Replacement Parts for Self-Propelled Bituminous Paving Equipment From Canada; Final Results of Antidumping Duty Administrative Review Publication: Federal Register Agency: International Trade Administration Byline: Susan G. Esserman Date: 14 April 1995 Subject: American Government • Roads & Highways

[Federal Register Volume 60, Number 72 (Friday, April 14, 1995)]
[Notices]
[Pages 19019-19021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9274]



[[Page 19019]]

DEPARTMENT OF COMMERCE

[A-122-057]


Replacement Parts for Self-Propelled Bituminous Paving Equipment 
From Canada; 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 November 21, 1994, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
review of the antidumping duty order on replacement parts for self-
propelled bituminous paving equipment from Canada (59 FR 59993). The 
review period is September 1, 1990 through August 31, 1991. This review 
involves one manufacturer/exporter of this merchandise, the Allatt 
Paving Division of Ingersoll-Rand Canada Inc. (Allatt). After 
considering the comments submitted by petitioner and respondent, we 
determine the dumping margin for this period to be 6.86 percent.

EFFECTIVE DATE: April 14, 1995.

FOR FURTHER INFORMATION CONTACT: Gayle Longest or Kelly Parkhill, 
Office of Countervailing Compliance, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 
Washington, DC 20230; telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On November 21, 1994, the Department published in the Federal 
Register the preliminary results of its administrative review of the 
antidumping duty order on replacement parts for self-propelled 
bituminous paving equipment from Canada (59 FR 59993) covering the 
period September 1, 1990 through August 31, 1991. This review involves 
one manufacturer/exporter of this merchandise, Allatt. The Department 
has now completed this administrative review in accordance with section 
751 of the Tariff Act of 1930, as amended (the Act).

