpose of which is to test

information provided by a party for accuracy and completeness. Normally

an audit entails selective examination rather than testing of an entire

universe''); see also Monsanto Co. v. United States, 698 F. Supp. 275,

281 (CIT 1988) (``verification is a spot check and is not intended to

be an exhaustive examination of the respondent's business''). To

accomplish this, the Department uses standard verification methods, and

among other things, examines the source documents that respondents

claim were used to

[[Page 54827]]

compile the information contained in their questionnaire response.

To assist respondents in preparing for verification, the Department

issues an outline of the verification to respondents prior to the

arrival of the verifiers. Prior to verification in this case, the

Department sent an outline of the verification procedures to Clover/

Lucky. The outline identified the information in the response that the

Department intended to verify and the types of source documents that

would be examined by the Department when conducting the verification.

The outline also indicated that it was not exhaustive, and that the

Department might request relevant additional material necessary for a

complete verification.

As discussed above, the Department does not have an unlimited

amount of time in which to conduct a verification. As characterized by

the CIT itself, verification under these conditions is, by its very

nature, a spot check rather than a complete audit. As such, it is

crucial that the information reported in the questionnaire response can

be readily verified if selected for examination. Given the time limits

of verification, the Department is unable to await, let alone accept,

numerous clarifications or corrections to responses at verification,

nor can it explore all conceivable verification methods suggested by a

respondent in the hope that one of them might conceivably result in the

information being verified at some indefinite point in the future.

The alternative methods of verification suggested by Clover/Lucky

would have required significant amounts of additional time to

undertake. In this case, such time was no longer available because of

the difficulties encountered in verifying the information in the

response using standard verification procedures as set forth in the

verification outline that was sent to Clover/Lucky. For example, with

respect to timing the processing steps on the factory floor as an

alternative method of verifying labor hours, respondent noted in its

comments that Clover's POS cookware production process is a complicated

one. According to Clover/Lucky, the simplest piece of enamelware, a

plate, involves seven processes while a teakettle (a covered cookware

item) involves 48 processes. Some of these processes (e.g., enameling)

involve considerable time between steps. Given the need to take several

readings per processing step being examined in order to calculate a

meaningful average, this method would require considerable time and

effort to verify even one cookware item, much less a meaningful sample

of the approximately 45 cookware items under review. Further, Clover

manufactures over 450 different enamelware items, only a portion of

which are cookware items sold in the United States. Therefore, it is

highly unlikely that the Department would be able to randomly select a

cookware item from the piece rate table (a table listing the standard

amounts of time required to complete individual processing steps for

each enamelware item produced by the company) and find that it is being

produced that day on the shop floor.

In addition, two of the suggested alternatives, the use of 1995

(post-POR) source documents to verify 1993/94 data and the post-

verification shipment of finished and semi-finished cookware products

to the United States for examination by the Department are simply not

reasonable verification alternatives. The Department cannot accept

unrelated information from a future review period to substitute for

source documents from the period under review. The comparison of 1995

time cards to 1993/94 labor records and piece rate tables will not

result in any meaningful determination as to the accuracy of the

submitted 1993/94 information. As to the submission of selected pieces

of finished and semi-finished cookware to the Department for

examination and weighing, the purpose of on-site verification is to

enable the Department not only to check certain factual information but

also to be able to further verify the accuracy of the submitted

information through questions to, and clarifying statements from, those

individuals that either prepared the response, are involved in the

manufacture and exportation of the merchandise under review or are

responsible for maintaining the company's books and records. This is

not possible under Clover/Lucky's suggested alternative methods of

verification.

Comment 2: Clover/Lucky alleges that it should not be penalized for

failing to maintain the source documentation needed to support its

reported labor hours/record retention. Neither the questionnaire nor

the outline specifically stated that time cards needed to be retained

for verification. Further, these records are not required to be kept by

local tax authorities.

