[Federal Register Volume 63, Number 13 (Wednesday, January 21, 1998)]
[Notices]
[Pages 3085-3092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1400]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-832]


Pure Magnesium From the People's Republic of China: Final Results 
of Antidumping Duty New Shipper Administrative Review

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

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SUMMARY: On October 23, 1997, the Department of Commerce published the 
preliminary results of the new shipper administrative review of the 
antidumping duty order on pure magnesium from the People's Republic of 
China (62 FR 55215). This review covers one manufacturer/exporter of 
the subject merchandise to the United States, Taiyuan Heavy Machinery 
Import and Export Corporation, and the period of review is May 1, 1996, 
through October 31, 1996. We gave interested parties an opportunity to 
comment on our preliminary results.
    We have determined that U.S. sales have been made below the normal 
value, and we will instruct the U.S. Customs Service to assess 
antidumping duties based on the difference between Export Price and 
Normal Value.

EFFECTIVE DATE: January 21, 1998.

FOR FURTHER INFORMATION CONTACT: Everett Kelly or Brian C. Smith, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-4194 or (202) 482-1766, 
respectively.

SUPPLEMENTARY INFORMATION: Unless otherwise indicated, all citations to 
the statute are references to the provisions effective January 1, 1995, 
the effective date of the amendments made to the Tariff Act of 1930, as 
amended (the Act), by the Uruguay Round Agreements Act (URAA). In 
addition, unless otherwise indicated, all citations to the Department 
of Commerce (the Department) regulations are to those codified at 19 
CFR part 353 (April 1997). Where appropriate, references are made to 
the Department's final regulations, codified at 19 CFR part 351 (62 FR 
27296), as a statement of current departmental practice.

Background

    On October 23, 1997, the Department published in the Federal 
Register (62 FR 55215) the preliminary results of its new shipper 
administrative review of the antidumping duty order on pure magnesium 
from the PRC (62 FR 55215). On November 13, the petitioner <SUP>1</SUP> 
and Taiyuan Heavy Machinery Import and Export Corporation (Taiyuan) 
submitted publicly available information on surrogate values for 
factors of production for consideration in the final results. On 
November 18, the petitioner and Taiyuan each submitted case briefs. On 
November 20, both parties submitted comments on the other's publicly 
available information submitted on November 13. On November 26, the 
parties submitted rebuttal briefs. On December 2, 1997, the Department 
held a public hearing.
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    \1\ The petitioner includes the following entities: Magnesium 
Corporation of America, International Union of Operating Engineers, 
Local 564, and the United Steelworkers of America, Local 8319.
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Scope of Order

    The product covered by this order is pure primary magnesium 
regardless of chemistry, form or size, unless expressly excluded from 
the scope of this order. Primary magnesium is a metal or alloy 
containing by weight primarily the element magnesium and produced by 
decomposing raw materials into magnesium metal. Pure primary magnesium 
is used primarily as a chemical in the aluminum alloying, 
desulfurization, and chemical reduction industries. In addition, pure 
primary magnesium is used as an input in producing magnesium alloy.
    Pure primary magnesium encompasses products (including, but not 
limited to, butt ends, stubs, crowns and crystals) <SUP>2</SUP> with 
the following primary magnesium contents:
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    \2\ Since the antidumping duty order was issued, we have 
clarified that the scope of the original order includes, but is not 
limited to, butt ends, stubs, crowns and crystals. See May 22, 1997, 
instructions in U.S. customs and November 14, 1997, Final Scope Rule 
of Antidumping Duty Order on Pure Magnesium from the PRC.
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    (1) Products that contain at least 99.95% primary magnesium, by 
weight

[[Page 3086]]

(generally referred to as ``ultra-pure'' magnesium);
    (2) Products that contain less than 99.95% but not less than 99.8% 
primary magnesium, by weight (generally referred to as ``pure'' 
magnesium); and
    (3) Products (generally referred to as ``off-specification pure'' 
magnesium) that contain 50% or greater, but less than 99.8% primary 
magnesium, by weight, and that do not conform to ASTM specifications 
for alloy magnesium.
    ``Off-specification pure'' magnesium is pure primary magnesium 
containing magnesium scrap, secondary magnesium, oxidized magnesium or 
impurities (whether or not intentionally added) that cause the primary 
magnesium content to fall below 99.8% by weight. It generally does not 
contain, individually or in combination, 1.5% or more, by weight, of 
the following alloying elements: Aluminum, manganese, zinc, silicon, 
thorium, zirconium and rare earths.
    Excluded from the scope of this order are alloy primary magnesium 
(that meets specifications for alloy magnesium), primary magnesium 
anodes, granular primary magnesium (including turnings, chips and 
powder), having a maximum physical dimension (i.e., length or diameter) 
of one inch or less, secondary magnesium (which has pure primary 
magnesium content of less than 50% by weight), and remelted magnesium 
whose pure primary magnesium content is less than 50% by weight.
    Pure magnesium products covered by this order are currently 
classifiable under Harmonized Tariff Schedule of the United States 
(HTSUS) subheadings 8104.11.00, 8104.19.00, 8104.20.00, 8104.30.00, 
8104.90.00, 3824.90.11, 3824.90.19 and 9817.00.90. Although the HTSUS 
subheadings are provided for convenience and customs purposes, our 
written description of the scope is dispositive.

