Mechanical Transfer Presses From Japan; Final Results of Antidumping Duty Administrative Review and Revocation of Antidumping Duty Administrative Order in Part

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-810]

Mechanical Transfer Presses From Japan; Final Results of

Antidumping Duty Administrative Review and Revocation of Antidumping

Duty Administrative Order in Part

AGENCY: International Trade Administration/Import Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

review and revocation of antidumping duty administrative order in part.

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SUMMARY: On March 6, 1998, the Department of Commerce (the Department)

published in the Federal Register the preliminary results of its

antidumping duty administrative review of the antidumping duty order on

mechanical transfer presses (MTPs) from Japan and intent to revoke in

part with respect to respondent Aida Engineering, Ltd. (Aida) (63 FR

11211). This review covers two manufacturers/exporters of the subject

merchandise to the United States and the period of February 1, 1996

through January 31, 1997. We gave interested parties an opportunity to

comment on the preliminary results of review. We received comments from

Aida. We received rebuttal comments from Verson Division of Allied

Products Corp., the United Autoworkers of America, and the United

Steelworkers of America (AFL-CIO/CLC) (petitioners). We have not

changed the results from those presented in the preliminary results of

review. We have also determined to revoke the order in part, with

respect to Aida.

EFFECTIVE DATE: July 10, 1998.

FOR FURTHER INFORMATION CONTACT: Lesley Stagliano or Maureen Flannery,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington D.C. 20230; telephone (202) 482-3782, (202) 482-3020.

SUPPLEMENTARY INFORMATION:

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provision 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. In addition, unless otherwise indicated,

all citations to the Department's regulations are to the provisions

codified at 19 CFR part 353 (1997).

Background

On March 6, 1998, the Department of Commerce (the Department)

published in the Federal Register the preliminary results of the review

of the antidumping duty order and intent to revoke order in part on

MTPs from Japan (63 FR 11211). The Department has now completed this

antidumping duty administrative review in accordance with section

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

Scope of Review

Imports covered by this review include MTPs currently classifiable

under Harmonized Tariff Schedule (HTS) item numbers 8462.99.0035 and

8466.94.5040. The HTS numbers are provided for convenience and for U.S.

Customs purposes. The written description remains dispositive of the

scope of the order.

The term mechanical transfer presses refers to automatic metal-

forming machine tools with multiple die stations in which the work

piece is moved from station to station by a transfer mechanism designed

as an integral part of the press and synchronized with the press

action, whether imported as machines or parts suitable for use solely

or principally with these machines. These presses may be imported

assembled or unassembled. This review does not cover certain parts and

accessories, which were determined to be outside the scope of the order

(See ``Final Scope Ruling on Spare and Replacement Parts,'' U.S.

Department of Commerce, March 20, 1992; and ``Final Scope Ruling on the

Antidumping Duty Order on Mechanical Transfer Presses (MTPs) from

Japan: Request by Komatsu, Ltd.,'' U.S. Department of Commerce, October

1, 1996).

This review covers two manufacturers of MTPs, and the period

February 1, 1996 through January 31, 1997.

Analysis of the Comments Received

We gave interested parties an opportunity to comment on the

preliminary results of review. We received comments from Aida and

rebuttal comments from petitioners.

Comment 1: Aida contends that the Department erred in excluding

below-cost sales in calculating the profit rate for constructed value.

Aida states that its below-cost sales were not outside the ordinary

course of trade according to the general definition of ``ordinary

course of trade'' as it is defined in Section 771(15) of the Act;

therefore, they should not have been excluded by the Department in its

calculation of constructed value. Section 771(15) states:

The term ``ordinary course of trade'' means the conditions and

practices which, for a reasonable time prior to the exportation of

the merchandise which is the subject of the investigation, have been

normal in the trade under consideration with respect to merchandise

of the same class or kind. The administering authority shall

consider the following sales and transactions, among others, to be

outside the ordinary course of trade:

(A) Sales disregarded under section 773(b)(1)

(B) Transactions disregarded under section 773(f)(2)

Aida states that the Department and the courts have consistently held

that below-cost sales are not per se outside the ``ordinary course of

trade.'' See, e.g., Federal-Mogul Corp. v. United States, 918 F. Supp.

386, 402-403 (Ct. Int'l Trade, 1996); Timken Co. v. United States, 930

F. Supp. 621, 624-625 (Ct. Int'l Trade, 1996); and Torrington Co. v.

United States, 984 F. Supp. 67, 75 (Ct, Int'l Trade, 1996). Although

these cases were decided under the definition of ``ordinary course of

trade'' as it existed prior to the Uruguay Round Agreements Act (URAA),

Aida maintains that these cases continue to be valid because this

definition was carried forward with URAA law. Aida asserts that the

second sentence of section 771(15) only applies to below-cost sales

that have been disregarded for purposes of normal value comparisons

under section 773(b) of the Act.

