18448 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

of review for all shipments of certain

cold-rolled and corrosion-resistant

carbon steel flat products from Korea

entered, or withdrawn from warehouse,

for consumption on or after the

publication date, as provided for by

section 751(a)(1) of the Act: (1) The cash

deposit rates for the reviewed

companies named above will be the

rates for those firms as stated above; (2)

for previously investigated companies

not listed above, the cash deposit rate

will continue to be the companyspecific rate published for the most

recent period; (3) if the exporter is not

a firm covered in these reviews, or the

original LTFV investigations, 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 (4) if neither the

exporter nor the manufacturer is a firm

covered in these reviews, the cash

deposit rate will continue to be 14.44

percent (for certain cold-rolled carbon

steel flat products) and 17.70 percent

(for certain corrosion-resistant carbon

steel flat products), which were the ‘‘all

others’’ rates in the LTFV investigations.

See Flat-Rolled Final at 37191.

Article VI¶5 of the GATT (cited

earlier) provides that ‘‘[n]o product

* * * shall be subject to both

antidumping and countervailing duties

to compensate for the same situation of

dumping or export subsidization.’’ This

provision is implemented by section

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

antidumping duties cannot be assessed

on the portion of the margin attributable

to export subsidies, there is no reason to

require a cash deposit or bond for that

amount. Accordingly, the level of export

subsidies as determined in Final

Affirmative Countervailing Duty

Determinations and Final Negative

Critical Circumstances Determinations;

Certain Steel Products from Korea (58

FR 37328—July 9, 1993), which is 0.05

percent ad valorem, will be subtracted

from the cash deposit rate for deposit

purposes.

The deposit requirements, when

imposed, shall remain in effect until

publication of the final results of the

next administrative reviews.

This notice 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.

This notice also serves as a reminder

to parties subject to administrative

protective order (‘‘APO’’) of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with section 353.34(d) of the

Department’s regulations. Timely

notification of 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.

These administrative reviews and

notice are in accordance with section

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

1675(a)(1)) and § 353.22 of the

Department’s regulations.

Dated: April 2, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–9424 Filed 4–14–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–122–822 & A–122–823]

Certain Corrosion-Resistant Carbon

Steel Flat Products and Certain Cut-toLength Carbon Steel Plate From

Canada: Final Results of Antidumping

Duty Administrative Reviews

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative

reviews.

SUMMARY: On October 4, 1996, the

Department of Commerce (the

Department) published the preliminary

results of its administrative reviews of

the antidumping duty orders on certain

corrosion-resistant carbon steel flat

products and certain cut-to-length

carbon steel plate from Canada. These

reviews cover four manufacturers/

exporters 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.

Based upon our analysis of the

comments received, we have changed

the results from those presented in the

preliminary results of review.

We determine that sales have been

made below normal value (‘‘NV’’) by

various companies subject to these

reviews. Thus, we will instruct U.S.

Customs to assess antidumping duties

based on the difference between the

export price (‘‘EP’’) or constructed

export price (‘‘CEP’’) and the NV.

EFFECTIVE DATE: April 15, 1997.

FOR FURTHER INFORMATION CONTACT:

Robert Bolling (Continuous Colour Coat

(‘‘CCC’’)), Eric Johnson (Dofasco Inc.

and Sorevco Inc. (‘‘Dofasco’’)), Greg

Weber (Algoma, Inc. (‘‘Algoma’’)), N.

Gerard Zapiain (Stelco, Inc. (‘‘Stelco’’)),

or Jean Kemp, Import Administration,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–3793.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all

citations to the statute refer 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 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).

Background

On October 4, 1996, the Department

published in the Federal Register (61

FR 51892) the preliminary results of its

administrative reviews of the

antidumping duty orders on certain

corrosion-resistant carbon steel flat

products and certain cut-to-length

carbon steel plate from Canada. We gave

interested parties an opportunity to

comment on our preliminary results. We

received written comments on

November 4, 1996 from Algoma, CCC,

Dofasco/Sorevco, Stelco and from the

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. We received rebuttal

comments on November 12, 1996 from

interested parties.

As we noted in the preliminary

results of review, on February 28, 1996,

the petitioners requested that the

Department determine whether

antidumping duties had been absorbed

by Algoma, Dofasco, and Stelco (for

corrosion-resistant only) during the

POR, pursuant to section 751(a)(4) of the

Act. Section 751(a)(4) provides that the

Department, if requested, will determine

during an administrative review

initiated two years or four years after
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18449

publication of the order whether

antidumping duties have been absorbed

by a foreign producer or exporter subject

to the order if the subject merchandise

is sold in the United States through an

importer who is affiliated with such

foreign producer or exporter. Section

751(a)(4) was added to the Act by the

URAA.

For transition orders as defined in

section 751(c)(6)(C) of the Act, i.e.,

orders in effect as of January 1, 1995,

§ 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 do 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 orders

on corrosion-resistant carbon steel flat

products and cut-to-length carbon steel

plate from Canada have 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 these

reviews were initiated in 1995, we have

not considered the issue of absorption

in these reviews. However, if requested,

we will do so in the next reviews.

Under the Act, the Department may

extend the deadline for completion of

administrative reviews if it determines

that it is not practicable to complete the

reviews within the statutory time limit

of 365 days. On April 1, 1996, the

Department extended the time limits for

the preliminary and final results in this

case. See, Extension of Time Limit for

Antidumping Duty Administrative

Reviews 61 FR 14291 (1996).

We have now completed the

administrative reviews in accordance

with section 751 of the Act.

Scope of Reviews

The merchandise under review is

certain corrosion-resistant carbon steel

flat products and certain cut-to-length

carbon steel plate. Although the

Harmonized Tariff Schedule of the

United States (HTSUS) subheadings are

provided for convenience and customs

purposes, the written description of the

merchandise under investigation is

dispositive.

I. Certain Corrosion-Resistant Carbon

Steel Flat Products

These products include flat-rolled

carbon steel products, of rectangular

shape, either clad, plated, or coated

with corrosion-resistant metals such as

zinc, aluminum, or zinc-, aluminum-,

nickel-or iron-based alloys, whether or

not corrugated or painted, varnished or

coated with plastics or other

nonmetallic substances in addition to

the metallic coating, in coils (whether or

not in successively superimposed

layers) and of a width of 0.5 inch or

greater, or in straight lengths which, if

of a thickness less than 4.75 millimeters,

are of a width of 0.5 inch or greater and

which measures at least 10 times the

thickness or if of a thickness of 4.75

millimeters or more are of a width

which exceeds 150 millimeters and

measures at least twice the thickness, as

currently classifiable in the HTSUS

under item numbers 7210.30.0030,

7210.30.0060, 7210.41.0000,

7210.49.0030, 7210.49.0090,

7210.61.0000, 7210.69.0000,

7210.70.6030, 7210.70.6060,

7210.70.6090, 7210.90.1000,

7210.90.6000, 7210.90.9000,

7212.20.0000, 7212.30.1030,

7212.30.1090, 7212.30.3000,

7212.30.5000, 7212.40.1000,

7212.40.5000, 7212.50.0000,

7212.60.0000, 7215.90.1000,

7215.90.3000, 7215.90.5000,

7217.20.1500, 7217.30.1530,

7217.30.1560, 7217.90.1000,

7217.90.5030, 7217.90.5060,

7217.90.5090. Included in this review

are corrosion-resistant flat-rolled

products of non-rectangular 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 beveled or

rounded at the edges. Excluded from

this review are flat-rolled steel products

either plated or coated with tin, lead,

chromium, chromium oxides, both tin

and lead (‘‘terne plate’’), or both

chromium and chromium oxides (‘‘tinfree steel’’), whether or not painted,

varnished or coated with plastics or

other nonmetallic substances in

addition to the metallic coating. Also

excluded from this review are clad

products in straight lengths of 0.1875

inch or more in composite thickness

and of a width which exceeds 150

millimeters and measures at least twice

the thickness. Also excluded from this

review are certain clad stainless flatrolled products, which are three-layered

corrosion resistant carbon steel flatrolled products less than 4.75

millimeters in composite thickness that

consist of a carbon steel flat-rolled

product clad on both sides with

stainless steel in a 20%–60%–20%

ratio.

II. Certain Cut-to-Length Carbon Steel

Plate

These products include 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 hotrolled 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 HTSUS 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 in this review

are flat-rolled products of nonrectangular 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 from this review is grade X–

70 plate.

The period of review (POR) is August

1, 1994, through July 31, 1995.
18450 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

Analysis of Comments Received

Algoma

Comment 1

Petitioners argue that Algoma’s

method of reporting costs is distortive

and should be rejected because Algoma

allocated rolling costs based on the

average rolling cost of only one of its

two mills that produces subject

merchandise. Petitioners argue that the

Department has consistently required

that respondents report COP and CV

based on the actual costs incurred.

Petitioners point to the Department’s

antidumping questionnaire which states

that COP and CV figures ‘‘should be

calculated based on the actual costs

incurred by your company during the

period of review * * * as recorded

under its normal accounting system.’’

Petitioners also cite IPSCO, Inc. and

IPSCO Steel, Inc. v. United States, 687

F. Supp. 633, 639 (CIT 1988) which

quotes F.W. Myers & Co., Inc. v. United

States, 376 F. Supp. 860, 873 (CIT 1974)

in stating ‘‘value determinations made

in antidumping cases ‘must be based

upon proof of actual costs of prices—not

estimates, approximations or averages. ’

Petitioners argue that Algoma did not

weight-average the actual rolling costs

of each mill. As the Department’s

antidumping questionnaire at D–2

states, ‘‘If you produce the merchandise

under review at more than one facility,

you must report COP and CV based on

the weighted-average of costs incurred

at all facilities.’’ Petitioners cite

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From Italy, 60 FR 10959, 10962

(February 28, 1995): ‘‘if a respondent

produces subject merchandise at more

than one facility, the reported COM

should be the weighted-average

manufacturing costs from all facilities.’’

Petitioners claim that Algoma’s

methodology resulted in the

misreporting of COP and CV.

Petitioners also claim that Algoma’s

methodology causes all comparisons of

non-identical merchandise to be

erroneous. Petitioners argue that

Algoma’s failure to report actual costs—

whether under or overstated—means

that the difference in merchandise tests

are invalid. Petitioners claim that the

20-percent test, which the Department

uses to determine if a non-identical

home market product is sufficiently

similar to the U.S. product for a price

comparison, will not operate properly

due to Algoma’s flawed methodology.

Therefore, petitioners argue that where

non-identical sales are being matched,

there is no way to ensure that the

comparison is being made with

merchandise that is comparable as

required by the statute. Thus,

petitioners argue that since costs are

overstated, the DIFMER adjustment will

always be incorrect. Petitioners cite

Certain Pasta from Turkey, 61 FR 30309,

30311 (June 14, 1996) which states,

‘‘Insofar as DIFMER data is based on

cost information {that is flawed}, the

effect of these physical differences

cannot be determined by the

Department.’’

Petitioners also argue that Algoma’s

attempts to justify its allocation system

must be rejected. Petitioners specifically

point to Algoma’s claim that its

accounting system does not record costs

at a sufficient level of detail that would

permit direct calculation of actual costs

incurred at the 106′′ mill that relate only

to the subject merchandise. Petitioners

argue that there are few, if any,

accounting systems that maintain costs

in the normal course of business in a

manner that mirrors the Department’s

reporting requirements. Petitioners

point to § 351.308 of the Department’s

Proposed Regulations which state, ‘‘not

all information that needs to be

produced during the course of a

proceeding is kept in the ordinary

course of business (e.g., worksheets),

and failure to provide such information

may be deemed to violate the ‘best of

ability’ standard.’’ Petitioners go on to

say that all respondents—including

Algoma—are required to construct

methodologies for reporting purposes

that result in the reasonable allocation

of actual costs.

Finally, petitioners argue that

Algoma’s distortive allocation

methodology leaves the Department

with no alternative but to reject COP

and CV and apply total facts available.

Petitioners claim, pursuant to section

776(b) of the statute, that the

Department should select the most

adverse margin available as the final

weighted-average margin for this

review. However, petitioners argue, if

the Department decides not to apply

total adverse facts available, then it

should apply facts available with regard

to the comparison of non-identical

merchandise. In selecting partial facts

available, they argue, the Department

should follow its own established

practice and add an upward DIFMER

adjustment equal to 20 percent of

TCOMU to normal value for each

comparison of non-identical products.

Petitioners cite two Department

decisions, Gray Portland Cement and

Clinker from Mexico, Results of

Redetermination Pursuant to Court

Remand, and Tapered Roller Bearings,

and Certain Components Thereof, from

Japan, 56 FR 26054, 26057 (June 6,

1991), in which the Department added

an upward DIFMER adjustment of 20

percent as best information available.

Accordingly, petitioners feel the

Department should apply the same

remedy in this situation.

Algoma argues that although they

were unable to report actual rolling

costs for the 106′′ mill, the Department

must examine any cost allocation to

determine if it is reasonable.

Respondent cites Floral Trading Council

v. U.S., 822 F. Supp 766, 772 (CIT 1993)

and Welded Stainless Steel Pipe from

Malaysia, Final Determination of Sales

at Less Than Fair Value, 59 FR 4023,

4027 (January 28, 1994) in which the

Department accepted allocation

methods as reasonable. Respondent

asserts that the Department should

continue to accept Algoma’s rolling cost

allocation method because it did so in

the first review of this case, Certain

Steel Products from Canada: Final

Results of Administrative Review, 61 FR

at 13817. In that decision, the

Department accepted Algoma’s rolling

cost calculation methodology stating,

‘‘Algoma’s reporting of rolling costs

incurred at only one of its

manufacturing facilities is reasonable,

considering (1) The nature of its cost

accounting system, (2) Algoma’s verified

inability to determine specific rolling

costs based upon the gauge of materials

being manufactured at either facility,

and (3) the conservative methodology

adopted by Algoma.’’ Respondent

contends that same rationale is fully

supported by the record in this review

and leads to the conclusion that

Algoma’s method for calculating rolling

costs is reasonable.

Additionally, respondent asserts that

Algoma explicitly sought the

Department’s guidance on whether to

use the same rolling cost calculation

methodology as in the first

administrative review and that the

Department instructed Algoma to use

the same methodology. Respondent

argues Algoma does not track rolling

costs by width and gauge in the normal

course of business. In addition, a very

large percentage of the products

produced on the 166′′ Plate Mill and a

very small percentage of the products

produced on the 106′′ Strip Mill

constitute subject merchandise.

Respondents contend, in light of those

two verified facts, Algoma had only

three reasonable alternatives in

assigning rolling costs to a particular

category of subject merchandise: It

could either assign the average Strip

Mill rolling costs, assign the average

Plate Mill rolling costs, or assign a

mixture of the two. Respondents argue

that since the 106′′ Strip Mill average
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18451

rolling costs are overwhelmingly

determined by non-subject

merchandise, using the average 106′′

mill rolling cost, or a mixture of costs

from both mills, would have caused the

rolling cost calculation to be driven by

the cost of rolling non-subject

merchandise. Therefore, Algoma used

the average rolling cost of the 166′′

mill—where only products with gauges

falling within the definition of subject

merchandise are rolled—as a surrogate

for the average rolling cost of the 106′′

mill. Respondent argues that this is a

conservative methodology based on the

verified fact that rolling costs on the

166′′ mill were higher than rolling costs

on the 106′′ mill. Based on the facts

above, respondents argue that Algoma’s

rolling cost methodology should again

be determined reasonable by the

Department.

