(Cite as: 47 FR 55406)

NOTICES

DEPARTMENT OF COMMERCE

Bicycle Tires and Tubes From Taiwan; Preliminary Results of

Administrative Review of Countervailing Duty Order

Thursday, December 9, 1982

*55406 AGENCY: International Trade Administration, Commerce.

ACTION: Notice of preliminary results of administrative review of countervailing duty order.

SUMMARY: The Department of Commerce has conducted an administrative review of the countervailing duty order on bicycle tires and tubes from Taiwan. The review covers the period October 28, 1981 through December 31, 1981, and the single company subject to the order, Cheng Shin Rubber Company, Ltd. As a result of this review, the Department has preliminarily determined the amount of the net subsidy to be 0.90 percent of the f.o.b. invoice price of the merchandise. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE: December 9, 1982.

FOR FURTHER INFORMATION CONTACT: Charles Anderson or Laura Kneale, Office of Compliance, International Trade Administration, U.S. Department of Commerce, Washington, D.C., 20230; telephone: (202) 377-2786.

SUPPLEMENTARY INFORMATION:

Background

On February 17, 1982, the Department of Commerce ("the Department") published in the Federal Register (47 FR 6913) a countervailing duty order with respect to bicycle tires and tubes manufactured by one Taiwanese company, Cheng Shin Rubber Company, Ltd. ("Cheng Shin"), and announced its intent to conduct an administrative review of the order within twelve months. As required by section 751 of the Tariff Act of 1930 ("the Tariff Act"), the Department has now conducted that administrative review.

Scope of the Review

Imports covered by the review are pneumatic bicycle tires and tubes of rubber or plastic, manufactured by Cheng Shin, whether such tires and tubes are sold together as units or separately. Bicycle tires and tubes are currently classifiable under items 772.4800 and 772.5700 of the Tariff Schedules of the United States Annotated.

The review covers the period October 28, 1981, the date of suspension of liquidation, through December 31, 1981, and the two programs found countervailable in the "Reopened Investigation--Final Countervailing Duty Determination" (46 FR 53201, October 28, 1981): A preferential income tax rate ceiling and a program of preferential export financing.

Analysis of Programs

(1) Preferential Income Tax Rate Ceiling

Firms whose establishment or expansion was "approved" before December 31, 1973 under the Statute for the Encouragement of Investment qualify for a tax rate ceiling of 25 percent of the firm's taxable income. The standard tax rate is 35 percent of taxable income.

Prior to 1982, we considered benefits from any income tax-related subsidy program to be received in the tax year in which the income was earned. As set forth in the notices of "Final Results of Administrative Review of Countervailing Duty Order" on Brazilian castor oil and scissors and shears (46 FR 62487, 47 FR 10266), and more recently in the notice of "Final Affirmative Countervailing Duty Determinations and Countervailing Duty Orders" on certain steel products from South Africa (47 FR 39379), we now consider the benefit in a review period to stem from reductions in taxes on income earned in the previous year, for it is only after a company's books have closed that the magnitude of the benefit, if any, can be known.

Thus, in order to determine the benefit received by Cheng Shin from the income tax rate ceiling in 1981, we require 1980 income tax data. Although we requested this data several times, the firm did not provide it. Therefore, we have used the income tax benefit from the latest year prior to 1981 for which we have the information as the best information available. That year is 1977, the period covered by the original and reopened investigations.

In the final determination of the reopened investigation, we calculated the ratio of bicycle tire and tube sales to total sales and applied that ratio to total taxable income, thereby computing a taxable income assignable to bicycle tire and tube sales. By comparing the taxes paid on that amount with what would have been paid on that amount, absent the ceiling, we arrived at a net subsidy. As the Government of Taiwan bestows the benefit on the basis of taxable income earned on total sales, however, a more appropriate method of calculating the benefit is to divide the tax savings attributable to total taxable income by Cheng Shin's total sales. *55407 Modifying the calculations for 1977 in this manner, we find the ad valorem subsidy from the income tax rate ceiling to be 0.90 percent.

(2) Preferential Export Financing

Under the Export Financing Program, an exporter receives a short-term loan at the prevailing commercial rate of interest upon the presentation of a letter of credit from a foreign buyer. This rate is subsequently lowered by the lending institution upon approval by the Central Bank of Cina. During the period of review, Cheng Shin did not receive any preferential export financing for bicycle tires and tubes.

Preliminary Results of the Review

As a result of our review, we preliminarily determine that the net subsidy conferred upon Cheng Shin during the period of review is 0.90 percent ad valorem. Accordingly, the Department intends to instruct the Customs Service to assess countervailing duties of 0.90 percent of the f.o.b. invoice price on all shipments by Cheng Shin of Taiwanese bicycle tires and tubes entered, or withdrawn from warehouse, for consumption on or after October 28, 1981 and exported on or before December 31, 1981.

Further, as provided for by section 751(a)(1) of the Tariff Act, we intend to instruct the Customs Service to collect a cash deposit of estimated countervailing duties of 0.90 percent of the f.o.b. invoice price on all shipments of this merchandise from Cheng Shin entered, or withdrawn from warehouse, for consumption on or after the date of public publication of the final results of the current review. This deposit requirement shall remain in effect until publication of the final results of the next administrative review.

Interested parties may submit written comments of these preliminary results within 30 days of the date of publication of this notice and may request disclosure and/or a hearing within 10 days of the date of publication. Any request for an administrative protective order must be made no later than 5 days after the date of publication. The Department will publish the final results of this administrative review including the results of its analysis of issues raised in any such written comments or at a hearing.

This administrative review and notice are in accordance with section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and s 355.41 of the Commerce Regulations (19 CFR 355.41).

December 2, 1982.

Gary N. Horlick,

Deputy Assistant Secretary for Import Administration.

[FR Doc. 82-33580 Filed 12-8-82; 8:45 am]

BILLING CODE 3510-25-M