[Federal Register: March 1, 1996 (Volume 61, Number 42)]
[Notices]
[Page 8029-8034]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
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DEPARTMENT OF COMMERCE
[A-588-837]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Large Newspaper Printing
Presses and Components Thereof, Whether Assembled or Unassembled, From
Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: March 1, 1996.
FOR FURTHER INFORMATION CONTACT: William Crow or Irene Darzenta, Office
of Antidumping Investigations, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-0116 or (202) 482-6320.
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 Rounds Agreements Act.
PRELIMINARY DETERMINATION: As explained in the memoranda from the
Assistant Secretary for Import Administration dated November 22, 1995,
and January 11, 1996, the Department of Commerce (the Department) has
exercised its discretion to toll all deadlines for the duration of the
partial shutdowns of the Federal Government from November 15 through
November 21, 1995, and December 16, 1995, through January 6, 1996.
Thus, all deadlines in this investigation have been extended by 28
days, i.e., one day for each day (or partial day) the Department was
closed. The revised deadline for this preliminary determination is
February 23, 1996.
We preliminarily determine that large newspaper printing presses
and components thereof (LNPPs) from Japan are being, or are likely to
be, sold in the United States at less than fair value (LTFV), as
provided in section 733 of the Act. The estimated margins of sales at
LTFV are shown in the ``Suspension of Liquidation'' section of this
notice.
Case History
Since the initiation of this investigation on July 20, 1995 (60 FR
38546 (July 27, 1995)), the following events have occurred:
On August 14, 1995, the United States International Trade
Commission (ITC) notified the Department of Commerce (the Department)
of its affirmative preliminary determination. (See ITC Investigation
No. 731-TA-736 and 737.)
On August 28, 1995, we presented Section A <SUP>1 of the
questionnaires to the Japanese embassy, counsel for Mitsubishi Heavy
Industries, Ltd., (MHI) and Tokyo Kikai Seisakusho, Ltd. (TKS). MHI
submitted responses to Section A on September 27, 1995, and October 10,
1995, as revised on December 13, 1995. TKS submitted responses to
Section A on September 27, 1995, and October 2,5, and 10, 1995, as
revised on October 17, 1995.
\1\ Section A requests data concerning corporate organization,
accounting practices, markets and merchandise.
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On October 20, 1995, at the request of Rockwell Graphics Systems,
Inc. And its parent company, Rockwell International Corporation (the
petitioner), we postponed the preliminary determination to January 26,
1996. See Notice of Postponement of Preliminary Determinations:
Antidumping Investigation of Large Newspaper Printing Presses and
Components Thereof, Whether Assembled or Unassembled from Japan (60 FR
54841, October 26, 1995).
On October 19, 1995, the petitioner alleged that there are
reasonable grounds to believe or suspect that MHI and TKS made below-
cost sales of the subject merchandise in Japan, and that these below-
cost sales must be excluded from the Department's calculation of profit
for constructed value (CV). Because we determined the appropriate basis
for normal value (NV) to be CV, we did not address petitioner's below-
cost allegation. We did, however, solicit contract price and production
costs data for MHI's and TKS's home market sales of subject merchandise
in order to compute selling,general and administratie expenses (SG&A)
and profit for CV in accordance with section 773(e)(2)(A) of the Act.
(See ``Product Comparisons'' section of this notice.)
The Department issued Sections C and D of its questionnaire to MHI
on October 27, 1995.<SUP>2 The Department issued Section C, D, and E
<SUP>3 to TKS on October 27, 1995. MHI submitted its response to
Section C and D on December 1, 1995, as revised December 13, 1995. TKS
submitted its response to Section C, D, and E on December 1, 1995.
Because of the first partial federal government shutdown mentioned
previously, a supplemental questionnaire was not issued until December
8, 1995. Because of the second partial government shutdown, MHI and TKS
responded to the supplemental questionnaires on January 18, 1996.
\2\ Section C requests data on sales to the United States.
Section D requests data on the cost of production and constructed
value.
\3\ Section E requests data on the cost of further manufacturing
or assembly performed in the United States.