Concerning petitioners’ argument that

Algoma’s methodology renders the

DIFMER adjustment inaccurate,

respondent argues that these arguments

are based on conclusions that are

untrue. Respondent provides

calculations for the potentially affected

matches, which they argue demonstrate

that it would be mathematically

impossible for the cost reporting

methodology to yield a distortion in the

results of the DIFMER test.

Department’s Position. We agree with

respondent. Consistent with the final

results of the first review, Certain Steel

Products from Canada: Final Results of

Administrative Review, 61 FR at 13817,

Algoma’s cost reporting methodology is

reasonable, considering (1) we verified

its cost accounting system, (2) Algoma’s

verified inability to determine specific

rolling costs based upon the gauge of the

material being manufactured at either

facility, (3) the conservative

methodology adopted by Algoma and

verified by the Department, and (4)

respondent’s compliance with

Department instructions on cost

reporting methodology in this review.

Petitioners state that it is the

responsibility of any respondent to

construct methodologies for reporting

purposes that result in the reasonable

allocation of costs. The Department

determined that Algoma’s cost

accounting system computes one

average rolling cost for all products

rolled on the 166′′ Plate Mill and one

average rolling cost for all products

rolled on the 106′′ Strip Mill. Moreover,

the Department verified that a very large

percentage of the products produced on

the 166′′ mill and a very small

percentage of the products produced on

the 106′′ mill are subject merchandise.

Therefore it was a reasonable and nondistortive methodology for Algoma to

use the average cost of the 166′′ mill as

a surrogate for the rolling cost of the

106′′ mill. Accepting this methodology

is made more reasonable by the fact that

the average rolling cost of the 166′′ mill

is higher than the average rolling cost of

the 106′′ mill, thus insuring a

conservative costing methodology.

However, this difference in rolling costs

is not so great as to cause significant

distortions to the DIFMER.

Regarding petitioners’ claim that the

Department should reject Algoma’s COP

and CV data and apply total facts

available, respondent has acted to the

best of its ability and provided the

Department with a reasonable

methodology that has been verified.

Moreover, the Department provided

guidance on Algoma’s cost reporting

methodology and respondents complied

with that guidance. Regarding

petitioners’ claim that the Department

should apply facts available with regard

to the comparison of non-identical

goods, once again, respondent has

provided a reasonable methodology and

the DIFMER is, therefore, reliable.

Respondent has demonstrated that for

the product comparisons in question

Algoma’s cost methodology would not

cause the 20-percent DIFMER test to

yield inaccurate results. In addition,

while it is possible that the allocation

method could change the DIFMER

adjustment amount slightly for some

product comparisons, the insignificant

degree of the possible difference is not

enough to render the allocation method

unreasonable and invalid. Based on the

above arguments, the verified record,

and previous Department decisions, we

find that Algoma’s cost allocation

methodology, productivity matrices,

exclusion of certain runs, and DIFMER

adjustments are accurate and

reasonable.

Comment 2

Petitioners argue that the record

shows that Algoma sold subject

merchandise at two different levels of

trade. Petitioners contend that in

determining whether customers are at

separate levels of trade, the Department

reviews the selling activities performed

by the seller for each type of customer.

Petitioners assert that Algoma stated

that it sold subject merchandise to ‘‘two

very different types of customers’’: steel

service centers (SSCs) and end-users.

Petitioners state that Algoma

specifically stated in its July 11

supplemental response that it performed

selling functions for end-users that are

not ‘‘routinely performed’’ for SSCs. In

addition, Algoma stated that it

performed some of the selling functions

identified by the Department ‘‘mainly

for end users.’’ Petitioners assert that

this is significant because the

Department has previously found

differences in these types of selling

functions to be important in

distinguishing separate levels of trade.

See, Antifriction Bearings from France,

61 FR at 35720.

Petitioners argue that the Department

accepted Algoma’s claim that all sales

are at one level of trade based on the

Department’s ‘‘examin{ation} and

verif{ication} of the selling functions’’

identified by Algoma. Petitioners note,

however, that Algoma did not report its

selling functions on the record until two

months after verification. Therefore,

Petitioners contend, there is no possible

way for the Department to have

‘‘examined and verified’’ Algoma’s

selling functions. Even if the

Department were to rely on Algoma’s

unverified descriptions of selling

functions, Petitioners argue that the

Department must still find that Algoma

sold to two levels of trade. Petitioners

assert that such a conclusion is

mandated because the functions

undertaken by Algoma for its end-user

customers are significantly different

from those engaged in for the SSC

customers.

Therefore, Petitioners argue that the

Department must make a level of trade

adjustment. Petitioners contend that the

statute requires that ‘‘to the extent

practicable,’’ U.S. sales should be

compared to home market sales at the

same level of trade, 19 U.S.C. section

1677b (a)(1)(B). When a U.S. sale is

compared to a home market sale at a

different level of trade, however, the

Department is required to determine if

a level of trade adjustment should be

made, 19 U.S.C. section 1677b(a)(7)(A).

Petitioners argue that an adjustment

must be made under the statute where

the difference in level of trade affects

price comparability. Petitioners claim

that the Department set forth its

methodology for making this

determination in Antifriction Bearings

from France, 61 FR at 35719. Petitioners

argue that the difference in level of trade

between sales to SSCs and end-users

does affect price comparability.

Petitioners present a number of

calculations that they contend

demonstrate a pattern of consistent

price difference between the different

levels of trade in the home market based

on both the number of models and the

quantity of sales. Accordingly,

petitioners argue that a level of trade

adjustment is warranted.

Respondent contends that the

Department correctly concluded in the

preliminary results that Algoma sells

plate products at one level of trade.
18452 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

Respondent asserts that conclusion is

fully supported by the verified record in

this review, and the Department should

reach the same conclusion in the final

results of review. Respondent points to

the Department’s preliminary analysis

memorandum, which states that the

Department ‘‘examined and verified the

selling functions’’ performed by Algoma

for its two customer classes: end-users

and steel service centers (SSCs). Based

on the verified information, the

Department concluded in its analysis

memorandum that ‘‘Algoma’s selling

activities were substantially similar for

both classes of customers for sales of

subject merchandise and warrant one

level of trade.’’ Respondent states that

Algoma determined that it sold plate

products at only one level of trade, by

comparing the services performed for

plate customers to those performed for

purchasers of sheet products, its largest

product line. For sheet products,

Algoma engages in very different levels

and types of selling functions for service

centers and fabricators. Respondent

states for plate products, however, those

services are rarely performed.

Respondent also asserts that on those

rare occasions when services like justin-time delivery are performed for plate

customers, they are mainly performed

for end-users. Respondent points to

Algoma’s July 11 supplemental

questionnaire response which states that

‘‘(w)hile Algoma does perform some

selling functions for end-users in plate

trade that are not routinely performed

for SSCs, in Algoma’s view the activity

is not so significant as to cause plate

end-users to be a level of trade different

from SSCs.

Respondent also asserts that the

Department’s preliminary decision that

Algoma sells plate products to only one

level of trade is consistent with other

recent decisions. Respondent points to

the final determination in Certain Pasta

from Italy, 61 FR 30326, 30337–39, and

30342–43 (June 14, 1996) (quoting

Proposed Regulations), which states that

‘‘small differences in the functions of

the seller will not alter the level of

trade.’’ Respondent claims Algoma has

demonstrated that the selling functions

performed for various customer classes

of the subject merchandise are

‘‘sufficiently similar’’ to justify a finding

of one level of trade, as was the case for

many of the respondents in that case. In

addition, respondent asserts that the

Department should disregard

petitioners’’ calculations that suggest

that a price discrepancy exists between

levels of trade. Respondent claims that

petitioners’’ calculations hardly

constitute the ‘‘significant correlation

between prices and selling expenses on

one hand, and levels of trade on the

other,’’ required to make a level of trade

adjustment. See, Steel Plate from

Sweden, 61 FR 15772, 15776 (April 9,

1996) (Final Review). Based on the

above comments and previous

Department decisions, respondent

contends that the Department is correct

in finding that Algoma sold plate

products at one level of trade and, thus,

there is no need for the Department to

make a level of trade adjustment.

Department’s Position. The

Department agrees with respondent that

Algoma sold plate products at one level

of trade and, thus, no level of trade

adjustment is warranted.

In order to determine whether sales in

the comparison market are made at

more than one level of trade, the

Department must find that sales have

been made at different stages in the

marketing process, or the equivalent.

We make this determination on the

basis of a review of the distribution

system, including selling functions,

class of customer, and the level of

selling expenses for each type of sale.

Different stages of marketing necessarily

involve differences in selling functions,

but differences in selling functions,

even substantial ones, are not alone

sufficient to establish a difference in the

level of trade. While customer categories

such as ‘‘distributor’’ and ‘‘wholesaler’’

may be useful in identifying different

levels of trade, they are insufficient in

themselves to establish that there is a

difference in the level of trade. See,

Antifriction Bearings (other than

Tapered Roller Bearings) and Parts

Thereof from France, et al: Final Results

of Antidumping Administrative

Reviews, 62 FR 2081, 2105 (January 15,

1997).

An examination of Algoma’s selling

activities—the selling functions and the

level of selling expenses—for Algoma’s

two customer classes indicates that

while Algoma occasionally may perform

some services for end-users that it does

not perform for SSCs, these differences

in terms of selling functions and level

of selling expenses are not great enough

to warrant a finding of different levels

of trade. As respondent noted in Certain

Pasta from Italy, 61 FR 30326, 30337–

39, and 30342–43 (June 14, 1996), small

differences in selling functions do not

warrant a different level of trade.

Petitioners’ arguments on price

comparability are moot because the

Department has determined that only

one level of trade exists.

Finally, the Department disagrees

with petitioners’’ contention that the

Department did not review Algoma’s

selling activities at verification because

Algoma submitted some of its selling

activity information after verification.

Prior to verification, there was enough

information on the record concerning

Algoma’s selling activities for the

Department to determine whether these

activities were ‘‘substantially similar’’

for Algoma’s two customer classes: endusers and steel service centers (SSCs).

Moreover, prior to verification,

petitioners notified the Department of

their concerns and requested that the

Department carefully analyze and test

all of Algoma’s selling functions and

differences in these selling functions

between end-users and SSCs. At

verification, the Department examined

the differences in selling activities

between end-users and SSCs. Algoma’s

supplemental response concerning level

of trade, requested by the Department

and submitted after verification,

presented no evidence to contradict this

determination and does not invalidate

the information which was verified.

Comment 3

Petitioners claim that Algoma’s failure

to provide plate qualities for certain

sales warrants the application of adverse

facts available. For the preliminary

results, respondent identified plate

quality as ‘‘structural’’, ‘‘pressure

vessel’’, or ‘‘other.’’ Algoma reported

‘‘other’’ as the plate quality for a number

of its prime home market sales and for

some of its prime U.S. market sales as

well. Petitioners argue that Algoma’s

incomplete reporting of plate quality

has undermined the Department’s

model match program. For this reason,

petitioners assert the Department should

apply facts available to all U.S. sales

where plate quality has been identified

as ‘‘other.’’

Petitioners state that Algoma

attempted to justify its reporting method

by claiming that its method was

consistent with industry standards and

practices. According to Algoma, any

plate not falling into either the

structural or pressure vessel quality

categories, is appropriately considered

‘‘other.’’ Petitioners claim, however, that

there are, in fact, other plate quality

categories recognized in the steel

industry. Petitioners point to the Iron

and Steel Society’s authoritative Steel

Products Manual which mentions four

other ‘‘quality descriptions’’ for steel

plate.

Petitioners contend that the Court of

International Trade (CIT) has

specifically stated that respondents

must provide complete information

regarding the physical characteristics of

subject merchandise. In Timken Co. v.

United States, 630 F. Supp. 1327, 1338

(CIT 1986), the CIT stated, ‘‘It is of
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18453

particular importance that the

administering agency itself make the

required determination of what

constitutes most similar merchandise,

rather than delegating that

responsibility to an interested party.’’ In

the same case, the CIT states that

‘‘accepting a foreign manufacturer’s

assertions as to what constitutes most

similar merchandise without obtaining

the complete data needed to determine

the appropriateness of those assertions’’,

would ‘‘violate the spirit of the statutory

requirement.’’

Petitioners contend that because of

Algoma’s incomplete reporting, the

Department should apply adverse facts

available because of the Department’s

repeated requests and Algoma’s

repeated refusals to provide this

information. Petitioners assert that the

Department should apply the most

adverse margin to all United States sales

where plate quality has been reported as

‘‘other.’’

Respondent claims that Petitioners’

arguments are misplaced because

Algoma has properly reported, and the

Department has verified and accepted,

the three categories of plate quality

reported by Algoma in this review. In

response to the Department’s first

supplemental questionnaire, Algoma

explained that it:

‘‘followed the Department’s instructions in

separating subject merchandise into the

categories of ‘structural,’ ‘pressure vessel’ or

‘other’ in the PLQUALH/U fields. Consistent

with industry standards and practices, the

only ‘quality’ types recognized for plate

products are structural and pressure vessel.

Any plate not falling into one of the two

categories is appropriately considered ‘other,’

and therefore was included by Algoma in the

‘other’ category. The types of plate that may

not meet the structural or pressure vessel

qualities, and therefore are appropriately

considered ‘other,’ include floor plate,

chemical grades, and non-prime plate.

Respondent also asserts that at

verification, the Department verified the

plate qualities reported by Algoma.

In response to petitioners’ cite to the

Iron and Steel Society publication,

respondent contends that the additional

plate qualities mentioned by the

publication are both out of date and not

applicable to Algoma. Respondent also

asserts that the very same publication

supports Algoma’s understanding by

listing as typical, in ‘‘Typical Standard

Specifications,’’ only structural and

pressure vessel qualities.

Respondent argues that based on the

facts above and the verified record, the

Department should not change its

decision regarding plate quality

categories in making its final

determination.

Department’s Position. We agree with

respondent. Algoma classified all plate

that did not fall within the structural or

pressure vessel qualities, as ‘‘other.’’

The Department fully verified the plate

qualities reported by Algoma during the

period of review. The Department agrees

this practice is consistent with industry

standards. In addition, this

classification does not undermine the

Department’s model match program.

Petitioners’ cite to Timken Co. v. United

States is not relevant to this issue

because the Department has accepted

and verified Algoma’s reporting of

qualities; therefore Algoma’s response

cannot be considered incomplete. In

addition, petitioners’ mention of the

Iron and Steel Society’s Steel Products

Manual is also irrelevant. That

publication quotes additional plate

qualities that are not relevant to this

review and that in no way would affect

model matches. Furthermore, since

Algoma properly reported all plate

qualities, there is no need to consider

petitioners’ argument for the use of

adverse facts available. Based on the

verified record and industry standards,

the Department fully accepts Algoma’s

reporting of plate qualities.

Comment 4

Petitioners argue that the Department

erred in accepting as a movement charge

deductible from normal value under

section 773(a)(6)(B)(ii) of the statute

Algoma’s reported freight expenses,

which Algoma incurred in transporting

merchandise to a further processor.

Petitioners argue that the Department

has consistently treated such expenses

as a cost of manufacturing, and not a

movement charge. Therefore, the

Department should disallow Algoma’s

claim for a freight adjustment for all

further processed sales.

