Diamond Sawblades and Parts Thereof From the Republic of Korea: Preliminary Results of Antidumping Duty Administrative Review, 76128-76135 [2011-31285]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 76, Number 234 (Tuesday, December 6, 2011)]
[Notices]
[Pages 76128-76135]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31285]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-855]


Diamond Sawblades and Parts Thereof From the Republic of Korea: 
Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

SUMMARY: The Department of Commerce (``Department'') is conducting an 
administrative review of the antidumping duty order on diamond 
sawblades and parts thereof (``diamond

[[Page 76129]]

sawblades'') from the Republic of Korea (``Korea''). The period of 
review is January 23, 2009, through October 31, 2010. This review 
covers imports of diamond sawblades from three manufacturers/exporters: 
Ehwa Diamond Industrial Co., Ltd. (``Ehwa''); Hyosung D&P Co., Ltd. 
(``Hyosung''); and Shinhan Diamond Industrial Co., Ltd. (``Shinhan''). 
The Department preliminarily finds that Shinhan and Ehwa made sales of 
the subject merchandise below normal value. For Hyosung, we have 
determined to apply adverse facts available as a result of its failure 
to provide the information necessary to determine an antidumping duty 
rate for the preliminary results and its failure to provide information 
within the deadlines established by the Department. Pursuant to an 
order issued by the U.S. Court of International Trade (``CIT'') on 
October 24, 2011, liquidation of the entries covered by this 
administrative review is enjoined. Interested parties are invited to 
comment on these preliminary results. The Department will issue the 
final results not later than 120 days from the date of publication of 
this notice.

DATES: Effective Date: December 6, 2011.

FOR FURTHER INFORMATION CONTACT: Sergio Balbontin or Austin Redington, 
AD/CVD Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-6478 
and (202) 482-1664, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On November 4, 2009, the Department published an antidumping duty 
order on diamond sawblades from Korea. See Diamond Sawblades and Parts 
Thereof From the People's Republic of China and the Republic of Korea: 
Antidumping Duty Orders, 74 FR 57145 (November 4, 2009) (``Order''). On 
November 1, 2010, the Department published a notice of opportunity to 
request an administrative review of the Order. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity To Request Administrative Review, 75 FR 67079 (November 1, 
2010).
    On November 30, 2010, the Diamond Sawblades Manufacturers' 
Coalition (``Petitioner'') requested that the Department conduct such a 
review for the following companies: Ehwa; Hyosung; Hyosung Diamond 
Industrial Co., Ltd.; SH Trading Inc.; Shinhan; and Western Diamond 
Tools Inc. Also on November 30, 2010, Husqvarna Construction Products 
North America (``HCPNA''), a U.S. producer of subject merchandise, 
requested an administrative review of Ehwa; Shinhan; and Hyosung 
Diamond Industrial Co., Ltd. On November 30, 2010, Ehwa; Shinhan; and 
SH Trading, Inc. submitted their own requests for an administrative 
review.
    On December 28, 2010, in accordance with section 751(a) of the 
Tariff Act of 1930, as amended (``the Act''), we initiated an 
administrative review of all six requested companies. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Request 
for Revocation in Part, 75 FR 81565 (December 28, 2010).
    On February 3, 2011, the Department noted that SH Trading, Inc. is 
the U.S. affiliate of Shinhan; Western Diamond Tools Inc. is the U.S. 
affiliate of Hyosung; and Hyosung officially changed its name from 
``Hyosung Diamond Industrial Co., Ltd.'' to ``Hyosung D&P Co., Ltd.'' 
in December 2004. See Memorandum from Patricia Tran to the File, ``Re: 
2009-2010 Diamond Sawblades and Parts Thereof from the Republic of 
Korea: Respondents to the First Administrative Review,'' dated February 
3, 2011. See also Notice of Preliminary Determination of Sales at Less 
Than Fair Value, Postponement of Final Determination, and Negative 
Preliminary Critical Circumstances Determination: Diamond Sawblades and 
Parts Thereof from the Republic of Korea, 70 FR 77135 (December 29, 
2005). Therefore, we preliminarily determine that there are three 
companies for which an administrative review was requested: Shinhan, 
Hyosung, and Ehwa.
    In the Final LTFV Determination, the Department stated that it 
would consider whether to revise the physical characteristics used to 
identify the subject merchandise for model matching purposes. See 
Notice of Final Determination of Sales at Less Than Fair Value and 
Final Determination of Critical Circumstances: Diamond Sawblades and 
Parts Thereof from the Republic of Korea, 71 FR 29310 (May 22, 2006) 
(``Final LTFV Determination''), and accompanying Issues and Decision 
Memorandum (``Diamond Sawblades IDM'') at Comment 1. Accordingly, on 
February 16, 2011, the Department gave interested parties an 
opportunity to comment on this issue. See Letter from Yasmin Nair, 
Program Manager, Office 1 AD/CVD Operations, to All Interested Parties, 
dated February 16, 2011, which is on file in the Central Records Unit 
(``CRU'') in room 7046; see also the Order.
    On February 23, 2011, the Department received comments filed on 
behalf of Shinhan and Ehwa. On February 24, the Department received 
comments filed on behalf of the Petitioner. On March 1, 2011, the 
Department received rebuttal comments from Shinhan, Ehwa, and Weihai 
Xiangguang Mechanical Industrial Co. Ltd. (``Weihai''), a Chinese 
producer affiliated with Ehwa.
    On April 4, 2011, the Department adopted changes to certain model 
matching characteristics for these preliminary results, including 
physical form and total diamond weight of the subject merchandise. For 
a full discussion of these changes, see Memorandum to Susan Kuhbach, 
Office Director, from Christopher Siepmann, ``Re: Summary of Comments 
from Interested parties on Model Match Characteristics,'' dated April 
4, 2011 (``Model Match Memo'').
    On April 8, 2011, the Department issued antidumping duty 
questionnaires to Shinhan, Hyosung, and Ehwa. The Department received 
responses from all three companies in May and June 2011.
    On April 18, 2011, Ehwa requested that it be excused from reporting 
certain information relating to U.S. sales of merchandise further 
manufactured in the United States by its affiliated U.S. customer, 
General Tool, Inc. (``General Tool''). Ehwa claimed that the value of 
the further processing that occurred in the United States substantially 
exceeded the value of the imported components. Petitioner submitted 
comments on Ehwa's request on April 22, 2011. The Department met with 
representatives of Ehwa on May 3, 2011, to discuss the request. On 
August 12, 2011, the Department agreed that Ehwa did not need to 
respond to section E of the Department's questionnaire, but directed 
Ehwa to report the quantity and value of these further manufactured 
sales. See Letter to J. David Park from Yasmin Nair, Program Manager, 
dated August 12, 2011.
    On July 8, 2011, the Department published in the Federal Register 
an extension of the time limit for the completion of the preliminary 
results of this review until no later than November 30, 2011, as 
permitted by section 751(a)(3)(A) of the Act. See Diamond Sawblades and 
Parts Thereof From the Republic of Korea: Extension of Time Limit for 
the Preliminary Results of the Antidumping Duty Administrative Review, 
76 FR 40324 (July 8, 2011).
    In July, August, September, and October 2011, the Department issued 
supplemental questionnaires all three companies. The Department 
received responses to these supplemental

