# Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties

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URL: https://www.frixlaw.com/law-library/documents/fr%3A98-27729

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** October 15, 1998
- **Citation:** 63 FR 55361

## Text

DEPARTMENT OF COMMERCE

International Trade Administration

Antidumping and Countervailing Duty Proceedings: Assessment of
Antidumping Duties

AGENCY: International Trade Administration/Import Administration,
Department of Commerce.

ACTION: Notice and request for comment on policy concerning assessment
of antidumping duties and request for comment.

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SUMMARY: The Department of Commerce (the Department) has observed that
there is confusion among parties importing merchandise into the United
States subject to an antidumping duty order about the application of
the Department's regulation on automatic liquidation where a reseller
has been involved in the chain of commerce for merchandise. This notice
clarifies the Department's interpretation of its automatic-liquidation
regulation and requests public comment before it adopts a final
interpretation.

FOR FURTHER INFORMATION CONTACT: Joan L. MacKenzie, Senior Attorney,
Office of the Chief Counsel for Import Administration, (202) 482-1310,
or Laurie Parkhill, Director, Office 3, Import Administration, (202)
482-4733.

SUPPLEMENTARY INFORMATION: This notice proposes to clarify the
Department's regulation on automatic liquidation at 19 CFR 351.212(c).
At issue is whether a producer's company-specific cash deposit rate can
serve as

[[Page 55362]]

the basis for automatic liquidation under section 351.212(c) where an
intermediary (e.g., a reseller, a trading company, an exporter) exports
the merchandise and where the entries are suspended at the producer's
cash-deposit rate. This notice uses the term ``reseller'' to apply to
any intermediary that could be an interested party as defined in
section 771(9)(A) of the Tariff Act of 1930, as amended (the Act).

Summary of Proposed Clarification

As discussed in detail below, the Department's position is that
automatic liquidation at the cash deposit rate required at the time of
entry can only apply to a reseller if no administrative review has been
requested, either of the reseller or of any producer of the merchandise
the reseller exported to the United States, and the reseller does not
have its own cash deposit rate. If the Department conducts a review of
a producer of the reseller's merchandise where entries of the
merchandise were suspended at the producer's rate, automatic
liquidation will not apply to the reseller's sales. If, in the course
of an administrative review, the Department determines that the
producer knew that the merchandise it sold to the reseller was destined
for the United States, the reseller's merchandise will be liquidated at
the producer's assessment rate which the Department calculates for the
producer in the review. If, on the other hand, the Department
determines in the administrative review that the producer did not know
that the merchandise it sold to the reseller was destined for the
United States, the reseller's merchandise will not be liquidated at the
assessment rate the Department determines for the producer or
automatically at the rate required as a deposit at the time of entry.
In that situation, the entries of merchandise from the reseller during
the period of review will be liquidated at the all-others rate if there
was no company-specific review of the reseller for that review period.

Effective Date

The Department proposes that this clarification apply to all
entries for which the anniversary date for requesting an administrative
review is on or after the date of publication of a final notice on this
issue.