Petitioners state that the Department

requires respondents to establish that

they are entitled to favorable

adjustments to normal value. Petitioners

cite The Timken Company v. United

States, 673 F. Supp. 495, 513, (CIT

1987), in which the Court ‘‘plac(es) the

burden of establishing adjustments on a

respondent that seeks the adjustments

and that has access to the necessary

information.’’ Petitioners contend that

Algoma has failed to establish that it is

entitled to a favorable adjustment to

normal value. Petitioners assert that

Algoma defends its reporting by

claiming that its freight expenses were

incurred ‘‘post-sale’’ and hence should

be classified as movement charges.

However, petitioners claim that the

freight expenses in question were

incurred in transporting unfinished

merchandise for further processing, and

thus, they are properly classified as cost

of manufacturing, and not a movement

charge. Therefore, petitioners argue,

whether the freight expenses were

incurred pre-sale or post-sale is

irrelevant. Petitioners cite Certain

Carbon Steel Flat Products from

Canada, 58 FR 37099, 37118 (comment

61) (July 9, 1993), which states ‘‘pre-sale

freight charges for unfinished

merchandise should not be considered a

movement charge.’’ The Department

decision goes on to say, ‘‘(f)reight

between a factory and the further

processor of a work in progress is not a

deductible adjustment . . .’’ Similarly,

petitioners argue, the Department has

consistently treated the freight from the

U.S. port to a further manufacturing

plant as a cost of further manufacturing,

and not a freight expense. See, Gray

Portland Cement and Clinker from

Japan, 60 FR 43761, 43768 (Aug. 23,

1995).

Therefore, based on the reasons above

petitioners argue that the Department

should disallow Algoma’s claim for a

freight adjustment for all further

processed sales.

Respondent claims that petitioners’

arguments are based on the incorrect

assumption that these freight expenses

are pre-sale freight expenses.

Respondent contends that under the

recently amended antidumping law, all

freight expense incurred from the

producer to the processor and from the

processor to the customer, should be

deducted from normal value. Section

773 (a)(6)(B)(ii) states that an adjustment

to normal value is appropriate for ‘‘the

amount, if any, included in the price

. . . attributable to any additional costs,

charges, and expenses incident to

bringing the foreign like product from

the original place of shipment to the

place of delivery to the purchaser.’’

Respondent cites the Statement of

Administrative Action (SAA) at 827,

which also explains that under that new

section movement charges are to be

deducted from normal value. According

to respondent, Algoma’s movement

charges from the plant to the processor

and then to the customer fall within that

statutory provision and thus are

properly deducted from normal value.

Respondent also claims that petitioners’

citations to the decisions by the

Department under the old law are

irrelevant to this review in light of the

change in the law and the Department’s

practice.

Department’s Position. We agree with

respondent. The freight from Algoma to

the further processor is a movement

charge deductible pursuant to 773

(a)(6)(B)(ii) because it is not freight

incurred in the process of
18454 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

manufacturing subject merchandise but

freight incurred in sending subject

merchandise for further processing at

the customer’s request as part of the

sale. Algoma performs this further

processing on a small percentage of

sales as a courtesy to the customer and

is not part of its actual production of

subject merchandise which is being

used for comparison in this review.

Moreover, it would be unfair to

respondent to compare ex-factory prices

in the U.S. market with home market

prices that include freight. In order to

insure that a proper comparison is made

with ex-factory home market products

and ex-factory U.S. market products, all

ex-factory freight expenses need to be

excluded from the price. Based on the

information in the record, the

Department has determined that the

respondent has satisfied its burden of

establishing its entitlement to the

adjustment under Timken. Petitioners’

cite to Certain Carbon Steel Flat

Products from Canada is irrelevant

because that case involved the pre-sale

transfer of a work-in-process. In

addition, petitioners’ cite to Gray

Portland Cement and Clinker from

Japan is inappropriate because it deals

with the cost of further manufacturing

in the United States which is not

relevant to this case.

Comment 5

Petitioners argue that Algoma should

not be allowed a freight adjustment for

sales in which it inadvertently reported

actual freight in the accrued freight

field. Throughout this review, Algoma

has claimed that it had reported an

accrued freight expense amount in the

INLFACH field of its sales tape.

Petitioners state that according to

Algoma, the amount reported in this

field was not based on the freight

expenses actually incurred, rather it was

based on the expected freight charge at

the time the products were shipped.

Petitioners contend that Algoma

claimed, for the first time, four months

after verification, that for certain sales it

had ‘‘inadvertently’’ reported the actual

amount for inland freight in the accrued

freight field (INLFACH) and that the

Department had verified this claim.

Petitioners argue that respondent’s

claims were untimely, unsupported by

the record and must be rejected by the

Department. Again petitioners point to

the Timken case which places the

burden of establishing adjustments on

respondents. Petitioners claim that there

is no mention whatsoever in the

verification reports of the Department

having verified (or even having been

notified of) Algoma’s claim. Moreover,

petitioners assert, there is no mention of

Algoma’s ‘‘inadvertent’’ reporting in the

Corrections Memorandum that Algoma

submitted at the outset of verification.

Therefore, petitioners contend, the

Department has no alternative but to

deny Algoma’s claimed freight

adjustment for all sales where freight

expenses are reported in the INLFACH

field of the sales database.

Respondent argues that the

Department’s preliminary results

correctly concluded that Algoma

properly reported actual freight

expense. Respondent contends that as

Algoma explained to Department

officials during verification, due to an

oversight, Algoma reported the actual

amount for inland freight associated

with those transactions in the accrued

freight (INLFACH) field. Respondent

asserts that this fact does not affect the

freight expense calculation and has been

fully explained to the Department.

Respondent states that at verification,

Algoma demonstrated that the freight

expense reported for these sales

transactions was fully accounted for and

properly included in Algoma’s sales

tape, but it merely appeared in the

wrong field. Respondent claims the

Department verified this by examining

two of the preselected sales traces.

Respondent states that in the sales

verification exhibits, Algoma provided

the Department with freight invoices

and calculations confirming that the

freight reported in INLFACH

represented the actual freight expense

incurred for the shipment to the

customer. Respondent claims that

Algoma did not identify this issue in its

Corrections Memo mentioned by

petitioners because no correction was

necessary. Respondent asserts that

whether the amounts appeared in the

actual or accrued expense field had

absolutely no affect on the margin

calculation. Therefore, respondent

argues, the Department should continue

to accept Algoma’s explanation for the

final determination.

Department’s Position. We agree with

respondent. Whether the actual freight

is reported in the actual freight field

(INLFTCH) or the accrued freight field

(INLFACH) has no effect on the margin

calculation. For the preliminary and

final determinations, freight expense

was calculated by adding the actual

freight field and the accrued freight field

together. Thus, whether the actual

freight expense was in the actual field

or the accrued field is not important,

since they are combined into one freight

expense. This fact renders this argument

moot as long as the actual freight

amounts were reported and verified in

one of the two fields. As stated in the

Department’s verification reports and

documented by verification exhibits, the

freight amounts were verified by the

Department and found to be accurate.

Comment 6

Petitioners argue that a circumstanceof-sale adjustment for credit expense

should not be allowed for sales where

Algoma failed to report payment dates.

Petitioners assert that throughout this

review, Algoma made numerous

revisions and corrections to its data

tapes. Algoma, however, never updated

its sales tape to include the payment

dates that were missing from its initial

sales tape. Petitioners claim that

respondent failed to do this even though

the missing information became

available to Algoma during the course of

this review. Petitioners assert that

Algoma’s failure to report complete

payment date information has made it

impossible for the Department to

calculate accurately Algoma’s credit

expenses.

Petitioners argue that Algoma’s

justification for incomplete reporting

must be rejected. Respondent stated that

it did not provide the missing payment

dates because ‘‘at no time during this

review did the Department request that

Algoma update its sales tape to include

payment date information.’’ Petitioners

cite the Department’s decision in Brass

Sheet and Strip from Canada, 61 FR

46618, 46620 (September 4, 1996).

Petitioners contend, as with the

respondent in Brass Sheet and Strip,

Algoma failed to provide information

that had been specifically requested by

the Department and which was in

respondent’s possession. Petitioners

argue for the reasons above, the

Department must deny respondent’s

claim for a circumstance of sale

adjustment for credit expenses for all

sales with missing payment dates.

Respondent contends that Algoma

reported all requested payment date

information and that information was

fully verified by the Department.

Respondent states that as Algoma

demonstrated during verification,

payment dates were not reported on

Algoma’s sales tape for orders that were

unpaid at the time Algoma created the

tape. Respondent asserts that this is

customary practice and at no time

during the review did the Department

request that Algoma update its sales

tape to include payment date

information. Respondent also states that

the Department carefully verified and

gathered supporting documentation on

those transactions which petitioners

requested the Department verify as

‘‘bona fide.’’ Respondent argues that

since Algoma has complied with all the

Department’s requests for information,
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18455

the Department should reject

petitioners’ arguments.

Department’s Position. We agree with

respondent. The Department never

requested the updated payment dates

from Algoma. In addition, the

alternative methodology Algoma used of

substituting in an average number of

days outstanding for the unknown date

is reasonable and has been verified.

Based on these facts, the Department

will allow the circumstance-of-sale

adjustment for all sales with missing

payment dates.

Comment 7

Petitioners claim that Algoma should

not be allowed to use the U.S. prime

rate in calculating its U.S. credit

expense, but instead, Algoma should

use a rate more consistent with

commercial reality. Petitioners cite the

case La Metalli Industriale v. United

States, 912 F.2d 455 (Fed. Cir. 1990),

which states the cost of credit ‘‘must be

imputed on the basis of usual and

reasonable commercial behavior.’’

Petitioners argue that since Algoma

could not qualify for the Canadian

prime rate in any of its home market

borrowings, Algoma would not be able

to qualify for the U.S. prime rate.

Therefore, petitioners claim the U.S.

prime rate does not reflect the

commercial reality of borrowing in the

United States for Algoma. They cite

Certain Corrosion-Resistant Carbon

Steel Flat Products from Australia; Final

Results of Antidumping Duty

Administrative Reviews, 61 FR 14049,

14054 (March 29, 1996) (Steel from

Australia) and Final Results of

Antidumping Duty Administrative

Review; Certain Cut-to-Length Carbon

Steel Plate from Sweden, 61 FR 15772,

15780 (April 9, 1996) (Steel from

Sweden). In Steel from Australia and

Steel from Sweden, the Department

stated that, in the absence of U.S. dollar

borrowings, a reasonable surrogate for

imputing U.S. credit expense must be

used. Petitioners argue that the fact that

Algoma could not qualify for the

Canadian prime rate provides

substantial evidence that Algoma could

not qualify for the U.S. prime rate.

Therefore, petitioners suggest that the

U.S. prime rate be adjusted to reflect

this fact, or in the alternative, the

Department could use Algoma’s

adjusted home market interest rate. In

Canada, Algoma qualified for loans of

.5%, 1.0%, and 1.5% above the

Canadian prime rate. Therefore,

petitioners state that 1.5% should be

added to the U.S. prime rate to reflect

Algoma’s commercial reality of

borrowing in the United States. The

alternative is to adjust the home market

interest rate to account for currency

fluctuations. Petitioners cite Certain

Fresh Cut Flowers from Colombia, 61 FR

42833, 42848 (August 9, 1996) in which

this method was used in the absence of

U.S. dollar borrowings.

Respondent argues that the use of the

Federal Reserve prime short-term

lending rate is consistent with

Department practice. Respondent cites

two cases, Canned Pineapple Fruit from

Thailand: Final Determination of Sales

at Less than Fair Value, 60 FR 29553,

29558 (June 5, 1995) and Brass Sheet

and Strip from Germany: Final Results

of Antidumping Duty Administrative

Review, 60 FR 38542, 38545 (July 27,

1995), in which the U.S. prime rate was

used to compute U.S. credit expense in

the absence of any borrowing in U.S.

dollars. Respondent also cites Section C

of the Department’s questionnaire

which states ‘‘if you have not borrowed

in U.S. dollars, use a U.S. published

commercial bank prime short-term

lending rate.’’ Respondent also cites

Steel from Australia and Steel from

Sweden. Respondent states that in both

cases the Department concluded that the

Federal Reserve rate in effect over the

POR was a ‘‘reasonable surrogate’’ for an

actual dollar interest rate. In both cases

the Department chose the average shortterm lending rate as calculated by the

Federal Reserve. Each quarter the

Federal Reserve collects data on loans

made during the first full week of the

mid-month of each quarter by sampling

340 commercial banks of all sizes. The

sample data are used to estimate the

terms of loans extended during that

week to all insured commercial banks.

This rate represents a reasonable

surrogate for an actual dollar interest

rate because it is calculated based on

actual loans to a variety of actual

customers.

Also, respondent states that the

Department itself has recognized that

the use of Aexternal ‘‘external’’

information, such as the Federal Reserve

rate, is preferred over an adjusted home

market interest rate in deriving

computed credit costs. The Department

states in its September 6, 1994

Memorandum re: Proposed Change In

Policy Regarding Interest Rates Used In

Credit Calculations that the

Department’s preference is to get the

interest rate for both currencies

concerned, rather than making an

adjustment to the home market interest

rate to account for exchange rate

fluctuations. Therefore, respondent

argues that the Federal Reserve

commercial bank prime short-term

interest rate should be used when

calculating Algoma’s credit expense.

Department’s Position. We agree, in

part, with respondent and petitioners

that commercial reality can be more

accurately reflected by a surrogate U.S.

short-term interest rate. Consistent with

Department practice in Steel from

Sweden and Steel from Australia, we are

selecting the U.S. average short-term

lending rate as reported by the Federal

Reserve. This ‘‘survey rate’’ reflects the

average short-term lending rate of 340

U.S. banks given over the quarter. Given

the absence of actual short-term

borrowing in the United Stated by

Algoma during the POR, this average is

the best measure of the short-term cost

of funds in the United States during the

POR.

Comment 8

Respondent claims that the

Department’s model match program

failed to match U.S. products of a

certain grade to home market products

of the same grade. Also, respondent

claims that the Department’s margin

program incorrectly modified the billing

adjustment value for an invoice on

which a rounding difference was

identified at Algoma’s verification.

Department’s Position. The

Department agrees with respondent in

both cases and has made the appropriate

corrections for the final results.

CCC

Comment 1

Petitioners state that CCC utilized

Stelco’s costs of producing steel

substrate in its cost of production (COP)

and constructed value (CV) data because

the Department treated Stelco as an

affiliated supplier to CCC in the first

review. Petitioners note that CCC’s

reported transfer prices for Stelco

substrate were different than the

reported costs. Petitioners, therefore,

argue that under the Tariff Act, CCC

would have been required to utilize

Stelco’s transfer prices in reporting COP

and CV. Petitioners state that sections

773(f)(2) and (3) of the Act provide that

major inputs purchased from affiliated

parties must be valued at the higher of

market value, transfer price or the

affiliate’s cost of production. Therefore,

petitioners state that the Department

must recalculate CCC’s COP and CV to

account for the difference between

Stelco’s costs of production and transfer

prices for the final results.

Respondent states that the

antidumping law does not require the

use of the higher of transfer price or

cost. It requires the use of cost whenever

the prices between related parties

cannot be demonstrated to be at arm’s

length. Respondent notes that it has
18456 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

always reported its cost of steel

substrate at the cost of production

incurred by Stelco, since the original

investigation, and the Department used

these costs in the last administrative

review. Respondent argues that the

Department has interpreted the

antidumping law to require the use of

cost to value inputs by related parties

whenever the transfer prices between

them could not be shown to have been

made at arm’s length. In addition,

respondent states that the transfer price

whether higher or lower than the cost of

production is not relevant if the transfer

price could not be shown to have been

an arm’s length price. Respondent

argues that petitioners have not argued

that Stelco’s prices to CCC are at arm’s

length. Therefore, respondent states that

there is no basis in the law for using’s

Stelco’s prices to CCC to establish the

cost of Stelco’s substrate to CCC.

