Federal Register / Vol. 62, No. 191 / Thursday, October 2, 1997 / Notices 51629

1The petitioners are Allied Tube & Conduit and

Wheatland Tube Company.

Countervailing Enforcement, Attention:

Sheila Forbes, in room 3065 of the main

Commerce Building. Further, in

accordance with section 351.303(f)(1)(i)

of the regulations, a copy of each

request must be served on every party

on the Department’s service list.

The Department will publish in the

Federal Register a notice of ‘‘Initiation

of Administrative Review of

Antidumping or Countervailing Duty

Order, Finding, or Suspended

Investigation’’ for requests received by

the last day of October 1997. If the

Department does not receive, by the last

day of October 1997, a request for

review of entries covered by an order,

finding, or suspended investigation

listed in this notice and for the period

identified above, the Department will

instruct the Customs Service to assess

antidumping or countervailing duties on

those entries at a rate equal to the cash

deposit (or bond for) estimated

antidumping or countervailing duties

required on those entries at the time of

entry, or withdrawal from warehouse,

for consumption and to continue to

collect the cash deposit previously

ordered.

This notice is not required by statute

but is published as a service to the

international trading community.

Dated: September 26, 1997.

Jeffrey P. Bialos,

Principal Deputy Assistant Secretary for

Import Administration.

[FR Doc. 97–26195 Filed 10–1–97; 8:45 am]

BILLING CODE 3510–DS–M

DEPARTMENT OF COMMERCE

International Trade Administration

[A–489–501]

Notice of Final Results of Antidumping

Duty Administrative Review: Certain

Welded Carbon Steel Pipe and Tube

From Turkey

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

SUMMARY: On May 13, 1997, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on certain

welded carbon steel pipe and tube from

Turkey. The review covers shipments of

this merchandise to the United States

during the period of review (POR) May

1, 1993, through April 30, 1994.

Based on our analysis of the

comments received, and the correction

of certain ministerial errors, we have

changed the preliminary results. The

final results are listed below in the

section ‘‘Final Results of Review.’’

EFFECTIVE DATE: October 2, 1997.

FOR FURTHER INFORMATION CONTACT:

Charles Riggle or Kris Campbell, Office

of AD/CVD Enforcement II, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482–0650 and (202)

482–3813, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the statute and to the

Department’s regulations are references

to the provisions as they existed on

December 31, 1994.

Background

This review covers two

manufacturers/exporters to the United

States of the subject merchandise, the

Borusan Group (Borusan) and

Yucelboru Ihracat Ithalat ve Pazarlama

A.S. (Yucelboru). On May 13, 1997, the

Department published in the Federal

Register the Preliminary Results of

Administrative Review of the

Antidumping Duty Order on Certain

Welded Carbon Steel Pipe and Tube

from Turkey (62 FR 26286) (Preliminary

Results). We received case and rebuttal

briefs from the petitioners 1 and Borusan

on June 19, 1997, and June 26, 1997,

respectively. Yucelboru did not submit

a case or rebuttal brief. On August 1,

1997, we requested comments from

Borusan and the petitioners regarding

how we intended to calculate importerspecific ad valorem assessment rates for

Borusan. Since Yucelboru’s margin in

the preliminary results was de minimis,

we did not request comments from

Yucelboru. On August 5, 1997, we

received comments on the assessment

rate from the petitioners.

The Department has now completed

this administrative review in

accordance with section 751 of the

Tariff Act of 1930, as amended (the Act).

Scope of the Review

Imports covered by this review are

shipments of certain welded carbon

steel pipe and tube products with an

outside diameter of 0.375 inch or more

but not over 16 inches, of any wall

thickness. These products are currently

classifiable under the following

Harmonized Tariff Schedule of the

United States (HTSUS) 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. These products,

commonly referred to in the industry as

standard pipe and tube, are produced to

various American Society for Testing

and Materials (ASTM) specifications,

most notably A–120, A–53 or A–135.

Although the HTSUS subheadings are

provided for convenience and customs

purposes, our written description of the

scope of this proceeding is dispositive.

Comparison of United States Price and

Foreign Market Value

For both companies involved in this

review, we calculated transactionspecific U.S. prices (USP) and compared

them to foreign market values (FMV)

based on either weighted-average home

market prices or constructed values

(CV). For price-to-price comparisons, we

compared identical merchandise, where

possible. Where there were no sales of

identical merchandise in the home

market to compare to U.S. sales, we

made comparisons of similar

merchandise based on the

characteristics listed in the

Department’s antidumping

questionnaire.

Where sales were made in the home

market on a different weight basis from

the U.S. market (e.g., theoretical versus

actual weight), we converted all

quantities to the same weight basis,

using the conversion factors supplied by

the company, before making our fair

value comparisons.

We have determined that Turkey

experienced a high rate of inflation

throughout the POR, as measured by the

wholesale price index (WPI) published

in International Financial Statistics.

(See Comment 1 below). Therefore, in

accordance with our practice, and in

order to avoid the distortions caused by

the effects of this level of inflation on

prices, we did not apply the

Department’s 90/60 day rule if we were

unable to match sales within the same

month. Rather, we resorted to CV as the

basis of FMV. See Notice of Final

Determination of Sales at Less Than

Fair Value: Certain Steel Concrete

Reinforcing Bars from Turkey, 62 FR

9737, 9738 (March 4, 1997) (Rebar from

Turkey).

