[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: 94-31804]


[Federal Register: December 28, 1994]


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DEPARTMENT OF COMMERCE
[A-469-805]


Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Bar From Spain

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

EFFECTIVE DATE: December 28, 1994.

FOR FURTHER INFORMATION CONTACT: Mary Jenkins or Kate Johnson, Office 
of Antidumping Investigations, Import Administration, U.S. Department 
of Commerce, 14th Street and Constitution Avenue, N.W., Washington, 
D.C. 20230; telephone (202) 482-1756 or 482-4929, respectively.

Final Determination

    We determine that stainless steel bar (SSB) from Spain 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 product 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 have 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 section 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 subheading is 
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, to December 31, 
1993.

Case History

    Since publication of the notice of preliminary determination on 
August 4, 1994 (59 FR 39740), which the Department amended through a 
notice of Correction of Ministerial Errors published on September 13, 
1994 (59 FR 46962), the following events have occurred.
    On August 3, 1994, after receiving letters from the Department 
dated July 13 and 29, 1994, regarding deficiencies in its initial 
questionnaire response, Acenor, S.A. (Acenor) informed the Department 
that, on July 27, 1994, it had sold the part of its industrial assets 
dedicated to the production of SSB to DIGECO, S.A. and CLORIMAX, SRL. 
Acenor provided no further details about this sale or its successors. 
Given this situation, Acenor requested that it be allowed to withdraw 
as a mandatory respondent, and that it be granted an indefinite 
extension of time for its successors to decide whether to continue 
participating in the investigation. The Department denied these 
requests, and neither Acenor nor its successors filed any further 
submissions with the Department.
    On August 4, 1994, Roldan submitted a supplemental response to the 
Section D questionnaire. On September 19, 1994, Roldan submitted 
supplemental information relating to its sales response.
    Verification of Roldan's responses took place in September and 
October 1994. As requested by the Department, on November 7, 1994, 
Roldan submitted a post verification submission based on verification 
findings.
    Case and rebuttal briefs were submitted on November 16, and 21, 
1994, respectively. A hearing was held on November 23, 1994.

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 
Acenor. Neither Acenor nor its successors responded to our deficiency 
letters, and we were not able to verify the incomplete information in 
Acenor's initial questionnaire given Acenor's complete withdrawal from 
this proceeding. On that basis, we have found that Acenor 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, the 
highest rate calculated for another respondent, or the estimated margin 
found for that respondent in the preliminary determination (if 
applicable). Accordingly, as BIA, we are assigning to Acenor the 
highest margin among the margins alleged in the petition, as 
recalculated by the Department. See Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof from the Federal Republic of 
Germany; Final Results of Antidumping Duty Administrative Review 
(Antifriction Bearings) (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) (Allied Signal); 
see also Krupp Stahl, AG et al. v. United States, 822 F. Supp. 789 (CIT 
1993)).

Such or Similar Merchandise

    We have determined that all the 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 of Commerce.
    Consistent with our preliminary determination, we altered the order 
of the SSB grades specified within the grade criterion of Appendix V to 
account for certain other SSB grades which respondent sold 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.

Fair Value Comparisons

    To determine whether sales of SSB from Spain 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. In 
accordance with 19 C.F.R. 353.58, we made comparisons at the same level 
of trade, where possible. We made revisions to respondents' reported 
data, where appropriate, based on verification findings.

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 
exporter's sales price methodology was not otherwise indicated.
    We calculated PP based on CIF delivered prices to unrelated 
customers in the United States. We made deductions, where appropriate, 
for foreign brokerage and handling, foreign inland freight, ocean 
freight, marine insurance, U.S. brokerage and handling (including 
insurance), U.S. inland freight and U.S. import duties. No adjustment 
was made for freight charge differentials claimed by Roldan because the 
actual cost of freight paid by Roldan was deducted (see Comment 10 
below).
    We made an adjustment to USP for the value-added tax (VAT) paid on 
the comparison sales in Spain, in accordance with our practice, 
pursuant to the Court of International Trade decision in Federal-Mogul 
Corp. v. United States, 834 F. Supp 1319 (CIT 1993). (See Final 
Determination of Sales at Less than Fair Value: Calcium Aluminate 
Cement, Cement Clinker and Flux from France, 59 FR 14136, March 25, 
1994).

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 
and section 353.48(a) of the Department's regulations. Based on this 
comparison, we determined that Roldan had a viable home market with 
respect to sales of SSB during the POI.