Additionally, respondents states that the

facts of the record do not support use of

the transfer prices as the cost of

production.

Department’s Position. We agree with

petitioners. Under section 773 (f)(2) and

(3) of the Act, major inputs purchased

from affiliated parties may be valued at

the higher of market value, transfer

price or the affiliate’s cost of

production. In the Final Results of

Antidumping Administrative Review:

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from France, Germany, Italy,

Japan, Singapore, and the United

Kingdom, 62 FR 2,081, 2,115 (January

15, 1997) the Department found ‘‘that in

the case of a transaction between

affiliated persons involving a major

input, we will use the highest of the

transfer price between the affiliated

parties, the market price between

unaffiliated parties, and the affiliated

supplier’s cost of producing the major

input.’’ There is no market price on the

record for this input. Therefore, the

Department’s analysis was focused on

transfer prices and cost of production.

However, since CCC did not provide the

Department with specific information

on transfer prices by model (i.e., control

number), the Department could not

perform the comparison on a model by

model basis. Therefore, the Department

compared CCC’s average transfer price

for all models to the average total cost

of manufacture for all models. The

Department found that CCC’s average

total cost of manufacture was higher

than its average transfer price.

Therefore, for the final results, the

Department finds that substrate from

Stelco will be valued at the cost of

production. In addition, we disagree

with respondent that the Department

has interpreted the antidumping law to

require the use of cost to value inputs

by related parties only where the

transfer price between the parties could

not be shown to have been made at

arm’s length. Even where prices are

demonstrated to have been made at

arm’s length, under section 773(f)(3) of

the Act, where such prices are for major

inputs and are below the cost of

production, the Department may

disregard such prices and base the value

of the major input on its cost.

Comment 2

Petitioners argue that CCC failed to

report its general and administrative

(G&A) expense in the manner requested

by the Department. Petitioners state that

the Department’s questionnaire required

CCC to reconcile reported costs to the

company’s audited financial statements

for the year that most clearly

corresponds to the POR. In addition,

petitioners note that CCC’s fiscal year

data encompasses a full nine months of

the POR, and that administrative and

sales expenses in CCC’s financial

statements can be reconciled to its

audited financial statements. Petitioners

state that CCC used the G&A expenses

for the POR. Therefore, petitioners argue

that the Department should recalculate

G&A expenses using a fiscal year period

and not a POR period.

Respondent states that the

Department should continue to

calculate G&A expenses based on the

POR financial statement data rather than

1995 fiscal year data. Respondent notes

that it believes that using 1995 fiscal

year data would be improper for several

reasons. First, the Department’s past

practice has been to use CCC’s expenses

for the POR to calculate the G&A ratio.

Second, the Department requires that

fiscal year G&A calculations be end-ofyear adjustments which are fully

incorporated in the POR costs, which

respondent states it has done. Lastly, the

respondent notes that all of its monthly

financial statements can be reconciled

with the appropriate audited financial

statements and the audited financial

statements are drafted using the

monthly financial statements, which

would negate petitioners argument that

the Department should use fiscal year

1995 costs since they can be reconciled

to the audited financial statement. Also,

respondent states that it provided a

reconciliation of G&A costs to the

aggregated monthly financial

statements. Therefore, the Department

should continue to follow its

methodology and calculate G&A costs

based on the POR expenses as reported

in the POR financial statement.

Department’s Position. We agree with

petitioners. It is the Department’s

normal practice to calculate G&A

expenses based on full-year G&A and

cost of sales figures as reported in the

audited financial statement which most

closely corresponds to the POR. (See,

Certain Pasta from Italy, Final

Determination of Sales at Less than Fair

Value, 61 FR 30326, 30363 (June 14,

1996).) While respondent argues that the

Department should continue to

calculate G&A expenses based on POR

financial statement data, the Department

may change its position on a specific

issue taken in prior proceedings as long

as it provides an explanation for the

change (see, Rust v. Sullivan, 500 U.S.

173, 186–187 (1991).) Although CCC

submitted G&A expenses in the last

administrative review based on costs

from monthly financial statements for

the POR, that methodology was not the

Department’s normal practice for

calculating G&A expenses. Furthermore,

there is no basis in this record to justify

deviating from the Department’s normal

practice. Consequently, we are

following our normal practice in this

review, which is to calculate G&A

expense based on CCC’s 1995 annual

audited financial statements. (See,

Furfuryl Alcohol from Thailand, Final

Determination of Sales at Less Than

Fair Value, 60 FR 22557, 22560, (May 8,

1995).) However, to avoid doublecounting, the Department subtracted

indirect selling expenses and movement

expenses from the general and

administrative expenses (i.e., the

numerator) reported in the audited

financial statements.

Comment 3

Petitioners argue that CCC incorrectly

calculated interest expense and failed to

reconcile that value to the amount of

interest reported in its audited income

statement. Petitioners note that CCC

reduced its financial statement interest

expense by an unexplained amount

when it calculated its interest expense

ratio. Petitioners state that the

Department only allows an offset to

interest expense for short-term interest

income that is related to production

operations. Moreover, petitioners argue

that for the Department to allow the

short-term interest income offset it is the

respondent’s responsibility to prove that

interest income was short-term and

related to production operations.

Therefore, petitioners argue that the

Department should recalculate CCC’s

interest expense using its 1995 audited

financial statements.

Respondent states that it reported

only the interest expense it paid during

the year. Respondent notes that the
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18457

interest it excluded from total interest

expense was not paid during the year.

Respondent argues that based on the

relationship between the two parties

that it is appropriate to exclude this

interest expense. Therefore, CCC

contends it excluded the interest in

accordance with Department practice.

Department’s Position. It is the

Department’s standard practice to

calculate interest expense based on

audited financial statements which most

closely correspond to the POR. (See,

Notice of Final Determination of Sales

at Less Than Fair Value: Canned

Pineapple Fruit from Thailand, 60 FR

29553, 29569 (June 5, 1995)) Only shortterm interest income directly related to

general operations of the company may

be used as an offset to interest expense.

(See, Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from the Federal Republic of

Germany, Final Results of Antidumping

Duty Administrative Review, 56 FR

31734 (July 11, 1991)) The reduction

CCC made to its interest expense was

not interest income; rather, it was an

exclusion of certain interest expenses

which it had not paid. The Department

calculates the interest expense based on

the total interest a company incurs

(accrual basis) and not simply the

interest it paid (cash basis). Section

773(f)(1)(a) specifies that costs will be

calculated based on records kept in

accordance with generally accepted

accounting principles (GAAP).

Financial statements prepared on the

accrual basis are GAAP, while financial

statements prepared on the cash basis

are not GAAP. Therefore, for the final

results, we have recalculated interest

expense based on CCC’s 1995 interest

expense from annual audited financial

statements which were prepared on the

accrual basis and in accordance with

GAAP.

Comment 4

Petitioners argue that for one control

number (CONNUM) CCC reported

inconsistent cost information.

Petitioners state that CCC reported its

variable and total costs of manufacture

differently in its sales and costs listings.

Moreover, CCC’s cost data was not

verified, therefore it is not possible to

determine which set of calculations is

correct. Therefore, petitioners argue that

the Department should utilize the

higher of the two values for calculating

COP and CV, as facts available.

Respondent states that the cost data

for the one U.S. sale falling within this

particular CONNUM should be

corrected. Respondent states that it

originally improperly reported this sale

as a temper rolled product. However,

during the course of verification, CCC

states it discovered that this sale was a

non-temper rolled product.

Additionally, respondent states that it

corrected the final sales database for this

CONNUM, but inadvertently failed to

do so in its cost database because of a

computer glitch.

Respondent opposes the petitioners’

argument that because the Department

did not conduct a full cost verification,

it should use an adverse inference and

apply the higher costs for all sales

falling within this CONIUM in the U.S.

and home markets. Respondent notes

that this would be unfair. Respondent

argues that the Department reviewed

two CONNUMs during verification and

verified its VCOM and TCOM

calculations of these two CONNUMs

with no discrepancies. Respondent

argues that facts available are used

where the requested information is

missing or cannot be used because it has

not been provided, was provided late, or

the Department could not verify the

information. Respondent states that it

provided the information in a timely

manner and was able to verify the costs.

Therefore, no basis exists to substitute

the higher temper rolled costs for the

non-temper rolled costs.

Department’s Position. We agree with

the respondent. At verification, the

Department discovered that the control

number for this sale was incorrectly

reported. The Department then allowed

the respondent the opportunity to

correct its database (See, Verification

Report, Pre-Selected U.S. Sale EP1

Exhibit 10). While respondent corrected

the sales information for this control

number, it failed to correct its cost

information. In addition, the

Department verified CCC’s methodology

for calculating the variable cost of

manufacturing (VCOM) and the total

cost of manufacturing (TCOM) and

found that its methodology was

reasonable (see, Verification Report,

CONNUM Cost Traces). Therefore, for

the final results, the Department has

corrected CCC’s cost information (i.e.,

VCOM and TCOM) in the U.S. database

for this CONNUM in the model match

program.

Comment 5

Petitioners state that section 772(c) of

the Act provides that in calculating EP

or CEP, a deduction must be made to

account for duties, including

antidumping duties, paid by the

respondent or its related party, as

supported by C.J. Tower & Sons v.

United States, 71 f.2d 438, 445 (C.C.P.A.

1934). Thus, conclude petitioners, the

statute requires that the Department

must deduct antidumping duties paid

by the respondent on U.S. sales.

Petitioners state that in Federal-Mogul

Corp. v. United States, the plaintiff

challenged the Department’s decision

not to deduct estimated antidumping

duty deposits under the predecessor

provision to section 772(c)(2)(A).

Petitioners contend that the Department

argued that this provision applied only

to deduction of ‘‘normal’’ import duties.

Petitioners also state that, the

Department argued in the alternative,

not deducting estimated antidumping

duties (as opposed to duties actually to

be assessed) had been its longstanding

practice. The CIT affirmed the

Department’s refusal to deduct

estimated AD duties, but did not adopt

the Department’s reasoning that section

772 applied only to ‘‘normal’’ import

duties, and that antidumping duties

were not normal import duties within

the meaning of the statute (813 F. Supp.

872). Thus, petitioners maintain that

section 772 requires the Department to

deduct any import duties (including

antidumping duties) that can be

accurately determined at the time the

Department calculates dumping

margins.

Petitioners state that the legislative

history to the URAA does not suggest

that Congress rejected the construction

of section 772(c)(2)(A) urged by

petitioners. Petitioners continue that the

Senate Finance Committee recognized

that the Court of International Trade

was considering this issue, and directed

the Department to abide by the outcome

of that litigation (see, S. Rep. No. 412,

103d Cong., 2d Sess. 64 (1994)).

Therefore, state petitioners, Congress

did not intend to ratify the Department’s

not having treated duties as a cost in the

URAA, but recognized that the issue

would be resolved through the judicial

process.

Petitioners state that the difference

calculated between normal value and EP

or CEP on each sale by the Department’s

margin program is equal to the AD

duties to be paid by the importer. Once

this difference is calculated, they argue,

it should then be deducted from EP or

CEP for use in calculating final margins.

Respondent asserts that the

Department should once again reject

petitioners’ argument to deduct AD

duties in its margin calculation and that

the Department did not deduct AD

duties from EP and CEP sales in the first

administrative review. Respondents

contend that petitioners failed to offer

any argument as to why the Department

should reach a different conclusion in

this review. Respondent continues that

in numerous determinations over many

years, the Department has consistently
18458 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

refused to deduct AD duties from EP

and CEP sales and should continue to

do so. Respondent contends that while

petitioners’’ argue that section

772(c)(2)(A) requires the Department to

deduct AD duties from EP and CEP

sales, there are no U.S. rulings in direct

support of their interpretation.

Respondent states that the Department

has consistently rejected petitioners’’

argument and that the most succinct

rationale for the Department’s policy is

contained in Carbon Steel Flat Products

from the Netherlands, 61 FR 48465

(September 13, 1996)). It states, in part,

‘‘it is the Department’s longstanding

position that antidumping and

countervailing duties are not a cost

within the meaning of 19 U.S.C. section

1677(a)(d). . . . Unlike normal duties,

which are an assessment against value,

antidumping duties derive from the

margin of dumping or the rate of

subsidization found. Logically,

antidumping and countervailing duties

cannot be part of the very calculation

from which they are derived.’’

Respondent concludes that the

Department’s practice is clear, and that

the CIT has consistently affirmed the

decision not to deduct AD duty deposits

from EP and CEP sales. Additionally,

respondent states that the URAA House

Ways and Means Committee Report and

the SAA explicitly state that the new

duty absorption provision is not

intended to provide for the treatment of

antidumping duties as a cost. Thus,

states respondent, the Department

should continue to refuse to deduct AD

duties from Stelco’s EP and CEP sales.

Department’s Position. We disagree

with petitioners. As we stated in the

final results of the first administrative

review of this order. The Department

does not deduct antidumping duties

from the U.S. price, because they do not

qualify for deduction as ‘‘normal import

duties, under section 772 and because

such a deduction would double-count

the dumping margin. See, Certain

Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length

Carbon Steel Plate from Canada: Final

Results of Antidumping Duty

Administrative Review, 61 FR 13815

(March 28, 1996) (Comment 23): note

that the applicable provision of the

statute, 1677a(d)(2)(A), in that review

was recodified under the URAA as

1677a(c)(2)(A). Nothing in the SAA or in

the legislative history of the URAA

compels the Department to reconsider

that decision. Furthermore, there have

been no intervening judicial

interpretations suggesting that the

Department reconsider its interpretation

of the statute as it applies to this case.

Dofasco

Comment 1

Petitioners argue that Dofasco failed

to use its normal cost accounting system

to prepare the response as required by

the questionnaire. Petitioners maintain

that the system which Dofasco, Inc.

chose to use, the PaYs system (a

management system), is not audited and

therefore cannot be used to report costs.

Petitioners also state that the

Department’s questionnaire requires

respondent to contact the official in

charge before submitting the response to

Section D of the questionnaire in the

event that respondent does not intend to

use its normal cost accounting system

and cost allocation methods to compute

COP and CV for the merchandise under

review. The Department, therefore,

should use adverse facts available.

Dofasco asserts that it submitted

actual, fully-absorbed product costs.

According to Dofasco, it relied on its

normal cost accounting system for the

POR costs, and the PaYs system was

used only to calculate product costs.

Dofasco further notes that the PaYs

system, as an allocative system, does not

require an audit opinion.

Department’s Position. The

Department’s Questionnaire states that

the ‘‘COP and CV figures that you report

in the response (to Section D of the

Questionnaire) should be calculated

based on the actual costs incurred by

your company during the period of

review as recorded under its normal

accounting system.’’ See, Department’s

Second Administrative Review

Antidumping Questionnaire (September

14, 1995), page D–1. The Questionnaire

further states that these figures must

reconcile to the actual cost reported in

the company’s costs accounting system

and to accounting records used by the

company to prepare its financial

statements.

Significantly, the Department verified

that the COP and CV figures reported in

Dofasco’s response were in fact based on

the actual costs incurred by Dofasco

during the period of review.