Department's Position: Contrary to respondent's characterization

that its failure to maintain source documentation for reported labor

hours was the cause of the failed verification, in this review, labor

hours were among the many items that Clover/Lucky was unable to tie to

or support with source documentation.

In addition, we disagree with respondent's claim that it should not

be penalized for failing to maintain certain source documents because

the Department did not specifically identify these source documents in

its questionnaire or outline. Both the questionnaire and the

verification outline make it clear that the information submitted in

the response may be subject to verification. Because responses

submitted in an administrative review may be subject to verification,

it is incumbent upon a respondent to retain the source documentation

which it used to prepare the questionnaire response. The verification

outline further notes that we will be tying the information reported in

the response to the company's source documents that support that

information. The outline provides examples of the type of documents we

examine and clearly states that we may require any additional

documentation necessary for a complete verification. Time cards are

among the documents that support a company's payroll. That the

Department might request to examine these time cards can hardly be

considered outside the realm of possibility in a verification of

reported labor hours. Section 773(c)(3) of the Act, which enumerates

the specific factors of production that the Department examines in NME

cases, lists as the very first factor ``hours of labor required''

(section 773(c)(3)(A)).

The record keeping requirements of local tax authorities are not

germane to the records that need to be maintained for verification of

the questionnaire response in an antidumping administrative review. See

Krupp Stahl A.G. v. United States, 17 CIT 450; 822 F. Supp. 789, 791-92

(1993) (holding that the fact that a foreign government did not require

retention of business records did not absolve the respondent from its

obligation or responsibility to respond to the Department's

questionnaire response in an antidumping proceeding. The court upheld

the Department's use of BIA.) See also Antifriction Bearings (Other

Than Tapered Roller Bearings) and Parts Thereof From France, et al.;

Final Results of Antidumping Duty Administrative Reviews, Partial

Termination of Administrative Reviews, and Revocation in Part of

Antidumping Duty Orders, 60 FR 10900, 10990 (February 28, 1995).

Comment 3: Clover/Lucky claims that the Department's conclusion

that Clover was unable to document its per-unit enamel consumption

figure is

[[Page 54828]]

unfounded. At verification, the company explained the sampling

procedure it used to estimate the per-unit consumption. By weighing

three to five samples of each model throughout the various coating and

drying processes, it calculated a per-unit weighted-average of enamel

consumption. Clover/Lucky contends that, based on this procedure, the

company prepared the table used to report per-unit enamel consumption

in its response. As respondent itself states, because enamel coating is

a hand-dipped process, the difference between the actual weight of an

individual item may be quite different from the consumption figure

calculated in the sample. However, since the consumption figures were

derived from actual figures, respondent claims it was not necessary for

the company to maintain the underlying source documents.

Department's Position: We disagree with respondent. The

verification report does not support Clover/Lucky's contention that it

was able to document the per-unit enamel consumption. As stated by

Clover/Lucky itself in its case brief, the company did not retain any

of the original worksheets or underlying source documents of the per-

unit enamel consumption after conducting its sample weighing.

As discussed previously, it is the responsibility of the

respondent, and not of the Department, to create a sufficient record in

the administrative review. Tatung Co., v. United States, 18 CIT 1137,

1140 (1994). The purpose of verification is to verify the accuracy of

the response through examination of source documentation, not to

collect information or recreate supporting source documentation that

respondent has failed to maintain. Further, as discussed previously, we

reject Clover's suggestion that the Department allow it to ship, after

verification, selected samples of finished and semi-finished cookware

products to the Department in order that the Department could further

test the accuracy of the reported figures. For further information

regarding the Department's position on this, see Department's Position

to Comment 1.

