Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices 33041

produce, and presumably dump,

additional subject merchandise which

requires annealing.

Department Position: These issues

were addressed in the preliminary

results wherein the Department

indicated that it did not consider these

factors conclusive. Final determinations

regarding these points need not be

reached in these final results since we

not find that, due to the extensive of a

non-de-minimis dumping margin in this

review, Wolverine is not eligible for

revocation pursuant to 19 CFR

353.25(a)(2).

Final Results for the Review

As a result of our comparison of EP

to NV, we determine that a dumping

margin of 0.67 percent exists for

Wolverine for the period January 1,

1996 through December 31, 1996, and

we determine, not to revoke in part the

antidumping duty order with respect to

imports of subject merchandise from

Wolverine.

The Department will determine, and

the U.S. Customs Service shall assess,

antidumping duties on all appropriate

entries. For assessment purposes, we

have calculated importer-specific ad

valorem duty assessment rates for the

merchandise based on the ratio of the

total amount of antidumping duties

calculated for the examined sales during

the POR to the total quantity of sales

examined during the POR. The

Department will issue appraisement

instructions directly to the Customs

Service.

Furthermore, the following deposit

requirements will be effective upon

publication of these final results for all

shipments of the subject merchandise

entered, or withdrawn from warehouse,

for consumption on or after the

publication date provided by section

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

rate for Wolverine will be the rate stated

above; (2) if the exporter is not a firm

covered in this review, a prior review,

or the original less than fair value

(LTFV) investigation, but the

manufacturer is, the cash deposit rate

will be the rate established for the most

recent period for the manufacturer of

the merchandise; and (3) the cash

deposit rate for all other manufacturers

or exporters will continue to be the ‘‘all

others’’ rate established in the LTFV

investigation. These deposit

requirements, when imposed, shall

remain in effect until publication of the

final results of the next administrative

review.

Notification of Interested Parties

This notice also serves as a final

reminder to importers of their

responsibility under 19 CFR 353.26 to

file a certificate regarding the

reimbursement of antidumping duties

prior to liquidation of the relevant

entries during this review period.

Failure to comply with this requirement

could result in the Secretary’s

presumption that reimbursement of the

antidumping duties occurred and the

subsequent assessment of double

antidumping duties.

This notice also serves as a reminder

to parties subject to administrative

protective orders (APOs) of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with 19 CFR 353.34(d)(1). Timely

written notification of the return/

destruction of APO materials or

conversion to judicial protective order is

hereby requested. Failure to comply

with the regulations and the terms of an

APO is a sanctionable violation.

This administrative review and notice

are in accordance with sections

751(a)(1) and 777(i)(1) of the Act.

Dated: June 9, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 98–16106 Filed 6–16–98; 8:45 am]

BILLING CODE 3510–DS–M

DEPARTMENT OF COMMERCE

International Trade Administration

[A–201–805]

Circular Welded Non-Alloy Steel Pipe

and Tube From Mexico: 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 December 8, 1997, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on circular

welded non-alloy steel pipe from

Mexico covering exports of this

merchandise to the United States by one

manufacturer/exporter, Hylsa S.A. de

C.V. (‘‘Hylsa’’) during the period

November 1, 1995 through October 31,

1996. See Circular Welded Non-Alloy

Steel Pipe and Tube from Mexico:

Preliminary Results of Antidumping

Duty Administrative Review and Partial

Termination of Review, 62 FR 64564

(Preliminary Results). We invited

interested parties to comment on the

preliminary results. We received

comments and rebuttals from petitioners

and Hylsa. Based on our analysis of the

comments received, we have changed

the results from those presented in the

preliminary results of review.

EFFECTIVE DATE: June 17, 1998.

FOR FURTHER INFORMATION CONTACT:

Ilissa Kabak at (202) 482–0145 or John

Kugelman at (202) 482–0649,

Enforcement Group III—Office 8, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

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

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all

citations to the Tariff Act of 1930, as

amended (the Act) are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Act by the Uruguay Round

Agreements Act (URAA). In addition,

unless otherwise indicated, all

references to the Department’s

regulations are to 19 C.F.R. Part 353

(April 1, 1997). Where appropriate, we

have cited the Department’s new

regulations, codified at 19 C.F.R. 351 (62

FR 27296, May 19, 1997). While not

binding on this review, the new

regulations serve as a restatement of the

Department’s policies.

Background

The Department published an

antidumping duty order on circular

welded non-alloy steel pipe and tube

from Mexico on November 2, 1992 (57

FR 49453). The Department published a

notice of ‘‘Opportunity to Request an

Administrative Review’’ of the

antidumping duty order for the 1995/96

review period on November 4, 1996 (61

FR 56663). On November 27, 1996,

respondents Hylsa and Tuberia

Nacional S.A. de C.V. (‘‘TUNA’’)

requested that the Department conduct

an administrative review of the

antidumping duty order on circular

welded non-alloy steel pipe and tube

from Mexico. We initiated this review

on December 16, 1996. See 61 FR 66017.

On February 4, 1997, TUNA requested

a withdrawal from the proceeding.

Pursuant to 19 C.F.R. 353.22(a)(5) of the

Department’s regulations, the

Department may allow a party that

requests an administrative review to

withdraw such request not later than 90

days after the date of publication of the

notice of initiation of the administrative

review. TUNA’s request for withdrawal

was timely and there were no requests

for review of TUNA from other
33042 Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices

interested parties. Therefore, the

Department terminated this review with

respect to TUNA in the December 8,

1997 preliminary results of this

administrative review in accordance

with § 353.22(a)(5) of the Department’s

regulations (19 CFR 353.22(a)(5)).

Under § 751(a)(3)(A) of the Act, the

Department may extend the deadline for

issuing the preliminary results of an

administrative review if it determines

that it is not practicable to complete the

review within the statutory time limit of

245 days. The Department determined

that timely completion was not

practicable. Accordingly, on July 8,

1997, the Department published a notice

of extension of the time limit for the

preliminary results in this case to

December 2, 1997. See Extension of

Time Limit for Antidumping Duty

Administrative Review, 62 FR 36488.

We held a public hearing on February

20, 1998.

The Department has now completed

this review in accordance with § 751(a)

of the Act.

Scope of the Review

The products covered by this order

are circular welded non-alloy steel

pipes and tubes, of circular crosssection, not more than 406.4 millimeters

(16 inches) in outside diameter,

regardless of wall thickness, surface

finish (black, galvanized, or painted), or

end finish (plain end, beveled end,

threaded, or threaded and coupled).

These pipes and tubes are generally

known as standard pipes and tubes and

are intended for the low pressure

conveyance of water, steam, natural gas,

and other liquids and gases in plumbing

and heating systems, air conditioning

units, automatic sprinkler systems, and

other related uses, and generally meet

ASTM A–53 specifications. Standard

pipe may also be used for light loadbearing applications, such as for fence

tubing, and as structural pipe tubing

used for framing and support members

for reconstruction or load-bearing

purposes in the construction,

shipbuilding, trucking, farm equipment,

and related industries. Unfinished

conduit pipe is also included in these

orders.

All carbon steel pipes and tubes

within the physical description outlined

above are included within the scope of

this order, except line pipe, oil country

tubular goods, boiler tubing, mechanical

tubing, pipe and tube hollows for

redraws, finished scaffolding, and

finished conduit. Standard pipe that is

dual or triple certified/stenciled that

enters the U.S. as line pipe of a kind

used for oil or gas pipelines is also not

included in this order.

Imports of the products covered by

this order are currently classifiable

under the following Harmonized Tariff

Schedule (HTS) subheadings:

7306.30.10.00, 7306.30.50.25,

7306.30.50.32, 7306.30.50.40,

7306.30.50.55, 7306.30.50.85, and

7306.30.50.90.

Although the HTS subheadings are

provided for convenience and customs

purposes, our written description of the

scope of these proceedings is

dispositive.

The period of review (POR) is

November 1, 1995 through October 31,

1996. This review covers sales of

circular welded non-alloy steel pipe and

tube by Hylsa.

Fair Value Comparisons

To determine whether sales of subject

merchandise from Mexico 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 ‘‘Normal Value’’

sections of the preliminary results of

review notice (see Preliminary Results at

64565–64566). On January 8, 1998, the

Court of Appeals for the Federal Circuit

issued a decision in CEMEX v. United

States, 133 F.3d 897 (Fed. Cir. 1998). In

that case, which involved a

determination by the Department under

pre-URAA law, the Court discussed the

appropriateness of using constructed

value (CV) as the basis for foreign

market value when the Department

finds home market sales to be outside

the ‘‘ordinary course of trade.’’

