Certain Refrigeration Compressors From the Republic of Singapore: Final Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[C-559-001]

Certain Refrigeration Compressors From the Republic of Singapore:

Final Results of Countervailing Duty Administrative Review

AGENCY: Import Administration/International Trade Administration/

Department of Commerce.

ACTION: Notice of Final Results of Countervailing Duty Administrative

Review.

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SUMMARY: On December 9, 1997, the Department of Commerce published the

preliminary results of its administrative review of the agreement

suspending the countervailing duty investigation on certain

refrigeration compressors from the Republic of Singapore.

In our preliminary results of review, we preliminarily determined

that the signatories to the suspension agreement complied with the

terms of the suspension agreement during the period of review (POR). We

gave interested parties an opportunity to comment on our preliminary

results. We received comments from petitioner and respondents.

We have now completed this review, the thirteenth review of this

Agreement, and determine that the Government of the Republic of

Singapore (GOS), Matsushita Refrigeration Industries (Singapore) Pte.

Ltd. (MARIS), and Asia Matsushita Electric (Singapore) Pte. Ltd. (AMS),

the signatories to the suspension agreement, have complied with the

terms of the suspension agreement during the period April 1, 1995

through March 31, 1996. Based on our analysis of the comments received,

we have not changed the results from those presented in the preliminary

results of review.

EFFECTIVE DATE: June 16, 1998.

FOR FURTHER INFORMATION CONTACT: Robert Bolling or Rick Johnson, Import

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

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

20230; telephone: (202) 482-3434 or 482-0165, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (``the Act''), are references to the provisions

effective January 1, 1995, the effective date of the amendments made to

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 set forth at 19 CFR part 355 (April

1997).

Background

On December 9, 1997, the Department of Commerce (the Department)

published in the Federal Register (62 FR 64806) the preliminary results

of its administrative review of the agreement suspending the

countervailing duty investigation on certain refrigeration compressors

from the Republic of Singapore. We received comments from interested

parties on our preliminary results. Additionally, the Department sent

out a supplemental questionnaire to the respondents on December 22,

1997 to obtain additional information on testing of the subject

merchandise. Petitioner provided comments to respondents' subsequent

January 6, 1998 submission on January 7, 1998. See Comments 3 and 6

below. We have now completed this administrative review in accordance

with section 751 of the Act.

Scope of the Review

Imports covered by this review are shipments of hermetic

refrigeration compressors rated not over one-quarter horsepower from

Singapore. This merchandise is currently classified under Harmonized

Tariff Schedule (HTS) item number 8414.30.40. The HTS item number is

provided for convenience and Customs purposes. The written description

remains dispositive.

The review covers the period April 1, 1995 through March 31, 1996,

and includes three programs. The review covers one producer and one

exporter of the subject merchandise, MARIS and AMS, respectively.

Under the terms of the suspension agreement, the GOS agrees to

offset completely the amount of the net bounty or grant (subsidy)

determined by the Department in this proceeding to exist with respect

to the subject merchandise. The offset entails the

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collection by the GOS of an export charge applicable to the subject

merchandise exported on or after the effective date of the agreement.

See Certain Refrigeration Compressors from the Republic of Singapore:

Suspension of Countervailing Duty Investigation (``Suspension

Agreement''), 48 FR 51167, 51170 (November 7, 1983).

Analysis of Comments Received

Comment 1: Respondents argue that the Department should notify the

GOS that it may refund the entire amount of the provisional export

charge collected with respect to past imports with respect to this POR.

Additionally, respondents argue that the Department should establish a

zero provisional export charge for future exports of the subject

merchandise.

First, respondents argue that the Department has consistently

maintained, with respect to both antidumping and countervailing duty

proceedings, that there is no difference between a de minimis and a

zero subsidy, citing, inter alia, Final Negative Countervailing Duty

Determination: Certain Steel Products from South Africa, (58 FR 62100,

62103, 62104 November 24, 1993). Additionally, respondents note that

the Department's prior regulations stated that ``[a] de minimis margin

is considered a zero margin.'' See Countervailing Duties Final Rule, 53

FR 52306, 52327 (December 27, 1988). Moreover, respondents argue that

the Department's May 1997 regulations (which the Department notes do

not govern this review) state that a de minimis margin is the same as

``a zero margin.'' See Antidumping Duties, Countervailing Duties, 62 FR

27296 (May 19, 1997)(to be codified at 19 C.F.R. Section 351.106(b)).

Respondents also note that the Statement of Administrative Action

(``the SAA'') states that ``de minimis margins are regarded as zero

margins.'' See Statement of Administration Action, in Uruguay Round

Trade Agreements, Texts of Agreements, Implementing Bill, Statement of

Administrative Action, and Required Supporting Statements, H.R. Doc.

