[Federal Register Volume 66, Number 103 (Tuesday, May 29, 2001)]
[Notices]
[Pages 29080-29086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13406]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-846]
Brake Rotors From the People's Republic of China: Preliminary
Results and Partial Rescission of Fifth New Shipper Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results and partial rescission of fifth
new shipper review.
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SUMMARY: The Department of Commerce is currently conducting the fifth
new shipper review of the antidumping duty order on brake rotors from
the People's Republic of China covering the period April 1, 2000,
through September 30, 2000. This review covers three exporters. We have
preliminarily determined that two exporters have made sales at not less
than normal value. For the other exporter, we have preliminarily
determined that it failed to demonstrate its entitlement to a separate
rate and thus are preliminarily rescinding the review with respect to
it. If these preliminary results are adopted in our final results of
this review, we will instruct the Customs Service to assess no
antidumping duties on entries of subject merchandise during the period
of review from the two exporters, for which the importer-specific
assessment rates are zero or de minimis (i.e., less than 0.50 percent),
and to assess duties on all entries of subject merchandise made during
the period of review by the other exporter at the country-wide rate.
Furthermore, we will instruct the Customs Service to require a cash
deposit on all future entries of the subject merchandise from that
exporter at the country-wide rate.
We will issue the final results no later than 90 days from the date
of issuance of this notice.
EFFECTIVE DATE: May 29, 2001.
FOR FURTHER INFORMATION CONTACT: Brian Smith or Brian Ledgerwood,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-1766 or (202) 482-3836,
respectively.
The 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. In addition, unless
otherwise indicated, all citations to the Department's regulations are
to 19 CFR Part 351 (2000).
SUPPLEMENTARY INFORMATION:
Background
On October 31, 2000, the Department received timely requests from
Beijing Concord Auto Technology Inc. (``Concord''), Qingdao Meita
Automotive Industry Co., Ltd. (``Meita''), and Shandong Laizhou Huanri
Group General Co. (``Huanri General'') for a new shipper review of this
antidumping duty order in accordance with 19 CFR 351.214(c). In their
requests for a new shipper review and in accordance with 19 CFR
351.214(b)(2)(i) and (iii)(A), Concord, Huanri General, and Meita each
certified that it did not export the subject merchandise to the United
States during the period covered by the original less-than-fair-value
(``LTFV'') investigation and that it is not affiliated with any company
which exported the subject merchandise to the United States during the
period of investigation (``POI''). Concord, Huanri General, and Meita
also certified that their export activities are not controlled by the
central government of the People's Republic of China (``PRC'').
Pursuant to 19 CFR 351.214(b)(2)(iv), Concord, Huanri General, and
Meita submitted documentation establishing the date on which the
merchandise was first entered for consumption in the United States, the
volume of that first shipment, and the date of the first sale to an
unaffiliated customer in the United States.
The Department initiated a new shipper review covering Concord,
Huanri General, and Meita on November 20, 2000. See Brake Rotors from
the People's Republic of China: Initiation of New Shipper Antidumping
Duty Review, 65 FR 70695 (November 27, 2000).
On November 28, 2000, we issued a questionnaire to each PRC company
listed in the brake rotor initiation notice. On December 5, 2000, the
Department provided the parties an opportunity to submit publicly
available information for consideration in these preliminary results.
On December 28, 2000, Concord, Huanri General, and Meita requested an
extension of time until January 19, 2001, to file their responses to
the antidumping duty questionnaire, which the Department subsequently
granted on December 29, 2000. On January 9, 2001, the petitioner \1\
requested an extension of time until February 20, 2001, to submit
publicly available information for consideration in the preliminary
results, which the Department subsequently granted to all parties on
January 16, 2001.
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\1\ The petitioner is the Coalition for the Preservation of
American Brake Drum and Rotor Aftermarket Manufacturers.
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On January 25, 2001, the Department notified the respondents that
it intended to conduct a verification of their responses to the
antidumping duty questionnaire in this review and provided each
respondent with a sample verification outline for purposes of
familiarizing each company with the verification process. On January
19, 2001, each respondent submitted its questionnaire response.
Also on January 25, 2001, the Department issued supplemental
questionnaires to each respondent. On February 5, 2001, each respondent
requested an extension of time until February 23, 2001, to file its
response to the supplemental questionnaire, which the Department
subsequently granted on February 7, 2001. On February 23, 2001, each
respondent submitted its supplemental questionnaire response.
On February 20, 2001, the respondents and the petitioner submitted
publicly available information. On February 27, 2001, the respondents
and the petitioner provided rebuttal comments on the publicly available
information submitted by the other.