Furthermore, we reconciled these actual

costs to Dofasco’s accounting records

used by the company to prepare its

financial statements. Therefore, we

determined that the actual costs from

Dofasco’s process cost accounting

system formed the basis of Dofasco’s

response. The overriding concern, then,

becomes the allocation methodologies

employed by respondents.

Dofasco utilized a management cost

system to perform the allocations of its

actual costs. Petitioners question the

integrity of such an allocation system,

citing Certain Hot-Rolled Carbon Steel

Flat Products from Korea. Specifically,

petitioners note that the Department

stated in that case that reliance on ‘‘a

management cost system which has not

been audited and is not used for the

preparation of the financial statements

or for any purposed outside internal

deliberations of the company does not

assure the Department that such costs

have been stated in accordance with

generally accepted accounting

principles, or that all costs have been

appropriately captured by the system.’’

See, Certain Hot-Rolled Carbon Steel

Flat Products from Korea, 58 FR 37176,

37186 (July 9, 1993).

However, we note that the

circumstances surrounding the

Department’s decision in Hot Rolled

Steel from Korea and this case are

significantly different. First, in HotRolled Steel from Korea, the Department

found at verification that respondent

was unable to reconcile its reported per

unit costs to company documents

maintained and used in the ordinary

course of business. In contrast, at

verification, Dofasco reconciled its

actual costs to documents maintained

and used in the ordinary course of

business, such as the grade code cost

table (Cost Verification Report, page 4)

the corporate order history database

(Cost Verification Report, pp. 4–5), and

therefore the PaYs system.

Second, while the respondent in HotRolled Steel from Korea reconciled

(with adjustments) the total costs of

production from its management system

with the total costs of production used

in its financial accounting system and

its audited financial statement,

respondent could not support the

adjustments it made to the financial

statement system. Dofasco’s reported

production costs, in contrast, tied to its

financial accounting system and to its

audited financial statements (see, e.g.,

page 3 of the Cost Verification Report),

and the Department found no

inappropriate adjustments to Dofasco’s

financial statement system.

Finally, we note that the Department’s

remedy in Hot-Rolled Steel from Korea

was to upwardly revise respondent’s

costs by the difference between the

financial accounting system total costs

and the submitted management system

total costs. However, the Department

verified that Dofasco modified PaYs to

include all costs (except for the minor

discrepancies discussed at Comments 2

and 3 below). See, e.g., the Department’s

review of Dofasco’s reported costs for

fixed overhead expense (page 14 of the

Cost Verification Report), and for

inventory change (page 15 of the Cost

Verification Report).
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18459

Petitioners have also cited Certain

Carbon Steel Flat Products from Brazil,

58 FR 37091 (July 9, 1993) and Erasable

Programmable Read Only Panels from

Japan, 51 FR 39680 (October 30, 1986)

as further evidence that the Department

expects respondent to base its response

on its normal cost accounting system.

However, because we determined that

Dofasco’s costs tied to its normal cost

accounting system, respondents have

fulfilled that expectation.

Petitioners stress that, as an

unaudited system, errors in the program

will remain uncorrected, and that the

costs generated by the system are not

necessarily formulated in accordance

within generally accepted accounting

principles. 19 U.S.C. section 1677b(f)

states that ‘‘costs shall normally be

calculated based on the costs of the

exporter or producer...if such records

are kept in keeping with the generally

accepted accounting principles of the

exporting country.’’ In this respect,

Dofasco has responded to the

Department’s request for information in

accordance with the statute. The

Department found at verification that

Dofasco’s costs were in fact based on

audited costs, and thus were costs based

on records kept in accordance with the

generally accepted accounting

principles of Canada. See, e.g., Cost

Verification Report at pp. 7–12, 14–15,

18–19. As respondent has noted in its

rebuttal brief, the PaYs system allocates

costs from Dofasco’s cost accounting

system to specific Departmentallydefined products (‘‘control numbers’’).

Thus, the Department’s role at

verification with regard to this

allocation system was to (1) ensure that

the costs forming the basis of the

allocation were audited costs; and (2) to

examine the parameters on which the

allocations were based. As discussed

above, the Department verified that the

reported costs were actual and audited.

Furthermore, at verification we

examined several allocations made by

the PaYs system (see, pages 5 and 9 of

the Cost Verification Report) to confirm

that these allocations were used in

Dofasco’s normal course of business,

have been used historically by Dofasco,

and reasonably reflect and accurately

capture all actual costs in producing the

product under review, as required by

the SAA (at 834–835).

Regarding respondent’s obligation to

contact the official in charge before

submitting the response to Section D of

the questionnaire in the event that

respondent does not intend to use its

normal cost accounting system and cost

allocation methods to compute COP and

CV for the merchandise under review,

we note that respondent’s reported costs

tie to its normal cost accounting system.

Furthermore, the PaYs system is a cost

accounting system used by Dofasco for

management accounting and cost

control purposes (see, Cost Verification

Report, page 4) which reconciles

completely with the financial

accounting system. Therefore, we do not

find that Dofasco was obliged to notify

the Department of its methodology prior

to submission of its response.

Comment 2

Petitioners maintain that the PaYs

system and Dofasco’s normal cost

accounting system have different yield

loss rates, and such a difference affects

the accuracy of reported costs.

Petitioners also argue that the yield loss

calculated for the PaYs system was in

part due to the inclusion of impossible

yields on certain individual orders.

Dofasco asserts that the difference in

yield loss was due to three factors. First,

Dofasco states that the yield loss for

PaYs was based on home market orders,

as requested by the Department, while

the yield loss under Dofasco’s normal

accounting system is based on total

shipments since separate inventories are

not kept for the home market versus

other destinations. Second, Dofasco

noted that the yield loss for PaYs is

based on production over the period of

review, while the yield loss under

Dofasco’s normal accounting system is

based on shipments over the period of

review. Finally, Dofasco stated that

PaYs tracks weights by operation, thus

separating galvalume from galvanized

material, while under Dofasco’s normal

accounting system galvalume and

galvanized material are kept in common

inventory accounts to the end of cold

rolling.

Department’s Position. At verification,

the Department reviewed Dofasco’s

narrative explanation of the yield loss.

See, Cost Verification Report, pg. 20.

Petitioners do not contest the rationale

offered by Dofasco to explain

differences between the yield loss rates

and the Department has accepted the

rationale as reasonable. However, as

petitioners have noted, an examination

of the data placed on the record

indicates that, in addition to the three

reasons put forward by Dofasco

explaining the differences in yield loss

rates, inaccurate data also affected the

yield loss rates generated by PaYs. As

petitioners also note, Dofasco did not

provide a numerical reconciliation of

the difference at verification.

Additionally, Dofasco has not offered an

explanation of the apparently

aberrational data to which petitioners

have pointed in their case brief.

Section 776(a)(1) of the Act stipulates

that if the necessary information is not

available on the record * * * the

administering authority and the

Commission shall, subject to section

782(d), use the facts otherwise available

in reaching the applicable

determination under this title.

Therefore, for the final results of review,

the Department has calculated the

difference between Dofasco’s reported

yield loss rate after excluding sales

orders which incorporate inaccurate

data. As facts otherwise available, the

Department considers the error for this

group of products to be representative of

Dofasco’s reporting of all subject

merchandise. Because the effect of the

error was to over-report produced

weight, the corresponding yield loss rate

was under-reported by the PaYs system.

Thus, we have upwardly adjusted

Dofasco’s reported cost of manufacture

on all models by the percentage

difference between the reported yield

loss rate and the corrected yield loss

rate. See, Memorandum to the File:

Analysis Memorandum for the Final

Results of Review—Second

Administrative Review of Certain

Corrosion-Resistant Carbon Steel Flat

Products from Canada (Dofasco), page

7.

Comment 3

Petitioners maintain that the PaYs

system fails to account for changes in

work-in-process inventory (‘‘WIP’’), and

that Dofasco failed to include these

costs in its reported costs.

Dofasco responds that, because the

costs incorporated into PaYs originate

from the normal process cost accounting

system, changes in WIP have been

included in PaYs. Further, Dofasco

asserts that the Department verified that

Dofasco adjusted for inventory change,

both finished and in process.

Department’s Position. We agree with

petitioners. Contrary to respondent’s

assertion with regard to what the

Department verified, at verification the

Department reconciled WIP to Dofasco’s

financial statements, and verified

Dofasco’s reported actual costs for workin-process and finished inventory. See,

Cost Verification Report at page 3. There

is no discussion in the verification

report showing that Dofasco provided a

reconciliation of WIP to the costs

included in Dofasco’s computer

submission to the Department.

While there is no evidence that WIP

has been included in Dofasco’s reported

costs through PaYs, the record contains

evidence of Dofasco’s WIP change for

the POR. See, Exhibit 7 of the Cost

Verification Report. Because inventories

for all WIP rose for the POR, the effect
18460 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

is that Dofasco overstated its costs for

the period by a small amount. See,

Analysis Memorandum, pg. 7 and

Attachment 2. We have adjusted

Dofasco’s cost of manufacture

accordingly.

Comment 4

According to petitioners, despite the

Department’s repeated requests, Dofasco

failed to provide an inventory cost

reconciliation. Petitioners insist that

Dofasco should have been able to

reconcile its 10 normal cost accounting

product groupings to the over-1000

Departmentally-defined ‘‘products.’’

Petitioners argue that no company is

expected to maintain its costs using the

Department’s narrow product definition.

Petitioners allege that Dofasco failed

to prepare the necessary reconciliation:

specifically, multiplying the reported

costs by the quantity and reconciling the

total to the financial statements.

Petitioners state that: (1) While

individual costs used by PaYs are

derived from the same source

documents as the financial statements,

nevertheless it does not follow that per

unit costs of manufacture (COMs)

calculated by PaYs will equal the per

unit costs maintained for purposes of

the financial statements; and (2) items

presented at verification failed to

demonstrate that Dofasco had submitted

fully-absorbed product costs. Petitioners

assert that, barring use of adverse facts

available, the Department should

request reconciliations again, and verify

them.

Dofasco argues that the PaYs system

correctly accounts for changes in

inventory, and that Dofasco has

reconciled its reported costs.

Furthermore, the Department verified

these costs, by reconciling (1) the

financial statements (which include

inventory values) to the normal cost

accounting system, and (2) the normal

cost accounting system to PaYs. In

addition, Dofasco claims that for certain

‘‘PRODUCTS’’ (Departmentally defined

models) selected by the Department, it

provided a detailed reconciliation of the

normal cost accounting system to PaYs,

and a reconciliation of PaYs to

PRODUCT costs.

Department’s Position. In its original

questionnaire and in a supplemental

questionnaire, we asked for an

inventory cost reconciliation, for

selected models. Specifically, we asked

Dofasco to perform the reconciliation

from the per-unit cost of the product

Dofasco records for inventory

movements from work-in-process to

finished goods inventory to the COM

submitted in the COP/CV response. In

response to this request, Dofasco

provided a thorough explanation in its

submission to the Department as to why

such a reconciliation was not possible,

explaining adequately why its ten

normal, internal product categories for

corrosion-resistant products do not lend

themselves to a reconciliation with

specific, Departmentally-defined

models.

Nonetheless, at verification, the

company reconciled numerous costs

from the audited financial statements, to

plant operating statements, to Dofasco’s

Section D response, to the PaYs system,

and to submitted COP/CV data.

Additionally, at verification, we

reviewed the cost build-up for two

specific models. See, Cost Verification

Report, pp. 5–6. Petitioner cites

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from Germany, 56 FR 31692,

31707 (July 11, 1991) and the

Department’s statement that

‘‘verification depends precisely on tying

amounts reported in the responses to

the company’s internal accounting and

financial statements. Failure to

demonstrate such a relationship results

in a failed verification.’’ In this case, the

Department upholds this principle.

Actual cost expenditures, as reported in

Dofasco’s Section D response, have been

tied to Dofasco’s plant operating

statements, financial statements, normal

accounting records, and, through PaYs,

to the submitted COP/CV. See, e.g., the

discussion of Dofasco’s variable

overhead expense in the Cost

Verification Report, pp. 11–12.

Therefore, the Department determines

that costs have been accurately captured

and that the cost amounts reported in

the response reconcile to the company’s

financial statements.

Comment 5

Petitioners argue that Dofasco

improperly calculated its interest

expense factors. Petitioners state that

Dofasco did not include certain

expenses in the calculation of total

interest expense. According to

petitioners, Dofasco also improperly

included a profit sharing figure in its

cost of sales. Finally, petitioners

maintain that Dofasco improperly

adjusted for trade accounts receivable

for the CV interest expense. Petitioners

assert that Dofasco should conform the

CV interest expense to its COP expense

calculation.

Dofasco contends that it did include

the proper expenses in its consolidated

interest expense calculation, and that it

properly included profit sharing in

general and administrative expenses

only. With regard to an adjustment for

trade accounts receivable, Dofasco

argues that the Department’s policy on

this issue was elucidated 3 1/2 months

after Dofasco’s submission of its Section

D response. Therefore, Dofasco

maintains that it was not an ‘‘error’’ by

Dofasco to report the CV interest

expense in the manner it did.

Department’s Position. The expenses

that petitioners maintain have been

excluded from the interest expense

calculation have in fact been included

in respondent’s calculation of interest.

See, Dofasco, Inc.’s response to Section

D Supplemental, Exhibit Supp. I.8,

‘‘Calculation of Interest’’ for 1995,

which shows that the expenses in

question have been included in one of

the components of Dofasco’s

calculation.

With regard to the amount for profit

sharing, verification exhibit 33, page B3

shows that the cost of sales figure

reported on page B1 does not include

profit sharing, but does include the cost

of sales figure used in Dofasco’s

calculation shown on page A1.

Furthermore, the cost of sales figure

reported on page B1 indicates that it is

a figure calculated before certain

adjustments, including that for profit

sharing.

Finally, with regard to the calculation

of interest expense for CV, we agree

with Dofasco that its response

methodology does not constitute an

‘‘error,’’ as the Department had not

made clear respondents’ requirements

under the new statute at the time of

Dofasco Inc.’s Section D submission.

Nevertheless, the Department has stated

in Certain Pasta from Italy that the

statute requires interest expense to be

computed in the same way for COP and

CV, and that an accounts receivable

offset for CV interest expense is not

permitted. Therefore, for the purposes of

calculating interest expense for the final

results of review, we have revised

Dofasco’s calculation of interest expense

for CV to remove the offset for trade

accounts receivable.

Comment 6

Petitioners state that Dofasco should

treat sales through Dofasco’s U.S.

subsidiary as constructed export price

sales, because Dofasco USA (DUSA)

played a significant role in the sales

process, incurred expenses connected

with its U.S. and further manufacturing

activities, and because the

circumstances regarding ownership and

control of the merchandise sold in the

U.S. prior to delivery to customers were

such that these sales should be

considered CEP sales.

Petitioners argue that, in the event

that the Department does not classify all

DUSA sales as CEP sales, then it must
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at least classify those DUSA sales for

which there has been further

manufacturing as CEP transactions.

Petitioners allege that in this same

situation, the Department ruled in

Certain Cold-Rolled and CorrosionResistant Carbon Steel Flat Products

from Korea that such sales should be

considered CEP sales.

Petitioners also maintain that, in the

event that the Department does not

classify all further manufactured sales

as CEP sales, it must at least classify

those DUSA sales for which the date of

sale occurred after importation as CEP

sales.