In accordance with 19 CFR 353.58, we

made comparisons at the same level of

trade, where possible (see Sales

Comment 8 below). For Borusan, we

determined that there was one U.S. level

of trade (i.e., distributor) and three home

market levels of trade: wholesaler/

distributor, retailer, and end-user.

Yucelboru had no level of trade

distinctions in either market.
51630 Federal Register / Vol. 62, No. 191 / Thursday, October 2, 1997 / Notices

United States Price

We based USP on purchase price in

accordance with section 772(b) of the

Act, because the subject merchandise

was sold directly to the first unrelated

purchaser in the United States prior to

importation and the exporter’s sales

price methodology was not indicated by

the facts of record. We calculated

purchase price based on the same

methodology used in the Preliminary

Results, with the following exceptions:

Borusan

1. We corrected the gross unit price

and quantity reported for one sales

transaction (see Comment 9 below);

2. We added countervailing duties

imposed on the subject merchandise to

offset export subsidies, pursuant to

section 772(c)(1)(C) of the Act (see

Comment 11 below); and

3. We converted certain direct selling

and movement expenses from Turkish

lira to U.S. dollars using exchange rates

based on the date of shipment (see

Comment 15 below).

Yucelboru

1. We converted certain movement

expenses from Turkish lira to U.S.

dollars using exchange rates based on

the date of shipment.

Foreign Market Value

Where FMV was based on home

market price, we used the same

methodology to calculate FMV as that

described in the Preliminary Results,

with the following exceptions:

Borusan

1. We deducted home market direct

selling expenses and added U.S. direct

selling expenses as a COS adjustment to

FMV (see Comment 14 below); and

2. We indexed home market packing

expenses before deducting them from

FMV and indexed U.S. packing

expenses before adding them to FMV

(see Comment 13 below).

Yucelboru

1. We deducted home market direct

selling expenses and added U.S. direct

selling expenses as a COS adjustment to

FMV; and

2. We indexed home market packing

expenses before deducting them from

FMV and indexed U.S. packing

expenses before adding them to FMV.

Where FMV was based on CV, we

used the same methodology for Borusan

as that described in the Preliminary

Results, with the following exceptions:

1. We adjusted the calculated interest

expenses to avoid double counting

imputed credit and inventory carrying

expenses (see Comment 5 below);

2. We indexed all material costs (see

Comment 3 below); and

3. We deducted home market direct

selling expenses and added U.S. direct

selling expenses as a COS adjustment to

FMV (see Comment 14 below).

Cost of Production

As discussed in the Preliminary

Results, we conducted an investigation

to determine whether Borusan or

Yucelboru made home market sales

during the POR at prices below its cost

of production (COP) within the meaning

of section 773(b) of the Act (see also

Comment 2 below). We disregarded

individual below-cost sales of models

for which greater than 10 percent and

no more than 90 percent of sales were

sold at less than COP over an extended

period of time. We disregarded all sales

of models with greater than 90 percent

of sales at less than COP over an

extended period of time.

Analysis of Comments Received

We gave interested parties an

opportunity to comment on the

preliminary results. We received

comments and rebuttal comments from

the petitioners and Borusan, but did not

receive any comments from Yucelboru.

Comment 1: Inflation. Borusan argues

that Turkey did not experience

hyperinflation until the last four POR

months (January through April, 1994).

Accordingly, Borusan argues that the

Department should limit the application

of its hyperinflationary methodology to

sales made during these months. Citing

Final Determination of Sales at Less

Than Fair Value: Certain Fresh Cut

Flowers from Peru, 52 FR 7000, 7002

(March 6, 1987) (Flowers from Peru),

Borusan states that the Department that

previously limited its hyperinflationary

methodology in this manner where a

country experiences high inflation for a

only a few months during the POR. As

support for its position, Borusan claims

that Turkey’s inflation rate for 1993 was

56 percent, which is below the

Department’s established threshold of

60–65 percent (citing, inter alia, Import

Administration Policy Bulletin Number

94.5, ‘‘Differences in Merchandise

Calculation in Hyperinflationary

Economies’’ (March 25, 1994) at 1, n.1).

The petitioners respond that the

Department appropriately applied its

hyperinflationary methodology to the

entire POR. Citing Final Results of

Administrative Review: Certain Fresh

Cut Flowers from Colombia, 61 FR

42833, 42845 (August 19, 1996) (Flowers

from Colombia), the petitioners note

that, contrary to Borusan’s claim that

the hyperinflationary threshold is 60

percent, the Department recently stated

that economies are considered

hyperinflationary where annual

inflation is greater than 50 percent. The

petitioners assert, therefore, that the 56

percent inflation rate for 1993 cited by

Borusan is hyperinflationary.

The petitioners further add that

Borusan provided no justification for

why the Department should

differentiate between certain months

within the review period and state that

no justification exists because, in this

case, the POR inflation rate exceeds 125

percent. Regarding the precedent cited

by Borusan for such a differentiation,

the petitioners note that Flowers from

Peru was an investigation and content

that, consequently, the Department’s

practice of using aggregate comparison

market prices and costs in investigations

(as opposed to monthly prices in

reviews) makes investigations more

appropriate proceeding for using a

hyperinflationary methodology for only

part of the period.

DOC Position: We agree with the

petitioners. Although Import

Administration Policy Bulletin Number

94.5 states that ‘‘an economy is deemed

to be hyperinflationary if its monthly or

annual inflation rates are greater than 5

percent and 60 percent, respectively,’’

in recent cases we have considered

inflation rates lower than 60 percent to

warrant application of our high-inflation

methodology to avoid the distortions

that may be caused by such inflation.