On March 2, 2001, the Department provided a verification outline to
each
[[Page 29081]]
respondent. Also on March 2, 2001, the petitioner provided comments on
the respondent's questionnaire responses for consideration by the
Department. From March 9 through March 28, 2001, the Department
conducted its verification of the information submitted by each
respondent, in accordance with 19 CFR 351.307.
On April 24 and 27, 2001, the Department issued its verification
reports. We provided parties with an opportunity to submit comments on
our verification findings for consideration in these preliminary
results (see April 25, 2001, Memorandum from Brian C. Smith, Team
Leader, to the File and April 27, 2001, Memorandum from Brian E.
Ledgerwood, Financial Analyst, to the File). On May 2 and 4, 2001, the
parties submitted their comments on the Department's verification
findings. On May 7, 2001, the petitioner submitted rebuttal comments.
Scope of the Order
The products covered by this order are brake rotors made of gray
cast iron, whether finished, semifinished, or unfinished, ranging in
diameter from 8 to 16 inches (20.32 to 40.64 centimeters) and in weight
from 8 to 45 pounds (3.63 to 20.41 kilograms). The size parameters
(weight and dimension) of the brake rotors limit their use to the
following types of motor vehicles: automobiles, all-terrain vehicles,
vans and recreational vehicles under ``one ton and a half,'' and light
trucks designated as ``one ton and a half.''
Finished brake rotors are those that are ready for sale and
installation without any further operations. Semi-finished rotors are
those on which the surface is not entirely smooth, and have undergone
some drilling. Unfinished rotors are those which have undergone some
grinding or turning.
These brake rotors are for motor vehicles, and do not contain in
the casting a logo of an original equipment manufacturer (``OEM'')
which produces vehicles sold in the United States (e.g., General
Motors, Ford, Chrysler, Honda, Toyota, Volvo). Brake rotors covered in
this order are not certified by OEM producers of vehicles sold in the
United States. The scope also includes composite brake rotors that are
made of gray cast iron, which contain a steel plate, but otherwise meet
the above criteria. Excluded from the scope of this order are brake
rotors made of gray cast iron, whether finished, semifinished, or
unfinished, with a diameter less than 8 inches or greater than 16
inches (less than 20.32 centimeters or greater than 40.64 centimeters)
and a weight less than 8 pounds or greater than 45 pounds (less than
3.63 kilograms or greater than 20.41 kilograms).
Brake rotors are currently classifiable under subheading
8708.39.5010 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 scope of this
order is dispositive.
Period of Review
The period of review (``POR'') covers April 1, 2000, through
September 30, 2000.
Verification
As provided in section 782(i)(2) of the Act, we verified
information provided by each respondent. We used standard verification
procedures, including on-site inspection of the manufacturer's
facilities and examination of relevant sales and financial records. Our
verification results are outlined in the verification report for each
company (see April 24, 2001, Verification Report for Huanri General and
Laizhou Huanri Automobile Parts Co., Ltd. (``Huanri Auto'') in the
Fifth Antidumping Duty New Shipper Review (``Huanri General
verification report''), April 24, 2001, Verification Report for Concord
and Yantai Mouping Hongli Machinery Factory (``Hongli'') in the Fifth
Antidumping Duty New Shipper Review (``Concord verification report''),
and the April 27, 2001, Verification Report for Qingdao Meita
Automotive Industry Co., Ltd. in the Fifth Antidumping Duty New Shipper
Review (``Meita verification report'') for further discussion).
Partial Rescission of New Shipper Review
We are preliminarily rescinding, in part, the fifth new shipper
review with respect to Concord because it failed to demonstrate at
verification that it was entitled to a separate rate (see ``Separate
Rates'' section below for further discussion).
Separate Rates
In proceedings involving non-market-economy (``NME'') countries,
the Department begins with a rebuttable presumption that all companies
within the country are subject to government control and thus should be
assessed a single antidumping duty deposit rate (i.e., a PRC-wide
rate).
One respondent, Meita, is wholly foreign-owned. Thus, for Meita, a
separate-rates analysis is not necessary to determine whether it is
independent from government control (see Notice of Final Determination
of Sales at Less Than Fair Value: Creatine Monohydrate from the
People's Republic of China, 64 FR 71104, 71105 (December 20, 1999).