Dofasco states that the Department

properly determined that U.S. sales

through DUSA were export price

transactions. Dofasco notes that the

Department and the Court have held

that sales through a U.S. affiliate are

export price transactions if the

merchandise is sold directly to U.S.

customers without physically entering

the affiliate’s inventory. Dofasco goes on

to state that the sales constitute a

customary commercial channel of trade,

and the U.S. affiliate only acted as a

paper processor and communications

link for those sales. Dofasco argues that

the merchandise sold did not enter

DUSA’s physical inventory for storage

awaiting sale to a customer, and that

Dofasco negotiated the prices charged

and was responsible for marketing and

sales development. Dofasco notes that

the Department has held (including in

the first review of this case) that the

circumstances surrounding the further

processing of some of the merchandise

sold through a U.S. affiliate do not

indicate that those sales were CEP

transactions. Dofasco also stresses that

the further processing was not

undertaken on the account of the

producer or exporter, or the affiliated

party in the United States.

Department’s Position. We agree with

respondent. The Department, in the first

administrative review of this

proceeding, noted that Dofasco’s sales

through DUSA were purchase price

(now referred to as export price)

transactions. The Department noted that

‘‘while the Department usually finds

further manufacturing of merchandise

occurs in the context of ESP (now CEP)

sales, and while 19 U.S.C. section

1677a(e)(3), discussing adjustments to

ESP, is the only explicit reference to

further manufacturing in the statute, it

would clearly be a mistake to define the

sale as an ESP sale simply because there

is further manufacturing.’’ See,

Memorandum for Roland MacDonald:

Administrative Review of Corrosion

Resistant Carbon Steel Flat Products

from Canada: Categorization of sales of

Dofasco, Inc. (‘‘Memorandum for

Roland MacDonald’’), page 2 (July 12,

1995) (Public Version). While this

decision was made under the pre-URAA

governing statute, there are no

differences under the post-URAA statute

with regard to the statutory basis for this

determination.

Thus, in the first administrative

review the Department based its

decision with regard to the DUSA sales

on three factors: (1) While DUSA took

title to the steel, it did not take the steel

into physical inventory; (2) because

DUSA had no facilities in the United

States, it was clear that the channel of

delivery was directly from Dofasco to

the customer, or to an unrelated

processor of the customer’s choosing;

and (3) DUSA was nothing more than a

processor of paper and communications

link. See, Memorandum for Roland

MacDonald, page 3 (July 12, 1995)

(Public Version).

In the current administrative

proceeding, the only change in

circumstances is the establishment of a

separate DUSA office in the United

States. Hence, the Department must

review the basis of its earlier decision in

light of this changed circumstance.

Specifically, we must determine: (1)

Whether DUSA takes physical inventory

of subject merchandise at the new

location; (2) whether the channel of

delivery is customary (i.e., still from

Dofasco to the customer); and (3)

whether the new office performs a role

more significant than that of a processor

of documents and communications link.

With regard to whether DUSA takes

physical inventory of subject

merchandise at the new location,

Dofasco has stated for the record that

neither Dofasco nor DUSA own or lease

any U.S. warehousing facilities. See,

Dofasco’s Supplemental Sales Response,

pp. 23–24 (January 18, 1996). Petitioners

do not dispute this fact. Rather,

petitioners argue that the fact that DUSA

does not own a warehouse has no legal

significance. Instead, petitioners stress

that the ‘‘critical fact’’ is that the

merchandise is in the United States

prior to being sent to the ultimate

customer, under circumstances which

warrant the Department’s determination

that such sales are CEP sales.

Despite petitioners’ assertions, as the

Department noted in the first

administrative review (Memorandum

for Roland MacDonald, page 3 (Public

Version)), the Department has long

required that the merchandise be taken

into physical inventory, rather than

mere financial (accounting) inventory.

See, Certain Steel from France, 58 FR,

37134 (1993) (sale is PP where U.S.

subsidiary takes title but does not

warehouse merchandise in the ordinary

course of business); Polyethylene

Terephthalate (‘‘PET’’) Film, Sheet and

Strip from Japan, 56 FR 16300, 16303

(1991) (sale is PP where subsidiary takes

financial but not physical inventory).

Therefore, we find no reason to reverse

our decision based on this criterion.

With regard to whether the channel of

delivery is customary, the Department

determined in the first administrative

review that because DUSA has no

facilities in the United States, it is clear

that the channel of delivery is directly

from Dofasco to the customer, or to an

unrelated processor of the customer’s

choosing. While DUSA now has an

office in the United States, the

Department has verified for the current

review that Dofasco’s channels of

delivery through DUSA remain the same

as for the prior review period.

Petitioners suggest that the mere

existence of this U.S. office serves to

establish that the ‘‘use of DUSA as was

done during the POR is not the

customary channel of trade.’’ See,

Petitioners’ Case Brief at 38. However,

petitioners have not shown that the

channel of delivery is in any way

different from the previous review

period. Indeed, there is no record

evidence that subject merchandise is

now being shipped to the U.S. affiliate

(or to a warehouse dictated by the

customer) from the subsidiary location

in the United States, or that the channel

of shipment is otherwise different from

the first administrative period.

Therefore, there is no reason to reverse

our decision in the last administrative

review based on this criterion.

With regard to the last criterion,

whether DUSA plays a role more

significant than that of a processor of

documents and communications link,

petitioners make several arguments.

First, petitioners state that, by virtue of

maintaining U.S. operations, DUSA

incurred significant expenses in

connection with its activities, such as

salaries of its personnel and general and

administrative expenses to support

them. Petitioners argue that deducting

such expenses from the U.S. price in

CEP situations is one of the statutory

requirements intended to ensure fair

comparisons in an antidumping

analysis. Second, petitioners maintain

that the record shows that DUSA was an

active participant in the negotiating and

selling process, citing letters with

customers which are on the record of

this review. Finally, petitioners state

that certain other support functions

performed by DUSA add to the

significance of its role as a seller.

Petitioners suggest that the existence

of a U.S. operation which incurs
18462 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

‘‘significant’’ expenses requires the

Department, by statute, to treat sales

through this U.S. affiliate as CEP sales

in order to deduct such expenses from

the U.S. price. However, we disagree

that the level of the expenses, by itself,

should be a criterion. Rather, the

significant consideration is whether the

U.S. affiliate’s function is more than

acting as a communications link

between the unaffiliated customer and

the exporter. We have stated this in

numerous other cases in which the

Department has considered whether

there are circumstances in which sales

through U.S. affiliates should be treated

as export price (or, under the pre-URAA

law, purchase price) transactions. See,

e.g., Certain Corrosion-Resistant Carbon

Steel Flat Products from Korea, 61 FR

18547; Stainless Steel Wire Rod from

France 58 FR 68865; and New Minivans

from Japan 21 FR 21937. The

Department’s three criteria for

determining the treatment of sales

through a U.S. affiliate as EP or CEP are

appropriate for making this

determination.

With regard to petitioners’

interpretation of DUSA’s role in the

negotiating and selling process, the

record evidence does not prove that the

terms and conditions of a specific

contract (see, Attachment I.10 of the

January 18, 1996 Supplemental

Questionnaire Response, APO Version)

were negotiated by DUSA, nor does the

evidence contradict Dofasco’s

explanation regarding the contract’s

circumstances (see, Respondent’s

Rebuttal Brief (APO Version), pg. 25).

Moreover, numerous documents have

been placed on the record, including

those taken at verification,

demonstrating DUSA’s role vis-a-vis

Dofasco, Inc.’s role in sales negotiations.

See, e.g., exhibit 2 of the Sales

Verification Report; and Attachments

I.6, I.8, and I.9 of Dofasco’s

Supplemental Questionnaire Response

(January 18, 1996). These documents

support respondent’s claim that

Dofasco, Inc. was primarily responsible

for conducting sales activities with U.S.

clients.

Finally, concerning petitioners’

assertion that certain other support

functions performed by DUSA add to

the significance of its role as a seller, we

believe that the affiliate’s status with

regard to title, its involvement in

warehousing and further processing,

and the performance of certain selling

functions do not warrant rejection of

Dofasco’s EP classification of these

sales. First, with regard to title, these

circumstances are no different than in

the first review. See, Memorandum for

Roland MacDonald at page 3. Second,

petitioners have not accurately

described DUSA’s role with regard to

warehousing and further processing.

Thus, petitioners’ cite to Large

Newspaper Printing Presses from

Germany does not provide an applicable

precedent. Finally, because the

Department verified that DUSA

continued to perform the same

functions as a sales facilitator as it did

during the first administrative review

(see, Dofasco Sales Verification Report,

August 6, 1996, pg. 2), we do not regard

the performance of the selling function

cited by petitioners (see, Page 36 of

petitioners’ Case Brief) as adding to the

significance of DUSA’s role.

Comment 7

Petitioners claim that Dofasco failed

to report freight charges for numerous

U.S. sales, and that by doing so, Dofasco

failed to act to the best of its ability in

preparing its response. Therefore,

petitioners argue that the Department

should use the highest freight rate as

partial facts available for these sales,

citing PVC and Polystyrene Framing

Stock from the United Kingdom, 61 FR

51411, 51415 (October 2, 1996).

Dofasco asserts that petitioners’

contention that it failed to report any

freight charges for U.S. sales is wrong,

because the freight expense is contained

in computer fields other than the ones

specifying the maximum freight charge

for U.S. transactions.

Department’s Position We agree with

respondents that, for the large majority

of the sales in question, Dofasco has in

fact reported freight charges as required

by the Department. As noted by Dofasco

in its rebuttal brief, in many instances

it has reported maximum freight charges

in the computer field for freight from

Dofasco to the warehouse. Additionally,

the Department verified that Dofasco

reported actual freight in the computer

fields for warehousing, further

processing, and freight-out.

However, for several of these

transactions, Dofasco failed to report

any freight charges. See, Analysis

Memorandum at page 4. For these sales,

as partial facts available we have

assigned the maximum freight value for

that destination (consistent with

Dofasco’s reporting methodology of

using the maximum value for each

destination), or, in the event there was

no maximum freight value for that

destination anywhere on the database,

we have assigned the highest maximum

freight value for any destination.

Comment 8

Petitioners argue that the Department

should deduct antidumping duties paid

by Dofasco USA which were reimbursed

by Dofasco. According to petitioners,

the fact that Dofasco USA had more

liabilities than assets is evidence that it

must have been reimbursed

antidumping duties paid on U.S.

imports. Petitioners state that this is

contrary to the statute.

Dofasco contends that no evidence

exists to support petitioners’ allegation

that Dofasco pays antidumping duties

on behalf of Dofasco USA or reimburses

Dofasco USA for antidumping duties.

Dofasco claims that the language of the

reimbursement provision, as well as the

Department’s interpretation of that

regulation, indicates that in order to

trigger the regulation, affirmative

evidence (‘‘evidence beyond a mere

allegation’’) must exist. According to

Dofasco, because petitioners have failed

to establish a link between

intracorporate transfers of funds and the

reimbursement of antidumping duties,

the Department should not rule that

reimbursement exists.

Department’s Position. We agree with

respondents. In this case, petitioners

have provided no evidence showing that

the Dofasco directly pays antidumping

duties or reimburses Dofasco USA

specifically for such duties. Even if

Dofasco USAs financial records could

be construed to show that there has

been an intracorporate transfer of funds,

such a transfer is likewise insufficient

evidence of reimbursement of duties. As

the Department stated in AFBs from

France, ‘‘the antidumping law does not

. . . prohibit related parties from

transferring money to one another.’’ See,

Final Results of Antidumping

Administrative Review: Antifriction

Bearings (Other than Tapered Roller

Bearings) and Parts Thereof from

France, 57 FR 28360, 28371 (June 24,

1992). The Department clarified this

point before the Court of International

Trade, in Torrington Co. v. United

States (881 F. Supp. at 629):

Commerce states 19 CFR 353.26

mandates a deduction to USP, not when

there is any transfer between related

parties, but rather, when there is

reimbursement of antidumping duties.

Commerce asserts that it has

consistently held that absent evidence

of reimbursements, it has no authority

to make such an adjustment to U.S.

price.

Thus, we do not find that

reimbursement of antidumping duties

exists in this case.

Comment 9

Petitioners argue that the Department

must deduct antidumping duties paid

by the respondent or related parties,

pursuant to section 772(c)(2)(A) of the

Act. Specifically, petitioners argue that
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18463

the phrase ‘‘import’’ used in this

provision included antidumping and

countervailing duties.

Dofasco asserts that the Department

has consistently determined not to

deduct antidumping duties from US

price and should continue to do so for

the final results.

Department’s Position. We agree with

respondents. See, CCC comment 5

supra.

Comment 10

Respondents allege certain clerical

errors were made in the computer

program used to calculate Dofasco’s

margin. Specifically, Dofasco claims

that the Department made errors by: (1)

Failing to follow the established product

hierarchy in the model match program;

(2) improperly calculating the weightedaverage home market values where there

are two or more most similar products

in the home market; (3) failing to

combine a customer category for

Sorevco, Inc. in the same manner as was

done for Dofasco Inc.’s customer

categories (petitioners made the same

claim); (4) erroneously including

customer category in the model match

program; (5) erroneously including sales

in its model match which were

excluded in the margin calculation

program; (6) failing to exclude, from the

margin calculation program, sales

outside the ordinary course of trade, and

those outside the window period

(petitioners made the same claim); (7)

incorrectly calculating entry value for

those sales in which Dofasco was unable

to provide an entry value figure; (8)

including certain repetitive language in

the program; (9) not eliminating sales of

a given product to affiliated customers

when no sales of that same product

were made to unaffiliated customers in

the pattern of price differences program;

(10) performing an incorrect

mathematical computation in

calculating constructed value profit; (11)

erroneously matching sales within the

same month at different levels of trade

before matching sales at the same level

of trade within the 90/60 day window

period; and (12) improperly including

sales which had failed the arm’s-length

test in calculating indirect selling

expenses and constructed value profit.

Petitioners additionally claimed that

the Department made a clerical error by

including the minimum freight field for

expenses used to calculate cost instead

of the maximum freight field.

Department’s Position. We agree with

all comments made by Dofasco and

petitioners, and have corrected our

program for the final results.

Stelco Inc.

Comment 1

Because Stelco reported the cost of

painting steel coils by its affiliate

Baycoat in lieu of reporting the price

charged by Baycoat to Stelco, petitioners

urge the Department to: (i) Draw an

adverse inference based on Stelco’s

failure to cooperate; (ii) utilize the most

adverse facts otherwise available to

recalculate COP and CV; and, (iii) use

an adverse adjustment to normal value

with respect to the comparison of

nonidentical merchandise. Petitioners

state the Department was fully justified

in rejecting Stelco’s use of

manufacturing costs as the value of

painting services provided to Stelco by

its affiliate Baycoat.

Petitioners cite section 773 (f)(2) and

(3) of the Tariff Act of 1930 (‘‘the Act’),

as amended, which states that when

valuing inputs supplied to a respondent

by affiliated suppliers the value

reported for a transaction must be the

value of such input (i.e., transfer price)

provided such price reflects the price

commonly charged in the market.

Petitioners state that the cost of

producing the input may only be used

for a major input where it is greater than

the market value. Petitioners assert the

facts on the record of this case establish

that (1) painting was a major input; (2)

the prices charged to Stelco by Baycoat

were at market value; and, (3) the

transfer prices were higher than the cost

of production.

