Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From Japan: Final Results of Antidumping Duty Administrative Review and Partial Rescission of Administrative Reviews

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final results of antidumping duty administrative review.

SUMMARY:

On October 12, 1999, the Department of Commerce published the preliminary results of the administrative reviews of the antidumping duty order on large newspaper printing presses and components thereof, whether assembled or unassembled, from Japan (64 FR 55243). These reviews cover Mitsubishi Heavy Industries, Ltd. and Tokyo Kikai Seisakusho, Ltd., manufacturers/exporters of the subject merchandise to the United States. The periods of review for Mitsubishi Heavy Industries, Ltd. are September 5, 1996, through August 31, 1997, and September 1, 1997, through August 31, 1998. The period of review for Tokyo Kikai Seisakusho is September 1, 1997, through August 31, 1998. We gave interested parties an opportunity to comment on the preliminary results. Based on our analysis of the comments received and the correction of certain data, the final results differ from the preliminary results. The final results for Tokyo Kikai Seisakusho, Ltd. are listed below in the “Final Results of the Review” section of this notice. For the reasons stated in the “Partial Rescission of Reviews” section of this notice, we have rescinded these reviews with respect to Mitsubishi Heavy Industries, Ltd.

EFFECTIVE DATE:

February 15, 2000.

FOR FURTHER INFORMATION CONTACT:

Kate Johnson or Rebecca Trainor, Office 2, AD/CVD Enforcement Group I, Import Administration, Room B099, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington DC 20230; telephone: (202) 482-4929, or (202) 482-4007, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to 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 (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to 19 CFR part 351 (1998).

Background

On October 12, 1999, the Department of Commerce (the Department) published in the Federal Register the preliminary results of the first administrative reviews of the antidumping duty order on large newspaper printing presses and components thereof, whether assembled or unassembled, from Japan (LNPPs) (64 FR 55243) (Preliminary Results).

On December 27, 1999, we published in the Federal Register the final results of a changed-circumstances antidumping duty administrative review of this order, which resulted in the partial revocation of the order with respect to certain merchandise specified in the “Scope of Reviews” section of this notice. This merchandise was under review for Mitsubishi Heavy Industries (MHI) at the time of the Preliminary Results. See Large Newspaper Printing Presses Components Thereof, Whether Assembled or Unassembled, from Japan: Final Results of Changed Circumstances Antidumping Duty Administrative Review and Intent to Revoke Antidumping Duty Order, In part, 64 FR 72315, (Changed Circumstances Review).

On December 10, 1999, the respondent Tokyo Kikai Seisakusho, Ltd. (TKS) submitted comments on the Preliminary Results. The Department has now completed its administrative reviews in accordance with section 751 of the Tariff Act of 1930, as amended (the Act).

Scope of the Reviews

The products covered by these reviews are large newspaper printing presses, including press systems, press additions and press components, whether assembled or unassembled, whether complete or incomplete, that are capable of printing or otherwise manipulating a roll of paper more than two pages across. A page is defined as a newspaper broadsheet page in which the lines of type are printed perpendicular to the running of the direction of the paper or a newspaper tabloid page with lines of type parallel to the running of the direction of the paper.

In addition to press systems, the scope of these reviews includes the five press system components. They are: (1) A printing unit, which is any component that prints in monocolor, spot color and/or process (full) color; (2) a reel tension paster, which is any component that feeds a roll of paper more than two newspaper broadsheet pages in width into a subject printing unit; (3) a folder, which is a module or combination of modules capable of cutting, folding, and/or delivering the paper from a roll or rolls of newspaper broadsheet paper more than two pages in width into a newspaper format; (4) conveyance and access apparatus capable of manipulating a roll of paper more than two newspaper broadsheet pages across through the production process and which provides structural support and access; and (5) a computerized control system, which is any computer equipment and/or software designed specifically to control, monitor, adjust, and coordinate the functions and operations of large newspaper printing presses or press components.

A press addition is comprised of a union of one or more of the press components defined above and the equipment necessary to integrate such components into an existing press system.

Because of their size, large newspaper printing press systems, press additions, and press components are typically shipped either partially assembled or unassembled, complete or incomplete, and are assembled and/or completed prior to and/or during the installation process in the United States. Any of the five components, or collection of components, the use of which is to fulfill a contract for large newspaper printing press systems, press additions, or press components, regardless of degree of assembly and/or degree of combination with non-subject elements before or after importation, is included in the scope of these reviews. Also included in the scope are elements of a LNPP system, addition or component, which taken altogether, constitute at least 50 percent of the cost of manufacture of any of the five major LNPP components of which they are a part.