With respect to the petitioner's May 4, 2001, contention that Meita
should be denied a separate rate because it failed to provide its
fiscal year (``FY'') 2000 financial statements, no separate-rates
analysis is necessary for Meita since it is wholly foreign-owned. As
for Meita's inability to provide its FY 2000 financial statements, the
Department's verification findings note that Meita was unable to
provide these documents at verification because it had not prepared it
as of the date of the verification. Reliance on its accounting records
and source documentation (including bank statements) provided the
Department with the necessary documentation to determine the accuracy
of the data Meita submitted in its questionnaire response. Moreover,
the Department does not consider a company not having a financial
statement at verification (especially if the company's auditing period
follows the Department's verification) to constitute grounds for
automatic failure or evidence that its accounting records are
unreliable. The Department cannot require the respondent to furnish
financial documents that have not been created in the normal course of
business as of the date of verification. Therefore, we find the
petitioner's argument is without merit.
Huanri General claims that it is collectively owned by local
villagers and Concord claims that it is owned by private PRC
individuals. Thus, for these two companies, a separate-rates analysis
is necessary to determine whether this exporter is independent from
government control (see Notice of Final Determination of Sales at Less
Than Fair Value: Bicycles From the People's Republic of China
(``Bicycles'') 61 FR 56570 (April 30, 1996)).
To establish whether a firm is sufficiently independent in its
export activities from government control to be entitled to a separate
rate, the Department utilizes a test arising from the Final
Determination of Sales at Less Than Fair Value: Sparklers from the
People's Republic of China, 56 FR 20588 (May 6, 1991) (``Sparklers''),
and amplified in the Final Determination of Sales at Less Than Fair
Value: Silicon Carbide from the People's Republic of China, 59 FR 22585
(May 2, 1994) (``Silicon Carbide''). Under the separate-rates criteria,
the Department assigns separate rates in NME cases only if the
respondent can demonstrate the absence of both de jure and de facto
governmental control over export activities.
[[Page 29082]]
1. De Jure Control
Huanri General has placed on the administrative record documents to
demonstrate absence of de jure control, including the ``Law of the
People's Republic of China on Industrial Enterprises Owned by the Whole
People,'' adopted on April 13, 1988 (``the Industrial Enterprises
Law''); ``The Enterprise Legal Person Registration Administrative
Regulations,'' promulgated on June 13, 1988; the 1990 ``Regulation
Governing Rural Collectively-Owned Enterprises of PRC;'' the 1992
``Regulations for Transformation of Operational Mechanisms of State-
Owned Industrial Enterprises;'' (``Business Operation Provisions'');
and the 1994 ``Foreign Trade Law of the People's Republic of China.''
As in prior cases, we have analyzed these laws and have found them
to establish sufficiently an absence of de jure control of companies
``owned by the whole people,'' privately owned enterprises, joint
ventures, stock companies including limited liability companies, and
collectively owned enterprises. See, e.g., Final Determination of Sales
at Less than Fair Value: Furfuryl Alcohol from the People's Republic of
China (``Furfuryl Alcohol'') 60 FR 22544 (May 8, 1995), and Preliminary
Determination of Sales at Less Than Fair Value: Certain Partial-
Extension Steel Drawer Slides with Rollers from the People's Republic
of China, 60 FR 29571 (June 5, 1995).
In its May 2, 2001, submission, the petitioner included an August
28, 2000, article from the International Herald Tribune and an April 2,
2000, article from AP Worldstream, claiming that excerpts from these
articles constituted evidence that the village committee members, who
set up Huanri General, are chosen by the local PRC Communist Party
branch or officials at the PRC town government level. After examining
the information provided by the petitioner in the context of the laws
we have examined in previous NME proceedings, we do not have a
sufficient basis in this proceeding to conclude that the information
provided by the petitioner constitutes grounds for conclusively
determining that collectively owned companies (such as Huanri General)
are controlled de jure by the PRC government because the information
noted above does not directly relate to the company under review.
2. De Facto Control
As stated in previous cases, there is some evidence that certain
enactments of the PRC central government have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC. See
Silicon Carbide and Furfuryl Alcohol. Therefore, the Department has
determined that an analysis of de facto control is critical in
determining whether the respondents are, in fact, subject to a degree
of governmental control which would preclude the Department from
assigning separate rates.
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) Whether the export prices are set by, or
subject to the approval of, a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding the disposition of profits or
financing of losses (see Silicon Carbide and Furfuryl Alcohol).
Concord and Huanri General each asserted the following: (1) It
establishes its own export prices; (2) it negotiates contracts without
guidance from any governmental entities or organizations; (3) it makes
its own personnel decisions; and (4) it retains the proceeds of its
export sales, uses profits according to its business needs, and has the
authority to sell its assets and to obtain loans.
