[Federal Register Volume 59, Number 58 (Friday, March 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7122]


[[Page Unknown]]

[Federal Register: March 25, 1994]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-427-812]

 

Final Determinations of Sales at Less Than Fair Value: Calcium 
Aluminate Cement, Cement Clinker and Flux From France

Agency: Import Administration, International Trade Administration, 
Commerce.

EFFECTIVE DATE: March 25, 1994.

FOR FURTHER INFORMATION CONTACT: V. Irene Darzenta or Katherine 
Johnson, Office of Antidumping Investigations, Import Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue NW., 
Washington, DC 20230; telephone (202) 482-6320 or 482-4929, 
respectively.

Final Determinations

    We determine that calcium aluminate (CA) cement, cement clinker and 
flux from France are being, or are likely to be, 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.

Scope of Investigations

    The products subject to these investigations constitute two classes 
or kinds of merchandise: (1) CA cement and cement clinker, and (2) CA 
flux. The products covered by these investigations include CA cement, 
cement clinker and flux, other than white, high purity CA cement, 
cement clinker and flux. These products contain by weight more than 32 
percent but less than 65 percent alumina and more than one percent each 
of iron and silica.
    CA cement/cement clinker and CA flux have significantly different 
physical characteristics and end uses. CA cement is a specialty 
hydraulic non-portland cement used for construction purposes. CA cement 
clinker is the primary material used as a binding agent in the 
production of CA cement. CA flux is used primarily as a desulfurizer 
and/or cleaning agent in the steel manufacturing process. CA clinker 
produced for sale as flux cannot be used to produce CA cement, and CA 
clinker used to produce CA cement cannot be used as a flux in the 
production of steel.
    CA flux has a chemical composition distinct from CA cement clinker. 
CA cement clinker contains the hydraulic mineral mono-calcium 
aluminate, which gives it a molar ratio of lime to alumina of 
approximately 1:1. In contrast, CA clinker sold as a flux does not 
contain mono-calcium aluminate; it contains the complex mineral 
C12A7 (12CaO * 7A12O2), which gives it a molar 
ratio of lime to alumina of approximately 2:1. This higher lime to 
alumina ratio gives the CA clinker sold as a flux a lower melting point 
than CA cement, and also results in extra lime which can bond with 
sulfur and other impurities in molten steel. Although CA clinker sold 
as flux has some hydraulic properties, it hydrates too quickly to be 
used for those properties.
    These products are currently classifiable under the following 
Harmonized Tariff Schedule of the United States (HTSUS) subheadings: 
2523.30.0000 (for aluminous cement) and 2523.10.0000 (for cement 
clinker and flux). Although the HTSUS subheadings are provided for 
convenience and customs purposes, the written description of the scope 
of these investigations remains dispositive.

Period of Investigations

    The period of investigation (POI) is October 1, 1992, through March 
31, 1993.

Case History

    Since the publication of the notice of preliminary determinations 
on November 3, 1993 (58 FR 58683), the following events have occurred.
    On October 29, 1993, the respondent, Lafarge Fondu International 
(LFI) and Lafarge Calcium Aluminates, Inc. (LCA) (collectively 
Lafarge), and the petitioner, Lehigh Portland Cement Company (Lehigh), 
both requested that the Department postpone the final determinations in 
these investigations. Pursuant to these requests, the Department 
postponed the final determinations until March 18, 1994 (58 FR 60843, 
November 18, 1993).
    On November 8, 1993, Lafarge submitted supplemental responses to 
the Department's questionnaire for CA flux sales.
    On November 15, 1993, petitioner requested that the Department 
collect data on respondent's home market sales of CA flux, objecting to 
respondent's use of constructed value (CV) based on differences-in-
merchandise (difmer) adjustments calculated inclusive of home market 
bagging costs. (See Comment 11 in the ``Interested Party Comments'' 
section of this notice.) Subsequently, on November 24, 1993, the 
Department requested that respondent provide such data.
    On November 15 and 24, 1993, respectively, Lafarge and Lehigh 
requested a public hearing. On December 14, 1993, the Department issued 
a second set of supplemental questionnaires for sales of both classes 
or kinds of merchandise. Respondent submitted home market sales data 
for flux and responses to the Department's second set of supplemental 
questionnaires on December 23 and 29, 1993, respectively. On January 3, 
1994, respondent submitted certain corrections to the cost and sales 
data reported in its previous questionnaire responses.
    The Department conducted verification of the cost and sales 
responses of LFI and LCA from January 10 through January 20, 1994, in 
Paris, France and Chesapeake, Virginia.
    Petitioner and respondent filed case and rebuttal briefs on 
February 14 and 18, 1994, respectively. On February 16, 1994, the 
parties withdrew their requests for a public hearing which was 
scheduled to take place on February 18, 1994.

Such or Similar Comparisons

    Regarding the CA cement and cement clinker class or kind of 
merchandise, we have determined that the products covered by this 
investigation constitute two ``such or similar'' categories of 
merchandise: CA cement and CA cement clinker. We made fair value 
comparisons on this basis. Since this investigation was initiated 
during a period in which certain simplification procedures were in 
effect (see the preliminary determination), we conducted the home 
market viability test based on the class or kind of merchandise, rather 
than on the such or similar category. In order to determine whether 
there was a sufficient volume of sales in the home market to serve as a 
viable basis for calculating foreign market value (FMV), we compared 
the volume of home market sales of CA cement and cement clinker to the 
volume of third country sales of CA cement and cement clinker, in 
accordance with section 773(a)(1)(B) of the Act, and determined that 
the home market was viable for the CA cement and cement clinker class 
or kind. During the POI, CA cement clinker was the only product within 
the cement class or kind which was imported into the United States from 
France. Because there were no sales of such or similar merchandise 
(i.e., clinker) in the home market during the POI to compare to U.S. 
sales, we made comparisons on the basis of CV (see the ``Fair Value 
Comparisons'' section of this notice), in accordance with section 
773(a)(2) of the Act.
    Regarding the CA flux class or kind of merchandise, we determined 
that the products covered by this investigation comprise a single 
``such or similar'' category of merchandise and that the home market 
was viable. Where there were no sales of identical merchandise in the 
home market during the POI to compare to U.S. sales, we made similar 
merchandise comparisons on the basis of size (i.e., degree of crushing/
screening), in accordance with section 773(a)(1) of the Act (see the 
``Fair Value Comparisons'' section of this notice). We made adjustments 
for differences in the physical characteristics of the merchandise, in 
accordance with section 773(a)(4)(C) of the Act.

Fair Value Comparisons

    To determine whether sales of CA cement and cement clinker, and CA 
flux from France were made at less than fair value, we compared United 
States Price (USP) to the FMV, as specified in the ``United States 
Price'' and ``Foreign Market Value'' sections of this notice. We made 
revisions to respondent's reported data, where appropriate, based on 
verification findings. For those unreported U.S. cement sales which 
respondent claimed were made pursuant to certain graduated requirements 
contracts effective prior to the POI, but for which respondent could 
not provide documentary evidence substantiating its claim, we based our 
analysis on best information available (BIA), in accordance with 19 CFR 
353.37. As BIA, we used the highest, non-aberrational margin calculated 
for any of respondent's reported U.S. sales of cement. (See Comment 1 
in the ``Interested Party Comments'' section of this notice.)