For purposes of these reviews, the following definitions apply irrespective of any different definition that may be found in Customs rulings, U.S. Customs law or the Harmonized Tariff Schedule of the United States (HTSUS): the term “unassembled” means fully or partially unassembled or disassembled; and (2) the term “incomplete” means lacking one or more elements with which the LNPP is intended to be equipped in order to fulfill a contract for a LNPP system, addition or component.

This scope does not cover spare or replacement parts. Spare or replacement parts imported pursuant to a LNPP contract, which are not integral to the original start-up and operation of the LNPP, and are separately identified and valued in a LNPP contract, whether or not shipped in combination with covered merchandise, are excluded from the scope of these reviews. Used presses are also not subject to this scope. Used presses are those that have been previously sold in an arm's-length transaction to a purchaser that used them to produce newspapers in the ordinary course of business.

Also excluded from the scope, in accordance with the Department's determination in the Changed Circumstances Review, are elements and components of LNPP systems, and additions thereto, which feature a 22 inch cut-off, 50 inch web width and a rated speed no greater than 75,000 copies per hour. In addition to the specifications set out in this paragraph, all of which must be met in order for the product to be excluded from the scope of the order, the product must also meet all of the specifications detailed in the five numbered sections following this paragraph. If one or more of these criteria is not fulfilled, the product is not excluded from the scope of the order.

1. Printing Unit: A printing unit which is a color keyless blanket-to-blanket tower unit with a fixed gain infeed and fixed gain outfeed, with a rated speed no greater than 75,000 copies per hour, which includes the following features:

• Each tower consisting of four levels, one or more of which must be populated.
• Plate cylinders which contain slot lock-ups and blanket cylinders which contain reel rod lock-ups both of which are of solid carbon steel with nickel plating and with bearers at both ends which are configured in-line with bearers of other cylinders.
• Keyless inking system which consists of a passive feed ink delivery system, an eight roller ink train, and a non-anilox and non-porous metering roller.
• The dampener system which consists of a two nozzle per page spraybar and two roller dampener with one chrome drum and one form roller.
• The equipment contained in the color keyless ink delivery system is designed to achieve a constant, uniform feed of ink film across the cylinder without ink keys. This system requires use of keyless ink which accepts greater water content.

2. Folder: A module which is a double 3:2 rotary folder with 160 pages collect capability and double (over and under) delivery, with a cut-off length of 22 inches. The upper section consists of three-high double formers (total of 6) with six sets of nipping rollers.

3. RTP: A component which is of the two-arm design with core drives and core brakes, designed for 50 inch diameter rolls; and arranged in the press line in the back-to-back configuration (left and right hand load pairs).

4. Conveyance and Access Apparatus: Conveyance and access apparatus capable of manipulating a roll of paper more than two newspaper broadsheets across through the production process, and a drive system which is of conventional shafted design.

5. Computerized Control System: A computerized control system, which is any computer equipment and/or software designed specifically to control, monitor, adjust, and coordinate the functions and operations of large newspaper printing presses or press components.

These reviews cover all current and future printing technologies capable of printing newspapers, including, but not limited to, lithographic (offset or direct), flexographic, and letterpress systems. The products covered by these reviews are imported into the United States under subheadings 8443.11.10, 8443.11.50, 8443.30.00, 8443.59.50, 8443.60.00, and 8443.90.50 of the HTSUS. Large newspaper printing presses may also enter under HTSUS subheadings 8443.21.00 and 8443.40.00. Large newspaper printing press computerized control systems may enter under HTSUS subheadings 8471.49.10, 8471.49.21, 8471.49.26, 8471.50.40, 8471.50.80, and 8537.10.90. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of these reviews is dispositive.

Partial Rescission of Administrative Reviews

On December 27, 1999, we published in the Federal Register the final results of a changed circumstances antidumping duty administrative review of this order, in which we determined to revoke from the order elements and components of LNPP systems, and additions thereto, imported to fulfill a contract for one or more complete LNPP systems that meet a specific set of criteria, as described in the petitioner's May 28, 1999, request for a changed circumstances review. See Changed Circumstances Review and the “Scope of the Reviews” section of this notice. As a result of this partial revocation, which applies to all entries of LNPP systems and additions thereto from Japan as described above, entered, or withdrawn from warehouse, for consumption on or after September 4, 1996, and which covers all of the LNPP merchandise that MHI exported to the United States during the above-specified administrative review periods, we have determined that MHI had no shipments of subject merchandise during these administrative review periods. Therefore, we are rescinding these reviews with respect to MHI.

