[Federal Register Volume 61, Number 61 (Thursday, March 28, 1996)]
[Notices]
[Pages 13815-13834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7462]



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DEPARTMENT OF COMMERCE
[A-122-820 (Lead Case Number); A-122-822; A-122-823]


Certain Corrosion-Resistant Carbon Steel Flat Products and 
Certain Cut-to-Length Carbon Steel Plate From Canada; Final Results of 
Antidumping Duty Administrative Reviews

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

ACTION: Notice of Final Results of Antidumping Duty Administrative 
Reviews.

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SUMMARY: On August 16, 1995, the Department of Commerce (the 
Department) published the preliminary results of the administrative 
reviews of the antidumping duty orders on certain corrosion-resistant 
carbon steel flat products and certain cut-to-length carbon steel plate 
from Canada. These reviews cover five manufacturers/exporters of the 
subject merchandise to the United States and the period February 4, 
1993, through July 31, 1994. We gave interested parties an opportunity 
to comment on our preliminary results. Based on our analysis of the 
comments received, we have changed the results from those presented in 
the preliminary results of reviews.

EFFECTIVE DATE: March 28, 1996.

FOR FURTHER INFORMATION CONTACT: John Drury (CCC), Eric Johnson 
(Dofasco/Sorevco), Stephen Jacques (Manitoba Rolling Mills), Jim Rice 
(Algoma), Gerry Zapiain (Stelco), or Jean Kemp, Office of Agreements 
Compliance, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-3793.

SUPPLEMENTARY INFORMATION:

Background

    On August 16, 1995, the Department published in the Federal 
Register (60 FR 42511) the preliminary results of the administrative 
reviews of the antidumping duty orders on corrosion-resistant carbon 
steel flat products and certain cut-to-length carbon steel plate from 
Canada (58 FR 44162, August 19, 1993). The Department has now completed 
these administrative reviews in accordance with section 751 of the 
Tariff Act of 1930, as amended (the Act).

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the statute and to the 
Department's regulations are references to the provisions as they 
existed on December 31, 1994.

Scope of this Review

    The products covered by these administrative reviews constitute two 
separate ``classes or kinds'' of merchandise: (1) certain corrosion-
resistant steel and (2) certain cut-to-length plate.
    The first class or kind, certain corrosion-resistant steel, 
includes flat-rolled carbon steel products, of rectangular shape, 
either clad, plated, or coated with corrosion-resistant metals such as 
zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based alloys, 
whether or not corrugated or painted, varnished or coated with plastics 
or other nonmetallic substances in addition to the metallic coating, in 
coils (whether or not in successively superimposed layers) and of a 
width of 0.5 inch or greater, or in straight lengths which, if of a 
thickness less than 4.75 millimeters, are of a width of 0.5 inch or 
greater and which measures at least 10 times the thickness or if of a 
thickness of 4.75 millimeters or more are of a width which exceeds 150 
millimeters and measures at least twice the thickness, as currently 
classifiable in the Harmonized Tariff Schedule (HTS) under item numbers 
7210.31.0000, 7210.39.0000, 7210.41.0000, 7210.49.0030, 7210.49.0090, 
7210.60.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 
7210.90.6000, 7210.90.9000, 7212.21.0000, 7212.29.0000, 7212.30.1030, 
7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 
7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.5000, 7217.12.1000, 
7217.13.1000, 7217.19.1000, 7217.19.5000, 7217.22.5000, 7217.23.5000, 
7217.29.1000, 7217.29.5000, 7217.32.5000, 7217.33.5000, 7217.39.1000, 
and 7217.39.5000. Included are flat-rolled products of nonrectangular 
cross-section where such cross-section is achieved subsequent to the 
rolling process (i.e., products which have been worked after rolling)--
for example, products which have been beveled or rounded at the edges. 
Excluded are flat-rolled steel products either plated or coated with 
tin, lead, chromium, chromium oxides, both tin and lead (``terne 
plate''), or both

[[Page 13816]]
chromium and chromium oxides (``tin-free steel''), whether or not 
painted, varnished or coated with plastics or other nonmetallic 
substances in addition to the metallic coating. Also excluded are clad 
products in straight lengths of 0.1875 inch or more in composite 
thickness and of a width which exceeds 150 millimeters and measures at 
least twice the thickness. Also excluded are certain clad stainless 
flat-rolled products, which are three-layered corrosion-resistant 
carbon steel flat-rolled products less than 4.75 millimeters in 
composite thickness that consist of a carbon steel flat-rolled product 
clad on both sides with stainless steel in a 20%-60%-20% ratio. These 
HTS item numbers are provided for convenience and Customs purposes. The 
written description remains dispositive.
    The second class or kind, certain cut-to-length plate, includes 
hot-rolled carbon steel universal mill plates (i.e., flat-rolled 
products rolled on four faces or in a closed box pass, of a width 
exceeding 150 millimeters but not exceeding 1,250 millimeters and of a 
thickness of not less than 4 millimeters, not in coils and without 
patterns in relief), of rectangular shape, neither clad, plated nor 
coated with metal, whether or not painted, varnished, or coated with 
plastics or other nonmetallic substances; and certain hot-rolled carbon 
steel flat-rolled products in straight lengths, of rectangular shape, 
hot rolled, neither clad, plated, nor coated with metal, whether or not 
painted, varnished, or coated with plastics or other nonmetallic 
substances, 4.75 millimeters or more in thickness and of a width which 
exceeds 150 millimeters and measures at least twice the thickness, as 
currently classifiable in the HTS under item numbers 7208.31.0000, 
7208.32.0000, 7208.33.1000, 7208.33.5000, 7208.41.0000, 7208.42.0000, 
7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.11.0000, 
7211.12.0000, 7211.21.0000, 7211.22.0045, 7211.90.0000, 7212.40.1000, 
7212.40.5000, and 7212.50.0000. Included are flat-rolled products of 
nonrectangular cross-section where such cross-section is achieved 
subsequent to the rolling process (i.e., products which have been 
worked after rolling)--for example, products which have been beveled or 
rounded at the edges. Excluded is grade X-70 plate. These HTS item 
numbers are provided for convenience and Customs purposes. The written 
description remains dispositive.
    The periods of review (POR) are February 4, 1993, through July 31, 
1994.

VAT Tax Methodology

    In light of the Federal Circuit's decision in Federal Mogul v. 
United States, CAFC No. 94-1097, the Department has changed its 
treatment of home market consumption taxes. Where merchandise exported 
to the United States is exempt from the consumption tax, the Department 
will add to the U.S. price the absolute amount of such taxes charged on 
the comparison sales in the home market. This is the same methodology 
that the Department adopted following the decision of the Federal 
Circuit in Zenith v. United States, 988 F. 2d 1573, 1582 (1993), and 
which was suggested by that court in footnote 4 of its decision. The 
Court of International Trade (CIT) overturned this methodology in 
Federal Mogul v. United States, 834 F. Supp. 1391 (1993), and the 
Department acquiesced in the CIT's decision. The Department then 
followed the CIT's preferred methodology, which was to calculate the 
tax to be added to U.S. price by multiplying the adjusted U.S. price by 
the foreign market tax rate; the Department made adjustments to this 
amount so that the tax adjustment would not alter a ``zero'' pre-tax 
dumping assessment.
    The foreign exporters in the Federal Mogul case, however, appealed 
that decision to the Federal Circuit, which reversed the CIT and held 
that the statute did not preclude Commerce from using the ``Zenith 
footnote 4'' methodology to calculate tax-neutral dumping assessments 
(i.e., assessments that are unaffected by the existence or amount of 
home market consumption taxes). Moreover, the Federal Circuit 
recognized that certain international agreements to which the United 
States is a party, in particular the General Agreement on Tariffs and 
Trade (GATT) and the Tokyo Round Antidumping Code, required the 
calculation of tax-neutral dumping assessments. The Federal Circuit 
remanded the case to the CIT with instructions to direct Commerce to 
determine which tax methodology it will employ.
    The Department has determined that the ``Zenith footnote 4'' 
methodology should be used. First, as the Department has explained in 
numerous administrative determinations and court filings over the past 
decade, and as the Federal Circuit has now recognized, Article VI of 
the GATT and Article 2 of the Tokyo Round Antidumping Code required 
that dumping assessments be tax-neutral. This requirement continues 
under the new Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade. Second, the URAA (Uruguay Round 
Administrative Action) explicitly amended the antidumping law to remove 
consumption taxes from the home market price and to eliminate the 
addition of taxes to U.S. price, so that no consumption tax is included 
in the price in either market. The Statement of Administrative Action 
(p. 159) explicitly states that this change was intended to result in 
tax neutrality.
    While the ``Zenith footnote 4'' methodology is slightly different 
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA 
law required that the tax be added to United States price rather than 
subtracted from home market price, it does result in tax-neutral duty 
assessments. In sum, the Department has elected to treat consumption 
taxes in a manner consistent with its longstanding policy of tax-
neutrality and with the GATT.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments and rebuttal comments from 
Algoma Steel Inc. (Algoma), Continuous Colour Coat (CCC), Dofasco Inc./
Sorevco, Inc. (Dofasco), Manitoba Rolling Mills (MRM), Stelco Inc. 
(Stelco), exporters of the subject merchandise, (respondents), and from 
Bethlehem Steel Corporation, U.S. Steel Group a Unit of USX 
Corporation, Inland Steel Industries, Inc., Gulf States Steel Inc. Of 
Alabama, Sharon Steel Corporation, Geneva Steel, and Lukens Steel 
Company, petitioners. At the request of petitioners, the Department 
held a hearing on September 29, 1995.

Algoma

    Comment 1: Algoma argues that the Department's margin program fails 
to weight-average all appropriate ``most similar'' matches where there 
is no identical home market sale to match to a U.S. sale. Algoma's 
contention is that the computer program ignores all but the last 
possible ``most similar'' match, and then matches that individual 
similar home market sale to the U.S. sale. Respondent argues that the 
Department should modify the program so the appropriate ``most 
similar'' matches are weight-averaged prior to comparison to a U.S. 
sale.
    Department's Position: The Department agrees with respondent. It is 
our standard practice to weight-average the most similar matches and we 
have corrected our calculations for the final results accordingly.

[[Page 13817]]

    Comment 2: Algoma produces subject merchandise on two rolling 
mills, a 166'' mill and a 106'' mill. Algoma reported rolling costs 
only for the 166'' mill, citing the limitations of its accounting 
system and other factors. Petitioner disagrees with this methodology, 
and objects to the Department's use of certain information presented by 
Algoma to the Department at verification. Petitioner's and respondent's 
arguments regarding the various aspects of this issue, as well as the 
Department's positions, are found below.
    Petitioners contend that even though Algoma acknowledges producing 
subject merchandise on its 106'' plate mill, it did not submit this 
mill's cost information as part of its response to the Department's 
COP/CV questionnaire, but rather, only submitted cost information for 
its 166'' plate mill. Petitioners argue that Algoma failed to provide 
actual manufacturing cost information as required by the Department's 
instructions. Compounding this failure to report all relevant 
production costs, petitioners contend that Algoma's presentation of new 
factual information regarding the 106'' mill at verification was 
improper and untimely. Petitioners argue that the deadline for 
submitting new information was March 7, 1994, a full six weeks prior to 
the presentation of this new information at verification. In addition, 
it is argued that the Department's practice, as explained in Calcium 
Aluminate Cement, Cement Clinker and Flux from France, 59 FR 14136, 
14140 (1994) has been to not permit the submission of new information 
at verification (other than minor corrections). Petitioners also cite 
Mechanical Transfer Presses from Germany, 59 FR 9958 (1994), Photo 
Albums and Filler Pages from Korea, 50 FR 43754 (1985) and Steel Wire 
Rope from Taiwan, 56 FR 46288 (1991).
    Moreover, petitioners state that even if the Department does accept 
this new information, the information provided is of no use because it 
is based upon total production costs of the mill, not just the costs of 
producing the subject merchandise. As a result, the utility of this 
information is minimal, as there is no way, in the view of petitioners, 
to verify that the production costs of subject merchandise associated 
with the 106'' mill are lower than the production costs of the 166'' 
mill, as suggested by Algoma.
    Because Algoma did not provide actual production costs as requested 
in the Department's questionnaire, and did not notify either 
petitioners or the Department of its failure to use its actual 
production costs, petitioners argue that the Department should apply 
total best information available (BIA). Short of that, petitioners 
suggest that since the 106'' mill produces plate with a gauge less than 
3/8'' and less that 96'' in width, all home market sales of material 
meeting these two physical criteria be deemed to be sold at below cost, 
and since a valid constructed value comparison would also be 
impossible, all matching identical and similar U.S. sales should be 
treated as BIA and be presumed to have been sold at below cost.
    Concerning petitioners' contention that Algoma failed to report 
costs in accordance with the Department's questionnaire, Algoma asserts 
that it properly calculated a rolling cost for subject merchandise. 
Algoma contends that because its cost accounting system does not 
attribute costs of a particular process directly to different gauges of 
steel, it calculated the average cost per ton of the cost center 
producing the vast preponderance of the subject merchandise and 
attributed these costs to individual products. Algoma also argues that 
it possesses no records that would permit direct calculation of costs 
incurred at the 106'' mill that relate only to subject merchandise.
    Algoma argues that, as demonstrated at verification, the average 
rolling cost on the 106'' mill is significantly less than that of the 
166'' plate mill, thus Algoma used the most conservative approach 
possible in determining the average rolling cost for subject 
merchandise. Algoma further argues that this cost information was an 
appropriate subject of verification. Finally, Algoma cites Replacement 
Parts for Self-Propelled Bituminous Paving Equipment from Canada, 58 FR 
15481 (1993) and Floral Trade Council of Davis Cal. v. U.S. 775 F. Supp 
1492, 1499 (CIT 1991) for the proposition that the Department may 
request information at any time during a proceeding. Thus Algoma 
disagrees with petitioner's allegations that Algoma's ``Comparison of 
Costs'' exhibit was new factual information presented at verification. 
Algoma considers this to be documentation supporting the accuracy and 
reasonableness of the information submitted and the methodologies 
employed by Algoma in preparing its questionnaire responses.
    Finally, Algoma also takes exception to petitioner's suggestion 
that the Department resort to total BIA if it determines that Algoma's 
reported rolling cost data is not appropriate or reasonable. Algoma 
asserts that petitioners themselves acknowledge that the data available 
to Algoma pertaining to the 106'' strip mill would not have been an 
appropriate basis for a COP response. Algoma believes that the approach 
it has adopted has been reviewed and verified by the Department, and 
represents a reasonable and conservative approach to account for the 
rolling costs that were incurred on the 106'' mill.
    Department's Position: We agree with respondents. Algoma has two 
rolling mills: a 166'' mill and a 106'' mill. While the 166'' mill 
produces only subject merchandise, only a very small percentage of the 
merchandise produced on the 106'' mill is subject merchandise (the rest 
being strip products too narrow to be included in the scope of this 
order). Further, an ``overwhelming majority'' of subject merchandise is 
produced on the 166'' mill. The Department verified that Algoma could 
not separate the costs to produce different gauges of steel on the 
106'' mill, thus it could not specifically identify the cost to produce 
subject merchandise on that mill. Therefore, because subject 
merchandise produced on the 106'' mill is a small percentage of the 
total quantity of subject merchandise produced, and because the average 
COP of the 106'' mill is lower than the average of the 166'' mill, the 
Department finds that it was reasonable for Algoma to use the COP of 
the 166'' mill as the basis for the COP of all subject merchandise.
    Algoma's reporting of rolling costs incurred at only one of its two 
manufacturing facilities is reasonable, considering (1) the nature of 
its cost accounting system, (2) Algoma's verified inability to 
determine specific rolling costs based upon the gauge of the material 
being manufactured at either facility, and (3) the conservative 
methodology adopted by Algoma. Algoma stated, and the Department 
verified, that Algoma is not capable of specifically determining direct 
calculation of rolling costs incurred at the unreported mill on a basis 
that would capture costs solely of subject material (which represents a 
small percentage of that rolling mill's production). The alternative 
methodology used by Algoma is reasonable.
    The Department verified the soundness and reasonableness of 
Algoma's methodology of calculating rolling costs for all subject 
merchandise. As stated in the Department's verification report ``Algoma 
demonstrated that costs at the 166'' (plate mill) were significantly 
higher than at the 106'' (strip) mill.'' Therefore, this information 
indicates that the use of the 166'' mill costs was conservative.