No. 103-316, 103d Cong. 2d Sess. (1994) at 844 (the ``SAA''). Finally,

respondents argue that the Court of International Trade (CIT) did not

review a de minimis finding on the grounds that doing so would be to

provide an advisory opinion on a case in which no subsidization was

found. See Georgetown Steel Corp. v. United States, 810 F. Supp. 318,

321 (Ct. Int'l Trade 1992). Therefore, respondents argue that former

and current law, current Commerce regulations and the CIT support the

treatment of a de minimis margin as a zero margin, and thus the

Department has no authority to impose or establish a de minimis export

charge.

Second, respondents argue that the Department has stated that, as a

matter of policy, it is a waste of resources to offset de minimis

subsidies, because it is costly and has a minimal impact on the market.

See Antidumping Duties and Countervailing Duties: De Minimis Margins

and De Minimis Subsidies, 52 FR 30660, 30661 (August 17, 1987) (``it

would be unreasonable for the Department and the U.S. Customs Service

to squander their scarce resources administering orders for which the

dumping margins and net subsidies are below 0.5%''). Respondents assert

that this rationale also applies in the context of a suspension

agreement, and provides the Department an additional reason to modify

its preliminary administrative review results.

Lastly, respondents argue that requiring the GOS to collect a de

minimis export charge would be contrary to the intent of the suspension

agreement. Respondents assert that the suspension agreement was

intended to offset the amount of the net subsidy through an export

charge, and this charge should be neither smaller nor greater than the

duty Customs would collect. According to respondents, requiring the

collection of a de minimis export charge, when there would be no

countervailing duty imposed on imports under a CVD order, would

contravene the requirement of the suspension agreement that the export

charge offset (but not exceed) the amount of the subsidization.

Petitioner argues that the suspension agreement and the

countervailing duty law require that all bounties and grants be

countervailed. Petitioner asserts that the terms of the agreement

require the GOS ``to offset completely the amount of the net bounty or

grant determined by the Department in this proceeding to exist with

respect to the subject product.'' See Suspension Agreement at 51169.

Petitioner also argues that there is not a de minimis threshold within

the suspension agreement governing this proceeding.

Petitioner notes that the authorization for suspension agreements

from the Tariff Act of 1930, as amended, section 704(b)(1), states the

foreign government or exporters of the product must agree ``to

eliminate the countervailable subsidy completely or to offset

completely the amount of the net countervailable subsidy.'' Petitioner

argues that the language of the suspension agreement specifically

states that the subsidy is to be ``offset completely'' and the

Department does not have the authority to disregard that language as

respondents have requested. Petitioner asserts that the language of the

agreement cannot be changed, and to do so would not be consistent with

the Act.

Petitioner argues that the respondents suggest that the regulatory

and statutory provisions setting the de minimis standards in

investigations and reviews of contested orders prevail over the

language of the agreement and section 704(d) of the Act. Petitioner

states that the May 1997 regulations are aimed at the conduct of

investigations in disputed cases or the review of results in those

cases. Thus, petitioner maintains that the language of the Act

(specifically, the de minimis provisions), cannot be applied to the

monitoring of a suspension agreement. Moreover, petitioner asserts that

the monitoring provision in the Act (section 704(d)) is not to be used

to ``import'' rules from other areas of countervailing duty

enforcement. Therefore, petitioner argues that the provisions of the

Act and the May 1997 regulations are not applicable to this case

because the respondents have exercised their right to arrive at an ad

hoc arrangement (i.e., the suspension agreement) to ``modify * * *

behavior so as to eliminate dumping or subidization * * *'' See 19 CFR

section 351.208(a), 62 FR 27388.

Petitioner rebuts respondents' argument that the collection of the

export charge would waste the Department's resources, asserting that

because all parties agreed to the suspension agreement, both the

Department and the respondents have saved resources by avoiding the

final phase of the investigation. Lastly, petitioner argues that

respondents' claim that requiring the GOS to collect a de minimis

export charge would be contrary to the suspension agreement is

inconsistent with the principles of contract interpretation; namely,

only when the contract terms are ambiguous is it proper to look outside

to divine some intent. Since the de minimis standard is not found in

the suspension agreement, petitioner argues that it cannot be read into

the agreement.

Petitioner asserts that respondents' reliance upon Georgetown Steel

is misplaced because the CIT did not reject a challenge to the de

minimis determination, but instead declined to reach additional issues

because the Department's de minimis calculation in that case was not

disturbed. Furthermore, petitioner argues that respondents have not

presented any evidence or legal argument to disregard the meaning of

the suspension

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agreement, citing a decision of the Court of Appeals for the Federal

Circuit which stated that if the ``provisions are clear and

unambiguous, they must be given their plain and ordinary meaning . . .

and the court may not resort to extrinsic evidence to interpret them.''

See McAbee Construction, Inc. v United States, 97 F.3d 1431, 1435 (Fed.

Cir. 1996)(citation omitted).

