61964 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

DEPARTMENT OF COMMERCE

International Trade Administration

[A–570–849]

Final Determination of Sales at Less

Than Fair Value: Certain Cut-to-Length

Carbon Steel Plate From the People’s

Republic of China

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final determination of

sales at less than fair value.

EFFECTIVE DATE: November 20, 1997.

FOR FURTHER INFORMATION CONTACT: Lyn

Baranowski, Doreen Chen, Gregory

Weber, N. Gerard Zapiain or Stephen

Jacques, Import Administration,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–1385, (202) 482–0413, (202)

482–1102, (202) 482–1395 or (202) 482–

1391, respectively.

The Applicable Statute

Unless otherwise indicated, all

citations to the statute are references to

the provisions effective January 1, 1995,

the effective date of the amendments

made to the Tariff Act of 1930 (‘‘the

Act’’) by the Uruguay Rounds

Agreements Act (URAA). In addition,

unless otherwise indicated, all citations

to the Department’s regulations are to

the regulations codified at 19 CFR Part

353 (April 1, 1996).

Final Determination

We determine that certain cut-tolength carbon steel plate from the

People’s Republic of China (‘‘PRC’’) is

being, or is likely to be, sold in the

United States at less than fair value

(‘‘LTFV’’), as provided in section 733 of

the Act. The estimated margins are

shown in the ‘‘Suspension of

Liquidation’’ section of this notice.

Case History

The petitioners in this investigation

are Geneva Steel Company and Gulf

States Steel Company.

The respondents which are PRC firms

unless otherwise indicated:

(1) China Metallurgical Import &

Export Liaoning Company (‘‘Liaoning’’),

an exporter of subject merchandise;

Wuyang Iron and Steel Company

(‘‘Wuyang’’), which produced the

merchandise sold by Liaoning;

(2) Anshan Iron and Steel Complex

(‘‘AISCO’’), a producer of subject

merchandise; Angang International

Trade Corporation (‘‘Anshan

International’’), a wholly-owned AISCO

subsidiary in China which exported

subject merchandise made by AISCO,

and Sincerely Asia, Limited (‘‘SAL’’) a

partially-owned Hong Kong affiliate of

AISCO involved in sales of subject

merchandise to the United States

(collectively, ‘‘Anshan’’);

(3) Baoshan Iron & Steel Corporation

(‘‘Bao’’), a producer of subject

merchandise; Bao Steel International

Trade Corporation (‘‘Bao Steel ITC’’), a

wholly-owned subsidiary of Bao

responsible for selling Bao material

domestically and abroad; and Bao Steel

Metals Trading Corporation (‘‘B. M.

International’’), a partially-owned U.S.

subsidiary involved in U.S. sales,

(collectively ‘‘Baoshan’’);

(4) Wuhan Iron & Steel Company

(‘‘Wuhan’’) a producer of subject

merchandise; International Economic

and Trading Corporation (‘‘IETC’’), a

wholly-owned subsidiary responsible

for exporting Wuhan merchandise;

Cheerwu Trader Ltd. (‘‘Cheerwu’’) a

partially-owned Hong Kong affiliate of

Wuhan involved in sales of subject

merchandise to the United States

(collectively ‘‘WISCO’’);

(5) Shanghai Pudong Iron and Steel

Company (‘‘Shanghai Pudong’’) a

producer and exporter of subject

merchandise. During the investigation,

we also requested information from and

conducted verification of Shanghai

No.1, a non-exporting producer of

subject merchandise which Shanghai

Pudong had earlier indicated shared a

common trustee, Shanghai Metallurgical

Holding (Group) Co. (‘‘Shanghai

Metallurgical’’).

We consider Liaoning, Anshan,

Baoshan, WISCO and Shanghai Pudong

to be sellers of the subject merchandise

during the POI.

Since the preliminary determination

in this investigation (Preliminary

Determination of Sales at Less Than

Fair Value: Certain Cut-to-Length

Carbon Steel Plate from the People’s

Republic of China, 62 FR at 31972 (June

11, 1997)), the following events have

occurred:

From June through July 1997, we

verified the questionnaire responses of

the respondents. Pursuant to section

782(d) of the Act, the Department

rejected certain portions of submissions

submitted by Anshan, Baoshan and

WISCO one week prior to verification.

On August 5, 1997 we issued our

verification reports.

At the request of the Department,

interested parties submitted additional

information on surrogate values on

August 5, 1997, for consideration in the

final determination.

The petitioners and all of the

respondents submitted case briefs on

August 29, 1997, and rebuttal briefs on

September 9, 1997. The Department

held a public hearing for this

investigation on September 16, 1997 at

the requests of respondents and

petitioners.

On October 24, 1997, the Department

entered into an Agreement with the

Government of the PRC suspending this

investigation. Pursuant to Section 734(g)

of the Act, petitioners, Liaoning and

Wuyang have requested that this

investigation be continued. If the ITC’s

final determination is negative, the

Agreement shall have no force or effect

and the investigation shall be

terminated. See Section 734(f)(3)(A) of

the Act. If, on the other hand, the

Commission’s determination is

affirmative, the Agreement shall remain

in force but the Department shall not

issue an Antidumping duty order so

long as (1) the Agreement remains in

force, (2) the Agreement continues to

meet the requirements of subsection (d)

and (l) of the Act, and the parties to the

Agreement carry out their obligations

under the Agreement in accordance

with its terms. See Section 734(f)(3)(B)

of the Act.

Scope of the Investigation

The products covered by this

investigation are hot-rolled iron and

non-alloy steel universal mill plates

(i.e., flat-rolled products rolled on four

faces or in a closed box pass, of a width

exceeding 150 mm but not exceeding

1250 mm and of a thickness of not less

than 4 mm, not in coils and without

patterns in relief), of rectangular shape,

neither clad, plated nor coated with

metal, whether or not painted,

varnished, or coated with plastics or

other nonmetallic substances; and

certain iron and non-alloy steel flatrolled products not in coils, of

rectangular shape, hot-rolled, neither

clad, plated, nor coated with metal,

whether or not painted, varnished, or

coated with plastics or other

nonmetallic substances, 4.75 mm or

more in thickness and of a width which

exceeds 150 mm and measures at least

twice the thickness. Included as subject

merchandise in this petition are flatrolled products of nonrectangular crosssection where such cross-section is

achieved subsequent to the rolling

process (i.e., products which have been

‘‘worked after rolling’’)—for example,

products which have been bevelled or

rounded at the edges. This merchandise

is currently classified in the

Harmonized Tariff Schedule of the

United States (HTS) under item

numbers 7208.40.3030, 7208.40.3060,
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61965

7208.51.0030, 7208.51.0045,

7208.51.0060, 7208.52.0000,

7208.53.0000, 7208.90.0000,

7210.70.3000, 7210.90.9000,

7211.13.0000, 7211.14.0030,

7211.14.0045, 7211.90.0000,

7212.40.1000, 7212.40.5000,

7212.50.0000. Although the HTS

subheadings are provided for

convenience and customs purposes, our

written description of the scope of this

investigation is dispositive.

Period of Investigation

The period of investigation (POI) is

April 1, 1996, through September 30,

1996.

Separate Rates

All of the respondents have requested

separate, company-specific rates. In

their questionnaire responses,

respondents state that they are

independent legal entities. Of the five

respondents, Anshan, Baoshan,

Liaoning and WISCO have reported that

they are collectively-owned enterprises,

registered as being ‘‘owned by all the

people.’’ Shanghai Pudong and

Shanghai No. 1 are ‘‘owned by all the

people’; Shanghai Pudong has also

stated that these two firms are owned by

Shanghai Metallurgical, which is in turn

is also owned by ‘‘all the people.’’

Shanghai Pudong stated that it does not

have any corporate relationship with

any level of the PRC Government.

As stated in the Final Determination

of Sales at Less than Fair Value: Silicon

Carbide from the People’s Republic of

China, 59 FR at 22585, 22586 (May 2,

1994) (‘‘Silicon Carbide’’) and in the

Final Determination of Sales at Less

Than Fair Value: Furfuryl Alcohol from

the People’s Republic of China, 60 FR at

22544 (May 8, 1995) (‘‘Furfuryl

Alcohol’’), ownership of a company by

‘‘all the people’’ does not require the

application of a single rate. Accordingly,

each of these respondents is eligible for

consideration for a separate rate.

To establish whether a firm is

sufficiently independent to be entitled

to a separate rate, the Department

analyzes each exporting entity under the

test established in the Final

Determination of Sales at Less Than

Fair Value: Sparklers from the People’s

Republic of China, 56 FR. at 20588 (May

6, 1991) (‘‘Sparklers’’) and amplified in

Silicon Carbide. Under the separate

rates criteria, the Department assigns

separate rates in nonmarket-economy

cases only if an exporter can

affirmatively demonstrate the absence of

both (1) de jure and (2) de facto

governmental control over export

activities. See Silicon Carbide and

Furfuryl Alcohol.

1. Absence of De Jure Control

The respondents have placed on the

administrative record a number of

documents to demonstrate absence of de

jure control. Respondents submitted the

‘‘Law of the PRC on Industrial

Enterprises Owned By the Whole

People,’’ adopted on April 13, 1988 (the

Industrial Enterprises Law). The

Department has previously determined

that this Civil Law does not confer de

jure independence on the branches of

government-owned and controlled

enterprises. See Sigma Corp v. United

States, 890 F. Supp. 1077, 1080 (CIT

1995). However, the Industrial

Enterprises Law has been analyzed by

the Department in past cases and has

been found to sufficiently establish an

absence of de jure control of companies

‘‘owned by the whole people,’’ such as

those participating in this case. (See e.g.,

Notice of Preliminary Determination of

Sales at Less Than Fair Value and

Postponement of Final Determination:

Certain Partial-Extension Steel Drawer

Slides with Rollers from the People’s

Republic of China, 60 FR at 14725,

14727 (June 5, 1995) (‘‘Drawer Slides’’);

Notice of Preliminary Determination of

Sales at Less Than Fair Value: Honey

from the People’s Republic of China, 60

FR at 14725, 14727 (March 20, 1995);

and Furfuryl Alcohol. The Industrial

Enterprises Law provides that

enterprises owned by ‘‘the whole

people’’ shall make their own

management decisions, be responsible

for their own profits and losses, choose

their own suppliers, and purchase their

own goods and materials. The

Regulations of the People’s Republic of

China for Controlling the Registration of

Enterprises as Legal Persons (Legal

Persons Regulations), issued on July 13,

1988 by the State Administration for

Industry and Commerce of the PRC,

provide that, to qualify as legal persons,

companies must have the ‘‘ability to

bear civil liability independently’’ and

the right to control and manage their

business. These regulations also state

that, as an independent legal entity, a

company is responsible for its own

profits and losses. See Notice of Final

Determination of Sales at Less Than

Fair Value: Manganese Metal from the

People’s Republic of China, 60 FR at

56046 (November 6, 1995).

In sum, in prior cases, the Department

has analyzed the Chinese laws and

regulations on the record in this case,

and found that they establish an absence

of de jure control for the types of

companies seeking separate rates in this

investigation. We have no new

information in these proceedings which

would cause us to reconsider this

determination.

2. Absence of De Facto Control

The Department typically considers

four factors in evaluating whether each

respondent is subject to de facto

governmental control of its export

functions: (1) whether the export prices

are set by or are subject to the approval

of a governmental authority; (2) whether

the respondent has authority to

negotiate and sign contracts and other

agreements; (3) whether the respondent

has autonomy from the government in

making decisions regarding the

selection of management; and (4)

whether the respondent retains the

proceeds of its export sales and makes

independent decisions regarding

disposition of profits or financing of

losses. See, e.g., Silicon Carbide and

Furfuryl Alcohol. These factors are not

necessarily exhaustive and other

relevant indicia of government control

may be considered.

Respondents have asserted, and we

verified, the following: (1) they establish

their own export prices independently

of the government and without the

approval of a government authority; (2)

they negotiate contracts, without

guidance from any governmental

entities or organizations; (3) they make

their own personnel decisions including

the selection of management; and (4)

they retain the proceeds of their export

sales, use profits according to their

business needs, and have the authority

to obtain loans. In addition,

respondents’ questionnaire responses

indicate that company-specific pricing

during the POI does not suggest

coordination among exporters. During

the verification proceedings,

Department officials viewed such

evidence as sales documents, company

correspondence, and bank statements.

This information supports a finding that

there is a de facto absence of

government control of the export

functions of these companies.

Consequently, we have determined that

the five responding exporters have met

the criteria for the application of

separate rates. We determine, as facts

available, that non-responsive exporters

have not met the criteria for application

of separate rates. See also Comments 1

and 55.

China-Wide Rate

The petition filed on November 5,

1996 identified 28 PRC steel producers

with the capacity to produce cut-tolength carbon steel plate during the POI.

We received adequate responses from

the five respondents identified above.

We received certification of non-
61966 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

shipment with respect to seven

companies from the China Chamber of

Commerce for Metals and Chemicals

(CCCMC) in a letter dated January 22,

1997. Additionally, we received a letter

from one respondent factory indicating

shipments through parties which have

not responded to the questionnaire. See

Non-Responsive Exporters section

above. All other companies did not

respond to our questionnaire. Further,

U.S. import statistics indicate that the

total quantity and value of U.S. imports

of cut-to-length carbon steel plate from

the PRC during the POI is greater that

the total quantity and value of plate

reported by all PRC companies that

submitted questionnaire responses.

Given these discrepancies, we conclude

that not all exporters of PRC plate

responded to our questionnaire.

Accordingly, we are applying a single

antidumping rate—the China-wide

rate—to all exporters in the PRC other

than those receiving an individual rate,

based on our presumption that those

respondents who failed to respond

constitute a single enterprise under

common control by the PRC

government. See, e.g., Final

Determination of Sales at Less Than

Fair Value: Bicycles From the People’s

Republic of China, 61 FR at 19026

(April 30, 1996) (Bicycles).

Facts Available

This China-wide antidumping rate is

based on facts available. Section

776(a)(2) of the Act provides that ‘‘if an

interested party or any other person—

(A) withholds information that has been

requested by the administering

authority; (B) fails to provide such

information by the deadlines for the

submission of the information or in the

form and manner requested, subject to

subsections (c)(1) and (e) of section 782;

(C) significantly impedes a proceeding

under this title; or (D) provides such

information but the information cannot

be verified as provided in section 782(i),

the administering authority * * * shall,

subject to section 782(d), use the facts

otherwise available in reaching the

applicable determination under this

title.’’

In addition, section 776(b) of the Act

provides that, if the Department finds

that an interested party ‘‘has failed to

cooperate by not acting to the best of its

ability to comply with a request for

information,’’ the Department may use

information that is adverse to the

interests of that party as the facts

otherwise available. The statute also

provides that such an adverse inference

may be based on secondary information,

including information drawn from the

petition.

As discussed above, all PRC exporters

that do not qualify for a separate rate are

treated as a single enterprise. Because

some exporters of the single enterprise

failed to respond to the Department’s

requests for information, that single

enterprise is considered to be

uncooperative. Accordingly, consistent

with section 776(b)(1) of the Act, we

have applied, as total adverse facts

available, the highest margin calculated

for a respondent in this proceeding.

Based on our comparison of the

calculated margins for the other

respondents in this proceeding to the

margins in the petition, we have

concluded that the highest calculated

margin is the most appropriate record

information on which to form the basis

for dumping calculations in this

investigation since this rate is higher

than the highest rate in the petition.

Accordingly, the Department has based

the China-wide rate on information from

respondents. In this case, the highest

calculated margin is 128.59 percent.

Fair Value Comparisons

To determine if the cut-to-length plate

from the PRC sold to the United States

by the PRC exporters receiving separate

rates was sold at less than fair value, we

compared the ‘‘United States Price’’

(USP) to NV, as specified in the ‘‘United

States Price’’ and ‘‘Normal Value’’

sections of this notice.

United States Price

Export Price

We based USP on export price (EP) in

accordance with section 772(a) of the

Act, because the subject merchandise

was sold to unrelated purchasers in the

United States prior to importation and

because constructed export price

methodology was not otherwise

indicated. In accordance with section

777A(d)(1)(A)(i) of the Act, we

compared POI-wide weighted-average

export prices (EPs) to NV based on the

factors of production. See Company

Specific Calculation Memoranda,

October 24, 1997.

For those exporters that responded to

the Department’s questionnaire, we

calculated EP based on prices to

unaffiliated purchasers in the United

States. We made deductions, where

appropriate, for foreign inland freight,

ocean freight, marine insurance, and

foreign brokerage. See ‘‘Factor

Valuations’’ section of this notice.

Normal Value

A. Factors of Production

Because the Department has

determined that China is a non-market

economy (‘‘NME’’) country, we

calculated NV based on factors of

production reported by respondents in

accordance with section 773(c) of the

Act. Where an input was sourced from

a market economy and paid for in

market economy currency, we used the

actual price paid for the input to

calculate the NV in accordance with our

practice. See Lasko Metal Products v.

United States (‘‘Lasko’’), 437 F. 3d 1442,

1443 (Fed. Cir. 1994). We valued the

remaining factors using publicly

available information from India where

possible. Where appropriate Indian

values were not available, we for the

most part used publicly available

information from Indonesia. In one case,

when no appropriate value was

available from a country at the same

level of development, we used a U.S.

value. See Comment 19 (slag).

B. Factor Valuations

The selection of the surrogate values

was based on the quality and

contemporaneity of the data. Where

possible, we attempted to value material

inputs on the basis of tax-exclusive

domestic prices. Where we were not

able to rely on domestic prices, we used

import prices to value factors. To the

extent possible, we removed from the

import data import prices from

countries which the Department has

previously determined to be NMEs. As

appropriate, we converted import prices

for inputs to delivered prices. For those

values not contemporaneous with the

POI, we adjusted for inflation using

wholesale price indices (WPI), or

consumer price indices (CPI) published

in the International Monetary Fund’s

International Financial Statistics. For a

complete analysis of our selection of

surrogate values, see each company’s

Factors Valuation Memorandum dated

October 24, 1997. We have made the

following changes to surrogate valuation

since the preliminary determination:

To value coal, we used import prices

for the months contemporaneous with

the POI for which such data were

available from the Monthly Statistics of

the Foreign Trade of India (Monthly

Statistics). We also valued coal as two

separate categories: coking coal and

other coal. See Comment 16.

To value iron ore, for the final

determination, we have, to the extent

possible, treated different types of iron

ore as separate factors of production

(i.e., we treated the different types of

iron ore as separate inputs with separate

surrogate values). When a producer has

purchased any type of iron ore from one

or more market economy suppliers, we

have relied, to the fullest extent

possible, on the market economy

purchase prices which were verified by
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61967

the Department. When a given producer

sourced a particular type of iron ore

only locally, or imported only an

insignificant percentage of that type or

iron ore, we valued that type of iron ore

for that producer based on Indian

Monthly Statistics. See Comment 16.

To value steel scrap, we used import

prices for the months contemporaneous

with the POI for which such data were

available from the Monthly Statistics.

See Comment 17.

To value iron scrap, fluorite/fluospar,

ferromanganese, magnesium ore,

aluminum and coke, we used Indian

import values for the months

contemporaneous with the POI for

which such data were available from the

Monthly Statistics. See Comment 18.

To value scale, we used the United

States market price for slag, which is a

similar product. See Comment 19.

To value dolomite, we used import

prices for ‘‘agglomerated dolomite’’ from

the Monthly Statistics. See Comment 15.

To value stones, we used data from

the ‘‘Stone, Sand and Gravel’’ SITC 273

category from the United Nations

Commodity Trade Statistics. See

Comment 20.

To value silicon manganese, we used

import prices from the Monthly

Statistics. See Comment 21.

To value barge rates, we used a simple

average of the rates used in the

preliminary determination and river

rates from the Inland Waterways

Authority of India (part of the Ministry

of Surface Transportation of the

Government of India) submitted by

respondents. See Comment 25.

To value factory overhead, SG&A and

profit for all respondents and firms, we

calculated a simple average using the

financial reports of the TATA Iron and

Steel Company (‘‘TATA’’) and the Steel

Authority of India Limited (‘‘SAIL’’).

See Comment 3.

Verification

As provided in section 782(i) of the

Act, we verified the information

submitted by respondents for use in our

final determination. We used standard

verification procedures including

examination of relevant accounting and

production records and original source

documents provided by the

respondents.

Critical Circumstances

Section 735(a)(3) of the Act provides

that, in a final determination, the

Department will determine whether:

(A)(i) there is a history of dumping and

material injury by reason of dumped

imports in the United States or

elsewhere of the subject merchandise, or

(ii) the person by whom, or for whose

account, the merchandise was imported

knew or should have known that the

exporter was selling the subject

merchandise at less than its fair value

and that there would be material injury

by reason of such sales, and (B) there

have been massive imports of the

subject merchandise over a relatively

short period.

1. Importer Knowledge of Dumping

In determining whether there is a

reasonable basis to believe or suspect

that an importer knew or should have

known that the exporter was selling the

plate at less than fair value, the

Department normally considers margins

of 15 percent or more sufficient to

impute knowledge of dumping for

constructed export price (CEP) sales,

and margins of 25 percent or more for

export price (EP) sales. See, e.g.,

Preliminary Critical Circumstances

Determination: Honey from the People’s

Republic of China (PRC), 60 FR at 29824

(June 6, 1995) (‘‘Preliminary Honey’’)

and Notice of Final Determination of

Sales at Less Than Fair Value: Brake

Drums and Rotors from the People’s

Republic of China, 62 FR 9160 (Feb. 28,

1997) (‘‘Brake Drums and Rotors’’) .

Since the company specific margins

for EP sales in our final determination

for carbon steel plate are equal to or

greater than 25 percent for Anshan,

Baoshan, Shanghai Pudong and WISCO,

we have imputed knowledge of

dumping to importers of subject

merchandise from these exporters. We

found that Liaoning had margins below

25 percent. Because we found these

margins to be below 25 percent, we do

not impute knowledge of dumping to

importers of subject merchandise

reported by Liaoning. Therefore for

Liaoning, we find that critical

circumstances do not exist with respect

to the subject merchandise.

2. Importer Knowledge of Material

Injury

Pursuant to the URAA, and in

conformance with the WTO

Antidumping Agreement, the statute

now includes a provision requiring the

Department, when relying upon section

735(a)(3)(A)(ii), to determine whether

the importer knew or should have

known that there would be material

injury by reason of the less than fair

value sales. In this respect, the

preliminary finding of the International

Trade Commission (ITC) is instructive,

especially because the general public,

including importers, is deemed to have

notice of that finding as published in

the Federal Register. If the ITC finds a

reasonable indication of present

material injury to the relevant U.S.

industry, the Department will determine

that a reasonable basis exists to impute

importer knowledge that there would be

material injury by reason of dumped

imports during the critical

circumstances period—the 90-day

period beginning with the initiation of

the investigation. See 19 CFR 351.16(g).

If, as in this case, the ITC preliminarily

finds threat of material injury (see Cutto-Length Carbon Steel Plate from

China, Russia, South Africa, and

Ukraine, U.S. International Trade

Commission, December 1996), the

Department will also consider the extent

of the increase in the volume of imports

of the subject merchandise during the

critical circumstances period and the

magnitude of the margins in

determining whether a reasonable basis

exists to impute knowledge that

material injury was likely. As noted

below, the extent of the import increase

is nearly double that needed to find

‘‘massive imports.’’ Despite the fact that

the ITC found only threat of injury, we

find that the sheer volume of imports

entering the U.S. from the PRC would

have alerted importers to the fact that

the U.S. industry would be injured by

these dumped imports.

3. Massive Imports

When examining the volume and

value of trade flow data, the Department

typically compares the export volume

for equal periods immediately preceding

and following the filing of the petition.

Pursuant to 19 CFR 353.16(f)(2), unless

the imports in the comparison period

have increased by at least 15 percent

over the imports during the base period,

we will not consider the imports to have

been ‘‘massive.’’ In order to determine

whether there have been massive

imports of cut-to-length plate, we

compared imports in the three months

following the initiation of the

investigation with imports in the three

months preceding initiation.

In this case, imports of Chinese plate

increased 29 percent in the three

months following the initiation of the

investigation when compared to the

three months preceding initiation, or

nearly two times the level of increase

needed to find ‘‘massive imports’’

during the same period.

4. China-Wide Entity Results

With respect to companies subject to

the China-wide rate (i.e., companies

which did not respond to the

Department’s questionnaire), we are

imputing importer knowledge of

dumping based on the China-wide

dumping rate which is greater than 25

percent. As noted above, we have also

determined that importers knew or
61968 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

should have known that there would be

material injury to the U.S. industry due

to dumping by the China-wide entity

based on the ITC’s preliminary

determination and the fact that imports

in the comparison period are nearly

twice the level for finding ‘‘massive

imports.’’ In the absence of shipment

data for the China-wide entity, we have

determined based on the facts available,

and making the adverse inference

permitted under section 776(b) of the

Act because this entity did not provide

an adequate response to our

questionnaire, that there were massive

imports of certain cut-to-length carbon

steel plate by companies that did not

respond to the Department’s

questionnaire. Therefore, we determine

that critical circumstances exist with

regard to these companies.

5. Cooperating Respondents Results

Based on the ITC’s preliminary

determination of threat of injury, the

massive increases in imports noted

above, and the margins greater than 25

percent for Anshan, Baoshan, Shanghai

Pudong and WISCO, the Department

determines that critical circumstances

exist for Anshan, Baoshan, Shanghai

Pudong and WISCO. Because we found

margins to be below 25 percent, we do

not impute importer knowledge of

dumping for Liaoning. Therefore for

Liaoning, we find that critical

circumstances do not exist with respect

to the subject merchandise.

