[Federal Register Volume 60, Number 62 (Friday, March 31, 1995)]
[Notices]
[Pages 16608-16618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8017]



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DEPARTMENT OF COMMERCE
[A-588-834]


Final Determination of Sales at Less Than Fair Value: Antidumping 
Duty Investigation of Stainless Steel Angle From Japan

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

EFFECTIVE DATE: March 31, 1995.

FOR FURTHER INFORMATION CONTACT: James Maeder or Bill Crow, Office of 
Antidumping Investigations, Import Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW., Washington, DC 
20230; telephone (202) 482-3330 or 482-0116, respectively.

Final Determination

    We determine that stainless steel angle (SSA) from Japan is being 
sold in the United States at less than fair value, as provided in 
section 735 of the Tariff Act of 1930, as amended (``the Act''). The 
estimated margins are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    Since the preliminary determination of sales at less than fair 
value in this investigation on November 4, 1994 (59 FR 56053, November 
10, 1994), the following events have occurred.
    On November 23, 1994, the petitioners alleged that the preliminary 
margin calculations contained three distinct ministerial errors. As 
detailed in the December 8, 1994, memorandum to Barbara R. Stafford, 
the Department agreed that the errors identified by the petitioners 
were ministerial in nature, but did not amend the preliminary 
determination because these errors were not significant, as defined in 
the Proposed Regulations (19 CFR 353.15(g)(4)(ii)).
    In December 1994, the Department conducted its sales and cost 
[[Page 16609]] verifications of the respondent, Aichi Steel Works Ltd. 
(``Aichi'') in Japan.
    On February 17, 1995, the petitioners and Aichi submitted case 
briefs. Rebuttal briefs were submitted by both parties on February 24, 
1995.

Scope of Investigation

    For purposes of this investigation, the term ``stainless steel 
angle'' includes hot-rolled, whether or not annealed or descaled, 
stainless steel products of equal leg length angled at 90 degrees, that 
are not otherwise advanced.
    The stainless steel angle subject to this investigation is 
currently classifiable under subheadings 7222.40.30.20 and 
7222.40.30.60 of the Harmonized Tariff Schedules of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and Customs purposes, our written description of the scope of this 
investigation is dispositive.
    As noted in the March 21, 1995 memorandum from the Acting Director 
of the Office of Antidumping Investigations to the Deputy Assistant 
Secretary for Investigations, the Department has clarified the scope of 
the investigation as published in the preliminary determination, to 
specifically exclude stainless steel products of unequal leg length.

Period of Investigation

    The period of investigation (POI) is November 1, 1993, through 
April 30, 1994.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Statute and to the 
Department's regulations are in reference to the provisions as they 
existed on December 31, 1994. References to the Antidumping and 
Countervailing Duties: Notice of Proposed Rulemaking and Request for 
Public Comments, 57 FR 1131 (Jan. 10, 1992), concerning corrections of 
ministerial errors, (``Proposed Regulations''), are provided solely for 
further explanation of the Department's antidumping practice. Although 
the Department has withdrawn the particular rulemaking proceeding 
pursuant to which the Proposed Regulations were issued, the subject 
matter of these regulations is being considered in connection with an 
ongoing rulemaking proceeding, which, among other things, is intended 
to conform the Department's regulations to the Uruguay Round Agreements 
Act. See 60 FR 80 (Jan. 3, 1995).

Such or Similar Comparisons

    For purposes of the final determination, we have determined that 
SSA constitutes a single ``such or similar'' category of merchandise.
    The respondent reported that there were no sales of identical 
merchandise in the home market during the POI. Because there were no 
sales of identical merchandise in the home market to compare to U.S. 
sales, we made similar merchandise comparisons on the basis of: (1) 
Stainless steel grade; (2) leg-length; (3) thickness; (4) spine length; 
and (5) other characteristics, as listed in Appendix V of the 
Department's questionnaire, and in accordance with section 772(16) of 
the Act.

Fair Value Comparisons

    To determine whether sales of SSA from Japan to the United States 
were made at less than fair value, we compared the United States price 
(USP) to the foreign market value (FMV), as specified in the ``United 
States Price'' and ``Foreign Market Value'' sections of this notice. 
When comparing the U.S. sales to sales of similar merchandise in the 
home market, we made adjustments for differences in physical 
characteristics, pursuant to 19 CFR 353.57. Further, in accordance with 
19 CFR 353.58, we made comparisons at the same level of trade, where 
possible.

United States Price

    We based USP on purchase price, in accordance with section 772(b) 
of the Act, because the subject merchandise was sold to an unrelated 
purchaser before importation into the United States and because 
exporter's sales price methodology was not otherwise indicated. For the 
reasons detailed in the Comment section of this notice, we reclassified 
the level of trade of U.S. sales to categorize them as having been made 
to a trading company.
    With regard to the calculation of movement expenses, we made 
deductions from the U.S. sales price, where appropriate, for foreign 
brokerage, foreign inland freight, and insurance.
    We recalculated U.S. credit expenses based on Aichi's lending rate 
to its customers as opposed to Aichi's investment return rate. In 
accordance with section 772(d)(1)(B) of the Act, we added to USP the 
amount of import duties which were not collected on inputs due to 
exportation of SSA to the United States.
    In accordance with our standard practice, pursuant to the decision 
of the U.S. Court of International Trade (CIT) in Federal-Mogul 
Corporation and The Torrington Company v. United States, 834 F. Supp. 
1391 (CIT 1993), our calculations include an adjustment to U.S. price 
for the consumption tax levied on comparison sales in Japan. See Final 
Determination of Sales at Less Than Fair Value: Certain Carbon Steel 
Butt-Weld Pipe Fittings from France (60 FR 10538, 10539, February 27, 
1995) and Preliminary Antidumping Duty Determination: Color Negative 
Photographic Paper and Chemical Components from Japan (59 FR 16177, 
16179, April 6, 1994), for an explanation of this methodology.

