Chrome-Plated Lug Nuts From Taiwan; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-810]

Chrome-Plated Lug Nuts From Taiwan; 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 October 7, 1998, the Department of Commerce (the

Department) published the preliminary results of administrative review

of the antidumping duty order on chrome-plated lug nuts from Taiwan.

The review covers 18 manufacturers/exporters and the period September

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

received, the dumping margins have not changed from those presented in

the preliminary results.

EFFECTIVE DATE: April 9, 1999.

FOR FURTHER INFORMATION CONTACT: Ron Trentham or Thomas Futtner, Office

of AD/CVD 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-

6320 or 482-3814, respectively.

Applicable Statute and Regulations

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 (URAA). In addition, unless otherwise

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

regulations codified at 19 CFR part 351 (1998).

Background

On October 7, 1998, the Department published the preliminary

results (63 FR 53875) of its administrative review of the antidumping

duty order on chrome-plated lug nuts from Taiwan (September 20, 1991,

56 FR 47737). The Department has now completed this administrative

review in accordance with section 751 of the Act.

Scope of the Review

The merchandise covered by this review is one-piece and two-piece

chrome-plated lug nuts, finished or unfinished, which are more than

\11/16\ inches (17.45 millimeters) in height and which have a hexagonal

(hex) size of at least \3/4\ inches (19.05 millimeters) but not over

one inch (25.4 millimeters), plus or minus \1/16\ of an inch (1.59 mm).

The term ``unfinished'' refers to unplated and/or unassembled chrome-

plated lug nuts. The subject merchandise is used for securing wheels to

cars, vans, trucks, utility vehicles, and trailers. Zinc-plated lug

nuts, finished or unfinished, and stainless-steel capped lug nuts are

not within the scope of this review. Chrome-plated lock nuts are also

not within the scope of this review.

During the period of review, chrome-plated lug nuts were provided

for under subheading 7318.16.00.00 of the Harmonized Tariff Schedule

(HTS). Although the HTS subheading is provided for convenience and

Customs purposes, our written description of the scope of this review

is dispositive. This review covers the following firms: Gourmet

Equipment (Taiwan) Corporation (``Gourmet''), Buxton International

Corporation (``Buxton''), Chu Fong Metallic Electric Co.(``Chu Fong''),

San Chien Industrial Works, Ltd. (``San Chien''), Anmax Industrial Co.,

Ltd. (``Anmax)'', Hwen Hsin Enterprises Co., Ltd. (``Hwen Hsin''), San

Shing Hardware Works Co. (``San Shing''), Trade Union International

Inc./Top Line (``Trade Union''), Uniauto, Inc. (``Uniauto''), Wing Tang

Electrical Manufacturing Company (``Wing Tang'') and Multigrand

Industries Inc. (``Multigrand''), and the period September 1, 1996,

through August 31, 1997. Buxton, Chu Fong, San Chien, Anmax, Hwen Hsin,

San Ching, Trade Union, Uniauto, Wing Tang and Multigrand failed to

completely respond to the Department's questionnaire and therefore were

assigned an adverse facts available rate of 10.67 percent.

Questionnaires were sent to Transcend International, Kwan How

Enterprises Co., Kwan Ta Enterprises Co., Ltd., Everspring Plastic

Corporation, Gingen Metal Corp., Goldwanate Associates, Inc., Kuang

Hong Industries Inc., but were returned as undeliverable. These firms

therefore received the ``all others'' rate of 6.93 percent.

Analysis of Comments Received

We invited interested parties to comment on the preliminary

results. We received timely comments from one respondent, Gourmet, and

rebuttal comments from petitioner, Consolidated International

Automotive. Based on the comments received, we have not changed our

determination with respect to Gourmet for the final results.

Comments

Respondent argues that it has cooperated fully and that the

Department cannot require it to provide information that is impossible

for Gourmet to provide, or in a form which Gourmet simply does not

have. In such a situation, the Department must consider any other

independent information which is sufficient to substantiate the sales

and other data provided in Gourmet's submissions.