[[Page 76130]]

questionnaires from Ehwa and Shinhan in September and October 2011. 
Hyosung did not respond to any of the Department's supplemental 
questionnaires.

Scope of the Review

    The products covered by the order are all finished circular 
sawblades, whether slotted or not, with a working part that is 
comprised of a diamond segment or segments, and parts thereof, 
regardless of specification or size, except as specifically excluded 
below. Within the scope of the order are semifinished diamond 
sawblades, including diamond sawblade cores and diamond sawblade 
segments. Diamond sawblade cores are circular steel plates, whether or 
not attached to non-steel plates, with slots. Diamond sawblade cores 
are manufactured principally, but not exclusively, from alloy steel. A 
diamond sawblade segment consists of a mixture of diamonds (whether 
natural or synthetic, and regardless of the quantity of diamonds) and 
metal powders (including, but not limited to, iron, cobalt, nickel, 
tungsten carbide) that are formed together into a solid shape (from 
generally, but not limited to, a heating and pressing process).
    Sawblades with diamonds directly attached to the core with a resin 
or electroplated bond, which thereby do not contain a diamond segment, 
are not included within the scope of this order. Diamond sawblades and/
or sawblade cores with a thickness of less than 0.025 inches, or with a 
thickness greater than 1.1 inches, are excluded from the scope of these 
orders. Circular steel plates that have a cutting edge of non-diamond 
material, such as external teeth that protrude from the outer diameter 
of the plate, whether or not finished, are excluded from the scope of 
this order. Diamond sawblade cores with a Rockwell C hardness of less 
than 25 are excluded from the scope of this order. Diamond sawblades 
and/or diamond segment(s) with diamonds that predominantly have a mesh 
size number greater than 240 (such as 250 or 260) are excluded from the 
scope of this order.
    Merchandise subject to these orders is typically imported under 
heading 8202.39.00.00 of the Harmonized Tariff Schedule of the United 
States (``HTSUS''). When packaged together as a set for retail sale 
with an item that is separately classified under headings 8202 to 8205 
of the HTSUS, diamond sawblades or parts thereof may be imported under 
heading 8206.00.00.00 of the HTSUS. On October 11, 2011, the Department 
added HTSUS 6804.21.00.00 to the scope description pursuant to a 
request by CBP.
    The tariff classification is provided for convenience and customs 
purposes; however, the written description of the scope of this order 
is dispositive.