Index of Interested Party Comments

a. General Comments

1 Separate Rates

2 Reporting of Sales

3 Financial Data from Indian Annual

Reports

4 Offset Interest Expense by Short-term

Income

5 Exclusion of Packing and Other Expenses

from SG&A

6 Exclusion of Taxes from SG&A and

overhead

7 Adjustment of Overhead Rate

8 Energy Adjustment

9 Credit for By-Products

10 Treatment of Gases

11 Valuation of Self-Produced Inputs

12 Domestic Inland Freight Expenses

13 Regression-Based Analysis

14 Labor Factors

15 Valuation of Limestone, Dolomite and

Quicklime

16 Basket Categories—Coal and Iron Ore

17 Steel Scrap, Pig Iron Valuation

18 Valuation of Iron Scrap, Fluorite/

Fluorspar, Coke, Aluminum, Magnesium

19 Scale and Slag

20 Stones

21 Silicon Manganese

22 Electricity

23 Nominal vs. Actual Thickness

24 Alloy/Non-Alloy Steel Issue

25 River Freight

26 Ocean Freight Rates

27 Brokerage and Handling

28 Rejection of Untimely Factual

Information

29 Methodology Used for Selection of

Surrogate Values

30 Ministerial Error—Freight for Purchases

of Certain Inputs

b. Anshan Specific Comments

31 Valuation of Certain Inputs

32 Valuation of Ocean Freight for Input(s)

imported from Market Economy

Suppliers

33 Factors for Sintering Plant

34 Anshan’s Reporting Methodology

35 Freight Amount on SAL Invoices

36 Labor Plate Mill, Roughing Mill, Other

Sintering Mill

37 Material Inputs at No. 2 Steelmaking

Plant

38 By-Product Credits

39 Credit For By-Products Produced in

Coke Plant

40 Raw Materials for Sintering Shop

41 Moisture Content of a Certain Factor

42 Ministerial Errors

c. Baoshan Specific Comments

43 Product Specificity

44 Further Processing of By-Products

45 Inconsistencies discovered at

Verification

46 Freight Reporting

47 Valuation of Certain Input

48 Packing

d. Liaoning/Wuyang Specific Comments

49 Verification of Wuyang’s Labor

Allocations

50 Wuyang’s Standard Raw Material

Consumption Rates

51 Reliability of Labor Allocations

52 Treatment of Heavy Oil, Oxygen and

Coal Gas

53 Transportation from Factory to Port

e. Shanghai Pudong Specific Comments

54 Facts Available

55 Shanghai Pudong and Shanghai No. 1

56 Unreported Consumption of Input

57 Transportation Charges for Certain

Inputs

58 Unreported Inputs from Unaffiliated

Company

59 Gas Inputs

60 Adjustment of Labor Inputs

61 Assignment of Appropriate Surrogate

Values

62 Ministerial Errors

f. WISCO Specific Comments

63 Facts Available

64 By-Product Credits

65 Facts Available for a Certain Input

66 Financial Records

67 Product Specificity

68 Adjustment of Labor Inputs

69 Ministerial Error-River Freight

Interested Party Comments

Comment 1: Separate Rates

Petitioners contend that the

Department’s preliminary decision to

assign separate rates to the five

respondents who submitted

questionnaire responses in this case—

Anshan, Baoshan, Liaoning, WISCO and

Shanghai Pudong—cannot be sustained

in the final determination. Petitioners

note that under the Department’s policy,

exporters in non-market economies are

entitled to separate, company-specific

margins only when they can

demonstrate an absence of government

control over export activities, both in

law and in fact. Final Determination of

Sales at Less Than Fair Value: Sparklers

from the People’s Republic of China, 56

FR 20,588 (May 6, 1991) (‘‘Sparklers’’);

Silicon Carbide. They assert that none of

the PRC respondents has met this

burden of proof, whether with respect to

de jure or de facto control. Petitioners

claim that the PRC government controls

the steel industry.

Petitioners also claim that

respondents did not fully cooperate

with the Department. They note that

Baoshan only submitted certain

‘‘excerpts’’ from its annual report to the

Department at verification. In addition,

they contend that Anshan did not

provide certain reports and financial

statements. Petitioners argue that this

information would likely demonstrate

that respondents are not entitled to a

separate rate.

Respondents argue that petitioners’

arguments regarding separate rates are

factually and legally flawed and must be

rejected.

Respondents note that in the

preliminary determination, the

Department determined, respondents

were not subject to de jure or de facto

government control. They assert that

petitioners do not provide any valid

arguments or evidence that would

justify a reconsideration of this

determination. Respondents also note

the Department verified the accuracy of

this information. Accordingly, they

assert that the Department should affirm

its finding of an absence of de jure and

de facto control in the final

determination and should continue to

calculate a separate rate for each

respondent in the final determination.

Department’s Position: We agree with

respondents. The Department’s NME

separate rates policy is based upon a

rebuttable presumption that NME

entities operate under government

control and do not merit separate rates.

This presumption can be overcome by a

respondent’s affirmative showing that it

operates without de jure or de facto

government control.

We found that the respondents have

met their affirmative evidentiary burden

with respect to the Department’s

criterion of de jure control, because they

have provided copies of business

licences and the applicable government
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61969

statute granting them the right to

operate as independent companies.

We found that the respondents met

the evidentiary burden with respect to

de facto control as well. During

verification, the Department examined

the issue and found that information

provided by respondents supported the

contention that there is a de facto

absence of government control of the

export functions of the respondents. See

Separate Rates Memorandum, October

24, 1997. Consequently, we have

determined that the respondents have

met the criteria for the application of

separate rates.

We also disagree with petitioners’

assertion that Baoshan failed to provide

a complete annual report at verification.

The Department examined the entire

annual report at verification and

included in the verification exhibits

those segments applicable to the

investigation. We also disagree with

petitioners that Anshan did not

cooperate regarding submission of

certain documents; the Department

never requested the documents

petitioners claim Anshan refused to

provide.

Comment 2: Reporting of Sales

Petitioners contend that the

respondents do not appear to have

reported all of their sales for export to

the United States. They state that a

review of the quantity and value of

subject merchandise reported by the

respondents during the six-month POI

shows that sales of the subject

merchandise were under-reported as

compared to U.S. import statistics.

Petitioners contend that should the

Department find that any respondent

that has failed to cooperate by not

reporting sales of the subject

merchandise for export in its

questionnaire response should be

deemed a non-responsive exporter and

denied eligibility for consideration for a

separate rate.

Respondents contend that as part of

its investigation in this case, the

Department has conducted a thorough

examination of the sales made during

the period of investigation by each of

the respondents involved in this

proceeding. Respondents assert that the

Department’s examination confirmed

that the respondents have reported all of

their sales properly.

Department’s Position: We agree with

respondents. The Department

conducted verification of the sales

quantity and value totals submitted by

each of the respondents in the

questionnaire responses and we found

that all respondents properly reported

sales during the POI.

Comment 3: Financial Data From

Annual Reports of Indian Steel

Companies

Petitioners argue that the Department

should use financial data from annual

reports of major steel producers in the

principal surrogate country to calculate

factor values for profit, SG&A and

overhead. Petitioners claim that

representative data that most accurately

reflect the current earnings and

expenditures of Indian cut-to-length

plate (‘‘CTLP’’) producers can be found

in recent annual reports of the two

largest Indian steel plate producers: the

TATA Iron and Steel Company

(‘‘TATA’’) and the Steel Authority of

India Limited (‘‘SAIL’’). Petitioners state

that these reports closely correlate with

the POI and the industry being

investigated. Petitioners note that the

Department used a very similar

methodology in its selection of surrogate

values in the concurrent investigation of

imports of CTLP from the Ukraine.

Petitioners state that, in its preliminary

determination for both Azovstal and

Ilyich, the Department calculated COM,

SG&A, profit and overhead by averaging

data from the annual reports of two

companies in Brazil, the principal

surrogate country in that case. See

Preliminary Determination of Sales at

less Than Fair Value: Certain Cut-toLength Carbon Steel Plate from the

Ukraine, 62 FR at 31957, June 11, 1997.

In contrast, petitioners claim the most

recent data published in the Reserve

Bank of India Bulletin (dated April

1995) are for 1992–1993. They argue

there is no indication that any of this

combined data is audited or follows

Indian generally accepted accounting

principles (GAAP). Finally, they state

that the Reserve Bank data used in the

preliminary determination are not

specific to steel production and include

an unknown number of other

manufacturing and chemical companies.

Respondents agree that the use of

information from Indian steel producers

may be preferable to the rates obtained

from the Reserve Bank of India Bulletin.

However, respondents disagree with

petitioners’ suggestion that the

Department should limit its analysis to

SAIL and TATA when there is

information on the record for six such

companies: (1) TATA; (2) SAIL; (3)

Pennar Steels, Inc. (‘‘Pennar’’); (4)

Nippon Denro Ispat Ltd. (‘‘Nippon

Denro’’); (5) Visvesvaraya Iron & Steel

Ltd. (‘‘Visvesvaraya’’); and (6) Lloyds

Metals and Engineers, Ltd. (‘‘Lloyds’’).

Respondents agree that the

Department’s goal in selecting expense

rates should be to use representative

data that most accurately reflect the

current earnings and expenditures of

Indian cut-to-length plate producers.

Respondents claim that ignoring twothirds of the data that is on the record

would be clearly inconsistent with the

Department’s goal of obtaining

representative data—and would violate

the Department’s fundamental

obligation to calculate dumping margins

as fairly and accurately as possible.

Respondents also dispute petitioners’

claim that there is insufficient detail in

SAIL’s annual report to calculate an

overhead rate.

Liaoning and Wuyang argue that the

Department should calculate surrogate

overhead costs, SG&A expenses, and

profit using the actual data contained in

the annual financial reports of the six

Indian producers of flat-rolled steel

products that are on the record in this

investigation. They argue that the data

contained in these six annual reports are

more appropriate for calculating

overhead, profit and SG&A ratios than

the information from the Reserve Bank

of India Bulletin used in the preliminary

determination because the annual report

financial information is specific to

India’s steel industry. They state that

using factory-specific information also

would be consistent with the approach

taken by Commerce in a number of

other investigations. See Brake Drums

and Rotors, 62 FR 9160; Melamine

Institutional Dinnerware Products From

the People’s Republic of China, 62 FR

1708 (January 13, 1997); Tapered Roller

Bearings and Parts Thereof, Finished or

Unfinished, from the Hungarian

People’s Republic, 52 FR 17428 (May 8,

1987); Bicycles, 61 FR 19026.

Liaoning and Wuyang also argue that

the financial experience of these

companies represents a broad spectrum

of India’s flat-rolled steel industry, and

an analysis that omits certain companies

(or uses only the large or only the small

companies) would result in overhead,

profit and SG&A ratios that are not

representative of either India’s or

China’s steel industry. For example, not

all of the PRC respondents are largescale producers like the Indian

producers SAIL and TATA. Wuyang, in

particular, is a small steel mill, whose

annual sales are only ten percent of

those of TATA, and whose size (in

number of employees) is far more

similar to Visvesvaraya or Nippon

Denro. Moreover, they argue that

Wuyang does not have a blast furnace or

basic oxygen furnace. Wuyang’s

steelmaking relies entirely on electric

arc furnaces, and Wuyang’s overhead,

profit and SG&A ratios are much more

likely to be similar to those of Lloyds or

Pennar than those of SAIL or TATA.

They state that only an analysis that
61970 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

includes all the Indian steel producers

will result in surrogate overhead, profit

and SG&A ratios that are equally

representative of the surrogate

experience.

Liaoning and Wuyang argue that, in

calculating the ratios, Commerce should

not calculate weighted-average ratios for

the Indian steel producers. Rather,

Commerce should calculate overall

ratios using a straight average of the data

contained in the six companies’

financial statements. See Bicycles from

China, 61 FR at 19039 (when using the

Indian producers’ annual reports to

derive overhead, profit and SG&A,

Commerce calculated ‘‘a simple average

of the financial statements consistent

with [its] normal practice’’).

Petitioners argue the Department

should not rely on the data from Pennar,

Nippon Denro, Visvesvaraya or Lloyds

Metals at all, but instead use data from

SAIL and TATA only. Petitioners state

that the Department’s preference is to

derive its calculation of NME financial

ratios from firms that are significant

producers of merchandise that is

identical or most similar to that

produced by the respondents under

investigation. See Melamine

Institutional Dinnerware Products from

the People’s Republic of China, 62 FR

1708, 1712 (January 13, 1997); Brake

Drums and Brake Rotors from the

People’s Republic of China, 62 FR 9160,

9167 (Feb. 28, 1997) (Final

Determination) (financial data of two

companies not used because there was

no information indicating their

production of subject merchandise

during the POI); Polyvinyl Alcohol from

the People’s Republic of China, 61 FR

14057 at 14061 (March 29, 1996) (Final

Determination) (‘‘the Department seeks

to base surrogate values on the industry

experience closest to the product under

investigation’’) . Petitioners claim that

TATA and SAIL are companies that

produce cut-to-length carbon steel plate.

By contrast, petitioners claim Pennar

Steels, Nippon Denro, Visvesvaraya, and

Lloyds Metals do not produce subject

merchandise. Therefore, petitioners

argue that, because reliable financial

data is available from Indian carbon

steel plate producers, consistent with its

standard practice, the Department

should not rely on the data of other

companies that do not produce subject

merchandise.

Department’s Position: We agree with

petitioners. It is the Department’s

preference to base SG&A and profit

ratios on data from actual producers of

subject merchandise in the surrogate

country. See Brake Drums and Rotors,

62 FR at 9168. Of the six companies

whose annual reports were submitted

on the record, only SAIL and TATA

actually produce cut-to-length carbon

steel plate. In addition, SAIL and TATA

are the only two companies whose

annual reports reflect the costs of

producing steel and hot-rolled coils.

This is relevant as all five Chinese

respondents produce coils and steel that

are manufactured into plate. The

Department is not using the annual

report of Visvesvaraya because it is a

subsidiary of SAIL and, therefore, all its

financial information is already

incorporated into SAIL’s annual report.

In addition, Visvesvaraya produced

alloy and specialty steel, not cut-tolength plate. The Department is not

using Pennar’s annual report because

Pennar buys hot-rolled coils and

processes the coils into cold-rolled

strips. Thus, Pennar produces neither

steel nor cut-to-length plate. The

Department is not using the annual

report of Lloyd’s Metals or Nippon

because both produce sponge iron and

send the iron to an affiliate where it is

processed into hot-rolled coils (the

affiliates’ costs are not incorporated into

the annual reports). The coils are then

sent back to Lloyd’s and Nippon, where

they are processed into cold-rolled

products. Thus, like Pennar, neither

Lloyd’s Metal nor Nippon produces

steel or cut-to-length plate.

In contrast, the annual reports of both

SAIL and TATA list plate as products.

In addition, Iron and Steel Works of the

World, 12th edition lists both

companies as producers of plate. There

does appear to be a slight discrepancy

in regard to TATA. Page 49 of TATA’s

annual report indicates that TATA has

not produced any ‘‘plate’’ since 1993.

However, the physical characteristics of

the ‘‘plate’’ category for the production

statistics are unclear. It is possible that

products that the Department considers

plate could be included in the category

‘‘sheets’’. Furthermore, TATA’s annual

report shows significant production of

both steel and hot-rolled coils.

Consequently, for the final

determination, we have calculated

overhead, SG&A, and profit surrogate

values by using a simple average of

relevant data from the annual reports of

TATA and SAIL.

Comment 4: Interest Expenses Offset for

Short-Term Income

Liaoning and Wuyang argue that

Commerce should, when possible, offset

the interest and financial expenses of

Indian steel producers with their

corresponding operating income. That

is, when calculating SG&A, Commerce

should offset interest expenses by the

amount of short-term interest income.

See Brake Drums and Rotors, 62 FR at

9168 (Department reduced interest

expenses by amounts for interest

income and also allocated a portion of

‘‘other income’’ as short-term interest

income for those companies that did not

specify a breakdown of their nonoperating income); see also Frozen

Concentrated Orange Juice from Brazil;

Final Results of Antidumping Duty

Administrative Review, 55 FR 26721,

Comment 8 (June 29, 1990). Liaoning

and Wuyang state that merely adding

financial expenses to SG&A without

reducing those amounts by any

corresponding operating income would

overstate actual net financial expenses.

They claim that offsetting financial

expenses against financial gains reflects

more accurately the Indian producers’

actual financial cost of doing business.

Petitioners argue that Liaoning is

incorrect in arguing that the Department

should, when possible, offset interest

and financial expenses of Indian steel

producers with their corresponding

operating income. Petitioners argue that

neither Brake Drums and Rotors nor

Frozen Concentrated Orange Juice from

Brazil supports offsetting financial

expenses by operating income other

than short-term interest earned.

Petitioners state that in Brake Drums

and Rotors, where the respondents

made the same claim based on the

Orange Juice determination, the

Department offset interest expenses by

the amount of short-term interest

income. Petitioners cite Brake Drums

and Rotors, in which the Department

‘‘disagree{d} that operating income

* * * should be in the offset.’’ 62 FR at

9168. Petitioners claim that although the

Department did offset the interest

expense of certain producers by a

portion of their ‘‘other income’’ or

‘‘miscellaneous receipts,’’ this was done

merely as a means of allocating shortterm interest costs for those producers

whose financial statements did not

specify a breakdown of non-operating

income. Petitioners argue that interest

and financial expenses may be reduced

by amounts for interest income only if

the surrogate producers’ financial

reports note that the income was shortterm in nature.

Department’s Position: We agree with

petitioners. The Department will offset

interest expense by short-term interest

income only where it is clear from the

financial statements that the interest

income was indeed short-term in nature.

See Brake Drums at Rotors, 62 FR at

9168. For the annual report of SAIL, the

Department considered the following

items of the line item ‘‘Interest Earned’’

(page 31 of SAIL’s annual report) as

short-term interest income: (1) loans and

advances to other companies, (2) loans
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61971

and advances to customers, (3) loans

and advances to employees, and (4)

term deposits. Therefore, we offset

SAIL’s interest expense by these

amounts for the final determination. For

the annual report of TATA, we found

that the interest expense reported (page

24 of TATA’s annual report) was

already net of all short-term interest

income. Therefore, for the final

determination, we did not further offset

the interest expense.

Comment 5: Exclusion of Packing and

Other Expenses From SG&A Expenses

Liaoning and Wuyang also argue that,

when calculating SG&A, Commerce

should exclude all expenses incurred by

Indian steel producers that relate to

packing, as well as all other direct

selling expenses. They state that since

packing and direct selling expenses are

separately accounted for in the

Department’s dumping calculation,

these expenses must be excluded to

avoid double-counting. They argue that

Commerce should ensure that packing

and other direct selling expenses are not

double-counted by excluding the

categories ‘‘other expenses’’ and

‘‘miscellaneous expenses’’ in the Indian

financials from the surrogate SG&A

values. They cite the Preliminary

Determination of Sales at Less Than

Fair Value; Brake Drums and Rotors

from China, 61 FR 53190. In that case,

there was no indication from an Indian

producer’s financial statement used to

calculate SG&A as to which line item

expenses included a specific amount for

packing expenses. Commerce

considered packing expenses to be

included in the line item labeled

‘‘miscellaneous expenses’’ since ‘‘there

appears to be no other entry under

which such an expense could be

included.’’ Commerce therefore

removed the amount for ‘‘miscellaneous

expenses’’ from the SG&A calculation.

See Factor Valuation Memorandum,

Attachment 9, Shivaji Analysis, at 2.

Similarly, because there was no

indication from the financial statement

of another producer as to which line

item expenses included a specific

amount for packing expenses,

Commerce considered this expense to

be included in the line item labeled

‘‘other expenses,’’ and removed the

amount for ‘‘other expenses’’ from the

SG&A calculation. Id., Rico Analysis, at

2. Liaoning and Wuyang argue that in

this investigation, where the Indian

steel producers’ financial statements do

not indicate what amounts are related to

packing, Commerce similarly should

remove ‘‘other expenses’’ or

‘‘miscellaneous expenses’’ from the

calculation of SG&A in order to avoid

including an expense that is already

deducted from U.S. price.

Liaoning and Wuyang also argue that

Commerce should exclude from the

calculation of SG&A all direct selling

expenses incurred by the Indian steel

producers that normally are deducted

from export price and constructed

export price transactions when

calculating net U.S. price. They state

that direct selling expenses, such as

commissions, discounts, bank charges,

royalties, etc., should not be included in

normal value as part of the surrogate

SG&A ratio because they are deducted

from U.S. price. They claim that

Commerce cannot make a fair

comparison of normal value to export

price and constructed export price if it

includes direct selling expenses in

SG&A in the normal value calculation,

but deducts such expenses from EP and

CEP. See Torrington Co. v. United

States, 66 F.3d 1347, 1352 (Fed. Cir.

1995) (the antidumping statute requires

an ‘‘apples to apples’’ comparison).

They argue that to ensure a fair

comparison, Commerce therefore should

calculate an amount for SG&A that is

net of all direct selling expenses.

Petitioners argue there is no basis for

Liaoning’s claim that costs related to

packing would be included in either a

‘‘miscellaneous expense’’ of ‘‘other

expense’’ category. To the contrary,

petitioners argue that most steel

companies pack their merchandise at

the production site; thus, the labor and

materials associated with packing, if

there are any, will be included in cost

of manufacturing, not in SG&A.

Petitioners argue that for those

companies that pack merchandise at a

separate facility and assign the costs to

SG&A, packing is usually specified as a

discrete item.

Petitioners argue that even if some

companies were to include packing in a

miscellaneous or catch-all expense

category, it is clear the packing would

be just one of numerous expenses.

Petitioners claim it would therefore be

inappropriate—indeed distortive—to

deduct the entire amount of the reported

miscellaneous or other expense, as

respondents suggests.

Petitioners suggest that respondents’

reliance on the preliminary

determination in Brake Drums and

Rotors is misplaced. Petitioners claim

for its preliminary determination, the

Department removed the amount for

‘‘other expenses’’ for the Indian

producer RICO to account for packing

expenses. Brake Drums and Rotors, 61

FR 53190 at 53197 (October 10, 1996).

Petitioners state that in the final

determination, however, the Department

reversed itself. Petitioners state that the

Department expressly included RICO’s

‘‘other expenses’’ in its SG&A

calculations.

Petitioners argue that the Department

should reject respondents’ argument

that all direct selling expenses should

be excluded from its surrogate SG&A

calculation. Petitioners argue that the

purpose of the calculation of the SG&A

of the Indian producer is to determine

the ratio of selling, general and

administrative expense to the cost of

manufacture. Petitioners argue that all

expenses incident to selling, general and

administrative functions of the company

should be part of the SG&A calculation.

Even if the Department should decide

to exclude direct selling expenses,

petitioners argue, respondents’

classification of such expense is overly

broad. Petitioners argue that there is no

evidence that the suggested exclusions

were directly related to specific sales.

Petitioners argue that because the

Department has no information on the

specific amount of direct selling

expenses incurred by surrogate country

producers, the Department should

decline to make an item-by-item

evaluation of the Indian companies’

SG&A components. See Oscillating Fans

and Ceiling Fans from the People’s

Republic of China (‘‘Oscillating Fans’’),

56 FR 55271 at 55276 (Oct. 25, 1991)

(Final Determination); Tapered Roller

Bearings and Parts Thereof, Finished or

Unfinished, from the Socialist Republic

of Romania, 52 FR 17433, 17436 (May

8, 1987) (Final Determination).

Petitioners argue that since there is no

indication whether (or how much of)

such purported expenses are directly

related to specific sales, the Department

should reject respondents’ claim that

‘‘direct selling’’ expenses should be

excluded from the surrogate SG&A

ratios.

Department’s Position: We agree with

respondents that packing expenses

should be excluded from the SG&A

surrogate value to the extent possible.

However, we disagree that all ‘‘other

expenses’’ and ‘‘miscellaneous expense’’

categories should be excluded to

prevent double-counting from

occurring. If there is a line in an Indian

producer’s financial statement for

packing expenses, then the Department

should not include it in SG&A.

However, for both SAIL and TATA there

is no specific line item limited to

packing expenses. As petitioners state, it

would be unreasonable and distortive

for the Department to exclude all

‘‘other’’ or ‘‘miscellaneous’’ expenses

just because they might contain packing

expenses. These categories are

undoubtedly made up of many expenses

and may not include packing expenses
61972 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

at all. It is possible, as petitioners

suggest, that these companies included

packing expenses in their raw material

costs.

We note that the fact pattern in this

investigation differs from Brake Drums

and Rotors. We found that the ‘‘other’’

and ‘‘miscellaneous’’ categories listed in

SAIL’s and TATA’s annual reports are

too large to throw out simply because

they might contain packing. Our

examination of TATA’s other expenses

(page 26 of TATA’s annual report)

shows that it includes items such as

provision for proportionate premium on

redemption of non-convertible

debentures, expenses of issue of rights

shares, loss on discarded assets,

provision for diminution in value of

investments and exchange differences.

We find that there is no indication that

the other expenses category includes

packing. Our examination of SAIL’s

annual report indicates that there is no

explanation of the miscellaneous

category other than that it includes a

donation (page 36 of SAIL’s annual

report).

In regard to direct selling expenses,

we agree in part with respondents. We

note that in this investigation, all U.S.

sales were EP sales. Therefore, we have

not included, in our calculation of

SG&A and overhead, items for which we

made adjustments to U.S. price (i.e.,

movement expenses). However, we do

not agree with respondents that items

such as commissions, export sales

expenses, insurance, and royalties

should be excluded from our calculation

of SG&A and overhead. All of these

factors contribute to the SG&A and

overhead ratios of Indian steel

producers; therefore these items (i.e.,

commissions, export sales expenses,

insurance, and royalties) have been

included in our SG&A calculations for

the final determination. However, we

have not included, in our calculations of

SG&A and overhead values, items for

which we made adjustments to U.S.

price. To the extent possible, we only

deducted from U.S. price such items

such as movement expenses. For all five

respondents, we deducted brokerage

and handling from U.S. price. In

addition, we deducted from U.S. price,

insurance related to export sales for two

respondents.

Respondents claim we should exclude

commissions, export sales expense,

insurance, and royalty and ‘‘cess’’ as

direct selling expenses for SAIL.

Likewise, they claim we should exclude

royalty, insurance charges, and

commission/discounts as direct selling

expenses for TATA. We disagree with

respondents’ arguments. Because we did

not exclude such expenses from U.S.

price, we are including them in SG&A.

