[Federal Register Volume 59, Number 248 (Wednesday, December 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31802]


[Federal Register: December 28, 1994]


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DEPARTMENT OF COMMERCE
(A-533-810)


Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Bar from India

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

EFFECTIVE DATE: December 28, 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 Determination

    We determine that stainless steel bar (SSB) from India is being, or 
is 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 Investigation

    The merchandise covered by this investigation is SSB. For purposes 
of this investigation, the term ``stainless steel bar'' means articles 
of stainless steel in straight lengths that have been either hot-
rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-
finished, or ground, having a uniform solid cross section along their 
whole length in the shape of circles, segments of circles, ovals, 
rectangles (including squares), triangles, hexagons, octagons or other 
convex polygons. SSB includes cold finished SSBs that are turned or 
ground in straight lengths, whether produced from hot-rolled bar or 
from straightened and cut rod or wire, and reinforcing bars that have 
indentations, ribs, grooves, or other deformations produced during the 
rolling process.
    Except as specified above, the term does not include stainless 
steel semi-finished products, cut length flat-rolled products (i.e., 
cut length rolled products which if less than 4.75 mm in thickness have 
a width measuring at least 10 times the thickness, or if 4.75 mm or 
more in thickness having a width which exceeds 150 mm and measures at 
least twice the thickness), wire (i.e., cold-formed products in coils, 
of any uniform solid cross sections along their whole length, which do 
not conform to the definition of flat-rolled products), and angles, 
shapes and sections.
    The SSB subject to this investigation is currently classifiable 
under subheadings 7222.10.0005, 7222.10.0050, 7222.20.0005, 
7222.20.0045, 7222.20.0075 and 7222.30.0000 of the Harmonized Tariff 
Schedule 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.

Period of Investigation

    The period of investigation (POI) is July 1, 1993, through December 
31, 1993.

Case History

    Since the publication of the notice of preliminary determination on 
August 4, 1994 (59 FR 39733), the following events have occurred.
    On August 5, 1994, Grand Foundry Limited (GF) submitted its 
response to Section D of the Department's questionnaire. On August 18, 
1994, petitioners submitted comments on GF's August 5, Section D 
questionnaire response. The Department issued a Section D deficiency 
questionnaire on September 9, 1994. On September 16, 1994, respondent 
requested an extension of time until October 3, 1994, within which to 
respond to the Department's deficiency questionnaire. Petitioners 
opposed this request on September 19. On September 20, the Department 
granted respondent a partial extension until September 30 to submit its 
response.
    The Department issued its sales verification outline on August 26, 
1994. On August 29, 1994, GF submitted revised U.S. and third country 
sales listings correcting certain clerical errors found in preparation 
for verification.
    On September 28, 1994, petitioners submitted comments for the 
verification of GF's Section D response. Respondent submitted its 
Section D deficiency response on September 30, 1994. The Department 
issued its cost verification outline on October 3, 1994.
    Verification of GF's questionnaire responses took place in Bombay, 
India, from September 5 through 9, and from October 10 through 14, 
1994.
    On October 11, 1994, GF submitted certain minor clerical error 
corrections/clarifications relevant to the reported cost data which it 
found in preparation for verification.
    In a letter to the Department on October 27, 1994, Bhansali 
Ferromet Bars (P) Ltd. (Bhansali) and Paramount Trading Inc. 
(Paramount), a foreign exporter and domestic importer of subject 
merchandise, respectively, requested that Bhansali be assigned the 
preliminary margin calculated for GF, rather than the ``all others'' 
rate normally assigned to non-responding foreign producers/exporters. 
(See Comment 1 in the ``Interested Party Comments'' section of this 
notice.)
    The Department's sales and cost verification reports were issued on 
November 2, and 3, 1994, respectively.
    Neither petitioners nor respondent requested a public hearing in 
this proceeding. Case and rebuttal briefs were received on November 10, 
and 17, 1994, respectively.

Best Information Available

    In accordance with section 776(c) of the Act, we have determined 
that the use of best information available (BIA) is appropriate for 
Mukand Limited (Mukand). Mukand did not respond to the Department's 
questionnaire, and, as such, we find it has not cooperated in this 
investigation.
    Specifically, our BIA methodology for uncooperative respondents is 
to assign the higher of the highest margin alleged in the petition or 
the highest rate calculated for another respondent. Accordingly, as 
BIA, we are assigning to Mukand the highest margin among the margins 
alleged in the petition. See Antifriction Bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof from the Federal Republic of 
Germany; Final Results of Antidumping Duty Administrative Review (56 FR 
31692, 31704, July 11, 1991). The Department's methodology for 
assigning BIA has been upheld by the U.S. Court of Appeals for the 
Federal Circuit. See, Allied Signal Aerospace Co. v. United States, 996 
F.2d 1185 (Fed. Cir. 1993); see also Krupp Stahl, AG et al. v. United 
States, 822 F. Supp. 789 (CIT 1993)).