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On October 26 and 31, 1995, TKS requested that the Department
exclude a certain sale to the Dallas Morning News and a sale to the
Spokane Spokesman Review from our antidumping analysis. During the
period preceding this preliminary determination, the petitioner
objected on several occasions to TKS's proposal. We determined to
include these two sales in our preliminary antidumping analysis,
contrary to TKS's arguments, since U.S. sales cannot classified as
outside the ordinary course of trade, and because there are no
administrative barriers to conducting an analysis of these sales.
[[Page 8030]]
See February 23, 1996, Memorandum to Richard W. Moreland, from The
Team, Re: Request for Exclusion of TKS Sales.
During the period July 28, 1995 through January 23, 1996, the
petitioner, MHI and TKS filed comments requesting clarification of the
scope of this investigation with respect to elements (i.e., parts or
subcomponents) of covered components, and spare and replacement parts.
Respondents in the companion investigation of LNPPs from Germany, Konig
Bauer Albert and MAN Roland Druckmaschienen, also submitted comments
concerning scope on the record of this preceding. On January 23, 1996,
petitioner clarified the scope to exclude used presses. See Scope of
Investigation section of this notice. At the Department's request, on
February 8, 1996, the parties filed comments on suspension of
liquidation instructions.
On February 2, 1996, petitioner filed comments on issues concerning
MHI to be resolved and on general methodologies to be employed in the
preliminary determination. Petitioner filed additional comments
concerning MHI issues on February 8, 1996, and concerning TKS issues on
February 6, 1996. MHI and TKS filed such comments on February 6 and 16,
1996, respectively.
Respondent Selection
The producers named in the petition were MHI and TKS. On August 2,
1995, we contacted the U.S. Embassy in Tokyo, requesting the
identification of Japanese producers and exporters of LNPPs to the
United States, and the volume and value of subject merchandise they
sold to the United States during the period January 1, 1991 through May
31, 1995. On July 31, 1996, we requested the names and addresses of
manufacturers or exporters; and the value and quantity of the subject
merchandise sold and shipped to the United States for each company
during the period January 1, 1991 through May 31, 1995, from the
Embassy of Japan in Washington D.C. On August 11, 1995, we received a
reply from the Embassy of Japan indicating that there were no other
Japanese exporters of subject merchandise to the United States. At the
time of respondent selection, no reply had been received from our
Embassy in Tokyo.
Based on the petition and the information received from the Embassy
of Japan, we issued questionnaires to MHI and TKS. (See the August 28,
1995, Memorandum to The File Re: Questionnaire Recipients.)
Postponement of Final Determination and Extension of Provisional
Measures
Pursuant to section 735(a)(2)(A) of the Act, on February 9, 1996,
MHI requested, and on February 13, 1996, TKS requested that, in the
event of an affirmative preliminary determination in this
investigation, the Department postpone its final determination until 60
days after the date of the scheduled final determination, which is
equivalent to 135 days after the publication of an affirmative
preliminary determination in the Federal Register. In accordance with
19 CFR 353.20(b), because our preliminary determination is affirmative,
the respondent accounts for a significant proportion of exports of the
subject merchandise, and no compelling reasons for denial exist, we are
granting respondents' request and postponing the final determination.
Section 773(d) of the Act provides that provisional measures may
not remain in effect for more than four months. However, that provision
of the Act also states that the Department may extend that period to
six months at the request of exporters representing a significant
proportion of exports of the subject merchandise. Such a request was
made by both respondents in this investigation on February 23, 1996.
Accordingly, we are extending the applicability of the provisional
measures to six months in this investigation.
Scope of Investigation
As specified below, we have revised the scope since our notice of
initiation to exclude used presses, in accordance with the petitioner's
January 23, 1996, clarification. Furthermore, we have clarified the
scope to include ``elements'' (otherwise referred to as ``parts'' or
``subcomponents'') of an LNPP system, addition or component, which
taken as a whole, constitute a subject LNPP system, addition or
component used to fulfill an LNPP contract. See ``Scope Issues''
section of this notice concerning the treatment of elements in the
scope. In addition, we have stipulated that spare or replacement parts,
which are imported pursuant to an LNPP contract and are separately
identified and valued in that contract, whether or not shipped in
combination with covered merchandise, are excluded from the scope of
the investigation. (See February 23, 1996, Decision Memorandum to
Richard Moreland from The Team Re: Scope Issues.)