With respect to Concord, as detailed in the Department's April 24,
2001, verification report at page three, Concord was unable to provide
for the Department's review its bank statements for the POR. As a
result, the Department was unable to determine the extent of Concord's
deposit and withdrawal activity from its bank accounts or link the bank
deposit and withdrawal receipts it did examine to entries reflected in
the company's statements furnished by its banks.
As stated above, one of the Department's de facto criteria for
determining whether an exporter is entitled to a separate rate is that
the exporter must demonstrate that it retains the proceeds of its
export sales and makes independent decisions regarding the disposition
of profits or financing of losses. In its May 4, 2001, submission, the
respondent maintains that the Department was able to establish through
an examination of source documentation (i.e., bank receipts, voucher
booklets, invoices, etc.) at verification that Concord controlled the
disposition of its sales proceeds and that, therefore, it had
demonstrated a de facto absence of government control with respect to
its export activities. However, contrary to the respondent's assertion,
absent review of the company's bank statements for the POR, the
Department was unable to ascertain whether Concord retained all of its
proceeds from the sale of subject merchandise and made independent
decisions regarding the disposition of profits or financing of losses.
Specifically, without the bank statements, the Department could not
confirm that all of Concord's secondary documentation (i.e., bank
receipts) was provided at verification and therefore could not confirm
that the company met the above-mentioned de facto criterion. The
Department could rely only on the bank receipts furnished by the
company at verification to check whether the company retained its
proceeds, rather than trace the amounts of those receipts to its bank
accounts. Relying only on bank receipts without a reliable reference
document with which to reconcile them is insufficient for purposes of
testing the disposition of the company's proceeds. In this instance,
because we were unable to reconcile Concord's bank receipts with an
independent reference document such as a bank statement, we determined
that the bank receipts were insufficient for the purposes of examining
whether Concord controlled the disposition of its profits. Therefore,
absent examination of a primary reference document (e.g., the bank
statement), the Department was unable to adequately verify Concord's
claim.
As a result of not being able to provide critical documentation at
verification for demonstrating an absence of de facto government
control based on the separate-rates criteria outlined above, the
Department preliminarily finds that Concord has not adequately
demonstrated that it is not part of the NME entity. Therefore, we find
that Concord is not entitled to a separate rate. As part of the NME
entity, Concord is not entitled to a rate as a new shipper because the
NME entity as a whole was subject to the LTFV investigation. For these
reasons, we are preliminarily rescinding the new shipper review with
respect to Concord.
As for Huanri General, the Department preliminarily finds that
Huanri General has demonstrated a de facto absence of government
control and is entitled to a separate rate for the several reasons. As
detailed in the verification report and supported by documentation
examined at verification,
[[Page 29083]]
Huanri General was set up by the Panjacun village committee through
capital voluntarily provided by all of the inhabitants of Panjacun
village. At verification, the Department further clarified that the
members of the village committee were elected to the committee by the
villagers who also provided the capital to set up Huanri General (see
pages 5 and 7 of the Huanri General verification report). Data on the
record establishes that the villagers are the long-term investors/
shareholders in Huanri General and that the villagers determine via
election the individuals who serve on the village committee. Further,
the villagers have entrusted the village committee to decide how and
when Huanri General's profits are to be distributed. In this case, the
villagers have in fact elected a group within the same village (i.e.,
the village committee) to handle the business decisions and operation
strategy of the company which is wholly owned by all the villagers,
some of whom are also elected members of the village committee. Based
on these facts, we conclude that the central government does not
control Huanri General's export activities.
The petitioner contends in its May 2, 2001, submission that the
village committee is a PRC government entity which has a financial
relationship with the town government and that this link constitutes
government control of Huanri General's operations. We have ruled in
previous NME cases that companies which are either owned by local or
provincial government entities or the managers of which are appointed
by the provincial, not the central, government can also receive a
separate rate if they sufficiently demonstrate that they are entitled
to one based on the criteria set forth in Sparklers and amplified in
Silicon Carbide and Furfuryl Alcohol. For example, in one NME case, the
Department found that although, the local government owned an exporting
company, that company elected its own management and was responsible
for all decisions such as determining export prices, allocation and
retention of profits on export sales, and negotiating export sales
contracts (see Chrome-Plated Lug Nuts from the People's Republic of
China: Preliminary Results of Antidumping Duty Administrative Review,
60 FR 42504, 42505 (August 16, 1995) (``Lug Nuts'')). The Department
also found in another NME case that, although the provincial government
appointed the management of a company, that company was entitled to a
separate rate because it was able to demonstrate that it solely
performed the de facto activities noted above and there was no evidence
of significant government involvement in that company's business
operations (see Pure Magnesium from the People's Republic of China:
Final Results of Antidumping Duty New Shipper Administrative Review, 63
FR 3085, 3086 (January 21, 1998) (``Pure Magnesium'').
