Professional Electric Cutting Tools From Japan; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-823]

Professional Electric Cutting Tools From Japan; Final Results of

Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of Antidumping Duty Administrative

Review.

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

SUMMARY: On June 5, 1998, the Department of Commerce (the Department)

published the preliminary results of its administrative review of the

antidumping duty order on professional electrical cutting tools (PECTs)

from Japan. The period of review (POR) covers sales of the subject

merchandise to the United States during the period July 1, 1996 through

June 30, 1997.

We gave interested parties an opportunity to comment on our

preliminary results. Based on our analysis of the comments received, we

have changed the results from those presented in the preliminary

results of the review.

EFFECTIVE DATE: October 9, 1998.

FOR FURTHER INFORMATION CONTACT: Lyn Baranowski, AD/CVD Enforcement

Group III, Office 9, Import Administration, International Trade

Administration, U.S. Department of

[[Page 54442]]

Commerce, 14th Street and Constitution Avenue, NW, Washington, DC

20230; telephone: (202) 482-3208.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

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 by the

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

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

regulations codified at 19 CFR part 351 (62 FR 27296; May 19, 1997).

Background

On June 5, 1998, we published in the Federal Register (63 FR 30706)

the preliminary results of the administrative review of the antidumping

duty order on PECTs from Japan (58 FR 37461); July 12, 1993. We

received case briefs from one respondent, Makita Corporation and Makita

U.S.A., Inc. (Makita) and the petitioner, Black and Decker (U.S.), Inc.

(Black & Decker) on July 6, 1998. Petitioner and respondent submitted

rebuttal briefs on July 13, 1998. The Department is conducting this

review in accordance with section 751 of the Act.

Scope of the Review

Imports covered by this review are shipments of PECTs from Japan.

PECTs may be assembled or unassembled, and corded or cordless.

The term ``electric'' encompasses electromechanical devices,

including tools with electronic variable speed features. The term

``assembled'' includes unfinished or incomplete articles, which have

the essential characteristics of the finished or complete tool. The

term ``unassembled'' means components which, when taken as a whole, can

be converted into the finished or unfinished or incomplete tool through

simple assembly operations (e.g., kits).

PECTs have blades or other cutting devices used for cutting wood,

metal, and other materials. PECTs include chop saws, circular saws, jig

saws, reciprocating saws, miter saws, portable bank saws, cut-off

machines, shears, nibblers, planers, routers, joiners, jointers, metal

cutting saws, and similar cutting tools.

The products subject to this order include all hand-held PECTs and

certain bench-top, hand-operated PECTs. Hand-operated tools are

designed so that only the functional or moving part is held and moved

by hand while in use, the whole being designed to rest on a table top,

bench, or other surface. Bench-top tools are small stationary tools

that can be mounted or placed on a table or bench. These are generally

distinguishable from other stationary tools by size and ease of

movement.

The scope of the PECT order includes only the following bench-top,

hand-operated tools: cut-off saws; PVC saws; chop saws; cut-off

machines, currently classifiable under subheading 8461 of the

Harmonized Tariff Schedule of the United States (HTSUS); all types of

miter saws, including slide compound miter saws and compound miter

saws, currently classifiable under subheading 8465 of the HTSUS; and

portable band saws with detachable bases, also currently classifiable

under subheading 8465 of the HTSUS.

This order does not include: professional sanding/grinding tools;

professional electric drilling/fastening tools; lawn and garden tools;

heat guns; paint and wallpaper strippers; and chain saws, currently

classifiable under subheading 8508 of the HTSUS.

Parts or components of PECTs when they are imported as kits, or as

accessories imported together with covered tools, are included within

the scope of this order.

``Corded'' and ``cordless'' PECTs are included within the scope of

this order. ``Corded'' PECTs, which are driven by electric current

passed through a power cord, are, for purposes of this order, defined

as power tools which have at least five of the following seven

characteristics:

1. The predominate use of ball, needle, or roller bearings (i.e., a

majority or greater number of the bearings in the tool are ball,

needle, or roller bearings;

2. Helical, spiral bevel, or worm gearing;

3. Rubber (or some equivalent material which meets UL's

specifications S or SJ) jacketed power supply cord with a length of 8

feet or more;

4. Power supply cord with a separate cord protector;

5. Externally accessible motor brushes;

6. The predominate use of heat treated transmission parts (i.e., a

majority or greater number of the transmission parts in the tool are

heat treated); and

7. The presence of more than one coil per slot armature.

If only six of the above seven characteristics are applicable to a

particular ``corded'' tool, then that tool must have at least four of

the six characteristics to be considered a ``corded'' PECT.