Comment 4: Clover/Lucky argues that it should not be penalized for

failing to report the quantities of water, electricity and fuel

consumed in the production process because the Department did not

specifically ask the company to report quantities of indirect materials

in its factors of production questionnaire. Rather, as stated in

Clover/Lucky's case brief, the Department only requested factor inputs

for the following: (A) Direct Materials; (B) Direct Labor; (C) Factory

Overhead; (D) Selling, General and Administrative Expenses; (E) Other;

and (F) Packing. Therefore, the Department cannot not fault Clover for

failing to report information that was not fairly requested, citing

Koyo Seiko Company, Ltd. and Koyo Corporation of U.S.A. v. The United

States, 92 F.3rd 1162, 1168 (Fed. Cir. 1986). Clover/Lucky argues

further that since the Department verified Clover's total value of

electricity and fuel consumption against financial statements and

vouchers which contained both quantities and values of electricity and

fuel consumption, it could just as well have compiled the total

quantities of energy used.

Department's Position: We disagree with respondent. Because the

prices of materials and inputs in an NME are not considered valid for

calculation purposes, the Department requires respondents to report the

amount, rather than the value, of materials consumed in the production

process. Although the questionnaire did not specifically include

``indirect materials'' or ``energy'' in the list of factor input

categories, it is clear that such items are covered by the Department's

questionnaire. The list of requested information, with respect to the

factors of production, is broad and all-inclusive--it includes all the

major categories involved in production as well as a catch-all category

(i.e., ``Other''). Indirect materials and energy consumed in the

production process normally fall under Factory Overhead, the very

category Clover/Lucky used when reporting its expenses for electricity,

water and fuel (rather than the requested quantities for these same

three items). However, these inputs could have just as easily been

categorized as Other, or in certain cases, if applicable, Direct

Materials. All three of these categories were listed by the Department

in its questionnaire. Therefore, it cannot be construed that the

information asked for at verification was unfairly requested.

As to whether the Department could have gathered the information at

verification from financial documents or invoices, again, respondent is

asking the Department to take on the responsibility of creating the

company's response at verification. As discussed previously, it is the

responsibility of the respondent, and not of the Department, to create

a sufficient record in the administrative review. Tianjin Machinery I/E

Corp. v. United States, 806 F. Supp. 1008, 1015 (CIT 1992). The Court

has held that the Department ``is not required to . . . recalculate a

respondent's submission to develop an accurate response.'' Tatung Co.,

v. United States, 18 CIT at 1142 n.3, citing Chinsung Indus. Co. v.

United States, 705 F. Supp. 598, 601-02 (1989).

Comment 5: Clover/Lucky contests the Department's statement in the

verification report that there was an extremely large number of

typographical errors in the reported quantities of steel purchases.

Clover/Lucky also claims that the statements in the verification report

that the company was unable to reconcile the quantity of steel

requisitioned for production with inventory withdrawals, and that it

was also unable to substantiate its reported per unit quantities of

steel, are incorrect. The company claims that much of the steel

information was verified and that those items that did not verify were

not substantial and would not materially affect the company's response.

Department's Position: We disagree with respondent. At

verification, we found a number of discrepancies with respect to both

steel purchases and steel consumption. From a small sample of selected

invoices, the Department discovered typographical errors resulting in

the under reporting of individual steel purchases in two cases by 22

and 43 percent, the over reporting of individual steel purchases by 222

percent in another, and the misclassification of one purchase's steel

thickness. Because at verification the Department is only able to

verify information through spot-checking, where we find discrepancies

in the subset that is actually tested, we must judge the effect of such

discrepancies that are randomly revealed on the unexamined portion of

the response. See, e.g., Antifriction Bearings (Other Than Tapered

Roller Bearings) and Parts Thereof From France, et. al.; Final Results

of Antidumping Duty Administrative Review, 62 FR 2081 (January 15,

1997).

Further, Clover/Lucky incorrectly concludes that the reported net

discrepancy is inconsequential because it is small when compared to

total reported steel purchases. In fact, the figure in the verification

report was based on an examination of only a small portion of the steel

purchases (those with a thickness of 4 mm), not all steel purchases and

includes errors in both directions. Because at verification we examined

a subset of steel purchases and found discrepancies in the reporting

with respect to this subset, the Department must attribute to all of

the steel purchases these same discrepancies. See Belmont Industries v.

