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Notice of Preliminary Determination of Sales at Less Than Fair Value: Metal Calendar Slides from Japan

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Start Preamble

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a petition filed by Stuebing Automatic Machine Start Printed Page 5245Company (Petitioner), the U.S. Department of Commerce (the Department) initiated and is conducting an investigation of sales of metal calendar slides (MCS) from Japan for the period April 1, 2004 through March 31, 2005. See Notice of Initiation of Antidumping Duty Investigation: Metal Calendar Slides from Japan, 70 FR 43122 (July 26, 2005) (Initiation Notice). The Department preliminarily determines that MCS 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(b) of the Tariff Act of 1930, as amended (the Act). The estimated margins of sales at LTFV are listed in the “Suspension of Liquidation” section of this notice. Interested parties are invited to comment on this preliminary determination.

EFFECTIVE DATE:

February 1, 2006.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Scott Lindsay, Dara Iserson, or Kimberley Hunt, AD/CVD Operations, Office 6, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-0780, (202) 482-4052, or (202) 482-1272, respectively.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Case History

This investigation was initiated on July 19, 2005. See Initiation Notice. Since the initiation of the investigation, the following events have occurred. On August 3, 2005, the Department issued a letter providing interested parties an opportunity to comment on a proposed set of model-match criteria. We received comments in response to this letter from Petitioner and Nishiyama Kinzoku Co., Ltd. (Nishiyama). on August 17, 2005. Based on these submissions, we determined the appropriate model-match characteristics. See Memorandum to Maria MacKay through Thomas Gilgunn, “Selection of Model Matching Criteria for Purposes of the Antidumping Duty Questionnaire” (September 26, 2005).

On August 11, 2005, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that imports of the products subject to this investigation are materially injuring an industry in the United States producing the domestic like product. See Metal Calendar Slides from Japan, 70 FR 48778 (August 19, 2005) (ITC Preliminary Determination).

On September 21, 2005, the Department selected Nishiyama Kinzoku Co., Ltd. (Nishiyama) as the sole respondent in this investigation. See Respondent Selection section below. The Department issued its section A of the questionnaire to Nishiyama on September 21, 2005 and sections B-D on September 27, 2005.[1] Nishiyama submitted its response to section A on October 28, 2005, and its response to sections B and C on November 14, 2005. The Department issued a supplemental questionnaire to Nishiyama on December 7, 2005. We received the supplemental response for sections A-C on December 27, 2005. Nishiyama submitted its section D response on December 30, 2005.

On November 2, 2005, Nishiyama notified the Department of its intention to use its fiscal year (FY) (calendar year 2004), rather than the period of investigation (POI), as the basis for reporting variable manufacturing cost and total manufacturing cost in its November 14, 2005 sections B and C responses. Petitioner commented on this cost reporting period shift in its November 25, 2005 submission. On November 28, 2005, the Department requested additional information from Nishiyama in order to determine the appropriateness of its use of its FY costs. Based on our analysis of Nishiyama's December 12, 2005 response, we allowed the shift because there were no significant cost differences between the periods. See Letter from Barbara E. Tillman to Nishiyama, “Antidumping Duty Investigation of Metal Calendar Slides from Japan” (December 27, 2005).

On November 10, 2005, Petitioner requested that the Department extend the preliminary determination in this investigation from December 6, 2005 to January 25, 2006. We postponed the preliminary determination to January 25, 2006, under section 733(c)(1) of the Act. See Notice of Postponement of Preliminary Determination in the Antidumping Duty Investigation of Metal Calendar Slides from Japan, 70 FR 70059 (November 21, 2005).

On January 19, 2006, Petitioner submitted comments regarding the preliminary determination. Due to the statutory deadline governing this investigation, we were unable to fully analyze these comments for the purposes of the preliminary determination. If necessary, the Department will issue an additional supplemental questionnaire to clarify issues raised by Petitioner.

Although critical circumstances were not alleged in the petition, Petitioner maintained that there is a reasonable basis to believe or suspect that critical circumstances will exist with regard to imports of MCS from Japan. See Petition for Imposition of Antidumping Duties on Metal Calendar Slides from Japan (June 29, 2005) (Petition). In the Petition, Petitioner requested that the Department monitor imports of MCS pursuant to section 351.206(g) of the Department's regulations. In the Initiation Notice, the Department stated that it would monitor imports of MCS from Japan and would request that U.S. Customs and Border Protection (CBP) compile information on an expedited basis regarding entries of the subject merchandise. Initiation Notice, 70 FR at 43124.