However, the URAA amended the

definition of sales outside the ‘‘ordinary

course of trade’’ to include sales below

cost. See § 771(15) of the Act.

Consequently, the Department has

reconsidered its practice in light of this

court decision and has determined that

it would be inappropriate to resort

directly to CV, in lieu of foreign market

sales, as the basis for NV if the

Department finds foreign market sales of

merchandise identical or most similar to

that sold in the United States to be

outside the ‘‘ordinary course of trade.’’

Instead, the Department will use sales of

similar merchandise, if such sales exist.

The Department will use CV as the basis

for NV only when there are no abovecost sales that are otherwise suitable for

comparison. Therefore, in this

proceeding, when making comparisons

in accordance with § 771(16) of the Act,

we considered all products sold in the

home market as described in the ‘‘Scope

of Review’’ section of this notice, above,

that were in the ordinary course of trade

for purposes of determining appropriate

product comparisons to U.S. sales.

Where there were no sales of identical

merchandise in the home market made

in the ordinary course of trade to

compare to U.S. sales, we compared

U.S. sales to sales of the most similar

foreign like product made in the

ordinary course of trade, based on the

characteristics listed in Sections B and

C of our antidumping questionnaire. We

have implemented the Court’s decision

in this case, to the extent that the data

on the record permitted.

Analysis of Comments Received

We invited interested parties to

comment on our preliminary results of

review. We received both comments and

rebuttals from petitioners and Hylsa.

The following analysis addresses the

issues raised by the parties in these

comments and rebuttals.

Comment 1: Reimbursement

During the POR, Hylsa was the

producer, exporter, and importer of

record for all U.S. sales of subject

merchandise. Hylsa’s U.S. customs

broker claims Hylsa as the importer of

record on the customs entry document

completed upon importation of subject

merchandise. The broker then invoices

Hylsa to reclaim the customs duties and

service fees it incurred. Hylsa

International Corporation (Hylsa

International) is a U.S. company whollyowned by Hylsa; it has no employees,

nor does it perform any sales activities.

Hylsa International is used by Hylsa as

a conduit through which Hylsa passes

sales invoices to, and collects payments

from, its U.S. customers. To this end,

Hylsa issues two invoices for its U.S.

sales; one invoice is from Hylsa to Hylsa

International while the other is from

Hylsa International to the U.S.

customer. The latter invoice is issued to

the U.S. customer for purchase and

payment records. The U.S. customer

remits payment to Hylsa International’s

bank account, and Hylsa applies these

payments to the customer account it

maintains for Hylsa International. For a

more detailed explanation of Hylsa

International, see Sales Verification

Report at 8.

Petitioners request that the

Department apply the reimbursement

regulation, 19 CFR § 353.26, in this

administrative review by deducting the

amount of antidumping duties paid by

Hylsa on behalf of the importer, or

reimbursed to the importer, from the

export price. Petitioners object to the

Department’s interpretation of § 353.26

set forth in the preliminary results of

this administrative review. The

Department stated in the preliminary

results that separate corporate entities

must exist as producer/reseller and

importer in order to invoke the
Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices 33043

reimbursement regulation. Petitioners

argue that, contrary to the Department’s

position, the regulation does not require

that the producer/exporter and importer

be separate entities. According to

petitioners, the only case in which this

situation was addressed was in the

previously completed administrative

review of this order. See Circular

Welded Non-Alloy Steel Pipe and Tube

from Mexico (Final Results of Pipe and

Tube from Mexico), 62 FR 37014 at

37017 (July 10, 1997) (Comment 4).

There, petitioners aver, the Department

did not decide this issue.

Petitioners state that cases in which

the Department has discussed the

application of the reimbursement

regulation all involved the payment of

duties by a foreign affiliate. In such

cases, petitioners contend, the

Department has not inferred that

reimbursement has occurred from the

mere fact of affiliation. To this end,

petitioners cite Certain Cut-to-Length

Carbon Steel Plate from Germany, 62 FR

18390 at 18394 (April 15, 1997)

(Comment 6). On the other hand,

petitioners argue, the Department has

not hesitated in applying the

reimbursement regulation in cases

where there is evidence of the

producer’s direct payment of, or

reimbursement for, antidumping duties

incurred by an affiliated importer. See

Furfuryl Alcohol from the Republic of

South Africa (Furfuryl Alcohol), 62 FR

36488, 36490 (July 8, 1997) (preliminary

results) and Certain Cold-Rolled Carbon

Steel Flat Products from the

Netherlands (Preliminary Results of

Steel Products from the Netherlands), 61

FR 51888, 51891 (October 4, 1996).

According to petitioners, the

Department has rejected the argument

that since two affiliated parties are

collapsed to calculate a dumping

margin, the parties should also be

collapsed under the reimbursement

regulation (citing Circular Welded NonAlloy Steel Pipe from the Republic of

Korea (Pipe from Korea), 62 FR 55574,

55580 (October 27, 1997) and Color

Television Receivers from the Republic

of Korea (Color Television Receivers), 61

FR 4408, 4411 (February 6, 1996)).

Petitioners argue that, because the

Department has not collapsed entities to

apply the reimbursement regulation, we

have not concluded whether the

regulation can apply to a single entity.

Additionally, because § 353.26 applies

regardless of the affiliation between the

producer/exporter and the importer, it

would be inconsistent to apply the

regulation in a case where the producer

and importer are affiliated but not apply

it when the producer and importer are

a single entity. Petitioners state that the

Department recognized this principle

with regards to duty absorption in

Certain Hot-Rolled Lead and Bismuth

Carbon Steel Products from the United

Kingdom, 61 FR 65022 at 65023

(December 10, 1996) (preliminary

results).

Petitioners note that in the few cases

in which the Department has addressed

the issue of reimbursement, it has

demonstrated that the producers’ direct

payment of antidumping duties triggers

§ 353.26. Petitioners cite to Brass Sheet

and Strip from the Netherlands (Brass

from the Netherlands), 57 FR 9534

(March 19, 1992) (Comment 6) and

Color Television Receivers at 4410–4411

in support of their position. Petitioners

maintain that while the Department has

previously stated that the

reimbursement regulation cannot apply

in cases where, as here, the importer is

the exporter, the Department has,

nevertheless, applied the

reimbursement provision in cases with

CEP sales without addressing concerns

over the possibility of one party

reimbursing itself. Petitioners refer to

Certain Cold-Rolled Carbon Steel Flat

Products from the Netherlands (Final

Results of Steel Products from the

Netherlands), 61 FR 48465 at 48470

(September 13, 1996) (Comment 17) and

Furfuryl Alcohol at 36490.

However, petitioners state that if the

Department continues to interpret the

regulation as requiring two separate

entities, we should find reimbursement

in this case because two entities are, in

fact, involved. Petitioners note that in

the regulations the Department defines

‘‘importer’’ as ‘‘the person by whom, or

for whose account, the merchandise is

imported.’’ 19 CFR § 353.2(i). Petitioners

argue that this definition may refer to

more than one entity. In this case, they

assert that while Hylsa may be the

‘‘importer’’ because it is ‘‘the person by

whom * * * the merchandise is

imported,’’ Hylsa International may also

be considered an ‘‘importer’’ if it is the

party ‘‘for whose account * * * the

merchandise is imported.’’ Because

Hylsa International is a separate legal

entity that acts as a reseller for Hylsa’s

sales to U.S. customers, we may

consider it to be the ‘‘importer’’ in this

case. Therefore, petitioners argue that if

Hylsa International is the ‘‘importer,’’

then the Department should find that

Hylsa is paying U.S. antidumping duties

on behalf of the ‘‘importer’’ within the

framework of § 353.26.

Petitioners also assert that the

reimbursement regulation applies even

though assessment of antidumping

duties has not occurred and cites Final

Results of Steel Products from the

Netherlands at 48470–71. According to

petitioners, the Department has taken

several approaches to implementing the

reimbursement provisions. Petitioners

note that in past cases, including the

above referenced administrative review,

we have ordered the U.S. Customs

Service to double the duty assessment

rates published in the final results

instead of deducting the amount of

antidumping duties from the export

price when applying the reimbursement

regulation. However, in the Preliminary

Results of Steel Products from the

Netherlands, the Department deducted

the amount of antidumping duties to be

paid from the export price. Petitioners

urge the Department to adhere to the

plain language of the regulation and

deduct any antidumping duties paid by

Hylsa from EP.