United States, 733 F. Supp. 1507, 1508 (CIT 1990); see also Monsanto

Co. v. United States, 698 F. Supp. 275, 281 (CIT 1988). Therefore, the

figure understates the impact of the

[[Page 54829]]

discrepancies, even when properly compared to 4mm steel purchases.

Problems also arose with respect to the verification of steel

consumption. The Department was unable to verify the reported ratio for

steel scrap, which, because of its significance in the manufacture of

POS cookware, is an important factor in determining total steel

consumption. The spot check of departmental steel requisitions to

inventory withdrawals showed a discrepancy of approximately seven

percent that the company was unable to account for.

The Department faced similar problems in its verification of the

per unit quantities of steel used in the production of cooking ware

that were reported in the response. The company submitted theoretical

quantities based on an equation it developed using the specific density

of steel. As to the statement in the verification report which noted no

discrepancies between the reported per unit steel amounts and the

method used by the company to calculate these amounts (cited by

respondent as support for their conclusion that the problems in this

area were insignificant), the only conclusion that can be drawn from

that statement is that the company did not make any mathematical errors

in its calculations, nor any transcription errors when typing this

figure in the response. As such, the Department's statement in its

verification report that it found no discrepancies between the reported

per unit steel amounts and the method respondent used to calculate

these reported figures has no bearing on either the accuracy of the

method the company chose to estimate its per unit steel consumption or

the figures in its response. The fact remains that the company could

not corroborate the calculated theoretical per unit figures with

sampled actual weight readings or support the figures used in the per

unit calculations with the measurements from the technical drawings

that the company claimed as supporting documentation.

The discrepancies, the errors in reporting and the inability to

reconcile the figures reported in the response with supporting

documentation, demonstrate that the company's response with respect to,

not only its purchases, but also its consumption of steel, the primary

material input in the POS production process, cannot be relied upon.

Comment 6: With respect to depreciation expenses regarding certain

fixed assets, Clover/Lucky argues it did not create ``fixed asset

cards'' (instead of a fixed-asset ledger, Clover records all its asset-

related information on fixed asset cards) for its equipment at the time

they were installed because the cards are only required to be created

during the first fiscal year period. Further, although Clover admits

that it had no system in place to show ownership of the molds,\2\ it

contends that the Department could have examined loan documents to

determine the identity of the fixed assets in question. Moreover,

Clover/Lucky claims that its technicians know the identity of the asset

by merely looking at it. According to respondent, the Department could

have reviewed the loan documents and successfully verified this section

of the response if it had allowed sufficient time for verification.

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\2\ Certain molds were among the fixed assets which the

Department selected for verification of depreciation expenses.

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Department's Position: The Department examined depreciation

expenses in this case because of Clover/Lucky's claim that the POS

cooking ware industry constituted a market-oriented industry (MOI).

Since the Department found that the POS cooking ware industry does not

constitute an MOI (see Department's position to Comment 9), the issue

raised by respondent is moot.

Comment 7: Clover/Lucky argues that even if the Department rejects

Clover's factors of production information in this case, it should

determine the foreign market value (FMV) based on Lucky's home market

(Hong Kong) sales or third country sales.

Petitioner disputes Clover/Lucky's argument, claiming that Clover/

Lucky is, in effect, challenging the Department's preliminary finding

that the POS cooking ware industry does not constitute a market-

oriented industry. Petitioner points out that Clover has provided no

information that prices for significant inputs are not controlled by

the PRC government. Petitioner argues that the Department must,

therefore, calculate FMV using the factors of production methodology.