United States Price

    All of Lafarge's U.S. sales to the first unrelated purchaser took 
place after importation into the United states. Therefore, we based USP 
on exporter's sales prices (ESP), in accordance with section 772(c) of 
the Act.
    For ESP sales of cement, we included in our final analysis certain 
reported sales allegedly made under an exclusive supply contract, using 
the reported, verified date of purchase order as the date of sale. (See 
Comment 2 in the ``Interested Party Comments'' section of this notice.) 
For ESP sales of flux, we included in our final analysis certain 
reported sales made under a contract which expired but which respondent 
claimed had been subsequently renewed prior to the POI, but for which 
respondent could not provide documentary evidence substantiating that 
claim. For these sales, we used the verified date of purchase order (or 
date of invoice where the purchase order date was unavailable) as the 
date of sale. (See Comment 9 in the ``Interested Party Comments'' 
section of this notice.) Furthermore, we excluded certain reported flux 
shipments made in October 1992 pursuant to a contract effective prior 
to the POI, the price terms of which were modified in November 1992. 
(See Comment 10 in the ``Interested Party Comments'' section of this 
notice.)
    We calculated USP based on packed or bulk, ex-U.S. warehouse or 
delivered prices to unrelated customers in the United States. For sales 
of both classes or kinds of merchandise, we made deductions, where 
appropriate, for foreign inland freight, foreign brokerage and 
handling, ocean freight, marine insurance, U.S. brokerage and handling 
(including harbor maintenance and customs processing fees), unloading 
costs, and U.S. inland freight charges (including loading, freight to 
processors' warehouses/transfer freight to warehouses, demurrage and 
freight to customer charges, where applicable). For sales of CA flux, 
we recalculated foreign inland freight, foreign brokerage and handling, 
ocean freight and U.S. inland freight expenses to correct minor 
clerical errors found at verification.
    For sales of both classes or kinds of merchandise, we also deducted 
direct selling expenses including credit and product liability 
premiums. We recalculated credit expenses to account for discounts, 
where applicable, and to correct minor clerical errors found at 
verification with respect to the reported weighted-average short-term 
interest rate and the reported payment or shipment dates for certain 
transactions. We also recalculated credit for those sales that had 
missing payment dates. For those missing payment dates, we used, as 
BIA, the date of the final determination as the date of payment. In 
addition, we reclassified premiums for product liability insurance as 
direct selling expenses, and deducted them from USP accordingly. (See 
Comment 15 in the ``Interested Party Comments'' section of this 
notice.)
    For sales of both classes or kinds of merchandise, we also deducted 
indirect selling expenses (including pre-sale warehousing costs 
incurred in the United States and selling expenses incurred in France 
on the merchandise exported to the United States for further 
manufacturing). U.S. indirect selling expenses were recalculated to 
exclude certain administrative expenses which were determined to be 
more appropriately classified as general and administrative (G&A) 
expenses. (See Comment 18 in the ``Interested Party Comments'' section 
of this notice.) We also deducted imputed inventory carrying costs for 
the period between production of the clinker/flux in France and 
shipment of the finished cement/processed flux to the customer in the 
United States. For sales of CA cement, we recalculated inventory 
carrying costs for the period between production of the clinker in 
France and the start of production of the finished cement in the United 
States, using the verified weighted-average short-term interest rate in 
France for the POI. (See Comment 4 in the ``Interested Party Comments'' 
section of this notice.)
    For sales of CA cement, we also deducted rebates, discounts and 
warranty expenses, where applicable. For sales of CA flux, we also 
deducted commissions, where appropriate.
    In addition, for both classes or kinds of merchandise, we made 
deductions, where appropriate, for all value added in the United States 
pursuant to section 772(e)(3) of the Act. The value added consists of 
the costs associated with further manufacturing the imported products, 
including a proportional amount of any profit related to further 
manufacturing. We calculated profit attributable to further 
manufacturing in the United States by deducting from the sales price 
all applicable costs incurred in producing the further manufactured 
products. We then allocated the total profit proportionally to all 
components of cost. We deducted only the profit attributable to the 
value added in the United States. In determining the costs incurred to 
produce the further manufactured products, we included: (1) The costs 
of manufacture (COM); (2) movement and packing expenses; (3) selling, 
general and administrative (SG&A) expenses; and (4) interest expenses.
    For both classes or kinds of merchandise, we relied on the 
submitted further manufacturing costs except in certain instances where 
the costs were not appropriately quantified or valued. We reclassified 
certain administrative expenses which were reported as indirect selling 
expenses as G&A expenses. We also recalculated financial expenses to 
exclude the claimed adjustment for short-term interest income. (See 
Comments 18 and 19, respectively, in the ``Interested Party Comments'' 
section of this notice.)
    For CA flux sales, we made an adjustment to U.S. price for the 
value-added tax (VAT) paid on the comparison sale in France. In 
Federal-Mogul Corporation and The Torrington Company v. United States, 
Slip Op. 93-194 (CIT October 7, 1993), the Court of International Trade 
(CIT) rejected our revised implementation of the Act's instructions on 
taxes and prohibited us from applying a purely tax neutral margin 
calculation methodology. Accordingly, we have again changed our 
practice, as instructed by the CIT, and adjusted USP for tax by 
multiplying the home market tax rate by the U.S. price at the point in 
the chain of commerce of the U.S. merchandise that is analogous to the 
point in the home market chain of commerce at which the foreign 
government applies the home market consumption tax.
    In this investigation, the tax levied on the subject merchandise in 
the home market is 18.6 percent. We calculated the appropriate tax 
adjustment to be 18.6 percent of USP net of adjustments reflected on 
the invoice at the time of sale (which, in this case, is the point in 
the chain of commerce of the U.S. merchandise that is analogous to the 
point in the home market chain of commerce at which the foreign 
government applies the home market consumption tax), and added this 
amount to the USP. We also calculated the amount of the tax adjustment 
that was due solely to the inclusion of price deductions in the 
original tax base (i.e., 18.6 percent of the sum of any adjustments, 
expenses and charges that were deducted from the tax base). We deducted 
this amount from the net USP after all other additions and deductions 
had been made. By making this additional tax adjustment, we avoid a 
distortion that would cause the creation of a dumping margin even when 
pre-tax dumping is zero.

Foreign Market Value

    For CA cement and cement clinker, we based FMV on the CV data 
submitted for cement clinker because cement clinker was the only such 
or similar product within the cement and clinker class or kind which 
was imported into the United States during the POI, and there were no 
sales of this product in the home market or to unrelated customers in 
third countries during the POI. (See the ``Such or Similar 
Comparisons'' section of this notice.) For CA flux, we based FMV on 
home market sales prices because we found the home market to be viable 
for flux sales during the POI, and because the difference-in-
merchandise adjustments between the flux products sold to the United 
States and those sold in the home market do not exceed 20 percent. (See 
Comment 12 in the ``Interested Party Comment'' sections of this 
notice.)

CV-to-Price Comparisons

    We calculated CV for cement clinker based on the sum of Lafarge's 
cost of materials, fabrication, general expenses, U.S. packing costs 
and profit. We relied on the submitted CV information, except in the 
following instances where the costs were not appropriately quantified 
or valued:

    (1) We adjusted material costs for minor errors presented at 
verification. We also increased material costs for foreign exchange 
losses incurred when reporting raw materials. (See Comment 21 in the 
``Interested Party Comments'' section of this notice.)
    (2) We adjusted variable overhead to correct minor errors found 
at verification.
    (3) We did not allow the annualization of fixed costs as we had 
done in the preliminary determination because respondent incorrectly 
reported labor costs as part of annualized fixed costs, rather than 
as variable costs for the POI in accordance with the Department's 
instructions; and because respondent failed to provide an 
itemization of fixed and variable costs that would allow us to 
appropriately reclassify labor costs from annualized fixed costs to 
POI variable costs. As BIA, we used the fixed costs, including the 
labor costs, incurred during the POI. (See Comment 22 in the 
``Interested Party Comments'' section of this notice.)
    (4) We revised the COM reported to include an amount for 
depreciation on research and development (R&D) assets which was not 
originally reported. (See Comment 20 in the ``Interested Party 
Comments'' section of this notice.)
    (5) We recalculated financial expenses to exclude the claimed 
adjustment for short-term interest income. (See Comment 19 in the 
``Interested Party Comments'' section of this notice.)
    (6) We also recalculated home market selling expenses on a class 
or kind basis. (See Comment 6 in the ``Interested Party Comments'' 
section of this notice.)
In accordance with section 773(e)(1)(B) (i) and (ii) of the Act we 
included in CV the recalculated general expenses since these 
expenses were greater than the statutory minimum of ten percent of 
the COM. We revised respondent's reported profit calculation to 
reflect verification findings. (See Comment 8 in the ``Interested 
Party Comments'' section of this notice.) Since this amount was 
greater than the statutory minimum of eight percent of the sum of 
the COM and general expenses, we used the recalculated profit for CV 
purposes.
    We deducted from CV home market direct selling expenses. We also 
deducted home market indirect selling expenses capped by the amount 
of U.S. indirect selling expenses attributable to the cement clinker 
imported into the United States and further manufactured into 
finished cement, in accordance with 19 CFR 353.56(b)(2).