Separate Rates

    In proceedings involving non-market-economy (``NME'') countries, 
the Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and thus should be 
assessed a single antidumping duty deposit rate. To establish whether a 
firm is sufficiently independent from government control to be entitled 
to a separate rate, the Department analyzes each exporting entity under 
a test arising out of the Final Determination of Sales at Less Than 
Fair Value: Sparklers from the People's Republic of China (56 FR 20588, 
May 6, 1991) and amplified in Final Determination of Sales at Less Than 
Fair Value: Silicon Carbide from the People's Republic of China (59 FR 
22585, May 2, 1994) (Silicon Carbide). Under the separate rates 
criteria, the Department assigns separate rates in nonmarket economy 
cases only if the respondent can demonstrate the absence of both de 
jure and de facto governmental control over export activities.

1. De Jure Control

    Taiyuan has placed on the administrative record documents to 
demonstrate absence of de jure control: the ``Law of the People's 
Republic of China on Industrial Enterprises Owned by the Whole 
People,'' adopted on April 13, 1988; (the Industrial Enterprises Law), 
and the 1992 regulations that supplemented it, ``Regulations for 
Transformation of Operational Mechanisms of State-Owned Industrial 
Enterprises'' (Business Operation Provisions). We have analyzed these 
laws in previous cases and have found them sufficiently to establish an 
absence of de jure control of companies ``owned by the whole people,'' 
such as Taiyuan. (See, e.g., Final Determination of Sales at Less than 
Fair Value: Furfuryl Alcohol from the People's Republic of China 
(``Furfuryl Alcohol'') 60 FR 22544 (May 8, 1995)). The Industrial 
Enterprises Law provides that enterprises owned by ``the whole people'' 
shall make their own management decisions, be responsible for their own 
profits and losses, choose their own suppliers, and purchase their own 
goods and materials. The Business Operation Provisions confer upon 
state-owned enterprises the responsibility for making investment 
decisions, the right to dispose of retained capital and assets, and the 
authority to form joint ventures and to merge with other enterprises. 
Taiyuan also states that pure magnesium does not appear on any 
government lists regarding export provisions or export licensing, and 
that no quotas are imposed on pure magnesium. In sum, in prior cases, 
the Department examined both the Industrial Enterprises Law and the 
Business Operations Provisions, and found that they establish an 
absence of de jure control. We have no new information in this 
proceedings which would cause us to reconsider this determination with 
regard to Taiyuan.

2. De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by or 
subject to the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses. See Silicon Carbide and Furfuryl Alcohol.
    Taiyuan asserted the following: (1) It establishes its own export 
prices; (2) it negotiates contracts, without guidance from any 
governmental entities or organizations; (3) it makes its own personnel 
decisions; and (4) it retains the proceeds of its export sales, uses 
profits according to its business needs and has the authority to sell 
its assets and to obtain loans. During verification proceedings, 
Department officials viewed such evidence as sales documents that 
showed Taiyuan sales prices were negotiated solely by Taiyuan and its 
customer. In addition, the Department generally noted no significant 
indication of government involvement in Taiyuan's business operations. 
Taiyuan officials are appointed by a bureau of the provincial 
government, rather than the central government, and there are no other 
known exporters of the subject merchandise under the control of the 
provincial government. Sales documents reviewed indicated that Taiyuan 
sales prices were negotiated solely by Taiyuan and its customer. In 
addition, the Department reviewed sales payments, bank statements and 
accounting documentation that provided evidence that Taiyuan received 
payment in U.S. dollars, which was deposited into its bank account 
after being converted to renminbi (RMB). See Taiyuan Sales Verification 
Report. This information, taken in its entirety, supports a finding 
that there is de facto an absence of governmental control of export 
functions. Consequently, we have determined that Taiyuan has met the 
criteria for the application of separate rates. See Notice of Final 
Determination at Less Than Fair Value: Persulfates from the Peoples 
Republic of China, 62 FR 27222 (May 19, 1997).

Fair Value Comparisons

    To determine whether sales of the subject merchandise by Taiyuan to 
the United States were made at less than fair value, we compared the 
export price (EP) to the normal value (NV), as described in the 
``Export Price and

[[Page 3087]]

Constructed Export Price'' and ``Normal Value'' sections of this 
notice, below.

Export Price

    We calculated EP in accordance with section 772(a) of the Act, 
because the subject merchandise was sold directly by the PRC exporter 
to unaffiliated parties in the United States prior to importation into 
the United States and the constructed export price methodology was not 
warranted based on the facts of record. We calculated EP based on the 
same methodology used in the preliminary results, with the following 
exception:
    To value foreign inland freight, we used the average rate contained 
in the Indian periodical The Times of India. We have used this same 
rate in numerous NME cases where India has been selected as the primary 
surrogate. See Final Determinations of Sales at Less Than Fair Value: 
Brake Drums and Brake Rotors from the People's Republic of China (PRC), 
62 FR 9160 (February 28, 1997) (Brake Rotors)).

