Brake Rotors From the People's Republic of China: Final Results and Partial Rescission of the 2004/2005 Administrative Review and Notice of Rescission of 2004/2005 New Shipper Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On May 8, 2006, the Department of Commerce (“the Department”) published the preliminary results of the 2004/2005 administrative and new shipper reviews of the antidumping duty order on brake rotors from the People's Republic of China (PRC). See Brake Rotors From the People's Republic of China: Preliminary Results and Partial Rescission of the 2004/2005 Administrative Review and Preliminary Notice of Intent to Rescind the 2004/2005 New Shipper Review, 71 FR 26736 (May 8, 2006) (“Preliminary Results/Intent to Rescind”). At that time, we invited interested parties to comment on our preliminary results and preliminary notice of intent to rescind the new shipper review. Based on our analysis of the comments received, we have made certain changes to our calculations. The final dumping margins for these reviews are listed in the “Final Results of Review” section below.

EFFECTIVE DATE:

November 14, 2006.

FOR FURTHER INFORMATION CONTACT:

Erin Begnal or Michael Quigley, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-1442 and (202) 482-4047, respectively.

SUPPLEMENTARY INFORMATION:

Background

The period of review (“POR”) is April 1, 2005, through March 31, 2006. We published the preliminary results in the 2004/2005 administrative review and preliminary intent to rescind the new shipper review in the Federal Register on May 8, 2006. See Preliminary Results/Intent to Rescind, 71 FR 26736.

On June 19, 2006, we received a case brief on behalf of the petitioner, the Coalition for the Preservation of American Brake Drum and Rotor After Market Manufacturers (“petitioner”). In addition, we received a case brief on behalf of respondents China National Industrial Machinery Import & Export Corporation (“CNIM”), Qingdao Gren (“Group”) Co. (“Gren”), Shanxi Fengkun Metallurgical Limited Company and Shanxi Fengkun Foundry Limited Company (“Fengkun”), Shenyang Yinghao Machinery Co., Ltd. (“Yinghao”), Laizhou Auto Brake Equipment Company (“LABEC”), Yantai Winhere Auto-Part Manufacturing Co., Ltd. (“Winhere”), Longkou Haimeng Machinery Co., Ltd. (“Haimeng”), Laizhou Luqi Machinery Co., Ltd. (“Luqi”), Laizhou Hongda Auto Replacement Parts Co. (“Hongda”), Hongfa Machinery (“Dalian”) Group Co., Ltd. (“Hongfa”), Qingdao Meita Automotive Industry Co., Ltd. (“Meita”), and Shandong Huanri (“Group”) General Company, Shandong Huanri Group Co., Ltd., and Laizhou Huanri Automobile Parts Co., Ltd. (“Huanri”). Additionally, we received a case brief on behalf of Wecly International, an importer of subject merchandise, on June 19, 2006.

On June 22, 2006, we requested that all mandatory respondents in the administrative and new shipper reviews submit consumption data, for the POR, for both bentonite and coal powder. On July 5, 2006, we received responses to our June 22, 2006, questionnaire from Haimeng, Xiangfen Hengtai Brake System Co., Ltd. (“Hengtai”), Hongfa, Meita, Winhere and Shanxi Zhongding Auto Parts Co., Ltd. (“SZAP”). On July 11, 2006, we received rebuttal briefs from the petitioners and from LABEC, Winhere, Haimeng, Luqi, Hongda, Hongfa, Meita, and Huanri (collectively, the “Trade Pacific respondents”).

On July 10, 2006, we issued a request for comments on the Department's proposed methodology to value bentonite and coal powder as direct materials, as well as the consumption data obtained from respondents. On July 17, 2006, the Trade Pacific respondents and the petitioner each filed comments. On July 24, 2006, both the Trade Pacific respondents and the petitioner filed rebuttal comments.

In the case and rebuttal briefs received from the parties after the Preliminary Results/Intent to Rescind, we received extensive comments on the Department's decision to select respondents via sampling. For further details on these comments, as well as others, and the Department's positions on each, please see the memorandum to David M. Spooner, Assistant Secretary for Import Administration, from Stephen J. Claeys, Deputy Assistant Secretary for Import Administration, regarding Issues and Decision Memorandum for the Final Results in the 2004/2005 Administrative Review and New Shipper Review of Brake Rotors from the People's Republic of China (November 6, 2006) (“Decision Memorandum”) and the company-specific analysis memoranda, which are on file in Import Administration's Central Records Unit, room B-099 of the Department of Commerce building. The Decision Memorandum is also available at http://ia.ita.doc.gov.