See Flowers from Colombia, at 42845

and Notice of Final Determination of

Sales at Less Than Fair Value: Certain

Pasta from Turkey, 61 FR 30309, 30314

(June 14, 1996) (Pasta from Turkey).

Thus, even if we were to split the POR

into 1993 and 1994 segments as

requested by Borusan, we would find

high inflation to exist for the entire

period, since the inflation rate was

greater than 50 percent during both

1993 and 1994.

We further note with respect to

Borusan’s proposal to break the POR

into discrete periods that, although not

dispositive of this issue, we routinely

examine the entire review period when

determining whether high inflation

exists. Borusan has provided no

compelling rationale to depart from this

methodology other than citing inflation

rates for the two periods. See Pasta from

Turkey, at 30314, and Notice of Final

Results of Antidumping Duty

Administrative Review: Certain Welded

Carbon Steel Pipe and Tube from

Turkey, 61 FR 69067, 69068 (December

31, 1996) (the 1994–95 Review). With

respect to the one case cited by Borusan

where the Department treated one

portion of the period as inflationary and

the other portion as non-inflationary,
Federal Register / Vol. 62, No. 191 / Thursday, October 2, 1997 / Notices 51631

wholesale price index data compiled by

the International Monetary Fund (IMF)

indicate that the inflation rate for the

period designated as non-inflationary in

that case exceeded 50 percent. As such,

the finding in Flowers from Peru, which

was made over ten years ago, conflicts

with our current practice.

Comment 2: Initiation of Cost

Investigation. Borusan argues that the

Department improperly initiated a salesbelow-cost investigation because: (1)

The petitioners’ cost allegation was not

submitted until 14 months after the

deadline set forth in 19 CFR

353.31(c)(ii); and (2) the allegation

contained serious methodological flaws.

With respect to the issue of timeliness,

Borusan contends that, even though the

issuance of the questionnaire and the

submission of the response both

occurred after the regulatory deadline

for filing COP allegations (120 days after

initiation of the review), the petitioners

should not be excused for filing the COP

allegation an additional six months after

the submission of the sales

questionnaire response (citing Notice of

Final Results of Antidumping Duty

Administrative Review: Certain Forged

Steel Crankshafts From the United

Kingdom, 60 FR 52150, 52153 (October

5, 1995) (Crankshafts from the U.K.)).

Borusan adds that the allegation was

insufficient because it: (1) Deducted

credit expenses from the HM prices

while including them in the costs, and

(2) excluded downstream HM sales by

related resellers from the analysis.

Borusan contends that because the

sales-below-cost investigation was

improperly initiated, the Department

should ignore the results of the cost test

(citing Koyo Seiko, Ltd. v. United States,

806 F. Supp. 1008 (1992)).

The petitioners maintain that because

the Department did not issue its

questionnaire in this review until 254

days after publication of the notice of

initiation, the 120-day time limit does

not apply, and the Department was free

to establish any reasonable date as the

deadline for the sales-below-cost

allegation. The petitioners state,

however, that the Department did not

establish a new deadline for filing a

COP allegation. The petitioners add that

the computerized version of Borusan’s

initial sales questionnaire response

(filed in May 1995) was unreadable, as

acknowledged by Borusan, and state

that Borusan did not submit a readable

computer tape until September 1995.

Finally, the petitioners contend that the

COP allegation itself is accurate

because: (1) Non-investment interest

expenses are in fact not included in the

COPs, and (2) the exclusion of reseller

sales is in accord with Borusan’s claims

during the POR that the Department

should not consider such sales in its

dumping analysis.

DOC Position: We agree with the

petitioners. Regarding the timeliness of

the sales-below-cost allegation, section

353.31(c)(1)(ii) of our regulations

authorizes the Secretary to determine a

new time limit beyond the general 120-

day limit for alleging sales below cost if,

in the Secretary’s view, a relevant

response is untimely or incomplete. In

this respect, we find that a number of

factors warrant our acceptance of the

petitioners’ allegation. The Department

delayed issuance of the sales

questionnaire until February 24, 1995,

and the computerized version of

Borusan’s initial questionnaire response

submitted on May 25, 1995, was

unreadable. Therefore, the petitioners

did not initially have the requisite data

with which to make the allegation until

a readable computerized version of

Borusan’s questionnaire response was

submitted on September 29, 1995. Once

the petitioners received the necessary

data, they filed their allegation on

January 11, 1996, which was within a

reasonable time after receiving readable

computer data under the circumstances

of this case. During the period

September 29, 1995, to January 11,

1996, there were closures at the

Department due to the Federal budget

crisis and a blizzard (i.e., November 15

through 21, 1995, and December 16,

1995, through January 11, 1996). These

extenuating circumstances were clearly

beyond the petitioners’ control. In

addition, the petitioners requested an

extension for filing their allegation. This

is unlike the facts in Crankshafts from

the U.K., where the petitioners failed to

make an allegation of sales-below-cost

until filing their case brief, even though

they had access to the data that would

have enabled them to file a timely

allegation. Id., at 52153.

Regarding the merits of the allegation,

section 773(b) of the Act requires that

the Department make a sales below cost

determination whenever it has

reasonable grounds to believe or suspect

that sales in the home market have been

made at prices below the cost of

production. As stated in our December

4, 1996, ‘‘Petitioners’ Allegation of Sales

Below the Cost of Production

Memorandum’’ (COP Allegation

Memorandum), we found that the data

submitted by the petitioners, which was

based on information contained in

Borusan’s questionnaire responses,

provided reasonable grounds to believe

or suspect that Borusan had made

below-cost sales.

