Certain Forged Steel Crankshafts From the United Kingdom; Final Results of Antidumping Duty Administrative Review and Revocation of Antidumping Duty Order

DEPARTMENT OF COMMERCE

International Trade Administration

[A-412-602]

Certain Forged Steel Crankshafts From the United Kingdom; Final

Results of Antidumping Duty Administrative Review and Revocation of

Antidumping Duty Order

AGENCY: Import Administration, International Trade Administration,

Department of Commerce

ACTION: Notice of Final Results of Antidumping Duty Administrative

Review and Revocation of Antidumping Duty Order.

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SUMMARY: On December 3, 1996, the Department of Commerce (the

Department) published the preliminary results of its administrative

review of the antidumping duty order on certain forged steel

crankshafts from the United Kingdom (61 FR 64055). This review covers

shipments of this merchandise to the United States during the period

September 1, 1994 through August 31, 1995.

We gave interested parties an opportunity to comment on our

preliminary results. Based on our analysis of the comments and rebuttal

comments received, we have corrected certain clerical errors in the

margin calculations. The final weighted-average dumping margin for the

reviewed firm is listed below in the section entitled ``Final Results

of the Review.''

EFFECTIVE DATE: April 8, 1997.

FOR FURTHER INFORMATION CONTACT: David Dirstine, Lyn Johnson, or

Richard Rimlinger, Import Administration, International Trade

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

Constitution Avenue, NW,

[[Page 16769]]

Washington D.C. 20230; telephone (202) 482-4733.

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

current regulations, as amended by the interim regulations published in

the Federal Register on May 11, 1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

On December 3, 1996, the Department published the preliminary

results of its administrative review of the antidumping duty order on

certain forged steel crankshafts from the United Kingdom (61 FR 64055).

This review covers shipments of this merchandise to the United States

during the period September 1, 1994 through August 31, 1995.

We gave interested parties an opportunity to comment on our

preliminary results. At the request of petitioner, the Krupp Gerlach

Company (KGC), we held a public hearing on January 21, 1997. The

Department has now conducted this administrative review in accordance

with section 751 of the Act.

Scope of Review

Imports covered by this review are certain forged steel

crankshafts. The term ``crankshafts,'' as used in this review, includes

forged carbon or alloy steel crankshafts with a shipping weight between

40 and 750 pounds, whether machined or unmachined. These products are

currently classifiable under item numbers 8483.10.10.10, 8483.10.10.30,

8483.10.30.10, and 8483.10.30.50 of the Harmonized Tariff Schedule

(HTS). Neither cast crankshafts nor forged crankshafts with shipping

weights of less than 40 pounds or more than 750 pounds are subject to

this review. The HTS item numbers are provided for convenience and

Customs purposes. The written description remains dispositive of the

scope of the order.

This review covers one manufacturer/exporter of crankshafts,

British Steel Forgings (BSF), and the period September 1, 1994 through

August 31, 1995.

Changes Since the Preliminary Results

Based on our analysis of comments received, we have made some

changes in the final results in our calculations for the preliminary

results of review, we inadvertently did not take into account credit

expense adjustments that respondent reported prior to verification for

certain U.S. models when making circumstance-of-sale adjustments. We

have included the correct credit costs in our final calculations. We

also improperly converted amounts stated in Pounds Sterling to U.S.

dollars by multiplying amounts stated in Pounds Sterling by the

applicable-exchange-rate-conversion factors when, in fact, the Pounds

Sterling amounts should have been divided by those conversion factors.

We have converted currencies correctly in our final calculations. We

incorrectly made deductions from, rather than additions to, home market

(HM) sales for certain supplemental charges. We made the appropriate

corrections for these final results. Finally, we inadvertently omitted

supplemental charges related to U.S. sales which resulted in

understated U.S. prices. We added these supplemental charges to the

relevant U.S. sales for these final results.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. On January 2, and January 9, 1997, we received

case and rebuttal briefs from KGC and BSF.

Comment 1: KGC argues that the Department incorrectly calculated

constructed value (CV) because it computed a simple-average profit

figure using only the profit margins of the BSF crankshaft forging and

machining facilities and did not include the profit realized by British

Steels Engineering Steels (BSES), the division that supplies the steel

for producing crankshafts. KGC argues that, because the Department

considers BSF and BSES to be divisions of the same corporation for

purposes of determining raw material costs, they also must be treated

as a single corporate entity for purposes of determining the profits

generated by their combined activities.