Price-to-Price Comparisons

    For sales of flux, we calculated FMV based on packed, ex-factory or 
delivered prices to unrelated home market customers. We excluded from 
our analysis those sales made to home market customers on a test basis 
because they were in unusually small quantities, rather than in the 
usual commercial quantities, in accordance with 19 CFR 353.46(a)(1). We 
also excluded from our analysis those sales to a home market customer 
which were destined for a third country market. (See Comment 16 in the 
``Interested Party Comments'' section of this notice.) We made 
deductions, where appropriate, for rebates. We also deducted home 
market packing costs which were recalculated to exclude the costs of 
bagging and G&A expenses. (See Comments 11 and 12 in the ``Interested 
Party Comments'' section of this notice.)
    Pursuant to section 773(a)(4)(B) and 19 CFR 353.56(a)(2), we also 
deducted direct selling expenses including bagging costs, credit, 
technical service expenses and product liability premiums. (See 
Comments 11, 13 and 15 in the ``Interested Party Comments'' section of 
this notice.) We recalculated credit expenses to exclude VAT from the 
gross unit prices and to correct minor clerical errors found at 
verification with respect to the credit periods reported for certain 
transactions. (See Comment 14 in the ``Interested Party Comments'' 
section of this notice.) We revised respondent's reported technical 
service expense calculation, treating the verified travel expense 
portion of the calculation as a direct expense and the verified salary 
portion as an indirect selling expense. (See Comment 13 in the 
``Interested Party Comments'' section of this notice.) In accordance 
with the decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray 
Portland Cement v. United States, Slip Op. 93-1239 (Fed. Cir., January 
5, 1994), we made a circumstance-of-sale adjustment for post-sale home 
market movement expenses, namely inland freight and loading charges. We 
also deducted from FMV home market indirect selling expenses, including 
inventory carrying costs. The deduction for home market indirect 
selling expenses was capped by the sum of U.S. indirect selling 
expenses and U.S. commissions attributable to the flux imported into 
the United States and further manufactured, in accordance with 19 CFR 
353.56(b) (1) and (2). Where there was no U.S. commission applicable to 
a particular U.S. flux sale, we offset the indirect selling expenses in 
the United States with a corresponding deduction for indirect selling 
expenses in the home market, capped by the total indirect selling 
expenses incurred on the U.S. sale in the manner described above.
    We included in FMV the amount of the VAT collected in the home 
market. We also calculated the amount of the tax that was due solely to 
the inclusion of price deductions in the original tax base (i.e., 18.6 
percent of the sum of any adjustments, expenses, charges and offsets 
that were deducted from the tax base). We deducted this amount after 
all other additions and deductions had been made. By making this 
additional tax adjustment, we avoid a distortion that would cause the 
creation of a dumping margin even when pre-tax dumping is zero.
    We also made an adjustment for physical differences in the 
merchandise, in accordance with 19 CFR 353.57. We revised the reported 
difmer amount to reflect only the verified variable COM, excluding the 
reported costs of bagging associated with the home market products, and 
associated G&A expenses and profit. (See Comments 11 and 12 in the 
``Interested Party Comments'' section of this notice.)

Verification

    As provided in section 776(b) of the Act, we conducted verification 
of the information provided by Lafarge by using standard verification 
procedures, including the examination of relevant sales, cost and 
financial records, and selection of original source documentation.

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the dates of the U.S. sales as certified by the Federal 
Reserve Bank of New York.

Interested Party Comments

Comment 1

    Petitioner argues that certain unreported U.S. CA cement sales 
alleged by Lafarge to have been made under graduated requirements 
contracts effective prior to the POI should be included in the 
Department's final analysis. Petitioner notes that at verification 
respondent could not provide the Department with any contemporaneous 
documentation regarding the acceptance of the essential terms of sale 
by the customers associated with these contracts. Petitioner contends 
that, despite the fact that respondent believes that these shipments 
were based on contracts entered into before the POI, the Department 
could not verify the existence or terms of these alleged contracts. 
Petitioner also maintains that respondent refused to provide the 
relevant data requested by the Department with regard to this issue.
    Petitioner further argues that respondent never demonstrated that 
the alleged contracts governing these CA cement shipments were made 
prior to the POI. According to petitioner, the alleged contracts cover 
time periods much earlier than the POI and in fact constitute 
unilateral sales proposals made by Lafarge which are not evidence of a 
binding commitment between the parties as to quantity and price. 
According to petitioner, Lafarge also has not demonstrated that these 
shipments were not in excess of the quantity requirements stipulated in 
the alleged contracts.
    Petitioner believes that, as BIA, the Department should apply a 
rate of 198.10 percent, the highest margin alleged in the petition, to 
account for these sales.
    Respondent maintains that for these CA cement sales the Department 
should use the date of the customers' acceptance of the graduated 
requirements pricing proposals as the date of sale and exclude these 
sales from its final analysis. Respondent believes its pricing 
proposals were accepted by the customers when the customers placed 
initial purchase orders at the prices specified in the proposals. At 
the time these orders were placed, respondent claims the parties had 
already orally reached an agreement with LCA regarding the percentage 
of their requirements they were committed to purchase from LCA in order 
to qualify for each price level specified in the proposals; the orders 
provided confirmation of each customer's prior acceptance of LCA's 
pricing proposal. Because these initial orders were dated prior to the 
POI, respondent argues that the date of sale for the shipments made 
during the POI pursuant to these proposals also fell outside the POI 
and, therefore, these shipments were properly not reported to the 
Department.
    Respondent notes, however, that, should the Department disagree 
with its reasoning and determine that the shipments pursuant to 
graduated requirements contracts should be included in its analysis, 
there is no basis for the Department to make adverse inferences or use 
``punitive'' BIA. Respondent asserts that it fully disclosed the nature 
of its graduated requirements contracts to the Department from the 
start of this case, and it had no reason to believe that it should 
provide further information about those shipments in the form of a 
sales listing. Respondent further notes that it provided a summary of 
the quantity and value of the shipments made during the POI under the 
graduated requirements contracts in its December 29, 1993, supplemental 
questionnaire response, and that, at verification, Department verifiers 
retained as an exhibit a listing of all the POI invoices generated 
under these contracts with related pricing and other sales data. 
Respondent argues that, if the Department decides to include these 
sales in the final determination, the sales data examined at 
verification should be used to allow proper analysis of these sales.

DOC Position

    We agree with petitioner in part. Despite several requests for 
information in our questionnaires, Lafarge did not provide 
documentation regarding customers' acceptance of the graduated 
requirements pricing proposals. For example, Lafarge did not provide 
any of the ``initial'' orders allegedly placed pursuant to these 
graduated requirements pricing proposals. In addition, respondent did 
not offer any indication of the date on which these ``initial'' orders 
were placed for purposes of establishing date of sale for these sales. 
Furthermore, respondent could not provide at verification any 
contemporaneous documentation or other sufficient evidence regarding 
acceptance of the terms of sale by customers associated with the 
subject graduated requirements contracts or indicating a ``meeting of 
the minds'' between the parties with respect to price and quantity, 
despite the Department's repeated requests for such evidence. The POI 
invoices that we examined at verification that were allegedly generated 
pursuant to the pricing proposals and ``initial'' orders gave no 
indication of association with the pricing proposals or ``initial'' 
orders, and respondent provided no other documentation that would 
establish such a connection.
    Lafarge submitted in its December 29, 1993, response sample pricing 
proposals associated with the graduated requirements customers in 
question. At verification, we were able to examine in detail only one 
of those pricing proposals. This proposal, dated January 9, 1991, was 
specifically for 1991 (all the prices and discounts mentioned 
referenced 1991 only) and was silent on the effective period of the 
terms it quoted. We also reviewed a letter that was dated January 20, 
1994, the last day of verification, and was faxed to the respondent on 
that day by the customer in question. This letter attempted to show 
that the January 9, 1991, pricing proposal constituted the date of the 
agreement regarding the essential terms of sale for all sales made to 
that customer after that date. This letter also discussed renewal of 
the pricing arrangement. However, not only was this letter unclear as 
to exactly what kind of agreement the parties had reached pursuant to 
the proposal, but it also did not indicate when renewal was discussed. 
In accordance with the Department's practice, the date of any such 
renewal would constitute a new date of sale. Also in accordance with 
our practice, we required some form of documentation attesting to the 
date of renewal, yet no documentation apart from the faxed letter was 
provided. Lafarge was also unable to provide any such documentation for 
the other customers in question.
    Without some documentary evidence of a renewal prior to the POI, we 
cannot assume that the terms of the January 1991 pricing proposal were 
in effect during the POI. See Final Determination of Sales at Less Than 
Fair Value: Certain Forged Steel Crankshafts from the Federal Republic 
of Germany, 52 FR 28170, 28172 (July 28, 1987) (Crankshafts from the 
FRG); and Final Determination of Sales at Less Than Fair Value: Gray 
Portland Cement and Clinker from Mexico, 55 FR 29244, 29248 (July 18, 
1990) (Gray Portland Cement from Mexico). Because we have no such 
evidence, we have determined that the dates of sale for the shipments 
at issue are within the POI. Accordingly, we have included them in our 
final dumping analysis. We do not think, however, that the pricing 
information contained in the invoice listing referred to by respondent 
is appropriate for use in our dumping analysis. This data was only 
submitted at verification to support the reconciliation of Lafarge's 
reported POI sales with its financial statements (information 
previously submitted in its responses). For purposes of making CV-to-
price comparisons in our dumping analysis, this listing constitutes new 
information under 19 CFR 353.31(a)(i), and was therefore not timely 
submitted. It is not the Department's practice to accept new 
information at verification, because it leaves no opportunity for 
petitioners to analyze the sales reporting and provide deficiency 
questions, and no opportunity for petitioners to analyze and comment on 
these sales. In addressing this issue previously, we have stated:

    The untimely submission of key information * * * precluded the 
Department from conducting a reasonable and thorough analysis of 
this information prior to the verification, just as petitioners were 
unable to comment on the new [information] * * * The purpose of 
verification is to establish the accuracy of a response rather than 
to reconstruct the information to fit the requirements of the 
Department.