Product Comparisons

    We have determined that all products covered by this investigation 
constitute a single category of such or similar merchandise. We made 
fair value comparisons on this basis. In accordance with the 
Department's standard methodology, we first compared identical 
merchandise. Where there were no sales of identical merchandise to 
compare to U.S. sales, we made similar merchandise comparisons on the 
basis of the criteria defined in Appendix V to the antidumping 
questionnaire (on file in Room B-099 of the main building of the 
Department).
    Consistent with our preliminary determination, we altered the order 
of the SSB grades specified within the grade criterion of Appendix V of 
our questionnaire. This was done to account for certain other SSB 
grades which respondent sold in the third country market during the 
POI, but which were not taken into account in Appendix V. We also 
reversed the order of the size and shape criteria in Appendix V. 
Because there were no sales of export-quality merchandise in the home 
market during the POI to compare to U.S. sales, we used GF's third 
country sales in Germany, in accordance with section 773(a)(1) of the 
Act. See the ``Foreign Market Value'' 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. In 
accordance with 19 CFR 353.38, we made comparisons at the same level of 
trade, where possible.

Fair Value Comparisons

    As discussed above, we are using BIA with regard to Mukand. For GF, 
we made fair value comparisons as discussed below.
    To determine whether sales of SSB from GF 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.
    We made revisions to respondent's reported data, where appropriate, 
based on verification findings. We included in our analysis certain 
U.S. sales of subject merchandise which respondent incorrectly deleted 
from its August 29, 1994 sales listing. (See Comment 2 in the 
``Interested Party Comments'' section of this notice.)

United States Price

    We based USP on purchase price (PP), in accordance with section 
772(b) of the Act, because the subject merchandise was sold to 
unrelated purchasers in the United States before importation and 
because exporter's sales price methodology was not otherwise indicated.
    We calculated PP based on packed C&F prices to unrelated customers. 
In accordance with section 772(d)(2)(A) of the Act, we made deductions, 
where appropriate, for foreign brokerage (including containerization, 
foreign inland freight and port charges) and ocean freight.
    We recalculated credit expenses to account for the verified short-
term interest rate.

Foreign Market Value

    In order to determine whether there were sufficient sales of SSB in 
the home market to serve as a viable basis for calculating FMV, we 
compared the volume of home market sales of SSB to the volume of third 
country sales of SSB in accordance with section 773(a)(1)(B) of the 
Act. Based on this comparison, we determined that GF had a viable home 
market with respect to sales of SSB during the POI. However, based on 
GF's claim, which we verified, that sales in its home market made 
during the POI consisted only of SSB scrap and rejects and that its 
U.S. sales during the same period consisted only of first (or export) 
quality SSB, we determined that third country sales would be a more 
appropriate basis for FMV. (See April 5, 1994 Decision Memorandum To 
Richard W. Moreland From The Team Re: Appropriate Basis for FMV.)
    In order to select the appropriate third country in this case, we 
examined three factors in accordance with 19 C.F.R. 353.49(b): (1) the 
degree of similarity in terms of physical characteristics between the 
products sold in the United States and the individual third country 
markets; (2) the volume of sales in each third country market relative 
to that in the United States; and (3) the similarity of the market 
organization and development between the U.S. market and third country 
market. Based on these factors, we selected sales to Germany as the 
appropriate basis on which to calculate FMV.