The Department has obtained CBP data covering entries of subject merchandise from January 1, 2003, through October 31, 2005. We placed this data on the record on January 10, 2006. See Memorandum to the File from Dara Iserson, “Antidumping Duty Investigation of Metal Calendar Slides from Japan: The Placing of U.S. Bureau of Customs and Border Protection IM-115 Data on the Record” (January 10, 2006). In addition, Nishiyama submitted to the Department the volume and value of its monthly shipments to the United States for the period 2003 through 2005. On January 19, 2006, Petitioner alleged critical circumstances. Pursuant to section 351.206(c)(2)(ii) of the Department's regulations, the Department will issue its preliminary finding with respect to critical circumstances within 30 days of Petitioner's allegation.

Respondent Selection

Section 777A(c)(1) of the Act directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. In the Petition, Petitioners identified five potential producers and exporters of MCS in Japan: Nishiyama, BSI Corp., Sanko Shoji KK, Taiyo Shoko KK, and KK Shino Kanagu. On August 5, 2005, the Department sent a cable to the U.S. Embassy in Tokyo, Japan requesting information about the potential producers/exporters of MCS. See Memorandum to the File from Dara Iserson, “Metal Calendar Slides from Start Printed Page 5246Japan - Mini Quantity and Value Questionnaire Responses and Respondent Selection” (September 21, 2005) (placing the cable to the embassy on the record) (Mini Q&V Memorandum). The Embassy's August 9, 2005, reply confirmed that Nishiyama produced MCS and exported MCS to the United States. In addition, Sanko Shoji KK, Taiyo Shoko KK, and KK Shino Kanagu each informed the U.S. Embassy that they produce MCS and distribute them in the Japanese market, but do not directly export MCS to the United States. Finally, the U.S. Embassy stated that it was unable to obtain any information regarding BSI Corp.

On August 18, 2005, the Department sent Nishiyama, BSI Corp., Sanko Shoji KK, Taiyo Shoko KK, and KK Shino Kanagu letters requesting information on the total quantity and value of MCS that each produced and/or exported to the United States during the POI. We also requested that, if the company did not produce the product, it provide the Department with the total quantity and value of subject merchandise that it exported to the United States during the POI. On August 26, 2005, we received a response from BSI Corp. certifying that it neither produced nor exported subject merchandise to the United States during the POI. On August 31, 2005, we received a response from Nishiyama certifying the amount of in-scope merchandise it produced in Japan and exported to the United States during the POI. On September 7, 2005, we received a response from Sanko Shoji KK, certifying that it has never made shipments of MCS to the United States and that it has only made sales in its home market. To date, the Department has not received a response from Taiyo Shoko KK or KK Shino Kanagu.

Based on our analysis of the information collected by the U.S. Embassy and the information provided in responses to the letters requesting quantity and value information, we determined that Nishiyama was the only known exporter of metal calendar slides to the United States. See Mini Q&V Memorandum. Therefore, Nishiyama is the sole respondent in this investigation and the Department has calculated an individual dumping margin for the company. See section 777A(c)(2)(B) of the Act. See Mini Q&V Memorandum (providing the complete analysis of the respondent selection).

Period of Investigation

The POI is April 1, 2004 through March 31, 2005. This period corresponds to the four most recent fiscal quarters prior to the month of filing of the Petition (i.e., June 2005) involving imports from a market economy, and is in accordance with the Department's regulations. See 19 CFR 351.204(b)(1).

