Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40391

may be resubmitted with or without

name and address within 7 days.

Permits: Permits required for

implementation include the following:

1. U.S. Army Corps of Engineers

—Approval of discharge of dredged or

fill material into the waters of the

United States under Section 404 of

the Clean Water Act;

—Approval of the construction of

structure or work in navigable waters

of the United States under Section 10

of the Rivers and Harbors Act of 1899;

2. Environmental Protection Agency

—National Pollutant Discharge

Elimination System (402) Permit;

—Review Spill Prevention Control and

Countermeasure Plan;

3. State of Alaska, Department of

Natural Resources

—Tideland Permit and Lease or

Easement;

4. State of Alaska, Department of

Environmental Conservation

—Solid Waste Disposal Permit;

—Certification of Compliance with

Alaska Water Quality Standards (401

Certification)

Responsible Official: Carol J.

Jorgensen, Assistant Forest Supervisor,

Stikine Area, Tongass National Forest,

P.O. Box 309, Petersburg, Alaska 99833,

is the responsible official. The

responsible official will consider the

comments, response, disclosure of

environmental consequences, and

applicable laws, regulations, and

policies in making the decision and

stating the rationale in the Record of

Decision.

Dated: July 15, 1998.

Carol J. Jorgensen,

Assistant Forest Supervisor.

[FR Doc. 98–20185 Filed 7–28–98; 8:45 am]

BILLING CODE 3410–11–M

ASSASSINATION RECORDS REVIEW

BOARD

Sunshine Act Meeting

DATE: August 6, 1998.

PLACE: ARRB 600 E Street, NW.,

Washington, DC.

STATUS: Closed.

MATTERS TO BE CONSIDERED:

1. Review and Accept Minutes of

Closed Meeting.

2. Review of Assassination Records.

3. Other Business.

CONTACT PERSON FOR MORE INFORMATION:

Eileen Sullivan, Press Officer, 600 E

Street, NW, Second Floor, Washington,

DC 20530. Telephone: (202) 724–0088;

Fax: (202) 724–0457.

Laura Denk,

Executive Director.

[FR Doc. 98–20373 Filed 7–27–98; 1:02 pm]

BILLING CODE 6118–01–P

DEPARTMENT OF COMMERCE

INTERNATIONAL TRADE

ADMINISTRATION

[A–122–047]

Elemental Sulphur From Canada:

Extension of Time Limit for Preliminary

Results of the Antidumping Duty

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of extension of time limit

for preliminary results of antidumping

duty administrative review.

SUMMARY: The Department of Commerce

(‘‘the Department’’) is extending the

time limit for the preliminary results of

the review of elemental sulphur from

Canada. This review covers the period

December 1, 1996 through November

30, 1997.

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT: Rick

Johnson at (202) 482–3818; Office of

AD/CVD Enforcement, Group III, Office

9, Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW, Washington,

D.C. 20230.

The Applicable Statute

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).

Postponement of Preliminary Results

The Department has determined that

it is not practicable to issue its

preliminary results of the administrative

review within the original time limit of

September 2, 1998. (See Decision

Memorandum from Joseph A. Spetrini,

Deputy Assistant Secretary,

Enforcement Group III to Robert

LaRussa, Assistant Secretary for Import

Administration, July 9, 1998). The

Department is extending the time limit

for completion of the preliminary

results until November 1, 1998 in

accordance with Section 751(a)(3)(A) of

the Act.

The deadline for the final results of

this review will continue to be 120 days

after publication of the preliminary

results.

Dated: July 14, 1998.

Roland L. MacDonald,

Acting Deputy Assistant Secretary for

Enforcement Group III.

[FR Doc. 98–20267 Filed 7–28–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–469–807]

Notice of Final Determination of Sales

at Less Than Fair Value: Stainless

Steel Wire Rod From Spain

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Howard Smith or Irene Darzenta, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW, Washington, DC 20230;

telephone: (202) 482–5193 or (202) 482–

6320, respectively.

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 citations

to the Department’s regulations are to

the regulations at 19 CFR part 351, 62

FR 27296 (May 19, 1997).

Final Determination

We determine that stainless steel wire

rod (SSWR) from Spain is being sold in

the United States at less than fair value

(LTFV), as provided in section 735 of

the Act. The estimated margins are

shown in the ‘‘Suspension of

Liquidation’’ section of this notice.

Case History

The preliminary determination in this

investigation was issued on February

25, 1998. See Notice of Preliminary

Determination of Sales at Less Than

Fair Value and Postponement of Final

Determination: Stainless Steel Wire Rod

from Spain, 63 FR 10849 (March 5,

1998) (Notice of Preliminary

Determination). Since the preliminary

determination, the following events

have occurred:
40392 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

On March 6, 1998 the respondent in

this investigation, Roldan, S.A.

(Roldan), alleged that the Department of

Commerce (the Department) made a

ministerial error in calculating the

margin for the preliminary

determination. While we agreed with

Roldan’s allegation, in accordance with

sections 351.224(e) and 351.224(g) of

the Department’s regulations, we did

not amend our preliminary

determination because the ministerial

error was not significant. However, we

have corrected this error in the final

determination. For further discussion of

the ministerial error, see the

Memorandum from Howard Smith to

Holly Kuga dated March 6, 1998.

In March 1998, we issued

supplemental questionnaires to Roldan

and received responses to those

questionnaires. Roldan submitted

corrected sales and cost databases in

April 1998.

We verified Roldan’s questionnaire

responses in April and May 1998. At

verification, Roldan identified various

errors in its sales and cost databases,

including incorrect payment dates for a

significant number of U.S. sales and

incorrect production quantities for all

models listed in the cost databases. We

requested that Roldan correct the

erroneous U.S. payment dates and

production quantities, and submit

revised U.S. sales and cost databases. In

response to our request, Roldan

submitted revised cost data on May 8,

1998, and revised U.S. sales data on

June 12, 1998. The revised U.S. sales

database included updated U.S. credit

expenses based on the corrected

payment dates.

The petitioners (i.e., AL Tech

Specialty Steel Corp., Carpenter

Technology Corp., Republic Engineered

Steels, Talley Metals Technology, Inc.,

and the United Steel Workers of

America, AFL–CIO/CLC) and Roldan

submitted case briefs on June 11, 1998,

and rebuttal briefs on June 18, 1998. At

the request of all parties, the public

hearing scheduled for June 19, 1998,

was canceled.

Scope of Investigation

For purposes of this investigation,

SSWR comprises products that are hotrolled or hot-rolled annealed and/or

pickled and/or descaled rounds,

squares, octagons, hexagons or other

shapes, in coils, that may also be coated

with a lubricant containing copper, lime

or oxalate. SSWR is made of alloy steels

containing, by weight, 1.2 percent or

less of carbon and 10.5 percent or more

of chromium, with or without other

elements. These products are

manufactured only by hot-rolling or hotrolling, annealing, and/or pickling and/

or descaling, are normally sold in coiled

form, and are of solid cross-section. The

majority of SSWR sold in the United

States is round in cross-sectional shape,

annealed and pickled, and later coldfinished into stainless steel wire or

small-diameter bar.

The most common size for such

products is 5.5 millimeters or 0.217

inches in diameter, which represents

the smallest size that normally is

produced on a rolling mill and is the

size that most wire-drawing machines

are set up to draw. The range of SSWR

sizes normally sold in the United States

is between 0.20 inches and 1.312 inches

diameter. Two stainless steel grades,

SF20T and K–M35FL, are excluded

from the scope of the investigation. The

chemical makeup for the excluded

grades is as follows:

SF20T

Carbon 0.05 max Chromium 19.00/21.00

Manganese 2.00 max Molybdenum 1.50/2.50

Phosphorous 0.05 max Lead added (0.10/0.30)

Sulfur 0.15 max Tellurium added (0.03 min)

Silicon 1.00 max

K–M35FL

Carbon 0.015 max Nickel 0.30 max

Silicon 0.70/1.00 Chromium 12.50/14.00

Manganese 0.40 max Lead 0.10/0.30

Phosphorous 0.04 max Aluminum 0.20/0.35

Sulfur 0.03 max

The products under investigation are

currently classifiable under subheadings

7221.00.0005, 7221.00.0015,

7221.00.0030, 7221.00.0045, and

7221.00.0075 of the Harmonized Tariff

Schedule of the United States (HTSUS).

Although the HTSUS subheadings are

provided for convenience and customs

purposes, the written description of the

scope of this investigation is dispositive.

Period of Investigation

The period of investigation (POI) is

July 1, 1996, through June 30, 1997.

Fair Value Comparisons

To determine whether sales of SSWR

from Spain to the United States were

made at less than fair value, we

compared the Constructed Export Price

(CEP) to the Normal Value (NV) as

defined in sections 772(b) and 773(a) of

the Act, respectively. We calculated CEP

and NV following the general

methodologies described in the

preliminary determination. However, as

noted in the ‘‘Constructed Export Price’’

and ‘‘Normal Value’’ sections below, we

adjusted certain reported data based on

our findings at verification and our

positions discussed in the ‘‘Interested

Party Comments’’ section of this notice.

For further discussion, see the

Calculation Memorandum from Howard

Smith to Irene Darzenta dated July 20,

1998 (Calculation Memorandum).

Product Comparisons

We performed product comparisons

based on the same characteristics and in

the same general manner as that

outlined in the preliminary

determination. See Comment 3 in the

‘‘Interested Party Comments’’ section of

this notice.

As in the preliminary determination,

in instances where Roldan has reported

a non-AISI grade (or an internal grade

code) for a product that falls within an

AISI category, we have used the actual

AISI grade in our analysis rather than

the non-AISI grade reported by Roldan.

In instances where the chemical content

ranges of a reported non-AISI grade (or

an internal grade code) are outside the

parameters of an AISI grade, we have

used the non-AISI (or internal) grade

code reported by Roldan in our analysis.

However, in instances in which an

internal grade matches all the specified
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40393

chemical content tolerance ranges of an

AISI grade, but the internal grade also

contains amounts of chemicals that are

not otherwise specified as being

included in the standard AISI

designation, we have used the

corresponding AISI grade rather than

the internal grade.

Use of Constructed Value

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.) (Cemex). In that

case, based on the pre-URAA version of

the Act, 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.’’ This

issue was not raised by any party in this

proceeding. However, the URAA

amended the definition of sales outside

the ‘‘ordinary course of trade’’ to

include sales below cost. See Section

771(15) of the Act. Consequently, the

Department has reconsidered its

practice in accordance with the Cemex

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 section 771(16) of

the Act, we considered all products sold

in the home market, as described in the

‘‘Scope of Investigation’’ 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.