Foreign Market Value

    As stated in the preliminary determination, we found that the home 
market was viable for sales of SSA, in accordance with 19 CFR 
353.48(a).
    Because Aichi maintained that its sales to related parties in the 
home market were made at arm's length, we examined those sales under 
the Department's arm's-length test. Where possible, in applying this 
test, we compared related and unrelated party sales at the same level 
of trade. We considered a party as related to the respondent whenever 
the respondent had a substantial ownership interest in the party. See 
Appendix II to the Final Determination of Sales at Less Than Fair 
Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina 
(58 FR 37077, July 9, 1993) for more information on the Department's 
arm's-length test. In order to determine whether a sale is made at 
arm's length, we must compare the related-party price for a given 
product model to the average price for the same product model as sold 
to unrelated customers. Therefore, certain related-party sales were 
excluded from our analysis because those specific product models could 
not be compared to unrelated sales and because they were made in 
insignificant quantities.
    In the home market, Aichi sells SSAs through several distribution 
channels. Where Aichi sold SSAs through its subsidiary, that 
subsidiary's sales to unrelated parties formed the basis of our FMV 
calculation. We only included sales to the related parties that were 
made at arm's length.
    We calculated FMV based on delivered prices. Deductions were made 
for discounts and rebates, where applicable.
    In light of the decision of the U.S. Court of Appeals for the 
Federal Circuit's (CAFC) in Ad Hoc Committee of AZ-NM-TX-FL Producers 
of Gray Portland Cement v. United States, 13 F.3d 398 (Fed. Cir. 1994), 
the Department no longer can deduct home [[Page 16610]] market movement 
charges from FMV pursuant to its inherent power to fill in gaps in the 
antidumping statute. Instead, we adjust, where appropriate, for those 
expenses under the circumstance-of-sale provision of 19 CFR 353.56(a). 
Accordingly, in the present case, we deducted post-sale home market 
inland freight and insurance from FMV under the circumstance-of-sale 
provision of 19 CFR 353.56(a).
    Examination of the facts surrounding one expense claimed as a 
rebate by Aichi led us to determine that this reported adjustment was, 
in fact, a transfer of funds from the parent to its subsidiary. As 
stated in Final Results of Antidumping Duty Administrative Review: 
Color Television Recievers from Korea (53 FR 24975, July 1, 1988), 
``Transactions between related parties are intracorporate transfers of 
funds for which no adjustment should be allowed.'' In Final 
Determination of Sales at Less Than Fair Value: Coated Groundwood Paper 
from Finland (56 FR 56372, November 4, 1991), we made an exception for 
rebates paid to a related party where sales to that party were found to 
be at arm's length. However, in this instance, the rebates in question 
are to a related reseller, and the sales reported to the Department are 
the downstream resales of that related party to the first unrelated 
purchaser. This rebate was not passed on to the unrelated purchaser. 
Consequently, we did not make any adjustments to FMV for this claimed 
rebate.
    FMV was reduced by home market packing costs and U.S. packing costs 
were added, in accordance with section 773(a)(1) of the Act. The 
Department also made circumstance-of-sale adjustments for home market 
direct selling expenses, which included imputed credit expenses, and 
commissions, in accordance with 19 CFR 353.56(a)(2). Pre-sale 
warehousing expenses and pre-sale foreign freight charges were 
classified as home market indirect selling expenses, pursuant to the 
Departments practice and as upheld by The Torrington Co. v. the United 
States, No. 91-08-00567, Slip Op. 94-168 (CIT 1994). We deducted 
commissions incurred on home market sales and added total U.S. indirect 
selling expenses, capped by the amount of home market commissions; 
those total U.S. indirect selling expenses included U.S. inventory 
carrying costs, and indirect selling expenses incurred in Japan on U.S. 
sales.
    We adjusted for the consumption tax in accordance with our practice 
(see ``United States Price'' section of this notice).

Cost of Production (COP)

    As we indicated in our preliminary determination, on September 7, 
1994, the Department initiated an investigation of sales in the home 
market made below the cost of production (COP). In order to determine 
whether home market sales prices were below COP within the meaning of 
section 773(b) of the Act, we calculated COP based on the sum of the 
respondent's cost of materials, fabrication, general, and packing 
expenses, in accordance with 19 CFR 353.51(c). As discussed in the 
Department's cost verification report, Aichi had misreported the 
material costs of two SSA models. We corrected the reported material 
costs used in COP and constructed value (CV) for those two models by 
using the average material cost of all other models of the same grade 
as a reasonable surrogate, since verification revealed that the 
misreporting resulted from a technical flaw inherent in the 
computerized cost allocations used by Aichi in the normal course of 
business. We then compared the COP to the home market selling prices, 
net of movement charges and discounts and rebates.
    In accordance with Section 773(b) of the Act, we followed our 
standard methodology to determine whether the home market sales of each 
product were made at prices below their COP in substantial quantities 
over an extended period of time, and whether such sales were made at 
prices that would permit recovery of all costs within a reasonable 
period of time in the normal course of trade.
    To satisfy the requirement of 773(b)(1) that below-cost sales be 
disregarded only if made in substantial quantities, we applied the 
following methodology. Where we found that over 90 percent of a 
respondent's sales of a given product were at prices above the COP, we 
did not disregard any below-cost sales because we determined that 
respondent's below-cost sales are not made in substantial quantities. 
If between ten and 90 percent of a respondent's sales of a given 
product were at prices above the COP, we disregarded only the below-
cost sales if made over an extended period of time. Where we found that 
more than 90 percent of a respondent's sales of a given product were at 
prices below the COP and were sold over an extended period of time, we 
disregarded all sales for that model and calculated FMV based on CV, in 
accordance with section 773(b) of the Act.
    In accordance with section 773(b)(1) of the Act, in order to 
determine whether below-cost sales had been made over an extended 
period of time, we compared the number of months in which below-cost 
sales occurred for each product to the number of months in the POI in 
which that product was sold. If a product was sold in three or more 
months of the POI, we did not exclude below-cost sales unless there 
were below-cost sales in at least three months during the POI. When we 
found that sales of a product only occurred in one or two months, the 
number of months in which the sales occurred constituted the extended 
period of time; i.e., where sales of a product were made in only two 
months, the extended period of time was two months, where sales of a 
product were made in only one month, the extended period of time was 
one month. (See Final Determination of Sales at Less Than Fair Value: 
Certain Carbon Steel Butt-Weld Pipe Fittings from the United Kingdom 
(60 FR 10558, 10560, February 27, 1995). Based on this, for U.S. sales 
of certain products, there were adequate home market sales made above 
the cost of production to serve as FMV. For U.S. sales of other 
products, there were not. In such cases, we matched U.S. sales to CV.

Constructed Value

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of the cost of materials, fabrication, general 
expenses, profit, and U.S. packing cost. In accordance with section 
773(e)(1)(B) of the Act, for general expenses, which include selling 
and financial expenses (SG&A), we used the reported general expenses 
because these were greater than the statutory minimum of ten percent of 
the cost of production. For profit, we used the statutory minimum of 
eight percent of the cost of manufacturing and general expenses, 
because Aichi's reported profit was less than eight percent of the 
total of cost of manufacturing and general expenses.

Currency Conversion

    We have made currency conversions based on the official exchange 
rates, as certified by the Federal Reserve Bank of New York, in effect 
on the dates of the U.S. sales, pursuant to 19 CFR 353.60.

Verification

    As provided in section 776(b) of the Act, we verified the 
information used in making our final determination.

Interested Party Comments

Comment 1--Level of Trade

    The petitioners maintain that the reported U.S. sales were not made 
to a [[Page 16611]] distributor, as the respondent claims, but to a 
trading company. They contend that since the sales are made to 
Kanematsu<SUP>1 for delivery to its wholly-owned subsidiary, KGS, and 
since Kanematsu is a trading company, U.S. sales should be classified 
as trading company sales. According to the petitioners, Aichi's 
descriptions in its June 29, 1994, submissions at exhibits 31 and 32 
identify Kanematsu at a different level of trade than reported. The 
petitioners maintain that the record shows that Kanematsu did not 
inventory SSA, since the subject merchandise was shipped directly by 
Aichi to KGS. Thus, they argue, Aichi's own definition categorizes 
Kanematsu as a trading company.