Cost of Production

    Petitioners alleged that Roldan made home market 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 the June 13, 
1994, decision memorandum from Richard W. Moreland to Barbara R. 
Stafford.)
    In order to determine whether home market 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 home 
market 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 and fabrication, general expenses and 
packing costs, in accordance with 19 CFR 353.51(c). We then compared 
the COP for each product to the home market price, net of movement 
expenses.
    We relied on the submitted COP data with the following exceptions 
where the costs were not appropriately quantified or valued: At 
verification, we found that Roldan, when reporting the cost of 
manufacturing (COM) associated with the blooms which it purchased from 
its parent company, erroneously failed to classify its parent's cost of 
production as Roldan's raw materials costs and, in addition, wholly 
excluded its parent's selling, general and administrative (SG&A) 
expenses. We had Roldan recalculate its COM to correct the errors. For 
COP purposes, we valued Roldan's raw materials costs for the blooms 
purchased from its parent at the parent's cost of production. In 
addition, we revised the SG&A rate applied to Roldan's COM to reflect 
only Roldan's experience rather than the experience of both Roldan and 
its parent. Finally, discrepancies between the difference-in-
merchandise (difmer) data and cost data were corrected.
    In accordance with section 773(b) of the Act, we also examined 
whether Roldan's home market 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 home market 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 home market sales made during the POI were 
priced below COP, we excluded from the calculation of FMV those home 
market 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).
    With regard to Section 773(b)(2) of the Act, Roldan provided no 
indication that any of the below-cost sales were at prices that would 
permit recovery of all costs within a reasonable period of time and in 
the normal course of trade.

Results of COP Test

    We examined Roldan's product-specific COP data, as corrected based 
on our findings at verification. For certain products, we found that 
less than 10 percent of home market sales were below COP; accordingly, 
we included all home market sales of these products in the computation 
of FMV. For certain other products, we found that between 10 and 90 
percent of home market sales were below COP over an extended period of 
time, and we therefore excluded from the computation of FMV those sales 
which were below COP. Finally, we found that for certain products, more 
than 90 percent of Roldan's home market sales were at below-COP prices 
over an extended period of time. We disregarded all of these sales. 
After performing this analysis, certain U.S. sales were left without a 
match. Accordingly, for those sales, we based FMV on CV.

Price to Price Comparisons

    For price-to-price comparisons, we calculated FMV based on packed 
delivered and FOB prices to unrelated customers in the home market. 
Based on verification findings, we increased the gross unit price to 
account for freight revenue collected from certain customers for 
merchandise not yet shipped. We also increased the gross unit price for 
sales made by Roldan's related service centers to account for a cutting 
surcharge charged to its customers and interest revenue collected from 
certain customers for extended credit terms.

Constructed Value

    We calculated 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 COM, as appropriate; and 2) for 
profit, we used the statutory minimum of eight percent of the sum of 
COM and general expenses.
    We relied on the submitted CV data except where the costs were not 
appropriately quantified or valued, as described above in the ``Cost of 
Production'' section of this notice. For CV purposes, however, Roldan's 
raw materials costs (for the blooms that it purchased from its parent) 
were valued at an amount equal to the higher of the transfer price, 
market price or the parent's cost of production. In addition, the SG&A 
rate applied to Roldan's COM was changed so that it reflected only 
Roldan's experience rather than the experience of both Roldan and its 
parent, as Roldan had reported it. Finally, discrepancies between the 
difmer data and cost data were corrected.
    For both price-to-price comparisons and comparisons to CV, we made 
circumstance-of-sale adjustments, where appropriate, for differences in 
credit expenses, pursuant to 19 C.F.R. 353.56(a)(2). Roldan calculated 
credit expenses based on the average interest rate received from its 
discounted accounts receivable during the POI from one bank. Based on 
findings at verification, we re-calculated home market and U.S. credit 
expenses based on an average of the interest rates of all banks used by 
Roldan to discount its accounts receivable during the POI. In addition, 
for those sales with missing shipment dates and payment dates, we 
calculated credit expenses based on the average payment period for the 
respondent's sales reported with shipment and payment dates.
    We did not make a circumstance-of-sale adjustment for commissions 
claimed by Roldan that were paid to its parent company for export sales 
services, nor did we adjust for commissions paid by Roldan to the U.S. 
subsidiary of its parent company for marketing Roldan's products in the 
United States. We consider these payments to be intra-company transfers 
not tied directly to sales of the subject merchandise (see Comment 4 
below).
    We deducted home market packing costs and added U.S. packing costs 
inclusive of the labor cost submitted in Roldan's post verification 
submission for certain U.S. packing forms, in accordance with section 
773(a)(1) of the Act.
    For price-to-price comparisons only, we also made adjustments, 
where appropriate, for differences in the physical characteristics of 
the merchandise in accordance with section 773(a)(4)(C) of the Act. We 
adjusted for VAT in accordance with our practice, as described in the 
``United States Price'' section of this notice, above.
    In light of the Court of Appeals for the Federal Circuit's decision 
in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. 
United States, 13 F.3d 998 (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) or, where appropriate, the exporter's sales 
price offset provision of 19 C.F.R. 353.56(b)(2), as appropriate. We 
did so in this case. This adjustment included home market inland 
freight and insurance.
    In addition to the adjustments noted above, there were certain U.S. 
sales for which there were no comparable sales at the same level of 
trade (as reported by Roldan) in the home market. For these U.S. sales, 
we used home market sales at a different level of trade (as reported by 
Roldan) as the basis for our less than fair value comparisons (see DOC 
response to comment 7). For these comparisons, in accordance with 19 
C.F.R. 353.58, we made a level of trade adjustment. As a level of trade 
adjustment, we offset the cost difference between the indirect selling 
expenses incurred by respondent in the home market in selling to the 
different levels of trade. We granted this adjustment because, based on 
our analysis of the questionnaire response, we are satisfied that: 1) 
Roldan's sales from its factory to unrelated customers and its sales 
through its related service centers represent two distinct levels of 
trade; and 2) the difference in level of trade affects price 
comparability (see Comments 6 through 8 below).