Level of Trade

In the preliminary determination we

found that Roldan’s home market sales

were at a different and more advanced

level of trade than its U.S. sales;

however, the information on the record

did not permit us to quantify a level of

trade (LOT) adjustment based on a

pattern of consistent price differences

and, thus, we were unable to grant a

LOT adjustment. Because we

reclassified Roldan’s U.S. sales as CEP

transactions we granted Roldan a CEP

offset in accordance with section

773(a)(7)(B) of the Act. Our findings at

verification continue to support our

preliminary level of trade analysis.

Moreover, we have continued to treat

Roldan’s U.S. sales as CEP transactions

(see Comment 1 in the ‘‘Interested Party

Comments’’ section of this notice).

Therefore, in the final determination,

we have also granted Roldan a CEP

offset.

Facts Available

At verification, we found that Roldan

failed to report certain U.S. sales that

were made by its affiliated U.S. sales

agent during the POI. In accordance

with section 776 (b) of the Act, we have

used adverse facts available with regard

to these sales in reaching our final

determination. For further discussion,

see Comment 2 in the ‘‘Interested Party

Comments’’ section of this notice.

Constructed Export Price

In the preliminary determination, we

treated Roldan U.S. sales as CEP

transactions even though Roldan

reported all of its U.S. sales as export

price (EP) transactions. In this final

determination, we have continued to

treat Roldan’s U.S. sales as CEP

transactions and, thus, we followed the

methodology described in the

preliminary determination to adjust CEP

in accordance with section 772(b) of the

Act. However, we revised the following

U.S. sales data based on our verification

findings: (1) the gross unit price for six

observations; (2) the quantity for one

observation; (3) the shipment date and

credit expense for one observation; (4)

the discount for one observation; (5) the

U.S. inland freight for one observation;

and (6) the indirect selling expenses

incurred in both the home and U.S.

markets for all U.S. observations (see the

Sales Verification Report from Howard

Smith to Holly Kuga, dated June 4,

1998, at pages 2, 3, 18, 24, 29 and 36

(Sales Verification Report)).

Normal Value

As noted in the preliminary

determination, we determined that

Roldan’s sales in the home market serve

as a viable basis for calculating NV. In

performing the price-to-price

comparisons described in the ‘‘Fair

Value Comparisons’’ section of this

notice, we followed the methodology

described in the preliminary

determination in adjusting NV in

accordance with sections 773(a)(6) and

773(a)(7) of the Act. However, we

revised the following home market sales

data based on our verification findings:

(1) the gross unit price for one

observation; (2) the further processing

code for one observation; and (3) the

indirect selling expenses incurred in the

home market for all home market

observations (see the Sales Verification

Report at pages 13, 14, and 21).

In addition, consistent with our

finding in the preliminary

determination, we have excluded from

our analysis Roldan’s home market sales

to an affiliated consumer of SSWR

because we determined that those sales

were not made at arm’s-length prices

and, thus, were outside the ordinary

course of trade. Furthermore, we found

that for certain models of SSWR, more

than 20 percent of Roldan’s home

market sales made within an extended

period of time were sold at prices that

were less than the cost of production

(COP), and that these prices did not

provide for the recovery of costs within

a reasonable period of time. Thus, in

accordance with section 773 (b)(1) of the

Act, we disregarded the below-cost sales

and used the remaining above cost sales

as the basis for determining NV. For

further discussion of the arm’s-length

and sales-below-cost test used in our

analysis, see Notice of Preliminary

Determination, at pages 13–16.

Calculation of COP

We calculated the weighted-average

COP, which was used in our salesbelow-cost test, in accordance with

section 773(b)(3) of the Act.

Specifically, we calculated the

weighted-average COP for each model

by adding together Roldan’s cost of

materials and fabrication for the foreign

like product, plus amounts for home

market selling, general and

administrative expenses and packing

costs. We have relied on Roldan’s

reported COP except in the following

specific instances where the reported

amount was not appropriately

quantified or valued:

(1) We disallowed Roldan’s claimed

startup adjustment (see Comment 6 in

the ‘‘Interested Party Comments’’

section of this notice and the

Concurrence Memorandum from Peter

Scholl and Howard Smith to Holly

Kuga, dated July 20, 1998 (Concurrence

Memorandum)).

(2) We increased reported COP by the

amount of the inventory write-down

that Roldan excluded from COP (see
40394 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

Comment 7 in the ‘‘Interested Party

Comments’’ section of this notice).

(3) We increased reported COP by the

amount of the productive assets that

were written off during the POI (see

Comment 8 in the ‘‘Interested Party

Comments’’ section of this notice).

For further discussion of the above

adjustments, see the Calculation

Memorandum.

Currency Conversion

As in the preliminary determination,

we made currency conversions into U.S.

dollars based on the exchange rates in

effect on the dates of the U.S. sales as

certified by the Federal Reserve Bank in

accordance with Section 773A of the

Act.

Interested Party Comments

Comment 1: Classifying U.S. Sales as EP

or CEP Sales

In the preliminary determination, the

Department reclassified all of Roldan’s

U.S. sales as CEP sales because it found

that Roldan’s affiliated U.S. sales entity,

Acerinox, U.S.A., performed a variety of

significant selling functions in

connection with Roldan’s U.S. sales,

including negotiating sales terms with

U.S. customers, reporting to Roldan

concerning market conditions, and

identifying U.S. customers. Roldan

argues its U.S. sales should be classified

as EP sales in the final determination

because the Department verified that

Acerinox, U.S.A. did not perform the

selling functions attributed to it in the

preliminary determination but merely

communicated Roldan’s sales terms to

U.S. customers, provided Roldan with

information about market events, such

as potential antidumping complaints,

and coordinated with U.S. freight

forwarders to move SSWR through U.S.

customs and to transport it to the U.S.

customer. Roldan maintains these

services are ancillary to its U.S. sales

and demonstrate that Acerinox, U.S.A.

is simply a ‘‘processor of sales-related

documentation’’ and a ‘‘communication

link’’ with the U.S. customer.

Furthermore, Roldan claims Acerinox,

U.S.A. did not provide some of the

services which the Department

considers to be indicative of a U.S.

affiliate’s substantial involvement in the

sales process. Specifically, Roldan notes

that Acerinox, U.S.A. did not evaluate

U.S. customers’ credit, negotiate sales

terms without Roldan’s approval and,

except for two unusual sales, take title

to the merchandise and invoice the U.S.

customer. Roldan, citing Certain Cut-toLength Carbon Steel Plate From

Germany: Final Results of Antidumping

Duty Administrative Review, 62 FR

18,390 (April 15, 1997), and Extruded

Rubber Thread From Malaysia: Final

Results of Antidumping Duty

Administrative Review, 63 FR 12,752,

12,759 (March 16, 1998), notes that the

Department has classified U.S. sales as

CEP transactions where the U.S. affiliate

performed the aforementioned sales

activities. Moreover, Roldan claims that

in other antidumping cases the

Department found U.S. affiliates that

performed more services than Acerinox,

U.S.A. performed to be ‘‘processors of

sales-related documentation’’ and

‘‘communication links.’’ In support of

this claim, Roldan cites Certain ColdRolled and Corrosion-Resistant Carbon

Steel Flat Products From Korea: Final

Results of Antidumping Duty

Administrative Reviews, 62 FR 18,404

(April 15, 1997), where, according to

Roldan, the U.S. affiliate paid

antidumping and countervailing duty

cash deposits, extended credit to U.S.

customers, processed warranty claims,

and developed projects. Finally, Roldan

notes that in the Notice of Final

Determination of Sales at Less Than

Fair Value: Stainless Steel Bar From

Spain, 59 FR 66,931, 66,932 (December

28, 1994) (Stainless Steel Bar), the

Department determined that Roldan’s

U.S. sales were properly classified as

purchase price sales (now called EP

sales) because ‘‘the subject merchandise

was sold to unrelated purchasers in the

United States before importation and

exporter sales price methodology

(currently CEP methodology) was not

otherwise indicated.’’ According to

Roldan, EP treatment, which should be

determined using the same criteria as

that applicable to the former purchase

price treatment, is appropriate in the

instant investigation because its U.S.

sales process has not changed.

Furthermore, Roldan objects to the

methodology the Department currently

employs to determine whether an

affiliated U.S. sales entity’s activities are

limited to that of a ‘‘processor of salesrelated documentation’’ and a

‘‘communication link.’’ According to

Roldan, the Department has unlawfully

changed its long-standing analysis of

this issue and now finds that unless the

record demonstrates that the U.S.

affiliate’s involvement in making the

sale is incidental or ancillary, the U.S.

affiliate is more than a ‘‘processor of

sales-related documentation’’ and a

‘‘communication link’’ and, thus, CEP

treatment is appropriate. In support of

this assertion, Roldan cites Certain

Cold-Rolled and Corrosion-Resistant

Carbon Steel Flat Products From Korea:

Final Results of Antidumping Duty

Administrative Reviews, 63 FR 13170

(March 18, 1998) (Steel From Korea), in

which, Roldan argues, the Department

found the U.S. affiliates’ role to be more

than ancillary to the sales process and

reclassified respondents’ U.S. sales as

CEP sales. Roldan argues that the

Department’s current analysis of this

issue will make it impossible for a

foreign manufacturer with a U.S.

affiliate to classify its U.S. sales as EP

sales because today’s business practices

often do not provide evidence of the

extent of an affiliate’s involvement in

making a sale (e.g., communication

between foreign manufacturers and their

U.S. affiliates is often over the

telephone). Nevertheless, using the

‘‘new’’ analysis that the Department

applied in Steel From Korea, Roldan

maintains its U.S. sales remain EP sales.

According to Roldan, the record in the

instant investigation shows that

Acerinox, U.S.A. performed fewer and

less significant functions than those

performed by the U.S. affiliates of the

respondents whose sales were

reclassified as CEP sales in Steel From

Korea. Roldan also maintains its U.S.

sales should be classified as EP sales

under the Department’s ‘‘new’’ analysis

because Acerinox, U.S.A. incurred less

indirect selling expenses than Roldan

incurred in selling the subject

merchandise.