    \1\Aichi has not claimed proprietary treatment for the identity 
of its U.S. customer, nor for that customer's U.S. subsidiary.
---------------------------------------------------------------------------

    Aichi claims that it has reported levels of trade based on the 
different economic functions performed by its customers. According to 
the respondent, while Kanematsu is nominally a trading company, it 
actually functions as a distributor in Japan for sales of SSA, since it 
does take the SSA into inventory. Correspondingly, the respondent 
reported sales to Kanematsu in the home market as ``distributor'' 
sales. Aichi maintains that it detailed in its June 29, 1994, 
submission and in the documentation of sales at verification, how 
Aichi's sales to the United States begin with price negotiations held 
with KGS, not Kanematsu. Aichi stresses that it deals directly with 
KGS, which functions as a mill depot for Aichi's angles and, therefore, 
holds inventory. Aichi reiterates that the prices are set between Aichi 
and KGS on CIF terms considering KGS's function as a mill depot, and 
that the price to Kanematsu is merely calculated from this CIF price. 
Respondent's argument centers on the price negotiations between Aichi 
and KGS, and Kanematsu's role in facilitating the documentation for 
Aichi's sales to KGS; accordingly, Aichi maintains that its sales are, 
in effect, to a distributor.

DOC Position

    We disagree with the respondent. In accordance with 19 CFR 353.58, 
we have changed the designation of U.S. sales level of trade to that of 
a trading company. It is Kanematsu which establishes the basic business 
relationship with Aichi and which pays for the merchandise. Because 
Kanematsu is the controlling entity with final approval of the subject 
sales to the United States, we have determined that the appropriate 
designation of the level of trade of U.S. sales is that of a trading 
company transaction. Thus, we are matching trading company sales in 
Japan to trading company sales in the United States first; if no 
trading company sales exist in Japan for the product model, then we 
used distributor sales in Japan instead.

Comment 2--Aichi's Price Protection Program as Control

    The petitioners maintain that in the event the Department does not 
classify Aichi's home market sales price protection program as a 
commission program, the Department should reconsider its determination 
not to treat Aichi and the participating members of the price 
protection program as related parties. They restate their argument, 
previously made before the preliminary determination, that the record 
demonstrates that the manufacturer, Aichi, exercises significant 
control over the selling practices of the reseller companies 
participating in the price protection program. Contending that, while 
these parties are not related via stock or equity ownership, the 
business dealings between them do not represent arm's-length 
transactions, the petitioners argue that the Department should treat 
these parties as related.
    Aichi counters that the Department thoroughly reviewed its records 
at verification to examine the members' activities, none of which would 
give Aichi either de jure or de facto control over these member 
companies. Rejecting the petitioners' contention that the possibility 
of control is the operative standard for relatedness, Aichi states that 
the petitioners have failed to provide any measurable criteria for 
applying such a standard. Aichi maintains that, in the absence of 
evidence that Aichi exerts control over these members and in the 
absence of an ownership interest greater than 5 percent, the 
petitioners argument that Aichi is related to these customers should be 
rejected.

DOC Position

    We disagree with the petitioners and determine that members of the 
program are not related. We believe that the evidence on the record 
does not indicate that Aichi maintains control over members of the 
price protection program. The information provided does not indicate 
that Aichi can set the prices of the members; price is set by market 
conditions. The price protection agreement is not a contractual 
agreement constituting business control over the members. No evidence 
exists in the record of this investigation which indicates that Aichi 
exercises, or can exercise, control over participants in the price 
protection program.

Comment 3--The Nature of Price Protection Adjustments

    The petitioners maintain that the Department should treat the 
amounts which Aichi claimed as discounts as home market commissions 
under the commission offset provision. They argue that a review of the 
administration of the price protection program demonstrates that the 
adjustments granted represent ommissions rather than discounts, arguing 
that the calculation of the adjustments is based, not on the purchases 
made by these firms, but rather on their resales. The petitioners 
further maintain that discounts are price reductions which are based 
solely on the transaction between the manufacturer and the immediate 
purchaser. The analysis conducted by petitioners instead characterizes 
the reported adjustments as the equivalent of payments for services 
rendered by a commissioned agent. The petitioners cite to the Final 
Determination of Sales at Less than Fair Value: Sweaters Wholly or in 
Chief Weight of Man-Made Fiber from Taiwan (55 FR 34585,34598 (August 
23, 1990)), which they maintain shows that the Department has 
classified selling expenses as commissions when it found that the 
manufacturers' trading company performed the functions of a commission 
agent.
    As an alternative approach, the petitioners argue that even if the 
Department decides not to treat all of the price protection adjustments 
as commissions, it should, at a minimum, offset indirect U.S. selling 
expenses against those price protection adjustments expressly 
identified as commissions.
    Aichi states that the petitioners ignore a basic distinction 
between discounts which are a prepayment price reduction, and 
commissions which are a form of payment for services. Aichi maintains 
that its accounting system treats discounts differently from 
commissions and likewise the Department's methodology should treat the 
adjustments differently. Citing numerous investigations and court 
cases, including Sonco Steel Tube Division v. United States, 714 F. 
Supp. 1218, 1222 (CIT 1989), Aichi seeks to demonstrate that the 
Department's practice of treating early payment discounts as price 
adjustments instead of circumstance-of-sale adjustments is longstanding 
and supported by the Courts. Aichi believes that the pre-payment price 
protection adjustments are similar to early-payment discount 
[[Page 16612]] programs and, accordingly, should be given the same 
treatment in the Department's margin calculations.
    Aichi maintains that since the price protection program deals with 
reductions in prices to its customers, not in selling expenses actually 
incured, the program cannot be considered to generate commissions. 
Aichi notes that in its accounting system, the price protection 
discounts are netted from accounts receivable as a reduction from sales 
revenue and are, therefore, reflected in its net sales. Aichi contrasts 
its treatment of commissions (paid only on non-subject merchandise) 
which are expensed in Aichi's SG&A accounts with its treatment of the 
price protection adjustments as a component netted from accounts 
receivable.
    Central to Aichi's presentation is its contention that the 
Department in every prior determination has determined price protection 
adjustments to be discounts; for this reason it refers to its listing 
of those determinations in exhibit 4 of its September 19, 1994, 
submission. According to Aichi, the discount nominally identified as 
the ``commission'' adjustment was administered and calculated according 
to an agreed-upon formula just as are all other components of the price 
protection program.
    Aichi maintains that the petitioners' citation to Sweaters from 
Taiwan is ill-chosen because, in that investigation, the Department 
treated payments to a trading company as commissions for a combination 
of reasons not present here: because the trading company never took 
possession of the merchandise, because the trading company never paid 
the manufacturer directly for the merchandise, and because the 
respondent treated the payment amounts as commission expenses in its 
accounting records.