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 Roldan 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
    Petitioners argue that Acenor's status as a party to this 
proceeding cannot be altered simply by the apparent transfer of its 
production assets to other owners. Petitioners state that any change in 
the ownership of Acenor took place some time subsequent to the POI, and 
thus does not alter the fact that Acenor was the producer and exporter 
of the subject merchandise at issue during the POI. Thus, the 
ostensible transfer of ownership and the question of the status of the 
successor companies is an issue for a future administrative review, not 
for this investigation.
    Petitioners argue that Acenor should be subject to the highest 
adverse margin on record as BIA. Petitioners state that in determining 
what rate to apply as BIA, the agency has developed a two-tiered 
methodology, in which the most adverse rate is assigned to an 
uncooperative respondent, and cite to Antifriction Bearings and Allied-
Signal. Petitioners submit that the most adverse rate available for 
Acenor is the highest individual margin calculated by the Department's 
preliminary determination for Acenor. As support for this selection, 
petitioners cite Final Determination of Sales at Less Than Fair Value; 
Certain Hot-rolled Carbon Steel Flat Products, et al., from France, 58 
FR 37125 (July 9, 1993), and Final Determination of Sales at Less Than 
Fair Value; Stainless Steel Wire Rods from France, 57 FR 68865 (Dec. 
29, 1993).
DOC Position
    We agree with petitioners and have treated Acenor as an 
uncooperative respondent for BIA purposes in this investigation. Once a 
company has been named as a mandatory respondent, a decision to 
withdraw is in essence a decision to refuse to cooperate in the 
Department's investigation. In assigning total BIA to an uncooperative 
respondent, our methodology specifies that we will assign the highest 
margin from among: (a) the margins in the petition, (b) the calculated 
rate for another respondent, or (c) the estimated margin found for that 
respondent in the preliminary determination. See Final Determinations 
of Sales at Less Than Fair Value; Certain Hot-Rolled Carbon Steel Flat 
Products, et al., from Canada, 58 FR 37099, 37100-01 (July 9, 1993). 
Although petitioners cite to Certain Hot-Rolled Carbon Steel Flat 
Products from France and Stainless Steel Wire Rods from France as cases 
where the Department has used the highest margin calculated for an 
individual sale as BIA, those cases involved partial BIA, not total 
BIA. In this case, we have assigned Acenor the highest margin in the 
petition.
Comment 2
    Petitioners argue that the Department should use BIA to calculate a 
dumping margin for Roldan because Roldan was unable to establish, 
through any existing company records, that the sales it had reported 
were accurate. Petitioners further state that, at verification, the 
lists used to substantiate the supporting documents for Roldan's sales 
volume and value figures were inappropriately developed while the 
verification was on-going.
    Respondent states that the Department's verification team was: (1) 
able to establish that all sales were correctly reported, (2) able to 
determine that the total sales quantity and value were correct, and (3) 
able to trace the sales journal directly to the general ledgers and 
financial statements.
DOC Position
    We disagree with petitioners. Petitioners quote the verification 
report out of context. Based on our analysis of Roldan's sales 
reporting and accounting system at verification, we were able to 
determine that the total quantity and value figures reported by Roldan 
were complete and accurate. Roldan's sales are recorded in its 
accounting books at the time of invoice, rather then the time at which 
price and quantity are agreed upon (as reflected in mill order 
acceptances). Therefore, Roldan reported its total quantity and value 
figures based on mill order acceptances. Consequently, in order to 
reconcile Roldan's total quantity and value figures reported to the 
Department, Roldan created a list of the orders accepted by the mill to 
capture all sales made within the POI in accordance with the 
Department's date of sale methodology. The mill acceptance orders were 
verified by the Department. Therefore, we consider Roldan to have 
presented appropriate documentation to support its reported sales.
Comment 3
    Petitioners argue that during the verification of Inoxcenter, one 
of Roldan's related distributors, the Department found that Inoxcenter 
applied a surcharge for cutting SSB to some customers and that 
information on this charge was not included in the sales data 
previously submitted to the Department. Petitioners state that the 
Department should adjust all of Roldan's home market sales prices 
upward for this unreported surcharge by applying the surcharge as a 
percentage of the sales value of the invoice which contained a cutting 
surcharge to all home market sales.
    Respondent states that the amount of this charge to customers is 
minimal and that it would have required a manual search of thousands of 
invoices to be able to report this item. Respondent further argues that 
Inoxcenter, like most service centers in Spain and in the United 
States, maintains inventory and, where necessary, cuts the steel 
products it sells. Respondent states that any minimal amount of 
additional sales revenue or selling expense resulting from these 
services are reflected in indirect selling expenses.
DOC Position
    We agree with petitioners that an adjustment is warranted for the 
unreported cutting surcharge. However, we consider the adjustment 
advocated by petitioners to be inappropriate given the circumstances of 
