47632 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

difference in levels of trade does not

have a price effect and, therefore, no

adjustment is necessary.

The statute also provides for an

adjustment to NV when NV is based on

a level of trade different from that of the

CEP if the NV is more remote from the

factory than the CEP and if we are

unable to determine whether the

difference in levels of trade between

CEP level and NV level affects the

comparability of their prices. This latter

situation can occur where there is no

home market level of trade equivalent to

the U.S. sales level or where there is an

equivalent home market level but the

data are insufficient to support a

conclusion on price effect. This

adjustment, the ‘‘CEP offset,’’ is

identified in section 773(a)(7)(B) of the

Act and is the lower of the following:

• The indirect selling expenses on the

home market sale, or

• The indirect selling expenses

deducted from the starting price used to

calculate CEP.

The CEP offset is not automatic each

time we use CEP. The CEP offset is

made only when the level of trade of the

home market sale is more advanced

than the level of trade of the U.S. (CEP)

sale and there is not an appropriate

basis for determining whether there is

an effect on price comparability.

To determine whether an level-oftrade adjustment was appropriate, in

accordance with the principles

discussed above, we examined

information regarding the distribution

systems in both the United States and

the Mexican markets, including the

selling functions, classes of customer,

and selling expenses for CEMEX and

CDC. Upon consideration of these

factors, the Department determined that

there is one level-of-trade in the home

market—sales of cement shipped to endusers and ready-mixers in bulk and

bagged form—and a different level-oftrade in the U.S. market—sales to

affiliated importers. Because there was

only one level of trade in the home

market, we were unable to perform the

analysis for a level of trade adjustment.

We further determined that

Respondent’s sales to end users and

ready-mixers in the home market are at

a more advanced level of trade than

sales to affiliated importers in the

United States because CEMEX and CDC

perform more selling functions for sales

to end-users and ready-mixers in the

home market than for sales to affiliated

importers in the United States. As a

result, the Department has preliminarily

determined to grant Respondent an

adjustment to normal value in the form

of a CEP offset.

Preliminary Results of Review

As a result of our review, we

preliminarily determine the dumping

margin for CEMEX for the period

August 1, 1995, through July 31, 1996,

to be 35.88 percent.

Interested parties may request

disclosure within five days of the date

of publication of this notice. Any

interested party may request a hearing

within 10 days of publication. Any

hearing, if requested, will be held 44

days after the date of publication or the

first business day thereafter. Case briefs

and/or other written comments from

interested parties may be submitted not

later than 30 days after the date of

publication. Rebuttal briefs and

rebuttals to written comments, limited

to issues raised in those comments, may

be filed not later than 37 days after the

date of publication of this notice. The

Department will publish its final results

of this administrative review, including

its analysis of issues raised in any

written comments or at a hearing, not

later than 180 days after the date of

publication of this notice.

Upon completion of this review, the

Department shall determine, and the

Customs Service shall assess,

antidumping duties on all appropriate

entries.

The Department will issue

appropriate appraisement instructions

directly to the Customs Service upon

completion of this review.

Furthermore, the following deposit

requirements will be effective for all

shipments of the subject merchandise

entered, or withdrawn from warehouse,

for consumption on or after the

publication date of the final results of

review, as provided by section 751(a)(1)

of the Act: (1) The cash deposit rate for

the reviewed company will be the rate

determined in the final results of

review; (2) for previously reviewed or

investigated companies not mentioned

above, the cash deposit rate will

continue to be the company-specific rate

published for the most recent period; (3)

if the exporter is not a firm covered in

this review, a prior review, or in the

original LTFV investigation, but the

manufacturer is, the cash deposit rate

will be the rate established for the most

recent period for the manufacture of the

merchandise; and (4) the cash deposit

rate for all other manufacturers or

exporters will be 61.85 percent, the all

others rate from the LTFV investigation.

These deposit requirements, when

imposed, shall remain in effect until

publication of the final results of the

next administrative review.

This notice also serves as a

preliminary reminder to importers of

their responsibility under 19 CFR

353.26 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

dumping duties.

This administrative review and notice

are in accordance with the Act (19

U.S.C. 1675 (a)(1)) and 19 CFR 353.22.

Dated: September 2, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–24000 Filed 9–9–97; 8:45 am]

BILLING CODE 3510–25–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–533–502]

Certain Welded Carbon Standard Steel

Pipes and Tubes From India; Final

Results of New Shippers Antidumping

Duty Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of new

shippers antidumping duty

administrative review.

SUMMARY: On May 1, 1997, the

Department of Commerce published the

preliminary results of a new shippers

administrative review of the

antidumping duty order on certain

welded carbon steel standard pipes and

tubes from India. The review covers two

manufacturers/exporters. The period of

review is May 1, 1995 through April 30,

1996.

Based on our analysis of the

comments received, we have made

changes, including corrections of certain

inadvertent programming and clerical

errors, in the margin calculations for

Rajinder Pipes Ltd. and Lloyd’s Metals

& Engineers Ltd. The final weightedaverage dumping margins for the

reviewed firms are listed below in the

section entitled ‘‘Final Results of

Review.’’

EFFECTIVE DATE: September 10, 1997.

FOR FURTHER INFORMATION CONTACT:

Davina Hashmi or Kristie Strecker, at

Import Administration, International

Trade Administration, U.S. Department

of Commerce, Washington, D.C. 20230;

Telephone: (202) 482–4733.
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47633

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all

citations to the Tariff Act of 1930, as

amended (the Tariff Act), are references

to the provisions effective January 1,

1995, the effective date of the

amendments made to the Tariff Act by

the Uruguay Round Agreements Act

(URAA).

Background

On May 1, 1997, the Department of

Commerce (the Department) published

the preliminary results of a new

shippers administrative review of the

antidumping duty order on certain

welded carbon steel standard pipes and

tubes from India (62 FR 23760)

(Preliminary Results). On May 30, 1997,

we received briefs on behalf of Allied

Tube & Conduit Corp., Sawhill Tubular

Division of Armco, Inc., Wheatland

Tube Co., and Laclede Steel Co.

(petitioners), and Rajinder Pipes Ltd.

(Rajinder). We received rebuttal briefs

from petitioners, Rajinder Pipes Ltd.,

and Lloyd’s Metals & Engineers

(Lloyd’s) on June 6, 1997. The

Department has conducted this new

shippers administrative review in

accordance with section 751(a)(2)(B) of

the Act.

This review covers Rajinder Pipes

Ltd. (Rajinder) and Lloyd’s Metals and

Engineers (Lloyd’s), and the period of

review is May 1, 1995 through April 30,

1996.

Scope of Review

The products covered by this review

include circular welded non-alloy steel

pipes and tubes, of circular crosssection, with an outside diameter of

0.372 inch or more but not more than

406.4 millimeters (16 inches) in outside

diameter, regardless of wall thickness,

surface finish (black, galvanized, or

painted), or end finish (plain end,

beveled end, threaded, or threaded and

coupled). These pipes and tubes are

generally known as standard pipe,

though they may also be called

structural or mechanical tubing in

certain applications. Standard pipes and

tubes are intended for the low-pressure

conveyance of water, steam, natural gas,

air and other liquids and gases in

plumbing and heating systems, airconditioner units, automatic sprinkler

systems, and other related uses.

Standard pipe may also be used for light

load-bearing and mechanical

applications, such as for fence tubing,

and for protection of electrical wiring,

such as conduit shells.

The scope is not limited to standard

pipe and fence tubing or those types of

mechanical and structural pipe that are

used in standard pipe applications. All

carbon-steel pipes and tubes within the

physical description outlined above are

included in the scope of this order,

except for line pipe, oil-country tubular

goods, boiler tubing, cold-drawn or

cold-rolled mechanical tubing, pipe and

tube hollows for redraws, finished

scaffolding, and finished rigid conduit.

Imports of the products covered by

this review are currently classified

under the following Harmonized Tariff

Schedule (HTS) subheadings:

7306.30.10.00, 7306.30.50.25,

7306.30.50.32, 7306.30.50.40,

7306.30.50.55, 7306.30.50.85, and

7306.30.50.90. Although the HTS

subheadings are provided for

convenience and customs purposes, our

written description of the scope of this

proceeding is dispositive.

Changes Since the Preliminary Results

Based on our analysis of comments

received, we have made certain

corrections that changed our results. We

have corrected certain programming and

clerical errors in our Preliminary

Results, where applicable; they are

discussed in the relevant comment

sections below.

Comment 1

Petitioners contend that, based on the

record developed in this new shippers

review, Rajinder is not entitled to a

duty-drawback adjustment to

constructed export price (CEP).

Petitioners state that there is little

supporting documentation on the record

with respect to the duty-drawback

program to which Rajinder subscribes

and that the information that is on the

record is vague. Petitioners also argue

that the record is void of evidence that

Rajinder applied for or received duty

drawback from the government for

materials imported and used as inputs

for the finished product exported to the

United States. Petitioners state that the

only evidence on the record supporting

Rajinder’s claimed duty drawback is a

statement by Rajinder that it received a

duty-drawback license.

In addition, petitioners contend that

the Department applies a two-part test

for determining whether an adjustment

for duty drawback is appropriate, which

petitioners contend Rajinder did not

meet. First, petitioners maintain that the

record does not indicate that import

duties and rebates were directly linked

to and dependent on one another.

Second, petitioners also maintain that

the record does not demonstrate that

there were sufficient imports of raw

materials (citing Far East Machinery Co.

v United States, 699 F. Supp 309, 311

(CIT 1988); Carlisle Tire & Rubber Co. v

United States, 657 F. Supp. 1287 (CIT

1987)).

Petitioners further contend that the

Advanced License program at issue is

an export-incentive program rather than

a duty-drawback program. Petitioners

argue that, under the Indian Advanced

License program to which Rajinder

subscribed, eligibility for the benefit

was based on the act of exporting rather

than the act of importing. Petitioners

indicate that, in its supplemental

questionnaire response, Rajinder termed

the duty-drawback program as an

‘‘export incentive’’ program and that

Rajinder stated that payment was

carried in its financial books as an

export-incentive program. Petitioners

assert that the Advanced License

program operates in a manner similar to

export-restitution payments. Petitioners

maintain that, as in Sorbitol From

France; Final Determination of Sales at

Less Than Fair Value, 47 FR 6459, 6460

(February 12, 1982), the Department

found that export-restitution payments

did not constitute a proper dutydrawback program and that the Court of

International Trade (CIT) upheld the

Department’s decision denying

drawback in the case where exporters of

sorbitol were eligible for an export

payment whether or not any import

duties were paid.