Petitioners claim that the record in

this investigation shows that Acerinox,

U.S.A. is involved in every aspect of the

sales process for Roldan’s sales of SSWR

in the United States and, thus, the

Department correctly reclassified

Roldan’s U.S. sales as CEP sales for the

preliminary determination and should

continue to do so in the final

determination. According to petitioners,

the Department verified that Acerinox,

U.S.A. (1) is contacted by U.S.

customers inquiring about purchasing

Roldan’s SSWR; (2) contacted U.S.

customers that it has not dealt with for

some time; (3) accepted orders of less

than 60 metric tons from U.S. customers

without obtaining Roldan’s approval of

the sales terms; (4) handled returns of

U.S. sales of Roldan’s SSWR; and (5)

inventoried Roldan’s SSWR in the

United States. Petitioners also note that

Roldan identified Acerinox, U.S.A. as

the selling agent for all of its U.S. sales

of SSWR in its response to the

Department’s antidumping

questionnaire. Regarding Acerinox,

U.S.A.’s role in those sales, petitioners

maintain that Roldan reported that

Acerinox, U.S.A. contacts U.S.

customers, accepts the customers’

orders, collects the customers’

payments, pays U.S. import duties on

Roldan’s SSWR and arranges for the
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40395

1See the Sales Verification Report at page 33.

2Acerinox, S.A., the parent company of Roldan

and Acerinox, U.S.A., provides a number of

services in connection with Roldan’s U.S. sales of

SSWR including serving as a communication link

between Roldan and Acerinox, U.S.A. (e.g., directs

customers’ technical questions to the appropriate

Roldan personnel). Roldan pays Acerinox, S.A. a

fee for these services.

transportation of SSWR from the port of

entry to the U.S. customer. Furthermore,

petitioners assert there is no evidence

on the record supporting Roldan’s claim

that it approved the terms of its U.S.

sales of SSWR or indicating that Roldan

had any direct dealings with

unaffiliated U.S. purchasers of its

SSWR. Petitioners claim that the sales

in question are CEP sales because

Acerinox, U.S.A. handled all of the

dealings with U.S. customers and in

doing so, it acted as more than a

‘‘processor of sales related

documentation’’ or a ‘‘communications

link’’ (see Steel From Korea at page

13183).

Additionally, petitioners argue that if

the Department continues to treat

Roldan’s U.S. sales as CEP sales, it must

reduce U.S. price by the amount of the

sales commission Roldan paid

Acerinox, U.S.A. because (1) this

amount exceeds the selling expenses

incurred by Acerinox, U.S.A.; and (2) as

Roldan has admitted on the record of

this investigation, the commission

payments are at arm’s-length.

Petitioners note that the Department’s

practice of not making any adjustment

for commission expense if it is unable

to determine that the commission was

paid at arm’s-length does not apply to

the instant investigation.

DOC Position: We agree with

petitioners, in part, and have continued

to treat Roldan’s U.S. sales as CEP sales

in the final determination.

Section 772(b) of the Act defines CEP

as ‘‘the price at which the subject

merchandise is first sold (or agreed to be

sold) in the United States before or after

the date of importation by or for the

account of the producer or exporter of

such merchandise or by a seller

affiliated with the producer or exporter,

to a purchaser not affiliated with the

producer or exporter, as adjusted’’

(emphasis added). Section 772(a) of the

Act defines EP as ‘‘the price at which

the subject merchandise is first sold (or

agreed to be sold) before the date of

importation by the producer or exporter

of the subject merchandise outside of

the United States to an unaffiliated

purchaser in the United States, or to an

unaffiliated purchaser for exportation to

the United States, as adjusted.’’ When

sales are made prior to importation

through an affiliated or unaffiliated U.S.

sales agent to an unaffiliated customer

in the United States, our practice is to

examine several criteria in order to

determine whether the sales are EP

sales. Those criteria are: (1) whether the

merchandise was shipped directly from

the manufacturer to the unaffiliated U.S.

customer; (2) whether this was the

customary commercial channel between

the parties involved; and (3) whether

the function of the U.S. selling agent

was limited to that of a ‘‘processor of

sales-related documentation’’ and a

‘‘communications link’’ with the

unaffiliated U.S. buyer. Where all three

criteria are met, indicating that the

activities of the U.S. selling agent are

ancillary to the sale, the Department has

regarded the routine selling functions of

the exporter as merely having been

relocated geographically from the

country of exportation to the United

States where the sales agent performs

them, and has determined the sales to

be EP sales. Where one or more of these

conditions is not met, indicating that

the U.S. sales agent is substantially

involved in the U.S. sales process, the

Department has classified the sales in

question as CEP sales. See, e.g., Steel

From Korea, and Viscose Rayon Staple

Fiber from Finland: Final Results of

Antidumping Duty Administrative

Review, 63 FR 32820 (June 16, 1998).

In the instant investigation, the sales

in question were made prior to

importation through Roldan’s affiliated

U.S. sales agent, Acerinox, U.S.A., to

unaffiliated customers in the United

States. The fact that the subject

merchandise was shipped directly from

Roldan to the unaffiliated U.S.

customers and that this was the

customary commercial channel between

these parties is not disputed. The issue

is whether Acerinox, U.S.A.’s role in the

sales process was incidental or ancillary

to the sale (i.e., limited to that of a

‘‘processor of sales-related

documentation’’ and a

‘‘communications link’’).

We have determined that the extent

and nature of Acerinox, U.S.A.’s

involvement in selling Roldan’s SSWR

indicates that the subject merchandise

sales occurred in the United States and,

thus, are CEP transactions. The record

shows that during the POI, the sales

process for Roldan’s U.S. sales of SSWR

typically included the following

events:1

(1) On occasion, Acerinox, U.S.A. will

contact U.S. customers that it has not

dealt with for some time. Otherwise,

U.S. customers contact Acerinox, U.S.A.

to inquire about purchasing Roldan’s

SSWR. Acerinox, U.S.A. does not

actively market Roldan’s SSWR in the

United States because Roldan’s product

is well-known among the relatively

small number of customers in the

marketplace.

(2) Acerinox, U.S.A. may accept the

customer’s order, if it is a small order,

without contacting Acerinox, S.A.2 in

Spain to determine if Roldan will accept

the sales terms. Acerinox, U.S.A.

accepts small orders based on its past

dealings with Roldan, its knowledge of

Roldan’s requirements, and the

parameters Roldan sets regarding sales

terms. For inquiries regarding

significant purchases (generally more

than three containers or 60 metric tons),

Acerinox, U.S.A. will contact Acerinox,

S.A. to determine the sales terms that

Roldan will accept. Roldan will then

specify an acceptable price, and any

acceptable deviations from this price

depending on the quantity the customer

requires, the price the customer desires,

and/or the historical relationship with

the customer making the inquiry. In

setting the price, Acerinox, U.S.A. may

provide its opinion as to whether

Roldan can obtain a more favorable

price from the customer.

(3) After an order is accepted,

Acerinox, U.S.A. transmits the order

through Acerinox, S.A. to Roldan.

(4) After Roldan has produced the

order, Acerinox, S.A. arranges

transportation of the subject

merchandise to the United States.

(5) Acerinox, U.S.A. coordinates with

U.S. freight forwarders to move the

subject merchandise through U.S.

Customs and to transport it to U.S.

customers.

(6) Acerinox, S.A. invoices U.S.

customers in Roldan’s name.

(7) U.S. customers remit payment to

Acerinox, U.S.A., which subsequently

transfers the payment to Roldan by wire.

Thus, the record shows that Acerinox,

U.S.A. was involved in every aspect of

the sales process except for arranging for

shipment of SSWR to the United States

and invoicing U.S. customers.

Moreover, Acerinox, U.S.A.’s

involvement in the sales process was

extensive when compared to that of

Roldan or Acerinox, S.A. Accordingly,

the preponderance of selling functions

incurred to sell Roldan’s SSWR to U.S.

customers occurred in the United States.

Furthermore, Acerinox, U.S.A.’s role

in negotiating the terms of certain U.S.

sales is not indicative of the ancillary

role normally played by a ‘‘processor of

sales-related documentation’’ and a

‘‘communications link.’’ Specifically,

Acerinox, U.S.A.’s authority to negotiate

and accept sales terms for small orders

of SSWR without Roldan’s specific
40396 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

approval of the orders, as well as its

authority to initiate contact with U.S.

customers that it has not dealt with for

some time, contradicts Roldan’s claim

that Acerinox, U.S.A. was simply a

‘‘processor of sales-related

documentation’’ and a

‘‘communications link.’’ In addition,

there is no documentary evidence

supporting Roldan’s claim that it

approved the sales terms for all large

orders (e.g., evidence of price

acceptance or rejection by Roldan); nor

is there any evidence of direct contacts

or agreements between Roldan and the

ultimate U.S. purchasers of the subject

merchandise. The absence of such

evidence and Acerinox, U.S.A.’s

admitted role in negotiating the terms of

small orders, calls into question

Roldan’s claim that Acerinox, U.S.A.

was simply a ‘‘communication link’’ in

the sales negotiation process. Moreover,

Acerinox, U.S.A.’s extensive

involvement in the U.S. sales process,

its authority to negotiate and accept

sales terms in certain situations and the

fact that it initiated contact with U.S.

customers on occasion, distinguishes

the instant case from the cases Roldan

cited to support EP treatment of its

sales. Therefore, we have determined

that Roldan’s U.S. sales were made in

the United States and, in accordance

Section 772(b) of the Act, we have

classified these sales as CEP sales for the

final determination.

However, we disagree with

petitioners’ argument that the

Department must reduce Roldan’s CEP

sales by the amount of the sales

commission Roldan paid Acerinox,

U.S.A. in connection with its U.S. sales

of SSWR. Section 772(d) of the Act

provides that CEP shall be reduced by

selling expenses ‘‘incurred by or for the

account of the producer or exporter, or

the affiliated seller in the United States,

in selling the subject merchandise.’’

Section 351.402(e) of the Departments

regulations states that ‘‘where a person

affiliated with the exporter or producer

incurs any of the expenses deducted

from constructed export price under

section 772(d) of the Act and is

reimbursed for such expenses by the

exporter, producer or other affiliate, the

Secretary normally will make an

adjustment based on the actual cost to

the affiliated person.’’ In the instant

investigation, Acerinox, U.S.A. incurred

selling expenses that are deducted from

CEP under section 772 (d) of the Act,

and Roldan reimbursed Acerinox,

U.S.A. for these expenses through the

commission. Therefore, in accordance

with section 351.402(e) of the

Department’s regulations, for the final

determination we adjusted Roldan’s

CEP sales by Acerinox, U.S.A.’s actual

selling expenses, revised based on

verification findings.

Comment 2: Unreported U.S. Sales

At verification, the Department found

that Roldan’s U.S. affiliate, Acerinox,

U.S.A., purchased shipments of

Roldan’s SSWR that were rejected by

U.S. customers, held the rejected SSWR

in inventory, and then resold the

rejected SSWR to other unaffiliated

customers in the United States.