[[Page 13818]]

    The Department also notes, as did petitioners, that rolling cost 
data from the 106'' strip mill was of limited utility because it is 
based upon total production costs and not just the costs of rolling the 
subject merchandise. Because of the limitations of Algoma's cost 
accounting system, this rolling cost data would have been an 
inappropriate basis for determining rolling costs for subject 
merchandise produced on the 106'' strip mill.
    In addition, the Department does not consider the rolling mill 
costs associated with the 106'' strip mill we examined at verification 
to be new information. The Department's responsibility at verification 
is to verify the accuracy and completeness of the questionnaire 
response. In this case, Algoma had clearly stated on the record that 
the rolling costs it submitted to the Department, for a variety of 
reasons, reflected only those costs incurred at the 166'' plate mill. 
Therefore, by verifying all the information available which pertained 
to the 106'' strip mill, the Department was merely verifying the 
reasonableness and accuracy of a methodology Algoma had already 
reported.
    Petitioners' citation to Calcium Aluminate Cement, Cement Clinker 
and Flux from France is not relevant here because that case refers to 
the presentation of new factual information and the Department's 
treatment of such information with regard to statutory deadlines. In 
this case, the new information at issue represents the type of 
supporting documentation which the Department routinely reviews during 
the course of a verification.
    Petitioners reference to Mechanical Transfer Presses from Germany 
is not relevant here because in that instance, the respondent submitted 
unsolicited post-verification information which it was unable to 
provide during the actual verification. Petitioners also cite to Photo 
Album and Filler Pages from Korea and Steel Wire Rope from Taiwan to 
support their argument that new information presented at verification 
is unacceptable because such acceptance precludes the Department from a 
reasonable and thorough analysis of the information and denies 
petitioners their right to comment on such information prior to its 
acceptance. Again, however, the Department finds that the information 
reviewed at verification was not new information, but rather simply 
documentation supporting Algoma's contention that it was unable to 
report meaningful cost data on one particular rolling mill, that the 
vast majority of subject merchandise was produced on that mill and that 
the other mill's costs were significantly lower.
    Finally, the Department agrees with Algoma that costs associated 
with movement to the 106'' mill and with coiling and uncoiling were 
properly included in the average 106'' mill costs which were compared 
to the 166'' mill costs at verification.
    Regarding petitioner's recommendation that the Department apply 
total BIA or, alternatively, partial BIA to material meeting the gauge 
and width criteria of subject merchandise rolled on the 106'' strip 
mill, the Department finds that BIA is not appropriate in this 
circumstance where the respondent has provided complete information for 
the mill producing the vast majority of the subject merchandise and 
supporting documentation for its reported cost.
    Comment 3: Petitioners object to Algoma's May 5, 1995, changes to 
its reported scrap revenue data. Petitioners contend that this new 
information is not supported by any verification documentation and is 
inconsistent with existing verification exhibits, and no Departmental 
request for a recalculation of scrap revenue exists on the record. 
Petitioners also argue that this new information is untimely.
    Petitioners further note that although the Department did request 
that Algoma submit a revised cost tape following verification, the 
Department did not solicit any corrections regarding Algoma's reported 
scrap revenue data. Petitioners allege that Algoma submitted this new 
information without disclosing it to either petitioners or the 
Department. Petitioners contend that this inclusion of unsolicited data 
is improper and is in violation of 19 CFR 353.31(a)(i), which sets a 
deadline of seven days prior to verification for the submission of 
unsolicited factual information. Petitioners urge the Department to 
base its margin calculations on verified data only, citing Light-Walled 
Welded Rectangular Carbon Steel Tubing from Argentina (54 FR 13913), in 
which the Department was requested by respondent to verify a 
significant quantity of new information. In addition, in that case, 
respondent submitted an unsolicited revised response after the 
preliminary determination. All these factors resulted in the 
Department's use of total BIA because of the uncertainty of the 
veracity of the respondent's information.
    Algoma contends that all the changes made by Algoma pursuant to the 
post-verification tape were disclosed to the Department. As explained 
at verification, Algoma identified a correction for yield loss for 
Algoma's No. 1 shearing line and reported this correction to the 
Department at the beginning of verification. This correction increased 
the calculated generation of scrap, which in turn increased the 
resulting scrap revenue data as a simple mathematical function (i.e., 
the higher the yield loss figure, the greater the amount of scrap that 
is generated and sold or recycled into the production cycle). 
Respondent holds that this is not ``new information.''
    Algoma also contends that petitioners' allegation that this scrap 
revenue data is inconsistent with the cost verification exhibits and 
cannot be the product of the yield loss correction is without merit. 
According to Algoma, petitioners do not understand the scrap revenue 
calculation and the verification document they cite contains the 
erroneous data which Algoma later corrected. Algoma adds that 
petitioners' contention that all product categories should have been 
revised is incorrect, because only one particular line was affected by 
this correction.
    Department's Position: We agree with respondent that the post-
verification submission of information related to yield loss (based 
upon errors disclosed at the beginning of verification) and the 
resultant change in scrap revenue does not constitute new information, 
and is not a violation of 19 CFR 353.31(a)(i).
    On April 28, 1995, Algoma filed a ``Corrections Memorandum'' with 
the Department, which indicated the errors Algoma discovered in its 
response during the process of preparing for its COP/CV verification. 
One of the errors discovered was an error in its calculation of yield 
loss for one of Algoma's production lines. The error, as verified by 
the Department, involved an understatement of yield loss, which Algoma 
corrected, pursuant to the Department's instructions following 
verification. As a result of this correction, in which the yield loss 
factor was increased, Algoma discovered that as a function of the yield 
loss correction scrap revenue was increased because the increased yield 
loss automatically increased the amount of imputed scrap generated, and 
thus increased Algoma's scrap revenue figure. For Algoma to have acted 
otherwise (i.e., to have corrected only the yield loss data without 
having corrected subsequent derivative information) would have been to 
knowingly submit erroneous data to the Department, and the Department 
would have had to request a correction.
    In addition, petitioners' reference to Light-Walled Welded 
Rectangular Carbon Steel Tubing from Argentina is

[[Page 13819]]
not directly relevant to this proceeding because the nature and extent 
of the respondents' revisions to their responses in that case (at 
verification and following the preliminary determination) are far in 
excess of any additional or new information presented by Algoma in the 
course of this administrative review.
    Comment 4: Petitioners allege that Algoma submitted incorrect 
revised yield loss data for each of its general product categories, as 
the result of having based its calculation on the wrong yield loss per 
ton value. Petitioners contend that the correct way to calculate yield 
loss is to use the value of the loss at each production stage, in order 
to ensure that the total yield loss value actually reflects the value 
of the tonnage lost at each stage of production. According to 
petitioner, Algoma valued the tonnage lost at each production stage 
before it entered that production process, resulting in an 
understatement of the value of the total yield loss.
    In addition, petitioners argue that Algoma's revised yield loss 
data is not supported by any documentation and that there is 
insufficient information on the record to correct for the understated 
yield loss values. Therefore, petitioners contend that to correct 
Algoma's misreported yield data, the Department should increase the 
yield loss amounts for Algoma's other product categories, as reported 
in their March 27, 1995 cost tape, to correspond to the increase 
reported by petitioners in their rebuttal brief.
    Algoma argues that its revised yield loss figures are correct and 
that petitioners' arguments are based upon a misunderstanding of the 
methodology used by Algoma. Apparently, petitioners assume that the 
variable HRMYLD (plate rolling mill yield loss) contains not just the 
value of raw materials lost in later processes, but also reflects yield 
loss of labor and overhead costs added by later processes. In fact, the 
HRMYLD figure contains only losses in raw material (slab) value that is 
caused by product waste in downstream processes. Other yield losses are 
reported as labor, variable overhead, or fixed overhead losses. This 
reporting methodology was necessitated by the Department's requirement 
that costs be reported on a consistent basis, per ton of finished 
plate.
    Department's Position: We agree with respondent. Through inspection 
of verification documentation, specifically, the slab-to-finished-
plate-processing-cost sheet and Algoma's documentation supporting its 
calculation of scrap revenues, and the subsequent corrections submitted 
to the Department, the Department is satisfied that Algoma has properly 
reported correct yield loss data for its regular sheared plate.
    Comment 5: Petitioner contends that Algoma's short-term interest 
expense was calculated using an incorrect short-term interest income 
offset. According to petitioners, two of the items used by Algoma to 
calculate its interest expense do not belong in the calculation because 
their interest revenues do not represent income earned from short-term 
investments of the company's working capital. See Television Receivers, 
Monochrome and Color from Japan, 56 FR 56189, 56192 (1991) (Television 
Receivers from Japan).
    Specifically, Algoma has failed to demonstrate that there was (1) 
an ``investment'', (2) that if there was, that it was short-term, and 
(3) that if there was an investment, that it was related to the current 
operations of the company. See Dynamic Random Access Memory 
Semiconductors of One Megabit and Above from Korea, 58 FR 15467, 15473 
(1993) (DRAMS from Korea). Petitioners also cite Certain Hot-Rolled 
Carbon Steel flat products, Certain Cold-Rolled Carbon Steel Flat 
Products, and Certain Cut-to-Length Carbon Steel Plate from Canada, 58 
FR 37099, 37119 (1993), in which a respondent improperly offset 
interest expense against interest gained from settlement of a tax case.
    Algoma asserts that it properly calculated its interest expense. 
Algoma contends that petitioners have misstated the law, and that the 
Court of International Trade has held that respondents may offset 
against interest expense company interest income ``related to the 
general operations of the firm'' (Timken Company v. United States, 852 
F. Supp. 1040, 1048 (CIT 1994)). Additionally, it is the Department's 
practice ``to accept a reduction of total interest expense by such 
short-term interest income because such income is earned from working 
capital, which by definition is related to manufacturing and sales 
operations.'' See Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts thereof from France, 60 FR 10900, 10925-26 (1995) 
(AFBs from France).
    Department's Position: We agree with respondent. Petitioners' 
citation to Flat Rolled Steel from Canada does not apply. In that case, 
the Department stated only that it agreed with petitioners' point that 
a manufacturing line's interest expense ``should be included in the 
cost of production * * *.'' This comment did not address, nor did the 
Department's response address, the issue of appropriate interest 
offsets. Petitioners also cite Television Receivers from Japan and 
DRAMS from Korea. In Television Receivers from Japan, the Department 
stated that it would allow an offset to interest expense only with 
interest income from short-term investments of the company's working 
capital. However, we disagree with petitioners that methodology applies 
in this review because since that determination was published, the 
Department has expanded its view of what constitutes an appropriate 
offset to interest expense. In DRAMS from Korea, the Department stated 
only that such short-term investments must be ``related to the current 
operations of the company.'' More recently, however, the Department 
stated in AFB's from France, that ``the interest earned on short-term 
deposits, on advance payments to suppliers, and on late payments is 
derived from manufacturing and sales operations. The Department's 
practice is to accept a reduction of total interest expense by such 
short-term interest income because such income is earned from working 
capital, which by definition is related to manufacturing and sales 
operations. Therefore, we accepted the interest offset as reported by 
SNR.'' In light of these recent decisions of what constitutes an 
appropriate interest offset, the Department agrees with Algoma that it 
properly calculated its interest expense and that all its claimed 
offsets are allowable.
    Comment 6: Petitioners contend that some of Algoma's product 
specifications and suggested model matches are incorrect. According to 
petitioners, Algoma made several errors in reporting technical 
properties in its suggested model match, and when corrected, it becomes 
clear that certain matches are incorrect.
    Algoma argues that one of petitioners' proposed revised model 
matches is correct but that the other suggested match is less accurate 
than that originally submitted by Algoma, and that Algoma's original 
model matching hierarchy be used in that case.
    Department's Position: The Department agrees with both parties that 
one model match modification suggested by petitioners is correct, and 
that model match is reflected in these final results. The Department 
also agrees with petitioner that the second disputed model match should 
be modified on the basis of petitioners' proposal, because the basis 
upon which Algoma determined the model match is not appropriate, 
according to the model match hierarchy as laid out in the Department's 
instructions. The Department agrees that the petitioners' proposed 
model match is a closer match