Cost of Production

    Petitioners alleged that GF made third country sales during the POI 
at prices below the cost of production (COP). Based on information 
submitted by petitioners in their allegation, and in accordance with 
section 773(b) of the Act, we concluded that we had reasonable grounds 
to believe or suspect that sales were made below COP. (See June 15, 
1994, Decision Memorandum from Richard W. Moreland to Barbara R. 
Stafford Re: Petitioners' Allegation of Sales Below the Cost of 
Production.)
    In order to determine whether third country prices were below COP 
within the meaning of section 773(b) of the Act, we performed a 
product-specific cost test, in which we examined whether each third 
country product sold during the POI was priced below the COP of that 
product. See, e.g., Final Determination of Sales at Not Less Than Fair 
Value: Saccharin from Korea (59 FR 58826; November 15, 1994) (Saccharin 
from Korea). We calculated COP based on the sum of the respondent's 
reported cost of materials, fabrication, general expenses and packing 
costs, in accordance with 19 CFR 353.51(c). We compared the COP for 
each product to the third country price, net of movement expenses.
    We relied on the submitted COP data except in the following 
instances where the costs were not appropriately quantified or valued:
    1. We increased the reported nickel costs by excluding inventory on 
hand at December 31, 1993, which we determined more accurately 
reflected the COP during the POI;
    2. We recalculated wastage related to the centerless grinding and 
smooth turning processes to reflect the correct recovery amounts;
    3. We increased fixed overhead amounts to reflect minor corrections 
found at verification;
    4. We recalculated the general and administrative (G&A) expense and 
financial expense ratios to reflect results for the year ended March 
31, 1994;
    5. We eliminated the income tax provision amount included in the 
G&A expense calculation; and
    6. We recalculated third country indirect selling expenses in 
accordance with verification findings.
    In accordance with section 773(b) of the Act, we also examined 
whether GF's third country sales were made below COP in substantial 
quantities over an extended period of time, and whether such sales were 
made at prices that would permit the recovery of all costs within a 
reasonable period of time in the normal course of trade.
    To satisfy the requirement of section 773(b)(1) that below cost 
sales be disregarded only if made in substantial quantities, the 
following methodology was used: For each product where less than ten 
percent, by quantity, of the third country sales made during the POI 
were made at prices below the COP, we included all sales of that model 
in the computation of FMV. For each product where ten percent or more, 
but less than 90 percent, of the third country sales made during the 
POI were priced below COP, we excluded from the calculation of FMV 
those third country sales which were priced below COP, provided that 
the below cost sales of that product were made over an extended period 
of time. Where we found that more than 90 percent of the respondent's 
sales of a particular product were at prices below the COP and were 
made over an extended period of time, we disregarded all sales of that 
product and calculated FMV based on constructed value (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 Saccharin from Korea).
    We examined GF's product-specific COP data, as corrected based on 
our findings at verification, and found no sales below COP.

Constructed Value-to-Price Comparisons

    For one U.S. sales comparison, where the variable costs of the 
differences in physical characteristics of the merchandise exceeded 20 
percent, we used constructed value (CV) as the basis for FMV, in 
accordance with section 773(a)(2) of the Act. Pursuant to section 
773(e) of the Act, we calculated constructed value (CV) based on the 
sum of the cost of materials, fabrication, general expenses, U.S. 
packing costs and profit. In accordance with section 773(e)(1)(B) (i) 
and (ii) of the Act we: 1) included the greater of respondent's 
reported general expenses or the statutory minimum of ten percent of 
the cost of manufacture (COM), as appropriate; and 2) used the greater 
of respondent's actual profit or the statutory minimum of eight percent 
of the sum of COM and general expenses.
    We relied on the submitted CV data, but made the same modifications 
numbered 1-5 under the ``Cost of Production'' section of this notice.
    Pursuant to 19 C.F.R. 353.56(a)(2), we made circumstance-of-sale 
adjustments, where appropriate, for differences in credit expenses and 
bank charges (including bank interest, courier charges and commissions) 
between the U.S. and third country markets. We recalculated credit 
expenses to reflect the verified short-term interest rate. We deducted 
third country commissions and added U.S. indirect selling expenses 
(which were recalculated based on verification findings) capped by the 
amount of third country commissions in accordance with 19 CFR 
353.56(b).

Price-to-Price Comparisons

    For all other U.S. sales comparisons, in accordance with 19 C.F.R. 
353.46, we calculated FMV based on CIF or C&F prices charged to 
unrelated customers in Germany.
    In light of the Court of Appeals for the Federal Circuit's (CAFC) 
decision 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 market movement charges from FMV pursuant to 
its inherent power to fill in gaps in the antidumping statute. Instead, 
we will adjust for those expenses under the circumstance-of-sale 
provision of 19 C.F.R. 353.56(a) and the exporter's sales price offset 
provision of 19 C.F.R. 353.56(b)(2), as appropriate. Accordingly, in 
the present case, we deducted post-sale movement charges from FMV under 
the circumstance-of-sale provision of 19 C.F.R. 353.56(a). This 
adjustment included home market foreign brokerage (including 
containerization, foreign inland freight, loading and port fees), ocean 
freight, and marine insurance.
    Pursuant to 19 C.F.R. 353.56(a)(2), we made further circumstance-
of-sale adjustments, where appropriate, for differences in credit 
expenses and bank charges (including bank interest, courier charges and 
commissions) between the U.S. and third country markets. We 
recalculated credit expenses to reflect the verified short-term 
interest rate. We deducted third country commissions and added U.S. 
indirect selling expenses capped by the amount of third country 
commissions in accordance with 19 CFR 353.56(b). We recalculated U.S. 
indirect selling expenses in accordance with our findings at 
verification.
    We also deducted third country packing and added U.S. packing 
costs, in accordance with section 773(a)(1) of the Act. We made 
adjustments, where appropriate, for differences in the physical 
characteristics of the merchandise, in accordance with section 
773(a)(4)(C) of the Act.