Aida argues that there were no home market sales ``under

consideration for the determination of normal value,'' and no sales

were disregarded under section 773(b)(1). Aida contends that the

Department based its decision to use constructed value on section

773(a)(1)(C) when it stated that ``the particular market situation in

this case, which requires that the subject merchandise be built to each

customer's specifications, does not permit proper price-to-price

comparisons in either the home market or third countries.'' 63 FR

11213. Aida concludes that, since no home market sales were considered

or disregarded for price comparison under section 773(b)(1), the second

sentence of section 771(15) was inapplicable, and that Aida's below-

cost sales were not outside the ordinary course of trade.

Aida argues that the Department's discussion of the below-cost

sales issue is based on an incorrect interpretation of

[[Page 37332]]

section 773(b)(1) in that the Department equated calculation of

constructed value profit with ``determination of normal value.'' Aida

states that, prior to the URAA amendments, the Department consistently

took the position that section 773(b)(1) did not apply to the

calculation of constructed value. See Antifriction Bearings . . . and

Parts Thereof From France, et al., 57 FR 28360, June 24, 1992. Aida

asserts that the Department's position was upheld by the Court of

Appeals for the Federal Circuit in Torrington Co. v. United States, 127

F.3d 1077, 1977, in which the Court stated:

The requirement in 19 U.S.C. 1677b(b) [Section 773(b) of the

Act] that Commerce ``shall'' disregard below-cost sales when

calculating FMV based on actual sales figures does not apply when

Commerce calculates FMV based on constructed value.

Aida asserts that, although the URAA revised section 773(b)(1), it did

not change the basic structure of the provision, namely that

disregarding sales ``in the determination of normal value'' means that

the sales will not be used to determine price-based normal value, not

that they will not be used to determine the profit rate for constructed

value. See SAA at 163, House Rept. 103-316 at 833. Aida states that

Congress amended the statute to provide for exclusion of certain below-

cost sales from the constructed value profit calculation by adding the

second sentence to the definition of ``ordinary course of trade'' in

section 771(15). Aida asserts that in conjunction with the definitions

of constructed value profit in section 773(e), the amendment determines

when below-cost sales may be excluded from constructed value profit.

See 62 FR 27359, supra. See also Final Results of Antidumping Duty

Review: Color Picture Tubes from Japan, 62 FR 34201, 34209, June 25,

1997. Aida contends that if sales could be disregarded under section

773(b)(1) for constructed value purposes there would be no reason for

the addition of clause (A) to section 771(15), and below-cost sales

would be excluded without regard to the method of profit calculation.

Aida argues that sales were not considered for price comparisons under

section 773(a) and were not disregarded for such purposes pursuant to

section 773(b)(1); thus, they are not outside the ordinary course of

trade, and, therefore, do not meet the conditions for exclusion from

the constructed value profit calculation under section 773(e)(2)(A).

In addition, Aida states that nothing on the record suggests that

Aida's below-cost sales fell into any of the ``ordinary course of

trade'' definitions mentioned in the Statement of Administrative Action

(SAA), which accompanied the URAA amendments.

Petitioners contend that, in the 1995-1996 administrative review of

this order, the Department rejected this same argument stating:

We conclude, therefore, that in this review it is appropriate to

exclude these sales from the profit calculation as outside the

ordinary course of trade, pursuant to Section 771(15) of the Act.

The fact that we did not ``disregard'' such sales in a price based

determination of NV as provided in Section 771(15) of the Act does

not prevent the Department from finding these sales outside the

ordinary course of trade when we have, in effect, conducted a cost

test on the sales and found that they have failed. We would have

disregarded these sales, pursuant to Section 773(b)(1) of the Act if

we were using price-to-price comparisons, and, as a result, we

believe that it is appropriate to do so here. Mechanical Transfer

Presses from Japan: Final Results of Antidumping Duty Administrative

Review, 62 FR 11850-22, March 17, 1997.