KGC further argues that the Department incorrectly included in its

calculations the loss realized by one of the four crankshaft forging

and machining facilities. KGC argues that, as stated in

Sec. 773(e)(2)(A) of the Act, as amended by the URAA, CV must be based

on profits (i.e., not losses) realized in the ordinary course of trade.

Therefore, KGC contends, the Department should not have allowed this

loss to reduce average profit used for CV.

In rebuttal, BSF states that the Department correctly calculated

the profit percentage used in the calculation of CV. BSF contends that

it properly determined profit by referring to the management reports

that it uses to prepare the consolidated financial statements at the

level of reporting which most specifically relates to the sale of

crankshafts in the United Kingdom, i.e., the facilities which produce

and sell crankshafts for consumption in the United Kingdom and

reflected in the financial records of those facilities. BSF argues

that, when BSES ships steel to BSF (another division of the same

company) for processing into crankshafts, there is no sale involved;

rather, BSF asserts, it is making an interdivisional transfer of raw

materials within the same company. BSF further argues that BSES's

profit on sales of a full range of products including downstream steel

products to customers outside of the company has nothing to do with

BSF's profit on sales on crankshafts. BSF contends that, contrary to

KGC's interpretation, nowhere in the URAA or the Statement of

Administrative Action (SAA) is it ever suggested that, in computing the

level of profit, the Department should ignore facilities at which

expenses exceeded revenue.

Department's Position: As in the previous review, we continue to

consider BSF and BSES to be divisions of the same corporate entity. See

Certain Forged Steel Crankshafts from the United Kingdom, 61 FR 54613

(October 21, 1996) (Crankshafts V). However, this does not necessarily

mean that the combined profits and losses of these two sister divisions

of the same corporate entity should be used as the profit reflective of

crankshaft sales. First, we do not consider the transfer of the raw

material, i.e., steel from one division to another division within the

same company, to be a transaction in this case, so there is no profit

present in that transaction. Second, there is no connection between

crankshafts and the profit that BSES realizes on its wide line of steel

products, many of which have no relationship whatsoever with

crankshafts.

We note that for the preliminary results we used the combined

profit of BSF's four crankshaft-forging and machining facilities but

incorrectly stated to interested parties that we had used a simple

average profit figure for these facilities. For these final results we

have used a profit figure based on the combination of the weighted-

average profit rates for each of the four

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crankshaft-forging and machining facilities. This rate is appropriate

because, as a combined rate, it is directly related to the production

and sale of the subject merchandise.

With respect to petitioner's argument that for the profit

calculation we must exclude losses by one of BSF's facilities, we

disagree. Contrary to our statement in the preliminary results of this

review, we did not base profit for CV on the methodology set forth in

Sec. 773(e)(2)(A) of the statute. Rather, the Department was unable to

calculate the actual amounts of profit realized in connection with the

production and sale of the foreign like product because the information

to calculate a profit on that basis was not available. Accordingly, as

facts available, we used the actual amounts of profit realized by BSF

in connection with the production and sale of merchandise that is in

the same general category of products as the subject merchandise, the

alternative methodology set forth in Sec. 773(e)(2)(B)(i) of the

statute. This alternative method does not require that all sales used

to determine the profit amount be within the ordinary course of trade.

Therefore, we calculated the weighted-average profit based upon the

profit experience of each of BSF's manufacturing plants that produce

crankshafts (i.e., the same general category of products as the subject

merchandise).

Moreover, the profit and loss experience of the four plants is

relevant to the overall profit determination for the foreign like

product because those facilities each produce subject merchandise (or

foreign like product).

Comment 2: KGC argues that, unless the Department uses the profit

of both BSES and BSF in its computation of profit for CV, it must use

transfer prices between BSES and BSF rather than cost of production

(COP) as the measure of BSF's raw material cost of steel. In rebuttal,

BSF contends that KGC essentially repeats its arguments that it made

during the fifth administrative review and which the Department

rejected.

Department's Position: We have addressed the issue of profit in

response to the previous comment. Regarding the cost of steel, because

BSF and BSES are divisions of the same corporation, BSF's steel cost

for producing crankshafts is the COP of the steel manufactured by BSES.

Therefore, we used the COP data provided by BSF, which we verified, in

calculating CV. See Crankshafts V at 54614.

Comment 3: KGC argues that the Department incorrectly calculated

normal value (NV) for a HM crankshaft model which was used for price-

to-price comparisons to two crankshaft models sold in the United States

and provides calculations it conducted. KGC contends that the

Department's calculations understate the true NV of the HM model by

more than ten percent.