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. See 19 C.F.R. 353.60(a).

Verification

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

Interested Party Comments

    Comment 1: Bhansali and Paramount, a foreign exporter and domestic 
importer of subject merchandise, respectively, requested in a letter to 
the Department on October 27, 1994, that Bhansali be assigned the 
preliminary margin calculated for GF (2.67 percent), rather than the 
``all others'' rate normally assigned to non-respondent foreign 
producers/exporters. Bhansali and Paramount believe this treatment to 
be appropriate because: (1) Bhansali procures the raw materials for SSB 
production from the same sources as GF, and like GF, converts the 
material into SSB; and (2) the all others rate includes the BIA margin 
for Mukand which did not cooperate in the investigation. They contend 
that ``penalizing'' Bhansali with the all others rate would be denying 
them ``equal protection'' and ``due process.''
    Petitioners believe that the Department should retain the 
preliminary ``all others'' rate (11.85 percent) for Bhansali's and 
Paramount's SSB exports to the United States. Petitioners state that 
the two interested parties appear to rest their request on the fact 
that Bhansali procures raw materials from the same source as GF and 
subsequently converts the material into SSB. They assert that this 
argument ignores the fact that the Department is required to verify all 
information upon which it relies in calculating antidumping margins in 
an investigation. Moreover, petitioners point out that as interested 
parties, Bhansali and Paramount could have requested the Department to 
permit Bhansali to appear as a voluntary respondent and, thereby, 
receive a separate dumping rate based on its own verified data. 
Petitioners also point out that both companies may request an 
administrative review of Bhansali's exports and, thereby, obtain a 
company-specific rate for Bhansali's shipments to the United States.
    Furthermore, petitioners assert that the Department has repeatedly 
used BIA in calculating the ``all others'' rate for non-responding 
companies, even when there is only one respondent and when the rate 
reflects the most adverse BIA. According to petitioners, the Department 
has been reluctant to modify the all others rate calculation absent 
compelling circumstances. To support its arguments, petitioners cite, 
among other Department rulings, the Final Determination of Sales at 
Less Than Fair Value: Steel Wire Rope from India, 56 FR 46285 
(September 11, 1992) and Final Determination of Sales at Less Than Fair 
Value: Certain Paper Clips from the People's Republic of China, 54 FR 
51168 (October 7, 1994).
    DOC Position: We agree with petitioners. The Department assigns 
company-specific rates to those companies which were either mandatory 
respondents or accepted as voluntary respondents. See Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Forged 
Stainless Steel Flanges from India, 58 Fed. Reg. 68853, 68857 (Dec. 29, 
1993) (``Steel Flanges''); Antidumping; Oil Country Tubular Goods from 
Canada; Final Determination of Sales at Less Than Fair Value, 51 Fed. 
Reg. 15029 (Apr. 22, 1986). In this case, Bhansali was neither named by 
the Department as a mandatory respondent nor did it request treatment 
as a voluntary respondent. It is our practice to assign the ``all 
others'' rate to companies which either were not named as mandatory 
respondents or did not request voluntary status. See Floral Trade 
Council v. United States, 822 F. Supp. 766, 768 (CIT 1993); See Steel 
Flanges at 68857. The Department applies the ``all-others'' rate to 
these companies because they did not provide company-specific 
information necessary to calculate individual rates. Given the fact 
that Bhansali, as a foreign exporter, was given the opportunity to 
request treatment as a voluntary respondent, and, thereby, could have 
participated in the investigation and receive a company-specific rate, 
we believe that Bhansali was not denied equal protection and was 
afforded due process. In addition, because both Bhansali and Paramount 
will be able to request an administrative review, if an order is issued 
in this case, we believe that these parties have not been denied due 
process. We disagree with Bhansali that we could use GF's data to 
calculate a company-specific rate because there is no evidence on the 
record that GF's data is the same as its own and the Department must 
verify all information upon which it relies in calculating a margin.
    We also disagree with Bhansali's argument not to include the BIA 
rate in the all-others rate calculation. It is the Department's 
practice to calculate the all-others rate based on the average of the 
margins assigned to all companies under investigation. See Steel 
Flanges at 68858. Consequently, we included the BIA rate in calculating 
the all-others rate.
    Comment 2: Petitioners argue that the seven sales that were deleted 
from GF's revised August 29, 1994, U.S. sales listing should be 
included in the Department's final margin analysis. Petitioners assert 
that these sales, shipped under two invoices, were made pursuant to a 
purchase order dated within the POI. Despite the fact that the purchase 
order was ultimately canceled, a portion of the order was shipped to 
the U.S. customer. Accordingly, petitioners maintain that the subject 
transactions should be returned to the revised sales listing from which 
they were removed.
    Respondent states that it is indifferent as to whether these sales 
are included in the Department's analysis. GF asserts that it submitted 