Comment 6: Exclusion of Taxes From

Overhead and SG&A

Liaoning and Wuyang also argue that

the Department should not include in

its calculation of the overhead and

SG&A ratios the expenses incurred by

Indian producers of steel that relate to

taxes paid to governmental authorities.

They state that, in past cases, the

Department’s practice has been to

construct a value for the subject

merchandise as if it were manufactured

by a producer in the surrogate country

for export. Pencils from the People’s

Republic of China, 59 FR at 55625 (Nov.

8, 1994). Hence, they argue, in

constructing values based on Indian

domestic prices, the Department must

eliminate excise duties, levies, and sales

taxes from those prices, as these items

are rebated upon export from India. See

Brake Drums and Rotors, 62 FR at 9163.

In addition, they state that the

Department has expressed a clear

preference for PAI that is tax exclusive.

See Disposable Lighters from the PRC,

59 FR at 64191, 64914 (Dec. 13, 1994);

Sebacic Acid from the PRC, 59 FR at

28053 (May 31, 1994). Therefore, they

argue Commerce should remove from

the surrogate overhead and SG&A

calculation any excise duty listed in the

financial reports. Brake Drums and

Rotors, 62 FR at 9164.

Department’s Position: We agree in

part with respondents. We have

deducted all excise duties from our

calculation of SG&A. However, we have

not excluded the line ‘‘rates and taxes’’

from our calculations. These taxes

represent the taxes and licenses,

property taxes and other miscellaneous

taxes that Indian steel producers incur

in the normal course of business and,

thus, should be a part of our SG&A

surrogate value.

Comment 7: Adjustment of Surrogate

Overhead Rate

Respondents state that in the

preliminary determination, the

Department adjusted the surrogate

overhead rate for all Chinese

respondents who reported any workers

as performing overhead or SG&A

functions that were not specifically tied

to the production of subject

merchandise. Respondents argue that

this adjustment was unnecessary

because (1) the surrogate overhead rate

used by the Department in the

preliminary determination included

overhead and SG&A labor and (2) the

Chinese respondents in this

investigation properly allocated labor

between direct labor, indirect labor,

factory overhead labor, and SG&A labor.

Respondents argue that the labor

adjustment made in the preliminary

determination arbitrarily and unfairly

reclassified all workers working in

plants involved in the production of

subject merchandise as direct

production workers, regardless of the

tasks performed. Respondents claim this

unfairly penalized Chinese respondents

for following normal Departmental

practice and excluding hours worked by

overhead and SG&A workers from the

hours reported for production of subject

merchandise. Respondents argue that as

a matter of principle and established

practice, the Department recognizes (1)

that some functions performed by

workers are properly classifiable as

factory overhead or SG&A functions and

(2) that the Department’s normal value

calculations in non-market economy

cases should include only workers

involved in the production of subject

merchandise—workers performing

overhead and SG&A tasks are not to be

included. See Carbon Steel Butt-Weld

Pipe Fittings from the People’s Republic

of China, 57 FR at 21058, 21064 (May

18, 1992) (direct labor hours for factory

level administrators and workshop level

supervisors found to be factory

overhead and SG&A, respectively);

Furfuryl Alcohol, 60 FR at 22544, 22548

(‘‘Since our surrogate value for factory

overhead includes indirect labor and it

is the Department’s practice to only

include the production labor related to

the subject merchandise, we have

revised our final calculations on labor to

avoid double counting labor.’’).

Respondents argue that the reason

overhead workers and SG&A workers

should not be included in the

Department’s calculations is that the

costs of such workers are already

reflected in the surrogate overhead and

SG&A rates applied by the Department

to the direct production costs incurred

by the non-market economy producers.

Respondents claim that they

undertook an analysis of the workers

employed in the facilities involved in

the production of subject merchandise

and attempted to classify workers in a

manner consistent with the

Department’s request for information

and the Department’s practice.

Respondents state that in the

questionnaires issued by the

Department in this investigation, the

Department required Chinese

respondents to report labor hours for

‘‘direct, skilled workers,’’ ‘‘direct,

unskilled workers,’’ and ‘‘indirect

workers’’—yet never provided specific

(or even illustrative) instructions

regarding how such workers should be
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61973

identified. They also claim the

Department never provided any

guidance regarding how ‘‘indirect’’

workers were to be distinguished from

‘‘factory overhead’’ workers or SG&A

workers. Respondents state that they

disclosed in their responses the rules

applied by each respondent for

classifying workers, as well as a

substantial amount of information

regarding the tasks performed by

workers in the production facilities.

Respondents argue that, under these

classification methodologies, the

dominant characteristic of workers

classified as ‘‘factory overhead’’ workers

is that these workers were responsible

for the maintenance of the facilities.

They also argue the dominant

characteristic of SG&A workers is that

they performed relatively high-level,

supervisory or administrative functions

within the facilities and were not

physically involved in the production

process.

Respondents claim that neither the

Department nor the petitioners have

objected to the classification

methodologies used by the Chinese

respondents to distinguish between

direct, indirect, factory overhead, and

SG&A workers. They also claim that

neither the Department nor the

petitioners have proposed any

modifications or alternatives to the

methodologies used by the respondents

to classify labor. Respondents claim

that, in light of these circumstances, it

is fair to conclude that the rules used by

the respondents to classify labor are

reasonable. Respondents claim, in other

words, that they were correct in

classifying maintenance workers as

factory overhead workers and in

classifying supervisors and

administrators as SG&A workers and in

excluding such workers from their

reported labor hours, (i.e., labor outside

SG&A and overhead Therefore,

respondents argue that any reclassification of workers is unnecessary.

In addition, respondents argue that

the Indian surrogate values for factory

overhead and SG&A rate reflect the

labor cost of maintenance and

administration. Accordingly, they claim

there is no reasonable justification for

‘‘adjusting’’ (i.e., inflating) such rates to

account for maintenance workers and

administrative personnel—since such

an adjustment would double-count

labor expenses.

Liaoning and Wuyang reiterate that

the Department should not, in the final

determination, make an adjustment to

increase the surrogate overhead value

for Wuyang to account for labor

resources dedicated to overhead. They

state that in its reported production

expense factors, Wuyang excluded from

its ‘‘labor’’ calculation certain workers

because of the Department’s policy for

calculating overhead and SG&A in nonmarket economy investigations. They

argue that these workers can be divided

into three categories according to the

relationship of their activities to the

subject merchandise: (1) activities

entirely unrelated to steel plate, in

particular the activities of the

automation research and development

division, which performs research and

development related to the company’s

consulting services in the field of

industrial automation; (2) activities

generally related to all products and

services (for example, the personnel

department); and (3) activities generally

related to steelmaking, in particular the

activities of the steel research and

development division. They argue with

respect to category (3), to Liaoning and

Wuyang’s knowledge the Department

has never included R&D in the factors

of production because doing so would

almost certainly double-count R&D

included in the surrogate values for

factory overhead and SG&A. See, e.g.,

Oscillating Fans, 56 FR at 55271

(Commerce Department agreed with

Respondent that product development

and manufacturing liaison costs are not

direct manufacturing costs to be

included in the factors of production

and that these costs are properly valued

using surrogate country data for factory

overhead). They state that because

surrogate overhead and SG&A values

already include R&D expenses, the

overhead value would double-count

R&D if the Department were to include

Wuyang’s R&D labor in the factors of

production. They also argue that the

Department has established an explicit

policy in NME cases of not adjusting the

surrogate values for R&D expenses

under any circumstances. In ChromePlated Lug Nuts from China, for

example, a respondent requested the

Department to exclude R&D expenses

from the surrogate value for factory

overhead on the ground that the

respondent did not actually incur R&D

expenses. They claim that the

Department refused to exclude the R&D,

citing the Department’s policy not to

make an ‘‘item-by-item evaluation of

overhead components.’’ 61 FR at 58514,

58517 (November 15, 1996), citing Pure

Magnesium and Alloy Magnesium from

the Russian Federation, 60 FR 16440

(March 30, 1995) and Tapered Roller

Bearings from Hungary, 52 FR at 17428

(May 8, 1987). They state that the

Department reiterated this policy in

Heavy Forged Hand Tools from China,

61 FR 46443 (September 3, 1996), when

the Department refused to deduct R&D

expenses from surrogate overhead

values based on data published in the

April 1995 Bulletin of the Reserve Bank

of India, the same source upon which

petitioners relied in their petition to

calculate factory overhead.

Liaoning and Wuyang conclude that

given the nature of the overhead and

SG&A activities described above and the

Department’s established policy in NME

cases, Commerce should not reallocate

any of Wuyang’s overhead labor to the

labor valued directly based on factors of

production. In the alternative, they

argue that if Commerce does adjust the

surrogate overhead value to account for

‘‘additional labor,’’ however, then

Commerce also should (1) make all

necessary corresponding adjustments to

Wuyang’s energy consumption factors,

because Wuyang allocated its energy

consumption based on its reported labor

hours; and (2) exclude ‘‘other

manufacturing expenses,’’ ‘‘other

expenses,’’ and ‘‘miscellaneous

expenses’’ from the surrogate overhead

and SG&A values to avoid double

counting labor expenses.

Petitioners state that this issue is not

relevant to the final determination

unless the Department again chooses to

rely on a source for the surrogate value

for overhead that does not include labor,

such as the Bulletin of the Reserve Bank

of India data. However if this is the case,

petitioners argue the Department should

make an adjustment along the same

lines as the one made in the preliminary

determination because the Department’s

methodology is sound.

Petitioners claim that respondents’

criticism of the Department’s approach

rests on several false premises: (a) that

the values from the Reserve Bank of

India Bulletin already included labor;

(b) that overhead and SG&A workers are

not to be included in the Department’s

calculations; (c) that the Department’s

labor adjustment to overhead arbitrarily

and unfairly reclassified all workers

working in plants involved in the

production of subject merchandise as

direct production workers, regardless of

the tasks performed; and (d) that the

Department would have acted

differently had it understood that not all

respondents had allocated a majority of

their workers to overhead and SG&A.

Petitioners also argue that normal

value in NME cases always includes a

component for overhead and SG&A.

Petitioners state that respondents do not

seem to disagree in principle with the

notion that the labor associated with

overhead belongs in the surrogate value

for overhead. Petitioners argue that it

then becomes a factual question of
61974 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

whether such labor is, or is not,

included in the surrogate data.

Petitioners argue that labor is not

included in the surrogate overhead

value calculated from the Reserve Bank

of India Bulletin.

Finally, petitioners argue,

respondents are wrong in focusing on

the Department’s statement in the

preliminary determination that

respondents allocated a majority of the

labor employed in their facilities to

overhead and selling and general

administrative tasks. Petitioners argue it

is plain from the preliminary

calculation memoranda that the

Department’s decision to adjust

overhead for labor was not dependent

on a respondent allocating a ‘‘majority’’

of its workers to overhead and SG&A.

Petitioners argue that respondents

have presented no cognizable basis for

challenging the Department’s practice of

adjusting the surrogate overhead value

for labor where such value does not

already include overhead labor.

Petitioners state that if, in the final

determination, the Department uses a

surrogate overhead value other than the

value derived from the Reserve Bank of

India Bulletin, and if that alternative

value likewise does not include all

overhead labor, a similar adjustment

should be made.

Department’s Position: Because the

Department is now using a simple

average of the annual reports of SAIL

and TATA, rather than the Reserve Bank

of India Bulletin, to calculate our

surrogate overhead and SG&A values

the question of whether or not the data

in that publication included overhead

labor is now moot. We agree with

petitioners that to the extent that our

new surrogates do not include overhead

or SG&A labor, adjustments to these

values are appropriate.

SAIL’s annual report explicitly states

that ‘‘employee remuneration and

benefits’’ are not included in the

overhead category ‘‘repairs and

maintenance.’’ Nor is there any

indication that ‘‘employee remuneration

and benefits’’ would be included in the

following overhead categories: ‘‘stores

and spares,’’ ‘‘joint plant committee,’’

‘‘insurance,’’ ‘‘rent,’’ ‘‘royalty and cess,’’

‘‘cash discount,’’ ‘‘conversion charges,’’

or ‘‘water charges.’’ However, ‘‘handling

expenses,’’ which is broken down into

handling of raw materials, finished

goods, and scrap recovery, would

appear to consist entirely of overhead

labor. In addition, there are SG&A

categories that appear to account for

SG&A labor, such as, ‘‘directors fee,’’

‘‘remuneration to auditors,’’ ‘‘cost audit

fee,’’ and ‘‘miscellaneous.’’ It is also

likely that the following SG&A

categories contain some labor: ‘‘export

sales expense,’’ ‘‘security expenses,’’

‘‘traveling expenses,’’ ‘‘training

expenses.’’ Therefore it appears that the

surrogate overhead and SG&A values

calculated from SAIL’s annual report

contain overhead and SG&A labor.

TATA’s annual report also explicitly

states that overhead items ‘‘stores

consumed,’’ ‘‘repairs to buildings,’’

‘‘repairs to machinery,’’ and ‘‘relining

expenses’’ exclude amounts charged to

wages and salaries. There is no

indication that the other overhead

categories, ‘‘rents,’’ ‘‘royalty,’’

‘‘insurance charges,’’ ‘‘joint plant

committee funds,’’ ‘‘conversion

charges,’’ and ‘‘depreciation’’ include

overhead labor. TATA’s material

handling charges appear to be included

with freight charges in the category

‘‘freight and handling charges’’ which

we allocated to COM as they are part of

TATA’s cost. We have no way of

determining how much of this figure

should be allocated to handling charges,

and thus, to overhead. Therefore, we are

including the entire amount in COM.

With regards to SG&A labor, the annual

report indicates that managerial

remuneration is included in the SG&A

category ‘‘other expenses.’’ Therefore, it

appears that the surrogate overhead and

SG&A values calculated from TATA’s

annual report contain SG&A labor,

however, it is inconclusive whether or

not it contains overhead labor.

As stated above, the Department’s

surrogate SG&A and overhead values are

based on a simple average of the values

calculated from the annual reports of

TATA and SAIL. Therefore, since both

the annual reports clearly contain SG&A

labor, it is not necessary for the

Department to make an adjustment to

our SG&A surrogate value to account for

SG&A labor.

As mentioned above, the overhead

surrogate value calculated from SAIL’s

annual report does contain overhead

labor, however it is inconclusive

whether the overhead surrogate value

calculated from TATA’s annual report

contains overhead labor. Therefore, our

simple average of the two contains some

overhead labor but it is not clear

whether it contains sufficient overhead

labor. To ensure that no double

counting occurs, the Department is

faced with the options of (1) excluding

from its calculation of overhead all SAIL

and TATA income statement line items

that might include overhead labor and

making a similar overhead adjustment

as in the preliminary determination (in

the preliminary determination, the

Department adjusted the overhead

surrogate value using ratios developed

from respondents reported overhead

and direct workers), or (2) leaving the

overhead surrogate as calculated and

not making the overhead labor

adjustment. The Department considers

it more reasonable to leave the overhead

surrogate as calculated. The Department

fears that excluding all categories that

might include overhead labor would

unfairly exclude many costs that should

be included in our overhead surrogate.

Therefore, given the Department’s new

surrogate values for SG&A and

overhead, we did not make any

adjustments for overhead or SG&A labor

in the final determination.

Comment 8: Overhead Energy

Adjustment

Respondents argue that the

Department’s overhead energy

adjustment was unnecessary and

improper in the context of this

investigation, because (1) virtually all

energy used by the Chinese respondents

is already included in the Department’s

normal value calculation, and (2) the

calculation used by the Department

bears no relationship to any reasonable

‘‘overhead energy’’ costs incurred in the

production of subject merchandise.

Respondents state that the only energy

inputs treated as overhead by the

Department were water, compressed or

forced air, and steam. Respondents

claim that each of the overhead energy

items is relatively inexpensive so the

overall cost of ‘‘overhead energy’’ is

negligible. They argue no adjustment is

necessary in the final determination.

Respondents argue that the

adjustment used by the Department in

the preliminary determination was

arbitrary and improper. They claim the

costs calculated using this methodology

bear no relationship to any reasonable

cost of overhead energy. They contend

that the purpose of the overhead energy

adjustment made in the preliminary

determination was to include a portion

of overhead that was apparently missing

from our selected surrogate. The Reserve

Bank of India Bulletin overhead data

does not contain any items that would

lead the Department to believe that

overhead energy was accounted for.

They claim there is no reasonable basis

to believe the adjustment used by the

Department would provide a reasonable

estimate of the costs of providing water,

steam, and compressed air to the steel

production facilities of the Chinese

respondents and therefore should not be

used in the final determination.

Petitioners argue that, had the

Department not made some kind of

adjustment for the omission of power

and fuel from the overhead calculation,

it would have improperly ignored

respondents’ overhead energy costs.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61975

Petitioners argue there is no support on

the record for respondents’ belated

claim that these costs are ‘‘negligible’’,

because they have not been reported.

Petitioners state that the point of the

adjustment is to develop a reasonable

estimate of the overhead energy costs of

producers of plate in the surrogate

country. Petitioners do agree that the

methodology used by the Department is

arbitrary, but the solution proposed by

respondents (i.e., ignoring the issue

altogether) is not adequate. Instead,

petitioners claim if the Department

continues to use data from the Reserve

Bank of India Bulletin for overhead, the

energy adjustment should be

accomplished by other means. Because

the record data from Indian sources

does not allow the Department to

precisely distinguish overhead energy

from direct energy inputs used in the

steel industry, petitioners argue the

Department should develop a ratio from

the cost accounting data provided by

Geneva Steel in the petition. Consistent

with the usual cost accounting practices

of the steel industry, petitioners argue

the petition separately sets forth direct

energy inputs and overhead energy

consumption. From this information,

petitioners suggest the Department can

determine the ratio of Geneva’s

overhead energy costs to direct energy

costs. Petitioners argue that the

surrogate value for overhead should be

increased by an amount equal to the

above ratio times the individual

respondent’s total surrogate costs for

direct inputs of fuels, utilities, and

gases.

Petitioners point out that, like the

adjustment to overhead for additional

labor, the overhead energy adjustment is

largely a function of the Department’s

choice of the source for the overhead

surrogate value. Petitioners argue that

regardless of the Department’s choice of

overhead surrogate value in the final

determination, it should carefully

examine whether overhead energy is

included; if it is not, the Department

should make an overhead energy

adjustment similar to the one just

described.

Department’s Position: We agree with

petitioners that this issue is tied to the

Department’s choice of the source for

the overhead surrogate value. As

discussed above, we have chosen a

simple average of the annual reports of

SAIL and TATA as the source for the

overhead surrogate value. We then

examined whether overhead energy was

included in the overhead values

reported in those reports. Using a

methodology similar to that used in the

preliminary determination, we excluded

the categories ‘‘power and fuel,’’ ‘‘fuel

oil consumed,’’ and ‘‘purchase of

power’’ from our value for overhead

since we are valuing these items as

direct inputs. For SAIL, we included in

our overhead calculation the item

‘‘water charges’’ since the Department

normally treats water as an overhead

expense. In addition, we consider it

likely that additional overhead energy is

included in the overhead item ‘‘stores

and spares.’’ We allocated the item

‘‘stores and spares’’ to overhead. For

TATA, there is no item that is entirely

comprised of overhead energy.

However, we consider it likely that

some overhead energy is included in the

overhead item ‘‘stores and spares.’’

As with our calculation of overhead

labor described in Comment 7, the

simple average of SAIL’s and TATA’s

calculated overhead values contains

some overhead energy but it is not clear

whether it contains sufficient overhead

energy. To ensure that no double

counting occurs, the Department is

faced with the options of (1) excluding

from its calculation of overhead all SAIL

and TATA income statement line items

that might contain overhead energy and

making an appropriate overhead energy

adjustment, or (2) leaving the surrogate

overhead value as calculated and not

making an adjustment for overhead

energy. The Department considers it

more reasonable to leave the overhead

surrogate as calculated. As with labor,

the Department fears that excluding all

categories that might include overhead

energy would unfairly exclude many

costs that should be included in our

overhead surrogate. Therefore, given the

Department’s new surrogate value for

overhead, we did not make any

adjustment for overhead energy in the

final determination.

Comment 9: Credit for By-Products

Respondents argue the Department

must credit respondents’ cost of

manufacture for by-products before

applying the factory overhead rate in the

final determination. They argue that in

the preliminary determination, the

Department treated costs and credits

asymmetrically by deducting byproducts from the cost of manufacture

after applying the factory overhead rate

and without including factory overhead

in its calculations of by-product credits.

Department’s Position: We agree with

respondents. In calculating the cost of

manufacture, the Department uses a net

material amount that we derive by

deducting the by-products from gross

materials. Therefore, we credit byproducts before we calculate the cost of

manufacture and overhead.

Comment 10: Treatment of Gases

Respondents argue that the

Department should treat industrial gases

as overhead for the final results.

Respondents argue that, in deciding

whether to treat industrial gases as

overhead or direct material inputs, the

fundamental issue is how such

materials are treated by Indian steel

producers. Respondents state that if the

standard practice for Indian firms is to

treat industrial gases as overhead, then

those values must already be included

in the surrogate value for factory

overhead that the Department is using.

Respondents claim that, if this is the

case, including industrial gases as a

direct input as well as in overhead

would result in double-counting.

Respondents argue that a review of

the financial information of Indian steel

producers on the record reveals that the

standard practice for Indian steel

companies is to include industrial gases

as part of factory overhead. Respondents

claim that none of the annual reports of

Indian steel companies provided in this

investigation treated industrial gases as

either a material input or an energy

source. Thus, respondents argue,

including the cost of those gases as a

direct input in the final calculations

would double-count those costs.

Petitioners argue that industrial gases

used in iron and steel making should be

treated as direct energy inputs, and not

as overhead. Petitioners state that unless

a gas is used specifically for overhead

energy (e.g., to heat a facility) it should

not be characterized as overhead.

Petitioners argue that gases such as

oxygen are important inputs in the steel

making process, serving both as refining

agents and as an energy source.

Petitioners argue that valuing these

gases as direct inputs would not result

in double-counting as respondents

claim. Petitioners state that worksheets

provided by the Department in its

Factor Valuation Memorandum show

that these energy inputs are not

included in factory overhead

(Commerce specifically excluded

‘‘power and fuel’’ expenses before it

calculated the overhead rate for the

preliminary determination).

Accordingly, petitioners argue there is

no double counting.

Petitioners argue that the respondents’

contention that the standard practice for

Indian steel companies is to include

these energy inputs as part of factory

overhead is incorrect. Petitioners claim

that respondents’ statement that ‘‘none

of the annual reports * * * treated

industrial gases as either a material

input or an energy source’’ is incorrect.

Petitioners argue that the listing for
61976 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

‘‘Others’’ in the power and fuel cost of

SAIL most likely includes industrial

gases. Petitioners argue that neither

SAIL’s annual report nor TATA’s

provides any information which

supports respondents’ contention that

industrial gas inputs should be included

in factory overhead.

Petitioners state that Indian

accounting practices actually require

that energy inputs be treated as direct

inputs. They argue that in Brake Drums

and Rotors, the Department found that,

under Indian GAAP, inputs may be

treated as factory overhead only if they

are not consumed in the production

process. See 62 FR at 9160, 9169 (citing

the Compendium of Statements and

Standards published by the Institute of

Chartered Accountants of India).

Petitioners argue that in this case there

can be no dispute that these energy

inputs are consumed in the production

process. Accordingly, petitioners argue

that respondents’ arguments regarding

the inclusion of energy inputs in factory

overhead should be rejected.

Department’s Position: We agree with

petitioners. There is no indication in the

annual reports of SAIL and TATA that

they treat industrial gases as overhead

energy costs. We have therefore valued

these gases as direct inputs and

excluded the line items ‘‘power and

fuel,’’ ‘‘fuel oil consumed,’’ and

‘‘purchase of power’’ from our overhead

calculations to ensure that no double

counting of these costs occurs.

Comment 11: Valuation of SelfProduced Inputs

Respondents argue the Department’s

primary goal and responsibility in

selecting surrogate values in

investigations involving producers in a

non-market economy (NME) is to

determine—as accurately, fairly, and

predictably as possible—the costs that

would have been incurred in producing

the subject merchandise if the costs of

such production had been determined

by market forces. See Oscillating Fans,

56 FR at 55271, 55275, cited with

approval in Lasko, 43 F.3d at 1442. To

do so, the Department requires

respondents to report the actual inputs

they use in the production of the subject

merchandise, and then values those

inputs at the price for those inputs in a

comparable market economy. In this

case, the Department is calculating a

normal value for steel plate based on the

actual inputs used by the Chinese

producers to manufacture steel plate

and the values for those inputs

primarily in India.

Respondents claim that the same

rationale that leads the Department to

calculate normal value for steel plate

based on the actual factors of

production also requires that it use a

similar methodology for self-produced

inputs (such as oxygen, nitrogen, argon

and similar gases) ‘‘ at least when the

necessary information is available on

the record. In this case, respondents

argue the Department does have verified

information on the actual inputs used to

produce the oxygen, nitrogen, argon and

similar gases that are used in steel plate

production by Anshan, Baoshan,

Shanghai Pudong and WISCO.

Respondents argue the Department

should therefore calculate the value for

those gases based on the actual inputs.

Respondents state that in the

preliminary determination, the

Department ignored the actual inputs

used to make these gases, and instead

valued these gases based on price

quotations for such gases in India.

Respondents claim such an approach

would be appropriate only if the

Department were to assume that it is

more accurate to use the prices in India

for those gases than to build up the

values for those gases from the actual

inputs used to produce them.

Respondents claim that assumption is

flatly inconsistent with the entire

methodology used in non-marketeconomy cases, and cannot be correct.

Respondents argue that, if previous

assumption were correct, then it would

follow that Commerce should value

steel plate based on price quotations

from Indian suppliers rather than to

build up a normal value based on the

actual factors of production used in

manufacturing steel plate.

Petitioners argue that the values

assigned to industrial gases used by

respondents should be based on Indian

surrogate values and not respondents’

factors of production for these gases.

Petitioners claim that the respondents’

factors of production cannot be used by

the Department because they are

inherently unreliable. Petitioners argue

that it is only where the Department can

determine that a non-market economy

producer’s input prices are reliable that

accuracy, fairness and predictability are

enhanced by using those input prices.