Discussion

The longstanding principle behind the Department's assessment
policy is that company-specific assessment rates must be based on the
sales information of the first company in the commercial chain that
knew, at the time the merchandise was sold, that the merchandise was
destined for the United States. See, e.g., Stainless Steel Sheet and
Strip Products from the Federal Republic of Germany, 48 FR 20459, 20460
(1983); Small Business Telephone Systems and Subassemblies from Korea,
54 FR 53141, 53147-48 (1989); Oil County Tubular Goods from Canada, 55
FR 50739, 50740 (1990); Chrome-Plated Lug Nuts from Taiwan, 56 FR 36130
(1991); Antifriction Bearings (Except Tapered Roller Bearings) and
Parts Thereof from Japan, 56 FR 31754, 31756 (1991); Television
Receivers from Japan, 58 FR 11211, 11216 (1993). If dumping is
occurring, the company that sets the price of the merchandise sold in
the United States is responsible for the dumping, and any company-
specific assessment rate must reflect that company's sales prices to
the United States.
The existence of dumping is initially determined in a less-than-
fair-value investigation. The Department investigates all producers,
where practicable (19 CFR 351.204(c)). It also investigates other
foreign interested parties, if there are resources to do so, although
it is seldom possible to investigate resellers in an antidumping
investigation (19 CFR 351.204(d)). If the Department makes a
preliminary affirmative determination that dumping is occurring, it
calculates company-specific weighted-average dumping margins for
investigated companies (19 CFR 351.204(c)). These dumping margins are
estimates of dumping activity. The Department also calculates an ``all-
others'' dumping margin, which is the simple average of the calculated
company-specific margins. This rate applies to entries of merchandise
from producers and exporters for which the Department has not
established a company-specific rate.
The Department publishes a notice in the Federal Register of its
preliminary determination and orders the U.S. Customs Service to
collect a bond or cash deposit at the time the merchandise subject to
the investigation enters the United States (19 CFR 351.205(d)). The
bond/cash deposits serve as security for the final amount of dumping
liability. The estimated dumping margins the Department determines in
the investigation set the bond/cash deposit rate; in other words, the
producer's company-specific dumping margin which the Department
determines is the bond/cash deposit rate for merchandise produced by
that producer and imported into the United States.
After notice and opportunity for comment, the Department calculates
final dumping margins. If the International Trade Commission makes a
final affirmative determination that the dumping is causing injury to
the U.S. industry, the Department publishes an antidumping duty order
and instructs the Customs Service to continue to collect a cash deposit
at the time the merchandise subject to the order enters the United
States; bonds are no longer an option for importers to post as security
(19 CFR 351.211).
The Department instructs Customs to apply any reseller's company-
specific cash deposit rate to entries of merchandise sold by that
reseller. If there is no company-specific reseller cash deposit rate
and the importer identifies the producer, the Department instructs
Customs to apply the producer's cash deposit rate to the entry. This
logic stems from the fact that, when subject merchandise enters the
United States through a reseller, the Department does not know who set
the price of the subject merchandise to the United States. The
Department instructs Customs to apply the producer's cash deposit rate
where the producer of the merchandise is identified on the assumption
that the producer knew that the merchandise was destined for the United
States. This assumption is more often true than not. Subject
merchandise sold through a reseller and imported where there is no
company-specific reseller rate or where the importer did not identify
the producer of the merchandise is subject to the all-others cash
deposit rate.
After the passage of a year from the month the antidumping duty
order was published (called the anniversary month) and annually
thereafter, interested parties must decide whether to ask the
Department to conduct an administrative review of sales for the past
year under section 751(a)(1) of the Act. Reasons for such requests will
vary; generally, a party will request a review of a producer or of an
exporter with its own rate because the party believes the actual
dumping liability is higher or lower than the cash deposit. Parties may
decide to request a review of a reseller which does not have its own
rate because they believe the actual dumping liability is higher or
lower than the cash deposit or, if the producer which supplied the
reseller is reviewed, the all-others rate.
During the anniversary month, a domestic interested party or an
interested party described in section 771(9)(B) of the Act may request
in writing that the Secretary conduct an administrative review of
specified

[[Page 55363]]

