Heavy Forged Hand Tools From the People's Republic of China; Final Results and Partial Rescission of Antidumping Duty Administrative Review and Determination Not To Revoke in Part

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final results and partial rescission of antidumping duty administrative review and determination not to revoke in part.

SUMMARY:

On November 7, 2000, the Department of Commerce (the Department) published the preliminary results of the administrative reviews of the antidumping duty orders on heavy forged hand tools (HFHTs) from the People's Republic of China (PRC). The reviews cover five manufacturer/exporters with respect to the following classes or kinds of merchandise, Fujian Machinery & Equipment Import & Export Corporation (FMEC) (axes/adzes, bars/wedges, hammers/sledges, and picks/mattocks), Liaoning Machinery Import & Export Corporation (LMC) (bars/wedges), Shandong Machinery Import & Export Corporation (SMC) (axes/adzes, bars/wedges, hammers/sledges, and picks/mattocks), Shandong Huarong General Group Corporation (Huarong) (axes/adzes and bars/wedges) and Tianjin Machinery Import & Export Corporation (TMC) (axes/adzes, bars/wedges, hammers/sledges, and picks/mattocks). The period of review (POR) is February 1, 1999, through January 31, 2000. Based on our analysis of the comments received, we have made changes in the margin calculations. Therefore, the final results differ from the preliminary results. The final weighted-average dumping margins for the reviewed firms are listed below in the section entitled Final Results of Reviews.

EFFECTIVE DATE:

September 17, 2001.

FOR FURTHER INFORMATION CONTACT:

Jeff Pedersen or Esther Chen, Office of AD/CVD Enforcement, Office 4, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-4195 and (202) 482-2305, respectively.

SUPPLEMENTARY INFORMATION:

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).

Background

On November 7, 2000, the Department of Commerce (the Department) published the preliminary results of the administrative reviews of the antidumping duty orders on HFHTs from the PRC. See Notice of Preliminary Results and Preliminary Partial Rescission of Antidumping Duty Administrative Reviews and Notice of Intent Not To Revoke in Part of Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, From the People's Republic of China 65 FR 66691 (November 7, 2000) (Preliminary Results). We conducted verifications of LMC, SMC and Huarong after publication of the preliminary results. See Memorandum to the File from Jeff Pedersen re: Verification of Huarong (June 26, 2001); Memorandum to the File from Jeff Pedersen re: Verification of LMC (June 26, 2001); and Memorandum to the File from Jeff Pedersen re: Verification of SMC (June 26, 2001). Only after the verification reports were completed did we invite parties to comment on our preliminary results of review. Ames True Temper and its Woodings-Verona operations (petitioner) originally filed its case brief on July 16, 2001. Because the original case brief submitted by the petitioner contained new factual information, the petitioner filed an expurgated version of the brief on August 17, 2001. The petitioner filed its rebuttal brief on July 24, 2001. LMC, Huarong, SMC, and TMC (respondents) filed their case brief on July 18, 2001, and their rebuttal brief on August 3, 2001. No party requested a public hearing. Following the period for briefing, the Department placed on the record, and solicited comments on, proposed surrogate values for electricity and wooden pallets. The petitioner provided comments on August 22, 2001. The Department's analysis of the comments raised in these submissions are addressed in the Issues and Decision Memorandum from Bernard T. Carreau, Deputy Assistant Secretary, Import Administration, to Richard W. Moreland, Acting Assistant Secretary for Import Administration (Decision Memorandum), dated concurrently with this notice, which is hereby adopted by this notice.

The Department has conducted this administrative review in accordance with section 751 of the Act.

Scope of Review

Imports covered by these reviews are shipments of HFHTs from the PRC comprising the following classes or kinds of merchandise: (1) hammers and sledges with heads over 1.5 kg (3.33 pounds) (hammers/sledges); (2) bars over 18 inches in length, track tools and wedges (bars/wedges); (3) picks/mattocks; and (4) axes/adzes.