Petitioners argue that prior

determinations did not bind the

Department because of a significant

change in the law. Between the time of

the first review and the current

proceeding sections 773(f) (2) and (3) of

the Act were amended and now clearly

apply to both cost of production and

constructed value, whereas under the

old law different rules applied.

Petitioners argue that Stelco’s

acknowledgment in their submissions

that prices from Baycoat were market

prices establish that the prices were at

fair (i.e., market) value.

Petitioners also claim Stelco had more

than adequate notice of the change in

the law through the new statute, the

statement of administrative action, the

new questionnaire, and the

Department’s request for transfer prices

in the supplemental questionnaire.

Petitioners cite section 776(b) of the

Act, as amended, to support their

contention that the Department use an

adverse inference. Petitioners state that

the fact that transfer prices examined by

the Department differed from the

reported costs is compelling evidence

that Stelco withheld transfer price

information and failed to provide

information in the form or manner

requested. Petitioners argue Department

practice is to use an adverse inference

where a respondent has not cooperated

to the best of its ability. Petitioners cite

the Preliminary Results of Antidumping

Duty Administrative Review: Granular

Polytetrafluoroethylene Resin from Italy,

61 FR 51266, 51267 (October 1, 1996)

(Resin from Italy) and the Preliminary

Results of Antidumping Duty

Administrative Review: Roller Chain,

Other Than Bicycle, From Japan, 61 FR

28,168, 28,169 (June 4, 1996) (Roller

Chain from Japan) to support their

contention the Department has used the

most adverse information when

choosing among alternative facts

available.

Petitioners reason that applying an

adjustment factor to the difference in

merchandise data does not constitute an

adverse inference either. Petitioners

suggest the highest difference in

merchandise adjustment that can be

added to normal value and still result in

comparable merchandise is 20 percent

of the total cost of manufacturing.

Petitioners cite the Final Results of

Antidumping Administrative Review:

Tapered Roller Bearings, Four Inches or

Less in Outside Diameter and Certain

Components Thereof, from Japan, 56 FR

26,054, 25,055, 25,058 (June 6, 1991),

and Gray Portland Cement and Clinker

from Mexico, Results of

Redetermination Pursuant to Court

Remand at 13 (February 1, 1996)

(remand determination), CEMEX, S.A. v.

United States, Slip Op. 96–132, LEXIS

147, at 10–11 (CIT, 1996) to support the

use of a 20-percent difference in

merchandise adjustment.

Respondent states the Department’s

preliminary results on this issue

reverses the methodology that was

specifically accepted in the original

final determination and first review.

Stelco argues the Department’s

determination is unsupported by any of

the usual criteria for changing

methodologies established in prior

determinations. Stelco asserts there has

been no change in the law and no

significant mistake in the earlier

determination. Stelco cites Shikoku

Chemical Corporation, et al., v. United

States, 795 F.Supp. 417 (CIT 1992)

which held that principles of fairness

prevented Commerce from changing its

methodology where key facts had not

changed to justify a new approach and

respondents had relied on the old

method of calculating the adjustment.

Stelco further contends that in this same

review the Department preliminarily

accepted Dofasco’s use of the cost of

painting by Baycoat. Stelco argues that
18464 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

the invoiced prices from Baycoat are

inappropriate to use because they have

not been shown to be indicative of

market prices or arm’s length prices.

Stelco states that Baycoat sells only to

its two shareholders, Stelco and

Dofasco, and therefore no unaffiliated

transactions exist with which to

establish the arm’s length nature of the

transactions. Stelco cites the Final

Determination of Sales at Less Than

Fair Value: Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof from the Federal Republic

of Germany, 54 FR 18,992, Appendix B

(May 3, 1989) (AFB’s from Germany)

where the Department stated that

lacking arm’s length prices for

components to compare to transfer

prices, for CV purposes, the Department

generally used the cost of the

components as representative of the

value reflected in the market under

consideration. Stelco points out that

under the shareholder agreement, each

partner shares in the profit or loss from

Baycoat at year-end. Stelco cites AFB’s

from Germany, to support its claim that

when transfer prices from a joint

venture company are used, the transfer

price must be adjusted by any loss

incurred by the joint venture company

because the loss of the joint venture

must be absorbed by the participants in

the joint venture. Lastly, Stelco asserts

if the Department considered paint a

major input, it failed to provide Stelco

with adequate notice and an

opportunity to provide transfer price

information.

Department’s Position. The

Department agrees with petitioners that

sections 773(f) (2) and (3) of the Act

directs Commerce to value inputs

supplied by affiliated persons at the

transfer price between the entities

provided that such a price reflects the

price commonly charged in the market

and, for major inputs, is not below the

cost of producing the input. In the Final

Results of Antidumping Administrative

Review: Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof from France, Germany,

Italy, Japan, Singapore, and the United

Kingdom, 62 FR 2,081, 2,115 (January

15, 1997) the Department found ‘‘that in

the case of a transaction between

affiliated persons involving a major

input, we will use the highest of the

transfer price between the affiliated

parties, the market price between

unaffiliated parties, and the affiliated

supplier’s cost of producing the major

input.’’ Stelco identified painting as a

major input in its section D response to

the antidumping questionnaire.

Therefore, the Department agrees that

painting services provided to Stelco by

its affiliate, Baycoat, should be valued at

the invoice price between the two

companies provided that the invoice

price represents a price commonly

charged in the market. The Department

agrees with petitioners that valuing this

input at cost would only be appropriate

where cost is higher than the transfer

price. See, section 773(f)(3) of the Act.

Our verification established that the

transfer price was higher than the cost

of painting services for sample

transactions. Furthermore, Stelco

acknowledged that Baycoat’s selling

prices were set at prevailing market

rates and above cost in their response to

the supplemental section D

questionnaire response.

Since Stelco did not report transfer

prices for each control number as

requested, we have increased the

reported cost of painting by the average

difference between the transfer price

from the sampled painting invoices

obtained at the verification and the

painting cost reported for the final

results. Section 776(a) of the Act states

in part that a determination may be

made on the basis of facts available if

necessary information is not available

on the record or if any interested party

fails to provide such information by the

deadlines for submission of the

information or in the form and manner

requested.

The Department disagrees with

petitioners that applying the ratio

representing the difference between the

cost and transfer price to the painting

cost reported as part of the variable cost

of manufacture does not appropriately

adjust cost for the difference in

merchandise calculation. The difference

in merchandise calculation will account

for the cost difference between paint

services valued at cost and at transfer

price by taking into account that the

transfer price for painting exceeds the

cost.

The Department disagrees with

respondent’s allegation that the

Department’s preliminary results were

unsupported by any of the usual criteria

for changing methodologies established

in prior determinations such as a change

in the law or a significant mistake made

in the earlier determination. The

Department is not bound by prior

determinations because the law changed

with the enactment of the Uruguay

Round Agreements Act which amended

the Act and made affiliated party

transactions (i.e., the transactions

disregarded and major input rules)

apply to both cost of production and

constructed value, whereas these rules

previously applied only to the

calculation of constructed value.

The Department disagrees with

Stelco’s reference to AFB’s from

Germany which Stelco contends

supports the acceptance of transfer

prices with an appropriate reduction for

profits on inputs transferred from the

affiliated party. In AFB’s from Germany

we compared the transfer prices to the

cost of production and found that the

cost of production of the affiliated

inputs was higher than the transfer

prices. The Department used cost for the

affiliated inputs in that case because the

transfer prices were below the cost of

production. Mathematically, this was

done by adjusting the transfer price

upward by the losses at the affiliate.

This is consistent with our practice in

this case where we compared the

transfer price of painting to the cost of

painting and found that the transfer

price exceeded the cost. The

Department used the transfer price

because it is higher than the cost of

production of the major input. Section

773(f)(3) of the Act allows the

Department to use the cost of

production of a major input where it is

greater than the transfer price.

The Department has determined that

Stelco had adequate notice of the

change in the law through the new

statute, the SAA, and through our

request for transfer prices in the original

questionnaire and the supplemental cost

questionnaire.

Finally, in order to be consistent in

our treatment of painting services

Baycoat provided for its other owner,

Dofasco, for these final results, we have

recalculated the input value of Baycoat’s

painting services based on transfer

price. See, Dofasco’s Analysis

Memorandum at page 7.

Comment 2

Petitioners argue Stelco’s general and

administrative expense (‘‘G&A’’) should

be recalculated based entirely on the

unconsolidated income statement.

Petitioners state the Department

incorrectly combined selected

unconsolidated data with consolidated

data (i.e., sundry income and expense)

in the preliminary results and

consequently calculated an inaccurate

G&A expense rate. Petitioners state that

Stelco started with the amount of

sundry expense reported in its

consolidated financial statements and

adjusted the consolidated amount for

certain items specifically related to

other consolidated entities. Petitioners

take issue with a consolidating entry

reducing unconsolidated sundry

expense. Petitioners claim that Stelco

provided no reasonable explanation for

why this offset to unconsolidated

sundry expense should be allowed.
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18465

Petitioners state the offset is not

supported by any record evidence and

must be disallowed.

Stelco responds that petitioners’’

argument with regard to lack of record

evidence is inconsistent with the

Department’s preliminary determination

and verification report. Stelco asserts

the methodology for calculating the

sundry expense reported using the

consolidated sundry income and

expense figure as a starting point was

fully documented in its submissions

and was not identified as deficient in

the Department’s verification report.

Stelco states the Department verified

and traced all the amounts included in

Stelco’s G&A expense calculation and

used these figures in its preliminary

determination. Stelco concludes that

there is no basis to resort to facts

available since they have cooperated

fully with the Department’s requests for

information.

Department’s Position. Petitioners

state correctly that the Department’s

normal practice is to use G&A expenses

from the unconsolidated income

statement. See, the Final Results of

Antidumping Administrative Duty

Review: Ferrosilicon from Brazil, 61 FR,

59,407, 59,411 (November 22, 1996) and

Final Determination of Sales at Less

Than Fair Value: Certain Hot Rolled

Carbon Steel Flat Products, Certain

Cold-Rolled Carbon Steel Flat Products,

and Certain Corrosion Resistant Carbon

Steel Flat Products from Japan, 37154,

37166 (July 9, 1993). However, the

Department disagrees with petitioners’

assertion that the Department randomly

combined unconsolidated and

consolidated G&A data and

consequently computed an incorrect

G&A rate. The Department based G&A

on Stelco’s unconsolidated data. The

Department adjusted a component of

G&A, the unconsolidated sundry

income/expense account, for

intercompany transactions which

effectively overstated the balance of this

account. The Department has

determined it would be inappropriate to

use the unconsolidated sundry income/

expense account without adjustment

because this would double count

income/expenses which were

subsequently eliminated during

consolidation. During consolidation,

profits/losses from intercompany

transactions are eliminated in order to

recognize profits/losses from

transactions only with unaffiliated

companies. For the final results, the

Department has computed a G&A rate

based on Stelco’s unconsolidated G&A

expenses and cost of sales, adjusted as

noted above.

Comment 3

Petitioners contend that Stelco USA’s

slitting expenses must be treated as a

further manufacturing cost because

slitting costs represent further

processing charges incurred in the

United States pursuant to section 772

(d)(2) of the Act. Petitioners state that

section 772 (d)(2) of the Act requires

that adjustments to U.S. price be made

for ‘‘the cost of any further manufacture

or assembly (including additional

material and labor), . . . .’’

Department’s Position. The

Department agrees with petitioners that

certain CEP sales which were slit in the

United States qualify as further

manufacturing as defined section

772(d)(2) of the Act. Therefore, for all

sales where the computer variable

DIRSELU is greater than zero, we have

designated the variable SALETYPE as

‘‘FMG’’ and have added DIRSELU to the

variable FURMANU for these final

results.

Comment 4

Petitioners, citing Final Results of an

Antidumping Duty Administrative

Review: Gray Portland Cement and

Clinker from Japan, 58 FR 48,826,

48,829 (Comment 8) (September 20,

1993) state that the Department has held

and the Court of International Trade has

affirmed that freight incurred in moving

merchandise from the U.S. port to a

further processor should be treated as a

further manufacturing cost, and that the

Department did not do so in its

preliminary results. Petitioners claim

that this practice was affirmed in The

Ad Hoc Committee of Southern

California Producers of Gray Portland

Cement v. the United States, 914 F.

Supp. 535, 541. Petitioners conclude

that for all sales with SALETYPE

‘‘FMG’’, the Department should add

USOTREU, INLFTC1U and INLFTC2U

to FURMANU.

Department’s Position. We agree with

petitioners. There is no record

information with regard to movement

expenses as a condition of sale. Thus,

we have made appropriate computer

program adjustments for all sales with

SALETYPE ‘‘FMG’’ to have added

USOTREU, (INLFTC1U * EXRATE) and

INLFTC2U to FURMANU.

Comment 5

Stelco disagrees with the

Department’s decision at the

preliminary results of review to exclude

payments to governments other than

income taxes (a component of general

and administrative expenses) from their

calculation of cost of sales which was

used as the denominator in the

financing expense ratio. Stelco objects

to the assertion that the cost of sales

figure it provided was not based on the

actual accounting records of the

company. Stelco asserts that its cost of

sales figure is derived directly from its

accounting records albeit in a different

format from the published income

statement which aggregates general

ledger accounts in summary form.

Stelco argues that payments to

governments other than income taxes

and corporate services (components of

general and administrative expenses)

relate directly to the cost of production

and therefore should be included in the

cost of sales denominator.

Department’s Position. We disagree

with Stelco. Stelco argues that the

consolidated cost of sales used as the

denominator in the financing expense

rate should include corporate services

and payments to governments other

than income taxes. Summarized in the

caption corporate services are costs of

administration, legal, information

system and treasury services.

Summarized in the caption payments to

governments other than income taxes

are non-income-based levied by

Canadian federal, provincial, regional

and municipal governments such as

property taxes, business taxes, and

capital taxes. Corporate services and

payments to governments other than

income taxes are periodic expenses

general in nature related to the company

as a whole. The Department has

determined these expenses are properly

classified as general and administrative

expense items which should be

excluded from cost of sales. As

explained in the Final Determination of

Sales at Less Than Fair Value: Certain

Pasta from Italy, 61 FR, 30,326, 30,349

(June 14, 1996), the financial expense

rate should be calculated on a basis

consistent with the cost of

manufacturing (‘‘COM’’) figures to

which they are applied. The reported

COMs do not include general and

administrative expenses so cost of sales

should not include any general and

administrative expenses. We have

therefore recalculated the financing

expense rate for the final results

excluding corporate services and

payments to governments other than

income taxes from the denominator,

cost of sales.

Comment 6

Petitioners allege the Department

made several errors in the margin

program utilized in the preliminary

results. Petitioners state the Department

omitted the variable SOTHMAT at line

294 of the margin program when

calculating TOTCOM. Petitioners argue
18466 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

that the Department included sales

which failed the related party arm’s

length test in the CV profit calculation

which is incorrect since these sales are

outside the ordinary course of trade.

Petitioners urge the Department to

exclude such sales in calculating CV

profit. Petitioners argue that in line 1131

of the constructed value portion of the

program that the Department used an

ampersand instead of an asterisk in the

formula. Petitioners assert the

Department omitted the variable

SOTHMAT at line 1140 of the

constructed value portion of the

program. Petitioners also state the

Department added asterisks to lines

1139 and 1143 making these lines

inoperable and recommend removing

the asterisks. Petitioners note the

Department defined Stelco’s total cost of

manufacture for CV purposes as

TOTCOMU whereas in subsequent lines

of programming, however, the

Department used the term TOTCOM

instead. Petitioners advocate replacing

TOTCOM with TOTCOMU in lines

1145, 1146, 1148 and 1149 of the final

margin program. Petitioners observe that

in line 1150 the Department reduced CV

by TOTCOM which was incorrect.

