35190 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices

Anti-friction bearings proceedings and firms Period/Class

or kind

Technoimportexport, S.A. (TIE) ........................................................................................................................................... Ball

Singapore: A–559–801 .............................................................................................................................................................. 5/1/97–4/30/98

NMB Singapore Ltd./Pelmec Industies (Pte.) Ltd. ............................................................................................................... Ball

Sweden: A–401–801 .................................................................................................................................................................. 5/1/97–4/30/98

SKF Sverige AB ................................................................................................................................................................... Ball & Cylindrical

Rolfer LDA ............................................................................................................................................................................ Ball

Minetti ................................................................................................................................................................................... Ball

Motovario .............................................................................................................................................................................. Ball

Rodaindustria SA ................................................................................................................................................................. Ball

Rodiandustria Vigo SA ......................................................................................................................................................... Ball

Bucher-Guyer AG ................................................................................................................................................................. Ball

Alfa Team GmbH ................................................................................................................................................................. Ball

D & R Technisher Grosshandel ........................................................................................................................................... Ball

Frolich & Dorken GmbH ....................................................................................................................................................... Ball

RMV Walzlager Vetr. GmbH ................................................................................................................................................ Ball

Wyko Export ......................................................................................................................................................................... Ball

The United Kingdom: A–412–801 ............................................................................................................................................ 5/1/97–4/30/98

NSK Bearings Europe Ltd./RHP Bearings Ltd. .................................................................................................................... Ball & Cylindrical

Barden Corporation .............................................................................................................................................................. Ball & Cylindrical

FAG (U.K.) Limited ............................................................................................................................................................... Ball & Cylindrical

SNFA Bearings Limited ........................................................................................................................................................ Ball & Cylindrical

Countervailing Duty Proceedings

None.

Suspension Agreements

None.

During any administrative review

covering all or part of a period falling

between the first and second or third

and fourth anniversary of the

publication of an antidumping duty

order under § 351.211 or a

determination under § 351.218(d)

(sunset review), the Secretary, if

requested by a domestic interested party

within 30 days of the date of publication

of the notice of initiation of the review,

will determine whether antidumping

duties have been absorbed by an

exporter or producer subject to the

review if the subject merchandise is

sold in the United States through an

importer that is affiliated with such

exporter or producer. The request must

include the name(s) of the exporter or

producer for which the inquiry is

requested.

For transition orders defined in

section 751(c)(6) of the Act, the

Secretary will apply paragraph (j)(1) of

this section to any administrative

review initiated in 1996 or 1998 (19 CFR

351.213(j)(1–2)).

Interested parties must submit

applications for disclosure under

administrative protective orders in

accordance with 19 CFR 351.305.

These initiations and this notice are

in accordance with section 751(a) of the

Tariff Act of 1930, as amended (19

U.S.C. 1675(a)), and 19 CFR

351.221(c)(1)(i).

Dated: June 22, 1998.

Maria Harris Tildon,

Acting Deputy Assistant Secretary for Import

Administration.

[FR Doc. 98–17137 Filed 6–26–98; 8:45 am]

BILLING CODE 3510–DS–M

DEPARTMENT OF COMMERCE

International Trade Administration

[A–489–501]

Notice of Final Results and Partial

Rescission of Antidumping Duty

Administrative Review: Certain Welded

Carbon Steel Pipe and Tube From

Turkey

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

SUMMARY: On February 6, 1998, the

Department of Commerce published the

preliminary results of its administrative

review of the antidumping duty order

on certain welded carbon steel pipe and

tube from Turkey. The review covers

shipments of this merchandise to the

United States by one respondent during

the period May 1, 1996, through April

30, 1997. Based on our analysis of

comments received, these final results

differ from the preliminary results. The

final results are listed below in the

section ‘‘Final Results of Review.’’

EFFECTIVE DATE: June 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Charles Riggle or Kris Campbell, Office

of AD/CVD Enforcement 2, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW, Washington, DC 20230;

telephone: (202) 482–0650 and (202)

482–3813, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the statute are references to

the provisions effective January 1, 1995,

the effective date of the amendments

made to the Tariff Act of 1930 (the Act)

by the Uruguay Round Agreements Act

(URAA). In addition, unless otherwise

indicated, all citations to the

Department of Commerce’s (the

Department’s) regulations refer to the

regulations last codified at 19 CFR part

353. While the Department’s revised

regulations, as codified at 19 CFR part

351 (Antidumping Duties;

Countervailing Duties, 62 FR 27296

(May 19, 1997) (‘‘revised regulations’’),

do not govern this review, they do

describe the Department’s practice

where cited in this notice.

Background

This review covers one manufacturer/

exporter, the Borusan Group (Borusan),

of merchandise subject to the

antidumping duty order on certain

welded carbon steel pipe and tube from

Turkey. On February 6, 1998, the

Department published the preliminary

results of this review. See Notice of

Preliminary Results of Antidumping

Duty Administrative Review: Certain

Welded Carbon Steel Pipe and Tube

from Turkey, 63 FR 6155 (Preliminary

Results). On March 9, 1998, we received

case briefs from Allied Tube & Conduit

Corporation and Wheatland Tube

Company (collectively, ‘‘the

petitioners’’) and from Borusan. We
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices 35191

received rebuttal briefs from both

parties on March 16, 1998.

Scope of Review

Imports covered by this review are

shipments of certain welded carbon

steel pipe and tube products with an

outside diameter of 0.375 inch or more

but not over 16 inches, of any wall

thickness. Imports of subject

merchandise are currently classifiable

under the following Harmonized Tariff

Schedule of the United States (HTSUS)

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, 7306.30.50.90. These

products, commonly referred to in the

industry as standard pipe and tube, are

produced to various American Society

for Testing and Materials (ASTM)

specifications, most notably A–120, A–

53 or A–135. Although the HTSUS

subheadings are provided for

convenience and customs purposes, the

written description of the scope of this

proceeding is dispositive.

Partial Rescission

We originally initiated a review of

three companies: Borusan, Yucelboru

Ihracat Ithalat ve Pazarlama A.S./

Cayirova Boru Sanayi ve Ticaret A.S.

(Yucelboru), and Erbosan Erviyas Boru

Sanayii ve Ticaret A.S. (Erbosan). See

Notice of Initiation of Antidumping

Duty Administrative Review, 62 FR

35154 (June 30, 1997). However, as

noted in the preliminary results,

Yucelboru and Erbosan notified us that

they had no shipments of subject

merchandise during the period of

review (POR). Although we

inadvertently did not publish a notice of

rescission at the time of the preliminary

results, we did confirm with the

Customs Service that this was correct

and so stated in the preliminary results.

See Preliminary Results at 6155. We

received no comments concerning either

of these companies for the final results.

Therefore, consistent with our practice

(see, e.g., Certain Fresh Cut Flowers

From Colombia; Final Results and

Partial Rescission of Antidumping Duty

Administrative Review, 62 FR 53287,

53288 (October 14, 1997), we have

rescinded our review of the two

companies with no shipments during

the POR. See also 19 CFR 351.213(d)(3)

of the Department’s revised regulations.

Fair Value Comparisons

We calculated export price (EP) and

normal value based on the same

methodology used in the preliminary

results. However, as discussed further

below, due to a change in our matching

methodology vis a vis sales disregarded

as below cost, we were able to match all

U.S. sales to sales of similar

merchandise sold in the home market

without resorting to constructed value

(CV).

On January 8, 1998, the Court of

Appeals of the Federal Circuit issued a

decision in Cemex v. United States,

1998 WL 3626 (Fed. Cir.) (Cemex). In

that case, based on the pre-URAA Act,

the Court discussed the appropriateness

of using CV as the basis for foreign

market value (normal value) when the

Department finds home market sales to

be outside the ‘‘ordinary course of

trade.’’

Although this issue was not raised by

any party in this proceeding, in light of

the Cemex decision the Department has

reconsidered its practice with respect to

any sales found to be outside the

‘‘ordinary course of trade.’’ Under the

URAA, such sales now include sales

disregarded as below cost. See Section

771(15). In accordance with Cemex, the

Department has determined that it

would be inappropriate to resort

directly to CV, in lieu of comparison

market sales, as the basis for normal

value where sales of merchandise

identical to, or most similar to, that sold

in the United States are disregarded as

below cost. Instead, we will use sales of

similar merchandise, if such sales exist,

and will resort to CV as the basis for

normal value only when there are no

above-cost sales that are otherwise

suitable for comparison. Therefore, in

this proceeding, when making

comparisons in accordance with section

771(16) of the Act, we considered all

products sold in the home market as

described in the ‘‘Scope of the 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 contemporaneous

sales of identical merchandise in the

home market made in the ordinary

course of trade to compare to U.S. sales,

we were able to compare U.S. sales to

contemporaneous sales of the most

similar foreign like product made in the

ordinary course of trade, based on the

matching characteristics identified in

the preliminary results. See Preliminary

Results at 6156.