Department's Position: We agree with respondents. The Department's

policy with respect to a de minimis and or a zero subsidy is clear. The

applicable Department regulations for this review state that ``the

Secretary will disregard any aggregate net subsidy that the Secretary

determines is less than 0.5% ad valorem or the equivalent specific

rate.'' See 19 CFR 355.7. Additionally, petitioner's argument for

requiring the GOS to continue to offset the net bounty or grant is not

accurate. First, the Department's regulations apply equally to

administrative reviews and/or suspension agreements. Suspension

agreements must be written in accordance with the same statute and

regulations which govern the review of an order. We agree with

respondents that the Department has held that if a subsidy is de

minimis there are no benefits to constitute bounties or grants within

the meaning of the countervailing duty law. See Certain Steel Products

from South Africa, 58 FR 62100, 62103 (November 24, 1993). While

petitioner is correct that the suspension agreement does not have a de

minimis threshold within its text, such language is unnecessary,

precisely because the Department's CVD regulations govern the review of

the agreement.

Second, petitioner's argument that the suspension agreement

requires that the GOS ``offset completely the amount of the net bounty

or grant'' has merit only when that net bounty or grant is above a de

minimis level. Although the suspension agreement does not provide for

de mimimis language in the text of the agreement, the Department's

regulations make it clear that, ``the Secretary will treat as de

minimis any . . . countervailable subsidy rate that is less than 0.5

percent ad valorem, or the equivalent specific rate.'' See 19 CFR

Section 355.7. If the suspension agreement were an order, the

Department would not require the U.S. Customs Service to collect

duties. Therefore, the Department has no basis, either through the

applicable statute, regulations, or case precedent to require the GOS

to continue collecting an export charge for the subject merchandise. Of

course, any subsequent review for which the Department finds a

countervailable subsidy above de minimis would result in the resumption

of the collection of cash deposits on subject merchandise.

Comment 2: Petitioner argues that the Department should capture

benefits which MARIS and AMS have accrued after the results of

administrative reviews have become final. Petitioner asserts that the

current administrative review revealed evidence that respondents may

have received preferential tax benefits in prior administrative reviews

that were not included in the relevant final results for those

administrative reviews. Petitioner asserts that under Singaporean law,

respondents have up to six years to negotiate their final tax

assessment, and the results of an administrative review may become

final before taxes are finalized. Therefore, petitioner maintains that

these tax benefits may never become part of the Department's

calculations.

Petitioner asserts that the suspension agreement clearly states

that all benefits received by the respondents are to be offset by

payments to the GOS. Petitioner states that Singapore's tax collection

methodology permits and encourages avoidance of the intended purpose of

the suspension agreement, which is to offset completely the tax

benefit. Petitioner contends that to correct this problem, the

Department should require respondents to submit information on their

tax liabilities made final during any POR, regardless of when they

accrued, and then adjust the current administrative review calculations

to reflect the benefits received from prior administrative reviews. In

doing so, the Department will capture any benefits that respondents may

have received from the tax programs, and eliminate incentives to delay

finalization of tax liabilities until after the results of the

Department's administrative review have become final. Petitioner

contends that following its suggested solution would not require the

Department to reopen past inquires, but would simply recognize that

benefits become effective when the final tax liability is determined,

i.e., in the then-current POR.

Respondents argue that there is no basis for the Department to

reexamine benefits allegedly provided by the GOS in prior reviews.

According to respondents, petitioner contends that in this

administrative review it was revealed for the first time that the

operation of the Singapore tax system may have resulted in respondents

receiving preferential tax benefits in prior years that were not

included in the final administrative results of prior reviews. However,

respondents argue that the Singaporean tax system has been in effect

since before the petition was filed, and the Singaporean tax system

allows a taxpayer to object to his initial tax assessment and continue

to negotiate the final amount of assessment by the GOS within a certain

time period. Thus, respondents argue that the Department and the

petitioner have been made aware of Singapore's tax system prior to the

current review.

Respondents also note that they have described the tax system

process in past administrative reviews. Additionally, respondents

assert that they have submitted provisional tax computations in prior

administrative reviews, and that this fact should have alerted the

Department and petitioner that the tax computations were not final.

Moreover, respondents assert that in the twelfth administrative review,

the Department used MARIS' (then-) most recent tax computations to

calculate the export charge, although the tax computations were not

final. See Certain Refrigeration Compressors from the Republic of

Singapore: Final Results of Countervailing Duty Administrative Review,

62 FR 36045 (July 3, 1997).

Second, respondents argue that, as a matter of law, prior

administrative reviews cannot be reopened. Respondents assert that

under U.S. law, each administrative review is a separate proceeding,

conducted based upon its own record. See 19 USC Sec. 1675(a)(1).