See Oscillating Fans, 56 FR at 55271

and 55274–75.

Petitioners claim that respondents

used the Department’s August 18, 1997

request for spreadsheets used in

calculating the factors of production as

a chance to cure existing deficits in the

record regarding respondents’ industrial

gas production by submitting complete

factor of production data for ‘‘certain’’

gases. Petitioners claim it would be

unfair for the Department to use this

mostly unverified data to calculate

factors of production for industrial gases

because petitioners have not been

afforded the opportunity to comment on

these data and the Department did not

have ample opportunity to consider

whether to verify the data pertaining to

industrial gases.

Petitioners argue that respondents did

not, as they contend, submit complete

factor information for the industrial

gases used in the steelmaking processes

in their questionnaires or supplemental

questionnaires. Petitioners claim that

the cites to questionnaire and

supplemental questionnaire responses

did not adequately identify the data

necessary to sustain respondents’

contention that they produce all of the

industrial gases they use. Petitioners

also argue that the Department’s

findings at verification regarding gas

usage and production by respondents

further calls into question the reliability

of respondents’ industrial gas

production factor information. In

addition, petitioners argue that

respondents have not put any

information on the record regarding the

ownership of their gas plants. For these

reasons, petitioners argue that the

respondents’ factors of production for

these gases are unreliable and should

not be used for the final determination.

Department’s Position: We agree that,

for some respondents, the value of the

subject merchandise in this case is more

accurately measured if the selfproduced gases are valued based on the

actual inputs used to make these gases.

In NME cases, the Department selects

the surrogate values that reflect best the

costs that would have been incurred in

producing the subject merchandise if

the costs of such production had been

determined by market forces. It is the

Department’s practice to collect data on

all direct inputs actually used to

produce the subject merchandise,

including any indirect inputs used in

the in-house production of any direct

input.

To accurately value all direct and

indirect inputs, the Department requires

sufficient time to analyze usage rates

and select appropriate surrogate values.

It is also important that interested

parties have the opportunity to

comment on the reported usage rate and

surrogate value proposed by the

Department. For these reasons, it is

important that the Department receives

the respondents in a timely manner. In

the instant case, although WISCO

claimed that the inputs for the

production of this gas were reported in

its April 14, 1997 submission, the actual

information was not submitted until

seven days before the verification. The

later submission was untimely because

the Department had specifically
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61977

requested that information and provided

a deadline which was more than two

months earlier. The fact that this

information was verified does not

commit the Department to consider it

timely in its final determination.

Similarly, Baoshan’s April 14, 1997

supplemental response claimed to have

reported the inputs used in selfproducing a certain gas, but the actual

data were absent from the specified

appendix. Baoshan claims that data on

this gas and its material inputs can be

found in a different appendix and this

information was verified. However, that

appendix responds to the Department’s

question on energy consumption and

contained a Baoshan Energy Department

report for only the month of July.

Furthermore, no labor factors involved

in the self-production of oxygen are

included on the worksheet. The Energy

Department report was later verified for

the integrity of the reported energy

consumption rather than for production

of this gas. Not until Baoshan’s August

21, 1997 submission, which reached the

Department after verification, did

Baoshan provide, in a usable format, the

complete factors for the gas it selfproduces.

The Department is rejecting WISCO

and Baoshan’s production data for their

self-produced gases due to untimeliness

and lack of consistency. For WISCO and

Baoshan, therefore, we are continuing to

use the Indian surrogate values that

were used for the preliminary

determination for their self-produced

gases.

Anshan reported gases which were

self-produced and their production

inputs. Shanghai Pudong reported three

factors as being as self-produced and

provided their inputs. For these two

respondents, the Department used their

reported production inputs for valuing

the factors for producing the subject

merchandise.

We disagree with the petitioner’s

claim that the verification of the selfproduced gases showed them to be

unreliable for Anshan and Shanghai

Pudong. These data were submitted on

the record in a timely fashion and were

verified. The verification report contains

no mention of discrepancies in these

data.

Comment 12: Domestic Inland Freight

Expenses

Liaoning and Wuyang maintain that if

the Department uses Indian Monthly

Statistics to derive surrogate values for

raw material inputs, it should not add

to these costs an extra amount for

domestic inland freight expenses.

Respondent argues that in Sigma

Corporation v. the United States, 117

F.3d 1401 (Fed. Cir. July 7, 1997)

(‘‘Sigma’’), the U.S. Court of Appeals for

the Federal Circuit (‘‘CAFC’’) ruled that

to do so would overstate the value of the

freight component of normal value. In

making its decision, they argue, the

Court determined that the Department’s

methodology of adding a constructive

freight charge on top of the import

prices double counted a substantial

component of the total freight expense.

These respondents conclude that the

Court’s holding in Sigma is applicable

to this case, and if the Department uses

Indian Monthly Statistics to derive

surrogate values for raw material inputs,

it should not add a constructive freight

charge on top of these prices for the

shipment of such raw materials from

Chinese suppliers to the respondents in

this investigation.

Petitioners argue that, in Sigma, the

CAFC did not preclude the Department

from making an adjustment to account

for domestic freight. Petitioners argue

that, to the contrary, the Court expressly

determined that the Department must

devise an appropriate methodology to

account for the freight component

without double counting. Petitioners

add that it is obvious that, depending on

distances and modes of transportation,

the domestic freight expense to

transport an input from a supplier in

China to the producer of the subject

merchandise can be considerably greater

than the freight included in the Indian

Monthly Statistics. Petitioners maintains

that, as the Sigma Court recognized, the

Department had a statutory duty to

select a methodology that produces

‘‘reasonably accurately estimates of the

true value of the factors of production.’’

Petitioners conclude that this includes a

proper accounting of the domestic

inland freight and that, accordingly, the

Department should devise an

appropriate methodology to account for

the freight charges from the Chinese

suppliers of the input to Wuyang’s

factory without double counting.

Department’s Position: We agree with

petitioners and, in part, with

respondents. The CAFC’s decision in

Sigma requires that we revise our

calculation of source-to-factory

surrogate freight for those material

inputs that are valued on CIF import

values in the surrogate country. The

Sigma decision states that the

Department should not use a

methodology that assumes import prices

do not have freight included and thus

values the freight cost based on the full

distance from domestic supplier to

producer in all cases. Accordingly, as in

the Notice of Final Determination of

Sales at Less Than Fair Value: Collated

Roofing Nails from the People’s

Republic of China, 62 FR at 51410

(October 1, 1997) (‘‘Nails’’), we have

added to CIF surrogate values from

India a surrogate freight cost using the

shorter of the reported distances from

either the closest PRC port of export to

the factory, or from the domestic

supplier to the factory. Where the same

input is sourced by the same producer

from more than one source, we used the

shorter of the reported distances for

each supplier.

Comment 13: Regression Based Analysis

Some respondents argue that the

Department should use its regressionbased analysis to value labor.

Respondents argue that the

Department’s current policy, as stated in

its revised regulations, is to use a

regression-based wage rate, in order to

achieve a fairer, more accurate, and

more predictable result. Respondents

state that as the Department explained

in the commentary accompanying its

revised regulations: ‘‘[B]y combining

data from more than one country, the

regression-based approach will yield a

more accurate result. It also is fairer,

because the valuation of labor will not

vary depending on which country the

Department selects as the economically

comparable surrogate economy. Finally,

the results of the regression analysis are

available to all parties, thus making the

labor value in all NME cases entirely

predictable.’’ See Antidumping Duties,

Countervailing Duties, 62 FR 27296,

27367 (May 19, 1997) (final rule).

Respondents argue that the

Department has stated that these revised

regulations ‘‘serve as a restatement of

the Department’s interpretation of the

requirements of the [Tariff] Act as

amended by the URAA,’’ even in cases

which are not directly governed by the

new regulations. See 19 CFR § 351.701.

Thus, respondents argue the new wage

rate methodology set forth in the revised

regulations (and in the Department’s

June 2, 1997, Policy Memorandum)

should be applied in this case.

Petitioners argue the Department

should reject the suggestion that labor

inputs should be valued using the new

regression-based methodology described

in the Final Rule. Petitioners claim that:

(1) unless the regression model is

limited to data from surrogate countries

that are at a level of economic

development similar to China’s, the new

labor valuation methodology set forth in

19 CFR § 351.701(c)(3) is contrary to

section 773(c)(4) of the Act, 19 U.S.C.

1677b(c)(4), (2) it fails to account

adequately for labor costs other than

wages, (3) by its own terms, the new

regulation does not apply to this

investigation, (4) it has not been the
61978 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

Department’s practice to use the

regression methodology in NME cases

initiated prior to the effective date of the

new regulations; and (5) the new

regression model has not yet been

published in accordance with the

requirements of the Administrative

Procedure Act.

Petitioners also urge the Department

not to use the labor cost methodology

used in the preliminary determination.

Petitioners state that, in the preliminary

determination, the Department applied

a single labor rate for the three levels of

labor (skilled, unskilled and indirect)

that all respondents used in calculating

their labor factors. They state that in this

case, the Department used data from the

Ministry of Labour, Government of India

Annual Report 1994–95 which contains

1990–91 data for the average labor cost

in rupees per man-day worked for the

‘‘Basic Metals and Alloys Industries.’’

Petitioners argue that the labor data

found in the Report and used by the

Department in its preliminary

determination are aberrational. First,

they note that these data are

approximately six years old. Second,

they point out that the Report does not

provide any information as to which

industry sectors or companies are

included in the category ‘‘Basic Metal

and Alloys Industries.’’ Third, they

argue that the methodology used by

companies or industry associations to

obtain the data submitted to the

Ministry of Labour and compiled for its

Report is unknown. As a result of the

above, petitioners argue that it is not

clear whether the labor rate provided in

the Report closely reflects the average

labor rate paid by a large integrated steel

producer in India.

Instead of the regression-based model

described in its new regulations or the

approach used in the preliminary

determination, petitioners argue that the

Department should instead use a labor

surrogate value methodology based on

data provided in TATA and SAIL’s

1995–1996 Annual Reports to calculate

a surrogate labor value. Petitioners

claim that a labor factor value based on

the actual wages paid to the employees

of a large integrated steel producer in

the surrogate country is a more accurate

means of calculating the labor value

than either of the two approaches

previously described. Furthermore,

petitioners argue that use of a labor

value calculated from SAIL and TATA

financial information would be

consistent with the use of COM, SG&A

and profit values derived from annual

reports of these companies.

Liaoning and Wuyang argue that, as a

surrogate value for labor, Commerce

should use the average labor cost per

man-day worked for the Basic Metal and

Alloys Industries as reported in the

Ministry of Labour Government of India

Annual Report 1994–95, which

Commerce used in the preliminary

determination. They claim Commerce

should not calculate the surrogate labor

value using data contained in the

financial statements of Indian producers

of steel as recommended by petitioners

because such a methodology is both

unreasonable and unreliable.

First, they argue that the salary and

wage data listed in the Indian financial

statements include high remuneration

for company management personnel

and other salaried workers, rather than

being specific to line production

workers, which is the group for which

a surrogate labor valuation is sought.

They claim the calculation of any

surrogate labor rate based on such

figures therefore would grossly inflate

the Indian labor rate for production

workers in the steel industry.

Second, they argue that any

relationship between the annual

expenditure of a company for wages,

salaries, etc. and the absolute number of

employees of any given day during the

year is entirely speculative. They state

that the Indian steel producer financial

statements on the record provide

information regarding yearly employee

remuneration and benefit amounts, but

none of the financial statements

provides specific information regarding

(1) the number of labor hours worked at

each company during the year, (2) the

number of different employees paid

during the year, (3) whether such

employees worked overtime, and (4)

whether such employees were paid an

additional amount for overtime worked.

Finally, they argue that the record

evidence provides no support

whatsoever for petitioners’ assertion

that the employee remuneration paid by

SAIL in 1995–96 corresponds only to

the 187,504 persons reported as

employees on March 31, 1996. They

state that the data provided by

petitioners vis-a`-vis TATA are even

more tenuous, since there is no support

for their assumption that the total

number of employees reported in the

1997 Iron and Steel Works of the World

publication is accurate or even related

to TATA’s 1995–96 fiscal year. These

questions, they argue, render unusable

petitioners’ suppositions as to the

number of workers employed by each

company, and the possible number of

hours worked each day by company

employees.

In comparison, Liaoning and Wuyang

argue that the Report used by Commerce

in the preliminary determination

includes figures that are representative

of the entire Indian steel industry,

including both large companies and

small, and provides labor cost data

specific to production line workers. In

addition, they state that, as noted in the

Commerce Department’s factor

valuation memoranda, the labor rate

provided in the Report is inclusive of

wages and salaries, all types of bonuses,

money value of benefits in kind, old age

benefits, maternity benefits, social

security charges, family pension,

retirement benefits, and other group

benefits. They argue that unlike the

unsubstantiated figures calculated by

petitioners, the Ministry of Labour

values are not distorted by conjecture

regarding such factors as the number of

employees, man days worked, the

inclusion of overtime hours. Therefore,

they claim Commerce should continue

to value labor in the final determination

using the average labor cost per manday worked for the Basic Metal and

Alloys Industries from the Report,

which Commerce did in the preliminary

determination.

Department’s Position: We agree with

Liaoning and Wuyang. Because the

regulations applicable to this

investigation do not dictate a particular

approach to selecting surrogate value for

labor, the Department has the discretion

in choosing a method of valuing labor.

However, it has not been our practice to

use the regression-based labor rate

developed in the new regulations

initiated prior to issuing these new

regulations. Because we have not

elected to use the regression analysis

approach, we need not address all of the

arguments concerning this

methodology. We also disagree with

petitioners’ proposal to use the financial

statements of SAIL and TATA. These

statements include high wages for

company management personnel and

other salaried workers, and thus are not

specific to direct and other production

labor. Also, the financial statements

only report aggregate labor costs and do

not provide information regarding the

number of labor hours and thus we

could not determine a labor rate for

these companies.

Comment 14: Labor Factors

Anshan, Baoshan, Shanghai Pudong

and WISCO state that, throughout this

investigation, petitioners have

contended that the data on labor usage

submitted by the Chinese respondents

must be compared to information in

PaineWebber’s World Steel Dynamics.

Respondents state that petitioners claim

that any differences between

information reported by the respondents

and the information contained in World

Steel Dynamics is to be treated as
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61979

evidence that the Chinese respondents

are reporting their information

inaccurately is without merit. Anshan,

Baoshan, Shanghai Pudong and WISCO

state that the labor hours reported are

the result of a detailed analysis of the

companies’ labor forces, based on the

Department’s reporting requirements.

Anshan, Baoshan, Shanghai Pudong and

WISCO argue the source documents and

methodology used to derive these

figures were examined in detail by the

Department during verification, and no

significant discrepancies were found.

Therefore, they argue, these data have

been shown to be reliable.

By contrast, respondents argue, the

source of the information in World Steel

Dynamics is unknown, the methodology

used by World Steel Dynamics to derive

that information is not explained, and

the figures reported in World Steel

Dynamics have not been verified.

Respondents claim that, in these

circumstances, the labor usage figures

reported in World Steel Dynamics have

no probative value at all. Respondents

argue that data from this service

certainly do not provide a reasonable

basis for disregarding the verified

information reported by respondents.

Department’s Position: We agree with

respondents. We verified all of the

respondents’ reported labor factors and

we noted no major discrepancies. In

light of these facts, we have no reason

to believe that the labor factors they

provided in their questionnaire have

been misreported.

Comment 15: Valuation of Limestone,

Dolomite and Quicklime

Anshan, Baoshan, Shanghai Pudong

and WISCO argue that, in the final

determination, the Department should

value limestone and dolomite based on

domestic Indian prices, rather than on

Indian Monthly Statistics. Respondents

argue that domestic Indian prices for

limestone and dolomite are preferable

because (1) it is Department policy to

use domestic, tax-exclusive prices

where possible; (2) due to the low

market value of limestone, limestone is

ordinarily obtained domestically; and

(3) import values used for limestone and

dolomite are aberrational when

compared to the domestic prices

submitted for these values. Respondents

claim that the Department incorrectly

used, as the surrogate value for

dolomite, price information for

‘‘calcined’’ dolomite, although the

dolomite inputs used by respondents

are ‘‘uncalcined.’’ Furthermore, the

value for quicklime, respondents

contend, should be the same as the

value for limestone because the two

products are comparable. They contend

that petitioners’ argument (see below) is

internally inconsistent and should

therefore be disregarded.

Liaoning and Wuyang argue that the

Department should base the surrogate

values for these raw material inputs on

data contained in the financial

statements of Indian producers. See

Brake Drums and Rotors, 62 FR at 91631

(Feb. 28, 1997). They state that,

following its normal practice,

Commerce should derive tax-exclusive

surrogate values by deducting from the

raw material costs all excise taxes,

central sales taxes, and state sales taxes.

See Public Version of the Factor

Valuation Memorandum from Brake

Drums and Rotors, at 2 (Feb. 21, 1997)

(Commerce ‘‘adjusted the domestic

average value to exclude the excise and

sales tax’’ and ‘‘accepted the fourpercent sales tax as a conservative

estimate of Indian state sales tax and

have deducted amounts for sales taxes’’

at that rate). They argue a simple

average tax-exclusive surrogate value

should be calculated for materials for

which data exists from more than one

company.

In their case brief, petitioners

maintain that the import values used in

the preliminary determination are

accurate surrogate values for limestone

and dolomite sourced domestically by

some of the respondents, because

certain other Chinese steel producers

imported limestone and dolomite for

use in the production process.

Petitioners agree with respondents that

it is the responsibility of the Department

to find surrogate values which

reasonably reflect the economic

conditions faced by Chinese producers

of cut-to-length carbon steel plate. See

Oscillating Fans, 56 FR at 55271, 55275.

Therefore, petitioners contend that it is

reasonable for the Department to use

surrogate import raw material input

sources when Chinese producers also

import the same.

However, in their rebuttal brief,

petitioners urge the Department to use

adverse facts available in valuing

limestone, claiming that respondents

failed to provide complete and truthful

answers to the Department’s

questionnaires with regard to the source

of supply for these inputs. Should the

Department agree to apply adverse facts

available, petitioners suggest that it rely

on the data of an Indian producer of

subject merchandise, SAIL, because this

data constitutes both the highest value

on the record, as well as the most

reliable and appropriate surrogate value

under the Department’s precedent.

Petitioners urge the Department to

value dolomite with the same value that

it assigned to limestone. Petitioners

argue that respondents’ claim that the

proper surrogate value for dolomite is

for ‘‘uncalcined’’ dolomite is without

merit, because there is no evidence

provided by the respondents or

otherwise that their dolomite inputs are

uncalcined. In addition, petitioners

refute respondents’ claim that dolomite

and limestone should be valued as

‘‘crushed stones’’ (Respondents PAI

Memorandum, August 5, 1997).

According to petitioners, evidence on

the record shows that crushed stones are

not pure enough for use in metallurgy.

For quicklime, petitioners argue that

the Department should separately value

limestone and quicklime, as was done

in the preliminary investigation .

However, they maintain that should the

Department decide to value the two

products with the same surrogate value,

the Department should use SAIL’s value

for limestone and quicklime.

Department’s Position: We agree with

the petitioners in part. The surrogate

value for limestone in the preliminary

determination was based on the Indian

import price. We find that this value is

the most representative of the prices for

limestone during the POI because the

domestic prices submitted by

respondents appear to be significantly

lower than both the Monthly Statistics

and data from Indian steel producers

that was submitted by petitioners. In

addition, because we are unfamiliar

with India 1995: A Reference Annual,

we hesitate to give it greater weight as

a source for limestone value than we

give to the Monthly Statistics, which we

have frequently used for valuation

purposes and have no reason to believe

is not reliable with respect to this input.

We also agree with petitioners that some

companies import limestone and that

this provides support for the use of

appropriate import data to value

limestone. For the final determination,

we are relying on the same surrogate

value used in the preliminary

determination. We reject petitioners’

argument that we should apply adverse

facts available for limestone based on

what petitioners believe to be

uncooperative behavior on the part of

one company, because there is no

evidence on the record to support their

assertion that one company did not act

to the best of its ability to provide

certain information concerning

limestone to the Department.

We agree with respondents that

limestone and quicklime are comparable

products, based on our review of the

Monthly Statistics. However, we have

decided that the difference between

them is too significant to value

quicklime based on the surrogate for

limestone. We therefore agree with
61980 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

petitioners that we should value the two

products based on their individual

values as reported in Monthly Statistics.

With respect to dolomite, we agree

that limestone and dolomite, though

separate products, are of comparable

value. We have determined that the

Monthly Statistics upon which we relied

in the preliminary determination are

obviously aberrational because the value

from the source which we used in the

preliminary determination (a value for

‘‘calcinated’’ dolomite) is approximately

ten times the value of limestone. In

contrast, based on our examination of

Indian steel producers’ data, we find

that the value of the dolomite they use

(which is not identified as either

‘‘calcinated’’ or nor ‘‘calcinated’’) is

generally significantly lower than that of

the limestone they use. Therefore, for

the final determination, we determined

that the value for ‘‘agglomerated’’

dolomite in the Indian Monthly

Statistics is comparable to that for

limestone in the same source. Therefore,

we are using the Monthly Statistics

value for ‘‘agglomerated’’ dolomite to

value dolomite in the final

determination.

Comment 16: Basket Categories—Coal

and Iron Ore

Anshan, Baoshan, Shanghai Pudong

and WISCO contend that the

Department’s decision to use a single

surrogate value for all coal and iron ore

inputs in the preliminary determination

was faulty and suggest that the

Department instead assign different

values for each kind of coal and iron ore

input used in the production process.

For coal, they argue that the

Department’s practice has traditionally

been to base its surrogate values on the

prices in the surrogate country for

materials which most closely reflect the

specific grade and chemical

composition of the type of input used by

the NME producer. See Certain Helical

Spring Lock Washers from the People’s

Republic of China, 61 FR 41994, 41996–

97 (August 13, 1996) (‘‘Helical Spring

Lock Washers’’), and Heavy Forged

Hand Tools from the People’s Republic

of China, 62 FR 11813, 11815 (March

13, 1997). Therefore, they contend that

the Department should separately value

the different kinds of coal used in the

production process. Respondents also

contend that coal should be valued and

based on Indian, not Indonesian, values.

For iron ore, Anshan, Baoshan,

Shanghai Pudong and WISCO assert that

the Department should value different

forms of this input based on the market

prices paid for such ores. These market

economy purchase prices and

quantities, they maintain, were verified

by the Department. Similarly, they urge

the Department to calculate freight rates

for the delivery of iron ore purchased

from market economy suppliers using

the actual rates paid by the Chinese

respondents for such shipments during

the POI. For domestically purchased

iron ore, Anshan, Baoshan, Shanghai

Pudong and WISCO suggest that the

Department value all iron ore using one

Indian domestic price from India 1995:

A Reference Manual. They also

maintain that, in valuing freight for

domestic iron ore purchases, the

Department should average the

distances from each company’s iron ore

suppliers and apply surrogate freight

rates to this average distance.

Petitioners maintain that it was

appropriate to assign a single surrogate

value for all coal used, because

respondents reported various kinds of

coal in a confusing manner. In addition,

they assert that the value used in the

preliminary determination is accurate

and reasonable. Petitioners contend,

however, that should the Department

decide to value different kinds of coal

separately, it should rely on surrogate

values obtained from annual reports of

certain Indian producers of subject

merchandise.

With respect to iron ore, petitioners

assert that domestically purchased iron

ore could not be significantly cheaper

than other forms purchased from market

economy suppliers due to the fact that

the imported iron ore is in the form of

concentrate, which requires further

processing before it can be used. As a

result, they urge the Department to

maintain the methodology it used in the

preliminary determination.

Department’s Position: COAL: We

agree with respondents that the

Department should value coal based on

the surrogate country values for types of

coal which most closely reflect the

specific grades and chemical

composition of coal types used by the

Chinese producers. We have valued

coking coal and other coal separately,

relying on Indian Monthly Statistics to

formulate appropriate surrogate values.

We did not value thermal coal

separately because the information

submitted by respondents comes from

countries not normally used as

surrogates and we were unable to

independently find values for this type

of coal. For all coal other than coking

coal, we based our surrogate value on

the classifications ‘‘other,’’ ‘‘anthracite’’

and ‘‘steam coal,’’ which we averaged.

We used Indian Monthly Statistics

because we determined that the data

were more appropriate and more

specific than the data from the Indian

steel producers.

Iron Ore: With respect to iron ore, we

note that it has been the Department’s

position in the past that when a

significant portion of an input used by

a given producer is purchased from

market economy suppliers, the

Department relies entirely on the market

economy purchase prices in valuing that

input for that producer. Our

methodology in the preliminary

determination was to aggregate all iron

ore whether sourced domestically or

from market economy suppliers into a

single basket which we valued at

international prices from market

economy suppliers. However, for the

final determination, we have, to the

extent possible, treated different types

of iron ore as separate factors of

production (i.e., we have valued

different types of iron ore as separate

inputs). When a producer has purchased

any type of iron ore from one or more

market economy suppliers, we have

relied to the fullest extent possible on

the market economy purchase prices

which were verified by the Department.

When a given producer sourced a

particular type of iron ore only locally,

or imported only an insignificant

percentage of that type of iron ore, we

valued that type of iron ore for that

producer based on Indian Monthly

Statistics.

Freight For Coal and Iron Ore: Where

we relied on the market economy

purchase prices to value the input, we

also relied, for freight cost from the

market economy suppliers to the

Chinese port, on the market economy

freight rates which the Department

verified. For Chinese inland freight on

market economy purchased imports and

for domestically sourced inputs, we

relied on the Chinese domestic freight

factors, valued using Indian surrogate

data. We have not based domestic

freight costs on an average of the

distance between all suppliers and the

relevant producers because a supplierby-supplier calculation provides a more

accurate estimate of the costs of a

producer that sources different amounts

of an input from multiple suppliers in

different locations. See Comment 12

regarding the Department’s current

freight methodology.