In this instance, because Gourmet does not have audited financial

statements, Gourmet argues that the Department must rely on other forms

of independent substantiation. Gourmet argues that the Department has a

long-standing practice to accept whatever substantiation is available

to satisfy itself that the data submitted can be relied upon. In this

review, Gourmet submitted bank records as a means to independently

substantiate its response. Gourmet points to the Notice of Final

Determination of Sales at less Than Fair Value: Collated Roofing Nails

from Taiwan, 62 FR 51,427 (October 1, 1997), where the Department

stated that where a respondent submitted sales and cost data based on

unaudited financial statements, verification may be based on the

respondent's ``tax return or any other independent source .''

Gourmet argues that the use of facts available is not warranted

under section 776(a) of the Act (19 USC1677e(a)) because the necessary

information is on the record. Gourmet has responded to all of the

Department's requests for information with the exception of one

document, audited financial statements, which do not exist and

therefore can not be withheld. Gourmet argues that, unlike the

situation in previous reviews in this review where it stated that its

data was unverifiable, its submitted data can and should be verified.

Gourmet points to Borden, Inc. v. United States, 4 F. Supp. 2d 1221

(Ct. Int'l Trade 1998) (Borden), where the court found that the

Department is required to consider information submitted by a party

even if that information does not precisely conform to the Department's

request, as long as the party has cooperated to the best of its

ability.

[[Page 17315]]

Gourmet acknowledges that section 776(a) of the Act may apply

because the Department may take the position that Gourmet has failed to

provide the requested information in the form and manner requested.

However, Gourmet disagrees with its applicability for two reasons.

First, while Gourmet failed to provide information in the form of

audited financial statements, it provided the same information in the

form of bank records. Second, the application of facts available

pursuant to section 776(a)(2)(B) of the Act is conditional on an

additional finding that the provisions set out in section 782(e) of the

Act (19 U.S.C. 1677m(e)) have not been met. Gourmet points to Borden,

where the court said section 782(e) of the Act requires that no matter

how unsatisfactory the Department may find the information submitted,

it must still use that information rather than facts available, so long

as the criteria of that provision have been met.

Gourmet argues that its situation is similar to that in the Notice

of Final Determination of Sales at Less Than Fair Value: Certain

Preserved Mushrooms from Chile, 63 FR 56,613 (October 22, 1998) (Chile

Mushrooms). In that case, the Department concluded that resort to facts

available was not required where independent auditors were unable to

reconcile the respondent's books and records with its financial

statements and were ``otherwise unable to account for significant

assets and liabilities,'' and where the respondent, like Gourmet, was

not legally obligated to have audited financial statements. Gourmet

states that the Department correctly concluded that the law would not

permit rejection of the submitted data in its entirety because the

respondent had met the five conditions of 782(e) of the Act (19 U.S.C.

1677m(e)).

Because Gourmet has provided such independent substantiation and

has cooperated to the best of its ability, the Department may not

decline to use Gourmet's submitted information in making its

determination. Gourmet maintains that the information was submitted on

time, can be verified, is complete and reliable, can be used without

undue difficulty, and Gourmet has demonstrated that it has acted to the

best of its ability in providing information.

Even if the Department does decline to use such information and

resorts instead to ``facts available,'' the Department must find that

Gourmet has cooperated to the best of its ability and therefore that an

adverse inference would be unwarranted. Gourmet claims that it has

provided complete responses to all of the Department's questionnaires.

Gourmet undertook extraordinary efforts to produce alternative forms of

records to satisfy the Department's requirement for independent

substantiation of submitted information.

Gourmet asserts that the Department incorrectly concluded that its

submissions could not be reconciled to its financial statements in this

review, as it did in the fourth administrative review even though the

facts are different. In this review, unlike the fourth, Gourmet does

not admit its submission cannot be reconciled. On the contrary, Gourmet

has submitted detailed reconciliation statements to its tax return and

bank statements. Furthermore, the Department's requirements for

verifiable submissions as discussed in a Memorandum from Thomas Futtner

to Holly Kuga, Aug. 20, 1998, does not mandate the submission of

audited financial statements.