Petitioners also contend that

Rajinder’s export-incentive program

does not meet the requirement for an

adjustment under the statute. Citing

Huffy v. United States, 632 F. Supp. 50,

53 (CIT 1986), petitioners argue that the

payment of duties on imported material

must be a prerequisite to receipt of the

export rebate in order to qualify for a

duty-drawback adjustment.

Rajinder maintains that, in its

questionnaire response, it stated that its

claimed duty drawback is ‘‘on the

record’’. Rajinder further states that, not

only is there information on the record

that a duty-drawback program exists in

India, but the Department examined

such information when it conducted a

verification of Lloyds’ claimed duty

drawback. Rajinder also states that,

despite the absence of ‘‘documentary

evidence’’ on the record, it was ready

and willing to provide evidence of its

duty-drawback program at verification.

Rajinder deems petitioners’ comment

meaningless that eligibility for the

benefit was based on the act of

exporting a finished product, not on the

act of importing a dutiable product.

Rajinder maintains that, under the

Advanced License program, the

drawback benefit never accrues unless

the product is exported. If a company

imports raw materials duty-free and
47634 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

then fails to meet its export obligation,

the company would be required to pay

the duty on the imported material.

Rajinder also states that, under the

Advanced License program, there is a

direct link between the imported

material and the exported finished

product because duty-free materials that

may be imported are specified in the

license and the materials imported must

conform to the materials used in the

finished export product. Rajinder points

out that the Department granted

adjustments for duty drawback in

Notice of Final Determination of Sales at

Less Than Fair Value: Certain Carbon

Steel Butt-Weld Pipe Fittings From

India, 60 FR 10545, 10547 (February 27,

1995), and Notice of Final

Determination of Sales at Less Than Fair

Value: Stainless Steel Bar from India, 59

FR 66915, 66919–20 (December 28,

1994), although in these cases

adjustments were made to constructed

value (CV).

Rajinder contends that the Advanced

License program is different from cases

which generally relate to exportrestitution payments. Rajinder

maintains that the Department affirmed

that the Advanced License scheme is

equivalent to a duty-drawback system in

Certain Iron-Metal Castings from India:

Final Results of Countervailing Duty

Administrative Review, 61 FR 64687

(December 6, 1996).

Department’s Position

Although we allowed it for the

preliminary results, we have denied

Rajinder’s claimed duty drawback for

these final results of review. In our

supplemental questionnaire, we

requested Rajinder to provide

information demonstrating that it met

our two-part test. In using this test, we

consider: (a) whether the import duty

and rebate are directly linked to, and

dependent upon, one another; and (b)

whether the company claiming the

adjustment can show that there were

sufficient imports of the imported raw

materials to account for the drawback

received on the exported product. This

test has been upheld consistently by the

Court of International Trade (CIT). See,

e.g., Federal-Mogul Corp. v. United

States, 862 F. Supp. 384, 409 (CIT 1994)

(Federal-Mogul). Although we have

recognized India’s Advanced License

program in other cases involving Indian

companies exporting merchandise to the

United States, Rajinder responded

inadequately to our requests for further

information regarding this claimed

adjustment because its response did not

contain the information we requested in

our supplemental questionnaire.

Rajinder only supplied a narrative

description of the Advanced License

program and a worksheet showing its

duty-drawback calculations. Rajinder

did not supply a copy of the Advanced

License nor any evidence that a dutydrawback transaction occurred.

Therefore, the record lacks any evidence

supporting Rajinder’s claimed duty

drawback. Rajinder only stated that it

applied for the license for duty

drawback after the period of review

(POR). Rajinder argued that we

reviewed duty drawback at Lloyd’s and,

therefore, the adjustment should be

granted to Rajinder. The program we

reviewed at Lloyd’s was the Passbook

system, while Rajinder uses the

Advanced License program and,

therefore, this argument is not relevant.

Because we have denied Rajinder’s

claimed duty drawback on this basis, we

have not addressed the other arguments

concerning the program which

petitioners raised.

Comment 2

Petitioners contend that Lloyd’s is not

entitled to a duty-drawback adjustment

for its export price sales. Petitioners

assert that Lloyd’s failed to meet the

Department’s two-part test for a dutydrawback adjustment. Petitioners argue

that the record fails to demonstrate that

the payment of import duties was

directly linked to and dependent upon

receipt of the export rebate. Petitioners

argue, in particular, that the payment of

duties on imported material must be a

prerequisite to receipt of the export

rebate in order to qualify for a dutydrawback adjustment (citing Huffy v.

United States). Petitioners maintain

that, under India’s Passbook system (a

duty-drawback program), Lloyd’s can

apply for the export incentive even

though it did not previously import raw

material used in the production of the

exported merchandise. According to

petitioners, under the Passbook system,

Lloyd’s first exports products and then

receives credit based on its volume of

exports. Petitioners point out that, in its

supplemental questionnaire response,

Lloyd’s states that the credit received

may not be limited to the raw material

used in the production of exported

merchandise for which it received

credit.

Petitioners assert that Lloyd’s was free

to import any type of hot-rolled steel

product regardless of whether it was an

input used in the production of the

exported subject merchandise.

Petitioners refer to the Input-Output (IO) Norms, which identify on a productspecific basis the amount of raw

material which may be imported

compared to the amount of finished

product which may be exported under

the drawback program. Petitioners argue

that Lloyds’ response indicates that

these norms allow for the importation of

steel material that may not be used to

produce the exported product.

Petitioners contend that the

verification exhibit and Lloyds’

supplemental questionnaire response

demonstrate that, rather than operating

as a duty-drawback system, the

Passbook system is an export-incentive

program. Petitioners state that the

Passbook program is similar to that in

Sorbitol From France, 47 FR 6459, 6460

(1982), in which the Department denied

a duty-drawback adjustment because

exporters of sorbitol were eligible for an

export payment whether or not any

import duties were paid, and the CIT

upheld the Department’s determination

in Roquette Freres v. United States, 583

F. Supp. 599, 602 (1984). Petitioners

conclude that, as in Roquette Freres,

there is no evidence on the record in

this case that accrual of the benefit is

determined on the importation of an

input product that could be used in the

production of the exported merchandise

from which the export benefit was

calculated. Therefore, petitioners argue

that the drawback adjustment should be

denied.

Lloyd’s responds that petitioners’

arguments are baseless. Lloyd’s

contends that it has met both parts of

the Department’s two-part test.

Specifically, Lloyd’s argues that under

the Passbook system there is a direct

link between the import duty and the

rebate of duties. Lloyd’s explains that

the credits recorded in the Passbook can

only be given to the exporter upon

exportation of certain items and the

credit can only be used by the exporter

to pay import duties. Lloyd’s argues

that, if a sufficient amount of credits

exist in the Passbook, the Indian

Customs Service does not collect duties.

Lloyd’s points out that the credit

received is limited to the payment of

customs duties by the exporter and that

these credits are otherwise rendered

useless. Lloyd’s states that, in the

instant case, it accrued benefits for

import duties. Lloyd’s further asserts

that the verification documents provide

evidence that there were sufficient raw

materials on which Lloyd’s paid duty

and which were used in the production

and subsequent export of subject

merchandise.

Lloyd’s states that the Passbook

system is an international-trade

incentive because it encourages and

requires both imports and exports.

Lloyd’s states that the Passbook system

requires the credits accrued to be

applied toward import duties and the

refund can be used for any purpose.
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47635

Lloyd’s also indicates that the Passbook

system allows Indian companies to

select the most advantageous raw

materials without regard to duties,

which results in a savings in costs and

sales prices.

Lloyd’s argues that petitioners

incorrectly characterize the Passbook

program as an export-incentive program.

Lloyd’s explains that the Indian

government changed its former system,

the International Price Reimbursement

Scheme, to its current Passbook system

because it determined that the old

scheme did not comport with the U.S.

fair-trade statute. Lloyd’s indicates that,

under the new program, eligible export

items and their corresponding import

items are identified.

Lloyd’s also rebuts petitioners’ claim

that Lloyd’s I–O Norms allow for the

importation of steel products that are

not used in the production of the final

exported merchandise. Lloyd’s

maintains that the products identified

are steel products that are both

authorized as qualifying goods and

envisioned for use in the production of

pipe and tube. Lloyd’s asserts that it met

the requirements that imports be

sufficient to cover the amount of exports

which Lloyd’s argues it demonstrated at

verification.

Lloyd’s contends that the Passbook

program can be easily distinguished

from the program cited in Roquette

Freres. In Roquette Freres, Lloyd’s

asserts, the Department denied the

claimed drawback because the export

credits were received regardless of

whether the recipient had imported raw

materials. Lloyd’s maintains that, unlike

the program cited in Roquette Freres,

the credit Lloyd’s received is dependent

upon the identity and quantity of

exported goods. Lloyd’s further

contends that, under the drawback

program in Roquette Freres, imports

were not required, whereas under the

Passbook program, receipt of benefits

are contingent upon the importation of

materials.

Lloyd’s maintains that the Passbook

program meets the requirements under

section 772(c)(1)(B) of the statute.

Lloyd’s states that this provision of the

law applies to both rebates and the noncollection of duties. Lloyd’s argues that

there is no requirement in the statute

that duties must first be paid and then

rebated.

Department’s Position

We disagree with petitioners. Section

772(c)(1)(B) of the Act provides that

export price (or constructed export

price) shall be increased by ‘‘the amount

of any import duties imposed by the

country of exportation which have been

rebated, or which have not been

collected, by reason of the exportation

of the subject merchandise to the United

States’ (emphasis added). As described

in response to comment 1 above, we

determine whether an adjustment to

U.S. price for a respondent’s claimed

duty drawback is appropriate when the

respondent can demonstrate that it

meets both parts of our two-part test.

There must be: (1) a sufficient link

between the import duty and the rebate,

and (2) a sufficient amount of raw

materials imported and used in the

production of the final exported

product. Petitioners have not challenged

the Department’s determination

regarding the second part of the test,

that Lloyd’s has demonstrated that it

imported a sufficient amount of raw

materials, or hot-rolled (HR) coils, used

in the production of the final exported

product. See Lloyds’ Home-market

Verification Report, at 11 (May 9, 1997).

As for the first part of the test, which

petitioners have challenged, the Indian

Passbook System presents the rare

situation in which, rather than being

rebated as is usually the case, the import

duties were actually ‘‘not collected, by

reason of the exportation of the subject

merchandise to the United States.’’ This

type of program falls within the express

language of section 772(c)(1)(B). As

described below, Lloyd’s has

demonstrated to our satisfaction that it

met both parts of our two-part test.