Comment 17: Valuation of Steel Scrap

and Pig Iron

Anshan, Baoshan, Shanghai Pudong,

and WISCO argue that the Department

should value steel scrap and pig iron

based on domestic price information

from India from the Economic Times

because the prices reported in the

Economic Times represents prevailing

prices in the Indian market which are

preferable to import prices in the
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61981

Department’s hierarchy of surrogate

value sources, and the prices reported in

the Economic Times are

contemporaneous with the POI.

Liaoning and Wuyang argue that the

Department should base the surrogate

values for steel scrap and pig iron

inputs on data contained in the

financial statements of Indian

producers, citing Brake Drums and

Rotors, 62 FR at 9163. They state that,

following its normal practice,

Commerce should derive tax-exclusive

surrogate values by deducting from the

raw material costs all excise taxes,

central sales taxes, and state sales taxes.

See Factor Valuation Memorandum

from Brake Drums and Rotors, at 2 (Feb.

21, 1997), which Liaoning and Wuyang

have placed on the record of this

investigation (Commerce ‘‘adjusted the

domestic average value to exclude the

excise and sales tax’’ and ‘‘accepted the

four-percent sales tax as a conservative

estimate of Indian state sales tax and

have deducted amounts for sales taxes’’

at that rate). Liaoning and Wuyang argue

that a simple average tax-exclusive

surrogate value should be calculated for

materials for which data exists from

more than one company. See Factor

Valuation Memorandum from Brake

Drums and Rotors, at 4.

Petitioners contend that the

Department should value steel scrap

and pig iron based on U.N. Trade

Commodity Statistics, or else continue

to use the value used in the preliminary

determination, which is based on

Indonesian import data. They maintain

that values that the four respondents

submitted from the Economic Times

represent a snapshot of prices that do

not represent prevailing prices

throughout the entire period of

investigation.

Department’s Position: For steel scrap,

we are using contemporaneous import

data from Indian Monthly Statistics. For

pig iron, we were unable to use the

Indian Monthly Statistics as we

determined that the import price was

aberrational because the Indian data was

based on a very small quantity and was

almost two times the price of the

Indonesian pig iron. Consequently, we

are continuing to use prices from

Indonesian import statistics that we

used in the preliminary determination.

We did not use the data submitted by

either petitioners or respondents for

either pig iron and steel scrap because

we found that these values were

aberrational compared to the Indonesian

import statistics. We did not use the

values from the Economic Times

because we determine that the

information in the Economic Times

submitted by respondents and in the

U.N. Trade Commodity Statistics

submitted by petitioners was

aberrational. More detail on this issue

may be found in the business

proprietary version of the Concurrence

Memorandum.

Comment 18: Valuation of Iron Scrap,

Fluorite/Fluorspar, Coke, Aluminum,

Magnesium Ore, Ferrosilicon,

Ferromanganese and Magnesium Ore

Anshan, Baoshan, Shanghai Pudong

and WISCO argue that the Department

should value iron scrap, fluorite/

fluorspar, coke, aluminum, magnesium

ore, ferrosilicon, ferromanganese, and

magnesium ore based on Indian

Monthly Statistics that correspond to the

investigation period. In the preliminary

determination, the Department valued

some of these inputs based on import

statistics which pre-dated the period of

investigation. These respondents argue

that petitioners’ suggestion that the

Department value some of these inputs

based on data from 1994 U.N. Trade

Commodity Trade Statistics should be

ignored, respondents argue because it is

not contemporaneous and less specific

to the inputs in question.

Liaoning and Wuyang argue that the

Department should base the surrogate

values for these inputs on data

contained in the financial statements of

Indian steel producers. See Brake

Drums and Rotors, 62 FR at 9163. They

state that, following its normal practice,

Commerce should derive tax-exclusive

surrogate values by deducting from the

raw material costs all excise taxes,

central sales taxes, and state sales taxes,

citing to Factor Valuation Memorandum

from Brake Drums and Rotors, at 2 (Feb.

21, 1997) which they have added to the

record of this case. They argue a simple

average tax-exclusive surrogate value

should be calculated for materials for

which data exists from more than one

company. See Factor Valuation

Memorandum from Brake Drums and

Rotors, at 4.

Petitioners urge the Department to

either value these inputs based on the

1994 U.N. Commodity Trade Statistics,

and argue that these statistics, although

less contemporaneous, are more

reliable.

Department’s Position: We agree with

the four respondents. To the extent

possible, we have relied on

contemporaneous data, as the

Department normally prefers to use

prices that are representative of prices

in effect during the POI. For iron scrap,

we used the same Indian Monthly

Statistics value as we did in the

preliminary determination because this

is the most contemporaneous value on

the record. For ferrosilicon, flourite/

fluorspar, ferromanganese, magnesium

ore, aluminum, and coke, we have

adopted the values from the Indian

Monthly Statistics for April through July

of 1996, as submitted by the

respondents as these values are more

contemporaneous with the POI than the

similar values used in the preliminary

determination. We have rejected

Liaoning and Wuyang’s argument that

we should value these factors based on

Indian domestic data because we have

found appropriate surrogate values that

represent a larger sample of prices from

Indian Monthly Statistics.

Comment 19: Scale and Slag

Anshan, Baoshan, Shanghai Pudong

and WISCO argue that the Department

appropriately valued slag at the low

U.S. market price of $6.91 per metric

ton and that the Department should

continue to value slag in the same

manner for the final determination.

Anshan, Baoshan, Shanghai Pudong and

WISCO additionally contend, however,

that the Indian import price of $483.91

per metric ton for scale is aberrational

high and that the Department should

apply the same surrogate value for scale

as it applies to slag. Furthermore, these

respondents argue that, because both

slag and scale are self-generated byproducts of the steelmaking process, the

Department should not apply any

freight expense to the surrogate prices

for slag and scale in the final

determination.

Petitioners agree that slag is

essentially a mineral waste and has a

relative low value. Scale, on the other

hand, they argue, is processed steel,

consisting of cuttings from actual steel

slabs. Scale, reason petitioners, thus has

a far greater value as an input in

steelmaking than does slag. Petitioners

continue that there is nothing on the

record to substantiate respondents’

claim that the Indian price for scale is

‘‘aberrational.’’ Petitioners conclude that

the Indian price the Department

adopted in the preliminary

determination is reliable and should be

used for the final determination.

Department’s Position: We agree with

respondents in part. Scale is of little

value in the steelmaking process.

Because slag and scale are very similar,

the Department used the same value for

scale and slag ($6.91 per metric ton) in

its final determination. Furthermore, we

agree with respondent that a freight

expense should not be added to the

surrogate prices for slag and scale when

no freight is incurred in China on these

inputs, because they are self-generated.
61982 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

Comment 20: Stones

Anshan, Baoshan, Shanghai Pudong

and WISCO argue that, to the extent that

surrogate values for some types of

‘‘stones’’ have already been submitted

on the record (e.g., manganese,

quicklime, limestone and dolomite), the

Department should use that information

for surrogate values for these inputs. To

value types of stones for which no

specific surrogate value has been

provided to the Department (e.g.,

serpentine, calcium carbon trioxide

(CaCO3), silicon sand/silicon dioxide),

the Department should use the surrogate

value for ‘‘stone, sand and gravel’’

proposed by the petitioners in their

August 5, 1997 submission at Exhibit

A—that is, $25.21 per metric ton.

Petitioners state that, with respect to

silicon, the Department has already

found an appropriate surrogate value.

Petitioners contend that respondents

have conceded that the category

‘‘stones’’ contains unreported ‘‘silicon

sand’’ and silicon dioxide in unknown

quantities. Therefore, petitioners state

that the Department should use the

value for silicon as facts available in

valuing ‘‘stones’’ for which no specific

surrogate value has been provided. In

addition, regarding calcium carbonate

(CaC2) rocks, petitioners argue that the

Department should recalculate

consumption for each company.

Department’s Position: We agree with

respondents that the Department should

use appropriate and specific surrogate

values for all types of ‘‘stones.’’ For the

final determination, for Baoshan,

Liaoning, Shanghai Pudong and WISCO,

we have obtained appropriate separate

values for all types of stones which were

separately reported. For Anshan, we

have obtained a value from the U.N.

Trade Commodity Statistics for ‘‘stones,

sand and gravel’’ and are valuing stones

for which we do not have a surrogate

value using this data. We disagree with

petitioners’ assertion that we should use

silicon as facts available for silicon

sand. Based on our understanding of the

steel industry, silicon sand is more

comparable to generic sand than it is to

silicon, which is a comparatively

expensive commodity.

Comment 21: Silicon Manganese

Respondents note that, in the

preliminary determination, the

Department valued silicon manganese at

$578.68 per metric ton, based on

information contained in the 1995–96

annual report of SAIL. Respondents

argue that, if the Department continues

to use this source in the final

determination, the value should be

adjusted not only for inflation, but also

to remove Indian taxes reflected in the

reported number.

Petitioners counter that nothing in the

record supports respondents’ claim that

taxes are included in the surrogate value

used by the Department for silicon

manganese (based on SAIL data). Even

if taxes were included, furthermore,

there is no record information that

would allow for a determination of the

amount of taxes paid. Accordingly,

petitioners contend that the SAIL data

must be used as reported.

Department’s Position: Although we

consider the value for silicon

manganese we used in the preliminary

determination appropriate for use in our

final determination calculations, we

have located a more contemporaneous

Indian Monthly Statistic for the period

April 1996 through July 1996 which we

believe to be more accurate and

representative of a larger sample of the

commodity. For the final determination,

we are relying on this import price to

value silicon manganese.

Comment 22: Electricity

Anshan, Baoshan, Shanghai Pudong

and WISCO contend that, in the

preliminary determination, the

Department valued electricity at $0.06

per kilowatt hour, based on data

reported in the July 1995 publication

Current Energy Scene in India,

published by the Center for Monitoring

Indian Economy. These respondents

contend that the Department should

continue to use this value in the final

determination.

Petitioners state that respondents’

suggested rate for electricity reflects the

simple average of the Indian state

electricity rates for the ‘‘large industry’’

category as of January 1, 1995, adjusted

to the POI. See Shanghai Pudong Factor

Valuation Memorandum, June 3, 1997,

at 4–5. Petitioners maintain that, in its

final determination, the Department

should use the electricity rates reported

by Indian flat-rolled steel producers in

their annual reports for the fiscal year

ending March 1996. These reported

rates are preferable, argue petitioners,

because they are more contemporaneous

with the POI and are specific to large

steel manufacturers. See Polyvinyl

Alcohol from the People’s Republic of

China, 61 FR 14057 at 14061 (March 29,

1996) (Final Determination). Petitioners

calculate the weighted average

electricity rate for Pennar Steels Ltd.,

Nippon Denro Ispat Ltd., Visvesveraya

Iron & Steel Ltd., SAIL, and Tata Steel

Ltd., at $0.0648 per kilowatt hour.

Department’s Position: We agree with

respondents. We consider the rate for

electricity we used in the preliminary

determination appropriate for use in our

final determination calculations as it is

publicly available and nothing on the

record suggests that this value is

aberrational.

Comment 23: Scope Issue

Petitioners argue that the scope

should be clarified to state that it covers

plate 4.75 mm in thickness or more, in

nominal or actual thickness. They state

that, due to thickness tolerances in the

various common plate specifications,

foreign producers may sell plate as 3⁄16

inch (4.75 mm) plate at thickness less

than 3⁄16 inch and remain within the

specification.

Petitioners allege that there is a

significant U.S. market for 3⁄16-inch

(4.75 mm) plate. They also argue that

they always intended that the scope of

the investigation would cover product

of 4.75 mm in actual or nominal

thickness because any plate within the

tolerance for 4.75 mm nominal

thickness plate will compete directly

with any other plate within the

tolerance. The customer knows that all

plates within the tolerance meet the

performance standards of the

specification.

Petitioners argue that actual and

nominal thickness products are

produced on the same equipment,

marketed in the same way to the same

customers and generally priced

identically. They allege that failure to

include plate with a nominal thickness

of at least 4.75 mm but an actual

thickness of less than 4.75 mm would

seriously undermine the scope of the

investigation by allowing products that

are considered identical in the market to

be treated differently under the scope.

Anshan, Baoshan, Shanghai Pudong

and WISCO point out that petitioners’

request to change the scope was

submitted more than five months after

the filing of the petition. They argue that

petitioners’ proposal to change the

scope so late in the proceeding is

contrary to the requirements of the law.

Respondents note that the statute does

not permit the Department to amend the

scope of the petition so late in this

investigation.

Department’s Position: We disagree

with petitioners and have decided not to

change the scope of products under

investigation. For a more complete

discussion of this issue, See

Memorandum on Scope of

Investigations on Carbon Steel Plate

from Joseph Spetrini to Robert S.

LaRussa.

Comment 24: Alloy/Non-Alloy Steel

Issue

Petitioners allege that foreign

producers are beginning to slightly vary
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61983

the alloy content of their carbon plate in

order to technically remove the product

from the non-alloy steel tariff

subcategories in the Harmonized Tariff

Schedule of the United States

(‘‘HTSUS’’) and place the products

within the ‘‘other alloy steel’’ HTSUS

subcategories without changing the

specification, grade, physical

characteristics or applications of the

CTLP. Petitioners contend that such

low-alloy plates should be covered by

the scope.

Petitioners argue that products

classified as alloy steel under the HTS,

but ordered and produced to ‘‘carbon’’

steel specifications, should be included

within the scope of the investigation.

They argue that the alloys being added

to these products are not changing the

performance characteristics of plate, and

the alloy-added carbon products and

other carbon products are the functional

equivalents of one another. Petitioners

further contend that the products are

produced by the same manufacturers on

the same equipment, are sold to the

same customers for the same uses, and

have nearly identical costs.

Petitioners assert that where the

added alloy does not change the

performance characteristics of the plate

or affect the product’s classification

within the industry specification, the

product should remain within the scope

of the investigation. They argue that the

addition of alloys that do not change the

performance characteristics or

specifications of the product will not

change the purchasers’ perception of the

value, function or use of the product.

Petitioners conclude by stating that the

failure to include such completely

substitutable products within the scope

would undermine the efficacy of any

order.

Anshan, Baoshan, Shanghai Pudong

and WISCO again argue that petitioners’

request to change the scope was

untimely submitted and should be

rejected by the Department, as it is

contrary to the requirements of the law.

Moreover, respondents contend that

Department and classification practice

demonstrate that carbon steel does not

include products with alloying agents

such as boron. Finally, respondents

assert that the statute does not permit

the Department to amend the scope of

the petition proposed in the manner

proposed by petitioners so late in this

investigation.

Department’s Position: We disagree

with petitioners and have decided not to

change the scope of products under

investigation. For a more complete

discussion of this issue, See

Memorandum on Scope of

Investigations on Carbon Steel Plate

from Joseph Spetrini to Robert S.

LaRussa.

Comment 25: River Freight

Anshan, Baoshan, Shanghai Pudong

and WISCO argue that, in the final

determination, the Department should

not value river freight costs for

purchases of materials (and for the

shipments of finished products by the

Chinese producers) using the surrogate

value relied upon for the preliminary

determination, which was based on a

1993 embassy cable regarding river

barge rates in India originally submitted

for Helical Spring Lock Washers, 61 FR

at 41994. In particular, Anshan,

Baoshan, Shanghai Pudong and WISCO

argue that this source should not be

used in the final determination because

(1) the rates do not in any way reflect

the costs of shipping raw materials and

merchandise on the Yangtze River on

which their steel mill and export

facilities are located, and (2) the rates do

not even accurately reflect the costs of

river shipping in India.

Respondents argue that the

Department must, to the extent possible,

select surrogate values for river rates

which accurately and fairly reflect the

costs of the shipping raw materials and

steel products on the Yangtze River.

Respondents maintain that the use of

Indian river barge rates to establish

surrogate values for Chinese shipments

of raw materials and final steel products

on the Yangtze River is inappropriate

because there are no rivers in India that

are comparable to the Yangtze River and

river shipping rates are heavily

dependent on the types of rivers used

for shipping and the types of products

being shipped.

As an alternative to the Indian barge

rates in the 1993 cable, respondents

urge that the Department use published

Mississippi River shipping rates as

surrogate values for the cost of shipping

on the Yangtze River because, they

claim, the Mississippi River is a

‘‘working river’’ that is comparable in

size to the Yangtze River.

If the Department continues to use

Indian shipping rates to value shipping

on the Yangtze river, respondents

recommend that the Department use

current, actual shipping rates rather

than the 1993 quotation used in the

preliminary determination. Respondents

argue that the 1996–97 rates collected

and reported by the Ministry of Surface

Transport of the Government of India,

which they have submitted, are

preferable because they are less

aberrational, more contemporaneous,

and based on a broader range or

merchandise than the rates used in the

preliminary determination, which do

not identify the product for which these

rates were quoted.

Petitioners argue that the data on river

freight supplied by the respondents are

unreliable; therefore, they urge, the

Department should continue to use the

same values as in the preliminary

determination. Petitioners argue that

respondents’ claim that Indian rivers are

generally not accessible to large vessels

is baseless, stating that CIA reports

indicate that a large percentage of

inland waterways in India are navigable.

Petitioners object to the use of U.S.

freight rates as surrogate values, arguing

that the Department must calculate

normal value based on, ‘‘to the extent

possible, the prices or costs of factors of

production in one or more market

economy countries that are * * * at a

level of economic development

comparable to that of the nonmarket

economy country * * *.’’ 19 U.S.C.

1677b(c)(4). Petitioners contend that

United States is not an appropriate

surrogate country because it is at a

different level of economic development

than the People’s Republic of China and

not one of the five countries identified

by the Department as potentially

suitable surrogates. See Memorandum to

E. Yang from D. Mueller, January 29,

1997 (‘‘DOC Surrogate Selection

Memo’’).

Further, petitioners assert that the

information on Indian river freight rates

supplied by respondents is questionable

with respect to its meaning, origin and

reliability. Petitioners argue that

respondents have not provided any

credible evidence that the rates used by

the Department in the preliminary

determination are ‘‘aberrational.’’

Department’s Position: We agree with

both respondents and petitioners in

part. For the final determination, we

have decided to base the river rates

freight on a simple average of the rates

used in the preliminary determination

and information submitted by

respondents. We note that the river rates

we used in the preliminary

determination were significantly higher

than rates for other forms of

transportation. For example, to ship

merchandise 1100 km. by river using

the rates used in the preliminary

determination would cost $68 per ton,

whereas to ship the same distance by

train would only cost approximately

$15 per ton. We note that a respondent

would usually use, in the normal course

of business, the most cost effective and

efficient mode of transportation.

However, respondents did not ship by

train. It is our own practice to value the

factors of production actually used by

respondents. Consequently, we have

concluded that to only use the surrogate
61984 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

value we used in the preliminary results

would be inappropriate.

Respondents also submitted river

rates from the Inland Waterways

Authority of India, which is part of the

Ministry of Surface Transportation of

the Government of India. We disagree

with petitioners’ argument that the

Department should reject this

information because respondents used a

consultant in obtaining this information.

While it is true that a consultant was

involved in obtaining this information,

the fact remains that the source of the

data is the Indian Government. In

addition, we can find no evidence to

support the conclusion that the river

rates presented in that document are

unreliable or distortive. The rates

represent a wide variety of rivers,

products and distances in India,

including river rates to and from

Calcutta, which is a major port. At the

same time, we hesitate to use only the

river rate information obtained by

respondents for the final determination.

As no evidence on the record indicates

what instructions were given to the

consultant or what questions the

consultant asked the Indian Waterways

Authority to obtain the data.

We also disagree with respondents’

contention that we should use rates

from the Mississippi River for the final

determination. First, the United States is

not one of the selected surrogate

countries that the Department normally

uses. The Department also searched for

alternative sources of information from

other surrogate countries. In particular,

we attempted to obtain river rate

information from Egypt (the Nile river)

and Pakistan (the Indus river). However,

we were unable to obtain publicly

available information for river rates

from these countries. Second, all rivers

are to some degree unique, and the

Department’s ability to address the

quantity and the types of differences

noted by respondents is limited. Thus,

it is not our practice to find a surrogate

value for freight over a particular route,

but rather to ascertain a reasonable

value for river freight.

Comment 26: Ocean Freight Rates

Respondents argue that the

Department should apply product- and

port-specific ocean freight rates.

Respondents maintain that, in the

preliminary determination, the

Department improperly applied the

ocean freight rates for shipping steel

plate to other types of products, which

would necessarily have different

shipping rates. Respondents urge that

the Department should value raw

materials purchased from marketeconomy suppliers using sale-specific

shipping cost information from market

economy ocean freight providers.

Respondents recommend that productand port-specific ocean-shipping rates

published in Shipping Intelligence

Weekly be used to value ocean freight

shipments in the final determination.

Petitioners argue that the Department

should continue using the ocean freight

rates from U.S. import statistic reports

(IM–145 reports) used in the

preliminary determination. Petitioners

assert that the Department should not

value raw materials purchased from

market-economy suppliers using salespecific shipping cost information from

market economy shippers unless there

is sufficient evidence that the specific

respondent purchased the input from a

market economy supplier in market

economy currency. Further, petitioners

argue that the surrogate values based on

shipping rates reported from Shipping

Intelligence Weekly submitted by

respondents are inadequate for several

reasons. First, petitioners note that rates

reported from the Shipping Intelligence

Weekly are not actual freight rates paid

by customers, but instead are described

as ‘‘average earnings.’’ Second,

petitioners contend that respondents

chose rates for the most efficient type of

vessel for their surrogate value. Third,

petitioners note that information from

Shipping Intelligence Weekly was not

accompanied by the certification of

accuracy as required by 19 CFR

§ 353.31(i). Petitioners urge the

Department to continue using import

data in the preliminary determination,

since the import data is representative

of a large sample of shipments and

relate specifically to the chosen

surrogate country.

Department’s Position: We agree with

petitioners that rates reported from

Shipping Intelligence Weekly are not

actual freight rates paid by customers,

but instead are described as ‘‘average

earnings.’’ Second, we agree that

respondents appear to have provided

rate data for the most efficient type of

vessel, rather than the actual freight

rates paid by customers. Consequently,

we find that the value reported in the

Shipping Intelligence Weekly are not

appropriate for use as surrogate values

for ocean freight. For the final

determination, therefore, we have

continued to use the IM–145 ocean rates

used in the preliminary determination.

Comment 27: Brokerage and Handling

Anshan, Baoshan, Shanghai Pudong

and WISCO argue that the surrogate

value for brokerage and handling

charges used in the preliminary

determination is aberrational. This

value was based on ranged, public

information from 1991–92 that was

originally submitted in the Department’s

investigation of Sulphur Vat Dyes from

India, 38 FR at 11835, 11841. These

respondents recommend that the

Department use, instead, as a surrogate

value for brokerage and handling, prices

they have submitted which are reported

by Amrok Shipping Private Ltd. , a

shipper from India.

Liaoning and Wuyang argue that the

Department should use a brokerage and

handling value contained in the public

version of the response of Isibars

Limited in the antidumping review of

Stainless Steel Wire Rod from India,

which they have added to the record of

this case to value foreign brokerage.

They maintain that the value for

brokerage and handling used in the

preliminary determination is

inappropriate because that value is for

a product unrelated to the subject

merchandise of this investigation.

Liaoning and Wuyang contend that the

brokerage and handling value from

1995–96 Stainless Steel Wire Rod from

India is preferable because it is specific

to steel, more contemporaneous, and

more reliable, since it has been verified

by the Department.

Petitioners argue that the Department

should continue to use the surrogate

value for brokerage and handling used

in the preliminary determination.

Petitioners find it significant that this

surrogate value for foreign brokerage

and handling was used by the

Department in two other final

investigations. Petitioners argue that

information provided by the four

respondents is an anecdotal and

selective commentary by a private

shipping company that may have been

paid to act as a consultant by the

respondents. Petitioners urge that the

Department reject the information

provided by the four respondents on the

basis that it is likely to be biased and

unreliable.

Department’s Position: We agree with

Liaoning and Wuyang. In the

preliminary determination, we used

brokerage and handling rates as reported

in ranged, public information from

1991–92 that was originally submitted

in the Department’s investigation of

Sulphur Vat Dyes. We are unfamiliar

with the Amrok Shipping brokerage and

handling information submitted by

Anshan, Baoshan, Shanghai Pudong and

WISCO and do not know what questions

the four respondents asked to obtain the

brokerage and handling rates. The

brokerage and handling rates submitted

constitute an individual’s estimate and

were not specific concerning certain

charges. In addition, we have no

background information on the period
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61985

of time applicable to the brokerage and

handling values submitted by these

respondents. Since the brokerage and

handling rates in used in the Stainless

Steel Wire Rod are more

contemporaneous than the information

used in the preliminary determination,

specific to steel and verified by the

Department, we have used those rates

for the final determination.

Comment 28: Rejection of Untimely

Factual Information

The four respondents argue that the

Department should not reject factual

information submitted within the

deadlines established by its regulations.

Thus, respondents urge the Department

to reconsider and reverse its earlier

decision to reject submissions from

Anshan, Baoshan and WISCO.

Respondents maintain that the

information at issue was submitted

within the deadlines pursuant to the

Department’s regulations, which allow

for the submission of factual

information in an antidumping

investigation up to one week prior to the

start of verification, in accordance with

19 CFR § 353.31(a). Respondents

maintain that the Department, in

rejecting certain portions of the

respondents’ submission, misapplied

the provision of 19 CFR § 353.31(b)(2),

which states that, ’’ in no event will the

Secretary consider unsolicited

questionnaire responses submitted after

the date of publication of the Secretary’s

preliminary determination.’’ Citing to

the preamble of the relevant regulations,

respondents argue that this provision

applies only to questionnaire responses

received from voluntary respondents

and not to those from mandatory

respondents. See Antidumping Duties,

54 FR at 12742, 12759–60 (Mar. 28,

1989) (final rule).

Further, respondents maintain that, in

accordance with the provisions of its

regulations, the Department has in the

past allowed respondents to supplement

their previous questionnaire responses

prior to verification. See Certain Iron

Construction Casting from the People’s

Republic of China, 50 FR at 43594 (Oct.