Scope of the Order

The products covered by this order are brake rotors made of gray cast iron, whether finished, semifinished, or unfinished, ranging in diameter from 8 to 16 inches (20.32 to 40.64 centimeters) and in weight from 8 to 45 pounds (3.63 to 20.41 kilograms). The size parameters (weight and dimension) of the brake rotors limit their use to the following types of motor vehicles: automobiles, all-terrain vehicles, vans and recreational vehicles under “one ton and a half,” and light trucks designated as “one ton and a half.”

Finished brake rotors are those that are ready for sale and installation without any further operations. Semi-finished rotors are those on which the surface is not entirely smooth, and have undergone some drilling. Unfinished rotors are those that have undergone some grinding or turning.

These brake rotors are for motor vehicles, and do not contain in the casting a logo of an original equipment manufacturer (“OEM”) that produces vehicles sold in the United States. (e.g., General Motors, Ford, Chrysler, Honda, Toyota, Volvo). Brake rotors covered in this order are not certified by OEM producers of vehicles sold in the United States. The scope also includes composite brake rotors that are made of gray cast iron, which contain a steel plate, but otherwise meet the above criteria. Excluded from the scope of this order are brake rotors made of gray cast iron, whether finished, semifinished, or unfinished, with a diameter less than 8 inches or greater than 16 inches (less than 20.32 centimeters or greater than 40.64 centimeters) and a weight less than 8 pounds or greater than 45 pounds (less than 3.63 kilograms or greater than 20.41 kilograms).

Brake rotors are currently classifiable under subheading 8708.39.5010 of the Harmonized Tariff Schedule of the United States (“HTSUS”).¹ Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the scope of this order is dispositive.

Partial Rescission of Administrative Review

We are rescinding the administrative review with respect to Longkou Jinzheng Machinery Co., Ltd.; Xianghe Xumingyuan Auto Parts Co.; National Automotive Industry Import & Export Corporation or China National Automotive Industry Import & Export Corporation, and manufactured by any company other than Shandong Laizhou Capco Industry; Shandong Laizhou Capco Industry, and manufactured by any company other than Shandong Laizhou Capco Industry; Laizhou Luyuan Automobile Fittings Co., and manufactured by any company other than Laizhou Luyuan Automobile Fittings Co. or Shenyang Honbase Machinery Co., Ltd.; Shenyang Honbase Machinery Co., Ltd., and manufactured by any company other than Laizhou Luyuan Automobile Fittings Co., or Shenyang Honbase Machinery Co., Ltd.; Dixion Brake System (Longkou) Ltd.; and Laizhou Wally Automobile Co., Ltd. We are rescinding these reviews either because we found no evidence that any of these companies made shipments of the subject merchandise during the POR, in accordance with 19 CFR 351.213(d)(3), or these companies consented to a rescission of the administrative review pursuant to 19 CFR 351.214(j).

Bona Fide Sale Analysis—SZAP

For the reasons stated below, we continue to find that SZAP's reported U.S. sale during the POR does not appear to be a bona fide sale, based on the totality of the facts on the record. See, e.g., Glycine From The People's Republic of China: Rescission of Antidumping Duty New Shipper Review of Hebei New Donghua Amino Acid Co., Ltd., 69 FR 47405, 47406 (August 5, 2004). In examining the totality of the circumstances, the Department examines whether the transaction is “commercially reasonable” or “atypical.” See Freshwater Crawfish Tail Meat from the People's Republic of China: Notice of Final Results of Antidumping Duty New Shipper Review and Final Rescission of Antidumping Duty New Shipper Review, 68 FR 1439, 1440 (January 10, 2003). Atypical or non-typical in this context means unrepresentative of a normal business practice. See Am. Silicon Techs. v. United States, 110 F. Supp. 2d 992, 995 (CIT 2000). The Department considers a number of factors in its bona fides analysis, “all of which may speak to the commercial realities surrounding an alleged sale of subject merchandise.” See Hebei New Donghua Amino Acid Co., Ltd. v. United States, 374 F. Supp. 2d 1333, 1342, (CIT 2005) (“New Donghua”) (citation omitted).