Borusan’s claims notwithstanding, we

determined that the methodology used

by petitioners gave us reason to suspect

that sales were made below cost.

Because petitioners excluded noninvestment interest expenses from the

SG&A component of COP, thereby

understating Borusan’s actual costs,

they made a corresponding adjustment

to price by subtracting credit expenses.

Based on this analysis there was a

considerable number of sales made

below cost. Furthermore, for a

significant number of these sales the

price/cost differential was such that,

even if credit expenses were added back

into the price calculation, we had

reason to believe that these would have

been below-cost sales.

Second, we did not include sales

made by Borusan’s related resellers in

our analysis of the cost allegation

because neither we nor the petitioners

could determine from Borusan’s

response the additional costs incurred

by the related resellers. Therefore, we

did not find it appropriate to include

these sales in our analysis of whether to

initiate a below-cost investigation. See

COP Allegation Memorandum.

Moreover, the sales we did examine

were ‘‘representative of the broader

range of foreign models which may be

used to determine FMV for the various

U.S. models’’ and our analysis of the

below-cost allegation regarding these

sales indicated that there was a

sufficient basis to initiate a below-cost

investigation. See Import

Administration Policy Bulletin No. 94/

1, ‘‘Cost of Production—Standards for

Initiation of Inquiry’’ (March 25, 1994).

Comment 3: Exclusion of Material

Costs from WPI Adjustment to COP. The

petitioners allege that the Department

erroneously excluded some, but not all,

raw materials from the indexing of the

cost of manufacturing (COM).

Specifically, the petitioners claim that

the Department failed to subtract

varnish and coupling costs from the

total monthly COM figures before

indexing. The petitioners contend that

the Department should index the rest of

the COM, calculate a weighted average,

then deflate the average and add direct

materials costs, including the varnish

and coupling costs, to calculate the

monthly COM.

Borusan concurs with the petitioners

that the Department should subtract

varnish and coupling costs before

indexing and calculating the COM.

DOC Position: We disagree with both

parties. In cases involving high

inflation, it is our general practice to

index all costs, whether they are

reported on a replacement cost or

historical cost basis. In the Preliminary

Results, the coil, zinc, varnish and

coupling costs all should have been
51632 Federal Register / Vol. 62, No. 191 / Thursday, October 2, 1997 / Notices

indexed in order to derive indexed

weighted-average COMs that include

raw materials costs. In high-inflation

cases, it is normally the Department’s

practice to request that respondents

report their material costs on a monthly

replacement cost basis (i.e., the costs to

the producer to replace the materials in

the month consumer). See Final Results

of Antidumping Duty Administrative

Review: Ferrosilicon from Brazil, 61 FR

59407, 59408 (November 22, 1996). This

data reflects the increases in materials

costs from month to month due to

inflation.

However, in accordance with our

practice, we still need to index all

monthly replacement costs forward to

the end of the POR in order to calculate

a POR weighted-average COM, which

applies to both inflationary and noninflationary cases. We then deflate this

POR average COM to derive a cost for

each month that is based on a POR

weighted average. This monthly cost is

then compared to sales in that month.

It we did not index costs in this manner,

our calculations could be affected by

monthly changes, other than inflation,

that affect these costs (i.e., price

fluctuations due to material shortages).

Comment 4: Use of Production

Quantity. The petitioners maintain that

the Department should use monthly

production quantities contained in

Borusan’s post-verification data

submission rather than sales quantities

to weight-average the indexed COP.

Borusan claims that the Department

did in fact use production quantities to

weight average the COP in the

preliminary results and therefore no

correction is required.

DOC Position: We agree with Borusan.

In the Preliminary Results, we used the

production quantities contained in

Borusan’s March 31, 1997, data

submission to weight-average COP (see

lines 22436, 22437, 22561 and 22562 of

Department’s SAS margin program used

in the Preliminary Results). The

preliminary results calculation

memorandum erroneously stated that

we used the sales quantity to weightaverage the indexed conversion costs.

See Analysis for Borusan Group

(Calculation Memorandum)(May 8,

1997). We have continued to use the

production quantities to weight-average

the COP in the final results.

Comment 5: Interest Expense—

Inclusion of Foreign Exchange Gains

and Losses. Borusan claims that the

Department should exclude foreign

exchange losses from the interest

expense calculation used in the COP/CV

calculations. Maintaining that these

losses are primarily losses on foreign

currency loans due to the high inflation

experienced in Turkey and the

devaluation of the Turkish Lira, Borusan

contends that the losses should be

treated as an inflation adjustment and

not as a cost of production.

The petitioners maintain that Borusan

should not be allowed to exclude

foreign exchange losses from its costs on

the basis that a significant portion of the

foreign exchange losses resulted from

inflation. The petitioners contend that

the Department already adjusts for the

inflation effects of each cost element by

using its hyperinflationary methodology

to calculate infation-adjusted costs.

They further contend that the

Department’s practice, as set forth in

Rebar from Turkey, is to include these

losses in the COP/CV financial expenses

even where the economy is considered

hyperinflationary. The petitioners also

note that the Department’s verification

report indicates that the interest

expenses obtained were to be adjusted

using wholesale price indices for the

preliminary results but that no

adjustment was made.