this case. At verification, we examined a small number of sales (due to 
time constraints), and found the surcharge on only one of the sales. 
Therefore, we have applied this surcharge to all service center sales 
in the ratio observed for the six sales verified.
Comment 4
    Petitioners argue that the Department should make a circumstance of 
sale adjustment for commissions paid to Acerol Corporation (Acerol), 
Roldan's related U.S. sales organization. Petitioners disagree with the 
Department's refusal to make a circumstance-of-sale adjustment in the 
preliminary determination, where the Department treated the expenses as 
intra-company transfers, not tied directly to sales of the subject 
merchandise.
    Petitioners first state that, since it is in the respondent's best 
interest that expenses incurred in the United States be indirect, 
Roldan must demonstrate that the payments to Acerol are not tied 
directly to sales. Petitioners cite to Tapered Roller Bearings, 
Finished and Unfinished, and Parts Thereof, from Japan; Final Results 
of Administrative Review, 57 FR 4951, 4955-56 (1992), in which the 
Department stated that it generally will reclassify a U.S. adjustment 
as direct when a respondent fails to provide information substantiating 
that the U.S. adjustment is indirect. Petitioners also cite to Timken 
Co. v. United States 673 F Supp. 495 (CIT 1987), in which the CIT 
stated that it is reasonable that the burden of establishing an 
adjustment is on the respondent that seeks that adjustment. Petitioners 
further argue that Acerol's financial statements classify these 
payments as commissions.
    Petitioners next insist that the Department, in its preliminary 
determination, impermissibly assumed that the U.S. commission payments 
were not made at arm's length. According to petitioners, Roldan failed 
to satisfy its burden of showing that these payments were not at arm's 
length, and therefore the Department should have assumed that they were 
at arm's length.
    Respondent refers to the Department's verification report of 
Inoxcenter to argue that its payments to Acerol were not tied directly 
to sales. In addition, respondent states that these payments were 
negotiated between Roldan's and Acerinox' chief executive officers. 
Respondent argues that this type of negotiation between related parties 
could hardly be considered indicative of an arm's-length transaction.
DOC Position
    We agree with respondent. In Final Determination of Sales at Less 
Than Fair Value; Coated Groundwood Paper From Finland, 56 FR 56359 
(Nov. 4, 1991) (Coated Groundwood Paper), we explained that we 
interpreted LMI-La Metalli Industriale, S.p.A. v. United States, 912 
F.2d 455 (Fed. Cir. 1990), to mean that related party commissions paid 
in either the United States or the home market are allowable as 
circumstance-of-sale adjustments when they are determined to be (a) at 
arm's length, and (b) directly related to the sales in question. In the 
instant investigation, we have found that the ``commissions'' at issue 
are indirect selling expenses, and are neither arms'-length nor 
directly related to the sales under consideration. Therefore, no 
circumstance-of-sale adjustment is warranted. In this regard, we 
examined the payments made by Roldan to Acerol at verification and 
found that they were year-end, intra-company payments made to cover 
Acerol's operating expenses. We concluded that there was no 
relationship between the amount of the payments and direct sales made 
through Acerol. We also noted, based on our review of Acerol's 
financial statements, that these payments, which were included in 
indirect selling expenses, were separate from the charges made by 
Acerol to perform such services as movement, which are characterized as 
commissions in Acerol's financial statements. Furthermore, in this 
investigation, we cannot find the ``commissions'' at issue to have been 
provided at arm's length. We have no appropriate benchmark against 
which to test whether the commission arrangements between Roldan and 
Acerol are at arm's length.
Comment 5
    With regard to product comparisons, petitioners argue that the 
Department should continue to use the product comparisons used in the 
preliminary determination, and that there is no basis to use the five 
SSB size ranges proposed by Roldan. According to petitioners, use of 
only five groupings results in groupings much too broad to be 
meaningful or to provide appropriate comparisons, particularly in the 
narrowest dimensions. Petitioners state that Roldan's cost accounting 
system may assign these products the same costs, but that does not mean 
that the products actually bear the same costs. Finally, petitioners 
note that the product criteria for SSB were not developed for this 
investigation alone, but have been applied to other contemporaneous SSB 
investigations and no respondent in any other SSB investigation has 
claimed that the sizes should be compared in ranges.
    Respondent argues that the use of each millimeter to determine 
whether a product is identical is far too restrictive for matching 
purposes. Roldan urges the Department to treat as identical all sizes 
within each of the five ranges it has identified in its responses. 
Roldan states that in terms of its manufacturing costs, the sizes 
falling within each of these ranges are identical for matching 
purposes. This would not only result in more identical comparisons, but 
also identical comparisons of sizes bearing the same manufacturing cost 
under Roldan's cost accounting system; Moreover, it would avoid the 
difmer adjustment distortions caused by attempting to compare, as most 
similar, products having different manufacturing costs.
DOC Position