Although some bona fides issues may share commonalities across various Department cases, the Department examines the bona fide nature of a sale on a case-by-case basis, and the analysis may vary with the facts surrounding each sale. See Tianjin Tiancheng Pharmaceutical Co., Ltd. v. United States, 366 F. Supp. 2d 1246, 1260 (CIT 2005) (“TTPC”) (citing Certain Preserved Mushrooms From the People's Republic of China: Final Results and Partial Rescission of the New Shipper Review and Final Results and Partial Rescission of the Third Antidumping Duty Administrative Review, 68 FR 41304 (July 11, 2003), and accompanying Issues and Decision Memorandum at 20). In TTPC, the court affirmed the Department's practice of considering that “any factor which indicates that the sale under consideration is not likely to be typical of those which the producer will make in the future is relevant,” and that “the weight given to each factor investigated will depend on the circumstances surrounding the sale.” Id., 366 F. Supp. 2d at 1250, 1263. In New Donghua, the court upheld the Department's practice of “examin{ing} objective, verifiable factors to ensure that a sale is not being made to circumvent an antidumping duty order.” New Donghua, 374 F. Supp. 2d at 1339.

In examining the bona fide nature of SZAP's sale, we find that: 1) the difference in the sales price of SZAP's single POR sale as compared to the prices of its subsequent sales; 2) the quantity of its single POR sale as compared to its subsequent sales; 3) questionable sales documentation pertaining to SZAP's U.S. sale; and finally, 4) other indicia of a non-bona fide transaction, all demonstrate that the single sale under review was not bona fide. See Memorandum to James C. Doyle through Christopher D. Riker from Erin C. Begnal regarding Bona Fides Analysis and Intent to Rescind New Shipper Review of Brake Rotors from the People's Republic of China for Shanxi Zhongding Auto Parts Co., Ltd. (May 1, 2006). Therefore, we find that this sale does not provide a reasonable or reliable basis for calculating a dumping margin.

For the reasons mentioned above, the Department continues to find that SZAP's sole U.S. sale during the POR was not a bona fide commercial transaction and is rescinding the new shipper review of SZAP. See Decision Memorandum, at Comment 10.

Separate Rates

In our Preliminary Results, we found that all respondents except Huanri, Qingdao Rotec Auto Parts Co., Ltd. (“Rotec”), and China National Machinery & Equipment Import & Export (Xianjiang) Corporation's exports except for those produced by Zibo Botai Manufacturing Co., Ltd. (“Xianjiang/Other than Zibo”), qualified for separate rates. Preliminary Results, 71 FR at 26741.

On March 8, 2006, Huanri filed a letter with the Department indicating that it wished to cancel the scheduled verification before it began. Huanri acknowledged in this letter that it understood, because of the verification cancellation, that the Department may find that Huanri did not cooperate to the best of its ability, pursuant to section 776(b) of the Tariff Act of 1930, as amended (“the Act”). Therefore, in the preliminary results, the Department found that Huanri did not demonstrate a de facto absence of government control with respect to making its own decisions in key personnel selections, the use of its profits from the proceeds of export sales, and the authority to negotiate and sign contracts and other agreements. This is consistent with the Department's practice. See Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585, 22586 (May 2, 1994). Huanri is therefore not entitled to a separate rate. See Decision Memorandum, at Comment 11; see also Preliminary Results, 71 FR at 26741. Because Rotec and Xianjiang/Other than Zibo failed to respond to the quantity and value questionnaire and did not participate further in this review, we did not have the necessary information to determine their separate rate status. Therefore, we find that Rotec and Xianjiang/Other than Zibo are not eligible to receive separate rates. Because we continue to find that Huanri, Rotec, and Xianjiang/Other than Zibo do not qualify for separate rates, these respondents are deemed to be part of the PRC-wide entity and thus, are subject to the PRC-wide rate.

The PRC-wide rate will apply to all entries of subject merchandise except for entries from PRC producers/exporters that have their own calculated rate.

Adverse Facts Available

Section 776(a)(1) of the Act provides that, when necessary information is not available on the record, the Department may use the facts otherwise available (“FA”) to reach a determination. Section 776(a)(2) of the Act provides that, if an interested party or any other person: (A) withholds information that has been requested by the administering authority; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782; (C) significantly impedes a proceeding under this title; or (D) provides such information but the information cannot be verified as provided in section 782(i), the Department shall, subject to section 782(d) of the Act, use the facts otherwise available in reaching the applicable results under this title.

Where the Department determines that a response to a request for information does not comply with the request, section 782(d) of the Act provides that the Department shall promptly inform the party submitting the response of the nature of the deficiency and shall, to the extent practicable, provide that party with an opportunity to remedy or explain the deficiency. Section 782(d) further states that, if the party submits further information that is unsatisfactory or untimely, the administering authority may, subject to subsection (e), disregard all or part of the original and subsequent responses. Section 782(e) of the Act provides that the Department shall not decline to consider information that is submitted by an interested party and is necessary to make a determination but does not meet all the applicable requirements established by the administering authority if (1) the information is submitted by the deadline established for its submission; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable results; (4) the interested party has demonstrated that it acted to the best of its ability in providing the information and meeting the requirements established by the administering authority with respect to the information; and (5) the information can be used without undue difficulties.