In addition, the petitioners argue that

the Department should disallow

Borusan’s reported foreign exchange

gains as an offset to interest expense

because, contrary to the Department’s

policy for allowing this offset, the

foreign exchange gains resulted

primarily from export sales and not

from the importation of raw materials.

DOC Position: We agree with the

petitioners that we should include

Borusan’s foreign exchanges losses and

exclude Borusan’s reported foreign

exchange gains in calculating the COP/

CV. With respect to foreign exchange

losses, we have included this expense in

our COP/CV interest expense

calculation. The cost verification report

notes that Borusan’s foreign exchange

losses are incurred on dollardenominated debt. Further, as noted by

Borusan, these losses are reflected in its

income statement. The Department has

clearly established that translation

losses on dollar-denominated loans, as

reflected in a company’s income

statement, are appropriately included in

the cost of production because they

reflect an actual increase in the amount

of local currency that will have to be

paid to settle these loans. See Final

Determination of Sales at Less Than

Fair Value: Fresh Cut Roses from

Ecuador, 60 FR 7019, 7039 (February 6,

1995)(Roses from Ecuador). We not that

although hyperinflation was largely

responsible for the depreciation of the

Turkish Lira, the inflation factor has

been accounted for by indexing the

interest expense for inflation using

WPIs. See Calculation Memorandum.

With respect to foreign exchange

gains, we have not included such gains

in the interest expense calculation,

consistent with our findings in other

segments of this proceeding. See the

1994–95 Review at 69072. The record

evidence demonstrates that the foreign

exchange gains at issue result from

export sales transactions. See Exhibit 13

of the cost verification report. Our

practice is to include foreign exchange

gains as an offset to finance expenses if

they are related to the cost of acquiring

debt for purposes of financing

production operations, and to exclude

this item if it relates to sales. See Rebar

from Turkey, at 9741, and Pasta From

Turkey, at 30324. In this case, we find

that foreign exchange gains are related

to sales, not production; therefore, they

should not be used as an offset for

calculating home market interest

expenses.

Comment 6: Imputed Credit Expense

in Constructed Value/Offset to Trade

Receivables and Finished Goods

Inventory Portion of Interest Expense.

Borusan alleges that the Department

failed to adjust the CV interest expense

factor to offset the imputed credit

expense with that portion of actual

finance expenses related to the

financing of trade receivables. Borusan

maintains that the Department’s past

practice, as set forth in Final

Determination of Sales at Less Than

Fair Value: Stainless Steel Butt-Weld

Pipe Fitting from Taiwan 58 FR 28556,

28560 (May 14, 1993) (Fittings from

Taiwan), is to include imputed credit

costs in CV and offset the actual finance

expenses by an amount attributed to

financing trade receivables in order to

avoid double counting of finance

expenses. Therefore, Borusan contends

that the Department should adjust the

interest rate factor used for CV.

The petitioners respond that it is not

clear that the Department included

imputed credit expenses in the CV in

the preliminary results; therefore, the

Department must first ensure that it has

included imputed credit costs (and

inventory carrying costs) in CV before

making any offset for trade receivables

financing.

DOC Position: In the Preliminary

Results, we correctly included imputed

credit expenses and inventory carrying

expenses in the CV. The inclusion of

these imputed expenses in the CV is in

accordance with our established

practice prior to the amendments made

to the Act by the Uruguay Round

Agreements Act (URAA) effective

January 1, 1995. See. e.g., Final

Determination of Sales at Less Than

Value: Certain All-Terrain Vehicles from

Japan, 54 FR 4864, 4867 (January 31,
Federal Register / Vol. 62, No. 191 / Thursday, October 2, 1997 / Notices 51633

1989). However, we failed to adjust the

interest expense in order to avoid

double counting that portion of the

interest expense that corresponds with

the imputed credit expense or with the

imputed inventory carrying expenses,

(i.e., financing of trade receivables and

financing of finished goods inventory).

For these final results, we offset the

reported interest expense by an amount

attributable to financing trade

receivables and finished goods

inventory. See Fittings from Taiwan at

28560. We calculated the offset as a

percentage of trade receivables and

finished goods inventory to total assets,

using the balance reported in the

audited financial statements. We then

used this ratio to reduce the interest rate

used to calculate finance expenses in

our CV calculation.

Comment 7: Depreciation. The

petitioners allege that Borusan

incorrectly calculated its depreciation

because it did not index its monthly

depreciation expenses forward to

equivalent terms. Rather, the petitioners

allege that Borusan calculated this

expense by adding the monthly amounts

in its accounting records and then

dividing the total by 12. Instead of

calculating a simple average, the

petitioners contend that Borusan should

have inflated each monthly depreciation

figure to December 1993 so they would

be expressed in equivalent terms. The

inflated figures should have then been

summed and the result divided by 12 to

obtain an inflation-adjusted monthly

average that is then deflated to derive

depreciation costs for each month. The

petitioners further maintain that

Borusan incorrectly deflated the simple

monthly average calculated for

depreciation, as noted in the Cost

Verification report, and assert that the

Department should deflate the monthly

average depreciation using the

calculation formula shown in

verification exhibit M1.

Borusan responds that the Department

should not recalculate the average

monthly depreciation figure by

expressing it in December 1993 terms

because, as noted in Borusan’s financial

statements, the depreciation amount is

already stated in December 1993 terms.

Borusan contends that the petitioners’

recommended approach would result in

a double indexing of this cost. Also,

Borusan states that the manner in which

it converted this December 1993

depreciation amount to monthly POR

amounts is correct. With respect to the

second point, Borusan notes that the

data used by the Department in the

preliminary results, based on Borusan’s

March 31, 1997, post-verification

submission, already incorporated the

required correction to Borusan’s

depreciation adjustment in the manner

prescribed in the verification report.

