[Federal Register Volume 62, Number 72 (Tuesday, April 15, 1997)]
[Notices]
[Pages 18396-18404]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9423]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-401-805]


Certain Cut-to-Length Carbon Steel Plate From Sweden: Final 
Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative 
review.

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SUMMARY: On October 4, 1996, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
review of the antidumping duty order on certain cut-to-length carbon 
steel plate from Sweden. This review covers one manufacturer/exporter 
of the subject merchandise to the United States and the period August 
1, 1994 through July 31, 1995. We gave interested parties an 
opportunity to comment on our preliminary results. We have not changed 
the results from those presented in the preliminary results of review.

EFFECTIVE DATE: April 15, 1997.

FOR FURTHER INFORMATION CONTACT: Elizabeth Patience or Jean Kemp, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-3793.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all 
citations to the Tariff Act of 1930, as amended (the Act), are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Act by the Uruguay Round Agreements 
Act (URAA). In addition, unless otherwise indicated, all citations to 
the Department's regulations are to the current regulations, as amended 
by the interim regulations published in the Federal Register on May 11, 
1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

    On October 4, 1996, the Department published in the Federal 
Register (61 FR 51898) the preliminary results of its administrative 
review of the antidumping duty order on certain cut-to-length carbon 
steel plate from Sweden (58 FR 44162). We gave interested parties an 
opportunity to comment on our preliminary results and held a public 
hearing on November 19, 1996. We received written comments from SSAB 
Svenskt Stal AB (SSAB), respondent, and from petitioners: Bethlehem 
Steel Corporation, U.S. Steel Group (a unit of USX Corporation), Inland 
Steel Industries Inc., Gulf States Steel Inc. of Alabama, Sharon Steel 
Corporation, Geneva Steel, and Lukens Steel Company. At the request of 
respondent and petitioners, a public hearing was held on November 19, 
1996. We have now completed the administrative review in accordance 
with section 751(a) of the Act.

Scope of Review

    Certain cut-to-length plate includes hot-rolled carbon steel 
universal mill plates (i.e., flat-rolled products rolled on four faces 
or in a closed box pass, of a width exceeding 150 millimeters but not 
exceeding 1,250 millimeters and of a thickness of not less than 4 
millimeters, 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 hot-rolled carbon steel flat-rolled products in 
straight lengths, 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 millimeters 
or more in thickness and of a width which exceeds 150 millimeters and 
measures at least twice the thickness, as currently classifiable in the 
HTS under item numbers 7208.40.3030, 7208.40.3060, 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. Included are 
flat-rolled products of non-rectangular cross-section 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 beveled or rounded at the edges. Excluded is grade X-70 plate. 
These HTS item numbers are provided for convenience and Customs 
purposes. The written description remains dispositive.
    The period of review (POR) is August 1, 1994, through July 31, 
1995.

Analysis of Comments Received

Comment 1--Reconciliation of Kalkyl System Costs

    SSAB argues that it maintains two cost accounting systems, the 
normal cost accounting system and the kalkyl system. The company's 
normal cost accounting system is used for financial accounting purposes 
and records total costs for each major cost center. The kalkyl system, 
on the other hand, is a ``parallel system'' which is used to compute 
budgeted costs for each order item. Respondent contends that the kalkyl 
system is an alternate cost accounting system and not a ``sales 
estimating tool'' as stated in the Department's preliminary results. 
SSAB states that it uses the kalkyl system to ensure profitability of 
orders it accepts and that the kalkyl system has been used historically 
in the normal course of business. SSAB further notes that this system 
has been accepted by the Department in a past review. Respondent claims 
that the kalkyl system is the only costing system maintained by its 
Oxelosund facility (SSOX) that contains the cost detail required to 
meet the Department's demands for costs per control number (i.e., per 
product).
    SSAB argues that it notified the Department of the fact that the 
kalkyl system was not a formal part of SSOX's

[[Page 18397]]