Cost of Production

As discussed in the preliminary

results, we conducted an investigation

to determine whether Borusan made

home market sales of the foreign like

product during the POR at prices below

its cost of production (COP) within the

meaning of section 773(b)(1) of the Act.

We calculated the COP following the

same methodology as in the preliminary

results, with the following exceptions.

1. While we based our calculation of

interest expenses on the interest

expenses of the consolidated Borusan

Group companies, we have allocated

this expense (which was reported on an

annual basis) to each month of the POR

using the ratio of monthly to annual

interest expenses for the four largest of

the Borusan Group companies,

consistent with the 1994–95 review. We

have also recalculated Borusan’s

amortized foreign exchange losses. See

Comment 7.

2. We have valued purchases of coil

and zinc by Borusan’s mills from

affiliated parties at the higher of the cost

of producing the input, the transfer

price, or the market price. See Comment

8.

3. We added packing to the cost of

manufacturing (COM) in order not to

understate the calculation of general

and administrative expenses (G&A) and

interest, because the cost of goods sold

(COGS) used in the denominator to

calculate the G&A and interest expense

factor includes packing. See Comment

9.

4. We deducted imputed credit

expenses from CV. See Comment 10.

5. We corrected a clerical error

regarding indexation of monthly costs.

See Final Results Analysis

Memorandum from Case Analyst to File:

Pipe and Tube from Turkey (June 8,

1998) (Final Results Analysis

Memorandum).

Analysis of Comments Received

We gave interested parties an

opportunity to comment on the

preliminary results. As noted above, we

received comments and rebuttal

comments from the petitioners and from

Borusan.

Comment 1: Level of Trade

The petitioners submit the following

comments regarding the level-of-trade

analysis in the preliminary results: (1)

the Department incorrectly determined

that there are two levels of trade in the

home market without sufficient record

evidence that home market sales differ

significantly in terms of the stage of

marketing involved (see Comment 1A,

below); (2) because there is only one

home market level of trade, the

Department incorrectly granted a levelof-trade adjustment when comparing

U.S. sales to one of the two purported

home market levels (see Comment 1A,

below); (3) even if the Department finds

two home market levels of trade, no

adjustment should be made because

Borusan has not demonstrated a causal
35192 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices

1Borusan initially claimed three home market

levels of trade—sales shipped directly from the mill

to distributors/wholesalers (LOT A, ‘‘mill direct’’),

sales made by affiliated resellers that also involve

direct shipment from the mill to the customer (LOT

B, ‘‘reseller back-to-back’’), and sales made by

affiliated resellers out of locally maintained forward

inventory (LOT C, ‘‘reseller inventory sales’’). As in

the 1994–95 review, we collapsed LOTs A and B

in the preliminary results, but found that LOT C

sales were made at a level of trade separate from

LOT A/B sales. Contrary to the 1994–95 review,

however, we found a pattern of consistent price

differences between the two levels, and made a

level-of-trade adjustment when comparing U.S.

sales with LOT C sales. See Preliminary Results at

6158; see also Notice of Final Results of

Antidumping Duty Administrative Review: Certain

Welded Carbon Steel Pipe and Tube from Turkey,

61 FR 69067, 69068–69069 (December 31, 1996)

(1994–95 Final Results).

2No review was conducted with respect to the

1995–96 period.

link between (a) differences in the

marketing stages between the two levels

and (b) pricing differences between the

two levels, i.e., it has not shown that

marketing differences at the two

purported levels have caused pricing

differences at the two levels (see

Comment 1B, below); and (4) if a levelof-trade adjustment is granted, it should

be calculated on a reseller-specific basis

(see Comment 1C, below).

Comment 1A—Identification of Home

Market Levels of Trade

The petitioners state that there is only

one level of trade in the home market

because there are no significant

differences in the stage of marketing for

any of Borusan’s purported levels of

trade.1 The petitioners contend that,

based on an analysis of the customer

class and the selling functions involved,

LOT C sales should not be considered

as a separate level of trade.

The petitioners first emphasize that

the type of customer is an important

factor in the level-of-trade analysis.

Referencing the preamble to the

Department’s revised regulations

(Preamble to Antidumping Duties;

Countervailing Duties, 62 FR 27296,

27371, (May 19, 1997) (Preamble)) and

Gray Portland Cement and Clinker from

Mexico: Final Results of Antidumping

Duty Administrative Review, 62 FR

17148, 17156 (April 9, 1997) (Mexican

Cement), the petitioners state that

different levels of trade necessarily

involve purchasers at different places in

the chain of distribution. According to

the petitioners, Borusan’s mill direct

sales at LOT A, back-to-back sales

through resellers at LOT B, and reseller

inventory sales at LOT C all involve

sales to end users. The petitioners

submit that Borusan has shown only

that there are sales to different types of

end users at all three claimed levels of

trade, and argue that distinctions among

types of end users are not relevant to a

determination regarding whether such

customers occupy different places in the

chain of distribution.

Regarding selling functions, the

petitioners contend that four of the 12

claimed selling functions as reported by

Borusan are not selling functions at all,

and maintain that the remaining eight

do not show any material difference in

the nature or level of selling function

being provided. The petitioners claim

that inventory maintenance is the only

significant selling function present in

LOT C and not in LOT A/B. Even here,

however, the petitioners contend that

LOT A/B sales also involve maintaining

inventory at the mill, and argue that any

difference in the inventory maintenance

at the two levels is not significant in

terms of the level-of-trade analysis.

Citing Notice of Final Determination of

Sales at Less Than Fair Value: Certain

Pasta from Italy, 61 FR 30326, 30337

(June 14, 1996) (Pasta from Italy), the

petitioners assert that mere differences

in the degree to which a particular

selling function is performed are given

little weight in establishing separate

levels of trade. The petitioners add that

it is rare that the Department would find

that any single selling function is so

significant as to warrant a finding of

different levels of trade, citing Preamble

to Antidumping Duties; Countervailing

Duties; Proposed Regulations, 61 FR

7308, 7348 (February 27, 1996)

(Proposed Regulations). The petitioners

conclude that, since LOT C sales are not

made at a level of trade separate from

LOT A/B, no adjustment should be

made for comparisons involving LOT C

sales.

Borusan responds that, although it

disagrees with the Department’s

determination to collapse LOTs A and

B, the Department should continue to

find at least two levels of trade (LOT A/

B and LOT C) because Borusan has

adequately demonstrated the existence

of separate and distinct levels of trade

in the home market. Borusan

characterizes its home market channels

of distribution as follows: LOT A

involves made-to-order sales direct from

the mill to sophisticated, unaffiliated

distributor/resellers at high volumes;

LOT B sales are made through affiliated

resellers primarily to unaffiliated

distributors, on an FOB-mill basis where

the merchandise is shipped directly to

the customers without the merchandise

entering the resellers’ inventory; and,

LOT C sales are made by the resellers

out of locally maintained forward

inventory to small local retailers and

end users.

Borusan argues that its sales at LOT

C involve several qualitatively and

quantitatively different selling functions

than those involved in LOT A/B.

Principally, Borusan claims, LOT C

sales are made out of pre-positioned

inventory from regional warehouses

instead of directly from the mill.

According to Borusan, this sales process

does not involve only inventory

maintenance, but also requires the

performance of a number of additional

functions (and the incurrence of certain

additional selling expenses) at the LOT

C level, including forecasting of regional

demand for different products,

inventory planning, placing orders with

the mill, making arrangements for

shipping from the mill, and incurring

inventory carrying costs during the

holding period. Borusan argues further

that, since LOT C sales are routinely

made to small, local retailers and endusers, LOT C resellers are involved in

customer education and problemsolving, and providing advice on

suitability, uses, and characteristics of

Borusan’s products.

Finally, with respect to the

petitioners’ argument that inventory

maintenance occurs at both LOT A/B

and LOT C, Borusan notes that LOT C

involves the pre-positioning of forward

inventory, a selling function that the

Department has recognized as both

significant in and of itself, and distinct

from the inventory maintenance that

occurs at the mill, citing Pasta from

Italy at 30341–30342.