DOC Position

    We agree, in part, with both parties. Under the program, Aichi 
receives aggregate monthly resale reports from the price protection 
member companies; Aichi does not set prices for the member companies. 
Member companies do not report individual sales prices back to Aichi, 
only aggregate resales values. The price protection program does not 
require member companies to report expenses to Aichi; the program's 
various adjustments take into account that the member firms will incur 
certain selling expenses in making those resales.
    As described by Aichi and verified by the Department, the general 
purpose and actual administration of the price protection program 
consists of Aichi granting price reductions to its customer to ensure a 
set return on the resales of the merchandise. Unlike the company 
examined in the investigation of Sweaters from Taiwan, Aichi did not 
report the expenses incurred by an intermediary party in making 
resales. Instead, Aichi is, for the most part, granting discounts in 
order to ensure that the prices received by resellers are adequate. 
Because these price adjustments are based on claims settled according 
to terms agreed upon at sale and before payment, we are treating the 
claimed adjustments for four of the five elements of the price 
protection program as discounts, similar in execution to early payment 
discounts, for purposes of the final determination. See Sonco Steel 
Tube Division v. United States, 714 F. Supplement 1218, 1222 (CIT 
1989); Granular Polytetrafluorethylene Resin from Japan; Preliminary 
Results of Antidumping Duty Administrative Review, 60 FR 5622 (January 
30, 1995); et al.
    Four adjustments (the exception being the adjustment calculated in 
recognition of member companies' role as resellers) are not like 
commissions, which are normally set at given rates prior to sale and 
which are not dependent on ultimate resale prices. One component of 
Aichi's program, however, which was specifically designed in 
recognition of the selling function of the member companies, is the 
functional equivalent of a sales commission. As stated by Aichi in its 
July 28, 1994, submission at 18, ``Aichi guarantees * * * a set return 
on their SSA sales by granting a commission for their resales of Aichi 
SSAs and price adjustments that 'account' for 'selling expenses' 
presumably incurred * * * in making resales.'' The reduction in price 
termed a commission adjustment is, in fact, similar to a commission 
payment. The amount is set and administered like a commission. This 
adjustment is designed, by Aichi's own account, to take into 
consideration the expenses which the price protection member companies 
must incur to find and maintain their customers. The importance of this 
function is underlined by Aichi's reliance on the external sales and 
marketing abilities of its price-protected customers. We are, 
therefore, treating this reported adjustment as a commission, deducting 
it from FMV and adding to FMV indirect selling expenses incurred by 
Aichi on U.S. sales, capped by the amount of the home market 
commission.

Comment 4--Duty Drawback

    The petitioners maintain that the record in the investigation 
demonstrates that Aichi is not entitled to an upward adjustment to U.S. 
price by virtue of duty drawback. They contend that Aichi does not have 
a valid claim to a duty drawback adjustment because the cost 
verification demonstrated that import duties were not included in the 
prices for any of the angle that Aichi sold in Japan during the POI. 
They cite the December 29, 1994, cost verification report, which states 
that ``Aichi re-exported enough nickel and chromium during the POI in 
order to avoid paying any (import) duty amounts.'' They also cite the 
report's analysis that ``since there are no duties included in the home 
market price, it may be appropriate to exclude the submitted addition 
to COP and CV for exempted duty, and to exclude the duty adjustment to 
USP.''
    The petitioners' contention rests on the concept that the statute 
requires that import duties be added to U.S. price in order to prevent 
the creation of dumping margins, or the increase of dumping margins, as 
a result of comparing duty-inclusive home market prices to duty-
exclusive U.S. prices. Based on this interpretation, the petitioners 
maintain that granting a drawback adjustment in this case would 
contravene the object of the statute because the record shows that 
Aichi used both domestic and imported nickel and chromium to 
manufacture its stainless steel products, and because Japan's 
substitution drawback regulations allowed Aichi to obtain exemption 
from payment of duties for all of its imported nickel and chromium. 
Thus, they argue, all of Aichi's home market sales were at prices that 
were exclusive of duties on imported nickel and chromium. The 
petitioners object to the comparison of what they characterize as duty-
inclusive U.S. prices to duty-exclusive home market prices.
    Alternatively, they argue that if the Department adds duty drawback 
to Aichi's U.S. prices it should also add the same amount of import 
duties to Aichi's reported home market prices and reported cost of 
production.
    The petitioners maintain that none of the arguments presented by 
Aichi in its case brief alters the Department's concerns voiced in the 
cost verification report. They contend that the reasoning inherent in 
Aichi's arguments suggests that the drawback adjustment is 
inappropriate. Petitioners characterize Aichi's reporting as 
specifically acknowledging that the purpose of the duty drawback 
adjustment is to ``neutralize the duty difference between sales made to 
the U.S. and sales made in the home market.'' [[Page 16613]] 
    Aichi maintains that, in its preliminary determination, the 
Department correctly made a price-related adjustment to Aichi's U.S. 
price for duty drawback earned in connection with its exports to the 
United States. Likewise, Aichi believes that the Department was correct 
in its preliminary upward adjustment to Aichi's COP and CV for the 
amount of duty drawback revenues included in its cost of production. 
According to Aichi, the upward adjustment to cost is necessary because 
COP and CV are intended to represent the theoretical cost of producing 
a product to be sold in the home market. Aichi states that its cost 
system does not specifically allocate duty drawback earned between cost 
of production for export products and cost of production for home 
market products. Thus, Aichi maintains, it needed to extract duty 
drawback savings from its normal cost system to enable the Department 
to identify the theoretical costs of production for a product to be 
sold in the home market. Aichi disagrees with the comments in the cost 
verification report, which noted that there may be a connection between 
the purpose of Aichi's price-related duty drawback adjustment and its 
cost-related duty drawback adjustment. Aichi argues that there is no 
connection because, while the price-related adjustment captures duty 
drawback savings which are earned in connection with exports to the 
United States, the cost-related adjustment simply isolates the duty 
drawback savings included in its normal cost accounting system for all 
products.
    In addressing the petitioners' arguments, Aichi cites to the 
statute, Court decisions, Department practice, and the GATT, in 
maintaining that it is irrelevant whether products sold in the home 
market are produced from imported and duty-paid raw materials. 
According to Aichi, the petitioners mischaracterize the conditions 
under which the Department makes a duty-drawback adjustment.
    In Aichi's view, the antidumping statute and the Department's 
practice do not require the respondent receiving rebates on, or 
exemptions from, import duties by reason of exportation of finished 
products, to demonstrate that its home market prices include import 
duties in order for its U.S. prices to be eligible for a duty-drawback 
adjustment. Aichi maintains that the statute and regulations make clear 
that the duty-drawback adjustment is to capture a difference in selling 
circumstances whereby a company receives import duty-drawback rights or 
earnings by virtue of exportation which are not earned when products 
are sold on the home market. Citing several investigations, including 
Certain Welded Stainless Steel Pipe from Korea (57 FR 53693,53696) 
(1992), Aichi seeks to demonstrate that the Department has consistently 
used a two prong test to analyze duty-drawback claims:
    <bullet> Import duty and rebate are directly linked to, and 
dependent upon one another, and;
    <bullet> The company claiming the adjustment can demonstrate that 
there were sufficient imports of imported raw material to account for 
the duty drawback received on the exports of the manufacturing product.
    Aichi faults the petitioners for not noting that the Court of 
International Trade has flatly rejected past requests to add as a new 
condition to the two-prong test the mandatory inclusion of dutiable 
imported inputs into the production of the merchandise sold in the home 
market. Aichi cites Chang Tieh Industry v. U.S., 840 F. Supp. 141, 147 
(CIT 1993):

    [Plaintiff's] arguments provide no basis from which to conclude 
that drawback adjustments should not be made unless ITA determines 
that the cost of the products sold in the home market is duty-
inclusive. To require such a finding would add a new hurdle to the 
drawback test that is not required by the statute.