With respect to Huanri General, the data on the record demonstrates
that, unlike the situations which existed in Lug Nuts and Pure
Magnesium, we have no evidence that this company is owned by the town
government or that its management is appointed by the town government.
Rather, this company is ultimately owned by the villagers of Panjacun
village. Moreover, the president of the company (who is also the
company's legal representative on the company's business license and
was elected by the villagers as the chairman of the village committee)
appoints the managers. Consistent with the facts in Pure Magnesium and
Lug Nuts, Huanri General in this case has also demonstrated that it is
responsible for all decisions such as determining export prices,
allocation and retention of profits on export sales, and negotiating
export sales contracts. Although the village committee actually decides
how the company's profits are to be distributed, we do not find that
the village committee constitutes a form of central or provincial
government control over the company, especially since all of the
village committee members are investors in the company.
We also are not convinced by the petitioner's argument that the
village committee's dealings with the town government constitute
evidence that the town government controls both the village committee's
and Huanri General's operations. Based on our examination of the
village committee's financial records at verification, we found that
the village committee is an entity which simply pays infrastructure
taxes to the town government and to which the town government owes
money (see page 6 of the Huanri General verification report). Thus, in
this case, the town government is a debtor to the village committee.
These activities are no different than those of any company paying its
taxes and operating a business without government interference in the
PRC. Moreover, the information provided by Huanri General in its
response and amplified and/or clarified at verification supports a
preliminary finding that there is de facto absence of governmental
control of the export functions of Huanri General. See Pure Magnesium
from the People's Republic of China: Preliminary Results of Antidumping
Duty New Shipper Administrative Review, 62 FR 55215 (October 23, 1997).
Consequently, we have preliminarily determined that Huanri General has
met the criteria for the application of separate rates.
Fair Value Comparisons
To determine whether sales of the subject merchandise by Huanri
General and Meita to the United States were made at LTFV, we compared
the export price to the normal value, as described in the ``Export
Price'' and ``Normal Value'' sections of this notice, below.
Export Price
We used export price methodology in accordance with section 772(a)
of the Act because the subject merchandise was sold by the exporter
directly to an unaffiliated customer in the United States prior to
importation and constructed export price was not otherwise indicated.
For both respondents, we calculated export price based on packed,
FOB foreign port prices to the first unaffiliated purchaser in the
United States. Where appropriate, we made deductions from the starting
price (gross unit price) for foreign inland freight and foreign
brokerage and handling charges in the PRC, in accordance with section
772(c) of the Act. Because foreign inland freight and foreign brokerage
and handling fees were provided by PRC service providers or paid for in
renminbi, we based those charges on surrogate rates from India (see
``Surrogate Country'' section below for further discussion of our
surrogate-country selection). To value foreign inland trucking charges,
we used a November 1999 average truck freight value based on price
quotes from Indian trucking companies. We used this rate most recently
in the fourth new shipper review of brake rotors from the PRC (see
Brake Rotors from the People's Republic of China: Final Results and
Partial Rescission of Fourth New Shipper Review and Rescission of Third
Antidumping Duty Administrative Review, 66 FR 27063 (May 16, 2001)
(which cites to Brake Rotors from the People's Republic of China:
Preliminary Results and Partial Rescission of the Fourth New Shipper
Review and Rescission of the Third Antidumping Duty Administrative
Review, 66 FR 1303, 1308 (January 8, 2001)) (``Brake Rotors Fourth New
Shipper Review'')). To value foreign brokerage and handling expenses,
we relied on public information reported in the 1997-1998 antidumping
duty new shipper review of stainless steel wire rod from India (see
also Brake Rotors Fourth New
[[Page 29084]]
Shipper Review). Based on our verification findings, we revised the
reported distance from Huanri General's supplier factory, Huanri Auto,
to the port of exportation (see page 16 of the Huanri General
verification report).
Normal Value
A. Non-Market-Economy Status
In every case conducted by the Department involving the PRC, the
PRC has been treated as a NME country. Pursuant to section
771(18)(C)(i) of the Act, any determination that a foreign country is a
NME country shall remain in effect until revoked by the administering
authority (see Notice of Preliminary Results of Antidumping Duty
Administrative Review and New Shipper Reviews, Partial Rescission of
the Antidumping Duty Administrative Review, and Rescission of a New
Shipper Review: Freshwater Crawfish Tail Meat From the People's
Republic of China, 65 FR 60399, 60404 (October 11, 2000).) None of the
parties to this proceeding has contested such treatment. Accordingly,
we calculated normal value in accordance with section 773(c) of the
Act, which applies to NME countries.
