Mechanical Transfer Presses From Japan; Preliminary Results of Antidumping Duty Administrative Review, and Intent To Revoke Order in Part

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-810]

Mechanical Transfer Presses From Japan; Preliminary Results of

Antidumping Duty Administrative Review, and Intent To Revoke Order in

Part

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review, and intent to revoke order in part; mechanical

transfer presses from Japan.

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

SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on mechanical

transfer presses (MTPs) from Japan in response to a request by

petitioners, Verson Division of Allied Products Corp., the United

Autoworkers of America, and the United Steelworkers of America (AFL-

CIO/CLC); and by respondent Aida Engineering, Ltd. (Aida). This review

covers shipments of this merchandise to the United States during the

period February 1, 1996 through January 31, 1997.

We have preliminarily determined that sales have not been made

below normal value (NV). If these preliminary results are adopted in

our final results, we will instruct U.S. Customs to liquidate entries

without regard to antidumping duties. Based on Aida's three consecutive

years of de minimis margins, we intend to revoke the order with respect

to Aida.

Interested parties are invited to comment on these preliminary

results. Parties who submit argument are requested to submit with each

argument: (1) A statement of the issue, and (2) a brief summary of the

argument.

[[Page 11212]]

EFFECTIVE DATE: March 6, 1998.

FOR FURTHER INFORMATION CONTACT: Elisabeth Urfer or Maureen Flannery,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, NW.,

Washington D.C. 20230; telephone (202) 482-4733.

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions 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, as they existed on April 1, 1996.

SUPPLEMENTARY INFORMATION:

Background

The Department published in the Federal Register an antidumping

duty order on MTPs from Japan on February 16, 1990 (55 FR 5642). On

February 3, 1997, we published in the Federal Register (62 FR 4978) a

notice of opportunity to request an administrative review of the

antidumping duty order on MTPs from Japan covering the period February

1, 1996 through January 31, 1997.

In accordance with 19 CFR 353.25(b)(1) and (2), Aida requested

revocation of the antidumping duty order with respect to Aida, and

requested that the Department conduct an administrative review of the

antidumping order in accordance with Sec. 353.22(a)(2) and

Sec. 353.25(b) of the regulations. Petitioners requested that we

conduct a review of Hitachi Zosen Corporation (Hitachi Zosen) and

Ishikawajima-Harima Heavy Industries Co., Ltd. (IHI). We published a

notice of initiation of this antidumping duty administrative review on

MTPs on March 18, 1997 (62 FR 12793).

Petitioners requested that the Department initiate an investigation

of sales below the cost of production (COP) with respect to Hitachi

Zosen. We concluded that an initiation of a COP investigation was not

warranted. (See memorandum from Maureen Flannery to Edward Yang,

``Mechanical Transfer Presses from Japan: Allegation of Sales Below

Cost for Hitachi Zosen Corp.,'' dated September 23, 1997.)

On June 16, 1997, the Petitioners withdrew their request for an

administrative review with respect to IHI. IHI likewise requested that

the Department terminate the administrative review on June 23, 1997. We

rescinded the review with respect to IHI on November 10, 1997, and

extended the preliminary results. See Mechanical Transfer Presses From

Japan: Extension of Time Limits for Preliminary Results of Antidumping

Duty Administrative Review, and Partial Recission of Administrative

Review, 62 FR 60471. The Department is conducting this administrative

review in accordance with section 751 of 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.

Verification

As provided in section 782(i) of the Act, we verified information

provided by Aida by using standard verification procedures, including

on-site inspection of the manufacturer's facilities, the examination of

relevant sales and financial records, and the selection of original

documentation containing relevant information. Our verification results

are outlined in the public version of the verification report.

Intent To Revoke

On February 27, 1997, Aida submitted a request, in accordance with

19 CFR 353.25(b), to revoke the order covering MTPs from Japan with

respect to Aida's sales of this merchandise. Aida's request was

accompanied by the certification required under 19 CFR 353.25(b)(1) and

the agreement to immediate reinstatement in the relevant antidumping

order required under 19 CFR 353.25 (a)(2)(iii) and (b)(2).

In the two prior reviews of this order, we determined that Aida

sold MTPs from Japan at not less than NV. The Department conducted a

verification of Aida's response for this review and preliminarily

determines that Aida sold MTPs at not less than NV during the review

period. Based on Aida's three consecutive years of zero or de minimis

margins, the above-mentioned certification, and the absence of any

evidence to the contrary on the record of this review, we have

preliminarily determined that it is not likely that Aida will in the

future sell subject merchandise at less than NV. Therefore, if these

preliminary findings are affirmed in our final results, we intend to

revoke the order on MTPs from Japan with regard to Aida.