    Maintaining that the petitioners' suggestion to make an upward 
duty-drawback adjustment to FMV by increasing the import duty component 
of cost of production/constructed value is tantamount to not making any 
adjustment at all, Aichi asks the Department to reject such an 
alternative. According to Aichi, the amount of import duties included 
in COP/CV will depend on several factors including: (1) Whether the 
company normally allocates duty-drawback earnings to the cost of 
production for export products, (2) the relative quantity of raw 
materials which are imported and exempted from import duties, and (3) 
the volume of home market sales relative to the volume of export sales 
to all countries. Aichi argues that none of these factors affects the 
calculation of the entitlement or earnings-based adjustment used to 
increase U.S. price. Aichi concludes that there is no legal or policy 
reason for denying or changing Aichi's drawback adjustment.

DOC Position

    We disagree with the petitioners. The only germane issue is whether 
or not Aichi's documented duty drawback meets the two pertinent 
statutory criteria. At verification we examined Aichi's duty drawback 
and documented that the application of the duty exemption program 
reported to the Department had been accurately described and 
quantified. Although Aichi then and now maintains that the imported 
materials need not have been physically consumed in the actual 
production of the U.S. shipments, company officials also demonstrated 
that imported alloys are used in the batches from which SSAs destined 
for the United States were produced. Most importantly, the inclusion of 
imported inputs in equal proportions in merchandise sold in both the 
home market and in the United States is not a requirement for obtaining 
a duty drawback adjustment. As stated by the Department in Final 
Determination of Sales at Less Than Fair Value: Certain Welded 
Stainless Steel Pipes from Taiwan (57 FR53705, 53710, November 12, 
1992):

    Other claims by petitioners do not speak to the test 
traditionally applied by the Department but rather seek to impose 
additional requirements for duty drawback claims, which are not 
required by the statute, the regulations, or past Department 
practice. There is no basis for petitioners' argument that the 
Department should not make a duty drawback adjustment, unless it 
determines that the cost of products sold in the home market 
includes duties on imported raw materials.

    Therefore, we made a duty drawback adjustment to U.S. price in our 
final margin calculations following this principle. In accordance with 
this principle, the Department calculates the amount of duty included 
in CV. CV includes import duties which have been waived or rebated upon 
export because such duties are added to U.S. price. The cost figures 
used for constructed value reflect the weighted-average value of duty 
costs, which, due to Aichi's use of domestically-sourced inputs in the 
production of SSA, are not necessarily the exact equivalent of the duty 
drawback adjustment on U.S. sales.

Comment 5--Rebates

    The petitioners argue that the Department should correct the 
mistake noted in the verification report at pages 20-23, whereby Aichi 
included the three percent consumption tax in the numerators of its 
formulas for allocating rebates and thus overstated the reported 
rebates. The respondent did not address this issue.

DOC Position

    On February 23, 1995, the Department instructed Aichi to resubmit a 
computer tape correcting this calculation error. It did so on March 3, 
1995. [[Page 16614]] 

Comment 6--Sales Outside the Ordinary Course of Trade

    The petitioners agree with Aichi's contention that sales of 
ferritic angle should be considered as sales outside the ordinary 
course of trade because Aichi did not sell ferritic angle to the United 
States during the POI. They also agree with Aichi's argument that 
billing and expense adjustments that were erroneously classified as 
sales transactions should be excluded from consideration as a basis for 
FMV. They note without comment that Aichi contends that angles with 
spine length of seven meters are outside of the ordinary course of 
trade. However, they disagree with Aichi's contention that products for 
nuclear use, grade 304HT or of special straightness, should be 
considered outside the ordinary course of trade. The petitioners 
maintain that since no physical differences existed but, instead, 
different selling and packing costs were incurred, Aichi should have 
reported those under the respective charges and adjustment fields 
available in the sales listing. According to the petitioners, a number 
of the home market product codes used for those products Aichi 
identifies as within the ordinary course of trade are also used for 
those products which Aichi claims to be outside the ordinary course of 
trade. The petitioners argue that Aichi has not submitted evidence to 
show that the special sales were made through a different channel of 
trade or by way of some unusual marketing practice. In the petitioners' 
view, the Department's acceptance of a designation of outside the 
ordinary course of trade is normally reserved for sample sales and 
sales of secondary quality.
    The petitioners contend further that, because Aichi did not provide 
timely evidence to support its claim that nuclear SSAs were sold 
outside the ordinary course of trade, the Department should not exclude 
those transactions from the final margin analysis. For support, the 
petitioners cite the CIT's ruling in Timken Co. v. United States, 865 
F. Supp. 850 (CIT 1994), which overturned the Department's exclusion of 
certain sales as outside the ordinary course of trade where the 
respondents only alleged that their sales were not in the ordinary 
course of trade. Further, the petitioners maintain that Aichi's 
arguments fail because none of the circumstances identified by Aichi 
provide a sufficient basis for treating sales for nuclear applications 
as sales outside the ordinary course of trade. The petitioners maintain 
that SSAs sold for nuclear purposes possess the same anti-corrosive 
properties as SSA sold for other applications. Moreover, they contend 
that special expenses incurred to make nuclear application sales could, 
and should, have been captured as claims for circumstance of sale 
adjustments.
    Aichi maintains that the nuclear SSA sales involved such different 
circumstances that they should be excluded from the margin calculation 
analysis. According to Aichi, the Department verified that the nuclear 
SSAs are distinguished by their unique sales process and application, 
and that these factors are sufficient to call for the exclusion of 
nuclear SSAs from the antidumping analysis. The special requirements 
for nuclear SSAs, examined at verification, such as special 
documentation of quality, special warranties, special inspections, 
special packing, and special quality control inspections, in 
conjunction with relatively different quantity and prices in comparison 
to sales of SSA not certified for nuclear use, are factors Aichi lists 
in support of its request for exclusionary treatment. Aichi cites Final 
Determination of Sales at Less Than Fair Value: Tapered Roller 
Bearings, Finished and Unfinished, and Parts Thereof, from Japan, 52 FR 
30700, 30704 (August 17, 1987) (``Tapered Roller Bearings from Japan'') 
in support of its contention that the Department excludes sales when 
the transactions: (1) Involve individual sales at very small quantities 
at substantially higher prices; (2) most of the sales were later 
cancelled; and, (3) there were no comparable sales in the United 
States.
    Contending that because the price of nuclear SSAs are set at vastly 
different price ranges due to the unique nature of the products and 
their sales process, Aichi rejects the possible use of circumstance-of-
sale adjustments as inadequately capturing the basic sales differences. 
Aichi maintains that these unique circumstances are precisely the 
reason for excluding these sales as unrepresentative. Aichi further 
maintains that none of the home market product codes which the 
petitioners ascribe as applying both to sales designated as outside the 
ordinary course of trade and to sales designatied as within the 
ordinary course of trade, pertain to sale of nuclear-use SSA.

