Natural Bristle Paintbrushes and Brush Heads From the People's Republic of China; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-501]

Natural Bristle Paintbrushes and Brush Heads From the People's

Republic of China; Final Results of Antidumping Duty Administrative

Review

AGENCY: Import Administration, International Trade Administration, U.S.

Department of Commerce.

ACTION: Notice of final results of the antidumping duty administrative

review of natural bristle paintbrushes and brush heads from the

People's Republic of China.

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

SUMMARY: On November 7, 1997, the Department of Commerce (the

Department) published the preliminary results of its administrative

review of the antidumping order on natural bristle paint brushes and

brush heads (paint brushes) from the People's Republic of China (PRC).

The review covers two exporters of the subject merchandise and the

period February 1, 1996 through January 31, 1997.

We gave interested parties an opportunity to comment on our

preliminary results. We received comments from Hunan Provincial Native

Produce and Animal By-Product Import and Export Corporation (Hunan). We

did not receive rebuttal comments. After considering these comments, we

have not changed the final results from those presented in the

preliminary results of review and have determined that sales have not

been made below normal value (NV), as explained below.

EFFECTIVE DATE: March 13, 1998.

FOR FURTHER INFORMATION CONTACT: Eric Scheier or Maureen Flannery,

Antidumping/Countervailing Duty Enforcement, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington D.C. 20230; telephone

(202) 482-4733.

[[Page 12450]]

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 of April 1, 1996.

Background

On November 7, 1997, the Department published the preliminary

results of review (62 FR 60228). The Department has now completed this

administrative review in accordance with section 751 of the Act.

Scope of Review

Imports covered by this review are shipments of natural bristle

paint brushes and brush heads from the PRC. Excluded from the order are

paint brushes with a blend of 40 percent natural bristles and 60

percent synthetic filaments. The merchandise under review is currently

classifiable under item 9603.40.40.40 of the Harmonized Tariff Schedule

of the United States (HTSUS). Although the HTSUS subheading is provided

for convenience and Customs purposes, the written description of the

merchandise is dispositive.

This review covers the period February 1, 1996 through January 31,

1997.

Interested Party Comments

We gave interested parties an opportunity to comment on the

preliminary results of review. We received comments from Hunan. We did

not receive rebuttal comments from any party.

Comment 1

Hunan argues that the Department should correct the calculation of

the surrogate overhead rate to avoid double-counting certain overhead

expenses. While Hunan notes that all parties agree on the use of

Indonesia's Large and Medium Manufacturing Statistics: 1995, Volume II

as the source of information to be used in calculating a surrogate

factory overhead rate, Hunan disagrees with the Department's

methodology using these data to calculate the surrogate overhead rate.

Hunan states that it was inappropriate for the Department to add ``new

purchases,'' ``second-hand purchases,'' and ``constructions major

repairs and improvements'' to the expenses included for total factory

overhead. Hunan claims that ``new purchases,'' ``second-hand

purchases'' and ``constructions major repairs and improvements'' are

incorrectly classified as fixed overhead items, and maintains that

these items are properly classified as capital expenditures, which are

charged to asset accounts and are included only as a balance sheet

item.

Secondly, Hunan states that its own proposed methodology for

valuing factory overhead already includes fixed overhead expenses of

``repairs and industrial services received'' and ``rent of building,

machinery and equipment.'' Hunan alleges that the classification of

``repairs and industrial services received'' and ``rent of building,

machinery and equipment'' as variable overhead expenses is incorrect

because neither expense varies in proportion to the number of units

produced.

Furthermore, Hunan disagrees with the use of new and second-hand

purchases as a proxy for depreciation, which had not been accounted for

in Indonesia's Large and Medium Manufacturing Statistics: 1995, Volume

II. Hunan states that new and second-hand purchases and construction,

major repairs and improvements are capital expenses partially expensed

through depreciation, and are booked as assets on the balance sheet.

The value of fixed assets, Hunan states, is depreciated over time.

Hunan submits that, while the exclusion of depreciation from

overhead may artificially depress the surrogate overhead rate, it will

artificially inflate the surrogate profit rate calculated as the total

value for gross value added output less the amount for total

expenditures. Hunan states that, should the Department continue to use

the methodology it used in the preliminary results for the final

results, an adjustment must be made to the profit calculation to

compensate for the exclusion of depreciation from total expenditures.