The products covered by these investigations are large newspaper
printing presses, including press systems, press additions and press
components, whether assembled or unassembled, 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 complete systems, the scope of these investigations
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, or a printing-unit
cylinder;
(2) A reel tension paster (RTP), 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. 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 this investigation. Also included in the scope
are elements of an LNPP system, addition or component, which taken as a
whole, constitute a subject LNPP system, addition or
[[Page 8031]]
component used to fulfill an LNPP contract.
This scope does not cover spare or replacement parts. Spare or
replacement parts imported pursuant to an LNPP contract, which are not
integral to the original start-up and operation of the LNPP, and are
separately identified and valued in an LNPP contract, whether or not
shipped in combination with covered merchandise, are excluded from the
scope of this investigation. 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.
Further, these investigations 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 investigations 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, 8524.51.30, 8524.52.20, 8524.53.20, 8524.91.00,
8524.99.00 and 8537.10.90. Although the HTSUS subheadings are provided
for convenience and customs purposes, our written description of the
scope of these investigations is dispositive.
Scope Issues
Since our initiation, we received numerous comments from interested
parties in this investigation and the concurrent investigation
involving Germany, requesting that the Department clarify the treatment
of ``elements'' in the scope of the investigation.
In general, respondents believe that if the imported elements do
not constitute a complete, albeit unassembled, component, or are
missing ``essential'' elements to function as one of the five
components named in the scope, they would not be subject to the scope
of this investigation and the concurrent investigation involving
Germany. The petitioner believes that, because an imported LNPP press,
addition or component will almost always contain elements, which, by
themselves, are not subject to the scope, it is not practical to
exclude these elements from the scope of the investigation in so far as
they comprise an incomplete subject component. (For a complete
discussion of these comments, see February 23, 1996 Memorandum to
Richard W. Moreland from The Team Re: Scope Issues.)
As stated in the ``Scope of Investigations'' section above, we
interpret the scope to include those elements or collection of elements
imported from a subject country in so far as they constitute any one of
the five covered components which are, in turn, used to fulfill a
contract for a LNPP press system, press addition or press component.
Individual parts per se are not covered by the scope of these
investigations unless taken as a whole they constitute a subject
component used to fulfill an LNPP contract. This interpretation,
however, raises a question: at what point do the elements imported from
a subject country rise to the level of an LNPP component, addition or
system subject to the scope of these investigations?
The Department must decide on a reasonable and practicable approach
in determining what constitutes a subject LNPP component, addition or
system, and in so doing, establish the basis on which we will include
elements in the scope. We are considering two alternative approaches
for analyzing what governs the inclusion of parts or subcomponents,
other than spare or replacement parts, within the scope of these
investigations. One approach would consider, on a case-by-case basis,
whether the imported parts or subcomponents when taken together are
essentially an LNPP system, addition or component. This so called
``essence'' approach is of necessity subjective and turns on the
question of how near the sum of the imported parts comes to comprising
a complete LNPP system, addition or component. A second approach would
consider the value of the imported parts or subcomponents relative to
the total value of the finished LNPP component, addition or system in
the United States. That is, we would determine that the imported parts
or subcomponents would be within the scope if they comprised a certain
minimum percentage of the value of the parts of a finished LNPP system,
addition or component.
Both of these approaches raise threshold questions. Because certain
sales reported by respondents in both the German and Japanese
investigations consist of imported elements from Germany or Japan,
rather than a complete LNPP component, addition or system, acceptance
of either of the two approaches will have implications as to which of
the respondents sales the Department will consider in its final
determination. Therefore, we are presently soliciting comments from
interested parties as to the merits of these approaches and/or others
that may be relevant for use in the final determination. Interested
party comments on this topic are due no later than May 1, 1996.
Period of Investigation (POI)
The petitioner, MHI, and TKS filed comments on October 19, 20, 25
and 26, 1995, concerning the appropriate period of investigation (POI)
and the use of home market sales as the basis for NV. On October 27,
1995, we established the appropriate POI for MHI to be July 1, 1991
through June 30, 1995, and for TKS to be July 1, 1992 through June 30,
1995.
As a result of changes to section 773(b)(2)(B) of the Act, which
codified the normal period within which sales made below the cost of
production are to be analyzed, the Department modified its practice so
that the standard POI would cover a one-year period. In this
investigation, however, in order to capture sufficient and
representative sales, the Department established a POI beyond the
normal one-year period because of the nature of the LNPP industry,
characterized by custom order sales and long term sales contracts. (See
October 27, 1995, Memorandum to Richard W. Moreland, from The Team Re:
Establishing the Period of Investigation.)