``Cordless'' PECTs, for the purposes of this order, consist of

those cordless electric power tools having a voltage greater than 7.2

volts and a battery recharge time of one hour or less.

PECTs are currently classifiable under the following subheadings of

the HTSUS: 8508.20.00.20, 8508.20.00.70, 8508.20.00.90, 8461.50.00.20,

8465.91.00.35, 85.80.00.55, 8508.80.00.65 and 8508.80.00.90. Although

the HTSUS subheading is provided for convenience and customs purposes,

the written description of the merchandise under review is dispositive.

This review covers one company, Makita Corporation (Makita), and

the period July 1, 1996 through June 30, 1997.

Analysis of the Comments Received

Comment 1

Makita argues that the Department should revise its CEP profit

calculations to reflect the profit from the entire foreign like

product, not just the profit from the home market models that are the

closest matches to the U.S. models. Makita states that the statute and

the Department's regulations (see 19 U.S.C. section 1677a(d)(3) and

1677b(e)(2)(A), and 19 CFR 351.402(d) and 351.405(b)) require the

Department to base its CEP profit calculation on the entire home market

sales database reported by Makita. According to Makita, the Department

has conclusively stated that a calculation of CV and CEP should be

based on sales of the ``foreign like product'' which includes all home

market sales during the POR (see Antifriction Bearings (Other than

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

Japan, Romania, Singapore, Sweden, and the United Kingdom: Final

Results of Antidumping Duty Administrative Reviews, 63 FR 33320, 33323

(June 18, 1998); Color Picture Tubes from Japan: Final Results of

Antidumping Duty Administrative Review, 62 FR 34201 (June 25, 1997);

Antifriction Bearings (Other than Tapered Roller Bearings) and Parts

Thereof from France, Germany, Italy, Japan, Romania, Singapore, Sweden,

and the United Kingdom: Final Results of Antidumping Duty

Administrative Reviews, 62 FR 54043, (October 17, 1997); and Certain

Internal-Combustion Industrial Forklift Trucks from Japan: Final

Results of Antidumping Duty Administrative Reviews, 62 FR 5592

(February 6, 1997). Makita claims that in a previous administrative

review of this proceeding, the Department erred in incorrectly limiting

the home market database to those models used as matches for U.S. sales

for the purposes

[[Page 54443]]

of calculating CV and CEP profit in the preliminary results. This error

was corrected for the final results of that review (see Professional

Electric Cutting Tools from Japan: Final Results of Antidumping Duty

Administrative Review, 62 FR 386, 388 (January 3, 1997) (PECT 94/95

Final). Makita thus urges the Department to revise its calculation of

CEP profit for the final results of this review and use the profit

resulting from sales of all products in the home market database to

calculate CEP profit.

Petitioner agrees that the Department should calculate the profit

for purposes of the CEP sale on the basis of the foreign like product.

However, it disagrees with Makita in its definition of the term

``foreign like product.'' In its interpretation, petitioner claims that

the term ``foreign like product'' is defined by the statute as the

sales used as a basis of comparison with sales to the United States (19

U.S.C. section 1677b(a)). Petitioner notes that 19 U.S.C. section

1677(16)(A), (B), and (C) requires the Department to select as the

foreign like product merchandise that is, in the first instance,

identical to that sold in the United States. If identical merchandise

does not exist, the Department may select merchandise similar to the

foreign like product, the objective being to develop a pool of

comparable products, the prices of which are used to calculate NV.

Petitioner cites Koyo Seiko Co., Ltd. versus United States, 66 F.3d

1204, 1209 (Fed. Cir. 1995) (Koyo Seiko) in support of its contention

that the pool of matched models is the foreign like products from which

the home market portion of the CEP profit is derived.