Period of Review

    The period of review (``POR'') is January 23, 2009, through October 
31, 2010.

Use of Facts Otherwise Available and Adverse Inferences

    Sections 776(a)(1) and (2) of the Act provide that the Department 
shall apply ``facts otherwise available'' if, inter alia, necessary 
information is not on the record or an interested party or any other 
person: (A) Withholds information that has been requested; (B) fails to 
provide information within the deadlines established, or in the form 
and manner requested by the Department, subject to subsections (c)(1) 
and (e) of section 782 of the Act; (C) significantly impedes a 
proceeding; or (D) provides information that cannot be verified as 
provided by section 782(d) of the Act.
    We have determined that the use of facts otherwise available is 
appropriate for the preliminary results with respect to Hyosung 
because, as noted above, Hyosung failed to respond to the Department's 
supplemental questionnaires. Specifically, the Department issued 
Hyosung a section D supplemental in August 2011 and a section A 
supplemental in September 2011. Although Hyosung requested, and the 
Department granted, an extension of time to respond to the section D 
supplemental questionnaire, Hyosung ultimately did not respond. Hyosung 
did not request an extension of time to respond to the section A 
supplemental questionnaire, nor did it submit a response. By doing so, 
Hyosung did not provide the information necessary to determine an 
antidumping duty rate for the preliminary results and failed to provide 
information within the deadlines established by the Department. 
Therefore, in light of Hyosung's continued failure to provide requested 
information necessary to calculate accurate dumping margins in this 
case, we determine, in accordance with section 776(a) of the Act, that 
the use of facts otherwise available with an adverse inference is 
appropriate for these preliminary results.

Adverse Facts Available

    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying facts otherwise available when a 
party has failed to cooperate by not acting to the best of its ability 
to comply with a request for information. By electing not to respond to 
the Department's supplemental questionnaires, Hyosung has not 
cooperated to the best of its ability in this review. Therefore, we 
determine that an adverse inference is warranted, pursuant to section 
776(b) of the Act.
    In deciding which facts to use as adverse facts available 
(``AFA''), section 776(b) of the Act and 19 CFR 351.308(c)(1) authorize 
the Department to rely on information derived from: (1) The petition; 
(2) a final determination in the investigation; (3) any previous review 
or determination; or (4) any other information placed on the record. 
The Department's practice when selecting an adverse rate from among the 
possible sources of information is to ensure that the rate is 
sufficiently adverse ``as to effectuate the statutory purposes of the 
adverse facts available rule to induce respondents to provide the 
Department with complete and accurate information in a timely manner.'' 
See, e.g., Notice of Final Determination of Sales at Less Than Fair 
Value: Static Random Access Memory Semiconductors From Taiwan, 63 FR 
8909, 8932 (February 23, 1998). The Department's practice also ensures 
``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 Uruguay Round 
Agreements Act, H.R. Rep. No. 103-316, Vol. I, at 870 (1994), reprinted 
at 1994 U.S.C.C.A.N 4040, 4199.
    We are preliminarily assigning Hyosung an AFA rate of 121.19 
percent. This rate was selected from Shinhan's transaction specific 
margins during the POR. See, Memorandum from Austin Redington, 
International Trade Compliance Analyst through Yasmin Nair, Program 
Manager to Susan H. Kuhbach, Senior Office Director, ``Adverse Facts 
Available Rate for Hyosung D&P Co., Ltd.,'' dated November 30, 2011. 
Application of this rate is consistent with the purpose of AFA, i.e., 
to induce respondents to provide the Department with complete and 
accurate information in a timely manner as explained above. No 
corroboration of this rate is necessary because we are relying on 
information obtained in the course of this review, rather than 
secondary information. See, 19 CFR 351.308(c) and (d) and section 
776(c) of the Act; See also Multilayered Wood Flooring From the 
People's Republic of China: Final Determination of Sales at Less Than 
Fair Value, 76 FR 64318, 64322 (October 18, 2011).

