This section of the FEDERAL REGISTER

contains documents other than rules or

proposed rules that are applicable to the

public. Notices of hearings and investigations,

committee meetings, agency decisions and

rulings, delegations of authority, filing of

petitions and applications and agency

statements of organization and functions are

examples of documents appearing in this

section.

Notices Federal Register

65264

Vol. 60, No. 243

Tuesday, December 19, 1995

DEPARTMENT OF COMMERCE

International Trade Administration

[A–588–804]

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From Japan; Amended Final

Results of Antidumping Duty

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of Amended Final

Results of Antidumping Duty

Administrative Review.

SUMMARY: On February 28, 1995, the

Department of Commerce (the

Department) published the final results

of its administrative reviews of the

antidumping duty orders on antifriction

bearings (other than tapered roller

bearings) and parts thereof (AFBs) from

Japan (60 FR 10900). On September 25,

1995, the Court of International Trade

(CIT) ordered the Department to correct

two ministerial errors in the final results

with respect to AFBs from Japan sold by

Izumoto Seiko Co., Ltd. (IKS).

Accordingly, we are amending our final

results of administrative review of the

antidumping duty orders on AFBs from

Japan with respect to IKS. The reviews

cover the period May 1, 1992, through

April 30, 1993. The ‘‘classes or kinds’’

of merchandise covered by these

reviews are ball bearings and parts

thereof (BBs), cylindrical roller bearings

and parts thereof (CRBs), and spherical

plain bearings and parts thereof (SPBs).

EFFECTIVE DATE: December 19, 1995.

FOR FURTHER INFORMATION CONTACT:

Michael F. Panfeld or Richard

Rimlinger, Office of Antidumping

Compliance, Import Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone

(202) 482–4733.

SUPPLEMENTARY INFORMATION:

Background

On February 28, 1995, the Department

published the final results of

antidumping duty administrative

review, partial termination, and

revocation in part of the antidumping

duty orders on antifriction bearings

(other than tapered roller bearings) and

parts thereof from France, et al. (60 FR

10900). The review period is May 1,

1992, through April 30, 1993. The

classes or kinds of merchandise covered

by these reviews are BBs, CRBs, and

SPBs. For a detailed description of the

products covered under these classes or

kinds of merchandise, including a

compilation of all pertinent scope

determinations, see the ‘‘Scope

Appendix’’ of the final results

referenced above.

One respondent, IKS, challenged the

final results before the CIT, alleging

ministerial errors in the final results for

AFBs from Japan. On September 25,

1995, the CIT ordered the Department to

correct the errors and publish the

amended final results in the Federal

Register.

The CIT ordered the Department to

make the following corrections to its

analysis for IKS: 1) to correct the

erroneous calculation of a negative

United States price (USP) for certain

observations; and 2) to correct the

erroneous inclusion of movement

expenses incurred in Japan in the

calculation of movement expenses

(MOVT) for further manufactured

merchandise. We have corrected the

ministerial errors in IKS’s margin

calculations for the amended final

results of review for the period May 1,

1992, through April 30, 1993.

Based on the correction of the

ministerial errors in our calculations for

IKS, we have determined that the

following percentage weighted-average

margins exist for the period May 1,

1992, through April 30, 1993:

Manufacturer/exporter,

and country BBs CRBs SPBs

IKS, Japan .................. 4.65 ( 1 ) ( 1 )

1 No U.S. sales during the review period.

Based on these results, the

Department will instruct the Customs

Service to collect cash deposits of

estimated antidumping duties on all

appropriate entries in accordance with

the procedures discussed in the final

results of these reviews. These deposit

requirements are effective for all

shipments of the subject merchandise

entered, or withdrawn from warehouse,

for consumption on or after the date of

publication of this notice and shall

remain in effect until publication of the

final results of the next administrative

review.

This notice serves as a reminder to

importers of their responsibility under

19 CFR 353.26 to file a certificate

regarding the reimbursement of

antidumping duties prior to liquidation

of the relevant entries during the review

period. Failure to comply with this

requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This amendment of final results of

review and notice are in accordance

with section 751(f) of the Tariff Act (19

U.S.C. 1673(d)) and 19 CFR 353.28(c).

Dated: December 14, 1995.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 95–30955 Filed 12–18–95; 8:45 am]

BILLING CODE 3510–DS–P

[A–428–814]

Certain Cold-Rolled Carbon Steel Flat

Products From Germany; Final Results

of Antidumping Duty Administrative

Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of

Antidumping Duty Administrative

Reviews.

SUMMARY: On August 2, 1995, the

Department of Commerce (the

Department) published the preliminary

results of the administrative review of

the antidumping duty order on Certain

Cold-Rolled Carbon Steel Flat Products

from Germany (A–428–814)

(Preliminary Results). The review covers

sales from one manufacturer of the

subject merchandise to the United

States and the period August 18, 1993,

through July 31, 1994. We gave

interested parties an opportunity to

comment on our preliminary results.

Based on our analysis of the comments
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65265

received, we have changed the results

from those presented in the preliminary

results of review.

EFFECTIVE DATE: December 19, 1995.

FOR FURTHER INFORMATION CONTACT:

Steve Bezirganian or Robin Gray, Office

of Agreements Compliance, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

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

telephone: (202) 482–1395 or (202) 482–

0196, respectively.

SUPPLEMENTARY INFORMATION:

Background

On August 2, 1995, the Department

published in the Federal Register (60

FR 39355) the preliminary results of the

administrative review of the

antidumping duty order on certain coldrolled carbon steel flat products from

Germany (58 FR 44170, August 19,

1993). The Department has now

completed this administrative review in

accordance with section 751 of the

Tariff Act of 1930, as amended (the Act).

Applicable Statute and Regulations

Unless otherwise stated, all citations

to the statute and to the Department’s

regulations are references to the

provisions as they existed on December

31, 1994.

Scope of these Reviews

The products covered by this review

include cold-rolled (cold-reduced)

carbon steel flat-rolled products, of

rectangular shape, neither clad, plated

nor coated with metal, whether or not

painted, varnished or coated with

plastics or other nonmetallic substances,

in coils (whether or not in successively

superimposed layers) and of a width of

0.5 inch or greater, or in straight lengths

which, if of a thickness less than 4.75

millimeters, are of a width of 0.5 inch

or greater and which measures at least

10 times the thickness or if of a

thickness of 4.75 millimeters or more

are of a width which exceeds 150

millimeters and measures at least twice

the thickness, as currently classifiable in

the HTS under item numbers

7209.11.0000, 7209.12.0030,

7209.12.0090, 7209.13.0030,

7209.13.0090, 7209.14.0030,

7209.14.0090, 7209.21.0000,

7209.22.0000, 7209.23.0000,

7209.24.1010, 7209.24.1050,

7209.24.5000, 7209.31.0000,

7209.32.0000, 7209.33.0000,

7209.34.0000, 7209.41.0000,

7209.42.0000, 7209.43.0000,

7209.44.0000, 7209.90.0000,

7210.70.3000, 7210.90.9000,

7211.30.1030, 7211.30.1090,

7211.30.3000, 7211.30.5000,

7211.41.1000, 7211.41.3030,

7211.41.3090, 7211.41.5000,

7211.41.7030, 7211.41.7060,

7211.41.7075, 7211.41.7085,

7211.49.1030, 7211.49.1090,

7211.49.3000, 7211.49.5030,

7211.49.5060, 7211.49.5090,

7211.90.0000, 7212.40.1000,

7212.40.5000, 7212.50.0000,

7217.11.1000, 7217.11.2000,

7217.11.3000, 7217.19.1000,

7217.19.5000, 7217.21.1000,

7217.29.1000, 7217.29.5000,

7217.31.1000, 7217.39.1000, and

7217.39.5000. Included in this review

are flat-rolled products of

nonrectangular cross-section where

such cross-section is achieved

subsequent to the rolling process (i.e.,

products which have been ‘‘worked

after rolling’’)—for example, products

which have been bevelled or rounded at

the edges. Excluded from this review is

certain shadow mask steel, i.e.,

aluminum-killed, cold-rolled steel coil

that is open-coil annealed, has a carbon

content of less than 0.002 percent, is of

0.003 to 0.012 inch in thickness, 15 to

30 inches in width, and has an ultra flat,

isotropic surface. These HTS item

numbers are provided for convenience

and Customs purposes. The written

description remains dispositive.

This review covers one exporter of

certain cold-rolled carbon steel flat

products, Thyssen AG (TAG). The

review period is August 18, 1993,

through July 31, 1994.

Analysis of Comments Received

We gave interested parties an

opportunity to comment on the

preliminary results. Petitioners and

Thyssen requested a public hearing but

later withdrew their requests.

Petitioners and Thyssen filed case briefs

and rebuttal briefs on September 1,

1995, and September 12, 1995,

respectively.

Comment 1: Petitioners argue that

fundamental and pervasive flaws in

Thyssen’s responses require the use of

total best information available (‘‘BIA’’).

Petitioners argue that the failure of the

Department to apply total BIA provides

a significant disincentive for

respondents to comply with the

Department’s instructions and

information requests in the future, and

encourages them to respond selectively

in accordance with what would be to

their benefit in the margin calculation.

Thyssen counters that the Department

correctly determined in its July 20,

1995, memorandum on the use of BIA

(‘‘July 20, 1995, memorandum’’) that the

use of total BIA is not warranted in this

case, and that petitioners’ ‘‘total BIA’’

argument grossly mischaracterizes the

record and does not provide any new

information which would warrant a

departure from the Department’s

preliminary results. Thyssen argues that

total BIA is reserved for those

respondents who have been truly

uncooperative or whose submissions

have been so replete with errors as to

make application of partial or neutral

BIA impossible. See Antifriction

Bearings (Other than Tapered Roller

Bearings) and Parts from France; et al;

Final Results of Antidumping

Administrative Reviews, 60 FR 10900,

10908 (February 28, 1995). Thyssen

argues that the Department’s use of BIA

should not unfairly penalize a

respondent who substantially

cooperates. See, e.g., Allied-Signal

Aerospace Co. v. United States, 996 F.

2d 1185 (Fed. Cir. 1993); NTN Bearing

Corp. of America v. United States, Slip

Op. 93–129 (CIT July 13, 1993).

Department’s Position: As discussed

in the Department’s July 20, 1995,

memorandum, the Department applies

total BIA when a respondent fails to

submit information in a timely manner,

or when the submitted data is

sufficiently flawed, so that the response

as a whole is rendered unusable. The

Department considers the errors and

inconsistencies in Thyssen’s submission

of such a nature that they have had a

limited effect upon the analysis and, as

appropriate, can be dealt with on an

individual basis. Individual issues

which petitioners argue warrant the use

of total BIA, and Thyssen’s rebuttals, are

addressed below in Comments 2

through 4.

Comment 2: Petitioners argue that

Thyssen’s reporting of product

characteristics was replete with

mistakes and omissions and could not

be conclusively verified by the

Department given Thyssen’s failure or

refusal to provide mill certificate

information. Petitioners argue that

Thyssen’s unreliable product

comparisons and erroneous reporting

preclude an accurate determination of

the true dumping margin in this review,

as demonstrated by the home market

verification report. Furthermore,

petitioners argue that product

characteristics could not be

conclusively verified because of

Thyssen’s failure to provide mill

certificates or similar information that

would conclusively demonstrate the

physical properties of the merchandise

in question. Petitioners argue that order

documentation, product brochures, and

Thyssen’s ‘‘List of Analysis’’ directory

do not indicate the particular

specifications to which each transaction

in fact conforms. Petitioners note that
65266 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

while Thyssen has attempted to justify

its failure to produce such

documentation at verification by

claiming that these documents generally

are not requested by Thyssen’s home

market customers because of the extra

charge, Thyssen’s price list in its

Section III response indicates that

Thyssen does not always charge extra

for preparation of information typically

provided on mill certificates or similar

documentation.

Thyssen responds that, as the

Department noted in its July 20, 1995,

memorandum, almost all of Thyssen’s

home market product characteristic

errors involved products with the

quality classification of ‘‘other high

strength’’ that would not be used for

matching purposes. Thyssen also argues

that, as noted in the Department’s July

20, 1995, memorandum, the only errors

in Thyssen’s U.S. sales product

characteristics involved sales to specific

customers which Thyssen brought to the

Department’s attention at the beginning

of the product characteristic review in

Germany, and which Thyssen had

corrected by the beginning of the U.S.

verification.

Thyssen argues that mill certificates

were never required, as the

Department’s July 20, 1995,

memorandum also noted, and that the

Department properly did not demand

access to Thyssen’s magnetic tape

records for whatever mill certificate

information might have been available.

Thyssen argues that it does not maintain

mill certificates in its current

‘‘database’’ for more than three months

after shipment for two reasons: these

documents generally are not requested

by Thyssen’s customers, and so database

access is not required; and the volume

of business makes retention in the

database impractical. Thyssen notes that

the mill certificate information was and

remains available on magnetic tape, but

that retrieval of isolated pieces of data

from this medium is time consuming.

Thyssen notes that it was able to

provide from its ‘‘database,’’

immediately upon request, a mill

certificate for a sale in February 1995 for

the only shipment where this document

was requested by the customer. Thyssen

argues that it provided the Department

with mill certificates for all of its U.S.

sales, where mill certificates are an

order requirement, and argues that the

Department confirmed that the ordered

material corresponded to that which

was produced and sold. Finally,

Thyssen argues that petitioners’ citation

of a price list showing that some

minimal information will be provided

free of charge ‘‘if selected and precisely

ordered by the purchaser’’ does not

contradict the Department’s finding that

Thyssen charges extra for ‘‘the vast

majority of test certificates.’’

Department’s Position: Petitioners

have questioned several aspects of

Thyssen’s reporting of product

characteristics. First, we disagree with

petitioners regarding the errors in

reported product characteristics for

home market sales involving the quality

‘‘other high strength.’’ These errors were

discovered in a review of observations

that Thyssen had designated with this

specific quality. The specific sales in

which errors were discovered were not

used for matching purposes. After the

discovery of this error, the Department

examined additional ‘‘high strength’’

sales; no discrepancies were identified.

Regarding the majority of product

characteristic errors for U.S. sales, the

Department verified that Thyssen had

identified the correct product

characteristic information. We

instructed Thyssen to incorporate those

corrections in its final tape submission,

and Thyssen did so in a satisfactory

manner. Regarding mill certificates, the

Department indicated in its verification

outline of March 8, 1995, and

throughout its review of product

characteristics of home market and U.S.

sales during verification in Germany,

that it would be preferable if we were

able to review the appropriate mill

certificates for the observations in

question. Thyssen indicated at

verification that an attempt to locate

available information for the period of

review (‘‘POR’’) from magnetic tape

would be very burdensome. In any case,

the Department remains satisfied with

Thyssen’s presentation of

documentation regarding the product

characteristics of its reported sales.

Although the documentation reviewed

at verification in Germany indicated

several errors committed by Thyssen in

its reporting of product classifications,

nothing was noted at verification that

indicated that Thyssen shipped

merchandise, as specified in its

commercial invoices, that differed from

the specifications noted in the

corresponding purchase orders and in

Thyssen’s general production standards

by grade. (Contrary to Thyssen’s

assertion, most of the mill certificates

provided during the verification in

Detroit were not used for purposes of

product characteristic verification, as

the verification of the product

characteristics of pre-selected and

surprise sales for both markets had

already been completed during the

verification in Germany.) As noted in

the Department’s July 20, 1995,

memorandum, the Department did not

insist that Thyssen’s magnetic tape

records be reviewed because the

retrieval of isolated pieces of data from

Thyssen’s magnetic tape records would

have been inordinately burdensome for

Thyssen to have accomplished during

verification.

Comment 3: Petitioners claim that the

numerous corrections and clarifications

provided by Thyssen demonstrate that

Thyssen’s response cannot be deemed

reliable or usable. Petitioners argue that

the nature of the errors precludes proper

product matching, distorts claimed

expenses and adjustments, and prevents

an accurate analysis and substantiation

of costs overall.

Thyssen argues that the clerical errors

identified and corrected by Thyssen

during the course of the review were

inconsequential when compared to the

millions of bits of information reported;

that the Department noted numerous

instances, in its verification reports,

where no discrepancies were found; and

that the Department correctly concluded

in its July 20, 1995, memorandum that

the problems found were not sufficient

to render Thyssen’s submission

unreliable or unusable.