Normal Value

    We calculated NV in accordance with section 773(c) of the Act, 
which applies to non-market economy countries. In accordance with 
section 773(c)(4) of the Act, we must, to the extent possible, value 
the factors of production in one or more market economy countries that 
(1) are at a level of economic development comparable to that of the 
non-market economy country, and (2) are significant producers of 
comparable merchandise. We have determined that Indonesia and India are 
the countries most comparable to the PRC in terms of overall economic 
development and both are significant producers of comparable 
merchandise (aluminum). Further, India also produces magnesium. For 
these final results, we have continued to use India as a surrogate 
country because it meets the Department's criteria for surrogate 
country selection.
    The selection of the surrogate values was based on the quality and 
contemporaneity of the data. Where possible, we attempted to value 
material inputs on the basis of tax-exclusive domestic prices (see 
Comment 17). Where we were not able to rely on domestic prices, we used 
import prices to value factors. As appropriate, we adjusted input 
prices to make them delivered prices. Where import values were used, we 
added an amount for surrogate freight attributable to the lesser of 
either the distance from the source to the factory or the nearest port 
to the factory (see Comment 18). For those values not contemporaneous 
with the POR, we adjusted for inflation using wholesale price indices 
published in the International Monetary Fund's International Financial 
Statistics. For a complete analysis of surrogate values, see the 
January 14, 1998, Calculation Memorandum (Calculation Memorandum). We 
note changes to surrogate valuation since the preliminary results as 
follows:
    To value ferrosilicon, we used a simple average of prices 
applicable during the POR from Metal Bulletin, and the Iron and Steel 
Newsletter (see Comment 6).
    To value calcinate dolomite and fluorite powder, we have used 
prices from Monthly Statistics of the Foreign Trade of India (Monthly 
Statistics) (see Comments 8 and 9, respectively).
    To value barium chloride, we used prices from United Nations Import 
Statistics (see Comment 10).
    To value electricity, we used the August 1996 rate in Business 
World (see Comment 12).
    To value truck freight rates, we used the average rate contained in 
the Indian periodical The Times of India.
    To value factory overhead, SG&A, and profit, we used the financial 
report of Southern Magnesium and Chemicals Ltd. (SMCL) because this 
company is a producer of the subject merchandise and the data from the 
report is contemporaneous to the POR (see Comment 2).
    We have considered the line item labeled ``stores and spares 
consumed'' to include the reducing vessel and have treated the reducing 
vessel as part of factory overhead because the reducing vessel is not a 
direct material consumed in the production process. Although the SMCL 
financial report may have treated the reducing vessel as a direct 
material and included the reducing vessel as part of line item ``raw 
materials consumed,'' we have, in calculating the surrogate overhead 
percentage, reduced SMCL's cost of materials consumed and increased 
overhead by the amount attributable to the reducing vessel costs (see 
Comment 1). We have not included in the surrogate overhead and SG&A 
calculations the excise duty amount listed in SMCL's financial report 
(see Brake Rotors at 9164). We based our factory overhead calculation 
on the cost of goods manufactured rather than on the cost of goods 
sold. We also included interest and/or financial expenses in the SG&A 
calculation. In addition, we only reduced interest and financial 
expenses by amounts for interest income if the Indian financial report 
noted that the income was short-term in nature. Where the financial 
report did not distinguish short-term interest income as a line item 
within total ``other income,'' we used the relative ratio of interest 
income to total other income as reported for the Indian metals and 
chemicals industry in the Reserve Bank of India Bulletin (RBI 
Bulletin). For a further discussion of other adjustments made, see 
January 14, 1998, Calculation Memorandum).

Interested Party Comments

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments and rebuttal comments from 
the petitioner and Taiyuan.
    Comment 1: Treatment of the Reducing Vessel. The petitioner claims 
that evidence on the record demonstrates that the reducing vessel is 
not part of factory overhead and that the Department must treat and 
value the reducing vessel as a direct material regardless of which 
public information it uses to calculate a value for factory overhead. 
The petitioner also refers to a U.S. Bureau of Mines (BOM) study of the 
silicothermic process of magnesium production which treats the reducing 
vessel as a direct material cost and not part of factory overhead. If 
the Department decides to use the financial report of SMCL (an Indian 
producer) to value factory overhead, the petitioner argues, then it 
should also take into consideration the fact that the data in the 
financial report demonstrate that the vessel is treated as a direct 
material rather than as part of stores and spares. The petitioner 
points out that even though Indian accounting standards state that a 
material can be considered part of factory overhead if it assists the 
manufacturing process but does not enter physically into the 
composition of the finished product, this is not necessarily the case 
with reducing vessels. Alternatively, the petitioner argues that if the 
Department decides to use data from the RBI Bulletin, then it should 
take into consideration the fact that public information on the record 
demonstrates that the cost of the reducing vessel is not captured in a 
calculated factory overhead rate using data from the RBI Bulletin, 
because the cost of the vessel is neither indirect nor minor. The 
petitioner claims that if the Department uses the RBI Bulletin to 
calculate factory overhead, then the Department needs to make an 
adjustment to the factory overhead rate to account for the cost of the 
reducing vessel.
    Taiyuan contends that the reducing vessel is not a raw material 
which is part of the direct cost of production. Rather, Taiyuan 
maintains that the reducing vessel is a reusable piece of equipment 
that does not physically enter into the finished product, and that

[[Page 3088]]