DOC Position: We continue to find

that there are two home market levels of

trade, LOT A/B and LOT C. We also find

that LOT C involves a more remote level

than LOT A/B. For these final results,

we have continued to match U.S. sales

first to LOT A/B; where we matched

U.S. sales to LOT C, we have granted a

level-of-trade adjustment, as discussed

further in our response to Comments 1B

and 1C below.

In order to find that sales are made at

different levels of trade, we must

determine that such sales involve

different stages of marketing. See 19

CFR 351.412(b)(2). As a threshold

matter, we analyze selling functions to

determine if the levels of trade

identified by a party are meaningful.

Preamble at 27371. Our examination of

the record evidence in this case

confirms that, consistent with our

preliminary results and with the final

results of the 1994–95 review,2 there are

significant differences in the selling

functions involved in LOT A/B sales in

comparison with those involved in LOT

C sales.

At LOT A/B, Borusan makes home

market sales directly from the mill to

large, sophisticated customers or, in a
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices 35193

‘back-to-back’ manner, where the sale is

made by an affiliated reseller who does

not take the merchandise into its

inventory. In both instances, sales are

made on an FOB-mill basis, and

Borusan’s customers make their own

transportation arrangements regarding

delivery of the merchandise from the

mill. At LOT C, Borusan: (1) makes lowquantity sales to smaller customers

through affiliated resellers who take the

merchandise into inventory prior to the

sale; (2) provides delivery services once

the sale is made; and (3) maintains more

intensive and frequent interactions with

the customer. Thus, contrary to the

petitioners’ assertions, we find that

there is more than one significant

selling function that occurs at LOT C

and not at LOT A/B. We discuss each

in turn, below.

First, while it is not the only

difference between LOT C sales and

LOT A/B sales, inventory maintenance

is a principal selling function that

distinguishes these levels. Since LOT C

sales are made out of stock, the affiliated

resellers at LOT C have the

responsibility of storing merchandise

before purchasers have been found. The

additional responsibility of maintaining

merchandise in inventory also gives rise

to related selling functions that are

performed at LOT C. These include

forecasting of regional demand for

different products, inventory planning,

placing orders with the mill, and

incurring inventory carrying costs

during the holding period. We also note

that, in taking merchandise into

inventory at LOT C, Borusan’s affiliated

resellers perform delivery-related

functions that are not performed at LOT

A/B, including: (1) arranging for

shipment of merchandise involved in

LOT C sales from the mill to the

affiliated reseller’s warehouse; and (2)

providing immediate local delivery of

such pre-positioned inventory once the

sale is made to the final customer. See

Borusan Questionnaire Response

Section A (Borusan section A response)

at 14 (resellers making LOT C sales

‘‘specialize in providing immediate

local delivery of standard grades which

they keep in inventory’’).

The additional forward warehousing

and related activities performed by the

affiliated resellers in making LOT C

sales, as described above, constitute a

distinct set of selling activities separate

from any inventory maintenance

performed at the mill. Thus, we disagree

with the petitioners’ contention that,

since some form of inventory

maintenance is conducted at each level

of trade, any differences in this selling

function are insufficient to support a

finding of different levels of trade.

Considering the additional selling

functions associated with maintaining

inventory at the affiliated reseller’s

warehouse for LOT C sales, we do not

accept the petitioners’ claim that the

inventory maintenance performed at

Borusan’s mills is so similar to the

reseller forward warehousing performed

by affiliated resellers making LOT C

sales as to render the differences in

inventory maintenance between LOT A/

B and LOT C sales insignificant for our

analysis.

In addition to the inventory-and

delivery-related selling activities

described above, LOT C sales, which are

typically smaller-volume sales, involve

customer-based selling activities

specific to the customers involved in

such sales, which, as further discussed

below, differ in the aggregate from the

customers served by LOT A/B. These

include customer education and advice

on the suitability, uses, and

characteristics of Borusan’s products.

Based on the above analysis of selling

activities, we have determined that

there are meaningful distinctions

between LOT A/B and LOT C. Aside

from selling functions, we also consider

the type of customer and the level of

selling expenses in determining whether

sales are made at different stages of

marketing. See Preamble at 2731.

Regarding the petitioners’ arguments

with respect to customer class, while we

agree with the petitioners that the type

of customer is an important indicator in

identifying levels of trade (id.), we

disagree with their assertion that the

fact that both levels of trade involve

some sales to end-users requires a

finding that there are no customer

differences between these levels. First,

as a point of clarification, Borusan’s

LOT C sales are made not only to end

users, but also to local distributors and

small retailers. Second, the relevant

standard, regardless of customer labels,

is whether the customers involved at

each purported level of trade constitute

purchasers at different stages in the

chain of distribution. See Antifriction

Bearings from France et al.; Final

Results of Antidumping Duty

Administrative Reviews, 62 FR 54053,

54055 (October 17, 1997) (AFBs 1995–

96).

The record evidence before us

indicates that LOT C customers occupy

a different place in the chain of

distribution than do LOT A/B

customers. At LOT C, the affiliated

resellers tend to make sales in small

quantities (‘‘sometimes just a few pieces

of pipe at a time’’) to these customers.

Borusan section A response at 13. In

contrast, Borusan makes mill direct

sales only to the following customers:

affiliated companies, customers

requiring special technical services, or

customers located in Istanbul that

purchase at high volume. Id. at 12.

Finally, with respect to the level of

selling expenses involved at each

channel of distribution, our examination

of the expenses reported on home

market sales indicates that, as Borusan

claims, the per-unit indirect selling

expenses are higher for sales made

through LOT C than for those made at

LOT A/B. Consistent with the

Department’s practice and regulations,

we have considered this as an

additional factor in our determination

that LOT C is separate from, and more

advanced than, LOT A/B.

Comment 1B—Price Differences

Between Levels of Trade

The petitioners contend that, even if

the Department correctly determined

that Borusan’s LOT C sales were made

at a different level of trade than its LOT

A/B sales, the Department erred in

granting a level-of-trade adjustment

with respect to comparisons made to

LOT C sales. According to the

petitioners, Borusan has not

demonstrated that any price differences

that exist between LOT A/B and LOT C

are due to the difference in level of

trade. The petitioners note that the

Statement of Administrative Action

accompanying the URAA (SAA)

provides that the Department will grant

a level-of-trade adjustment only where

there is a difference in level of trade and

the difference affects price

comparability. Therefore, the petitioners

claim, the burden is on Borusan to

demonstrate a ‘‘causal link’’ between the

difference in selling functions and the

difference in prices.

The petitioners argue that, in this

case, one likely reason that prices for

sales at LOT C are higher than at LOT

A/B is because of the smaller volumes

involved in LOT C sales. In this respect,

the petitioners reference the SAA (at

830) for the proposition that the

Department must ‘‘ensure that a

percentage difference in price is not

more appropriately attributable to

differences in the quantities purchased

in individual sales.’’ The petitioners

also suggest that another factor in higher

LOT C prices is the fact that trade

discounts are offered at LOT A/B but

not at LOT C. The petitioners conclude

that, because Borusan has made no

effort to discount the impact of nonlevel-of-trade factors that account for the

difference in prices, it is not entitled to

a level of trade adjustment.

Borusan responds that there is no

provision in the statute or regulations

that requires that there be a causal link
35194 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices

3Although, as noted above, we consider

Borusan’s claimed LOT A and LOT B sales to be

made at the same level of trade, we continue to refer

to sales made through the back-to-back reseller

channel as ‘LOT B’ sales for ease of reference and

in keeping with the terminology used by the

interested parties in this case.

between different selling functions and

differences in prices. Rather, Borusan

asserts, after finding separate levels of

trade, the Department need only find

that a pattern of price differences exists

at different levels of trade, which allows

the presumption that the price

differences are attributable to different

levels of trade. Borusan agrees in part

that the price differences here arise

because of a difference in quantities

sold at each level; however, Borusan

disagrees with the petitioners’

interpretation of the SAA’s provision

regarding quantities and level-of-trade

adjustments. Borusan argues that the

petitioners have taken this quote out of

context, as it is only intended to be

illustrative of the Department’s concern

against double-counting when a party

claims both a level-of-trade adjustment

and an adjustment for differences in

quantities.

DOC Position: We agree with the

petitioners that we may adjust for

differences in levels of trade only when

such a difference is ‘‘demonstrated to

affect price comparability,’’ as provided

at section 773(a)(7)(A)(ii) of the Act.