Department’s Position: We disagree

with petitioners. As reflected in the

Department’s July 20, 1995,

memorandum and elsewhere in this

final determination in regard to

particular areas of concern, the

Department properly allowed Thyssen

to make corrections to its submissions.

We determined that the remaining

errors and inconsistencies did not

warrant disregarding Thyssen’s

submission as a whole, and could be

dealt with on an individual basis.

Comment 4: Petitioners assert that

Thyssen failed to report cost

information as requested by the

Department, thereby rendering the

company’s responses unusable for the

purposes of our final results.

Specifically, petitioners first argue that

Thyssen failed to provide a schedule of

production quantities, thereby

preventing the Department from tying

control number specific cost of

production (‘‘COP’’) and constructed

value (‘‘CV’’) figures to Thyssen’s

accounting records. Petitioners argue

that the verification of production

quantities was crucial in determining

the accuracy of Thyssen’s reported COP

and CV amounts because the company

used production quantities to compute

(1) the average per-unit costs contained

in its cost center expense reports, (2) the

per-ton basis costs that were common to

all products within each cost center,

and (3) all product-specific basis costs

within each cost center as part of the

‘‘tons per hour’’ factor. Petitioners note

that the Department has stated that the
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65267

failure of a respondent to show that the

product-specific costs included in COP

and CV are tied to the company’s

accounting records results in a failed

verification. See Antifriction Bearings

(Other Than Tapered Roller Bearings

and Parts Thereof From the Federal

Republic of Germany); Final Results of

Antidumping Duty Administrative

Review, 56 FR 31692, 31707 (July 11,

1991) (AFBs From Germany). Petitioners

argue that, despite the Department’s

specific request for such a schedule,

Thyssen refused to provide this

information, claiming that it would be

extremely burdensome, but failing to

show why that was the case. Petitioners

claim that the Department appears to

have contradicted the record, including

its own cost verification report, when it

stated that ‘‘Thyssen did report productspecific costs in that it computed actual

product-specific costs using production

quantities at each stage of the

production process’’ and that ‘‘[t]hese

production quantities were reviewed

and tested at verification.’’ Petitioners

believe the cost verification report

indicates that product-specific

production quantity information was

not provided to the Department at

verification. Petitioners argue that the

Department’s ‘‘alternative verification

procedures,’’ i.e., the examination of

fiscal-year ending inventory balances

and movements in and out of a single

warehouse, cannot be deemed to have

demonstrated a link between production

quantity information and Thyssen’s

financial records.

Petitioners also argue that Thyssen

failed to identify product-specific costs

as standard or actual costs, thereby

preventing the Department from tying

‘‘basis costs’’ to actual production

quantities. Petitioners argue that the

Department has determined that it

cannot use the cost response of a

respondent which failed to provide

actual costs and was unable to support

its standard costs. See Final

Determination of Sales at Less Than

Fair Value: New Steel Rail, Except Light

Rail, from Canada, 54 FR 31984, 31985–

86 (August 3, 1989).

Petitioners argue that throughout the

review Thyssen has failed to

conclusively identify whether its

reported cost figures are based on

standard or actual cost amounts.

Petitioner contends that all of the

information on the record indicates that

Thyssen’s product-specific

manufacturing costs for the COP and CV

figures are based on standards for which

variances must be calculated.

Petitioners assert that the information

on the record is inconsistent with

statements from the Department’s cost

verification report that it ‘‘tested that the

standard costs were fully adjusted by

the variances incurred and thus the

submitted costs reflect the actual costs

incurred during the respective fiscal

periods.’’

Petitioners conclude that Thyssen’s

failure to report cost information as

requested requires the Department to

reject the company’s questionnaire

responses and apply total BIA.

Petitioners argue that the flaws in

Thyssen’s reporting of COP and CV

preclude the Department from

conducting its sales-below-cost test and

prevent the Department from having

confidence in the difference-inmerchandise (‘‘difmer’’) data, which are

needed in the Department’s margin

calculations. Petitioners argue that, if

the Department determines not to reject

Thyssen’s responses on the whole, the

Department must, at the very least,

apply as BIA to Thyssen’s cost

information the highest cost of

manufacturing for all COP and CV

values from sales in this review.

Thyssen counters that there is no

doubt that the Department verified the

company’s actual production costs and

actual production quantities. The

Department utilized an exacting

standard to verify Thyssen’s submitted

costs and the results of the Department’s

verification are supported by substantial

evidence. Respondent argues that

petitioners’ claims must be rejected.

Thyssen argues that the Department’s

statements in its July 20, 1995,

memorandum regarding this issue are

accurate, contrary to the assertions of

petitioners. Thyssen argues that its own

submissions and the Department’s cost

verification report confirm that the

actual production quantities were

provided and verified. The actual costs

were incurred by each processing cost

center, based upon actual production,

actual yield, actual work time and

standard performance.

Furthermore, Thyssen argues that

petitioners have mischaracterized the

purpose of the Department’s request for

product-specific quantity information

which was provided by alternative

means. According to Thyssen, the

request for quantity information

pertained not to the compilation of

production costs, but rather was

designed to allow the Department to

reconcile to Thyssen’s inventory.

Department’s Position: We disagree

with petitioners’ allegation that Thyssen

failed the cost verification. The

Department’s verification provided

reasonable assurance of the accuracy of

Thyssen’s reported costs, and our cost

verification report outlined all of the

testing which we performed and noted

any exceptions or deficiencies in the

results of that testing. As stated recently

by the Court of Appeals for the Federal

Circuit, the Act ‘‘gives Commerce wide

latitude in its verification procedures.’’

American Alloys Inc. v. United States,

30 F.3d 1469, 1475 (Fed. Cir. 1994). The

standard for verification is not to verify

all information or to require perfect

accuracy. ‘‘Verification is like an audit,

the purpose of which is to test

information provided by a party for

accuracy and completeness, so that

Commerce can justifiably rely on that

information.’’ Tatung Co. v. United

States, Slip Op. 94–195 (CIT December

14, 1994). Accordingly, as detailed

below, we are satisfied that the

shortcomings identified in the cost

verification report regarding Thyssen’s

data do not undermine the reliability of

Thyssen’s submission as a whole and do

not warrant resort to BIA.

Contrary to petitioners’ assertions, we

do not believe that Thyssen’s omission

of product-specific (i.e., control numberspecific) production quantities renders

the company’s questionnaire response

unreliable for purposes of calculating

COP and CV. As Thyssen explained in

its response and as we observed at

verification, the company does not

maintain production quantities on such

a product-specific basis as part of its

normal accounting system. Instead,

Thyssen relies on total production

quantity figures at each of its steel

production stages to compute an average

per-unit coil cost for all products.

Thyssen then converts this average coil

cost to a product specific cost based on

a standard table of ‘‘extras,’’ which are

discussed further below. Thus, the total

production quantities at each

production stage are determinative, as

relied upon by Thyssen to calculate the

per-stage costs which are then

accumulated to determine the coil

production cost.

As part of our verification testing, we

required Thyssen to provide accounting

records showing actual production

quantities at each stage of production. In

order to verify the accuracy of Thyssen’s

reported per-unit costs we examined

production quantities and total

production costs for selected cost

centers within specific production

stages. We found no discrepancies

between the production quantities used

by Thyssen to compute the actual

weighted-average cost reported to the

Department and the company’s normal

production records.

In contrast to Thyssen, the respondent

in question in AFBs From Germany, the

case cited by petitioners, was able to

report the relevant information

(regarding labor, overhead and other
65268 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

expenses) on a model- or productspecific basis. The Department

determined, however, that it could not

tie the reported model-specific amounts

to the respondent’s internal accounting

records and financial statements,

information which was successfully

verified. AFBs From Germany, 56 FR at

31707. Being unable to devise a

methodology to better allocate labor and

overhead costs, the Department relied

upon total BIA. Id. Following a

challenge by respondent, the CIT

remanded the AFBs From Germany

determination, stressing that the actual

information provided by respondent

was accurate and verified. The CIT

required the Department to further

explain why, instead of relying upon

total BIA, it had not supplied its own

methodology or that of another

respondent. Nippon Pillow Block Sales

Co. v. United States, 820 F. Supp. 1444,

1455 (CIT 1993). Following remand, the

CIT upheld the Department’s

determination that it could not develop

an allocation methodology or use that of

another respondent which would allow

it to use the previously verified data.

Nippon Pillow Block Sales Co. v. United

States, 837 F. Supp. 434, 436 (CIT

1993).

Hence, as demonstrated by both the

Department’s initial determination and

the CIT’s two decisions, AFBs From

Germany stands for the principle that

the Department should rely upon a

party’s information to the extent

possible. Here, because we found

Thyssen’s cost information as well as its

accounting methodology reasonable and

verifiable, we see no reason for resorting

to BIA.

With respect to petitioners’ claim that

it is unclear whether Thyssen reported

standard or actual costs, it is clear from

the computer tape submitted by

Thyssen and from the verification report

that Thyssen reported the actual

weighted-average cost of producing

cold-rolled coil. The adjustments

Thyssen made to adjust the base cost to

actual cost are described in the cost

verification report at pages 5–7. Thyssen

adjusted the average cost of coil by three

factors on the computer tape: the

computer variables CREXT1 and

CREXT2 (‘‘extras’’) accounted for

composition, size, width, and form

differences between the average product

and the unique product; the computer

variable THMOADJ adjusted the average

coil cost for year-end accruals, price and

overhead variances. These three

computer variables adjusted the average

coil cost to actual product-specific cost.

Petitioners’ reliance upon New Steel

Rail From Canada is misplaced. In that

case, the Department rejected the

respondent’s COP information after

determining that it could not be

verified. The Department found, among

other deficiencies, that the respondent

had developed information for the

investigation based on the standard

product costs used by the company,

‘‘which were not part of the normal

financial accounting system and which

were for a period subsequent to the

period of investigation.’’ New Steel Rail

From Canada, 54 FR at 31985. Despite

having a cost system which reported

actual costs, the company in question

‘‘chose not to use this information for its

response.’’ Id. By contrast, there is no

evidence in the record of this review

indicating that Thyssen deviated from

its normal accounting methodology

except to the extent necessary to meet

the Department’s reporting

requirements.

We also disagree with petitioners’

contention that it is inappropriate to use

standard machine times as a basis on

which to compute labor cost for specific

products. The use of standard machine

times as a reasonable and appropriate

allocation basis is well substantiated in

both accounting and Departmental

practice. Notice of Preliminary

Determination of Sales at Less than Fair

Value and Postponement of Final

Determination: Certain Welded

Stainless Steel Pipes from the Republic

of Korea, 57 FR 27731, 27733 (June 22,

1992). Machine hours effectively relate

the labor cost incurred to the specific

product. We find it reasonable and not

distortive to use standard machine

hours to allocate actual processing costs

to specific products.

In sum, Thyssen supported its COP

and CV figures with substantial

evidence on the record as is indicated

by the company’s questionnaire

responses, supplemental responses and

verification exhibits. We reviewed and

tested the accuracy and completeness of

Thyssen’s submitted COP and CV data

and did not identify any problems

which would cast doubt on the

company’s response as a whole.

Accordingly, we have relied on

Thyssen’s cost response as the basis for

our final results of this administrative

review.

Comment 5: Petitioners argue that,

should the Department determine not to

disregard Thyssen’s cost response, it

must still account for Thyssen’s failure

to provide actual costs of material

inputs from related parties. Petitioners

argue that this failure prevents the

verification of the valuation of materials

acquired from related suppliers and

requires the application of BIA.

Petitioners first contend that

Thyssen’s provision of financial

statements or reports for a related iron

ore supplier and a related ferrous scrap

supplier in lieu of actual costs was

insufficient for determining whether

transfer prices are above or below the

cost of production. Petitioners cite the

final determination in the underlying

investigation, which stated that ‘‘[f]or

the Department to be assured that the

transfer prices are above costs, the

Department must be able to test the

transfer prices against the actual costs of

production of the inputs. * * *’’ Notice

of Final Determination of Sales at Less

Than Fair Value: Certain Hot-Rolled

Carbon Steel Flat Products, Certain

Cold-Rolled Carbon Steel Flat Products,

Certain Corrosion-Resistant Carbon

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

Germany, 59 FR 37136, 37151 (July 9,

1993) (Steel from Germany). Petitioners

argue that the Department’s verification

of Thyssen’s related iron ore supplier

was inadequate to show whether

transfer prices were above costs, and did

not account for the fact that the overall

profit on that supplier’s income

statement may obscure the fact that it

incurs costs, on sales to Thyssen that are

most likely not incurred on other sales,

such as transportation and additional

processing costs. Petitioners argue that

the COP information provided by the

related scrap supplier are also

insufficient to demonstrate that the

merchandise was sold above the cost of

production. Furthermore, petitioners

argue that Thyssen failed to distinguish

between the cost of merchandise sold to

Thyssen and the cost of merchandise

sold to other customers. Consequently,

petitioners argue that Thyssen failed to

demonstrate that the transfer prices paid

were above the supplier’s cost of

production, and therefore the

application of BIA is warranted.

Thyssen responds that petitioners’

claims ignore the cost verification

report, the accompanying exhibits and

analysis, as well as the substantial

documentation provided by Thyssen.

Thyssen points to its March 8, 1995,

submission at 8–17 and accompanying

exhibits 11–15, and pages 12–16 and

exhibit G of the Department’s May 17,

1995, cost verification report. Thyssen

argues that the Department did not base

its decision to accept related party input

suppliers’ prices solely on profit

information in the financial statements.

Further, Thyssen provided extensive

information relating to sales quantities

and production costs for its related iron

ore supplier which established that

transfer prices were above actual

production costs. Thyssen counters that

given its related iron ore suppliers’
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65269

product mix, petitioners’ suggestion that

potentially differing terms of sale could

have resulted in production costs

exceeding transfer prices is absurd on

its face.

In regard to scrap sales, Thyssen

quotes the cost verification report at 16

which concluded that the ‘‘Rhine region

scrap division, the only division

providing scrap to Thyssen Stahl AG

(‘‘TSAG’’), was profitable on a DM per

ton basis.’’ Thyssen states the

Department acted reasonably in using

the transfer prices submitted in

determining COP and CV in the absence

of any evidence that the cost data

supplied was unreliable or any evidence

of record more probative than that

which Thyssen and its related suppliers

submitted.

Further, Thyssen contends that the

cost information submitted by

petitioners cannot be considered

because it consists of factual

information available to petitioners

prior to publication of the preliminary

determination and therefore was not

timely filed. See NSK Ltd. v. United

States, 798 F. Supp. 721, 725 (CIT

1992).

Department’s Position: The

Department disagrees with petitioners.

Thyssen submitted evidence that the

prices paid to related suppliers for the

most significant inputs identified by the

Department were at arm’s length and

were not at prices below the related

suppliers’ cost of production. The

Department tested the submitted prices

from a major related iron ore supplier

and a major related scrap supplier. The

Department found that the iron ore

prices from unrelated and related

suppliers were the same. The

Department found that scrap prices from

unrelated and related suppliers were

comparable. The Department also tested

that the prices were above the cost of

production. The Department computed

a cost per ton of iron ore from the

constant currency income statements of

the major related iron ore supplier for

the years ending December 31, 1993 and

December 31, 1994. We compared this

amount to the average sales price,

noting that the transfer price was higher

than the average cost. It was appropriate

in this case to use the average cost

calculation because the major iron ore

supplier’s sole business is the sale of

iron ore; therefore, financial results are

not affected by other lines of business.

Petitioners’ argument that the profit on

domestic sales may far exceed the profit

on export sales is speculative and not

supported by evidence on the record.

Export sales constituted the majority of

the related suppliers’ sales. Export sales

commanded significantly higher prices

than domestic sales; this higher price

should reflect any additional processing

or transportation costs envisioned by

petitioners.

In addition, at verification we

reviewed the profit analysis of the major

scrap supplier’s Rhine region division,

which supplies Thyssen with its ferrous

scrap, and concluded that the division

was profitable and therefore its sales of

scrap were at prices above the cost of

production.

Comment 6: Petitioners assert that the

Department should use BIA for the CV

of material inputs. Petitioners argue that

for purposes of calculating CV, it is not

sufficient that the transfer prices of

major inputs reflect market value.