[[Page 13820]]
than that proposed by Algoma on the basis of comparable chemical 
characteristics. See also the Department's Analysis Memo.
    Comment 7: Petitioners allege that Algoma's allocation of indirect 
selling expenses is incorrect and must be rejected. Specifically, it is 
alleged that Algoma failed to properly report its indirect selling 
expenses on a market-specific basis.
    In calculating its indirect selling expense factors for each 
market, Algoma allocated a certain percentage of its indirect selling 
expenses exclusively to the home market, with the remainder allocated 
between markets, including its home market, based upon sales to the 
home market as a percentage of total sales. Algoma claimed it cannot 
separately identify U.S. specific indirect selling expenses from 
expenses related to other markets. Algoma's records indicate that these 
expenses were classified in six cost centers, four of which support 
sales in all markets and two supporting sales in Canada only. Thus, 
Algoma allocated the Canadian cost centers to the home market and the 
other four across all markets.
    Petitioners argue that the record clearly indicates that there are 
market-specific selling expenses that Algoma could have reported on a 
market-specific basis (e.g., the ``U.S. Sales Department'') which 
Algoma combined with its indirect selling expenses to all markets. 
Petitioners argue that only the percentage of indirect selling expenses 
properly identified by Algoma as relating to the home market should be 
used in the calculation of home market indirect selling expenses, 
citing Steel Jacks from Canada, 50 FR 42577 (1985), wherein the 
Department denied respondent's allocation methodology because it was 
unable to provide any evidence separating certain selling expenses by 
product and market.
    Algoma argues that its allocation of indirect selling expenses is 
correct given the constraints of its normal business procedures. As 
explained by Algoma in submissions and at verification, the ``U.S. 
Sales Department'' is, in fact, a misnomer. During the POR, this 
department consisted of one employee, who also had other 
responsibilities beyond those associated with sales to the United 
States. In addition, sales to the United States were also handled by 
other personnel. Consistent with this reality, Algoma does not treat 
this department as a separate cost center in the normal course of 
business and demonstrated this at verification. Instead, Algoma 
distinguishes between the costs of selling in the home market, and all 
other selling costs to all other markets, and costs in this second 
category are not, and cannot be, broken out among specific countries.
    Department's Position: We agree with respondent. The Department 
verified each of Algoma's indirect selling cost centers, and we 
confirmed that although Algoma does maintain some information specific 
to home market, United States, and ``off-Shore'' sales (quantity, cost 
of sales, etc.), it does not maintain specific information on selling 
expenses for each of these three markets. Instead, it maintains some 
indirect selling expense information only for home market sales while 
other indirect selling expense information cannot be broken out by 
market. The former group was only attributed to the home market, while 
the latter was allocated over all three markets (home market, U.S., and 
off-shore). Thus the Department is satisfied that Algoma has allocated 
these indirect selling expenses as specifically as possible given the 
limitations of its business records. In addition, Steel Jacks from 
Canada is not applicable here because in that case, respondent was not 
able to demonstrate that these indirect selling expenses related 
``solely to sales in the Canadian market.'' In the case of Algoma, it 
has been able to identify and separate Canada-specific indirect selling 
expenses from ``other market'' selling expenses, and within the 
confines of Algoma's financial accounting system, has properly 
allocated its indirect selling expenses among all appropriate markets.
    Comment 8: Petitioners allege that the margin program incorrectly 
defines U.S. Direct Expense (USDIREXP), and that it fails to include 
deductions for U.S. Duty and Brokerage expenses. In addition, the 
commission offsets are incorrectly defined. Algoma agrees with 
petitioners, and requests that the Department correct these errors in 
the final results of review.
    Department's Position: We agree with both parties, and the 
corrections are reflected in the Department's final results.

CCC

    Comment 9: In its response to the Department's questionnaire 
concerning the Model Match, CCC did not provide complete physical 
characteristics data for all sales. Petitioners assert that the 
Department erred in accepting incomplete data from respondent on 
physical characteristics for sales in both the U.S. and home markets. 
Petitioners further state that the use of these missing variables for 
the purposes of the model match is inconsistent with past practice and 
contrary to existing statute. Specifically, petitioners assert that 19 
U.S.C 1677(16) requires comparisons with identical physical 
characteristics and that the Department's practice is not consistent 
with that requirement. In addition, petitioners believe that the 
methodology violates 19 U.S.C. 1677b(a)(4) in that no diffmers are used 
to adjust for potentially different physical characteristics. 
Petitioners insist that the Department use BIA in cases where sales are 
reported with missing physical characteristics values. Petitioners 
request that the Department apply either a regular second-tier BIA (the 
highest calculated rate in either the investigation or the review, 
18.71%), or the highest non-aberrant margin found on any CCC sale.
    Petitioners conclude that the Department must use BIA if the 
respondent is unable to provide the adequate information. By failing to 
report full product characteristics for a number of prime home market 
and U.S. sales, petitioners state that CCC made it impossible to 
accurately perform the model match with respect to these sales or to 
determine accurate costs of these products. Petitioners reason that the 
Department is required to use BIA whenever a party or any other person 
refuses or is unable to produce information requested in a timely 
manner and in the form required, or otherwise significantly impedes an 
investigation. Petitioners recommend that to ensure that respondents 
are encouraged to provide complete information, the Department should 
apply to the relevant transactions either the higher of a calculated 
margin found in the investigation or review, or the highest non-
aberrant margin found on any CCC sale.
    Respondents state that the law does not require identical matches 
to mean identical in every respect, and that the Department can make 
reasonable interpretations of the term ``identical.'' In addition, 
respondents assert that petitioners have already accepted the 
proposition that the Department may depart from product matching 
criteria. To support this assertion, respondents note that the 
Department used the exact same methodology in its treatment of missing 
physical characteristics for seconds produced by Dofasco as outlined in 
a policy paper dated April 19, 1995, and that petitioners did not 
object to that policy. Respondents claim that the same policy is 
applicable to CCC.
    Respondents also note that CCC is not a steel substrate 
manufacturer, but purchases substrate from others, and as such does not 
know many of the characteristics of the underlying

[[Page 13821]]
substrate. In particular, CCC contends that substrate purchased from 
service centers often lacked specific physical characteristic 
information and that CCC was unable to obtain said information. CCC 
argues that its customers are unconcerned with many of the 
characteristics of the steel substrate which underlies its coated steel 
products.
    Department's Position: We disagree with Petitioners. The Department 
has the authority to determine what merchandise qualifies as such or 
similar for the purposes of the statute. United Engineering & Forging 
v. United States, 779 F. Supp. 1375, 1380-82 (CIT 1991); NTN Bearing 
Corp. v. United States, 747 F. Supp. 726, 735-36 (CIT 1990); Kerr-McGee 
Chem. Corp. v. United States, 741 F. Supp. 947, 951-52 (CIT 1990); 
Monsanto Co. v. United States, 698 F. Supp. 275, 277-278 (CIT 1988); 
Timken Co. v. United States (Timken I), 630 F. Supp. 1327, 1338 (CIT 
1986).
    The market for the specific products manufactured by CCC is unlike 
the market for other corrosion-resistant steel products in certain 
respects. Because CCC's specialized customers are unconcerned with 
certain characteristics of the steel, CCC has no need to record those 
characteristics. Moreover, unlike other respondents, CCC does not 
manufacture steel substrate. Rather, it either paints or galvanizes 
substrate purchased from other sources. Therefore, for those sales with 
missing product characteristics, CCC does not possess, or cannot 
obtain, all of the product characteristics requested in the 
Department's model match criteria, since some of the criteria in 
question are only available to the original manufacturer of the 
substrate. Most importantly, however, because both CCC's U.S. and home 
market customers are unconcerned with the missing characteristics, 
there is no reason those characteristics should be used to determine 
which sales should be compared. Finally, the Department verified that 
the missing characteristics are not random in nature. Rather, CCC could 
not report specific sets of characteristics depending upon the type of 
seller of the original substrate (e.g. steel service centers). As such, 
the Department determines that any given set of missing characteristics 
in a sale are the result of a purchase from a particular type of seller 
of the substrate and not as a result of ``selective reporting'' by the 
respondent.
    In light of the circumstances contained in this review, we believe 
that the Department's decision to accept a modified matching hierarchy 
for some sales is proper. The Department is using a similar modified 
hierarchy for the purposes of comparing certain of Dofasco's such or 
similar merchandise, in the same administrative review of carbon steel 
flat products from Canada. Specifically, the methodology used by the 
Department for CCC is similar to that used for the comparison of non-
prime merchandise manufactured by a Dofasco (See Department of Commerce 
Memorandum, A-100-003, of April 19, 1995; ``For those respondents 
unable to report the same product characteristics for seconds in both 
markets, the Department could simply drop the missing characteristics 
and compare products based on the same characteristics reported in both 
markets.''). As with the market for CCC's coated products, the 
Department determined that the market for non-prime merchandise was 
highly specialized, and that, therefore, the standard hierarchy would 
require parties to report irrelevant characteristics (of which they 
were unlikely to maintain records) and would produce inappropriate 
matches. No interested party raised objections to the methodology for 
matching non-prime merchandise.
    In its sales verification, the Department noted that CCC used 
available information to report type, process, metal, coating weight, 
thickness, width, and form. In addition, it reported quality, strength, 
temper rolling, and tension leveling for input coils purchased from 
Stelco. Stelco provided the reported information requested by CCC. 
During the verification, the Department confirmed that CCC did not 
possess the four characteristics previously mentioned for coil 
purchased from suppliers other than Stelco.
    Petitioners cite the Timken case as support for their contention 
that the Department is compelled to use BIA in this case. However, the 
case in question differs from Timken in regard to the facts. In Timken, 
the court directed the Department to collect additional home market 
sales data from a previous review period which had already been 
completed. When it requested the additional data, the Department found 
that the company under review had already disposed of all of its home 
market data for the period and was unable to provide the necessary 
information, necessitating the use of BIA. Unlike the situation in 
Timken, CCC did not dispose of the relevant data, but rather had no 
reason to ever maintain such data. Thus, the use of BIA in this case is 
not warranted.
    Comment 10: Petitioners protest the use of certain slitting 
expenses incurred by CCC in U.S. sales as an addition to Foreign Market 
Value. Petitioners claim that the Department should instead deduct the 
expenses from U.S. price. Petitioners cite 19 U.S.C. 
Sec. 1677a(d)(2)(A), stating that ``the statute requires that 
additional costs, charges and expenses incident to bringing the 
merchandise from the place of shipment in the country of exportation to 
the United States shall be deducted from U.S. price.''
    Department's Position: We disagree with Petitioners. Both CCC and 
Dofasco had U.S. sales which were slit in the U.S. by unrelated 
slitters. In both cases, the Department considered the sales to be 
purchase price sales, and not exporter sales price sales. The slitters 
in question were unrelated to the companies being reviewed. However, 
there were slight differences between CCC and Dofasco in terms of the 
structure of transactions performed by unrelated slitter. In the case 
of Dofasco, the customer designates the slitter to be used. The slitter 
invoices Dofasco, which then adds the amount of the charge, noted on a 
separate line of the invoice, to the price that it charges the customer 
for the un-slit steel. By contrast, CCC, chooses the slitter, which is 
a single non-related U.S. company. Furthermore, CCC does not separate 
the charges but instead includes them in the overall sales price. CCC 
finalizes the price prior to shipment into the U.S. and maintains a 
record of the expense charged to it by the slitter.
    As a result, the Department simply disregarded the price for the 
slitting when identifying the price charged by Dofasco. For CCC, 
however, the slitting expense is a circumstance of sale expense for 
which the Department must make a circumstance of sale adjustment to FMV 
under section 773(a)(4).
    Petitioners' reliance on section 772(d)(2)(A) is unwarranted. That 
provision deals with the deduction from USP of movement and related 
expenses (such as freight, brokerage, handling and port charges). 
Although the slitting expense was incurred prior to delivery to the 
customer, that fact alone does not make the expense a movement expense 
subject to 772(d)(2)(A).
    Comment 11: Petitioners object to the Department's price adjustment 
methodology regarding credit and debit notes for sales in both the U.S. 
and Canadian markets. Specifically, Petitioners believe that the 
Department should not allocate such adjustments over multiple sales. 
Instead, the Department should tie said adjustments directly to 
specific sales and use BIA when these expenses cannot be tied to 
specific sales.