However, this sub-section also explicitly

provides for how any such effect on

price comparability is to be determined,

i.e., based on ‘‘a pattern of consistent

price differences between sales at

different levels of trade in the country

in which normal value is determined.’’

Id. In this case, as stated in the

preliminary results, we determined that

a pattern of consistent price differences

existed because we found the monthly

average prices were higher at one level

of trade for virtually all models and

months as well as for virtually all sales.

See Preliminary Results at 6158.

Therefore, we cannot accept the

petitioners’ argument that Borusan must

otherwise demonstrate a ‘‘causal link’’

between the difference in selling

functions and prices in order to receive

a level-of-trade adjustment for

comparisons involving LOT C sales.

The Department ruled definitively on

this issue in Antifriction Bearings from

France et al., 62 FR 2081, 2108 (January

15, 1997) (AFBs 1994–95). In addressing

an argument made by the petitioner in

that case that various respondents had

failed to demonstrate that differences in

prices were due to differences in the

selling functions performed at each

level of trade, the Department stated:

The adoption of [the petitioner’s] ‘‘due to’’

standard would impose an independent

causation requirement upon both the levelof-trade adjustment and CEP-offset

provisions. Such a requirement is neither

required by the statute nor administratively

feasible.

Id.

We also note the following regarding

the petitioners’ arguments concerning

the effect on prices of (1) Borusan’s

discount policy and (2) the quantities

sold at each level of trade. First,

regarding the argument that the lower

net prices at LOT A/B are caused in part

by greater discounts granted at this level

versus those granted at LOT C, while we

agree that such differences in Borusan’s

discount policy between levels of trade

may result in lower net prices at LOT A/

B, this does not change that fact that

such differences in net prices between

levels of trade exist. Regarding the

petitioners’ argument concerning

differences in quantities sold, the SAA

provision cited by the petitioners

regarding quantity differences vis a vis

the level-of-trade analysis concerns the

importance of not double-counting any

quantity adjustment already granted (no

quantity adjustment was made in this

case). In this respect, the SAA provides:

Commerce will isolate the price effect, if

any, attributable to the sale at different levels

of trade, and will ensure that expenses

previously deducted from normal value are

not deducted a second time through a level

of trade adjustment.

SAA at 830. See also Senate Report on

the Uruguay Round Agreements Act,

which provides as follows:

[S]ection 224 first creates section

773(a)(7)(A) providing for level of trade

adjustments. Under this new provision,

Commerce is directed to increase or decrease

normal value to make due allowance for any

difference (or lack of difference) between

normal value and export price or constructed

export price that is shown to be wholly or

partly due to a difference in level of trade.

To avoid double counting, however, this new

section expressly precludes level of trade

adjustments to account for differences for

which an allowance has already otherwise

been made.

Joint Report of the Committee on

Finance et al., Uruguay Round

Agreements Act, S. Rep. No. 103–412, at

70 (1994) (emphasis added).

Comment 1C—Reseller-Specific Levelof-Trade Adjustment

The petitioners contend that, in the

event the Department continues to grant

a level-of-trade adjustment for

comparisons involving home market

sales made at LOT C, it should make the

adjustment on a reseller-specific basis.

The petitioners argue that this is a more

accurate methodology because it reflects

the average amount of additional

inventory maintenance performed by

the specific reseller involved in each

transaction.

Borusan responds that there is no

legal basis for making the level-of-trade

adjustment on a reseller-specific basis.

Borusan states that the Department’s

revised regulations regarding level of

trade state that the Department will

normally calculate the amount of a

level-of-trade adjustment by: (1)

calculating the weighted-averages of the

prices of sales at the two home market

levels of trade; (2) calculating the

average of the percentage differences

between those weighted-average prices;

and (3) applying this average percentage

difference to normal value. See 19 CFR

351.412(e). Thus, Borusan concludes,

the adjustment is to be made using a

combined weighted-average of all sales

at a particular level of trade.

DOC Position: We agree with Borusan

that the revised regulations provide for

a weighted-average adjustment. Further,

the SAA states that ‘‘any adjustments

under section 773(a)(7)(A) will be

calculated as the percentage by which

the weighted-average prices at each of

the two levels of trade differ in the

market used to establish normal value.’’

See SAA at 830. Accordingly, we have

not changed the manner in which we

have calculated the adjustment for these

final results.

Comment 2: Home Market Indirect

Selling Expenses

The petitioners argue that, because

Borusan failed to follow the instructions

in the Department’s initial questionnaire

regarding one of its two reported home

market indirect selling expense fields,

the Department should re-calculate

these expenses based on adverse facts

available. The petitioners’ comments

concern the INDIRSH1 expense, for

which Borusan calculated separate

factors based on the indirect selling

expenses of each company that makes

the final sale to the unaffiliated

customer (i.e., expenses incurred by the

mills—Borusan Boru (BBBF), Kartal

Boru, and Bosas—for LOT A sales, and

expenses incurred by resellers for LOT

B3 and LOT C sales), allocated across

home market sales made by each

company. Borusan’s specific

deficiencies with respect to the

Department’s instructions include the

following, according to the petitioners:

(1) the failure to provide a list of

overhead expenses itemizing the

specific elements of each company’s

expenses, and (2) the submission of

worksheets that are meaningless

because they do not demonstrate either

the amount of each type of expense or
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices 35195

the manner in which it was derived and

allocated.

The petitioners also list a number of

indirect selling expense and sales values

that purportedly do not reconcile with

Borusan’s financial statements. Due to

the proprietary nature of this list of

selling expenses and sales values, we

are unable to summarize or address the

petitioners’ specific comments in this

regard. We address these claims further

in the Final Results Analysis

Memorandum.

Noting that the Department did not

conduct a verification of information

provided by Borusan in this review, the

petitioners assert that the accuracy of

the Department’s margin calculation

depends almost entirely on Borusan’s

cooperation and responsiveness, and

maintain that Borusan’s disregard of the

Department’s instructions is tantamount

to failing verification. The petitioners

claim that Borusan should, therefore, be

deemed an uncooperative respondent,

and its indirect selling expenses should

be calculated using adverse facts

available, based on the precedent

established in Olympic Adhesives, Inc.

v. United States, 899 F.2d 1565, 1571

(Fed. Cir. 1990). The petitioners

recommend that the Department apply

the highest indirect selling expense

factor calculated for any member of the

Borusan Group to each producer and

reseller in the Borusan Group.

Borusan responds that its indirect

selling expenses were adequately

documented and, therefore, should not

be modified. First, Borusan explains

that, in response to the Department’s

instructions, it provided a complete

explanation of how indirect selling

expenses were calculated for BBBF, the

largest pipe producer in the Borusan

Group, and for Bozoklar, an affiliated

reseller. Second, Borusan explains that,

for this review, it used the same

methodology that was verified and

accepted by the Department in the

1993–94 and 1994–95 reviews.

DOC Position: Consistent with the

past two reviews involving this

company, we have accepted Borusan’s

methodology for reporting indirect

selling expenses.

Section 776 of the Act provides, inter

alia, that the Department shall apply

facts available if an interested party

withholds information that has been

requested by the Department. In this

case, there is no basis upon which to

apply facts available as Borusan has

provided the necessary information

requested.

First, we do not agree with the

petitioners regarding the adequacy of

the supporting documentation

submitted by Borusan concerning its

INDIRSH1 expense. In its response to

our supplemental questionnaire,

Borusan provided detailed support for

indirect selling expenses incurred by

the largest pipe producer (BBBF) and by

one of its largest resellers (Bozoklar).

See Borusan sections A–D supplemental

questionnaire response (December 19,

1997) (Borusan supplemental response),

at Exhibits 13–14. As we explain further

in the Final Results Analysis

Memorandum, this documentation

supports the reported expense and is in

accordance with the company’s normal

books and records.

Regarding the petitioners’ proposal

that we treat Borusan as if it had failed

verification due to the failure to provide

information requested by the

Department, as noted above, we have no

basis for that decision; accordingly, we

have not changed the calculation of

Borusan’s indirect selling expenses. In

addition, we note that: (1) we conducted

successful verifications of this company

in the past two administrative reviews;

(2) no verification was required for

Borusan in this administrative review;

and (3) the petitioners did not request

that we verify Borusan’s data in this

review.