B. Surrogate Country
Section 773(c)(4) of the Act requires the Department to value a NME
producer's factors of production, to the extent possible, in one or
more market-economy countries that (1) are at a level of economic
development comparable to that of the NME country, and (2) are
significant producers of comparable merchandise. India and Indonesia
are among the countries comparable to the PRC in terms of overall
economic development (see December 4, 2000, Memorandum from the Office
of Policy to Brian C. Smith, Team Leader). In addition, based on
publicly available information placed on the record, India is a
significant producer of the subject merchandise. Accordingly, we
considered India the primary surrogate country for purposes of valuing
the factors of production because it meets the Department's criteria
for surrogate-country selection. Where we could not find surrogate
values in India, we used values from Indonesia.
C. Factors of Production
In accordance with section 773(c) of the Act, we calculated normal
value based on the factors of production which included, but were not
limited to: (A) Hours of labor required; (B) quantities of raw
materials employed; (C) amounts of energy and other utilities consumed;
and (D) representative capital costs, including depreciation. We used
the factors reported by Huanri Auto and Meita which produced the brake
rotors exported to the United States by Huanri General and Meita,
respectively, during the POR. To calculate normal value, we multiplied
the reported unit factor quantities by publicly available Indian or
Indonesian values.
Based on our verification findings at Huanri General and Huanri
Auto, we found that Huanri Auto used an additional packing material
(i.e., tin clamps) to pack the subject merchandise for exportation and
used lugs and bearing cups for one of its brake rotor models. We
accounted for these items in our factors analysis. In addition, we
revised the following data in Huanri General's and Huanri Auto's
response: (1) The reported per-unit weight for one brake rotor model;
(2) the reported per-unit factor amounts for all material, energy, and
labor inputs based on revisions to the total POR production quantity
figure \2\ for brake rotors and per-unit weights of certain brake rotor
models; (3) the per-unit factor amounts for steel strap for each brake
rotor model reported in the Section D response; and (4) the distances
from Huanri Auto to certain of its suppliers (see pages 18, 19, 22
through 25 of the Huanri General verification report and May 21, 2001,
Memorandum from Case Analyst to the File).
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\2\ In order to derive the per-unit consumption amount for each
factor of production as reported in the Section D response, the
respondent first derived a factor-specific allocation factor by
dividing the total POR factor consumption over the total POR
production weight. The respondent then multiplied the factor-
specific allocation factor by the per-unit weight of each brake
rotor model to arrive at the per-unit consumption amount for each
factor on a brake rotor model-specific basis.
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Based on our verification findings at Meita, we found that the
factory used an additional packing material (i.e., clamps) to pack the
subject merchandise for exportation which we accounted for in our
factors analysis. We also revised the following data reported in
Meita's response: (1) The per-unit factor amounts for steel strap for
each brake rotor model; (2) the reported per-unit factor amounts for
all four labor inputs; and (3) the distances from Meita to certain of
its suppliers (see verification exhibit 0 and pages 18 and 20 of the
Meita verification report and May 21, 2001, Memorandum from Case
Analyst to the File).
In its May 2, 2001, comments, the petitioner claims that the extent
and magnitude of the Department's corrections to Huanri General's data
based on verification (1) constitute major corrections; (2) represent
an attempt by Huanri General to reconstruct its response; (3) undermine
the integrity of the company's overall response; and (4) constitute
grounds for resorting to adverse facts available in this situation.
After considering the totality of the corrections identified above for
Huanri General and the circumstances under which those errors were
made, we find that the (1) above-mentioned errors were inadvertent and
common in nature; and (2) the corrections had no meaningful impact on
our calculation of normal value for Huanri General.
We selected surrogate values for this review based on the quality,
specificity, and contemporaneity of the data. As appropriate, we
adjusted input prices to make them delivered prices. For those values
not contemporaneous with the POR and quoted in a foreign currency, we
adjusted for inflation using wholesale price indices published in the
International Monetary Fund's International Financial Statistics.
To value pig iron, steel and iron scrap, ferrosilicon, and
ferromanganese, limestone, and lubrication oil, we used April 1998-
March 1999 average import values from the Indian government publication
Monthly Statistics of the Foreign Trade of India (``Monthly
Statistics'').
One of the brake rotor models which Huanri Auto made during the POR
used lug bolts and ball bearing cups (see discussion above). Because we
could not obtain a product-specific price from India to value lug
bolts, we used a January-March 1999 product-specific import value from
the Indonesian government publication Foreign Trade Statistical
Bulletin (see Bicycles, 61 FR at 19040 (Comment 17)). To value ball
bearing cups, we used an April 1998-December 1998 average import value
from Monthly Statistics.