28, 1985); Polyvinyl Alcohol from the

People’s Republic of China, 60 FR at

32757 (June 17, 1997); Collated Roofing

Nails from the People’s Republic of

China, 62 FR at 25895 (May 12, 1997)

(preliminary determination). Moreover,

respondents argue that the Department

had sufficient time to analyze and verify

the additional information submitted,

and that the rejection of this information

would unfairly penalize respondents for

providing information that they claim

the Department had not requested be

provided in a questionnaire with an

earlier due date.

For Anshan, the rejected information

consisted of freight information for

certain inputs. Anshan argues that this

freight information should be accepted

because Commerce had not requested

this information in its supplemental

questionnaires and thus this

information was not untimely provided.

For Baoshan Steel, the Department

had requested information on distances

from suppliers for all inputs in its

supplemental questionnaire, and

Baoshan Steel neglected to include

information on the distance for one

category of inputs. Baoshan Steel

submitted the omitted information one

week prior to the start of verification.

For WISCO, the information rejected

by the Department consisted of the

factors of production for producing

oxygen and similar gases. Respondents

argue that the Department, in the

supplemental questionnaire, gave

WISCO the option of either providing

these factors of production or explaining

why these factors of production should

not be used. Respondents allege that,

due to an inadvertent error, the factor

information they intended to provide

was omitted from the supplemental

questionnaire. Respondents submitted

this information one week prior to

verification.

Petitioners argue that respondents’

challenge to the Department’s decision

to reject their untimely submission of

information requested in the

Department’s questionnaires is both

misleading and without merit.

Petitioners refer to 19 CFR § 353.32(b),

which provides that, in the Secretary’s

written request to an interested party for

a response to a questionnaire, the

Secretary will specify the time limit for

response. ’The Secretary will return to

the submitter, with written reasons for

return of the document, any untimely or

unsolicited questionnaire responses

rejected by the Department.’’ 19 CFR

§ 353.31(b)(2). Petitioners maintain that

the respondents’ submissions were

properly rejected by the Department in

accordance with section 353.31(b)(2)

because (1) the information that

respondents claim was improperly

rejected by the Department consists of

information provided in response to

supplemental questionnaires and (2) the

information was submitted after the

deadline for questionnaire responses.

Petitioners add that, although the

Department has allowed respondents to

supplement their previous

questionnaire responses even later than

seven days prior to verification in past

cases, regulations should still be

enforced under the present

circumstances. Petitioners also maintain

that respondents have not adequately

demonstrated that they were not given

ample notice and opportunity to file

said information in a timely fashion.

With respect to Anshan, petitioners

argue that Anshan’s freight information

was not submitted within the deadlines

established by the Department’s

regulations. With respect to Baoshan,

petitioners argue that the rejected

information was requested both in the

Department’s December 19, 1996 and

again in the Department’s March 13,

1997 questionnaire. Petitioners argue

that Baoshan had ample notice and

opportunity to comply with the

Department’s requests and that, as noted

in the Department’s letter of June 16,

1997, there is no reason to believe that

this information was ’inadvertently

omitted.’’ See letter from Edward C.

Yang to Shearman & Sterling, June 16,

1997. With respect to WISCO,

petitioners argue that the Department

correctly rejected WISCO’s submission

of factors of production for oxygen and

similar gases, because respondents

failed to provide this information,

which was requested by the Department

in its questionnaire of March 12, 1997,

in its April 14, 1997 supplemental

questionnaire response. Petitioners

argue that, in response to the

Department’s supplemental

questionnaire, WISCO neither provided

factors of production for oxygen and

similar gases nor explained why it was

inappropriate to revise its calculations

to account for the production of oxygen

and similar gases.

Department’s Position: We agree with

Anshan, but not with Baoshan and

WISCO. For Anshan, we have

reconsidered our prior decision to reject

information on freight distances for

certain inputs. Because, in its March 12,

1997 supplemental questionnaire, the

Department did not specifically request

that Anshan provide information

concerning the means of transportation

or distances for certain material inputs

obtained from domestic sources, this

information did not constitute an out-oftime reply to a questionnaire, and

because the information was otherwise

timely provided, we should reject this

information. Therefore, for the final

determination, we have accepted

Anshan’s information on distances

between its plant and the sources of

certain inputs, and have used this

information in calculating freight

expenses for those inputs.

With regard to Baoshan, the

Department has determined, that it

correctly rejected the information

submitted by Baoshan on June 10, 1997

with respect to the shipping distances
61986 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

for one category of input. Baoshan

stated in that submission, which was

received one week prior to verification,

that they omitted such information in

the supplemental questionnaire

responses due to an alleged oversight.

Because the Department specifically

requested this information in its March

12, 1997 supplemental questionnaire to

Baoshan, which required a complete

response by April 14, 1997, Baoshan

had ample notice and opportunity to

comply with the Department’s requests

for this information. Therefore, we did

not use the rejected information for the

final determination.

For WISCO, the Department has

determined that it correctly rejected

information on factors of production for

oxygen and similar gases. The

Department requested this information

in a supplemental questionnaire on

March 12, 1997. WISCO has stated that

it inadvertently omitted the information

from its April 14, 1997 response due to

a mis-communication and finally

submitted the data in its June 10, 1997

submission. Since WISCO had ample

notice and opportunity to comply with

the Department’s requests, we have not

used the untimely submitted

information on factors of production for

oxygen and similar gases for the final

determination.

Although the legislative history of the

regulation cited by the four respondents

indicates that, in ‘‘unusual

circumstances,’’ the Department may

retain and consider ‘‘unsolicited

questionnaire responses’’ (i.e., initial

responses from voluntary respondents),

this provision does not revoke the rules

of timeliness even for such respondents.

Further, respondents’ reliance on this

passage is inapposite, because they are

mandatory, not voluntary, respondents

and the data at issue were ‘‘untimely’’

provided (based on the time limit

specified by Commerce for response to

the questionnaire), not ‘‘unsolicited.’’

See 54 FR at 12759–60, 12781.

Comment 29: General Issues Regarding

Selection of Surrogate Values

Anshan, Baoshan, Liaoning and

WISCO argue that the Department

should revise the methodology used to

select surrogate values for material

inputs. Respondents argue that, in the

preliminary determination, the

Department departed from its

established ‘‘rules’’ for selecting

surrogate values, which were developed

to ensure ‘‘accuracy, fairness and

predictability.’’ Oscillating Fans, 56 FR

at 55271, 55275, cited with approval in

Lasko, 43 F.3d 1442.

These respondents claim that the

Department made certain

‘‘methodological errors’’ in selecting the

surrogate values used in the preliminary

determination, and urge the following

principles should guide the

Department’s selection of surrogate

values. First, these respondents

maintain that the Department should

use surrogate values that conform to the

specific materials used in production.

Respondents argue that by assigning

values from ‘basket’ categories to certain

inputs which they reported at a more

specific level, the Department departed

from its established practice to base its

surrogate values on the prices in the

surrogate country for materials which

most closely reflect the specific grade

and chemical composition of the type of

input used by the NME producer,

whenever possible. See Lock Washers,

61 FR at 41994, 41996–97. Anshan,

Baoshan, Shanghai Pudong and WISCO

argue that the Department’s reasoning

for using ‘‘basket’’ categories for

surrogate values is incorrect. For

example, they contend that publicly

available published information on

domestic prices in India for each of the

types of coal used by the Chinese

respondents was available and provided

in their March 4 and August 5, 1997

submissions, despite the Department’s

statement in the preliminary

determination that the use of these

‘‘basket’’ categories was necessary

because the Department did not have

publicly available published

information on the specific prices for

specific inputs within the basket

categories. Preliminary Determination,

62 FR at 31976. In addition, respondents

note that each of them provided

information on actual prices paid for

each type of iron ore purchased from

market economy suppliers in both the

questionnaire and supplemental

questionnaire responses.

Second, the four respondents

maintain that the Department departed

from its established practice of

selecting, where possible, sources which

provide domestic, tax-exclusive prices.

See Brake Drums and Rotors, 62 FR at

9160, 9163. Instead, respondents

maintain that the Department used

import data to value a number of inputs

for which publicly available published

information on domestic prices was

already on the record. Respondents

argue that the Department should use

domestic, tax-exclusive prices in

preference to import values.

Third, they maintain, when the

Department does use import data, it

should, in accordance with its

established practice, use the available

import data that is most

contemporaneous with the investigation

period. Respondents argue that, in the

final determination, when the

Department uses import data, it should

use Indian import data for the

investigation period which have become

available since the publication of the

preliminary determination and have

been submitted for the record of this

investigation.

Fourth, they insist that the

Department should not use surrogate

values that are aberrational. See

Sulfanilic Acid from the Republic of

Hungary, 57 FR at 48203, 48206 (Oct.

22, 1992). These respondents contend

that a number of surrogate values used

in the preliminary determination were

aberrational, resulting in the distortion

of the results of the Department’s

preliminary calculations. They urge the

Department to carefully review the

surrogate values used in the final

determination to avoid similar

distortions. In addition, respondents

advise that where the values obtained

from the primary surrogate are

aberrational or otherwise unreasonable,

the Department should use sources

other than the designated ‘‘primary’’

surrogate for surrogate values. Heavy

Forged Hand Tools from the People’s

Republic of China, 60 FR at 49251,

49253 (Sept. 22, 1995).

Fifth, respondents argue that the

Department should properly inflate any

surrogate values that are not

contemporaneous with the investigation

period. In order to do so, respondents

maintain that the Department should

correct certain clerical errors involving

both the selection of the appropriate

data from the International Financial

Statistics publication and the decision

as to whether to use wholesale price

index (WPI) or Consumer Price Index

(CPI) inflators for certain surrogate

values.

Petitioners argue that the Department

properly selected surrogate values for

material inputs in its preliminary

investigation in accordance with

previous practices and regulations.

Petitioners refer to Section 773(c)(1) of

the Act, which states that for the

purposes of determining normal value

in a non-market economy, ‘‘the

valuation of the factors of production

shall be based on the best available

information regarding the values of such

factors.’’ 19 U.S. C. 1677b(c)(1).

Petitioners assert that the statute does

not require Commerce to follow any

single approach in evaluating data.

Olympia Industrial, Inc. v. United

States, Slip Op. 97–44 (Ct. Int’l Trade

1997).

Petitioners state the following with

regard to the ‘‘established rules’’

governing the Department’s approach in

selecting surrogate values: the
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61987

Department has stated that its objective

in selecting surrogate values in a nonmarket economy investigation is to

value the inputs at prices that most

closely reflect the type of product used

by producers in the country under

investigation. See Helical Spring Lock

Washers, 61 FR at 11813, 11815 (March

13, 1997); the Department’s clear

preference is to use published

information that is most closely

concurrent to the specific period of

investigation (POI) or period of review

(POR). See Drawer Slides, 60 FR at

54472, 54476 (October 24, 1995); the

Department has a longstanding practice

of relying, to the extent possible on

publicly available information. See

Sebacic Acid From the People’s

Republic of China, 62 FR at 10530,

10534 (March 7, 1997); it is the

Department’s practice, in selecting the

‘‘best available data,’’ to use data from

a variety of sources and to use different

sources to value different factors.

Sulfanilic Acid from the People’s

Republic of China, 61 FR at 53703,

53704 (October 15, 1996).

Petitioners argue that in the

preliminary determination, the

Department clearly states that it

maintained a preference for using

publicly available tax-exclusive

domestic prices and indicated that the

Department evaluated a number of

possible sources before choosing the

most appropriate and reliable prices.

Petitioners rebut respondents’ claim

that the Department departed from its

practice of using, whenever possible,

surrogate values that conform to the

specific materials used in production.

Petitioners argue that it was appropriate

for the Department to create a ‘‘basket’’

category and assign a single surrogate

value for coal for all respondents, given

that labels provided by respondents for

forms of coal inputs and their respective

uses were confusing and unclear.

Petitioners argue that the Department

did not depart from its practice of using

domestic, tax-exclusive prices in

preference to import values. Petitioners

maintain that the Department’s stated

preference for domestic, tax-exclusive

prices is conditioned upon the finding

of reliable publicly available

information. In the present case,

petitioners assert that the Department

were unable to locate reliable domestic

value at the time of the preliminary

determination. Petitioners argue that the

Department should use the same

sources and values for inputs as it did

in the preliminary investigation except

where amended by material input

suggestions made by petitioners in their

August 5, 1997 PAI submission and

their briefs.

Petitioners argue that the Department

should use available import data most

contemporaneous with the investigation

period if they are otherwise reliable. See

Helical Spring Lock Washers, 61 FR at

41994, 41996–7.

Petitioners argue that respondents’

claims that certain surrogate values are

aberrational are unwarranted.

Petitioners agree with respondents

that the Department should properly

inflate any surrogate values that are not

contemporaneous with the period of

investigation. Petitioners recommend

that the Department use the wholesale

price index (WPI) to derive inflators

regardless of whether the associated

values were reported in Rupees or U.S.

dollars. However, petitioners object to

the use of United States producer price

index (PPI) for inflating dollardenominated prices, which was used in

the preliminary determination.

Petitioners argue that since the inflation

adjustments are intended to reflect price

trends in the surrogate country and not

monetary trends in United States, the

Department should use inflation indices

for the surrogate country, rather than

those for the United States. See e.g.

Circular Welded Non-Alloy Steel Pipe

from Romania, 61 FR at 24274.

Department’s Position: Both

respondents and petitioners are correct

in stating that certain general principles

have guided the Department’s practice

in selecting surrogate values. We agree

that surrogate values should be products

which are as similar as possible to the

input for which a surrogate value is

needed. Likewise, we normally prefer a

fully reliable domestic, tax-exclusive

price to an equally reliable import price.

We also prefer data (import and

domestic) that are more

contemporaneous to the POI/ POR to

data that are less contemporaneous, and

will normally update a value if more

data covering additional months within

the POI/POR become available to us

between the preliminary and the final

determination.

When we must use data that are not

contemporaneous to the POI or POR, we

agree that it should be indexed forward

using an appropriate index. We also

agree that the Department should not

use values which it has found to be

‘‘aberrational,’’ and that when the

values obtained for the primary

surrogate are aberrational, the

Department should seek appropriate

values in other economies, preferably in

those at a similar level of economic

development. We also have a longstanding practice of preferring publicly

available information to other types of

information.

It is important to emphasize, however,

that our overarching mandate is to select

the ‘‘best’’ available data (see 19 U.S.C.

1677b(c)(1)), which involves weighing

all of the relevant characteristics of the

data, rather than relying solely on one

or two absolute ‘‘rules.’’ Thus, for

example, the most specific data may not

be the most contemporaneous, the most

reliable, or from the selected surrogate

country. There is no set hierarchy for

applying the above-stated principles,

nor will parties always agree as to the

reliability of certain data or the

relevance of certain facts or assertions.

Thus, the Department must weigh

available information with respect to

each input value and make a productspecific and case-specific decision as to

what the ‘‘best’’ surrogate value is for

each input. This we have done, to the

best of our ability, in this case.

Concerning petitioners’ comments

regarding the proper inflation of any

surrogate values that are not

contemporaneous with the POI, we note

that the Department agrees with their

assertion that we should use WPI for

those Indian values denominated in

Rupees. However, we disagree with

their objection to the use of PPI for

inflating dollar-denominated prices,

which was the methodology the

Department used in the preliminary

determination. We have determined that

it is a reasonable methodology to use a

U.S. index for those values denominated

in U.S. dollars, because price indices in

the United States would directly impact

those prices denominated in the U.S.

dollars.

Comment 30: Ministerial Error—Freight

for Purchases of Certain Inputs

Petitioners argue that the Department

should change the freight charges for

purchases of certain inputs which travel

by two modes of transportation for

Baoshan, Shanghai Pudong and WISCO.

Petitioners allege that, in the

preliminary determination, the

Department incorrectly weight-averaged

the costs associated with the modes of

transportation.

Respondents did not comment on this

issue.

Department’s Position: We agree with

petitioners with respect to Baoshan and

WISCO. For these companies, we have

corrected the error for the final

determination. However, we disagree

with petitioners concerning Shanghai

Pudong as we determine that this error

is not applicable to Shanghai Pudong.

Because this issue involves business

proprietary information, please see

Concurrence Memorandum for more

information.
61988 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

Company-Specific Comments

1. Anshan

Comment 31: Valuation of Certain

Inputs

Anshan argues that the Department

should revise the surrogate values for

certain inputs (the identity of which

constitutes business proprietary

information) to reflect the translation

corrections provided to the Department

in its June 19, 1997 submission. Anshan

asserts that the translation corrections

accurately describe the value of the

grades of the inputs at issue and that the

Department confirmed their accuracy

during verification.

Petitioners argue that the Department

should not revise surrogate valuations to

reflect the translation corrections

contained in respondent’s June 19, 1997

submission because the translation

corrections constitute untimely and

unsolicited information, and therefore

should be rejected. If the Department

accepts Anshan’s representations,

petitioners recommend that the

Department continue to use the same

value for the inputs as was used in the

preliminary determination and make

adjustments as necessary, according to

their chemical descriptions. Petitioners

refute respondents’ claims that the

results of verification sufficiently

confirmed the accuracy of the

translations. In addition, petitioners

argue that the record information

relating to the inputs (the identity of

which constitutes business proprietary

information) suggests that chemical

content for certain inputs claimed by

respondent are not accurate.

Department’s Position: We agree with

Anshan. We agree that the corrections

concerning this input that Anshan

submitted to the Department on June 19,

1997 (prior to the beginning of

verification) were timely. Therefore, we

disagree with petitioners’ contention

that the information was untimely and

should be rejected. As we indicated in

our verification report for Anshan, we

found at verification that there were

translation problems concerning both

the exact name of the input and its

chemical identity. However, we

examined supporting documentation

which indicated and confirmed the

chemical composition of the input.

Comment 32: Valuation of Ocean

Freight for Input(s) Imported From

Market Economy Suppliers

Anshan argues that the Department

should calculate ocean freight charges

for its purchases of a certain input based

on the actual shipping costs incurred.

Petitioners disagree, claiming that the

documentation provided by Anshan did

not demonstrate the payment was made

in market economy currency.

Accordingly, petitioners urge the

Department to reject the freight rates

proposed by Anshan.

Department’s Position: We agree with

Anshan that we should value ocean

freight charges incurred in shipping

market economy inputs based on the

actual shipping costs incurred. This is

consistent with the Department’s

practice of using the actual prices paid

for inputs which were purchased from

market economy suppliers and paid for

in market economy currency. See 19

CFR 351.408(1). We also disagree with

petitioners’ contention that the

documentation provided by Anshan did

not demonstrate the payment for the

input was in market economy currency.

We note that Anshan included copies of

invoices and bank statements

denominated in U.S. dollars in their

June 19, 1997 submission.

Comment 33: Factors for Sintering Plant

Petitioners argue that the Department

should use facts available for material,

energy, and labor factors for the material

preparation workshop in Anshan’s

sintering plant. Petitioners argue that

the verification reports state that

Anshan failed to report these factors for

the material preparation workshop in

the general sintering plant. With respect

to the labor component, petitioners

recommend that the Department should

use labor figures from the firing shop

and the mineral concentration shop. For

the omitted energy component of this

workshop, petitioners urge that the

Department should use the highest

reported energy consumption (in terms

of electricity, natural gas, and each other

reported energy factor, per metric ton of

plate) for any other shop.

Anshan objects to petitioners’ claim

that it failed to report factors of

production for the general sintering

plant. Anshan argues that omission of

these factors from its response stems

from a misunderstanding during

verification about the functions of the

materials preparation workshop.

Anshan explained that market economy

input is processed prior to importation,

and does not require further processing

by the material preparation workshop.

Therefore, the inclusion of the factors

for the materials preparation department

in Anshan’s factors of production would

result in double-counting.

Department’s Position: We agree with

Anshan. As the market economy input

is processed prior to importation, and

does not require further processing by

the material preparation workshop, we

would be double-counting if we

included in our calculation of normal

value the factors of production for the

material workshop.

Comment 34: Anshan’s Reporting

Methodology

Petitioners argue that Anshan’s

margin must be based entirely on facts

available because its reporting

methodology does not provide an

adequate factual basis for a final

determination. Petitioners contend that

Anshan’s questionnaire responses do

not contain information with sufficient

product-specificity because, they claim,

Anshan’s reporting methodology both

lacks a meaningful product code system

and fails to account for cost variations

between products of different widths.

Petitioners also identify as another

anomaly in factor reporting the lack of

CONNUM-specific electricity factors. If

the Department chooses to accept

Anshan’s reporting methodology,

petitioners request that any final

calculations based thereon must take

into account the errors, omissions and

inconsistencies discovered at

verification.

Anshan, citing Steel Plate from Korea,

58 FR at 37176, 37190 (July 9, 1993),

argues that petitioners’ challenge to

Anshan’s reporting methodology is

unsubstantiated and should be

disregarded. Anshan argues its records

do not allow for the calculation of

width-specific factors of production.

Anshan contends its reporting

methodology does sufficiently identify

the source of production for plates of

differing widths.

Further, Anshan charges that

petitioners have provided no basis for

rejecting the verified methodology used

by Anshan to identify the source of the

slabs for each type of plate. Anshan

argues that it provided a detailed

description of the methodology, along

with supporting documentation which

can trace the source of production of

slabs and ingots. Anshan argues, further,

that which items the Department

examines at verification is something to

be decided not by petitioners but by the

Department. The Department, they note,

does not have to examine every single

issue at verification, as long as it is

satisfied, that, on the whole, the

verification indicates that the response

was accurate. See Silicon Metal from

Argentina, 58 FR at 65336, 65340 (Dec.

14, 1993).

Department’s Position: We agree with

Anshan. During verification, we noted

that Anshan’s reporting methodology

was not based on width-specific data.

Since Anshan did not use a widthspecific methodology in the normal
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61989

course of business, it would be

inappropriate to use facts available

because they reported data based on

their usual system rather than a widthspecific system, unless the system

normally used is found to be distortive

to the margin calculation. The

Department has determined that Anshan

reported its factor data using a nondistortive methodology that provided

information of sufficient product

specificity to support a final

determination.

Comment 35: Freight Amounts on SAL

Invoices

Petitioners argue that freight charges

reported for U.S. sales should be the

freight costs paid by the customer,

rather than the freight costs incurred by

Anshan’s affiliate, Sincerely Asia

Limited (SAL).

Anshan argues that sections 772(a)

and (c) of the Tariff Act requires that

freight costs incurred by the Anshan’s

affiliate, rather than the customer,

should be deducted from export price.

Department’s Position: We disagree

with petitioners. Section 772(c)(2)(A)

calls for the export price to be reduced

by ’the amount, if any, included in such

price (emphasis added), attributable to

* * * expenses * * * incident to

bringing the subject merchandise from

the original place of shipment in the

exporting country to the place of

delivery in the United States.’’ Because

freight costs paid by the unrelated

customer should not be ’included in’’

the export price, there is no reason to

deduct these from export price.

Comment 36: Labor for Plate Mill,

Roughing Mill; Other Sintering Labor

and Iron Making

Plate Mill: Petitioners argue that

respondent should revise labor factors

for plate mill labor to reflect the results

of verification.

Anshan agrees that plate mill labor

figures should be revised, based on their

August 21, 1997 submission, which

reflects the number of workers verified

by the Department.

Roughing Mill: Petitioners argue that

Anshan’s labor database for the

roughing mill should be rejected

because labor figures for that facility

could not be verified. Petitioners argue

that certain labor for this facility

identified by respondents as

‘‘unrelated’’ labor should be attributed

to subject merchandise. For labor factors

for the roughing mill, petitioners urge

the Department to use as facts available

the highest per-ton labor rate of any

other Anshan shop involved in the

production of subject merchandise.

Anshan states that roughing mill labor

figures should be revised, based on their

August 21, 1997 submission, which

reflects the number of workers verified

by the Department.

Other Sintering Labor: Petitioners

argue that the Department should revise

other sintering plant labor according to

discoveries made at verification, and

that the Department should assign

sintering plant maintenance to the

production of subject merchandise

rather than overhead.

Anshan argues that it is not necessary

to reclassify any of Anshan’s workers.

Respondent maintains that Anshan

properly identified all of its labor

expenses at each relevant production

facility, and classified its workers

according to the Department’s

questionnaire instructions; Anshan

states, moreover, that the Department

verified its reporting methodology.

Iron-Making: Petitioners argue that

certain workers that Anshan identified

as ‘‘unrelated workers’’ in the ironmaking plant must be included in labor

costs of producing subject merchandise.

Anshan argues that the Department

examined its classification of workers at

verification and noted the Department

found no discrepancy in this regard.

Department’s Position: We agree with

both respondents and petitioners in

part. Anshan provided a detailed

description of the functions and job

positions for all workers both directly

and indirectly involved in the

production of subject merchandise. In

addition, we verified labor categories at

verification.

For the plate mill, we agree with

petitioners and Anshan, and have used

revised plate mill figures that were

based on the results of verification.

For the roughing mill, we found at

verification that we were unable to

verify the labor calculations submitted

in the June 19, 1997 submission, as we

could not tie these calculations to

supporting summary worksheets

examined at verification. Consequently,

for the final determination, we have

used the highest per-ton labor rate for a

mill contained in Anshan’s August 21,

1997 submission concerning labor

calculations as facts available.

For other sintering labor, we have

revised our calculations for the final

determination to reflect the results of

verification in this category. We

disagree with petitioners that we should

reclassify sintering plant maintenance to

the production of subject merchandise

rather than overhead. We examined the

labor classifications at verification and

found no evidence that Anshan

improperly classified sintering plant

maintenance workers.

Likewise, for iron-making, we

examined Anshan’s classification of

workers at verification and found no

evidence that these workers were

improperly classified.

Comment 37: Material Inputs at No. 2

Steelmaking Plant

Petitioners argue that the Department

should use facts available for certain

‘‘auxiliary materials’’ used at the No. 2

Steelmaking plant that were not

reported to the Department, but

discovered at verification. Petitioners

urge that the Department use the highest

consumption rate reported for the

material (or similar material) by Anshan

or any other respondent at any stage of

production.

Anshan disagrees, arguing that the

auxiliary materials not included in the

reported factors for the No. 2

Steelmaking plant were either refractory

materials used in the repair and

maintenance of equipment or were used

only for the production of non-subject

merchandise. Anshan argues that the

refractory materials should be

considered overhead materials whose

costs need not be reported individually

because overhead materials are included

in the surrogate value for overhead and

thus do not require separate factor

valuation.