United States Price (USP)

Aida and Hitachi Zosen argue that we should use the contract prices

as our starting price for MTPs under review. However, contract prices

may include accessories and spare parts. Destack feeders, which are

accessories, and spare and replacement parts have been found to be

outside the scope of the order. Aida and Hitachi Zosen cite the Final

Determination of Sales at Less Than Fair Value: Mechanical Transfer

Presses from Japan, 55 FR 335, (January, 4, 1990), which states:

For purposes of the final determination, we have determined that

the prices charged for spare parts, tooling and other accessories

associated with the basic machine which are separately identified in

the contractual sales documentation should not be included in the

gross price of the MTP * * *.

Hitachi Zosen argues that, for its MTP sales to the United States,

the purchase order and the invoice evidence only the price for the

system or set, and not discrete prices for the components, and that the

parties intended to buy a press system rather than discrete machines.

Aida similarly argues that, for all but one of its MTPs sold to the

United States, the contracted price was a single price that included

all goods and services covered by the sale. Petitioners argue that it

is the Department's policy to use the price of the MTP and exclude

other items that were included in the sale from its analysis.

Petitioners claim that when sales documents are reviewed it appears

that the price is broken down into components. At verification of Aida

we found that, for one of its four sales which Aida claimed could not

be

[[Page 11213]]

broken out, the price of the components could, in fact, be broken out;

therefore, we have subtracted out the price of the destack feeder from

the starting price. We also made a corresponding adjustment to

constructed value (CV) to account for the cost of the destack feeder.

We found that, for another MTP, the price of the spare parts could be

broken out, but we could not break out the cost of the spare parts from

the CV; therefore, we did not make an adjustment for that sale.

A. Aida

For sales made by Aida we calculated an export price, in accordance

with section 772(a) of the Act, because the subject merchandise was

sold by Aida directly to the first unaffiliated purchasers in the

United States prior to importation into the United States, and

constructed export price was not otherwise indicated.

We calculated export price based on the delivered or f.o.b. price

to unaffiliated purchasers. We made deductions, where appropriate, for

rebates, inland insurance, brokerage and handling, foreign inland

freight, international freight, marine insurance, U.S. inland freight,

U.S. transportation expenses, and U.S. customs duty.

B. Hitachi Zosen

For sales made by Hitachi Zosen we calculated an export price, in

accordance with section 772(a) of the Act, because the subject

merchandise was sold by Hitachi Zosen to unaffiliated purchasers in the

United States prior to importation into the United States, and

constructed export price was not otherwise indicated.

We calculated export price based on the delivered prices and ex-

godown prices to unaffiliated purchasers. We made deductions for

foreign inland freight and inland insurance, and, where appropriate,

brokerage and handling, international freight, installation,

supervision and U.S. duty in accordance with section 772(c) of the Act.

Normal Value (NV)

We preliminarily determine that the use of CV is warranted to

calculate NV for Aida and Hitachi Zosen, in accordance with section

773(a)(4) of the Act. While the home market is viable, 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.

Aida and Hitachi Zosen assert that home, third country, and U.S.

market products are distinguished by the many differences in

specifications between the various presses, and that no merchandise

sold in the home market or to a third country is identical to the

merchandise sold to the United States. Aida and Hitachi Zosen argue

that it is not possible to determine cost differences because (1) there

is no baseline specification for comparison purposes; (2) the design of

a press is dictated throughout by the combination of specifications

applicable to the press, and it is not possible to isolate the cost

effect of any single specification; and (3) differences in cost between

two presses result not only from differences in specifications, but

also from differences in material costs, processing costs, fiscal

periods, and production efficiency from press to press.

Petitioners argue that presses may be sufficiently similar to allow

for price-to-price comparisons because they are all automotive metal-

forming machine tools with multiple die stations. On June 12, 1997, the

Department requested additional cost information. In response to this

request, Aida and Hitachi Zosen put information on the record that

clearly indicated that the prices of home market and U.S. sales could

not be compared. See Memorandum from Elisabeth Urfer to Edward Yang,

dated March 2, 1998. We note that, in past proceedings involving large,

custom-built capital equipment, including prior reviews of this order,

we have normally resorted to CV. (See, e.g., Large Power Transformers

from France; Final Result of Antidumping Administrative Review, 61 FR

40403, August 2, 1996; Notice of Final Determination of Sales at Less

Than Fair Value: Large Newspaper Printing Presses and Components

Thereof, Whether Assembled or Unassembled, From Japan, 61 FR 38139,

July 23, 1996; and Mechanical Transfer Presses From Japan: Final

Results of Antidumping Duty Administrative Review, 62 FR 11820, March

13, 1997.)