Petitioners assert that the Department maintained that it was

appropriate to exclude below-cost sales from CV profit, as sales made

outside the ordinary course of trade in Large Newspaper Printing

Presses from Japan; Final Determination of Sales at less Than Fair

Value, 61 FR 38139-45, July 23, 1996; and Certain Welded Carbon Steel

Pipes from Thailand; Final Results of Antidumping Duty Administrative

Review, 61 FR 56515-18, November 1, 1996. Petitioners argue that

although the Department does not treat below-cost sales as per se

outside the ordinary course of trade in price-to-price cases, the

Department has a per se rule with respect to below-cost sales made in a

case where normal value is based on CV from the outset due to the

unique nature of the product involved. Petitioners state that, in such

situations, the Department performs a cost test on a sale-by-sale basis

``because each MTP is custom-built, differs significantly in

specifications, and is essentially a discrete model.'' Preliminary

Results at 11213.

Petitioners state that in the only ``new'' law case cited by Aida,

the Department did not disregard below-cost sales because the

Department based normal value on price-to-price comparisons, and the

specific models found to be below-cost did not exceed the Department's

``20 percent'' test. See Final Results of Antidumping Duty Review:

Color Picture Tubes from Japan, 62 FR 34209. Petitioners point out that

Aida states in its case brief that the Department referenced Mechanical

Transfer Presses from Japan in Color Picture Tubes from Japan, and

indicates that, while a per se rule may not attain in price-to-price

cases, below-cost sales are properly excluded from CV profit when

normal value is based on CV. Accordingly, petitioners argue that the

Department should continue to disregard below-cost sales in its CV

profit calculation for the final results, consistent with its

determination in the preliminary results and the other cited cases.

Department's Position: Aida's argument that no sales were

disregarded under section 773(b)(1), and therefore none can be

considered outside the ordinary course of trade reflects an overly-

restrictive interpretation of the Act, and raises form over substance.

Because the Department found below-cost sales in the previous review,

the Department had ``reasonable grounds to believe or suspect'' that

home market sales were made at prices which were below the cost of

production under section 773(b)(2)(A)(ii), and therefore was required

to initiate a cost investigation under section 773(b)(1). Moreover, as

the Department explained in the prior review, there are reasonable

grounds to believe that below-cost sales were made where actual costs

demonstrate as much, as they do in the present case. MTPs from Japan,

62 FR at 11822.

Furthermore, the facts of this case closely resemble those of

LNPPs, in which the Department explained, ``the unique cost reporting

aspects of this case were such that, in effect, [we] conducted a cost

investigation. . .'' 61 FR at 38145.

The Department also explained in LNPPs that, the Department has

sufficient flexibility under section 771(15) to conclude, in the

present circumstances, that sales below the cost of production should

be disregarded as outside the ordinary course of trade. Id. This

position has been upheld by the CIT in Mitsubishi Heavy Industries v.

U.S., Slip Op. 98-82. at 41-42 (CIT June 23, 1998). Section 771(15)

makes clear on its face that the circumstances listed are only two

``among others'' in which sales should be considered to have been made

outside the ordinary course of trade. See also URAA Statement of

Administrative Action (SAA), H.R. Doc. 103-316, 103d Cong., 2d Sess,

Vol. 1 at 834. Thus, even taking AIDA's view that the Department is not

acting under section 773(b), the Department has the authority to find,

in the present circumstances, that sales which it finds to be below

cost, and which it would disregard under section 773(b), are outside

the ordinary course of trade.

Finally, Aida's overly-rigid reading of the statute must be

rejected because it

[[Page 37333]]

would mean that in cases such as the present one and LNPPs, where the

complexity of the product makes resort to CV almost inevitable, the

Department would be unreasonably precluded from computing actual profit

under section 773(e)(2)(A), the preferred method of determining CV

profit, since sales outside the ordinary course of trade may not be

used in the calculation of profit under that method. Moreover, the SAA,

at 840, indicates that under this provision ``in most cases Commerce

would use profitable sales as the basis for calculating profit.'' Thus,

Aida's interpretation of the statute undermines Congress' preference

for the calculation of actual profit for purposes of CV.

Comment 2: Aida contends that the Department should use the

Japanese short-term interest rate to calculate credit expenses for

Aida's U.S. sales #1-4 which were made in yen. Aida originally reported

the credit expenses for U.S. sales #1-4 based on the Japanese yen

short-term prime interest rate, but later revised their calculations in

accordance with the Department's supplemental questionnaire. Aida cites

both Sodium Azide from Japan, 61 FR 42585, 42588, August 16, 1996, and

Engineered Process Gas Turbo-Compressor Systems * * * from Japan, 62 FR

24394, 24408, May 5, 1997, which state:

[W]hen sales are made in, and future payments are expected in a

given currency, the measure of the company's extension of credit

should be based on an interest rate tied to the currency in which

its receivables are denominated.

Thus, Aida argues that since U.S. sales #1-4 were made in yen and

payment was received in yen, the yen short-term interest rate should be

used to calculate credit expense for these sales.