Final Result of Sales at Less Than Fair Value; Light-Walled Welded 
Rectangular Carbon Steel Tubing from Argentina, 54 FR 13913 (April 6, 
1989); Final Determinations of Sales at Less Than Fair Value: Certain 
Hot-Rolled Carbon Steel Flat Products and Cold-Rolled Carbon Steel Flat 
Products from the Netherlands, 58 FR 37199, 37203 (July 9, 1993).
    Even if this listing had been submitted seven days prior to 
verification, in accordance with 19 CFR 353.31(a)(i), it did not 
contain sufficient data for purposes of dumping analysis. Therefore, 
because we did not have complete sales information on the record to 
properly analyze these sales, we used BIA.
    However, we do not think that use of the petition rate as BIA for 
these sales, as suggested by petitioner, is warranted. In this case, we 
are using partial BIA because Lafarge has provided responses to our 
questionnaires. When we resort to partial BIA, it is our practice to 
use the highest non-aberrational margin based on respondent's reported 
sales. This is an adverse figure, yet is based on the respondent's 
calculated margins. Therefore, we have used as BIA for these sales the 
highest, non-aberrational margin calculated for any of respondent's 
reported U.S. sales of cement.

Comment 2

    Petitioner contends that certain reported U.S. cement sales alleged 
to have been made under an exclusive supply contract dated outside the 
POI should be included in the Department's analysis. Petitioner argues 
that the Department was unable to verify that these sales were in fact 
made pursuant to a Master Agreement that Lafarge claims was an 
exclusive supply contract. Accordingly, petitioner maintains that 
respondent failed verification with respect to these sales. 
Furthermore, petitioner contends that, even if the Department had been 
able to verify these sales, respondent never had an exclusive supply 
contract with this particular customer. Petitioner asserts that the 
Master Agreement is neither ``exclusive'' nor a ``contract.'' 
Therefore, petitioner argues that the Department should determine that 
the appropriate date of sale for these particular sales is the date of 
invoice, which is within the POI, and the Department should include 
these sales in its dumping calculation.
    Respondent maintains that the Department should consider the date 
of the Master Agreement as the date of sale for the subject sales. 
Respondent argues that the blanket purchase orders issued by the 
customer prior to the POI indicates the customer's commitment to 
purchase its requirements from the respondent for specific products at 
the specific prices set by the Master Agreement.

DOC Position

    We agree with petitioner. In our deficiency questionnaire of 
December 14, 1993, the Department specifically asked the respondent to 
support its assertion regarding the ``exclusivity'' of the Master 
Agreement. Respondent, in its December 29, 1993, response, could 
neither demonstrate that the Master Agreement was ``exclusive,'' nor 
what quantity of the subject merchandise the respondent was agreeing to 
sell. Rather, Lafarge merely stated that the customer purchased all its 
requirements for certain cement products from it and that the ``volume 
commitment'' mentioned in the Master Agreement had been agreed to 
beforehand. Since we have no documentation demonstrating that a 
``meeting of the minds'' regarding both quantity and price occurred 
before the POI, we cannot assume, based on respondent's word, that the 
Master Agreement is a requirements contract for purposes of 
establishing date of sale. (See Crankshafts from the FRG and Gray 
Portland Cement from Mexico.) Accordingly, we have determined the 
appropriate date of sale for these particular sales to be the date of 
purchase order, and we have included them in our final dumping 
calculations.

Comment 3

    Petitioner argues that the Department should reverse its 
preliminary determination that CA cement and CA cement clinker 
constitute two such or similar categories. According to petitioner, the 
Department's determination was based on the incorrect premises that: 
(1) CA cement is not like CA cement clinker in the purposes for which 
used, and (2) in all past cases involving intermediate and finished 
products the Department has determined that there should be two such or 
similar categories. Petitioner contends that there is no question that 
CA cement and CA cement clinker constitute only one such or similar 
category pursuant to section 1677(16)(C) of the antidumping statute. 
According to petitioner, CA cement clinker is like the CA cement it is 
used to produce, and the difference-in-merchandise adjustment that 
would be required to make fair value comparisons between home market 
sales of CA cement and U.S. sales of clinker would be well below the 
Department's 20 percent difmer guideline. Petitioner further argues 
that because there is no data on the record for home market sales of CA 
cement to calculate FMV, the Department should use BIA to determine a 
margin for Lafarge's sales of both CA cement and CA cement clinker. 
Petitioner believes that, as BIA, the Department should use 41.23 
percent, which is the lowest margin alleged in the petition.
    Respondent does not believe that there is any reason for the 
Department to revisit its decision that CA cement and CA cement clinker 
are different such or similar categories at this late stage in the 
investigation. Respondent argues that it would be unfair for the 
Department to penalize it for failing to report information that the 
Department decided not to request. Furthermore, respondent contends 
that the statute does not allow the Department to use BIA when the 
information at issue was never requested.

DOC Position

    We agree with respondent. It was decided early on in these 
investigations that CA cement and cement clinker constituted two such 
or similar categories of merchandise in accordance with the definition 
of similar merchandise under section 771(16)(B)(ii) and (C)(ii) of the 
Act, which states that the component materials and uses of the products 
must be ``like.'' (See June 15, 1993, Memorandum from Richard W. 
Moreland to Barbara R. Stafford Re Such or Similar Categories and 
attached Memorandum from Stafford to Moreland). In this case, while 
cement and clinker may be made of similar materials, they are not used 
for the same purposes. Clinker is used to make cement, and cement is 
used to bind things together or to create some structure or form. 
Clinker requires further processing to be like cement in the purposes 
for which it is used. For these reasons we have held cement and clinker 
to constitute different such or similar merchandise categories in this 
and past cement cases. Moreover, contrary to petitioner's assertion, 
the component materials and uses of products within the class or kind 
of merchandise subject to investigation are the determinants in 
establishing categories of such or similar merchandise: The 20 percent 
difmer rule is not considered by the Department in establishing such or 
similar categories.

Comment 4

    Respondent maintains that in the preliminary determination the 
Department incorrectly deducted from the USP as an indirect selling 
expense, inventory carrying costs (ICC) based on an inventory period 
including the time between clinker production in France and production 
of the finished cement in the United States. Respondent claims that it 
did not sell clinker to an unrelated party in the United States, but 
rather to its U.S. subsidiary for further processing into cement. 
Therefore, the clinker in this case is work-in-process inventory, and 
the period between the production of the intermediate clinker product 
and the completion of the finished cement product is part of the 
production period. Respondent maintains that the Department ordinarily 
imputes an ICC for finished goods inventory and almost never imputes 
ICC on work-in-process inventory, except for large, made-to-order goods 
that are produced as discrete projects. To support its arguments, 
respondent cites among other cases the Final Determination of Sales at 
Less Than Fair Value: Dynamic Random Access Memory Semiconductors of 
One Megabit and Above from the Republic of Korea (58 FR 15467, March 
23, 1993) (DRAMs from Korea) and Color Television Receivers from the 
Republic of Korea; Final Results of Antidumping Duty Administrative 
Review (55 FR 26,255, June 27, 1990) (CTVs from Korea). Furthermore, 
citing Final Determination of Sales at Less Than Fair Value: Offshore 
Platform Jackets and Piles from Japan (51 FR 11788, April 7, 1986) 
(OPJPs from Japan) and the Final Determination of Sales at Less Than 
Fair Value: Mechanical Transfer Presses from Japan (55 FR 335, January 
4, 1990) (MTPs from Japan), respondent maintains that in the rare 
instances in which the Department has imputed ICC on work-in-process 
inventory, it classifies those costs as part of the COM, not as selling 
expenses.
    Petitioner contends that ICC must be calculated to include the time 
CA cement clinker is produced in France until the time it is further 
manufactured into cement in the United States. Petitioner argues that 
both CA clinker and cement will be subject to the scope of any order 
that may be issued in this case and, therefore, CA clinker cannot be 
considered work-in-process, as respondent suggests.