As for other unreported material

inputs, Anshan maintains that they

were excluded because they were not

used in the production of subject

merchandise sold by Anshan in the

United States during the investigation

period.

Department’s Position: We agree, in

part, with both Anshan and petitioners.

We agree with Anshan that some of

their ‘‘auxiliary materials’’ are properly

classified as refractory materials, and

thus are part of overhead.

However, for certain other inputs, we

agree with petitioners. There is no

evidence on the record to confirm the

accuracy of Anshan’s contention that

the five unreported inputs other than

refractory materials were used only for

the production of non-subject

merchandise. We were unable to find

supporting documentation either in the

verification report, verification exhibits

or questionnaire responses to confirm

that these inputs were only used for the

production of non-subject merchandise.

Consequently, since Anshan did not

report these factors, we have applied

facts available for these certain inputs

used in the Number 2 Steelmaking plant

for the final determination.

We have information on consumption

levels from Anshan concerning only one

of the five unreported inputs.

Consequently, as facts available, for

three unreported inputs for which we

have no information concerning
61990 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

consumption levels for either the exact

input or an input was substantially the

same, we applied the consumption rate

of the non-reported input for which we

have information. We determined that a

fourth unreported input was

substantially the same as a reported

input, and used the consumption value

for the reported input. To value each of

the five inputs, we used the surrogate

value from the Monthly Statistics either

for the input in question or if no such

value was available, for a similar input.

Because some of the information

associated with this issue is business

proprietary, please see the Concurrence

Memorandum of October 24, 1997.

Comment 38: By-Product Credits

Petitioners maintain that energy used

for additional processing in by-product

production should be deducted from the

by-product credit. Petitioners maintain

that if the respondent is receiving a

credit for a processed by-product, the

energy used for additional processing

must be reported so that its value can

be deducted from the credit.

Anshan argues that if energy is

deducted from the by-product credit,

respondent should still receive a credit

for its by-product production.

Department’s Position: We agree with

both petitioners and respondents.

Because additional energy costs are

incurred in processing the by-product,

energy costs should be deducted from

the by-product credits. Therefore, we

will deduct energy used for additional

processing from the by-product credit.

See Comment 44.

Comment 39: Credit for a By-Product

Produced in Coke Plant

Petitioners argue that Anshan should

receive no credit for a by-product which

was discovered at verification to have

been misreported. If the Department

grants a credit for the by-product at

issue, petitioners urge that the surrogate

value for the by-product be based on the

correction made at verification. If the

by-product undergoes additional

processing, petitioners argue that the byproduct credit must be reduced by the

value of such additional processing.

Anshan objects to petitioners’ claim

that the Department should deny it a

credit for the by-product at issue.

Anshan argues that the Department

verified the amount of this by-product

generated at the coke plant; thus,

Anshan is entitled to a credit for its

production of this by-product.

Department’s Position: We agree with

Anshan. We have revised the byproduct credit for the input which was

correctly reported at verification.

Comment 40: Raw Materials for

Sintering Shop

Petitioners argue that the Department

should use facts available for certain

raw material inputs in the sintering

shop because Anshan failed to provide

the Department with understandable,

usable data with regard to these raw

materials. Petitioners note that Anshan

misidentified one gas input used by the

sintering plant; therefore, petitioners

urge that facts available should be used

with regard to this gas input.

Anshan argues that although there

was some confusion at verification

regarding the correct translation of the

input names, there is no justification for

using facts available. Anshan notes that

both petitioners and respondent appear

to agree concerning the type of materials

in question. Consequently, Anshan

argues that these materials are already

included in overhead and to include

them again as raw materials would

result in double counting.

Department’s Position: We disagree

with petitioners that the Department

should use facts available for these raw

materials. While it was true that we

encountered difficulties at verification

concerning the proper translation of

these items, we were able to examine

supporting documentation concerning

the input. Consequently, we disagree

with petitioners’ assertion that Anshan

did not provide understandable, usable

data with regard to these raw materials.

Because the details of this issue are

business proprietary, please see the

Concurrence Memorandum for a more

complete discussion of this issue.

Comment 41: Moisture Content of a

Certain Factor

Petitioners allege that it was

inappropriate for Anshan to strip out

moisture content of a certain input.

Petitioners urge the Department to

inflate the value to obtain a weight

based equivalent to the weight basis

used for the matching surrogate value.

Anshan argues that it would be

improper and highly distortive for the

Department to inflate the reported factor

in the manner proposed by petitioners.

Department’s Position: We agree with

respondent. As the details underlying

this comment are business proprietary,

please see the Concurrence

Memorandum.

Comment 42: Ministerial Errors

Petitioners argue that the Department

should correct certain ministerial errors

in its preliminary determination as to

Anshan pertaining to ocean freight,

transportation surrogate values, and

foreign inland freight.

First, with respect to ocean freight,

petitioners note that a ministerial error

in the SAS program inadvertently

truncated a data field used in the

calculations of the actual ocean freight

rate paid on an invoice-specific basis for

a market economy carrier. Petitioners

also note that the SAS program failed to

deduct freight charges for certain

invoices.

Second, with respect to transportation

surrogate values for foreign inland

freight, petitioners note that the inflator

the Department used to develop the

transportation surrogate value is

incorrect. According to petitioners, the

truck transportation rate for Anshan

should be changed from $0.02km/MT to

the $0.03/km/MT, which is the value

cited in the cable that is the source of

the surrogate value, and which is the

value used for the other respondents.

Third, with respect to foreign inland

freight, petitioners claim that the

Department inadvertently applied the

surrogate freight rate for truck to certain

foreign inland freight factors for which

the proper transportation freight rate

should be that for train.

Fourth, with respect to the freight

expense incurred for fuel oil, petitioners

argue that the freight charge for fuel oil

which is brought to Anshan by truck

should be revised from $0.20/MT to

$0.03/km/MT, to conform with the

value cited in the cable which is the

source of the surrogate value used.

Anshan had no comment with respect

to the alleged ministerial errors

identified by petitioners.

Department’s Position: We agree with

petitioners as to all of the above

ministerial errors and have made

appropriate corrections for the final

determination.

2. BAOSHAN

Comment 43: Product Specificity

Petitioners argue that Baoshan’s

margin must be based on facts available

because its reporting methodology, even

if faithfully followed, does not provide

an adequate factual basis for a final

determination. Petitioners claim that the

information reported by Baoshan, even

if verified, does not provide an adequate

basis for calculation of a dumping

margin, largely because of a lack of

product specificity. They argue that

verification of an inadequate database

does not transform it into an adequate

database.

Petitioners argue that Baoshan’s factor

information cannot be used because it is

not product-specific. Petitioners claim

that Baoshan’s cost models and

reporting of U.S. sales do not make

distinctions on a proper basis.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61991

Petitioners claim that verification did

not resolve these problems; instead, it

only confirmed that Baoshan applied a

flawed methodology. Petitioners argue

that Baoshan’s margin in the final

determination should be based on

neutral facts available. For a more

detailed discussion of this issue, please

see Baoshan’s Factor Value

Memorandum.

Baoshan argues that the information it

reported was as product specific as

possible. Moreover, Baoshan argues that

this information was fully disclosed in

Baoshan’s February 14 and April 14,

1997 submissions as well as during

verification. Baoshan states that the

Department never asked it to revise its

calculations to make them more

product-specific than its records

allowed. Accordingly, Baoshan argues,

there is no basis for rejecting the

information it has submitted.

Department’s Position: We agree with

Baoshan. The Department verified that

Baoshan reported its factors of

production in a manner as productspecific as possible. The Department has

determined that using a database that

conforms to Baoshan’s records kept in

the normal course of business is a more

reasonable reporting methodology and

produces less distortive results than

would follow from the use of a

constructed reporting methodology that

deviates from Baoshan’s records.

Comment 44: Further Processing of ByProducts

Petitioners state that, in the

verification report for Baoshan, the

Department notes that one of the

reported by-products was further

refined to produce two other byproducts. Petitioners argue that, as with

all other by-products resulting from all

other processes (regardless of the

respondent involved), the Department

must ensure that any surrogate value

given as a credit for any by-product

actually matches the by-product of the

plate production process, rather than

some further refined product.

Petitioners claim that if the Department

cannot match the actual by-product of

the plate production process, but can

only find a surrogate value for the

further-processed material, then that

surrogate value must be offset by the

value of further processing. Petitioners

argue that where the respondent has not

provided sufficient information to

calculate the offset in such

circumstances, the by-product credit

should be denied.

Baoshan did not comment on this

issue.

Department’s Position: We agree with

petitioners. As the Department noted in

its verification report for Baoshan, one

of its by-products was further refined to

produce two other by-products. The

Department also noted that Baoshan did

not report the factors involved in the

further refinement. It is the

Department’s policy to only grant byproduct credits for by-products actually

produced directly as a result of the

production process. A respondent must

report the factors associated with the

further refining of a by-product if it

wishes to receive a credit for the further

refined product. Because Baoshan failed

to report these factors, therefore, we are

only granting a credit for the one byproduct directly produced in the

production process.

Comment 45: Inconsistencies

Discovered at Verification

Petitioners argue that the Department

should correct all inconsistencies

discovered at verification. Petitioners

state that proper surrogate values should

be matched to each input, in the

proportions indicated in the verification

report. Petitioners argue that, where the

record does not contain a suitable

surrogate value, the Department should

use, as facts available, the most costly

material for each respective process on

the record.

Baoshan agrees that all data

discovered at verification to be incorrect

should be corrected for the final results.

However, Baoshan disagrees with

petitioners’ suggestion that the

Department must assign adverse facts

available to value the factors affected by

these changes. Baoshan claims that the

Department has a statutory obligation to

calculate margins as accurately and

fairly as possible. Accordingly, Baoshan

states, regardless of when the factors

information was reported, the

Department should assign

representative surrogate values.

Department’s Position: We agree with

Baoshan. It is the Department’s policy to

assign surrogate values that most closely

match the reported factor. We have

surrogate values for all the inputs

referenced by this comment.

Consequently, there is no need for the

Department to use facts available for

these factors for the final determination.

Because this comment involves business

proprietary information, please see the

Concurrence Memorandum for a more

complete explanation.

Comment 46: Freight Reporting

Petitioners argue that the Department

found numerous discrepancies in the

freight information supplied by

Baoshan; therefore, Baoshan’s reporting

of freight factors is unreliable.

Petitioners argue that, as facts available,

the Department should use the distance

to the most distant supplier for all

freight factors. However, petitioners

state if the Department does not use

facts available for all freight, then it

must correct certain ministerial errors

relating to freight charges in the

preliminary determination. Petitioners

allege ministerial errors concerning two

factors and the highest calculated freight

rate.

Baoshan argues that petitioners

misconstrued the Department’s

verification report. Baoshan argues that

the report discusses the proper

methodology for calculating freight

distances for Baoshan’s suppliers of one

input. Baoshan claims that, at

verification, the Department confirmed

that its suppliers each supplied varying

quantities of an input during the

investigation period—not identical

quantities as the Department had

presumed in making the freight

calculation in the preliminary

determination. Baoshan claims that the

Department’s narrative in its verification

report merely reiterates the information

that was previously submitted. Baoshan

argues that this is not a reason for

calculating the freight costs for this

input based on facts available.

Baoshan argues that, contrary to

petitioners’ allegation, Baoshan did

provide distances and transportation

mode for the input at issue. Baoshan

claims the accuracy of this information

was confirmed by the Department

during verification. Accordingly,

Baoshan argues, the Department should

use this information for the final

determination.

Finally, Baoshan claims that

petitioners’ explanation of the

Department’s ministerial errors with

respect to freight does not provide the

correct calculation of these values.

Baoshan argues that the calculation

which they submitted in their rebuttal

brief should be used.

Department’s Position: We agree in

part with Baoshan. While there were

errors discovered in Baoshan’s reported

freight factors, the errors were not

significant enough to render the

information unreliable. We have

corrected all of the discovered

inconsistencies for this final

determination. We disagree, however,

that the Department verified that

Baoshan received different quantities of

one input from different suppliers.

Because proprietary information is

involved, please see Analysis

Memorandum for Baoshan for further

discussion of this issue. Because we

were unable to rely on Baoshan’s freight

factor data for one input (for reasons

discussed in the Analysis
61992 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

Memorandum), we have used facts

available for freight distances in

connection with that factor. As facts

available, we will continue to use the

same methodology used in the

preliminary determination and take a

simple average of all of Baoshan’s

suppliers of this input.

Comment 47: Valuation of a Certain

Input

Baoshan argues that a certain input,

the identity of which is business

proprietary information, should be

valued based on the input-specific

surrogate value information that has

already been submitted on the record.

Department’s Position: We agree with

Baoshan. Because of the proprietary

nature of this issue, see the Concurrence

Memorandum.

Comment 48: Packing

Baoshan argues that the Department’s

preliminary calculation of the cost of

packing for Bao Steel’s exports contain

three errors. (1) The preliminary

determination, Baoshan claims,

incorrectly calculated packing costs

based on reported information for

loading materials. (2) The Department’s

preliminary packing cost calculations

used an invented ‘‘estimate’’ of the

weight of each piece of packing material

used by Bao Steel. (3) In the preliminary

determination, the Department added an

amount for freight costs to the surrogate

value for the packing materials used by

Baoshan.

Department’s Position: We agree in

part with Baoshan. At verification, the

Department was able to ascertain the

actual weight of Baoshan’s packing

materials. Thus, in the final

determination, we have used this value

instead of the estimated weight used in

the preliminary determination. In

addition, we will not add freight to the

surrogate value for the materials used

for packing because the materials are

self-produced. We disagree however,

with Baoshan’s claim that the

Department used information reported

for loading materials instead of that

reported for packing materials. We used

packing labor information from Exhibit

D–6 of Baoshan’s February 19, 1997

response. Thus, we used the same

packing labor information for the final

determination.

3. Liaoning/(Wuyang)

Comment 49: Verification of Labor

Allocations

Petitioners assert that the document

examined at verification ‘‘Corporate

Announcement of Organizational

Structure’’ was not collected as a

verification exhibit and does not in

itself attest to the accuracy of Wuyang’s

labor allocations. Petitioners allege that

no attempt was made to verify Wuyang’s

labor allocations by examining company

attendance records, payroll ledgers or

other employment records. Thus,

according to petitioners, those

allocations have not been verified and

cannot be considered reliable.

Department’s Position: We disagree

with petitioners. Wuyang’s verification

report states that, in order to tie together

the A–36 allocation calculation for

labor, the Department examined the

original Ingot-Casting Cost Statement,

the Finished Goods Inventory Ledger of

the Steelmaking Plant, and the

Production Accumulation Report of the

Production Office. For steelmaking, the

Department tied original payroll records

to the total number of employees

reported to the Department. The

Department tied the total payroll

expenses for these same employees to

the August and June 1996 payroll

ledgers. The Department noted no

discrepancies. Thus, petitioners are in

error when they state that the

Department did not examine

employment records and that therefore

Wuyang’s labor allocations were not

verified. Furthermore, the Department is

not required to collect particular

documents as exhibits to attest that

items have been verified to its

satisfaction.

Comment 50: Standard Raw Material

Factor Consumption Rates

Petitioners argue that Wuyang’s raw

material consumption rates ignore

differences in chemical composition for

different products. In addition,

petitioners maintain that there is no

supporting documentation to

substantiate Wuyang’s assertion that the

material input factors reported are the

quantities required to produce a ton of

finished product sold on a theoretical

weight basis. Petitioners claim that

Wuyang’s reported factor values are

unreliable and unverified and that it

failed to act to the best of its ability.

Petitioners conclude that the

Department should decline to consider

Wuyang’s raw material factor

information and apply facts available.

Liaoning and Wuyang counter

petitioners’ claim by stating that they

fail to recognize that Wuyang’s carbon

steel plate is produced using scrap steel

and that although Wuyang’s steel scrap

factor inputs are, in fact, identical for

each grade of subject merchandise that

the company produces, the types of

scrap steel used in production differ in

chemistry for different grades of

merchandise. Liaoning and Wuyang

argue that Wuyang’s reported material

inputs thus account for the differences

in inputs required to produce different

products and reflect the actual material

inputs for each product sold. Liaoning

and Wuyang conclude that Wuyang has

provided the Department with complete

and accurate information, which has

been verified without discrepancy. With

respect to production on a theoretical

weight basis, Wuyang explains that it

has allocated actual consumption to

theoretical production in a manner

similar to the manner the way in which

a company uses a standard cost system

to allocate actual costs.

Department’s Position: We agree with

Liaoning and Wuyang. The verification

report does not note any discrepancies

between what it encountered at

verification and what Wuyang reported.

With respect to the petitioners’ criticism

as to Wuyang’s use of theoretical

weights, we note that Wuyang reported

the actual amounts of material inputs

required to produce one theoretical ton

of finished product. Consequently, for

the final determination, there was no

need for the Department to make any

adjustment to factor or sales amounts

due to Wuyang’s use of theoretical

weight.

Comment 51: Reliability of Labor

Allocations

Petitioners state that Wuyang’s

reported labor input rates are

understated and must be rejected.

Petitioners conclude that the

Department must base the final results

for Liaoning and Wuyang on the adverse

best information available pursuant to

19 U.S.C. § 1677e(b) and (c). Failing

that, the Department must revise

Wuyang’s data. In addition, petitioners

argue that respondent made a clerical

error in its labor hour calculations.

Department’s Position: We agree with

petitioners that Wuyang’s reported labor

input rates are understated, and we have

therefore recalculated those rates. We

also agree that there was a clerical error

in the labor hours calculation, and have

corrected that error for the final

determination. Because this issue

involves business proprietary

information, please see the Concurrence

Memorandum for a further discussion of

this issue.

Comment 52: Treatment of Heavy Oil,

Oxygen and Coal Gas

Petitioners, citing Sebacic Acid from

the People’s Republic of China, 62 FR at

10530 (March 7, 1997), state that,

consistent with past practice, heavy oil,

oxygen, and coal gas should be treated

as direct energy inputs rather than as

overhead expenses. Petitioners add that
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61993

Wuyang has never provided evidence

that heavy oil was not a fuel and that

at no time has Wuyang explained how

heavy oil was used in the production

process.

Liaoning and Wuyang have expressed

opposition to the Department’s

inclusion of heavy oil in energy costs.

See Wuyang’s submission of June 16,

1997. Liaoning and Wuyang state that in

the event that the Department disagrees

with Wuyang and includes heavy oil in

energy costs, the Department should use

the revised factor the Department

verified. Liaoning and Wuyang add that

the Department used facts available to

determine Chinese inland freight for

heavy oil. If the Department were to

value heavy oil as a factor of production

rather than including it in overhead,

and thus were to require data for

calculating freight, the Department

should use the freight distance reported

in its June 16, 1997 submission

according to Liaoning and Wuyang.

Department’s Position: We agree in

part with both petitioners and

respondents. At the preliminary

determination we included electricity

and coal gas as direct materials as well

as heavy oil with freight added (see

calculation memorandum from case

analysts to the file, June 3, 1997). At

verification, the Department learned

that Wuyang had mistranslated the

measure for heavy oil as kilograms

when it should have been represented

in jin, a Chinese unit of measure

equivalent to half a kilogram. See

Memorandum to Edward Yang, Director,

Office of AD/CVD Enforcement Office 9,

from Elizabeth Patience and Doreen

Chen, Analysts, August 5, 1997.

However, neither at verification nor at

any other time did Wuyang provide

evidence that heavy oil was not a fuel

or explain how it was used in the

production process. We therefore: (1)

Used the revised usage factor for heavy

oil described in the verification report,

(2) included electricity, coal gas and

heavy oil as direct energy inputs and (3)

used the freight distance Wuyang

reported in its June 16, 1997

submission.

Comment 53: Transportation From

Factory to Port

Petitioners maintain that Wuyang

knew that the subject merchandise it

sold to Liaoning was destined for resale

in the United States, and Liaoning never

took physical possession of the subject

merchandise. Accordingly, the surrogate

value of the cost of transporting the

subject merchandise from the factory to

the port of exportation should be

deducted from the U.S. price, conclude

petitioners, in accordance with the

practice described in Brake Drums and

Rotors, 62 FR at 9160, 9170.

Liaoning and Wuyang state that

foreign inland freight should not be

deducted from Liaoning’s export prices

because this expense was not incurred

by Liaoning, but rather was incurred by

its unaffiliated supplier. They further

argue that, at verification, the

Department ascertained that Wuyang’s

factory price included delivery of the

merchandise to the seaport where it was

shipped to the United States by

Liaoning. Respondent argues that in

Titanium Sponge From the Russian

Federation: Final Results of

Antidumping Duty Administrative

Review, 61 FR at 58525 (November 15,

1996) (‘‘Titanium Sponge’’), the

Department determined that ‘‘when a

reseller, not the producer, is considered

the exporter, the ‘‘original place of

shipment’’ is the point from which the

reseller shipped the merchandise.’’

Respondent concludes that Liaoning’s

acquisition price thus included all

inland freight expenses, and the cost of

transporting the subject merchandise

from the factory to the PRC seaport

should hence be treated as a component

of Wuyang’s total costs instead of a

deduction from the price to the U.S.

customer.

Department’s Position: We agree with

petitioners. In Brake Drums and Rotors

we explained that it is the Department’s

‘‘normal methodology to strip all

movement charges, including all foreign

inland freight, from the U.S. price being

compared to the NME normal value

based on factors of production.’’ While

it is true that in Titanium Sponge the

Department did not deduct factory-toport movement charges from the U.S.

starting price, and instead included ‘‘in

normal value an amount for the inland

freight,’’ the circumstances in that case

were different from those in the current

investigation. Specifically, in Titanium

Sponge, (1) the subject merchandise

produced in an NME country was sold

to an exporter located in a market

economy without knowledge on the part

of the producer that the United States

was the ultimate destination for the

merchandise, and (2) the exporter took

physical possession of the subject

merchandise. Liaoning is not located in

a market economy; therefore the actual

price it paid to Wuyang, which also is

not a market economy firm, is not

relevant. (Furthermore, Liaoning’s

supplemental section B questionnaire

response states that ‘‘Liaoning does not

hold any inventory of the subject

merchandise prior to export’’). The

expense incurred to transport the steel

to the port is part of the cost of the U.S.

sale and the factory was the original

place of shipment for the sale. Thus the

Department has continued to deduct the

surrogate value of the cost of

transporting the subject merchandise

from the factory to the port of

exportation from the U.S. price in its

final determination calculations.

4. Shanghai Pudong

Comment 54: Facts Available

Petitioners allege that the verification

team’s investigation of Shanghai Pudong

revealed that the company had been

repeatedly misstating and concealing

information concerning many critical

aspects of this investigation. See, e.g.,

Verification Report at 1–2 (listing seven

of the items that had been misreported

by this respondent). Petitioners contend

that the consistency and repetition of

Shanghai Pudong’s omissions and

misrepresentations suggest that these

were not innocent mistakes, but

calculated to obtain results more

favorable to Shanghai Pudong,

demonstrating its repeated lack of

cooperation in providing the requested

information. Petitioners argue that

Shanghai Pudong’s actions in this

regard have prejudiced the petitioners

and warrant application of adverse facts

available.

Shanghai Pudong argues that

petitioners’ accusation and request for

adverse facts available is completely

without merit. Shanghai Pudong asserts

that the only evidence offered by

petitioners of the alleged omissions

were errors corrected by Shanghai

Pudong at the start of verification.

Shanghai Pudong asserts that it went to

great lengths to ensure that the

information provided to the Department

was as accurate and complete as

possible and that the Department

verified the responses finding only

minor errors.

Department’s Position: We disagree

with petitioners. The errors cited by

petitioners were corrected by

respondents prior to the start of the

Department’s verification. In addition,

the Department examined the errors in

question and determined that they were

not large enough or sufficiently different

from the previous responses to

constitute a new questionnaire

response. Consequently, the Department

determines that there is no basis

rejecting Shanghai Pudong’s entire

response for the use of total adverse

facts available in this situation.

Comment 55: Shanghai Pudong and

Shanghai No. 1

Petitioners contend that Shanghai

Pudong and Shanghai No. 1, which did

not respond to the Department’s
61994 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

questionnaire, should be collapsed by

the Department and treated as a single

entity because, they allege, both plants

are controlled by Shanghai

Metallurgical. Petitioners contend that

Shanghai Metallurgical is involved in

the business operations of Shanghai

Pudong and Shanghai No.1. They note

that the Department discovered at

verification that Shanghai Metallurgical

appoints the Chairman of the Board of

both Shanghai Pudong and Shanghai

No.1. Additionally, petitioners note that

all large investments by Shanghai

Pudong and Shanghai No. 1 must be

approved directly by Shanghai

Metallurgical. Petitioners claim that

respondents characterization of

Shanghai Pudong and Shanghai No. 1 as

‘‘competitors’’ is simply preposterous.

Petitioners note that there is an annual

meeting between Shanghai

Metallurgical, Shanghai Pudong and

Shanghai No. 1 which includes

discussion of business targets,

investment and productivity. Petitioners

state that no such meetings or

discussions pursuant to such meetings

could possibly take place between true

competitors.

Petitioners also contend that the

production facilities of Shanghai

Pudong and Shanghai No.1 are not

substantially different, thus presenting

the possibility of manipulation of price

or production. Therefore, that the two

companies should be treated as one

entity for purposes of calculating an

antidumping margin.

Shanghai Pudong asserts that under

the provisions of Section 771(33) of the

Tariff Act, Shanghai Pudong and

Shanghai No. 1 are not affiliated. It

states that the two companies are not

siblings, spouses, or ancestors/lineal

descendants. The two firms, Shanghai

Pudong contends, are not officers,

directors, partners or employers nor do

they control each other or own stock in

one another. Shanghai Pudong argues

that Shanghai Metallurgical does not

exercise control over either it or

Shanghai No. 1. Accordingly, they

argue, this is not a case of ‘‘[t]wo or

more persons directly or indirectly

controlling, controlled by, or under

common control with, any person’’

under the terms of Section 1677(33)(f) of

the statute. Consequently, Shanghai

Pudong claims there is no basis for

finding that Shanghai Pudong and

Shanghai No. 1 are affiliated under the

statute.

