[Federal Register: August 28, 1997 (Volume 62, Number 167)]
[Notices]
[Page 45623-45627]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28au97-36]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-841]
Notice of Final Determination of Sales at Less Than Fair Value:
Vector Supercomputers From Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 28, 1997.
FOR FURTHER INFORMATION CONTACT: Edward Easton or Sunkyu Kim, Office of
AD/CVD Enforcement II, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1777 or (202) 482-2613.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as
[[Page 45624]]
amended (``the Act''), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all citations to the Department's regulations are
to those codified at 19 CFR 353 (April 1, 1996).
Final Determination
We determine that vector supercomputers from Japan are being sold
in the United States at less than fair value (``LTFV''), as provided in
section 735(b) 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 preliminary determination of sales at less than fair
value in this investigation on March 28, 1997, (62 FR 16544, April 7,
1997) (``Preliminary Determination''), the following events have
occurred.
As discussed in the Preliminary Determination, on January 28, 1997,
we initiated a sales below the cost of production (``COP'')
investigation with respect to Fujitsu Ltd.'s (``Fujitsu'') home market
sales. Section D of the Department's questionnaire requesting COP and
constructed value (``CV'') data was issued to Fujitsu on February 12,
1997. Fujitsu submitted its response to Section D of the questionnaire
on April 14, 1997. Based on our analysis of Fujitsu's response to
Section D, we issued a supplemental questionnaire on April 28, 1997.
The response to this supplemental questionnaire was due on May 12,
1997. On May 7, 1997, at Fujitsu's request, we met with Fujitsu's
counsel and corporate representative concerning the Department's
Section D supplemental questionnaire. At the May 7 meeting, Fujitsu
raised concerns about the scope of the questions and the availability
of requested information. On May 8, 1997, Fujitsu requested an
extension of time until May 19, 1997, to submit its response to the
supplemental questionnaire. In its letter, Fujitsu stated that it would
file as much of its response as it could prepare by May 12, 1997, and
file the remainder of its response by May 19, 1997. We granted this
request on May 9, 1997.
On May 12, 1997, Fujitsu submitted a portion of its response to the
supplemental cost questionnaire. Fujitsu, however, failed to submit the
remainder of its response on May 19, 1997. On May 20, 1997, Fujitsu
submitted a letter stating that it would no longer participate in the
Department's investigation and that it would concentrate its opposition
to the petition in the material injury investigation conducted by the
International Trade Commission (``ITC''). In this letter, Fujitsu
stated that it based its decision on the conclusion that it could not
provide a complete response to the Department's supplemental cost
questionnaire by the May 19, 1997 deadline and that the company's
resources would be better served by participating in the ITC's
investigation. As a result of Fujitsu's decision to not complete its
response to the Department's supplemental questionnaire, we are
applying facts otherwise available in our final determination. For a
further discussion, see ``Facts Available'' section below.
As requested in the Preliminary Determination, comments on the
suspension of liquidation instructions were submitted by Fujitsu and
the petitioner, Cray Research, Inc. (``Cray''), on May 12, 1997. The
petitioner submitted its responses to Fujitsu's comments on May 19,
1997. For a further discussion, see Comments 2, 3, and 4, below.
Both Fujitsu and the petitioner submitted case briefs on July 7,
1997, and rebuttal briefs on July 11, 1997. At the request of Fujitsu,
a public hearing was held on July 16, 1997.
Scope of Investigation
The products covered by this investigation are all vector
supercomputers, whether new or used, and whether in assembled or
unassembled form, as well as vector supercomputer spare parts, repair
parts, upgrades, and system software, shipped to fulfill the
requirements of a contract entered into on or after April 7, 1997, for
the sale and, if included, maintenance of a vector supercomputer. A
vector supercomputer is any computer with a vector hardware unit as an
integral part of its central processing unit boards.
In general, the vector supercomputers imported from Japan, whether
assembled or unassembled, covered in this investigation are classified
under heading 8471 of the Harmonized Tariff Schedules of the United
States (``HTS''). Merchandise properly classifiable under HTS Number
8471.10 and 8471.30, however, is excluded from the scope of this
investigation. These references to the HTS are provided for convenience
and customs purposes. Our written description of the scope of this
investigation is dispositive.
This scope language has been modified from that issued in our
preliminary determination. The reason for the modification is discussed
in Comment 3, below.
Period of Investigation
The period of investigation (``POI'') is July 1, 1995 through June
30, 1996.