normal cost and financial accounting system but, rather a separate and 
distinct system relied upon by the company in the normal course of 
business. Despite this fact, according to SSAB, the Department, at 
verification, insisted that the kalkyl system be reconciled to costs 
recorded under the company's normal cost accounting system as presented 
in its audited financial statements. SSAB asserts that the Department 
has discretion as to whether to reconcile the submitted costs to 
audited financial statements and, since it did not do so in the last 
review, it abused its discretion by making reconciliation a requirement 
in this review. SSAB maintains that the SSOX kalkyl system provided an 
accurate, reliable, and fully verifiable cost database. SSAB argues 
that the Department would have rejected any new data base SSAB tried to 
create based on a revised accounting system and would have resorted to 
facts available. See Foam Extruded PVC and Polystyrene Framing Stock 
from the United Kingdom: Final Determination of Sales at Less Than Fair 
Value, 61 FR 51411, 51415 (October 2, 1996) (Framing Stock).
    SSAB also argues that the Department's determination that it failed 
the cost verification because it could not reconcile its reported costs 
to the costs in the financial accounting system is arbitrary, 
capricious, and is contrary to law. According to SSAB, the Department's 
actual past practice demonstrates that reconciliation of reported costs 
to audited financial statements is not a mandatory test uniformly 
applied by the Department. SSAB contends that the Department determined 
in Certain Pasta From Turkey: Final Determination of Sales at Less Than 
Fair Value, 61 FR 30309, 30317 (June 14, 1996) that the refusal of the 
Turkish respondent to provide the financial statements to the 
Department did not warrant total adverse facts available as the 
Department was, through some unexplained means, ``able to substantiate 
much of the remaining information contained in its COP/CV data base.'' 
See also, Framing Stock, Certain Pasta from Italy: Final Determination 
of Sales at Less Than Fair Value, 61 FR 30326, 30358 (June 14, 1996), 
and Welded Stainless Steel Pipe from Malaysia: Final Determination of 
Sales at Less Than Fair Value, 59 FR 4023, 4027 (January 28, 1994).
    Moreover, SSAB alleges that the cost verification methodology 
employed by the Department in this review is arbitrary, capricious, and 
contrary to law. SSAB contends that in this review, the Department 
verifiers applied a dramatically different verification methodology 
than the first review by demanding that SSOX first directly reconcile 
all submitted kalkyl-based cost data with SSOX's normal accounting 
system. Respondent argues that verifiers in this review pursued 
reconciliation of the reported kalkyl costs to SSOX's financials and 
therefore refused to, or had no time to, verify the accuracy of the 
kalkyl costs (and the reported SSOX costs) as a stand-alone system. 
Respondent maintains that it had no reason to believe, on the basis of 
section D of the Department's questionnaire or supplemental cost 
questionnaires, that the Department would, without notice, change its 
methodology in the second review cost verification and require SSOX to 
reconcile the kalkyl product-specific cost data directly to the cost 
data contained in SSOX's financial statements.
    SSAB argues, citing Shikoku Chemicals Corp. v. United States, 795 
F. Supp. 417 (CIT 1992), National Corn Grower's Association v. Baker, 
840 F.2d 1547, 1555 (Fed. Cir. 1988), and IPSCO, Inc. v. United States, 
687 F. Supp. 614, 631 n.27, that it was an abuse of discretion for the 
Department, in the second administrative review, to change, without 
prior notice to SSAB, the verification methodology used by the 
Department in the first review and relied upon by SSAB in reporting its 
cost data in the second administrative review. Respondent cites to 
Calcium Hypochlorite from Japan, 55 FR 41259 (October 10, 1990) as a 
case where the Department reversed its preliminary decision and made an 
adjustment consistent with previous reviews for the ``purposes of 
administrative equity.''
    Respondent contends that in evaluating the kalkyl system and in 
establishing the verification outline, the Department ignored the fact 
that the kalkyl system is not a formal part of either SSOX's cost 
accounting system or SSOX's financial accounting system. Respondent 
argues that the statute requires the Department to consider all 
allocations of costs if they have been historically used by the 
producer and reasonably reflect costs associated with the production 
and sale of the merchandise. However, respondent argues that the 
statute does not mention normal accounting records, audited financials 
or the reconciliation of all reported product-specific costs to the 
audited financials or normal accounting systems of a respondent. 
Respondent argues that the Department's regulations do not require 
reconciliation to audited financials. Additionally, respondent 
maintains that neither the statute nor the regulations regarding 
verification discuss either a full reconciliation of all reported costs 
to audited financials or minimum thresholds a respondent must meet 
during a verification.
    SSAB maintains that it advised the Department early in this 
proceeding that the SSOX normal accounting system does not track 
product-specific costs. Citing American Permac, Inc. v. United States, 
703 F. Supp. 97 (CIT 1988), respondent claims there is nothing in the 
statute or regulations that requires a respondent, during verification, 
to ``precisely and conclusively'' tie its reported costs directly into 
a respondent's normal accounting system.
    Respondent argues that SSOX was able to establish a link between 
the normal kalkyl system costs and the costs reported in the company's 
financial accounting system demonstrating that the total normal kalkyl 
system costs were completely consistent with the total costs in the 
accounting system. See Silicon Metal from Brazil, 61 FR 46763, 46767 
(September 5, 1996). Respondent maintains that once this link was 
established, the verification team should have, but failed to, move on 
to verify the costs contained in the SSOX kalkyl system and to verify 
SSAB Tunnplat's (SSTP) reported costs.
    Petitioners argue that the cost data submitted by SSAB could not be 
verified to the Department's satisfaction. Additionally, petitioners 
contend that SSAB's submitted costs could not be reconciled to its 
audited financial records. Petitioners maintain that respondent's 
submitted costs were not demonstrated to be accurate and reliable. 
Petitioners claim that because the kalkyl system is a management 
reporting system and not an alternative cost accounting system, 
generally accepted accounting principles are not applicable. Moreover, 
petitioners maintain that SSAB's representation that the kalkyl system 
is maintained in the ordinary course of business does not demonstrate 
that the system reflects actual costs or is otherwise accurate and 
reliable.
    Petitioners contend that the Department's request for a 
reconciliation between SSAB's submitted costs and the company's normal 
accounting system and its audited financial statements was reasonable, 
consistent with longstanding practice, supported by substantial 
evidence and in accordance with law. Petitioners argue that the 
Department's verification methodology is consistent with longstanding 
practice, supported by substantial evidence, and in accordance with 
law. Petitioners note

[[Page 18398]]