To value coking coal, we used an April 1998-August 1998 average
import price from Monthly Statistics. We also added an amount for
loading and additional transportation charges associated with
delivering coal to the factory based on June 1999 Indian price data
contained in the periodical Business Line. For firewood, we used an
April 1997-March 1998 average import value from Monthly Statistics
rather than a 1991 domestic value from the Food and Agricultural
Organization of the United Nations' working paper Wood Materials from
Non-Forest Areas (which we used in Brake Rotors Fourth New Shipper
Review) because Monthly Statistics provided a more contemporaneous
value for firewood. To value electricity, we used data from the Indian
publications 1995 Conference of
[[Page 29085]]
Indian Industries: Handbook of Statistics and The Center for Monitoring
Indian Economy and the methodology used in two recent NME cases. (See
Persulfates from the People's Republic of China: Final Results of
Antidumping Duty Administrative Review and Partial Rescission of
Administrative Review, 65 FR 46691, 46692 (July 31, 2000); Manganese
Metal from the People's Republic of China: Final Results of Antidumping
Duty Administrative Review, 65 FR 30067, 30068 (May 10, 2000); and
Preliminary Results Valuation Memorandum for further discussion.)
We valued labor based on a regression-based wage rate, in
accordance with 19 CFR 351.408(c)(3).
To value selling, general, and administrative (``SG&A'') expenses,
factory overhead, and profit, we used the 1998 financial data of
Jayaswals Neco Limited and the 1998-1999 financial data of Kalyani
Brakes Limited and Rico Auto Industries Limited.
Where appropriate, we removed from the surrogate overhead and SG&A
calculations the excise duty amount listed in the financial reports
(see Brake Rotors Investigation, 62 FR 9164). We made certain
adjustments to the ratios calculated as a result of reclassifying
certain expenses contained in the financial reports. In utilizing the
financial data of the Indian companies, we treated the line item
labeled ``stores and spares consumed'' as part of factory overhead
because stores and spares are not direct materials consumed in the
production process. Based on publicly available information, we
considered molding materials (i.e., sand, bentonite, coal powder, steel
pellets, lead powder, and waste oil) to be indirect materials included
in the ``stores and spares consumed'' category of the financial
statements. We based our factory overhead calculation on the cost of
manufacturing. We also included interest and/or financial expenses in
the SG&A calculation. In addition, we only reduced interest and
financial expenses by amounts for interest income if the Indian
financial report noted that the income was short-term in nature. Where
a company did not distinguish interest income as a line item within
total ``other income,'' we used the ratio of interest income to total
other income as reported for the Indian metals industry in the Reserve
Bank of India Bulletin to calculate the interest income amount. For
example, if an Indian company's financial statement indicated that the
company had miscellaneous receipts or other income under the general
category ``other income,'' we applied a ratio (based on data contained
in Reserve Bank of India Bulletin) to the figure for miscellaneous
receipts or other income in the financial statement to determine the
amount associated with short-term interest income. To avoid double-
counting, we treated the line item ``packing, freight, and delivery
charges'' as expenses to be valued separately. Specifically, to
determine the packing expense, we used Huanri General's and Meita's
reported packing material factors. For a further discussion of other
adjustments made, see the Preliminary Results Valuation Memorandum.
All inputs were shipped by truck. Therefore, to value PRC inland
freight, we used a November 1999 average truck freight value based on
price quotes from Indian trucking companies.
In accordance with the decision of the Court of Appeals for the
Federal Circuit in Sigma Corp. v. United States, 117 F.3d 1401 (1997),
we revised our methodology for calculating source-to-factory surrogate
freight for those material inputs that are valued based on CIF import
values in the surrogate country. Therefore, on an input-specific basis,
we have added to CIF surrogate values from India a surrogate freight
cost using the shorter of the reported distances from (1) the closest
PRC port of importation to the factory or (2) the domestic supplier to
the factory.
To value corrugated cartons, plastic bags and sheet, nails, tape,
and steel strap, we used April 1998-March 1999 average import values
from Monthly Statistics. Because we could not obtain a non-aberrational
and/or current price from India to value pallet wood, we used a 1998
import value from the Indonesian government publication Foreign Trade
Statistical Bulletin. (See Brake Rotors Fourth New Shipper Review,
which cites to Issues and Decision Memorandum from Richard W. Moreland,
Deputy Assistant Secretary for Import Administration, to Bernard T.