However, Roldan failed to report

Acerinox, U.S.A.’s sales of SSWR during

the POI. At verification, Roldan stated

that it did not report these sales because

they were not made in the ordinary

course of trade. Petitioners maintain

Roldan should have reported these sales

because the antidumping provisions

allow sales outside the ordinary course

of trade to be excluded from reported

home market or third country sales, but

not from U.S. sales. Petitioners also note

that although the original sales of SSWR

were canceled, the subsequent resales of

SSWR by Acerinox, U.S.A. should have

been reported because they were not

canceled. In addition, petitioners

contend that the information on the

unreported sales that Roldan provided

at verification constitutes factual

information that must be submitted no

later than seven days before verification.

Thus, petitioners argue, this information

was untimely and should not be used by

the Department in the final

determination. Petitioners, cite the Final

Determination of Sales at Less Than

Fair Value: Certain Stainless Steel Wire

Rods From France 58 FR 68,865, 68,869

(December 29, 1993) (Wire Rods From

France), in support of their view that the

Department should assign a margin to

the unreported sales equal to the greater

of the average margins alleged in the

petition, or the highest non-aberrant

margin calculated from Roldan’s data.

Roldan claims it properly excluded

Acerinox, U.S.A.’s resales of rejected

SSWR from reported sales. Specifically,

Roldan argues that it should not have

reported the sales in question because

the original U.S. customers canceled the

sales and the Department’s antidumping

questionnaire clearly instructs

respondents not to report canceled U.S.

sales. Even if the Department should

ignore the instructions in its

antidumping questionnaire, Roldan

maintains it properly excluded these

sales from reported sales because they

were sold in a completely different

manner from the rest of its U.S. sales

and, thus, were outside the ordinary

course of trade. In particular, Roldan

states that its U.S. customers typically

order SSWR prior to its production and

importation and that the SSWR is

shipped directly to the customer,

whereas Acerinox, U.S.A. resold SSWR

to customers after the material had been

produced, shipped to the original

customer in the United States, and then

re-shipped to Acerinox, U.S.A. or

Acerinox, U.S.A.’s customer. In

addition, Roldan notes that Acerinox,

U.S.A. informed its customers that they

were purchasing rejected material and

the Department has excluded U.S. sales

of defective merchandise from its

antidumping analysis in past cases such

as the Final Determination of Sales at

Less Than Fair Value: Coated

Groundwood Paper From Finland, 56

FR 56,363, 56,371 (November 4, 1991).

According to Roldan, the

antidumping statute, legislative history,

and the Department’s past practice

support a finding that these sales are

outside the ordinary course of trade.

Roldan states that in addition to certain

sales below the COP and certain sales

between affiliated parties, the Statement

of Administrative Action (SAA) allows

the Department to ‘‘consider other types

of sales or transactions to be outside the

ordinary course of trade when such

sales or transactions have characteristics

that are not ordinary as compared to

sales or transactions made in the same

market.’’ While conceding that the

ordinary course of trade requirement

has historically been applied to home

market or third country sales, Roldan,

citing Ipsco Inc. versus United States,

714 F. Supp 1211, 1217 (Ct. Int’l Trade

1989) (Ipsco), notes that the Department

may disregard certain U.S. sales if ‘‘the

inclusion of [such] sales, which are

clearly atypical, would undermine the

fairness of the comparison of foreign

and U.S. sales.’’ Roldan also notes that

in Ipsco, the Court recognized the

Department’s practice of excluding sales

that are not representative of the seller’s

behavior and sales whose volume is so

low that they would have an

insignificant effect on the margin.

Roldan notes that the resales of rejected

SSWR constituted such a small

percentage of Acerinox, U.S.A.’s sales

that they cannot be considered

representative of Acerinox, U.S.A.’s

behavior. Thus, for the reasons outlined

above, Roldan asserts that Acerinox,

U.S.A.’’s resales of SSWR are outside

the ordinary course of trade and should

not have been reported to the

Department.

However, if the Department

determines that this small quantity of

sales should have been reported, Roldan

requests that the Department use the

actual verified sales data that was

provided at verification. Roldan claims
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40397

petitioners’ argument that the

Department should assign a margin to

these sales using adverse inferences fails

because such inferences are only

appropriate when an interested party

fails to cooperate by not acting to the

best of its ability to reply to a request

for information from the administering

authority or the Commission. Roldan

argues that petitioners misapplied the

Department’s ruling in Wire Rods From

France to the instant investigation

because, unlike Wire Rods From France,

wherein the respondents failed to report

all sales transactions in a timely

manner, Roldan did not report the sales

in question because the Department’s

antidumping questionnaire specifically

instructed Roldan to report sales net of

returns. Moreover, Roldan claims that it

presented information concerning the

unreported sales on its own initiative as

part of the completeness test conducted

at verification and that it has fully

cooperated with the Department’s

requests for additional information

regarding these sales. Thus, Roldan

maintains there is no basis for the

Department to use adverse facts

available to determine the margin for

these unreported sales.

DOC Position: We agree with

petitioners. Section 772(b) of the Act

defines CEP as the ‘‘price at which the

subject merchandise is first sold (or

agreed to be sold) in the United States

before or after the date of importation by

* * * a seller affiliated with the

producer or exporter to a purchaser not

affiliated with the producer or exporter

* * *’’ Thus, in the antidumping

questionnaire issued in this

investigation, the Department instructed

Roldan to ‘‘prepare a single response

which includes the information for all

affiliates. The questionnaire goes on to

state that the respondent should

‘‘include information concerning

affiliates which sold the products under

investigation during the period of

investigation (‘‘POI’’) in the comparison

market or the United States market or

both. Combine the sales and cost of

these affiliates with your sales and cost

in the same computer data file(s) and

submit a single combined narrative

response.’’ See the Department’s

antidumping questionnaire dated

September 19, 1997 at page G–6. Roldan

failed to comply with the Department’s

instructions even though its U.S.

affiliate, Acerinox, U.S.A., sold subject

merchandise to unaffiliated purchasers

during the POI. The fact that Acerinox,

U.S.A. purchased subject merchandise

from Roldan after Roldan’s original U.S.

customer rejected the shipment and

canceled the sale does not change the

fact that Acerinox, U.S.A. subsequently

resold that merchandise to other

unaffiliated U.S. customers during the

POI. Those resales were not canceled

and should have been reported to the

Department.

In addition, the ordinary course of

trade provision does not apply to U.S.

transactions (see Notice of Final

Determination of Sales at Less Than

Fair Value: Static Random Access

Memory Semiconductors From Taiwan,

63 FR 8909, 8931 (Comment 22)

(February 23, 1998)). As the U.S. Court

of International Trade (CIT) noted in

American Permac, Inc., et al., versus

The United States, 783 F. Supp. 1421,

1423 (CIT 1992) (American Permac),

‘‘regular exclusion of sales not in the

ordinary course of trade only occurs on

the home-market side of the price

comparison.’’ The court went on to state

that ‘‘whether sales are in or out of the

ordinary course of trade is not the

determinative factor on the U.S. sales

side of the equation. Fairness,

distortion, representativeness are the

issues to be examined. The goal is to

include the sales but to utilize whatever

methodology is needed to ensure a fair

comparison.’’ 783 F. Supp. 1421, 1424.

While the Department may at times

exclude certain U.S. sales in order to

ensure a fair comparison (as noted in

Ipsco), in the instant investigation there

is no need to exclude the sales at issue

because, based on the record evidence

(including our examination of sales

documentation), we cannot conclude

that these sales are in any way

unrepresentative or would otherwise

improperly distort our calculations. We

also note that prior to the submission of

its case brief, Roldan never requested

exclusion of the sales at issue or

exoneration of the reporting

requirement with respect to these sales.

It was not until after the Department

had discovered the unreported sales at

verification (see the Sales Verification

Report at page 12) that Roldan raised the

issue of excluding the unreported sales.

Therefore, based on the foregoing, we

conclude that such sales should have

been reported to the Department.

As indicated above, Roldan states that

if the Department decides that the sales

at issue should have been reported, it

should use the actual verified sales data

that was provided at verification.

However, at verification the only

information that the Department

requested, and that Roldan provided

with regard to Acerinox, U.S.A.’s resales

of subject merchandise, was the

quantity and gross unit price of each

sale. The Department requested this

information to determine the magnitude

of the unreported sales in comparison to

the reported U.S. sales. The Department

did not request, and Roldan did not

provide, the data required to adjust the

gross unit price of the unreported sales

in accordance with section 772(c) of the

Act (e.g., information on freight and

other selling expenses). Moreover, even

if Roldan had provided this information

at verification, it is unlikely that the

Department would have considered the

information timely and accepted it (see

19 CFR 351.301(b)(1) and 351.302(d)).

Section 776 (a) of the Act provides

that when necessary information is not

available on the record, the

administering authority shall * * *

‘‘use the facts otherwise available in

reaching the applicable determination

under this title.’’ Section 776 (b) of the

Act states that ‘‘if the administering

authority or the Commission (as the case

may be) finds that an interested party

has failed to cooperate by not acting to

the best of its ability to comply with a

request for information from the

administering authority or the

Commission, the administering

authority or the Commission (as the case

may be), in reaching the applicable

determination under this title, may use

an inference that is adverse to the

interests of that party in selecting from

among the facts otherwise available.’’

For this final determination, the

Department finds that Roldan failed to

act to the best of its ability to comply

with the Department’s requests for

information regarding sales of subject

merchandise by Acerinox, U.S.A. In its

response to section C of the

Department’s antidumping

questionnaire, Roldan stated that it did

not incur inventory carrying costs in the

United States because Acerinox, U.S.A.

‘‘does not take possession of, or

warehouse, the subject merchandise.’’

However, because Acerinox U.S.A.’s

1996 balance sheet reported an

inventory balance, in a supplemental

questionnaire, the Department

specifically asked Roldan whether

Acerinox, U.S.A. sold subject

merchandise from inventory during the

POI. In its January 16, 1998 response to

the Department’s supplemental

questionnaire, Roldan stated that

‘‘Acerinox, U.S.A. does not keep

inventory of Roldan SSWR, nor

generally speaking, of any of Roldan’s

products. * * * The inventory balance

that appears in the 1996 Acerinox,

U.S.A. annual report relates to nonsubject merchandise.’’ However, at

verification, the Department found

substantial documentation evidencing

Acerinox, U.S.A.’s sales of Roldan’s

SSWR from inventory during the POI.

The fact that this documentation was

readily available and company officials
40398 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

3 During the course of the instant investigation,

petitioners requested that the Department include

actual chemical content of the steel, rather than

AISI grade, as one of the model-matching criteria.