that the Department is provided with wide discretion in determining the 
verification methodology it will employ and the Department's 
verification team properly determined not to accept new cost 
information at verification.
Department Position
    We disagree with SSAB. The Department's practice with respect to 
calculating costs is directed by section 773(f)(1)(A) of the Act. This 
provision specifically requires that costs be calculated based on the 
records of the exporter or producer of the merchandise, if such records 
are kept in accordance with the generally accepted accounting 
principles (GAAP) of the exporting country and reasonably reflect the 
costs associated with the production and sale of the merchandise. 
Consistent with the statute, the Department will accept costs of the 
exporter or producer if they are based on the records which are kept in 
accordance with GAAP of the exporting country and reasonably reflect 
the costs associated with the production and sale of the merchandise. 
After establishing that the costs are based on the normal books and 
records, which are in conformity with GAAP, the Department is charged 
with determining if those costs reasonably reflect the costs associated 
with the production and sale of the merchandise, i.e., have they been 
properly allocated to the products. In determining if the costs were 
properly allocated to products the Department will look at whether the 
allocation methods have been historically used.
    In this case, SSAB has stated that it has two cost accounting 
systems, its normal financial accounting system and the kalkyl system. 
From the financial accounting system, the company prepares its audited 
financial statements. These financial statements reflect the company's 
actual costs, in accordance with GAAP. The basic accuracy of the 
statements and their consistency with GAAP is evidenced by the opinion 
of the independent auditors. With regard to its kalkyl system, SSAB 
explains that it is ``not a formal part of either the cost accounting 
system or the financial accounting system. Instead it is used as a tool 
in assessing the appropriate price for a given order.'' See SSAB's May 
27, 1996 response to the Department's supplemental Section D 
questionnaire at 39. SSAB further explains that the two systems are 
``designed around entirely different parameters, and are designed to 
serve completely different purposes.'' See respondent's case brief at 
18. With regard to SSAB's argument that they had to report costs using 
the more specific kalkyl system or suffer the consequences of facts 
available, we disagree. We find the fact that the kalkyl system is 
capable of calculating more detailed product-specific costs to be 
without significance to proper cost reporting if such costs cannot be 
shown to be the actual costs incurred by the company as recorded in 
financial accounting records that are maintained following GAAP.
    Further, we note that the system SSAB used to prepare its cost 
response for its SSOX facility was not the company's usual kalkyl 
system but, instead, was a ``modified'' version of the kalkyl system. 
Verification testing showed that the per unit costs from the 
``modified'' kalkyl system (i.e., the submitted cost data) were 
substantially less than the costs in the company's basic kalkyl system. 
SSAB was unable to reconcile these discrepancies during verification. 
Apart from the inconsistencies between the reported costs and the 
kalkyl system costs, the Department's verification also established 
that both the total production costs and the per unit costs from SSAB's 
kalkyl system differed from information in the company's financial 
accounting system (i.e., the financial statements). SSAB was unable to 
reconcile these discrepancies. In short, the company was unable to 
demonstrate that the submitted data properly reflected the actual costs 
incurred by the company as recorded in its normal system, consistent 
with GAAP. (The cost verification report details the specific 
procedures performed and the results of this testing. See Memorandum 
from Theresa Caherty and Elizabeth Patience, September 20, 1996, the 
Cost Verification Report. See also, Certain Cut-to-Length Carbon Steel 
Plate From Sweden: Preliminary Results of Antidumping Duty 
Administrative Review 61 FR 51898, 51899, October 4, 1996.)
    With regard to SSAB's claim that the Department changed its 
verification standard from the prior review period without providing 
notice of this change, we disagree and note that the Department's basic 
methodology (i.e., the requirement that the submitted costs be 
reconciled to the company's normal accounting records maintained in 
accordance with GAAP) was unchanged. SSAB's statement that in the first 
review period it ``could not reconcile its kalkyl-based reported costs 
directly to SSOX's normal accounting system'' is not supported by the 
findings of that proceeding. See Memorandum from Paul McEnrue, August 
3, 1995, Public Version of Cost Verification Report.
    Consistent with the statute and legislative history, the Department 
has a long-standing practice of requiring a reconciliation of the 
reported data to the company's financial statements. This practice 
ensures that the reported costs are reflective of the company's actual 
experience as shown in its books and records. (See S. Rep. No. 412, 
103rd Cong., 2nd Sess. 74-75 (1994) ``* * * costs that most accurately 
reflect the resources actually used on the production of the 
merchandise in question.'' See also H.R. Rep. No. 826, 103rd Cong. 
Sess., pt. 1, at 90-91 (1994), and the SAA at 164-165.)
    SSAB's reliance on Certain Pasta from Turkey to support its 
contention that reconciliation of reported costs is discretionary is 
misplaced. A more careful reading of this notice reveals that the facts 
present in Certain Pasta from Turkey are not analogous to SSAB's 
situation in the instant proceeding. In Certain Pasta from Turkey, the 
respondent (Maktas) did not fail to reconcile its submitted costs to 
its own books and records, but rather Maktas did not provide the 
financial statements of its majority owner (Piyale-Besin). Because of 
the parent-subsidiary relationship, the Department generally relies on 
the consolidated financial expenses of such entities. Absent 
information for the parent company, Piyale-Besin, the Department relied 
on facts available to estimate the appropriate financial expenses of 
the consolidated entity in Certain Pasta from Turkey. Thus, that case 
does not address the issue of a respondent company's failure to 
reconcile its reported manufacturing costs to the actual production 
costs recorded in its normal books and records.
    Likewise, we cannot agree with SSAB's reliance on Silicon Metal 
from Brazil in support of its belief that a minimal ``link'' to the 
financial statements is sufficient. In Silicon Metal from Brazil the 
respondent relied on its financial accounting system to prepare the 
actual costs submitted to the Department. Because of the limitations of 
its cost accounting system the respondent relied only on data 
maintained in the financial accounting system. At verification, the 
company was able to demonstrate that its reported costs reconciled to 
its financial statements. Thus, the Department was able to rely on the 
respondent's financial statements to support the reported costs. 
Accordingly, Silicon Metal from Brazil has no relevance to the instant 
proceeding where SSAB was unable to reconcile its reported costs to its 
own financial statements. We further note that SSAB was also unable to