Duty Absorption

On November 17, 1998, and on January 21, 1999, the petitioner requested that the Department determine whether antidumping duties had been absorbed during the periods of review (POR). Section 751(a)(4) of the Act provides for the Department, if requested, to determine during an administrative review initiated two or four years after the publication of the order, whether antidumping duties have been absorbed by a foreign producer or exporter, if the subject merchandise is sold in the United States through an affiliated importer. In this case, TKS sold to the United States through an importer that is affiliated within the meaning of section 751(a)(4) of the Act.

Section 351.213(j)(1) of the Department's regulations provides that during any administrative review covering all or part of a period falling between the first and second or third and fourth anniversary of the publication of an antidumping order, the Department will conduct a duty absorption review, if requested. Because these reviews were initiated two years after the publication of the order, we are making a duty absorption determination in this segment of the proceeding.

The Department's February 5, 1999, antidumping questionnaire requested proof that unaffiliated purchasers will ultimately pay the antidumping duties to be assessed on entries during the review periods. Although TKS did not respond to this request, we find that there is no duty absorption, because we have determined that there is no dumping margin with respect to TKS's U.S. sales.

Interested Party Comments

Comment 1: CEP Profit Calculation

TKS argues that the Department overstated the amount of constructed export price (CEP) profit in its preliminary margin calculations by failing to account for an amount for installation expenses incurred on the home market sales in the CEP profit calculation. TKS argues that, according to section 772(f)(2) of the Act, the Department is required to consider the “total expenses” incurred when calculating CEP profit. TKS points out that the Department has included installation expenses in the calculation of home market profit for purposes of determining constructed value (CV), and argues that the Department should revise its preliminary calculations to include installation costs in the CEP profit calculation as well.

The Department's Position

We agree with TKS that installation expenses should have been accounted for in the calculation of CEP profit. When calculating CEP profit, we use the respondent's “total actual profit” for all sales of the subject merchandise and the foreign like product. Thus, the calculation includes all revenues and expenses resulting from the respondent's export price and home market sales. See section 772(f)(2)(D) of the Act. Accordingly, we have included home market installation expenses in the CEP profit calculation for the final results.

Comment 2: Home Market Profit Calculation

TKS argues that the Department has overstated home market profit in its preliminary margin calculation by failing to properly account for direct and indirect selling expenses.

The Department's Position

To determine a respondent's CV profit, we typically calculate a profit rate using the respondent's actual profit on home market sales made in the ordinary course of trade (see Comment 3 for more details). In determining the actual profit, we take into account direct and indirect selling expenses. See section 773(e) of the Act. Accordingly, we have included direct and indirect selling expenses in the CV profit calculation for the final results. For further discussion of the calculation and application of this rate see the Calculation Memorandum dated February 9, 2000.

Comment 3: Foreign Like Product

TKS contends that the Department has not sufficiently demonstrated that the LNPP additions sold in the home market during the POR constitute “the foreign like product,” as defined in section 771(16) of the Act. Therefore, TKS objects to the Department's preliminary calculation of CV profit based on above-cost home market sales in accordance with section 773(e)(2)(A) of the Act.

TKS states that the Department apparently has based its foreign like product determination on section 771(16)(C), which defines the foreign like product as merchandise (1) produced in the same country and by the same person and of the same general class or kind as the merchandise which is the subject of the investigation; (2) like the subject merchandise in the purpose for which used; and (3) which the administering authority determines may reasonably be compared with the subject merchandise. TKS asserts that, since there is no record evidence to support this finding, the Department should determine that no foreign like product exists in the home market and base its CV profit calculation on section 773(e)(2)(B) of the Act.

