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

DEPARTMENT OF COMMERCE

International Trade Administration

[C-559-001]

Final Results of Countervailing Duty Administrative Review:

Certain Refrigeration Compressors from the Republic of Singapore

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of Countervailing Duty Administrative

Review.

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

EFFECTIVE DATE: December 15, 1998.

FOR FURTHER INFORMATION CONTACT: Maria K. Dybczak or Rick Johnson,

Office of Antidumping/Countervailing Duty Enforcement, Group III,

Office IX, Import Administration, U.S. Department of Commerce, Room

1874, 14th Street and Constitution Avenue, N.W., Washington, D.C.

20230; telephone (202) 482-1398, or 482-3818, respectively.

SUMMARY: On August 11, 1998, 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 Agreement during the period of review (POR). We gave

interested parties an opportunity to comment on our preliminary

results. We received comments from petitioner Tecumseh Products Company

(``Tecumseh'') and respondents, the Government of the Republic of

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

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

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

Agreement, and determine that the Government of the Republic of

Singapore, MARIS, and AMS, the signatories to the Suspension Agreement,

have complied with the terms of the Agreement during the period April

1, 1996 through March 31, 1997. Based on our analysis of the comments

received, we have not changed the results from those

[[Page 69046]]

presented in the preliminary results of review.

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 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 351 (62 FR 27296, May 19, 1997).

SUPPLEMENTARY INFORMATION:

Background

On August 11, 1998, the Department of Commerce (the Department)

published in the Federal Register (63 FR 42825) 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 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 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 dispostive.

The review period is April 1, 1996 through March 31, 1997, and

includes two programs. The review covers one producer and one exporter

of the subject merchandise, MARIS and AMS, respectively. These two

companies, along with the GOS, are the signatories to the suspension

agreement.

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

offset completely the amount of the net bounty or grant determined by

the Department to exist in this proceeding with respect to the subject

merchandise. The offset entails the 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 the Countervailing Duty

Investigation. (``Suspension Agreement'') 48 FR 51167, 51170 (November

7, 1983).

Analysis of Comments Received

Comment 1: Petitioner claims that Singapore's tax laws permit

delays in assessment and collection that can result in erroneous

determinations of the proper export charge under the Suspension

Agreement. Petitioner notes that under Singapore's tax laws, assessment

and collection of taxes can be negotiated up to six years following the

year under consideration. Thus, as a result, the Department must

complete its final determination for each annual review period based

upon the provisional data. For example, petitioner notes that,

following the publication of the final results of the most recently

completed review, MARIS submitted for the record on the current review

another calculation for the export charge for the previous review.

Petitioner argues that if the updated tax information had been received

prior to the final results of review, the export charge rate would have

doubled. Petitioner notes that essentially the same fact pattern was in

effect in the two most recent administrative reviews (12th and 13th).

Petitioner contends that the Department's determinations in the 12th

and 13th reviews may not reflect the total benefits relating to those

periods as their respective tax assessments have not been finalized.

Petitioner argues that the Department should require respondents to

submit information on all tax liabilities made final during the POR,

regardless of when the liability accrued, and then to adjust the

current POR's calculations to reflect the benefits not previously

accounted for in the earlier POR. Petitioner contends that the

Department's use of provisional tax data where final assessments are

not available provides an incentive to respondents to delay final

determination of tax liabilities until an administrative review has

been concluded.

Respondents argue that there is no basis for the Department to

reexamine benefits allegedly provided in prior reviews. Respondents

assert that the Singapore tax system allows for negotiation of

assessments for the purpose of ensuring a fair tax assessment, not, as

petitioner contends, for the purpose of delay or forgiveness of the tax

liability. Respondents contend that the Singapore tax system functions

like those of many other countries in allowing the taxpayer to object

to and appeal a tax interpretation with which it disagrees. Respondents

argue that the Department should reject petitioner's request to require

respondents to submit information on tax liabilities made final during

any POR, regardless of when the liability accrued, and then to adjust

current year calculations to reflect any benefits recognized after

reviews were completed. In support of their position, respondents make

the following five arguments.