Department's Position: The Department agrees with respondents, in

that, credit for U.S. sales # 1-4 should be denominated in Japanese

yen. The Department has used a short-term interest rate tied to the

currency in which the sales are denominated. We based this interest

rate on the respondent's weighted-average short-term borrowing

experience in the currency of the transaction. Thus, we have calculated

credit for U.S. sales #1-4 based on Japanese yen since these sales were

denominated in yen.

Comment 3: Aida argues that the Department should reduce expenses

in U.S. sale #2 on a pro-rata basis to adjust for the removal of the

destack feeder from the sales price. In its preliminary determination,

the Department removed the destack feeder from sale #2 by subtracting

from the reported gross unit price the line item price set forth for

the destack feeder in a price quotation that had preceded the contract.

Aida argues that having done so, the Department should have subtracted

the amount of expense attributable to the destack feeder from the

movement expenses, warranty expense, credit expense, and service fee to

reflect the removal of the destack feeder from the sale.

Department's Position: The Department agrees with Aida in that

expenses in U.S. sale #2 should be reduced on a pro rata basis

corresponding to the subtraction of the destack feeder from the sales

price. The Department has revised the U.S. sales summary to reflect

these changes.

Comment 4: Aida asserts that the Department should deduct

transportation expense from the sales price in calculating profit on

home market sales. Aida states that its cost accounting includes

transportation cost in its manufacturing cost. Aida Section D Response,

pp. D-34, D-35. Since the Department treats transportation cost as a

movement expense, Aida deducted transportation cost from manufacturing

cost in calculating cost of manufacture cost (MANCOST), and it

subtracted transportation cost as a separate line item in calculating

the home market profit rate. Aida Supplemental Response Exhibit S-10.

Since it is a cost incurred by Aida on the sales, Aida maintains that

transportation cost must be subtracted from revenue in calculating

profit. Aida contends that when the Department recalculated Aida's home

market profit rate, it failed to deduct transportation expense, thus,

overstating home market profit.

Department's Position: The Department agrees with Aida.

Transportation expense should be deducted from the sales price when

calculating the home market profit rate. To ensure that home market

profit is calculated correctly it is necessary to deduct the

transportation expense from both the sales price and the COM.

Final Results of the Review

We determine that the following dumping margins exist:

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

Margin

Manufacturer/exporter Time Period (percent)

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

Aida Engineering, Ltd............... 2/1/96-1/31/97 0.00

Hitachi-Zosen....................... 2/1/96-1/31/97 0.00

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

We further determine that Aida sold MTPs at not less than NV for

three consecutive review periods, including this review period, and it

is not likely that Aida will in the future sell subject merchandise at

less than NV. Additionally, Aida has submitted the required

certifications, and has agreed to its immediate reinstatement in the

antidumping duty order, as long as any firm is subject to the order, if

the Department concludes under 19 CFR 353.22(f) that, subsequent to

revocation, it sold the subject merchandise at less than NV.

Furthermore, we received no comments from any interested party

contesting the revocation. For these reasons we are revoking the order

on MTPs from Japan with respect to Aida in accordance with section

751(d) of the Act and 19 CFR 353.25(a)(2). In accordance with the

regulations, the Department will take seriously any credible evidence

that, subsequent to the revocation, Aida sold the merchandise at less

than NV.

This revocation applies to all entries of the subject merchandise

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

after February 1, 1997. The Department will order suspension of

liquidation ended for all such entries and will instruct the Customs

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

further instruct the Customs Service to refund with interest any cash

deposits on entries made on or after February 1, 1997.

The following deposit requirements will be effective upon

publication of this notice of final results of administrative review

for all shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication date as provided

by section 751(a)(2)(c) of the Act: (1) The cash deposit rate for

Hitachi Zosen will be the rate stated above; (2) if the exporter is not

a firm covered in this review, a prior review, or the original less

than fair value (LTFV) investigation, but the manufacturer is, the cash

deposit rate will be the rate established for the most recent period

for the manufacturer of

[[Page 37334]]

the merchandise; and (3) the cash deposit rate for all other

manufacturers or exporters will be the rate established in the

investigation of sales at less than fair value, which is 14.51 percent.

These deposit requirements, when imposed, shall remain in effect until

publication of the final results of the next administrative review.

This notice serves as a final reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

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

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and subsequent assessment

of double antidumping duties.

Notification to Interested Parties

This notice also 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 353.34(d). Timely written notification of

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

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

This determination is issued and published in accordance with

sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 353.22(f).

Dated: July 2, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-18307 Filed 7-9-98; 8:45 am]

BILLING CODE 3510-DS-P