    We agree with petitioners that we should continue to use the 
product comparisons used in our preliminary determination. It only 
became apparent at verification that respondent's cost accounting 
system does not recognize cost differences at the level of detail in 
Appendix V. Respondent did not raise this issue prior to verification; 
therefore, at this stage in the investigation, we will not consider 
changing our product matching criteria.
Comment 6
    Petitioners argue that in accordance with the test set forth in 
Appendix II to the final determination in Final Determination of Sales 
at Less Than Fair Value; Certain Cold-Rolled Carbon Steel Flat Products 
From Argentina, 58 FR 37062 (July 9, 1993) (Argentina Steel), the 
Department should reject Roldan's related party sales and rely instead 
on sales by Roldan's related parties to the first unrelated customer in 
the home market, i.e., the downstream sales. Petitioners add that to 
ignore the entire home market of resales to unrelated parties under the 
guise of a level of trade assertion, as Roldan requests, would 
essentially nullify the agency's related party test and unjustly limit 
the home market database of comparisons. Moreover, petitioners also 
argue that Roldan's downstream sales, i.e, the home market sales at 
Level II (see Comment 7 below), are tainted because of Roldan's 
inability to trace these sales (through the large related service 
centers) to Roldan merchandise, given that the service centers purchase 
from Roldan and other producers but do not have records to trace the 
source of the SSB for any particular sale. According to petitioners, 
BIA would be the only appropriate alternative where such home market 
sales were needed for comparison to U.S. sales. Petitioners assert that 
in Final Determinations of Sales at Less Than Fair Value; Certain Hot-
Rolled Flat Carbon Steel Products, et al. from France, 58 FR 37,125, 
37127-28 (1993), where the respondent's related party prices were not 
at arm's length and the respondent failed to report home market 
downstream sales, the Department used BIA.
    Roldan argues that the Department should use its related party 
sales. Roldan argues, alternatively, that the Department should only 
match Level I home market sales with U.S. sales. According to Roldan, 
the use of Level II home market sales is inappropriate given the fact 
that there is no assurance that any given sale by the related service 
centers selling at Level II actually included the sale of SSB produced 
by Roldan.
DOC Position
    We have applied the test set forth in Appendix II to the final 
determination in Argentina Steel, and we have determined that Roldan's 
related party sales are not at arms-length. Accordingly, we have 
rejected all of Roldan's related party sales and have relied instead on 
sales by Roldan's related parties to the first unrelated customer in 
the home market. In addition, consistent with our past practice, we 
have used home market sales at both Level I and Level II for matching 
purposes. See, e.g., Final Results of Antidumping Duty Administrative 
Reviews; Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, from Japan and Tapered Roller Bearings, Four Inches or Less 
in Outside Diameter, and Components Thereof, from Japan, 58 FR 64720, 
64729 (Dec. 9, 1993). Sales of certain SSB products made by Roldan's 
related service centers to the first unrelated customer in the home 
market involved commingled SSB products, i.e., SSB products that could 
have been produced by Roldan or by other unrelated suppliers. Section 
773(a)(1) of the Act directs that FMV be calculated based on sales of 
``such or similar merchandise,'' and the term ``such or similar 
merchandise'' is defined by section 771(16) of the Act as merchandise 
which is produced in the same country and by the same person as the 
merchandise which is the subject of the investigation. Therefore, we 
cannot use sales of SSB products produced by persons other than Roldan 
when calculating FMV. We have only included in our foreign market value 
analysis sales made by related service centers of the SSB products that 
we were able to determine were purchased exclusively from Roldan.
Comment 7
    Roldan has identified two levels of trade within its home market 
distribution system. Roldan argues that Level I sales are made directly 
from the factory (through the commercial department of Roldan's parent, 
Acerinox) to large related and unrelated service centers and large end-
users that maintain substantial inventories and, therefore, are willing 
to wait the two to three months it usually takes from the time the 
order is placed until the product can be manufactured and delivered. 
Roldan states that Level II sales are made by its large related service 
centers, who have purchased merchandise directly from Acerinox' 
commercial department, i.e., at Level I. According to Roldan, these 
related service centers have the expenses of maintaining merchandise in 
inventory for resale to unrelated end-users, and occasionally to other 
unrelated service centers. Roldan also maintains that, while there are 
two types of customers at each level of trade, i.e., service center and 
end-user, the level of trade is dictated by whether the customer wants 
immediate delivery or wants to wait 2-4 months, and whether the cost of 
carrying inventory falls on the seller or the customer. Roldan also 
argues that the prices and selling expenses are very different at each 
level of trade, and thereby requests a cost-based level of trade 
adjustment.
    Petitioners argue that Roldan has inaccurately claimed that its 
sales through related parties are at a different level of trade. 
Petitioners argue that Roldan's distinctions are not between levels of 
trade but between volumes sold and timing of delivery. Petitioners 