The Indian Passbook system

constitutes a proper drawback program.

At verification, we examined Lloyd’s

claimed duty drawback and certain

aspects of the Indian law which govern

the application of the Passbook system.

The system requires that the input used

in the production of the final exported

product be imported in order to obtain

the drawback benefit. Under the

program, the Indian government records

all imports and exports in a ‘‘passbook’’.

The government reduces the amount of

duties owed on future imports, provided

the final exported merchandise

incorporates an amount of the input

product equivalent to that which was

previously imported and an equivalent

amount of duties were previously

suspended. As explained in our

verification report, ‘‘Lloyd’s must show

to the government that the exported

product includes imported inputs in

order to be credited the percentage

charged for the imported goods’

(emphasis added). Lloyds’ Verification

Report at 12.

We disagree with petitioners that

payment of duties on the imported

material is a prerequisite to receipt of

benefits. As noted, section 772(c)(1)(B)

requires either that the import duties be

rebated or that they not be collected by

reason of the exportation of the subject

merchandise to the United States.

Consequently, the Department has never

established a strict prerequisite that

import duties must actually be paid and

subsequently rebated in order for there

to be the necessary link justifying an

adjustment to U.S. price. Nor have the

courts established such a requirement. It

is true, as petitioners note, that the CIT

stated in Far East Machinery that

payment of import duties is a

‘‘prerequisite to receipt of an export

rebate’’ to qualify for an adjustment. 699

F. Supp. at 313. However, petitioners

have taken the CIT’s discussion of this

issue out of context. In Far East

Machinery, as in other cases, the

respondent had actually paid duties

upon importing the input and had

received some amount of rebate upon

exporting the subject merchandise. The

question concerned only whether the

government drawback program at issue

established the necessary link between

actual payment of the duties and receipt

of the rebate. See id.; see also E.I.

DuPont de Nemours & Co. v. United

States, 841 F. Supp. 1237, 1242–43 (CIT

1993); Huffy Corp., supra, 632 F. Supp.

at 53. The Department is not aware of

any case in which the CIT has ruled

upon a government drawback program,

such as the Indian Passbook system,

under which duties are suspended on

imported inputs, provided the company

subsequently exports merchandise

containing an equivalent amount of the

input as was imported, all of which is

monitored by way of a credit-debit

system. Therefore, these cases do not

address the Department’s present

determination.

In this case, the Indian government

has effectively suspended collection of

duties on imported steel contingent

upon the same company later exporting

pipe containing an equivalent amount of

steel. The Department has reviewed this

type of program before. For instance, in

Silicon Metal From Brazil; Final Results

of Antidumping Duty Administrative

Review, 62 FR 1970, 1976 (January 7,

1997), the Department found that a

certain Brazilian duty-drawback

program suspended the payment of

taxes or duties that ordinarily would

have been due upon importation. The

Department granted a duty-drawback

adjustment to export price pursuant to

section 771(c)(1)(B) of the Act. In

Extruded Rubber Thread From

Malaysia; Final Results of Antidumping

Duty Administrative Review, 62 FR

33588, 33598–99 (June 20, 1997), a duty

was imposed upon imported goods sold

in the home market but not collected
47636 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

when the subject merchandise

incorporating those imported goods was

exported. The Department ‘‘add[ed] the

amount of the uncollected duty to the

U.S. price.’’

Therefore, the issue in this review

remains whether Lloyd’s has established

the necessary link between the

government’s collection—or, in this

case, suspension—of import duties and

the rebate, which in this case is a credit.

The Department is satisfied that this

link exists.

Further, we disagree with petitioners’

contention that the Passbook system

constitutes an export-restitution

program rather than a duty-drawback

program. For instance, the Passbook

program differs from the exportsubstitution program administered by

the European Community in Sorbitol

From France. There, the Department

denied the claimed drawback because

export-restitution payments were

received by exporters regardless of

whether they used inputs that were

imported or sourced domestically. The

CIT upheld this determination in

Roquette Freres, supra, 583 F. Supp. at

602–03. By contrast, the Indian

Passbook program requires that the final

exported product contain an equivalent

amount of the input as was imported. At

our verification of Lloyd’s, we examined

the provision of the Indian law

requiring that a company ‘‘show to the

government that the exported product

includes imported inputs.’’ The raw

materials referred to in this provision of

the Indian law are the ‘‘. . . imports of

the input used in the exported product.’’

Lloyds’ Verification Report at 11.

Comment 3

Petitioners argue that the Department

should reject Rajinder’s reported steel

costs, which petitioners contend contain

numerous problems and deficiencies.

Petitioners allege that (1) Rajinder’s

reported steel prices may not include

freight costs; (2) although Rajinder made

purchases from other suppliers, it

reported its steel prices only on the

prices based from the Steel Authority of

India (SAIL) and the Department was

not able to verify purchases made from

other suppliers because Rajinder did not

provide invoices for other suppliers; (3)

the cost of steel reported in Rajinder’s

1996 annual report is higher than the

rates listed on the invoices at

verification; (4) Rajinder never provided

supporting documentation for its

assumed scrap rate and, based on the

verification report, it appears that the

Department never verified the actual

scrap rate; and (5) Rajinder grossly

overstated the scrap value of steel. For

these reasons, petitioners urge the

Department to value scrap based on the

ratio of the reported scrap price per

metric ton to the average price of steel

consumed and apply this ratio to the

price of steel reported in the cost

response.

Rajinder argues that its cost response

indicates that transportation costs, along

with other selling expenses, were

included in the steel price. Rajinder also

maintains that the Department verified

its freight costs and found no

discrepancies.

With respect to the issue of Rajinder’s

other suppliers, Rajinder argues that,

although the verification report

indicates that ‘‘on rare occasions’’

Rajinder purchased from other

suppliers, it is unlikely that these rare

purchases were made at prices higher

than those made from SAIL. Rajinder

also points out that not every invoice is

required to be provided at verification.

Rajinder maintains that the Department,

nonetheless, found no discrepancies

with Rajinder’s reported steel costs.

Rajinder contends that petitioners

have used an invalid approach to

conclude that, on average, the cost of

steel reported in Rajinder’s annual

report is higher than the price it

reported. Rajinder also argues that there

is nothing on the record or in the

verification report that suggests that

Rajinder’s scrap rate is unreasonable or

should not have been used. Rajinder

states that the scrap value was verified

and, therefore, should be accepted for

the final results of review.

Department’s Position

We agree with petitioners that freight

costs are not included in the cost of

steel, and we have added freight costs

to Rajinder’s reported steel costs for

these final results of review. Although

Rajinder reported the correct amount for

steel costs, it neglected to include the

amounts for freight which are clearly

indicated on its invoices. Therefore, we

have adjusted Rajinder’s reported steel

prices for freight costs. See Section B

response, October 7, 1996, page B–7;

Section D Supplemental Questionnaire

response, March 18, 1997, page 8; and

verification exhibit 22.

Concerning Rajinder’s reported steel

prices, we have accepted them for these

final results of review. See Memo to the

File, August 29, 1997.

Petitioners are incorrect that the cost

of steel reported in Rajinder’s 1996

annual report is higher than the rates

listed on the invoices at verification.

Petitioners compared the average cost of

steel consumed for year-end 1996 to

individual steel invoice prices.

Petitioners determined an average cost

of steel consumed by dividing the total

value, in rupees, of iron and steel

consumed by the total quantity of iron

and steel consumed. This equation

contains general values that are

comprised of both steel and iron.

However, iron is not a material used in

the production of merchandise covered

by the scope of this order. Further, the

steel inputs in the numerator are not

limited to the production of subject

merchandise. Therefore, petitioners

have incorrectly made a comparison

between a broad spectrum of

merchandise reported in Rajinder’s

financial statements and the individual

steel invoice prices that are materials

Rajinder used to produce merchandise

subject to this review.

Petitioners’ argument that the scrap

value is too high, as well as petitioners’

suggested alternative method for

calculating the scrap value, are equally

misplaced. Petitioners determined that

the scrap value was too high by dividing

a scrap resale value by the invoice value

of a single transaction. This method is

incorrect because the numerator is

based on both subject and non-subject

merchandise, whereas the denominator

reflects subject merchandise only.

However, scrap value can be easily and

correctly derived by dividing the

quantity of merchandise (i.e., iron and

steel) by the value of such merchandise

(i.e., iron and steel). Based on this

method, the scrap value for either

category of merchandise in the financial

statement (i.e., material consumed or

ending inventory) provides reasonable

values upon which we can rely.

Moreover, we verified these amounts

and found no discrepancies. Therefore,

there is no reason to suspect the

reported scrap rate.

Comment 4

Petitioners argue that the Department

should reject Rajinder’s reported zinc

costs. Petitioners argue that the zinc

price and zinc scrap value Rajinder

reported in its questionnaire response

were understated and overstated,

respectively, compared with the zinc

price and zinc scrap value Rajinder

reported in its annual report. Petitioners

contend that, for the final results of

review, the Department should make the

necessary changes to the reported zinc

price and zinc scrap value.

Rajinder states that, with respect to

zinc costs, there is no reason to suspect

that Rajinder overvalued its scrap

adjustment. Rajinder states that virtually

all cost data were verified and the

Department found no discrepancies

with the zinc cost data. Rajinder further

maintains that the difference between

amounts reported by Rajinder and the

average cost for zinc that the
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47637

Department and the petitioners

calculated can be attributed to the

adjustments for excise and sales tax, as

noted in the Department’s verification

report.

Department’s Position

We disagree with petitioners.

Reference to the amounts in the

financial statement is not necessary here

because we verified the reported

amounts and are satisfied that use of

these amounts is appropriate.

Rajinder also confuses the issue by

arguing that the difference between the

amount of zinc it reported and the

average cost of zinc that the Department

and petitioners calculated can be

explained by an adjustment for excise

and sales tax. As we stated in the

verification report, excise and sales tax

account for the difference between the

cost per metric ton, reported in Indian

rupees, and the average cost per metric

ton of zinc purchased during the period

of review (POR), also reported in Indian

rupees. The comparison of these zinc

costs to which Rajinder referred in its

reply brief is different from the

comparison of zinc costs that petitioners

made, which focused on the figures

reported for zinc price, zinc scrap value,

and zinc consumed.

In conclusion, we are satisfied that

the reported amounts were verified and

accurately reflect Rajinder’s costs. For

the final results, we have accepted

Rajinder’s reported zinc price and scrap

value.