Comment 3: Allocation of Home Market

Inland Freight From Plant to

Warehouse, Warranty, and Interest

Revenue

The petitioners contend that

Borusan’s calculations of home market

inland freight from plant to warehouse,

warranty expenses, and interest revenue

on an annual basis are distortive and

should have been calculated on a

monthly basis. Citing Tapered Roller

Bearings and Parts Thereof, Finished

and Unfinished, from Japan and

Tapered Roller Bearings, Four Inches or

Less in Outside Diameter, and

Components Thereof, from Japan (TRBs

from Japan), 63 FR 2565 (January 15,

1998), the petitioners state that the

Department’s practice is to accept

allocations only if they are not distortive

and the respondent is fully cooperative

but unable to report the information in

a more specific manner.

With respect to inland freight from

plant to warehouse, the petitioners

argue that the allocation of freight

charges across the entire POR is

distortive, and maintain that Borusan

has not shown that it is unable to report

this expense on a monthly basis.

Regarding warranty expenses, the

petitioners assert that in addition to

allocating this expense on an annual

basis, Borusan has failed to comply with

the Department’s instructions to report

such expenses on a model-specific

basis, or on the most product-specific

basis possible. Regarding interest

revenue, the petitioners claim that

Borusan’s customer-specific allocations

are insufficient because, as with inland

freight and warranty, allocating this

revenue on a yearly basis does not

properly account for inflation in Turkey.

The petitioners request that the

Department base freight charges and

warranty expenses on adverse facts

available by not deducting these

expenses from normal value; for interest

revenue, the petitioners recommend the

highest revenue reported for any

customer during the POR.

Borusan responds generally that: (1)

its responses to the Department’s

information requests concerning these

expenses were complete; (2) while the

Department requested further

explanation regarding how Borusan

calculated these charges, it never

instructed Borusan to recalculate the

expenses once Borusan supplied these

explanations; and (3) the petitioners

have provided no evidence for their

assertion that Borusan’s methodology

with respect to these expenses is

distortive.

Regarding inland freight expenses,

Borusan cites to its supplemental

questionnaire response, wherein the

company provides an explanation

regarding why it would be extremely

burdensome to tie particular freight

invoices to particular sales invoices.

Borusan argues that its approach is

reasonable given the large number of

home market sales. In addition, Borusan

notes that it based its reporting of freight

charges on calendar year 1996, which

the company maintains is conservative

since, in so doing, it applied an average

1996 charge per ton to POR sales,

including those made in 1997.

According to Borusan, it is the

Department’s practice to accept values

from the fiscal year that most closely

approximates the POR when the POR

spans two fiscal years.

Regarding the warranty expense,

Borusan states that the Department’s

supplemental questionnaire focused on

inquiring into why Borusan had

calculated warranty expenses on a

calendar-year basis instead of on a POR

basis. Borusan states that it explained in

its responses the calculation of warranty

on a fiscal year basis is appropriate

because it most closely reflects the POR.

Borusan adds that, as with inland

freight, it is conservative to calculate

home market warranty expenses on a

calendar-year (1996) basis given the

high inflation rate in Turkey.

Finally, regarding interest revenue,

Borusan states that, as explained in its

supplemental response, it is unable to

tie these charges to individual
35196 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices

4 In the event that future reviews of this order are

requested, we will reconsider whether to request

certain selling expense information on a monthly

basis.

transactions. Borusan adds that

calculating this item on an annual basis

is less distortive than a monthly

calculation because interest collected in

one month generally relates to invoices

from a prior month.

DOC Position: We do not agree with

the petitioners’ claim that, because

Borusan’s home market inland freight

expense, warranty expense, and interest

revenue were not reported on a monthly

basis, we should base these items on

adverse facts available. However, we

have determined that Borusan

incorrectly reported home market

inland freight expenses for certain LOT

B sales, because the terms of sale

indicate that these expenses were not

incurred on such sales. We have not

adjusted for inland freight with respect

to LOT B sales.

We first address the petitioners’

claims regarding monthly versus annual

expense allocations. In our

supplemental questionnaire, we asked

Borusan for further clarification

regarding a number of aspects of its

reporting of these items, including

requests for further descriptions of the

allocation methodologies used in

calculating the per-unit amounts

reported in Borusan’s home market sales

database. Our questions concerned

primarily: (1) the allocation of the

inland freight expense to subject versus

non-subject merchandise; (2) the

feasibility of reporting the inland freight

expense on a transaction-specific basis;

(3) the direct versus indirect nature of

the warranty expense; and (4) the

rationale for reporting the warranty

expense on a calendar-year, as opposed

to POR, basis. See, e.g., questions 34–36,

and 39, of the Department’s

supplemental questionnaire (November

21, 1997). Borusan addressed each of

our questions in turn in its

supplemental response. See Borusan

Supplemental Response at 29–33.

Borusan’s initial questionnaire response

also addressed the basis for its reporting

of interest revenue using a customerspecific methodology. See Borusan

Questionnaire Response for sections B–

D (September 8, 1997) (Borusan sections

B–D response).

While we requested further

information regarding various aspects of

Borusan’s allocation methodologies, we

did not request the company to report

these items on a monthly basis in either

the initial or the supplemental

questionnaire. Given that we did not

request that Borusan report these items

in this manner, it would be

inappropriate to resort to adverse facts

available as requested by the

petitioners.4

However, we did not deduct freight

expenses reported in the home market

sales listing for LOT B sales, because

Borusan has clearly indicated that such

sales are made on an FOB-mill basis.

Borusan allocated its freight expenses

on a reseller-specific basis, allocating

total freight expenses across all sales by

each reseller, regardless of whether the

sale was made at claimed LOT B or at

LOT C. In response to our request that

it report inland freight expenses on a

transaction-specific basis, Borusan

explained in its supplemental response

(at 30–31) that it was unable to do so

due to the large number of transactions

involved, and, instead, continued to

allocate these expenses across all sales

by reseller. Thus, if a reseller made both

LOT B and LOT C sales, Borusan

reported per-unit freight expenses

(Inland Freight, Plant to Distribution

Warehouse; Inland Freight, Plant/

Warehouse to Customer) for both LOT B

and LOT C sales made by that reseller.

In providing this explanation, Borusan

referred to delivery expenses incurred

on ‘‘back-to-back’’ sales. However,

Borusan has clearly indicated, in a

number of places in its questionnaire

responses and in its case briefs, that the

terms of sale for LOT B sales do not

include delivery. See Borusan section A

response at 13 (describing the delivery

process on LOT B sales: ‘‘The customer

arranges for the transportation of the

merchandise from the mill to the

intended destination.’’); see also

Borusan sections B–D response at B–15,

regarding terms of delivery for each

channel of distribution; see also

Borusan rebuttal brief at 5: (‘‘LOT B

sales involve shipment of the

merchandise on an FOB-mill basis

directly to the customers without the

merchandise entering into the resellers’

inventory.’’) Although one element of

the inland freight from plant to

warehouse expense (truck loading

expense) is reportedly incurred on all

domestic shipments of merchandise

produced by one mill (BBBF), Borusan

provided no means of isolating this

expense from the other inland freight

expenses that it did not in fact incur on

LOT B sales. Accordingly, for these final

results, we have not made a deduction

for inland freight expenses with respect

to sales made at LOT B.

Comment 4: Pre-Sale Warehouse

Expenses

The petitioners assert that the

Department should deny any

adjustment to normal value for

Borusan’s pre-sale warehouse expenses

based on Borusan’s failure to quantify

these expenses properly. According to

the petitioners, Borusan did not take the

following actions, as required by the

initial questionnaire: (1) Borusan did

not list all warehouse locations used to

distribute the foreign like product; (2)

Borusan did not follow the instructions

that it report as pre-sale warehouse

expenses direct warehouse expenses

only, and that it include indirect

expenses for pre-sale warehousing

among its reported indirect selling

expenses; and (3) Borusan did not

describe how the indirect and the direct

costs of warehouse operations were

separated. The petitioners state that,

instead, Borusan simply calculated the

reported pre-sale warehouse expense for

each reseller by dividing the total

warehouse expense incurred during

1996, including indirect expenses, by

the total quantity of goods sold out of

stock in 1996. In light of these alleged

failures to comply with the

Department’s instructions, the

petitioners assert that the Department

should deny any deduction to normal

value for pre-sale warehouse expenses.