the necessary data for these sales so that the Department may consider 
them in its analysis, if appropriate. However, GF points out that it 
had a legitimate basis to believe that such sales should be excluded. 
According to respondent, by explicit agreement between GF and the U.S. 
customer after purchase order issuance, the quantity shipped greatly 
differed from the quantity ordered. In other words, a significant term 
of sale changed after the date of purchase order and, in fact, after 
the date of shipment. Under the Department's practice for determining 
date of sale, when the buyer and seller agree on a change in the terms 
of sale after the purchase order, the new date of sale is the date on 
which the change in terms was agreed upon. In the case of the subject 
sales, respondent maintains that the new date of sale is the date of 
shipment which falls outside the POI.
    DOC Position: We agree with petitioners. We verified that these 
sales should not have been deleted from respondent's U.S. sales 
listing. While we found that the purchase order at issue was cancelled 
in June 1994, we also found that a portion of the order had been 
shipped under two invoices in February and April 1994, prior to order 
cancellation. The terms of sale, as specified in the original purchase 
order dated within the POI, did not change until after the two 
shipments were made. Therefore, we consider the subject sales to be 
appropriately included in the sales listing and, accordingly, have used 
them in our final analysis.
    Comment 3: For certain U.S. sales made to one U.S. customer during 
the POI, GF reported two different prices--purchase order price 
(reported under the variable ``GRSUPRU'' in the U.S. sales listing) and 
invoice price (reported under the variable ``INVPRU in the U.S. sales 
listing). In its August 29, 1994, submission and at verification, 
respondent explained that the difference between the two prices was an 
offset granted by GF to the customer which related to pre-POI shipments 
made under the International Price Reimbursement Scheme (IPRS)1.
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    \1\ Under the IPRS, which expired prior to the POI for stainless 
steel products, the Indian government compensated exporters for the 
higher cost of using domestic versus imported materials in the 
production of export products.
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    Petitioners contend that for these transactions, the prices 
reported under the ``INVPRU'' variable (i.e., the price charged minus 
the IPRS offset), rather than the ``GRSUPRU'' variable, (i.e., the 
price agreed upon by the parties), should be used by the Department as 
the basis of U.S. price in its final margin calculations. Petitioners' 
contention is premised primarily on the following: (1) the Department 
verified that INVPRU was the actual price paid by the customer; and (2) 
GF did not provide sufficient evidence to the Department at 
verification to substantiate its claim that the difference between the 
two prices related to the effects of the IPRS on pre-POI shipments. 
(For a detailed summary of petitioners' comments, see December 16, 
1994, Final Concurrence Memorandum from the Team to Barbara R. Stafford 
at 8-9.)
    Respondent claims that for the transactions at issue, GRSUPRU, not 
INVPRU, is the actual total price charged and paid to GF by the U.S. 
customer, and, therefore, GRSUPRU should be used as the basis of U.S. 
price in the Department's final analysis. According to GF, GRSUPRU and 
INVPRU differ for one U.S. customer because of commitments made between 
GF and that customer with respect to pre-POI shipments that related to 
the IPRS. Contrary to suggestions in the Department's sales 
verification report, respondent claims that there was no price change 
between the purchase order and invoice with respect to these few sales. 
If the Department concluded that there was a change in price, the date 
of sale would be affected. In this case, the date of sale would have 
been the date of shipment since the alleged price change was first 
reflected in the invoice issued after shipment, which for several 
transactions occurred after the POI. Respondent asserts that, contrary 
to a statement in the Department's verification report, GF's 
allocations of certain charges (i.e., bank interest charges, indirect 
selling expenses and imputed credit expenses) applicable to the subject 
sales were correct; that is, it was correct to use GRSUPRU in its 
allocation methodology since that is the actual price paid for those 
sales. (For a detailed summary of respondent's comments, see December 
16, 1994, Final Concurrence Memorandum from the Team to Barbara R. 
Stafford at 7-8.)
    DOC Position: We agree with respondent. It appears that the 
inconsistencies in the Department's sales verification report resulted 
in confusion between the parties concerning the definition of, and 
difference between, GRSUPRU and INVPRU. In our sales verification 
report on page 19, we noted that our examination of source 
documentation revealed ``no discrepancies'' with respondent's claim. 
However, in an earlier section of our verification report on page 6 and 
at the top of page 19, respectively, we incorrectly suggested that, for 
certain sales made to one U.S. customer during the POI, there were 
price ``changes'' between the purchase order and invoice due to the 
effects of the IPRS, and that INVPRU referred to the ``actual price GF 
charged the U.S. customer'' which differed from the original purchase 
order price. We also incorrectly suggested on page 20, that because GF 