Indian general accounting principles treat such items as part of 
overhead costs. Therefore, Taiyuan maintains that the Department should 
continue to consider the reducing vessel as part of factory overhead.
    DOC Position: We agree with Taiyuan. The reducing vessel is not 
incorporated into the finished product. Rather, it is equipment 
necessary for producing the subject merchandise which eventually needs 
to be replaced after continuous use. Although we conclude that SMCL 
treated the reducing vessel as a direct material in its 1995-96 
financial report, we do not find that the reducing vessel should be 
considered a direct material rather than an indirect material for 
purposes of antidumping law. To the extent possible, we have adjusted 
the direct material amount reflected in SMCL's financial report by 
removing from the cost of direct materials and adding to factory 
overhead an amount for the reducing vessel based on data contained in 
SMCL's 1994-95 financial report. We have treated the reducing vessel 
cost as part of factory overhead and have used the SMCL 1995-96 
financial report to calculate a factory overhead percentage (see 
Comment 2 for further discussion).
    Comment 2: Surrogate Values for Factory Overhead, SG&A and Profit. 
The petitioner claims that the Department must use the financial 
statement of SMCL rather than the RBI Bulletin to value factory 
overhead, SG&A and profit because the Indian producer uses the 
silicothermic process employed by Taiyuan's supplier and therefore 
consumes the reducing vessel in producing magnesium. In addition, the 
petitioner claims that the data contained in SMCL's financial statement 
are more specific to magnesium production and more contemporaneous to 
the period of review (POR) than the data in the RBI Bulletin.
    Taiyuan argues that the Department should use the data on the 
chemicals and metals industry from the RBI Bulletin to value factory 
overhead, SG&A and profit because the Department has used these data in 
numerous NME cases and because it has a high degree of reliability 
given that it contains data compiled from many companies. Taiyuan 
argues that the Department should not rely on the SMCL financial report 
to calculate these surrogate percentages because that financial report 
is not publicly available published information. Taiyuan also alleges 
that the SMCL financial report is not in accordance with Indian 
generally accepted accounting principles (GAAP) because SMCL may have 
considered the reducing vessel as part of direct materials and Indian 
GAAP require that materials which assist in the manufacturing process, 
but which do not enter physically into the finished product, are not to 
be considered as direct materials. Finally, Taiyuan argues that the 
SMCL financial report is unusable because information in the report 
indicates that SMCL was unable to produce and sell product during 
periods of high demand, undertook major capital improvement projects 
and maintained an abnormally high level of raw material stocks, all of 
which may have distorted its factory overhead, SG&A and profit ratios.
    DOS Position: We agree with the petitioner. In numerous NME cases, 
we have expressed a preference for using the ``most product-specific 
information possible from the surrogate market'' (see, e.g., Brake 
Rotors at 9168). We find that SMCL's 1996 financial report is for an 
Indian producer of the subject merchandise and more specific than the 
industry-wide data for metals production contained in the 1992-93 RBI 
Bulletin. Moreover, we find that the 1996 SMCL financial report 
contains data which is more contemporaneous to the POR than data 
contained in the 1992-93 RBI Bulletin. In addition, we find that the 
SMCL financial report is publicly available information within the 
meaning of 19 CFR 351.301. As for Taiyuan's argument that SMCL's 
financial report is not in accordance with Indian GAAP, we find that 
the financial report has been audited by an Indian accounting firm and 
that even though SMCL may have treated the reducing vessel as a direct 
material in its financial report, this designation does not necessarily 
indicate that the financial report is not in accordance with Indian 
GAAP. With regard to the argument that SMCL's financial report is not 
usable because of possible production, capital investment and inventory 
irregularities, we note that there is no evidence in the financial 
report which indicates that these factors were abnormal for Indian 
producers in general. In addition, we find that Taiyuan has not 
provided any evidence which indicates that the data contained in the 
1996 SMCL financial report is not reasonably representative of the 
production and selling experience of other producers of the subject 
merchandise in India during the time period in question.
    Comment 3: Calculation of SG&A. Taiyuan contends that the 
Department should deduct from SG&A certain selling expenses (i.e., 
royalty, selling commission, and advertisement) normally deducted from 
EP and CEP and also an amount reflected in the RBI Bulletin for ``other 
expenses'' and then take the remainder and divide it by the sum of 
total SG&A and COM to derive the SG&A percentage. Taiyuan cites to the 
Department's Antidumping Manual which states that SG&A should be 
expressed as a percentage of the cost of goods sold.
    The petitioner contends that the Department should not deduct the 
royalty, selling commissions, or advertisement expenses from SG&A 
because it has made no such deductions to EP and because it cannot make 
a circumstance-of-sale (COS) adjustment based on the data on the 
record. Moreover, the petitioner maintains that the Department should 
not deduct ``other expenses'' from SG&A because there is no evidence 
that this expense category includes expenses already reported 
separately in the response (i.e., packing costs). Finally, the 
petitioner states it is the Department's established practice to 
include only the COM in the denominator of the SG&A ratio.
    DOC Position: We agree in part with the petitioner. We have not 
made a COS adjustment to NV. In NME proceedings, the Department does 
not generally adjust NV for COS differences given (a) the imprecise 
information for distinguishing between direct and indirect selling 
expenses in the surrogate SG&A source (i.e., SMCL's financial report); 
and (b) the absence of non-NME information about what direct selling 
expenses are included in EP (except where CEP is used) (see Final 
Determination of Sales at Less Than Fair Value: Bicycles from the 
People's Republic of China, 61 FR 19026, 19031 (April 30, 1996) 
(Bicycles)). As for accounting for expenses already reported separately 
in the response (i.e., packing expenses), we note that SMCL's financial 
report does not provide a separate line item for packing expenses. 
Since there is no information in the financial report which indicates 
that SMCL incurs packing expenses, we have not removed any packing 
expenses from the SG&A calculation. Regarding the calculation of the 
SG&A percentage, we have used the cost of goods manufactured, not the 
cost of goods sold, in the denominator of the SG&A ratio consistent 
with our current practice, which is not reflected in the Antidumping 
Manual (see Brake Rotors at 9164).
    Comment 4: Material Consumption Figures. The petitioner argues that 
the Department should not have subtracted the monthly values reported 
as negative from the total amount of material consumed because it is 
impossible that Taiyuan's supplier consumed negative amounts of inputs 
in any months in