DOC Position: We agree with Borusan.

At our request, Borusan submitted

revised COP and CV databases on March

31, 1997, in which the depreciation

adjustment was recalculated in

accordance with our instructions. The

revised data were used in the

preliminary results. See Calculation

Memorandum, at 4. Furthermore,

Borusan’s depreciation expenses were

stated in December 1993 terms in

accordance with Turkish law. Note 2 of

Borusan’s audited financial statements

for 1992 and 1993 states that ‘‘Turkish

commercial practice and tax legislation

require that financial statements be

prepared in accordance with the

historical cost convention with the sole

exception of the optional revaluation of

fixed assets on the basis of indices

published on an annual basis by the

Ministry of Finance.’’ Note 3(f) of the

financial statements indicates that

property, plant and equipment were

revalued on December 31, 1993 using

the Ministry of Finance’s officially

published index of 58.4 percent. See

Exhibit 4 of Borusan’s questionnaire

response dated May 8, 1995.

Specifically, each month’s depreciation

expense was originally reported in

December 1993 cost terms, and was then

deflated to each month. See page 25 and

Exhibit M–1 of the cost verification

report. Therefore, consistent with our

established practice, we have not

adjusted further Borusan’s depreciation

expense because the reported

depreciation expense had already been

adjusted for inflation when the assets

were revalued based on the Ministry’s

index. See Rebar From Turkey at 9748.

Comment 8: Level of Trade. Borusan

contends that the Department’s decision

in the Preliminary Results to collapse

certain levels of trade (LOTs) was in

error. Borusan claims that it sells to five

separate LOTs in the home market: (1)

direct mill sales to trading companies

(LOT 1); (2) direct mill sales to

industrial end-users (LOT 2); (3)

downstream sales to local wholesalers

(LOT 3); (4) downstream sales to

retailers (LOT 4); and (5) downstream

sales to industrial end-users (LOT 5).

Borusan argues that the Department’s

decision to collapse LOT 1 with LOT 3,

and to collapse LOT 2 with LOT 5, is

based on a fundamental

misunderstanding of Borusan’s reported

LOTs and cannot be justified by the

evidence contained on the

administrative record in the review.

Borusan contends that it met its

burden of justifying its claimed LOTs

through the information submitted in its

questionnaire response. Moreover,

Borusan maintains that the Department

provided insufficient explanation in the

preliminary results for collapsing these

LOTs. Alternatively, if the Department

rejects this argument, Borusan requests

that the Department use the same LOTs

as it did in the 1994–95 Review.

The petitioners contend that Borusan

did not adequately differentiate or

document the asserted five levels of

trade, despite a specific request by the

Department in a supplemental

questionnaire for such differentiation

and documentation.

DOC Position: We agree with the

petitioners. As in the Preliminary

Results, we treated Borusan’s reported

LOTs 1 and 3 as one LOT, and we

treated reported LOTs 2 and 5 as one

LOT.

In determining the number of LOTs

under the pre-Uruguay Round Tariff

Act, we examine the function of the

respondent’s customers and determine

where in the distribution chain the

customers fall (i.e., wholesaler, retailer,

end-user). See Import Administration

Policy Bulletin No. 92/1, ‘‘Matching at

Levels of Trade,’’ (July 29, 1992), at 2;

and Final Results of Antidumping Duty

Administrative Reviews: Certain

Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length

Carbon Steel Plate from Canada, 61 FR

13815, 13825 (March 28, 1996). It is the

respondent’s responsibility to

distinguish its claimed LOTs in this

manner.

Applying this standard to the instant

proceeding, the information provided by

Borusan does not indicate that LOTs 1

and 3 are distinct, nor does it

adequately distinguish LOTs 2 and 5.

LOT 1 involves direct sales by Borusan

to trading companies. LOT 3 involves

related party resales to wholesalers.

Evidence contained in Borusan’s

February 26, 1996, submission indicates

that there is significant overlap in the

functions performed and the place in

the chain of distribution for the

customers (trading companies and

wholesalers) involved in claimed LOTs

1 and 3. For instance, certain trading

companies sell directly to retailers;

these trading companies have the same

function in the chain of distribution as

wholesalers, i.e., both function as

resellers of the subject merchandise to

retailers. Thus, the fact that claimed

LOT 1 involves direct sales while

claimed LOT 3 involves resales does not

establish that separate LOTs in fact exist

for these sales, absent evidence that the

customers involved in these two groups

of sales occupy different places in the

chain of distribution. Because the

information provided by Borusan does
51634 Federal Register / Vol. 62, No. 191 / Thursday, October 2, 1997 / Notices

not indicate such differences in the

chain of distribution, we determined

that LOTs 1 and 3 are appropriately

considered as one level for this review.

Our decision to collapse reported

LOTs 2 and 5 is based on the same

principle. Claimed LOT 2 involves

direct sales to end users, while claimed

LOT 5 involves related party resales to

end users. As with claimed LOTs 1 and

3, our examination of the record

evidence indicates that there is a

significant overlap in the function of the

customers in the chain of distribution

for these claimed levels (end users in

both cases). We therefore have collapsed

LOT 2 with LOT 5. See Final

Determination of Sales at Less Than

Fair Value: Certain Carbon and Alloy

Steel Wire Rod from Canada, 59 FR

18791, 18794 (April 20, 1994).