Petitioner concludes that if the foreign like product is expanded

beyond the pool of matched models to include all similar products, as

respondent requests, the resulting profit figure would be

unrepresentative of the products that were used to determine NV.

Department's Position

We agree with respondents that we erred in limiting the home market

database to those models used as matches for U.S. sales for purposes of

calculating CEP profit in the preliminary results. For the final

results, we have used all sales of the foreign like product for the

purposes of calculating CEP profit.

19 CFR 351.402(d)(1) specifically states that the Department

``normally will use the aggregate of expenses and profit for...all

foreign like products sold in the exporting country . . .'' As the

Department stated in PECT 94/95 Final, for purposes of calculating CV

and CEP profit, we interpret the term ``foreign like product'' to be

inclusive of all merchandise sold in the home market which is in the

same general class or kind of merchandise as that under consideration.

We have continued to follow this practice in this review.

Comment 2

Petitioner asserts that the Department incorrectly granted Makita a

Constructed Export Price (``CEP'') offset. As argument, they

incorporated their rebuttal brief from the third administrative review

of this proceeding. See the relevant portion of Comment 1 from the

Final Results of the 95/96 Review of this proceeding (Professional

Electrical Cutting Tools from Japan: Final Results of Antidumping Duty

Administrative Review, 63 FR 6891 (February 11, 1998) (PECT 95/96

Final). Petitioner asserts that Makita has not established that sales

to wholesalers in Japan were made at a different stage of marketing

compared to its wholesaler in the United States.

Petitioner contends that even if the Department were correct that a

CEP offset is appropriate, this methodology has been invalidated by the

Court of International Trade in the case of Borden, Inc. et al. versus

United States, 1988 WL 178722, Slip Op. 98-36 (CIT 1998) (Borden).

Petitioner maintains that, in Borden, the Court held that Commerce's

methodology in determining level of trade (``LOT'') adjustments and CEP

offsets is contrary to the clear terms of the governing statute. The

Court stated that Commerce should only make price adjustments to the

starting prices of CEP sales after comparing those sales to home market

sales in the LOT analysis.

According to petitioner, the Department applied the methodology for

adjusting and calculating CEP that the Court rejected in Borden, and

consequently should correct this error in the final results of this

administrative review.

Makita argues that the Department was correct in granting Makita a

CEP offset as the Department has a complete, fully documented and

verified level of trade (LOT) analysis for the record of this review

supporting the granting of this offset. Specifically, Makita responds

that the Department has found ``vast (and verified) differences in

selling functions and stages of marketing'' between Makita's HM sales

and its CEP sales. Makita states that this analysis resulted in a fair

pricing comparison and that, as a result, the Department's analysis is

in full accordance with the law.

Makita further contends that the remand guidelines established in

Borden do not invalidate the Department's LOT methodology, claiming

that the LOT analysis performed by the Department meets all of the

requirements set forth in Borden, and provides for a fair comparison of

home market and U.S. prices. Makita maintains that the Court concedes

that the statutory LOT adjustments to which the Court refers could

bring about the same result created by the automatic deduction of

expenses under 19 U.S.C. section 1677a(d) (``section (d) expenses'').

As a result, Makita argues, there is no evidence that the Department's

prior deduction of expenses and profit under 19 U.S.C. section 1677a(d)

in any way affects the integrity, objectivity, or completeness of its

LOT analysis, or that it results in unfair price comparisons. In fact,

Makita asserts that the Department considered all relevant selling

functions in its level of trade analysis, not just those relating to

deductible expenses.

Makita asserts that if the Borden guidelines are interpreted as

establishing the relevant U.S. LOT at the unadjusted CEP level, and

therefore not allowing the deductions of section (d) expenses at any

time, then these guidelines are contrary to the law. According to

Makita, under this broad view of Borden, the relevant U.S. LOT would be

the starting price (the unadjusted CEP level), the LOT would never

change over the course of the Department's entire LOT inquiry, and

section (d) expenses would never be deducted. Makita believes this

methodology to be inconsistent with the Court's view that a

determination of the proper LOT is the very purpose of the Department's

LOT inquiry, and completely ignores the fact that the statutory offset

remedy is, by its very terms, designed to correct for differences in

the foreign parent company's indirect selling expenses (under 19 U.S.C.

section 1677b(7)(B)). Makita asserts that section (d) expenses, which

are incurred by the U.S. affiliate, have no bearing on these indirect

selling expenses.