For further discussion, see the December 18, 1997

Decision Memorandum to Holly Kuga from The

Team, Subject: Whether to Reconsider the

Department’s Model Match Methodology for This

Product.

had knowledge of these sales, as

evidenced by their responses to

questioning at verification, yet Roldan

failed to identify and report these sales

even when the Department specifically

requested that it do so, indicates that

Roldan did not act to the best of its

ability to comply with the Department’s

request for information. Consequently,

for the final determination we have

based the margin for all unreported U.S.

sales on adverse facts available. As

adverse facts available (AFA), we have

selected a sufficiently adverse margin

from the fair value comparisons which

were performed for Roldan’s reported

sales. The selected AFA margin is

sufficiently adverse so as to effectuate

the statutory purposes of the adverse

facts available rule to induce

respondents to provide the Department

with complete and accurate information

in a timely manner. See the SAA at page

870. We also sought a margin that is

indicative of Roldan’s customary selling

practices and is rationally related to the

transactions to which the AFA are being

applied. To that end, we selected a

margin for sales of a product that

involved a substantial commercial

quantity and fell within the mainstream

of Roldan’s transactions based on

quantity. Finally, we found nothing on

the record to indicate that the sales of

the product we selected were not

transacted in a normal manner. For

details regarding the methodology used

to calculate the AFA margin, see the

Calculation Memorandum, dated July

20, 1998.

Comment 3: Diameter as a Model Match

Criterion

Roldan contends that the diameter of

SSWR should not be one of the modelmatch criteria used in the instant

investigation because it has no

appreciable affect on Roldan’s

production costs and no affect on the

price Roldan charges its U.S. customers.

Roldan notes that the Agreement on

Implementation of Article VI of the

General Agreement on Tariffs and Trade

1994, and section 351.411 of the

Department’s regulations, require that in

making a fair comparison between EP

and NV, due allowance shall be made

for differences which affect price

comparability, including differences in

physical characteristics. According to

Roldan, this requirement implies that

physical characteristics that do not

affect price should not be used in

matching products for price comparison

purposes. Roldan maintains that the

Department examined numerous sales

invoices at verification and found that

Roldan charged the same price for

different diameters of SSWR with the

same AISI grade that were sold to the

same customer under the same invoice.

Moreover, Roldan notes that it placed

evidence on the record of this

proceeding showing that U.S.

companies, including one petitioner,

sell different diameters of the same AISI

grade of SSWR at the same price.

Therefore, Roldan contends, that price

is based on AISI grade and the seller’s

historical commercial relationship with

the customer, not the diameter of the

product. In addition, Roldan maintains

there is no cost basis for using diameter

as a model match criterion because

diameter has no affect on its cost of

producing SSWR. Roldan claims it

demonstrated at verification that smaller

diameter SSWR, which requires more

passes through the rolling mill than

larger diameter SSWR, can have costs

similar to larger diameter SSWR because

of the quantities produced and the order

of production. Finally, Roldan argues

that in the instant investigation,

matching products for price comparison

purposes using the product’s diameter

has artificially created a dumping

margin because this methodology gives

greater significance to a product

category with a large U.S. and relatively

small home market sales volume.

Roldan claims this matching

methodology, together with the

additional weight given to dumping

margins of products with a large U.S.

sales volume, has created a dumping

margin where none exists. Thus, Roldan

contends there is overwhelming

evidence on the record of this

investigation showing that diameter

should not be used as a model-match

criterion. According to Roldan, AISI

grade is the only appropriate modelmatch criterion.

While petitioners are not in complete

agreement with the model-matching

methodology the Department is using in

the instant investigation 3, petitioners

argue that Roldan’s suggestion that the

Department use AISI grade as the only

model-matching criterion is unjustified,

flawed, and untimely. Specifically,

petitioners claim Roldan’s assertion that

it demonstrated at verification that

diameter has ‘‘no appreciable effect’’ on

its cost of producing SSWR misstates

the Department’s verification findings.

Petitioners maintain the Department

actually found that Roldan does not

distinguish between the cost of different

diameters of SSWR in its cost

accounting records. Therefore,

petitioners contend that Roldan’s

records prevented the Department from

verifying Roldan’s claim that the actual

costs incurred to produce different

diameters of SSWR is the same.

Furthermore, petitioners argue that if

production costs for different diameters

of SSWR were the same, and price is not

based on diameter, the use of diameter

as a model-matching criterion should

not distort the dumping margin as

Roldan suggested. Petitioners also

maintain that using AISI grade as the

sole model-matching criterion increases

the potential for manipulation of model

matches and impairs the Department’s

ability to select, where necessary, the

most similar model, because the

Department would not have additional

information on the record describing the

product’s physical characteristics.

Finally, petitioners state that Roldan

first asserted that diameter has no

‘‘appreciable’’ effect on production costs

more than four months after the

antidumping questionnaire was issued,

which was well after the Department

had considered the parties’ views on

model-matching and decided on its

model-matching methodology. Thus,

according to petitioners, Roldan’s

argument is untimely. For the above

reasons, petitioners urge the Department

to use the product matching criteria

identified in the antidumping

questionnaire in the final determination.

DOC Position: We agree with

petitioners and have continued to use

diameter as a model-matching criterion

in the final determination. In

determining whether a class or kind of

foreign merchandise is being, or is likely

to be, sold in the United States at less

than its fair value, the Department

compares the price of subject

merchandise sold in the United States

with the price of the ‘‘foreign like

product’’ sold in the foreign market.

Section 771(16) of the Act defines

‘‘foreign like product’’ as: ‘‘merchandise

in the first of the following categories in

respect of which a determination for the

purposes of subtitle B of this title can be

satisfactorily made:

(A) The subject merchandise and

other merchandise which is identical in

physical characteristics with, and was

produced in the same country by the

same person as, that merchandise.

(B) Merchandise—

(i) produced in the same country and

by the same person as the merchandise

which is the subject of the investigation,

(ii) like that merchandise in

component material or materials and in

the purposes for which used, and
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40399

4See the Sales Verification Report at verification

exhibit 19a.

(iii) approximately equal in

commercial value to that merchandise.

(C) Merchandise—

(i) produced in the same country and

by the same person and of the same

general class or kind as the merchandise

which is the subject of the investigation,

(ii) like that merchandise in the

purposes for which used, and

(iii) which the administering

authority determines may reasonably be

compared with that merchandise.’’

In making fair value comparisons, the

Department identifies the ‘‘foreign like

product’’ by comparing the physical

characteristics of subject merchandise

with the physical characteristics of

merchandise sold in the foreign market.

So as not to unreasonably distort

comparisons involving similar

merchandise, the Department does not

compare subject merchandise sold in

the United States to merchandise sold in

the foreign market where the cost of the

merchandise differs from the cost of

subject merchandise by more than 20

percent (see Policy Bulletin 92.2).

In the instant investigation, after

soliciting comments from interested

parties, the Department determined that

diameter should be one of the

characteristics (i.e., one of the matching

criteria) used to make product

comparisons. Although Roldan argues

that diameter is an inappropriate

characteristic for purposes of model

matching, it has not placed substantial

evidence on the record showing that the

Department’s decision to use diameter

as a matching criterion is unreasonable.

As noted by the CIT in Toyo Umpanki

Co., Ltd. v. United States, 848 F. Supp.

178, 185 (CIT 1994) (Toyo), the

Department has ‘‘broad discretion in

choosing a methodology to carry out its

statutory mandate’’ under section

771(16) of the Act which governs model

matching. Regarding that methodology,

the CIT noted in Toyo, that ‘‘even if

another alternative is more reasonable,

Commerce has acted within its authority

if its decision is reasonable.’’ Roldan’s

argument that the Department’s

matching methodology distorted the

dumping margin by comparing a

product category with a large U.S. and

relatively small home market sales

volume, seems to argue indirectly for

the need for a price adjustment under

section 773(a)(6)(C)(i) of the Act, which

respondent has not claimed, rather than

a need to alter the Department’s

matching criteria. Furthermore,

Roldan’s argument that diameter has no

affect on sales price is questionable

because at verification, the Department

found instances where Roldan sold

different diameters of the same AISI

grade of SSWR to the same home market

customer under the same invoice but at

different prices (see the Sales

Verification Report from at pages 16–

17). Although the Department found at

verification that Roldan records the

same cost for different diameters of a

particular grade of SSWR, this fact alone

is insufficient to show that the

Department acted unreasonably in

selecting the model-matching criteria

and that its selection distorts the

dumping margin. Roldan has not

demonstrated that diameter is not a

factor in pricing SSWR. Moreover, it is

more reasonable to conclude that if the

cost and price of different diameters of

the same AISI grade of SSWR are the

same, as Roldan claims, using diameter

as a matching criterion should not

distort the dumping margin. Therefore,

we have continued to use diameter as a

model matching criterion in the final

determination.

Comment 4: Identifying the Appropriate

Interest Rate for the U.S. Credit Expense

Calculation

At verification, the Department found

that Roldan calculated its U.S. credit

expenses using the weighted-average

interest rate on short-term pesetadenominated loans that were obtained

to finance U.S. dollar receivables. The

Department also found that Roldan did

not have any outstanding U.S. dollardenominated loans during the POI.

Petitioners note that the Department’s

antidumping questionnaire instructs

respondents to calculate U.S. credit

expenses using a published U.S.

commercial bank short-term prime

lending rate if they had not borrowed

U.S. dollars. Thus, for the final

determination, petitioners urge the

Department to recalculate Roldan’s U.S.

credit expenses using the U.S. prime

interest rate for the POI. Based on data

from the Chicago Federal Reserve Bank,

petitioners identify this rate as 8.317

percent.

Contrary to the Department’s

verification findings, Roldan maintains

that the evidence on the record of this

investigation shows it calculated U.S.

credit expenses using the weightedaverage interest rate on short-term U.S.

dollar-denominated loans. Specifically,

Roldan identifies sales verification

exhibit 19a, which contains bank

documentation showing the amount of

U.S. dollars borrowed and the peseta

equivalent to this amount. To support

its claim, Roldan notes that it must

borrow to pay expenses incurred in U.S.

dollars and repay the U.S. dollardenominated loans using pesetas

because it does not have a U.S. dollar

bank account. Roldan maintains the

Department should accept the reported

U.S. credit expenses for the final

determination because Roldan used the

proper interest rate to calculate those

credit expenses.

DOC Position: We agree with Roldan

and have accepted the interest rate

Roldan used to calculate the reported

U.S. credit expenses for the final

determination. During the POI, Roldan

financed U.S. dollar receivables by

obtaining short-term bank loans.