state that the same types of customers are at both levels of trade 
claimed by Roldan: service centers (i.e., distributors) and end-users. 
Petitioners argue that these customers perform the same functions at 
both levels identified by Roldan. Petitioners cite to the Department's 
recent decision in Final Determination of Sales at Less Than Fair 
Value; Certain Carbon and Alloy Steel Wire Rod from Canada, 59 FR 18791 
(April 20, 1994), where the Department rejected respondent's claim of 
differences in levels of trade because it was based on differences in 
quantities and types of products, not functions. In addition, the 
Department noted that the two claimed levels of trade represented end-
users. Petitioners also argue that Roldan's attempt to include end-
users at each of its purported levels of trade suffers from the same 
flaws the agency identified in Preliminary Determination of Sales at 
Less Than Fair Value; Disposable Pocket Lighters from Thailand, 59 FR 
53414, 53415 (Oct. 24, 1994). In that case, the Department found that 
there was no indication of different functions performed to justify a 
distinction within the same general category.
DOC Position
    Consistent with Import Administration Policy Bulletin 92.2 dated 
July 29, 1992, we have accepted respondent's level of trade 
classifications for matching purposes. We have done so because the 
record indicates that there are distinct functions and selling services 
at each of the levels of trade identified which result in different 
selling expenses.
    At the first level of trade (Level I), Roldan manufactures and 
ships to order relatively large quantities. As the product is 
manufactured after receipt of the order, the costs and risks of 
maintaining a finished goods inventory are transferred from Roldan to 
the buyer. Since the time between order and shipment is at least two 
months, the buyer, not Roldan, bears the risks attendant to a long 
elapsed time between order and receipt. On the other hand, at the 
second level of trade (Level II), Roldan sells through related steel 
service centers. The service centers sell relatively small orders, from 
inventory, manufactured in advance, and maintained at the service 
center. It is the service center, not the customer, that bears the cost 
and risks of maintaining inventory.
    Although the customer category ``end-user'' purchases at both 
levels of trade, the characteristics of these customers is 
significantly different. There is, in fact, little or no overlap 
between Roldan's unrelated customers that purchase at Level I and Level 
II. The end-users that purchase at Level I have predictable 
manufacturing lead times that permit advance orders in relatively large 
quantities and have the capacity to maintain significant inventory; the 
end-users purchasing at Level II operate with shorter lead times and 
lower inventory. Moreover, the end-users at Level II purchase both the 
manufactured product and inventory maintenance services from Roldan and 
the cost of these additional services generally is reflected in the 
price.
    In summary, our analysis indicates that there is both a correlation 
between prices and level of trade and a correlation between selling 
expenses and level of trade. Therefore, we have accepted respondent's 
request and have made a cost-based level of trade adjustment.
Comment 8
    Petitioners argue that Roldan's reported level of trade adjustment 
is flawed because the Department found at verification that the 
methodology Roldan used to report costs at different levels of trade 
was not consistent. According to petitioners, respondent has failed to 
compare apples with apples in calculating expenses for the different 
levels of trade.
    Petitioners further argue that the entire additional selling 
expense applicable to selling Roldan bars should not be deducted. 
According to petitioners, if the Departments make a level of trade 
adjustment, it should derive its best estimate of costs incurred at 
Level I sales, and offset the indirect selling expenses reported for 
Level II by this amount.
    Petitioners state that the Department should recalculate the cost 
data rather than accept the intra-company transfer payment figures 
provided by Roldan. In addition to this re-adjustment, petitioners 
argue that there are three other flaws in Roldan's calculation of its 
Level II selling expenses: 1) Roldan did not include sales to related 
parties, 2) Roldan included fixed expenses and non-selling expenses, 
and 3) Roldan included general and administrative expenses.
    Roldan argues that because the price at which its merchandise is 
sold is dictated by the level of trade at which it is sold and the 
additional selling expenses incurred, a level of trade adjustment is 
warranted. Roldan states that the indirect selling expenses for the 
large related service centers selling at Level II represent the 
additional selling expenses applicable to selling Roldan bars at Level 
II rather than at Level I. Roldan states that the Level II selling 
expenses represent, in their entirety, the ``appropriate adjustment for 
differences affecting price comparability'' and, therefore, should be 
subtracted from the Level II price in order to arrive at a comparable 
price to be compared with the sales made directly from the factory.
DOC Position
    We agree with respondent that a level of trade adjustment should be 
made. As in Final Results of Antidumping Duty Administrative Review; 
Tapered Roller Bearings, Finished and Unfinished, and Parts Thereof 
from Japan (56 FR 41512, August 21, 1991), we have made a level of 
trade adjustment based on an offset between the indirect selling 
expenses incurred in selling subject merchandise at Level I and Level 