Rather, section 773(e)(2) of the Act

requires the Department to disregard the

transfer price of a major input and use

the actual cost of producing the input if

the transfer price is below the related

supplier’s COP for that input. See

Antifriction Bearings From France,

supra, 60 FR at 10924. Petitioners argue

that Thyssen’s failure to provide

credible evidence that the transfer price

for iron ore was above the cost of

production despite numerous requests

from the Department for this

information constitutes reasonable

grounds to believe or suspect that the

transfer prices paid by Thyssen were

less than the cost of production. With

respect to ‘‘non-major’’ inputs,

petitioners argue that Thyssen failed to

demonstrate that its transfer prices were

at arm’s length as, except for scrap,

which the Department examined at

verification, Thyssen provided only selfselected invoices which cannot be

considered representative of prices.

Department’s Position: The

Department disagrees with petitioners.

As discussed above in response to

comment 5, the Department’s testing at

verification revealed that Thyssen’s

related party did not offer preferential

pricing to related suppliers for major

inputs. Moreover, we verified that major

inputs were purchased at prices that

were not below their cost of production.

We are satisfied with Thyssen’s

submissions regarding this issue, as

verified. With respect to materials

purchased from related suppliers which

consisted of a small part of the cost of

manufacturing—so-called ‘‘non-major’’

inputs—the Department elected not to

verify these amounts. We determined

that these inputs had a minimal effect

on the total cost of manufacturing.

Given this fact, the constraints of time,

and the nature of verification (see

response to comment 4), we did not

consider it necessary to verify these

amounts individually.

Comment 7: Thyssen argues that, for

purposes of its COP and CV

calculations, the Department incorrectly

reduced Thyssen’s reported interest

income by interest/dividends earned on

security investments of working capital.

Thyssen disputes the Department’s

rationale that ‘‘the Department does not

generally allow dividends as an offset to

financing expense because dividends

are not considered to be short-term in

nature.’’ According to Thyssen, only

short-term income from current assets

was included in the interest income

offset. Thyssen argues that, since this

income was attributable to Thyssen’s

‘‘short term investments of its working

capital,’’ it should not have been

excluded from the interest income

offset. See, e.g., Antifriction Bearings

From France, 60 FR at 10926; and

Television Receivers, Monochrome and

Color from Japan; Final Results of

Administrative Review, 56 FR 23281,

23282–83 (May 21, 1991). Thyssen

argues that a cost verification exhibit

confirms that its claim was limited to

income from current assets and did not

include interest from long term

securities and interest other than from

current assets.

Petitioners agree with the

Department’s preliminary determination

that Thyssen has not demonstrated that

the source of the claimed income is

short-term in nature.

Department’s Position: Thyssen has

not demonstrated that it is entitled to an

offset to interest expenses for income

derived from dividends. The

Department’s long-established practice

is to deny an offset for income of this

nature. See Final Determination of Sales

at Less Than Fair Value: Circular

Welded Non-Alloy Steel Pipe From the

Republic of Korea, 57 FR 42942, 42953

(September 17, 1992); Final

Determination of Sales at Not Less Than

Fair Value: Saccharin From Korea, 59

FR 58826, 58828 (November 15, 1994).

The CIT recently affirmed the

Department’s general standard in NTN

Bearing Corp. v. United States, Slip Op.

95–165 (CIT Oct. 2, 1995). Relying on its

earlier decision in Timken Co. v. United

States, 852 F. Supp. 1040, 1048 (CIT

1994), the court clarified that to qualify

for an offset, interest income must be

related to the ‘‘ordinary operations of a

company.’’ NTN Bearing at 32. While

this standard does not require that

interest income be tied directly to the

production of the subject merchandise,

a respondent must show ‘‘a nexus

between the reported interest income’’

and its ‘‘manufacturing operation.’’ Id.

at 33; see Timken at 1048. Unlike

interest income earned from the shortterm investment of working capital,
65270 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

only rarely will dividend income earned

from a company’s investment activities

meet this standard. See Final

Determination of Sales at Less Than

Fair Value: Certain Carbon and Alloy

Steel Wire Rod from Canada, 59 FR

18791, 18795 (April 20, 1994).

Thyssen argues in its brief that its

dividend income qualifies as an offset

because it is ‘‘short-term’’ income from

current assets, such as ‘‘interest on

current bank accounts, interest on time

and fixed-term deposits and interest on

short-term securities.’’ However, the

verification exhibit referred to by

Thyssen as support actually

characterizes the income in question as

‘‘dividends from securities of working

capital.’’ Cost Verification Report,

Exhibit K. This is very similar to the

facts in NTN Bearings, where the CIT

upheld the Department’s denial of the

offset. NTN Bearing at 33. See also

Television Receivers, Monochrome and

Color, from Japan; Final Results of

Antidumping Duty Administrative

Review, 56 FR 34180, 34184 (July 26,

1991). Indeed, Thyssen made little if

any effort to demonstrate why its

dividend income qualified as an offset.

Therefore, because Thyssen failed to

show the necessary nexus between its

dividend income and manufacturing

operations, we have denied the claimed

offset.

Comment 8: Thyssen reported

separate cost and allocated expense data

for sales observations according to the

fiscal year in which the sales took place.

The Department conformed its

computer programs so that they could

utilize these fiscal year data. Thyssen

argues that the Department incorrectly

calculated one weighted-average home

market direct selling expense and one

weighted-average home market indirect

selling expense for the entire POR.

Thyssen argues that this is inconsistent

with the Department’s utilization of

separate fiscal year costs and expenses

for all of the other elements utilized in

calculating constructed value.

Petitioners argue that calculating two

such general expenses per control

number (‘‘CONNUM’’), as requested by

Thyssen, would improperly separate the

class or kind into two categories, each

of which has a separate cost. Petitioners

argue more generally that the reporting

of two costs and/or expenses per

CONNUM conflicts with the statute and

Department practice, distorts the effects

of the costs and expenses, and is

administratively burdensome.

Consequently, petitioners argue that the

Department should re-calculate a single

weighted average for all costs and

expenses covering the two fiscal

periods.

Department’s Position: We disagree

with petitioners’ assertion that the

reporting of costs for the two fiscal

periods covered by the POR violates the

antidumping statute which directs the

Department to calculate for constructed

value, the ‘‘general expenses and profit

equal to that usually reflected in sales

of merchandise in the same general

class or kind as the merchandise under

consideration.’’ Thyssen did calculate

general expenses for the same class or

kind of merchandise in accordance with

the statute for the two fiscal periods

encompassed within the POR. We have

determined that computing general

expenses by fiscal period does not, in

effect, divide the class or kind of

merchandise because the calculation for

each period covers the entire class or

kind. Using expenses associated with

each fiscal period has not distorted our

analysis because we have used

contemporaneous prices and expenses.

Contrary to petitioners’ assertions,

attempting to recalculate a single

weighted average for all costs and

expenses covering the two fiscal periods

would be extraordinarily burdensome.

We inadvertently did not account for

two fiscal years in the instance noted by

Thyssen, and have adjusted the

programming language for weightedaverage home market direct and indirect

selling expenses so those calculations

are in accordance with the Department’s

general use of separate fiscal year data.

In this instance we have used the

reported data.

Comment 9: Thyssen argues that the

Department, through clerical error,

improperly calculated Thyssen’s fiscal

1992/93 cost of manufacture for cost of

production. Thyssen argues that the

Department failed in one instance, due

to a missing zero, to follow its June 16,

1995, COP, CV, and Further

Manufacturing Concurrence

Memorandum in correcting Thyssen’s

thirteenth month adjustment.

Department’s Position: We agree with

Thyssen, and have incorporated the

correct information in the programming

for the final results.

Comment 10: Thyssen asserts that the

Department improperly failed to adjust

for physical differences in merchandise

when comparing U.S. sales to home

market sales falling within the same

control number (or CONNUM,

identified in the sales data bases as

CONNUMU and CONNUMH,

respectively).

According to Thyssen, it reported its

variable manufacturing costs on a

weighted-average basis for each

CONNUMU and CONNUMH, with the

weighted average derived from actual

costs attributable to each individual

invoice. Consequently, Thyssen argues

that the material costs, labor costs and

overhead expenses were not necessarily

identical for all sales within a particular

CONNUM. Similarly, because the

physical characteristics of the

merchandise grouped together in the

U.S. sales listing often differed from the

physical characteristics of merchandise

grouped together in the home market

sales listing, the variable cost of

manufacturing for U.S. sales (VCOMU)

often differed from variable cost of

manufacturing for home market sales

(VCOMH) for product groupings with

the same identifying CONNUM.

As noted in the May 17, 1995, cost

verification report at 22, ‘‘the variable

cost of manufacturing in the home

market sales listing and the U.S. sales

listing was computed by calculating a

variable cost of manufacturing for each

sale and weight averaging all sale

specific model costs within the control

number.’’ Thyssen asserts that the

Department verified that Thyssen had

quantified its product-specific cost

differences resulting from differences in

physical characteristics not reflected in

the model matching characteristics

upon which the determination of

specific CONNUMs is based. Therefore,

according to Thyssen, the Department

established that the differences in the

VCOMH and VCOMU for product

groupings with the same identifying

CONNUM were based on the physical

differences in the merchandise actually

falling within each group.

As support, Thyssen refers to section

771(16)(A) of the Act, which uses the

phrase ‘‘identical in physical

characteristics.’’ Because this phrase is

not defined, Thyssen argues that it must

be construed in accordance with its

common meaning, i.e., ‘‘exactly the

same.’’ Thyssen cites various cases

where the Department noted that its

product groupings are not necessarily

limited to a single ‘‘identical’’ product.

See, e.g., Antifriction Bearings (Other

than Tapered Roller Bearings) and Parts

Thereof from France; et al.; Final

Results of Antidumping Duty

Administrative Reviews, 57 FR 28360,

28364–66 (June 24, 1992); Antifriction

Bearings (Other than Tapered Roller

Bearings) and Parts Thereof from the

Federal Republic of Germany, Final

Determination of Sales at Less than Fair

Value, 54 FR 18992, 19072 (May 3,

1989). Thyssen concludes that the

Department has refused to make

adjustments for differences in costs of

producing merchandise only when the

products in question had identical

physical characteristics. See Import

Administration Policy Bulletin, No. 93.2

(July 29, 1992).
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65271

In response, petitioners argue that it is

well established in the cold-rolled

carbon steel flat products cases that all

products which have the same

CONNUM are considered by the

Department to be ‘‘identical’’ for the

purpose of applying Section

773(a)(4)(C). For example, Appendix V

of the questionnaire from the underlying

investigation states that ‘‘[f]or purposes

of these investigations, products will be

considered ‘identical’ in thickness if

they fall within the same thickness

range * * * regardless of the actual

thickness of the products’’; ‘‘products

will be considered ‘identical’ in width

if they fall within the same width range

identified * * * regardless of the actual

width of the merchandise’’; ‘‘and ‘‘[n]o

difference in merchandise adjustment

(difmer) may be claimed for products

that are within the same thickness or

width range, but differ in actual

measurement.’’ Similarly, the

Department stated that, in following

such an approach for determining

which sales are of ‘‘identical’’

merchandise, ‘‘if there are ‘identical’

matches according to our designated

criteria, we will not make an adjustment

for any additional differences in

merchandise (difmer).’’

Petitioners argue that, in the present

review, CONNUMs have been defined

such that each CONNUM has a unique

set of identifiers for the matching

criteria established by the Department.

As a result, products sold in the United

States and home markets which have

the same CONNUM would share the

same ‘‘identifier’’ for all of the

Department’s product-matching criteria

and, accordingly, the Department was

correct in not making difmer

adjustments for U.S. and home market

products with the same CONNUM.

Department’s Position: We disagree

with respondent. As explained below,

the Department correctly declined to

make difmer adjustments when U.S.

sales were matched to what we

determined to be home market sales of

identical merchandise (i.e., when the

U.S. and home market sales in question

possessed the same product

characteristics as set forth by the

Department in its model matching

criteria).

Section 771(16) of the Act directs the

Department to compare sales of home

market merchandise which are ‘‘such or

similar’’ to merchandise sold in the

United States. In accordance with

section 771(16)(A), the Department first

identifies and compares that

merchandise which is ‘‘identical’’ in

physical characteristics, followed by

sales of merchandise which is most

‘‘similar’’ in physical characteristics. To

make these determinations, the

Department devises a hierarchy of

commercially meaningful characteristics

suitable to each class or kind of

merchandise. The Department considers

merchandise to be identical within the

meaning of section 771(16)(A) when all

the relevant characteristics match.

The courts have recognized that the

Department has broad discretion ‘‘to

choose the manner in which ‘such or

similar’ merchandise shall be selected.’’

Koyo Seiko Co. v. United States, 66 F.3d

1204, 1209 (Fed. Cir. 1995). This

discretion extends to determining which

products properly should be considered

identical.

However, the Department is not

authorized to grant difmer adjustments

within identical product categories.

Under section 773(a)(4)(C) of the Act,

the Department may only adjust for cost

differences between two products which

are ‘‘similar’’ in physical characteristics,

and in this way compensate for any

difference in the price derived solely

from the physical difference between

the two products compared.

Basing its product matching criteria

on commercially meaningful

characteristics permits the Department

to draw reasonable distinctions between

products for matching purposes,

without attempting to account for every

possible difference inherent in certain

classes or kinds of merchandise. Given

the tremendous number of variations

between products in the various flatrolled carbon steel product categories,

including cold-rolled steel, the

Department has followed this approach

in the present case, beginning with the

original less-than-fair-value

investigation. As such, the Department

may define certain products as being

‘‘identical’’ within the meaning of

section 771(16)(A), even though they

contain minor differences. See Final

Determination of Sales at Less Than

Fair Value; Gray Portland Cement and

Clinker From Mexico, 55 FR 29244,

29247–48 (July 18, 1990). Similarly, the

Department need not account for every

conceivable physical characteristic of a

product in its hierarchy. Thus, a range

of products may be considered

‘‘identical’’ within the meaning of the

statute.

For instance, as Thyssen correctly

notes in its case brief, many steel

products would have been treated by

the Department as identical (i.e., in the

same CONNUM) even when their

widths differed from one another,

because this product characteristic is

identified in terms of ranges (e.g., 40 to

60 inches as identifier ‘‘F’’ for the width

product characteristic). In other words,

two sales could be classified in the same

CONNUM even if one was of

merchandise with a width of 41 inches

and the other was of merchandise with

a width of 59 inches because both

would fall within the width category

identified as ‘‘F’’.

At the outset of the present review,

when it had an opportunity to comment

on the hierarchy of product matching

criteria, Thyssen failed to argue that it

considered the Department’s width and

thickness product categories overly

broad, nor did Thyssen argue that

additional product characteristics

should be included within the

hierarchy. Because the products within

each CONNUM are identical within the

meaning of the statute, the VCOMH and

VCOMU reported by Thyssen within

individual CONNUMs do not provide a

basis for making difmer adjustments.

Comment 11: Thyssen contends that

the Department improperly compared

U.S. sales of seconds to constructed

value, rather than to home market sales

of seconds. Thyssen acknowledges that

home market seconds were sold at

prices below cost. However, Thyssen

cites the Senate Report accompanying

the Trade Reform Act of 1974 to argue

that neither the statute nor the

Department’s regulations mandate that

all below cost home market sales be

disregarded in calculating foreign

market value. See S.Rep. No. 1298, 93d

Cong., 2nd Sess. 173 (1974). Thyssen

argues that in the steel industry it is

normal business practice for all

companies, including Thyssen, to sell

secondary steel at less than the cost of

producing prime steel of the same grade.

At the same time, however, sales of

seconds are relatively infrequent in

comparison to sales of prime material

and do not prevent a steel manufacturer

from recovering production costs on all

steel sales, primes and seconds, within

a reasonable period in the normal

course of trade. Thyssen contends that

this result is directly contrary to the

intent of Congress.

Thyssen argues that IPSCO, Inc. v.

United States, 965 F.2d 1056, 1060 (Fed.

Cir. 1992), which the Department cites

at page 3 in its April 19, 1995,

memorandum on treatment of nonprime merchandise (from Roland

MacDonald to Joseph Spetrini, General

Issue Case No. A–100–003), merely

permits the Department to compare the

prices of seconds to constructed value

in appropriate circumstances; IPSCO

does not mandate that result. Thyssen

contends that the particular issue which

it has raised, the question of whether

Thyssen’s sales of seconds were in

sufficiently large quantities over a

significantly lengthy period, is fact-
65272 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

specific to the instant review and was

not presented to the IPSCO court.