[[Page 18399]]

reconcile its reported costs to its normal kalkyl system.
    SSAB's argument that the Department's verifiers erred by not 
proceeding beyond the overall reconciliation of submitted costs to 
actual financial statement costs fails to recognize the importance of 
this reconciliation as the starting point of the Department's cost 
verification procedures. The Department conducts antidumping inquiries 
of companies that operate in a wide variety of industries. In those 
cases involving COP and CV, the Department attempts to work within the 
limitations presented by the respondent's normal accounting systems for 
purposes of establishing a reasonable method for allocating costs to 
individual models of the subject merchandise. Before assessing the 
reasonableness of respondent's cost allocation methodology, however, 
the Department must ensure that the total amount of the reported costs 
account for all of the actual costs incurred by the respondent in 
producing the subject merchandise during the period under examination. 
This is done by performing a reconciliation of the respondent's 
submitted COP and CV data to the company's audited financial statements 
(when such statements are available). Because of the time constraints 
imposed on verifications, the Department must rely generally on the 
independent auditor's opinion that the respondent's financial 
statements present the actual costs incurred by the company as reported 
in accordance with GAAP in the exporting country. In situations where 
the respondent's total reported costs differ from amounts reported in 
its financial statements, the overall cost reconciliation helps the 
Department to identify and quantify the amount of those differences in 
order to determine whether it was reasonable for the respondent to 
depart from its normal GAAP accounting methods for purposes of 
reporting COP and CV.
    Although the format of the reconciliation of submitted costs to 
actual financial statement costs depends greatly on the nature of the 
accounting records maintained by the respondent, the reconciliation 
represents the starting point of a cost verification because it assures 
the Department that the respondent has accounted for all costs before 
allocating those costs to individual products. Contrary to SSAB's 
assertion, it would be of little value for the Department to review 
respondent's cost allocation methods and individual elements of costs 
before determining that, in total, all actual production costs for the 
subject merchandise had been accounted for in the submitted costs. 
Verifying individual elements of cost and their allocation without 
ensuring that these elements represent actual costs incurred by the 
company provides no assurance with respect to the accuracy and 
reasonableness of the submitted COP and CV data. Moreover, in this 
specific instance, the Department verifiers could not proceed to verify 
SSAB's submitted COP and CV data based on the modified kalkyl system 
before understanding that the kalkyl system from which these costs were 
derived reconciled to SSAB's actual production costs as presented in 
the company's audited GAAP financial statements.
    Respondent cites to American Permac with regard to the burden of 
proof on a respondent. In American Permac, the CIT found that Commerce 
had required, as the basis of a level of trade adjustment, that 
respondent trace ``precisely and conclusively the exact level of impact 
the difference in the levels of trade might have on (home market 
prices).'' The CIT found that this burden of proof was unreasonable, 
citing the fact that the statute contains a presumption that certain 
differences in commercial terms will distort the price comparison. Id. 
Thus, American Permac is irrelevant to the instant proceeding for two 
reasons. First, the issue here is not level of trade, but rather the 
Department's consistent practice of requiring that the respondent 
establish that the reported costs are based on the company's normal 
books and records kept in conformity with GAAP. This practice has been 
affirmed in Nippon Pillow Block v. U.S., 820 F. Supp. 1444 (CIT 1993). 
Second, unlike circumstances of sale, there is not a presumption in the 
statute or regulations that reported costs will reconcile to the 
company's normal books and records. Indeed, the very purpose of 
verification, which is to confirm the accuracy of the data reported, 
reflects the absence of any such presumption.
    Our verification testing and other evidence on the record regarding 
SSAB's use of a modified kalkyl system indicate that this system is not 
maintained in accordance with GAAP and had a significant distortive 
impact on SSAB's reported COP and CV data. SSAB's failure to reconcile 
its submitted costs to its normal books and records prevented us from 
quantifying the magnitude of the distortions which exist in its 
submitted data. Accordingly, the Department's determination that SSAB 
failed the cost verification was objective and consistent with our past 
practice to reject a respondent's COP and CV data when it cannot be 
shown that the costs reported to the Department are the respondent's 
actual costs for the subject merchandise. See e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Grain Oriented 
Electrical Steel from Italy, 59 FR 33952 (July 1, 1994).

Comment 2--Verification Team

    SSAB argues that the verification was systematically flawed. SSAB 
alleges that the Department ``prejudged'' the integrity of SSOX's cost 
data, such ``prejudgment'' evidenced by the Department's statements at 
the beginning of verification. For example, SSAB declares that the 
Department's verifiers in this review indicated an intent to pursue 
reconciliation of the reported kalkyl costs to SSOX's financial 
statement costs and, as a result, refused to, or had no time to, verify 
the accuracy of the kalkyl costs. SSAB also argues that the 
verification team's instructions that they would be unable to accept 
new information during verification demonstrates the fact that they had 
prejudged the integrity of the company's submitted cost data. In SSAB's 
view, this evidence shows a prejudicial ``mindset.''
    Petitioners argue that the Department's verification team properly 
determined not to accept new cost information at verification. 
Petitioners maintain that verification is intended to test the accuracy 
of data already submitted rather than to provide the respondent the 
opportunity to submit a new response. Petitioners note that the 
Department's verification agenda in the present case, and nearly every 
verification agenda issued by the Department in recent years contains 
such a statement: ``Please note that verification is not intended to be 
an opportunity for submitting new factual information.'' See Cost 
Verification Agenda, August 1, 1996 at 2. Petitioners argue that a 
statement by the verifiers that new cost data would not be accepted at 
verification does not demonstrate any preconceived bias by the 
Department against SSAB. Petitioners maintain that the Department 
afforded SSAB more chances than is appropriate to prove the accuracy 
and reliability of its submissions.
Department Position
    We find SSAB's comments with respect to the procedures applied by 
and ability of the Department's verification team to be unfounded. The 
Department's verification was conducted in accordance with the 
regulatory and statutory requirements and followed standard 
verification procedures. As discussed in our