[[Page 13822]]

    Respondents contend that both the Department's policy and various 
court decisions do not allow for the allocation of such expenses to 
unspecified invoices. In the case of CCC, however, respondent notes 
that the adjustments in question are directly related to a specific 
group of invoices. Therefore, the credit and debit notes are directly 
related to a set of sales, rather than one sale in particular or to all 
sales. As such, they meet the criteria of the Department for direct 
expenses.
    Department's Position: While the Department prefers that discounts, 
rebates and other price adjustments be reported on a transaction-
specific basis, the Department has long recognized that some price 
adjustments are not granted on that basis, and thus cannot be reported 
on that basis. However, the Department disagrees with CCC's argument 
that the debits and credits at issue were not granted on a transaction-
specific basis. CCC issued the adjustments when a customer over- or 
under-paid a specific transaction. By including several invoices on the 
debit or credit note, CCC allocated the debit or credit over the 
transactions included on the note. Consequently, the debits and credits 
are transaction-specific but not invoice-specific.
    Nevertheless, the Department does not agree with petitioners that 
this methodology is sufficient to warrant treatment of the adjustments 
as indirect expenses in the home market (or application of BIA in the 
U.S. market), under the policy discussed in Antifriction Bearings (and 
Parts Thereof) from France, 58 FR 39729, 39759 (1993), cited by 
petitioners. In that case, the Department contrasted transaction-
specific reporting with customer- or product-specific reporting. In 
this case, the amount of the ``allocation'' is limited to a few 
specific transactions, all to the same customer, and typically within a 
very limited period of time. Thus the danger of allocation, which is 
the averaging effect on prices, is extremely limited in this case. This 
case is similar to situations, permitted by the Department as direct 
adjustments, in which a rebate is granted on a limited number of 
purchases by a single customer. Because CCC's method of reporting this 
transaction is reasonable, the Department has allowed it as a direct 
adjustment.

Dofasco/Sorevco

    Comment 12: Respondents claim that the Department improperly 
reclassified certain home market rebates as post-sale price adjustments 
in the preliminary results. Dofasco states that, contrary to the 
Department's assertion, the record shows that the buyer was aware of 
the conditions to be fulfilled and the approximate amount of the 
rebates at the time of sale. Respondents also claim that there are no 
factual differences between the investigation and this administrative 
review concerning Dofasco's rebates. Finally, respondents assert that 
the antidumping law was never intended to be so rigid that memoranda or 
customer letters would be an insufficient basis to show previous 
knowledge. Therefore, Dofasco says that the Department should classify 
all of its home market rebates as rebates.
    Petitioners assert that respondents have failed in each case to 
substantiate these home market rebates. For the first type of rebate, 
petitioners claim that respondents have stated for the record that in 
the majority of cases, documentation which the Department requested to 
illustrate ``that their customer knew the conditions and terms of each 
rebate granted to the customer before the time of the sale'' did not 
exist. Furthermore, even in the minority of cases where some 
documentation exists, such evidence does not demonstrate the necessary 
facts for the Department to classify such expenses as rebates. 
Likewise, for the other two types of rebates, the documentation Dofasco 
presents as evidence is, according to petitioners, insufficient proof 
that the customers were aware of the terms of sale and the amount of 
the rebates at or before the time the sale was made.
    Department's Position: We agree with petitioners. First, the 
evidence to which respondents have pointed in their case brief in no 
way demonstrates that Dofasco's customers had knowledge of the terms 
and conditions of the rebates at or before the time of sale.
    For Dofasco-reported REBATE1H, respondents have referred to an 
internal Dofasco memorandum stating the terms of the rebate for a 
future period. Respondents argue that, while this internal memorandum 
``may not constitute explicit customer notice,'' the fact that the 
customer had been receiving the rebate for some time previously was a 
clear indication that the customer knew of the rebate prior to sale.
    In this case, respondents have implicitly acknowledged the inherent 
deficiency of this evidence: namely, that the document to which 
respondents refer is an internal memorandum, and thus by its nature 
cannot serve as evidence of the customer's prior awareness of the terms 
and conditions of the rebate. While the customer's receipt of this 
rebate over time may increase the likelihood that the customer may have 
expected to continue to receive this rebate, such a condition reflects 
at most the probability that Dofasco's ``rebate'' policy in this case 
represented its normal business practice. However, it does not 
constitute the customer's awareness of the rebate at or prior to the 
time of the sale.
    Furthermore, respondents explicitly acknowledged during 
verification that ``the majority of its rebate and pricing negotiations 
are completed over the phone and little written communication is 
exchanged between Dofasco and the customer.'' See Dofasco Sales 
Verification Report (May 5, 1995), at pg. 24. In fact, for REBATE1H we 
found no written communication proving prior customer awareness. In 
this respect, Dofasco's reference to the hand written notation in the 
example provided in their case brief is unpersuasive. Even presuming 
the individual in question is employed by the customer (for which we 
have no evidence), there is no indication when (or whether) the 
document was sent to the individual.
    With regard to Dofasco-reported REBATE2H, respondents have also 
failed to provide adequate evidence proving prior customer awareness 
for the example cited. The letters from the customer to Dofasco to 
which respondents refer in their case brief show nothing about what the 
customer knew at the time of the sale. Finally, concerning Dofasco-
reported REBATE3H, Dofasco's evidence suffers the same defect as 
REBATE1H: that is, the 1992 document provided as an attachment to 
respondents' case brief is an internal memorandum which fails entirely 
in proving the customer's prior awareness.
    Second, the Department takes issue with respondents' claim that 
there are ``no factual differences between the investigation and this 
administrative review'' concerning Dofasco's rebates. In fact, it is 
precisely the factual, documentary difference between the LTFV 
investigation and this administrative review which has led the 
Department to its decision to disallow the treatment of these 
``rebates'' as rebates for the Department's purposes. In the LTFV 
investigation, Dofasco was able to produce a certain type of document 
(an Allowance Approval Page) which proved that the customer was aware 
of the terms and conditions of these rebates at or before the time the 
sale was made. See, Dofasco's Response to Sections B, C, and E of the 
Department's Questionnaire, October 20, 1992, Appendix B-4. This

[[Page 13823]]
Allowance Approval Page is absent from the record of this review.
    Finally, concerning respondents' assertion that the antidumping law 
was never intended to be so rigid that memoranda or customer letters 
would be an insufficient basis to show previous knowledge, we stress 
that the Department's requirements in this regard are not arbitrary. 
The purpose of requiring respondents to prove that the buyer was aware 
of the conditions to be fulfilled and the approximate amount of the 
rebates at the time of the sale is to protect against manipulation of 
the dumping margins by a respondent once it learns that certain sales 
will be subject to review. See Antifriction Bearings (other than 
Tapered Roller Bearings) and Parts Thereof from France (AFBs), 60 FR 
10900, 10930 (February 28, 1995), which notes that the purpose of the 
rebate rule is to ``prevent respondents, after they realize that their 
sales will be subject to administrative review, from granting rebates 
in order to lower dumping margins on particular sales.'' Hence, in 
order to circumvent any such ex post facto downward adjustments of 
foreign market value, the Department has established the evidentiary 
requirement of ``prior knowledge''. Therefore, the Department disallows 
these ``rebates'' as Departmentally-defined rebates for the period of 
review.
    Comment 13: Petitioners argue that the Department should not treat 
Dofasco's home market rebates as post-sale price adjustments, because 
the Department has indicated that post-sale price adjustments are 
generally corrections to the price resulting from clerical or other 
data input errors. Moreover, petitioners assert that such a 
reclassification undermines the Department's policy of requiring a 
respondent to demonstrate that the rebate is justified. Therefore, 
petitioners conclude that Dofasco's claimed adjustments must be denied. 
Additionally, petitioners assert that even if the Department adjusts 
for Dofasco's rebates, it should not directly adjust for two types of 
``rebates'' because Dofasco reported these on a customer-specific 
basis, and not on a transaction or product-specific basis.
    Respondents argue that, even if the Department does not accept 
Dofasco's ``rebates'' as rebates (as defined by the Department), it 
must at a minimum accept them as post-sale price adjustments, since 
they reflect a respondent's normal business practice. Regarding the two 
types of ``rebates'' allegedly reported on a customer-specific basis, 
Dofasco claims that the Department verified that these rebates have 
been reported for each customer on a product-specific basis.
    Department's Position: We agree in part with respondents. While 
petitioners have asserted that post-sale price adjustments are 
``generally corrections to the price resulting from clerical or other 
data input errors,'' they have failed to note that in the case from 
which they cite, the Department also allowed post-sale price 
adjustments which were not data input errors, because they reflected 
the respondent's ``normal business practice.'' See AFBs at 10930. As 
Dofasco has argued, the post-sale price adjustments in this instance do 
reflect its normal business practice. The Department reviewed numerous 
documents at verification which confirmed this, and petitioners have 
not suggested otherwise. Additionally, although documentation regarding 
the administration of these ``rebates'' for this administrative review 
differs from the LTFV investigation, their existence since the 
beginning of the investigation indicates that the use of these 
``rebates'' reflects Dofasco's normal business practice. Nevertheless, 
in AFBs (at 10929), the Department stated that ``as a general matter, 
the Department only accepts claims for discounts, rebates and price 
adjustments as direct adjustments to price if actual amounts are 
reported for each transaction.'' The Department discovered at 
verification that for certain customers, for two types of Dofasco's 
claimed rebates (REBATE1H and REBATE2H), ``Dofasco totaled the value of 
specific credit notes issued to a customer and allocated them over 
sales to that customer.'' Furthermore, Dofasco demonstrated at 
verification that it had ``allocated rebates for a number of customers 
because the credit notes did not specify the invoices on which Dofasco 
granted the credit, and company officials noted that the invoicing 
department did not always identify correctly the specific product on 
which the credit was being granted.'' See Verification Report at 22. 
Thus, it is clear that these adjustments have often not been made on a 
transaction-specific basis, and the Department will, accordingly, treat 
them as indirect selling expenses for certain customers.
    Finally, the Department disagrees with petitioners' assertion that 
reclassification undermines the Department's policy with respect to 
rebates. Rebates typically may be granted as a fixed and constant 
percentage of sales. The Department's policy is to treat them as direct 
adjustments if they are reported on that basis. AFBs at 10929. By 
contrast, post-sale price adjustments are usually granted on a 
transaction-by-transaction basis and, to qualify as direct adjustments, 
may only be reported on that basis.
    Comment 14: Respondents state that the Department's preliminary 
results give the wrong impression concerning Dofasco's sales of 
secondary merchandise. Dofasco claims that it has informed the 
Department ``since the beginning of the LTFV investigation'' that it 
cannot properly identify all the product characteristics of secondary 
merchandise. Thus, Dofasco objects to the Department's alleged 
inference that Dofasco represented as accurate information certain 
product characteristics of its secondary merchandise.
    Petitioners did not comment on this issue.
    Department's Position: The Department has not stated at any time in 
this review that Dofasco has attempted to represent as complete 
information certain reported product characteristics for its sales of 
secondary merchandise. The evidence on the record of this review 
repeatedly confirms that Dofasco has consistently maintained it is 
unable to properly identify the product characteristics in question. 
See, e.g., Response of Dofasco Inc. to Sections IV & V of the 
Department of Commerce's Antidumping Administrative Review 
Questionnaire, pp. 15-17 of Section IV, (November 14, 1994); 
Supplemental Response of Dofasco Inc. to Section III, IV, and V of the 
Department of Commerce's Antidumping Administrative Review 
Questionnaire, pp. 21-25 (December 23, 1994); and Response of Dofasco 
Inc. to Section III, IV, and V of the Department of Commerce's 
Antidumping Administrative Review Supplemental Questionnaire, pg. 6 
(February 22, 1995). Furthermore, the Department explicitly verified 
respondents' contention through a thorough review of Dofasco's records 
regarding secondary merchandise. See Sales Verification Report (May 5, 
1995), pp. 8-10. The preliminary results of review merely confirm that 
the Department performed its model match on these six product 
characteristics (see also the Department's April 19, 1995 memorandum on 
secondary merchandise).
    Comment 15: Respondents claim that the Department employed a 
methodology for adjusting for taxes which artificially inflates 
margins. Dofasco notes that 19 U.S.C. 1677a(d) (1988) of the statute 
requires the Department to adjust U.S.P. to take into account taxes 
that are levied upon