Petitioners respond that it is

inappropriate to combine prime and

non-prime merchandise in determining

whether the quantity of below cost sales

is sufficiently large to warrant

disregarding those sales in determining

FMV. Petitioners contend that Thyssen

has taken the inconsistent positions that

the Department should separate prime

and non-prime merchandise for the

arm’s length test, but combine both

types of merchandise for the cost test.

Petitioners argue that the comparison of

U.S. sales with CV is mandated by

statute whenever such or similar home

market merchandise fails the COP test,

that Thyssen admits that its sales of

seconds fail this test, and that,

accordingly, U.S. sales of non-prime

merchandise should be compared to CV.

Petitioners add that Thyssen did not

provide any evidence that the costs of

the merchandise consisting of a

combination of both prime and nonprime merchandise would be recovered

over a reasonable period of time, even

if such an analysis were relevant.

Department’s Position: Thyssen is

essentially requesting that the

Department modify the below-cost test

it applied in the preliminary results to

include sales of seconds for matching

purposes whenever the corresponding

sales of prime were at above cost prices.

In this regard, Thyssen mistakenly relies

on the Senate report accompanying the

1974 Trade Reform Act to contend that

the Department should not disregard

sales of seconds, regardless of whether

they were at prices below cost. We

disagree.

The Act requires the Department to

determine whether a respondent’s sales

were made over an extended period of

time and in substantial quantities so as

to warrant disregarding those sales in

determining FMV. This test applies

across sales of a model as a whole,

whether they be prime, seconds or

otherwise. See 19 U.S.C. § 773(b). The

1974 Senate report did list several

exceptions to this test, including

obsolete and end-of-model year

merchandise, which the Department

should not disregard regardless of the

whether they were below cost.

This category of exceptions is narrow,

however, and is designed only to permit

the inclusion of below-cost sales which

can be expected to occur on an

‘‘infrequent’’ basis. S. Rep. No. 1298,

93d Cong., 2d Sess. 173 (1974); see also

Final Determination of Sales at Less

Than Fair Value: Dynamic Random

Access Memory Semiconductor of One

Megabit and Above From the Republic

of Korea, 58 FR 15467, 15476 (March 23,

1993). It is possible to verify whether

merchandise claimed to be obsolete or

end-of-model year actually falls within

the exception. The exception does not

include seconds, however, which tend

to occur more frequently and which a

party would be more inclined to

‘‘systematically’’ sell at prices which

will not permit recovery of all costs. See

S. Rep. 1298 at 173. It would also be

more difficult to verify whether a

product was properly classified as a

‘‘second.’’

In past cases, the Department has

considered prime and secondary

merchandise to be separate models for

matching purposes. ‘‘To do otherwise

would distort the margins, since sales

prices are dependent on the quality of

the merchandise.’’ Porcelain-on-Steel

Cooking Ware From Mexico; Final

Results of Antidumping Duty

Administrative Review, 58 FR 43327,

43328 (August 16, 1993). In IPSCO, the

Court of Appeals upheld the

Department’s approach of applying the

same cost to prime and secondary

merchandise. See IPSCO, 965 F.2d at

1061. In this case, we computed the cost

of Thyssen’s secondary merchandise

using a methodology consistent with

that applied in the IPSCO case. Based

on these cost figures, we found

insufficient quantities of above cost

sales and, accordingly used CV as FMV.

Comment 12: Thyssen argues that the

Department improperly combined sales

of prime and secondary merchandise in

its arm’s length test. According to

Thyssen, the Department should

conduct separate arm’s length tests and

calculate separate customer-specific

weighted-average price ratios for prime

and secondary merchandise. In support

of its argument, Thyssen asserts that

such treatment would be consistent

with the Department’s April 19, 1995,

memorandum on the treatment of nonprime merchandise.

Petitioners respond that Thyssen

misrepresents the Department’s

statements on this matter, indicating a

serious misunderstanding on Thyssen’s

part as to how the arm’s length test was

applied in the present case. Petitioners

describe the Department’s arm’s length

test as first comparing the net price of

sales of a CONNUM sold to a related

customer with the net price of sales of

a CONNUM sold to unrelated

customers. Only then, petitioners argue,

is the related customer-specific

weighted-average price ratio calculated,

by combining all CONNUMs, consisting

of all prime and non-prime merchandise

sold to both related and unrelated

customers. The Department’s test

separates prime and non-prime

merchandise in making the initial

comparison of related and unrelated

prices on a CONNUM-specific basis. It

is this initial comparison to which the

Department refers in its memorandum

when it states that ‘‘prime and seconds

should be separated.’’ Prime and nonprime merchandise are necessarily

separated for this initial CONNUMspecific comparison because prime and

non-prime merchandise do not share the

same CONNUM. The separation of

products on a CONNUM-specific basis

for the initial price comparison is

necessary because there are

understandable differences in prices

among CONNUMs, irrespective of

whether the different CONNUMs consist

of prime or non-prime merchandise.

Petitioners argue that the objective of

the Department’s arm’s length test is to

determine whether sales to individual

related customers are made at the same

or greater prices than those at which

sales of the same products are made to

unrelated customers. To make this

customer-specific determination, all

sales of all CONNUMs, both prime and

non-prime, must be combined, and, so,

the Department combined all

CONNUMs sold to related customers

which are also sold to unrelated

customers to determine the customerspecific weighted average price ratios.

Department’s Position: We disagree

with Thyssen. The Department’s April

19, 1995, seconds memorandum, states

that ‘‘if sales of seconds to related

parties are compared to sales of prime

(or prime and seconds combined) to

unrelated parties, the results of the

arm’s length test could be distorted.’’

The memorandum concludes that,

consequently, ‘‘prime and seconds

should be separated for purposes of

conducting the arm’s length test. . . .’’

The recommendation section of the

memorandum goes on to clarify,

however, that the separation of prime

and secondary merchandise is done on

what amounts to a CONNUM-specific

basis. In cases where sales of prime and

secondary merchandise were reported

together in the same CONNUM, the

Department treated them as separate

CONNUMs for purposes of the arm’s

length test. As petitioners point out, the

Department would ordinarily follow

this approach in the initial steps of

conducting the arm’s length test because

there are understandable differences in

prices among CONNUMs, irrespective of

whether the different CONNUMs consist

of prime or secondary merchandise. See

April 19, 1995, memorandum at 2–3. In

this specific case, Thyssen’s seconds

were already classified in separate

CONNUMs distinct from sales of prime

merchandise, meaning that the
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65273

Department was not required to make

such an initial separation.

The purpose of the Department’s

arm’s length test is to determine if total

sales to a related party are at arm’s

length. To make this determination, we

calculate, by CONNUM, prices to each

related party as a percentage of prices of

sales to unrelated parties. We then take

a weighted average of this ratio for all

CONNUMs sold to a given related party,

including seconds and prime, to

determine if sales to that related party

are at arm’s length. Thyssen has not

demonstrated that the approach resulted

in a distortion of the arm’s length test.

See Usinor Sacilor v. United States, 872

F.Supp. 1000, 1004 (CIT 1994).

Comment 13: Thyssen contends that

the Department improperly calculated

the VAT adjustment. Thyssen argues

that in Zenith Electronics Corporation v.

United States, 988 F.2d 1573 (Fed. Cir.

1993), the Federal Circuit held that the

Department’s practice of making a

circumstance of sale adjustment to FMV

to achieve tax neutrality was contrary to

law, reasoning that ‘‘Section

1677a(d)(1)(C), the section dealing with

tax adjustments, does not provide for

any adjustment to FMV to correct for

tax-related distortion of the dumping

margin,’’ and that ‘‘the specific

provision of Title 19 for tax adjustments

does not permit changes to FMV.’’ Id. at

1580. Thyssen adds that in Daewoo

Electronics v. International Union, 6

F.3d 1511, 1519–20 (Fed. Cir. 1993), the

Federal Circuit held that the tax should

be applied at the sale price at which the

tax was actually assessed.

Thyssen argues that, in Federal Mogul

Corp. v. United States, CAFC No. 94–

1097 (Fed. Cir. August 28, 1995), the

Federal Circuit expressly held that the

Department had the authority to

calculate the adjustment by taking the

paid tax amount in the home market for

the same merchandise, and adding ‘‘that

amount to the price actually paid in the

United States.’’ Slip Op. at 9. According

to Thyssen, the Court reasoned that the

tax neutral methodology which results

from adding the identical tax amount to

both the home market and the United

States sides of the dumping equation

‘‘clearly accords with international

understandings, negotiated by this

country regarding unfair trade policy,’’

whereas any alternative methodology

which artificially increases dumping

margins may ‘‘read a GATT violation

into the statute.’’ Id. at 22–23.

Thyssen argues that the Department’s

preliminary results are contrary to

Zenith in that it adjusted FMV by the

tax relating to expenses that were

deducted from FMV. Thyssen argues

that the Department’s preliminary

results are contrary to Daewoo in that its

calculation methodology resulted in the

tax being applied to an ex-factory price,

rather than the sales price at which the

tax was actually assessed. Thyssen

argues that both Zenith and Daewoo

prevent the Department from making

any secondary adjustments in

calculating the tax pursuant to section

772(d)(1)(C), and even if the Department

had this authority, it must be limited to

those isolated instances in which the

primary tax adjustment created margins

where none had previously existed.

Thyssen argues that in the case of

Thyssen a secondary adjustment could

never be authorized, since Thyssen’s

deductible U.S. expenses exceed its

deductible home market expenses, and

since the Department’s secondary

adjustment artificially and significantly

inflates dumping margins, in direct

contravention to Federal Mogul.

Thyssen concludes that the

Department’s preliminary results

methodology, which applies the VAT to

a different point in the chain of

commerce than the point at which the

tax is assessed, and which creates a

secondary tax adjustment to FMV, is

directly contrary to Federal Mogul,

Zenith, and Daewoo. Thyssen argues

that the Department should add to USP

the exact amount of the tax added to

FMV, as authorized by Federal Mogul,

or, alternatively, calculate the tax added

to FMV in the manner reported by

Thyssen (gross price less discounts,

times 0.15) and calculate the tax added

to USP by multiplying TINC’s net sales

price (gross price less cash discount,

where applicable) times the tax rate.

Petitioners assert that the Department

properly calculated the VAT adjustment

in accordance with its statutory

mandate and existing legal authority,

which requires that an adjustment be

made to USP to account for any VAT

that may have been charged on the

corresponding home market sale. To do

this, the Department applied the rate

from the home market to the U.S. sale

and added this amount to USP.

Petitioners argue that, because Federal

Mogul does not require that any

particular methodology be used, the

Department’s methodology in this case

is not precluded by the Court’s decision.

While Thyssen is correct in pointing out

that the Court of Appeals did rule on the

issue of the VAT adjustment

methodology, and clearly upheld the

Department’s previous methodology of

calculating the amount of tax paid on

the home market sale and adding the

amount of the tax to USP, the opinion

does not indicate that this is the only

methodology that the Department may

use. To the contrary, petitioners argue,

the Court does not state that use of this

methodology is required by the statute,

but rather that it is not precluded by the

statute. Furthermore, petitioners argue,

as demonstrated by its use in several

earlier determinations by the

Department, the methodology used in

this review is entirely reasonable. See,

e.g., Color Television Receivers from the

Republic of Korea; Final Results of

Antidumping Duty Administrative

Review, 59 FR 13700, 13701 (March 23,

1994); Certain Internal-Combustion

Industrial Forklift Trucks from Japan;

Final Results of Antidumping Duty

Administrative Review, 59 FR 1374,

1376 (January 10, 1994).

Department’s Position: In light of the

Federal Circuit’s decision in Federal

Mogul, the Department has changed its

treatment of home market consumption

taxes. Where merchandise exported to

the United States is exempt from the

consumption tax, the Department will

add to the U.S. price the absolute

amount of such taxes charged on the

comparison sales in the home market.

This is the same methodology that the

Department adopted following the

decision of the Federal Circuit in

Zenith, 988 F. 2d at 1582, and which

was suggested by that Court in footnote

4 of its decision. The CIT overturned

this methodology in Federal Mogul v.

United States, 834 F. Supp. 1391 (1993),

and the Department acquiesced in the

CIT’s decision. The Department then

followed the CIT’s preferred

methodology, which was to calculate

the tax to be added to U.S. price by

multiplying the adjusted U.S. price by

the foreign market tax rate; the

Department made adjustments to this

amount so that the tax adjustment

would not alter a ‘‘zero’’ pre-tax

dumping assessment.

The foreign exporters in the Federal

Mogul case, however, appealed that

decision to the Federal Circuit, which

reversed the CIT and held that the

statute did not preclude the Department

from using the ‘‘Zenith footnote 4’’

methodology to calculate tax-neutral

dumping assessments (i.e., assessments

that are unaffected by the existence or

amount of home market consumption

taxes). Moreover, the Federal Circuit

recognized that certain international

agreements of the United States, in

particular the General Agreement on

Tariffs and Trade (GATT) and the Tokyo

Round Antidumping Code, required the

calculation of tax-neutral dumping

assessments. The Federal Circuit

remanded the case to the CIT with

instructions to direct Commerce to

determine which tax methodology it

will employ.
65274 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

The Department has determined that

the ‘‘Zenith footnote 4’’ methodology

should be used. First, as the Department

has explained in numerous

administrative determinations and court

filings over the past decade, and as the

Federal Circuit has now recognized,

Article VI of the GATT and Article 2 of

the Tokyo Round Antidumping Code

required that dumping assessments be

tax-neutral. This requirement continues

under the new Agreement on

Implementation of Article VI of the

General Agreement on Tariffs and

Trade. Second, the Uruguay Round

Agreements Act, (URAA) explicitly

amended the antidumping law to

remove consumption taxes from the

home market price and to eliminate the

addition of taxes to U.S. price, so that

no consumption tax is included in the

price in either market. The Statement of

Administrative Action (p. 159)

explicitly states that this change was

intended to result in tax neutrality.

While the ‘‘Zenith footnote 4’’

methodology is slightly different from

the URAA methodology, in that section

772(d)(1)(C) of the pre-URAA law

required that the tax be added to United

States price rather than subtracted from

home market price, it does result in taxneutral duty assessments. In sum, the

Department has elected to treat

consumption taxes in a manner

consistent with its long standing policy

of tax-neutrality and with the GATT.

Comment 14: Thyssen argues that the

Department, through clerical error,

improperly failed to correct certain

reported home market product

characteristics. Thyssen argues that the

Department did not in its arm’s length

test program make all of the product

characteristics corrections made in its

model match program.

Department’s Position: We agree with

Thyssen that the arm’s length test

program did not contain all of the

product characteristic corrections made

in the model match program. However,

we note that this oversight had no effect

upon the Department’s analysis because

CONNUMs, rather than product

characteristics, are used within the

arm’s length computer program, and the

merchandise in question would still be

classified in the same distinct

CONNUMs even if the product

characteristics were corrected.

Consequently, we have removed any

reference to product characteristic

corrections from the arm’s length

program.

Comment 15: Thyssen argues that the

Department improperly excluded home

market sales prior to February 1993

from its calculations. Thyssen argues

that it is inconsistent for the Department

to include in its analysis shipments to

Thyssen’s U.S. customers with dates of

shipment from Germany during the POR

regardless of the date of the

requirements contract, while at the same

time excluding all home market

shipments with sale dates prior to

February 3, 1993, even though the date

of shipment from the mill, the

functional equivalent of the shipment

date from Germany for U.S. sale

observations, is within the POR.

Thyssen argues that this is

particularly egregious, given that the

Department has resorted to BIA for

certain of Budd’s U.S. resales because

Thyssen did not report home market

sales back far enough; it argues that the

Department cannot penalize Thyssen for

underreporting and at the same time

exclude transactions for being prior to

the requested reporting period.

Department’s Position: We disagree

with Thyssen. The Department is

applying BIA to the Budd sales with

dates of sale in 1992 because Thyssen

failed to report home market sales back

far enough to provide home market sales

contemporary with those Budd sales

(see Comment 31). Normally we request

home market sales for the entire period

from the earliest U.S. sale date forward

and would apply the arm’s length test

to all sales reported. However, Thyssen

selectively reported sales prior to

February 1993. Thyssen might have

reported home market sales for an

intervening period between the 1992

Budd sales and February 1993 based

solely upon the effects of such reporting

on the arm’s length test. Therefore, to

avoid the risk of distorting the arm’s

length test results, we disregarded those

sales, which were not contemporaneous

with any U.S. sales.