[[Page 76131]]

Fair Value Comparisons

    To determine whether Ehwa's and Shinhan's (collectively, ``the 
respondents'') sales of diamond sawblades to the United States were 
made at less than normal value (``NV''), the Department compared 
constructed export price (``CEP'') to NV, as described in the 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice below.
    Pursuant to section 777A(d)(2) of the Act, we compared the CEPs of 
individual U.S. transactions to the weighted-average NV of the foreign-
like product, where there were sales made in the ordinary course of 
trade, as discussed in the ``Cost of Production Analysis'' section, 
below.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondents in the home market 
(``HM'') during the POR that fit the description in the ``Scope of 
Review'' section of this notice to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
We compared U.S. sales to sales made in the HM, where appropriate. We 
have relied upon fourteen criteria to match U.S. sales of subject 
merchandise to comparison-market sales of the foreign like product. 
These criteria, in order of importance are: (1) Physical form; (2) 
diameter; (3) type of attachment; (4) cutting edge; (5) diamond mesh 
size; (6) total diamond weight; (7) diamond grade; (8) segment height; 
(9) segment thickness; (10) segment length; (11) number of segments; 
(12) core metal; (13) core type; and (14) core thickness.
    As detailed in the Model Match Memo, we limited matches on the 
basis of physical form (i.e., U.S. sales of finished sawblades can only 
match to home market sales of finished sawblades; U.S. sales of 
segments can only match to home market sales of segments; and U.S. 
sales of cores can only match to home markets sales of cores). Where 
there were no sales of identical merchandise in the HM made in the 
ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade, while still controlling for physical form 
(e.g., we allowed matching of a U.S. sale to HM sales if physical form 
was identical, but the home market sale was within a window period that 
precedes the U.S. sale by three months or is subsequent to the U.S. 
sale by two months). Where there were no sales of identical or similar 
merchandise made in the ordinary course of trade, we made product 
comparisons using constructed value (``CV'').

Date of Sale

    Section 351.401(i) of the Department's regulations states that the 
Department normally will use the date of invoice, as recorded in the 
producer's or exporter's records kept in the ordinary course of 
business, as the date of sale. The regulation provides further that the 
Department may use a date other than the date of the invoice if the 
Secretary is satisfied that a different date better reflects the date 
on which the material terms of sale are established. The Department has 
a long-standing practice of finding that, where shipment date precedes 
invoice date, shipment date better reflects the date on which the 
material terms of sale are established. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value and Negative Final 
Determination of Critical Circumstances: Certain Frozen and Canned 
Warmwater Shrimp From Thailand, 69 FR 76918 (December 23, 2004), and 
accompanying Issues and Decision Memorandum at Comment 10; see also 
Notice of Final Determination of Sales at Less Than Fair Value: 
Structural Steel Beams From Germany, 67 FR 35497 (May 20, 2002), and 
accompanying Issues and Decision Memorandum at Comment 2.
    For U.S. sales, each respondent reported the earlier of the date of 
invoice or the date of shipment.\1\ Therefore, for each respondent's 
U.S. sales, the Department determines that it is appropriate to use the 
earlier of the date of invoice or the date of shipment as date of sale. 
This determination is consistent with the Final LTFV Determination.
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    \1\ See Ehwa's (date) Questionnaire Response (``Ehwa QR'') at C-
14 and Ehwa's (date) Supplemental QR (``Ehwa SQR'') at S-10. See 
also Shinhan's (date) Questionnaire Response (``Shinhan QR'') at C-
13, 14.
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    For home market sales, both respondents reported invoice date as 
date of sale because both permit home market customers to make order 
changes up to that time.\2\ Both Ehwa and Shinhan reported that the 
invoice establishes the material terms of sale. Therefore, for home 
market sales, the Department determines that it is appropriate to use 
invoice date as date of sale for both companies. This determination is 
consistent with the Final LTFV Determination.
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    \2\ See Ehwa QR at B-13, 14. See also Shinhan QR at B-12, 13.
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Constructed Export Price

    For the price to the United States, each respondent reported making 
only CEP sales. Section 772(b) of the Act defines CEP as the price at 
which the subject merchandise is first sold in the United States before 
or after the date of importation, by, or for the account of the 
producer or exporter of the merchandise, or by a seller affiliated with 
the producer or exporter, to an unaffiliated purchaser, as adjusted 
under sections 772(c) and (d) of the Act.

Ehwa

    We calculated a CEP for all of Ehwa's U.S. sales because the 
subject merchandise was sold directly to General Tool, Ehwa's U.S. 
affiliate, prior to being sold to the first unaffiliated purchaser in 
the United States.\3\ Ehwa reported that, while all CEP sales were made 
to General Tool, from the beginning of the POR through October 21, 
2009, Ehwa had three additional U.S. affiliated resellers, Dia-
Technolog, Inc., Diamond Vantage, Inc., and New England Diamond, Inc, 
which merged with General Tool after October 21, 2009.\4\ We made 
deductions from the starting price for movement expenses in accordance 
with section 772(c)(2)(A) of the Act. These include expenses incurred 
for inland freight, domestic brokerage and handling, and U.S. brokerage 
and handling. In addition, we made deductions from the U.S. starting 
price for discounts, rebates, and billing adjustments. Pursuant to 
section 772(d)(3) of the Act, we further reduced the starting price by 
an amount for profit to arrive at CEP. In accordance with section 
772(f) of the Act, we calculated the CEP profit rate using the expenses 
incurred by Ehwa and its U.S. affiliates on their sales of the subject 
merchandise in the United States and the profit associated with those 
sales.
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    \3\ See Ehwa QR at A-16 and Section C, generally.
    \4\ See Ehwa QR at A-1.
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    The Department interprets section 772(c)(1)(B) of the Act as 
requiring that any duty drawback be added to CEP if two criteria are 
met: (1) Import duties and rebates are directly linked to, and 
dependent upon, one another, and; (2) raw materials were imported in 
sufficient quantities to account for the duty drawback received on 
exports of the manufactured product. The first prong of the test 
requires the Department ``to analyze whether the foreign country in 
question makes entitlement to duty drawback dependent upon the payment 
of import duties.'' See Far East Machinery v. United States, 699 F. 
Supp. 309, 311 (CIT 1988). This ensures that a duty