[[Page 13824]]
foreign market sales, but that are rebated or not collected upon export 
sales. Respondents argue that because the Department's tax methodology 
violates the United States' international obligation by increasing or 
creating dumping margins, the Department should adopt the tax-
adjustment methodology upheld by the Court of Appeals in Federal Mogul 
Corp. v. United States (Federal Mogul), 94-1097, -1104, at 20-21 (Fed. 
Cir. Aug. 28, 1995). Dofasco claims that the Court of Appeals 
specifically held that this U.S.P. tax-adjustment methodology is in 
accordance with the United States' international agreements and is 
reasonable.
    Petitioners assert that respondents have improperly characterized 
the Federal Mogul opinion, and furthermore, that Dofasco's proposed 
alternative methodology would ``artificially deflate the amount of cash 
deposits'' (emphasis added). First, petitioners claim that the Court 
supported the Department's methodology in Federal Mogul as consistent 
with the express statutory language and ``not an unreasonable 
position.'' Petitioners add that, even if the results are contrary to 
certain GATT provision, the Court noted in Federal Mogul that ``in the 
event of a conflict between a GATT obligation and a statute, the 
statute must prevail.'' Therefore, the Court did not order the 
Department to utilize the methodology in Federal Mogul which 
respondents in this case now advocate. Instead, according to 
petitioners, the Court allowed the Department discretion to select a 
tax methodology such as the one used for the preliminary results here.
    Second, petitioners argue that the utilization of Dofasco's 
proposed tax methodology would reduce the estimated duty deposit rate 
to a level below what it would be if no tax were imposed in the home 
market. Specifically, petitioners argue that Dofasco's approach, while 
creating an absolute dumping margin which is tax neutral, would deflate 
the ad valorem margin. Petitioners allege that this significant aspect 
of the methodology was not addressed by the Court of Appeals in Federal 
Mogul, and that ``no court has ever suggested that it was Congress' 
intent to diminish the amount of cash deposit rate to the detriment of 
the domestic industries (emphasis original).''
    Department's Position: In accordance with Federal Mogul, we have 
changed our VAT methodology (see VAT tax methodology section, above).
    Comment 16: Petitioners claim that Dofasco used an improper 
methodology for calculating its product-specific cost of production 
(COP), constructed value (CV), and difference in merchandise (difmer) 
data. Petitioners argue that Dofasco did not calculate its costs using 
its entire production volume to calculate weighted-average costs per 
product, but rather used only production for home market sales orders 
to determine the cost of manufacturing (COM) for COP, and only its 
production for U.S. sales orders to determine its COM for CV. 
Furthermore, petitioners claim that Dofasco did not alert the 
Department in its response concerning its methodology.
    Respondents claim that petitioners have misunderstood the cost 
methodology employed by Dofasco to calculate COP and CV. Respondents 
state that their calculation methodology is a two-step process. First, 
Dofasco calculates a per unit production cost based on total production 
of a Dofasco product. Dofasco then weight-averages all Dofasco products 
by the Department's control number and by production for sale in a 
particular market. Dofasco argues that this methodology is in 
accordance with the statute (19 U.S.C. 1677b(e) (1995) for CV and 19 
U.S.C. 1677b(b) (1995) for COP) and in accordance with the Department's 
questionnaire instructions.
    Department's Position: The Department agrees with respondent and 
considers Dofasco's COP/CV response to be in compliance with the 
statute and with the Department's questionnaire.
    Petitioners' argument that Dofasco used an improper methodology in 
determining COP and CV for subject merchandise because it does not take 
into account all of Dofasco's production is incorrect. As documented at 
verification, Dofasco used costs based on total production (on a 
control number basis) to determine COP and CV figures.
    In addition, as stated in the Department's questionnaire issued to 
Dofasco, COP represents ``the total cost of production of each product 
sold in the home market/third country'' and constructed value ``is 
based upon the costs incurred to produce each product sold in the U.S. 
market, as if it had been sold in the home market.'' Thus, Dofasco's 
practice of basing COP and CV on home market sales and U.S. sales 
respectively is entirely consistent with the Department's practice and 
intent.
    Comment 17: Petitioners claim that Dofasco failed to include third-
country production in its weighted-average cost calculations. As a 
result, according to petitioners, there is no way for the Department to 
determine accurate product-by-product cost data.
    Respondents claim that, as explained in Comment 16 above, the cost 
of manufacture for each product within a control number is based upon 
Dofasco's entire production volume of that product, regardless of where 
each individual production run of that product was sold.
    Department's Position: As stated above, the Department verified 
that Dofasco used costs incurred in its total production (within each 
CONNUMH and CONNUMU) to determine the COP and CV of subject 
merchandise. Third country information was only disregarded when 
Dofasco weight-averaged its costs to determine U.S.-specific CV data 
and home market-specific COP data.
    Comment 18: Petitioners claim that the reliability of Dofasco's COP 
data is compromised because Dofasco included in its calculations 
numerous sales orders where there was no cost for slab production, 
resulting in ``understated'' costs.
    Respondents note that, for a small number of products, Dofasco 
inadvertently has not reported slab costs. Respondents maintain that 
this was a simple error arising from their presumption that there were 
no sales in 1994 of steel poured into ingots at Dofasco's ingot mill, 
which the Department verified had closed in the third quarter of 1993. 
Respondents argue that petitioners should have informed the Department 
of this error prior to petitioners' submission of their case brief, and 
that petitioners' failure to do so was a deliberate attempt to prevent 
respondents from presenting proof that the actual incidence of missing 
slab costs is insignificant.
    Respondents add that, in the event Dofasco is not allowed the 
opportunity to correct this obvious error, the Department should adopt 
Dofasco's proposed methodology to correct this error, which Dofasco 
claims is adverse because it results in a certain increase in the cost 
data of all control numbers.
    Department's Position: We agree with petitioners in part. 
Regardless of whether Dofasco's failure to report certain slab costs 
was an oversight, the Department is obligated to correct such errors. 
Because of the nature of this error, which prevented the Department 
from identifying which sales should have included slab costs, the 
Department has adopted the following methodology: the Department 
upwardly adjusted Dofasco's reported value for the control number which 
we verified, utilizing the weighted-average costs of slab production of 
all sales orders

[[Page 13825]]
except those for which slab costs were clearly not included in reported 
production costs. Then, we applied to all control numbers, for both COP 
and CV purposes, the percentage difference between the upwardly 
adjusted value figure and the originally reported value figure as a 
partial BIA,. Because of the limited nature of this error, and the fact 
that Dofasco has been cooperative, the Department does not believe that 
total BIA is appropriate.
    Comment 19: Petitioners claim that the problems with Dofasco's cost 
data, as put forward in comments 16-18 above, also affected the difmer 
data to the point where such data is inaccurate and unreliable. 
Petitioners state that the data used to calculate COP, which it claims 
did not include certain slab cost data, were also used to calculate 
difmers. Additionally, petitioners argue that the difmers were 
calculated incorrectly for a significant number of CONNUMs where 
Dofasco sold the merchandise in both the home and U.S. markets. 
Finally, petitioners stress that the calculation of accurate difmer 
data is not possible because Dofasco ignored production for export to 
third countries in calculating COP, and there is no way to know whether 
all or only some CONNUMs are affected.
    Respondents agree with petitioners that the cost data used to 
calculate the difmer should be based on both U.S. and home market cost 
data, but that, due to a programming error, this did not occur in ``a 
few instances.'' Respondents argue that all the necessary information 
is currently on the record for the Department to recalculate difmers, 
and have provided the Department with proposed calculation strings and 
programming language to correct the data. Therefore, Dofasco asserts 
that there is no reason for the Department to resort to BIA.
    Department's Position: The Department agrees with petitioners that 
Dofasco's reported difmer data is incorrect. However, the errors are 
obvious and were brought to the Department's attention in sufficient 
time for correction. Moreover, as noted by respondent, the Department 
does possess all the information necessary to correct this data. As a 
result, the Department corrected this data by using the computer code 
submitted by respondent. The Department has thoroughly reviewed this 
language and is satisfied that it fully corrects the difmer data.
    Comment 20: Petitioners claim that respondents have under reported 
general and administrative costs by improperly deducting from its 
expense two items designated as ``Reversal of Restructuring Costs.'' 
Petitioners assert that the Department is clear that such prior period 
reversals are not part of the current year's cost of production. 
Petitioners argue that the Department should add a certain percentage 
to Dofasco's COP and CV figures to compensate for this improper 
calculation.
    Respondents argue that petitioners have been ``inconsistent'' on 
this issue between the LTFV investigation and this review. Respondents 
claim that, since the Department included the restructuring expenses 
(as ordinary expenses borne by the entire corporation) in their 
entirety as part of COP and CV in the LTFV investigation, the 
Department should now accept a prior period reversal of a portion of 
those original restructuring estimates. According to Dofasco, this 
approach would achieve consistency in the Department's treatment of 
these restructuring expenses, and would also coincide with the 
Department's ``long-standing practice'' of following the home country's 
generally accepted accounting principles.
    Respondents further argue that petitioners' reliance on Small 
Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line and 
Pressure Pipe from Italy, 60 FR 31981, 31987 (1995) is misplaced, 
because in that instance, the respondent attempted to benefit from a 
reversal during a POI of an expense prior to the POI.
    Department's Position: The Department agrees with respondent. In 
the Final Determination of Sales at Less Than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel 
Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products, 
and Certain Cut-to-Length Carbon Steel Plate from Canada (58 FR 37108), 
the Department agreed with petitioners that estimated expenditures 
related to restructuring should have been included in their entirety as 
part of COP and CV. In the investigation, these expenditures were on 
Dofasco's financial statements.
    In the present review, Dofasco's financial statements include 
certain partial reversals of those earlier restructuring estimates. In 
order for the Department to be consistent and abide by its long-
standing policy, it must also include these partial reversals in its 
calculation of COP and CV for Dofasco.
    Comment 21: Petitioners note that Dofasco claimed a total of five 
levels of trade which consisted of distributors, known as service 
centers, and the following four categories of end-users: automotive, 
construction, converters, and manufacturers. Petitioners claim that the 
Department should reject Dofasco's claim that its end-user customers 
comprised four distinct levels of trade and that Dofasco has not proved 
distinct selling functions for the reported total of five levels of 
trade. Petitioners argue that the Department should disallow 
respondents' claim of different levels of trade within one general 
category because it is contrary to Departmental practice. Petitioners 
claim further that any differences pointed to by Dofasco among its 
purported levels of trade predominantly concern quantities purchased, 
not function. Petitioners argue that the Department has emphasized in 
the past that such differences do not warrant distinct level of trade 
treatment. Finally, petitioners claim that the analysis provided by 
respondents attempting to show a correlation between price and selling 
expenses on the one hand and levels of trade on the other is flawed and 
meaningless. Thus, petitioners state that the Department should allow 
only two levels of trade: Distributors and end-users.
    Respondents note that the Department calculated its dumping margin 
in the final determination of the LTFV investigation based on its five 
reported levels of trade, which the Department verified. According to 
respondents, because the Department has verified these same five levels 
of trade in this review, and ``nothing has changed'' since the 
investigation regarding Dofasco's levels of trade, a Departmental 
decision to collapse Dofasco's levels of trade would ``constitute a 
change of policy * * * from the investigation,'' and that an agency 
must present an adequate basis for a policy change in such a situation. 
Moreover, respondents assert that the Department has differentiated 
among end-users in past cases. Finally, respondents claim that there 
were no meaningful methodological errors in its analysis of price and 
selling expenses by trade level, and that the record shows that 
Dofasco's prices indeed vary by level of trade for each particular 
product group.
    Department's Position: In asking for level of trade information, 
the Department attempts to determine where in the distribution chain 
the respondent's customer falls (end-user, distributor, retailer). 
Thus, ``comparisons are made at distinct, discernible levels of trade 
based on the function each level of trade performs, such as end-user, 
distributor, and retailer.'' See Certain Carbon and Alloy Steel Wire 
Rod from Canada (``Wire Rod from Canada''), 59 FR 18791, 18794 (April 
20, 1994) (Import Administration Policy Bulletin 92/1 (July 29, 1992)).

[[Page 13826]]

    In this case, Dofasco has reported separate levels of trade among 
four types of end-users: that is, Dofasco claims that, while all four 
types of end-users occupy the same spot on the distribution chain, the 
differences among these end-users are significant enough that the 
Department would be mistaken to conduct its model match if they were 
aggregated into one end-user level.
    However, the Department normally disallows a respondent's claim of 
different levels of trade within one general category. See Disposable 
Pocket Lighters from Thailand, 59 FR at 53415, and Disposable Pocket 
Lighters from Thailand, 60 FR 14263, 14264 (final determination) (March 
16, 1995). We note that, in its divisions among end-users, the only 
characteristics of each of these end-users about which Dofasco 
uniformly informed the Department were quantities and the customer's 
end-products. This represents the type of information which the 
Department highlighted as being inadequate in Wire Rod from Canada (59 
FR at 18794).
    In this respect, the Department notes that Dofasco has referred to 
a case (Limousines from Canada, 55 FR 11036, 11039 (1990)), in which 
two end-users were differentiated due to differences in volume 
purchased, lower prices, and different sales resources. With regard to 
quantities purchased, it is noteworthy that the decision in Limousines 
from Canada predates Wire Rod from Canada by four years, and as such 
does not reflect current Department policy with regard to quantities 
purchased. Moreover, there is no discussion on the record of this 
review confirming price differentials among construction, converter, 
and manufacturing end-users. Finally, regarding sales resources, the 
Department found at verification that Dofasco's construction and 
manufacturing customers are served by the same sales division, and 
Dofasco has not set up a sales division to service only its converter 
customers as it has done, for example, for its automotive customers.
    Dofasco also points to Stainless Steel Bar from Spain, in which 
Dofasco maintains that ``the Department separated end-user customers 
into two levels of trade because the characteristics of those customers 
were significantly different.'' See Stainless Steel Bar from Spain, 59 
FR 66931, 66937 (December 28, 1994). In fact, in its discussion Dofasco 
omitted a crucial distinction between the end-users in the case of 
Stainless Steel Bar from Spain: namely, one set of end-users purchased 
through one distribution channel (direct from factory), while the other 
group of end-users made its purchases through a different distribution 
channel (from related service centers).
    Nevertheless, Dofasco did report significantly more information 
regarding its sales to the automotive industry than it has for its 
sales to converters and manufacturers. This information includes a 
differentiated sales process (through a wholly-owned subsidiary), early 
vendor involvement, the presence of long-term requirements contracts, 
and generally lower prices. Together, such distinct and discernible 
functions represent exactly the sort of evidence which serves to 
distinguish sales to automotive manufacturers from sales to other 
customers, notwithstanding petitioners' contention regarding the 
methodological integrity of Dofasco's analysis of price and selling 
expenses. Moreover, the Department acknowledged in its questionnaire 
the uniqueness of automotive manufacturers as steel industry customers. 
Specifically, the computer field CUSTOMER CATEGORY/LEVEL OF TRADE 
(CUSTLOT) stated that respondents should ``(s)how a different code for 
each of the basic types of customers to whom you sell the merchandise, 
e.g., auto manufacturers, steel service centers, etc...'' (emphasis 
added).
    Finally, with regard to Dofasco's assertion that a Departmental 
decision to collapse Dofasco's levels of trade would constitute a 
change of policy from the investigation, and that ``an agency must 
present an adequate basis for a policy change'' (see British Steel, Plc 
v. United States, 879 F. Supp. 1254, 1307 (Ct. Int'l Trade 1995), 
citing Secretary of Agric. v. United States, 347 U.S. 645, 653-54, 74 
S.Ct. 826, 832, 98 L.Ed. 1015 (1954)), the LOT issue addressed in this 
review was not brought to the Department's attention in the 
investigation and the Department is not precluded from making a 
determination on that issue in this administrative review. Neither 
petitioners nor respondents briefed the issue in the investigation. 
Each segment of a proceeding (e.g. investigations and review) forms a 
separate administrative record about which parties may raise issues 
before the Department and seek judicial review.
    The Court's decision in British Steel, Plc v. United States cited 
by respondents is inapposite to the present case. The British Steel 
decision addressed a situation where the Department changed an 
explicitly stated policy between two segments of a proceeding. The 
issues raised by Petitioners in this proceeding concern the proper 
treatment of LOT in light of the facts presented and the Department's 
current policy.
    Consequently, in accordance with standard practice, the Department 
has determined that Dofasco's three reported levels of trade 
``construction'', ``converter'', and ``manufacturer'' are combined into 
one end-user level of trade. We have treated the automotive sector as a 
separate level of trade for the following reasons: a differentiated 
sales process (through a wholly-owned subsidiary), early vendor 
involvement, the presence of long-term requirements contracts, and 
generally lower prices.
    Comment 22: Petitioners assert that, for one term of sale, the 
Department should include freight revenue to Dofasco in gross unit 
price and should deduct reported freight rates. Petitioners note that 
Dofasco did not supply actual freight rates, and that Dofasco 
acknowledged that in certain cases it did not pay the same amount for 
freight as the amount charged by Dofasco to its customers. Therefore, 
petitioners claim that the Department should add freight paid in 
certain sales, and deduct reported minimum freight for that destination 
in the home market, and add freight paid in certain United States sales 
while deducting maximum freight for that destination. Additionally, 
petitioners claim that an adjustment should also be made to net price 
for the purposes of the cost test, but that the application of the 
maximum freight rate (instead of the minimum) should be used as BIA.
    Respondents argue that the Department properly accepted the freight 
amounts charged to Dofasco's customers for one term of sale. First, 
respondents state that there existed no requirement that Dofasco report 
actual freight charges. According to respondents, such a requirement 
would have imposed an unreasonable burden. Second, respondents stress 
that the Department has no reason to believe that the amounts charged 
to Dofasco's customers for these sales do not ``reasonably 
approximate'' Dofasco's actual freight expenses. Finally, respondents 
assert that petitioners have not indicated how differences between 
reported freight expenses and minimum/maximum freight rates charged are 
in any way significant.
    Department's Position: In reporting its freight expenses, Dofasco 
Inc. has used an allocative methodology because, as the Department 
verified, the carrier invoices Dofasco for this term of sale for a 
group of shipments, as opposed to individual sales orders. Because (1) 
it would impose a heavy burden on respondents to report actual freight 
charges; (2) the terms of the