TKS argues that the Department's analysis of this issue, expressed in its September 30, 1999, Normal Value (NV) Memorandum does not support the Department's conclusion that LNPPs sold in the home market were “foreign like product” within the meaning of section 771(16). First, TKS states, the Department did not find that home market LNPPs were identical to those sold to the United States. Rather, TKS asserts, the Department found “great” physical differences in sub-component specifications. Thus, TKS concludes, the Department's foreign like product determination must have relied on section 771(16)(C). Although the Department concludes in its NV Memorandum that “the general product characteristics of LNPP systems are comparable enough for them to be considered foreign like product,” TKS complains that the Department does not reveal what “general product characteristics” it considered in making its determination. Furthermore, TKS argues, this conclusion conflicts with the Department's statement in the NV Memorandum that there are “great” physical differences between home market and U.S. LNPPs. TKS points out that the Department's methodology with respect to this issue is similar to that used in the less-than-fair-value (LTFV) investigation. Furthermore, the United States Court of International Trade (CIT) has twice remanded to the Department this issue over the course of on-going litigation involving this case. TKS complains that, as in the court case, the Department has failed to point to any specific record evidence in support of its determination that home market LNPPs are “reasonably comparable” to LNPPs sold to the United States during the POR. Rather, the only analysis in the Department's memorandum supports the opposite conclusion—that the two are not reasonably comparable.

TKS further argues that the Department incorrectly relied on its home market viability determination as the basis for its foreign like product determination. TKS asserts that, in discussing home market viability in its NV Memorandum, the Department appears to consider the terms “foreign like product” and “general category of merchandise” to be interchangeable. TKS asserts that it is the Department's longstanding practice to make home market viability determinations based on the “class or kind of merchandise” rather than on the more narrow category of “foreign like product,” and cites to the Statement of Administrative Action (SAA) at 821-822 (“the viability of a market will be assessed based on sales of all merchandise subject to an antidumping proceeding”). Therefore, the Department's reference to “foreign like product” in the memorandum is not credible, and does not alter the fact that there is no foreign like product. TKS claims that the Department's home market viability analysis was in fact based on “the same general class or kind of merchandise,” as it took into consideration all reported home market sales.

Finally, TKS argues that, since there is no basis for finding that the reported home market sales of LNPPs constitute foreign like product under section 771(16) of the Act, the Department should utilize an alternative methodology for calculating CV profit, as provided in section 773(e)(2)(B)(i). In so doing, it would not be necessary to exclude any below-cost home market sales as being outside the ordinary course of trade, in accordance with the SAA at 841, which states that cost tests are not applicable to a “general category of merchandise.”

The Department's Position

We disagree with TKS's assertion that its home market sales of LNPPs are not “foreign like product” within the meaning of section 771(16)(C) of the Act. First, it is uncontested that TKS's home market LNPPs are produced in the same country (Japan) and by the same person (TKS) and are of the same general class or kind as the merchandise which is subject to investigation. Second, it is uncontested that TKS's home market LNPPs are like the subject merchandise in the purpose for which used (to produce newspapers). Third, the Department has determined that TKS's home market sales of LNPPs “may reasonably be compared” with the subject merchandise for purposes of calculating CV profit. As the Department explained in its September 30, 1999 Analysis Memorandum, “the general product characteristics of LNPP systems are comparable enough for them to be considered foreign like product.” Memorandum at 7. Contrary to TKS's claim, that same memorandum details the degree to which both respondents' home market and U.S. sales of LNPPs share the same general product characteristics. Id. at 5, 7. Reflecting TKS's own submissions, press configurations are described in comparable terms (e.g., roll width, cut-off length) and each unit is described using the same product characteristics (i.e., printing units, reel tension pasters, folders, conveyance and access apparatus and computerized control equipment). This finding is consistent with the Department's determination in the original investigation that these common press characteristics provided substantial evidence that TKS's home market LNPPs could reasonably be compared for purposed of calculating CV profit. As the Department explained on remand,

[w]hile the sheer number of characteristics—and the fact that each completed custom-made LNPP model reflected a different mix of these common characteristics—led to ITA's determination that price-to-price comparisons were not practicable, the fact that both respondents' LNPP (whether sold in Japan or the United States) shared these detailed characteristics constitutes substantial evidence that home market LNPP could reasonably serve as the basis for CV profit.

Second Remand Determination: Mitsubishi Heavy Industries, Ltd. v. United States, Court No. 96-10-02292 at 12 (August 23, 1999) (“Second Remand Determination”). Similarly, in the instant review, substantial evidence—in the form of TKS's own submissions describing the merchandise sold in the home market—caused the Department to conclude that TKS's home market LNPP sales satisfied the “reasonably comparable” prong of the foreign like product definition in section 771(16)(C). See, e.g., TKS's January 7, 1999, Section A response to the Department's questionnaire.