[[Page 76132]]

drawback adjustment will be made only where the drawback received by 
the manufacturer is contingent on import duties paid or accrued. The 
second prong requires the foreign producer to show that it imported a 
sufficient amount of raw material (upon which it paid import duties) to 
account for the exports upon which it claimed its rebates. Id.
    Ehwa reported that it received certain ``drawback'' amounts 
associated with duties paid on imported inputs pursuant to the Korean 
Government's individual application system, where the duty is rebated 
based upon each applicant's use of the imported input.\5\ As the 
applicable criteria have been met in the case of Ehwa, we made 
additions to the starting price for duty drawback in accordance with 
section 772(c)(1)(B) of the Act.
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    \5\ See Ehwa QR at C-29 and Ehwa SQR at S-20 and exhibits 26-32.
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Shinhan

    We calculated a CEP for Shinhan's U.S. sales because the subject 
merchandise was sold directly to SH Trading, Inc., Shinhan's U.S. 
affiliate, prior to being sold to the first unaffiliated purchaser in 
the United States. We made deductions from the starting price for 
movement expenses in accordance with section 772(c)(2)(A) of the Act. 
These include expenses incurred for inland freight, domestic brokerage 
and handling, and U.S. brokerage and handling. In addition, we made 
deductions from the U.S. starting price for discounts, rebates, and for 
billing adjustments. In accordance with section 772(f) of the Act, we 
calculated the CEP profit rate using the expenses incurred by Shinhan 
and its U.S. affiliate on their sales of the subject merchandise in the 
United States and the profit associated with those sales.
    As discussed above, the Department will add duty drawback to U.S. 
price only if the respondent demonstrates that it has satisfied the 
Department's two-prong test. Shinhan reported that it received certain 
``drawback'' amounts associated with duties paid on imported inputs 
pursuant to the Korean Government's individual application system, 
where the duty is rebated based upon each applicant's use of the 
imported input. As the applicable criteria have been met, we made 
additions to Shinhan's starting price for duty drawback in accordance 
with section 772(c)(1)(B) of the Act.

Normal Value

A. Selection of Comparison Market

    To determine whether there was a sufficient volume of sales of 
diamond sawblades in the home market to serve as a viable basis for 
calculating NV, the Department compared the respondents' home market 
sales of the foreign-like product to their volume of U.S. sales of the 
subject merchandise, in accordance with section 773(a)(1) of the Act. 
Pursuant to section 773(a)(1)(B) of the Act, because each respondent's 
reported aggregate volume of home market sales of the foreign-like 
product was greater than five percent of its aggregate volume of U.S. 
sales of the subject merchandise, the Department determined that the 
home market was viable for comparison purposes.

B. Level of Trade

    Section 773(a)(1)(B) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the CEP. Sales are made at different 
LOTs if they are made at different marketing stages (or their 
equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id. 
See also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (November 19, 1997) (``CTL Plate''). To determine 
whether NV sales are at a different LOT than U.S. sales, we examine 
stages in the marketing process and selling functions along the chain 
of distribution. See 19 CFR 351.412(c)(2). 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 a LOT 
adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP 
sales, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the difference in 
levels between NV and CEP affects price comparability, we adjust NV 
under section 773(a)(7)(B) of the Act (the CEP-offset provision). See 
CTL Plate, 62 FR at 61732 and Final Determination of Sales at Less Than 
Fair Value: Greenhouse Tomatoes From Canada, 67 FR 8781 (February 26, 
2002).
    In this review, we obtained information from each respondent 
regarding the marketing stages involved in making the reported HM and 
U.S. sales, including a description of the selling activities performed 
by each respondent for each channel of distribution. Company-specific 
LOT findings are summarized below.