Exclusion of the Washington Post Sale
On October 27, 1995, the Department decided to exclude MHI's sale
to the Washington Post from our antidumping analysis. (See Period of
Investigation Memorandum). On November 7, and November 20, 1995, the
petitioner requested that the Department reconsider its decision. On
November 13 and November 29, 1995, MHI rebutted the petitioner's
arguments.
The Department reaffirmed its exclusion of the Washington Post sale
from its margin analysis because (1) this sale was unbuilt, unshipped,
and uninstalled at the time of our analysis; (2) the Department
believes that the historical bench-marking integral to the use of
estimated costs was not reasonably available; and (3) because the
Department had two other sales available for analysis which were built,
delivered and installed. (See February 23, 1996, Memorandum to Richard
W. Moreland from The Team Re: Continuing the Exclusion of the
Washington Post Sale).
[[Page 8032]]
The Nature of the Guard Sale
On November 1, 1995, the petitioner requested that the Department
determine that the correct price for the Department to examine with
regard to the ultimate purchase of an LNPP by the Guard Publication
Company (Guard) is that set between MHI and the Sumitomo Trading
Company. In response to the petitioner's questions, the Department held
an ex parte meeting with counsel for MHI on December 7, 1995. Following
this meeting MHI submitted documentation with respect to this
transaction on December 7, 1995. MHI supplemented this submission with
more documentation on December 12, 1995. On January 11, 1996, the
petitioner submitted comments analyzing MHI's documentation of the
transaction. Finally, MHI submitted additional information concerning
this sale in its January 18, 1996, supplemental response. MHI
maintained that the documentation was evidence that the sale was made
by MHI to Guard.
Because of the participation of MHI in the business dealings
between Sumitomo and Guard, the documented correspondence between MHI
and Guard, and MHI's actual performance pursuant to the Guard's
technical requirements, we established that the appropriate transaction
to examine was the sale from MHI to Guard Publishing Company. (See
February 23, 1996, Memorandum to Richard W. Moreland from The Team Re:
Establishing the Proper Guard Sale.)
Product Comparisons
Although the home market was viable, in accordance with section 773
of the Act, we based NV on constructed value (CV) because we determined
that the particular market situation, which requires that the subject
merchandise be built to each customer's specifications, does not permit
proper price-to-price comparisons. (See November 9, 1995, Memorandum to
Richard W. Moreland from The Team Re: Determining the Appropriate Basis
for Normal Value.)
Fair Value Comparisons
To determine whether MHI's and TKS's sales of LNPPs to the United
States were made at less than fair value, we compared Constructed
Export Price (CEP) to the NV, as described in the ``Constructed Export
Price'' and ``Normal Value'' sections of this notice. In accordance
with section 777A(d)(1)(A)(ii), we calculated transaction-specific CEPs
(which in this case were synonymous with model-specific CEPs) for
comparison to transaction-specific NVs because there are few sales and
the merchandise is custom-made.
Constructed Export Price (CEP) and Further Manufacturing (FM)
TKS
TKS reported its sales as CEP and CEP/FM sales. Because we have
classified installation expenses as further manufacturing, we have
treated all TKS sales as CEP/FM sales. We calculated CEP, in accordance
with subsections 772 (b) and (d) of the Act, for (1) those sales to the
first unaffiliated purchaser that took place after importation by a
seller affiliated with the producer/exporter and (2) those sales
involved in further manufacturing in the United States.
We calculated CEP sales based on packed, installed prices to
unaffiliated customers. We made deductions from the starting price
(gross unit price), for foreign inland freight to port in Japan,
foreign brokerage and handling, international freight, combined marine
and foreign insurance, U.S. brokerage and handling, U.S. Customs duty,
U.S. inland freight port to customer, U.S. inland freight U.S.
warehouse to customer, and U.S. inland insurance. We also made
deductions for imputed credit, warranty, and other direct selling
expenses including certain U.S. trade show expenses.
In calculating imputed credit, we took into account the unique
nature and magnitude of the LNPP projects under investigation. These
projects require substantial capital expenditures over an extended time
period because of their size and their lengthy production process.