Petitioners state the Department should

correct line 1150 to read CV = TOTCVDSELCV. Petitioners note that the

Department failed to convert inland

freight charges listed under

‘‘INLFTC1U,’’ which were reported in

Canadian currency.

Petitioners also claim that in

implementing the CEP offset, the

Department failed to cap the offset by

the amount of U.S. indirect selling

expenses. Petitioners recommend

amending the computer program.

However, respondent contests

petitioners’ claim, stating that the

Department properly capped this offset.

Additionally, respondent contends that

petitioners’ proposed correcting

language attempts to obtain a change in

calculation methodology not related to

the capping of the CEP offset.

Department’s Position. The

Department agrees with petitioners in

all cases noted in the comment above,

except the one pertinent to the CEP

offset. The Department has thus made

all appropriate corrections to its margin

calculations for these final results.

Comment 7

Petitioners argue that because Stelco

had neither requested nor established

entitlement to a CEP offset, the

Department should not have made such

an adjustment. To qualify for a CEP

offset, state petitioners, referring to

section 773(a)(7)(B) of the statute and

the Statement of Administrative Action

(‘‘SAA’’) at 830, a respondent must first

establish that different levels of trade

exist between home market and U.S.

sales. Then, if the data do not provide

an adequate basis for LOT adjustment

and normal value is established at a

more advanced stage of distribution

than the CEP, the Department is

required to reduce normal value by the

CEP offset. Petitioners maintain that

Stelco did not demonstrate all of the

conditions which would entitle it to the

CEP offset granted by the Department as

a surrogate for a LOT adjustment.

Petitioners contend that Stelco has not

established that different LOTs exist, it

has not claimed an LOT adjustment, nor

has it requested a CEP offset. Petitioners

conclude that use of a CEP offset was

unwarranted and should not be used in

the final determination.

Respondent replies that the

Department properly fulfilled its

statutory mandate in granting Stelco a

CEP offset. Respondent agrees that it

must submit LOT data to demonstrate

that it is entitled to a CEP offset. Once

appropriate LOT data is submitted,

states respondent, section 773(a)(7)(B)

requires that the Department grant a

CEP offset as long as two conditions are

met: (1) When normal value is

established at a level of trade which

constitutes a more advanced stage of

distribution than the level of trade of the

constructed export price; and (2) the

data available do not provide an

appropriate basis to determine a level of

trade adjustment. Respondent concludes

that if the Department finds that the

LOT data submitted by respondent

satisfies both statutory criteria, normal

value shall be adjusted accordingly.

Respondent also contests petitioners’

apparent claim that a respondent must

claim a LOT adjustment in order for the

Department to conduct an LOT analysis.

Respondent states that section

773(a)(7)(A) requires the Department to

pursue an LOT analysis in all instances,

and that the Department acted properly

in doing so.

Respondent maintains that despite

petitioners’ claims, the record is replete

with LOT data submitted by Stelco and

that the Department had all the factual

information it needed for its LOT

analysis, and consequently had all the

information to support its use of a CEP

offset. Accordingly, respondent argues,

the Department should reaffirm its

decision to grant Stelco a CEP offset

adjustment.

Department’s Position. We agree with

respondent. Section 773(a)(1)(B)

requires that Commerce, to the extent

practicable, establish normal value

based on home market (or third country)

sales at the same level of trade as the

constructed export price or the starting

price for the export price. If Commerce

is able to compare sales at the same

level of trade, it will not make any level

of trade adjustment or constructed

export price offset in lieu of a level of

trade adjustment.

When sales in the U.S. and foreign

markets cannot be compared at the same

level of trade, an adjustment to normal

value may be appropriate. Section

773(a)(7)(A) provides that, after making

all appropriate adjustments to export

price or constructed export price and

normal value, Commerce shall adjust

normal value to account for any

differences in these prices that are

demonstrated to be attributable to

differences in the level of trade of the

comparison sales in each market. This

adjustment may either increase or

decrease normal value. Commerce will

grant such adjustments only where: (1)

There is a difference in the level of trade

(i.e., there is a difference between the

actual functions performed by the

sellers at the different levels of trade in

the two markets); and (2) the difference

affects price comparability.

In order to determine whether Stelco’s

sales in the comparison market are at a

different level of trade than the export

price or CEP, we examined whether the

comparison sales were at different

stages in the marketing process than the

export price or CEP. We made this

determination on the basis of a review

of the distribution system in the

comparison market, including selling

functions, class of customer, and the

level of selling expenses for each type

of sale. Different stages of marketing

necessarily involve differences in

selling functions, but differences in

selling functions, even substantial ones,

are not alone sufficient to establish a

difference in the level of trade. While

customer categories such as

‘‘distributor’’ and ‘‘wholesaler’’ may be

useful in identifying different levels of

trade, they are insufficient in

themselves to establish that there is a

difference in the level of trade.

Our discussion of the specific selling

functions that we examined, as well as

our Stelco-specific findings in this

regard, are contained in our preliminary

results.

The effect on price comparability is

measured by examining price

differences between goods sold to

different levels of trade in the foreign

market where normal value is being

established. Commerce measures any

effect on price comparability by

determining if there is a pattern of price

differences between sales at the

different levels of trade in the foreign

market.
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18467

Any adjustment under section

773(a)(7)(A) will be calculated as the

percentage by which the weightedaverage prices at each of the two levels

of trade differ in the market used to

establish normal value. An effect on

price comparability must be identified

and measured by observed differences

between prices at different levels of

trade. The Department will isolate the

price effect, if any, attributable to the

sale at different levels of trade, and will

ensure that expenses previously

deducted from normal value are not

deducted a second time through a level

of trade adjustment.

Only where different functions at

different levels of trade are established

under section 773(a)(7)(A)(i), but the

data available do not form an

appropriate basis for determining a level

of trade adjustment under section

773(a)(7)(A)(ii), will Commerce make a

CEP offset adjustment under section

773(a)(7)(B). In the case of Stelco, there

is only one home market level of trade

for the subject merchandise and that

level of trade is different from the level

of trade of the CEP. Therefore, Stelco’s

home market sales do not provide an

appropriate basis for determining a

level-of-trade adjustment. Moreover, we

have determined that data from Dofasco

(the other company in this proceeding

with multiple levels of trade) does not

form an appropriate basis for

determining whether a level of trade

adjustment is appropriate because none

of Dofasco’s home marketlevels of trade

are sufficiently similar to Stelco’s CEP

level of trade. See, Stelco Analysis

Memorandum at Attachment 1.

Therefore, because Stelco’s home

market sales are at a more advanced

stage of distribution than the level of

trade of the CEP and the data available

do not provide an appropriate basis to

determine a level-of-trade adjustment,

we have made a CEP offset adjustment.

This adjustment is ‘‘capped’’ by the

amount of indirect expenses deducted

in calculating CEP under section

772(d)(1)(D).

Comment 8

Petitioners argue that the Department

improperly excluded imputed expense

(i.e., credit expenses and inventory

carrying costs) from the calculation of

total United States expenses for the

purpose of determining profit on CEP

sales. Petitioners state that credit

expenses and inventory carrying costs

are deducted under section 772(d)(1) of

the Act. Accordingly, conclude

petitioners, these amounts must be

considered a part of ‘‘total United States

expenses’’ and must be included in the

allocation factor for such expenses.

Department’s Position. We agree with

petitioners. Section 772(d)(3) requires

that we deduct an amount of profit

allocated to the expenses described in

sections 772(d) (1) and (2). Section

772(d)(1) (B) and (C) state that the price

used to establish constructed export

price shall also be reduced by expenses

that result from, and bear a direct

relationship to, the sale, such as credit

expenses, guarantees and warranties;

(and) any selling expenses that the seller

pays on behalf of the purchaser. We

have thus corrected our margin

calculation program to include imputed

expenses in the calculation of total

United States expenses for this purpose.

In computing the total CEP profit for

allocation, we included any below-cost

sales in determining the total revenues

earned by Stelco and excluded any sales

to affiliated parties that were found to

have been made at non-arm’s-length

prices.

Comment 9

Petitioners state that section 772(c) of

the Act provides that in calculating EP

or CEP, a deduction must be made to

account for duties, including

antidumping duties, paid by the

respondent or its affiliated party, as

supported by C.J. Tower & Sons v.

United States, 71 f.2d 438, 445 (C.C.P.A.

1934). Thus, conclude petitioners, the

statute requires that the Department

must deduct antidumping duties paid

by the respondent on U.S. sales.

Petitioners state that in Federal-Mogul

Corp. v. United States, the plaintiff

challenged the Department’s decision

not to deduct estimated antidumping

duty deposits under the predecessor

provision to section 772(c)(2)(A).

Petitioners contend that the Department

argued that this provision applied only

to deduction of ‘‘normal’’ import duties.

Alternatively, say petitioners, the

Department argued that not deducting

estimated antidumping duties (as

opposed to duties actually to be

assessed) had been its longstanding

practice. The CIT affirmed the

Department’s refusal to deduct

estimated AD duties, but did not adopt

the Department’s reasoning that section

772 applied only to ‘‘normal’’ import

duties, and that antidumping duties

were not normal import duties within

the meaning of the statute (813 F. Supp.

872). Thus, petitioners maintain that

section 772 requires the Department to

deduct any import duties (including

antidumping duties) that can be

accurately determined at the time the

Department calculated dumping

margins.

Petitioners state that the legislative

history to the URAA does not suggest

that Congress rejected the construction

of section 772(c)(2)(A) urged by

petitioners. Petitioners continue that the

Senate Finance Committee recognized

that the Court of International Trade

was considering this issue, and directed

the Department to abide by the outcome

of that litigation (see, S. Rep. No. 412,

103d Cong., 2d Sess. 64 (1994)).

Therefore, state petitioners, Congress

did not intend to ratify the Department’s

not having treated duties as a cost in the

URAA, but recognized that the issue

would be resolved through the judicial

process.

Petitioners state that the difference

calculated between normal value and EP

or CEP on each sale by the Department’s

margin program is equal to the AD

duties to be paid by the importer. Once

this difference is calculated, state

petitioners, it is then deducted from EP

or CEP as a cost for use in calculating

final margins.

Respondent asserts that the

Department should once again reject

petitioners’’ argument to deduct AD

duties in its margin calculation and that

the Department did not deduct AD

duties from EP and CEP sales in the first

administrative review. Respondent

contends that petitioners failed to offer

any argument as to why the Department

should reach a different conclusion in

this review. Respondent continues that

in numerous determinations over many

years, the Department has consistently

refused to deduct AD duties from EP

and CEP sales and should continue to

do so. Respondent continues that

petitioners argument that section

772(c)(2)(A) requires the Department to

deduct AD duties from EP and CEP sales

notwithstanding, there are no U.S.

rulings in direct support of their

interpretation. Respondent states that

the Department has consistently rejected

petitioners argument as supported in

Carbon Steel Flat Products from the

Netherlands (61 FR 48465 (September

13, 1996)). It states, in part, ‘‘it is the

Department’s longstanding position that

antidumping and countervailing duties

are not a cost within the meaning of 19

U.S.C. section 1677(a)(d). . . . Unlike

normal duties, which are an assessment

against value, antidumping duties

derive from the margin of dumping or

the rate of subsidization found.

Logically, antidumping and

countervailing duties cannot be part of

the very calculation from which they are

derived.’’

Respondent concludes that the

Department’s practice is clear, and that

the CIT has consistently affirmed the its

decision not to deduct AD duty deposits
18468 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

from EP and CEP sales. Also,

respondent states that the URAA House

Ways and Means Committee Report and

the SAA explicitly state that the new

duty absorption provision is not

intended to provide for the treatment of

antidumping duties as a cost. Thus,

states respondent, the Department

should continue to refuse to deduct AD

duties from Stelco’s EP and CEP sales.

Department’s Position. We agree with

respondent. See, CCC comment 5, supra.

Final Results of Reviews

As a result of our review of the

comments received, we have changed

the results from those presented in

preliminary results of review. Therefore,

we determine that the following margins

exist as a result of our review:

Manufacturer/exporter Time period Margin

(percent)

Corrosion-Resistant Steel:

Dofasco ........................................................................................................................................................... 8/1/94–7/31/95 0.56

CCC ................................................................................................................................................................ 8/1/94–7/31/95 1.58

Stelco .............................................................................................................................................................. 8/1/94–7/31/95 0.55

Cut-to-Length Plate:

Algoma ............................................................................................................................................................ 8/1/94–7/31/95 1 0.37

Stelco .............................................................................................................................................................. 8/1/94–7/31/95 0

1This is a de minimis margin.

The Department shall determine, and

the 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

cash deposit requirements will be

effective upon publication of these final

results for all shipments of this

merchandise, entered or withdrawn

from warehouse for consumption on or

after the publication date, as provided

for by section 751(a)1) of the Act: (1) the

cash deposit rates for the reviewed

companies will be the rates for those

firms as stated above (except that if the

rate for a particular product is de

minimis i.e., less than 0.5 percent, a

cash deposit rate of zero will be

required for that company); (2) for

previously investigated companies not

listed above, the cash deposit rate will

continue to be the company-specific rate

published for the most recent period; (3)

if the exporter is not a firm covered in

this review, or the original investigation,

but the manufacturer is, the case deposit

rate will be the rate established for the

most recent period for the manufacturer

of the merchandise; and (4) the case

deposit rate for all other manufacturers

will be the ‘‘all others’’ rate made

effective by the final results of the 1993–

1994 administrative review of these

orders (see, Certain Corrosion-Resistant

Carbon Steel Flat Products and Certain

Cut-to-Length Steel Plate from Canada;

Final Results of Antidumping

Administrative Reviews, 61 FR 13815

(March 28, 1996)). As noted in those

final results, these rates are the ‘‘all

others’’ rates from the relevant LTFV

investigations which were 18.71 percent

for corrosion-resistant steel products

and 61.88 percent for plate (see,

Amended Final Determination, 60 FR

49582 (September 26, 1995)). These

deposit requirements shall remain in

effect until publication of the final

results of the next administrative

reviews.

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. This notice 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 § 353.22

of the Department’s regulations.

Dated: April 2, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–9425 Filed 4–14–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–405–802]

Certain Cut-to-Length Carbon Steel

from Finland; 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.

SUMMARY: On October 4, 1996, the

Department of Commerce (the

Department) published the preliminary

results of its 1994–95 administrative

review of the antidumping duty order

on certain cut-to-length carbon steel

from Finland. The review covers one

manufacturer/exporter, Rautaruukki Oy

(‘‘Rautaruukki’’), for the period August

1, 1994 through July 31, 1995. We gave

interested parties an opportunity to

comment on our preliminary results.

Based on our analysis of the comments

received, we have made the changes

described in this notice.

EFFECTIVE DATE: April 15, 1997.

FOR FURTHER INFORMATION CONTACT:

Jacqueline Wimbush or Linda Ludwig,

Office of AD/CVD Enforcement, Group

III, Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW, Washington,

DC 20230; telephone (202) 482–1374 or

482–3833, respectively.

SUPPLEMENTARY INFORMATION:

Background

On October 4, 1996, the Department

published in the Federal Register (61

FR 51901) the preliminary results of the