Ehwa

    As stated, Ehwa made its U.S. sales through four U.S. affiliates 
which merged into General Tool. However, all of Ehwa's sales were to 
General Tool.\6\ That is, all of the subject merchandise sold in the 
United States was purchased and imported by General Tool. The 
Department bases its CEP LOT analysis on the sale to the producer/
exporter's U.S. affiliate and, thus, looked only to Ehwa's ``General 
Tool'' LOT, rather than the four distinct LOTs identified by Ehwa. See 
Micron Tech. Inc. v. United States, 243 F. 3d 1301, 1313 (Fed. Cir. 
1997) and Torrington Co. v. United States, 146 F. Supp.2d 845, 875 (CIT 
2001).
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    \6\ See Ehwa QR at A-16, 17.
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    For its HM sales, Ehwa reported two LOTs based on customer types, 
distributors and end-users. Our analysis, however, revealed that there 
were no significant differences in the selling activities between the 
two reported HM LOTs. For a detailed analysis of the Department's Ehwa 
LOT analysis, see Memorandum from Sergio Balbontin, International Trade 
Analyst, to Yasmin Nair, Program Manager, ``Level of Trade Analysis,'' 
dated November 30, 2011. We, thus, compared one U.S. LOT to one HM LOT.
    Based upon: (1) The quantity of selling activities undertaken in 
the HM LOT but not in the U.S. LOT; and (2) the difference in level of 
intensity of the selling activities performed in both the markets, we 
preliminarily determine that the HM is at a more advanced LOT than the 
U.S. market LOT. Therefore, we are granting Ehwa a CEP offset to NV. 
See sections 773(7)(B) and 772(d)(1)(D) of the Act.

Shinhan

    Shinhan's reported LOT information, which is designated business 
proprietary, does not support a LOT adjustment. However, we have 
granted Shinhan a CEP-offset. For further discussion of Shinhan's LOT 
information and our analysis, see Memorandum from Scott Holland, 
International Trade Analyst, to Yasmin Nair, Program Manager, ``Level 
of Trade Analysis,'' dated November 30, 2011, a public version of which 
is on file in Department's CRU.

[[Page 76133]]

C. Sales to Affiliated Customers

    Shinhan made sales in the home market to affiliated customers. The 
Department may calculate NV based on a sale to an affiliated party only 
if it is satisfied that the price to the affiliated party is comparable 
to the price at which sales are made to parties not affiliated with the 
exporter or producer, i.e., sales were made at arm's length prices. See 
19 CFR 351.403(c). To test whether these sales were made at arm's 
length, the Department compared the starting prices of sales to 
affiliated customers to those of sales to unaffiliated customers, net 
of all movement charges, direct and indirect selling expenses, 
discounts, and packing. Where the price to affiliated parties was, on 
average, within a range of 98 to 102 percent of the price of the same 
or comparable merchandise to the unaffiliated parties, the Department 
determined that the sales made to affiliated parties were at arm's 
length. See Antidumping Proceedings: Affiliated Party Sales in the 
Ordinary Course of Trade, 67 FR 69186 (November 15, 2002). In 
accordance with this practice, only Shinhan's sales to affiliated 
parties made at arm's length were included in the Department's margin 
analysis. See Memorandum from Scott Holland, International Trade 
Analyst, to Yasmin Nair, Program Manager, ``Preliminary Results 
Calculation for Shinhan Diamond Industrial Co., Ltd.,'' dated November 
30, 2011 (``Shinhan Prelim Calc Memo'').