Hylsa counters that the

reimbursement regulation is

inapplicable in this case. Arguing that

Hylsa is the ‘‘importer,’’ Hylsa notes

that § 353.26 mandates the ‘‘importer’’

to file a pre-liquidation certificate with

the appropriate District Director of

Customs stating that the ‘‘importer’’ has

not entered into any duty

reimbursement agreement with the

manufacturer, producer, seller, or

exporter. Hylsa argues that since the

importer of record is the only party

required to provide this certification,

the ‘‘importer’’ under the

reimbursement regulation is defined as

the ‘‘importer of record.’’ Since Hylsa

International has not entered into any

reimbursement agreement with Hylsa,

respondent concludes, the

reimbursement provision of § 353.26

does not apply.

Hylsa argues that the Department’s

interpretation of the regulation was

correct in the preliminary results of this

administrative review. The Department

stated in the preliminary results that

separate entities must exist as producer

and/or seller and importer in order to

apply the reimbursement regulation.

Hylsa agrees that § 353.26 requires the

participation of two separate corporate

entities and that the regulation applies

only when antidumping duty payments

are made on behalf of the importer.

Hylsa also agrees with the petitioners

that the Department has never applied

the reimbursement regulation in a case

in which the producer/reseller and

importer are the same corporate entity,

but asserts, contrary to petitioners, that

this is not a case of first impression.

Hylsa argues that international sales

made on a duty-paid basis are a normal

part of international commerce.

Therefore, the fact that the Department

has not addressed the issue of

reimbursement in these situations does
33044 Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices

not mean that it has not previously been

considered by the Department or that

the Department does not have an

established practice with regard to this

issue. Rather, Hylsa argues that this

indicates that parties involved in

previous cases agreed that

reimbursement is impossible where the

producer and importer are the same

entity.

Lastly, Hylsa asserts that if the

Department is inclined to reconsider its

interpretation of § 353.26, it would not

be proper to do so for the final results

of this administrative review. Hylsa

believes that applying the

reimbursement regulation in cases

where the producer/reseller and

importer are the same entity would be

a fundamental change in Departmental

policy that should be completed

through our normal rule-making

procedures, including publication in the

Federal Register, and provision for

comment by all interested parties. The

application of the reimbursement

regulation to Hylsa’s sales in this review

would penalize Hylsa for failing to

predict what Hylsa characterizes as a

fundamental policy change.

Department’s Position

We disagree with petitioners that 19

CFR § 353.26 is applicable in this case.

Petitioners claim that because the

Department has not collapsed entities to

apply the reimbursement regulation in

past cases, we have not addressed

whether the regulation can apply to a

single entity. Our decision as to

reimbursement is based upon our

regulatory interpretation of 19 CFR

§ 353.26, which is that two separate

corporate entities must exist to invoke

the reimbursement regulation. This

interpretation was the basis for the

decision not to apply the reimbursement

regulation in the preliminary results of

this administrative review. Petitioners

cited to Brass Sheet and Strip from the

Netherlands and Final Results of Steel

Products from the Netherlands, in

which the Department invoked the

reimbursement regulation, and claimed

that the regulation should likewise be

applied here, where the exporter is the

importer. However, because two

separate entities were present in both of

those cases, those decisions do not

apply to the instant case in which one

corporate entity is the producer,

exporter and importer of record.

We also disagree with petitioners’

claim that Hylsa International could be

considered the ‘‘importer’’ to satisfy the

separate corporate entity requirement.

Hylsa International is a paper company

with no employees or sales activities. In

addition, the customs broker bills Hylsa,

not Hylsa International, for fees it

incurred. The customs broker also

claims Hylsa, not Hylsa International, as

the importer of record on the customs

entry document completed upon

importation of subject merchandise.

Therefore, we do not agree that the

subject merchandise imported into the

United States by Hylsa is for Hylsa

International’s account. Accordingly, we

conclude that, for purposes of the

reimbursement provision, Hylsa is the

importer as defined in 19 C.F.R.

§ 353.2(i) because it is ‘‘the person by

whom . . . the merchandise is

imported.’’

As indicated above, petitioners assert

that § 353.26 applies even when the

producer and importer are the same

entity. Petitioners claim that the

Department has applied the

reimbursement regulation to cases with

CEP sales without addressing concerns

regarding an entity reimbursing itself

and cites two antidumping cases to

support this argument. As indicated

above, petitioners assertions are

incorrect. In Color Television Receivers,

our premise was precisely the notion

that the reimbursement regulation does

not apply when the producer, exporter

and importer are one and the same

entity. In that case, the issue was

whether companies which had been

collapsed and treated as a single entity

for purposes of calculating duties

should also be considered a single entity

for purposes of applying the

reimbursement regulation. See Id. at

4411. In that case, we determined that

these are distinct issues, requiring

different analyses. As we stated, ‘‘[h]ow

antidumping duties are calculated and

who, under the law, is responsible for

paying those duties are separate and

distinct issues.’’ Id. at 4411. Unlike the

case now before us, Color Television

Receivers did not involve a single entity

involved in the production, export and

import of subject merchandise. In the

cases cited by petitioners, two entities

were involved in the production, export,

and import of the subject merchandise.

Because the Department has determined

that a single entity is involved in the

production, export, and import of

subject merchandise in this

administrative review, the two cited

cases are inapplicable in this instance.

While we recognize that petitioners’

position may be a permissible

interpretation of the regulation, the

Department continues to believe that

our interpretation is more appropriate

given the circumstances of this case.

Comment 2: Co-export Sales

Hylsa grants co-export rebates on

sales to home market customers that use

pipe as input material to manufacture

non-subject merchandise for export.

Hylsa explained that it provides the

rebate to account for the differential

between home market and export prices

for subject pipe charged to these

customers. Hylsa requires the majority

of its co-export customers to submit

export documentation as proof that they

are eligible for the rebate. See Sales

Verification Report at 9.

Petitioners assert that the Department

should exclude these co-export sales for

comparison purposes because the price

at which the merchandise is sold is not

‘‘the price at which the foreign like

product is first sold . . . for

consumption in the exporting country’’

under 19 U.S.C. § 1677b(a)(1)(B)(i).

Petitioners argue that the Department is

entitled to agency deference in defining

home market consumption on a case-bycase basis, citing Chevron U.S.A. Inc. v.

Natural Resources Defense Council, 467

U.S. 837, 842–843 (1984). Because coexport rebates are granted only for sales

which are subsequently exported after

further processing, petitioners insist that

such sales are not ‘‘for consumption’’ in

Mexico, and believe that including coexport sales in the normal value

calculation would encourage price

discrimination of subject merchandise

between Mexican and U.S. markets. Use

of these sales for comparison purposes,

petitioners conclude, will not provide

an accurate measurement of any price

differences between the two markets.

Alternatively, petitioners argue that

the Department may consider co-export

sales to be outside of the ordinary

course of trade as defined at 19 U.S.C.

§ 1677(15). Petitioners list a number of

factors that the Department should

consider when deciding whether sales

of subject merchandise are made outside

of the ordinary course of trade, citing

the Court of International Trade’s (CIT)

decision in Laclede Steel Co. v. United

States, Slip Op. 95–144, 1995 Court of

International Trade LEXIS 191 (Ct. Intl.

Trade 1995). These factors are: 1) the

price of the merchandise as compared to

other home market sales, 2) the profit

margin of the merchandise as compared

to other home market sales, 3) the

number of customers purchasing the

product, 4) quality assurances extended

for the merchandise, 5) differences in

how the product is sold, 6) the end use

of the merchandise, 7) the average size

of the sale compared to other home

market sales, and 8) distinguishable

characteristics of the product by the

seller. Petitioners state that the

Department should also note other

particular characteristics of Hylsa’s coexport sales, including (i) only home

market customers that export to the U.S.
Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices 33045

market receive the rebate, and (ii) coexport sales are made at prices not

representative of ‘‘conditions and

practices within Mexico for sales of

standard pipe.’’ Petitioners maintain

that Hylsa’s co-export sales prices are

below ‘‘normal’’ home market prices,

which proves that profitability is below

that of normal domestic sales. Sales

terms for co-export sales differ from

normal home market sales in that

separate export documentation and dual

invoicing are required. Petitioners note

that these sales are also made by Hylsa’s

export sales department instead of the

domestic sales department, which

handles all other home market sales.