[[Page 3089]]

which it produced magnesium ingots. Instead, the petitioner argues that 
the Department should require Taiyuan to provide additional information 
on its supplier's actual consumption figures for the inputs and months 
for which the supplier provided negative values. Alternatively, the 
petitioner argues that the Department should not reduce the quantities 
of the factors of production consumed by the amount of the reported 
negative consumption figures.
    Taiyuan contends that if the Department recognizes adjustments to 
increase material usage, then the Department should also recognize 
adjustments which decrease material usage.
    DOC Position: We agree with the respondent. The negative numbers do 
not reflect negative consumption amounts. Rather, the negative numbers 
noted in the inventory records are corrections to Taiyuan's supplier's 
records to reflect actual usage. The verification report specified all 
necessary corrections to reported data, and the correct information has 
been used for the final results.
    Comment 5: Reseller SG&A Expenses and Profit. The petitioner argues 
that in calculating CV and/or EP, the Department failed to account for 
expenses Taiyuan incurred in reselling its product to the United States 
market. The petitioner contends that the Department should have 
included in CV both surrogate producer SG&A expenses and profit (noted 
in SMCL's financial statement) plus an amount of reseller SG&A expenses 
and profit (noted in the RBI Bulletin). Alternatively, the petitioner 
argues that the Department should reduce EP by the amount of reseller 
SG&A expenses and profit in accordance with 19 U.S.C. 1677a(c)(2)(A) 
and also adjust EP for reseller SG&A expenses and profit as a COS 
adjustment in accordance with 19 U.S.C. 1677b(a)(6)(C)(iii).
    Taiyuan states that if the Department decides to include in CV an 
additional amount for the reseller's SG&A and profit, then the 
Department must make a corresponding level of trade adjustment to 
account for the different marketing level represented by such costs. 
However, Taiyuan states that the Department should not add these 
additional amounts to CV based on applicable costs to be included in 
the CV to establish NV.
    DOC Position: We disagree with the petitioner. In cases involving 
NMEs, we do not use exporter expenses and profit in our analysis. 
Instead, we obtain ratios for expenses and profit from a surrogate 
country, which in this case is India, and include in NV amounts based 
on the surrogate ratios. We consider those selling expenses and profit 
to approximate the selling expenses incurred and profit realized by 
both Taiyuan and Taiyuan's supplier of the subject merchandise. 
Therefore, we have accounted for the expenses incurred and profit 
realized by Taiyuan in reselling the subject merchandise to the U.S. 
market. As for subtracting an amount for these expenses and profit from 
export price or making a COS adjustment we have no basis to conclude 
that such adjustments are warranted or feasible (see Comment 3 for 
further discussion).
    Comment 6: Surrogate Value for Ferrosilicon. Taiyuan argues that 
the publication the Department used to value ferrosilicon in the 
preliminary results (i.e., Metal Bulletin) does not provide sufficient 
details on or reliable information for domestic values. Instead, 
Taiyuan claims that the Department should use a ferrosilicon import 
value submitted on November 13, 1997, from the publication Iron and 
Steel Newsletter (Iron and Steel). According to respondent, this 
information is more specific and reliable.
    The petitioner contends that the Department should not derive an 
import value from data in Iron and Steel because the value (1) Is 
either based on imports from NME countries (i.e., Russia) or from 
countries that are not ferrosilicon producers (i.e., Germany, the 
Netherlands); and (2) does not most closely correspond to the actual 
input consumed by Taiyuan. In addition, the petitioner contends that 
the import data on ferrosilicon contained in Iron and Steel are not 
representative of the price paid by purchasers in India nor are these 
import values most contemporaneous with the POR. Furthermore, the 
petitioner argues that the Department should not use price data from a 
1995-96 Indian producer financial statement submitted on November 20, 
1997, because the price is aberrationally low when compared with the 
data from Monthly Statistics and Metal Bulletin. Therefore, the 
petitioner maintains that the Department should continue to use data 
from Metal Bulletin to value ferrosilicon.
    DOC Position: We disagree in part with the petitioner. We have used 
a simple average POR value for all grades of ferrosilicon from two 
publications (i.e., Metal Bulletin and Iron and Steel). We find the 
July 1996 value of ferrosilicon in Metal Bulletin is no more 
representative or contemporaneous to the POR than is the July and 
August 1996 values of ferrosilicon in Iron and Steel. Therefore, we 
have used both values in the average price calculation. However, we 
have not removed an amount for excise or sales taxes from the domestic 
ferrosilicon value listed in Metal Bulletin because the publication 
does not indicate that the price is inclusive of these taxes. We have 
not included the values or quantities of ferrosilicon exported to India 
by countries listed in Iron and Steel which the Department has 
determined are NMEs (i.e., Russia, Kazakhstan). We have included the 
values and quantities of ferrosilicon from countries listed in Iron and 
Steel that are market economies but which the petitioner claims are not 
known to be producers of ferrosilicon because these countries are the 
exporters of record and are market economies that are determining the 
price of ferrosilicon that they sell to the Indian market. We have no 
evidence on the record which indicates that the ferrosilicon exported 
from these countries originates in NMEs.
    Comment 7: Surrogate Value for Dolomite. Taiyuan argues that the 
Department should not continue to use the April 1995-March 1996 value 
from a 1995-96 financial report of a single company (i.e., Indian 
Ferroalloy) to value dolomite because that price is unreliable and 
because there is no information in the financial report which indicates 
the type of dolomite referenced in that report. Instead, Taiyuan 
contends that the Department should use an indexed and averaged import 
value for three grades of dolomite from the Indian government 
publication 1994 Index Numbers of Wholesale Prices in India (Index 
Numbers). According to respondent, the data have been updated in this 
publication and are more contemporaneous to the POR than the data from 
a single company.
    The petitioner contends that the Department should continue to use 
the 1995-96 dolomite value from Indian Ferroalloy's financial report 
because the report provides a more contemporaneous value that is 
specific to the grade of dolomite used in magnesium production.
    DOC Position: We agree with the petitioner. We have used the April 
1995-March 1996 value from Indian Ferroalloy's financial report because 
it is more representative and more contemporaneous to the POR than the 
data contained in Index Numbers. We also have not used the data in 
Index Numbers because, although the Indian government publication 
appears to provide POR values for dolomite, there is no explanation how 
the product-specific indices were determined or why 1994 prices were 
selected for