DOC Position

    We disagree with both parties. As to whether ferritic and nuclear-
use sales were made outside the ordinary course of trade, Aichi has 
made an unsubstantiated argument. Aichi has not substantiated its claim 
under the guidelines enunciated in Tapered Roller Bearings from Japan, 
in support of its contentions. Additionally, the claims set forth do 
not satisfy the criteria enunciated in Final Results of Antidumping 
Duty Administrative Reviews: Certain Welded Carbon Steel Standard Pipes 
and Tubes from India, 56 FR 64,753, 64,753-55 (1991) (these terms were 
reiterated in the Court of International Trade's remand order in 
Circular Welded Non-Alloy Pipe from the Republic Korea). To determine 
whether sales were made outside of the ordinary course of trade, it is 
appropriate for the Department to analyze: (1) The number of home 
market customers buying the products; (2) the product standards and 
uses of the products; and, (3) price and profit differentials between 
the alleged non-ordinary sales and sales made in the ordinary course of 
trade. (See Leclede Steel Co. vs. U.S., No. 92-12-00784, Slip 94-160, 
at 28-29 (CIT October 12, 1995) Remand Order. Sales of ferritic SSA 
comprise a relatively small percentage of the total quantity of sales. 
However, Aichi never reported the data to quantify particular expenses 
which make such sales unique, nor did it address the market situation 
of the customers of ferritic SSA. No evidence of special channels of 
trade for ferritic SSA exists. We examined the spectrum of sales of the 
grade of SSA to which ferritic SSA belong and found that many of the 
customers who purchase ferritic SSA also purchase austenitic SSA. On 
average, ferritic SSA prices are only slightly different from those of 
austenitic SSA of the same leg-length. No information was submitted 
providing analysis for determining profit differentials.
    Sales of nuclear-use SSA also comprise a small percentage of the 
total quantity of sales, and only a slightly greater percentage of 
sales of the same angle type sold for non-nuclear use. On average, 
nuclear SSA prices are different from non-nuclear SSA of the same 
physical characteristics. However, Aichi never reported the data to 
quantify the nuclear-specific technical, packing, and warranty expenses 
it maintains are unique, nor did it address the market situation of the 
customers of nuclear-use SSA. No evidence of special channels of trade 
for nuclear-use SSA exists. We examined the spectrum of sales of the 
grade of SSA to which nuclear-use SSA belong and found that all of the 
customers who purchase nuclear SSA also purchase non-nuclear SSA. No 
information was submitted providing analysis for determining profit 
differentials.
    It is Aichi's responsibility to provide such data in defense of its 
claims, both for ferritic and for nuclear-use sales. 
[[Page 16615]] Aichi provided almost no explanation of any unique sales 
conditions for ferritic SSA. As regards nuclear-use SSA, Aichi did not 
provide analysis of the quantitative factors required to determine that 
such sales are outside of the ordinary course of trade, but instead 
gave general documentation at verification that such sales had specific 
sales conditions. Those aspects of the sales process should have been 
accounted for by a detailed explanation and reporting of circumstance-
of-sale adjustments. Therefore, we determine that neither ferritic nor 
nuclear-use SSA were sold outside of Aichi's normal course of trade.
    We are removing the separate line-items for billing and expense 
adjustments from the sales database for use in the less than fair value 
comparison, since these were erroneously entered as sales transactions.
    We are keeping in the database those sales of SSA which were of odd 
spine lengths, since these are subject merchandise.

Comment 7--Rate for U.S. Imputed Credit Calculations

    Aichi maintains that it reported the correct interest rate to 
calculate U.S. imputed credit expenses and credit income because this 
is the rate its pays for the pre-shipment advance money it receives 
from Kanematsu. According to Aichi, the use of the home market interest 
rate at the preliminary determination was based on the faulty 
understanding that the interest rate Aichi had used was based on 
investment returns. Aichi maintains that the rate reported is that 
which Aichi pays to Kanematsu for having received the pre-shipment 
advance money deposited by Kanematsu with Aichi for sales greater than 
a certain set amount. Therefore, Aichi argues that the correct interest 
rate for all U.S. imputed credit calculations is the percentage Aichi 
pays Kanematsu for pre-payment.
    The petitioners contend that, because the customer is credited for 
the time that Aichi held advance payment at a given rate for the period 
from the receipt of advance payment to shipment, the interest revenue 
that Aichi earned from the advance payments should have been calculated 
based on the difference between Aichi's short-term borrowing rate, as 
manifest by its use of promissory notes, and the interest rate that 
Aichi paid to Kanematsu. They argue that the Department should value 
the imputed interest revenue for advance payments at the difference 
between the two percentages.
    In addressing Aichi's arguments, the petitioners counter that the 
Department should recognize that Aichi was incurring interest expenses 
for two distinct periods: (1) the period between receipt of the advance 
payment and the date of shipment, and (2) the period from the date of 
shipment to the date of final payment. The petitioners argue that 
Aichi's methodology does not account for the interest rate that Aichi 
incurred to finance its receivables for the post-shipment period. They 
maintain that the interest rate for the post-shipment period should be 
Aichi's home market promissory note discount rate, which reflects the 
only short-term borrowing that Aichi had during the POI. They argue 
that the Department should continue to use Aichi's promissory note 
discount rate to calculate Aichi's post-shipment credit expense.

DOC Position

    We agree with the petitioners. The time value of the yen-
denominated U.S. sales should be measured by Aichi's short-term 
borrowings as represented by its use of promissory notes in Japan. 
Measuring the value of advance payments received by Aichi (i.e., 
Aichi's imputed credit revenue) should be measured by the difference 
between the time value of money to Aichi and the credit Aichi gives to 
Kanematsu for having advanced payment. With regard to establishing the 
time value of money, we verified Aichi's borrowing rate by examining 
the discount rate documented by Aichi's promissory notes on home market 
sales. We also verified the rate used by Aichi to credit Kanematsu for 
the value of the advance payment received before shipment. For those 
sales greater than a given amount, Aichi reduced the net total amount 
due from Kanematsu by the value of the advance payment for the time 
held, at an interest rate set internally. However, while this amount 
does reflect Aichi's internal evaluation of the time value of the money 
advanced by Kanematsu, the rate is not based on actual borrowing by 
Aichi during the POI. The Department, therefore, used a rate charged 
for borrowings to determine imputed credit, since by extending credit 
to its customers, Aichi acted as a lender. It is the Department's 
practice to use lending rates, as opposed to investment return rates, 
in calculating credit expenses. (See, e.g., Preliminary Determination 
of Sales at Less Than Fair Value: Antidumping Duty Investigation of 
Color Negative Photographic Paper and Chemical Components Thereof from 
Japan 59 FR 16177, (April 6, 1994), and Final Determination of Sales at 
Less Than Fair Value: Antifriction Bearings (Other than Tapered Roller 
Bearings) and Parts Thereof from Germany, 54 FR 18992, 19053 (May 3, 
1989).
    We have therefore recalculated imputed U.S. credit expenses based 
on the interest rate applied by Aichi's banks for discounting 
promissory notes and applied this rate to the portion of U.S. sales 
paid after shipment. The net value of Aichi's imputed interest income 
is measured as the difference between (1) the time value money based on 
Aichi's Japanese promissory notes and (2) the rate at which Aichi 
compensated Kanematsu for making advance payments. We have, therefore, 
also recalculated U.S. credit income on advance payments by using an 
interest rate that is the difference between the two rates.