Borusan responds that it properly

documented its pre-sale warehouse

expenses incurred in connection with

home market sales. First, Borusan

claims, the Department’s policy,

pursuant to section 773(a)(6) of the Act,

is to make an adjustment to normal

value for warehouse expenses, such as

these, that are incurred at remote selling

locations, citing Certain Porcelain-onSteel Cookware From Mexico: Final

Results of Administrative Review, 62 FR

42496 (August 7, 1997) (Cookware from

Mexico). Borusan adds that its

calculation of pre-sale warehouse

expenses was prepared according to the

methodology that was verified and

accepted by the Department during the

two most recent reviews. Finally,

Borusan states, the Department did not

ask in a supplemental questionnaire for

additional information regarding

Borusan’s calculation of pre-sale

warehouse expenses and, because the

petitioners have provided no evidence

to serve as a basis for the denial of an

adjustment for Borusan’s pre-sale

warehouse expenses, the Department

should continue to make this

adjustment to normal value.

DOC Position: We have accepted as a

movement expense the pre-sale

warehouse expenses claimed by
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices 35197

Borusan. With respect to the petitioners’

concern regarding the listing of

warehouse locations, we note that

Borusan did provide, in its initial

questionnaire response (at Exhibit B–7),

a list of locations for warehouses leased

by its affiliated resellers. (Borusan

incurred this expense for sales involving

such leased warehouses but not with

respect to warehouses owned by its

affiliates.) With respect to the

petitioners’ concern regarding direct

versus indirect warehouse expenses,

first, we consider warehousing expenses

that are incurred after the foreign like

product leaves the original place of

shipment as movement expenses. See 19

CFR 351.401(e)(2). Second, Borusan

properly isolated this expense to only

those sales on which it was incurred,

i.e., sales of merchandise stored in

leased warehouses. Accordingly, we

have accepted Borusan’s reporting of

this expense.

Comment 5: Packing Costs

The petitioners argue that Borusan

failed to create a factual record

supporting its calculation of packing

costs for both the comparison market

and the United States market and,

therefore, the Department should

calculate Borusan’s packing costs using

adverse facts available.

First, the petitioners claim that

sections B and C of the Department’s

questionnaire instructed Borusan to do

the following: (1) Describe the packing

types used in the comparison market

and those used to prepare merchandise

for shipment to the United States; (2)

submit worksheets listing the packing

materials used, the average cost of each

material, how much of each material

was used, the average labor hours by

packing type and the average per-hour

labor cost, including benefits; and, (3)

provide a list of overhead expenses

incurred in packing and demonstrate

how those expenses were allocated by

packing type.

Instead, the petitioners argue, Borusan

merely stated that: (1) It packs standard

pipe for shipment in both the export

and the domestic markets by tying

bundles of pipes together with metal

straps; and, (2) the reported packing cost

includes the costs of labor, materials

and overhead incurred during each

month allocated over the total metric

tons packed.

The petitioners argue further that,

while section D of the Department’s

questionnaire requests a complete and

detailed description of each stage of the

production process, Borusan’s

description of the packing stage merely

states that the pipe is marked and

bundled for final shipment. While

acknowledging that Borusan lists some

packing materials in response to this

item, the petitioners maintain that

Borusan neglected to explain whether

all bundles are packed in the same

manner, or to report the quantities and

costs of each packing material used.

Likewise, the petitioners argue, Borusan

failed to provide average labor hours

and average labor costs per hour for

packing, and provided no explanation

for its allocation of packing overhead

expenses. Finally, the petitioners

challenge Borusan’s methodology for

allocating packing costs by weight, and

insist that packing costs in the pipe

industry are largely a function of the

number of pieces being packed, not the

weight.

For these reasons, the petitioners

suggest that, consistent with Circular

Welded Non-Alloy Pipe and Tube From

Mexico: Final Results of Antidumping

Duty Administrative Review, 62 FR

37014, 37020 (July 10, 1997) (Pipe and

Tube from Mexico), the Department

should double the average reported

home market packing costs and use that

as the U.S. packing cost as adverse facts

available.

Borusan responds that the petitioners’

arguments are without merit, and

maintains that the petitioners have

overlooked important information

contained in Borusan’s response. First,

Borusan asserts that varnishing costs are

materials costs (and were fully

discussed in Borusan’s sections B–D

response at D–41–42) and not packing

costs as argued by the petitioners.

Second, Borusan claims that it provided

allocation worksheets (at Exhibit D–13)

that clearly explain the derivation of the

reported per-unit costs for each month

of the POR.

With respect to the petitioners’

argument that Borusan failed to provide

a list of variable overhead expenses

incurred in packing, Borusan points out

that it reported (at D–8) a list of the

packing material used to bundle the

pipes for shipment, plus the amount

and description of each overhead

expense incurred in packing.

Finally, Borusan claims that, while

the petitioners objected to Borusan’s

allocation of packing costs based on

weight, they offered no evidence to

support a claim that Borusan’s

allocation methodology is distortive or

inaccurate. Instead, Borusan argues, the

methodology is reasonable and,

furthermore, is consistent with the

methodology verified and accepted by

the Department during the two most

recent reviews.

DOC Position: The petitioners’

argument in favor of calculating

Borusan’s packing costs by use of

adverse facts available is essentially

two-pronged: (1) That Borusan has

failed to act to the best of its ability to

provide the complete information

requested, and (2) that Borusan’s chosen

methodology, which allocates packing

costs on the basis of weight, instead of

pieces, is not reflective of actual

practice in the pipe industry.

Regarding the first point, Borusan

listed (at D–8) its material inputs by

type, including packing materials.

Further, Borusan’s product brochure (at

Exhibit A–27) explains that the

merchandise is packaged as ‘‘bare

bundles.’’ The petitioners have provided

no evidence to indicate that Borusan has

neglected to report all packing materials

by type.

In addition, in response to our

questionnaire, Borusan provided (at

Exhibits D–13, D–14 and D–15) monthly

transformation cost tables for its three

production facilities. Borusan also

provided (at Exhibits D–21 and D–23,

respectively) worksheets illustrating the

cost calculations for the highest volume

U.S. product and the highest volume

home market product. Borusan

explained in its questionnaire response

(at D–44) that all of the costs used in

Exhibits D–13, D–14 and D–15 were

taken from data contained in the

company’s internal monthly ledgers.

Regarding the second point, we note

that in Pipe and Tube From Mexico, the

petitioners’ suggested model by which

we use adverse facts available to

calculate packing costs, the packing

costs were calculated on a weight basis,

the same methodology challenged as

unreliable by the petitioners in this

review. Furthermore, our acceptance of

Borusan’s methodology, which was

verified and accepted by the Department

in the two most recent reviews, is

consistent with prior segments of this

proceeding.

Comment 6: Allocation of Domestic

Brokerage and Handling on U.S. Sales

The petitioners argue that Borusan

should not have reported Turkish

lashing charges, customs charges,

loading charges, and port fees based on

the weight of each U.S. shipment, since

such charges are actually incurred on an

ad valorem basis. The petitioners

explain that basing such charges on

weight results in a distortion when

entries cover merchandise of varying

values. Therefore, the petitioners assert,

the Department should apply the

highest domestic brokerage and

handling amount reported for any U.S.

transaction to all U.S. sales as facts

available.

Borusan responds that the petitioners

assertion that brokerage and handling
35198 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices

costs are incurred on an ad valorem

basis is incorrect. Borusan asserts that a

percentage charge contained in

Borusan’s response, which is cited by

the petitioner in support of its claim

that these expenses are incurred on an

ad valorem basis, is in fact simply the

value-added-tax rate collected on the

customs charges and does not relate to

the amount of the customs charges in

any way.

DOC Position: The information on the

record supports Borusan’s position that

the brokerage and handling charges,

which Borusan reported on a shipmentspecific basis, reflect the actual charges

incurred by Borusan in connection with

its U.S. shipments. See Borusan sections

B–D response at Exhibit C–5. Therefore,

we have not accepted the petitioners’

arguments.

Comment 7: Interest Expense Factor

The petitioners make the following

comments regarding Borusan’s reported

interest expense factor. First, they raise

a general allocation claim, i.e., that

Borusan incorrectly calculated this

factor by taking the Borusan Group

companies’ annual expense amounts

and dividing by 12. The petitioners

propose that, as in the 1994–95 review,

the Department should allocate the

annual interest expense reported by

Borusan to each month of the POR using

the ratio of monthly-to-annual-interest

expenses for the four largest of the

Borusan Group firms.