Scope of Investigation

For the purpose of this investigation, the product covered is MCS. The products covered in this investigation are “V” and/or “U” shaped MCS manufactured from cold-rolled steel sheets, whether or not left in black form, tin plated or finished as tin free steel (TFS), typically with a thickness from 0.19 mm to 0.23 mm, typically in lengths from 152 mm to 915 mm, typically in widths from 12 mm to 29 mm when the slide is lying flat and before the angle is pressed into the slide (although they are not typically shipped in this “flat” form), that are typically either primed to protect the outside of the slide against oxidization or coated with a colored enamel or lacquer for decorative purposes, whether or not stacked, and excluding paper and plastic slides. MCS are typically provided with either a plastic attached hanger or eyelet to hang and bind calendars, posters, maps or charts, or the hanger can be stamped from the metal body of the slide itself. These MCS are believed to be classified under Harmonized Tariff Schedule of the United States (HTSUS) subheading 7326.90.1000 (Other articles of iron and steel: Forged or stamped; but not further worked: Other: Of tinplate). This HTSUS number is provided for convenience and U.S. Customs and Border Protection purposes. The written description of the scope of this investigation is dispositive.

Date of Sale

Nishiyama reported invoice date as the date of sale for both the home and U.S. markets. Nishiyama maintains that it makes no contract sales in either market. As such, Nishiyama maintains that its invoice, issued at the time of shipment, is the first document that establishes the price and quantity of the sale. Nishiyama contends that although its home market and U.S. customers issue purchase orders, the terms of sale including the quantity and price may change at any point up to the time of shipment. Nishiyama submitted documentation for home market and U.S. sales for which the terms of sale shown on the invoices differed from the terms of sale on the purchase orders. Because the material terms of sale are established when the invoice is issued, and because of our presumption that invoice date is the date of sale, as stated in section 351.401(i) of the Department's regulations, we are using invoice date as the date of sale for all of Nishiyama's sales in both markets.

Cost Reporting Period

As noted above, on November 2, 2005, Nishiyama notified the Department that it intended to report its total cost of manufacturing and variable cost of manufacturing for its November 14, 2005 section B and C responses based on the company's FY rather than the POI. On November 28, 2005, the Department issued a cost period shift questionnaire. Based on our analysis of Nishiyama's December 12, 2005 response, we allowed the shift, because there were no significant cost differences between the two periods. See Letter to Nishiyama, Re: “Antidumping Investigation of Metal Calendar Slides from Japan” (December 27, 2005).

Fair Value Comparisons

To determine whether sales of MCS to the United States were made at LTFV, we compared export price (EP) to normal value (NV), as described in the “U.S. Price” and “Normal Value” sections below.

U.S. Price

Section 772(a) of the Act defines EP as “the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States . . . ,” as adjusted under subsection (c). For purposes of this investigation, Nishiyama classified all of its U.S. sales as EP sales. Nishiyama has reported that it sold and shipped the subject merchandise directly to unaffiliated customers in the U.S. market and that it did not make any U.S. sales through an affiliated U.S. importer. Therefore, we preliminarily determine that Nishiyama's transactions were EP sales.

We calculated the EP in accordance with section 772(a) of the Act. We based EP price on Nishiyama's Cost and Freight (C&F) price to its unaffiliated U.S. customers. We then made appropriate deductions for foreign inland freight, domestic brokerage, and international freight pursuant to section 772(c) of the Act.

Normal Value

A. Selection of Comparison Market

Section 773(a)(1) of the Act directs the Department to calculate NV based on the price at which the foreign like product is first sold in the home market, Start Printed Page 5247provided that the merchandise is sold in sufficient quantities (or value, if quantity is inappropriate), and that there is no particular market situation that prevents a proper comparison with the EP. Under the statute, the Department will normally consider quantity (or value) insufficient if it is less than five percent of the aggregate quantity (or value) of sales of the subject merchandise to the United States. See Section 773(a)(1)(C) of the Act. We found that Nishiyama had a viable home market for MCS. As such, Nishiyama submitted its home market sales data for the calculation of NV. In deriving NV, we made adjustments as detailed in the “Calculation of Normal Value Based on Home Market Prices” section below.

C. Cost of Production Analysis

On December 2, 2005, Petitioner alleged that Nishiyama made sales in the home market at less than the cost of production (COP). Based on these allegations, and in accordance with section 773(b)(2)(A)(I) of the Act, we found reasonable grounds to believe or suspect that MCS sales were made in Japan at prices below the COP. See Memorandum from the Team to Barbara E. Tillman, “Petitioner's Allegation of Sales Below the Cost of Production for Nishiyama Kinzoku Co., Ltd. (Nishiyama)” (December 14, 2005). As a result, the Department is conducting an investigation to determine whether Nishiyama made home market sales of MCS at prices below COP during the POI within the meaning of section 773(b) of the Act.