Thyssen’s argument that some of the

excluded home market sales were

shipped during the POR, like the U.S.

sales, is unpersuasive. The Department

reviews shipments to the U.S. during

the period of review. However, in order

to make the price-to-price comparison,

we look at the date of sale for the U.S.

transaction, which may or may not be

different than the date of shipment to

the United States, and match it to a

home market sale with a

contemporaneous date of sale, which

may or may not be the date of shipment

in the home market. The fact that

Thyssen considers the shipment to its

home market customers the equivalent

of shipment from Germany to the

United States is not relevant for

purposes of identifying home market

sales for matching purposes.

Comment 16: Petitioners argue that

the Department should deduct all direct

and indirect selling expenses incurred

on further manufactured sales made in

the U.S. market from the gross prices

associated with those sales. Petitioners

argue that the Department’s calculation

of a share of U.S. direct and indirect

selling expense variables is appropriate

for purposes of calculating the ESP cap,

but that for purposes of calculating U.S.

price, all direct and indirect selling

expenses should be deducted.

Thyssen counters that the computer

programming language in question was

present in the version of the program

disseminated to all interested parties on

October 13, 1994. Petitioners filed

extensive comments on that program

with the Department, but did not object

to the Department’s proposed reduction

of U.S. price by only a share of U.S.

direct and indirect selling expenses.

Department’s Position: We agree with

petitioners that the methodology

followed by the Department in the

preliminary results, to reduce U.S. price

by only a share of U.S. direct and

indirect selling expenses, was

inappropriate. The Department

inadvertently included this language in

its computer program. Such a share

should only be used in the calculation

of the ESP cap or offset for further

manufactured sales in order to capture

the portion of the indirect selling

expenses attributable to foreign

manufacturing. We have corrected the

programming to reflect the correct

methodology. The fact that petitioners

failed to comment on this issue prior to

the preliminary results does not alter

the fact that they have identified a

program error that should be corrected.

Comment 17: Petitioners argue that,

for U.S. sales observations which the

Department determined required the use

of BIA, the Department should not have

applied what petitioners describe as

neutral BIA, the deposit rate from the

underlying investigation. Petitioners

claim that Thyssen’s submissions reflect

widespread omissions and

insufficiencies by Thyssen that require

application of, at the least, adverse BIA.

In support, petitioners emphasize the

CIT’s statement that, ‘‘[a]lthough the

ultimate purpose of BIA is not to

punish, BIA is intended to be adverse

and requires the use of adverse

assumptions.’’ National Steel Corp. v.

United States, 870 F. Supp. 1130, 1136

(CIT 1994) (National Steel). Petitioners

argue that, given Thyssen’s numerous

omissions and insufficiencies, it is

highly probable that there remain other,

undiscovered problems with Thyssen’s

submission.

Petitioners also assert that should the

Department continue to apply neutral

partial BIA in its final results,

respondents would have no reason to
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65275

comply with the Department’s requests

for information knowing that the worst

they could receive as BIA for any

missing or incomplete information is

the rate from the underlying

investigation. Petitioners cite the CIT’s

reasoning that using ‘‘BIA for only those

segments of a submission that are

rejected could permit a party * * * to

select the data it believed would be to

its benefit, leaving Commerce only to

fill in the blanks.’’ Tatung Co. v. United

States, Slip. Op. 94–195 at 13

(December 14, 1994) (citing Chinsung

Indus. v. United States, 705 F. Supp.

598, 601 (CIT 1989)). Petitioners argue

that an appropriately adverse partial

BIA would be either the higher of the

margin from the investigation or the

highest non-aberrant margin calculated

for Thyssen’s sales in this review;

because the latter figure is not known to

respondents until the final calculation

of the margin at the end of the review,

respondents would be unable to perform

the cost/benefit analysis to allow them

to selectively disclose only certain

information.

Thyssen responds that the

Department has broad discretion in

choosing BIA, and need only give a

reasonable explanation of its choice. See

Neuweg Fertigung GmbH v. United

States, Slip Op. 92–137 (CIT August 20,

1992). Thyssen argues that, contrary to

petitioners’ claims, the Department is

not required to utilize the highest nonaberrant margin from a respondent’s

sales for respondents who comply with

the Department’s information requests,

but provide information which is

incomplete or inaccurate in some

regard. Thyssen argues that in National

Steel the Court affirmed the

Department’s decision to apply

respondents’ weighted-average margin

as BIA where respondent fully

cooperated in the investigation and the

misreporting was limited in nature.

Thyssen argues that the Department’s

choice of BIA in its preliminary results

was identical to that utilized in

Antifriction Bearings From Germany, 56

FR at 31705.

Thyssen also argues that petitioners

mistakenly presume that additional,

undiscovered errors exist in Thyssen’s

database. Thyssen notes that it provided

clerical error corrections to the

Department, and the Department did

additional spot checks at verification

confirming errors had been corrected

and were limited to isolated sales as

reported by Thyssen. Thyssen

concludes that the Department’s use of

a benign BIA would not encourage a

future respondent to selectively report

information.

Department’s Position: As we

determined in the preliminary results,

Thyssen’s revised database did contain

unauthorized changes and other

unexplained problems, but the sales

affected were minimal in quantity

relative to the size of the entire data

base. As a result, the Department did

not apply ‘‘the most adverse partial

BIA’’ to such observations, but chose

instead to apply Thyssen’s weightedaverage margin from the original

investigation. Contrary to the position

taken by the petitioners, this approach

was approved by the CIT in National

Steel. See also Usinor Sacilor v. United

States, 872 F.Supp. 1000, 1007 (CIT

1994). At the same time, we do not

consider this rate to be neutral, as

argued by petitioners. It is considerably

higher than the rate assigned to most of

Thyssen’s sales during this review

which are based on the company’s own

data.

Comment 18: Petitioners argue that

the Department should multiply the

total volume of the BIA sales by the BIA

rate to calculate the total BIA margin,

then combine the resulting BIA margin

with the total dumping margin

calculated for the other sales to arrive at

the weighted-average dumping margin.

Petitioners argue that contrary to its

normal practice, the Department

incorrectly used the value of most of the

BIA sales in the calculation of the

weighted-average dumping margin. That

sales information, petitioners note, is

inherently unreliable, given that they

are BIA sales, and reduces the dumping

margin.

Thyssen acknowledges that the

Department could use either

methodology, assuming the use of BIA

was appropriate. Thyssen argues,

however, that use of the price

information in the calculation of the

weighted-average margin constitutes the

most reasonable method because there

were not price-related errors in the BIA

sales in question.

Department’s Position: We agree with

petitioner. We have decided to calculate

the overall margin for the final

determination by weight-averaging the

non-BIA and BIA margins by quantity

alone because that is the Department’s

normal practice. Moreover, we note that,

contrary to Thyssen’s assertions, a few

of the BIA observations in question did

involve unauthorized changes in price.

Comment 19: Thyssen argues that the

Department’s resort to BIA because of

clerical errors or arguably incomplete

analyses contained in summary

worksheets presented at the

commencement of the U.S. sales

verification constitutes ‘‘a clear abuse of

administrative discretion.’’ Thyssen

contends that the CIT has held that the

DOC has abused its discretion in the

past by rejecting a respondent’s post

preliminary determination submission

as untimely. See Usinor Sacilor v.

United States, 872 F.Supp. 1000, 1008

(CIT 1994) (Usinor Sacilor). Thyssen

cites the CIT decision in RHP Bearings

v. United States, 875 F.Supp. 854, 857

(CIT 1995) (RHP Bearings) that ‘‘[a]n

error, although untimely filed, is eligible

for correction if the error is obvious

from an examination of the

administrative record which is before

Commerce at the time of the preliminary

results and the newly submitted

information is obviously correct.’’

Thyssen also cites Brother Industries,

Ltd. v. United States, 771 F. Supp. 374,

384 (CIT 1991) (Brother), wherein the

CIT ordered the Department to correct a

respondent’s clerical error, which

respondent had brought to the

Department’s attention prior to

publication of the preliminary results in

an administrative review.

Thyssen claims that these cases

demonstrate that the Department’s

resort to BIA was inappropriate.

Thyssen argues that all of the errors in

question consisted of clerical errors in

summary worksheets, the correct data

were reported in its computer database,

and the clerical errors were brought to

the Department’s attention immediately

upon discovery and prior to publication

of the preliminary results.

Petitioners counter that, as the

Department and Thyssen have both

recognized, the information provided by

Thyssen at and after verification was

clearly erroneous and incomplete.

Petitioners also argue that the erroneous

information provided by Thyssen after

verification did affect the veracity of the

database as a whole. Petitioners argue

that since the majority of errors were not

identified until after verification,

corrections made to the data base after

verification obviously were not verified

by the Department. Petitioners state that

Thyssen did not identify the errors

made in its submissions, supplying

corrections only after petitioners had

identified them, and that Thyssen’s first

attempt at clarification, the June 13,

1995, submission, included additional

erroneous information. Petitioners assert

that isolated verification of so-called

corrected information does not negate

the pervasive errors throughout groups

of sales within Thyssen’s database, and

that a worksheet indicating an invoice

‘‘change’’ does not constitute sufficient

notice to the Department because it does

not identify the type or number of

‘‘changes’’ made to these invoices.

Petitioners add that it is not the

Department’s duty or obligation to
65276 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

correct a respondent’s errors. See NSK

Ltd. v. United States, 825 F. Supp. 315,

319 (CIT 1993); Color Television

Receivers from the Republic of Korea;

Final Results of Antidumping Duty

Administrative Reviews, 59 FR 42805,

42812 (August 19, 1994). Petitioners

contend that Thyssen has failed to

satisfy its burden of providing reliable

information. Petitioners explain that the

various cases cited by Thyssen do not

proscribe the application of BIA in the

circumstances of this proceeding.

Department’s Position: We disagree

with Thyssen’s assertion that the

Department’s use of BIA was

inappropriate. Thyssen failed to make

changes it proposed at verification

which the Department had authorized.

Thyssen also made changes which the

Department did not authorize. This

called into question the accuracy of the

information reported for those

observations. Thyssen was given the

opportunity to explain how the changes

in its final tape submission reflected the

changes authorized by the Department’s

May 15, 1995, and May 17, 1995,

memoranda to the file. Where Thyssen’s

explanation was not satisfactory, BIA

was applied, as described elsewhere in

this notice, in the preliminary notice,

and the Department’s analysis

memoranda.

Furthermore, we agree with

petitioners that the cases cited by

Thyssen do not require a different

outcome. For example, in Usinor

Sacilor, the Court found the Department

had abused its discretion by rejecting a

post-preliminary results submission

from the respondent. A controlling

consideration for the Court, however,

was that the Department’s questionnaire

had been misleading, which is not the

case here. In RHP Bearings, also cited by

Thyssen, the Court emphasized that it

may be appropriate to correct

respondent’s errors if the errors are

obvious from the record prior to the

preliminary results and the new

information is obviously correct.

Thyssen’s errors were neither obvious

nor was the ‘‘newly submitted

information’’ correct.

Finally, Brother is distinguishable

from the current situation as well.

There, the Court only required the

Department to consider respondent’s

revised data because it was ‘‘clerical’’ in

nature and because the Court was

ordering remand on other issues. The

Court stressed that its decision should

not be construed as undermining the

Department’s authority to disregard

untimely information. Brother, 771

F.Supp. at 384. In Thyssen’s case, most

of the information was provided after

verification and none of Thyssen’s

unauthorized changes could be verified

by the Department. Indeed, as

petitioners argue, in Brother the Court

emphasized the need for proper analysis

and verification for such information,

stating that the statute may require that

inadequate submissions be corrected if

received in time to permit proper

analysis and verification of the

information concerned. Such was not

the case here.

Comment 20: Thyssen provided

information at the beginning of the U.S.

verification to correct sales that it stated

had been reported twice in its U.S.

database. The Department determined

that Thyssen’s efforts to correct the

problem involving the ‘‘duplicates’’ at

verification and in its final tape

submission were unsatisfactory.

Accordingly, the preliminary results

reflected a BIA margin for the total

quantity of steel in any of the invoices

listed by Thyssen as ‘‘duplicates’’ and

not appearing in its final tape

submission.

Petitioners contend that the

Department should assign a BIA margin

to the total volume of the duplicate U.S.

sales deleted by Thyssen from its U.S.

market database. Petitioners argue that

this amount is handwritten on

Thyssen’s June 13, 1995, submission,

one of Thyssen’s submissions intended

to explain changes reflected in

Thyssen’s final tape submission.

Thyssen asserts that petitioners have

ignored the methodology used by the

Department. Thyssen argues that, once

the decision was made to use BIA in

this situation, the Department cannot

accept post-verification corrections

which were adverse to Thyssen, while

at the same time, rejecting all other

corrections as sufficiently unreliable to

justify the use of BIA.

Thyssen argues that the Department

improperly applied BIA to U.S. invoices

identified by Thyssen at verification as

duplicates. Thyssen argues that it

provided the list to the Department

prior to verification, it advised the

Department of clerical errors contained

in the list, and it explained the reason

for the discrepancies.

Department’s Position: We disagree

with Thyssen, and have continued to

apply BIA in this situation. The

numerous errors in Thyssen’s proposed

deletions call into question whether or

not any of the invoices in question

should actually have been deleted. In

the preliminary results, we

inadvertently failed to increase the U.S.

sales database by the quantities reported

for any of the invoices listed in the

‘‘deletion of alleged duplicates’’ section

of the relevant verification exhibit that

were deleted in Thyssen’s final tape

submission; these quantities could very

well have reflected distinct,

unduplicated sales. The actual invoice

and quantity information is included in

the Department’s December 12, 1995,

Final Analysis Memorandum from Steve

Bezirganian to the File (December 12,

1995, analysis memorandum). We have

corrected this error in these final results.

We agree with Thyssen that it would

be inappropriate to base the quantity to

which BIA is applied upon the amount

cited by petitioners. We were unable to

determine how the handwritten number

to which petitioners allude was

calculated. Therefore, because we have

no basis from which to conclude that

the handwritten number represents the

total quantity for the deleted invoices,

we have not used that amount.

Comment 21: Petitioners argue that

the Department should ensure that the

BIA dataset it creates contains all of the

invoices for which a BIA margin is to be

used. For example, the Department

stated in its June 16, 1995,

memorandum that its preliminary

results reflected the use of a BIA margin

for sales to which Thyssen made

unauthorized changes in quantity and/

or price in its last tape submission. The

Department applied BIA in the

preliminary results to four such

‘‘quantity/price’’ observations because

they reflected unauthorized price and/or

quantity changes for these observations.

Petitioners argue that the Department

failed to include three invoices

containing similar unauthorized

changes to quantity and/or price.

Petitioners also argue that the

Department inadvertently left out of its

BIA programming one of the four

quantity/price invoices by adding an

extra zero to the invoice number in its

programming.

Petitioners also argue that the

Department inadvertently did not

include three Richburg Division

invoices in its BIA list because the

spaces indicated in these invoice

numbers were not reported by Thyssen

in the Sales Verification exhibit in

question.

Thyssen responds that for the first

quantity/price invoice cited by

petitioners, the change in quantity was

minimal and it was explained by

Thyssen. Thyssen notes that the invoice

contained three separate lines, and

therefore is divided into three distinct

U.S. sales observations. Thyssen argues

that the change in question only affected

one line, so any BIA should only be

applied to the observation reflecting that

line of the invoice.

For the second quantity/price invoice

cited by petitioners, left out of the

Department’s BIA list because of clerical
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65277

error, Thyssen argues that BIA is

improper because the errors, for this and

other Richburg sales, related solely to

the summary worksheet provided to the

Department at verification and did not

affect the veracity of the data submitted

in the database. Thyssen notes that the

Department did not find an error in

quantity during the sales trace of one

observation that appeared as an addition

on the summary list, and that the

quantity observed for another sales trace

observation corresponded to the

corrected quantity in Thyssen’s June 13,

1995, submission. Petitioners counter by

noting that examples of sales with

correct quantity information do not

negate the pervasive errors throughout

the whole group of sales in question.

For the third quantity/price invoice

cited by petitioners, Thyssen argues that

it did report the changes in U.S. Sales

Verification Exhibit 24A1 and 24A3.

Thyssen claims that it also identified

at verification as requiring correction

the four quantity/price observations to

which the Department chose to apply

BIA in its preliminary results, two of

which were listed in its column of

changes entitled ‘‘Deletion of Duplicate

Invoices.’’ The other two were listed in

the column of changes entitled ‘‘Misc.