Regarding the specific items that

comprise Borusan’s reported interest

expense, the petitioners comment on the

calculation of this item in the

preliminary results as follows: (1) The

Department correctly denied the claim

made by Borusan in its supplemental

response that foreign exchange losses

should be excluded because they are

due to inflation; (2) Borusan incorrectly

included foreign exchange gains related

to sales; (3) Borusan incorrectly

amortized foreign exchange losses; and

(4) Borusan incorrectly included various

income items as offsets to its financial

expenses, while improperly excluding a

miscellaneous ‘‘other financial

expenses’’ item. Regarding each of these

items, the petitioners also claim that it

is not possible to reconcile Borusan’s

breakout of reported income and

expense items with the totals reported

in Borusan’s financial statements.

The petitioners’ primary arguments

concerning each of these issues are as

follows. With respect to (1), the

petitioners state that Borusan’s own

financial statement treats foreign

exchange losses as an expense, not as an

inflation adjustment. Regarding (2),

while the petitioners acknowledge that

gains on financial assets such as cash

balances are appropriate offsets to

financing costs, they maintain that

Borusan has not explained sufficiently

why its reported gains are appropriate

offsets, particularly in light of the fact

that the Department excluded Borusan’s

foreign exchange gains in the past two

reviews (finding that Borusan’s reported

foreign exchange gains were related to

sales, not production operations).

Regarding (3), the petitioners state that

exchange rate losses should not be

amortized but, instead, all period losses

should be included in the interest

expense factor, and maintain that

Borusan has not reported this expense

in accordance with its normal books and

records. Finally, with respect to (4), the

petitioners state that the Department

should not allow Borusan’s claimed

offsets for various categories of interest

income (which concern offsets other

than the exchange rate gain offset

discussed in item 2, above), but should

include the ‘‘other financial expenses’’

item because Borusan did not explain

sufficiently why this should be

excluded.

While Borusan does not address the

petitioners’ general comment that the

Department should allocate interest

expenses to each month of the POR

using the ratio of monthly-to-annualinterest expenses for the four largest of

the Borusan Group firms, it does

respond to each of the other comments

raised by the petitioners.

First, Borusan contends that, as

claimed in the supplemental

questionnaire, exchange rate losses are

caused by inflation and should not be

included in interest expense. Second,

Borusan states that, consistent with the

two most recent reviews, it did not

make any offset for exchange gains

related to sales. Third, Borusan

disagrees with the petitioners’

contention that there is no precedent for

Borusan’s amortization of exchange rate

losses on foreign currency debt. In fact,

Borusan claims, it is the Department’s

practice to amortize such translation

losses over the life of the loan. Fourth,

Borusan disputes the petitioners’

suggestion that it did not substantiate its

claimed interest income offsets, and

maintains that its ‘‘other financial

expenses’’ item should be excluded

because it concerns bank commissions,

which are reported in a separate field.

DOC Position: We first note that,

consistent with prior segments of this

proceeding and with the petitioners’

arguments in this segment of the

proceeding, we have allocated Borusan’s

interest expenses to each month of the

POR using the ratio of monthly-toannual-interest expenses for the four

largest of the Borusan Group companies.

See 1994–95 Final Results at 69074.

Regarding the petitioners’ comments

on the calculation of the interest factor,

we agree with the petitioners that

exchange losses on foreign currency

debt represent a cost of borrowing and,

therefore, should be included in the

financial expense calculation. See 1993–

94 Final Results at 51632 (‘‘The

Department has clearly established that

translation losses on dollardenominated loans, as reflected in the

company’s income statement, are

appropriately included in the cost of

production because they reflect an

actual increase in the amount of local

currency that will have to be paid to

settle these loans.’’) We have continued

to include such losses in the interest

expense calculation.

We disagree, however, with the

petitioners’ assertion that none of

Borusan’s reported exchange rate gains

should be allowed. Our practice is to

include foreign exchange gains as an

offset to finance expenses if they are

related to the cost of acquiring debt for

purposes of financing production

operations, and to exclude this item if

it relates to sales. See Notice of Final

Determination of Sales at Less Than

Fair Value: Certain Steel Concrete

Reinforcing Bars from Turkey (Rebar

from Turkey), 62 FR 9737, 9741 (March

4, 1997); see also Notice of Final

Determination of Sales at Less Than

Fair Value: Certain Pasta from Turkey,

61 FR 30309, 30324 (June 14, 1996). In

applying this standard in the prior two

segments of this proceeding, we did not

allow any of Borusan’s reported

exchange rate gains as an offset, finding

that such gains ‘‘were not debt-related,

but rather involved export sales

activities (i.e., the gains arising from

foreign-currency denominated export

receivables).’’ 1994–95 Final Results at

69074; see also 1993–94 Final Results at

51632 (‘‘In this case, we find that

foreign exchange gains are related to

sales, not production; therefore, they

should not be used as an offset for

calculating home market interest

expenses.’’)

However, unlike prior reviews, in the

instant proceeding Borusan has

included in its interest expense

calculation only those exchange rate

gains related to cash balances and

inventory, while excluding those related

to sales (accounts receivable). See

Borusan sections B–D response at

Exhibit D–20 (separating exchange rate

gains ‘‘earned on accounts receivable’’

from those earned on ‘‘cash balances

and other,’’ and demonstrating that

these two items equal ‘‘total foreign

exchange gains’’); see also Borusan
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices 35199

5The petitioners argue, based on proprietary

information, that the information provided in this

exhibit is insufficient to allow the Department to

change its position from the past two reviews and

grant an offset for exchange gains. We address this

aspect of the petitioners’ argument in the Final

Results Analysis Memorandum.

supplemental response, Attachment J 5).

Exchange rate gains on cash balances

and inventory are short-term in nature

and do not constitute a separate

investing activity. Accordingly, we have

accepted these exchange gains as an

offset to finance expenses.

We also disagree with the petitioners’

contention that Borusan should not be

permitted to amortize its exchange rate

losses. For purposes of our analysis, it

is appropriate to amortize the foreign

exchange losses over the life of the

associated debt, since the gain or loss is

realized only as the loans are paid. See,

e.g., Rebar from Turkey at 9743.

However, we also disagree with

Borusan’s proposed weighted-average

amortization of the foreign exchange

losses. Instead, we have amortized the

foreign exchange loss incurred on each

loan over the life of the associated loan.

Finally, regarding Borusan’s claimed

‘‘other income’’ offsets and its rationale

for not including its ‘‘other financial

expenses’’ item, we note the following.

First, as a general matter, we disagree

with the petitioners’ contention that it is

not possible to substantiate the breakout

of reported income and expense items

from the totals reported in the financial

statements. In fact, other than an

amount called discount on term

transactions, Borusan provided a

detailed breakdown of the items listed

in its financial expense calculation and

a brief description of each item included

therein. See Borusan sections B–D

response at D–20.

It is the Department’s practice to

allow a respondent to offset financial

expenses with short-term interest

income earned from the general

operations of the company. See, e.g.,

Timken v. United States, 852 F. Supp.

1040, 1048 (CIT 1994). The Department

does not, however, offset interest

expense with interest income earned on

long-term investments because longterm investment does not relate to

current operations. See Notice of Final

Determination of Sales at Less Than

Fair Value: Small Diameter Circular

Seamless Carbon and Alloy Steel,

Standard, Line and Pressure Pipe From

Italy, 60 FR 31981, 31991 (June 19,

1995). Therefore, we have included

income offsets that Borusan

demonstrated were short-term in nature.

We note in particular that the largest

such offset, Borusan’s ‘other financial

income,’ relates to short-term bank

interest; the absence of long-term notes

receivable on Borusan’s financial

statements indicates that this amount is

from short-term sources. We did not

allow one claimed offset, ‘discount on

term transactions,’ for which Borusan

failed to explain either the source of the

income or the short or long-term nature

of the item.

We also agree with Borusan that

‘other financial expenses’ concern bank

commissions, which were reported

separately. Accordingly, we have not

added such expenses to Borusan’s

interest expense calculation, as

requested by the petitioners.

Comment 8: Purchases From Affiliated

Suppliers

The petitioners argue that the

Department should revalue the costs of

coil and zinc purchased by Borusan’s

mills (BBBF, Kartal Boru, and Bosas)

from affiliated parties. The petitioners

state that the following data in

Borusan’s response indicate belowmarket pricing of such inputs: (1)

BBBF’s coil purchases from an affiliated

party covered only the cost of

production, plus transportation,

exclusive of the affiliated party’s selling,

general and administrative expenses or

profit; and (2) proprietary information

in Borusan’s response (as further

described in the Final Results Analysis

Memorandum) indicates that Kartal

Boru’s and Bosas’ coil purchases, and

BBBF’s zinc purchases also were not

made at market prices.