Shanghai Pudong states that it would

also be improper to collapse the two

companies because of significant

differences in their production facilities

and capabilities.

Shanghai Pudong further claims that

there is no possibility of manipulation

of price or production by Shanghai

Pudong and Shanghai No.1. It asserts

that the two companies are independent

entities that do not share any managerial

employees or board members. It notes

that there are no joint ventures between

the companies, and claims that they do

not share marketing information—each

company makes independent marketing

and pricing decisions. They also do not

share information regarding production

or scheduling. Consequently, Shanghai

Pudong asserts, there is absolutely no

evidence of any potential for the

manipulation of prices or production in

the event that Shanghai Pudong and

Shanghai No. 1 are not collapsed.

Shanghai Pudong also notes that

collapsing it with Shanghai No. 1 for the

purposes of calculating costs would

directly contradict the Department’s

past decisions. It claims in the German

Large Newspaper Printing Press case,

the Department acknowledged that the

related producers of identical subject

merchandise satisfied the normal

criteria for collapsing, but nevertheless

refused to collapse the companies for

the purpose of its cost calculations. See

Notice of Final Determination of Sales

at Less Than Fair Value: Large

Newspaper Printing Presses from

Germany (‘‘LNPPs from Germany’’), 61

FR 38166, 18188 (July 23, 1996). The

Department held that the criteria ‘‘relate

to collapsing companies for sales

purposes rather than cost.’’ Shanghai

Pudong claims there is clearly no basis

for collapsing it with Shanghai No. 1—

competitors who do not have any

business dealings with one another—for

the purposes of calculating costs.

Department’s Position: Petitioners

claim that the relationship which

Shanghai Pudong and Shanghai #1 share

with Shanghai Metallurgical requires

that the Department ‘‘collapse’’ the two

producers based on an analysis under

the criteria set forth in Nihon Cement.

See Nihon Cement Co. v. United States,

17 CIT 400 (1993).

We have construed petitioners’ claim

as a request to examine whether it is

appropriate for Shanghai Pudong to be

treated a separate entity for purposes of

assigning a dumping margin.

The sole reason advanced by

petitioners for arguing that Shanghai

Pudong should not be given a separate

rate is that this result is precluded by

Shanghai Metallurgical’s alleged control

over Shanghai Pudong and Shanghai

No. 1.

In NME cases we only assign separate

rates to exporters and Shanghai No. 1

did not export to the United States.

As discussed above in Comment 1, we

have determined that Shanghai Pudong

has met the criteria for separate rates by

demonstrating both a de facto and a de

jure absence of government control over

its export operations. Shanghai No. 1

has made no such demonstration and

therefore is not entitled to a separate

rate.

Furthermore, we note that, even if we

had conducted a ‘‘collapsing’’ analysis,

with respect to Shanghai Pudong and

Shanghai No.1, the results would have

been identical because substantial

retooling would be required in order for

Shanghai Pudong and Shanghai No. 1 to

restructure manufacturing priorities.

Finally, we determine that although

there is some potential for manipulation

of price or production, this potential is

not ‘‘significant.’’ Because business

proprietary information is associated

with these conclusions, please see the

Concurrence Memorandum for details.

We also note that Shanghai Pudong

incorrectly cites Comment 13 of LNPPs

from Germany for the proposition that

the Department will not ‘‘collapse’’

producing companies whose sales data

it is not using. Because the comment

cited involved a narrow issue of

averaging the cost of manufacturing the

subject merchandise with respect to the

respondent company and its affiliate,

the question of ‘‘collapsing’’ (i.e.,

treating two firms as a single

respondent) was not raised in that case.

Therefore, what the Department meant

by the last sentence of Comment 13 in

LNPPs from Germany was that the five

collapsing criteria cited by the LNPPs

respondent referred to ‘‘collapsing

companies,’’ rather than to decisions

solely involved cost averaging.

Comment 56: Unreported Consumption

of an Input

Petitioners contend that Shanghai

Pudong’s consumption and conversion

factors for a certain input are incorrect.

Petitioners state that information

obtained at verification was

undocumented and inconsistent with

information previously submitted by

respondent. Petitioners note that two of

Shanghai Pudong’s facilities showed a

different usage rate per ton of the input.

Accordingly, they urge that the

Department should base valuation of the

input on adverse information available.

Shanghai Pudong argues that

petitioners’ arguments are flawed and

should be disregarded. It notes that the

usage per ton of the input varies by

facility. In addition, it contends that it

did not track the usage of the input in

the normal course of business.

Consequently, at the request of the

Department, Shanghai Pudong
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61995

calculated a conversion calculation that

yielded the values reported to the

Department.

Department’s Position: We agree with

Shanghai Pudong. We reviewed this

issue at verification and found that the

usage rate for the input does vary by

facility. Consequently, we asked

Shanghai Pudong to calculate the

conversion factor and amount of the

material necessary to produce the input

which we examined at verification.

Since Shanghai Pudong’s methodology

was reasonable, we have accepted these

values for the final determination.

Because this issue involves business

proprietary information, please see the

Concurrence Memorandum for a more

complete explanation.

Comment 57: Transportation Charges for

Certain Inputs

Petitioners contend that the

Department should use adverse facts

available to value transportation charges

for a certain input. They argue that, at

verification, the Department found that

Shanghai Pudong’s reported information

for the largest suppliers of this input

were incorrect. Petitioners argue that, as

adverse facts available, the Department

should calculate freight charges for this

input based on the longest distance and

highest volume reported.

Petitioners also urge the Department

to use adverse facts available for the

transportation distances for four other

inputs. Petitioners note that the

Department discovered errors at

verification with respect to these inputs.

Shanghai Pudong asserts that it

attempted to provide support for the

input at verification but was not

allowed to by the Department. Shanghai

Pudong argues that despite the errors

uncovered at verification, the

information reported was basically

accurate and can be used for the final

determination.

Concerning the transportation

distances for the four other inputs,

Shanghai Pudong notes that the

Department verified the information and

found only minor errors. Shanghai

Pudong claims that the Department

should follow its established practice

and use the verified information in the

final determination, citing Ferrosilicon

from Brazil, 59 FR at 732, 736 (January

6, 1994) and Sulfur Dyes, 58 FR at 7537,

7543.

Department’s Position: We agree with

petitioners in part. We found at

verification that Shanghai Pudong

incorrectly reported its top ten suppliers

for a certain input. The Department

examined Shanghai Pudong’s

documentation and methodology with

the assistance of its staff and found it to

be incorrect. Consequently, for the final

determination, we calculated the freight

distances for this input using the longest

distance reported for the input.

However, we disagree with petitioners

regarding the transportation information

supplied for the other four inputs. The

Department verified this information

and found only minor errors.

Consequently, we have determined that

it is not necessary to use facts available

for the distances for these inputs. Due

to the proprietary nature of details

concerning this issue, see the

Concurrence Memorandum.

Comment 58: Unreported Inputs From

Unaffiliated Company

Petitioners contend that, at

verification, the Department asked for,

but was unable to obtain from Shanghai

Pudong, certain information concerning

inputs from an unaffiliated company.

They claim that certain information was

not part of the record and, therefore, the

Department should base its calculations

on adverse facts available.

Shanghai Pudong argues that the

petitioners misrepresent the facts

regarding the operations of the

unaffiliated company. Shanghai Pudong

contends that there is information on

the record concerning certain inputs

that it was able to obtain from the

company. Shanghai Pudong states that

for one input, it was unable to obtain

the information from the unaffiliated

entity. However, it notes that it

attempted to fully cooperate with the

Department. Further, it claims that

petitioners’ suggestion for using facts

available for this situation is

inappropriate because this is not a

situation in which an interested party

failed to cooperate.

Department’s Position: We agree with

respondents. Because of the proprietary

nature of the details of this issue, see the

Concurrence Memorandum.

Comment 59: Gas Inputs

Petitioners contend that Shanghai

Pudong misled the Department by not

correctly reporting gas inputs that were

used in a certain production facility.

Petitioners urge the Department to use

adverse facts available for these gas

inputs.

Shanghai Pudong argues that

petitioners misunderstand the

production process and have

erroneously stated where the inputs are

generated. Shanghai Pudong claims that

the production facility accounted for the

inputs in question in the

‘‘miscellaneous expenses’’ category.

Shanghai Pudong also notes that, in the

normal course of business, the facility

only consumed trivial amounts of these

inputs. Consequently, Shanghai Pudong

did not track these inputs in its normal

record keeping system. Therefore,

respondents state, there is no need to

use facts available in this situation.

Department’s Position: We agree with

respondent. We found at verification

that Shanghai Pudong did use small

amounts of certain inputs in a particular

facility and that respondent included

these inputs in the ‘‘miscellaneous

expenses’’ of its monthly production

report.

Comment 60: Adjustment of Labor

Inputs

Petitioners argue that the Department

should adjust Shanghai Pudong’s

reported labor inputs upward to account

for the cost factors associated with

transporting slabs between Shanghai

Pudong’s facilities. They contend that,

because respondent did not report these

factors, the Department should use

adverse facts available to calculate labor

costs incurred in the transportation

process.

Shanghai Pudong asserts that the

labor used to move materials between

facilities is properly treated as an

overhead expense. They further state

that they notified the Department that

they treated this expense as part of

overhead in the supplemental

questionnaire response. Shanghai

Pudong further notes that the

Department never notified Shanghai

Pudong that this methodology was

incorrect in any way. Shanghai Pudong

argues that petitioners’ arguments for

the use of facts available are incorrect

and should be rejected.

Department’s Position: We agree with

Shanghai Pudong that the labor used to

move materials between facilities is

properly treated as overhead. We

verified and accepted Shanghai

Pudong’s methodology for reporting the

workers involved and the unit with

which they are associated.

Comment 61: Assignment of

Appropriate Surrogate Values for a

Certain Input

Respondents argue that the

Department should assign appropriate

surrogate values to the two different

grades of a certain input used by

Shanghai Pudong. They maintain that

because the Department discussed usage

of different grades at verification and

because these two grades vary

substantially in market value, the

Department should assign appropriate

surrogate values to each of the grades

actually used in the production process.

Petitioners contend that there is no

evidence on the record to support

respondents’ proposed methodology of
61996 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

valuing the input by grade. According to

petitioners, the Department never

verified the quantity and value of the

different grades produced or consumed.

The new information submitted by

respondents should be disregarded as it

contains unverified information and

unexplained calculations based on the

unverified information. Petitioners

suggest valuing this input as they

suggested in their comment for the

relevant surrogate values.

Department’s Position: We agree with

petitioners that this information was

new at verification and represents a

major change to the data which had

been previously submitted. It has been

the Department’s practice that if this

information constitutes a significant

change, the Department may not use

this information in the final

determination. Failing to report inputs

in a timely manner clearly constitutes a

major impediment to the investigation.

See 19 U.S.C. 1677e((a)(2)(c)). Moreover,

by not reporting certain inputs until

after the due date for such information,

Shanghai Pudong has failed to act to the

best of its ability to comply with the

Department’s requests for timely

submissions of information.

However, the Department, in keeping

with our position in comment 29 above,

agrees that it is our responsibility to

value each of the grades of the input

separately, to the best of our ability.

Therefore, we have valued the two

grades reported before verification

separately. We are valuing one grade of

the input at the market economy price

paid by the respondent and we are

valuing the other grade of the same

input with Indian Monthly Statistics.

See Shanghai Pudong’s factor valuation

memorandum for more information on

this issue.

Comment 62: Ministerial Errors

Petitioners allege that the Department

made certain ministerial errors in the

preliminary determination with respect

to Shanghai Pudong.

Factor Costs for Certain Inputs:

Petitioners argue that the Department

should value two inputs based on the

production factors submitted by

Shanghai Pudong rather than Indian

surrogate values. Respondents agree

with petitioners that the Department

should use its reported factors rather

than the values from Indian Monthly

Statistics.

Transportation Surrogate Values:

Petitioners allege that the Department

used an incorrect transportation

surrogate value for truck freight in the

preliminary determination.

Respondents had no comment on this

issue.

Freight Error: Petitioners contend the

Department incorrectly calculated the

freight charges in the preliminary

determination. Respondents did not

comment on this issue.

Respondents had no comment on this

issue.

Freight for a Certain Input: Petitioners

argue that the Department should revise

its calculation of the freight charges

associated with a certain input.

Respondents did not comment on this

issue.

Department’s Position: (a) Factor costs

for certain inputs: We have used

surrogate values from Indian Monthly

Statistics for these inputs. (b)

Transportation surrogate value: We

agree with petitioners and have

corrected the error for the final

determination. (c) Freight error: We

agree with petitioners and have

corrected the error for the final

determination. (d) Freight for a Certain

Input: We agree with petitioners that we

incorrectly calculated freight for a

certain input in the preliminary

determination. However, the ministerial

error allegation is irrelevant to the final

determination as Shanghai Pudong

submitted revised transportation

distances which correct for this error.

Because of the proprietary nature of the

details of these issues, see the

Concurrence Memorandum for a more

complete discussion.

5. WISCO

Comment 63: Facts Available: Certain

Factors

Petitioners argue that, because certain

factor inputs were misreported or

withheld and only discovered at

verification, the Department should

apply adverse facts available for these

inputs. In particular, they contend that

WISCO did not report the inputs of

certain factors at particular stages of

production. Second, they argue that

WISCO misreported the amount of byproduct electricity generated at a certain

stage of production. Additionally, they

contend that WISCO misreported

certain by-products. Finally, they argue

that WISCO failed to report distances for

certain material inputs. They contend

that this misreporting constitutes a

significant impediment to this

investigation and as such, the

Department should apply adverse facts

available in making its final

determination. See 19 U.S.C. 1677e

((a)(2)(c)), 19 U.S.C. 1677e (b), and 19

U.S.C. 1677m(e) (1996).

WISCO asserts that the errors

discovered at verification were minor in

nature and did not impede the

investigation. It contends that the

Department typically uses information

to which minor correction have been

made in its final determination.

Department’s Position: We agree with

WISCO in part. We found that five of

the six errors that the Department

discovered at verification were minor in

nature and do not justify the use of

adverse facts available. Our review of

these five errors indicates that they were

caused by oversight or clerical error on

the part of WISCO. Consequently, we

disagree with petitioners’ assertion that

these errors clearly constituted a

significant impediment to this

investigation or that they proved that

WISCO failed to act to the best of its

ability to comply with a request for

information. We note that it has been

the Department’s position in the past to

accept such changes for the final

determination of an antidumping

investigation. See, e.g., Ferrosilicon

from Brazil, 59 FR at 736; Sulfur Dyes,

58 FR at 7543.

However, we agree with petitioners

that one of the six errors indicated that

WISCO did not report the inputs of

certain factors at particular stages of

production. Therefore, for these inputs

we have applied facts available for the

final determination. Because this

involves proprietary information, please

see the Concurrence Memorandum for a

more complete explanation.

Comment 64: By-Product Credits

Petitioners contend that the

Department should reject WISCO’s

claimed credits for by-products at a the

coke-making facility. They allege that, at

verification, the Department discovered

that many of the agents used to further

process a certain by-product into other

by-products are listed on WISCO’s

production reports but were not

reported to the Department.

Additionally, they argue that the

Department should not allow the offset

because the claimed by-products require

further processing. For this reason, they

argue that the Department should apply

facts available and deny any credit for

these by-products, relying on 19 U.S.C.

1677e(a) and (b).

Respondents argue that petitioners’

arguments appear to be based on a basic

misunderstanding of WISCO’s reporting

of factors used and products produced

at WISCO’s coke-making facility.

WISCO maintains that almost all of the

factors used to process the by-products

of the coke-making facility were

included in the reported factors of

production and that the minor reporting

errors discovered during verification

regarding factors used in the coke-
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices 61997

making facility consisted of the

omission of certain inputs used to

process a by-product. It contends that it

told the Department during verification

that only a few inputs are consumed

during processing. Therefore, WISCO

argues that the only relevant omissions

of factors in the particular facility were

the quantities of certain inputs used in

the processing of the by-product.

Furthermore, they assert that the

verification report indicates that these

quantities were reported in the

production records provided to the

Department during verification and are

included in the record in Verification

Exhibit W–24. WISCO urges the

Department to use this verified

information to determine the quantity of

inputs at the facility.

Department’s Position: We agree with

petitioners in part. The Department

noted in its verification report that

‘‘WISCO did not report the factors used

to further process [the inputs]. In fact,

many of the agents used to refine [the

inputs] are listed on the production

reports, but were not reported by

respondent.’’ The Department only

discovered these factors in examining

the production reports at the beginning

of verification, because WISCO did not

submit this information prior to

verification. It is the Department’s

general policy to only grant by-product

credits for by-products actually

produced directly as a result of the

production process. A respondent must

report the factors associated with the

further refining of a by-product if they

wish to receive a credit for the further

refined product. Even though these

factors were in the production reports,

WISCO failed to report these factors to

the Department. Therefore, we have

denied any credit for these by-products

for the final determination. Because this

issue involves business proprietary

information, please see the Concurrence

Memorandum for more information.

Comment 65: Facts Available

Petitioners contend that market

economy purchases of certain inputs

should be assigned adverse facts

available because the company was

unable, at verification, to provide

invoices for the purchases. See Persico

Pizzamiglio S.A. v. United States, 18

CIT 299, 305 (1994), 19 U.S.C. 1677m(i),

and 19 U.S.C. 1677e (1988). In addition,

they argue that the domestically

purchased input should be assigned

facts available for this company due to

the company’s failure to report

consumption of these inputs until after

the questionnaire deadline. As facts

available, they argue that the

Department should assign the highest

surrogate value on the record to each

purchase.

Respondents maintain that, even

though they were unable to provide

invoices to substantiate their market

economy purchases of certain inputs,

they did provide the Department with

copies of the relevant contracts, which

contained the price and the terms of

sale, and Chinese Government Customs

(CCIB) forms showing the quantities

imported. They contend that all relevant

information regarding WISCO’s market

economy purchases of these inputs were

verified by the Department and should

be used in the final determination.

Department’s Position: We agree with

petitioners that we should assign

adverse facts available to market

economy purchases of inputs at issue.

We found at verification that WISCO

was unable to provide invoices for the

purchases of these inputs. We did

examine the terms of sale based on the

contracts and the CCIB forms. The CCIB

forms do not include prices, and while

the contract show the original

arrangements, they may not reflect the

prices ultimately paid. This is why the

Department relies on invoices reflecting

the amount actually billed and the

currency in which payment was

required. These invoices should be

available to WISCO, and WISCO’s

failure to produce them casts doubt on

its assertion that the contract terms were

final. For the final determination, we are

using, as facts available, a single

surrogate value from Indian Monthly

Statistics for these inputs. Because this

issue and our calculation of adverse

facts available involves business

proprietary information, please see the

Concurrence Memorandum for a more

complete explanation of the issue and

our methodology.

Comment 66: Financial Records

Petitioners, citing Ansaldo

Componenti, S.p.A. v. United States,

628 F. Supp. 198, 204 (CIT 1986) argue

that the Department should apply

adverse facts available because WISCO

failed to provide certain financial

records requested by the Department in

the supplemental questionnaire. See

also 19 U.S.C. 1677e(a).

WISCO claims that, although it did

decline to submit copies of these

documents due to legitimate business

concerns, this decision did not impede

the course of the investigation. In

addition, WISCO states that the

Department did not inform it that its

response was deficient in any way.

WISCO maintains that, in non-market

economy cases, issues regarding the

actual profits earned by non-market

economy producers and regarding its

actual non-operating income and

expenses are not relevant to the

investigation. Instead, this information

is subsumed in the SG&A expense rate

and the profit rate that are obtained

from a surrogate country for use in the

Department’s normal value calculations.

Therefore, WISCO argues that adverse

facts available is not warranted in this

case.

Department’s Position: We agree with

respondents that, although WISCO did

not provide the requested financial

reports, it did provide a sufficient

explanation of why this information is

considered sensitive. We also

determined that the information

contained in the financial reports was

not necessary to the investigation and,

therefore, WISCO’s failure to provide it

did not impede the course of the

investigation. Consequently, we

disagree with petitioners claim that we

should use adverse facts available for

WISCO based on this issue. Because this

issue involves business proprietary

information, please see the Concurrence

Memorandum for a more complete

explanation.

Comment 67: Product Specificity

Petitioners contend that the

Department should reject WISCO’s

claim that it is unable to report certain

input factors based on width and other

characteristics. They argue that, in fact,

other information WISCO submitted on

the record suggests that WISCO could

have reported these characteristics.

Accordingly, petitioners urge the

Department to apply adverse facts

available.

WISCO maintains that it properly

answered the Department’s March 12,

1997 supplemental questionnaire on

this issue and explained therein why

width cannot be a distinguishing factor

for WISCO in the assignment of control

numbers. The Department, they argue,

did not notify WISCO that its response

was deficient in any way and at

verification, the Department examined

WISCO’s production records and

verified that its descriptions were

correct.

Department’s Position: We agree with

WISCO that its response to the

supplemental questionnaire was

sufficient to explain why WISCO was

unable to report input factors based on

certain characteristics. At verification,

we examined WISCO’s records and

found them to be consistent with the

response. Therefore, we disagree with

petitioners’ claim that the Department

should use facts available for this issue.
61998 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Notices

Comment 68: Adjustment of Labor

Inputs

Petitioners argue that the Department

should adjust WISCO’s reported labor

inputs upward to account for the

significant materials handling costs

associated with transporting materials

and equipment between WISCO’s

facilities. They contend that, because

labor may play a more significant role

in the transportation process than is

indicated by WISCO’s current allocation

methodology, the Department, using

adverse facts available, should calculate

labor and other costs incurred in the

transportation process and use this

information to adjust upward the labor

factor usage rates. See 19 U.S.C.

1677b(c)(3).

WISCO asserts that the labor used to

move materials between facilities is

properly treated as an overhead

expense. It further states that the

Department verified that the bulk of the

materials are transported between

facilities using conveyor belts and

pipelines and, therefore, petitioners’

assertion that the labor costs associated

with the transportation of material is

significant is factually incorrect.

Furthermore, WISCO maintains that it

has a separate transport unit that is

responsible for movement of materials

and equipment and it is not possible to

link specific inputs used in the

transport unit to the production of only

subject merchandise. WISCO argues

that, even if the Department decided to

adjust WISCO’s labor factors to account

for labor employed in the internal

transport unit, the adjustment suggested

by petitioners is inappropriate because

petitioners suggest that the Department

base its labor adjustment on the

surrogate value for train transportation.

WISCO argues that there is no

explanation for why the Department

should link a surrogate value for rail

freight and labor costs associated with

internal shipment of materials within

WISCO’s facilities. WISCO argues that

petitioners’ arguments should be

rejected.

Department’s Position: We agree with

WISCO that the labor used to move

materials between facilities is properly

treated as overhead, based on our

observations at verification. In addition,

we verified and accepted WISCO’s

methodology for reporting workers

involved in moving material between

facilities and the unit with which they

are associated.

Comment 69: Ministerial Error—River

Freight

Petitioners contend that the

Department made a ministerial error in

valuing river freight in the preliminary

determination and should correct it in

the final determination. WISCO did not

comment on this issue.

Department’s Position: We agree with

petitioners that there was a ministerial

error in the portion of the SAS program

used for valuing river freight in the

preliminary determination. We have

corrected this error for the final

determination. See Comment 25 above.

Suspension of Liquidation

On October 24, 1997, the Department

signed a suspension agreement with the

Government of the PRC suspending this

investigation. Therefore, we are

instructing Customs to terminate the

suspension of liquidation of all entries

of cut-to-length carbon steel plate from

the PRC. Any cash deposits of cut-tolength carbon steel plate from the PRC

shall be refunded and any bonds shall

be released.

On October 14, 1997, we received a

request from petitioners requesting that

we continue the investigation. We

received a separate request for

continuation from the United

Steelworkers of America, an interested

party under section 771(9)(D) of the Act

on October 15, 1997. Pursuant to these

requests, we have continued and

completed the investigation in

accordance with section 734(g) of the

Act. We have found the following

margins of dumping:

Weighted-average manufacturer/exporter Margin (percent)

Anshan (AISCO/Anshan International/Sincerely Asia Ltd.) ..................................................................................................................... 30.68

Baoshan (Bao/Baoshan International Trade Corp./Bao Steel Metals Trading Corp.) ............................................................................ 34.44

Liaoning ................................................................................................................................................................................................... 17.33

Shanghai Pudong .................................................................................................................................................................................... 38.16

WISCO (Wuhan/International Economic and Trading Corp./Cheerwu Trader Ltd.) ............................................................................... 128.59

China-wide Rate ...................................................................................................................................................................................... 128.59

China-Wide Rate

The China-wide rate applies to all

entries of the subject merchandise

except for entries from exporters that are

identified individually above.

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the ITC of our

determination. As our final

determination is affirmative, the ITC

will determine, within 45 days, whether

these imports are causing material

injury, or threat of material injury, to an

industry in the United States.

On October 24, 1997, the Department

entered into an Agreement with the

Government of the PRC suspending this

investigation. Pursuant to Section 734(g)

of the Act, petitioners, Liaoning and

Wuyang have requested that this

investigation be continued. If the ITC’s

final determination is negative, the

Agreement shall have no force or effect

and the investigation shall be

terminated. See Section 734(f)(3)(A) of

the Act. If, on the other hand, the

Commission’s determination is

affirmative, the Agreement shall remain

in force but the Department shall not

issue an Antidumping duty order so

long as (1) the Agreement remains in

force, (2) the Agreement continues to

meet the requirements of subsection (d)

and (l) of the Act, and the parties to the

Agreement carry out their obligations

under the Agreement in accordance

with its terms. See Section 734(f)(3)(B)

of the Act.

This determination is published

pursuant to section 735(d) of the Act.

Dated: October 24, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–30393 Filed 11–19–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

Evaluation of State Coastal

Management Programs and National

Estuarine Research Reserves

AGENCY: Office of Ocean and Coastal

Resource Management, National Ocean

Service, National Oceanic and

Atmospheric Administration (NOAA),

DOC.