Comment 5

Petitioners argue that the Department

should reject Rajinder’s reported

variable, labor, and fixed overhead

costs. Petitioners also contend that the

Department should disregard Rajinder’s

response and apply adverse facts

available because Rajinder refused to

comply with the Department’s request

to provide labor and overhead costs on

a product-specific basis. Petitioners

point out that Rajinder stated in its

supplemental questionnaire response

that it could not provide the requested

product-specific information because it

does not maintain costs in the manner

requested by the Department.

Petitioners assert that, because Rajinder

did not provide the requested

information, costs for products with

different physical characteristics were

not differentiated. Petitioners further

state that labor and overhead costs will

be affected because pipes with different

sizes and finish have different

processing times and the number of

pieces to handle will also be different.

Petitioners also maintain that

galvanized pipe will have higher labor

and overhead costs than black pipe as

a result of the pipe undergoing an

additional galvanizing process.

Petitioners argue that respondents are

often required to provide information in

an antidumping proceeding that is

different from the manner in which they

maintain their records in the ordinary

course of business. Petitioners also state

that, because Rajinder requested this

review, it should be held to the standard

of providing information that conforms

to the manner in which the Department

calculates dumping margins. Petitioners

maintain that, without the productspecific labor, variable, and overhead

costs, the Department cannot perform

accurate cost-of-production (COP) and

CV analyses and difference-inmerchandise (difmer) adjustments.

Petitioners contend that, with respect

to steel prices, steel scrap prices, zinc

values, and zinc scrap values, the

Department was unable to reconcile

with Rajinder’s financial statements

information that was collected at

verification. Petitioners argue that this

provides additional grounds, in addition

to Rajinder’s refusal to provide labor,

variable, and overhead cost information

on a product-specific basis, for

disregarding Rajinder’s response and

applying adverse facts available.

Rajinder states that it did not refuse

to comply with the Department’s

request to report its labor, variable, and

fixed overhead costs on a productspecific basis. Rather, Rajinder states, it

did not have the necessary data in its

cost system. Rajinder states that the

verification report further supports its

inability to provide the information as

requested by the Department. For

instance, Rajinder states that the

verification report notes that labor and

overhead costs were reported for one

type of pipe; it also notes that Rajinder

allocated costs on a mill-specific basis

which Rajinder believes is more

reasonable than if it had allocated the

costs over all production from the

various mills. Further, Rajinder

contends that petitioners erroneously

suggest that black pipe was used in

Rajinder’s calculations because

galvanized pipe will have higher labor

and overhead costs. Rajinder maintains

that its labor and overhead costs were

calculated for galvanized pipe only.

Rajinder maintains that it cooperated

fully in this review, that it provided

information based on its available

records, and that the Department should

accept its response. Rajinder concludes

that it makes no sense for the

Department to verify Rajinder’s costs,

find no discrepancies, use the

information for the preliminary results

of review, and then disregard the entire

response because petitioners feel these

costs should have been calculated

differently.

Department’s Position

We have determined that Rajinder’s

allocation of its reported labor and

overhead costs (variable and fixed) was

reasonable. The Department generally

prefers that respondents report costs on

a product-specific basis. However, in

accordance with section 773(f)(1)(A) of

the Act, our practice is to adhere to an

individual firm’s recording of costs,

provided we are satisfied that such costs

reasonably reflect the costs of producing

the subject merchandise and are in

accordance with the generally accepted

accounting principles (GAAP) of the

firm’s home country. See, e.g., Notice of

Final Determination of Sales at Less

Than Fair Value: Large Newspaper

Printing Presses and Components

Thereof, Whether Assembled or

Unassembled, From Japan, 61 FR 38139,

38154 (July 23, 1996).

Rajinder provided its labor and

overhead costs on a mill-specific basis.

Rajinder used this methodology to

record and allocate these costs in the

company’s ordinary course of business

during the POR. See Rajinder’s

Supplemental Cost Response at 12, 26

(March 18, 1997). As we noted in the

verification report, Rajinder produces

merchandise at several mills. Black and

galvanized pipe, merchandise subject to

this review, were produced at two of

these mills. Moreover, as stated in the

verification report, black and galvanized

pipe were also produced at separate

mills. See Rajinder’s Cost Verification

Report, at 7 (May 9, 1997). The three

home-market models of pipe that

proved to be the most comparable

matches to the models sold in the

United States were all galvanized pipe.

Each of these models passed the salesbelow-cost test and were within the

Department’s twenty-percent difmer

threshold. The record demonstrates that

all of these comparable models were

produced at the same mill. See

Rajinder’s Cost Questionnaire Response

at 5 (January 22, 1997); Rajinder’s

Section B Questionnaire Response,

Exhibit B–1 and B–2 (October 7, 1996);

and Rajinder’s Cost Verification Report

at 7. In addition, all of the pipe exported

to the United States was produced in

the same mill. See id. Therefore,

because we matched galvanized pipe

sold in the United States to galvanized

pipe of comparable size sold in the

home market and because black pipe

was not produced at the same mill at

which the comparable models were

produced, our calculations do not rely
47638 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

on any averaging of costs for galvanized

and black pipe.

Therefore, we have accepted

Rajinder’s allocation of its reported

labor and overhead costs. We are

satisfied that Rajinder’s allocation

methodology reasonably reflects its

costs of producing the subject

merchandise and it is in accordance

with Indian GAAP.

Comment 6

Petitioners argue that the Department

failed to include any sales from

Rajinder’s affiliate, Rajinder Steels Ltd.

(RSL), in the preliminary margin

calculations. Petitioners maintain that,

for the final results of review, the

Department should include RSL’s sales

in the price comparison because RSL

manufactured and sold subject

merchandise during the POR and RSL’s

reported sales transactions had control

numbers that matched Rajinder’s

reported U.S. sales.

Rajinder responds that the

Department properly excluded RSL’s

sales transactions from the margin

calculation. Rajinder contends that only

Rajinder sold subject merchandise to the

United States. Rajinder also argues that

its sales in the United States were

comparable in size to home-market

sales. Rajinder maintains that the

Department is not required to use RSL’s

sales in the price comparisons or cost

test because, as verified, the facilities of

Rajinder and RSL are separate. Further,

Rajinder states that there is no

indication of price manipulation.

Department’s Position

For purposes of the final results, we

have treated RPL and RSL as a single

entity, as described below.

As a precondition to ‘‘collapsing’’ two

companies in an antidumping analysis,

the Department must determine that the

parties are ‘‘affiliated’’ within the

meaning of section 771(33) of the Act.

Section 771(33) provides several bases

for finding affiliation. Subsection (F) of

section 771(33) is applicable here. It

provides that the definition of

‘‘affiliated persons’’ includes ‘‘[t]wo or

more persons directly or indirectly

controlling, controlled by, or under

common control with, any person.’’

Section 771(33) further explains that

control exists when one person is

‘‘legally or operationally in a position to

exercise restraint or direction over

another person.’’

The Department’s final regulations

implementing the URAA elaborate upon

the meaning of ‘‘control’’ under section

771(33). See Antidumping Duties;

Countervailing Duties; Final Rule, 62 FR

27296, 27380 (May 19, 1997)

(§ 351.102(b)) (Final Regulations); see

also Statement of Administrative Action

(SAA), H.R. Doc. 103–316, at 838 (1994).

The final regulations are not directly

applicable to this review because the

review was initiated prior to the date

the regulations took effect. However,

these new regulations do provide a

concise and accurate statement of the

Department’s practice and the type of

evidentiary criteria the Department has

determined are relevant to a collapsing

determination.

Section 351.102(b) of the Final

Regulations provides that, in

determining whether control exists for

the purpose of finding affiliation, the

Department will consider, among other

things, corporate or family groupings,

franchise or joint-venture agreements,

debt financing, and close supplier

relationships. See also SAA at 838.

Rajinder refers to RPL and RSL as

‘‘affiliated’’ but also claims that they are

‘‘independent’’ companies, with their

operational responsibilities managed by

different sets of people. Rajinder argues

that this is because the two companies

have separate shareholders and separate

operations—including accounts,

commercial, manufacturing, and sales

activities. As explained below, however,

we find that these are immaterial

differences and that RPL and RSL are

affiliated on the basis of control.

The record demonstrates that RPL and

RSL are ‘‘manufacturing units’’ within

the ‘‘Rajinder Group.’’ See Rajinder’s

Supplemental Section A Response, Nov.

13, 1996, at 2–6 & Appendix 1 (Section

A Supplemental); Rajinder’s Section A

Response, Aug. 20, 1996, at 10 (Section

A Response). The two companies share

four members of their boards of

directors out of a total of seven board

members for RPL and nine for RSL. RPL

and RSL also share the same top-level

management. Respondent also

identified numerous other management

and operational functions performed

jointly on behalf of the entire Rajinder

Group. Therefore, we determine that

RPL and RSL, and the Rajinder Group

as a whole, constitute a single

‘‘corporate grouping,’’ as contemplated

in our final regulations and the SAA,

which is under the common control,

directly or indirectly, of the same

person or persons, who are legally or

operationally in a position to exercise

restraint or direction over the entire

Rajinder Group. Furthermore, we find

that this ‘‘relationship has the potential

to impact decisions concerning the

production, pricing, or cost of the

subject merchandise of foreign like

product.’’ Final Regulations, 62 FR at

27380 (§ 351.102(b)). On this basis, we

determine that RPL and RSL are

affiliated pursuant to section 771(33)(F)

of the Act.

Section 351.401(f)(1) of the final

regulations provides that, consistent

with the Department’s practice, the

Department will collapse two or more

affiliated producers (1) which have

production facilities for similar or

identical products that would not

require substantial retooling of either

facility in order to restructure

manufacturing priorities and (2) the

Department concludes that there is a

significant potential for the

manipulation of price or production.

See Final Regulations, 62 FR at 27410

(§ 351.401(f)). Regarding the first

requirement, Rajinder acknowledges

that, like RPL, RSL produces and sells

subject merchandise in the home

market. Section A Supplemental at 2

and 6. According to Rajinder, this

merchandise is ‘‘similar’’ to that

exported by RPL to the United States.

On this basis, we determine that RPL

and RSL have production facilities for

similar or identical products that would

not require substantial retooling of

either facility in order to restructure

manufacturing priorities.