First, respondents assert that both petitioner and the Department

have long been aware of the Singapore tax system and how it operates,

and that the Department knowingly used provisional tax computations

when final tax computations were not available. Second, respondents

note that the Department has made many determinations involving the

Singaporean tax system, and has a long-standing practice of calculating

benefits received based on the latest income tax information available

(citing, e.g., Antifriction Bearings (Other than Tapered Roller

Bearings) and Parts Thereof from Singapore, 57 FR 4987 (Feb. 11, 1992);

Antifriction Bearings (Other than Tapered Roller Bearings) and Parts

Thereof from Singapore, 56 FR 9681 (March 7, 1991); Industrial Belts

and Components and Parts Thereof, Whether Cured or Uncured, from

Singapore, 54 FR 15520 (April 18, 1989)). Additionally, respondents

argue that the Department has consistently taken the position that it

will not adopt a change in methodology absent some intervening change

in either the basic facts or the governing law (citing Certain

Compressors from the Republic of Singapore, 55 FR 53028, 53029 (Dec.

26, 1990)). Respondents contend that no such change in either the facts

of the case or to the governing law has occurred and therefore, the

Department has no basis to revise its practice.

Third, respondents argue that there is no support for petitioner's

contention that respondents have no incentive to prepare an accurate

and timely tax return. Respondents contend that the Department has

explicitly relied on the IRAS's oversight function to ensure that

taxation figures submitted to the Department are accurate and verified

the accuracy of those figures over the last fifteen years during

previous reviews (citing, e.g., Certain Refrigeration Compressors from

the Republic of Singapore, 53 FR 25647, 25648 (July 8, 1988); Certain

Refrigeration Compressors from the Republic of Singapore, 53 FR 7778,

7779 (March 10, 1988); Certain Refrigeration Compressors from the

Republic of

[[Page 69047]]

Singapore, 50 FR 6025, 6026 (Feb. 13, 1985)).

Fourth, respondents argue that as a matter of law, the Department

cannot open prior administrative reviews. Respondents assert that under

U.S. law (specifically, 19 U.S.C. Sec. 1675(a)(1)), each administrative

review is a separate proceeding, conducted based upon its own record.

Additionally, respondents contend that previous entries that were

covered in a prior review cannot be assessed an additional export

charge once their countervailable status has been determined (citing

FAG Kugelfischer Georg Schafer KGaA v. United States, 932 F.Supp. 315

(CIT 1996)).

Finally, respondents contend that the Suspension Agreement does not

allow further adjustments to an export charge once a final export

charge has been imposed, and that there is no provision providing for

the collection of any other charges after the collection of the annual

adjustment. Respondents point out that the Suspension Agreement

explicitly requires the GOS to collect the annual adjustment ``within

30 days of notification by the Department of its determination'' in a

review. See Suspension Agreement at paragraph B.4.c, reprinted in

Certain Refrigeration Compressors from the Republic of Singapore, 48 FR

51167, 51170 (Nov. 7, 1983) (``Suspension Agreement'').

Department's Position: We disagree with petitioners. At the request

of the Department in this and the previous review, respondents have

provided updated tax information as it became available. See, e.g.,

Certain Refrigeration Compressors from the Republic of Singapore:

Fourteenth Administrative Review, Questionnaire Response, September 10,

1998; Certain Refrigeration Compressors from the Republic of Singapore:

Thirteenth Administrative Review, Questionnaire Response, April 6,

1998. We first note that the revised calculation submitted by

respondent was not finalized during the current review, and indeed

respondents reported that no tax assessments for any prior period of

review had been finalized during the current period of review. See

Certain Refrigeration Compressors from the Republic of Singapore:

Fourteenth Review, Rebuttal to Petitioner's Comments, May 21, 1998. As

such, no benefits relating to a prior review were recognized during the

current period of review.

Even if we were to recalculate the margin using the most recent

revised tax calculation (submitted in the current review after the

corresponding review had been completed), the total countervailing duty

rate calculated for respondents for the relevant period of review would

still remain de minimis. See Certain Refrigeration Compressors from the

Republic of Singapore: Fourteenth Review; Petitioner's Brief, September

10, 1998, Exhibit 1. Similarly, the Department reviewed petitioner's

same assertion during the previous review, and determined that an

export charge calculation based on the revised information would have

remained de minimis. See Certain Refrigeration Compressors from the

Republic of Singapore: Final Results of Countervailing Duty

Administrative Review, 63 FR at 32851 (June 16, 1998).