If the Department finds the information that Gourmet submitted to

be unverifiable, it does not follow that Gourmet has not acted to the

best of its ability. The Department has failed to articulate any basis

for finding that Gourmet failed to cooperate. In Allied-Signal

Aerospace Co. v. United States, 996 F.2d 1185 (Fed. Cir. 1993) (Allied-

Signal), the court held that where a respondent ``supplied as much of

the requested information as it could and offered to provide the

remaining information in a simplified form, . . . [i]t was unreasonable

for the ITA to have characterized respondent's behavior as a refusal to

cooperate.'' The court went on to say that ``the respondent failed to

provide a complete response to the requested information because it was

unable to, not because it refused to.'' The court made a similar

distinction in Borden where it stated ``Commerce has articulated no

reason for finding the respondent's failure was an unwillingness,

rather than simply an inability, to cooperate, other than vague hints

that respondent was cooking the books.''

Petitioner disagrees. As in previous reviews, Gourmet failed to

submit verifiable information that would allow Commerce to tie the

company's questionnaire response with its financial data. Petitioner

argues that the problem is not simply the form of information, but

rather its substance. Gourmet has been subject to previous reviews and

has been well aware of the deficiencies in its previous submissions,

yet Gourmet has made no showing of inability to prepare the requested

information. Petitioner argues that Commerce was correct to apply facts

available to Gourmet when it submitted information that had already

been found to be deficient.

Petitioner argues that the deficiencies in Gourmet's response

justify the application of facts available under the statute. Under

section 776(a)(2)(B) of the Act, Gourmet failed to provide requested

information, not simply the form of the information, but the substance

of the information. In terms of the statute, Gourmet's information is

so incomplete that it cannot serve as a reliable basis for determining

constructed value since Gourmet's financial information can not be

reconciled with its questionnaire response and is, therefore,

unverifiable.

Petitioner argues that Gourmet did not act to the best of its

ability in providing the information and meeting the Department's

requirements. Gourmet had participated in previous reviews where it

provided similarly deficient information and was sanctioned for doing

so. Petitioner argues that Gourmet could have corrected these

deficiencies but rather chose to submit the same substantively

incomplete and formally, nonconforming information.

Petitioner argues that Borden does not support Gourmet's position.

Borden does not address the applicability of section 776(a)(2)(D) of

the Act (19 U.S.C. 1677e(a)(2)(D)) to the deficient information

provided; by contrast in this review, Commerce has found that the

information submitted by Gourmet cannot be verified. Borden does not

preclude Commerce from applying facts available to the deficient

response, rather Borden requires Commerce to make the additional

finding that the respondent failed to act to the best of its ability.

This deficiency is not present in this review since Commerce expressly

stated ``that Gourmet has failed to cooperate by not acting to the best

of its ability.'' In Borden, the court noted that the respondent had

changed accounting methods and amended its questionnaire responses in

attempting to respond to the questionnaires. This situation is

plausible in an investigation, but not the sixth administrative review.

Petitioner also argues that Allied-Signal does not support

Gourmet's position. Unlike the facts in Allied-Signal, Gourmet has not

shown that it cannot provide the required information or that it would

be unable to prepare the necessary information.

Department's Position

We agree with petitioner. The Department finds that the use of

facts available is warranted under section 776(a) of the Act because

the information in Gourmet's questionnaire

[[Page 17316]]

response cannot be verified. Moreover, we have used an adverse

inference in applying the facts available, in accordance with section

776(b) of the Act, because Gourmet has failed to cooperate by not

acting to the best of its ability in this case. For a more complete

explanation of Gourmet's deficiencies (which include proprietary

information) see Memorandum from Thomas Futtner to Holly Kuga, August

20, 1998 (Futtner Memo).

Gourmet has failed to demonstrate that the information which it

placed on the record accurately reflects all of the relevant sales made

by the company during the period of review and its cost of production.

While Gourmet did possess relevant financial statements, it was not

able to demonstrate that the information it reported to the Department

agrees with those financial statements. Nor did it provide any evidence

of factors beyond its control which caused such discrepancies or any

reasonable basis for the Department to determine that its questionnaire

response was accurate despite these discrepancies. Gourmet has been

aware of, but has not corrected, deficiencies in its accounting system

even though these deficiencies caused the Department to use facts

available for the last several administrative reviews.

The Department does not reject questionnaire responses simply

because the respondent does not have an audited financial statement. In

such situations, the Department looks to other financial records,

prepared for purposes independent of the antidumping proceeding, such

as tax statements, which attest to the veracity of a respondent's

accounting system and information submitted to the Department. (see,

e.g., Collated Roofing Nails from Taiwan). In this case, Gourmet

possesses relevant (albeit unaudited) financial statements. As Gourmet

has acknowledged, however, the financial statements conflict with, and

hence do not support, its questionnaire response. See Futtner Memo.