Finally, as to Borusan’s argument that

we use the same LOTs used in the 1994–

95 Review, the criteria upon which we

examined Borusan’s LOT argument in

1994–95 Review cannot be applied to

this review because those criteria apply

to cases administered under the URAA.

See also Statement of Administrative

Action (SAA) accompanying the URAA

at 829–831.

Comment 9: Gross Unit Price

Correction. The petitioners contend that

the Department should correct the gross

unit price reported for the first sales

transaction examined at verification

(i.e., SVE M.1) based on its findings.

Borusan maintains that the

Department found at verification that

the gross unit price reported for the

sales transaction was correct.

DOC Position: We agree with the

petitioners. The gross unit price

reported for the sales transaction at

issue is incorrect because that price is

based on an incorrect weight amount

noted in the sales invoice. Although

Borusan reported the weight listed in

the invoice, that weight was incorrectly

calculated based on formulas used to

convert feet to metric tons. Therefore,

we have corrected this error in the sales

database.

Comment 10: Verification Corrections.

The petitioners state that the

Department should ensure that the

errors noted in Borusan’s March 31,

1997, submission have been corrected in

the final data used in this proceeding.

Borusan states that the Department

used sales and cost databases that

incorporated data corrections contained

in its March 31, 1997, submission.

Therefore, Borusan contends that there

is no need for the Department to make

any additional changes to Borusan’s

sales and cost information in the final

results.

DOC Position: We agree with the

petitioners and have ensured that the

sales and costs databases that we are

using for the final results incorporate all

corrections from verification. In the

course of examining whether the

corrections noted in the March 31, 1997,

submission were in fact included in the

sales and cost databases, we found that

certain corrections noted in verification

exhibit A1, regarding customer-specific

quantity rebates granted on 1993 sales,

were not included in the home market

database. We have corrected this for the

final results.

Comment 11: Countervailing Duty

Adjustment. Borusan maintains that the

Department erred in not making an

upward adjustment to U.S. price for

countervailing duties as required by

section 772(d)(1)(D) of the Act.

The petitioners did not comment on

this issue.

DOC Position: We agree with Borusan.

Since the countervailing duties in

question concern export subsidies, we

have added to the U.S. price an amount

for said duties (i.e., the actual amount

paid in CVD). This amount was

determined by multiplying the 7.26 ad

valorem rate by the C&F value net of

ocean freight expenses and CVD. See

Exhibit O1 of the cost verification

report.

Comment 12: Imputed Interest on

VAT Payments. Borusan argues that the

Department failed to allow a

circumstance of sale (COS) adjustment

for financing expenses incurred on

making VAT payments in the home

market. Borusan maintains that it must

finance its payment of VAT taxes, and

that this expense represents a carrying

expense incurred by Borusan until it

receives payment for the invoiced

amount (inclusive of VAT) for sales

made to its home market customers.

Borusan contends that there is no

discernible difference between adjusting

for credit expenses accrued in

connection with sales and financing

costs incurred on VAT payments.

Therefore, Borusan states that section

353.56 of the Department’s regulations

authorizes the Department to make an

adjustment to account for the carrying

costs incurred in financing VAT

payments.

The petitioners respond that the

claimed adjustment does not constitute

a COS adjustment as defined in section

353.56 of the Department’s regulations.

The petitioners cite to the 1994–95

Review where the Department

disallowed a COS adjustment for the

same VAT drawback claimed by

Borusan in the present case.

DOC Position: We agree with the

petitioners, and, consistent with our

treatment of this item in other segments

of this proceeding, have disallowed a

COS adjustment for imputed interest

resulting from delayed refunds of VAT

paid on inputs. See the 1994–95 Review,

at 69076. Allowing Borusan such an

adjustment would involve imputing an

expense incurred not between Borusan

and its customers, but between Borusan,

its supplier, and the government.

‘‘[W]hile such a[n expense] may affect

the notion of true economic cost to [the

respondent], it tells us nothing about the

difference in prices that result from the

different circumstances of sale.’’ See

Federal-Mogul Corp. v. United States,

839 F. Supp. 881, 885 (November 30,

1993).

Further, to the extent that Borusan

incurs such an expense, it is incurred

regardless of whether Borusan actually

makes such a sale. In other words, there

is no direct relationship between the

imputed expense and the sales being

examined. Accordingly, there is no basis

for making a COS adjustment.

Comment 13: Indexation of Packing

Expenses. Borusan contends that the

Department should have indexed the

packing expenses in connection with

home market and U.S. sales because the

Department found that Turkey

experienced hyperinflation during the

POR.

The petitioners argue that the

Department should not index packing

expenses because the packing costs

contain a large component of raw

materials which are already reported on

a replacement cost basis.

DOC Position: We agree with Borusan

and have indexed Borusan’s packing

expenses in both markets. Because the

timing of packing materials purchases in

a hyperinflationary economy may result

in an over- or under-statement of net

prices, our practice is to index all

packing costs in the manner done for

COM. See Pasta From Turkey, at 30323,

and the 1994–95 Review, at 69071.

Moreover, as noted above in Comment

3, in accordance with our practice, all

costs, including materials, are indexed

in hyperinflationary economy cases.

Therefore, we do not accept the

petitioners’ argument that packing costs

should not be indexed because some of

the packing expenses are reported on a

replacement cost basis.

Comment 14: Direct Selling Expenses.