Petitioners assert that even if the

Department does consider these sales to

be within the ordinary course of trade,

in the past it has reserved the inherent

authority under 19 C.F.R. § 353.44(b) to

exclude home market sales from its

calculation, if the Department believes

that their inclusion would not serve the

purpose of the antidumping law. This

provision states that if 80 percent of

home market sales are made at the same

price, the Department will calculate

normal value based on that sales price

alone, excluding the remaining

transactions. Petitioners also cite 19

C.F.R. § 353.44(c), which provides that,

if the Department decides that

§ 353.44(b) does not apply and that

using weighted-average price or prices

(as provided for in § 353.44(a)) is

inappropriate, the Department will use

any other reasonable method for

calculating normal value that it deems

appropriate. Therefore, petitioners

believe that we should disregard coexport sales in the calculation of normal

value.

Petitioners assert that if the

Department includes the co-export

sales, it should not allow any

adjustment for ‘‘co-export rebates’’

granted to home market customers.

According to petitioners, the

Department could not verify the basic

operation of these rebates as a result of

inconsistent and contradictory

explanations made by Hylsa at

verification. Therefore, petitioners assert

that the Department should add the

rebate amounts back into the invoiced

home market price using a

circumstance-of-sale (COS) adjustment

to increase normal value by the amount

equal to the co-export rebates, as

provided under 19 U.S.C. § 1677b(a)(6).

Petitioners cite Zenith Electronics Corp.

v. United States, 77 F.3d 426 (Fed. Cir.

1996), Mantex, Inc. v. United States, 841

F. Supp. 1290 (Ct. Intl. Trade 1993), and

Sawhill Tubular Division Cyclops Corp.

v. United States, 666 F. Supp. 1550 (Ct.

Intl. Trade 1987) to support the

discretion the courts have allowed the

Department regarding COS adjustments.

Petitioners state that we made a COS

adjustment in Oil Country Tubular

Goods from Argentina, 60 FR 33539

(June 28, 1995) (Comment 6) to account

for rebates granted on third-country

comparison market sales. Petitioners

note further that the CIT upheld our

adjustment and finding of a ‘‘causal

link’’ between the rebates and any

difference ‘‘or lack thereof’’ between

U.S. market prices and comparison

market prices in U.S. Steel Group v.

United States, 973 F. Supp. 1076 (Ct.

Intl. Trade 1997). Petitioners argue that

a ‘‘causal link’’ exists between Hylsa’s

co-export rebates and the difference in

prices between the U.S. and comparison

prices in the instant review.

Hylsa avers that the Department

should continue to include co-export

sales for comparison with U.S. sales.

Hylsa maintains that the operations of

the co-export rebate program were fully

explained to the Department and that

the confusion petitioners cite arose from

one sales trace analyzed at verification.

Hylsa argues that the payment process

for this sale was not characteristic of coexport sales payments, and that normal

invoicing procedures were followed by

Hylsa. Therefore, Hylsa believes that the

co-export rebate program was described

correctly to the Department.

Hylsa further argues that co-export

sales are made for consumption in the

home market, demonstrated by the fact

that the co-export customers transform

the foreign like product into

merchandise outside the scope of the

antidumping duty order before

exportation. Hylsa cites to Dynamic

Random Access Memory

Semiconductors of One Megabit and

Above from Korea (DRAMS from Korea),

58 FR 15467, 15473 (March 23, 1993) in

support of its position.

Additionally, Hylsa asserts that coexport sales are made within the

ordinary course of trade. Hylsa notes

that its co-export rebate program

predates the original antidumping duty

investigation and that the Department

included these sales in its home market

price calculations in the original

investigation, published in Circular

Welded Non-Alloy Steel Pipe from

Mexico (Final Determination of Pipe

from Mexico), 57 FR 42953, 42954

(September 17, 1992). Hylsa maintains

that no differences exist in ‘‘quality

assurance, average size of sale, product

markings, or the manner in which the

pipe is sold’’ between co-export sales

and other home market sales. Hylsa

contends that, under the Department’s

established practice, price differentials

alone are not sufficient to classify a

company’s sales, with otherwise-normal

distribution channels, as sales made

outside the ordinary course of trade. See

Electrolytic Manganese Dioxide from

Japan, 58 FR 28551, 28552 (May 14,

1993).

Hylsa also argues against the

petitioners’ proposed application of a

COS adjustment to co-export sales to

adjust for any price differential

attributable to co-export rebates. Hylsa

contends that the regulation regarding

COS adjustments provides for the

application of a COS adjustment to

account for differences in direct selling

and other assumed expenses. Hylsa

notes that petitioners do not address any

differences in direct selling and/or

assumed expenses between Hylsa’s coexport and other home market sales.

Hylsa also notes that any price

differential between these sales exists

because the co-export customer commits

to using the foreign like product as

input for non-subject merchandise

which is subsequently exported. The

Department cannot, and should not, use

this commitment to apply an

unfavorable COS adjustment, according

to Hylsa.

Department’s Position

We disagree with petitioners that coexport sales are not made for

consumption in the home market or that

these sales are outside the ordinary

course of trade. Additionally, we

disagree with petitioners that the

Department should exclude these sales

under 19 CFR § 353.44 (b) and (c) or that

we should apply a COS adjustment.

Hylsa’s co-export customers purchase

the foreign like product to use as an

input for the processing of merchandise

outside the scope of the antidumping

duty order. This finished merchandise

is then exported to the United States or

South America. We agree with Hylsa

that the transformation of the foreign

like product into non-subject

merchandise constitutes consumption

by the home market co-export customers

and that such transactions constitute

home market sales under section

773(a)(1)(B)(i) of the Act. We followed

this practice in the past. See, e.g.,

DRAMS from Korea at 15473. Consistent

with our findings in DRAMS from

Korea, the merchandise exported by

Hylsa’s co-export customers is not

within the class or kind of merchandise

subject to the order. Morever, as in

DRAMS from Korea, the record in this

case indicates that Hylsa does not know

the ultimate export destination to which

the further-processed merchandise is

shipped. See Id.

Furthermore, we do not consider

Hylsa’s co-export sales to be outside of
33046 Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices

the ordinary course of trade under 19

U.S.C. § 1677(15). This provision states

that ‘‘ordinary course of trade’’ means

the ‘‘conditions and practices which, for

a reasonable time prior to the

exportation of the subject merchandise,

have been normal in the trade under

consideration with respect to

merchandise of the same class or kind.’’

We note that Hylsa implemented the coexport rebate program before the

antidumping petition was filed.

Therefore, co-export sales have been

part of Hylsa’s normal business

practices for many years. Additionally,

we considered these sales as within the

ordinary course of trade and included

them in our home market price

calculation in the original investigation

in this case (see Final Determination of

Pipe from Mexico at 42954). Petitioners

argued that Laclede Steel Co. v. United

States outlined eight factors which the

Department should consider when

determining whether sales were made

within the ordinary course of trade. We

agree with petitioners that co-export

sales prices are lower than other home

market sales prices and that sales terms

are different for co-export sales.

However, no sales differences exist with

regard to quality assurance for the

product, distinguishable characteristics

of the pipe, average size of the sale, or

the manner in which the majority of coexport sales are sold (see Proprietary

Version of Hylsa’s July 3, 1997 Response

at 35). We believe that the above-cited

differences between co-export and other

home market sales in and of themselves

are not sufficient to consider co-export

sales as outside the ordinary course of

trade.

Petitioners note that we have the

inherent authority under 19 C.F.R.

§ 353.44 (b) and (c) to exclude those

sales that would not serve the purposes

of the antidumping statute. We note that

§ 353.44(b) concerns home market

transactions sold at the ‘‘same price.’’

The majority of Hylsa’s home market

sales are made at varying price levels,

thus rendering this provision

inapplicable. Additionally, § 353.44(c)

states that if the Department determines

that § 353.44 (a) and (b) do not apply,

we have the authority to ‘‘use any other

method for calculating foreign market

value.’’ Subparagraph (a), which states

that the Department will calculate

normal value by using the weightedaverage price when home market sales

vary in price, applies in the review.

Because we consider the co-export sales

to be made within the ordinary course

of trade and consider such sales as

home market sales, we do not need to

invoke our authority to exclude these

sales when calculating normal value.

Finally, we disagree with petitioners

that a COS adjustment is warranted for

the co-export sales. Under 19 C.F.R.

§ 353.56(a)(2), factors that would

warrant the use of a COS adjustment

involve differences in selling expenses,

such as ‘‘commissions, credit terms,

guarantees, warranties, technical

assistance, and servicing * * * [and]

also * * * differences in selling costs.’’