D. Cost of Production Analysis

    In the final determination of the investigation, the Department 
disregarded some sales by Ehwa and Shinhan because they were made at 
prices below the cost of production (``COP''). See Final LTFV 
Determination. Under section 773(b)(2)(A)(ii) of the Act, previously 
disregarded below-cost sales provide reasonable grounds for the 
Department to believe or suspect that both respondents made sales of 
the subject merchandise in the home market at prices below the COP in 
this review. Whenever the Department has reason to believe or suspect 
that sales were made below the COP, we are directed by section 773(b) 
of the Act to determine whether, in fact, there were below-cost sales.
    Pursuant to section 773(b)(1) of the Act, the Department may 
disregard sales that were made at less than the COP in its calculation 
of NV, if such sales were made in substantial quantities over an 
extended period of time at prices that would not permit recovery of 
costs within a reasonable period. The Department will find that a 
respondent's below-cost sales represent ``substantial quantities'' when 
20 percent or more of the volume of its sales of a foreign-like product 
are at prices less than the COP; however, where less than 20 percent of 
the volume of a respondent's sales of a foreign-like product are at 
prices less than the COP, the Department will not disregard such sales 
because they are not made in substantial quantities. See section 
773(b)(2)(C) of the Act. Further, in accordance with section 
773(b)(2)(B) of the Act, the Department normally considers sales to 
have been made within an extended period of time when the sales are 
made during a period of one year. Finally, if prices which are below 
the per-unit COP at the time of sale are not above the weighted-average 
per-unit COP for the POR, the Department will not consider such prices 
to provide for the recovery of costs within a reasonable period of 
time. See section 773(b)(2)(D) of the Act.
1. Test of Home Market Prices
    On a product-specific basis, the Department compared the 
respondents' adjusted weighted-average COP figures for the POR to their 
home market sales of the foreign-like product, as required under 
section 773(b) of the Act, to determine whether these sales were made 
at prices below the COP. Home market prices were exclusive of any 
applicable movement charges and indirect selling expenses.
    The Department found that, for certain sales of Ehwa's and 
Shinhan's foreign-like product, more than 20 percent of their sales 
were at prices below the COP and, thus, the below-cost sales were made 
within an extended period of time in substantial quantities. See 
Memorandum from Sergio Balbontin, International Trade Analyst, to 
Yasmin Nair, Program Manager, ``Preliminary Results Calculation for 
Ehwa Diamond Industrial Co., Ltd.,'' dated November 30, 2011 (``Ehwa 
Prelim Calc Memo''); see also Shinhan Prelim Calc Memo. In addition, 
these sales were made at prices that did not permit the recovery of 
costs within a reasonable period of time. Therefore, the Department 
excluded these below-cost sales and used both respondents' remaining 
above-cost sales of foreign-like product, made in the ordinary course 
of trade, as the basis for determining NV, in accordance with section 
773(b)(1) of the Act.
2. Calculation of COP
    The Department calculated Ehwa's and Shinhan's COP on a product-
specific basis, based on the sum of their costs of materials and 
fabrication for the merchandise under review, plus amounts for SG&A 
expenses, financial expenses, and the costs of all expenses incidental 
to placing the foreign-like product packed and in a condition ready for 
shipment, in accordance with section 773(b)(3) of the Act.
    The Department relied on the COP information submitted in the 
responses to our cost questionnaires with the following adjustments for 
each company:

Ehwa

    We relied on the COP data submitted by Ehwa in its October 27, 
2011, section D supplemental response. Based on our review of record 
evidence, Ehwa did not experience significant changes in the cost of 
manufacturing during the POR. Therefore, we followed our normal 
methodology of calculating an annual weighted-average cost.
    In accordance with the transactions disregarded rule of section 
773(f)(2) of the Act, we adjusted Ehwa's cost of manufacturing 
(``COM'') to reflect the market value of inputs purchased from an 
affiliate. In addition, we adjusted Ehwa's COM and general and 
administrative expenses to include the full amount of bonus expenses. 
For additional details on these adjustments, see memorandum from Ernest 
Z. Gziryan, Senior Accountant, to Neal M. Halper, Director, Office of 
Accounting, entitled ``Cost of Production and Constructed Value 
Calculation Adjustments for the Preliminary Results--Ehwa Diamond 
Industrial Co., Ltd.,'' dated November 30, 2011.

Shinhan

    We relied on the COP data submitted by Shinhan in its October 19, 
2011, section D supplemental response. Based on our review of record 
evidence, Shinhan did not experience significant changes in the cost of 
manufacturing during the POR. Therefore, we followed our normal 
methodology of calculating an annual weighted-average cost.

E. Constructed Value

    In accordance with section 773(e) of the Act, we calculated CV for 
Ehwa and Shinhan based on the sum of material and fabrication costs, 
selling, general and administrative (``SG&A'') expenses, profit, and 
U.S. packing costs. We calculated the COP component of CV as described 
in the ``Cost of Production Analysis'' section of this notice, above. 
In accordance with section 773(e)(2)(A) of the Act, we based SG&A 
expenses and profit on the amounts incurred and realized by Ehwa and 
Shinhan in connection with the production and sale

[[Page 76134]]

of the foreign like product in the ordinary course of trade, for 
consumption in the foreign country.

F. Calculation of Normal Value

    The Department calculated NV based on the prices Ehwa and Shinhan 
reported for their respective home market sales to unaffiliated 
customers which were made in the ordinary course of business. The 
Department added U.S. packing costs and deducted home market packing 
costs in accordance with sections 773(a)(6)(A) and (B) of the Act, 
respectively. The Department also made adjustments to NV, consistent 
with section 773(a)(6)(B)(ii) of the Act, to account for loading fees 
and for inland freight from the plant to the customer, where 
appropriate. In addition, the Department made adjustments to NV to 
account for differences in circumstances of sale, in accordance with 
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410, by deducting 
direct selling expenses incurred by Ehwa and Shinhan on their home 
market sales (i.e., credit expenses and bank charges) and adding U.S. 
direct selling expenses (i.e., credit expenses and bank charges), as 
appropriate. See 19 CFR 351.410(c) see also Shinhan Prelim Calc Memo 
and Ehwa Prelim Calc Memo.