[[Page 3090]]

indexation. We have not removed an amount for excise or sales taxes 
from the domestic dolomite value listed in Indian Ferroalloy's 
financial report because the financial report does not indicate that 
the price is inclusive of these taxes.
    Comment 8: Surrogate Value for Calcinated Dolomite (i.e., 
Calcinate). Taiyuan argues that it is the Department's policy to use, 
to the extent possible, statistics from a single country when 
developing the values for the factors of production. According to 
respondent, the Department used import statistics from Indonesia to 
value calcinated dolomite in the preliminary results. Taiyuan claims 
that because India is the primary surrogate country in this case, the 
Department should use the April-July 1996 Indian import value for 
calcinated dolomite from Monthly Statistics which Taiyuan furnished in 
its November 13, 1997, submission.
    DOC Position: We agree with Taiyuan. We have used the April-July 
1996 import value from Monthly Statistics to value calcinated dolomite.
    Comment 9: Surrogate Value for Fluorite Powder. Taiyuan argues that 
the April 1995-March 1996 value from Monthly Statistics the Department 
used in the preliminary results to value fluorite powder provides 
unreliable information during the POR. Taiyuan claims that the 
Department should use the April-July 1996 fluorite value import value 
from Monthly Statistics contained in its November 13, 1997, submission. 
The respondent argues that the data from this publication are more 
contemporaneous to the POR than the data used in the preliminary 
results.
    DOC Position: We agree with Taiyuan. We have used the April-July 
1996 import value from Monthly Statistics to value fluorite powder 
because it is more contemporaneous to the POI than is the April 1995-
March 1996 import value.
    Comment 10: Surrogate Value for Barium Chloride. The petitioner 
contends that the Department should use the January-December 1996 
Indian import value from United Nations Import Statistics instead of 
the Indonesian import value used in the preliminary results. The 
petitioner maintains that even though the Indian import value includes 
imports from the United States while the U.S. export data does not show 
exports of barium chloride to India, the export data of one country may 
not correspond to the import data of another for any number of reasons, 
including shipment of goods through intermediate countries. The 
petitioner also argues that if the Department continues to use the 
Indonesian import data to value barium chloride, the Department should 
not derive a hypothetical volume and value of U.S. imports into 
Indonesia and remove those amounts from the Indonesian import data 
since the Indonesian import data is not separately broken out by 
country of origin and because there is no necessary correlation between 
two different countries' import and export data.
    Taiyuan argues that the Department should use the Indonesian import 
data rather than the Indian import data to value barium chloride 
because the Indian import data contains imports from the United States 
while U.S. export data does not show exports of barium chloride to 
India. Taiyuan also maintains that the U.S. quantity and value data 
contained in the Indonesian import data is aberrational and that the 
Department should therefore remove the U.S. data from Indonesian import 
data by taking the volume and value of imports of barium chloride from 
all countries reported in the Indonesian import data and subtracting 
the volume and value of exports of barium chloride to Indonesia 
reflected in U.S. export data.
    DOC Position: We agree with the petitioner. Since India is the 
primary surrogate country in this case, we have used the Indian import 
prices to value barium chloride. We have used the January-December 1996 
Indian import price from United Nations Import Statistics to value 
barium chloride because the data in United Nations Import Statistics 
for this material is more contemporaneous to the POR than the Indian 
import prices contained in Monthly Statistics. We do not agree that the 
Indian import data are necessarily in error because they do not 
correlate with U.S. export data. The lack of correlation between two 
different countries' import and export data could result from various 
factors such as the reporting of intermediate destinations on export 
declarations. Therefore, we have no basis to conclude that the Indian 
data are erroneous.
    Comment 11: Surrogate Value for Coal. Taiyuan argues that the April 
1995-March 1996 import value from Monthly Statistics the Department 
used in the preliminary results is unreliable. Instead, Taiyuan claims 
that the Department should use an indexed and averaged import value for 
coal from the Index Numbers. As asserted by the respondent, the data 
are current to the POR and thus need no index calculation.
    The petitioner maintains that the Department should not use the 
prices from Index Numbers because those prices are domestic prices for 
coal produced in India, which are subject to government control. In 
addition, the petitioner asserts that the prices from this publication 
predate the POR by more than two years and are for a range of coal 
grades, none of which are used by Taiyuan. If the Department decides to 
use a domestic Indian coal price, then the petitioner contends that the 
Department should calculate an average price from Index Numbers using 
only the ``heat-intensive'' grades of coal listed in the publication.
    DOC Position: We disagree with Taiyuan. Taiyuan has offered no 
reason for finding that the April 1995-March 1996 coal import price 
from Monthly Statistics is unreliable. We have not used the coal prices 
from Index Numbers because, although that Indian government publication 
appears to provide POR values for coal, there is no explanation for how 
the product-specific indices were determined or why 1994 prices were 
selected for indexation.
    Comment 12: Surrogate Value for Electricity. Taiyuan argues that 
the Department should not use the August 1996 price in Business World 
to value electricity because this publication is not one normally 
considered by the Department in previous NME cases. Taiyuan maintains 
that the Department should use instead a 1995 value from the 
publication Confederation of India Industrial Handbook (``Industrial 
Handbook''), which has been used in previous NME cases, because the 
publication provides electricity rates applicable for rural areas in 
India. Taiyuan argues that since its producer is located in a rural 
area in the PRC, the rural electricity rates contained in Industrial 
Handbook would more accurately reflect the electricity costs incurred 
by the PRC producer.
    The petitioner contends that the Department should not use the 
rates in Industrial Handbook to value electricity because the rates it 
contains are not contemporaneous with the POR. In addition, the 
petitioner argues that in previous NME cases the Department has not 
adjusted a surrogate value to account for the fact that a production 
facility is located in a particular type of region within a country and 
should not do so in this case. Moreover, the petitioner contends that 
the data in Industrial Handbook identify different rates for rural and 
urban customers for only two Indian states, and that for the other 
states, the publication only provides one set of rates without making 
any distinction between urban and rural areas.
    DOC Position: We agree with the petitioner. We have used the August 
1996 industrial electricity rate