Department's Position: We disagree with respondent that FMV in this

case can be determined on the basis of Lucky's home market or third

country sales. In order for FMV to be based on Lucky's home market or

third country prices (which respondent, in its case brief, now requests

for the first time in this proceeding), Lucky would have had to allege

and demonstrate that it had third-country reseller status. Further, it

would have to meet the requirements of section 773(f) of the Act in

order to have its sales, either home market or third country, used as

the basis for FMV. Lucky made no such claim in this proceeding.

Moreover, issues of relatedness aside, since Clover knows at the time

of the sale the final destination of the merchandise, Lucky does not

qualify as a reseller from an intermediate country in any event. (See

Clover/Lucky's June 20, 1995 Questionnaire Response (Public Version)

which, at page 20, states that ``Clover is aware of the ultimate

destination of the POS cookware because the destination is indicated on

the outer carton.'') Moreover, given the relationship between Lucky and

Clover, we do not consider that there exists a ``purchase'' from the

PRC production facility by Lucky within the meaning of section 773(f).

(See Preliminary Determination of Sales at Less than Fair Value:

Disposable Pocket Lighters From the People's Republic of China, 59 FR

64191, 64194 (December 13, 1994)). Thus, even had Lucky made a proper

claim that it was a third country reseller within the meaning of

section 773(f) of the Act, the record evidence of this case would not

support such a determination. Therefore, Lucky's prices to customers in

Hong Kong or third countries could not be used as the basis for FMV--

only Clover's factors of production information could form the basis of

FMV, the method selected by the Department in this case. Moreover, had

we considered using Lucky's prices in Hong Kong or to third countries,

we would normally compare those prices to the cost of the merchandise

based on factors of production, because the merchandise was produced in

an NME country. We could not have performed this test, because we could

not verify the factors of production. As stated previously, as a result

of the failure of verification with respect to Clover's factors of

production information, the Department had to resort to the best

information available in this case under section 776(b) of the Act.

With respect to petitioner's rebuttal to respondent's claim,

petitioner mistakenly frames respondent's claim as one of advocating

the use of PRC prices to determine FMV (i.e., petitioner raises the

market-oriented industry discussion). Respondent, however, is not

arguing that the Department use Clover's price, but, instead, that the

Department use Lucky's home market or third country prices to determine

FMV. As respondent itself states on page 19 of its case brief, ``Lucky

and Clover are not requesting that Commerce use Clover's prices.''

Comment 8: Clover/Lucky argues that the Department should conduct a

supplemental verification and reexamine the information submitted in

[[Page 54830]]

its questionnaire response. This would allow the Department sufficient

time to explore the alternative verification methods enumerated by

Clover/Lucky in its comments.

Petitioner, however, contends that there is no basis to conduct a

re-verification, since Clover/Lucky provided no evidence that

Department's verification was flawed. Petitioner points out that the

CIT ruled that the Department ``is not required to re-verify

information submitted after verification, or recalculate a submission

to develop an accurate response.'' Tatung Co. v. United States, 18 CIT

at 1142 n.3, citing Chinsung Indus. Co. v. United States, 705 F. Supp.,

at 601-02.

Department's Position: We disagree with respondent. Conducting a

second verification, particularly after a company fails its first

verification, would be an extraordinary action. To do so would signal

to respondents that a failed verification can be overcome, which would

undermine both our ability to obtain complete and accurate information

from Clover/Lucky in time to conduct proper verifications and to

complete reviews in a timely manner as required by the Act. As in the

case cited by petitioner, the Department is not required to conduct a

supplemental verification. The CIT has ruled that ``Due to stringent

time deadlines and the significant limitations on Commerce's resources

it is vital that accurate information be provided promptly to allow the

agency sufficient time for review.'' Ceramica Regiomontana, S.A. v.

United States, 10 CIT 399, 406, 636 F. Supp, 961, 967 (1986).