Regarding TKS's claim that the Department incorrectly relied on its home market viability determination as the basis for its foreign like product determination, TKS's point is unclear. TKS is incorrect that the Department used the terms “foreign like product” and “general category of merchandise” interchangeably in the NV memorandum. TKS apparently misread the Department's reference to the “general product characteristics” shared by TKS's home market and U.S. LNPPs which supported the finding that home market LNPPs satisfied the foreign like product definition. TKS has also read the SAA at 821-822 out of context. The full sentence that TKS quotes reads: “The viability of a market will be assessed based on sales of all merchandise subject to an antidumping proceeding, not on a product-by-product or model-by-model basis.” The point of this statement is not to trump the statutory directive that viability be assessed on the basis of the foreign like product, but rather to emphasize that viability will be determined based on aggregate sales of the foreign like product, not on a segmented basis. See, also, Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27358 (May 19, 1997).

Nor do we believe there is any basis for TKS's claim that CV profit should be calculated pursuant to the alternative profit calculation methodology provided in section 773(e)(2)(B) of the Act. The methodology employed by the Department—pursuant to section 773(e)(2)(A)—is the preferred method for calculating CV profit. The language of the Act supports the Department's conclusion that the alternative provisions for determining CV profit are available only “if actual data are not available with respect to the amounts described in” section 773(e)(2)(A). See, also, Floral Trade Council v. United States, 41 F. Supp. 2d 319, 326 (CIT 1999). Here, the actual profit data for TKS's home market LNPP sales were available. Thus, the Department properly followed the statutory directive that the actual data for TKS's home market LNPP sales be used to calculate CV profit rather than TKS's alternative suggestion. The Department has previously explained that TKS's proposed application of an alternative profit methodology to its home market LNPP sales “ which TKS describes as the “general category of merchandise”—is flawed. See Second Remand Determination at 13-15. The statutory term “general category of products” has consistently been interpreted to encompass a group of products that is broader than the subject merchandise. See, e.g., Antifriction Bearings (AFBs)(Other Than Tapered Roller Bearings) and Parts Thereof from France et al.: Final Results of Antidumping Administrative Reviews, 64 FR 35590, 35611 (1999) (“general category of products” for AFBs would include non-subject merchandise such as tapered roller bearings). TKS fails to adequately justify why the Department should deviate from the preferred methodology, and its proposed implementation of an alternative methodology (including TKS's below cost sales) is inconsistent with Department practice. As a result, the Department has continued to calculate CV profit in the manner used in the preliminary results.

Comment 4: Check-Out Testing

TKS argues that check-out testing should be treated as movement expenses rather than as further manufacturing expenses, as the Department treated it in the preliminary results. TKS refers to its August 16, 1999 comments, in which it argued that the testing conducted for purposes of the Dallas Morning News (DMN) contract involved no manufacturing activities such as machining, forging, cutting, welding, or electronic assembly. TKS considers check-out testing to be the final stage of transporting the equipment to the ultimate customer, and must necessarily be done at the customer's installation site because the equipment must be dismantled for transportation due to its size. TKS points out that it did not provide the equipment installation services, a further indication that check-out testing should be treated as moving expenses for the DMN sale.

The Department's Position

We disagree with TKS. We have continued to classify testing and technical service expenses as part of further manufacturing because the U.S. installation process (including check-out testing) involves extensive technical activities on the part of engineers and installation supervisors. See Mitsubishi Heavy Industries v. United States, 15 F. Supp. 2d 807, 815-16 (CIT 1998).

Final Results of the Review

As a result of this review, we have determined that the following margin exists for TKS for the period September 1, 1997, through August 31, 1998:

Assessment Rates

The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. The Department will issue appraisement instructions directly to the Customs Service. For entries of subject merchandise from TKS during the POR, we have calculated an importer-specific assessment rate by aggregating the dumping margins calculated for all examined sales and dividing by the entered value of those sales. This rate will be assessed uniformly on all entries of that particular importer made during the POR. In accordance with 19 CFR 351.106(c)(2), we will instruct the Customs Service to liquidate without regard to antidumping duties all entries of the subject merchandise during the POR for which the importer-specific assessment rate is zero or de minimis (i.e., less than 0.50 percent).

This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

Cash Deposit Requirements

The following deposit requirements shall be effective for all shipments of the subject merchandise from Japan that are entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided for by section 751(a)(1) of the Act: (1) the cash deposit rate for TKS will be the rate established above in the “Final Results of the Review” section; (2) for previously 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, or the original 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) the cash deposit rate for all other manufacturers or exporters of this merchandise will continue to be 58.69 percent, the all others rate made effective by the LTFV investigation. These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

This notice serves as the only reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 353.34(d). Timely written notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulation and the terms of an APO is a sanctionable violation.

This administrative review and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221.