Preliminary Results of the Review

    We preliminarily determine that the following weighted-average 
dumping margins exist for the period January 23, 2009, through October 
31, 2010:

------------------------------------------------------------------------
                                                                Margin
                    Exporter/manufacturer                      (percent)
------------------------------------------------------------------------
Ehwa Diamond Industrial Co., Ltd............................       12.21
Hyosung Diamond Industrial Co., Ltd, Western Diamond Tools        121.19
 Inc., and Hyosung D&P Co., Ltd.............................
Shinhan Diamond Industrial Co., Ltd. and SH Trading, Inc....        3.50
------------------------------------------------------------------------

Public Comment

    The Department will disclose the calculations performed within five 
days of publication of this notice to the parties to this proceeding in 
accordance with 19 CFR 351.224(b).
    Pursuant to 19 CFR 351.309(c), interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, should be filed not later than 5 days after the time limit for 
filing case briefs. See 19 CFR 351.309(d). Parties submitting arguments 
in this proceeding are requested to submit with each argument: (1) A 
statement of the issue, (2) a brief summary of the argument, and (3) a 
table of authorities, in accordance with 19 CFR 351.309(d)(2). Further, 
parties submitting case and/or rebuttal briefs are requested to provide 
the Department with an additional electronic copy of the public version 
of any such comments on a computer diskette. Case and rebuttal briefs 
must be served on interested parties in accordance with 19 CFR 
351.303(f).
    Pursuant to 19 CFR 351.310(c), any interested party may request a 
hearing within 30 days of publication of this notice in the Federal 
Register. If a hearing is requested, the Department will notify 
interested parties of the hearing schedule. Issues raised in the 
hearing will be limited to those raised in the case briefs.
    The Department will issue the final results of this administrative 
review, which will include the results of its analysis of issues raised 
in any such comments, within 120 days of publication of these 
preliminary results, unless extended. See section 751(a)(3)(A) of the 
Act and 19 CFR 351.213(h).

Assessment Rates

    The Department shall determine, and CBP will assess, antidumping 
duties on all appropriate entries in accordance with 19 CFR 
351.212(b)(1). As mentioned above, on October 24, 2011, the U.S. Court 
of International Trade (``CIT'') preliminarily enjoined liquidation of 
entries which are subject to the Final LTFV Determination. Accordingly, 
the Department will not instruct CBP to assess antidumping duties 
pending resolution of the associated litigation.
    Pursuant to 19 CFR 351.212(b)(1), for all sales made by the 
respondents for which they have reported the importer of record and the 
entered value of the U.S. sales, we have calculated importer-specific 
assessment rates based on the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
those sales. Where the respondent did not report the entered value for 
U.S. sales to an importer, we have calculated importer-specific 
assessment rates for the merchandise in question by aggregating the 
dumping margins calculated for all U.S. sales to each importer and 
dividing this amount by the total quantity of those sales.
    To determine whether the duty assessment rates were de minimis, in 
accordance with the requirement set forth in 19 CFR 351.106(c)(2), the 
Department calculated importer-specific ad valorem ratios based on the 
entered value or the estimated entered value, when entered value was 
not reported.
    Pursuant to 19 CFR 351.106(c)(2), we will instruct CBP to liquidate 
without regard to antidumping duties any entries for which the 
assessment rate is de minimis (i.e., less than 0.50 percent).
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) 
(``Assessment Policy Notice''). This clarification will apply to 
entries of subject merchandise during the POR produced by Ehwa and 
Shinhan for which these companies did not know that their merchandise 
was destined for the United States. In such instances, we will instruct 
CBP to liquidate unreviewed entries at the all-others rate if there is 
no rate for the intermediate involved in the transaction. For a full 
discussion of this clarification, see Assessment Policy Notice.

Cash Deposit Requirements

    Effective October 24, 2011, the Department revoked the antidumping 
duty order on diamond sawblades from Korea, pursuant to a proceeding 
under section 129 of the Uruguay Round Agreements Act to implement the 
findings of the WorId Trade Organization dispute settlement panel in 
United States--Use of Zeroing in Anti-Dumping Measures Involving 
Products from Korea (WTIDS402/R) (January 18, 2011). See Notice of 
Implementation of Determination Under Section 129 of the Uruguay Round 
Agreements Act and Revocation of the Antidumping Duty Order on Diamond 
Sawblades and Parts Thereof From the Republic of Korea, 76 FR 66892 
(October 28, 2011), and accompanying Issues and Decision Memorandum. 
Consequently, no cash deposits are required on imports of subject 
merchandise.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    The Department is issuing and publishing these results in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act.


[[Page 76135]]


    Dated: November 30, 2011.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2011-31285 Filed 12-5-11; 8:45 am]
BILLING CODE 3510-DS-P