BSF notes that certain supplemental charges were incorrectly

subtracted from, rather than added to, HM models.

Department's Position: We agree with petitioner in part. We

inadvertently deducted two supplemental charges applicable to HM sales

from, rather than added to, HM price for the preliminary results. We

have corrected this error for these final results. In addition, as a

result of verification, we recalculated the first supplemental charge

and used the recalculated value in the preliminary results. However, in

its calculations for its case brief, KGC used the pre-verification

value for the first supplemental charge rather than the recalculated

amount. Moreover, KGC applied the highest reported expenses for

shipments of the comparator model in its calculations as opposed to a

weighted-average expense amount which we used in our preliminary

calculations. Therefore, KGC's calculation of NV does not reflect the

information on the record and our practice.

Comment 4: KGC argues that the Department should apply as ``best

information available'' (i.e., facts available) a 9.77 percent margin

to partially machined crankshafts which is the BIA rate that the

Department applied to this merchandise in the third administrative

review because the record of this review does not provide an adequate

basis to assess the accuracy of the information BSF has provided with

regard to its partially machined crankshafts.

Specifically, KGC argues that the record in this review does not

provide adequate information to ensure that the Department calculated

NV for BSF's partially machined crankshafts properly. KGC first claims

that BSF failed to describe in its response the rudimentary machining

processes that it applied to its partially machined crankshafts and the

costs associated with each such process. Second, KGC claims that there

is no explanation on the record as to why the total costs BSF reported

in its supplemental questionnaire response for these partially machined

crankshafts do not tie to the sum of the forging costs and machining

costs reported by BSF in its initial questionnaire response. Third, KGC

notes that the Department did not address partially machined

crankshafts in its verification report.

In response, BSF states that petitioner never argues that the

information on the record is incorrect but only that information which

was not supplied was never verified. BSF argues that the total costs

for the partially machined crankshafts which it submitted in its

supplemental response are correct. BSF further contends that it

described in detail the rudimentary machining processes involved in the

production of its partially machined crankshafts in its initial

questionnaire response and in its supplemental questionnaire response.

BSF suggests that KGC's confusion and inability to tie total costs

submitted for partially machined crankshafts to the sum of the forging

and machining costs separately submitted by BSF is the result of KGC

erroneously considering COP and transfer-price data of steel that BSF

uses to make crankshafts as submitted in a table in BSF's initial

questionnaire response to be costs of forging. BSF notes that the

Department never requested that it report separately the costs of

forging for partially machined crankshafts and, therefore, it never

submitted such data. However, BSF contends that the total costs of the

partially machined crankshafts which it did submit are nonetheless

accurate and could still be verified by the Department if necessary.

The Department, according to BSF, should reject KGC's claim that BIA

should be applied to partially-machined crankshafts.

Department's Position: We are satisfied with BSF's comprehensive

description of the process of manufacturing partially machined

crankshafts. Our analysis of the record evidence and our findings at

verification give us no reason to believe that the total cost data

submitted for partially machined crankshafts was inaccurate. The

Department's regulations provide for significant flexibility in

conducting verifications by permitting the verification of a sample of

data that the Department considers relevant to factual information

submitted. Recognizing that it is administratively impossible for us to

verify every topic, we purposefully selected those items to examine in

detail that we considered to reflect the universe of subject

merchandise in this proceeding., i.e., a complete examination of the

costs of the one HM model alleged to have been sold below cost, a

complete examination of the CV methodology and calculation for a

selected model sold in the United States, and a complete examination of

the machining costs for a machined crankshaft. Other than the

corrections and recalculations as noted in our verification report and

analysis

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memorandum, we found the data submitted by BSF to be accurate and we

have no reason to disregard the other portions of its response (e.g.,

BSF's data regarding partially machined crankshafts).

Comment 5: Based on a press release and newspaper article

announcing that BSF's parent sold the respondent's forging facilities

to a new company, KGC argues that, given the uncertainty about the

future ownership and potential business plans of BSF, the Department

cannot reasonably reach the conclusion, required under 19 CFR

Sec. 353.25(a)(1)(ii)), that BSF or its successor is not likely to

export crankshafts to the United States in the future at less than NV.

KGC urges the Department to continue the existing order until the

Department can reasonably determine that BSF's future U.S. pricing

practices will not result in less-than-NV sales.