[[Page 18400]]

response to Comment 1, SSAB's cost verification failure was due to its 
inability to demonstrate that the costs submitted to the Department 
were reflective of the actual costs and reconciled to actual costs 
recorded in its normal books and records.
    SSAB's assertions regarding the ``mindset'' of the verification 
team are unsupported by the record in this proceeding. Indeed, SSAB 
raised for the first time its claim of a particular ``mindset'' by the 
team in its case brief. This brief was submitted more than eleven weeks 
following the completion of the verification. Throughout the course of 
the on-site verification, SSAB's company officials, its counsel and 
consultants were informed of the discrepancies that the verification 
team had identified. In fact, the verification team discussed with SSAB 
company officials, its counsel and consultants the need to take breaks 
in the verification process in order to confer with Department 
officials in Washington concerning these discrepancies. At no time 
during the verification proceedings did SSAB contact Department 
officials in Washington to express concern that the verification team 
was prejudicial and not proceeding in an appropriate manner. Further, 
in the eleven weeks following the conclusion of the cost verification, 
SSAB did not contact the Department to express its concerns regarding 
the Department's assigned team. SSAB's current attempts to cast doubts 
on the fairness and competence of the verification team are not 
credible.
    With regard to SSAB's claim that the verification team's improper 
approach to verification was demonstrated by the statement that they 
could not accept new information while at verification, we find this 
assertion to be without merit. The team's actions were consistent with 
the statutory and regulatory deadlines regarding submissions of new 
factual information. This requirement, which applies in every 
antidumping proceeding, was noted in the Department's verification 
agenda which was sent to SSAB prior to verification. See Verification 
Agenda, August 1, 1996.

Comment 3--Total Facts Available

    SSAB contends that, pursuant to section 782(d) of the Act, the 
Department may not resort to facts available unless, upon determining 
that a response to a request for information does not comply with the 
request, the Department promptly informs the respondent submitting the 
response of the nature of the deficiency. Respondent maintains that the 
Department is required to provide the respondent with the opportunity 
to remedy or explain the deficiency subject to the time limits 
established for the completion of the review.
    Respondent argues that the Department never informed SSAB that the 
SSOX kalkyl-based cost data submitted by the company did not comply 
with the Department's requests for COP and CV information for the 
subject merchandise. Respondent also argues that neither of the two 
supplemental cost questionnaires issued by the Department constitute 
notification that the company's cost response was deficient. Therefore, 
respondent concludes that the failure of prompt notification of the 
alleged deficiencies in SSAB's submitted costs prohibits the Department 
from relying on facts available in this review.
    Additionally, respondent notes that, pursuant to section 776(b) of 
the Act, the Department may use adverse facts available only if 
substantial evidence on the record permits the Department to find that 
an interested party has failed to cooperate by not acting to the best 
of its ability to comply with a request for information. SSAB maintains 
that it cooperated fully with the Department, acting to the best of its 
ability to comply with the Department's requests for information.
    Respondent notes that the Department's determination that SSAB had 
not acted to the best of its ability in meeting the Department's 
requirements is based on the following assertions: (1) SSAB failed the 
cost verification, i.e., failed to report cost information that could 
be reconciled to its financial statements, and (2) failed to give the 
Department fair notice of this alleged defect. Respondent argues that 
neither of these assertions are supported by substantial evidence in 
the record, and therefore cannot provide the foundation to rely on 
adverse facts available required by statute. SSAB maintains that by 
relying on the very same basis to claim the right to apply adverse 
facts available, the Department is taking the position that the basis 
for deciding to rely on total facts available is also automatically 
grounds to rely upon adverse facts available. Respondent contends that 
this interpretation of the statute renders section 776(b) null and void 
as such an interpretation ignores that, in addition to the basis for 
deciding to rely on facts available, the Department must also find a 
separate and distinct basis for relying on adverse facts available. 
Respondent maintains that a verification failure cannot trigger the use 
of adverse facts available under section 776(b), otherwise that 
statutory provision is meaningless.
    Respondent argues that it is inherently unreasonable to expect that 
a respondent will give fair notice of a defect it has no reason to 
believe exists. Respondent maintains that it is for the Department, not 
a respondent, to first determine whether a questionnaire response is 
deficient or defective or whether a respondent will be able to pass a 
verification. Respondent argues that failure by the Department to give 
fair notice of a defect cannot be viewed as a failure of a respondent 
to act to the best of its ability to comply with a request for 
information. Respondent maintains that the Department never requested 
that SSAB notify the Department of any defects in its submission. 
Respondent, citing Olympic Adhesives Inc. v. United States, 899 F.2d 
1565, 1574 (Fed. Cir. 1990), maintains that the Department cannot 
resort to facts available if the Department never requested that a 
respondent supply the information, the absence of which is the basis 
for facts available.
    Respondent further notes that under the amendments to the 
antidumping laws by the URAA, the Department no longer has the 
discretion to return to an original investigation and apply adverse 
facts available rate based upon the highest previously determined 
margin, which, in turn, was calculated on the basis of BIA. Respondent 
notes that the Department is not permitted to automatically equate 
facts available with the most adverse information available. SSAB 
claims that the adverse facts available rate applied in this review by 
the Department is clearly intended to punish SSAB for circumstances 
outside of its control and is contrary to law. Respondent maintains 
that the Department is obligated, to the extent possible, to use actual 
data submitted for the record. See e.g., section 776(b) (3) and (4). 
Furthermore, respondent contends that the Department is now, by 
statute, clearly encouraged to rely upon actual data submitted in 
previous reviews.
    Respondent maintains that reconciling the kalkyl system cost data 
directly to the costs reported in SSOX's financial accounting system is 
a demand impossible for the company to meet. The demand that SSOX 
perform a function that was impossible for the company to perform is 
inherently unreasonable, arbitrary, capricious and contrary to law. 
Citing Bowe Passat Reinigungs-und Waschereitechnik v. United States, 
962 F. Supp 1138 (CIT 1996) and NEC Home Electronics, Ltd. v. United 
States, 54 F. 3d 736 (Fed. Cir.