Facts Available
Section 776(a)(2) of the Act provides that if an interested party
(1) withholds information that has been requested by the Department,
(2) fails to provide such information in a timely manner or in the form
or manner requested, (3) significantly impedes an antidumping
investigation, or (4) provides such information but the information
cannot be verified, the Department is required to use facts otherwise
available (subject to subsections 782(c)(1) and (e)) to make its
determination. Section 776(b) of the Act provides that adverse
inferences may be used against an interested party if that party failed
to cooperate by not acting to the best of its ability to comply with
requests for information. See also ``Statement of Administrative
Action'' accompanying the URAA, H.R. Rep. No. 316, 103rd Cong., 2d
Sess. 870 (SAA). Fujitsu's decision not to respond fully to the
Department's supplemental cost questionnaire or to other requests for
information by the Department demonstrates that it failed to act to the
best of its ability in this investigation. Therefore, the Department
has determined that an adverse inference is appropriate. In addition,
for the reasons described in the Preliminary Determination, we find
that the application of adverse facts available is appropriate for NEC
as well. Consistent with Departmental practice in cases where
respondents refuse to participate, as facts otherwise available, we
have considered assigning a margin stated in the petition.
A. Fujitsu
In its petition, Cray alleged that Fujitsu had delivered a four
processor vector supercomputer system to a U.S. customer, Western
Geophysical Co., for petroleum industry modeling applications. Cray
alleged also that the U.S. customer had not paid for or contracted to
purchase the system and, consequently, was unable to calculate an
estimated dumping margin for this Fujitsu sale. (The only calculated
estimated dumping margin in the petition concerned vector supercomputer
systems offered to a different U.S. customer by NEC Corporation.) After
the initiation of this investigation, the petitioner contacted the
Department to report that Cray's allegation that Fujitsu had not been
paid by Western Geophysical Co. for this sale
[[Page 45625]]
was mistaken. See, Memorandum to the File from the Case Analysts, dated
August 11, 1997.
Section 776(c) provides that if the Department relies upon
secondary information, such as the petition, when resorting to facts
otherwise available, it must, to the extent practicable, corroborate
that information using independent sources that are reasonably at its
disposal. To corroborate the information the petitioner asserted with
respect to Fujitsu's U.S. sale, the Department conducted a computerized
search of published documents. See, Memorandum to the File, from the
Case Analysts, dated August 12, 1997. This search disclosed that the
October 23, 1995 issue of the Japan Economic Journal discussed
Fujitsu's sale of a four-processor supercomputer to Western Geophysical
Co. for a price of $2 million. The search also disclosed that the
November 1, 1995 issue of Japan Economic Institute Report (``JEI
Report'') discussed the Fujitsu sale of a four-processor supercomputer
to Western Geophysical Co. The JEI Report stated that the Fujitsu
supercomputer had a list price of $2 million. Both the Japan Economic
Journal and JEI Report reported that the sale was made by Fujitsu;
neither publication referred to the participation of a systems
integrator. On the basis of this information, the Department adjusted
the petition margin calculated for NEC to determine a margin for
Fujitsu based on facts otherwise available.
For the export price, we used Fujitsu's $2 million price for the
four-processor supercomputer sold to Western Geophysical Co. as the
starting price. We adjusted this starting price to account for the
absence of a systems integrator in the Western Geophysical Co. sale. We
compared this export price to the CV of a vector supercomputer system
calculated in the petition. We adjusted the petition CV to account for
the number of processors in Fujitsu's sale to Western Geophysical Co.
The resulting dumping margin of 173.08 percent was assigned to Fujitsu
as facts otherwise available. See, Memorandum to the File from the Case
Analyst, dated August 13, 1997.
B. NEC Corporation
As discussed in the Preliminary Determination, NEC Corporation
(``NEC'') failed to answer the Department's questionnaire. Accordingly,
the Department assigned to NEC the margin stated in the petition, 454
percent, as facts otherwise available. At the preliminary
determination, the Department corroborated the information contained in
the petition within the meaning of section 776(c) of the Act and found
the information to have probative value; i.e., it is both relevant and
reliable. Since the preliminary determination, no party (including NEC)
has presented to the Department any information to challenge the
appropriateness of the information contained in the petition as the
basis for a facts available margin for NEC. Accordingly, for the final
determination, we continue to assign NEC the margin stated in the
petition, 454 percent.
C. The All Others Rate
This investigation has the unusual circumstance of both foreign
manufacturer/exporters being assigned dumping margins on the basis of
facts otherwise available. NEC and Fujitsu are the only Japanese
manufacturers of the subject merchandise which have made competing bids
for sales to the United States. Section 735(c)(5) of the Act provides
that where the dumping margins established for all exporters and
exporters and producers individually investigated are determined
entirely under section 776, the Department ``* * * may use any
reasonable method to establish the estimated all-others rate for
exporters and producers not individually investigated, including
averaging the estimated weighted average dumping margins determined for
the exporters and producers individually investigated.'' This provision
contemplates that we weight-average the facts-available margins to
establish the all others rate. Where the data is not available to
weight-average the facts available rates, the SAA, at 873, provides
that we may use other reasonable methods.