DOC Position

    We agree with petitioner. The Department's general practice in all 
further manufacturing cases has been to begin the inventory carrying 
period from the time that the product comes off of the production line. 
(See e.g., Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Wire Rods from France (58 FR 68865, December 29, 1993) 
(Wire Rods From France). In this case, we are calculating ICC for the 
imported product, which is the clinker that is further manufactured 
into finished cement. We distinguish this case from that of CTVs from 
Korea, where the product imported into the United States was the 
finished merchandise; and OPJPs from Japan and MTPs from Japan, where 
the products were large and made-to-order, unlike the subject 
merchandise in the instant investigation; and from DRAMs from Korea, 
where we made no adjustment regarding the imported merchandise only 
where it merely constituted parts of larger and considerably more 
complicated modules. Therefore, we have imputed ICC in this case 
inclusive of the period between production of the clinker in France and 
shipment to the first unrelated customer in the United States, and have 
adjusted USP accordingly. Moreover, for the portion of the ICC costs 
which reflect the period between production of the clinker in France 
and the start of production of the finished cement in the United 
States, we recalculated the reported ICC using the short-term interest 
rate prevailing in France during the POI.

Comment 5

    Respondent argues that the Department should use the U.S. 
warehousing costs included in the reported U.S. indirect selling 
expenses for CA cement sales. Contrary to what is suggested in the 
sales verification report, Lafarge maintains that the reported pre-sale 
warehousing costs for one warehouse are consistent with the prices 
shown in the warehousing contract examined at verification, and the 
pre-sale warehousing costs included in the reported indirect selling 
expenses were based on the actual costs incurred and paid by Lafarge, 
not on the per ton cost stated in the contract.

DOC Position

    We agree. Upon further examination of the documentation reviewed at 
verification, we noted that the verified per unit U.S. indirect selling 
expenses, reported inclusive of pre-sale warehousing costs, were based 
on actual costs incurred. Thus, we have deducted from USP the reported 
pre-sale warehousing costs as indirect selling expenses.

Comment 6

    Petitioner maintains that indirect selling expenses included in the 
CV of CA clinker should be recalculated to include indirect selling 
expenses allocated to CA cement as shown in Exhibit 6 of petitioner's 
case brief because clinker is of the same class or kind of merchandise 
as cement.
    Respondent argues against such a recalculation because the channels 
of distribution and sales process for CA clinker differ substantially 
from those of CA cement. Because the CV of clinker is intended to 
provide a surrogate for a home market sales price for clinker based on 
the costs and expenses that would be incurred in producing and selling 
clinker in the home market, Lafarge appropriately included in CV only 
the selling expenses that would be incurred in selling clinker.

DOC Position

    We disagree with respondent. Section 773(e)(1)(B) of the Act 
provides that CV should include, among other things, ``an amount for 
general expenses * * * equal to that usually reflected in sales of 
merchandise of the same general class or kind as the merchandise under 
consideration.'' We have recalculated indirect selling expenses to 
include home market indirect selling expenses for cement using verified 
information on the record. We consider cement indirect selling expenses 
to be representative of selling expenses of the general class or kind 
of merchandise, i.e., all CA products sold within the home market 
country.

Comment 7

    Petitioner asserts that the Department should make an adjustment to 
the G&A expense reported in the CV for clinker to include the 
amortization of patents and trademarks which respondent had not 
included in the reported G&A amount.
    Respondent argues that the amortization of patents and trademarks 
was included in the reported G&A expenses.

DOC Position

    We agree with respondent. Upon review of the verification exhibits 
we found that the reported depreciation costs included the amortization 
of patents and trademarks. (See Exhibit 14 and Cost Verification Report 
at 12).

Comment 8

    Petitioner argues that, for purposes of calculating the CV for 
clinker in the final determination, the Department should use the BIA 
profit ratio that the Department calculated for the preliminary 
determination. Petitioner does not believe the Department should use 
the reported profit ratio because this calculation includes data on 
sales of non-subject merchandise. Petitioner argues that this profit 
ratio expands beyond the CA cement and cement clinker class or kind 
and, therefore, should not be used. Petitioner further maintains that 
in past cases the Department has consistently rejected the use of 
profit based on merchandise other than of the class or kind subject to 
investigation.
    Respondent contends that the antidumping statute does not require 
the Department to use the profit on the ``class or kind'' of 
merchandise in its CV calculations. Rather, respondent states that the 
statute directs the Department to use the profit rate on the ``general 
class or kind,'' indicating an intent that the Department have 
flexibility in choosing the appropriate profit rate, and not be limited 
solely to the profit on the merchandise comprising the ``class or 
kind.''

DOC Position

    We agree with respondent. In accordance with section 773(e)(1)(B), 
we have used the verified profit rate for all CA products, including 
the subject merchandise, sold in France because it represents the 
profit experience on sales of the general class or kind of merchandise 
in the home market.

Comment 9

    Petitioner contends that certain reported U.S. flux sales made 
under an expired master order allegedly renewed prior to the POI should 
be included in the Department's analysis as sales made during the POI. 
Petitioner argues that the master order expired prior to the POI and 
was not renewed prior to the POI as respondent claims. Despite 
respondent's claim that prior to the POI the parties ``evidenced a 
clear intent to continue the contract under the terms specified in the 
expired master order'' but failed to renew the contract due to internal 
delays, there is no evidence on the record to support respondent's 
position. Petitioner argues that implicit renewal of the contract is 
not legally binding (i.e., there was no binding agreement between the 
parties as to any essential terms of sale at the time shipments of CA 
flux were made to this customer during the POI). According to 
petitioner, any shipments made to this customer during the POI were 
individual spot sales with dates of sale established by the date of the 
invoices issued for particular shipments.
    Respondent argues that the Department should use the date of the 
master order as the date of sale for sales made pursuant to this 
contract (which it claims was renewed prior to the POI), and exclude 
them from the dumping analysis in the final determination. Although the 
original contract expired prior to the POI, Lafarge claims that the 
customer continued to purchase from LCA after that date in accordance 
with the sales terms set in the original contract. Moreover, respondent 
maintains that the orders placed by the customer during the POI 
continued to reference the purchase order numbers from the expired 
master order. According to respondent, the customer indicated its 
intent to re-issue the master order, but had not yet done so because of 
internal delays. Based on these facts, respondent maintains that the 
shipments to this customer during the POI continued to be governed by 
the terms of the original master order even if there was no formal 
written agreement to that effect.

DOC Position

    We agree with petitioner. The effective date of the subject master 
order was prior to the POI. At verification, LCA could not provide any 
documentation indicating renewal of the subject master order prior to 
the POI. Without some documentary evidence of a renewal of the master 
order prior to the POI, we cannot assume, based on respondent's word, 
that the essential terms enumerated in the original master order (which 
expired three months prior to the POI) governed the subject flux 
shipments made during the POI. (See Crankshafts from the FRG and Gray 
Portland Cement from Mexico.) Therefore, we have included these sales 
in the final determination, using the verified date of purchase order 
(or date of invoice where the date of purchase order was unavailable) 
as the date of sale.

Comment 10

    Respondent argues that certain reported flux shipments made in 
October 1992 pursuant to a contract claimed to be effective prior to 
the POI, but the price terms of which were modified in November 1992, 
should not be included in our final dumping analysis. Respondent claims 
that the date of the November 1992 price modification notice should be 
used as the date of sale for subsequent sales made to this customer 
during the POI. Therefore, respondent asserts that all shipments made 
after the November price modification should be included in the 
Department's final dumping calculations, while those POI shipments made 
prior to the November price modification should be excluded from the 
final determination.

DOC Position

    We agree. Respondent reported all sales/shipments of flux to the 
customer in question pursuant to purchase orders issued during the POI, 
because (1) it was unable to locate the original master order for that 
customer allegedly dated prior to the POI and (2) the original price 
terms changed in November 1992. At verification, although we were 
unable to locate the original master agreement or blanket purchase 
order for the subject customer, we did find a ``change order'' dated 
November 2, 1992, which stipulated a change in price terms effective on 
that date. We also examined invoices issued to this customer shortly 
before and after the November 2 change order date. Based on our 
examination of these invoices, we found that the invoices confirmed 
LCA's acceptance of the November 2 change order, because the price per 
ton LCA charged the customer changed after that date. In accordance 
with these verification findings, we have included in our final dumping 
analysis only those shipments made after the November 1992 price 
modification, using the November 2, 1992, change order date as the date 
of sale for these shipments.