Regarding the second requirement,

whether ‘‘there is a significant potential

for the manipulation of price or

production,’’ section 351.401(f) explains

that the factors the Department may

consider include (1) the level of

common ownership; (2) whether

managerial employees or board

members of one of the affiliated

producers sit on the board of directors

of the other affiliated person; and (3)

whether operations are intertwined,

such as through the sharing of sales

information, involvement in production

and pricing decisions, the sharing of

facilities or employees, or significant

transactions between the affiliated

producers. See also FAG Kugelfischer v.

United States, 932 F. Supp. 315 (CIT

1996); Certain Fresh Cut Flowers From

Colombia; Final Results of Antidumping

Duty Administrative Reviews, 61 FR

42833, 42853 (August 19, 1996). Not all

of these criteria must be met in a

particular case; the requirement is that

the Department determine that the

affiliated companies are sufficiently

related to create the potential of price or

production manipulation. See, e.g.,

Final Regulations, 62 FR at 27346

(preamble); Flowers From Colombia, 61

FR at 42853.

We note that when affiliation is based

upon control, as in the present review,

there may be substantial overlap

between the evidence relied upon to

determine affiliation and that relied

upon to determine whether there is a

significant potential for the
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47639

manipulation of price or production.

The decision of whether to collapse is

normally dependent to one extent or

another upon the potential of one or

more persons or a part of a company to

control another. As we have often

stated, in collapsing, we look at the

‘‘level of inter-relatedness between

parties’’ or the ‘‘type and degree’’ of the

parties’’ relationship or affiliation. See,

e.g., Sulfanilic Acid from the PRC: Final

Results of Antidumping Duty

Administrative Review, 61 FR 53,711,

53,712 (1996) (citing Nihon Cement v.

United States, 17 CIT 400, 426 (1993));

Final Results of Antidumping Duty

Administrative Review; Iron

Construction Castings From Canada, 59

FR 25,603, 25,603–04 (1994); Final

Determination of Sales at Less Than Fair

Value: Antifriction Bearings (Other

Than Tapered Roller Bearings) and Parts

Thereof from the Federal Republic of

Germany, 54 FR 18,992, 19,089 (1989).

We determine that this requirement is

met as well. For the most part, we have

based this determination upon the same

evidence upon which we relied to

determine that the two companies are

affiliated. We consider the evidence

regarding control and the overlap

between the two companies’ boards of

directors and management sufficient to

warrant concluding that RPL and RSL

pose a significant potential for the

manipulation of price or production. As

detailed above, the boards of directors of

the two companies broadly overlap.

Moreover, three of the four overlapping

directors also jointly manage the two

affiliated companies. Along with the

other evidence of control in the record,

this evidence supports a finding that the

two companies essentially function or

have a significant potential to function

as a single entity. There is also

proprietary information on the record of

common ownership and inter-company

transactions within the Rajinder Group.

This evidence is not complete, however,

and we have not relied upon it in

reaching our determination.

Based upon our analysis of the

evidence on the record, we determine

that RPL and RSL are affiliated pursuant

to section 771(33)(F) of the Act; the two

companies have production facilities for

similar or identical products that would

not require substantial retooling of

either facility in order to restructure

manufacturing priorities; and, because

of the extent of common control

between the two companies, RPL and

RSL pose a significant potential for

manipulation of price or production.

Therefore, we have collapsed and

treated RPL and RSL as a single entity

for purposes of calculating the

appropriate dumping margin in these

final results of review.

Comment 7

Petitioners requested that the

Department conduct sales and cost

verifications of the responses submitted

by Lloyd’s and Rajinder. Petitioners

contend that the Department’s failure to

verify Lloyds’ cost response and

Rajinder’s sales response is contrary to

law. Petitioners state that, while the

Department enjoys ‘‘a degree of latitude

in implementing its verification

procedures,’’ these procedures must be

reasonable.

Petitioners state that, given the large

number of inaccuracies in Lloyds’ sales

response presented to the Department

officials at the outset of verification and

the fact that Lloyd’s is a first-time

participant, it is plausible that Lloyds’

cost response also contains numerous

deficiencies. Petitioners assert that

Lloyd’s did not provide corrections to

its cost response knowing that its cost

response would not be verified.

Petitioners conclude that the

Department should either verify Lloyds’

cost response prior to the final results of

review or apply facts available.

As for Rajinder, petitioners argue that

the company’s failure to provide

supporting documentation of price

adjustments, its failure to allocate costs

on a product-specific basis, and

inaccuracies found at verification

should have compelled the Department

to conduct a more complete verification

and are grounds to base the final results

on adverse facts available.

Lloyd’s states that the Department

conducted a thorough five-day

verification of Lloyds’ response and

there was no reason to suspect or find

inadequate the verified information.

Lloyd’s argues that the Department’s

verification report is filled with

conclusions of ‘‘no discrepancies’’.

Lloyd’s also asserts that it is

unreasonable to throw out Lloyds’ cost

response because it presented minor

corrections of its sales response at the

outset of verification.

Lloyd’s responds that the law does

not require the Department to verify

every aspect of a response. Lloyd’s

maintains that the Department has the

discretion to determine which items it

wishes to examine at verification.

Further, Lloyd’s asserts that it is

common practice for a respondent to

present corrections to its response that

were discovered during the preparation

for verification. Lloyd’s also asserts that

the corrections presented at verification

were minor and did not undermine the

reliability of Lloyd’s response. Lloyd’s

adds that, as far as it knew, the

Department intended to conduct a cost

verification since the verification

outline contained procedures for a cost

verification. Lloyd’s further states that

its cost information was accessible for

examination during the verification.

Rajinder responds that no verification

is required in a new shipper review.

Rajinder also states that the

Department’s decision to conduct only a

cost verification of Rajinder’s response

is not contrary to law because no

verification was required. Rajinder also

argues that, because there were no

discrepancies found with the verified

data, there is no reason to assume that

discrepancies would be found with nonverified data.

Department’s Position

We have conducted this new shippers

review in accordance with section

751(a)(2) of the Act and our regulations.

Although a verification was not required

by statute, the Department decided to

verify the accuracy of both parties’

submissions.

The courts have long agreed that

verification is a selective procedure and

the Department’s ability to verify

complete responses is constrained by

limitations on time and resources. See,

e.g., Bomont Indus. v. United States, 733

F. Supp. 1507, 1508 (CIT 1990). As in

this case, it is not always practicable for

the Department to conduct both sales

and cost verifications of every company

during every review. The Department

has considerable latitude in picking and

choosing which items it will examine in

detail. See Monsanto Co. v. United

States, 698 F. Supp. 275, 281 (CIT 1988)

(citing Hercules, Inc. v. United States,

673 F. Supp. 454, 469 (CIT 1987)). It is

enough for the Department ‘‘to receive

and verify sufficient information to

reasonably and properly make its

determination.’’ Hercules, 673 F. Supp.

at 471; see also Certain InternalCombustion Industrial Forklift Trucks

From Japan: Final Results of

Antidumping Duty Administrative

Review, 62 FR 5992, 5602 (February 6,

1997).

Therefore, contrary to petitioners’

assertions, the fact that the Department

could not devote the resources

necessary to verify Rajinder and Lloyds’

entire responses does not, standing

alone, call those responses into

question. Moreover, to the extent we

found problems with those portions of

the responses that we did verify, these

problems were relatively minor and did

not seriously call the responses into

question, neither with respect to the

portions we did verify nor those which

we did not. See Forklift Trucks From

Japan, 62 FR at 5602. For these reasons,
47640 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

we have continued to rely upon both

respondents’ complete responses,

except where indicated.

Comment 8

Rajinder contends that, for the final

results of review, the Department

should make a level-of-trade adjustment

for the Channel One sales that were

compared to U.S. sales because a pattern

of price differences exists at the

different levels of trade. Rajinder also

contends that the Department should

use the weighted-average price

differences provided in Rajinder’s

questionnaire response. Rajinder states

that the Department’s inability to

determine a pattern of consistent price

differences should not work to the

disadvantage of respondents,

particularly since the information has

already been provided on the record.

Further, Rajinder maintains that, until

the Department formulates a satisfactory

methodology of determining consistent

price differences, the pricing differences

presented by a respondent should be

valid indicators that such differences

exist at the different levels of trade and

should be used by the Department as the

pricing differences between the different

levels of trade.

Petitioners respond that the

Department should not grant a level-oftrade adjustment. Petitioners claim that

Rajinder has not demonstrated that a

pattern of different price levels exists.

Petitioners assert that Rajinder’s

calculation of the price differential is

flawed and that the statute requires

more than the comparison of two

average prices. According to petitioners,

the statute requires that prices be

reviewed on a product-specific basis.

Petitioners also argue that the difference

in prices must be measured against net

prices, exclusive of all statutory

adjustments, in order to ensure no

double counting occurs. Citing Certain

Carbon Steel Pipe and Tube From

Turkey, 61 FR 69,067 (December 31,

1996), petitioners maintain that the

Department has applied these minimum

standards in other cases.

Department’s Position

Rajinder reported two channels of

distribution in the home market: (1)

Sales to government agencies, original

equipment manufacturers, and endusers (Channel One); and (2) sales to

local distributors and trading companies

(Channel Two). In our preliminary

results, we determined, based on an

analysis of the selling functions

performed and the point in the chain of

distribution where the sale takes place,

that these two channels constituted two

different levels of trade in the home

market.

With respect to the U.S. market,

Rajinder reported that all sales were

made through one channel of

distribution, a local distributor. For our

preliminary results, we determined that

the CEP sales constituted a single level

of trade. Further, we found that,

although there were differences in terms

of selling activities performed in

Channel Two in the home market and

the CEP sales in the United States, these

differences in selling functions were not

alone sufficient to establish a difference

in the level of trade. We did find that

a difference in the level of trade existed

between Rajinder’s CEP sales and

Channel One sales in the home market.

For certain CEP sales where we found

that sales of identical matches took

place only at the Channel One level of

trade, we matched these sales to sales at

the Channel One level of trade.

However, because we were unable to

determine the extent of any pattern of

consistent price differences between the

two home-market channels of

distribution, we did not make a level-oftrade adjustment. We did, however,

apply a CEP-offset adjustment in the

preliminary results.

As we stated in the preliminary

results, we continued to examine the

issue of level of trade in this review.

After a more in-depth analysis, we

confirm our preliminary findings that

there are two different levels of trade in

the home market and that sales to

Channel Two are made at the same level

as the sales to the United States. Since

some products did not have a match at

the same level of trade, we reexamined

the issue of whether we should have

granted Rajinder a level-of-trade

adjustment.