Inasmuch as we do not have the data necessary to weight average the
NEC and Fujitsu facts-available margins, we have taken the simple
average of these margins to apply as the all others rate. This
calculation establishes an all others rate of 313.54 percent.
Interested Party Comments
Comment 1 Use of Facts Available for Fujitsu
The petitioner argues that Fujitsu's decision to end its
participation in the Department's investigation gives the Department no
option but to assign to Fujitsu a dumping margin based on facts
available. Further, the petitioner asserts that Fujitsu has not
cooperated with the Department in this investigation and that adverse
inferences are appropriate in assigning a facts available margin to
Fujitsu.
In choosing the appropriate adverse facts available margin, the
petitioner notes that although a facts available margin based solely on
the information contained in the petition would be consistent with both
the statute and Department practice, an alternative approach based on
certain data submitted by Fujitsu and adjusted by the petitioner would
be more accurate and, therefore, preferred. Using certain data from
Fujitsu's questionnaire responses, the petitioner calculated a facts
available dumping margin of 388.74 percent. This margin is based on a
comparison of an export price and constructed value for Fujitsu's
single U.S. sale made during the POI. In calculating the export price,
the petitioner made several adjustments to the export price information
submitted by Fujitsu. These adjustments include (1) an estimate of U.S.
indirect selling expenses based on SG&A expenses reported by Fujitsu's
U.S. subsidiary, Fujitsu America, Inc.'s (``FAI'') Supercomputer Group;
(2) use of a gross U.S. price which includes service revenues for a
shorter period of time than that used by Fujitsu; and (3) a
recalculation of freight charges, imputed credit, and inventory
carrying costs. In calculating the CV for Fujitsu's U.S. sale, the
petitioner calculated a value based on adjusted amounts for the cost of
manufacture, research and development, general and selling expenses and
profit.
Fujitsu acknowledges that the incompleteness of its unverified
information on the record in this investigation requires that the
Department establish a dumping margin on the basis of facts otherwise
available. Fujitsu asserts that the Department has a great deal of
discretion within which to assign a margin and requests that the
Department either assign the dumping margin calculated for the
preliminary determination or adjust the calculation in the petition
that was used to determine an alleged dumping margin for NEC.
DOC Position
The Department has assigned a margin based on facts otherwise
available for Fujitsu because Fujitsu refused to cooperate in our
investigation and prevented our making an accurate margin calculation.
We rejected Fujitsu's request to assign the dumping margin calculated
for the preliminary determination as facts available. This preliminary
margin was calculated before the Department had received Fujitsu's
responses to the cost-of-production and constructed value section of
our antidumping
[[Page 45626]]
questionnaire. For this final determination, the Department relied upon
information in the petition, with appropriate adjustments, which
Fujitsu suggested as an alternative to the preliminary determination
margin. However, we did not accept adjustments to the petition
information that Fujitsu made in its recalculation of the petition
margin where we were unable to corroborate the adjustment or verify the
data relied upon.
The Department also rejected the petitioner's estimated dumping
margin for Fujitsu. The petitioner's estimate relied on unverified
submissions as well as several of its own assumptions and adverse
inferences. Although the petitioner asserts that its calculation is
more accurate than relying on information in the petition, we believe
that its approach is speculative.
Comment 2 Entries to be Used in the United States Exclusively by
Fujitsu
Fujitsu asserts that the Department should not order the suspension
of liquidation on entries of covered merchandise for the exclusive use
of Fujitsu in the United States. Alternatively, Fujitsu suggests that
liquidation be suspended for such entries and that the cash deposit
rate for these entries be set at zero. Fujitsu argues that collecting
deposits on these entries is unreasonable inasmuch as they will never
be sold. The company cites to several Department determinations which
excluded certain products from the scope of an investigation on the
basis of end-use certificates.
The petitioner asserts that suspension of liquidation must be
ordered for these entries. Without suspension of liquidation, the
merchandise will enter the United States without the Department or the
U.S. Customs Service being in a position to verify that they were used
exclusively by Fujitsu. Similarly, the petitioner asserts that cash
deposits in the amount of the assigned antidumping duty margin be
collected to ensure that the merchandise is not sold after it's used by
Fujitsu. The petitioner would have the cash deposits returned to
Fujitsu only after the merchandise were reexported or destroyed under
the supervision of the Customs Service.