Because Roldan did not have a U.S.

dollar bank account, the bank converted

the amount of the U.S. dollar loans into

pesetas and deposited the pesetas into

Roldan’s bank account. Because Roldan

actually received pesetas and not U.S.

dollars, the Department identified the

loans as peseta-denominated loans in its

verification report and questioned

whether it was appropriate to calculate

U.S. credit expenses using the weightedaverage interest rate on these loans.

However, upon further examination of

the verification exhibits related to these

loans, we have determined that the

loans are dollar-denominated. 4 We

reached this determination because the

bank documentation examined at

verification shows that (1) the amount

borrowed and the related interest

charges were originally stated in U.S.

dollars; and (2) Roldan repaid the loans

using U.S. dollar receipts that were

wired directly from the United States to

Roldan’s bank in Spain, which loaned

Roldan the monies in question, and then

applied to the outstanding loan balances

at the same bank. The fact that the

amount borrowed and the related

interest charges were converted into

pesetas in order for Roldan to deposit

the funds into, and repay the interest

expense from, its bank account, does not

change the fact that Roldan originally

borrowed dollars, repaid the loans in

dollars, and paid dollar-based interest

charges on the loans. Thus, we have

accepted the short-term interest rate

Roldan used to calculate U.S. credit

expenses for the final determination.

Comment 5: Using Estimates to

Determine Home Market Indirect Selling

Expenses

Petitioners urge the Department to

reject Roldan’s adjustment for home

market indirect selling expenses

because, petitioners aver, at verification,

Roldan failed to provide information to

support the estimated allocation

percentages used in calculating the

adjustment.

Roldan contends the Department

should accept the estimated allocation

percentages used to calculate the home
40400 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

market indirect selling expense

adjustment because they are reasonable,

and the company does not keep records

in the normal course of business that

would allow it to determine the actual

percentages that it estimated. Roldan

holds that its estimates are based on its

significant commercial experience and

knowledge of its selling expenses and,

thus, are reasonable. In addition, Roldan

asserts that its home market indirect

selling expenses were ‘‘substantially

verified’’ and that the results of the sales

and cost verifications demonstrate that

Roldan has provided complete and

accurate information to the Department

throughout the investigation. Therefore,

Roldan maintains the Department has

no reason to believe the estimates are

unreasonable. Furthermore, Roldan

states that the Department cannot

require a respondent to support

information in its responses with

documentation which it does not

maintain. Roldan cites Olympic

Adhesives, Inc. v. United States, 899 F.

2d 1565, 1573 (Fed. Cir. 1990), arguing

that in this case, the Court ruled that

failure to provide information that does

not exist does not warrant the use of

best information available. Roldan also

notes that its accounting system was not

designed to supply information that

may be required by the Department in

antidumping duty investigations.

Therefore, Roldan urges the Department

to accept its claimed home market

indirect selling expenses.

DOC Position: We agree with Roldan

and have accepted its use of estimates

in calculating the adjustment for home

market indirect selling expenses in the

final determination. At verification, we

were able to reconcile selected expense

and cost of sales figures from Roldan’s

calculation of the home market indirect

selling expense adjustment to its

financial records (see the Sales

Verification Report at page 21).

However, we noted that in calculating

the home market indirect selling

expense adjustment, Roldan classified a

portion of employee costs and general

expenses as indirect selling expenses

based on estimated allocation

percentages. We found no evidence at

verification that Roldan maintained

records in the normal course of business

that would allow it to classify a portion

of these expenses as indirect selling

expenses based on actual figures rather

than estimates. Moreover, the overall

results of verification and the

insignificant amount of the reported

home market indirect selling expense

adjustment suggest that Roldan did not

overstate the adjustment. Therefore, it is

reasonable to presume that Roldan made

these estimates in good faith and that

they may be relied upon.

Comment 6: Adjusting Costs for Startup

Operations

In the instant investigation, Roldan

claimed an adjustment to production

costs for expenses incurred in ‘‘starting

up’’ its refurbished rolling mill and

pickling facility. Based on its startup

claims, Roldan submitted two COP and

CV databases. In the first database,

submitted as part of Roldan’s initial

questionnaire response, the Company

reported COP and CV that was adjusted

for startup costs based on the

methodology Roldan used in its normal

books and records to account for startup

costs. In response to our supplemental

questionnaire, Roldan submitted a

second COP and CV data file with a

revised adjustment for start-up costs

based on the methodology described in

section 773(f)(1)(C) of the Act.

Petitioners urge the Department to reject

both of Roldan’s claimed startup

adjustments because Roldan (1)

incorrectly identified the startup period;

(2) failed to amortize startup costs; and

(3) failed to separately report the actual

POI costs and the startup adjustment.

First, petitioners note that Roldan’s

accounting and production records do

not support the claimed startup period.

Specifically, petitioners note that in its

normal accounting records, Roldan

adjusted costs to account for what it

considered to be the excess startup costs

of the rolling mill by replacing the unit

production costs incurred from

September through December 1996,

with the unit costs incurred during the

previous eight months of that year

(Roldan reported the excess amount of

September through December

production costs over the costs for the

previous eight months as non-operating

expenses in its 1996 financial

statement). Thus, petitioners maintain

that Roldan’s books and records show

the startup period ended on December

31, 1996. However, petitioners point out

that Roldan did not use this startup

period to calculate the adjustment,

despite the statutory requirement in

section 773(f)(1)(A) of the Act that

production costs be calculated based on

the records of the exporter or producer

of the merchandise. Moreover,

petitioners claim that the startup period

used in Roldan’s accounting records is

supported by the startup provisions in

section 773 of the Act. Petitioners note

that section 773(f)(1)(C) of the Act

defines the end of the startup period as

‘‘the point at which the level of

commercial production that is

characteristic of the merchandise,

producer, or industry concerned is

achieved.’’ According to petitioners, this

means that Roldan’s startup period

ended when it achieved the average

level of production that it normally

experienced before refurbishing its

facilities. Petitioners maintain that the

rolling mill production data that Roldan

placed on the record in this

investigation shows that this average

level was achieved at a point which

confirms the startup period used in

Roldan’s books and records. Therefore,

petitioners maintain that the record

supports a startup period other than the

one used to calculate the reported

startup adjustment. Second, petitioners

state that Roldan failed to amortize

excess startup costs over a period

subsequent to the startup period in

accordance with the SAA’s

interpretation of section 773(f)(1)(C)(iii)

of the Act. Finally, petitioners note that

in calculating the startup adjustment

that was based on the methodology in

section 773(f)(1)(C) of the Act, Roldan

accounted for the startup adjustment by

replacing actual POI unit costs incurred

during the startup period with actual

unit costs incurred immediately after

the startup period ended. According to

petitioners, Roldan should have

reported actual unit costs incurred

during the POI, in accordance with the

instructions in section D of the

Department’s questionnaire, and

separately reported the startup

adjustment. Because of the above

deficiencies, petitioners ask the

Department to reject Roldan’s claimed

startup adjustment.

Roldan believes the Department erred

in disallowing its startup adjustment in

the preliminary determination because,

according to Roldan, it satisfied the

statutory conditions under which the

Department must make an adjustment

for startup costs. Roldan claims it

satisfied the first statutory condition,

which requires a producer to be using

a new production facility or producing

a new product that requires substantial

additional investment, because during

the POI it replaced nearly all of the

equipment in its rolling mill and

modified much of the remaining old

equipment so it would work in the new

mill. Roldan notes that under section

351.407(d)(1)(i) of the Department’s

regulations, a producer is considered to

be using new production facilities when

it has replaced nearly all of the

production machinery in its facility.

Roldan also notes that it placed

substantial evidence on the record,

which the Department verified, showing

that it extensively refurbished its mill.

Roldan also claims it placed substantial

evidence on the record showing that it
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40401

satisfied the second statutory condition

for a startup adjustment, which requires

that production levels be limited by

technical factors associated with the

initial phase of commercial production.

Accordingly, Roldan concludes that a

startup adjustment is required in the

instant investigation. Furthermore,

Roldan notes that it placed evidence on

the record, including the installation

contract with the company that

refurbished the rolling mill, which

shows that it used the proper startup

period in calculating the startup

adjustment. Roldan adds that its rolling

mill has not yet reached optimum

capacity.

Roldan disagrees with petitioners’

rationale for rejecting the reported

startup adjustment. Specifically, Roldan

holds that the startup period used to

calculate the adjustment does not have

to be the same as that used in a

company’s accounting records in order

for the Department to accept the

claimed startup adjustment. Roldan

notes that section 773(f)(1)(A) of the Act

states that ‘‘costs shall normally be

calculated based on the records of the

exporter or producer of the merchandise

* * * ’’ According to Roldan, the

startup provisions were included in the

Act to allow an exception to the

requirement that reported costs reflect

the producer’s normal records. Roldan

states that this exception recognizes the

fact that producers may incur unusually

high costs when starting a new

production facility. Furthermore,

Roldan disputes petitioners’ claim that

the startup period ended when Roldan

achieved the average level of production

that it normally experienced before

refurbishing its facilities. Roldan notes

that under section 773(f)(1)(C)(iii) of the

Act, ‘‘the startup period ends at the

point at which the level of commercial

production that is characteristic of the

merchandise, producer, or industry

concerned is achieved.’’ Because the

mill refurbishment increased

production capabilities, Roldan argues

that pre-refurbishment production

levels cannot be compared to postrefurbishment production levels in

order to determine the point at which

Roldan achieved commercial

production levels indicative of the end

of startup. Roldan asserts that one must

compare its post-refurbishment

production levels with production

levels characteristic of the SSWR

industry using the same type of rolling

mill as Roldan in order to determine

when Roldan’s startup period ended.

Roldan contends that the best indicator

of this ‘‘industry standard’’ for

commercial production is the arm’slength, pre-petition installation contract

for the new mill which identified the

quantity of SSWR to be rolled in a

specified number of consecutive runs in

order to reach commercial production

levels. Thus, Roldan claims it

appropriately determined that its

startup period ended when it reached

the commercial production levels

specified in the installation contract.

Consequently, Roldan urges the

Department to accept its claimed

adjustment for startup costs.

DOC Position: We have disallowed

Roldan’s claimed adjustment for startup

costs because the company did not

demonstrate its eligibility for such an

adjustment. Specifically, Roldan failed

to show that the renovation of the

company’s rolling and pickling mills

was, indeed, the equivalent of a ‘‘new

production facility’’ within the meaning

of section 773(f)(1)(C) of the Act.