Lastly, Hunan notes that the methodology proposed by Hunan for the

calculation of factory overhead, the SG&A rate, and the profit rate was

used previously by the Department in Notice of Final Determination of

Sales at Less than Fair Value: Collated Roofing Nails from the People's

Republic of China 62 FR 51410 (Oct. 1, 1997) (Roofing Nails). Hunan

further notes that in the initiation of the antidumping investigation

on Bicycles from the People's Republic of China 60 FR 21065 (May 1,

1995) (Bicycles), the Department accepted this same data source and

acknowledged that new purchases, second-hand purchases and

constructions, major repairs and improvements were capital expenditures

that should not be included in factory overhead.

Department's Position

While we agree with Hunan that new and second-hand purchases and

construction, major repairs and improvements are generally considered

capital assets rather than overhead items, the fact that, in the data

used, they are not recognized as assets and depreciated indicates that

they are being recognized in the year in which the expense was

incurred, and therefore are appropriately considered overhead expenses.

Therefore, we have continued to include these items as overhead

expenses. Hunan's assertion that certain items characterized as

variable overhead items in our preliminary results are actually fixed

overhead items is moot, because for these final results we have not

differentiated fixed and variable overhead.

We disagree with Hunan's assertion that the Department must make an

adjustment to the profit calculation to compensate for the exclusion of

depreciation from total expenditures. As noted above, depreciation was

not one of the expense items reported on the income statement, however,

the income statement did include a line items for capital assets

expensed. These capital assets were expensed during the period rather

than capitalized and depreciated. Therefore, it is not appropriate to

include an additional amount for depreciation in total expenditures.

Furthermore, while we note that the absence of depreciation from

factory overhead would cause the factory overhead percentage to be less

and profit to be greater than if depreciation existed on the income

statement in question, we disagree that we should arbitrarily assign an

amount of depreciation to be deducted from profit when depreciation is

not recognized on the income statement, nor identified elsewhere.

Finally, we disagree with Hunan that because we used or accepted a

certain methodology in Roofing Nails and Bicycles, we should continue

to do so in this review. We have reviewed the methodology used in

Roofing Nails and Bicycles, and have more closely examined the

components from which factory overhead was constructed for the current

preliminary results. As discussed above, we have determined that ``new

purchases,'' ``second-hand purchases'' and ``constructions major

repairs and improvements'' are overhead items in that they were

recognized in the year in which the expenses were incurred and, as

stated in

[[Page 12451]]

the preliminary results, represent part of the costs incurred to

produce the subject merchandise. Therefore, we have determined that the

methodology used for the preliminary results, which includes these

items in factory overhead, is the most appropriate for the surrogate

data in question. Based on the foregoing we have not changed the

calculations for these final results.

Final Results of Review

We determine that the following dumping margins exist:

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

Margin

Manufacturer/exporter Time period (percent)

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

Hunan Provincial Native Produce & Animal

By-Products I/E Corp................... 2/1/96-1/31/97 0.01

PRC-Wide rate........................... 2/1/96-1/31/97 351.92

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

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between export price and NV may vary from the percentage

stated above for Hunan. The Department will issue appraisement

instructions on each exporter directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon

publication of this notice of final results of review for all shipments

of paint brushes from the PRC 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) for Hunan, which was found to

merit a separate rate for the final results of this review, the cash

deposit rate will be zero, because the company-specific rate

established in the final results of this administrative review is, in

accordance with 19 CFR 353.6, de minimis, i.e., less than 0.5 percent;

(2) for all other PRC exporters, the cash deposit rate will be the PRC-

wide rate, which is 351.92 percent; (3) for previously reviewed non-PRC

exporters, the cash deposit rate will be the rate established in the

most recent segment of the proceeding; and (4) for all other non-PRC

exporters of subject merchandise from the PRC, the cash deposit rate

will be the rate applicable to the PRC supplier of that exporter.

These deposit rates, 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 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 9, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-6550 Filed 3-12-98; 8:45 am]

BILLING CODE 3510-DS-P