Moreover, the projects generally call for the purchaser to provide
scheduled progress payments prior to the completion of a given project.
In consideration of these factors, we computed credit by applying an
interest rate to the net balance of production costs incurred and
progress payments made during the construction period. We imputed
credit expenses for U.S. sales using U.S. prime short-term interest
rates as reported by the Federal Reserve, calculated as a weighted-
average rate for each fiscal year in the POI, since these sales were
denominated in U.S. dollars. However, because TKS reported that it did
not borrow in U.S. dollars, we used U.S. prime short-term interest
rates as a surrogate rate.
We deducted those indirect selling expenses that related to
economic activity in the United States. We have recalculated TKS's
reported indirect selling expenses incurred in the United States using
the total expenses and total revenue for TKS USA during the fiscal
years 1991 through 1995, in order to remove distortions in TKS USA's
financial statements caused by auditors' modifications to revenue
recognized during the POI.
We also deducted the cost of any further manufacturing or assembly
(including additional material and labor). Finally, we made an
adjustment for CEP profit in accordance with section 772(d)(3) of the
Act.
Furthermore, we have reclassified TKS's combined training and U.S.
testing expenses as installation expenses. We then reclassified total
installation expenses as U.S. further manufacturing activity.
We classified installation charges as part of further
manufacturing, because the U.S. installation process involves extensive
technical activities on the part of engineers and installation
supervisors and the integration of subject and non-subject merchandise
necessary for the operation of LNPPs. See Certain Internal-Combustion,
Industrial Forklift Trucks from Japan, 53 FR 12565 (Apr. 15, 1988) and
Small Business Telephone Systems and Subassemblies thereof from Korea,
54 FR 53151 (Dec. 27, 1989).
We have also classified as part of further manufacturing costs the
costs of certain non-Japanese items shipped directly to the United
States without further processing in Japan, and non-Japanese items
sourced in the United States, for integration into the overall LNPP
during the installation process.
We recomputed the U.S. further manufacturer's reported G&A rate
using the cost of goods sold amount reported in its audited financial
statements; and we included interest expense relating to the cost of
installation in U.S. further manufacturing.
MHI
MHI reported its sales as EP sales. We have classified all MHI
sales as CEP/FM sales because MHI's affiliated U.S. sales agent acted
as more than a processor of sales-related documentation and a
communication link with the unaffiliated U.S. customers; the U.S.
affiliate engaged in a broad range of activities including coordination
of installation, which we have classified as further manufacturing. We
calculated CEP, in accordance with subsections 772 (b) and (d) of the
Act, for these sales because they involved further manufacturing in the
United States.
We calculated CEP sales based on packed, installed prices to
unaffiliated customers in the United States. We made deductions for
inland freight to port in Japan; foreign brokerage and
[[Page 8033]]
handling; international freight; combined foreign inland and marine
insurance, export insurance and U.S. inland insurance, U.S. brokerage
and handling, U.S. Customs duty.
We also made deductions for post-sale warehousing, commissions,
imputed credit, direct warranty and training expenses, where
applicable.
With respect to reported technical service expenses, direct and
indirect, we have included these as part of total installation
expenses. We then reclassified total installation expenses as U.S.
further manufacturing activity. We are continuing to use the amounts
reported for technical expenses for purposes of the preliminary
determination. In light of MHI's claim that the expenses are limited in
time, the magnitude of any changes, and the relationship between
technical services in future years and the nature of MHI product
warranties, we are not changing the reported values; we will require
MHI to explain explicitly the administration of its technical servicing
for purposes of the final determination.
We deducted those indirect selling expenses that related to
economic activity in the United States. We have modified the
calculation of Mitsubishi Lithographic Presses--(MLP's) reported
indirect selling expenses to correct the allocation methodology for
common G&A expenses.
In calculating imputed credit, we took into account the unique
nature and magnitude of the LNPP projects under investigation. These
projects require substantial capital expenditures over an extended time
period because of their size and their lengthy production process.
Moreover, the projects generally call for the purchaser to provide
scheduled progress payments prior to the completion of a given project.