individual exporters or producers covered by an order if the requesting
person states why the person desires the Secretary to review those
particular exporters or producers (19 CFR 351.213). During the same
month, an exporter or producer covered by an order may request that the
Secretary conduct an administrative review of only that person. Also
during the anniversary month, an importer of the merchandise may
request that the Secretary conduct an administrative review of only an
exporter or producer of the subject merchandise which that importer
imported into the United States.
If no interested party requests a review of a producer's sales,
automatic liquidation applies to entries of merchandise exported by
that producer (19 CFR 351.212(b)). Because no review has been
requested, there is no reason to continue to suspend liquidation of the
entries. The producer's cash deposit rate at the time of entry serves
as the assessment rate for the entries during that period. Likewise,
entries of a producer's merchandise sold to the United States by a
reseller will be liquidated at the producer's cash deposit rate (if
there is no company-specific rate for the reseller at the time of entry
and no review of the reseller or the producer has been requested).
Because no review has been requested for either the producer or the
reseller, no one is challenging the assumption, which the Department
made when it assigned the producer's cash deposit rate to the entries
from the reseller, that the producer set the price of the merchandise
which the reseller sold to the United States.
If, however, an interested party requests the Department to conduct
a review of the producer's sales, the review applies to all sales of
the producer, including any sales to resellers of the producer's
merchandise, unless the reseller had its own company-specific rate at
the time of entry and the producer did not know that the sales to the
reseller were destined for the United States. In conducting the review
the Department will determine whether the producer or the reseller set
the price of the merchandise to the United States, based on evidence
submitted on the record of the review.
During the course of any administrative review, the Department
sends questionnaires to the foreign companies for which reviews have
been initiated, seeking extensive information on the companies' sales
to the United States and foreign market sales. A company reports sales
that it knew at the time of the sale were destined for the United
States as its U.S. sales. At the conclusion of the review the
Department instructs Customs to assess antidumping duties at the
producer's company-specific (or, as applicable, customer-specific)
assessment rate which the Department determined in conducting the
review.
The producer will report sales of the subject merchandise for which
it did not know the destination of the merchandise as foreign market
sales. These may include sales to resellers of merchandise that
ultimately came to the United States without the producer's knowledge
where the entries of the merchandise were suspended at the producer's
cash deposit rate. Because the producer did not set the price to the
United States for these sales, these entries of this merchandise will
not be assessed final antidumping duties at the producer's rate at the
conclusion of the review. The rate instead will be based on the
interested party in the chain of commerce that actually set the price
to the United States. If the Department did not conduct a review of
that party, however, there is no company-specific rate applicable to
these entries. In the absence of a company-specific rate, the
Department will base the assessment rate on the ``all-others'' rate.
Confusion has arisen because of the Department's practice of
assigning the producer's cash deposit rate to resellers' merchandise
that identifies the producer at the time of entry. Resellers have
asserted that, if the Department determined during the review that the
producer did not set the price of the reseller's merchandise to the
United States, entries of such merchandise are subject to automatic
liquidation at the rate required at the time of entry because no one
requested a review of the reseller. This is inconsistent with the
Department's assessment policy, however, that company-specific
assessment rates must be based on the sales information of the first
company in the commercial chain that knew, at the time the merchandise
was sold, that the merchandise was destined for the United States.
Since the evidence in the record of the administrative review shows
that the producer did not set the price of those sales, the assessment
of duties on merchandise exported by the resellers cannot be based on
the producer's rate. As no review of the reseller's sales was
conducted, there is no company-specific data on which to base a
company-specific reseller rate. Therefore, the only appropriate
assessment rate is the all-others rate.
This practice has been upheld by the Court of International Trade
(CIT). A similar issue arose in litigation involving televisions from
Japan (ABC International v. United States, 19 C.I.T. 787 (1995)). In
this case ABC imported televisions from Japan, identifying the
producers as Sharp, Toshiba, and JVC. The cash deposit rates for
merchandise produced by these producers were zero at the time of entry.
Because the importer identified the producer at the time of entry, the
Department required the importer to deposit estimated antidumping
duties at the producer's cash deposit rate. The Department then
conducted an administrative review of the producers. Liquidation of
ABC's entries was suspended during the conduct of the review, since the
producers identified at the time of entry were subject to review. The
review resulted in margins for the producers that ranged from 20 to 40
percent, and the Department ordered liquidation of all entries of
merchandise produced by these firms (including ABC's entries) at the
producers' rates determined in the administrative review. ABC did not
participate in the review.
After the entries were liquidated, ABC sued the Department,
alleging that its entries should have been liquidated automatically at
the zero cash deposit rate because its entries were not reviewed. The
Department took the position that, because the review was closed and
because ABC did not either participate in the review of the producers
or request a review of the exporter/reseller, it was foreclosed from
raising the issue in a protest. The CIT upheld the Department, noting
that automatic liquidation applies only where there was no review of
the reseller or the producer of the reseller's merchandise.
The Department recognizes that this policy will increase the need
of resellers to participate in the Department's proceedings. If a
reseller believes that the producer is not setting the price to the
United States, it should participate in the administrative review on
this issue. The only way that reseller or exporter can have its own
company-specific rate is to have an administrative review of its own.
The Department invites comments on this clarification. Written
comments are due October 30, 1998. Address written comments to Robert
S. LaRussa, Assistant Secretary for Import Administration, Dockets
Center, Room 1870, Pennsylvania Avenue and 14th Street , N.W.,
Washington, D.C. 20230. Attention: Laurie Parkhill, Comment on
Automatic Liquidation.

[[Page 55364]]

Dated: October 8, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-27729 Filed 10-14-98; 8:45 am]
BILLING CODE 3510-DS-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-27729. Public record. Not legal advice.