Additionally, respondents assert that entries covered in prior

administrative reviews cannot be assessed an additional export charge

once their countervailable status has been determined. See FAG

Kugelfischer Geor Schafer KgaA v. United States, 932 F. Supp. 315 (Ct.

Int'l Trade 1996).

Third, respondents argue that during the course of this suspension

agreement and other Departmental proceedings, the Department's practice

has been to calculate Economic Expansion Incentives Act (EEIA) tax

benefits based on the latest tax calculations that the respondents

submitted for that POR. Additionally, respondents maintain that the

Department does not change a methodology it has regularly utilized

absent some intervening change in basic fact or law, and that neither

of these events has occurred in this case.

Lastly, respondents argue that the suspension agreement does not

allow adjustments to an export charge once a final export charge has

been set. Therefore, respondents argue that the Department should

continue its practice of basing its calculation of any benefit MARIS

receives from Part VI of the

[[Page 32852]]

EEIA on MARIS' most recent tax computation.

Department's Position: The Department's analysis of the benefits

received through EEIA Part VI yielded an ad valorem rate of 0.23

percent. We note that, even if we were to recalculate the margin based

on the revised tax figures, the total countervailing duty rate

calculated for AMS and MARIS during the POR would remain de minimis.

See The Department's Calculation Methodology Memorandum: Export Charge

Rate Calculation for the Final Results of the Thirteen Administrative

Review--Certain Refrigeration Compressors from Singapore (April 1,

1995--March 31, 1996 (June 8, 1998).

Comment 3: Petitioner argues that respondents have failed to

explain discrepancies in reported volume and value of sales. Petitioner

asserts that AMS sales of subject merchandise were approximately 23%

higher than MARIS' production, although MARIS is AMS' sole supplier.

Petitioner notes that respondents stated in their October 7, 1997

submission that the discrepancy was due to the fact MARIS and AMS

booked their sales when made, thus creating differences in the timing

of when a particular sale is reported, and that AMS receives a greater

price for the compressors it sells than it pays to MARIS. Petitioner

asserts that minor timing differences alone cannot explain the

discrepancy.

Petitioner argues that the explanation the Department obtained at

verification did not provide an adequate reason for this discrepancy.

Petitioner notes that at verification respondents provided another

explanation for the discrepancy in volume and value; specifically, that

MARIS' engineers performed tests ``to determine which compressors were

1/4 horsepower or less based on generally accepted standard engineering

principles,'' and that MARIS discovered that its and its parent

company's manuals and sales literature did not correlate, and that some

of MARIS' sales thus had been misclassified as subject merchandise.

However, petitioner argues that MARIS' data provided at verification

does not explain the continuing discrepancy in volume and value because

a discrepancy continues to exist from the questionnaire responses.

Petitioner asserts that respondents have not explained why the

explanation in their October 7, 1997 response differs from the

explanation provided at verification. Additionally, petitioner states

that it is unclear when MARIS' engineers performed the engineering

tests to determine which compressors were subject merchandise.

Moreover, petitioner asserts that even if MARIS' tests were accurate,

they are not relevant, because the agreement covers refrigeration

compressors ``rated'' not greater than 1/4 horsepower, regardless of

whether they in fact are. Petitioner argues that refrigeration

compressors that respondents found to be over 1/4 horsepower were

nevertheless rated (i.e., labeled, identified, advertised and sold by

MARIS and AMS) as falling within the scope of the agreement and

therefore are subject merchandise. Lastly, petitioner argues that the

discrepancy cannot be explained away by the respondents testing

explanation because any knowledgeable engineer or salesman can convert

BTU ratings into horsepower without the need for tests.

Petitioner also argues that the data provided by respondents

concerning testing of their units and their attempt to explain

discrepancies in reported units sold constitute new information

submitted in an untimely fashion. Petitioner asserts that the

Department should reject this information in accordance with its long-

standing policy of rejecting new information. See Final Determination

of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel

Plate from the People's Republic of China, 62 FR 61964 (November 20,

1997), Final Determination of Sales at Less Than Fair Value: Certain

Cut-to-Length Carbon Steel Plate from the Russian Federation, 62 FR

61787, 61790 (November 19, 1997), Certain Helical Spring Lock Washers

from the People's Republic of China, 62 FR 61794 (November 19, 1997),

and Final Results of Antidumping Duty Administrative Review: Stainless

Steel Bar from India, 62 FR 37030 (July 10, 1997). Therefore,

petitioner argues that the inconsistencies in respondents' explanations

should lead the Department to apply an adverse facts available in this

case.

Respondents argue that there is no basis to apply facts available

with adverse inferences with regard to the alleged discrepancies in

MARIS' and AMS' volume and value of sales. Respondents assert that the

discrepancies between MARIS' and AMS' volume and value of sales of

subject merchandise do not provide insufficient data for the Department

to apply adverse facts available.