Scope of the Review

    Imports covered by this review are shipments of replacement parts 
for self-propelled bituminous paving equipment, excluding attachments 
and parts for attachments. This merchandise is currently classifiable 
under Harmonized Tariff Schedule (HTS) item numbers 4016.93.10, 
7315.11.00, 7315.89.50, 7315.90.00, 8336.50.00, 8479.99.00, 8481.20.00, 
8482.10.10, 8483.90.90, 8539.29.20, 8544.20.00, 8544.41.00, 8544.51.80, 
8544.60.20, and 9015.30.40. The HTS item numbers are provided for 
convenience and Customs purposes. The written description remains 
dispositive.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments from the petitioner, Blaw-
Knox, and from the Road Machinery Division of Ingersoll-Rand, which is 
the successor to the respondent.
    Comment 1: The petitioner claims that the Department improperly 
made adjustments to foreign market value (FMV) for pre-sale home market 
movement costs through a circumstance-of-sale adjustment and the 
exporter's sales price (ESP) offset. Petitioner maintains that these 
adjustments are prohibited by the decision of the Court of Appeals for 
the Federal Circuit (the Federal Circuit) in Ad Hoc Committee of AD-NM-
TX-FL Producers of Gray Portland Cement v. United States, 13 F.3d 398 
(Fed. Cir. 1994).
    Respondent maintains that Ingersoll-Rand did not claim pre-sale 
home market movement charges, and therefore that the issue is moot. 
(See Supplemental Questionnaire Response dated December 2, 1993, 
Section B-1 Format Sheets, p. 2).
    Department's Response: We agree with the respondent. No pre-sale 
home market movement charges were claimed and the Department did not 
make any adjustment to FMV for these expenses.
    Comment 2: The respondent argues that the Department incorrectly 
adjusted the United States price (USP) to account for certain home 
market taxes. The respondent maintains that the Department's current 
methodology is the result of the decision of the Court of International 
Trade (CIT) in Federal-Mogul Corp. v. United States, Slip Op. 93-194 
(CIT 1993) (Federal-Mogul), in which the court ordered the Department 
to adjust USP by the ad valorem tax rate at the same point in the chain 
of commerce at which the tax is imposed in the home market. Thus, the 
respondent claims that the first step of the Department's current tax 
methodology, as mandated in Federal-Mogul, is to increase USP by 
applying the home market tax rate to the price of U.S. sales at the 
point at which the product would be taxed in the home market. According 
to the respondent, the second step of the Department's tax methodology 
involves making an additional deduction to USP and FMV by multiplying 
each adjustment by the ad valorem tax rate. The respondent disagrees 
with the second step of the Department's methodology because it 
believes that the second round of adjustments does not conform with the 
requirement that the Department calculate accurate margins. 
Furthermore, even if these second step adjustments are warranted, the 
respondent maintains that the Department has not applied the stated 
methodology correctly.
    According to the respondent, the Department states in its 
preliminary results that the second step of the tax methodology is made 
to avoid creating dumping margins where they would not exist if no 
taxes were imposed, in accordance with Silicomanganese From Venezuela 
(59 FR 31205) and Zenith Electronics Corp. v. United States, 988F.2d 
1573 (Fed. Cir. 1993) (Zenith). The respondent argues that the 
Department has misinterpreted the holding of the Zenith opinion. The 
respondent claims that the Zenith decision does not require the 
Department to make specific adjustments to avoid margin creation 
resulting from the multiplier effect. Furthermore, the respondent 
argues that the Department's current tax methodology actually increases 
dumping margins, which is in conflict with the Department's duty to 
calculate accurate margins. Despite the CIT's decision upholding the 
Department's current tax methodology (see Independent Radionic Workers 
of America v. United States, 862 F. Supp. 422, 426 (CIT 1994); see also 
Torrington Co. v. United States, 866 F. Supp. 1434, 1436 (CIT 1994)), 
the respondent claims that the statute does not authorize the second 
step to the Department's tax methodology and that this methodology has 
not yet been reviewed by the Federal Circuit.
    In addition, the respondent argues that even if the Department's 
tax methodology is valid under the law, the Department did not 
correctly apply it in the preliminary results of this case. The 
respondent maintains that the second step tax adjustment is made to 
eliminate any residual tax that would have been included in the 
ultimate USP or FMV as a result of movement costs that were included in 
the tax base but were later deducted in deriving the ultimate 
comparison price. See Silicomanganese from Venezuela (59 FR 31205). The 
respondent claims that in the preliminary results the Department 
incorrectly made tax adjustments for all price adjustments, including 
other price adjustments that were not deductions.
    Specifically, the respondent argues that the Department made a tax 
[[Page 19020]] adjustment to both PP and ESP sales for the difference-
in-merchandise adjustment (difmer), which is incorrect because the 
difmer is an independent statutory adjustment made to FMV to account 
for differences in physical characteristics when a product sold in the 
United States does not have an exact match with a product sold in the 
home market. See 19 U.S.C. Sec. 1677b(a)(4)(C); 19 CFR 353.57. 
According to the respondent, because the difmer is not an adjustment 
for differences in circumstances of sale, pursuant to 19 U.S.C. 
Sec. 1677(a)(4)(B), it should not affect the tax added to USP or FMV. 
The respondent claims that the Department's tax adjustment for the 
difmer is in conflict with the directive established in Daewoo 
Electronics Co., Ltd. v. United States, 760 F. Supp. 200 (CIT 1991) 
(Daewoo), in which it is stated that tax adjustments are appropriate 
only to account for differences in the circumstances of sale. Thus, the 
respondent claims, by making this inappropriate adjustment to the 
difmer, the Department has increased the FMV unnecessarily, and thereby 
increased any dumping margins in comparisons where the difmer was a 
positive number.
    Furthermore, the respondent does not agree with tax adjustments 
that the Department made to FMV corresponding to adjustments that were 
added to derive FMV. The respondent claims that tax adjustments made 
for additions to FMV are in conflict with the Department's stated 
policy of making tax adjustments only for costs which are deducted from 
the USP on which the tax was calculated. Moreover, the respondent 
argues that after the Department makes its tax adjustments 
corresponding to deductions, USP and FMV no longer contain any residual 
tax resulting from costs that were a part of the original tax base. 
However, when the Department makes tax adjustments for costs that it 
adds to FMV, these costs result in creating margins that the initial 
adjustments were supposed to prevent. Thus, the respondent maintains, 
the Department should only make adjustments for costs that are deducted 
from the original tax base.
    Department's Position: The tax methodology used in this 
administrative review is the Department's current administrative 
practice. See Federal-Mogul. In Federal-Mogul, the CIT rejected our 
revised implementation of the Act's instructions on taxes and 
prohibited us from applying a purely tax-neutral margin calculation 
methodology. Accordingly, the Department changed its practice, as 
instructed by the CIT, and adjusted USP for home market tax by 
multiplying the home market tax rate by the USP at the point in the 
chain of commerce of the U.S. merchandise that is analogous to the 
point in the home market chain of commerce at which the foreign 
government applies the home market consumption tax, and have added the 
result to USP. In accordance with our tax methodology, we have also 
deducted from the USP and FMV those portions of the respective home 
market tax and the USP tax adjustments attributable to expenses 
included in the foreign market and U.S. bases of the tax if those 
expenses are later deducted to calculate FMV and USP. Specifically, we 
are deducting the difference between home market selling expenses and 
U.S. selling expenses, whether they are added to or deducted from FMV. 
Furthermore, all adjustments to U.S. price are required to be 
multiplied by the tax rate, including the difmer. These adjustments to 
the foreign market tax and the U.S. price tax adjustment are necessary 
to prevent the methodology for calculating the U.S. price tax 
adjustment from creating antidumping duty margins where no margins 
would exist if no taxes were levied upon foreign market sales.
    The adjustment to avoid the margin creation effect is in accordance 
with the Federal Circuit's holding that the application of the USP tax 
adjustment under section 772(d)(1)(C) of the Tariff Act should not 
create a dumping margin if pre-tax FMV does not exceed USP. See Zenith. 
In addition, the Federal Circuit specifically has held that an 
adjustment should be made to mitigate the impact of expenses that are 
deducted from FMV and USP upon the USP tax adjustment and the amount of 
tax included in FMV. See Daewoo. However, the mechanics of the 
Department's adjustments to the U.S. and foreign market tax amounts as 
described above are not identical to those suggested in Daewoo. With 
regard to the respondent's concern that this methodology expands the 
margins, the Federal Circuit in Zenith held that ``[b]y engaging in 
dumping, the exporters themselves are responsible for the multiplier 
effect. The multiplier effect does not create a dumping margin where 
one does not already exist.'' See Zenith at 1581-82. For the foregoing 
reasons, we have not amended our treatment of U.S. and home market 
taxes for these final results.
    Comment 3: The respondent argues that in calculating the FMV for 
ESP sales, the program was incorrect in that the U.S. packing costs 
were multiplied by the absolute amount of tax rather than multiplied by 
the tax rate. In addition, the respondent claims that when the 
Department recalculated the U.S. credit expense for ESP and PP sales, 
the Department applied the credit rate to the unit price, without first 
subtracting discounts. Thus, the respondent maintains that corrections 
should be made to the FMV calculation for ESP sales and to the U.S. 
credit expenses.
    Department's Position: We agree with the respondent. We have 
corrected our calculations for these inadvertent errors.
    Comment 4: The respondent maintains that there were two different 
tax rates in Canada during the review period: the FST, which was a 
value-added tax that was included in the price of the subject 
merchandise until December 31, 1990, and the GST, a goods and services 
tax levied after January 1, 1991, which is not included in the price 
charged to the customer. The respondent argues that in Federal-Mogul 
Corp. v. United States, Slip Op. 94-186, 8-9 (CIT, Dec. 7, 1994), the 
CIT determined that such home market taxes should only be applied to 
the part of the review period in which the tax was in effect. The 
respondent argues that to prevent the tax rate change from distorting 
the dumping margin, the Department should use the tax rate that would 
be applied to the U.S. sale in comparisons where the tax rates differ 
because the sale in one market occurred in 1990 and the sale in the 
other market occurred in 1991.
    Department's Position: We agree that the home market tax rate 
should be adjusted to account for the differences in tax rates during 
1990 and 1991; however, we disagree with respondent's proposal to use 
the tax rate that would be applied to the U.S. sale in comparisons 
where the tax rates differ. To account for the differences in the tax 
rates during the two periods, the Department instead derived a 
weighted-average tax rate for the period of review based on the volume 
of home market sales made during 1990 and 1991. In our calculations for 
these final results, we have used the home market weighted-average tax 
rate specific to the period of review for all comparisons of home 
market and U.S. sales.