HFHTs include heads for drilling, hammers, sledges, axes, mauls, picks, and mattocks, which may or may not be painted, which may or may not be finished, or which may or may not be imported with handles; assorted bar products and track tools including wrecking bars, digging bars and tampers; and steel wood splitting wedges. HFHTs are manufactured through a hot forge operation in which steel is sheared to required length, heated to forging temperature, and formed to final shape on forging equipment using dies specific to the desired product shape and size. Depending on the product, finishing operations may include shot-blasting, grinding, polishing and painting, and the insertion of handles for handled products. HFHTs are currently classifiable under the following Harmonized Tariff Schedule (HTS) subheadings: 8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically excluded are hammers and sledges with heads 1.5 kg (3.33 pounds) in weight and under, hoes and rakes, and bars 18 inches in length and under.

Although the HTSUS subheading is provided for convenience and customs purposes our written description of the scope of the orders is dispositive.

Partial Rescission of Review

In our preliminary results, we determined that during the POR, (1) Huarong did not export hammers/sledges and picks/mattocks, and (2) LMC did not export axes/adzes, hammers/sledges and picks/mattocks. Our review of Customs import data indicated that there were no entries of subject merchandise made by these manufacturers/exporters during the POR. Therefore, we preliminarily rescinded the review of Huarong with respect to hammers/sledges and picks/mattocks, and LMC with respect to axes/adzes, hammers/sledges and picks/mattocks. We have determined that no changes to our decision to rescind are warranted for purposes of these final results. Therefore, we are rescinding those reviews with respect to these manufacturers/exporters and products.

Determination Not To Revoke TMC, Huarong and LMC

As discussed in the Preliminary Results, Huarong requested revocation with respect to the bars/wedges HFHTs orders, LMC requested revocation with respect to the bars/wedges HFHTs orders, and TMC requested revocation with respect to the hammers/sledges and picks/mattocks HFHTs orders. After consideration of the criteria outlined at section 351.222(b) of the Department's regulations, the Department's practice, the comments of the parties, and the evidence on the record, we have determined that these respondents have not met the requirements for revocation from these respective orders. Section 351.222(b)(2) of the Department's regulations notes that the Secretary may revoke an antidumping order in part if the Secretary concludes, inter alia, that one or more exporters or producers covered by the order have sold the merchandise at not less than normal value (“NV”) for a period of at least three consecutive years. With respect to Huarong and LMC, we note that in the instant review, both respondents failed verification with respect to the bars/wedges order and that both respondents have failed to establish their entitlement to a separate rate with respect to this class or kind of merchandise. As a result, both respondents' final results margins are based on adverse facts available and are above de minimis. Therefore, neither Huarong nor LMC have met the regulatory requirements for revocation. Further, with regard to TMC, the Department notes that TMC does not have three consecutive reviews with zero or de minimis margins for either of the requested classes or kinds of merchandise, See Heavy Forged Hand Tools From the People's Republic of China; Amended Final Results of Antidumping Duty Administrative Reviews, 65 FR 50499 (August 18, 2000); Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, Final Results and Partial Rescission of Antidumping Reviews 64 FR 43659 (August 11, 1999). Thus, we find that TMC, Huarong and LMC do not qualify for revocation from the respective orders based upon section 351.222(b) of the Department's regulations.

Facts Available

1. Application of Facts Available

Section 776(a)(2) of the Act provides that:

if an interested party or any other person (A) withholds information that has been requested by the administering authority or the Commission under this title; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782; (C) significantly impedes a proceeding under this title; or (D) provides such information but the information cannot be verified as provided in section 782(i), the administering authority and the Commission shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title.

Moreover, section 776(b) of the Act provides that:

if the administering authority or the Commission (as the case may be) finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information from the administering authority or the Commission, the administering authority or the Commission (as the case may be), in reaching the applicable determination under this title, may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available. As outlined in section 776(b) of the Act, adverse facts available in the investigation; (3) any previous review under section 751 of the Act or determination under section 753 of the Act; or (4) any other information placed on the record.

FMEC

The Department sent FMEC an antidumping questionnaire, but the company did not respond. See Letter from the Department to FMEC (July 10, 2000). As described in the preliminary results, the Department found that FMEC was part of the “PRC-wide” entity and utilized facts available to determine the preliminary rates for the PRC-wide entity because information necessary to determine that margin on a calculated basis was not available. In addition, the Department used an adverse inference in selecting the margin for the PRC-wide entity because it found that that entity had failed to act to the best of its ability in responding to the Department's request for information. No parties have commented on this issue, nor has any additional information been placed on the record; therefore, we have continued to treat FMEC as part of the PRC-wide entity for these final results and to assign FMEC the PRC-wide rates for this review. See HFHTs Preliminary Results (for further discussion of our application of facts available).