Comment 11

    Respondent argues that CV should be the basis for FMV because 
including home market bagging costs in variable COM would cause the 
difmer adjustment to exceed 20 percent. Respondent states that the bags 
used in the home market are not merely packing for shipment, but rather 
consumer required packaging; therefore, their costs must be treated as 
part of COM. Respondent argues that it would be contrary to the 
Department's past practice to classify these bags as packing 
``incidental'' to the shipment of the merchandise. To support its 
arguments, respondent cites the FMV Calculations performed pursuant to 
the 1992 Suspension Agreement in the antidumping duty investigation on 
gray portland cement and clinker from Venezuela; Final Determination of 
Sales At Less Than Fair Value: Porcelain-on-Steel Cooking Ware from 
Taiwan (51 FR 36425, October 10, 1986) (Porcelain-on-Steel Cooking Ware 
from Taiwan); Final Determination of Sales At Less Than Fair Value: 
Certain Stainless Steel Cooking Ware from the Republic of Korea (51 FR 
42873, November 26, 1986) (Stainless Steel Cooking Ware from Korea); 
and Washington Red Raspberry Commission v. United States (859 F.2nd. 
898, 905 (Fed. Cir. 1988)).
    Furthermore, respondent argues that the bags used for home market 
packing have a number of special features unrelated to shipment: (1) 
they have built-in handles that facilitate use of a crane to lift the 
bag into the ladle or furnace of a steel mill; (2) they are constructed 
of non-permeable polymer material that protects the flux from 
contaminants in the steel mill environment and can vaporize in the 
steel melt without toxic emissions or undesirable residues; and (3) 
they come in varying sizes which allows the customer to control the 
amount of flux introduced into the steel melt. Respondent claims that 
its home market customers specifically order the bagged product, and 
they willingly pay more for it because they perceive that it provides 
additional value.
    In addition, respondent maintains that, because the bags are part 
of the merchandise purchased by home market customers and their costs 
are significant relative to the overall manufacturing costs of the 
product, it must set prices taking into account the SG&A and profit 
attributable to the bagging which are also significant. However, 
because the Department does not normally include SG&A and profit in 
packing or difmer adjustments, respondent contends that the 
Department's comparison of prices for bagged flux sold in the home 
market and bulk flux exported to the United States will not account for 
these factors and will therefore be distortive. Therefore, respondent 
argues that CV should be used instead of home market prices for 
purposes of calculating FMV for flux sales.
    Petitioner argues that bagging costs associated with home market 
flux sales should not be included in the calculation of the difmer 
adjustment because they represent packing costs related to shipment of 
the merchandise to the home market customer, rather than variable COM. 
Petitioner contends that such an inclusion is contrary to Department 
policy which states that the difmer adjustment is limited only to costs 
directly attributable to differences in the physical characteristics of 
the merchandise and that in this case all physical differences in the 
CA flux occur before the bagging/packing stage. Petitioner further 
claims that, contrary to respondent's assertion, the bagging/packing at 
issue is not consumer packing which serves an advertising, promotional 
and educational function at the point of sale to the retail end-user. 
Rather, using bags is another way of handling and shipping flux in bulk 
quantities. To buttress its argument, petitioner cites Final 
Determination of Sales at Less Than Fair Value: Pads for Woodwind 
Instrument Keys from Italy (58 FR 42295, August 9, 1993) (Pads from 
Italy), Final Determination of Sales at Less Than Fair Value: 
Industrial Phosphoric Acid from Israel (52 FR 25440, July 7, 1987) 
(Phosphoric Acid from Israel); and Preliminary Determination of Sales 
at Less Than Fair Value: Gray Portland Cement and Clinker from 
Venezuela (56 FR 56390, November 4, 1991) (Gray Portland Cement and 
Clinker from Venezuela). Petitioner claims that both respondent's CA 
flux marketing expert in France and petitioner's CA flux marketing 
expert in the United States agree that when a customer does not have a 
dedicated bulk storage silo system, the CA flux must be shipped to that 
customer in bags. Petitioner also contends that respondent's claims 
that the design of its bags adds value to the customer are not relevant 
to the determination of whether the bagging costs can be deducted as a 
packing expense.
    Petitioner further argues that respondent's cite to the suspension 
agreement concerning Gray Portland Cement and Clinker from Venezuela 
where the Department treated bagging costs as part of COM for purposes 
of calculating an FMV at or over which a Venezuelan cement producer/
exporter would have to sell in the United States is not relevant 
because calculation of a difmer adjustment was not at issue in that 
investigation. Petitioner points out that in the Venezuelan cement 
investigation the Department made fair value comparisons of bulk cement 
sold to the United States with cement sold in Venezuela in 50 to 100 
pound sacks, but did not make a difmer adjustment for packing/bagging. 
Instead, it adjusted for home market bagging costs by deducting them 
from FMV and adding the U.S. packing costs to FMV pursuant to its 
normal practice.
    In addition, petitioner notes that the normal packing adjustment in 
this case would include all fixed costs as well as variable costs of 
bagging/packing and thus would not distort fair value comparisons as 
would the inclusion of only variable bagging/packing costs in the 
difmer adjustment, as respondent suggests. According to petitioner, any 
claimed price distortions attributable to SG&A and profit associated 
with bagging/packing will be minimal because Lafarge subcontracts these 
services (i.e., the fees it pays to subcontractors would cover fixed 
costs such as G&A expenses, and any selling costs would be included in 
normal circumstance-of-sale adjustments). Petitioner concludes that, 
even if packing costs are included in the difmer adjustment, the 
Department should still use the home market sales data submitted by 
Lafarge after the preliminary determination rather than CV for fair 
value comparisons because the U.S. and home market flux products sold 
during the POI are comparable and the 20 percent difmer guideline is 
not an inflexible rule.

DOC Position

    We agree with petitioner in part. At verification, respondent 
explained that flux is placed in special bags pursuant to customer 
orders because home market customers do not have the appropriate 
facilities for handling and measuring flux for use in their steel 
production process. Bagged flux is not sold from inventory. Flux can be 
sold in bulk form without the specialty bags, and is sold as such to 
the United States and the majority of third country markets. The fact 
that customers (in the home market or otherwise) have the choice to buy 
the flux without the special bagging strongly suggests that the bagging 
is not an integral part of the product covered by the scope of the 
investigation and, therefore, should not be considered part of variable 
COM and included in the difmer adjustment. This is in contrast to the 
situation in Washington Red Raspberry Commission v. United States, 
where the subject merchandise [raspberries] would be unrecognizable and 
completely unusable without the containers in which it was sold.
    Characterizing the bagging costs as variable COM as suggested by 
respondent is not justifiable in this case. Respondent has not been 
able to explain to our satisfaction how bagging costs contribute to 
differences in the physical characteristics of the merchandise, as 
directed by 19 CFR 353.57. (See also the Department's July 29, 1992 
Policy Bulletin (No. 92.2), which states that any difmer adjustment 
must be tied to such differences.)
    The 1986 less than fair value determinations cited by respondent 
are inapposite. Stainless Steel Cooking Ware from Korea reflected our 
prior practice regarding the inclusion of difference in consumer 
packing in making difmer adjustments, which was changed in the 1992 
Policy Bulletin cited above. Likewise, in Porcelain-on-Steel Cookware 
from Taiwan, we merely said that consumer packaging was not a cost 
incidental to shipment. We did not say that it constituted an integral 
physical part of the merchandise under investigation.
    As noted above, in difmer analysis, we focus only on the 
differences in physical characteristics of the merchandise. The 
merchandise in this instance is CA flux. Bagging does not change the 
physical characteristics of flux and, therefore, it was not included in 
the difmer calculation. In the FMV Calculations performed pursuant to 
the Suspension Agreement in Venezuelan cement, we were not examining 
the differences in the physical characteristics per se of the subject 
merchandise. Therefore, respondent's reliance on Venezuelan cement is 
inapposite.
    We also do not consider bagging costs as representative of normal 
packing costs. Rather, it appears to us that Lafarge could not sell the 
flux to the home market customers without incurring these special 
bagging costs. While we agree with petitioner that Pads from Italy is 
applicable here (in that difmer adjustments are based on the variable 
cost of manufacture only), petitioner's reliance on Phosphoric Acid 
from Israel is misplaced, because the bagging for flux is clearly 
distinguishable from the drums used for packing (and accounted for in 
packing costs) in Phosphoric Acid from Israel. Therefore, we do not 
consider bagging in this case to be a pre-shipment expense, but rather 
a condition of sale. For these reasons, we have treated these bagging 
costs as direct selling expenses, rather than as part of variable COM 
or packing for purposes of the final determination. (See March 9, 1994, 
Memorandum from V. Irene Darzenta to Richard W. Moreland Re. Treatment 
of Bagging Costs Associated with Home Market Sales of Flux.) Because 
the difmer that resulted from exclusion of these costs from variable 
COM was less than 20 percent, we used the reported, verified home 
market flux sales as the basis for FMV and deducted bagging costs as 
direct selling expenses from FMV accordingly.

Comment 12

    Petitioner states that the difmer adjustment is also incorrect 
because respondent included fixed costs (i.e., G&A) and profit in its 
calculation. Petitioner asserts that if the Department includes bagging 
in the difmer adjustment, it should recalculate the amount of the 
difmer to include only variable costs. Finally, petitioner maintains 
that the reported packing expenses, inclusive of bagging costs, should 
be adjusted to avoid double- counting G&A expenses.