Borusan responds that the petitioners’

allegation regarding prices paid to

suppliers selectively ignores

information provided in Borusan’s

supplemental response that

demonstrates that the mills paid market

prices for affiliated party coil and zinc

inputs. Borusan claims that the

petitioners distort the administrative

record by characterizing BBBF’s coil

purchases from its affiliated supplier as

‘substantial.’

DOC Position: We consider the inputs

in question (coil and zinc) to be major

inputs with respect to the production of

subject merchandise. Accordingly, we

have valued purchases of coil and zinc

by Borusan’s mills from affiliated

parties at the higher of the cost of

producing the input, the transfer price,

or the market price. See section 773(f)(3)

of the Act; see also 19 CFR 351.407(b).

We describe our methodology for doing

so in the Final Results Analysis

Memorandum.

Comment 9: G&A and Interest Expense

The petitioners argue that the G&A

and interest expense factors must be

recalculated because the denominator

(COGS) includes packing, which, when

the factors are applied to COMs

exclusive of packing, understates the

G&A and interest expense calculations.

The petitioners suggest that the

Department should add packing to COM

to correct the understatement of G&A

and interest expenses, citing Circular

Welded Non-Alloy Steel Pipe from the

Republic of Korea, 62 FR 55574, 55581

(October 27, 1997).

Borusan responds that it has used the

same methodology in the two most

recent reviews and that this

methodology was verified and accepted

by the Department. Borusan contends

that packing represents an insignificant

portion of the understatement and is

more than offset by applying historical

G&A and interest expense factors to

replacement costs.

DOC Position: We agree with the

petitioners and have added packing to

COM when calculating the G&A and

interest expenses. Although Borusan

asserts that the distortion is negligible,

there is still an understatement of these

expenses. As for Borusan’s claim that

we are applying a historical G&A and

interest expense factor to replacement

costs, both G&A and interest have been

adjusted to account for inflation before

calculating the G&A and interest

expense factors.

Comment 10: Circumstance-of-Sale

Adjustment for Imputed Credit

Borusan claims that the Department

failed to make a circumstance-of-sale

(COS) adjustment to normal value for

imputed credit expenses when normal

value was based on CV. Borusan argues

that, pursuant to section 773(a)(8) of the

Act, the Department’s well-established

practice dictates that it make such an

adjustment, citing, e.g., Notice of Final

Determination of Sales at Less Than

Fair Value: Steel Wire Rod From

Canada, 63 FR 9182, 9195 (February 24,

1998); TRB’s From Japan at 2583;

Amended Final Results of Antidumping

Duty Administrative Review: Fresh Kiwi

Fruit From New Zealand, 62 FR 47440

(September 9, 1997)).

The petitioners respond that: (1) due

to Borusan’s failure to quantify the COS

adjustment it seeks, no such adjustment

is warranted, and (2) if the Department

does grant a COS adjustment, such

adjustment should be based on a proper

calculation of Borusan’s net prices.

Regarding the adequacy of Borusan’s

credit calculation, the petitioners claim

that Borusan calculated a POR-average

home market interest rate, and maintain

that Borusan’s failure to provide

monthly interest rates makes it

impossible to properly calculate home

market credit expenses for purposes of
35200 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 / Notices

6 We note that, in the preliminary results, we

erroneously indicated that if the assessment rates

that we calculated for the final results were de

minimis, we would not instruct Customs to assess

duties. However, section 353.6 (b) of our regulations

requires the assessment of duties for any importerspecific assessment rates greater than zero.

Accordingly, we have not disregarded de minimis

rates for assessment purposes.

the COS adjustment. The petitioners

assert that the various interest rates

charged to Borusan during the POR vary

widely, and suggest that, due to the high

inflation in Turkey, it would be unfair

to calculate interest expense on an

average basis. Further, the petitioners

add, it is the Department’s practice to

calculate costs on a monthly basis,

citing Pipe and Tube from Mexico at

37016.

The petitioners argue in the

alternative that, if the Department does

make the COS adjustment requested by

Borusan, imputed home market credit

expenses must be based on a proper

calculation of Borusan’s net prices.

Specifically, the petitioners argue,

Borusan’s calculation of net price does

not include a deduction for the quantity

rebate granted to certain customers by

Borusan, thereby overstating the net

price to which the credit expense is

applied.

DOC Position: Pursuant to section

773(a)(8) of the Act, a COS adjustment

for home market imputed credit

expenses should be made when CV is

the basis for normal value. We use

imputed credit expenses to measure the

effect of a specific respondent’s selling

practices in the United States and in the

comparison market. Because Borusan’s

U.S. sales were export price sales, the

adjustment entails adding U.S. imputed

credit to the CV, and subtracting home

market imputed credit from the CV.

Although we added the U.S. imputed

credit for the preliminary results, we

neglected to deduct the home market

imputed credit. We have made this

correction for the final results.

We disagree with the petitioners’

assertion that, because Borusan did not

calculate its home market credit

expense using monthly interest rates,

we should disallow this adjustment.

Borusan calculated this expense on a

weighted-average basis, i.e., the total

principle times the number of days

utilized for each short-term loan. This

methodology is consistent with that

used in calculating interest for both the

1993–94 and the 1994–95 reviews of

this proceeding, and we did not request

that Borusan recalculate this expense

using monthly interest rates. Under

these facts, it would be inappropriate to

deny this adjustment.

We also disagree that a deduction for

the quantity rebate, as proposed by the

petitioners, is appropriate, because the

quantity rebate is not part of the

opportunity cost of the use of money in

each sale. Instead, the quantity rebate is

given after payment has been made by

Borusan’s customer.

Final Results of Review

As a result of our review, we

determine that the following margin

exists for the period May 1, 1996,

through April 30, 1997:

Manufacturer/exporter Margin

(percent)

The Borusan Group .................. 0.02

The Department shall determine, and

Customs shall assess, antidumping

duties on all appropriate entries. As

discussed above, because the number of

transactions involved in this review and

other simplification methods prevent

entry-by-entry assessments, we have

calculated importer-specific assessment

rates. We divided the total dumping

margins for the reviewed sales by the

total entered value of those reviewed

sales. We will direct Customs to assess

the resulting percentage margin against

the entered customs values for the

subject merchandise on each of that

importer’s entries under the relevant

order during the review period.6 While

the Department is aware that the entered

value of the reviewed sales is not

necessarily equal to the entered value of

entries during the POR, use of entered

value of sales as the basis of the

assessment rate permits the Department

to collect a reasonable approximation of

the antidumping duties which would

have been determined if the Department

had reviewed those sales of

merchandise actually entered during the

POR.

Furthermore, the following deposit

requirements will be effective for all

shipments of the subject merchandise

entered, or withdrawn from warehouse,

for consumption on or after the

publication date of these final results of

administrative review, as provided by

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

deposit rate for Borusan will be zero; (2)

for merchandise exported by

manufacturers or exporters not covered

in this review but covered in a previous

segment of this proceeding, the cash

deposit rate will continue to be the

company-specific rate published in the

most recent final results in which that

manufacturer or exporter participated;

(3) if the exporter is not a firm covered

in this review or in any previous

segment of this proceeding, but the

manufacturer is, the cash deposit rate

will be that established for the

manufacturer of the merchandise in

these final results of review or in the

most recent final results in which that

manufacturer participated; and (4) if

neither the exporter nor the

manufacturer is a firm covered in this

review or in any previous segment of

this proceeding, the cash deposit rate

will be 14.74 percent, the all others rate

established in the less-than-fair-value

investigation. These deposit

requirements shall remain in effect until

publication of the final results of the

next administrative review.

This notice also serves as final

reminder to importers of their

responsibility 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 in the subsequent

assessment of double antidumping

duties.

This notice also is the only reminder

to parties subject to administrative

protective order (APO) of their

responsibility concerning the return or

destruction of proprietary information

disclosed under APO in accordance

with 19 CFR 353.34(d). Failure to

comply is a violation of the APO.

This determination is issued and

published in accordance with sections

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

Dated: June 18, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 98–17250 Filed 6–26–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

National Estuarine Research Reserve

System

AGENCY: Office of Ocean and Coastal

Resource Management (OCRM),

National Ocean Service (NOS), National

Oceanic and Atmospheric

Administration, Department of

Commerce.

ACTION: Notice of proposed boundary

expansion for the Padilla Bay National

Estuarine Research Reserve.

SUMMARY: The Sanctuaries and Reserves

Division of OCRM is considering a

requesting by the Washington State

Department of Ecology to include the 92