[[Page 13827]]
questionnaire did not prohibit the use of an appropriate allocative 
methodology in determining freight expenses; and (3) the Department has 
consistently allowed the use of reasonable allocative methodologies in 
reporting freight expenses (See, e.g., Small Diameter Circular Seamless 
Carbon and Alloy Steel, Standard, Line and Pressure Pie from Italy, 60 
FR 31981, 31987 (June 19, 1995), and Oil Country Tubular Goods from 
Korea (``OCTG from Korea''), 60 FR 33561, 33563 (June 28, 1995)), the 
Department agrees with respondent that respondent's use of allocations 
for the values reported for freight expense, (i.e., the amounts charged 
by Dofasco to its customers) is acceptable and we determine that the 
use of this allocation methodology does not cause inaccuracies or 
distortions.
    Nevertheless, the Department notes that Dofasco reported and the 
Department verified: (1) The amount Dofasco charged its customer on the 
invoice and the amount the customer paid Dofasco; and (2) the minimum 
freight rate charged by the carrier to Dofasco per destination for the 
home market, the maximum freight rate charged by the carrier to Dofasco 
per destination for the United States market, and the actual amount 
Dofasco paid the carrier. The reported minimum freight rates charged by 
the carrier to Dofasco in the home market reflect the minimum amount to 
be deducted from foreign market value. Therefore, the Department 
verified that Dofasco would have lowered its FMV (thereby lowering its 
margin) had it been able to report actual freight charged by the 
carrier to Dofasco, because the Department verified that in fact, 
Dofasco was always charged a higher rate by the carrier in the home 
market. Similarly, the reported maximum freight rates charged by the 
carrier to Dofasco in the U.S. market reflect the maximum amount to be 
deducted from U.S. price. Hence, the Department verified that Dofasco 
would have raised its USP (thereby lowering its margin) had it been 
able to report actual freight charged by the carrier to Dofasco, 
because the Department verified that in fact, Dofasco was always 
charged a lower rate by the carrier in the U.S. market.
    The Department verified that differences between reported freight 
expenses and minimum/maximum freight rates charged are indeed 
significant (see, e.g., Dofasco Sales Verification Report, May 5, 1995, 
pg. 21), and thus, contrary to respondents' assertion, the Department 
has adequate reason to believe that the amounts charged to Dofasco's 
customers for these sales do not reasonably approximate what Dofasco 
actually paid the carrier.
    Regarding petitioners' claim that an adjustment should also be made 
to net price for the purposes of determining whether certain sales have 
been made below the cost of production, but that the application of the 
maximum freight rate (instead of the minimum) should be used as BIA 
(thereby increasing the likelihood that a sale would fail the cost test 
by deducting a greater amount from the sale's gross unit price), the 
Department agrees with petitioner that some form of BIA should be used. 
However, petitioners' proposal in this situation, in which Dofasco has 
cooperated fully with the Department and has provided extensive 
information for the record of this review, is not appropriate. 
Petitioners have proposed that the Department adjust upward Dofasco's 
minimum freight rate per home market destination by the highest 
percentage difference between minimum and maximum freight rates for any 
home market destination. Instead, the Department determines that the 
percentage difference between minimum and maximum freight rates for the 
most popular home market destination for this term of sale should be 
used to upwardly adjust minimum freight rates for all home market 
destinations. The resulting BIA rate shall be applied to upwardly 
adjust the minimum freight charged to Dofasco by the carrier for home 
market sales for the purposes of calculating net price for the cost 
test.
    Therefore, for one term of sale, the Department will add freight 
paid to Dofasco by the customer and deduct reported minimum freight 
paid by Dofasco to its carrier for that destination in the home market, 
and add freight paid to Dofasco by the customer while deducting maximum 
freight paid by Dofasco to its carrier for that destination in the 
United States.
    Comment 23: Petitioners argue that the Department must deduct 
estimated antidumping duties paid by the respondent or related parties 
from U.S. price. Section 772(d)(2)(A) states that the purchase price 
and exporter's sales price shall be reduced by United States import 
duties. According to petitioners, antidumping duties are ``incident to 
bringing the subject merchandise from the place of shipment in the 
country of exportation to the place of delivery in the United States'' 
and are therefore properly classified as import duties. Furthermore, 
petitioners claim that antidumping or countervailing duties are 
considered ``import duties'' in trade laws unless the provision 
specifically indicates otherwise.
    Respondents rebut petitioners' assertion by noting that the 
Department, the courts, and the U.S. Congress have rejected 
petitioners' argument. Dofasco stresses that petitioners have cited 
``no legal or other authority whatsoever'' to support their argument. 
Respondents assert that Congress did not intend for the antidumping law 
to operate in the manner proposed by petitioners; that furthermore, 
Congress explicitly rejected such a treatment in drafting the Uruguay 
Round trade negotiations implementing legislation; and that to follow 
petitioners' proposal would result in a geometric and infinite margin 
inflation. Additionally, respondents have only paid ``estimated duty 
deposits,'' and not actual antidumping duties. Therefore, respondents 
claim that the U.S. Court of International Trade has agreed with the 
Department's practice of refusing to deduct estimated antidumping duty 
deposits in calculating margins for a given period of review.
    Department's Position: While section 772(d(2)(A) requires the 
deduction of normal ``import duties,'' cash deposits of estimated 
antidumping duties are not normal import duties, and do not qualify for 
deduction under section 772. Contrary to petitioners' argument, the CIT 
in Federal-Mogul v. United States 813 F. Supp. 856, 872 (CIT 1993), 
recognized that the actual amounts of normal duties to be assessed upon 
liquidation are known because they are based upon rates published in 
the Harmonized Tariff Schedule and the actual entered value of the 
merchandise. In contrast, deposits of estimated antidumping duties are 
based upon past dumping margins and may bear little relation to the 
actual current dumping margin. Thus, the CIT recognized the distinction 
between estimated antidumping duties and ``normal'' import duties for 
purposes of section 772(d)(2)(A).
    Petitioners' methodology also conflicts with the holding of the CIT 
in PQ Corp. v. United States, 652 F. Supp. 724 (CIT 1987), in which the 
court addressed the issue of deduction of estimated antidumping duties 
under section 772(d)(2)(A). The court cited with approval the 
Department's policy of not allowing estimated antidumping duties, based 
upon past margins, to alter the calculation of present margins. The 
court explained ``[i]f deposits of estimated antidumping duties entered 
into the calculation of present dumping margins, then those deposits 
would work to open up a margin where none otherwise exists.'' Id. At 
737.
    Petitioners argue at length that the Department should not 
distinguish

[[Page 13828]]
between purchase price and ESP transactions in deducting antidumping 
duties. However, because the Department does not deduct estimated 
antidumping duties from any transaction, this argument is inapposite.
    The Department agrees with petitioners that statements made in the 
URAA are not relevant in this review, which is being conducted under 
pre-URAA law. However, the policies of other countries, cited by 
petitioners with respect to this issue, are equally irrelevant.
    Comment 24: Respondents claim that the Department made a clerical 
error in its computer program on an inland freight charge for a U.S. 
sale.
    Petitioners claim that the Department made clerical errors in the 
computer program by: failing to include the further processing field in 
the U.S. price calculation; failing to deduct a U.S. rebate from U.S. 
price; improperly classifying U.S. duty and brokerage as U.S. direct 
expenses instead of movement expenses; and double-counting one home 
market rebate.
    Respondents agree with petitioners' identified clerical errors. 
Petitioners did not comment on respondents' identified clerical errors.
    Department's Position: We acknowledge the clerical errors which 
both parties have identified, and have corrected them for our final 
results of review.

MRM

    Comment 25: MRM contends that the Department's preliminary results 
contained a ministerial error affecting its treatment of VAT as it 
relates to U.S. sales. MRM asserts that the Department should multiply 
U.S. Price by 1.07 to account for the seven percent VAT tax which 
should be added to U.S. price.
    Petitioner agrees with MRM but argue that a similar error was made 
affecting FMV.
    Department's Position: The Department disagrees with both 
petitioners and respondents. In response to Federal Mogul v. United 
States, we have changed our VAT methodology in a manner not addressed 
by either party. See the VAT tax methodology section, above.
    Comment 26: Petitioners contend that MRM has not substantiated its 
reported rebate expense by failing to demonstrate that the rebates were 
contemplated at the time of sale, and that (with one exception) MRM did 
not have any written rebate agreements with any of its customers. In 
support for their position, petitioners cite Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof From France, et 
al.; Final Results of Antidumping Duty Administrative Reviews, 60 FR 
10900, 10930 (February 28, 1995). In addition, Petitioners allege that 
there is no documentary evidence of MRM's reported ``rebate program.'' 
Given the average value of these ``rebates'', Petitioners argue that 
the Department should not grant any adjustment to MRM's FMV (with the 
exception of the one customer who had a written agreement with MRM).
    MRM contends that it has satisfied the legal criteria for 
establishing that the Department should adjust FMV for rebates. MRM 
holds that it has established that the rebates are directly related to 
the sales under consideration by tying them directly to sales invoices 
and making reference to them on the invoice. In addition, MRM states 
that the Department conducted sales traces at verification that 
established that MRM paid the rebates and the documentation noted that 
the rebates were either customer or product specific in nature. MRM 
also argues that these rebates are fixed and determinable at the time 
of sale, and that it is a demonstrable business practice of MRM to 
offer these rebates.
    Department's Position: We agree with petitioners that MRM failed to 
demonstrate that the rebates were contemplated at the time of sale. At 
verification, we confirmed that in the normal course of business, MRM 
normally made verbal agreements over the telephone with its customers 
concerning rebates. Only one of MRM's customers had a written rebate 
agreement. At verification, we examined documentation for MRM's one 
customer that had a written rebate agreement. We found that the 
agreement stated MRM's rebate program for the upcoming year, the rebate 
amount and the minimum purchase necessary to qualify for the rebate.
    For the rebates where there were verbal agreements, we examined 
correspondence between MRM and its customers. These letters indicated 
the amount of sales on a monthly basis, the amount of the rebate earned 
and method of MRM's payment of the rebate to the customer. However, the 
correspondence from MRM to its customers fail to indicate what the 
customer knew at the time of the sale. In addition, MRM stated during 
verification that ``[i]n most cases there is no written agreement but 
there are verbal agreements between MRM and its customers. Negotiations 
and inquiries over MRM's rebate program are usually conducted over the 
telephone. MRM stated that it does not usually send a confirmation 
letter to its customers.'' See MRM Sales Verification Report (May 5, 
1995), at pg. 14. With regard to MRM's rebates, respondent has failed 
to provide adequate evidence proving prior customer awareness for the 
claimed rebate.
    As we stated in our position in Comment 13 concerning Dofasco's 
rebates, the Department allows post-sale price adjustments that reflect 
the respondent's ``normal business practice.'' The Department found 
that MRM's ``rebate'' program is part of the company's ``normal 
business practice.'' As the Department reviewed numerous documentation 
at verification that confirmed that MRM did pay the ``rebate'' amount 
claimed in the response, and as we tied the payments to the sale of 
subject merchandise, we will reclassify MRM's rebates to post-sale 
price adjustments and deduct them from FMV.
    Comment 27: Petitioners note that MRM was unable to report actual 
credit expense because it could not report actual date of payment, and 
instead estimated credit expense by multiplying its short-term interest 
rate by the terms of payment offered to the individual customer. 
Petitioners contend that MRM's credit expense cannot be based upon 
terms of payment alone, but must reflect actual credit experience in 
each market, since all customers do not always pay according to agreed 
terms of payment. In support of their position, petitioners cite 
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts 
Thereof From France, et al.; Final Results of Antidumping Duty 
Administrative Reviews, 60 FR 10900, 10915 (February 28, 1995); and 
Final Determination of Sales at Less Than Fair Value; Certain Tapered 
Roller Bearings from Italy, 49 FR 2278 (January 19, 1984). Petitioners 
contend that the Department should make no adjustment to FMV for credit 
expense and, for U.S. sales, apply as BIA the highest per unit credit 
expense reported by MRM for any sale.
    MRM argues that it reported estimated dates of payment based upon 
each customer's terms of payment because it does not maintain records 
of actual date of payment received for each invoice. MRM notes that 
Canadian GAAP does not require this information be maintained or 
collected by MRM. However, MRM did keep track of overdue accounts, and 
included those figures in its estimates.
    Department's Position: We disagree with petitioners that MRM's 
credit expenses should be denied. At verification, we found that MRM 
was unable to report the actual expense because in the normal course of 
business, MRM does not maintain