DOC Position

    For the reasons stated in the DOC Position to Comment 11 above and 
in accordance with the Department's normal methodology, we have 
recalculated the difmer adjustment to exclude bagging costs and include 
only variable COM. However, upon further review of the documentation 
examined at verification, we note that the G&A expenses included in the 
reported packing expenses were not double-counted. Notwithstanding this 
fact, we have also excluded from the packing adjustment the reported 
G&A expenses.

Comment 13

    Petitioner believes that the claimed adjustment for home market 
technical service expenses should be denied or reduced. Petitioner 
maintains that the Department should deny the claimed direct adjustment 
for home market technical service expenses, because these expenses 
cannot be directly tied to specific sales made during the POI. 
According to petitioner, services such as those provided by respondent 
for purposes of determining new uses for a product in future production 
aimed at increasing future sales levels constitute goodwill or sales 
promotion, and as such are not directly related to the sales under 
consideration. Petitioner also argues that technical service expenses 
attributable to test sales made during 1992 that are considered to be 
outside of the ordinary course of trade should be excluded from the 
adjustment; however, because the Department did not verify data that 
would permit their exclusion, the Department should deny the adjustment 
in toto. Nonetheless, if the Department determines that an adjustment 
is warranted, petitioner urges that it should only deduct the reported 
travel expenses and not the reported salary expenses comprising 
respondent's technical service expense calculation because salaries are 
considered fixed costs which are incurred whether or not the services 
are provided.
    Respondent contends that technical service expenses should be 
treated as direct selling expenses in accordance with past Department 
and court decisions. Respondent notes that the technical services 
performed by LFI in France consist of visits to customers to review and 
help analyze the customers' test data and to work with the customer to 
make more efficient use of flux in its steel operations. Lafarge 
emphasizes that the customer needs to know from the time he makes his 
purchase that LFI's technical staff will be available to provide this 
analysis for him on an on-going basis. According to respondent, these 
types of services are not provided by LCA in the United States because 
LCA's U.S. flux customers perform this technical service using their 
own personnel. Respondent argues further that an adjustment for 
technical service salaries is appropriate where the technical service 
personnel provide functions that the customer would otherwise have to 
perform himself.

DOC Position

    We agree with respondent in part. Lafarge provides the technical 
support to its home market customers because they have not yet 
developed the systems required to perform these services themselves. 
Without Lafarge's technical support, the customers cannot analyze and 
make appropriate adjustments in their steel production processes to 
optimize performance of CA flux in their operations. Given the nature 
of the steelmaking industry, it is reasonable to believe that, while 
these technical service expenses could not be directly tied to specific 
sales of flux, they would not otherwise have been incurred but for the 
sale of flux.
    It is the Department's practice to allow, as a direct selling 
expense, claims for services rendered in assisting the customer in 
solving problems with products purchased during the POI to the extent 
that the variable costs can be segregated from the fixed costs. In 
general, variable technical service costs include travel expense, while 
fixed technical service costs include salaries. (See e.g., Final 
Determination of Sales at Less Than Fair Value: Brass Sheet and Strip 
from Italy, 52 FR 816, January 9, 1987; and Final Determination of 
Sales at Less Than Fair Value: Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof from the Federal Republic of 
Germany, 54 FR 18992, May 3, 1989.) Therefore, in accordance with our 
practice, we have treated travel expenses associated with technical 
services as direct selling expenses, and we have treated salary 
expenses as indirect selling expenses and deducted them from FMV 
accordingly. We made no adjustment to these amounts for expenses 
related to test sales that may have been made in 1992, because we did 
not have sufficient information on the record to allow us to do so 
accurately.

Comment 14

    Petitioner claims that the adjustment for home market credit 
expenses should be denied or reduced. Petitioner believes that an 
adjustment for this expense should not be permitted because, of the 
sales verified, over one-quarter had incorrect shipment/payment dates. 
If the Department allows this expense, petitioner argues that it should 
be recalculated exclusive of VAT because Lafarge did not incur any 
credit expense for payment of the VAT.
    Respondent maintains that the Department should not deny or reduce 
home market credit expenses. It argues that the errors found at 
verification with respect to shipment/payment dates were minor and 
clerical in nature, and do not have a significant effect on the 
Department's analysis. According to respondent, by extending credit, 
Lafarge agrees to forego immediate payment of the total invoice amount 
which includes the price for the goods and applicable VAT taxes. It, 
therefore, loses the interest that could have been earned on the total 
invoice amount. Respondent asserts that the foregone interest 
represents the opportunity cost of extending credit. Respondent further 
asserts that, because this opportunity cost includes foregone interest 
on VAT, the foregone interest on VAT must be included in the credit 
adjustment.

DOC Position

    We disagree in part with both petitioner and respondent. We have 
determined that a credit adjustment in general is warranted in this 
case. The errors found at verification with respect to the credit 
period reported for two home market transactions were clerical and 
minor in nature and related to sales made either out of the ordinary 
course of trade or to a third country which we have excluded from our 
analysis. (See the ``Foreign Market Value'' section of this notice.) 
However, we have also determined that there is no statutory or 
regulatory basis for including VAT in the credit adjustment. While 
there may be an opportunity cost associated with extending credit on 
the payment of invoice value inclusive of VAT, that fact alone is not a 
sufficient basis for the Department to make an adjustment. We note that 
virtually every expense associated with less than fair value 
comparisons is paid for at some point after the cost is incurred. 
Accordingly, for each post-service payment, there is also an 
opportunity cost. Thus, to allow the type of adjustment suggested by 
respondent would imply that in the future the Department would be faced 
with the impossible task of trying to determine the opportunity cost of 
every freight charge, rebate, and selling expense for each sale 
reported in respondent's database. This exercise would make our 
calculations inordinately complicated, placing an unreasonable and 
onerous burden on both respondents and the Department. (See e.g., Final 
Determination of Sales at Less Than Fair Value: Sulfur Dyes, Including 
Sulfur Vat Dyes, from the United Kingdom, 58 FR 3253, January 8, 1993.) 
Consequently, we have recalculated home market credit expenses to 
exclude the VAT included in the gross unit prices used in the original 
calculation.

Comment 15

    Petitioner argues that home market product liability costs are 
indirect rather than direct selling expenses because they are not 
directly related to sales made during the POI. Respondent disagrees, 
stating that these premiums are directly related to sales because the 
premium is assessed on sales value. According to respondent, each 
additional sale results in an additional product liability premium 
expense.

DOC Position

    Because these premiums are assessed based on sales value, we have 
determined that these expenses are characteristic of direct expenses. 
We note that the U.S. product liability premium rates reported for U.S. 
sales of flux and cement were also based on sales value. Therefore, we 
have treated both home market and U.S. product liability expenses as 
direct selling expenses for purposes of the final determination, and 
have adjusted FMV and USP accordingly.

Comment 16

    Petitioner claims that those sales made to a home market customer 
that were destined for export should not be included as home market 
sales in the Department's analysis. Petitioner states that the 
Department verified that Lafarge knew that certain sales of CA flux 
were to be exported to a third country at the time of sale to the home 
market customer. Accordingly, petitioner argues that these sales should 
not be included in the Department's FMV calculation.

DOC Position

    We agree and have excluded these sales from our analysis.

Comment 17

    Petitioner believes that for purposes of calculating profit related 
to the value added in the United States, U.S. brokerage and handling 
(including merchandise processing and harbor maintenance), U.S. 
unloading, U.S. loading and U.S. freight to processors costs, where 
applicable, should be attributed to the COM of CA clinker and flux in 
the United States because these expenses are incurred only after the 
product has arrived in the United States. Petitioner further believes 
that certain U.S. selling expenses (e.g., credit, warranty, indirect 
selling expenses, inventory carrying costs and product liability 
expenses) should also be included as part of U.S. further manufacturing 
costs.
    Respondent does not believe that the Department should consider 
these charges and expenses to be part of U.S. further manufacturing 
costs, as petitioner requests. Lafarge contends that petitioner's 
argument is inconsistent with the antidumping statute and was put forth 
by petitioner solely to increase the profit allocated to further 
manufacturing and, as a result, the adjustment to USP.