DOC Position
The Department agrees with the petitioner that liquidation of these
entries must be suspended because the merchandise is covered by the
scope of the investigation and will enter the customs territory of the
United States. In the event that merchandise were to be sold after
entry, the suspension of liquidation would safeguard the government's
ability to collect antidumping duties. With respect to the collection
of cash deposits, the Department is not authorized to order the
suspension of liquidation but then to set the cash deposit rate at zero
in circumstances where the entered merchandise is clearly covered by
the scope of the antidumping duty investigation.
We have examined the citations offered by Fujitsu. They are
concerned with investigations in which the scope was defined by the use
of the product and other uses were not covered by the scope of
investigation. In this investigation, Fujitsu is claiming that vector
supercomputer systems that it imports into the United States for its
own use ought to be exempt from cash deposits from the order because a
related company will be using the covered merchandise exclusively. This
is not the situation where certain uses of a vector supercomputer were
excluded from the scope of the investigation.
Comment 3 Contracts Entered Into Prior to Suspension of Liquidation
Fujitsu requests that the Department clarify that the suspension of
liquidation instructions do not apply to ``follow on'' importations
pursuant to contracts for the sale of vector supercomputers entered
into prior to the date of suspension of liquidation in this
investigation, April 7, 1997.
Although the petitioner did not address Fujitsu's request in its
pre-hearing submissions, it objected to this request at the hearing.
DOC Position
The Department agrees with Fujitsu. We had intended that the
suspension of liquidation instructions in our Preliminary Determination
would apply to entries pursuant to any contract for the sale of a
vector supercomputer system on or after the date of its their
publication in the Federal Register.
Comment 4 Reporting Requirements
Both the petitioner and Fujitsu commented on the Department's
requirements set forth in the Preliminary Determination for reporting
information to the U.S. Customs Service and the Department on entry of
the subject merchandise.
This information included copies of the contracts pursuant to which
the entries were being made, a description of the merchandise being
entered, the actual or estimated price of the complete vector
supercomputer system, and a schedule of all future shipments to be made
pursuant to the contract. Both parties were concerned that much of the
information requested by the Department in the Preliminary
Determination was not necessary.
DOC Position
On the basis of these comments and consultations with the U.S.
Customs Service, the Department is requiring only that the U.S.
importer submit with its entry summary a detailed description of the
merchandise included in the entry with documentation that identifies
the contract pursuant to which the merchandise is being imported. After
examining this documentation for consistency with the entry summary,
the Customs Service will forward the documentation to the Department.
Detailed descriptions of entries and the identification of the relevant
sales contracts are necessary for the Department to be apprised of
entries subject to the order independent of administrative reviews and
scope inquiries. We expect, also, that the petitioner will inform the
Department when it becomes aware of U.S. vector supercomputer contracts
being awarded to Japanese manufacturers.
Continuation of Suspension of Liquidation
In accordance with section 735(c)(4)(A) of the Act, we are
directing the Customs Service to continue to suspend liquidation of all
entries of vector supercomputers from Japan, as defined in the ``Scope
of Investigation'' section of this notice, that are entered, or
withdrawn from warehouse, for consumption on or after April 7, 1997,
the date of publication of our preliminary determination in the Federal
Register. For these entries, 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.
------------------------------------------------------------------------
Margin
MFR/producer exporter percentage
------------------------------------------------------------------------
Fujitsu Ltd................................................ 173.08
NEC Corp................................................... 454.00
All Others................................................. 313.54
------------------------------------------------------------------------
Entry summaries covering merchandise within the scope of this
investigation must be accompanied by documentation provided by the U.S.
importer which identifies the vector supercomputer contract pursuant to
which the merchandise is imported and describes in detail the
merchandise included in the entry. After examining this documentation
for consistency with
[[Page 45627]]
the entry summary, the Customs Service will forward the documentation
to the Department.
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. As our final determination is affirmative,
the ITC will determine whether these imports are causing material
injury, or threat of material injury, to the industry within 45 days of
its receipt of this notification.
If the ITC determines that material injury, or threat of material
injury, does not exist, the proceeding will be terminated and all
securities posted will be refunded or canceled. If the ITC determines
that such injury does exist, the Department will issue an antidumping
duty order directing Customs officials to assess antidumping duties on
all imports of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the effective date of the
suspension of liquidation.
This determination is published pursuant to section 735(d) of the
Act.
Dated: August 20, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-22968 Filed 8-27-97; 8:45 am]
BILLING CODE 3510-DS-P