In consideration of these factors, we computed credit by applying an
interest rate to the net balance of production costs incurred and
progress payments made during the construction period. We imputed
credit expenses for U.S. sales using U.S. prime short-term interest
rates as reported by the Federal Reserve, calculated as a weighted-
average rate for each fiscal year in the POI, since these sales were
denominated in U.S. dollars. However, because MHI reported that it did
not borrow in U.S. dollars, we used U.S. prime short-term interest
rates as a surrogate rate.
Furthermore, we classified total installation expenses as part of
U.S. further manufacturing activity. We classified installation charges
as part of further manufacturing, because the U.S. installation process
involves extensive technical activities on the part of engineers and
installation supervisors and the integration of subject and non-subject
merchandise necessary for the operation of LNPPs.
We have also classified as part of further manufacturing costs the
costs of certain non-Japanese items shipped directly to the United
States without further processing in Japan, and non-Japanese items
sourced in the United States, for integration into the overall LNPP
during the installation process.
We also deducted the cost of any further manufacturing or assembly
(including additional material and labor). We made an adjustment for
CEP profit in accordance with section 772(d)(3) of the Act. Finally, we
adjusted MHI's reported U.S. further manufacturing costs to include a
portion of MHI's G&A and interest expense.
We also deducted the value of spare and replacement parts which are
excluded from the scope of the investigation, from the starting price,
where the value of these spare and replacement parts was separately
identified in the contractual documentation relevant to the sale.
Normal Value/Constructed Value
For the reasons outlined in the ``Product Comparisons'' section of
this notice, we based NV on CV.
TKS
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of the respondent's cost of materials, fabrication,
SG&A and U.S. packing costs as reported in the U.S. sales database. In
accordance with section 773(e)(2)(A), we based SG&A and profit on the
amounts incurred and realized by the respondent in connection with the
production and sale of the foreign like product in the ordinary course
of trade, for consumption in the foreign country.
We relied on the respondent's CV amounts except in the following
specific instance wherein the reported costs were improperly valued:
For one Dallas Morning News sale, we included the costs of parts from
earlier unsold models.
We calculated imputed credit for CV purposes in accordance with the
methodology explained in the ``Constructed Export Price'' section of
this notice. We imputed credit expenses for CV using the weighted-
average home market short-term interest rate reported for the POI since
these sales were denominated in yen.
We also included in CV the costs of spare and replacement parts for
those U.S. sales where the value of these parts could not be separately
identified in the contractual documentation and therefore was not
excluded from CEP.
For selling expenses, we used the weighted-average home market
selling expense rate, calculated based on sales made in the ordinary
course of trade, and applied this rate to U.S. cost of manufacture.
In accordance with section 773(a)(6)(B), we added U.S. packing
costs to a CV net of packing.
MHI
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of the respondent's cost of materials, fabrication,
SG&A and U.S. packing costs as reported in the U.S. sales database. In
accordance with section 773(e)(2)(A), we based SG&A and profit on the
amounts incurred and realized by the respondent in connection with the
production and sale of the foreign like product in the ordinary course
of trade, for consumption in the foreign country.
We relied on the respondent's CV amounts except in the following
specific instances wherein the reported costs were improperly valued:
1. We increased materials and contract labor costs to account for
inputs purchased from affiliated parties at below cost prices; and
2. We recalculated G&A and interest expense to include all four
years of the POI.
We calculated imputed credit for CV purposes in accordance with the
methodology explained in the ``Constructed Export Price'' section of
this notice. We imputed credit expenses for CV using the weighted-
average home market short-term interest rate reported for the POI since
these sales were denominated in yen.
For selling expenses, we used the weighted-average home market
selling expense rate, calculated based on sales made in the ordinary
course of trade, and applied this rate to U.S. cost of manufacture.
In accordance with section 773(a)(6)(B), we added the U.S. packing
costs to a CV net of packing.
Price to CV Comparisons
TKS
For CEP to CV comparisons, we deducted from CV the weighted-average
home market direct selling expenses, pursuant to section 773(a)(8) of
the Act.
MHI
For CEP to CV comparisons, we deducted from CV the weighted-average
home market direct selling expenses including commissions, pursuant to
section 773(a)(8) of the Act.