First, respondents argue that there is no evidence that either

MARIS' or AMS' sales figures are inaccurate. Respondents assert that at

verification the Department verified both MARIS' and AMS' volume and

value sales figures by tying the figures to each company's general

ledger, and the Department found no discrepancies.

Second, respondents state that they have provided the following

explanations regarding the difference between the company figures: (1)

Differences in testing by the two companies resulted in different

classifications for merchandise that was rated near \1/4\ horsepower;

(2) AMS receives a greater price for the compressors it sells than it

pays to MARIS for the same compressors; and (3) the sale of the same

compressor can be booked at different times, leading to discrepancies

in the amount of sales that occur in a year. Respondents maintain that

the vast majority of the difference was due to the misclassification of

the subject merchandise and the majority of these compressors were

shipped to countries other than the United States.

Third, respondents argue that there is no basis for including

compressors greater than \1/4\ horsepower (i.e., non-subject

merchandise) simply because they were inaccurately rated as being

subject merchandise. Additionally, respondent argue that the Department

should not reject as untimely new information submitted at verification

or provided pursuant to a supplemental questionnaire that was issued by

the Department.

Finally, respondents argue that the cases cited by petitioners in

fact show that the Department has the discretion to accept supplemental

information. Respondent notes that the Department has stated that it

can accept new information at verification when (1) ``the need for that

information was not evidenced previously, (2) the information makes

minor revisions to information already on the record, or (3) the

information corroborates, supports, or clarifies information already on

the record.'' See Final Results of Antidumping Administrative Review:

Titanium Sponge from the Russian Federation, 61 FR 58525 (November 15,

1996). Respondents assert that the Department requested additional

information from MARIS and AMS on the alleged discrepancies due to a

request from the petitioner. Moreover, respondents point to two

Department determinations that state it is within the Department's

discretion to accept new information. See Notice of Final Determination

of Sales at Less Than Fair Value; Certain Pasta from Turkey, 61 FR

30309, 30310 (June 14, 1996), and Notice of Final Results of

Antidumping Administrative Review; Certain Cut-to-Length Carbon Steel

Plate from Belgium, 63 FR 2959, 2960 (January 20, 1998). Respondents

note that in this case, the

[[Page 32853]]

Department requested the additional information after verification due

to issues raised by petitioner to ascertain whether information

provided on the record was accurate.

Lastly, respondents argue that the petitioner does not offer any

support for its argument that the scope of the suspension agreement is

determined based upon how respondents ``labeled, identified, advertised

and sold'' its compressors, and that the rating of a compressor is an

objective fact determined by its performance, and not by sales

literature.

Department's Position: The Department accepts respondent's

explanations for the discrepancy in MARIS' and AMS' volume and value

figures, and the Department has verified to its satisfaction

respondent's explanations for the discrepancy. First, we note that, at

verification, the Department verified the accuracy of both MARIS' and

AMS' volume and values figures. The Department verified MARIS' and AMS'

sales figures by tying the figures to each of the company's general

ledger, and the Department found no discrepancies. See Verification

Report, at pages 10-11 and 18-19, December 1, 1997. Specifically, the

Department verified MARIS' and AMS' total sales of subject merchandise

(i.e., volume and value) to the United States by tying the figures to

the company's books and ledgers, and the Department found no

discrepancies. See Verification Report, at pages 12 and 18-19.

Additionally, at verification MARIS stated that one of the reasons for

the difference between the company figures was that MARIS preformed

testing on all of its compressors. This testing resulted in different

classifications for merchandise that was rated near \1/4\ horsepower.

Also, MARIS stated that AMS used a different list from MARIS' to

classify compressors. Thus, the different classifications resulted in

AMS reporting a more inclusive amount of compressors including those

compressors that were not subject merchandise. Additionally, at

verification, MARIS stated that the vast majority of compressors that

petitioner argues are not reconciled, were shipped to countries other

than the United States. See Verification Report, at page 15.

Furthermore, the Department verified that MARIS had misclassified

compressors as subject merchandise which were then shipped to United

States. See Verification Report, at page 15 and Verification Exhibit M-

17. At verification, the Department did not find any discrepancies in

the materials that were reviewed using its standard verification

procedures and practices.

Admittedly, the Department did not and cannot verify every item in

a respondent's questionnaire response. ``However, [v]erification is a

spot check and is not intended to be an exhaustive examination of the

respondent's business. ITA has considerable latitude in picking and

choosing which items it will examine in detail.'' See Monsanto v.

United States, 698 F. Supp. 275, 280 (Ct. Int'l Trade 1988).

Nevertheless, the Department did verify to its satisfaction

respondent's explanations for the discrepancy and did not find any

evidence that respondent's were attempting to mislead or withhold any

information from the Department. Therefore, the Department has no

reason to apply adverse facts available in this case because

respondents complied with all requests for information and their

submissions were verified to the Department's satisfaction.