II. However, we agree with petitioners that these expenses should be 
allocated over all sales, to related and unrelated customers, and 
should not be limited solely to sales to unrelated customers, as 
reported by Roldan. Roldan has provided no evidence to suggest that the 
indirect selling expenses incurred at both levels of trade are incurred 
exclusively with respect to sales to unrelated customers. Rather, these 
expenses are indirect selling expenses which, by their very nature, are 
not attributable to specific sales. Therefore, we have followed our 
normal practice of allocating indirect selling expenses over all sales.
Comment 9
    According to petitioners, Roldan reported that the total freight 
cost that Roldan actually paid differed from the total amount charged 
on the invoice for export delivered merchandise. Petitioners state that 
this cost differential should be treated as movement charges rather 
than indirect selling expenses.
    Respondent argues that the revision in movement charges for U.S. 
sales requested by petitioners is inappropriate. Roldan further states 
that the ocean freight and other movement charges verified by the 
Department reflect the actual freight charged by the shipping company.
DOC Position
    We disagree with petitioners. We are not making the adjustment to 
U.S. movement charges suggested by petitioners. Since we verified the 
actual shipping costs incurred by Roldan, we know that the cost 
differential reported as indirect selling expenses does not reflect 
actual shipping costs for U.S. sales. Our examination of U.S. sales 
invoices did not show any additional costs for delivery of subject 
merchandise and, thus, no adjustment to the verified freight expenses 
is warranted.
Comment 10
    Petitioners state that a comparison of the average prices and total 
sales quantities for each home market product code on Roldan's June 15, 
1994, computer tape with those on its November 7, 1994, computer tape 
revealed changes to the average home market price or to the total home 
market sales quantities for some product codes. Moreover, petitioners 
state that they compared the prices on the two sales listings for the 
same sales and found that the prices for certain home market sales had 
changed. Petitioners argue that the Department should reject home 
market sales for which Roldan reported revised prices and quantities 
after verification.
    Respondent states that the changes in question are reflected in the 
pre-verification amendments filed with the Department by Roldan in its 
September 19, 1994, submission. These amendments included a number of 
cancelled sales, credit memos, and sales made outside the normal course 
of trade.
DOC Position
    The changes in Roldan's database were submitted to the Department 
on September 19, 1994. At verification, we examined the circumstances 
surrounding these sales. On the basis of that examination, we agree 
that the sales at issue should not be included in our margin analysis. 
These sales include cancelled sales, credit memos and sales outside the 
ordinary course of trade. (See also comment 6.)
Comment 11
    Respondent renews for the record its objection with respect to all 
stainless steel bar constituting a single class or kind of merchandise 
rather than two separate classes or kinds of merchandise for hot-rolled 
bar and cold-formed bar, respectively.
    Respondent also renews for the record its objection to the 
commencement of this investigation despite the failure of the 
petitioners to file a complete copy of the petition with the United 
States International Trade Commission as specifically required by law.
DOC Position
    Respondent has raised no new arguments concerning the determination 
of the class or kind of merchandise in this investigation, nor has 
respondent raised any new arguments with regard to the filing of the 
petition with the International Trade Commission (ITC). Therefore, 
there is no basis to reconsider our decision made at the preliminary 
determination. See Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Stainless Steel Bar from 
Spain (59 FR 39740, August 4, 1994).
Comment 12
    Petitioners argue that Roldan failed to report costs for the 
appropriate period. Roldan reported the weighted average cost of 
production based on costs incurred during the POI. Petitioners contend 
that Roldan should have provided cost of production data for the SSB 
that was sold in Spain during the POI. Petitioners assert that the 
Section D questionnaire ``covers cost of production information for the 
merchandise sold in the home market/third country.'' Roldan stated that 
production is generally scheduled for one to four months after the 
acceptance of an order; therefore, according to petitioners, the 
appropriate reporting period for cost would cover the last three months 
of the POI and the three months subsequent to the POI. Petitioners 
state that raw material prices increased 14.5 percent in the three 
months after the POI.
    Respondent argues that it reported costs for the appropriate 
period. Roldan cites the Section D questionnaire, which states: ``The 
cost of production and the CV should be calculated on a weighted 
average production basis for the cost incurred during the period of 
investigation.'' Respondent argues that for purposes of applying the 
antidumping law, every attempt should be made to permit an exporter an 
opportunity to determine whether or not goods are being sold at a 
dumped price at the time the decision is made to accept the order.
DOC Position
    We agree with respondent. The Section D questionnaire clearly 
requests weighted average production data based on costs incurred 
during the POI. We have departed from this general policy only when 