Section 776(b) of the Act provides that, in selecting from among the FA, the Department may use an inference that is adverse to the interests of the respondent if it determines that a party has failed to cooperate to the best of its ability. Adverse inferences are appropriate “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action (“SAA”) accompanying the URAA, H. Doc. No. 316, 103d Cong., 2d Session, at 870 (1994).

In determining whether a party failed to cooperate to the best of its ability, the Department considers whether a party could comply with the request for information, and whether a party paid insufficient attention to its statutory duties. See Pacific Giant, Inc. v. United States, 223 F. Supp. 2d 1336, 1342 (August 6, 2002). The focus of section 776(b) of the Act is on a respondent's failure to cooperate to the best of its ability, rather than just its failure to provide the requested information. See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003). An adverse inference may include reliance on information derived from the petition, the final results in the investigation, any previous review, or any other information placed on the record. See Section 776(b) of the Act.

Hengtai

Hengtai withheld and failed to provide information concerning its relationship with SZAP, as well as sales and FOP information for its sales of merchandise produced by SZAP. Moreover, by providing information that was contradicted by evidence discovered at the verification of another company (i.e., SZAP), Hengtai significantly impeded the Department's ability to calculate a relevant and meaningful margin. Therefore, application of facts available is warranted pursuant to sections 776(a)(2)(A), (B), and (C) of the Act. Additionally, because Hengtai failed to cooperate to the best of its ability by withholding necessary information in its possession in response to the Department's specific questions, the application of adverse facts available, pursuant to section 776(b) of the Act, is also warranted. See Memorandum to James C. Doyle, Director, AD/CVD Operations, Group 9, through Christopher D. Riker, Program Manager, AD/CVD Operations, Group 9, from Erin C. Begnal, Case Analyst, AD/CVD Operations, Group 9, regarding 2004/2005 Antidumping Administrative Review of Brake Rotors from the People's Republic of China: Preliminary Application of Adverse Facts Available to Xiangfen Hengtai Brake System Co., Ltd. (May 1, 2006).

PRC-Wide Entity

In the initiation notice, the Department stated that if one of the companies on which we initiated a review does not qualify for a separate rate, all other exporters of brake rotors from the PRC who have not qualified for a separate rate will be deemed to be covered by this review as part of the single PRC-wide entity of which the named exporter is a part. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 70 FR 30694 (May 27, 2005). For these final results, Rotec, Xianjiang/Other than Zibo, and Huanri are not eligible to receive separate rates and are thus considered to be part of the PRC-wide entity, subject to the PRC-wide rate.

As explained above, the PRC-wide entity (including Rotec, Xianjiang/Other than Zibo, and Huanri) did not respond to the Department's requests for information and precluded the Department from verifying information that was submitted. Therefore, we find that the PRC-wide entity withheld requested information from the Department and did not cooperate to the best of its ability. Because the PRC-wide entity did not cooperate to the best of its ability in the proceeding, the Department finds it necessary, pursuant to sections 776(a)(2)(A) and (D), and 776(b) of the Act, to use adverse facts available as the basis for these final results of review for the PRC-wide entity.

Corroboration

In accordance with the Department's practice, we have assigned the rate for the PRC-wide entity to Hengtai as adverse facts available. See, e.g., Rescission of Second New Shipper Review and Final Results and Partial Rescission of First Antidumping Duty Administrative Review: Brake Rotors from the People's Republic of China , 64 FR 61581 (November 12, 1999), and accompanying Issues and Decision Memorandum, at comment 1.

In selecting a rate for adverse facts available, the Department selects a rate that is sufficiently adverse “as to effectuate the purpose of the facts available rule to induce respondents to provide the Department with complete and accurate information in a timely manner.” See Final Results of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors from Taiwan, 63 FR 8909, 8932 (February 23, 1998). Consistent with section 776(c) of the Act, this rate is the highest dumping margin from any segment of this proceeding and was established in the less-than-fair-value investigation based on information contained in the petition, and corroborated in the final results of the first administrative review. See Brake Rotors From the People's Republic of China: Rescission of Second New Shipper Review and Final Results and Partial Rescission of First Antidumping Duty Administrative Review, 64 FR 61581, 61585 (November 12, 1999).