Second, we disagree with petitioner's argument that the data

provided by respondents concerning the testing of their units was new

information submitted in an untimely fashion. It is well-established in

the Department's regulations that we may invite submission of factual

information from parties at any time during a proceeding. See Section

355.31(B)(1). Furthermore, the cases petitioner cites, as evidence that

new information should be rejected were all cases in which new

information was submitted without the request of the Department.

Therefore, the Department will use the information requested after

verification in our final results of administrative review.

Finally, contrary to petitioners' contention, the scope of the

suspension agreement is not determined based upon how respondents may

have labeled, identified, advertised, and sold the subject merchandise.

Rather, the language of the suspension agreement covers those

refrigeration compressors that are in fact not over one-quarter

horsepower, and exported, directly or indirectly, from the Republic of

Singapore to the United States. See Suspension Agreement at 51170.

Accordingly, petitioner has not provided supporting evidence using the

above criteria to justify any changes to the scope of the suspension

agreement.

Comment 4: Petitioner argues that respondents have failed to

explain changes made to their tax benefit computations. Petitioner

states that at verification MARIS amended its tax computations in a

manner which reduced the company's estimated tax liability, and as a

result, the benefits accruing under the EEIA. Petitioner argues that

MARIS provided two different explanations at verification for the

change in the tax benefit and that both explanations cannot be correct.

See Verification Report at page 13, December 1, 1997 (Business

Proprietary Version). Petitioner asserts that it is critical for the

Department to ascertain MARIS' final tax liability in order to

calculate the company's actual tax benefit. Also, petitioner argues

that the Department is justified in applying adverse facts available

because the Department provided both MARIS and AMS the opportunity to

explain changes to their tax benefit computations and respondents

failed to provide ``credible'' explanations and accurate data.

Respondents assert that the statements they provided regarding

their tax benefit computations are consistent, and that the movement of

the warranty provisions from the Year of Assessment 1996 to the Year of

Assessment 1997 caused the increase in the warranty claim for 1997.

Therefore, the Department should continue to base MARIS' tax benefit on

the information provided at verification.

Department's Position: We agree with respondents. At verification,

the GOS provided the Department with updated income tax computations

from MARIS, and stated that MARIS increased its ``provision for

warranty'' based on additional warranty claims. See GOS verification

report at page 4. Additionally, MARIS stated that an independent

accounting firm computed and filed its taxes with the IRAS, and that an

official from the accounting firm confirmed at verification that MARIS'

tax computations were amended because the company's ``provision for

warranty'' increased due to additional warranty claims. See GOS and

MARIS Verification reports at pages 4 and 13, respectively. The

Department reviewed MARIS'' warranty expenses, and found this

explanation to be reasonable and not contradicted by any other

information reviewed at verification. See MARIS and GOS verification

reports at pages 4 and 13, respectively. Therefore, the Department has

no evidence to support petitioner's claim that respondents have failed

to explain changes made to its tax benefit computations. Therefore, for

the purposes of calculating a final margin, we have made no

adjustments.

Comment 5: Petitioner argues that the Department should correct its

methodology to conform to its methodology from past administrative

reviews by removing the deduction for the base export profit.

Petitioner states that in the preliminary results, the Department

calculated an adjusted profit applicable to export sales using a base

export profit reduction, and that

[[Page 32854]]

this export profit reduction has never been used in past administrative

reviews. Petitioner notes that no changes have occurred in the EEIA

program to account for the Department's change in its calculation

methodology. Moreover, petitioner argues that disregarding past

practice in the benefit calculation injects uncertainty into the

administrative review process, and thereby weakens the transparency of

the administrative review process.

Respondents note that petitioner is incorrect in stating that the

Department changed its methodology with regard to the base export

profit. Respondents state that in past administrative reviews, the

Department has calculated an export charge by subtracting the base

export profit figure, and that the Department has used this methodology

in other Singaporean reviews that benefit from Part VI of the EEIA.

Moreover, respondents assert that petitioner's proposal to exclude

``the base export profit reduction'' would violate the suspension

agreement because Singaporean law states that the base export profit is

taxed at the normal corporate tax rate (i.e., a countervailable benefit

is not conferred on the amount of the base export profit). Respondents

note that petitioner's request that the Department not subtract the

base export profit would result in the Department countervailing a

benefit not received, thereby resulting in an export charge that is

greater than what is required to offset the benefit that MARIS

receives. Therefore, respondents contend that the Department should

continue to subtract the base export profit figure from its

calculations.