Section 773(f)(1)(C) of the Act directs

the Department to provide for an

adjustment to the actual costs incurred

during the period of investigation or

review where such costs are affected by

the startup operations of the producer.

The statute provides, however, that the

adjustment is required only for those

startup operations where (1) a producer

is using new production facilities or

producing a new product that requires

substantial additional investment, and

(2) production levels are limited by

technical factors associated with the

initial phase of commercial production.

At the most basic level, the statutory

condition surrounding ‘‘new production

facilities’’ is certainly meant to include

those startup operations that involve

entirely new production facilities. See,

for example, Notice of Final

Determination of Sales at Less Than

Fair Value: Static Random Access

Memory Semiconductors from Taiwan,

63 FR 8909, 8930 (February 23, 1998)

(where the Department granted a startup

adjustment for the subject merchandise

manufactured using a brand new

semiconductor fabrication line installed

by the respondent during the POI). Yet,

as made clear by the SAA at page 836,

the term ‘‘new production facilities’’

may also include startup operations

involving ‘‘the substantially complete

retooling of an existing plant.’’ Here, the

phrase ‘‘substantially complete

retooling’’ is said to involve ‘‘the

replacement of nearly all production

machinery or the equivalent rebuilding

of existing machinery.’’

There are any number of instances in

which producers may choose to retool,

refurbish, or expand their existing

operations. These may range from

changing a worn machine part to the

replacement of all existing plant assets.

Moreover, in most of these instances,

normal production levels are disrupted

as a consequence of the operations. Yet,

in establishing a high threshold for

operations involving the ‘‘substantially

complete retooling’’ of a facility, the

SAA, in effect, limits the situations in

which retooling satisfies the conditions

for a startup adjustment by equating

such operations to those involving an

entirely new facility. That is, in order

for an existing facility to be considered

a new production facility within the

meaning of section 773(f)(1)(C) of the

Act, the SAA provides that it must be

retooled to the extent that it becomes a

brand new facility in virtually all

respects. Indeed, the ‘‘replacement of

nearly all production machinery or the

equivalent rebuilding of existing

machinery’’ would result in nothing less

than an essentially new facility. Thus,

the SAA makes clear that, in analyzing

these situations, an adjustment for

startup costs is warranted only in those

circumstances wherein the renovations

result in a near new facility.

In the instant case, Roldan claimed

that the investment it made in

refurbishing the company’s rolling and

pickling mills met the statutory

definition of ‘‘new production

facilities.’’ In its questionnaire

responses and at verification, Roldan

demonstrated that it had, in fact,

committed a significant amount of

investment capital as part of the

renovation project. In addition, at the

verification, Roldan officials provided

documentation supporting the purchase

and installation of new production

machinery. Roldan officials maintained

that the new equipment replaced

virtually all of the equipment from the

old rolling and pickling mills. Indeed,

Roldan provided a plant diagram as

evidence of this claim. In verifying

Roldan’s claim for a startup adjustment,

however, we found data from the

company’s normal accounting records

that contradicted Roldan’s claim that it

had replaced or rebuilt nearly all of the

previously existing production

machinery as part of the renovation

project. Portions of this information are

proprietary in nature and are therefore

discussed in detail in a separate

memorandum. See the Concurrence

Memorandum. In general, however,

while Roldan claims to have replaced or

rebuilt the production machinery from

its old rolling and pickling mills, the

company’s accounting records do not

support the contention that the

company disposed of these assets or

otherwise removed them from service.

In the absence of a showing by Roldan

that the old production equipment was,
40402 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

in fact, scrapped or otherwise disposed

of, we have no basis from which to

conclude that the renovation project

resulted in the replacement of nearly all

of the previously existing equipment or

the equivalent rebuilding of such

equipment.

The SAA at page 838 provides that

the burden of demonstrating entitlement

to a startup adjustment rests with the

party making the claim. Here, Roldan

failed to demonstrate that the renovated

rolling and pickling mills constituted

‘‘new production facilities’’ within the

meaning of section 773(f)(1)(C) of the

Act. Because Roldan has not shown that

it meets the first part of the statutory

requirement for a startup cost

adjustment, consistent with our past

practice, we have not addressed issues

surrounding whether the company’s

production levels were limited during

the POI by technical factors associated

with the initial phases of commercial

production. See Notice of Final Results

of Sales at Less Than Fair Value:

Collated Roofing Nails from Korea, 62

FR 51,420, 51, 426 (October 1, 1997)

(where the Department did not address

technical factors associated with

respondents’ claimed startup operations

because the operations did not

constitute a new production facility

within the meaning of the statute).

Similarly, we have not addressed the

startup period claimed by Roldan as

part of its request for a startup

adjustment.

Comment 7: Including Inventory WriteDowns in COP and CV

As a result of Roldan’s 1996 startup of

the refurbished rolling mill and pickling

facility, the year-end inventory values,

as recorded in Roldan’s inventory

account, were in excess of market value.

Thus, in accordance with Spanish

generally accepted accounting

principles (GAAP), Roldan wrote the

book value of its finished goods

inventory down to market value at the

end of 1996. Roldan calculated COP and

CV by reducing SSWR production costs

by the portion of the inventory writedown allocated to SSWR.

Petitioners urge the Department not

only to disallow this reduction, but also

to add the inventory write-down to COP

and CV. According to petitioners,

reducing production costs by the

inventory write-down (1) understates

actual production costs; (2) obviates any

finding of sales below cost by reducing

actual costs to sales value; and (3)

double counts the adjustment for startup

costs. Petitioners, citing the SAA at 835

and the instructions in section D of the

Department’s antidumping

questionnaire, note that the Department

requires respondents to report the actual

costs incurred in producing and selling

the product under investigation.

Petitioners maintain that the inventory

value of SSWR before the write-down

reflects the actual costs incurred to

produce SSWR and, thus, Roldan

should not have reduced reported costs

by the write-down. Moreover,

petitioners claim that writing down

inventory values to market value shows

that Roldan’s sales prices are below

cost. However, petitioners state that the

Department would not find sales to be

below cost if Roldan were allowed to

report production costs that were

reduced by the inventory write-down.

Furthermore, petitioners note that

Roldan already reduced reported costs

under the provision for startup

operations in section 773(f)(1)(C) of the

Act. Thus, petitioners argue, that

reducing reported costs by an inventory

write-down necessitated by startup

operations, double counts the startup

adjustment and understates actual

production costs. Rather than

subtracting the write-down from

reported costs, petitioners contend the

write-down should be added to COP

and CV. Petitioners note that the SAA

at 834 states that ‘‘Commerce normally

will calculate costs on the basis of

records kept by the exporter or producer

of the merchandise provided such

records are kept in accordance with

generally accepted accounting

principles of the exporting (or

producing) country and reasonably

reflect the costs associated with the

production and sale of the

merchandise.’’ According to petitioners,

Roldan recognized and recorded the

inventory write-down as an expense in

its accounting records. Petitioners also

note that this write-down was

recognized during the POI and recorded

in Roldan’s financial statements in

accordance with Spanish GAAP.

Therefore, petitioners request that the

Department increase COP and CV by the

amount of the inventory write-down.

Roldan holds that its inventory writedown should not be added to COP or CV

because the write-down did not reflect

actual costs but was merely an

accounting entry that resulted from its

conservative allocation of startup

expenses. Furthermore, Roldan contests

petitioners’ claim that its inventory

write-down constitutes recognition that

its sales are below cost because,

according to Roldan, the record in this

investigation shows that its sales are

above cost. Accordingly, Roldan

requests that the Department exclude

the inventory write-down from COP and

CV in the final determination.

DOC Position: We agree with both

petitioners and Roldan in part. The

finished goods inventory write-down

should not be added to production costs

in calculating COP or CV because it is

not a cost of production. Roldan records

the cost of manufacturing finished

products in its finished goods inventory

account. At the end of 1996, the cost of

finished products recorded in Roldan’s

inventory account exceeded the market

value of those products. In accordance

with Spanish GAAP, Roldan reduced

the value of its finished goods inventory

to market value in order to recognize the

fact that the future revenue-producing

ability of the inventory was no longer as

great as its cost. Roldan recorded this

reduction in future revenue-producing

ability as a loss in its 1996 profit and

loss statement. Although Roldan had

not realized this loss, the conservative

nature of accounting requires the loss to

be recognized when the value of

inventory exceeds market value, rather

than in the period in which the

inventory is sold. Thus, Roldan’s

inventory write-down is an accounting

provision, not an actual production cost.

In Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, Germany, Italy,

Japan, Singapore, and the United

Kingdom: Final Results of Antidumping

Duty Administrative Reviews, 62 FR

2081, 2117 (January 15, 1997) (AFBs),

the respondents recognized inventory

write-downs similar to Roldan’s and the

Department excluded the respondents’

inventory write-downs from COP and

CV, noting:

The inventory write-down these

respondents reported are not actual

costs but are a provisional reduction in

inventory value in anticipation of a

lower resale value * * * {The writedowns} are not realized expenses but

simply a contingent reduction in how

much revenue the companies expect to

make from the sale of the merchandise.

Since these particular inventory writedowns are not a realized expense, and

are not reflected in their accounting of

costs of goods in inventory, we have not

included them in the calculation of COP

and CV.

Therefore, in the final determination,

consistent with our approach in AFBs,

we did not add Roldan’s inventory

write-down to production costs, as

suggested by petitioners.

For similar reasons, in the final

determination, we also disallowed

Roldan’s reduction of reported

production costs by the inventory writedown. Roldan’s inventory write-down is

an adjustment to inventory value, and,

ultimately, cost of goods sold, not

production costs. As noted above,
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Roldan’s inventory write-down reflects

a decline in the future revenueproducing ability of the inventory, not

a reduction in production costs. Thus,

reducing production costs by the

inventory write-down would understate

the actual costs incurred to produce

SSWR.

Comment 8: Including Write-Offs of Idle

Assets in COP and CV

During the POI, Roldan permanently

ceased using its melt shop. In its

accounting records, Roldan wrote off the

melt shop assets and its inventory of

spare parts for the shop, but excluded

the write-offs from COP and CV because

they claimed they were extraordinary

costs that did not relate to SSWR

production. Petitioners maintain the

melt shop assets related to SSWR

production and, thus, in accordance

with Department policy, the write-offs

associated with these assets should be

included in COP and CV. To support

their position, petitioners argue that the

Department, in Certain Hot-Rolled Lead

Bismuth and Carbon Steel Products

From the United Kingdom: Final Results

of Antidumping Duty Administrative

Review, 63 FR 18,879, 18,882 (April 16,

1998) (Bismuth), included the closure

costs associated with productive assets

in the reported general and

administrative (G&A) expenses.