Huarong

Pursuant to sections 776(a)(2)(A) and (C) of the Act, the Department has determined that it is appropriate to apply the Facts available for purposes of determining the dumping margin for Huarong in the instant review. Specifically, Huarong failed to report the great majority of its U.S. market sales to the Department. Thus, pursuant to section 776(a)(2)(A) of the Act, the Department has determined that Huarong has withheld information that was requested by the Department. For further discussions of this issue please see relevant portions of the Decision Memorandum and the proprietary memorandum regarding Application of Adverse Facts Available to Shandong Huarong General Group Corporation (Huarong AFA Memorandum), dated concurrently with this notice. In addition, pursuant to section 776(a)(2)(C) of the Act, we have determined that Huarong has significantly impeded this review. Due to the proprietary nature of this discussion, please see the relevant portions of the Decision Memorandum and the proprietary Huarong AFA Memorandum.

We further determine that Huarong has failed to satisfy several of the requirements enunciated by section 782(e) of the Act. Pursuant to section 782(i) of the Act, the Department conducted an on-site verification of Huarong's data at Huarong's headquarters in China. Upon arrival at verification, the Department found that Huarong had prepared almost no documents requested of it in the Department's verification outline. As a result of the verification team having to devote extensive amounts of time to examining issues pertaining to the unreported U.S. sales, and difficulties in verifying the accuracy of the reported factors of production input levels, there was insufficient time for the verifiers to conduct a full factors of production verification. As a consequence of our findings at verification, we determined that Huarong did not act to the best of its ability in responding to the Department's requests for information pursuant to section 782(e)(4) of the Act.

For the reasons stated above, the application of section 782(e) of the Act does not overcome section 776(a)'s direction to use facts otherwise available for purposes of determining a dumping margin for Huarong. Thus, the use of facts available is warranted for Huarong in this case. Moreover, we determine that, due to the nature of Huarong's verification failures, and the inadequacy of its cooperation, the integrity of this company's reported data on the whole is compromised. Therefore, we determine that Huarong has not adequately demonstrated its entitlement to rates separate from the government entity. As a consequence Huarong will receive the PRC-wide entity rates.

Moreover, as discussed in detail in the Decision Memorandum and the Huarong AFA Memorandum, pursuant to section 776(B) of the Act, we have determined that Huarong did not cooperate by acting to the best of its ability to comply with the Department's requests for information.

LMC

Pursuant to sections 776(a)(2)(A) and (C) of the Act, the Department has determined that it is appropriate to apply the facts available for purposes of determining the dumping margin for LMC in the instant review. Pursuant to 776(a)(2)(A), we have determined that LMC has withheld significant information that was requested by the Department such that the Department is unable to calculate a dumping margin with respect to this company. Pursuant to 776(a)(2)(C), we further determined that LMC has significantly impeded the Department's ability to accurately determine a margin of dumping for LMC in the instant administrative review. Due to the proprietary nature of this issue, for further discussions please see the relevant portions of the Decision Memorandum and the proprietary memorandum regarding Application of Adverse Facts Available to Liaoning Machinery Import & Export Corporation (LMC AFA Memorandum), dated concurrently with this notice.

Pursuant to section 782(i) of the Act, the Department conducted an on-site verification of the information submitted by LMC at its sales headquarters in the PRC. In analyzing LMC's record information pursuant to section 782(e) of the Act, we have determined significant portions of LMC's reported data could not be verified in accordance with subsection 782(e)(2). Upon arrival at verification, the Department discovered that LMC had prepared none of the documentation requested in the April 9, 2001 sales verification outline. Moreover, during verification, it became evident that LMC could not provide the information necessary to verify its own submissions. As a consequence of our findings at verification, pursuant to section 782(e)(4) of the Act, we determined that LMC did not act to the best of its ability in responding to the Department's requests for information. Due to the proprietary nature of this issue, please see the relevant portions of the Decision Memorandum and the proprietary LMC AFA Memorandum.