Respondent continues that the starting price is, by definition,

never equal to the CEP level of sales. If the Court does not allow any

changes to the LOT at the starting price, or does not allow adjustments

to CEP even where this is required to allow for a fair comparison of

home market and U.S. pricing, then the Court is depriving litigants of

access to procedures which guarantee fair results.

In respondents' view, the Department has been consistently clear in

stating

[[Page 54444]]

that where a level of trade comparison is warranted and possible, the

level of trade for CEP sales will be evaluated based on the price after

adjustments are made under section 772(d) of the Act. See Static Random

Access Memory Semiconductors from Taiwan: Final Determination of Sales

at Less Than Fair Value, 63 FR 8909, 8918-8920 (February 23, 1998); and

Large Newspaper Printing Presses and Components Thereof, Whether

Assembled of Unassembled from Japan: Final Determination of Sales at

Less Than Fair Value, 61 FR 38139, 38143 (July 23, 1996). Makita

believes that this practice represents a reasonable interpretation of

the statute and should continue to be applied in this review.

Finally, Makita claims that, assuming that the Department's LOT

analysis does not comport with Borden, the guidelines are still not

binding on the Department because (1) Borden's applicability is limited

to its facts, and (2) the remand is not a ``final decision'' because

the Department has indicated that it plans to appeal Borden.

Department's Position

We agree with respondents that we correctly granted Makita a CEP

offset in this case. We concluded, based on factual evidence, that (1)

significant differences exist in the selling functions associated with

each of the two home market levels of trade and the CEP level of trade;

(2) the CEP level of trade is at a less advanced stage of distribution

than either home market level of trade; and (3) the data available do

not provide an appropriate basis for a level of trade adjustment for

any comparisons to CEP. Therefore, the Department has granted Makita a

CEP offset for the final results.

The Department is continuing its practice, articulated in section

351.412(c) of its regulations, of making level of trade comparisons for

CEP sales on the basis of the CEP after adjustments provided for in

section 772(d) of the statute. As stated in Certain Stainless Steel

Wire Rods from France: Final Results of Antidumping Duty Administrative

Review, 63 FR 30185 (June 3, 1998), we recognize that the Department's

practice has been criticized by the Court of International Trade in

Borden. However, the decision in Borden is not final, and we believe

our practice to be in full compliance with the statute and the

regulations. Thus, we will continue to apply the methodology

articulated in the regulations at section 351.412.

Final Results of Review

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

weighted-average dumping margin exists for the period June 30, 1996,

through July 1, 1997:

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

Manufacturer/Exporter Margin (percent)

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

Makita Corporation........................ 0.05 (de minimis)

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

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

assess, antidumping duties on all appropriate entries. Individual

differences between U.S. price and normal value may vary from the

percentages stated above. The Department will issue appraisement

instructions directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of these final results for all shipments of the

subject merchandise entered, or withdrawn from warehouse, for

consumption on or after the publication date provided by section

751(a)(1) of the Act: (1) No cash deposit will be required for the

reviewed company as the rate stated above is de minimis, i.e., less

than 0.5 percent; (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

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

manufacturers or exporters will continue to be the ``all others'' rate

of 54.52 percent, the all others rate established in the LTFV

investigation. These deposit requirements, when imposed, shall remain

in effect until publication of the final results of the next

administrative review.

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

responsibility under 19 CFR 351.402(f)(2) 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 the antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective orders (APOs) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d)(1), that continues to govern

business proprietary information in this segment of the proceeding.

Timely written notification of the return/destruction of APO materials

or conversion to judicial protective order is hereby requested. Failure

to comply with the regulations and the terms of an APO is a

sanctionable violation.

This determination is issued and published in accordance with

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: October 5, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-27277 Filed 10-8-98; 8:45 am]

BILLING CODE 3510-DS-P