Moreover, petitioners argue that

recognizing these write-offs for purposes

of the antidumping investigation is

consistent with Roldan’s recognition of

the write-offs in its accounting records.

Roldan argues that the write-offs of its

melt shop assets and related spare parts

should be excluded from reported costs

because the write-offs are merely

accounting adjustments which expense

the value of the assets, but do not record

actual production costs. According to

Roldan, it could not claim these writeoffs as production costs because the

assets were no longer used in

production. Even if the write-offs were

included in SSWR production costs,

Roldan claims the effect on costs would

be minimal because the assets were only

used during a small portion of the POI

and they were primarily used to

produce merchandise not subject to this

investigation. Roldan also maintains

that petitioners’ reliance on Bismuth is

misplaced because Roldan did not incur

any costs in closing its melt shop.

Therefore, Roldan urges the Department

to exclude the write-offs from COP and

CV in the final determination.

DOC Position: We agree with

petitioners and have included Roldan’s

write-offs of permanently idled assets

and related spare parts in COP and CV

in accordance with our past practice

(see Notice of Final Results of

Antidumping Duty Administrative

Review: Extruded Rubber Thread From

Malaysia, 61 FR 54,767, 54,772 (October

22, 1996) (Extruded Rubber Thread). In

Extruded Rubber Thread, the

Department stated :

There is nothing unusual about a

company’s writing off manufacturing

plants or equipment. Accordingly, we

do not consider write-offs to be a type

of extraordinary expense that we

exclude from the cost of producing

subject merchandise. The Department

has in the past included similar

equipment write-offs in the calculation

of COP and CV.

Consistent with our past practice, we

have also included the write-off of spare

parts in COP and CV in the final

determination. See Final Determination

of Sales at Less Than Fair Value; Color

Picture Tubes From Singapore, 52 FR

44,190, 44,196 (November 18, 1987),

wherein the Department included writeoffs of obsolete parts in the COP noting

that ‘‘obsolete parts are expenses

incurred in normal operations which

must be absorbed by current

production.’’

Roldan’s inventory of spare parts for

the permanently idled assets became

obsolete when the assets were written

off. Because these parts were related to

production and their cost was expensed

during the POI in Roldan’s audited

profit and loss statement, it is

appropriate to include the cost of these

spare parts in COP and CV.

Comment 9: Reducing General and

Administrative Expenses by Foreign

Exchange Gains

At verification, the Department found

that Roldan’s 1996 foreign currency

exchange gains related solely to

accounts receivable. According to

petitioners, in the Notice of Final

Determination of Sales at Less Than

Fair Value: Certain Pasta From Italy, 62

FR 30,326, 30,359–60 (June 4, 1996), the

Department stated that it does not

include foreign currency exchange gains

and loses in COP and CV when those

gains and losses relate to accounts

receivable. Therefore, petitioners

contend that in the final determination

the Department should exclude such

foreign currency exchange gains from

Roldan’s G&A expenses.

Roldan asserts that petitioners’

request is unnecessary because the

record shows it did not include foreign

currency exchange gains related to

accounts receivable in its reported G&A

expenses.

DOC Position: We agree with Roldan.

The Department found no evidence at

verification that Roldan reduced its

reported G&A expenses by foreign

currency exchange gains related to

accounts receivable. Therefore, we have

not increased reported G&A expenses by

Roldan’s foreign currency exchange

gains as requested by petitioners.

Comment 10: Including the Parent

Company’s General Expenses in

Reported Costs

Petitioners contend that the reported

G&A expenses should have included an

amount for the administrative services

Roldan’s parent company, Acerinox,

S.A., performed on behalf of Roldan.

Roldan maintains it paid for all the

services that Acerinox, S.A. performed

on its behalf and included these

payments in its reported general

expenses. Thus, Roldan argues it would

be inappropriate to increase reported

G&A expenses by a portion of Acerinox,

S.A.’s G&A expenses.

DOC Position: We agree with Roldan.

The Department found evidence at

verification that Roldan paid Acerinox,

S.A. for the administrative services it

performed on Roldan’s behalf and

included these payments in the reported

G&A expenses (see the Cost Verification

Report from Howard Smith and Peter

Scholl to Holly Kuga, dated June 4,

1998, at page 41). Therefore, we did not

include in addition, a portion of

Acerinox, S.A.’s expenses in the

reported G&A expenses.

Comment 11: Corrections Found at

Verification

Petitioners state that the Department

should revise Roldan’s reported data in

order to correct the errors which were

discovered at verification. Roldan did

not comment on this topic.

DOC Position: We agree with petitioners

and have corrected the errors found at

verification. For a list of these

corrections, see the ‘‘Constructed Export

Price’’ and ‘‘Normal Value’’ sections of

this notice.

Continuation of Suspension of

Liquidation

In accordance with section 733(d) of

the Act, we are directing the Customs

Service to continue to suspend

liquidation of all entries of SSWR from

Spain that are entered, or withdrawn

from warehouse, for consumption, on or

after the date of publication of this

notice in the Federal Register. The

Customs Service shall continue to

require a cash deposit or posting of a

bond equal to the estimated amount by

which the normal value exceeds the

U.S. price as shown below. These

suspension of liquidation instructions

will remain in effect until further notice.
40404 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

The weighted-average dumping margins

are as follows:

Exporter/manufacturer

Weightedaverage

margin percentage

Roldan, S.A ............................... 4.72

All Others .................................. 4.72

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the

International Trade Commission (ITC) of

our determination. As our final

determination is affirmative, the ITC

will, within 45 days, determine whether

these imports are materially injuring, or

threaten material injury to, the U.S.

industry. If the ITC determines that

material injury, or threat of material

injury does not exist, the proceeding

will be terminated and all securities

posted will be refunded or canceled. If

the ITC determines that such injury

does exist, the Department will issue an

antidumping duty order directing

Customs officials to assess antidumping

duties on all imports of the subject

merchandise entered for consumption

on or after the effective date of the

suspension of liquidation.

This determination is published

pursuant to section 777(i) of the Act.

Dated: July 20, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 98–20016 Filed 7–28–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

(A–580–829)

Notice of Final Determination of Sales

at Less Than Fair Value: Stainless

Steel Wire Rod From Korea

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Cameron Werker or Frank Thomson,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW, Washington,

DC 20230; telephone: (202) 482–3874 or

(202) 482–5254, respectively.

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 citations

to the Department’s regulations are to

the regulations at 19 CFR part 351, 62

FR 27296 (May 19, 1997).

Final Determination

We determine that stainless steel wire

rod (SSWR) from Korea is being sold in

the United States at less than fair value

(LTFV), as provided in section 735 of

the Act. The estimated margins are

shown in the ‘‘Suspension of

Liquidation’’ section of this notice.

Case History

The preliminary determination in this

investigation was issued on February

25, 1998. See Notice of Preliminary

Determination of Sales at Less Than

Fair Value and Postponement of Final

Determination: Stainless Steel Wire Rod

from Korea, 63 FR 10825 (March 5,

1998) (Preliminary Determination).

Since the preliminary determination,

the following events have occurred:

In March 1998, we issued

supplemental questionnaires to and

received responses from three

respondents in this case, Changwon

Specialty Steel Co., Ltd. (Changwon),

Dongbang Special Steel Co., Ltd.

(Dongbang), and Pohang Iron and Steel

Co., Ltd. (POSCO).

In April 1998, we verified the sales

and cost questionnaire responses of

these three companies. In June 1998,

Changwon submitted a revised U.S.

sales database at the Department’s

request.

The petitioners (i.e., AL Tech

Specialty Steel Corp., Carpenter

Technology Corp., Republic Engineered

Steels, Talley Metals Technology, Inc.,

and the United Steel Workers of

America, AFL-CIO/CLC) and the

respondents submitted case briefs on

June 5, 1998, and rebuttal briefs on June

10, 1998. At the request of all parties,

the public hearing scheduled for June

11, 1998, was canceled.

Scope of Investigation

For purposes of this investigation,

SSWR comprises products that are hotrolled or hot-rolled annealed and/or

pickled and/or descaled rounds,

squares, octagons, hexagons or other

shapes, in coils, that may also be coated

with a lubricant containing copper, lime

or oxalate. SSWR is made of alloy steels

containing, by weight, 1.2 percent or

less of carbon and 10.5 percent or more

of chromium, with or without other

elements. These products are

manufactured only by hot-rolling or hotrolling, annealing, and/or pickling and/

or descaling, are normally sold in coiled

form, and are of solid cross-section. The

majority of SSWR sold in the United

States is round in cross-sectional shape,

annealed and pickled, and later coldfinished into stainless steel wire or

small-diameter bar.

The most common size for such

products is 5.5 millimeters or 0.217

inches in diameter, which represents

the smallest size that normally is

produced on a rolling mill and is the

size that most wire-drawing machines

are set up to draw. The range of SSWR

sizes normally sold in the United States

is between 0.20 inches and 1.312 inches

diameter. Two stainless steel grades,

SF20T and K-M35FL, are excluded from

the scope of the investigation. The

chemical makeup for the excluded

grades is as follows:

SF20T

Carbon ............................ 0.05 max.

Manganese ..................... 2.00 max.

Phosphorous .................. 0.05 max.

Sulfur .............................. 0.15 max.

Silicon ............................. 1.00 max.

Chromium ....................... 19.00/21.00

Molybdenum ................... 1.50/2.50

Lead ................................ added (0.10/0.30)

Tellurium ......................... added (0.03 min)

K–M35FL

Carbon ............................ 0.015 max.

Silicon ............................. 0.70/1.00

Manganese ..................... 0.40 max.

Phosphorous .................. 0.04 max.

Sulfur .............................. 0.03 max.

Nickel .............................. 0.30 max.

Chromium ....................... 12.50/14.00

Lead ................................ 0.10/0.30

Aluminum ........................ 0.20/0.35

The products under investigation are

currently classifiable under subheadings

7221.00.0005, 7221.00.0015,

7221.00.0030, 7221.00.0045, and

7221.00.0075 of the Harmonized Tariff

Schedule of the United States (HTSUS).

Although the HTSUS subheadings are

provided for convenience and customs

purposes, the written description of the

scope of this investigation is dispositive.

Period of Investigation

The period of investigation (POI) is

July 1, 1996, through June 30, 1997.

Affiliation and Collapsing of

Respondents

For the reasons stated in the

Preliminary Determination, we have

continued to collapse POSCO and

Changwon as affiliated producers in

accordance with section 351.401(f) of

our regulations. Furthermore, as stated

in the Preliminary Determination, we

examined more closely at verification