Final Results of Review

    We determine the following dumping margin to exist for the period 
September 1, 1990 through August 31, 1991:

------------------------------------------------------------------------
                                                               Margin   
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
Allatt (Ingersoll-Rand)...................................          6.86
------------------------------------------------------------------------

    The Department will instruct the Customs Service to assess 
antidumping duties on all appropriate entries. 
[[Page 19021]] Individual differences between USP and FMV may vary from 
the percentages stated above. The Department will issue appraisement 
instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of these final results of administrative review for 
all shipments of the subject merchandise, entered, or withdrawn from 
warehouse, for consumption as provided by section 751(a)(1) of the 
Tariff Act: (1) The cash deposit rate for the reviewed company will be 
the rate as listed; (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) cash 
deposits for all other manufacturers or exporters will be 20.12 
percent. This is the ``new shipper'' rate established during the first 
final results published by the Department in the Federal Register on 
February 16, 1982 (47 FR 6681). We have determined that this rate is 
the appropriate rate, because we are unable to ascertain the ``all 
others'' rate from the Treasury less-than-fair-value investigation. 
These deposit requirements shall remain in effect until publication of 
the final results of the next administrative review.
    This notice also 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.
    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibilities 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 353.34(d). Failure to 
comply is a violation of the APO.
    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: April 7, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-9274 Filed 4-13-95; 8:45 am]
BILLING CODE 3510-DS-P