1. Calculation of Cost of Production

In accordance with section 773(b)(3) of the Act, we calculated a weighted-average COP based on the sum of the cost of materials and fabrication for the foreign like product, plus amounts for the home market selling, general, and administrative (SG&A) expenses, including interest expenses and packing expenses. We relied on the COP data submitted by Nishiyama in its cost questionnaire responses, except as noted below:

  • we revised Nishiyama's reported financial expense rate to include certain exchange losses;
  • we revised the reported cost of goods sold denominator used to calculate both the G&A and financial expense rates to account for the ending finished goods inventory, and to deduct certain selling expenses, and packing costs.

For further details regarding these adjustments, see Memorandum from Ernest Gzyrian to the File, “Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Determination - Nishiyama Kinzoku, Co., Ltd.” (January 25, 2005) (COP Memo).

2. Test of Home Market Sales Prices

We compared the weighted-average COP for Nishiyama to its home market sales prices of the foreign like product, as required under section 773(b) of the Act, to determine whether these sales had been made at prices below the COP within an extended period of time (i.e., a period of one year) in substantial quantities, and whether such prices were sufficient to permit the recovery of all costs within a reasonable period of time. On a model-specific basis, we compared the COP to the home market prices, less any applicable movement charges, discounts, rebates, and direct and indirect selling expenses.

3. Results of the COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of the respondent's sales of a given product during the POI are at prices less than the COP, we do not disregard any below-cost sales of that product, because we determine that in such instances the below-cost sales were not made in substantial quantities. Where 20 percent or more of the respondent's sales of a given product during the POI are at prices less than the COP, we determine that the below-cost sales represent substantial quantities within an extended period of time, in accordance with section 773(b)(1)(A) of the Act. In such cases, we also determine whether such sales were made at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(1)(B) of the Act.

We found that more than 20 percent of Nishiyama's home market sales of a given product during the POI were at prices below the COP, and in addition, the below-cost sales of the product were at prices which would not permit recovery of all costs within a reasonable time period, in accordance with section 773(b)(2)(D) of the Act. We therefore excluded these sales and used the remaining sales, if any, as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

D. Calculation of Normal Value Based on Home Market Prices

We calculated NV based on ex-works, “free on board,” or delivered prices to home market customers. We recalculated the starting price taking into account, where appropriate, billing adjustments and rebates in accordance with section 773(a)(6)(B)(iii) of the Act. In accordance with 19 CFR 351.401(c), we added other revenue (e.g., inland freight revenue), where applicable. Pursuant to section 773(a)(6)(B)(ii) of the Act, we made deductions from the starting price for inland freight, when appropriate. In accordance with sections 773(a)(6)(A) and (B) of the Act, we added U.S. packing costs and deducted home market packing, respectively. In accordance with section 773(a)(6)(iii) of the Act and 19 CFR 351.410(c-d), we made circumstances of sale adjustments for direct selling expenses, bank charges, and credit expenses.

We also made adjustments, in accordance with 19 CFR 351.410(e), for indirect selling expenses incurred on comparison market or U.S. sales where commissions were granted on sales in one market but not in the other, (i.e., commission offset). Specifically, where commissions were incurred in the U.S. market, but not in the home market, we limited the amount of the commission offset to the lesser of indirect selling expenses (including inventory carrying cost) incurred in the home market or the commissions paid in the U.S. market.

F. Level of Trade

In accordance with section 773(a)(1)(B)(I) of the Act, to the extent practicable, we determine NV based on sales in the home market at the same LOT as U.S. sales. See 19 CFR 351.412. The NV LOT is the level of the starting-price sale in the home market. For EP, the U.S. LOT is based on the starting price, which is usually from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer in the home market. If the comparison-market sales are at a different LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Act.

