A-201-820
Suspension Agreement
Public Document
Re: Unrestricted Partial-Lot Inspections v. Restricted Inspections
- Suspension Agreement on Fresh Tomatoes from Mexico
To All Interested Parties:
The May 2, 1997, Clarification (the Clarification) explains the
terms and conditions that the Department will apply when calculating
prices for transactions involving adjustments due to changes in
condition after shipment. A key requirement of the Clarification is
that no adjustments will be made for failure to meet suitable shipping
conditions unless supported by an unrestricted USDA inspection called
for no more than six hours from the time of arrival at the receiver
and performed in a timely fashion thereafter.
While the receiver may call for the inspection within the allowable
six-hour period, the inspection does not occur until the USDA
inspector is available. In the meantime, the receiver might sell
a portion of a lot and, therefore, by the time the USDA inspector
arrives, that part of the lot is not available for inspection.
Certain interested parties have questioned whether an inspection
conducted under these circumstances would be deemed restricted.
The purpose of this letter is to clarify our position on the matter.
If the person requesting the inspection allows the USDA inspector
full access to the partial lot within his possession, we consider
this to be an “unrestricted partial-lot” inspection. Alternatively,
if the person requesting the inspection restricts it to a portion
of the partial lot, we deem it a “restricted” inspection. As noted
above, we only allow adjustments to the transaction price for
condition defects if the USDA inspection is unrestricted.
When we calculate an adjustment for failure to meet suitable shipping
conditions where an unrestricted partial-lot inspection has taken
place and sufficient condition defects have been documented by a USDA
inspection certificate, we will assume that the portion of the lot
sold prior to the inspection had no condition defects and that, if
present during the inspection, those tomatoes would have reduced the
percentage of condition defects that were found on the inspection of
the partial lot. Accordingly, we will adjust the percentage(s) on
the USDA inspection certificate and apply the adjusted percentage(s)
to the whole lot. When the adjusted percentage(s) for the whole
lot fall below the threshold percentage(s) stipulated in the
Clarification, we will not allow any price adjustments. We have
prepared an example of these calculations (see Enclosure).
If you have any questions on this matter, please contact Mark Ross
at (202) 482-4794.
Sincerely,
Laurie Parkhill
Director
Office of AD/CVD Enforcement III
Enclosure
___________________________________________________________________
Unrestricted Partial-Lot Inspections
Suspension Agreement on Fresh Tomatoes from Mexico
I Examples that Illustrate the Department’s Position on Unrestricted
Partial-Lot Inspections
A. For purposes of calculating adjustments the Department will look
at each whole lot.
For example, before inspection 40 5x5s and 35 6x6s are sold from
a shipment of tomatoes, stated as 160 5x5s and 240 6x6s on the
invoice. The USDA inspection certificate from the unrestricted
partial-lot inspection indicates that the partial lots have 15-
and 16-percent soft/decay, respectively. The Department would
base its calculation of any adjustments for these condition
defects on the whole lot (160 5x5s and 240 6x6s, respectively).
B. The Department will assume that the portion of each lot sold
prior to inspection had no condition defects and adjust the
percentage(s) on the USDA inspection certificate downward.
The adjusted percentage(s) will be applied to the whole lot.
For example, prior to inspection 20 5x5s and 25 6x6s are sold
from a shipment of tomatoes, stated as 160 5x5s and 240 6x6s
on the invoice. The USDA inspection certificate from the
unrestricted partial-lot inspection indicates that the partial
lots have soft/decay condition defects of 25 and 26 percent,
respectively. The Department adjusts the percentage of soft/
decay by the boxes sold, assuming that the sold boxes contained
perfect tomatoes and, if present during the inspection, they
would have reduced the percentage of defective tomatoes. For
instance, to determine the amount of defective tomatoes for
the lot of 5x5s you multiply the 25-percent soft/decay by the
percentage of tomatoes inspected (i.e., 0.25 x (140 boxes
inspected / 160 total lot) = 21.88 percent). Finally, to
determine the number of boxes which may be considered DEFECTIVE
consistent with the Clarification, the Department multiplies
21.88 percent by the whole lot of 160 boxes. The result is that
approximately 35 boxes may be considered DEFECTIVE.
C. In situations when the adjusted percentage falls below the
threshold percentage(s) stipulated in the May 2, 1997,
Clarification no adjustment will be allowed.
For example, prior to inspection 45 4x4s and 84 5x6s are sold
from a shipment of tomatoes, stated as 263 4x4s and 262 5x6s
on the invoice. The USDA inspection certificate from the
unrestricted partial-lot inspection indicates that the partial
lots have condition defects (i.e., sunken and discolored areas)
of 15 and 16 percent, respectively. The Department adjusts the
percentages by the number of boxes sold, assuming that the sold
boxes contained perfect tomatoes and if present during the
inspection they would have lowered the percentage of defective
tomatoes. For instance, to determine the amount of defective
tomatoes for the whole lot of 4x4s, multiply the 15-percent
condition defect for sunken and discolored areas by the
percentage of tomatoes inspected (i.e., 0.15 x (218 boxes
inspected / 263 whole lot) = 12.43 percent). Similarly, the
same procedure is followed for the lot of 5x6s, obtaining 10.87
percent tomatoes with sunken and discolored areas. However,
since the adjusted percentages for each whole lot are lower
than the threshold percentage for condition defects other
than soft/decay allowed under the Clarification (i.e., 15
percent), no adjustment is allowable.
II. Example that Illustrates the Department’s Position on
Restricted Inspections
Inspections are deemed “restricted” when the USDA inspector
is not provided access to all of the whole or partial lot
on the invoice. In accordance with the Clarification, no
adjustment for condition defects is allowed for a restricted
inspection.
For example, 80 boxes are sold from a shipment of 400 25-pound
boxes of romas before the inspection. However, the person
requesting the inspection only allows the USDA inspector access
to a portion of the partial lot of 320 boxes. This inspection
is considered “restricted” and no adjustments are allowed for
condition defects where inspections are performed in such a
manner.
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