Borden does not support Gourmet's contention. Although in Borden

the court noted that the Department must consider submitted information

if that information meets the requirements of section 782(e) of the

Act, Gourmet's information does not meet those requirements. Gourmet's

submissions are not verifiable and therefore do not meet the

requirements of section 782(e)(2). While these submissions are for the

most part in the form requested by the Department, their content is

unreliable. See Futtner Memo. Moreover, in Borden, the court approved

the Department's use of adverse facts available in that case.

Further, Allied-Signal is not relevant to this case. In Allied-

Signal, where the Court held that the respondent had ``supplied as much

of the requested information as it could and offered to provide the

remaining information in a simplified form,...[i]t was unreasonable for

the ITA to have characterized respondent's behavior as a refusal to

cooperate.'' That case did not involve evidence on the record

indicating a fundamental discrepancy between information in the

questionnaire response and the respondent's financial statements.

Although Gourmet has participated in several antidumping administrative

reviews and is thoroughly familiar with the Department's requirements,

it has consistently failed to comply with the Department's standards by

continuing to provide unverifiable data.

In addition, Gourmet's reliance on Chile Mushrooms is misplaced.

Chile Mushrooms did not involve a fundamental disagreement between the

questionnaire response and the respondent's financial records. Rather

certain issues were raised by the findings of an independent audit of

the respondent's records. We determined that these findings were either

irrelevant for our purposes or could be adequately addressed by

adjustments and the use of partial FA. In this case, we are not dealing

the results of an independent audit or with information that may be

rendered useful by the application of partial facts available.

Gourmet is incorrect that the Department is basing its facts

available decision on the findings in previous reviews, where Gourmet

admitted that its submissions could not be reconciled. The Department

treats each administrative review separately. Based on the information

on the record in the instant review, we have determined that Gourmet's

accounting system and the information submitted to the Department are

unreliable. Id.. Reliance on the accounting system used for the

preparation of the financial statements is a key and vital part of the

Department's determination that a company's sales and constructed value

data are credible. Section 776(a)(2)(D) of the Act states that the

Department ``shall, subject to section 782(d), use the facts otherwise

available in reaching the applicable determination under this title''

if an interested party or any other person provides information but the

information cannot be verified. Because Gourmet's submissions are not

reconcilable to its financial statements and Gourmet has provided no

acceptable explanation and no reasonable alternative support for its

submission, it is unverifiable.

Despite the admitted discrepancies between its financial statements

and its questionnaire response, Gourmet argued that its questionnaire

response nonetheless could be verified using other information, such as

bank records. In attempting to demonstrate this, however, it became

clear that the records that it was attempting to rely on could not

adequately substantiate its response without requiring the Department

essentially to perform a complete audit of Gourmet's financial records.

This is not the purpose of a verification, which is fundamentally a

spot check of selected data--not a detailed examination of a

respondent's entire accounting system. We believe that Gourmet has had

sufficient notice of the Department's requirements for verifiable

submissions and ample opportunity to provide information that is

amenable to verification. Yet Gourmet has continued to provide

unverifiable data. Therefore, we determine that Gourmet has failed to

cooperate by not acting to the best of its ability, and thus we are

using an adverse inference in our application of facts available.

Section 776(b) of the Act provides that, in selecting from the

facts available, adverse inferences may be used when an interested

party fails to cooperate by not acting to the best of its ability to

comply with requests for information. See also Statement of

Administrative Action (``SAA'') accompanying the URAA, H.R. Doc. No.

316, 103d Cong., 2d Sess. 870 (1994). Section 776(b) of the Act

authorizes the Department to use as adverse facts available information

derived from the petition, the final determination from the less than

fair value (LTFV) investigation, a previous administrative review, or

any other information placed on the record.

Section 776(c) of the Act requires the Department to corroborate,

to the extent practicable, secondary information used as FA. Secondary

information is described in the Statement of Administrative Action

(SAA) (at 870) as ``[i]nformation derived from the petition that gave

rise to the investigation or review, the final determination concerning

the subject merchandise, or any previous review under section 751

concerning the subject merchandise.''