For the reasons discussed above, the application of section 782(e) of the Act does not overcome section 776(a)'s direction to use facts otherwise available to determine a margin of dumping for LMC in this administrative review. Thus the use of facts available is warranted for LMC in this case. Moreover, we determine that, due to the nature of LMC's verification failures, and the inadequacy of its cooperation, the integrity of LMC's company reported data on the whole is compromised. Therefore, we determine that LMC has not adequately demonstrated its entitlement to rates separate from the government entity. As a consequence LMC will receive the PRC-wide entity rates. Moreover, as discussed in detail in the Decision Memorandum and the LMC AFA Memorandum, the Department has determined, pursuant to section 776(B) of the Act, that LMC did not cooperate by acting to the best of its ability to comply with the Department's requests for information.

SMC

In the instant review, SMC responded fully to the Department's questionnaire with respect to the antidumping duty order on hammers/sledges from the PRC. However, with respect to the questionnaire regarding the remaining three HFHT orders, SMC only responded with respect to the separate rate portion of the questionnaire. SMC failed to provide any sales or factors of production data with respect to sales of axes/adzes, bars/wedges and picks/mattocks. Therefore, as in the preliminary results, we are basing SMC's margins for the final results of review with respect to these three classes or kinds of merchandise on adverse facts available. See the Preliminary Results for a full discussion of this issue. However, because SMC's data with respect to the separate rate issue is complete and was successfully verified, we determine that SMC has adequately established its continued entitlement to a separate rate for these three classes or kinds of merchandise. As adverse facts available for SMC for axes/adzes we have applied a margin of 18.72 percent, a calculated margin from the 1995-1996 POR; for bars/wedges we have applied a calculated margin of 47.88 percent, a calculated margin from the 1992-1993 POR; and for picks/mattocks we have applied a margin of 98.77 percent, the rate currently applicable to SMC and the PRC-wide entity, which is a calculated margin from the 1995-1996 POR.

2. Selection of Adverse Facts Available

For a discussion of the Department's selection of the adverse facts available rates to be applied to the appropriate classes or kinds of merchandises for SMC and the PRC-wide entity, see the Decision Memorandum. We have determined the adverse facts available rates as follows: for axes/adzes we have applied a calculated margin of 18.72 percent, the margin from the 1995-1996 POR; for bars/wedges we have applied a calculated margin of 47.88 percent, the margin from the 1992-1993 POR; for hammers/sledges we have applied a calculated margin of 27.71 percent, the margin from the 1992-1993 POR; and for picks/mattocks we have applied a margin of 98.77 percent, the rate currently applicable to SMC and the PRC-wide entity, which is the margin from the 1995-1996 POR.

3. Corroboration

For a discussion of the Department's corroboration of the adverse facts available rates to be applied to SMC and the PRC-wide entity, see the Decision Memorandum.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this administrative review are addressed in the Decision Memorandum. A list of the issues which parties have raised and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as an Appendix. Parties can find a complete discussion of all issues raised in this review and the corresponding recommendations in this public memorandum, which is on file in the Central Record Unit, room B-099 of the main Department of Commerce building. In addition, a complete version of the Decision Memorandum can be accessed directly on Import Administration's Web site at www.ia.ita.doc.gov. The paper copy and electronic version of the Decision Memorandum are identical in content.

Separate Rates Determination

As discussed above, FMEC, Huarong, and LMC have not demonstrated their entitlement to a rate separate from the PRC-wide entity. Therefore, for these final results of review, we are treating them as part of the PRC-wide entity. See Decision Memorandum. As in the preliminary results, TMC and SMC are entitled to separate rates.

Changes Since the Preliminary Results

In calculating the Final Results, the Department has made the following changes since the Preliminary Results.

1. The Department has used total adverse facts available for determining the margins for Huarong and LMC. See Comment 1 of the Decision Memorandum.

2. The Department has updated the surrogate values for factors of production, as appropriate, based on data contemporaneous with the POR where such data exists and is found not to be aberrational. See Comment 11 of the Decision Memorandum.

3. In valuing scrap railroad rails and wheels, the Department has omitted any values from HTS category 7204.49.01 in the final results, and used only values from HTS category 7204.49.09. See Comment 12 of the Decision Memorandum.