used GRSUPRU, not INVPRU, to calculate bank interest charges, imputed 
credit and indirect selling expenses, these expenses were 
``overstated'' for the affected sales.
    Based upon further review of the source documentation provided at 
verification, we believe that the difference between GRSUPRU and INVPRU 
reported for the affected sales resembles a kind of ``rebate'' given by 
GF to the U.S. customer on pre-POI shipments which was accounted for in 
the final invoice price for the affected POI shipments. We consider a 
rebate to be a return of a previous amount paid for goods. This 
``rebate'' was the vehicle by which respondent paid back what it owed 
the customer on pre-POI shipments in lieu of direct cash payments, and 
bore no relation to POI sales. Furthermore, we view GRSUPRU as the 
price that the customer would have otherwise paid for the subject 
sales, but for the ``rebate'' related to pre-POI shipments made under 
the IPRS. (For a complete discussion of this issue, see December 16, 
1994, Final Concurrence Memorandum from the Team to Barbara R. Stafford 
at 7-10.)
    Comment 4: Petitioners contend that certain bank charges incurred 
on third country sales should be allocated over invoice value, rather 
than weight, because they are based on the value of the merchandise. 
Petitioners maintain that by allocating these charges on the basis of 
weight, respondent has overstated them, thereby understating the net 
third country sales price. As best information available, petitioners 
suggest decreasing all third country bank charges based on the 
percentage difference between the per unit bank charge calculated by 
value and that calculated by weight for a sample transaction to more 
accurately reflect GF's true bank cost experience.
    Respondent argues that petitioners cite no record evidence for 
their assertion. Respondent maintains that the record clearly indicates 
that the subject bank charges (i.e., courier charges) are fixed charges 
that do not vary with transaction value. Furthermore, respondent 
emphasizes that it reported other bank charges (i.e., bank interest 
charges) which were allocated by value.
    DOC Position: We agree with respondent. GF claimed in its response 
and we verified that the subject bank charges were assessed on the 
basis of weight, not value. Therefore, we have used the verified bank 
charges in our analysis and made deductions to FMV, where appropriate. 
(See November 2, 1994, Sales Verification Report at page 12).
    Comment 5: Petitioners claim that GF incorrectly allocated its 
ocean freight and foreign brokerage charges on third country sales over 
net weight rather than gross weight. Since these expenses are incurred 
on the total weight of the shipments, petitioners contend that they 
should be allocated over gross weight. Petitioners add that although 
the differences between gross and net weight for most transactions in 
the third country sales listing are not substantial, for two invoices 
the differences are significant. Accordingly, petitioners argue that 
the movement expenses for all reported third country sales related to 
the two invoices should be decreased by the percentage difference 
between the net and gross weights.
    Respondent contends that net weight is the weight of SSB actually 
shipped; in contrast, gross weight includes packing materials. 
According to respondent, movement costs should be allocated over net 
weight so that the movement costs are fully absorbed by the SSB 
actually shipped. To allocate some movement costs to the packing 
materials would understate per unit movement costs. Furthermore, GF 
points out that it allocated movement costs over net weight for both 
U.S. and third country movement charges. If movement costs incurred on 
third country sales were allocated over gross weight, then for 
consistency purposes, movement costs incurred on U.S. sales should also 
be allocated over gross weight. Consequently, the reallocation would 
affect U.S. and third country sales equally, with no net impact on the 
Department's dumping margin calculation.
    DOC Position: We agree with respondent. Respondent claimed and we 
verified that the subject movement charges were properly allocated over 
net or actual weight of the subject merchandise, not gross weight. 
Therefore, we have made deductions to FMV, where appropriate, for the 
verified movement charges. (See November 2, 1994, Sales Verification 
Report at page 13).
    Comment 6: Petitioners argue that raw material costs should not be 
reduced by the revenues generated from sales of duty-free advance 
import licenses.2 Petitioners contend that the Department should 
disallow this reduction in GF's raw material costs for several reasons. 
First, they maintain that these revenues are unrelated to the 
production and sale of the subject merchandise because they reflect 
earnings gained from the sale of the unused portion of the import 
licenses. Second, the unused capacity was purchased by a company, the 
function of which was unrelated to the production of subject 
merchandise. Third, GF incurred no expenses in selling this unused 
capacity, as the purchaser incurred all costs related to the 
importation of the material. According to petitioners, the Department 
has consistently refused to allow an adjustment to respondent's costs 
of production for income that is unrelated to the production and sale 
of the subject merchandise. Among other cases, petitioners cite the 
final determination of Certain Stainless Steel Wire Rods from France 
(58 FR 68865; December 29, 1993) to support its argument.
---------------------------------------------------------------------------