unique circumstances arise, such as when production did not occur 
during the period of investigation. Companies frequently hold inventory 
for a period of time between production and shipment. Raw materials are 
held for a period of time between purchase and production. Sales are 
sometimes made from existing stock or may be produced to order. An 
average inventory holding period or length of time between order and 
production are only estimates. Therefore, absent strong evidence to the 
contrary, the Department assumes that the cost structure during the POI 
is representative and can be used to calculate an estimate of the cost 
of production.
    Finally, we note that, in cases where products are made ``to 
order'' a company would set prices based on its current costs. Any 
attempt to discern what costs will be in the future must be, at best, 
an estimate. If the expectation is that costs will significantly 
increase, then the sale would probably be structured as a cost plus 
contract.
Comment 13
    Petitioners argue that the Department should revise its 
calculations to account for unexplained changes and inconsistences in 
the cost data submitted after verification. According to petitioners' 
analysis: 1) for a significant number of products, the variable costs 
reported for cost of production were different from the variable costs 
reported for the product's difmer calculation; 2) for a significant 
number of products, the variable overhead and fixed overhead costs 
reported for cost of production were different from the costs reported 
prior to verification; and, 3) for a few products, the cost of 
manufacturing reported for constructed value was different from the 
cost of manufacturing reported for the product's difmer calculation.
    Respondent argues, with regard to item one, that the difference 
reflected in petitioners' analysis results from an adjustment relating 
to provisional amortization made to the cost of manufacturing. Instead 
of reducing each fixed overhead amount proportionally, the provision 
adjustment was applied directly to Roldan's cost of manufacturing. The 
net cost of manufacturing result is the same, but each of the fixed 
overhead amounts remains slightly overstated. They reflect the 
provisional amortization reported in Roldan's cost accounting system 
and have not been adjusted to reflect the actual rate of amortization 
reflected in the financial statements.
    As for item two, respondent disagrees with petitioners that the 
variable overhead and fixed overhead costs have been reported 
incorrectly. Respondent argues that the changes in variable and fixed 
overhead are the result of the change in the manner in which Acerinox' 
bloom costs were incorporated. Most of the differences referred to by 
petitioners appear to result from the fact that Acerinox' variable and 
fixed overhead costs for the blooms were no longer separately broken 
out, but rather were reported entirely as materials cost. Respondent 
notes that the increase in materials cost in the November submission 
generally more than outweighs the combined decreases reported in 
variable and fixed overhead costs.
    Finally, as for item three, respondent agrees with petitioners that 
the cost of manufacturing reported for constructed value should be the 
same as the cost of manufacturing reported for the product's difmer 
calculation.
DOC Position
    We agree with petitioners' first concern. There should not be a 
difference between the amounts reported for the difmer adjustment and 
the cost of production. There appears to be an error in the difmer data 
for one specific set of products; we have corrected this error for this 
final determination.
    We disagree with petitioners' second concern that the variable and 
fixed overhead costs of Roldan should not have changed in the revised 
post-verification submission. The variable and fixed overhead costs 
reported in the original response included the variable and fixed 
overhead costs of both Acerinox and Roldan. However, after Roldan was 
instructed to value the blooms purchased from Acerinox at the cost of 
production of Acerinox, and the variable and fixed overhead costs of 
Acerinox were reclassified to material costs (see ``Cost of 
Production'' section above), the post-verification submission 
necessarily reflected changes in Roldan's variable and fixed overhead 
costs.
    Finally, the Department agrees with petitioners' third concern that 
the cost of manufacturing of a product on the constructed value tape 
should equal the cost of manufacturing of that product on the difmer 
tape. The constructed value has been corrected accordingly.

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 Spain, that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. The Customs Service shall require a cash deposit or 
the 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:

------------------------------------------------------------------------
                                                                 Margin 
                Manufacturer/producer/exporter                  percent 
------------------------------------------------------------------------
Acerinox, S.A. (and successor companies).....................      62.85
Roldan, S.A..................................................       7.74
All Others...................................................      25.80
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
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 Spain 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 this investigation 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 and 19 C.F.R. 353.20(a)(4).

    Dated: December 19, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-31804 Filed 12-27-94; 8:45 am]
BILLING CODE 3510-DS-P