[[Page 18401]]

1995), respondent contends the Department cannot make demands on 
respondent that the respondent could not meet under any practical 
circumstances.
    Petitioners argue that the Department's determination to employ 
total facts available was reasonable, supported by substantial evidence 
and in accordance with law. Petitioners also maintain that the 
Department has adhered to the statutory elements for the application of 
total facts available, including the notice requirement. Petitioners 
also contend that the Department's determination to employ adverse 
facts available is reasonable, based on substantial evidence and in 
accordance with law. Moreover, petitioners argue that the Department 
properly applied total adverse facts available.

Department Position

    We disagree with SSAB. We find that our determination to rely on 
adverse facts available is reasonable, supported by evidence on this 
record and is otherwise in accordance with the law. Consistent with 
section 776(b) of the Act, we have applied total adverse facts 
available in reaching these final results of review.
    We believe that SSAB has misconstrued the notice provisions of 
section 782(d) of the Act. Specifically, we find SSAB's arguments that 
the Department was required to notify it and provide an opportunity to 
remedy its verification failure are unsupported. The provisions of 
section 782(d) apply to instances where ``a response to a request for 
information'' does not comply with the request. Thus, after reviewing a 
questionnaire response, the Department will provide a respondent with a 
notice of deficiencies in that response. However, after the 
Department's verifiers find that a response cannot be verified, the 
statute does not require, nor even suggest, that the Department provide 
the respondent with an opportunity to submit another response.
    With regard to SSAB's claims that a respondent cannot be found to 
be uncooperative for failing to comply with a request that is 
impossible to satisfy, the facts of this case do not support SSAB's 
claims for two reasons. First, pursuant to section 782(c)(1) of the 
Act, the Department will consider a party's ability to submit the 
information in the form requested if the respondent promptly after 
receiving the request notifies the Department that it is unable to 
supply the requested information together with a full explanation and 
suggested alternative forms so that the Department can consider 
modification of the requirements. In this case, respondent never 
notified the Department of its inability to provide the requested 
information. Second, if SSAB knew that SSOX's modified kalkyl system 
could not be reconciled to SSOX's normal financial accounting system, 
it should not have used this system for reporting the submitted cost 
data.
    Additionally, we disagree with respondent's claim that the 
Department treated its basis for total facts available as automatic 
grounds for adverse facts available. In our preliminary results, we 
clearly distinguish between the two concepts. The Department's bases 
for relying on total facts available were: SSAB's inability to 
demonstrate that the costs submitted to the Department were reflective 
of actual costs accrued to produce the subject merchandise and 
reconcilable to information recorded in the normal books and records; 
and our inability to use partial facts available to fill in for the 
unverified information. On the other hand, the Department's basis for 
relying on an adverse inference in selecting the appropriate facts 
available was SSAB's failure to act to the best of its ability in 
complying with our information requests, specifically, submitting cost 
data for the record which could not be verified, failing to prepare the 
requested reconciliations, and failing to inform the Department that 
the cost data could not be tied to actual costs as reflected in the 
financial accounting system. While the standards under the statute for 
total facts available and adverse inferences are different, there is no 
reason why some of the facts adduced to support findings under the two 
provisions cannot be the same. See, for example, Certain Pasta from 
Turkey at 30312 (adverse facts available as to Filiz).
    With regard to SSAB's claim that it did cooperate to the best of 
its ability, we note that SSAB now dismisses the specific guidance 
provided by the Department that the submitted costs must reconcile to 
the actual costs as reflected in the company's financial accounting 
system. SSAB asserts that these instructions were mere ``boilerplate'' 
instructions which did not apply to its submitted data. We disagree 
with this interpretation. The fact that the Department explains the 
same cost reconciliation requirements in every proceeding does not 
render them less significant; rather, the Department's consistent 
approach provides evidence of the paramount importance of these 
requirements in ensuring the accuracy of the submitted data.
    Further, we disagree with respondent's claim that the Department is 
required to use other data submitted by SSAB in this review. For 
reasons stated in the preliminary results of review, the submitted 
sales data is not usable. As part of those results, we noted that 
because of the flawed nature of the cost data, home market sales could 
not be tested to determine whether they were made at prices above 
production cost. We further explained that we could not rely upon 
SSAB's home market sales data due to the absence of reliable difference 
in merchandise figures which are based on the unverified cost 
information from the company's section D response. Additionally, the 
preliminary results stated that, in the absence of home market sales 
data (i.e., when the home market is viable but there are insufficient 
sales above COP to compare with U.S. sales), the Department would 
normally resort to the use of constructed value as normal value. 
However, the constructed value information reported by SSAB includes 
the discredited cost data. Therefore, the use of facts available for 
cost of production data precludes the use of the submitted constructed 
value information. We continue to find that the absence of reliable 
cost data renders SSAB's entire response unusable.
    SSAB's claim, citing Olympic Adhesives, that we ``cannot resort to 
facts available if the Department never requested that a respondent 
supply the information'' is not relevant to this case. In this case, 
the Department requested from SSAB certain cost information regarding 
the company's actual production costs during the POR. As previously 
noted, we find that, by failing to provide verifiable information 
responsive to this request SSAB did not comply with the Department's 
request.
    With regard to the appropriate total facts available, section 
776(b) of the Act provides that adverse inferences may be used against 
a party that has failed to cooperate by not acting to the best of its 
ability to comply with requests for information. See also SAA at 200. 
There is nothing ``automatic'' about the choice of adverse facts 
available, as the CIT has noted with respect to ``best information 
available'' (the predecessor to adverse facts available), Congress 
``explicitly left a gap for the agency to fill.'' Allied Signal 
Aerospace Co. v. United States, 996 F.2d 1185, 1191 Fed. Cir. 1993) 
(quoting Chevron U.S.A., Inc. v. Natural Resources Defense Council, 
Inc., 467 U.S. 837, 843-44 (1984)). We note, however, that our 
preliminary results specifically stated that, in the instant

[[Page 18402]]

proceeding, we did not apply the most adverse facts available to SSAB.
    We also disagree with SSAB's suggestion that we are not permitted 
to use petition data as total facts available. Section 776(b) of the 
Act authorizes the Department to use as adverse facts available 
information derived from the petition, the final determination in the 
investigation, a previous administrative review, or other information 
placed on the record. The statute provides no ``clear obligation'' or 
preference for relying on a particular source in determining adverse 
facts available. As to respondent's suggestion that we cannot rely on 
the final determination in the LTFV proceeding because it was based on 
best information available, we find no support for this claim. In fact, 
the SAA specifically states that facts available may include such 
sources as ``the petition, other information placed on the record, or 
determinations in a prior proceeding.'' (See, SAA at 200.)