We did not find that Hylsa’s co-export

sales had any demonstrable differences

in selling expenses, as referenced above.

Therefore, a COS adjustment is not

warranted for Hylsa’s co-export sales.

Comment 3: Additional Foreign Inland

Freight, Additional Inland Freight,

Additional Foreign Brokerage Fees, and

Additional U.S. Brokerage Fees

Hylsa argues that the Department

improperly rejected Hylsa’s reported

additional foreign inland freight,

additional inland freight, additional

foreign brokerage fees, and additional

U.S. brokerage fees and improperly

applied adverse partial facts available.

Hylsa explains that in its normal course

of business it incurs freight and

brokerage expenses which exceed the

amounts billed to, and collected from,

its customers. Hylsa asserts that it used

a reasonable allocation basis for

reporting these additional expenses,

given that it does not maintain actual

freight and brokerage costs on a salesspecific basis, and that transactionspecific reporting would have been too

burdensome. Hylsa argues that the

calculation methodology it used in this

administrative review was identical to

that which was verified and accepted by

the Department in the original

investigation of this case. Hylsa also

cites to the following cases as examples

where the Department allowed the

allocation of movement expenses when

the calculation of transaction-specific

costs was deemed too burdensome:

Industrial Belts from Japan, 58 FR

30018, 30022; Steel Wire Rope from

India, 56 FR 46285, 46287 (September

11, 1991).

Hylsa argues that the Department

verified the accuracy of the reported

additional freight and brokerage

expenses by reconciling the amounts

reported in Hylsa’s section B and C sales

listings to Hylsa’s cost accounting

system. Additionally, Hylsa asserts that

the Department verified the

unreasonable burden Hylsa would have

faced in attempting to report these

expenses on a transaction-specific basis.

Hylsa reiterated that it does not have

computer capabilities to match the

additional freight expenses to specific

invoices.

Hylsa asserts that the Department has

no reasonable basis for rejecting the

reported additional freight and

brokerage expenses. Hylsa notes that the

Department claimed in the preliminary

results of this administrative review that

the information was unverifiable based

on transaction-specific freight and

brokerage expenses the Department

calculated from individual sales traces

reviewed at verification. Hylsa

maintains that the allocation of these

additional expenses was reasonable

given that, ‘‘on average[,] Hylsa’s

customers paid Hylsa less for shipping

and brokerage expenses than Hylsa paid

its suppliers. Due to the inherent nature

of averages, however, a given customer

may have paid more or less than Hylsa

paid on any specific transaction.’’

Hylsa’s February 6 brief at 13. Hylsa

contends that this fluctuation does not

render the information unverifiable.

Hylsa further argues that the

Department was not warranted in its use

of partial adverse facts available for the

additional freight and brokerage

expenses in the preliminary results.

Hylsa asserts that it provided verifiable

information and cooperated to the best

of its ability to comply with our requests

for information. In addition, Hylsa

maintains that the Department did not

advise Hylsa in its supplemental

questionnaires that its reporting

methodology was incorrect. In sum,

Hylsa argues that the reporting of

additional freight and brokerage

expenses, in addition to those charged

to customers, to compensate for the

difference between the actual and

invoiced freight and brokerage

expenses, is proper and should be used.

Petitioners assert that the Department

should continue to disallow the

additional inland freight and foreign

inland freight expenses reported by

Hylsa for the final results of this review.

Petitioners argue that the methodology

Hylsa employed to calculate the

additional freight expenses for both

home market and U.S. sales is

unacceptable because it encompasses

fees incurred on both subject and

nonsubject merchandise allocated only

to sales of subject merchandise that

incurred freight expenses. Additionally,

petitioners argue that additional freight

charges result from partial truck load

shipments, noting that ‘‘[t]he shipping

company charges by the truckload, but

Hylsa invoices its customers for

shipping charges based on a flat per-ton

rate that assumes the truck is full.’’

Petitioners’ February 13 rebuttal brief at

3. Petitioners contend that Hylsa’s

methodology implies that it pays the
Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices 33047

same proportion of additional freight

fees for subject and non-subject

merchandise sales delivered by partial

truck loads. However, petitioners note

that there is no evidence on the record

supporting this assumption. Petitioners

assert that the verification report shows

that an overall calculated percentage

does not reasonably represent additional

freight charges for individual

transactions.

Petitioners cite to the final results of

the previous administrative review of

this case in which the Department

disallowed Hylsa’s claimed adjustment

for additional freight expenses. See

Circular Welded Non-Alloy Steel Pipe

and Tube from Mexico (Final Results of

Pipe from Mexico), 62 FR 37014, 37017

(July 10, 1997) (Comment 5). Petitioners

note that although the methodology

Hylsa used to report the additional

expenses in the above-cited review was

different than in this review, it was

flawed for similar reasons that are

apparent in the present review;

specifically, it resulted in the improper

allocation of freight and brokerage

expenses incurred on sales of nonsubject merchandise to sales of subject

merchandise. Additionally, the

Department found in the previous

review that Hylsa maintained records

that would have allowed it to tie freight

expenses to specific sales but that Hylsa

destroyed these records after a short

period of time. In response, the

Department stated in the final results

that it intended to investigate this

situation in future reviews. Petitioners

argue that Hylsa should have been

prepared in this present review to

substantiate its freight claim by

maintaining the appropriate records.

Petitioners argue that the Department

should also continue to deny any

adjustment for the additional foreign

and U.S. brokerage expenses. Petitioners

contend that because the calculations

represent brokerage expenses incurred

on subject and nonsubject merchandise

exported to both U.S. and third-country

markets, it is not a reasonable

representation of additional brokerage

fees incurred on U.S. sales of subject

merchandise. Petitioners cite to the

Memorandum to the File from Ilissa

Kabak, December 4, 1997 (Analysis

Memo) at 2 and the Sales Verification

Report, November 20, 1997, at 33.

Department’s Position

We disagree with Hylsa’s claim that

we improperly rejected the reported

additional foreign inland freight,

additional inland freight, additional

foreign brokerage fees, and additional

U.S. brokerage fees. We also disagree

with Hylsa’s claim that we improperly

applied adverse partial facts available.

Hylsa’s methodology for allocating

additional freight and brokerage

expenses to reported home market and

U.S. sales is unacceptable. In its original

and supplemental questionnaire

responses, Hylsa never explicitly

indicated that its additional freight

calculations included expenses incurred

on non-subject as well as subject

merchandise. Hylsa’s February 21, 1997

Section B response at 27 and July 3,

1997 response at 70. Thus, Hylsa’s

complaint that we did not alert Hylsa

that the reporting methodology was

incorrect in supplemental

questionnaires is not compelling.

Because Hylsa inadequately explained

its calculation methodology before

verification, it was not possible for us to

advise Hylsa that its methodology was

incorrect. We agree with petitioners

that, because these additional expenses

for sales of subject and non-subject

merchandise are allocated only to sales

of subject merchandise that incurred

freight expenses, the calculation

methodology for this expense is

unacceptable. As for the additional

foreign and U.S. brokerage expenses,

Hylsa again did not explicitly state in its

responses prior to verification that its

calculations for these expenses included

fees incurred for both subject and nonsubject merchandise sales to both U.S.

and third-country markets. Hylsa’s July

3, 1997 Section C response at 88.

Therefore, we agree with petitioners that

because these additional expenses for

subject and non-subject merchandise,

and for export markets other than the

United States, are allocated only to

subject merchandise sales to the U.S.

market, the calculation methodology is

distortive and, therefore, unacceptable.

We also disagree with Hylsa that the

information regarding the additional

freight and brokerage expenses was

verified and should not be rejected.

When comparing the total reported

freight and brokerage expenses with

actual costs incurred for the sales traces

we analyzed at verification, we

determined that the total freight and

brokerage fees, including the additional

expenses reported, did not reasonably

represent the actual costs incurred by

Hylsa and, therefore, could not be

considered verified. Accordingly, we

adjusted the expenses in our margin

calculation as explained in the Analysis

Memo at 2–3.

It is the respondent’s burden to

provide the Department with verifiable

information in antidumping

proceedings. See 19 CFR 353.37 and

353.54. As we noted in the final results

of the previous administrative review,

Hylsa maintains computerized records

that would allow it to tie total freight

expenses to specific transactions but

destroys these records after a short

period of time in the normal course of

business. Therefore, if these records

exist in Hylsa’s accounting system, we

expect Hylsa’s full cooperation in

providing us with verifiable

information, which would include these

records, to tie freight charges to specific

transactions. Therefore, we believe that

Hylsa did not cooperate to the best of its

ability and that the use of partial

adverse facts available is justified. As

we explained in our preliminary results,

we have applied partial facts available

in accordance with section 776 of the

Act. See Preliminary Results, 62 FR

64564 at 64565.