4. In valuing the scrap resulting from the HFHTs production process of the respondents' factories, the Department has omitted any values from HTS category 7204.49.01 in the final results, and used only values from HTS category 7204.49.09. See Comment 13 of the Decision Memorandum.

5. The Department has used a 1998 pallet wood value from the Indonesian publication Indonesian Foreign Trade Statistics. See Comment 14 of the Decision Memorandum.

6. The Department has used one truck freight rate, the rate used in the Bulk Aspirin FOP Valuation, for all instances in this review where truck freight costs were incurred. See Comment 16 of the Decision Memorandum.

7. The Department has used more contemporaneous data in deriving a surrogate value for electricity than that used in the Preliminary Results. See Comment 17 of the Decision Memorandum.

8. The Department has capped the surrogate inland freight cost based on the shorter of the reported distances from the closest PRC seaport to the factory or the domestic supplier to the factory, on an input-specific basis. See Comment 19 of the Decision Memorandum.

9. The Department has selected as facts available different PRC-wide rates for axes/adzes, bars/wedges and hammers/sledges to replace the rates invalidated by a judicial decision issued after the preliminary results. See Comment 22 of the Decision Memorandum.

10. The Department has recalculated the results using HTS category 7207.20.09 for the steel inputs for mauls, and using the price the factory paid the market economy supplier for hammers. See Comment 24 of the Decision Memorandum.

11. The Department has corrected TMC's error in reporting the volume of plastic strip. See Comment 25 of the Decision Memorandum.

Final Results of Reviews

We determine that the following percentage weighted-average margins exist for the period February 1, 1999, through January 31, 2000:

Assessment Rates

Pursuant to 19 CFR 351.212(b), the Department calculates an assessment rate for each importer of the subject merchandise. Where the importer-specific assessment rates calculated in these final results are above de minimis (i.e., at or above 0.5 percent), the Department will issue appraisement instructions directly to the Customs Service to assess antidumping duties on appropriate entries by applying the assessment rate to the entered value of the merchandise. For assessment purposes, we calculated importer-specific assessment rates for the subject merchandise by aggregating the dumping margins for all U.S. sales to each importer and dividing the amount by the total entered value of the sales to that importer.

Cash Deposit Requirements

The following deposit requirements will be effective upon publication of this notice of final results of administrative review for all shipments of HFHTs from the PRC entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(1) of the Act: (1) The cash deposit rates for the reviewed companies will be the rates shown above except that, for firms whose weighted-average margins are less than 0.5 percent, and therefore, de minimis, the Department shall require no deposit of estimated antidumping duties; (2) for previously reviewed or investigated companies with a separate rate not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) for all other PRC exporters, the cash deposit rates will be the PRC-wide rates shown above; (4) for all non-PRC exporters of the subject merchandise, the cash deposit rate will be the rate applicable to the PRC supplier of that exporter. 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 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 doubled 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 in accordance with 19 CFR 351.305. Timely written notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

These final results of administrative review are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 U.S.C. 1677f(i)(1)).

Appendix—Issues in Decision Memorandum

1. Verification Failures

2. Misreported LMC Sales

3. Inability to Use Accounting System

4. Differences Between Reported and Verified Consumption Rates

5. Alleged Failure to Identify Steel Input

6. Failure to Report Commissions

7. LMC's Failure to Report Certain Sales

8. Whether the Department Should Use a Steel Bar or Steel Billet Surrogate Value

9. Surrogate Value for Steel Bar

10. Surrogate Value for Steel Billet

11. Whether the Department Should Update and Correct Surrogate Values

12. Whether the Department Should Use HTS Category 7204.49.01 to Value Railroad Rails and Wheels Input

13. Surrogate Value for Scrap

14. Surrogate Value for Pallets

15. Surrogate Value(s) for Wooden and Fiberglass Handles

16. Surrogate Value for Truck Freight

17. Surrogate Value for Electricity

18. Financial Ratios

19. The Sigma Rule

20. Shakeproof Methodology

21. LIMAC Rate

22. PRC-wide Rate

23. Clerical Error

24. Error in the Preliminary Results for TMC

25. Reported Factors for Plastic Strip for Axes and Cartons for Bars/Wedges