    \2\ These licenses allow Indian exporters to import duty-free 
raw materials that are used in the production of export products. 
Indian exporters may also sell their license capacity to other (non-
exporting) companies which may not have obtained such a license 
directly from the government.
---------------------------------------------------------------------------

    Furthermore, petitioners assert that GF's revenues from sales of 
unused license capacity were earned in a period outside the POI. 
According to petitioners, since these revenues are unrelated to the 
production or sale of subject merchandise and were earned outside the 
POI, they should not be allowed as offsets to direct raw material 
costs.
    GF argues that the subject revenues should be considered in the 
calculation of raw material costs, as they are directly related to raw 
material purchases. According to GF, they exist only because GF used 
domestic, instead of imported, material to produce the SSBs for export. 
Respondent argues that, if not for these import license revenues, it 
would not make sense for the company to purchase domestic raw materials 
which have a higher cost than imported materials.
    Furthermore, GF asserts that the Indian Government Import License 
Program replaced the prior IPRS which had the same purpose and effect 
(i.e., compensating Indian exporters for the higher cost of using 
domestic material). Respondent points out that during the IPRS 
program's existence, it was well-established by Department precedent 
that raw material costs should be adjusted downward for IPRS 
reimbursements. GF cites Forged Stainless Steel Flanges from India (58 
FR 68853, 68558 (Comment 10) December 29, 1993) to support its claim. 
Similarly, respondent maintains that raw material costs should be 
reduced by the amount of revenues received from license sales which are 
permitted under the Indian Government Import License Program.
    In addition, respondent asserts that the import licenses were 
secured during the POI, which makes them applicable to POI production. 
Therefore, benefits from the sale of import licenses are related to, 
and were accrued during, the POI, regardless of when these benefits are 
posted in the company's books.
    DOC Position: We agree with respondent that the license fee 
revenues relate to purchases of raw materials for GF's export sales 
made during the POI. GF purchased raw materials in the domestic market 
to produce exported SSB. At the same time, GF sold its unused license 
capacity in a related transaction in order to reduce its overall raw 
material costs for exported products. Based on our understanding of the 
license program, GF had to demonstrate that the raw material amount 
covered by the import license was used in exported products, even if 
the license amount was sold to another party. GF was able to sell its 
import licenses only because it was able to satisfy its export 
obligation under the license by using domestically sourced raw 
materials, instead of imported raw materials, to produce its exported 
products. Therefore, the revenues GF received from the sale of its 
import licenses are directly related to its purchases of domestic raw 
materials and represent an appropriate offset to GF's raw materials 
costs.
    Comment 7: Petitioners argue that the nickel costs reported by GF 
should be adjusted to account for a decline in nickel costs at the end 
of the POI. They contend that the respondent's calculation of average 
POI material costs should not have included the declining nickel 
purchase prices at the end of the POI (December 1993). Petitioners 
argue that it is unreasonable to assume that the nickel purchased by GF 
in December 1993 was used in the production of subject merchandise 
during the POI, given the time necessary to import the nickel and 
convert it into wire rods or bars for use in SSB production. 
Accordingly, GF's nickel costs should be recalculated to exclude those 
purchases of nickel that could not have been used in production of the 
subject merchandise before the end of the POI.
    Respondent argues that it is possible that the nickel purchased in 
December 1993 was used in SSB production during the POI. Respondent 
states that the reason for the fall in nickel prices was mainly because 
the early POI nickel purchases were from domestic sources while the 
later POI nickel purchases were imports which are cheaper than 
domestically produced nickel. Furthermore, GF states that its financial 
accounting records do not track when purchased materials are actually 
used in production. Consequently, GF does not know whether the wire rod 
it receives from the contractor is made from an earlier or later supply 
of nickel. According to respondent, only the POI weighted-average 
approach can be reconciled with GF's financial statements.
    DOC Position: We agree with petitioners. Respondent's methodology 
for calculating weighted-average POI nickel costs failed to adequately 
account for the beginning POI inventory values and was based on 
quantities in excess of quantities used. In order to reasonably account 
for these deficiencies, we excluded from the weighted-average nickel 
cost calculation, the quantity purchased in excess of consumption (i.e. 
ending inventory), valued at the most recent purchase price. This 
approach most accurately values the nickel used in production.
    Comment 8: Petitioners contend that GF has understated its reported 
labor costs by the number of times material passes through a particular 
process. Since one bar can pass through a particular processing center 
more than once, petitioners argue that the total weight of material 
processed in that center will be greater than the finished good weight 
by a factor equal to the number of times it passes through that 
processing center. Accordingly, the Department should increase GF's 
reported labor costs by an appropriate factor in order to properly 