In sum, the use of partial adverse facts

available for additional freight and

foreign and U.S. brokerage charges on

U.S. sales and the denial of additional

freight deductions on home market sales

is justified and we continue to follow

this approach in these final results of

review.

Comment 4: U.S. Credit Expenses

Petitioners argue that the Department

should base U.S. credit expenses on

facts available. Petitioners note that in

its questionnaire response, Hylsa

explained that credit expenses were

calculated on a sale-by-sale basis using

the actual number of days between the

shipment and payment dates, citing

Hylsa’s February 21, 1997 Section C

questionnaire response at 31–32.

Subsequently, petitioners note that at

verification the Department found that

actual payment dates were not used for

Hylsa’s credit calculation, noting the

findings presented in the Sales

Verification Report at 18–20. Therefore,

petitioners argue that the Department

should use the longest reported

shipment-to-payment date interval to

calculate U.S. credit expenses.

Hylsa disagrees with petitioners’

request for the Department to apply

facts available to U.S. credit expenses.

Hylsa contends that the reported salespecific payment dates were the dates

on which the payments for U.S. sales

were posted in Hylsa’s accounting

system in the normal course of business.

Hylsa supported its position by

reiterating that when a U.S. customer

specifies invoices for which it is paying,

Hylsa’s accounting system records the

actual date of payment. However, if the

U.S. customer does not specify invoices

with its payment, Hylsa makes a

‘‘reasonable assignment’’ of the payment

to outstanding invoices in Hylsa

International’s customer account with

Hylsa, retiring the oldest outstanding
33048 Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices

balance first. Hylsa’s February 13

rebuttal brief at 18. Hylsa’s accounting

records reflect a longer outstanding

balance than is actually the case for

these sales. Therefore, Hylsa asserts, the

reported payment dates tend to overstate U.S. credit expenses due to the lag

time between the receipt of payment

and recording of payment for these sales

in the accounting system, thereby

rendering the application of facts

available unnecessary.

Department’s Position

We agree with Hylsa that applying

facts available for U.S. credit expenses

is unreasonable. While it is correct that

Hylsa did not use the actual payment

date for certain sales, we noted from the

verified sales traces that Hylsa reported

payment date as the date on which the

payment was recorded in its accounting

records in the normal course of

business. We agree with Hylsa that the

reported payment dates tend to overstate U.S. credit expenses due to the lag

time between the actual receipt of

payment and its subsequent recording

in the accounting system. Because

Hylsa’s methodology would tend to

over-state, rather than understate, U.S.

credit expenses, the application of facts

available is not justified in this instance.

Comment 5: Inland Freight Expenses for

1996 Co-Export Sales

Hylsa asserts that we improperly

disallowed deductions for inland freight

expenses incurred on co-export sales

made in 1996. Hylsa claimed that

although Department verifiers noted in

the verification report that no freight

charges were incurred on co-export

sales made during 1996, this conclusion

is incorrect due to a misunderstanding

by the Department. Hylsa argues that no

company official claimed during

verification that the co-export sales

made in 1996 did not incur freight

expenses. To support this, Hylsa filed

with its February 6 case brief an

affidavit from the company official

responsible for presenting freight

information during verification. The

affidavit states that this company

official explained to Department

verifiers that freight expenses for 1996

co-export sales were recorded in Hylsa’s

export freight expense account. Hylsa

also argues that in its submissions,

Hylsa claimed freight expenses for these

sales and that during verification the

Department confirmed that the sales in

question incurred freight charges.

Therefore, Hylsa contends that the

Department should not disallow the

freight expenses reported for 1996 coexport sales.

Petitioners argue that if the

Department uses co-export sales for

comparison for the final results of this

administrative review (see Comment 2

above), we should continue to disallow

the deduction of freight expenses for

1996 co-export sales. Petitioners

contend that the discrepancies the

Department discovered between the

questionnaire response and information

presented at verification justify denying

the adjustment. Additionally,

petitioners argue that the affidavit

submitted by Hylsa with its case brief

was untimely filed because the deadline

for submitting factual information to the

Department was June 16, 1997, 180 days

after the publication date of the notice

of initiation, as outlined in

§ 353.31(a)(1)(ii) of the Department’s

regulations. Petitioners believe that this

affidavit should not be considered for

the final results of this review nor

retained for the record, as allowed

under § 353.31(a)(3). Petitioners note

that even if the Department retains the

affidavit, the document should not

negate the statement, noted by the

Department in its sales verification

report, that Hylsa did not incur freight

expenses on 1996 co-export sales.

Department’s Position

We disagree with Hylsa that we

improperly disallowed deductions for

inland freight expenses incurred on coexport sales made in 1996. During

verification, Hylsa presented the

Department with worksheets regarding

freight expenses that were incurred

throughout the POR. We noted that the

co-export freight accounts had zero

recorded for each month of 1996. Prior

to submission of its case brief, Hylsa

never provided the Department with an

explanation that freight charges for its

home market co-export sales were

expensed in the export freight account.

Further, the record does not contain

evidence concerning i) how much

freight was incurred on co-export sales

in 1996, and ii) where, and how, such

charges were expensed in Hylsa’s

accounting records. Although Hylsa

submitted an affidavit with its February

6 case brief (at Appendix 1) from the

official in charge of presenting freight

expenses to the Department at

verification, by the affiant’s own

statement, he ‘‘did not include[ ]’’ data

on 1996 co-export freight expenses in

the worksheets presented specifically

for purposes of verifying domestic

inland freight. Therefore, Hylsa itself

made any such expenses unverifiable by

withholding the information that would

substantiate the claimed adjustment.

Therefore, we are denying Hylsa’s

claimed adjustment for freight expenses

incurred on 1996 co-export sales.

Comment 6: Simultaneous Reporting of

Early Payment Discounts and Reported

Interest Revenue

Hylsa argues that the Department

improperly disallowed early payment

discounts for observations where Hylsa

reported both early payment discounts

and interest revenue collected on late

payments. According to Hylsa, the

company’s accounting records

permitted it to report only a customerspecific allocated amount of early

payment discounts granted and late

payment fees/interest revenues

collected during the POR. Hylsa notes

that the Department accepted the

customer-specific allocation

methodology for these adjustments.

Hylsa argues against the Department’s

preliminary decision that the allocation

of both an early payment discount and

interest revenue fee to the same

transaction is inconsistent. Hylsa

maintains that this allocation reflects

that the customer in question remitted

payment early for some purchases and

late for others, not that the customer

earned early payment discounts and

paid late-payment charges on the same

sales transaction. Hylsa believes that

because this approach accurately

reflects the discounts granted and

income Hylsa received from these

customers, the Department should not

deny deductions of early payment

discounts for those sales that also have

a reported interest revenue.

Petitioners maintain that the

Department should continue to disallow

any deduction for early payment

discounts for those transactions with

simultaneously reported interest

revenue. Petitioners note it is

impossible for any given customer, on

average, to pay both early and late.

Therefore, argue petitioners, the

Department was correct in denying the

adjustment for these transactions.

Department’s Position

Prior to verification, Hylsa neglected

to explain that early payment discounts

reported for sales made in 1996 were

reported on an allocated, not actual,

basis. See Hylsa’s February 21, 1997

response at 19 and July 3, 1997 response

at 64. Although specifically asked to

explain how the reported per-unit early

payment amount was calculated, Hylsa

never suggested that the reported early

payment discounts were calculated,

allocated amounts. In its February 21

response Hylsa stated that ‘‘[t]he

amount of the prompt-payment discount

granted for each sale is reported on a

per-metric-ton basis. . .’’. We note that
Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices 33049

for other adjustments reported on an

allocated basis, Hylsa fully explained in

its questionnaire response that the

expenses were indeed allocated

amounts, not transaction-specific

amounts (e.g., interest revenue,

inventory carrying costs). See id. at 33,

38. Therefore, prior to verification,

Hylsa did not fully and accurately

disclose the methodology it used to

report early payment discounts for sales

made in 1996 prior to verification.

At verification Hylsa explained that it

implemented a new accounting system

in 1996. Hylsa stated that with this new

accounting system, it lost the ability to

tie early payment discounts and the

accompanying credit memos to specific

invoices issued throughout 1996. See

Sales Verification Report at 23. Hylsa

then explained that, for early payment

discounts granted in 1996, it calculated

a customer-specific percentage of early

payment discounts granted on sales of

subject and non-subject merchandise for

the calendar year 1996. Hylsa then

applied these customer-specific

percentages to reported home-market

sales. See Sales Verification Report at 24

and Verification Exhibit 17.