[[Page 13829]]
information on the date of payment in its computer system. We find that 
MRM's use of the average age of invoices for each month of the POR to 
be an acceptable methodology given the lack of company data concerning 
date of payment and the fact that the actual number of days outstanding 
on late payments were included in the estimate. At verification, we 
found that the credit information contained in the company's sales 
response tied to the company's internal records. We specifically 
examined customer-specific information about the number of days 
outstanding for credit while conducting our examination of MRM's sales 
traces at verification and found no discrepancies.
    We disagree with petitioners' interpretation of Roller Bearings 
from Italy because in that case, the Department rejected the credit 
expense because ``the seller received payment on various dates later 
than those required under the terms of sale but did not account for 
this (emphasis added).'' In contrast, MRM's methodology specifically 
took into account actual credit experience on overdue accounts. We also 
disagree with petitioners' reliance on Antifriction Bearings from 
France in which the Department stated that it would be inappropriate to 
make an adjustment based solely on agreed terms rather than actual 
terms. In this review, MRM was unable to report the actual expense due 
to its record keeping system but did account for the late payments. 
Therefore, for the purposes of the final results, we have allowed the 
claimed credit expense.
    Comment 28: Petitioners note that MRM has reported estimated 
freight expenses despite an ability to report actual freight expenses 
on an invoice-by-invoice basis. Therefore, Petitioners contend that the 
Department should reject MRM's freight information and as BIA use the 
lowest home market freight adjustment for all home market sales and the 
highest reported expense for constructed value and U.S. sales.
    MRM argues that in the ordinary course of business, it does not 
track actual freight costs to individual invoices. Instead, MRM 
includes an estimated freight cost in each invoice and when later 
available, records the actual freight payment in its account payable 
records. MRM argues that the Department verified the accuracy of these 
estimates by comparing the monthly variance between actual and 
estimated freight payments for shipments in both the U.S. and home 
markets. MRM states that it established the reasonableness of this 
approach at verification. MRM contends that the Department's 
preliminary decision to accept MRM's estimated freight expense is both 
reasonable and supported by substantial evidence on the record.
    Department's Position: We agree with respondent. We found that MRM 
does not track the actual freight payment on a invoice-by-invoice basis 
in the normal course of business. At verification, we examined 
documentation concerning MRM's estimated freight amounts and we 
successfully tied the estimated amounts to the response and proof of 
payment. In addition, we examined the variances between actual and 
estimated freight payments for both home market and U.S. sales and 
found that the variances were either nonexistent or de minimis and thus 
verified the accuracy of the method of estimation. Consequently, we 
determine that MRM's freight methodology is reasonable and will allow 
the adjustments for the final results.
    Comment 29: Petitioners argue that MRM improperly calculated its 
interest expense based upon information for 1993 and the first half of 
1994, instead of using only annual data. Petitioners contend that using 
partial year 1994 data is inappropriate and MRM should have used only 
1993 information.
    MRM argues that the Department verified the reported interest 
expense by tying it and the cost of goods sold to the audited financial 
statements of the Canam Manac group. Petitioner notes also that there 
is no compelling reason to base interest expense solely on annual 
figures.
    Department's Position: We agree with respondents. The Department 
tied MRM's interest expense at verification from the questionnaire 
response to the audited financial statements. We specifically examined 
the annual data from MRM's audited financial statements for 1993 and 
1994. Consequently, the Department examined and verified the full year 
data on interest expense for both 1993 and 1994 and the actual interest 
expenses during the POR. Accordingly, the Department will use MRM's 
interest expense as reported in its questionnaire response.
    Comment 30: Petitioners note that MRM reported its G&A expenses on 
a per/ton basis instead of expressing it as a ratio of cost of goods 
sold. Petitioners contend that the Department should recalculate the 
G&A expense as a percentage of cost of goods sold. In addition, 
petitioners assert that the Department should recalculate MRM's G&A 
expense as a ratio using 1993 annual data only (excluding the use of 
partial-year 1994 data).
    MRM states that it recalculated its G&A expense as a percentage of 
the cost of goods sold, in accordance with Departmental instructions, 
and submitted it the Department on May 5, 1995. Regarding Petitioner's 
argument that G&A expense should be based upon fiscal year figures only 
(citing Oil Country Tubular Goods from Argentina (60 FR 33539, 33549), 
MRM notes that the case actually states that ``the Department long-
standing [sic] practice is to calculate G&A expenses from the audited 
financial statement which most closely correspond to the POI.'' 
Therefore, MRM claims it is entirely appropriate to use the audited 
financial records corresponding directly to the POR.
    Department's Position: We agree with petitioners in part. We agree 
that the G&A expense should be calculated as a percentage of the cost 
of goods sold. However, petitioners are incorrect in their assertion 
that MRM's G&A expense is calculated on a per/ton basis. The Department 
required MRM to recalculate its G&A on a cost of goods sold basis (see 
Memorandum to the File, May 5, 1995, p.2).
    However, we disagree with petitioners that the Department should 
recalculate MRM's G&A expense as a ratio using 1993 annual data only 
(excluding the use of partial-year 1994 data). As we stated in Oil 
Country Tubular Goods, the Department's methodology for G&A expenses 
intends to smooth out fluctuations and capture a representative picture 
of respondent's G&A costs. MRM's G&A expenses are based on the cost of 
goods sold over the POR which include 1993 and the first seven months 
of 1994. At verification, we examined MRM's costs over the entire POR 
to ensure that respondent properly included all relevant costs in the 
calculation of its G&A expense. We tied the cost of goods sold to MRM's 
financial records and statements and determined that both the numerator 
and denominator in the G&A equation were correct and that the costs 
were not distortive.
    We agree with MRM's interpretation of Oil Country Tubular Goods 
from Argentina where the Department stated that its long-standing 
practice is to calculate G&A expenses from the audited financial 
statements which most closely correspond to the POI. The Department's 
position is also explained in Furfuryl Alcohol (see, Final 
Determination of Sales at Less Than Fair Value: Furfuryl Alcohol From 
Thailand, 60 FR 22557, 22560, May 8, 1995) where the Department 
determined that the G&A rate should be calculated from the annual 
audited financial statements. Since the Department confirmed the 
accuracy of MRM's G&A

[[Page 13830]]
expenses and tied the expenses to both its 1993 and 1994 audited 
financial statements, we will use MRM's G&A costs for the final 
results.

Stelco

    Comment 31: Stelco states that on August 11, 1995, it advised the 
Department of a significant error contained in the computer program 
used to calculate the antidumping margin calculation. Stelco maintains 
that the Department's computer error resulted in the exclusion of more 
than 60 percent of Stelco's U.S. sales from the antidumping margin 
calculation.
    Department's Position: We agree with respondent and have corrected 
our calculations for the final results of review.
    Comment 32: Petitioners state that the Department must apply BIA 
for Stelco's sales of prime corrosion-resistant merchandise with 
missing product characteristics. Petitioners state that the 
Department's methodology for matching prime sales with missing product 
characteristics violates three provisions of the antidumping statute. 
Petitioners contend that the statute requires the Department to 
determine FMV based on the price at which ``such or similar 
merchandise'' is sold in the home market. ``Such or similar 
merchandise,'' say petitioners, is defined by the statute as 
merchandise that is ``identical in physical characteristics'' or ``like 
that merchandise in component material or materials.'' Petitioners 
contend that these provisions compel the Department to match sales 
based on actual physical characteristics of the products and do not 
permit the Department to exclude sales with missing physical 
characteristics or to assume that missing characteristics are the same 
as reported for missing characteristics on matching sales.
    Petitioners continue that the antidumping statute requires the 
Department to make adjustments to FMV to take into account the 
differing costs that are present when matched products are similar but 
not identical.
    Petitioners conclude that the Department must use BIA if the 
respondent is unable to provide the adequate information, citing 
Antifriction Bearings (Other than Tapered Roller Bearings) and Parts 
Thereof from France et al., (57 FR 28360, 28379 June 24, 1992). By 
failing to report full product characteristics for a number of prime 
home market and U.S. sales, petitioners state that Stelco made it 
impossible to accurately perform the model match with respect to these 
sales or to determine accurate costs of these products. Petitioners 
assert that the Department is required to use BIA whenever a party or 
any other person refuses or is unable to produce information requested 
in a timely manner and in the form required, or otherwise significantly 
impedes an investigation. Petitioners recommend that to ensure that 
respondents are encouraged to provide complete information, the 
Department should apply to the relevant transactions the higher of 
second-tier BIA or the highest non-aberrant margin found on any Stelco 
sale. Petitioners indicate that this degree of BIA should be applied to 
all U.S. prime sales with missing product characteristics as well as to 
all U.S. sales whose best match could have been a home market sale with 
missing characteristics.
    Stelco contends that it did not fail to report any information 
available to it, nor did it misrepresent any information. Respondent 
indicates that Stelco informed the Department that there were a few 
sales for which it was not able to identify all of the product 
characteristics requested by the Department, and that a majority of 
these were sales of secondary merchandise and that the remainder were 
excess prime sales. Stelco explains these sales of seconds and excess 
prime had lost their ``mill order number'' and the company then lost 
track of the characteristics of the merchandise and does not know all 
of the manufacturing processes.
    Respondent maintains that petitioners overstate the significance of 
limited-characteristic sales. Respondent states that these sales equal 
.04 percent of total U.S. sales volume. Additionally, Stelco reasserts 
that given its inability to calculate exact costs for excess prime 
products, it applied its most reasonable surrogate: The average cost of 
production for all products having those same characteristics.
    Furthermore, respondent objects to petitioners' allegation that 
Stelco purposefully failed to report product characteristics to conceal 
high-priced home market sales to circumvent the antidumping law. Stelco 
states that its inability to provide complete characteristics 
represents an unintended consequence of the characteristics of the 
company's normal product invoicing system.
    Respondent states that petitioners' assertion that the Department's 
comparison of these sales violates three provisions of the antidumping 
statute is based on a fundamentally flawed concept of the law. 
Respondent maintains that there is nothing in the statute that defines 
``identical'' as meaning ``identical in every respect,'' that the 
interpretation of what is identical is up to the Department, and that 
the Department's comparison of limited-characteristic merchandise is 
the only reasonable policy in this case.
    Department's Position: We disagree with petitioners. The Department 
has the authority to determine what merchandise qualifies as such or 
similar for the purposes of the statute. United Engineering & Forging 
v. the United States, 779 F. Supp. 1375, 1380-82 (CIT1991); NTN Bearing 
Corp. v. United States, 747 F. Supp. 726, 735-36 (CIT 1990); Kerr-McGee 
Chem. Corp. v. United States, 741 F. Supp. 947, 951-52 (CIT 1990); 
Monsanto Co. v. the United States, 698 F. Supp. 275, 277-278 (CIT 
1988); Timken Co. v. United States (Timken I), 630 F. Supp. 1327, 1338 
(CIT 1986).
    Stelco's sales of excess prime represent a very small portion of 
its home market and United States sales and consist of one or more of 
the following types of merchandise: (1) Material downgraded from use in 
exposed portions of automobiles to use in unexposed portions; (2) 
merchandise resulting from production overruns; (3) leftover materials 
after customers cancel orders; and (4) merchandise with coil weights 
less than that required by the customer. The Department verified that 
Stelco customarily effects these sales by offering the customer a list 
of products it has ready for sale at specific prices, and the customer 
returns the offer either accepted, rejected or with a counteroffer. The 
sales process for this merchandise differs significantly from sales of 
other prime merchandise because under usual circumstances, the buyer 
and Stelco discuss quantity, quality and price before the merchandise 
is produced.
    The few prime sales Stelco made that did not have complete physical 
characteristics were orders for which the mill order number had been 
lost. The Department verified that Stelco designates prime sales 
lacking complete characteristics as excess prime sales before the 
product is sold. Stelco then finds customers for this merchandise. 
Although the material in question is prime, Stelco reported and the 
Department verified that it is sold at a reduced price, and in the vast 
majority of cases to distributors. While this merchandise is not 
defective, full and complete physical characteristics were not needed 
to make the sale to the customer. The end uses of such material are 
applications for which knowledge of certain of the product's 
characteristics was unimportant.
    The use of BIA is not appropriate in this case, because Department