Comment 8--Errors in U.S. Indirect Selling Expenses

    The petitioners argue that the Department should correct the errors 
concerning the calculation of U.S. indirect selling expenses as 
identified in the verification report. In the report, the Department 
noted that on November 23, 1994, Aichi reported that the correct amount 
of U.S. indirect selling expenses was a percent of sales value slightly 
higher than that on the computer tape submitted for purposes of 
verification. On February 23, 1995, the Department instructed Aichi to 
resubmit a computer tape correcting this calculation error. On March 1, 
1995, Aichi also requested that it revise the home market indirect 
selling expenses to reflect the narrative data submitted on November 
23, 1994. The tape, with the requisite revisions, was submitted on 
March 3, 1995.

DOC Position

    We agree with both parties. We used the revised percentages for 
both U.S. and home market indirect selling expenses, based on the data 
first submitted in narrative on November 23, 1994.

Comment 9--Home Market Inland Freight

    Aichi states that in preparing the documentation for verification 
of the home market inland freight charges, several errors had been 
discovered prior to, and voluntarily disclosed at, verification and 
corrected for the Department officials' inspection. (The first type of 
error involved a recording error of the contract rate for the route. 
The second type of error was due to the fact that the actual delivery 
route for particular shipments was sometimes different from the 
standard delivery route reflected in the contract freight 
[[Page 16616]] rate schedule.) The effect of these errors, Aichi 
emphasizes, had been to understate most inland freight costs. Aichi 
stresses that shipment-specific reporting of such costs was 
prohibitively burdensome, since Aichi's computerized records do not 
contain the data necessary to electronically compile the information. 
At verification, Aichi adjusted incorrect amounts for specific 
transactions and provided a revision of the chart showing freight 
expense charges by domestic destination. Aichi argues that the 
Department should make the adjustments to the home market inland 
freight charges based on the verified freight expenses.
    The petitioners contend that the Department should use the verified 
freight rate schedules originally reported and should not accept the 
revisions to the reported freight schedule rates. They argue that if 
the Department chooses to rely on the revised home market inland 
freight charges, it should only do so with respect to those home market 
sales actually found to contain erroneous freight costs. Additionally, 
they argue that any revisions to the respondent's home market inland 
freight costs should not include the amounts reported under the second 
inland freight variable field which they contend pertain to pre-sale 
expenses for shipments to the warehouses, and, therefore, should not be 
deducted as movement charges from FMV.

DOC Position

    We agree, in part, with both parties. We used the originally 
reported values for most home market sales. We examined a selection of 
the mistakes made in reporting these values and found that, 
overwhelmingly, the charges under-reported inland freight claimed as a 
reduction of FMV. Aichi voluntarily disclosed the mistakes and was able 
to quantify the general effect of the inaccuracies. However, due to the 
volume and complexity of the errors, a complete revision was not 
examined at verification. Therefore, we used the originally reported 
charges, with the exception of the corrections specifically examined at 
verification; for those transactions we (1) used the revised freight-
schedule data reported, and (2) added several invoice-specific 
corrections noted in the sales verification report at 31.
    Because certain expenses reported separately pertain to pre-sale 
expenses for transportation to warehouses, these costs should be 
included as a portion of home market indirect selling expenses, rather 
than movement charge deductions to FMV. Aichi reported on September 19, 
at 32-33 that ``because shipment date to the customer is sale date, 
these shipments to the warehousers are pre-sale and reported in 
INLFRTH2.'' For those transactions whose corrections were examined at 
verification, the correct values for pre-sale expenses are included in 
home market indirect selling expenses.

Comment 10--Additional Price Protection Adjustment

    Aichi originally argued that the Department should make an 
adjustment at the final determination for the additional price 
discounts discovered at verification, maintaining that the unreported 
discounts are no different from the other price protection discounts 
previously reported. For this reason, Aichi argued that the Department 
should adjust the applicable home market sales for these additional 
discounts.
    The petitioners argue that the newly claimed discounts constitute a 
claim submitted for the first time in Aichi's case brief and as such, 
is untimely. In its March 3, 1995, submission, Aichi withdrew its claim 
for additional price protection program discounts.

DOC Position

    Since Aichi has withdrawn its own claims, all arguments set forth 
by the interested parties are moot. We accept Aichi's withdrawal of the 
request for additional price protection adjustments.

Comment 11--Home Market Bank Charges

    Aichi argues that the Department should make an adjustment for 
Aichi's home market bank charges as direct selling expenses because the 
Department verified that Aichi incurs bank charges for the processing 
of promissory notes in connection with home market sales. Aichi cites 
several cases, including Final Determination of Sales at Less Than Fair 
Value: Ferrosilicon from Venezuela, 58 FR 27522, 27525 (May 10, 1993), 
to demonstrate that the proper treatment of bank charges is as a 
circumstance-of-sale adjustment.
    The petitioners contend that the Department should reject Aichi's 
claim for an adjustment based on bank charges given the untimeliness of 
the claim. Additionally, they argue that the Department did not review 
documents related to this charge during verification. If the Department 
were to consider Aichi's claim as timely and substantiated by the 
verification record, the petitioners maintain that they believe that 
such bank charges would have also been incurred in the discounting of 
anticipated revenues for U.S. sales. Therefore, they request that the 
Department either disregard Aichi's claim or, alternatively, make a 
similar adjustment for Aichi's U.S. sales.

DOC Position

    We agree with the petitioners that the respondent's claim is 
untimely. Therefore, we did not make any adjustments for bank charges.

Comment 12--Product-Matching Criteria

    Aichi argues that the Department should not conduct its sales-
below-cost test on a model-specific basis, whereby if more than 90 
percent of a model are found to be sold below the cost of production, 
constructed value is used as the basis of FMV. This claim is premised 
on Aichi's understanding that it is inconsistent with the statutory 
preference for price-to-price comparisons to resort to constructed 
value when a comparable model exits that in the home market that was 
sold above cost and that satisfies the 20 percent difference in 
merchandise test. Aichi contends that when there are no above-cost 
sales for a particular control number designated product, the 
Department should first compare the U.S. sale to the next most similar 
product.
    The petitioners contest Aichi's proposed revision to matching home 
market sales of the next most similar model to U.S. prices when the 
number of sales of the most similar model were found to be insufficient 
to form the basis of FMV because they were made below the cost of 
production. They cite to the Department's Import Administration Policy 
Bulletin 92/4, issued on December 15, 1992, wherein the Department 
states that because the statute ``specifies the determination of such 
or similar merchandise on the similarity of the merchandise only and 
not on whether the most similar model is sold above cost, section 
771(15) appears to direct us to the use of constructed value when the 
most similar model is sold below cost.''

DOC Position

    We agree with the petitioners. As outlined in the December 15, 
1995, Office of Policy Bulletin, it is the Department's practice to 
conduct the sales-below-cost test on a model-specific basis. The 
memorandum states that ``in determining FMV, if the Department finds 
that sales of a given model, otherwise suitable for comparison, are 
sold below the cost of production, and the remaining sales of that 
model are inadequate to determine FMV, the [[Page 16617]] Department 
will use constructed value to determine FMV.'' This has been the 
Department's consistent practice since the issuance of that Bulletin. 
Therefore, we used constructed value to determine FMV when 90 percent 
of the sales of a given model were found to be sold below the cost of 
production.