When we compare U.S. sales to home

market sales at a different level of trade,

we make a level-of-trade adjustment if

the difference in levels of trade affects

price comparability. We determine any

effect on price comparability by

examining sales at different levels of

trade in a single market, the home

market. Any price effect must be

manifested in a pattern of consistent

price differences between home market

sales used for comparison and sales at

the equivalent level of trade of the

export transaction. To quantify the price

differences, we calculate the difference

in the average of the net prices of the

same models sold at different levels of

trade. If we find a pattern of consistent

price differences, we use the average

difference in net prices to adjust normal

value when normal value is based on a

level of trade different from that of the

export sale. If there is no pattern of

consistent price differences, the

difference in levels of trade does not

have a price effect and, therefore, no

adjustment is necessary. See

Preliminary Results of Antidumping

Administrative Review: Antifriction

Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof from

France, Germany, Italy, Japan, Romania,

Singapore, Sweden and the United

Kingdom, 62 FR 31566 (June 10, 1997).

In its October 7, 1996, submission

Rajinder presented its calculations of a

level-of-trade adjustment. However,

Rajinder provided no evidence that the

prices it used for its analysis were net

prices or that the calculations were done

on a model-specific basis.

Therefore, we determined whether

there was a pattern of consistent price

differences between the different levels

of trade in the home market. We made

this determination by comparing, for

each model sold at both levels, the

average net price of sales made in the

ordinary course of trade at the two

levels of trade. If the average prices were

higher at one of the levels of trade for

a preponderance of the models, we

considered this to demonstrate a pattern

of consistent price differences. We also

considered whether the average prices

were higher at one of the levels of trade

for a preponderance of sales, based on

the quantities of each model sold, in

making this determination. For

Rajinder, we found a pattern of

consistent price differences. We applied

the average percentage difference to the

adjusted normal value as the level-oftrade adjustment. See Final Results of

Antidumping Administrative Review:

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from France, Germany, Italy,

Japan, Singapore, and the United

Kingdom, 62 FR 2081, 2105 (January 15,

1997).

Comment 9

Rajinder argues that, if the

Department uses a CEP-offset

adjustment for the final results of

review, it must correct the home-market

indirect selling expenses figure the

Department used in this calculation.

Rajinder explains that, while the

Department’s CEP-offset amount is

intended to represent home market

indirect selling expenses in dollars per

metric ton, it did not calculate it

correctly. Rajinder states that the

Department divided the total reported

indirect selling expenses by the total

sales quantity to obtain the numerator in

rupees per metric ton. However,

Rajinder notes that the total indirect

selling expenses were already reported

on a per-metric-ton basis, causing the
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47641

Department to make a lower CEP-offset

adjustment. Rajinder states that record

evidence shows that the rupee figure is

already reported on a per-metric-ton

basis and that the Department should

correct this error for the final results of

review.

Petitioners respond that, should the

Department change the calculation of

home-market indirect selling expenses

as Rajinder requests, it must make

several other changes to the calculations

as well. Petitioners repeat their

comment concerning commissions

(discussed in comment 13, below).

Petitioners assert that the Department

must ensure that deductions from

normal value for indirect selling

expenses are also deducted from the

home-market price in the below-costsales analysis.

Department’s Position

We agree with Rajinder that the

amount it reported for indirect selling

expenses was already on a metric-ton

basis. We have corrected this clerical

error for the final results.

Further, in conducting the cost test,

we adjust normal value and do not

include all deductions that we make to

the weighted-averaged normal value. In

doing this we adjust normal value to a

level comparable to the reported COP,

not to a level comparable to U.S. sales.

In particular, although adjusted normal

value reflects all actual deductions, it

does not include deductions for

expenses such as credit or inventory

carrying cost. Moreover, both parties’

comments concerning commissions and

appropriate CEP offset are irrelevant

since the Department has determined

not to use a CEP offset as described in

response to comment 8, above.

Finally, we have addressed

petitioners’ argument concerning

commissions and the appropriate CEP

offset in response to comment 13,

below.

Comment 10

Petitioners state that, for Rajinder’s

U.S. sales, the Department incorrectly

calculated gross unit price on a metricton basis. Further, they state that the

Department used the incorrect

conversion factor to translate net-ton

gross unit prices into metric-ton gross

unit prices which, according to

petitioners, resulted in an overstatement

of gross unit prices. Petitioners provide

instructions on how to calculate gross

unit price properly on a metric-ton basis

for the final results of review.

Rajinder agrees that the Department

applied the incorrect conversion factor

to translate net-ton gross unit prices into

metric-ton gross unit prices. Rajinder

also claims, however, that, aside from

the gross unit price, many other

deductions were overstated because the

Department used the incorrect

conversion factor to convert all U.S.

expenses to a metric-ton basis. Rajinder

recommends that the Department

correct all deductions, in addition to the

gross unit price, that were affected by

this conversion error. Rajinder states

that the Department also incorrectly

converted the adjustment for ‘‘Inland

Freight-Plant to Distribution

Warehouse’’ into metric tons because it

had reported this adjustment on a

metric-ton basis.

Department’s Position

We agree with both petitioners and

Rajinder that we converted the gross

unit price and selling expenses

incorrectly for the preliminary results.

We have examined all conversions,

including Inland Freight-Plant to

Distribution Warehouse, as

recommended by Rajinder and

petitioners and have corrected them for

the final results.

Comment 11

Petitioners state that, although the

preliminary analysis memo indicated a

deduction, the Department failed to

deduct Rajinder’s U.S. commissions

from CEP. Petitioners request that the

Department make this deduction for the

final results of review.

Rajinder agrees that the Department

failed to deduct U.S. commissions from

CEP. Rajinder explains that the

Department’s failure to make this

deduction has no effect on the margins,

however, because the Department

inadvertently did not make the

deduction for commissions in

calculating normal value. Rajinder

suggests that, if the Department makes

a deduction from CEP starting price for

U.S. commissions, it must offset that

deduction with a corresponding

deduction from normal value for

commissions or, as appropriate, indirect

selling expenses, in accordance with 19

CFR 353.56(b)(1). Thus, Rajinder claims,

the net effect of this adjustment would

be zero.

Department’s Position

The Department agrees with both

parties. In the preliminary results, we

neglected to deduct commissions from

either CEP or normal value. In

accordance with 19 CFR 353.56(a)(2),

the Department makes reasonable

allowances for differences in

circumstance of sale, including

commissions. For the final results, we

have deducted commissions from both

CEP and normal value, using the

amounts reported in the response.

Where Rajinder has a commission on

the U.S. sale but no home-market

commission, we have adjusted normal

value by using home-market indirect

selling expenses as an offsetting

commission to the commission in the

U.S. market. See our response to

comment 13.

Comment 12

Petitioners claim that the Department

incorrectly calculated the CEP-profit

ratio by dividing the total selling

expenses reported by Rajinder and RSL

in their financial statements by the

profit reported in the financial

statements. Petitioners state that, to

calculate total expenses in accordance

with section 772(f)(2)(C) of the Act, the

Department should use the expenses

incurred in order of preference (1) on

subject merchandise sold in the home

and U.S. markets, (2) the narrowest

category of merchandise sold in the

United States and home market that

contains the subject merchandise, or (3)

the narrowest category of merchandise

sold in all countries that contains the

subject merchandise. Petitioners claim

that the Department should have used

the sales and profit data for the foreign

like product as a basis for the CEP-profit

calculation, as required by the statute,

instead of relying on data at the overall

sales level from the financial statements,

which is the third choice under section

772(f)(2)(C) of the Act.

Additionally, petitioners claim that

the CEP ratio used by the Department in

the preliminary margin calculation

contained a misplaced decimal point

which should be corrected. Petitioners

also contend that the Department must

include commissions in the U.S. selling

expenses when it calculates CEP profit

for the final results of review.

Rajinder states that, because the

Department made a clerical error in

applying the calculated CEP-profit ratio,

the ratio the Department applied is

grossly different than the CEP ratio that

the Department actually calculated.

Provided the CEP ratio for the final

results of review does not change,

Rajinder contends that the Department

should use the ratio that it actually

calculated. Rajinder explains that any

change the Department makes to the

calculation of the CEP ratio may

produce lower, if not de minimis, CEPprofit figures than the ratio that the

Department actually calculated for the

preliminary results of review.

Department’s Position

We agree with the petitioners in part.

We used information from the financial

statements to determine CEP profit in
47642 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

our preliminary results, which is the

third preference under section

772(f)(2)(C) of the Act. Because COP

information was reported for only an

extraordinarily small portion of its pipe

sales in the home market, in this case,

we have continued to use profit levels

which we calculated from the financial

statements.

We agree that there were several

ministerial errors in the calculation of

CEP profit which caused us to

understate CEP profit. We have

reexamined Rajinder’s financial

statements and have made several

changes to the profit calculation. We

added the amounts listed as ‘‘variation

in stock’’ to the total revenue amounts.

We added interest expense and

depreciation expense to total cost and

then subtracted an amount for change in

inventory from total cost. We divided

total revenue by total cost to arrive at

the CEP-profit figure. Additionally,

when applying this percentage to U.S.

expenses, no change is necessary as

petitioners suggest because we have

already included commissions in the

denominator.

Comment 13

Petitioners state that, according to the

analysis memorandum prepared for

Rajinder for the preliminary results, the

Department deducted both the indirect

selling expenses and the CEP offset from

normal value and, as a result, some

indirect selling expenses were deducted

twice. Petitioners claim that indirect

selling expenses should not be deducted

from the home-market gross unit price

to calculate net home-market price

because these expenses can only be

deducted as a CEP offset when

comparing sales at different levels of

trade. Petitioners state, that as a

circumstance-of-sale (COS) adjustment,

commissions and indirect selling

expenses may be deducted from net

home-market price up to the amount of

U.S. commissions. Petitioners contend

that, when a COS adjustment is based

on the amount of home-market indirect

selling expenses (limited by the U.S.

commission amount), the CEP offset

cannot include those expenses that were

already deducted from the net homemarket price through the commissionoffset step.

Rajinder responds that, contrary to

petitioners’ assertion, the preliminary

calculations demonstrate that homemarket indirect selling expenses were

not deducted from net home-market

price. Therefore, these expenses were

not double counted. Rajinder states that

home-market inventory carrying costs

were not deducted from normal value

and, since they are post-sale expenses,

they are direct costs and normal value

should be adjusted to account for these

costs.

Department’s Position

Since the Department has determined

that a CEP-offset adjustment is not

appropriate, both petitioners’ and

Rajinder’s comments are moot. See our

response to comment 8 above.