Carreau, fulfilling the duties of Assistant Secretary for Import
Administration, dated May 8, 2001 (Comment 3).) We did not use the
pallet wood values obtained after March 1996 from Monthly Statistics
because they appeared aberrational relative to the overall value of the
subject merchandise.
At verification, the respondents informed us that they also use tin
clamps to fasten the steel straps around the brake rotors (see
discussion above, page 22 of the Huanri General verification report,
and page 18 of the Meita verification report). Therefore, to value tin
clamps, we used an April 1998-February 1999 average import value from
Monthly Statistics.
Preliminary Results of the Review
We preliminarily determine that the following margins exist for
Huanri General and Meita during the period April 1, 2000, through
September 30, 2000:
------------------------------------------------------------------------
Manufactuer/producer/exporter Margin percent
------------------------------------------------------------------------
Shandong Laizhou Huanri Group General Co................ 0.00
Qingado Meita Automotive Industry Co., Ltd.............. 0.00
------------------------------------------------------------------------
We will disclose the calculations used in our analysis to parties
to this proceeding within five days of the date of publication of this
notice.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, Room B-099, within 30 days of the
date of publication of this notice. Requests should contain: (1) The
party's name, address, and telephone number; (2) the number of
participants; and (3) a list of issues to be discussed. See 19 CFR
351.310(c). Any hearing, if requested, will be held approximately 44
days after the publication of this notice. Parties should confirm by
telephone the time, date, and place of the hearing 48 hours before the
scheduled time.
Issues raised in the hearing will be limited to those raised in
case briefs and rebuttal briefs. Case briefs from interested parties
may be submitted not later than 30 days after the date of publication
of this notice. Rebuttal briefs, limited to issues raised in the case
briefs, will be due not later than 37 days after the date of
publication of this notice. Parties who submit case briefs or rebuttal
briefs in this proceeding are requested to submit with each argument
(1) a statement of the issue and (2) a brief summary of the argument.
Parties are also encouraged to provide a summary of the arguments not
to exceed five pages and a table of statutes, regulations, and cases
cited.
The Department will issue the final results of this new shipper
review, including the results of its analysis of issues raised in any
such written briefs or at the hearing, if held, not later than 90 days
after the date of issuance of this notice.
Assessment Rates
The Department shall determine, and Customs shall assess,
antidumping duties on all appropriate entries. Pursuant to 19 CFR
351.212(b)(1), we will calculate importer-specific ad valorem duty
assessment rates based on
[[Page 29086]]
the ratio of the total amount of the dumping margins calculated for the
examined sales to the total entered value of those same sales. In order
to estimate the entered value, we will subtract applicable movement
expenses from the gross sales value. In accordance with 19 CFR
351.106(c)(2), we will instruct Customs to liquidate without regard to
antidumping duties all entries of subject merchandise during the POR
from Huanri General and Meita for which the importer-specific
assessment rate is zero or de minimis (i.e., less than 0.50 percent).
For entries subject to the PRC-wide rate, Customs shall assess ad
valorem duties at the rate established in the LTFV investigation. The
Department will issue appropriate appraisement instructions directly to
Customs upon completion of this review.
Cash Deposit Requirements
Upon completion of this new shipper review, for entries from Huanri
General and Meita, we will require cash deposits at the rates
established in the final results pursuant to 19 CFR 351.214(e) and as
further described below.
The following deposit requirements will be effective upon
publication of the final results of this new shipper antidumping duty
administrative review for all shipments of brake rotors from the PRC
entered, or withdrawn from warehouse, for consumption on or after the
publication date, as provided by section 751(a)(1) of the Act: (1) The
cash deposit rates for Huanri General and Meita will be the rates
established in the final results; (2) the cash deposit rate for PRC
exporters who received a separate rate in a prior segment of the
proceeding will continue to be the rate assigned in that segment of the
proceeding; (3) the cash deposit rate for the PRC NME entity (including
Concord) will continue to be 43.32 percent; and (4) the cash deposit
rate for non-PRC exporters of subject merchandise from the PRC will be
the rate applicable to the PRC supplier of that exporter. These
requirements, when imposed, shall remain in effect until publication of
the final results of the next administrative review.
Notification to Importers
This notice serves as a preliminary reminder to importers of their
responsibility under 19 CFR 351.402(f)(2) 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 new shipper administrative review and notice are in accordance
with section 751(a)(1) and (2)(B) of the Act (19 U.S.C. 1675(a)(1) and
(2)(B)) and 19 CFR 351.214.
Dated: May 21, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-13406 Filed 5-25-01; 8:45 am]
BILLING CODE 3510-DS-P