Comment 13--Correction to Understated COP

    The petitioners contend that the Department should correct all 
misstated material costs for purposes of the final determination by 
substituting the highest material cost reported by Aichi for the same 
grade of material.
    Aichi agrees with the petitioners that for two sizes of stainless 
steel angle products, the reported materials cost does not reflect 
actual costs and notes that this error was due to an output quantity 
recording error in Aichi's normal cost accounting system. However, 
Aichi explains that since neither of these products were produced in 
significant volume, nor exported to the United States, nor compared to 
U.S. products in the Department's product matching, they have no 
relevance in the Department's LTFV comparisons. Accordingly, Aichi 
contends that the Department should not revise material costs for these 
two sizes of products. In the event the Department decides to revise 
material costs for these two sizes of products, Aichi urges the 
Department to use the average of reported material costs within the 
same grade of steel rather than the highest reported costs.

DOC Position

    We agree in part with petitioner that Aichi's material costs for 
these two products should be revised. However, because the misstated 
material costs were due to re-coding errors from its cost accounting 
system, we do not consider it appropriate to penalize Aichi by using 
the highest material cost reported for the same grade of material. 
Instead, we agree with Aichi to revise the material costs for these two 
products using the average reported material cost within the same grade 
of steel.

Comment 14--Inclusion of Depreciation Expenses in COP

    The petitioners argue that the Department should increase Aichi's 
reported depreciation expense to account for the special depreciation 
amount on environmental and conservation equipment. They state that 
these expenses were recorded in Aichi's accounting records and were 
reported in its audited financial statements for the fiscal accounting 
period that covered the POI. Accordingly, the Department should 
increase Aichi's reported G&A expenses to include the special 
depreciation expense.
    Aichi contends that it included all conventional depreciation 
expenses in its submitted G&A rate and that it did not include the 
special depreciation expense or the reversal of this special 
depreciation because these amounts strictly relate to Japanese tax law. 
However, if the Department determines that the special depreciation 
amounts should appropriately be included in the G&A rate calculation, 
Aichi believes that its COP and CV would decrease due to the fact that 
the reversal of previously set aside depreciation exceeds the current 
year's special depreciation.

DOC Position

    The Department disagrees with the petitioners that the special 
depreciation expense should be included in the reported COP and CV 
amounts. This special depreciation relates solely to Japanese tax law 
which, in effect, allows companies to accelerate depreciation for 
purchases of environmental and conservation equipment. Since this 
depreciation relates solely to tax law and represents no real 
additional cost to the company, we excluded it from the COP and CV for 
purposes of the final determination.

Comment 15--Preliminary Ministerial Errors

    The petitioners maintain that the Department should make 
corrections pertaining to the following: (1) Comparison of tax-
inclusive U.S. prices to consumption tax-exclusive constructed value; 
(2) double-counting of other expenses for purposes of determining the 
SG&A amounts to be used in constructed value calculations; and, (3) 
double-counting of imputed credit in the formula used to calculate 
SG&A.
    Aichi contends that the Department should incorporate a revision to 
SG&A in the CV calculations by revising two lines of its preliminary 
computer programming to include the factor for imputed credit as one of 
the components of SG&A, but as deductions. Aichi maintains that the 
imputed credit value should be a downward adjustment to SG&A, both when 
measuring whether actual or statutory (10 percent) SG&A are to be used, 
and when defining what actual SG&A is comprised of. According to Aichi, 
the values reported should be used as downward adjustments to interest 
expenses requested in the section D questionnaire, based on Aichi's 
relative value of finished goods inventory and accounts receivable to 
total assets.
    In addition, Aichi argues that, when revising the calculation of 
SG&A in its programming, the Department should also revise the program 
to deduct warehousing expenses. Aichi contends that this revision is 
required because the Department's calculations double-count 
warehousing. Aichi maintains that home market warehousing expenses are 
included in FMV as a component of total indirect selling expenses. 
According to Aichi, the indirect selling expenses for CV are inclusive 
of warehousing; thus SG&A brings home-market warehousing into FMV when 
CV is used.

DOC Position

    We implemented the three corrections noted after the preliminary 
determination. Our final calculations took into account the following 
methodology:
    (A) The calculations exclude the tax adjustment included in the 
U.S. price to CV comparison programming.
    (B) The calculations eliminate the ``other expenses'' added to the 
SG&A test in the preliminary programming, as these double-counted these 
expenses.
    (C) The calculations eliminate the separate variable for imputed 
credit used in its SG&A test in the preliminary programming, as this 
double-counted the expenses. Aichi's claim that the reported value is 
the required adjustment to interest expenses is not correct; as noted 
in the final OA memorandum, the interest expense value has already been 
adjusted for imputed credit by the ratio of Aichi's accounts 
receivables to total assets.
    With regard to Aichi's request to modify the methodology for 
treating selling expenses, we disagree with Aichi, instead:
    (D) We included home market pre-sale warehousing as a component of 
the indirect selling expenses in CV and also treated U.S. post-sale 
warehousing as a direct selling expense and adjusted for it as a 
circumstance-of-sale, pursuant to Ad Hoc Committee of AZ-NM-TX-FL 
Producers of Gray Portland Cement V. United States, 13 F.3d 398 (Fed. 
Cir. 1994).

Continuation of Suspension of Liquidation

    In accordance with section 735(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all entries of stainless 
steel angle from Japan, as defined in the ``Scope of Investigation'' 
section of this notice, that are entered, or withdrawn from 
[[Page 16618]] warehouse, for consumption on or after November 10, 
1994.
    The Customs Service shall require a cash deposit or posting of a 
bond equal to the estimated preliminary dumping margin, as shown below. 
The suspension of liquidation will remain in effect until further 
notice.

------------------------------------------------------------------------
                                                               Margin   
              Producer/manufacturer/exporter                (percentage)
------------------------------------------------------------------------
Aichi Steel Works, LTD....................................         15.06
All Others................................................         15.06
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. The ITC will make its determination whether 
these imports materially injure, or threaten injury to, a U.S. industry 
within 45 days of the publication of this notice. If the ITC determines 
that material injury or threat of material injury does not exist, the 
proceeding will be terminated and all securities posted as a result of 
the suspension of liquidation will be refunded or cancelled.
    However, if the ITC determines that such injury does exist, we will 
issue an antidumping duty order directing the Customs Service officers 
to assess an antidumping duty on SSA from Japan, entered, or withdrawn 
from warehouse, for consumption on or after the date of suspension of 
liquidation, equal to the amount by which the foreign market value of 
the merchandise exceeds the United States price.
    This determination is published pursuant to section 735(d) of the 
Act (19 U.S.C. 1673(d)) and 19 CFR 353.20.

    Dated: March 24, 1995.
Barbara R. Stafford,
Acting Assistant Secretary for Import Administration.
[FR Doc. 95-8017 Filed 3-30-95; 8:45 am]
BILLING CODE 3510-DS-P