In response to comments submitted in

the case and rebuttal briefs, we further

analyzed Hylsa’s questionnaire

responses and verification exhibits. We

have concluded from information on the

record that Hylsa did indeed have the

ability to report transaction-specific

early payment discounts. Included in

documentation submitted by Hylsa at

Appendix SA–11 are examples of sales

invoices issued in 1996 with

accompanying credit memos for early

payment discounts. The credit memo

includes the invoice number for which

the early payment discount was granted.

Additionally, page 21 of Verification

Exhibit 21 shows the customer account

detail for a home market customer. We

found that this customer account

subledger reflects debit and credit

movement, by sales invoice, of the

account. Additionally, we found that

early payment discounts are recorded,

by invoice, in the same customer

account subledger. Therefore, we

conclude that Hylsa had the ability to

tie early payment discounts to specific

sales invoices, contrary to its claims at

verification. Furthermore, Hylsa

specifically stated that it was unable to

report transaction-specific early

payment discount amounts, not that

sales-specific reporting would be too

burdensome. We find that Hylsa did not

act to the best of its ability in

responding to our requests for

information. Hylsa failed to provide

accurate and verifiable information

regarding early payment discounts

granted in 1996. Therefore, for the final

results, we are denying the deduction of

all early payment discounts granted in

1996; we are continuing to allow

deduction of early payment discounts

for sales made in 1995, which were

reported on a transaction-specific basis.

Comment 7: Bare and Varnished Pipe

Hylsa argues that the Department

improperly instructed it to treat bare

and varnished pipe as having the same

surface finish when assigning control

numbers (CONNUMs). In its original

questionnaire responses, Hylsa reported

bare and varnished pipe as products

with separate surface finishes. Prior to

verification the Department instructed

Hylsa to consider bare and varnished

pipe as the same products when

assigning CONNUMs and subsequently

treated these products as identical

merchandise for the preliminary margin

calculation. Hylsa asserts that bare and

varnished pipe are not identical

products because of material and

production process differences, and that

bare and varnished pipe are recognized

in the marketplace as discrete products,

with differing prices and applications.

Hylsa cites Gray Portland Cement and

Clinker from Mexico, 55 FR 29244,

29247 (July 18, 1990) in which the

Department emphasized that

§ 771(16)(A) of the Act states a

preference for matching home market

merchandise with identical

characteristics to those products sold in

the U.S. market. Hylsa argues that bare

and varnished pipe are not physically

identical merchandise and, therefore,

the Department should follow statutory

preference and match identical

products. Because Hylsa sold varnished

pipe in Mexico identical to merchandise

sold in the United States, Hylsa argues,

the Department should not match home

market sales of bare pipe to U.S. sales

of varnished pipe.

Hylsa further asserts that market

behavior demonstrates that bare and

varnished pipe are different products

that are not easily interchangeable. For

example, customers who galvanize pipe

themselves prefer bare pipe so that they

will not have to remove the varnish

prior to galvanization. Additionally,

Hylsa contends that price differentials

between the two products can be

significant and cites a proprietary

example from its database of

transactions reported for January 1996.

According to Hylsa, bare and

varnished pipe go through different

finishing stages during the production

process. While varnished pipe is coated

with a lacquer varnish, bare pipe may be

pickled, oiled, or left untreated. Due to

these differences, Hylsa argues, end

products incur different costs of

production.

Petitioners respond that the

Department has always treated bare and

varnished pipe as the same product for

model-matching purposes in its pipe

and tube cases. Because varnishing is

viewed by the industry primarily as a

packing treatment to inhibit rust,

petitioners aver, its presence does not

transform the merchandise into a

different product. Petitioners claim that

Hylsa’s example of a price differential is

unreliable. They note it is based on a

comparison of one January 1996 sale of

bare pipe, which was sold to a customer

not even included in Hylsa’s list of

standard pipe customers, to three,

weighted-average January 1996 sales of

varnished pipe. Furthermore, argue

petitioners, the inclusion of co-export

sales and unreliable adjustments

reported in the sales database cause

substantial price differences between

identical products sold within the same

month. According to petitioners, these

price differences operate independently

of the pipe’s surface finish. Lastly,

petitioners state that one selective

example of a price differential between

bare and varnished pipe does not rise to

the level of a prima facie demonstration

of price differentials attributable to

differing surface finish.

Department’s Position

We agree with petitioners. Pickling,

oiling and varnishing are packing

treatments used to inhibit rust

development on finished pipe products.

The application of these treatments does

not transform the finished merchandise

into a different product for purposes of

merchandise comparison under

§ 771(16)(A) and (B) of the Act. We are

unable to determine from the record the

significance of Hylsa’s example of the

price differential between bare and

varnished pipe because one example of

a price differential is not representative

of a trend of price differentials. We have

treated bare and varnished pipe as

identical merchandise in previous

reviews of this and other pipe cases and

we continue to do so for the final results

of this review.

Comment 8: Value-Added Tax Included

in the Home Market Credit Expense

Calculation

The Department explained its

decision to exclude value-added taxes

(IVA) from the home market credit

expense calculation in the previous

review of this case. See Final Results of

Pipe from Mexico at 37016. In this

review we determined that because the

IVA is revenue for the government and

not for Hylsa, it should not be included
33050 Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices

in the credit calculation. Because of the

Department’s decision in the previous

review, Hylsa reported home market

credit expenses for this review exclusive

of IVA. Hylsa claims, however, that we

should include IVA when calculating

home market credit expenses for these

final results, as we accepted this

methodology in the less-than-fair-value

(LTFV) investigation of this case.

Hylsa claims that it allows its

customers to delay payment of the

entire invoice amount of a sale, which

includes the IVA. Therefore, the

opportunity cost to Hylsa of extending

credit should be based on the entire

amount of the invoice. Hylsa cites to

Certain Fresh Cut Flowers from Mexico,

56 FR 1794,1798 (January 17, 1991) and

Shop Towels from Bangladesh, 57 FR

3996, 4001 (February 3, 1992) as cases

where the Department’s approach to

credit expenses supports Hylsa’s

argument. Hylsa argues that the fact that

IVA is a revenue for the government, not

the company, is irrelevant because the

customer carries credit based on the

entire amount of the invoice, and it is

based on this amount that Hylsa incurs

the opportunity cost of capital.

Petitioners object to Hylsa’s

suggestion that the Department include

IVA in the home market credit expense

calculation. They note that Hylsa is

presenting the same argument that the

Department rejected in the previous

administrative review in Final Results

of Pipe from Mexico at 37016.

Petitioners argue that although the

opportunity cost of the money used to

pay taxes may be as genuine as other

opportunity costs, they represent an

incident of taxation, inclusion of which

does not serve any purpose under the

antidumping statute.

Department’s Position

We disagree with Hylsa that IVA

should be included in the home market

credit expense calculation because the

IVA is not a revenue for Hylsa but for

the government. As the Department

explained in Certain Cut-to-Length Steel

Plate from Brazil, 62 FR 18486 at 18488

(April 15, 1997), it is not our practice to

include VAT payments in credit

expense calculations. In that case we

stated that ‘‘[w]hile there may be a

potential opportunity cost associated

with the respondents’ prepayment of the

VAT, this fact alone is not a sufficient

basis for the Department to make an

adjustment in price-to-price

comparisons.’’ Id. at 1848. The

Department continued to explain that

‘‘to allow the type of credit adjustment

suggested by the respondents would

imply that in the future the Department

would be faced with the virtually

impossible task of trying to determine

the potential opportunity cost or gain of

every charge and expense reported in

the respondents’ home market and U.S.

databases.’’ Id. at 18488. Furthermore,

no statute or regulation requires us to

include IVA in the home market credit

expense calculation. For these final

results, we are following our established

practice of excluding the IVA from

home market credit expense

calculations in the final results of this

review.

Comment 9: General and Administrative

Expenses

Hylsa objects to the Department’s

recalculation of Hylsa’s general and

administrative expenses (G&A) in the

preliminary results of this

administrative review and believes that

the Department should use Hylsa’s

reported G&A rates. See Analysis Memo

at 9, Appendix 2. Hylsa argues that in

other cases the Department has accepted

its methodology which involves a

‘‘layered calculation’’ in which

‘‘corporate-wide G&A expenses are

allocated over corporate-wide cost of

goods sold, and divisional G&A

expenses are allocated over divisional

costs of goods sold.’’ Hylsa cites Flat

Panel Displays from Japan, 56 FR

32376, 32398–99 (July 16, 1991) as

support for its reporting methodology.