[[Page 3091]]

contained in Business World because it is more contemporaneous to the 
POR than the 1995 industrial electricity rate contained in Industrial 
Handbook. We do not agree with Taiyuan that we should use the rural 
electricity rate in Industrial Handbook because Taiyuan's supplier is 
located in a rural area in the PRC. The 1995 Industrial Handbook lists 
differentiated rural industrial rates for only one Indian state. This 
indicates that in general rural electricity rates are not different 
than urban electricity rates in India. Therefore, we find that the 
cited rural rates from Industrial Handbook would not be representative 
of rural rates for India as a whole.
    Comment 13: Inclusion/Exclusion of Provident Fund and Employees' 
Welfare Expenses in COM. Taiyuan contends that the labor portion of the 
NV calculation already includes provident fund and employees' welfare 
expense contributions. Therefore, when calculating COM, Taiyuan 
maintains that including these expenses in the overhead would result in 
double-counting.
    The petitioner maintains that the Department's new regression-based 
wage rate methodology uses wage rates from the Yearbook of Labor 
Statistics (Labor Statistics) published by the International Labor 
Office (ILO) and that these rates are based on cash payments received 
by employees. The petitioner contends that since provident fund 
payments and employee welfare expenses are not cash payments to 
employees, Taiyuan is incorrect that these costs are included in the 
surrogate value for labor. Therefore, the petitioner maintains that the 
Department should include these expenses in the factory overhead rate 
calculation.
    DOC Position: We agree with Taiyuan. The regression-based wage rate 
we have used to value labor in this case is based on wage rates 
contained in Labor Statistics. Information contained in Labor 
Statistics states that the Indian wage rate is a comprehensive wage 
rate which also includes employers' social security expenditures and 
welfare services. Therefore, consistent with Department practice, we 
have not included provident fund payments and employee welfare expenses 
in the numerator of the factory overhead rate calculation. See Final 
Determination for Sales at Less Than Fair Value: Polyvinyl Alcohol from 
the People's Republic of China 61 FR 14057, 14061 (March 29, 1996) 
(Comment 5).
    Comment 14: Adjustment of the Surrogate Value for No. 2 Flux. 
Taiyuan states that the Department made a clerical error in its 
preliminary results when it did not multiply the flux no. 2 surrogate 
value by the percentage purity of the input used by Taiyuan's suppliers 
as specified in the preliminary results calculation memorandum, in 
effect assuming the value to be for 100 percent pure flux.
    The petitioner maintains that the value the Department calculated 
for no. 2 flux incorporates the percentage factor.
    DOC Position: We agree with the petitioner. We have rechecked our 
calculation and find that our calculation is not in error.
    Comment 15: Inclusion of Transportation Fee in Electricity Rate. 
Taiyuan claims that in the preliminary results the Department 
incorrectly included a transportation fee in its surrogate value 
calculation for electricity. Therefore, Taiyuan maintains that the 
Department should exclude the transportation fee from its electricity 
value calculation.
    DOC Position: We agree with Taiyuan and have removed the 
transportation fee from the electrical surrogate value calculation.
    Comment 16: Packing Cost Calculation. Taiyuan claims that in the 
preliminary results the Department incorrectly determined the packing 
labor cost by calculating a cost based on labor hours rather than on 
labor minutes as reported in the response. Therefore, Taiyuan maintains 
that the Department should recalculate the packing labor cost using the 
reported labor minute factor.
    DOC Position: We agree with Taiyuan and have calculated a labor 
cost based on the labor minutes reported in Taiyuan's response.
    Comment 17: Deduction of Taxes from Surrogate Values Assigned to 
Raw Materials. Taiyuan contends that in any case where the Department 
uses financial statements of Indian producers to establish surrogate 
values for raw material inputs, the Department should follow the normal 
practice used in Brake Rotors to calculate a tax-exclusive value (see 
Brake Rotors at 9163). To ensure that surrogate values are exclusive of 
all taxes, Taiyuan states that the excise duty amount between 15 and 20 
percent plus a minimum of 4 percent for sales taxes should be deducted 
from any domestic purchase prices.
    Petitioner contends that although in prior NME cases the Department 
has adjusted for taxes only where the quoted price was specifically 
identified as being inclusive of excise and/or sales taxes, in this 
review, Taiyuan has not identified a single surrogate value that is 
specifically identified as being inclusive of taxes.
    DOC Position: We agree in part with Taiyuan. Consistent with 
Department practice, we have removed, where applicable, an amount for 
excise taxes (i.e., 15 percent since 1995 based on information 
contained in the record) and an amount for sales taxes (i.e., 4 
percent) from the domestic Indian values we are using in our 
calculations. Only one of the Indian publications we used for domestic 
values (i.e., sulfuric acid from Chemical Weekly) noted that the price 
was inclusive of excise and sales taxes. Therefore, we only removed tax 
amounts from prices we obtained from Chemical Weekly. Our decision in 
this case is consistent with the Department's decision in Brake Rotors 
where we removed taxes from prices for certain steel products obtained 
from an Indian government steel publication (i.e., Statistics for Iron 
and Steel) because data in the publication indicated that taxes were 
included in the prices.
    Comment 18: Use of Import Surrogate Values Net of Any Additional 
Amount for Domestic Inland Freight. Taiyuan argues that if the 
Department uses Indian import statistics for surrogate values of raw 
material inputs, it cannot add a constructed freight charge. Taiyuan 
cites Sigma Corp. v. United States (Sigma), 117 F.3d 1401 (CAFC July 7, 
1997) in which Taiyuan claims the Court held that using such a 
methodology was beyond the limits of permissible approximation. Sigma 
at 15.
    Petitioner argues that the Department properly calculated inland 
freight for raw materials in the preliminary results. Petitioner 
contends that Taiyuan misread the Sigma ruling. Petitioner states that, 
in Sigma, the Court did not determine that no additional amount for 
inland freight could be included in CV. According to petitioner, 
Sigma's ruling requires only that, when the surrogate value for an 
input is based on a CIF import value, any additional amount for freight 
for that input may not exceed the calculated freight costs of shipping 
the material from respondents' seaports in the PRC to their factories.
    DOC Position: We agree in part with the petitioner. Although the 
holding in Sigma permits, rather than dictates, the methodology 
referenced by the petitioner, it also does not dictate the outcome 
urged by Taiyuan. Instead, it leaves to the discretion of the 
Department the determination of a freight component which is not 
excessive. We do not find that the import values contained in Indian 
publications include all of the freight cost associated with 
transporting the imported input to the factory. Therefore, in 
accordance with Sigma decision, we