Nevertheless, we disagree with respondents' assertion that they are

only required to provide the Department with updated tax computations

when the updates occur prior to the completion of the administrative

review to which they pertain. Under paragraph C.1. of the Suspension

Agreement, the signatories to the Agreement ``agree to supply to the

Department any information and documentation the Department deems

necessary to demonstrate that they are in full compliance with the

Agreement.'' See Suspension Agreement at 51170. Despite respondents'

argument presented in its rebuttal brief, we note that, in response to

the Department's request, respondents appeared to acknowledge this

authority. That is, respondents did in fact provide tax statements for

the previous period of review, even though that review had been

completed. See Supplemental Questionnaire Response of September 3,

1998, Exhibit A. While the Department does not reopen prior

administrative reviews, this procedural restriction does not equate

with a lack of authority to review overall compliance with the

Suspension Agreement, particularly when the Suspension Agreement itself

allows for such review. Indeed, under section 751(a)(1)(C) of the Act,

the Department can ``review the current status of, and compliance with,

any agreement by reason of which an investigation was suspended, and

review the amount of any net countervailable subsidy * * * involved in

the agreement * * *''. Therefore, the Department has full authority to

require respondents to provide tax assessment information, not only for

the present period of review, but for all prior reviews where tax

assessments were revised or finalized during the instant POR.

Comment 2: Petitioner claims that respondents have refused to

provide the information required by the Suspension Agreement and

requested by the Department. Petitioner claims that respondent has not

met its obligations to provide complete and updated information,

specifically with regard to respondent's income tax liabilities (as

argued in Comment 1 by petitioner). Petitioner notes that respondents

made several commitments: to advise the Department if MARIS's tax

liability increased; to provide final tax calculations; and to provide

this information regardless of the period currently under review.

Petitioner claims that MARIS failed to notify the Department of its

modified tax assessment for the 12th and 13th reviews during the course

of the 13th administrative review period.

Petitioner argues that the Department should require respondents to

provide more regular reporting of information relating to taxes owed.

Petitioner suggests that, as the Government of Singapore is required by

the Suspension Agreement under paragraph C.2.2 (See Suspension

Agreement at 51170) to provide a quarterly certification that it

continues to be in compliance with the Agreement, the Department should

require that tax liability information (updated quarterly) be included

in the quarterly report. Petitioner also suggests that the Department

should advise respondents that failure to adhere to promises to supply

information will result in the application of adverse information

available.

Respondents argue that there is no basis in the Suspension

Agreement to require the GOS to provide financial or tax information on

a quarterly basis. Respondents assert that, contrary to petitioner's

contention, they have consistently indicated in their responses that

the tax calculations submitted were provisional and that respondents

would supplement their response if assessments were finalized prior to

the completion of the review. Additionally, respondents point out that

each of the alleged failures to provide information relate to prior

reviews, and that petitioner has no basis for complaint in the current

review.

Department's Position: We disagree with petitioner. Petitioner

contends that respondents failed to provide information during the

course of the previous review. This argument was considered by the

Department in the previous review, where we found that respondents had

not failed to provide information in response to requests from the

Department. See Certain Refrigeration Compressors from the Republic of

Singapore: Final Results of Countervailable Duty Administrative Review,

63 FR at 32852 (June 16, 1998). Petitioner has not made any contention

regarding a failure to submit

[[Page 69048]]

information during the current POR, and therefore, there is no basis to

further consider petitioner's claims within the context of this

administrative review. While we do not agree with respondent's

assertion that the Suspension Agreement provides no basis to require

the GOS to provide financial or tax information on a quarterly basis

(see Suspension Agreement, paragraph C, 48 FR at 51170), at this time,

we do not find it necessary to require such information from the GOS.

Comment 3: Petitioner claims that respondents have submitted false

information to the Department. Petitioner claims that respondents

submitted false information on three separate occasions: (1) statements

made during the previous review regarding the availability and filing

date of tax assessments; (2) statements made in the previous review

regarding the volume and value of sales of subject merchandise; and (3)

statements relating to the testing and rating of compressors made

during the hearing for the previous review. Petitioner suggests that

the Department instruct respondents that any subsequent submissions of

false information will result in the immediate imposition of adverse

facts available.

Respondents argue that petitioner's reference to any alleged

failure to adhere to obligations to provide information relate solely

to the previous review. Respondents cite to the final results of the

previous administrative review (see Certain Refrigeration Compressors

from the Republic of Singapore: Final Results of Countervailable Duty

Administrative Review, 63 FR at 32855 (June 16, 1998)), and assert that

the Department considered petitioner's contention in the previous

administrative review and found that respondents had not failed to

cooperate with the Department, and had acted to the best of their

ability in complying with all requests for information. Respondents

contend, therefore, that the Department should reject petitioner's

suggestion to advise respondents that failure to comply with requests

to provide information will result in the application of adverse facts

available.