Comment 14

The petitioners state that the

Department must apply a difmer

adjustment because the products sold in

the United States and home market are

not identical.

Rajinder claims that the petitioners’

assertion that the Department should

have adjusted normal value upward is

incorrect. Rajinder states that evidence

on the record indicates that the total

cost of manufacture for pipe sold in the

United States is less than the cost of

manufacture for the comparable pipe

sold in India. Rajinder adds that, if the

Department adjusts for difmer, the

adjustment should be a deduction from,

not an addition, to normal value.

Department’s Position

We agree with the petitioners that a

difmer adjustment should be applied

because the products are not identical.

The third matching characteristic, wall

thickness, varies slightly for the subject

merchandise sold in the United States.

Therefore, in accordance with section

773 (a)(6)(C)(iii), a difmer adjustment is

appropriate to account for this

difference.

We have calculated the difmer

adjustment by subtracting the variable

cost of manufacture for the closest

model match in the home market from

the variable cost of manufacture for each

U.S. sale. We then added the difmer

amount to normal value.

Comment 15

Petitioners state that the Department

incorrectly calculated Rajinder’s interest

expense in the COP calculation.

Petitioners claim that it not clear where

the Department obtained the figures it

used to calculate COP. According to

petitioners, the COP figures the

Department used were different from

those which Rajinder reported in its

supplemental cost-questionnaire

response. Petitioners recommend that

the Department correct its COP analysis

based on the more recent supplemental

cost-questionnaire response Rajinder

submitted.

Rajinder disagrees with petitioners.

Rajinder explains that the Department’s

COP calculation is different from the

COP reported by Rajinder in its

supplemental cost-questionnaire

response because the reported HM gross

unit prices do not include taxes,

whereas the data reported in the

supplemental cost-questionnaire

response do include taxes. Rajinder

claims that the Department properly

calculated COP because the taxes

excluded from gross unit price must

also be excluded from the cost

calculation for comparison purposes.

Department’s Position

We disagree with both parties. In its

supplemental cost response, Rajinder

reported separate interest-expense

calculations for Rajinder and its

affiliated party, RSL. In situations

involving affiliated parties, it is

sometimes appropriate for the

Department to calculate the interest

expense based on the operations of the

consolidated corporation. See

Ferrosilicon From Brazil: Final Results

of Antidumping Duty Administrative

Review, 61 FR 59407, 59412 (Nov. 22,

1996); Certain Corrosion-Resistant

Carbon Steel Flat Products From Korea:

Final Results of Antidumping Duty

Administrative Review, 61 FR 18547,

18567 (April 26, 1996). This is because

‘‘debt is fungible and corporations can

shift debt and its related expenses

toward or away from subsidiaries in

order to manage profit.’’ Ferrosilicon

From Brazil, 61 FR at 59412. Therefore,

the Department calculates COP using

the consolidated financing expenses of

the corporation or the affiliated parties

whenever the parent or the controlling

entities have ‘‘the power to determine

the capital structure of each member

company within the group.’’ Final

Determination of Sales at Less Than Fair

Value: New Minivans From Japan, 57

FR 21937, 21946 (May 26, 1992). This

is particularly the case when the

Department determines to collapse two

or more affiliated parties, as here. See

our response to comment 6, above.

Therefore, in this case, we used the

combined financial statements of

Rajinder and RSL to recalculate the

interest expense by dividing the

reported interest expense by the sum of

the cost of goods sold plus the

depreciation. This yields an applicable

ratio representative of the interest

expenses of both companies combined.

Contrary to petitioners’

recommendation to use the reported

amounts in the supplemental response,

the Department has used the

recalculated amounts that it used in the

preliminary results. Rajinder’s argument

that taxes were excluded from this

calculation is irrelevant.
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47643

Comment 16

Petitioners claim that there were

serious deficiencies in Lloyds’ cost

response which the Department never

examined. Petitioners claim that Lloyd’s

purchased coils from an affiliated party

and, while Lloyd’s claims the purchases

were at arm’s length, the transfer price

of coils from unaffiliates were on

average seven percent higher than prices

from the affiliate. Petitioners

recommend that the Department

disregard the steel prices from Lloyds’

affiliate and use the average from

unaffiliated parties.

Additionally, petitioners assert that

Lloyd’s did not report labor and

overhead costs to account for

differences in physical characteristics.

Petitioners explain that Lloyd’s

allocated all costs by tonnage which

failed to differentiate the costs for

products with different physical

characteristics. Petitioners state that

pipes with different sizes and finish

have different processing times and the

number of pieces to handle will be

different which ultimately affects labor

and overhead costs. Petitioners explain

that, since Lloyds’ COP and CV

calculations are based on inherently

flawed and distorted data, the

Department is unable to perform an

accurate COP analysis. Petitioners

reason that respondents are often

required to provide information in an

antidumping review that is different

from the manner in which they

maintain their records in the ordinary

course of business. Petitioners claim

that, since Lloyd’s requested this

review, Lloyd’s should be held to the

standard of providing information that

conforms to the manner in which the

Department calculates dumping

margins. Petitioners remark that the

Department requested that Lloyd’s

provide information on a productspecific basis and declined to do so;

therefore, Lloyd’s has withheld

information and impeded this review

which is grounds for applying facts

available. Petitioners state that, absent

this information, the Department cannot

perform accurate COP and CV analyses

and difmer adjustments.

Lloyd’s responds that petitioners have

no basis to question that purchases from

affiliated suppliers were priced lower

than purchases from unaffiliated

suppliers. Lloyd’s argues that

petitioners merely make an observation

from one exhibit on the record which

demonstrates price fluctuation. Lloyd’s

points out that prices from affiliated

suppliers were not consistently higher

or lower than prices from unaffiliated

suppliers. Lloyd’s claims that, in fact,

several purchases from affiliated

suppliers were priced lower than

purchases from unaffiliated suppliers.

Lloyd’s states further that these

fluctuations in price are indicative of

price negotiation and that seven percent

is not a meaningful difference in price.

Lloyd’s states that, contrary to

petitioners’ claim, it properly reported

labor and overhead costs. Lloyd’s claims

that it sold only one type of pipe in the

United States and that the variable costs

for producing pipe do not vary

significantly depending on the type of

steel pipe reported. Lloyd’s maintains

that, since the Department agreed with

Lloyds’ choice of home-market sales to

report (black, plain end, non-galvanized

pipe), there were no significant

differences in physical characteristics

such as size, surface finish or end finish

and, accordingly, no significant

differences in labor and overhead costs

to report. Lloyd’s explains that it

differentiates and allocates its costs in

the normal course of business, a

methodology the Department accepts

when the allocation of costs is

reasonable (citing Final Determination

of Sale at Less Than Fair Value: Fresh

Cut Roses From Colombia, 60 FR 6980,

7015 (Feb. 6, 1995)). Lloyd’s claims that

petitioners make reference to the higher

costs associated with galvanizing steel

pipe and manufacturing threaded and

coupled pipe, but that petitioners fail to

take into account that Lloyds’ reported

sales did not included galvanized,

threaded or coupled pipe. Additionally,

Lloyd’s explains that it did report a

difference in U.S. packing costs which

were approximately 30 percent higher

than home-market packing costs, due to

extra costs associated with packing for

international shipment.

Department’s Position

We agree in part with both parties.

Concerning the costs of hot-rolled coil,

we have used the average price listed for

other home-market suppliers from

Exhibit 3 of the March 17, 1997

submission. We found that the

purchases from Lloyd’s Steel Industries

Ltd. (LSIL), Lloyds’ affiliated supplier,

were nearly all lower in price than those

from the other home-market suppliers.

While Lloyd’s claims that its purchases

of hot-rolled coil from LSIL were at

arm’s-length prices, the evidence on the

record indicates otherwise. When, as

here, the transfer price between

affiliated parties is significantly lower

than the price from unaffiliated

suppliers, the respondent bears the

burden to provide evidence that the

affiliated-party’s transfer prices were at

arm’s-length. See section 773(f)(2) of the

Act. Lloyd’s failed to provide such

evidence. Therefore, we have not relied

upon Lloyds’ steel prices from LSIL and

have instead relied entirely upon the

price from the unaffiliated home-market

suppliers in our calculations of steel

material values.

Concerning the reporting of labor and

overhead costs, we agree with Lloyd’s.

We found that Lloyds’ allocation of its

labor and overhead costs was

reasonable. Because Lloyds’ U.S. sales

consisted of only one type of pipe

(black, plain-end pipe), the Department

permitted Lloyd’s to limit its home

market data base to those sales which

Lloyd’s considered most similar to the

sale made in the United States,

conditioned upon the Department

agreeing with Lloyds’ model-match

selections. The appropriate model

matches submitted by Lloyd’s were all

black, plain-end pipe. Therefore,

contrary to petitioners’ assertion,

Lloyd’s was not required to differentiate

costs for products with different

physical characteristics; such products

were simply not used for matching

purposes.

Lloyd’s reported its costs for the home

market, including labor, on a productspecific basis. This reflects Lloyd’s costrecording methodology used in its

ordinary course of business. See Section

D Questionnaire, January 22, 1997, page

21. Furthermore, petitioners incorrectly

claim that Lloyd’s allocated its costs by

tonnage. Lloyd’s explained that it

allocated the product-specific costs

associated with the production of the

subject merchandise on the basis of the

quantity and time required in the mill

to produce the product. See Section D

Supplemental Response, March 17,

1996, page 8.

Comment 17

Petitioners state that the Department

should deduct U.S. customs duties

indicated in verification exhibit 10 from

export price. Petitioners claim that,

because Lloyd’s is the importer of

record, it is responsible for the payment

of the duties.

Lloyd’s responds that it did not pay

the U.S. customs duties. Lloyd’s

explains that, with respect to most

commercial imports, the buyer typically

pays U.S. customs duties and then seeks

reimbursement from the party

contractually responsible. Lloyd’s

points to its supplemental questionnaire

response which states that in this case,

the buyer of Lloyds’ merchandise was

responsible for paying the U.S. customs

duties. Lloyd’s concludes that the

Department should not deduct import

duties from export price.
47644 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices

Department’s Position

We agree with petitioners. Lloyd’s is

the importer of record and, therefore,

ultimately responsible for the payment

of duties. Although record evidence

indicates that Lloyd’s sent a letter to the

U.S. buyer making the buyer responsible

for paying the U.S. customs duties, we

have no evidence that the customer

either accepted these terms or paid the

duties. We, therefore, determine that

Lloyd’s was responsible for the payment

of the U.S. duties, and we have

deducted the regular duties from the

export price.