DOC Position

    We disagree with petitioner. Because U.S. brokerage and handling, 
and U.S. unloading and loading costs, are incurred on the imported 
merchandise prior to the commencement of further manufacturing in the 
United States, we find that they do not form part of the value added in 
the United States. Regarding the costs of freight to processors' 
warehouses associated with flux sales, we find that they do form part 
of the costs of further manufacturing the imported flux in the United 
States because these costs are incurred to transport the imported flux 
to and among the processors' warehouses for further manufacture. For 
U.S. cement sales, however, such transfer freight costs represent costs 
incurred to transport the already further manufactured clinker (i.e., 
the finished cement) to the warehouses from which the finished product 
is ultimately sold to U.S. customers. No freight to processors costs 
are incurred on U.S. cement sales because the further processing occurs 
at Lafarge's plant which is located at the U.S. port of importation. 
Regarding U.S. selling expenses, these expenses are incurred to sell 
both the imported and further manufactured products. Therefore, adding 
these expenses to U.S. further manufacturing costs, as petitioner 
suggests, would disproportionately increase the U.S. value added for 
purposes of calculating profit. (See e.g., Wire Rods from France.) Of 
the expenses at issue, we have only included costs of freight to 
processors associated with U.S. flux sales as part of U.S. value added 
in our final profit calculation.

Comment 18

    Petitioner claims that the Department should recalculate 
respondent's U.S. indirect selling and G&A expenses for both cement and 
flux sales. Petitioner argues that, based on the Department's 
instructions, LCA's administration costs should have been reported as 
G&A (rather than indirect selling expenses), allocated based on cost of 
sales and included in the U.S. COM. According to petitioner, the 
Department should reduce the reported indirect selling expenses and the 
corresponding ESP cap.
    Respondent maintains that LCA's calculation correctly assigned its 
administrative expenses to its operations. According to Lafarge, 
because LCA's administrative staff supports LCA's sales operations as 
well as factory operations, a portion of LCA's administrative expenses 
should be considered sales administration and treated as an indirect 
selling expense. Respondent notes, however, that it would not object if 
the Department reduces the amount of administrative expenses assigned 
to the products under investigation under petitioner's proposal. 
Respondent contends that if the Department accepts petitioner's 
argument that U.S. indirect selling expenses and G&A should be 
recalculated, it should revise petitioner's calculations to use the 
correct, verified figures.

DOC Position

    We agree with petitioner on the need to reclassify LCA's 
administrative expenses. Because these expenses are more appropriately 
characteristic of G&A expenses, we have reclassified them from indirect 
selling to G&A expenses based on verified data on the record.

Comment 19

    Petitioner argues that no offset to financial expenses should be 
allowed for the short-term interest income claimed by Lafarge for 
purposes of calculating clinker CV and clinker and flux further 
manufacturing costs. Petitioner contends that the Department was unable 
to verify that the interest income reported was short-term in nature. 
Nor could the Department verify whether the reported interest income 
was related to the manufacture of the subject merchandise, according to 
petitioner.
    Respondent asserts that the Lafarge corporate policy is not to 
invest in assets which produce other than short-term interest income. 
Accordingly, respondent maintains that all interest income earned by 
respondent's parent company Lafarge Coppee was short-term in nature, 
and an offset to interest expense should be allowed for the entire 
reported short-term interest income amount.

DOC Position

    We agree with petitioner. The Department normally allows an offset 
to financial expenses for interest income earned on short-term 
investments of working capital related to the production of the subject 
merchandise. The Department does not offset interest expense with 
interest income earned on long-term investments related to activities 
unrelated to the manufacturing process. Because we were unable to 
verify the nature of the interest income reported, we have disallowed 
the financial expense offset claimed by Lafarge.

Comment 20

    Petitioner notes that the Department discovered at verification 
that the depreciation of R&D assets was not included in the R&D 
expenses reported for purposes of calculating clinker CV. Petitioner 
states that the Department should include this depreciation in the 
reported R&D expenses.

DOC Position

    We agree and have adjusted the R&D expenses reported for purposes 
of calculating clinker CV to reflect the inclusion of depreciation for 
R&D assets. We note that this adjustment also affected the total 
reported COM of the imported clinker and flux used in the calculation 
of U.S. value added profit.

Comment 21

    Petitioner asserts that exchange rate gains and losses should be 
added to raw material costs for purposes of calculating clinker CV. 
According to petitioner, during verification the Department discovered 
that Lafarge had not reported the foreign exchange gains and losses 
related to the importation of raw materials used to produce the subject 
merchandise.

DOC Position

    We agree, based on our findings at verification, that Lafarge did 
not report these foreign exchange gains and losses. Accordingly, we 
have added these gains and losses to the reported raw material costs 
for purposes of calculating clinker CV for the final determination. We 
note that this adjustment also affected the total reported COM of the 
imported clinker and flux used in the calculation of U.S. value added 
profit.

Comment 22

    Petitioner argues that, because LFI repeatedly refused to 
separately report its labor costs and classify them according to 
Department practice as variable costs for purposes of calculating 
clinker CV and total flux and clinker COM used in the calculation of 
U.S. value added profit, the Department must resort to BIA to determine 
these costs. As BIA, petitioner asserts that the Department should not 
annualize any fixed costs but rather use only the fixed costs reported 
for the POI. Petitioner argues that this is a reasonable BIA 
methodology given the Department's inability to break out the labor 
costs from fixed costs and properly treat the labor costs as variable 
costs.
    Respondent contends that LFI's labor costs have the characteristics 
of fixed costs since the number of workers working at LFI's plants is 
generally constant and the total pool of labor costs tends not to vary 
with production levels. LFI also asserts that labor costs are distorted 
by fluctuations in monthly production volumes as a result of plant 
shut-downs for maintenance. According to respondent, the use of fixed 
costs for the POI would distort the Department's CV and further 
manufacturing cost calculations. LFI states that, under the logic of 
the preliminary determination, fixed labor costs should be based on the 
reported annual period.

DOC Position

    We agree with petitioner. Lafarge normally records labor costs for 
clinker and flux as a fixed cost. Respondent followed its normal 
accounting system for the response and reported labor as a fixed cost 
for the year 1992. This methodology differs from the Department's 
normal practice where labor is considered a variable cost and as such 
would be reported on a weighted-average basis for the POI.
    In the preliminary determination the Department accepted the 
annualization of fixed costs because LFI claimed that periodic shut-
down expenses incurred for maintaining its furnaces created significant 
aberrations in monthly production costs. In order to eliminate the 
effect of these distortions, we allowed LFI to report fixed costs on an 
annual weighted-average basis.
    However, it was not until verification that the Department first 
discovered that labor costs were included in the reported annualized 
fixed costs. The Department's Section D and E questionnaires for 
clinker and flux identified direct and indirect labor as costs that 
should be reported as variable costs for response purposes. The 
questionnaires also specifically requested that LFI itemize the 
expenses included in fixed and variable costs. LFI did not itemize its 
variable or fixed costs or otherwise identify how it treated its labor 
costs in response to the Department's requests. Because LFI was not 
responsive to the Department's requests for information and incorrectly 
classified labor costs as fixed costs, and since there was no 
information on the record to permit the accurate reclassification of 
labor costs, we have disallowed the annualization of fixed costs and 
have used only the reported fixed costs for the POI as BIA for purposes 
of the final determination.

Suspension of Liquidation

    In accordance with section 733(d)(1) of the Act, we are directing 
the Customs Service to continue to suspend liquidation of all entries 
of CA cement and cement clinker from France and to begin the suspension 
of liquidation of all entries of CA flux from France that are entered, 
or withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. The Customs Service 
shall require a cash deposit or posting of a bond equal to the 
estimated margin amount by which the FMV of the subject merchandise 
exceeds the USP, as shown below. The less than fair value margins for 
CA cement and cement clinker are as follows: 

------------------------------------------------------------------------
                                                             Weighted-  
             Producer/manufacturer/exporter               average margin
                                                            percentage  
------------------------------------------------------------------------
Lafarge.................................................           18.91
All Others..............................................          18.91 
------------------------------------------------------------------------

    The less than fair value margins for CA flux are as follows: 

------------------------------------------------------------------------
                                                             Weighted-  
             Producer/manufacturer/exporter               average margin
                                                            percentage  
------------------------------------------------------------------------
Lafarge.................................................           31.08
All Others..............................................          31.08 
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determinations. As our 
final determinations are affirmative, the ITC will determine whether 
these imports are materially injuring, or threaten material injury to, 
the U.S. industry within 45 days.
    If the ITC determines that material injury or threat of material 
injury does not exist, the proceedings 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 Customs 
officers to assess an antidumping duty on CA cement, cement clinker and 
flux from France entered or withdrawn from warehouse, for consumption 
on or after the date of suspension of liquidation.

Notification to Interested Parties

    This notice serves as the only reminder to parties subject to 
administrative protective order (APO) in these investigations of their 
responsibility covering the return or destruction of proprietary 
information disclosed under APO in accordance with 19 CFR 353.34(d). 
Failure to comply is a violation of the APO.
    These determinations are published pursuant to section 735(d) of 
the Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).

    Dated: March 18, 1994.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-7122 Filed 3-24-94; 8:45 am]
BILLING CODE 3510-DS-P