Corrections.’’ Petitioners counter that a

worksheet indicating an invoice

‘‘change’’ does not constitute sufficient

notice to the Department because it does

not identify the type or number of

‘‘changes’’ made to these invoices.

Regarding the quantity/price invoice

for which the Department added an

extra zero, Thyssen argues that it had

identified this invoice as a ‘‘change,’’

and provided the Department with

corrected information immediately

upon discovery of the summary

worksheet error.

Regarding the other three Richburg

invoices which petitioner argues should

be included in the BIA dataset, Thyssen

again argues that BIA is not appropriate

for the sales in question because the

errors related solely to the summary

worksheet provided to the Department

at verification.

Thyssen concludes that the

Department should treat Thyssen’s

clerical mistakes in the same manner as

petitioners have suggested the

Department should correct the

Department’s own clerical errors.

Thyssen argues that the limited burden

of correcting the mistakes is far

outweighed by the preference for

accuracy in final dumping

determinations, and that it would be

both paradoxical and a clear abuse of

discretion for the Department to punish

Thyssen for its attempt to create as

error-free and as accurate a margin

calculation as possible.

Department’s Position: The

Department is not applying BIA to the

first quantity/price invoice in question.

That invoice is referred to on page 9 of

the U.S. Sales Verification report as

having an error in reported actual

weight. The Department did not instruct

Thyssen to make the correction to that

invoice in its post-verification database;

however, applying BIA to the invoice in

question because Thyssen unilaterally

corrected an error amounting to roughly

two-tenths of one percent that the

Department identified at verification,

would be inappropriate.

The Department is applying BIA to

the second quantity/price invoice in

question, as it did for other Richburg

Division invoices which Thyssen

attempted to correct at U.S. verification.

As noted in the Department’s June 16,

1995, analysis memorandum, Thyssen

provided a number of changes to the

U.S. sales database with respect to sales

from Richburg, but some of these

changes differed from those provided at

verification; differences included

incorrect quantities, deletion of nonexisting invoices or portions thereof,

and incorrect shipping dates. The

numerous errors and inconsistencies in

Thyssen’s presentation of changes

involving Richburg sales created doubts

about the observations in question. The

errors in Thyssen’s proposed changes

only became apparent after verification,

when Thyssen submitted its postverification database on May 22, 1995.

Furthermore, the fact that the

verification report seems to indicate that

a sale was reported accurately is not

dispositive, and we agree with

petitioners that the numerous errors

called into question the reliability of the

Richburg observations as a whole.

Regarding the third quantity/price

invoice in question, the Department

agrees with Thyssen that it provided the

appropriate changes to the Department

at verification in U.S. Sales Verification

Exhibit 24A1 and 24A3.

We are applying BIA to the four

quantity/price observations, consistent

with our preliminary results, because

there was no indication in the

correction exhibits provided by Thyssen

at the U.S. verification that quantity

and/or price of these observations

would be changed in Thyssen’s final

tape submission. These observations

differ from the first quantity/price

change observation cited by petitioners

as inappropriately left out of the

Department’s BIA dataset. The latter

observation involved an extremely small

error precisely identified during a sales

trace at verification, while the former

four observations involve previously

unidentified and unexplained changes

to quantity and/or price. We note that

for one of these four invoices, as noted

by petitioners, we inadvertently

included an extra zero in the invoice

number, and have corrected this error.

Regarding the other three Richburg

invoices cited by petitioners, we are

including these in the BIA dataset, in

accordance with the explanation above

regarding the Richburg observation

changes presented at verification.

Thyssen’s general argument that the

burden to correct its mistakes is limited

is unfounded. The mistakes in question

are of such nature that the accuracy of

the observations involved is called into

question. It is unclear whether the

‘‘corrected’’ data actually are correct,

and the Department cannot be expected

to take the steps necessary (i.e., an

additional verification) to make that

determination. Thyssen had numerous

opportunities to correct its mistakes.

One such opportunity was at the

beginning of verification, when Thyssen

did in fact provide lengthy lists of

changes. Review of these corrections

proved very time consuming,

particularly when errors in the

‘‘corrections’’ were discovered. Any

changes that were not authorized by the

Department prior to Thyssen’s final tape

submission, or that were not clearly

explained as resulting from such an

authorized change, were rightfully

subject to adverse BIA.

Comment 22: Thyssen argues that the

Department incorrectly applied a 16.56

percent BIA margin to all U.S.

observations relating to several

shipments of steel covered by a single

order. Thyssen contends that the

Department believes the data provided

in Thyssen’s post-verification database

submission did not reflect the changes

provided to the Department at

verification. Those changes involved

Thyssen’s attempt to update its database

to account for what previously had been

unshipped balances. Thyssen contends

that, in its June 13, 1995, submission, it

advised the Department of a

typographical error in the relevant

correction sheet provided at

verification, and that the actual quantity

shipped and the actual unshipped

balances were correctly reported in the

United States database.

Petitioners argue that the Department

properly applied BIA to this order, for

which information was inaccurately

reported.

Department’s Position: We disagree

with Thyssen. After reviewing these

data issues at verification, and after

allowing Thyssen to provide a postverification submission to clarify
65278 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

changes to its database. We have

determined that these errors are not

fully explained by the typographical

error identified by Thyssen. It is still not

clear how each of the invoice numbers

and shipment quantities listed under

the order in question relate to each other

and to specific observations in

Thyssen’s post-verification database

submitted on May 22, 1995.

Consequently, we have continued to

apply a margin based on BIA to the U.S.

observations relating to the order in

question.

Comment 23: Petitioners argue that

the Department, in its preliminary

results, improperly treated Thyssen’s

reported ‘‘trader discounts’’ granted to

trading companies for sales made to

customers that were end-users.

Petitioners argue that, since the trading

company never receives title to or takes

possession of the merchandise, these

deductions should be treated as a

commission expense to Thyssen, rather

than as a price discount. Moreover,

given that the trading companies serve

only as facilitators, there is no evidence

that the prices charged the end-user

customers in these transactions are

altered or affected by the commission.

Citing Industrial Phosphoric Acid

from Israel, 52 FR 25440, 25442 (July 7,

1987), Thyssen responds that the

reduction in price on these end-user

sales should properly be considered

discounts granted to the trading

companies. Respondent acknowledges

initially having characterized these as

commissions, but argues that it later

clarified that they are discounts because

the trading company is invoiced, it is

responsible for paying Thyssen, and it

bears the risk of loss if the customer

does not pay. Thyssen argues that the

trader discount is a reduction on the

invoice of the invoice amount, for

which no separate payment by TSAG is

made, and that it reduces the net price

received by TSAG, since it is a

deduction from the amount paid by the

trading company. Thyssen argues

further that the Department noted, in its

July 20, 1995 memorandum, that it

verified that if the traders were invoiced

and responsible for payment, they did

in fact receive the ‘‘discount.’’

Department’s Position: Generally

speaking, a commission is a payment to

a sales representative for engaging in

sales activity, normally on behalf of the

seller but occasionally on behalf of the

customer. See, e.g., Antifriction Bearings

(Other Than Tapered Roller Bearings)

and Parts Thereof From France, et al;

Final Results of Antidumping Duty

Administrative Reviews, Partial

Termination of Administrative Reviews,

and Revocation in Part of Antidumping

Duty Orders, 60 FR 10,900, 10,914 (Feb.

28, 1995); Final Determination of Sales

at Less Than Fair Value: Sulfur Dyes,

Including Sulfur Vat Dyes, From the

Peoples Republic of China, 58 FR 7537,

7543 (Feb. 8, 1993)(Sulfur Dyes). A

discount is a reduction in price to a

customer. See Sulfur Dyes From the

PRC. Therefore, the key question here is

whether there was one transaction

between Thyssen and the ultimate

purchaser in which the trading

companies acted as Thyssen’s sales

representatives for a commission; or

whether there were two transactions,

one in which the trading companies

bought from Thyssen and received a

discount on the price for that initial sale

and the ultimate purchaser then bought

from the trading companies.

In addressing this question, we looked

first to the manner in which Thyssen

reported its sales. Significantly, Thyssen

identified the transactions involving the

trading companies as sales made by

Thyssen itself to the ultimate customer.

This indicates that in Thyssen’s view,

there were no separate sales to the

trading companies; instead, the first and

only sale was to the ultimate purchaser.

Thus, the role of the trading companies

must have been that of a

commissionnaire. Thyssen’s claim that

the trading companies are intermediate

purchasers who receive a price discount

is inconsistent with its reporting of sales

to the ultimate customers.

Thyssen’s acknowledgement that it

conducted the price negotiations with

the ultimate customers also supports the

conclusion that there was a single sale

between Thyssen and the ultimate

customer. In addition, as petitioners

stressed, Thyssen originally referred to

the amounts in question as

‘‘commissions,’’ then used the term

‘‘discount’’ after the Department

requested supplemental information on

the commissions.

On the other hand, information in the

record appears to indicate that Thyssen

invoices the trading companies, and the

trading companies invoice the ultimate

customer. This suggests the presence of

two transactions. Moreover, the

Department did verify that the actual

invoices to the trading companies

referred to the amounts in question as

discounts. Although there is conflicting

evidence on the record, it is most

reasonable to treat this issue

consistently with Thyssen’s reporting of

its home market sales. Accordingly, we

have revised the preliminary results in

this respect and have treated these

deductions as commissions.

Comment 24: Petitioners contend that

the Department should deny Thyssen’s

claimed indirect selling expense

adjustment for home market technical

services expenses. The home market

verification report describes the

technical services expenses claimed by

Thyssen as consisting primarily of

research and development (R&D), which

petitioners argue are generally

considered production expenses rather

than selling expenses. Petitioners

conclude that these R&D expenses

cannot be tied directly to sales of the

subject merchandise, and so do not

qualify as technical services expenses.

Thyssen argues that the Department

noted in its Home Market Sales

Verification at 21 that the technical

services expenses claimed by Thyssen

are related to customer-specific testing

(not to be confused with the R&D

expenses claimed as indirect expenses),

and that, as such, these expenses are

product-specific.

Department’s Position: We disagree in

part with petitioners. Thyssen’s January

17, 1995, submission, at page 56, and

Exhibit 31 of that submission describe

the technical services identified on page

16 of Thyssen’s November 21, 1994,

Section IV submission. Exhibit 31

depicts the costs of assorted functions,

including the provision of advice

regarding potential new products and

adjustments in production processes.

However, home market verification

report Exhibit XXI indicates that the

cost center from which the costs were

derived was identified as ‘‘material

complaints.’’ As the verification report

confirms, the category material

complaints pertains to testing costs

related to warranty claims. Because the

information in Exhibit XXI referring

specifically to R&D is not reflected in

the technical services expense data

reported by Thyssen, we reject

petitioners’ assertion that these data

include R&D costs.

However, we do agree with

petitioners that the expenses in question

cannot be tied to subject merchandise,

and we note that Thyssen’s allocation

methodology, as presented at

verification, was deficient. Verification

Report Exhibit XXI indicates that

Thyssen derived its reported DM/ton

expense by dividing total technical

services expenses by shipments in

Germany. Thyssen’s total expenses, as is

clear from the exhibit, include those for

all cold-rolled material, including that

which was further processed out of the

scope of this review. Thyssen’s total

expenses also include those for

merchandise produced for all

customers, not just those in Germany.

Consequently, we have reduced this

expense amount by that amount which

we estimate pertains to non-covered

merchandise. See the Department’s
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65279

December 12, 1995, analysis

memorandum.

Comment 25: Petitioners assert that

the interest rate used by the Department

to calculate Thyssen’s home market

credit and inventory carrying cost

adjustments should be based solely

upon the company’s short-term

borrowings from unrelated parties.

Petitioners note that the Department has

recognized that expenses paid to related

parties in the home market may

sometimes be priced above the market

rate for those expenditures, and, in such

instances, the market rate of interest

should be employed in the calculation

of the adjustments to home market

price. See Color Picture Tubes from

Japan; Final Results of Antidumping

Duty Administrative Review, 55 FR

37915, 37922–23 (Sept. 14, 1990) (Color

Picture Tubes from Japan); High

Information Content Flat Panel Displays

and Display Glass Therefor from Japan:

Final determination; Recission of

Investigation and Partial Dismissal of

Petition, 56 FR 32376, 32393 (July 16,

1991)(Flat Panel Displays). Petitioners

suggest that the market ‘‘expense’’ of

Thyssen’s borrowings should be

determined by using interest rates of

Thyssen’s borrowings from unrelated

parties.

According to Thyssen, the

information on the record confirms that

the interest rates charged for intracompany loans were consistent with

other loans. Thyssen notes that it was

the nature of the loan, rather than the

relationship of the lender to Thyssen,

which was the critical factor in

determining Thyssen’s interest rates

during the POR.

Thyssen also argues that, in the fair

value investigation, the Department

rejected a similar claim by petitioners

that the Department should ignore

Thyssen’s related company borrowings,

where differences in rates were not

significant. Steel from Germany, 58 FR

at 37149. Thyssen adds that in Final

Determination of Sales at Less Than

Fair Value: Fresh Kiwifruit from New

Zealand, 57 FR 13695, 13705 (April 17,

1992), the Department rejected a

respondent’s attempt to disregard a

related-party loan, stating that ‘‘there

was no evidence that the interest rate on

the related-party loan did not reflect

market interest rates.’’

Department’s Position: We disagree

with petitioners. As in the original

investigation, Steel from Germany at

37149, we have determined that

information on the record indicates that

the intracompany loans in question

were made at what could be considered

market rates.

The situation here differs from that in

both determinations relied upon by

petitioners. In Color Picture Tubes from

Japan, the Department determined at

verification that the related party

charged the respondent more for freight

than the related party was charged by

the trading company that actually

delivered the merchandise. In Flat Panel

Displays from Japan, the Department

found that, rather than being a market

price, the price charged by the related

party was established for respondent’s

internal bookkeeping purposes only. By

contrast, in the present case, neither the

information in Exhibit XIV of the Home

Market Sales Verification, which

provides interest rates on loans of

varying duration from related and

unrelated parties, nor the Department’s

May 2, 1995, Home Market Sales

Verification Report, support the

contention that interest rates on

concurrent loans of similar duration

provided to Thyssen by related parties

differed in any meaningful way from

those offered by unrelated parties.

However, we note that in the

preliminary results we did not account

for the fact that Thyssen incorrectly

reported home market credit expenses

that were calculated based on a price

that does not net out discounts that are

not on the invoice. While Thyssen has

stated that it pays these discounts every

quarter, there is no information on the

record indicating that Thyssen pays the

customers such ‘‘discounts’’ for a

particular sale before the customer pays

for the merchandise. Thyssen confirmed

on page 13 of its June 23, 1995,

submission that it ‘‘does not incur any

financing expenses from date of

shipment to date of payment for these

out of invoice discounts.’’

Consequently, we have adjusted home

market credit expenses for the final

results and are calculating this expense

net of discounts not on the invoice. See

the Department’s December 12, 1995,

analysis memorandum.

Comment 26: Petitioners argue that

the Department should exclude the R&D

and general and administrative (G&A)

costs from the miscellaneous indirect

selling expense variable amounts

claimed by Thyssen. Petitioners

reiterate that expenses pertaining to

R&D are generally not selling expenses,

but, rather, production costs, and that

such expenses should be classified as

non-sales-related general and

administrative expenses. Petitioners

also argue that none of the various G&A

expenses claimed by Thyssen qualify as

indirect selling expenses, since they are

not associated with selling activities.

Finally, petitioners argue that should

the Department decide to include

Thyssen’s claimed R&D in the indirect

selling expenses deducted from USP

and FMV, it must correct the allocation

of those R&D expenses to the home and

U.S. markets.

Thyssen responds that the record

clearly establishes that it correctly

included these expenses in its home

market indirect selling expenses.

Thyssen argues that the R&D expenses

categorized as indirect selling expenses

include items related to selling, not

production activities. See Antifriction

Bearings from France, 60 FR at 10920.

Thyssen argues that the same is true for

the various G&A expenses included as

indirect selling expenses. Finally,

Thyssen argues that the Department

confirmed at verification that the R&D

expenses in question had been allocated

to each market on the identical basis as

were selling expenses, verified by the

DOC.