[[Page 8034]]
Currency Conversion
Section 773A(a) of the Act directs the Department to convert
foreign currencies based on the dollar exchange rate in effect on the
date of sale of the subject merchandise, except if it is established
that a currency transaction on forward markets is directly linked to an
export sale. When a company demonstrates that a sale on forward markets
is directly linked to a particular export sale in order to minimize its
exposure to exchange rate losses, the Department will use the rate of
exchange in the forward currency sale agreement. In this case, although
one respondent reported that foreign exchange currency contracts
applied to its reported U.S. sales, the record information was not
sufficient to conclude that these contracts were directly linked to the
particular sales in question.
Therefore, for the purpose of the preliminary determination, we
made currency conversions based on the official exchange rates in
effect on the dates of the U.S. sales as certified by the Federal
Reserve Bank. Section 773A(a) directs the Department to use a daily
exchange rate in order to convert foreign currencies into U.S. dollars,
unless the daily rate involves a ``fluctuation.'' For this preliminary
determination, we have determined that a fluctuation exists when the
daily exchange rate differs from the benchmark rate by 2.25 percent.
The benchmark is defined as the rolling average of rates for the past
40 business days. When we determined a fluctuation existed, we
substituted the benchmark for the daily rate.
Further, section 773A(b) directs the Department to allow a 60-day
adjustment period when a currency has undergone a sustained movement.
Such an adjustment period is required only when a foreign currency is
appreciating against the U.S. dollar. The use of an adjustment period
was not warranted in this case, because the dates of sale occurred
within periods where the Japanese yen remained generally constant
against the U.S. dollar.
Verification
As provided in section 782(i) of the Act, we will verify all
information used in making our final determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all entries of LNPP systems,
additions, and components, whether assembled or unassembled, from
Japan, that are entered, or withdrawn from warehouse for consumption,
on or after the date of publication of this notice in the Federal
Register. Furthermore, because we are still in the process of
clarifying the definition of a subject LNPP system, addition, or
component, as explained in the ``Scope Issues'' section of this notice,
we are also directing the Customs Service to suspend liquidation of
entries of elements (parts or subcomponents) of components imported to
fulfill a contract for an LNPP system, addition, or component, from
Japan, that are entered, or withdrawn from warehouse for consumption,
on or after the date of publication of this notice in the Federal
Register.
In addition, in order to ensure that our suspension of liquidation
instructions are not so broad as to cover merchandise imported for non-
subject uses, foreign producers/exporters and U.S. importers in the
LNPP industry shall be required to provide certification that the
imported merchandise would not be used to fulfill an LNPP contract. We
will also request that these parties register with the Customs Service
the LNPP contract number pursuant to which the merchandise is imported.
With respect to entries of LNPP spare and replacement parts, and used
presses, from Japan, which are expressly excluded from the scope of the
investigation, we will instruct the Customs Service not to suspend
liquidation of these entries if they are separately identified and
valued in the LNPP contract pursuant to which they are imported.
The Customs Service will require a cash deposit or posting of a
bond equal to the estimated amount by which the normal value exceeds
the export price as shown below. These suspension of liquidation
instructions will remain in effect until further notice.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/Manufacturer margin
percentage
------------------------------------------------------------------------
Mitsubishi Heavy Industries, Ltd........................... 47.57%
Tokyo Kikai Seisakusho, Ltd................................ 58.14%
All Others................................................. 53.72%
------------------------------------------------------------------------
The All Others rate applies to all entries of subject merchandise
except for entries of merchandise produced by MHI and TKS.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
Case briefs or other written comments in at least ten copies must
be submitted to the Assistant Secretary for Import Administration no
later than May 24,1996, and rebuttal briefs, no later than May 30,
1996. A list of authorities used and an executive summary of issues
should accompany any briefs submitted to the Department. Such summary
should be limited to five pages total, including footnotes. In
accordance with section 774 of the Act, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs. Tentatively, the hearing
will be held on June 4, 1996, time and place to be determined, at the
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230. Parties should confirm by telephone the time,
date, and place of the hearing 48 hours before the scheduled time.
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, U.S. Department of Commerce, Room
B-099, within ten days of the 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 the issues to be
discussed. Oral presentations will be limited to issues raised in the
briefs. If this investigation proceeds normally, we will make our final
determination by 135 days after the publication of this notice in the
Federal Register.
This determination is published pursuant to section 733(f) of the
Act.
Dated: February 23, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-4729 Filed 2-29-96; 8:45 am]
BILLING CODE 3510-DS-P