For Aida and Hitachi Zosen, CV consists of the cost of materials

and fabrication, selling, general and administrative expenses (SG&A),

profit, and packing. For Aida's purchases of materials from affiliated

parties, we used the higher of the transfer price or the cost of

production, as provided for by Section 773(f)(3). Because the parts

used in the manufacture of MTPs are custom-built, no market values were

available. We calculated SG&A and profit based on home market sales of

MTPs in accordance with section 773(e)(2)(A) of the Act. We did not

include below cost sales in our calculation of profit (see below). We

used packing costs for merchandise exported to the United States. For

Aida, we made a circumstance-of-sale adjustment by deducting from CV

home market direct selling expenses (i.e., warranties, commissions, and

credit), and adding to CV U.S. direct selling expenses (i.e.,

warranties, commissions, and credit). For Hitachi Zosen, we made a

circumstance-of-sale adjustment by deducting from CV home market direct

selling expenses (i.e., warranties), and adding to CV U.S. direct

selling expenses (i.e., warranties and credit). To calculate imputed

U.S. credit expense, we used the dollar-denominated interest rates

submitted by Hitachi Zosen and Aida.

For Aida, we disregarded below cost home market sales in making the

CV profit calculation. Section 773(b)(1) provides that, whenever the

Department has reasonable grounds to believe or suspect that home

market sales under consideration for the determination of NV have been

made at below cost prices, it shall determine whether, in fact, there

were below cost sales. That provision further provides that, if below

cost sales were made within an extended period of time in substantial

quantities and not at prices that would recover costs within a

reasonable period of time, the Department may disregard the below cost

sales.

In the prior review of this order, pursuant to section 773(b)(1),

the Department disregarded below cost home market sales in calculating

CV profit, i.e., they were disregarded in the determination of NV.

Therefore, reasonable grounds exist to believe or suspect that Aida

made below cost home market sales in the current review period. Section

773(b)(2)(ii). Accordingly, we requested and obtained from Aida the

cost data necessary to determine whether below cost sales occurred

during the period of review.

Because each MTP is custom-built, differs significantly in

specifications, and is essentially a discrete model, we performed the

cost test on a sale-by-sale basis. We compared the cost of each model

sold in the home market to the home market price of that model. The

Department found that certain home market models were sold at prices

below the cost of production, and thus in substantial quantities,

within an extended period of time, and at prices that do not permit

recovery of cost within a reasonable period of time. Therefore, we have

disregarded the below cost sales in determining CV profit.

In calculating the profit value for Aida, we have used home market

sales submitted by Aida for the period encompassing the period of

review and

[[Page 11214]]

sales contemporaneous to the U.S. sales. This was done to account for

the relatively long period of time between the date when the MTP is

sold and the date when it is completed for shipment.

Preliminary Results of the Review

We preliminarily 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 Corporation.................. 2/1/96-1/31/97 0.00

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

Parties to the proceeding may request disclosure within 5 days of

the date of publication of this notice. Any interested party may

request a hearing within 10 days of publication. Any hearing, if

requested, will be held 44 days after the publication of this notice,

or the first workday thereafter. Interested parties may submit case

briefs within 30 days of the date of publication of this notice.

Rebuttal briefs, which must be limited to issues raised in the case

briefs, may be filed not later than 37 days after the date of

publication. The Department will publish a notice of final results of

this administrative review, which will include the results of its

analysis of issues raised in any such comments, not later than 120 days

after the date of publication of this notice.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Upon completion

of this review, the Department will issue appraisement instructions

directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon

publication of the final results of this administrative review for all

shipments of MTPs from Japan entered, or withdrawn from warehouse, for

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

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

companies will be the rate established in the final results of this

review; (2) for previously reviewed or investigated companies not

listed above, the cash deposit rate will continue to be the company-

specific rate published for the most recent period; (3) if the exporter

is not a firm covered in this review, a prior review, or the original

less-than-fair-value 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 (4) for all other

producers and/or exporters of this merchandise, the cash deposit rate

shall be the rate established in the investigation of sales at less

than fair value, which is 14.51 percent.

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

publication of the final results of the next administrative review.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 353.25(b) 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 the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: March 2, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-5864 Filed 3-5-98; 8:45 am]

BILLING CODE 3510-DS-P