For the reasons stated in the Preliminary Results, the Department continues to find this rate to be both reliable and relevant, and, therefore, to have probative value in accordance with the SAA. See SAA, at 870; see also Preliminary Results. We received no comments on our preliminary analysis of this rate for purposes of these final results. Therefore, we determine that the rate of 43.32 percent is still reliable, relevant, and, has probative value within the meaning of section 776(c) of the Act. Accordingly, for these final results we continue to assign the rate of 43.32 percent to Hengtai and the PRC-wide entity (including Rotec, Xianjiang/Other than Zibo and Huanri) as adverse facts available.

Analysis of Comments Received

A list of the issues that parties raised, and to which we responded in the Decision Memorandum, accompanies this notice and is attached as Appendix 1. The paper copy and electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Results

Based on the comments received from the interested parties, the Department has made company-specific changes to the margin calculation for Hongfa. Additionally, based on information submitted since the Preliminary Results, some surrogate values have changed. Specifically, we have revised the surrogate values for steel scrap, cartons, bentonite, coal powder and pallet wood. See Decision Memorandum at comments 4, 5, 6, 7, and 8.

Final Results of Review

We determine that the following percentage margins exist on exports of brake rotors from the PRC for the period April 1, 2004, through March 31, 2005:

For details on the calculation of the antidumping duty weighted-average margin for each company, see the respective company's Analysis Memorandum for the Final Results of the 2004/2005 Administrative Review of the Antidumping Duty Order on Brake Rotors from the People's Republic of China, November 6, 2006.

Assessment Rates

The Department shall determine, and US Customs and Border Protection (“CBP”) shall assess, antidumping duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), we calculated importer- or customer-specific ad valorem duty assessment rates based on the ratio of the total amount of the dumping margins calculated for the examined sales to the total entered value of those same sales. Where the respondent did not report actual entered value, we calculated individual importer- or customer-specific assessment rates by aggregating the dumping margins calculated for all of the U.S. sales examined and dividing that amount by the total quantity of the sales examined.

In accordance with 19 CFR 351.106(c)(2), we will instruct CBP to liquidate, without regard to antidumping duties, all entries of subject merchandise during the POR for which the importer-specific assessment rate is zero or de minimis (i.e., less than 0.50 percent). To determine whether the per-unit duty assessment rates are de minimis, we calculated importer- or customer- specific ad valorem ratios based on export prices. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of these final results of review.

The following deposit rates shall be required for merchandise subject to the order, entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results, as provided by section 751(a)(1) and (a)(2)(B) of the Act: (1) the cash deposit rate for Meita and Winhere will be zero; (2) the cash deposit rate for Haimeng, Hentai, Honfa, and the “sample rate” exporters will be the rate indicated above; (3) the cash deposit rate for PRC exporters who received a separate rate in a prior segment of the proceeding will continue to be the rate assigned in that segment of the proceeding; (4) the cash deposit rate for the PRC NME entity will continue to be the PRC-wide rate (i.e., 43.32 percent); and (5) the cash deposit rate for non-PRC exporters of subject merchandise from the PRC will be the rate applicable to the PRC producer that supplied the exporter.

These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

Notification to Interested Parties

This notice serves as the final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and in the subsequent assessment of double antidumping duties.

This notice also serves as the only reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the return/destruction or conversion to judicial protective order of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

These results are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Appendix I

List of Issues in Decision Memorandum

General Issues

Comment 1: Sampling Methodology

A. The Department's Decision to Sample

B. Probability-Proportional-to-Size Methodology

C. Including Adverse Facts Available in the Sample Rate

D. Sampling's Effect on Revocation and Cash Deposit Rates

Comment 2: Surrogate Value for Labor Rate

Comment 3: Surrogate Value for Pig Iron

Comment 4: Surrogate Value for Steel Scrap

Comment 5: Surrogate Value for Plywood

Comment 6: Surrogate Value for Cartons

Comment 7: Bentonite and Carbon Powder as Raw Materials or Overhead Expense

Company-Specific Issues

Comment 8: Hongfa - Pallet Wood

Comment 9: Haimeng - Valuation of Components Supplied by U.S. Customers

Comment 10: SZAP - Bona Fides of New Shipper Sale

Comment 11: Hengtai, Rotec and Xianjiang - Denial of Separate Rates

Comment 12: Meita - Valuation of Ferro-Manganese

Comment 13: Cash Deposit Rate for Xianjiang