(Cite as: 49 FR 14777)
NOTICES
DEPARTMENT OF COMMERCE
[C-583-002]
Bicycle Tires and Tubes From Taiwan; Preliminary Results of Administrative
Review of Countervailing Duty Order
Friday, April 13, 1984
*14777 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 January 1, 1982 through December 31, 1982, and the single company subject to the order, Cheng Shin Rubber Company, Ltd.
As a result of the review, the Department has preliminarily determined the aggregate net subsidy for the period to be 0.76 percent ad valorem. Interested parties are invited to comment on these preliminary results.
EFFECTIVE DATE: April 13, 1984.
FOR FURTHER INFORMATION CONTACT: John McKean or Brian Kelly, Office of Compliance, International Trade Administration, U.S. Department of Commerce, Washington, D.C. 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On September 23, 1983, the Department of Commerce ("the Department") published in the Federal Register (48 FR 43366) the final results of its last administrative review of the countervailing duty order on bicycle tires and tubes manufactured by the one Taiwanese company covered by the order, Cheng Shin Rubber Company, Ltd. (47 FR 6913, February 17, 1982), and announced its intent to conduct the next administrative review. As required by section 751 of the Tariff Act of 1930 ("the Tariff Act"), the Department has *14778 now conducted that administrative review.
Because the International Trade Commission ("the ITC") determined under section 104(b) of the Trade Agreements Act that no industry in the United States would be injured by importations of this merchandise if this countervailing duty order were revoked (48 FR 26655), the Department revoked the order effective December 30, 1982, the date the ITC notified the Department that Cheng Shin had requested the injury determination.
Scope of the Review
Imports covered by the review are shipments of Taiwanese 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. Such merchandise is currently classifiable under items 772.4800 and 772.5700 of the Tariff Schedules of the United States Annotated.
The review covers the period January 1, 1982 through December 31, 1982, and six programs: (1) Preferential income tax rate ceilings; (2) preferential export financing; (3) income tax holidays; (4) tax deductions for investment in production equipment; (5) export loss reserves; and (6) deferred duty payments on raw materials.
Analysis of Programs
(1) Preferential Income Tax Rate Ceilings
Article 15 of the Statute for the Encouragement of Investment ("SEI") provides that, if a firm qualifies as a productive enterprise or a big trading company, its income tax (including surcharges) shall not exceed 25 percent. The stated standard tax rate is 35 percent of taxable income. Cheng Shin qualified as a productive enterprise, which entitled it to the 25 percent tax rate. We have not received adequate evidence that shows that the 25 percent income tax ceiling is not limited "to an enterprise or industry, or group of enterprises or industries" as provided in section 771(5)(B) of the Tariff Act. In order to calculate the benefit received by Cheng Shin in 1982, we used 1981 income tax data filed in 1982 to determine the tax differential between the 25 percent and 35 percent tax rates. We divided this differential by total sales for 1982. We preliminarily determine the benefit from this program to be 0.757 percent ad valorem for the period of review.
(2) Preferential Export Financing
Under the export financing program, the exporter receives a short-term loan at the prevailing commercial interest rate upon the presentation of a letter of credit from a foreign buyer. The interest rate is subsequently lowered by the lending institution upon approval by the Central Bank of China. Cheng Shin did not receive any preferential export financing for bicycle tires and tubes during 1982 nor was any outstanding from 1981. Therefore Cheng Shin received no benefit from the program during the period of review.
Article 6 of the SEI states that when a productive enterprise belonging to any of the fourteen business categories defined in Article 3 of the SEI expands its production equipment through capital investment, the increased income derived from the investment may be exempt from income tax for a period of four consecutive years from the date on which the newly added equipment begins operation or rendering services. Because Cheng Shin received the tax holiday in 1981 as an incentive for expanding its processing of merchandise not subject to this order (pneumatic tires for special purpose vehicles, including tires and tubes for aircraft, movable machine tools, construction equipment, and farm machinery), we preliminarily determine that there is no countervailable benefit on bicycle tires and tubes.
(4) Tax Deductions for Investment in Production Equipment
Article 10 of the SEI allows a productive enterprise to deduct ten to fifteen percent of the amount invested in production equipment during a tax year from the income tax payable for that tax year. If the income tax payable is less than the deductible amount, the enterprise may carry the deduction forward for up to four years. In 1982, Cheng Shin invested in equipment for the production of merchandise not subject to this order (radial tires, and tires and tubes for motorcycles, movable machine tools and farm machinery). We therefore preliminary determine that there is no countervailable benefit on bicycle tires and tubes.
Article 31 of the SEI allows firms to set aside a reserve of up to one percent of the previous year's exports to be used for compensation of export losses incurred. The Department stated in its last review that it would investigate this program. After investigation, we found that Cheng Shin set aside reserves for export losses in 1981. We divided the amount of the reserve used in 1982 by total export sales and found a benefit under this program of 0.002 percent ad valorem during the period of review.
(6) Deferred Duty Payments on Raw Materials
In our last review, we stated that we would examine whether Cheng Shin was deferring payments of import duties on raw materials used in goods ultimately sold by firms in the domestic market. Cheng Shin stated that there is no provision for this, although a statutory provision does exist that permits a remission of duties on imported inputs used in reexported products (section 3.092 Taxes in Taiwan, Republic of China). Under section 3.092, if the raw material is not exported in finished goods within eighteen months from the date of importation, the duty on the raw material must be paid together with a "delinquent fee" of 0.05 percent per day from the day of importation. This fee is greater than the comparable commercial interest rate. The program thus does not provide funds at less than commercial rates and is not countervailable.
Preliminary Results of the Review
As a result of the review, we preliminarily determine the aggregate net subsidy on Taiwanese bicycle tires and tubes manufactured by Cheng Shin to be 0.76 percent ad valorem for the period of review. The Department intends to instruct the Customs Service to assess countervailing duties of 0.76 percent of the f.o.b. price on all shipments of bicycle tires and tubes manfactured by Cheng Shin exported on or after January 1, 1982 and entered, or withdrawn from warehouse, for consumption on or before December 29, 1982.
Interested parties may submit written comments on 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 hearing, if requested, will be held 45 days after the date of publication or the first workday thereafter. 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)) *14779 and s 355.41 of the Commerce Regulations (19 CFR 355.41).
Dated: April 9, 1984.
Alan F. Holmer,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 84-9969 Filed 4-12-84; 8:45 am]
BILLING CODE 3510-DS-M
49 FR 14777-02,