Although the Department has conducted supplemental verifications in

the past (See, e.g., Cyanuric Acid and its Chlorinated Derivatives from

Japan; Final Results of Antidumping Duty Administrative Review, 51 FR

45495, 45496 (December 19, 1986); Cell Site Transceivers from Japan;

Final Determination of Sales at Less Than Fair Value, 49 FR 43080,

43084 (October 26, 1984); High Power Microwave Amplifiers and

Components Thereof from Japan, 47 FR 22134 (May 21, 1982) (final

determination of sales at less than fair value), and; Fireplace Mesh

Panels from Taiwan; Final Determination of Sales at Less Than Fair

Value, 47 FR 15393, 15395 (April 9, 1982)), in each of these cases, re-

verification was conducted pursuant to requests for additional

information requested by the Department, or due to a particular

emergency that arose in the case. In contrast, Lucky/Clover's request

is based primarily on general time constraints, constraints which must

always be imposed on a verification. There is simply no reason for the

Department to take the extraordinary measure in this case of conducting

a supplemental verification.

Comment 9: Clover/Lucky also argues that the Department should

conduct a supplemental verification to redetermine that the POS

cookware industry constitutes a market-oriented industry. Respondent

claims that, at verification, the Department could verify that the

company pays market prices for both labor and the PRC-sourced direct

and indirect materials it uses in the production of cooking ware.

Department's Position: We disagree with respondent. As discussed

above, in determining whether an industry under examination constitutes

a market-oriented industry, the Department examines the industry as a

whole, not just the practices of the company or companies under

investigation or review. (See Notice of Final Determination of Less

Than Fair Value; Furfuryl Alcohol from the People's Republic of China,

60 FR 22544 (May 8, 1995).) Clover/Lucky has not demonstrated that the

POS cooking ware industry constitutes a market-oriented industry in the

PRC, and we have adopted our preliminary determination with respect to

this issue for these final results. The examination of Clover's

purchases from its non-market suppliers and the wages it pays its

employees is insufficient to conclude that the POS cooking ware

industry as a whole is a market-oriented industry.

For a more detailed discussion of the Department's preliminary

determination that the POS cooking ware industry does not constitute a

market-oriented industry, see Memorandum to Barbara E. Tillman,

Director of the Office of CVD/AD Enforcement VI, dated January 17,

1997, ``Market-Oriented Industry Request in the 1993-1994

Administrative Review of POS Cooking Ware from the People's Republic of

China,''which is a public document on file in the Central Records Unit

(room B-099 of the Main Commerce Building).

Final Results of Review

Based on our analysis of comments from interested parties, we

determine that no changes to the preliminary results are warranted for

purposes of these final results. The dumping margins for each company

under review are:

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

Manufacturer/Exporter Rate(percent)

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

Clover/Lucky............................................. 66.65

PRC-Wide Rate (including China Light).................... 66.65

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

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

assess, antidumping duties on all appropriate entries. Individual

differences between United States price and FMV may vary from the

percentages stated above. The Department will issue appraisement

instructions directly to the U.S. Customs Service.

Since the final results for the more recent review period, December

1, 1994 through November 30, 1995 (1995 review period) were published

on June 17, 1997 (62 FR 3275), the cash deposit instructions contained

in that notice will apply to all shipments to the United States of

subject merchandise entered, or withdrawn from warehouse, for

consumption on or after June 17, 1997. The dumping margins established

for the period December 1, 1993 through November 30, 1994 period will

have no effect on the cash deposit rate for any firm except for the

company China Light. For China Light, which did not respond to our

questionnaire, and was not subject to the 1995 review, the cash deposit

rate will be the PRC-wide rate for the 1993-1994 period.

These deposit rates shall remain in effect until publication of the

final results of the next administrative review.

Notification to Interested Parties

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

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

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

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective orders (APOs) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d)(1). Timely written notification

of the return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations 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 (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

[[Page 54831]]

Dated: October 16, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-27990 Filed 10-21-97; 8:45 am]

BILLING CODE 3510-DS-P