Hylsa believes that its reported

‘‘layered’’ G&A expenses are consistent

with the methodology the Department

has routinely accepted. Further, Hylsa

claims the Department’s methodology in

the instant review is illogical because

Hylsa’s total G&A expenses include

costs for divisions that are not related to

the production or sale of subject

merchandise. Hylsa argues in the

alternative that if the Department does

not accept its methodology for reporting

G&A expenses, the information the

Department would need to recalculate

G&A on a company-wide basis is on the

record. Therefore, argues Hylsa, the

Department should not apply adverse

facts available as requested by the

petitioners.

Petitioners note that the Department

decided in the previous administrative

review of this case to use company-wide

G&A rates for the G&A calculation in

Final Results of Pipe from Mexico at

37022. Petitioners assert that although

the Department has determined that

G&A must be reported on a companywide basis, Hylsa has deliberately

refused to comply with the

Department’s request in this review. In

light of Hylsa’s deliberate refusal in this

regard, petitioners assert that the

Department should apply adverse facts

available using Hylsa’s, or any related

entity’s, highest G&A rate on the record.

Department’s Position

We disagree with both Hylsa and

petitioners, in part. In the original

questionnaire issued to Hylsa on

December 23, 1996, page D–16 states

that ‘‘G&A expenses are those period

expenses which relate to the activities of

the company as a whole rather than to

the production process alone * * *

[y]ou should also include in your

reported G&A expenses an amount for

administrative services performed on

your company’s behalf by its parent

company or other affiliated party.’’ It is

our practice to use company-wide G&A

expenses when calculating cost of

production and constructed value. See,

e.g., Final Determination of Sales at Less

Than Fair Value: Furfuryl Alcohol From

South Africa, 60 FR 22550, 22556

(1995).

However, we disagree with

petitioners’ contention that we should

use adverse facts available for G&A

expenses. We obtained the information

to calculate acceptable G&A rates at

verification. Therefore, it is unnecessary

and unreasonable to apply adverse facts

available given the circumstances in this

review. For these final results of review

we have continued to use the G&A rates

that we used for the preliminary results.

Comment 10: Additional Depreciation

Petitioners claim that in its margin

calculation program, the Department

neglected to include the additional

depreciation due to revaluation of fixed

assets for the Flat Products Division.

According to petitioners, this

information was discovered at

verification and is on the record.

Hylsa argues that these depreciation

costs were already included in the

preliminary results margin calculation

program, citing to the Analysis Memo at

8.

Department’s Position

We agree with Hylsa that these costs

were included in the preliminary results

margin calculation program. See

Analysis Memo at 8 and Appendix 1.

Therefore, we have continued to include

these additional depreciation costs for

these final results.

Comment 11: Classification of

Aluminum, Zinc, and Zinc Chloride

Petitioners assert that the cost

verification report implies that

aluminum, zinc, and zinc chloride have

been inappropriately classified as

overhead and not direct materials. See

Cost Verification Report at 27.

Petitioners note that because these are
Federal Register / Vol. 63, No. 116 /Wednesday, June 17, 1998 / Notices 33051

1The preliminary results of this administrative

review incorrectly stated that the ‘‘all others’’ rate

was 36.62 percent. Preliminary Results at 62 FR

64568.

material inputs, they should be

reclassified as direct materials costs.

Hylsa asserts that the materials in

question were correctly included in the

reported direct material costs and cites

to the Cost Verification Report at 22.

Department’s Position

We agree with Hylsa. After further

analysis we determined that aluminum,

zinc, and zinc chloride were properly

classified as direct materials for the

purposes of this review. Therefore, no

adjustment to Hylsa’s reported material

costs is needed for the final results.

Comment 12: Indirect Selling Expenses

in the Arm’s-Length Test

Petitioners note that the computer

program used to determine whether

Hylsa’s home market sales to affiliated

parties were at arm’s length for the

preliminary results of this

administrative review unintentionally

neglected to subtract indirect selling

expenses from the gross unit prices

prior to testing the affiliated-party

prices.

Department’s Position

It is the Department’s practice not to

adjust for indirect selling expenses for

home market sales in the arm’s-length

test and margin calculation programs

when the reviewed U.S. transactions are

EP sales. See Notice of Final Results of

Antidumping Duty Administrative

Review: Certain Welded Carbon Steel

Pipe and Tube from Turkey, 61 FR

69067 (December 31, 1996). Therefore,

we are not adjusting our methodology

for the final results of this

administrative review.

Comment 13: Reported Customer Codes

Petitioners argue that Hylsa’s reported

customer codes are reported in a nonnumeric and inconsistent format.

Petitioners assert that this inconsistency

may result in one customer being

treated as two separate entities in the

arm’s-length test if it has two customer

codes. Because the arm’s-length

program does not include special

instructions to correct for this error,

reason petitioners, the Department

should insert the proper language.

Department’s Position

We noted the inconsistent format in

which Hylsa reported customer codes

for the preliminary results of this

review. We inserted special computer

language to correct for the

inconsistencies that the petitioners

noted for affiliated-customer codes in

the arm’s-length test for the preliminary

results. Since the arm’s-length test

compares the weighted-average prices of

affiliated party sales, by customer code

and CONNUM, to the weight-averaged

prices of unaffiliated party sales by

CONNUM only, there is no need to

insert code to ‘‘correct’’ for the home

market customer codes. Therefore, for

these final results, we have not inserted

additional programming language

related to this issue.

Final Results of the Review

As a result of this review, we

determine that the following weightedaverage dumping margin exists:

CIRCULAR WELDED NON-ALLOY STEEL

PIPES AND TUBES

Producer/manufacturer/exporterWeighted-average margin

Hylsa ..................................... 8.31

The Department will determine, and

the U.S. Customs Service shall assess,

antidumping duties on all appropriate

entries. Because Hylsa was the only

importer during the POR, we have

calculated the importer-specific per-unit

duty assessment rate for the

merchandise imported by Hylsa by

dividing the total amount of

antidumping duties calculated during

the POR by the total quantity entered

during the POR. The Department will

issue appraisement instructions directly

to the Customs Service.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of review for all shipments of circular

welded non-alloy steel pipe from

Mexico entered, or withdrawn from

warehouse, for consumption on or after

the publication date, as provided for by

§ 751(a)(1) of the Act: (1) The cash

deposit rate for the reviewed company

will be the rate stated above; (2) if the

exporter is not a firm covered in this

review, a prior review, or the original

LTFV investigation, but the

manufacturer is, the cash deposit rate

will be the rate established for the most

recent period for the manufacturer of

the merchandise; (3) for previously

reviewed or investigated companies not

listed above, the cash deposit rate will

continue to be the company-specific rate

published for the most recent period; (4)

the cash deposit rate for all other

manufacturers or exporters will

continue to be the ‘‘all others’’ rate of

32.62 percent.1 See Notice of

Antidumping Orders: Certain Circular

Welded Non-Alloy Steel Pipe from

Brazil, the Republic of Korea (Korea),

Mexico, and Venezuela, and

Amendment to Final Determination of

Sales at Less Than Fair Value: Certain

Circular Welded Non-Alloy Steel Pipe

from Korea, 57 FR 49453 (November 2,

1992). These deposit requirements,

when imposed, shall remain in effect

until publication of the final results of

the next administrative review.

This notice serves as a final reminder

to importers of their responsibility

under 19 C.F.R. § 353.26 of the

Department’s regulations 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 19 C.F.R. § 353.34(d)(1) of the

Department’s regulations. Timely

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 determination is issued and

published in accordance with sections

751(a)(1) and 777(i)(1) of the Act.

Dated: June 8, 1998.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 98–16108 Filed 6–16–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

North Carolina State University; Notice

of Decision on Application for DutyFree Entry of Scientific Instrument

This decision is made pursuant to

Section 6(c) of the Educational,

Scientific, and Cultural Materials

Importation Act of 1966 (Pub. L. 89–

651, 80 Stat. 897; 15 CFR part 301).

Related records can be viewed between

8:30 A.M. and 5:00 P.M. in Room 4211,

U.S. Department of Commerce, 14th and

Constitution Avenue, NW, Washington,

DC.

Docket Number: 98–020. Applicant:

North Carolina State University,