In rebuttal, BSF argues that KGC provides no legal basis to support

its contention that the Department should not revoke the existing order

as it cannot reasonably determine that BSF is unlikely to make sales at

less than NV. BSF further argues that the lack of precedent to support

KGC's argument is not surprising; BSF has not discovered any instance

in which the Department has decided not to revoke an order because of a

change in ownership. Citing Toshiba Corp. v. United States, 15 CIT 597,

600 (1991) (Toshiba), BSF argues that the Department's policy in a

revocation proceeding is to examine only the information integral to

its antidumping investigation and not to gather all economic or

financial information about a company regardless of its relevance or

credibility. BSF further argues that, in light of Toshiba, KGC's

assertion that the proposed sale of BSF in some way affects the

Department's revocation determination is incorrect. BSF concludes that

its record of three years without dumping margins provides abundant

evidence that sales of crankshafts by BSF compete fairly in the United

States. BSF urges the Department to continue its practice of revoking

orders after three years of de minimis margins.

Department's Position: Pursuant to the Department's revocation

requirements under 19 CFR Sec. 353.25(a), respondent in this case filed

a timely request for revocation under Sec. 353.25(b), certified that

sales in the current review period were made at not less than normal

value under Sec. 353.25(b)(1), and has established the requisite three

consecutive years of de minimis margins under Sec. 353.25(a)(2)(i).

With respect to the issue of likelihood of resumption of dumping under

Sec. 353.25(a)(2)(ii), no evidence was submitted on the record of this

case in support of the contention that BSF is likely to resume dumping

after revocation of the order. Petitioner has instead argued that the

most recent change in the company's ownership by itself provides a

basis for the Department to deny revocation in this case because ``the

Department cannot reasonably reach the conclusion, required under 19

CFR Sec. 353.25(a)(1)(ii), that BSF or its successor is unlikely to

export crankshafts to the United States in the future at less than

NV.'' KGC January 2, 1997 submission at 22.

We disagree. Petitioner has failed to establish any relationship

between the reported change in ownership and the likelihood of

resumption of dumping by BSF. Petitioner's argument amounts to mere

speculation, particularly where, as here, the company under review has

changed ownership in the past without a corresponding effect on the

company's pricing behavior sufficient to generate a margin of dumping

greater than de minimis. Indeed, the company's previous change of

ownership combined with its continued pricing practices indicates that,

for this product, changes in corporate ownership are not likely to

affect pricing of subject merchandise sufficient to warrant denial of

revocation. Contrary to petitioner's contention, the continuation of de

minimis margins following the previous change in ownership tends to

support revocation in this case because it indicates that such a change

by itself does not have a meaningful effect on pricing in the

crankshaft market.

In sum, there is no evidence on the record to substantiate

petitioner's concern that BSF is likely to resume sales at dumped

prices. Because BSF has made sales at not less than NV for three

consecutive reviews and because there is no evidence on the record to

indicate the likelihood of resumption of sales at dumped prices, we are

revoking the antidumping duty order with respect to BSF. See Final

Results of Antidumping Duty Administrative Review and Revocation In

Part; Pressure Sensitive Plastic Tape From Italy, (55 FR 6031, 6032;

February 21, 1990). Further, since BSF is the only company covered by

the antidumping duty order on crankshafts from the United Kingdom, this

action constitutes a revocation of the order.

Final Results of Review

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

weighted-average margin exists for the period September 1, 1994 through

August 31, 1995.

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

Margin

Manufacturer/Exporter percent

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BSF........................................................... 0.31

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

As stated in our response to comment number 5 above, we have

determined that BSF has met the requirements for revocation set forth

in 19 CFR Sec. 353.25(a) of our regulations. We are therefore revoking

the order with respect to crankshafts from the United Kingdom, based on

our determination that BSF is the only known producer of crankshafts.

This revocation applies to all entries of the subject merchandise

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

August 31, 1995. The Department will order the suspension of

liquidation ended for all such entries and will instruct the Customs

Service to release any cash deposit or bonds. The Department will

further instruct Customs to refund with interest any cash deposits on

entries made on or after August 31, 1995. In addition, the Department

will terminate the review covering shipments of subject merchandise

from the United Kingdom during the period September 1, 1995 through

August 31, 1996, which was initiated on October 17, 1996 (61 FR 54154).

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

responsibility under 19 CFR Sec. 353.26 to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

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

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

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

Sec. 353.22.

Dated: April 2, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-8954 Filed 4-7-97; 8:45 am]

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