Department's Position: We agree with respondents. In prior

administrative reviews of Refrigeration Compressors, (e.g., the 1992/

1993 and 1993/1994) the Department has maintained a line item in its

calculation methodology which included an adjustment for base export

profit. Specifically, the Department's calculation of EEIA benefits

included the line item deduction ``Less: Base Export Profit.'' See The

Department's Calculation Methodology Memorandum: Export Charge Rate

Calculation for the Final Results of the Tenth Administrative Review--

Certain Refrigeration Compressors from Singapore (April 1, 1992--March

31, 1993). The Department's calculation for the 1993/1994 and 1994/1995

POR also includes the same line item deduction. See The Department's

Calculation Methodology Memorandum: Export Charge Rate Calculation for

the Final Results of the Tenth Administrative Review--Certain

Refrigeration Compressors from Singapore (April 1, 1993--March 31,

1994).

However, in the last administrative review of Refrigeration

Compressors for the period April 1, 1994 through March 31, 1995, the

Department inadvertently neglected to subtract the base export profit

in its calculation. In that administrative review, the respondents

submitted on the record a base export profit amount which should have

been deducted in our calculations. See Questionnaire Response April 25,

1996, Exhibit A-8, Statement A-1. Neither respondents nor petitioner

commented on this inadvertent omission. No party raised the issue and

therefore this calculation stood in our final results of review.

Accordingly, the Department rejects petitioner's argument that the

base export profit should be excluded from the calculation because this

reduction has never been used and is a change in the Department's

methodology. Therefore, for the purposes of calculating a final margin,

we have made no adjustments.

Comment 6: Petitioner argues that the Department should reject

certain information submitted at verification regarding MARIS' tax

liability, MARIS' and AMS' explanation of its sales figures, and MARIS'

tax liability and hence export subsidy, and apply facts available with

adverse inferences. Petitioner asserts that respondents participated in

this review with an intent to mislead the Department by not providing

complete and accurate information.

First, petitioner argues that MARIS withheld information on its tax

liability and misrepresented the reason for withholding this

information. Petitioner points out that in the 12th administrative

review, the Department allowed MARIS to rely on estimated taxes due,

for the purpose of calculating tax benefits received under EEIA (Part

VI) although the IRAS had subsequently assessed higher taxes.

Petitioner asserts that MARIS' failure to provide information regarding

changes in its tax situation is a violation under the suspension

agreement, which requires that ``[t]he Government of the Republic of

Singapore . . . notify the Department in writing within 30 days prior

to granting any new benefits to producers, manufacturers or exporters

of the subject merchandise which may be countervailable.'' See

Suspension Agreement at 51170. Additionally, MARIS and AMS's

predecessor agreed that they would ``notify the Department in writing

if they . . . apply for or receive directly or indirectly any new

benefits on the subject product.'' See Suspension Agreement at 51170.

Petitioner maintains that in past reviews, respondents have made

repeated undertakings to supplement their tax calculations as they

became final and if they incurred an additional liability. See 1994/95

administrative review Response of the Government of Singapore, MARIS

and AMS to the Department's countervailing Duty Questionnaire (Public

Version) pp. III-20, III-21 (April 25, 1996), which has been placed on

the record of this review. Petitioner states that respondents told the

Department that they would provide new tax information when the

provisional tax figures were finalized, but never provided these

updated figures when these figures changed. In fact, according to

petitioners, the existence of updated tax figures was never positively

represented by respondent, but instead was identified at verification

by the Department. Additionally, petitioner states that respondents'

explanation regarding the IRAS' new calculations (specifically, that

these calculations were made subsequent to the May 27, 1997) is

misleading, given that the new calculation was dated January 28, 1997

and paid in February, 1997.

Second, petitioner argues that MARIS failed to provide an accurate

and adequate explanation of discrepancies between MARIS' and AMS' sales

figures. Petitioner notes that respondents offered two explanations for

this discrepancy. The first explanation, made in early October, 1997,

related to the timing of sales by MARIS compared with those by AMS. The

second explanation, made at verification in October 1997, was that

MARIS performed tests to determine which compressors should be

classified as subject merchandise.

Third, petitioner argues that MARIS provided two different

explanations (i.e., see comment 4) for changes to its tax liability.

Petitioner argues that at verification MARIS provided a recalculation

of its tax liability for the POR which would reduce its export charge

payable. Petitioner asserts that the explanation the MARIS' accountants

provided at verification is not consistent with the explanation MARIS'

accountants provided to the GOS. Petitioner states that, given the fact

the Singaporean tax law permits the negotiation of the tax owed past

the Department's final results of review, the Department should

critically examine any unusual adjustments to MARIS tax return.

Based on these alleged attempts to mislead the Department,

petitioner asserts that the Department should apply adverse facts

available, by finding

[[Page 32855]]

that the respondents have ``failed to cooperate by not acting to the

best of [their] ability to comply with a request for information.'' 19

C.F.R. Section 351.308(a). Petitioner argues that the five criteria

that the Department uses to determine the use of facts available have

not been met in this case. These criteria stipulate that: (1) The

information is submitted by the deadline established for its

submission; (2) the information can be verified; (3) the information is

not so incomplete that it cannot serve as a reliable basis for reaching

the applicable determination; (4) the interested party has demonstrated

that it acted to the best of its ability in providing the information

and meeting the requirements established by the Department with respect

to the information; and (5) the information can be used without undue

difficulties. See Final Results of Antidumping Duty Administrative

Review: Circular Non-Alloy Steel Pipe from Mexico, 62 FR 37014 (July

10, 1997). Petitioner asserts that in this case none of the criteria

have been met.