Comment 4--Alternatives for Determining Facts Available

    Respondent argues that the Department should select, as facts 
available, an alternative cost methodology and calculate a dumping 
margin in this review on the basis of price-to-price comparisons or, in 
the alternative, apply the margin calculated for SSAB in the most 
recently completed review. As alternative cost methodologies, 
respondent suggests using (1) SSAB costs reported in the first 
administrative review, or (2) the costs reported in this review by 
SSTP. Respondent argues that the cost data reported by SSAB in the 
first review were fully verified by the Department and relied upon in 
calculating a margin for SSAB in that review. Alternatively, respondent 
maintains that SSTP's reported costs in both the first and second 
reviews were based upon that company's normal accounting records and 
were verified in the first review. Respondent argues that SSTP did not 
rely upon the kalkyl system in reporting control number specific costs 
in either the first or second review. Citing Certain Pasta from Turkey, 
61 FR 30309, 30312 (June 14, 1996), respondent argues that the 
Department should use the cost data submitted by SSTP either in the 
first review or this review. Respondent argues that SSAB was entitled 
to believe that had SSOX failed the cost verification, that verified 
SSTP cost data would be relied upon as facts otherwise available.
    SSAB argues that its total cost database consisted of two separate 
cost databases, one for SSOX and the other for SSTP. These two data 
bases were merged into a single cost database for purposes of reporting 
COP and CV to the Department. SSAB contends that the Department erred 
in rejecting SSAB's entire cost database because SSOX was unable to 
reconcile its reported costs, based on the kalkyl system, to its normal 
accounting system. Respondent maintains that the Department's planned 
verification of SSTP reported costs was extensive and exhaustive. 
Respondent claims that had the Department wanted to complete the cost 
verification of SSTP, all SSTP resources necessary were available to 
the Department during the cost verification at SSOX to enable the 
Department to do so. Respondent therefore concludes that if the 
Department determines SSAB did fail verification, it should use SSTP's 
costs as the most appropriate facts available.
    Alternatively, respondent argues that the Department should apply 
the antidumping margin from the first administrative review as 
alternative facts available. Respondent contends that in that review, 
the Department relied upon actual cost data, fully verified, in 
determining SSAB's control number specific costs of production. 
Respondent maintains that based on that data, the Department conducted 
its sales below cost test and calculated an antidumping margin using 
price-to-price comparisons. See Certain Cut-to-Length Carbon Steel 
Plate from Sweden, 61 FR 15772 (April 9, 1996). Respondent argues that 
a BIA margin rate, by definition, is not based on actual costs and 
cannot be viewed as a reliable or more accurate indicator of an 
antidumping duty margin which was calculated on the basis of actual, 
verified data, in a more recent review.
    Petitioners argue that the Department properly used a total adverse 
facts available rate based on SSAB's less than fair value investigation 
margin. Petitioners maintain that cost data from the first review are 
not part of the administrative record and have not been determined to 
be related to the connum-specific costs in the present review. 
Additionally, petitioners contend that SSTP's reported costs are not 
appropriate as alternative facts available because SSTP's cost data was 
not merged with SSOX's cost data. To substantiate this claim, 
petitioners point to SSAB's response where SSAB stated that no control 
number was produced at both SSOX and SSTP and therefore the reported 
cost for each control number was the COP and CV from the plant where 
the product was produced. Furthermore, petitioners refer to SSAB's 
response which states that only SSOX products were sold in the U.S. and 
that there were no U.S. or home market comparison products sold at 
SSTP. Moreover, petitioners assert that because the Department was 
unable to verify SSTP's cost data due to problems encountered at the 
SSOX cost verification, it would be inappropriate to use the SSTP cost 
data as a substitute for the flawed SSOX cost data. Finally, 
petitioners argue that the margin from the first administrative review 
inappropriately rewards SSAB for failing to provide responsive 
information and may allow SSAB to control the results by refusing to 
provide responsive information resulting in margins in excess of the 
previous review rate.
Department Position
    We disagree with respondent. None of the alternatives suggested by 
SSAB would appropriately serve as adverse facts available in this 
review because none of them is adverse. First, we note that actual 
costs from a previous review period are by definition not adverse. If 
the Department were to rely on such data, a respondent would have no 
incentive to report its costs once it was satisfied with the verified 
costs from a particular review period. Second, as to the use of SSTP's 
cost data, we have no reason to regard these costs as adverse with 
respect to SSOX's cost experience in producing the subject merchandise. 
Moreover, it is not clear that SSTP's cost data has any relation to 
SSOX's cost experience as SSTP's products are significantly different 
in terms of product characteristics from SSOX's (as respondent has 
repeatedly acknowledged).
    Finally, we note that the rate from the first administrative review 
is not appropriate because it does not capture the decision to assign 
an adverse facts available rate to SSAB. We agree with petitioners that 
the margin from the first review inappropriately rewards SSAB for 
failing to provide responsive information and may allow SSAB to control 
the results by refusing to provide responsive information resulting in 
margins in excess of the previous review rate.