Comment 18

Rajinder contends that the

Department improperly failed to deduct

certain expenses from home-market

sales prices. Rajinder maintains that the

Department’s preliminary analysis

memorandum states that the

Department intended to deduct, among

other things, commissions, advertising

and inventory carrying costs in the

calculation of normal value. However,

Rajinder argues, the printouts released

at disclosure indicate that the

Department failed to make these

deductions, and Rajinder requests that

the Department correct this error for the

final results of review.

Petitioners respond that the

Department may deduct from normal

value commissions and advertising

expenses as circumstance-of-sale

adjustments. Petitioners also respond

that the Department may deduct from

normal value indirect selling expenses,

such as inventory carrying costs, as a

CEP offset where two markets are being

compared at different levels of trade.

Department’s Position

We agree with both parties that we

should have adjusted home-market

prices for advertising and commission

expenses. With respect to advertising

expenses, Rajinder reported these

expenses as direct in nature although it

was not able to tie these expenses to the

specific models of merchandise under

review. Rajinder states in its response

that, ‘‘advertising expenses are incurred

only to advertise the merchandise to

small farmers, retailers, and

households.’’ Hence, the advertising

expenditures are aimed at the Rajinder’s

customer’s customer and, therefore, the

reported expenses are direct.

We agree with Rajinder that

commissions should be treated as direct

expenses which we have deducted from

normal value. Where Rajinder reported

commissions in only the U.S. market,

we have offset this expense by

deducting the home-market indirect

selling expenses by an equivalent

amount.

Because we have not applied a CEP

offset to normal value, the inclusion of

inventory carrying costs in Rajinder’s

indirect selling expenses pool is

irrelevant.

Comment 19

Rajinder states that the Department

improperly deducted inland freight

from U.S. prices for the distance from

the plant to the warehouse in India.

Rajinder explains that the Department

incorrectly converted the inland freight

expense into rupees per metric ton,

thereby overstating the deduction of

inland freight from U.S. price.

According to Rajinder, the record

provides evidence that this expense was

already reported on a per-metric-ton

basis. Rajinder states that the

Department should correct this error for

the final results.

Petitioners respond that the

Department should ensure that all

adjustments are properly converted on a

per-metric-ton basis for both the priceto-price and below-cost-sales analyses.

Department’s Position

We agree with Rajinder that by

making the wrong conversion we

improperly calculated the deduction of

inland freight from plant to warehouse.

We have corrected this error for these

final results. Additionally, as suggested

by petitioners, we have reexamined all

of the adjustments for normal value,

U.S. price, and the below-cost-sales

analysis to ensure that we have

converted them to the correct units.

Final Results of Review

As a result of our analysis, we have

determined that the following weightedaverage margins exist for the period May

1, 1994, through April 31, 1995:

Manufacturer/exporter Margin

(percent)

Rajinder ....................................... 25.45

Lloyd’s ......................................... 0.00

The results of this review shall be the

basis for the assessment of antidumping

duties on entries of merchandise

covered by these final results and for

future deposits of estimated duties. The

posting of a bond or security in lieu of

a cash deposit, pursuant to section

751(a)(2)(B)(iii) of the Act and section

353.22(h)(4) of the Department’s

regulations, will no longer be permitted

for these firms.

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. We have calculated an exporter/

importer-specific assessment rate for

both companies. For each respondent

we have divided the total dumping

margins for the reviewed sales by the

total entered value of those reviewed

sales. We will direct Customs to assess

the resulting percentage margin against

the entered Customs values for the

subject merchandise on each of

respondents’ entries during the review

period. While the Department is aware

that the entered value of sales during

the POR is not necessarily equal to the

entered value of entries during the POR,

use of entered value of sales as the basis

of the assessment rate permits the

Department to collect a reasonable

approximation of the antidumping

duties which would have been

determined if the Department had

reviewed those sales of merchandise

actually entered during the POR.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of administrative review for all

shipments of Indian pipe and tube

entered, or withdrawn from warehouse,

for consumption on or after the date of

publication, as provided by section

751(a)(1) of the Act: (1) the cash deposit

rates for the reviewed companies will be

the rates shown above; (2) for previously

reviewed or investigated companies not

listed above, the cash deposit rate will

continue to be the company-specific rate

published for the most recent period; (3)

if the exporter is not a firm covered in

this review, a prior review, or the less

than fair value investigation, but the

manufacturer is, the cash deposit rate

will be the rate established for the most

recent period for the manufacturer of

the merchandise. In accordance with the

CIT’s decisions in Floral Trade Council

v. United States, Slip Op. 93–79, and

Federal-Mogul v. United States, Slip Op.

93–83, the cash deposit rate for all other

manufacturers or exporters will be 7.08

percent, the rate determined in the

original less than fair value

investigation (51 FR 9089, March 17,

1986).

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

review.

This notice also serves as a final

reminder to importers of their

responsibility under 19 CFR 353.26 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
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Notices 47645

subsequent assessment of double

antidumping duties.

This notice also serves as the only

reminder to parties subject to

administrative protective orders (APO)

of their responsibility concerning the

return or destruction of proprietary

information disclosed under APO in

accordance with 19 CFR 353.34(d)(1).

Timely written notification of the

return/destruction of APO materials or

conversion to judicial protective order is

hereby requested. Failure to comply

with the regulations and the terms of an

APO is a sanctionable violation. Failure

to comply is a violation of the APO.

This administrative review and this

notice are in accordance with section

751(b) of the Act (19 U.S.C. 1675(b)(1))

and 19 CFR 353.22(h)(1997).

Dated: August 29, 1997.

Joseph A. Spetrini,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–23994 Filed 9–9–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

Applications for Duty-Free Entry of

Scientific Instruments

Pursuant to Section 6(c) of the

Educational, Scientific and Cultural

Materials Importation Act of 1966 (Pub.

L. 89–651; 80 Stat. 897; 15 CFR part

301), we invite comments on the

question of whether instruments of

equivalent scientific value, for the

purposes for which the instruments

shown below are intended to be used,

are being manufactured in the United

States.

Comments must comply with 15 CFR

301.5(a) (3) and (4) of the regulations

and be filed within 20 days with the

Statutory Import Programs Staff, U.S.

Department of Commerce, Washington,

D.C. 20230. Applications may be

examined between 8:30 A.M. and 5:00

P.M. in Room 4211, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C.

Docket Number: 97–073. Applicant:

Research Foundation of The City

University of New York, 79 Fifth

Avenue, New York, NY 10003.

Instrument: Electron Paramagnetic

Resonance Spectrometer, EMX Series.

Manufacturer: Bruker Instruments,

Germany. Intended Use: The instrument

will be used for studies of Lithiumtransition metal insertion compounds;

prefluorinated polymers prepared by

chemical or radiation crosslinking.

Investigations will be conducted to

determine the correlation between EPR

spectroscopic parameters and electrical

properties of the materials, the goal of

which is to better understand the

atomic/molecular level processes

associated with electrical conductivity.

Application accepted by Commissioner

of Customs: August 21, 1997.

Docket Number: 97–074. Applicant:

Case Western Reserve University,

School of Medicine, Department of

Biochemistry, 10900 Euclid Avenue,

Cleveland, OH 44106. Instrument:

Stopped-Flow Spectrometer, Model

SX.18MV. Manufacturer: Applied

Photophysics Ltd., United Kingdom.

Intended Use: The instrument will be

used to investigate the kinetics of the

interaction between biological

macromolecules and ligands in

experiments conducted to: (1) Monitor

the interaction between RNA

polymerase and double stranded DNA,

(2) monitor the interaction of

cinnamoyl-CoA substrates with enoylCoA hydratase and (3) monitor the

interaction of transcription factors with

ribosomes. Application accepted by

Commissioner of Customs: August 22,

1997.

Frank W. Creel,

Director, Statutory Import Programs Staff.

[FR Doc. 97–23996 Filed 9–9–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–508–605]

Industrial Phosphoric Acid From

Israel: Preliminary Results and Partial

Recission of Countervailing Duty

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of

countervailing duty administrative

review.

SUMMARY: The Department of Commerce

(the Department) is conducting an

administrative review of the

countervailing duty order on industrial

phosphoric acid from Israel for the

period January 1, 1995 through

December 31, 1995. For information on

the net subsidy for each reviewed

company, as well as for all nonreviewed companies, please see the

Preliminary Results of Review section of

this notice. If the final results remain

the same as these preliminary results of

administrative review, we will instruct

the U.S. Customs Service to assess

countervailing duties as detailed in the

Preliminary Results of Review.

Interested parties are invited to

comment on these preliminary results.

See Public Comment section of this

notice.

EFFECTIVE DATE: September 10, 1997.

FOR FURTHER INFORMATION CONTACT:

Christopher Cassel or Lorenza Olivas,

Office CVD/AD Enforcement VI, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW., Washington, DC 20230;

telephone: (202) 482–4847 or (202) 482–

2786.

SUPPLEMENTARY INFORMATION:

Background

On August 19, 1987, the Department

published in the Federal Register (52

FR 31057) the countervailing duty order

on industrial phosphoric acid from

Israel. On August 12, 1996, the

Department published a notice of

‘‘Opportunity to Request Administrative

Review’’ (61 FR 41768) of this

countervailing duty order. We received

a timely request for review, and we

initiated the review, covering the period

January 1, 1995 through December 31,

1995, on September 17, 1996 (61 FR

48882).

In accordance with 19 C.F.R.

355.22(a), this review covers only those

producers or exporters of the subject

merchandise for which a review was

specifically requested. Accordingly, this

review covers Rotem-Amfert Negev Ltd.

(Rotem) and Haifa Chemicals Ltd.

(Haifa). Haifa did not export the subject

merchandise during the period of

review. Therefore, we are rescinding the

review with respect to Haifa. This

review also covers nine programs.

Pursuant to section 751(a)(3) of the

Tariff Act of 1930, as amended, we

extended the preliminary results to no

later than September 2, 1997, and the

final results to 120 days from the date

on which these preliminary results are

published. See Certain Industrial

Phosphoric Acid from Israel; Extension

of Time Limit for Countervailing Duty

Administrative Review, 62 FR, 23220.

Applicable Statute

Unless otherwise indicated, all

citations to the statute are references to

the provisions of the Tariff Act of 1930,

as amended by the Uruguay Round

Agreements Act (URAA) effective

January 1, 1995 (the Act). The

Department is conducting this

administrative review in accordance

with section 751(a) of the Act.