In the current investigation, Nishiyama claimed two levels of trade in the home market and a single separate level of trade in the U.S. market. In addition, Nishiyama requested an LOT adjustment. Nishiyama maintains that its HM “LOT 1” sales are made to large calendar manufacturers who provide estimates of projected MCS purchases for the entire year. Nishiyama maintains that these estimates eliminate the need for the Start Printed Page 5248extensive coordination between sales and production that is required on “order by order” sales and enables Nishiyama to produce MCS during the non-peak season. Nishiyama contends that the “LOT 2” sales are made to small calendar manufacturers that do not provide estimates to Nishiyama, rather, Nishiyama produces MCS for these customers on an “order by order” basis. Nishiyama maintains that there is a shorter production lead time for this type of customer. Nishiyama also maintains that it has to make significant additional efforts to coordinate sales and production due to the shorter delivery schedules, smaller orders, and level of customization. Nishiyama claims that the U.S. sales more closely correspond to “LOT 1” because the U.S. customers place orders with longer lead times and do not require significant time for coordination with the customer.

In our original questionnaire and our supplemental questionnaire, we asked Nishiyama to provide a complete list of all the selling activities performed and services offered in the U.S. market and the home market for each claimed LOT. Pursuant to 19 CFR 351.412(c)(2), substantial differences in selling activities are a necessary condition for determining there is a difference in the stage of marketing. While Nishiyama claimed that there were some differences between these distribution channels, which it claimed constitute separate LOTs, we find that these differences are not differences in selling functions and do not create two LOTs. Information submitted by Nishiyama with respect to its claimed LOTs primarily focused on the differences in the lead times for the order, the size of the manufacturers making the orders, and the amount of coordination needed when dealing with large versus small manufacturers. Nishiyama did not submit any information on the specific selling activities and functions for each proposed LOT nor did it define the stages of marketing of each proposed LOT. Nishiyama has not demonstrated substantial differences in the selling activities in the U.S. market and home market. As such, Nishiyama has not adequately supported its claim that it has two LOTs in the home market and a different, separate LOT in the U.S. market, or that we should grant it an LOT adjustment.

Currency Conversions

We made currency conversions into U.S. dollars in accordance with section 773A of the Act based on exchange rates in effect on the dates of the U.S. sales, as obtained from the Federal Reserve Bank (the Department's preferred source for exchange rates).

Verification

In accordance with section 782(i) of the Act, we will verify the questionnaire responses of Nishiyama before making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, we are directing CBP to suspend liquidation of all entries of MCS 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. We are also instructing CBP to require a cash deposit or the posting of a bond equal to the weighted-average dumping margins as indicated in the chart below. These instructions suspending liquidation will remain in effect until further notice.

The weighted-average dumping margins are as follows:

Producer/ExporterWeighted-Average Margin (Percentage)
Nishiyama Kinzoku Co., Ltd.7.68%
All Others7.68%

Disclosure

In accordance with 19 CFR 351.224(b), the Department will disclose to interested parties, the calculations performed in this preliminary determination within five days of the date of the public announcement.

Public Comment

Interested parties are invited to comment on the preliminary determination. Interested parties may submit case briefs either 50 days after the date of publication of this notice or ten days after the issuance of the verification reports, whichever is later. See 19 CFR 351.309(c)(1)(I). Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days after the deadline for the submission of case briefs. See 19 CFR 351.309(d). A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries 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. If a request for a hearing is made, we will tentatively hold the hearing two days after the deadline for submission of rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230, at a time and in a room to be determined. Parties should confirm by telephone the date, time, and location of the hearing 48 hours before the scheduled date.

Interested parties who wish to request a hearing, or to participate in a hearing if one is requested, must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. At the hearing, oral presentations will be limited to issues raised in the briefs. See 19 CFR 351.310(c). Unless the Department receives a request for a postponement pursuant to section 735(a)(2) of the Act, the Department will make its final determination no later than 75 days after the date of this preliminary determination. See section 735(a)(1) of the Act.

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the ITC of the Department's preliminary affirmative determination. If the final determination in this proceeding is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether imports of MCS from Japan are materially injuring, or threatening material injury to, the U.S. industry. See section 735(b)(2) of the Act.

This determination is issued and published pursuant to sections 733(f) and 777(i)(1) of the Act.

Start Signature

Dated: January 25, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.

End Signature End Supplemental Information

Footnotes

1.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales, or, if the home market is not viable, of sales in the most appropriate third-country market (this section is not applicable to respondents in non-market economy (NME) cases). Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production (COP) of the foreign like product and the constructed value (CV) of the merchandise under investigation.

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[FR Doc. E6-1348 Filed 1-31-06; 8:45 am]

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