account for GF's actual labor experience with respect to the subject 
merchandise.
    Respondent maintains that it properly calculated labor costs by 
considering the cost for each time a particular bar passes through a 
production process and accounting for the per unit cost of that process 
by the number of times the bar passes through that process. GF asserts 
that the Department reviewed its allocation methodology at verification 
and noted that it appeared reasonable.
    DOC Position: We agree with respondent. GF's reported calculation 
methodology first computed a labor cost for each time a particular bar 
passed through a particular process. The ``per pass'' cost was then 
multiplied by the number of times a certain model passed through the 
particular process. We have determined that GF's labor cost methodology 
is reasonable, because it properly accounts for the cumulative cost of 
processing labor, and accordingly we conclude that no adjustment is 
warranted.
    Comment 9: Petitioners argue that the Department should revise the 
total production quantity used by GF in calculating certain costs by 
removing the quantity of inspection wastage, or second quality product. 
According to petitioners, the quantity of inspection wastage and 
secondary grade product should not be included in the allocation base 
because, by definition, these products did not meet inspection 
standards and were inferior in quality. The fact that these inferior 
products could not recover the entire raw material costs, let alone the 
processing costs, further indicates to petitioners that these products 
should not be treated as standard products in calculating GF's cost of 
production. Instead, petitioners maintain that the costs associated 
with these inferior products should be absorbed by the standard 
products. Accordingly, petitioners contend that, in its final 
determination, the Department should revise the total production 
quantity by removing the quantity for inspection wastage.
    Respondent argues that costs were properly allocated over all 
saleable products, including second-quality SSB. According to 
respondent, the costs to produce the lower quality bars were the same 
as those to produce higher quality bars which went through the same 
production process. In addition, respondent points out that at 
verification the Department reviewed the allocation methodology for 
variable expense items and noted it to be reasonable.
    DOC Position: We agree with respondent and have made no adjustment. 
When the finished bar comes out of production, it is examined and 
classified as either export quality or inspection wastage (i.e., second 
quality) by inspection teams. The same manufacturing factors go into 
the production of both export quality and second quality stainless 
steel bar. Other than quality and market value there is no difference 
between these products. We have determined that the circumstances in 
this case are similar to those in Certain Carbon and Alloy Steel Wire 
Rod From Canada, 59 FR 18797 (April 20, 1994), where we allowed the 
respondent to allocate production costs over both prime and non-prime 
merchandise. See also, IPSCO, Inc. v. United States, 965 F 2d 1057 
(Fed. Cir. 1990). We note that, in this context, inspection wastage (or 
second quality) and non-prime merchandise are synonymous.
    Comment 10: Petitioners contend that the Department should revise 
GF's direct material cost by adding a portion of the excise tax paid by 
GF to the total cost of direct materials. In petitioners opinion, the 
deductions to direct material costs GF claimed for excise and sales 
taxes which were refunded to GF upon exportation of the finished 
products are overstated because GF sold products in the domestic market 
during the POI. Because these products were not exported, GF was not 
eligible for excise and sales tax refunds on their sale. Therefore, 
petitioners maintain, the Department should revise GF's reported direct 
material costs to account for the overstatement of tax refunds.
    Respondent asserts that petitioners' arguments are irrelevant 
because this case concerns the costs of product sold to the United 
States and Germany, and not in the home market. GF also points out that 
when GF sells in the home market, GF charges the excise or sales taxes 
to its customer, meaning that GF ultimately does not incur such costs.
    DOC Position: We agree with respondent. We observed at verification 
that GF charged its domestic customers for sales and excise taxes they 
had paid on raw materials and, therefore, ultimately did not incur any 
cost for these taxes. We also observed that sales and excise taxes were 
refunded upon exportation of the subject merchandise. Consequently, we 
find no evidence on the record of an overstatement of tax refunds as 
claimed by petitioners.

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 SSB from India 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 SSB are as follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Producer/manufacturer/exporter                   margin  
                                                              percentage
------------------------------------------------------------------------
Grand Foundry..............................................         3.87
Mukand.....................................................        21.02
All Others.................................................        12.45
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determination. As our final 
determination is affirmative, the ITC will 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 SSB from India 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.
    This determination is published pursuant to section 735(d) of the 
Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).

    Dated: December 19, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-31802 Filed 12-27-94; 8:45 am]
BILLING CODE 3510-DS-P