Department's Position: We agree with respondents. All of

petitioner's allegations of false information relate to the previous

review, where they were fully considered by the Department and found to

be without merit. See Certain Compressors from the Republic of

Singapore: Final Results of Countervailable Duty Administrative Review,

63 FR at 32855 (June 16, 1998). Petitioner has made no allegation of

false information submitted in the current review, and the Department

has no reason to believe that the information respondent provided for

the record is inaccurate.

Comment 4: Petitioner claims that the problems cited in comments 1

and 2 require the Department to review the effectiveness of the current

Suspension Agreement. Petitioner notes that the Suspension Agreement

requires that benefits received by MARIS and AMS are to be offset

completely by payments to the Government of Singapore. Petitioner

asserts that the value of these benefits is sometimes not established

at the time the Department makes its final determination in a

particular administrative review. Petitioner suggests that, in order to

ensure that the Suspension Agreement is fully and fairly implemented,

the Department adopt the following measures: (1) require the GOS to

submit quarterly reports that include disclosure of any actions taken

by IRAS with regard to taxation of MARIS or AMS; (2) develop

questionnaires that require respondents to disclose any changes in

their tax liabilities for any prior review period; and (3) include

within any benefit analysis for the current POR any increased benefit

received by respondents that was unrecognized in a previous POR due to

a delay in ascertaining final tax obligations.

Respondent did not comment on this issue.

Department's Position: We disagree with petitioner in part. We do

not agree, at this time, that the Department should require the GOS to

submit tax information on a quarterly basis, nor should we include

within our current benefit analysis any increased benefit received by

the respondents in the current POR that relates to a previous review

period. However, the Department has asked, and will continue to ask,

that respondents provide information relating to tax assessments

finalized during a current POR, whether or not the assessment relates

to that POR.

Petitioner claims that respondents realize benefits which have

accrued after an administrative review has been closed, based on the

Singaporean tax system, which allows finalization of tax assessments up

to six years after the year of consideration. Because of the mechanics

of the Department's administrative review process, it is possible that

respondents can accrue benefits greater or less than those considered

in calculating the export charge rate for that period of review. Thus,

it is possible that respondents may be found to have been in compliance

with the Agreement within the context of the Department's

administrative review procedures, even though an offset calculation

based on finalized taxes may yield a different figure. However, in the

current review, respondents report that no tax assessments had been

finalized during the period of review, and therefore, no additional

benefits relating to a prior review have been recognized in current

POR. Therefore, petitioner's argument that respondents have accrued

benefits that were previously unrecognized is moot for this period of

review.

Under section 751(a)(1)(C) of the Act, the Department has the

authority to review the status of a suspension agreement within the

context of the administrative review. Given the possibility that

respondents may accrue benefits unrecognized during the period of

review to which they pertain, the Department intends to continue to ask

respondents for information relating to finalized tax assessments for

any prior period of review as a normal part of its administrative

review procedure.

Final Results of Review

We determine that the signatories to the Suspension Agreement have

complied with the terms of the Agreement, including the payment of the

provisional export charge, for the review period. From April 1, 1996 to

August 27, 1996, a provisional export charge of 3.00 percent was in

effect. From August 28, 1996 to March 31, 1997, a provisional export

charge of 2.22 percent was in effect.

We determine the net subsidy to be 0.56 percent of the f.o.b. value

of the merchandise for the April 1, 1996 through March 31, 1997 review

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

Suspension Agreement, the Department determines that, for the period of

review, a negative adjustment may be made to the provisional export

charge rate in effect. The adjustments will equal the difference

between the provisional rate in effect during the review period and the

rate determined in this review, plus interest. For this period, the GOS

may refund or credit to the companies, in accordance with paragraph

B.4.c of the Suspension Agreement, the difference between the two

provisional rates noted above and the 0.56 percent, 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

[[Page 69049]]

disposition of proprietary information disclosed under APO in

accordance with 19 CFR 355.306. 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 this notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.221.

Dated: December 8, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-33212 Filed 12-14-98; 8:45 am]

BILLING CODE 3510-DS-P