Department’s Position: We disagree

with petitioners regarding G&A

expenses. Our verification indicated

that the expenses in question were

indirect selling expenses. The type of

costs which Thyssen listed include

meals and transportation for Thyssen’s

customers. These are costs which we

reasonably consider to be selling

expenses.

However, petitioners are correct that

the Department does not normally

consider R&D expenses to be costs

associated with selling the merchandise.

See Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, et al.; Final

Results of Antidumping Duty

Administrative Reviews, 57 FR 28360,

28415 (June 24, 1992). There are

exceptions to this policy. See

Antifriction Bearings From France, 60

FR at 10920. However, we have

determined that Thyssen has not shown

that the R&D costs in question constitute

selling expenses. We have therefore

adjusted Thyssen’s miscellaneous home

market indirect selling expense variable

to reflect this finding. See the

Department’s December 12, 1995,

analysis memorandum.

Comment 27: Petitioners argue that

Thyssen’s reported home market

warranty expenses for the POR are

aberrational and that the Department

should instead use a weighted-average

for these indirect selling expenses based

on Thyssen’s reported data for calendar

years 1990 and 1991, and fiscal years

1991/92, 1992/93, and 1993/94.

Petitioners cite Television Receivers,

Monochrome and Color, From Japan;

Final Results of Antidumping Duty

Administrative Review, 56 FR 38417,

38421 (Aug. 13, 1991)(Television

Receivers from Japan); and Final
65280 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

Determination of Sales of Less Than

Fair Value: Certain Carbon And Alloy

Steel Wire Rod from Canada, 59 FR

18791, 18795–6 (April 20, 1994) (Steel

Wire Rod from Canada).

Petitioners argue that for U.S.

warranty expenses, the Department

should employ BIA in place of

Thyssen’s claimed adjustment.

Petitioners argue that for both its

automotive and non-automotive

divisions Thyssen provided U.S.

warranty expense information which

pertains to products well beyond the

scope of this review, and that Thyssen’s

use of total warranty expenses over total

sales does not conform to the CIT’s

ruling that the Department must

‘‘develop a methodology which removes

technical services and warranty

expenses incurred on sales of out of

scope merchandise.’’ Federal-Mogul

Corp. v. United States, 862 F. Supp. 384,

406–07 (CIT 1994). Petitioners also

argue that the reliability of Thyssen’s

reported warranty expenses are further

undermined by Thyssen’s failure to

provide information on its ‘‘historical

experience of warranty/guarantee

expenses for U.S. sales in each of the

five years preceding the period of

review,’’ as requested by the

Department.

Petitioners argue that the Department

should recalculate Thyssen’s per-unit

U.S. warranty expense adjustment by

dividing the total warranty expense

amounts reported by Thyssen for fiscal

years 1992/93 and 1993/94, by the total

volume of subject merchandise sold by

Thyssen in the U.S. market in each of

those fiscal years, respectively.

Furthermore, petitioners argue that,

because Thyssen did not provide

information on its warranty experience

for the five years preceding the POR, the

Department should apply the higher of

the two fiscal year amounts as BIA to all

U.S. sales.

Petitioners conclude that, should the

Department use the reported home

market warranty expenses in question

without weight-averaging, at a

minimum it must also use the U.S.

warranty expense data from the same

exhibit.

Thyssen responds that the

Department generally uses warranty

expenses incurred during the POR, and

will only resort to historical experience

in those instances in which: (1) a

respondent is not able to demonstrate a

relationship between POR sales and its

warranty expense claim, by tying actual

warranty expenses to POR sales; and (2)

a historical average would be a more

representative proxy of eventual

warranty expenses on POR sales than

warranty expenses actually incurred

during the review period. See Steel Wire

Rod from Canada, 59 FR at 18795–96,

and Television Receivers from Japan, 56

FR at 38421–22. Thyssen argues that the

Department properly relied upon

Thyssen’s home market warranty

expenses incurred in fiscal year 1993/

94, and that these expenses were only

slightly higher than those for fiscal year

1992/93 on either an absolute or a

percentage [of sales] basis. Thyssen also

argues that, for the last three fiscal

years, Thyssen’s home market warranty

expenses reflected a relatively steady

aggregate amount.

Regarding its U.S. warranty expenses,

Thyssen argues that it did in fact

provide adequate historical information.

It also argues that Federal Mogul does

not preclude the Department from

accepting the warranty expense

allocation methodology presented by

Thyssen, and that the Department

accepted a similar methodology in

Antifriction Bearings from France, 60

FR at 10910. Thyssen argues that even

petitioners acknowledge that the

Department verified both the amount of

U.S. warranty expenses incurred during

the POR and the total value of sales

upon which warranty expenses were

allocated. Thyssen argues that, contrary

to petitioners’ claim, the Department

never explicitly instructed Thyssen to

report only those warranty expenses

applicable to cold-rolled steel, but

rather requested that it do so or clarify

why it could not do so; and the

Department confirmed in its U.S. sales

verification report at 12–14 that the

necessary records were not maintained,

either by supplier or product type.

Thyssen argues that petitioners’

suggestion that the Department should

apply 100 percent of Thyssen’s verified

warranty expenses to cold-rolled

shipments must be rejected, since the

Department has confirmed that the

expenses relate to all products, and the

Department cannot penalize a

respondent for failing to maintain

business records in a particular manner

or for utilizing an allocation method

which subsequently may be rejected by

the Department. See, e.g., Industrial

Quimica del Nalon, S.A. v. United

States, 15 CIT 240, 244 (CIT 1991).

Finally, Thyssen also argues that

petitioners’ alternative of applying a

deutsche marks per metric ton warranty

expense to Thyssen’s U.S. shipments

based on a home market sales

verification exhibit is flawed, since the

document upon which petitioners rely

does not include data for fiscal year

1992/93. Thyssen argues that if the

Department does decide to use BIA for

U.S. warranty expenses, it should rely

on data utilized in its fair value

investigation, which were purportedly

accepted by petitioners and verified by

the Department from both a historical

and actual perspective.

Department’s Position: We disagree

with petitioners’ arguments that we

should use weighted-averaged expenses

calculated for earlier years because

Thyssen’s reported home market

warranty expenses were aberrational. As

noted in Television Receivers from

Japan, the Department generally uses

warranty expenses incurred during the

POR. As the Department’s May 2, 1995,

Home Market Sales Verification Report

indicates, there were no problems

observed with Thyssen’s reported home

market warranty expenses. Various

factors may lead to some variation in

warranty expenses, and the variations in

Thyssen’s expenses do not appear to be

abnormal.

Regarding Thyssen’s reported U.S.

warranty expenses, we agree with

Thyssen that it would not be

appropriate to apply Thyssen’s total

warranty expenses over total sales of

subject merchandise, as suggested by

petitioners. Given Thyssen’s substantial

U.S. sales of non-subject merchandise

relative to its U.S. sales of subject

merchandise, such an approach would

be inappropriately adverse.

However, Thyssen did submit, as

noted by petitioners, warranty expenses

for U.S. shipments of cold-rolled flat

products made during fiscal year 1993/

94. The data for 1993/94 U.S.

shipments, contained in Home Market

Verification Exhibit XIX, were reviewed

at the home market verification, and

found to be reasonable. Thus, we are

able to use this figure for calculating the

adjustment, a methodology which is

consistent with the CIT’s directive in

Federal Mogul. Thyssen did not submit

similar data in a timely fashion for fiscal

year 1992/93. However, there is no

indication on the record that Thyssen’s

1992/93 fiscal year warranty expenses

for U.S. sales of subject merchandise

were any higher or lower than those for

fiscal year 1993/94. Therefore, we have

used the 1993/94 data for all of

Thyssen’s U.S. sales, regardless of fiscal

year.

Comment 28: Petitioners argue that

the Department should reject all of the

cash discount information supplied by

Thyssen and employ instead, as BIA, an

ad valorem cash discount for all U.S.

sales based on the highest discount

granted to a U.S. customer. Petitioners

argue that the Department recognized in

its May 11, 1995, memorandum from

Richard O. Weible to Roland L.

MacDonald (May 11, 1995, discount

memorandum), that the cash discount

information provided by Thyssen is
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65281

highly unreliable and subject to serious

deficiencies, and that it is possible that

there are other inaccuracies in the U.S.

discount data that remain undetected.

Petitioners argue that the fact that the

errors found at verification were limited

to certain customers does not indicate

that such errors were not more

widespread, but rather suggests that the

contrary may be true, since the errors

noted were self-produced by Thyssen.

Furthermore, petitioners argue that

Thyssen has failed to explain why at

times its customers took the discount

when eligible, at other times they did

not take the discount when eligible, and

at still other times they took the

discount when they were technically

not eligible.

Thyssen argues that the Department’s

verification confirmed that Thyssen had

properly reported its cash discounts for

all of its U.S. customers other than those

specifically referred to in the

Department’s May 11, 1995 discount

memorandum. Thyssen also argues that

the Department verified the total

discounts granted by TINC as a

percentage of sales. Consequently,

Thyssen argues that the Department

must reject petitioners’ call for use of

BIA beyond that applied for U.S. cash

discounts in the preliminary results.

Department’s Position: We disagree

with petitioners. Our review of U.S.

discounts at verification included the

pre-selected and surprise sales trace

observations, as well as a thorough

review of Thyssen’s changes to its

discounts, which were proposed in a

timely manner. As noted in the

Department’s July 20, 1995,

memorandum at 5, the only problems

noted were limited to a few specific

customers, and discounts reported for

other customers were found to be

accurate. See also May 11, 1995,

discount memorandum. The only

relevant issue is the total amount of the

discounts, which has been determined

as noted above. The reasons why a

discount was offered or accepted for

specific transactions is irrelevant to this

inquiry.

Comment 29: Petitioners argue that

the Department should deny Thyssen’s

attempt to include interest income in

the calculation of its U.S. short-term

interest rate. Petitioners argue that the

calculation of a respondent’s imputed

credit and inventory carrying costs

should be based on the short-term

interest rate either actually or

potentially incurred by the respondent

in financing its accounts receivable. For

purposes of calculating its imputed

credit and inventory carrying costs,

Thyssen’s borrowing costs during the

POR are fully and accurately

represented by its weighted-average

gross interest expense. Petitioners argue

that the Department should base

Thyssen’s U.S. imputed credit and

inventory carrying cost amounts upon

the short-term interest rates reported by

the company prior to verification.

Thyssen argues that it properly

reduced its borrowing rate to account

for short-term interest income in order

to avoid a double deduction of interest

resulting from the fact that Thyssen

included an amount equal to TINC’s

allocated share of the interest expense of

Thyssen AG in its U.S. indirect selling

expense deduction from USP. Thyssen

argues that a similar adjustment was

made to avoid double-counting in

Antifriction Bearings (Other than

Tapered Roller Bearings) and Parts

Thereof from West Germany, 56 FR

31692, 31721 (July 11, 1991). Because

the Department’s questionnaire does not

provide for this particular deduction, if

interest income is not deducted from

interest paid, interest expenses

deducted from USP will be greater than

Thyssen’s actual borrowing costs for the

POR.

Department’s Position: We have

denied Thyssen’s claim for an

adjustment to its borrowing rate to offset

short-term interest income against the

deduction of credit expenses and

inventory carrying costs from U.S. price.

The Department does not normally

allow an offset of this type outside the

context of a COP or CV calculation. As

explained in Comment 7, in a COP or

CV calculation, the Department does

generally offset interest expenses for

short-term interest income earned

through a company’s ‘‘general

operations,’’ which excludes unrelated

and long-term interest income such as

that earned from investment activities.

NTN Bearing Corp., Slip Op. 95–165 at

33; Timken Co., 852 F.Supp. at 1048.

By contrast, in a sales calculation,

respondents must demonstrate a more

direct relationship between the interest

income and the sales under review in

order to qualify for an offsetting

adjustment.

See Certain Internal-Combustion,

Industrial Forklift Trucks from Japan;

Final Results of Antidumping Duty

Administrative Review, 59 FR 1374,

1378 (January 10, 1994). In accordance

with this standard, the Department has

offset interest income actually shown to

reduce the respondent’s cost of

extending credit to its customers. For

instance, the Department granted an

offset for interest earned on a

respondent’s sales of the subject

merchandise pursuant to a special

arrangement with another party.

Polyethylene Terephthalate Film, Sheet

and Strip From the Republic of Korea;

Final Results of Antidumping Duty

Administrative Review, 60 FR 42835,

42838 (August 17, 1995); see also

Certain Internal-Combustion, Industrial

Forklift Trucks from Japan; Final

Results of Antidumping Duty

Administrative Review, 57 FR 3167,

3178 (January 28, 1992). The

Department has also permitted an offset

for interest earned from pre-shipment

advance money, Final Determination of

Sales at Less Than Fair Value:

Antidumping Duty Investigation of

Stainless Steel Angle From Japan, 60 FR

16608, 16615 (March 31, 1995); Final

Determination of Sales at Less Than

Fair Value: Certain Hot-Rolled Carbon

Steel Flat Products, Certain Cold-Rolled

Carbon Steel Flat Products, and Certain

Corrosion Resistant Carbon Steel Flat

Products From Japan, 58 FR 37154,

37173 (July 9, 1993) (Steel From Japan),

and for interest earned on late

payments. Final Determination of Sales

at Less Than Fair Value; Certain

Internal-Combustion, Industrial Forklift

Trucks from Japan, 53 FR 12552, 12571

(April 15, 1988). The Department has

also determined that pre-payment funds

for which a party claims to have

received interest income may not be

used to finance ongoing operations.

Steel From Japan at 37173.

Thyssen did not claim the offsetting

adjustment for interest income until

verification. Thus, the Department was

never able to investigate the basis of its

claim. The verification report, which

contains the only explanation regarding

the funds, states only that Thyssen

received income ‘‘attributed to interest

that was part of a legal settlement.’’ U.S.

Verification Report at 10. An

accompanying verification exhibit

provides some detail as to the origin of

the interest income, in chart form, but

contains no indication that the funds

were derived from sales of the subject

merchandise. Id. at Exhibit 19.

Based on the record evidence we are

unable to determine whether the

interest income claimed as an offset was

associated with actual sales of the

subject merchandise. It was the

responsibility of Thyssen to

demonstrate entitlement to this

adjustment to U.S. price and we find

that Thyssen has failed to meet the

Department’s standard, as set forth

above. We have, therefore, revised our

preliminary results to eliminate the

offset for Thyssen’s claimed interest

income.

Comment 30: Petitioners argue that

the Department should adhere to its

decision not to allow Thyssen’s claimed

currency hedging adjustment.

Petitioners agree with the Department’s
65282 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

determination that the veracity of the

currency hedging gain information is

called into question by unexplained

changes involving this information in

Thyssen’s post-verification database.

Petitioners also argue that the

adjustment should be denied on legal

grounds. Petitioners cite the CIT’s

decision involving this adjustment in

the underlying investigation, in which

the court was ‘‘not persuaded that the

law presently permits any adjustment in

the computation of dumping margins for

either gains or losses which result from

the hedging of currencies.’’ Thyssen

Stahl AG v. United States, 886 F.Supp.

23, 32 (CIT 1995). Petitioners conclude

that the accuracy of Thyssen’s reported

data for this adjustment is largely

irrelevant since the CIT has ruled

expressly on this issue.

Thyssen responds that the

Department improperly denied its

currency hedging adjustment. Thyssen

argues that the Department verified that

Thyssen’s currency exchange contracts

were tied directly to its U.S. sales.

Regarding the variations in the

adjustment, Thyssen also points to its

previous explanation that ‘‘a change in

any field used in the formula to

calculate the exchange gain * * *

changes the exchange gain.’’

Thyssen also argues that the CIT’s

decision in Thyssen Stahl AG is not

final, since Thyssen has the opportunity

to appeal that decision to the Court of

Appeals for the Federal Circuit, and,

moreover, that decision is directly

contrary to Torrington Company v.

United States, 832 F. Supp. 379 (CIT

1993).

Department’s Position: We disagree

with Thyssen. As noted in the

preliminary results, Thyssen’s postverification database contained

numerous unexplained and

unauthorized changes in the currency

exchange expense variable. While the

Department recognized that this variable

would change if one of many other

variables changed, we were unable to

reconcile all of the changes to the

changes Thyssen was authorized to

make in its final tape submission.

Furthermore, the largest changes were

clearly unauthorized by the Department,

and were very much in Thyssen’s favor.

Consequently we are continuing to

disallow this adjustment. For purposes

of this review, therefore, petitioners’

and Thyssen’s arguments regarding the

CIT’s decision are moot.