Comment 5--Other Issues

    Petitioners argue that SSAB's sales data could not be verified. 
Petitioners contend that SSAB's assignment of plate specification codes 
is so flawed that proper product comparisons are not possible. 
Specifically, petitioners argue that SSAB miscoded its plate 
specifications resulting in inaccurate matches and SSAB has impeded the 
Department's ability to make appropriate comparisons by failing to

[[Page 18403]]

provide industry standards. Petitioners also argue that numerous other 
deficiencies in sales completeness, date of sale reporting, product 
characteristics and inaccurate, incomplete and unreported sales 
information render SSAB's sales responses unusable.
    Respondent argues that its specification codes provide a reliable 
and reasonable basis for model matches by the Department. Respondent 
maintains that the deficiencies alleged by petitioners do not render 
SSAB's sales data unusable. SSAB maintains that it disclosed the 
primary deficiencies alleged by petitioners to the Department in 
corrections submitted to the Department on the opening day of SSAB 
sales verifications. Respondent argues that it provided a complete 
reporting of home market and U.S. sales, as appropriate.
Department Position
    These issues are moot since the Department is using an assigned 
facts available margin in this review.

Comment 6--Duty Absorption

    Petitioners argue that the Department should determine that SSAB 
has absorbed antidumping duties on behalf of its U.S. customers. 
Petitioners maintain that the Department has the discretion to conduct 
such an inquiry even if it is not required to do so. Moreover, 
petitioners argue that the Department should exercise this discretion 
to conduct an absorption inquiry because they argue absorption is 
obvious on the record of this review and such an inquiry in this review 
would promote the efficient use of Departmental and interested party 
resources. Petitioners contend that SSAB and its U.S. subsidiary, 
Swedish Steel Inc., have absorbed antidumping and countervailing 
duties. Additionally, petitioners argue that confining absorption to 
the second and fourth reviews will encourage respondents to manipulate 
the administrative review process to avoid duty absorption findings.
    Respondent argues that the Department should reject petitioners' 
request to initiate a duty absorption investigation in this review. 
Respondent argues that the request for the duty absorption 
investigation is untimely. Respondent maintains that the Department's 
proposed timetable for conducting duty absorption investigations for 
transition reviews does not provide for a duty absorption investigation 
in this review. Moreover, respondent contends that the Department has 
established precedent in a parallel review that it will not undertake a 
duty absorption investigation. See Certain Cold-Rolled and Corrosion 
Resistant Carbon Steel Flat Products From Korea: Preliminary Results of 
Antidumping Duty Administrative Review, 61 FR 51882 (October 4, 1996). 
Respondents also maintain that initiating a duty absorption 
investigation in this administrative review would not promote the 
efficient use of Departmental and interested party resources. 
Respondent argues that it would require the Department to consider 
additional documentation, review all record information, and allow both 
parties the opportunity to comment on the results of the Department's 
analysis, in order to determine whether duty absorption has actually 
taken place.
Department Position
    For transition orders as defined in section 751(c)(6)(C) of the 
Act, i.e., orders in effect as of January 1, 1995, Sec. 351.213(j)(2) 
of the Department's proposed regulations provides that the Department 
will make a duty absorption determination, if requested, for any 
administrative review initiated in 1996 or 1998. See Notice of Proposed 
Rulemaking and Request for Public Comments, 61 FR 7308, 7366 (February 
27, 1996) (``Proposed Regulations''). The commentary to the proposed 
regulations explains that reviews initiated in 1996 will be considered 
initiated in the second year and reviews initiated in 1998 will be 
considered initiated in the fourth year. Id. at 7317. Although these 
proposed regulations are not yet binding upon the Department, they 
constitute a public statement of how the Department expects to proceed 
in construing section 751(a)(4) of the amended statute. This approach 
assures that interested parties will have the opportunity to request a 
duty absorption determination on entries for which the second and 
fourth years following an order have already passed, prior to the time 
for sunset review of the order under section 751(c). Because the order 
on cut-to-length carbon steel plate from Sweden has been in effect 
since 1993, these are transition orders. Therefore, based on the policy 
stated above, the Department will first consider a request for a duty 
absorption determination for reviews of these orders initiated in 1996. 
Because this review was initiated in 1995, we have not considered the 
issue of absorption in this review. However, if requested, we will do 
so in the next review.

Final Results of Review

    As a result of our review, we determine the dumping margin (in 
percent) for the period August 1, 1994, through July 31, 1995 to be as 
follows:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
SSAB.......................................................        24.23
------------------------------------------------------------------------

    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and normal value may vary from the 
percentages stated above. The Department will issue appraisement 
instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of these final results for all shipments of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the publication date as provided by section 
751(a)(1) of the Act: (1) The cash deposit rates for the reviewed 
company will be the rate stated above; (2) if the exporter is not a 
firm covered in this review, a prior review, or the original less-than-
fair-value (LTFV) investigation, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacturer of the merchandise; and (3) the cash deposit rate 
for all other manufacturers or exporters will continue to be the ``all 
others'' rate made effective by the final results of the 1993-1994 
administrative review of this order. (See, Certain Cut-to-Length Carbon 
Steel Plate From Sweden; Final Results of Antidumping Duty 
Administrative Review, 61 FR 15772 (April 9, 1996).) As noted in these 
final results, this rate is the ``all others'' rate from the relevant 
LTFV investigation. (See, Final Determination, 58 FR 37213 (July 9, 
1993).) These deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.

Notification of Interested Parties

    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.

[[Page 18404]]

    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification 
of the return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act 19 U.S.C. 1675(a)(1) and 19 CFR 
353.22(c)(5).

    Dated: April 2, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-9423 Filed 4-14-97; 8:45 am]
BILLING CODE 3510-DS-P