[[Page 3092]]

have included a freight amount equal to the lesser of: (1) The 
calculated freight cost of shipping material from the PRC port Taiyuan 
uses to export finished goods to its PRC factory or (2) the cost of 
shipping material from the domestic supplier to the factory. See Final 
Determination of Sales at Less Than Fair Value: Collated Roofing Nails 
From the People's Republic of China, 62 FR 51410,51413 (October 1, 
1997).

Currency Conversion

    We made currency conversions pursuant to section 773A(a) of the Act 
and 19 CFR 353.60 based on the rates certified by the Federal Reserve 
Bank.

Final Results of the Review

    As a result of our comparison of EP and NV, we determine that the 
following weighted-average margin exists for the period May 1, 1996, 
through October 31, 1996:

------------------------------------------------------------------------
                                                               Percent  
               Manufacturer/producer/exporter                   margin  
------------------------------------------------------------------------
Taiyuan Heavy Machinery Import and Export Corporation......        69.53
------------------------------------------------------------------------

    The Customs Service shall assess antidumping duties on all 
appropriate entries. Individual differences between export price and 
normal value may vary from the percentage stated above. We have 
calculated an importer-specific duty assessment rate based on the ratio 
of the total amount of AD duties calculated for the examined sales made 
during the POR to the total value of subject merchandise entered during 
the POR. This rate will be assessed uniformly on all entries of that 
particular importer made during the POR. The Department will issue 
appraisement instructions concerning the respondent directly to the 
U.S. Customs Service.
    Furthermore, the following deposit rates shall be required for 
merchandise, entered, or withdrawn from warehouse, for consumption on 
or after the publication date of these final results of administrative 
review, as provided for by section 751(a)(1) of the Tariff Act: (1) The 
cash deposit rate for Taiyuan will be the rate indicated above; (2) for 
previously reviewed or investigated companies not listed above that 
have a separate rate, the cash deposit rate will continue to be the 
company-specific rate published for the most recent period; (3) for all 
remaining PRC exporters, the cash deposit rate will be 108.26 percent, 
the PRC-wide rate established in the LTFV investigation; and (4) for 
non-PRC exporters, the cash deposit rate will be the rate applicable to 
the PRC supplier of that exporter.
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.
    This notice serves as the 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 the 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 19 CFR 353.34(d). Timely written notification or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and terms of the APO is a sanctionable 
violation.
    This new shipper administrative review and notice are in accordance 
with section 751(a)(2)(B) of the Act (19 U.S.C. 1675(a)(2)(B)) and 19 
CFR 353.28(c).

    Dated: January 14, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-1400 Filed 1-20-98; 8:45 am]
BILLING CODE 3510-DS-P