Borusan argues that the Department

incorrectly deducted direct selling

expenses from U.S. price and added

these expenses to FMV, thus double

counting the expenses. Borusan cites to

section 773(a)(4) of the Act in support

of its argument.

The petitioners did not comment on

this issue.
Federal Register / Vol. 62, No. 191 / Thursday, October 2, 1997 / Notices 51635

DOC Position: We agree with Borusan

and have corrected this error in the final

results. To make the COS adjustment,

we have deducted home market direct

selling expenses from FMV and then

added U.S. direct selling expenses to

FMV.

Comment 15: Conversion of Certain

Direct Selling and Movement Expenses.

Borusan contends that the Department

incorrectly converted certain direct

selling and movement expenses from

Turkish Lira to U.S. dollars by using

exchange rates based on dates of sale

rather than on dates of shipment.

The petitioners did not comment on

this issue.

DOC Position: We agree with Borusan.

In accordance with our practice, we

have corrected the error by using

exchange rates based on the date of

shipment to convert expenses from

Turkish lira to U.S. dollars. See Final

Determination of Sales at Less Than

Fair Value: Silicon Metal From Brazil,

56 FR 26977, 26980 (June 12, 1991)

(Comment 3).

Comment 16: Assessment Rate. On

August 1, 1997, we informed Borusan

and the petitioners that we intended to

calculate importer-specific ad valorem

assessment rates on entered value. Since

our antidumping questionnaire did not

request Borusan to submit entered

values in its questionnaire response, we

informed the parties that we would

calculate entered values by subtracting

international freight charges from the

gross unit prices reported in the U.S.

sales database.

The petitioners contend that to

calculate the entered values the

Department should also subtract from

the gross unit prices the discount that

Borusan grants its customers.

Borusan did not comment on this

issue.

DOC Position: We agree with the

petitioners. We have removed all

discounts from gross unit prices to

calculate entered values.

Final Results of Review

As a result of our review, we

determine that the following margins

exist for the period May 1, 1993,

through April 30, 1994:

Manufacturer/

exporter Review period Margin(percent)

Borusan ......... 5/1/93–4/30/94 4.01

Yucelboru ...... 5/1/93–4/30/94 0.00

The Department shall determine, and

Customs shall assess, antidumping

duties on all appropriate entries. The

Department will issue appraisement

instructions directly to Customs.

For Yucelboru, a cash deposit rate of

zero will be effective for all its

shipments of the subject merchandise

entered, or withdrawn from warehouse,

for consumption on or after the

publication date of these final results of

this administrative review, as provided

by section 751(a) of the Act.

For Borusan, the cash deposit rate

will continue to be 2.57 percent, the rate

effective since May 16, 1997, which was

published in the Notice of Amended

Final Results of Antidumping Duty

Administrative Review: Certain Welded

Carbon Steel Pipe and Tube from

Turkey, 62 FR 27013 (May 16, 1997).

For merchandise exported by

manufacturers or exporters not covered

in this review but covered in the

original less-than-fair-value (LTFV)

investigation or a previous review, the

cash deposit will continue to be the

most recent rate published in the final

determination or final results for which

the manufacturer or exporter received a

company-specific rate; if the exporter is

not a firm covered in this or a prior

review or the original investigation, but

the manufacturer is, the cash deposit

rate will be that established for the

manufacturer of the merchandise; and if

neither the exporter nor the

manufacturer is a firm covered in this or

any previous review, the cash deposit

rate will be 14.74 percent, the ‘‘all

others’’ rate established in the LTFV

investigation.

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

review.

This notice also serves as final

reminder to importers of their

responsibility to file a certificate

regarding the reimbursement of

antidumping duties prior to liquidation

of the relevant entries during this

review period. Failure to comply with

this requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This notice is the only reminder to

parties subject to administrative

protective order (APO) of their

responsibility concerning the return or

destruction of proprietary information

disclosed under APO in accordance

with 19 C.F.R. 353.34(d). Failure to

comply is a violation of the APO.

This administrative review and notice

are in accordance with section 751(a)(1)

of the Act (19 U.S.C. 1675(a)(1)) and 19

C.F.R. 353.22.

Dated: September 25, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–26196 Filed 10–1–97; 8:45 am]

BILLING CODE 3510–DS–M

DEPARTMENT OF COMMERCE

International Trade Administration

[C–401–056]

Viscose Rayon Staple Fiber From

Sweden; Final Results of

Countervailing Duty Administrative

Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

countervailing duty administrative

review.

SUMMARY: On June 6, 1997, the

Department of Commerce (‘‘the

Department’’) published in the Federal

Register its preliminary results of

administrative review of the

countervailing duty order on viscose

rayon staple fiber from Sweden for the

period January 1, 1995 through

December 31, 1995 (62 FR 31079). The

Department has now completed this

administrative review in accordance

with section 751(a) of the Tariff Act of

1930, as amended. For information on

the net subsidy for each reviewed

company, and for all non-reviewed

companies, please see the Final Results

of Review section of this notice. We will

instruct the U.S. Customs Service to

assess countervailing duties as detailed

in the Final Results of Review section of

this notice.

EFFECTIVE DATE: October 2, 1997.

FOR FURTHER INFORMATION CONTACT:

Stephanie Moore or Russell Morris,

Office of CVD/AD Enforcement VI,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–2786.

SUPPLEMENTARY INFORMATION:

Background

Pursuant to 19 CFR 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 Svenska Rayon AB (Svenska).

This review also covers the period

January 1, 1995 through December 31,

1995, and ten programs.