Respondents assert that petitioner's allegation that MARIS

misstated its tax liability and did not submit a timely recalculation

of its taxes is not relevant to this review, but instead applies to the

prior review, for which the record is closed. Consequently, respondents

assert the administrative record allows no further adjustments. Second,

respondents argue that petitioner's allegation that there is a

discrepancy between MARIS and AMS sales figures is without merit.

Respondents assert that there are no inaccuracies in either company's

sales figures, and that neither of these sales figures has any bearing

on the calculation of the export charge. Lastly, respondents argue that

petitioner's allegation that the Department has no choice but to rely

on MARIS' preliminary tax benefit calculation because respondents

offered two conflicting explanations is misplaced. Respondents state

that the Department reviewed MARIS' tax-related records at verification

(which included the warranty provision), and that the petitioner has

not provided any information that suggests that the warranty provision

is incorrect.

Finally, respondents argue that there is no basis for the

Department to apply adverse facts available to MARIS' and AMS' sales

figures because these figures do not have a bearing in the calculation

of the export charge. Respondents assert that the export charge is

calculated using MARIS' total exports of all compressors (i.e., subject

and non-subject merchandise), and the figures petitioner contend the

Department should consider are total sales of subject merchandise

(i.e., only compressors that are less than \1/4\ horsepower) to all

markets. Therefore, respondents argue that the figures petitioner has

questioned are not used in the calculation of the export charge.

Department's Position: We disagree with petitioner. The Department

has determined that the use of facts available is not warranted in this

final results of administrative review. First, petitioner argues that

the respondents did not meet its obligations under the suspension

agreement to provide updated tax information. The specific example to

which the petitioner cites is from the previous administrative review

and therefore is not relevant in the current review. With regard to

petitioner's specific arguments concerning this information, it is a

restatement of the argument petitioner makes in comment 2 above.

Second, petitioner argued that MARIS failed to provide an accurate

and adequate explanation of discrepancies between MARIS and AMS sales

figures. The Department has determined that MARIS has provided a

sufficient explanation for the alleged discrepancies which the

Department verified to its satisfaction. With regard to petitioner's

specific arguments concerning this information submitted by

respondents, see comment 3 above.

Third, petitioner argued that MARIS provided two different

explanations for changes to its tax liability. The Department has

determined that MARIS explanations for its changes to its tax liability

were reasonable. With regard to petitioner's specific arguments

concerning this information submitted by respondents, see comments 4

and 5 above.

Additionally, pursuant to section 776(a) and (b) of the Act,

examples of when the Department uses adverse facts available includes

when an interested party withholds information that has been requested

by the Department or fails to provide requested information by a set

deadline or significantly impedes a proceeding. In this case, the

Department has determined that respondents have not failed to cooperate

with the Department and have acted to the best of their ability in

complying with all requests for information. Additionally, respondents

have met all the deadlines for submission of information (i.e.,

questionnaire and supplemental questionnaire responses).

What the petitioner characterizes as untimely information and

justification for the Department's application of facts available was

information within the Department's discretion to request and accept at

any time during an investigation or administrative review. See 19

C.F.R. 355.31(b)(1). Therefore, facts available is not applicable under

these circumstances.

Final Results of Review

We determine that the signatories to the suspension agreement have

complied with the terms of the suspension agreement, including the

payment of the provisional export charge for the review period. From

April 1, 1995 through March 31, 1996, a provisional export charge of

1.80 percent was in effect.

We determine the net subsidy to be 0.23 percent of the f.o.b. value

of the merchandise for the April 1, 1995 through March 31, 1996 review

period. Following the methodology outlined in section B.4 of the

agreement, the Department determines that, for the period of review, a

negative adjustment may be made to the provisional export charge rate

in effect. Because the rate determined from this review is de minimis,

the adjustment will equal the entire provisional export charge in

effect for the POR, plus interest. For this period the GOS may refund

or credit, in accordance with section B.4.c of the agreement, the

amount to the companies, plus interest, calculated in accordance with

section 778(b) of the Tariff Act.

Notification of Interested Parties

This notice serves as a 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 355.34(d). Timely written notification of

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

This administrative review and notice are in accordance with

sections 751(a)(1) and 777(i)(1) of the Tariff Act and section 355.22

of the Department's regulations (19 CFR 355.22 (1997)).

Dated June 8, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-15871 Filed 6-15-98; 8:45 am]

BILLING CODE 3510-DS-P