Comment 31: Petitioners agree with

the Department’s preliminary

determination that BIA was warranted

for those Budd sales in the United States

for which Thyssen failed to report

contemporaneous home market sales.

Petitioners also argue, however, that the

Department should apply BIA to all of

Thyssen’s remaining reported Budd

sales to U.S. customers and to an

additional estimated quantity of Budd

sales to U.S. customers which Thyssen

failed to report.

Petitioners note that, contrary to

Thyssen’s assertions, the volume of the

unreported home market sales relative

to that of the Budd sales for which they

were needed is irrelevant. Petitioners

argue that the Department’s

longstanding practice is to compare

each U.S. sale to the weighted-average

FMV associated with all home market

sales made in the ordinary course of

trade within the same six-month period

as the U.S. sale. See, e.g., Final Results

of Antidumping Duty Administrative

Review: Certain Forged Steel

Crankshafts from the United Kingdom,

56 FR 5975, 5976 (Feb. 14, 1991).

Petitioners argue that, for the Budd sales

given BIA because of Thyssen’s failure

to report shipment dates from Germany,

Thyssen failed to offer any explanation

in its brief as to why those shipment

dates were not provided.

Petitioners also contend that the

Department should apply adverse BIA

to all of the Budd sales which Thyssen

did report because Thyssen did not

adequately address any of the

Department’s questions regarding U.S.

further processing by Budd.

Specifically, petitioners argue that

Thyssen did not describe the further

manufacturing processes performed by

Budd or the overhead factors or cost

accounting methodology; Thyssen also

failed to indicate whether

manufacturing processes were

performed in-house or by outside

contractors, or what equipment or

personnel were used.

Finally, petitioners argue that the

Department should apply BIA for sales

by Budd that Thyssen failed to report.

Petitioners argue that the Department is

required by section 751 of the Act to

determine the amount of the

antidumping duty by determining ‘‘the

foreign market value and United States

price of each entry of merchandise

subject to the antidumping duty order.’’

Petitioners provide a methodology for

estimating Budd’s unreported sales, and

argue that the Department apply as BIA

for these sales the higher of either the

margin rate from the underlying

investigation or the highest non-aberrant

margin rate calculated for sales in this

review.

Thyssen asserts that the Department

improperly applied a 16.56 percent BIA

margin to the 1992 Budd sales for which

Thyssen did not report

contemporaneous home market sales.

Thyssen argues that it would be absurd

to require it to report an enormous

number of additional home market sales

simply because a small amount of Budd

sales involved requirements contracts

consummated in 1992. Thyssen also

argues that such a reporting burden is

not appropriate given the inherent

difficulty in calculating meaningful

margins when comparing the home

market sales price for cold rolled steel

to the adjusted U.S. prices of motor

vehicle component parts such as those

sold by Budd. Thyssen concludes that

the Department should exclude these

Budd sales from the U.S. database,

citing the CIT decision in Sonco Steel

Tube Div. v. United States, 12 CIT 745,

748 (1988); or alternatively, the

Department should apply Thyssen’s

weighted average margin for Budd

resales, as determined in this review,

citing Nat’l Steel Corp. v. United States,

870 F.Supp. 1130 (CIT 1994).

Thyssen acknowledges that the data

submitted for Budd was not presented

in the identical format as that submitted

by TINC. But Thyssen argues that the

Department accepted Budd’s

submission as complete, as evidenced

by the fact that the Department did not

advise Thyssen that additional

information for Budd was required or

that the manner in which Budd reported

its costs failed to conform to Department

reporting requirements. Thyssen argues

that the information necessary for the

Department’s analysis was provided,

and that the Department has a degree of

latitude in implementing its verification

procedures. Thyssen also counters

petitioners’ argument that the highest

non-aberrant margin from this review

should be applied to petitioners’

estimate of unreported Budd sales.

According to Thyssen, the Department

never questioned Budd’s interpretation

of its reporting instructions, thereby

precluding resort to BIA. See, e.g., SKF

USA, Inc. v. United States, Slip Op. 95–

85 (CIT May 8, 1995).

Finally, Thyssen argues that, contrary

to petitioners’ contention, the

Department is not required to examine

every U.S. sale made by respondents

during the POR. See, e.g., Sonco Steel,

12 CIT at 748. The potentially

unreported Budd resales, Thyssen

argues, consist of merchandise which

was shipped by TINC to Budd prior to

the POR. Petitioners’ methodology for

estimating unreported Budd sales

assumes that all of Budd’s material costs

consist of cold rolled steel exported

from Germany by Thyssen, which

ignores the fact that the majority of steel

sold by TINC to Budd was not subject

cold rolled steel, and that only a de

minimis amount of Budd’s material
Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices 65283

costs consisted of cold rolled steel

purchased from Thyssen.

Department’s Position: The Budd

Company, like TSAG and TINC, is

wholly-owned by TAG. Thyssen

reported sales in the U.S. by Budd after

initially refusing to do so. However,

Thyssen continued to refuse to provide

the contemporaneous home market sales

needed for matching to the earliest

Budd sales. Because these Budd sales

were made pursuant to requirements

contracts, the necessary home market

sales were dated in 1992. We disagreed

with Thyssen’s request that the Budd’s

1992 U.S. sales be completely excluded

from the analysis or, alternatively,

assigned the weighted average margin

for other Budd sales in this review. See

Preliminary Results, 60 FR at 39356.

The Department requires respondents to

report contemporaneous home market

sales. Thyssen failed to do so for the

sales in question, which included some

observations for which Thyssen had

failed to report a shipment date from

Germany. Consequently, an adverse BIA

is appropriate for the 1992 Budd sales

in question, and we have continued to

apply the margin from the investigation.

See Id; the Department’s June 16, 1995,

Analysis Memo from Steve Bezirganian

to the File.

We disagree with petitioners’

contention that the Department should

assign BIA to all of those U.S. sales by

Budd which Thyssen did report because

of what petitioners contend was

Thyssen’s failure to provide sufficient

answers to the Department’s further

manufacturing questionnaire. The Budd

sale submission contained the variables

needed for the Department’s

calculations, albeit in an unwieldy

format. Moreover, the Department did

not request more detailed information

on Budd’s sales, because they

constituted a very small portion of

Thyssen’s total U.S. sales. For those

Budd sales which were reported, the

only information lacking was the

contemporaneous home market sales

data discussed previously.

The Department repeatedly requested

that Thyssen report U.S. sales made by

Budd. When Thyssen finally reported

Budd sales, this reporting was

incorrectly on shipments during the

POR from TINC to Budd, rather than

Budd sales to the first unrelated

customer during the POR (or, in the case

of requirements contracts between Budd

and its customers, shipments from

Germany during the POR). Petitioners

are correct that this leaves open the

possibility that Thyssen failed to report

all sales by Budd.

We agree with petitioners’ suggestion

that the Department assume that some

percentage of Budd’s sales during the

POR were unreported, and that we

should apply BIA to these ‘‘estimated

unreported’’ sales. However, applying

petitioners’ methodology for estimating

unreported sales by Budd would grossly

overestimate this possibility. Therefore,

we have determined that applying BIA

in the manner suggested by petitioners

would be unreasonable. Instead, we

have adjusted petitioners’ methodology

to reflect our observation that very few

of TINC’s sales were to Budd. Therefore,

for the final results, we have calculated

a different estimate of the number of

tons associated with these potentially

unreported Budd sales, which we have

added to the data base. As BIA, we have

applied the rate from the original

investigation to this estimated amount.

See the Department’s December 12,

1995, analysis memorandum.

Comment 32: Petitioners argue that

the Department should account for

unreported post-sale warehousing for

certain U.S. spot sales. Spot sales were

made from existing TINC inventories,

and were normally shipped

immediately after the sale took place.

Thyssen conceded that, in certain

limited instances, its U.S. spot sales

were shipped ten days or more after the

reported sale date. However, Thyssen

argues that it advised the Department of

this possibility in its November 22,

1994, questionnaire response. Thyssen

argues that the Department verified that

Thyssen reported all of its warehousing

costs in the warehousing expense

variable which the Department, as

required by law, deducted from the

sales price in calculating USP.

Department’s Position: The post-sale

expenses to which petitioners refer

constitute a small portion of the overall

amount reported by Thyssen in its presale warehousing expense variable.

Because this post-sale expense is being

deducted from U.S. price, and because

this expense is very small for most sales

in question, even if the Department

attempted to separate it into a separate

variable and chose to reclassify it as a

direct selling expense, the effect upon

Thyssen’s final calculated margin would

be negligible. Consequently, we have

chosen not to make any adjustments to

Thyssen’s pre-sale warehousing expense

variable.

Final Results of Review

As a result of this review, we have

determined that the following margin

exists for the period August 18, 1993,

through July 31, 1994:

Manufacturer/exporter Margin

(percent)

Thyssen .................................... 5.88

The Department shall determine, and

the U.S. Customs Service shall assess,

antidumping duties on all appropriate

entries. The Department shall issue

appraisement instructions directly to

the Customs Service.

Furthermore, the following deposit

requirements shall be effective, upon

publication of this notice of final results

of administrative review, for all

shipments of the subject merchandise

from Germany that are entered, or

withdrawn from warehouse, for

consumption on or after the publication

date, as provided for by section

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

deposit rate for Thyssen will be the rate

established above; (2) for previously

investigated companies not listed above,

the cash deposit rate will continue to be

the company-specific rate published for

the most recent period; (3) if the

exporter is not a firm covered in this

review, or the original investigation, but

the manufacturer is, the cash deposit

rate will be the rate established for the

most recent period for the manufacturer

of the merchandise; and (4) the cash

deposit rate for all other manufacturers

or exporters will continue to be 19.03

percent, the all others rate established in

the final results of the first

administrative review (58 FR 44170,

August 19, 1993).

The deposit requirements, when

imposed, shall remain in effect until

publication of the final results of the

next administrative review.

This notice serves as a final reminder

to importers of their responsibility

under 19 CFR 353.26 to file a certificate

regarding the reimbursement of

antidumping duties prior to liquidation

of the relevant entries during this

review period. Failure to comply with

this requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This notice serves as the only

reminder to parties subject to

administrative protective order (APO) of

their responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with section 353.34(d) of the

Department’s regulations. Timely

written notification of return/

destruction of APO materials or

conversion to judicial protective order is

hereby requested. Failure to comply

with the regulation and the terms of an

APO is a sanctionable violation.
65284 Federal Register / Vol. 60, No. 243 / Tuesday, December 19, 1995 / Notices

This administrative review and notice

are in accordance with section 751(a)(1)

of the Act (19 U.S.C. 1675(a)(1)) and 19

CFR 353.22.

Dated: December 12, 1995.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 95–30784 Filed 12–18–95; 8:45 am]

BILLING CODE 3510–DS–P

[A–580–815]

Certain Cold-Rolled Carbon Steel Flat

Products From Korea: Preliminary

Results of Antidumping Duty

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce

ACTION: Notice of Preliminary Results of

Antidumping Duty Administrative

Review.

SUMMARY: In response to requests by two

respondents, the Department of

Commerce (‘‘the Department’’) is

conducting an administrative review of

the antidumping duty order on certain

cold-rolled carbon steel flat products

from Korea. The review covers two

manufacturers/exporters of the subject

merchandise to the United States during

the period of review (‘‘POR’’) from

August 18, 1993, through July 31, 1994.

We have preliminarily determined

that sales have been made below the

foreign market value (‘‘FMV’’). If these

preliminary results are adopted in our

final results of administrative review,

we will instruct U.S. Customs to assess

antidumping duties equal to the

difference between the United States

price (‘‘USP’’) and the FMV.

Interested parties are invited to

comment on these preliminary results.

Parties who submit argument in this

proceeding are requested to submit with

the argument (1) a statement of the

issue, and (2) a brief summary of the

argument.

EFFECTIVE DATE: December 19, 1995.

FOR FURTHER INFORMATION CONTACT:

Alain Letort or Linda Ludwig, Office of

Agreements Compliance, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

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

telephone (202) 482–3793 or fax (202)

482–1388.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the statute and to the

Department’s regulations are references

to the provisions as they existed on

December 31, 1994.

Background

On July 9, 1993, the Commerce

Department published in the Federal

Register (58 FR 37176) the final

affirmative antidumping duty

determination on certain cold-rolled

carbon steel flat products from Korea,

for which we published an antidumping

duty order on August 19, 1993 (58 FR

44159). On August 3, 1994, the

Department published the ‘‘Notice of

Opportunity to Request an

Administrative Review’’ of this order for

the period August 18, 1993 through July

31, 1994 (59 FR 39543). We received a

request for an administrative review

from Dongbu Steel Co., Ltd. (‘‘Dongbu’’)

and Union Steel Manufacturing Co., Ltd.

(‘‘Union’’). We initiated the

administrative review on September 8,

1994 (59 FR 46391).

In a letter dated February 1, 1995,

petitioners formally requested that the

Department consider Union and

Dongkuk Industries Co., Ltd. (‘‘DKI’’),

which was not a respondent initially, as

related parties and ‘‘collapse’’ them as a

single producer of cold-rolled carbon

steel flat products.

In accordance with section 771(13) of

the Tariff Act of 1930, as amended (‘‘the

Act’’), the Department, in determining

whether parties are related, considers

whether the alleged related party:

1. Is an agent or principal of the exporter,

manufacturer, or producer;

2. Owns or controls, directly or indirectly,

through stock ownership or control or

otherwise, any interest in the business of the

exporter, manufacturer or producer;

3. Is a party in whose business the

exporter, manufacturer, or producer owns or

controls, directly or indirectly, any interest,

through stock ownership or control or

otherwise; or

4. Owns or controls, jointly or severally,

directly or indirectly, through stock

ownership or control or otherwise, 20

percent or more in the aggregate of the voting

power or control in the business carried on

by the person by whom or for whose account

the merchandise is imported into the United

States, and also 20 percent or more of such

power or control in the business of the

exporter, manufacturer or producer.

Factual information provided on the

record by Union, and supplemented by

petitioners, indicates that DKI and

Union are both affiliated with Dongkuk

Steel Mill (‘‘DSM’’). The record shows

that DSM holds, directly or indirectly, a

controlling share in Union’s equity.

DSM is in turn controlled by the Korean

family which owns the largest block of

shares in the company. That same

family controls, directly or indirectly, a

majority of DKI’s equity. The

Department therefore determined that

Union and DKI are related to each other

by virtue of their common affiliation

with the same ‘‘parents.’’ (See the

Department’s internal memorandum

from Joseph A. Spetrini to Susan G.

Esserman, dated May 22, 1995, and

entered onto the record of this

proceeding on September 28, 1995—

hereinafter referred to as ‘‘the collapsing

memo’’).

It is the Department’s practice to

collapse related parties when the facts

demonstrate that the relationship is

such that there is a strong possibility of

manipulation of prices and production

decisions that would result in

circumvention of antidumping law. In

determining whether to collapse related

parties, the Department considers the

following factors:

1. The level of common ownership;

2. Whether there are interlocking officers

and directors, (e.g., whether managerial

employees or board members of one

company sit on the board(s) of directors of

the other related party(ies));

3. The existence of production facilities for

similar or identical products that would not

require retooling either plant’s facilities to

implement a decision to restructure either

company’s manufacturing priorities; and

4. Whether the operations of the companies

are intertwined (e.g., sharing of sales

information; involvement in production and

pricing decisions; sharing of facilities or

employees; transactions between companies).

With respect to the first factor, the

Department has determined that there is

a significant level of common

ownership of both Union and DKI

through DSM and the family that

controls it. As noted above, factual

information provided on the record by

Union, and supplemented by

petitioners, indicates that DKI and

Union are both affiliated with the DSM

group. The same family owns by far the

largest block of shares in DSM and is

listed in DSM’s annual filing to the

Korean Securities and Exchange

Commission (‘‘KSEC’’) as ‘‘controlling’’

the company. DSM, in turn, directly and

indirectly (through its affiliated

companies), own a majority of the

equity in Union. The same family also

owns, directly and indirectly, a

controlling share of DKI’s equity.

With respect to the second factor,

evidence on the record demonstrates

that Union, DSM and DKI have

interlocking officers and directors. Two

of DKI’s board are family members and

members of DSM’s board. Five of

Union’s 18 board members are members

of DSM’s board; of those five, one is a

member of the family in question. The

president of DKI sits on the boards of

both DKI and Union. These interlocking