The SAA further provides that ``corroborate'' means simply that the

Department will satisfy itself that the secondary information to be

used has probative value (see SAA at 870). Thus, to corroborate

secondary information, the Department will, to the extent

[[Page 17317]]

practicable, examine the reliability and relevance of the information

used. However, unlike other types of information, such as input costs

or selling expenses, there are no independent sources for calculated

dumping margins. The only source for margins is an administrative

determination. Thus, in an administrative review, if the Department

chooses as total adverse facts available a calculated dumping margin

from a prior segment of the proceeding, it is not necessary to question

the reliability of the margin from that time period (i.e., the

Department can normally be satisfied that the information has probative

value and that it has complied with the corroboration requirements of

section 776(c) of the Act). See, e.g., Elemental Sulphur from Canada:

Preliminary Results of Antidumping Duty Administrative Review, 62 FR at

971 (January 7, 1997) and Antifriction Bearings (Other than Tapered

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

Singapore, and the United Kingdom 62 FR 2801 ( January 15,1997) (AFBs

1997).

As to the relevance of the margin used for adverse FA, the

Department stated in Tapered Roller Bearings from Japan; Final Results

of Antidumping Duty Administrative Review, 62 FR 47454 (September 9,

1997), that it will consider information reasonably at its disposal as

to whether there are circumstances that would render a margin

irrelevant. Where circumstances indicate that the selected margin is

not appropriate as adverse FA, the Department will disregard the margin

and determine an appropriate margin. See also Fresh Cut Flowers from

Mexico; Preliminary Results of Antidumping Duty Administrative Review,

60 FR 49567 (September 26, 1995). We have determined that there is no

evidence on the record that would indicate that the 10.67 percent rate,

a rate calculated from the LTFV investigation, is irrelevant or

inappropriate as an adverse facts available rate for the respondent in

the instant review. Therefore, we have applied, as adverse FA, the

highest margin for any firm in any segment of this proceeding, 10.67

percent, as the rate for Gourmet.

Final Results of Review

As a result of this review, we have determined that the following

margins exist for the period September 1, 1996, through August 31,

1997.

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

Percent

Manufacturer/exporter margin

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

Gourmet Equipment (Taiwan) Corporation....................... 10.67

Buxton International/Uniauto................................. 10.67

Chu Fong Metallic Electric Co................................ 6.93

Transcend International...................................... 6.93

San Chien Industrial Works, Ltd.............................. 10.67

Anmax Industrial Co., Ltd.................................... 10.67

Everspring Plastic Corp...................................... 6.93

Gingen Metal Corp............................................ 6.93

Goldwanate Associates, Inc................................... 6.93

Hwen Hsin Enterprises Co., Ltd............................... 10.67

Kwan How Enterprises Co., Ltd................................ 6.93

Kwan Ta Enterprises Co., Ltd................................. 6.93

Kuang Hong Industries Ltd.................................... 6.93

Multigrand Industries Inc.................................... 6.93

San Shing Hardware Works Co., Ltd............................ 10.67

Trade Union International Inc./Top Line...................... 10.67

Uniauto, Inc................................................. 10.67

Wing Tang Electrical Manufacturing Company................... 10.67

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

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. The Department

will issue appraisement instructions concerning all respondents

directly to the U.S. Customs Service.

We will assess antidumping duties on the above firms' entries at

the same rate as their above stated dumping margins since the margins

are not calculated rates, but are rates based upon facts available

pursuant to section 776 of the Act.

Further, the following cash deposit requirements will be effective

for all shipments of the subject merchandise, entered, or withdrawn

from warehouse, for consumption on or after the publication date of

these final results of administrative review, as provided for by

section 751(a)(1) of the Act: (1) the cash deposit rate for the

reviewed firms will be the rates indicated above; (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 in the original 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 (4)

if neither the exporter nor the manufacturer is a firm covered in this

or any previous review or the original investigation, the cash deposit

rate will be 6.93%, the all others rate established in the LTFV

investigation.

These deposit requirements 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 351.402(f) 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 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. Timely written notification or conversion to judicial protective

order is hereby requested. Failure to comply with the regulations and

the terms of the APO is a sanctionable violation.

This administrative review and notice are in accordance with

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

Dated: April 5, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-8922 Filed 4-8-99; 8:45 am]

BILLING CODE 3510-DS-P