[[Page 13831]]
methodology properly matches sales based on the information Stelco 
reported. The Department verified that because of the way that Stelco 
keeps its records Stelco could not report the full physical 
characteristics of the small number of sales in question. Petitioners' 
reference to AFB's from France is not precisely relevant, because in 
that case, the Department used the BIA cited by petitioners as total 
BIA for companies that either failed to respond to the Department's 
questionnaire or were unable to complete verification. In this case, 
Stelco cooperated with the Department and provided all the product 
matching physical characteristics that it could report. In addition, 
the Department could use the information that Stelco provided for 
matching purposes. Consequently, the use of total BIA in this 
circumstance is unwarranted.
    The Department's model match methodology uses a series of matching 
product characteristics to find such or similar matches. Using these 
product characteristics, the Department can reasonably find an 
``identical'' match although the merchandise may not be identical in 
every physical characteristic. We note that the Department used the 
same matching methodology in the LTFV investigation. (See Memorandum 
from Roland MacDonald to Joseph Spetrini, A-100-003, April 19, 1995).
    Therefore, because Stelco sold this merchandise in both markets, 
because the missing physical characteristics were not important to 
Stelco's customers and because we verified that respondent reported all 
physical characteristics it could, the Department matched this 
merchandise based on the limited physical characteristics reported. 
Since these were the only physical characteristics relevant to the way 
the product was sold, we conclude that we may make appropriate matches 
on the basis of only these physical characteristics in this limited 
circumstance.
    Comment 33: Petitioners contend that Stelco incorrectly reported 
gross unit prices for corrosion resistant and cut-to-length plate sales 
in both markets and that they should be rejected. Petitioners state 
that Stelco directly adjusted its reported gross unit prices for 
various clerical billing errors or other price adjustments. These 
adjustments were not made on a transaction-specific basis but were 
allocated over all invoices referenced on a particular credit or debit 
memo. Furthermore, say petitioners, Stelco's reporting made it 
unfeasible to decide what adjustments were made to particular sales, 
because allocated debits and credits were applied directly to gross 
unit price and not in a separate computer field, as required by the 
Department. Petitioners maintain that because it is not possible to 
determine the actual prices for sales to which price adjustments were 
assigned, the Department must reject Stelco's information with respect 
to these sales.
    Petitioners argue that it is the Department's practice to require 
respondents to attribute price adjustments to the precise transactions 
that lead to the adjustments on a transaction-specific basis, citing 
Antifriction Bearings (Other than Tapered Roller Bearings) and Parts 
Thereof from France et al., Final Results of Antidumping Administrative 
Review, (58 FR 39729, 39759 July 26, 1993) (AFBs from France (1993)). 
Despite the fact that the Department rejected Stelco's reporting of 
allocated price adjustments in the original investigation, and although 
both the CIT and a U.S.--Canada Binational Panel have specifically 
upheld the Department's policy with respect to price adjustments, 
Stelco reported allocated price adjustments in this review, declare 
petitioners.
    Petitioners maintain that in the case in which a respondent 
improperly allocates adjustments, the Department's normal practice is 
to treat the adjustments as indirect selling expenses in the home 
market, and to use the highest reported price adjustment as BIA in the 
U.S. market. Petitioners conclude that Stelco's improper reporting of 
its price adjustments merits this application of partial BIA, because 
it did not list these in the manner required by the Department. When a 
respondent fails to provide usable information for certain sales, the 
Department's practice is to use second-tier BIA for the misreported 
U.S. sales, as well as the U.S. sales whose matching FMV is affected by 
misreported home market sales, maintain petitioners.
    Respondent states that as verified by the Department through each 
selected sale, Stelco's credit and debit notes reference the specific 
invoice or invoices to which the credit or debit applies. Respondent 
continues that in the original investigation, adjustments for clerical 
errors were made on a customer and product-specific basis only. 
Respondent indicates that this means that in the investigation they 
allocated the total of all credit and debit notes issued to a customer 
on subject merchandise over all sales of subject merchandise to that 
customer: there was no tying of the adjustments to the individual 
invoices that they referenced in the adjustments. However, respondent 
states that for this review Stelco matched each credit and debit note 
to the specific invoice or invoices to which the note applies. 
Therefore, concludes respondent, the adjustments are no longer customer 
and product-specific, but are transaction-specific.
    Respondent additionally argues that Stelco correctly reported 
adjustments for clerical errors in billing. Respondent states that 
Stelco did not report these errors in a separate computer field for 
``rebates'' or ``discounts,'' because they do not meet that definition. 
Respondent concludes that at verification, the Department reviewed 
numerous transactions involving adjustments for clerical errors and 
noted in the verification report that ``all values had been entered 
correctly and that all adjustments had been calculated properly.''
    Department's Position: We agree with respondent. The verification 
report states that the Department examined documentation concerning 
Stelco's adjustments to price and we determined that Stelco properly 
allocated debit and credit notes on a transaction-specific basis. In 
AFB's from France, the Department made direct adjustments for reported 
home market discounts, rebates, and price adjustments if they were 
calculated on a transaction-specific basis and were not based on 
allocations. Petitioners' reliance on AFB's from France, as the basis 
for the Department to determine that Stelco incorrectly reported its 
gross unit sales prices is therefore unfounded because Stelco reported 
the majority of these expenses on a transaction-specific basis. 
However, on occasion, Stelco allocated debit and credit notes for a 
particular customer over more than one invoice. While the Department 
prefers that discounts, rebates and other price adjustments be reported 
on a transaction-specific basis, the Department has long recognized 
that some price adjustments are not granted on that basis, and thus 
cannot be reported on that basis.
    The Department does not agree that Stelco's methodology is 
sufficient to warrant application of BIA under the policy as discussed 
in AFBs from France (1993) 58 FR at 39759. In that case, the Department 
contrasted preferred, transaction-specific reporting with customer- or 
product-specific reporting. In this case, the amount of ``allocation'' 
is limited to a few specific transactions, all to the same customer, 
and typically within a very limited period of time. Thus the danger of 
allocation, which is the averaging effect on prices, is extremely 
limited in this case. This case is similar to situations,

[[Page 13832]]
permitted by the Department as direct adjustments, in which a rebate is 
granted on a limited number of purchases by a single customer. Because 
Stelco's method of reporting these adjustments is reasonable, the 
Department has allowed it as a direct adjustment.
    Comment 34: Petitioners assert that the Department should use BIA 
with respect to Stelco's reported cash discounts for corrosion-
resistant sales citing AFBs from France and Antifriction Bearings 
(Other than Tapered Roller Bearings) and Parts Thereof from France, et 
al., Final Results of Antidumping Administrative Review, (60 FR 10,929 
February 28, 1995). Petitioners state that the Department should treat 
these discounts as indirect selling expenses in the home market, and 
should use the highest reported discount as BIA in the U.S. market for 
all sales which incurred discounts because Stelco failed to report its 
early payment discounts on a transaction-specific basis.
    Respondent maintains that the Department`s decision to accept 
Stelco`s calculation of cash discounts is reasonable and is supported 
by evidence on the record. To calculate the adjustment for discounts, 
Stelco calculated total monthly sales and the total cash discount taken 
per month for each eligible customer. Stelco then calculated the actual 
percentage of cash discounts taken by each customer for each month. 
They then applied these percentages to the gross unit price. Stelco 
thus calculated the most precise early payment discount adjustment that 
it could from the information it had available from its computerized 
accounting system.
    Department`s Position: We agree with petitioners. Although Stelco`s 
submission of January 9, 1995 indicated that it granted the discounts 
on a transaction-specific basis, due to accounting restraints, Stelco 
could not report the actual discount amount, if any, granted on each 
transaction. Consequently, the Department has no basis to treat this 
discount as a direct selling expense. Consistent with our practice as 
outlined in AFBs from France, we are treating these discounts as 
indirect selling expenses in the home market and as direct selling 
expenses in the U.S. market as best information available.
    Comment 35: Petitioners maintain that the Department should not 
make a particular adjustment for certain U.S. sales of corrosion-
resistant carbon steel products.
    Respondent agrees that if petitioners` allegation is valid, that 
the Department should carefully examine its program to confirm that the 
claimed double-counting in fact occurs under the Department`s program.
    Department`s Position: We agree with petitioner and respondent that 
the adjustment results in double-counting and therefore the Department 
will not make this adjustment for the final results. Further 
explanation of this adjustment would reveal business proprietary 
information. (See Analysis Memorandum).
    Comment 36: Petitioners argue that the Department must deduct 
antidumping duties paid by the respondent or related parties paid on 
imports. Section 1677a(d) (1994) states that the purchase price and 
exporter`s sales price shall be reduced by United States import duties. 
Petitioners continue that antidumping duties are ``incident to bringing 
the subject merchandise from the place of shipment in the country of 
exportation to the place of delivery in the United States'' and are 
therefore properly classified as import duties. Furthermore, 
petitioners claim that ``duties'' or ``import duties'' in trade laws 
are to be read as antidumping or countervailing duties unless the 
provision specifically suggests otherwise.
    Respondent maintains that the Department has consistently refused 
to deduct antidumping duties from U.S. price and that it should 
continue to do so. Respondent asserts that petitioners argue that 19 
U.S.C. 1677a(d) requires the Department to deduct antidumping duties 
from United States price. Respondent cites Antifriction Bearings (Other 
Than Tapered Roller Bearings) and Parts Thereof from France, et al. 60 
FR 10900 (1995) and Antifriction Bearings (Other than Tapered Roller 
Bearings) and Parts Thereof from France, et al. 58 FR 39726 (1993) 
stating that to make an additional deduction from ESP for the same 
antidumping duties that correct this price discrimination results in 
double counting, and that the amount of antidumping duties assessed on 
imports of subject merchandise constitutes a selling expense, and 
therefore, should be deducted from ESP.
    Respondent continues that as recently as a month ago, the 
Department rejected almost identical arguments in Certain Hot-Rolled 
Lead and Bismuth Carbon Steel Plate from the United Kingdom 60 FR 44009 
(1995). In that case, the Department rejected petitioners` arguments 
and refused to make an adjustment for antidumping duties in its 
calculation. Respondent concludes, therefore, that the Department 
should reject petitioners` arguments in this case and continue to 
deduct antidumping duties from USP.
    Department's Position: We disagree with petitioners. For a more 
detailed explanation, please see Comment 23.
    Comment 37: Petitioners contend that Stelco U.S.A.'s slitting 
expenses must be treated as further manufacturing costs for purposes of 
calculating ESP. According to petitioners, respondent reported slitting 
expenses in the fields OTHEXP1U and OTHEXP2U but did not report these 
expenses in the fields for further manufacturing costs, nor were they 
treated as further manufacturing costs by the Department in its 
preliminary results. Instead, argue petitioners, the Department 
directly deducted these costs as selling expenses in calculating ESP. 
Petitioners state that Stelco U.S.A.'s slitting constitutes increased 
value resulting from a process of manufacture performed after 
importation. Therefore, petitioners assert that the Department must 
treat these expenses as further manufacturing costs for purposes of the 
final results.
    Respondent maintains that the Department's questionnaire instructs 
respondents to consider slitting expenses as selling expenses and that 
Stelco was required to treat these expenses as such for the sales 
listing, and not as a manufacturing cost. Additionally, continues 
respondent, the Department decided that Stelco's slitting expenses did 
not change an ESP sale into a further manufacturing (FMG) sale, but 
used the slitting expenses as an additional expense to ESP sales.
    Department's Position: We agree with petitioners. Stelco U.S.A. 
arranges for slitting services to be performed by unrelated parties 
prior to shipment or sale to its customers. Section 772 (e)(3) requires 
that adjustments to U.S. price be made for ``any increased value, 
including additional material and labor, resulting from a process of 
manufacture or assembly performed on the imported merchandise after 
importation of the merchandise and before its sale to a person who is 
not the exporter of the merchandise.'' The Department does not agree 
with Stelco's argument that the fact that further manufacturing 
expenses are requested in the sales section of the questionnaire gives 
any indication that such expenses will be treated as selling expenses. 
Accordingly, the Department is treating this slitting expense as 
further manufacturing for purposes of the final determination.
    Comment 38: Petitioners assert that respondent reported mistaken 
amounts in the field for variable manufacturing costs. Instead of 
reporting the correct variable costs amounts from the cost database, 
Stelco used the total cost of

[[Page 13833]]
manufacture for each control number in the sales listing, state 
petitioners. Petitioners maintain that the Department must correct this 
error for the final results.
    Department's Position: We agree with petitioners and have corrected 
this error.
    Comment 39: Petitioners state that the Department made several 
errors in its margin calculation programs that should be corrected for 
the final results. Petitioners list the following as the mistakes in 
the program for corrosion-resistant products: (A) The Department set 
various U.S. adjustments to ``0''; (B) the Department placed price 
adjustments in the field for U.S. direct expenses, and should have 
included them with other discounts and rebates to be deducted from U.S. 
price; (C) the Department's program treats credit expenses as indirect 
selling expenses in calculating ESP; (D) the program fails to convert 
the fields RCOM, RGNA, and RINTEX into U.S. dollars in calculating the 
foreign manufacturing costs of imported goods; and (E) the program 
fails to include technical services in the calculation of purchase 
price for U.S. sales. Additionally, the program also leaves out the 
variables for inventory carrying costs and market warehousing expenses 
in calculating indirect expenses for purchase price sales, contend 
petitioners. With respect to the program for plate, petitioners state 
that the Department's program incorrectly treats inventory carrying 
costs in the home market as a direct expense.
    Respondent did not comment on A, and agrees with petitioners on 
comments B, C, and D and provided additional coding to rectify price 
adjustments in the field for U.S. direct expenses in the corrosion-
resistant margin calculation program. With respect to comment E, 
respondent states that technical services should be treated as direct 
expenses and therefore should receive the same treatment in all 
calculations of net prices involving both corrosion-resistant and cut 
to length carbon steel plate. Regarding petitioners' comment on the 
treatment of inventory carrying costs, warehousing, and U.S. indirect 
expenses, Stelco alleges that contrary to petitioners' request, 
indirect selling expenses are not deducted from purchase price sales, 
and that the Department should not deduct such expenses from these 
sales. Respondent also agrees with petitioners' comments regarding 
plate and provided coding to correct the claimed inaccuracies.
    Department's Position: We agree with petitioners on comment A. We 
agree with petitioners and respondents on comments B, C, D and E. We 
also agree with respondents that inventory carrying costs, warehousing 
and U.S. indirect expenses are not deducted from purchase price sales. 
We agree with petitioners and respondents regarding the alleged 
inaccuracies regarding the margin calculation for plate. (See Analysis 
Memorandum).

Final Results of Reviews

    As a result of our reviews, we have determined that the following 
margins exist:

------------------------------------------------------------------------
                                                                Margin  
         Manufacturer/exporter               Time period      (percent) 
------------------------------------------------------------------------
       Corrosion-Resistant Steel                                        
                                                                        
Dofasco, Inc...........................      2/4/93-7/31/94         1.65
Continuous Colour Coat.................      2/4/93-7/31/94         1.96
Stelco, Inc............................      2/4/93-7/31/94         0.19
                                                                        
          Cut-to-Length Plate                                           
                                                                        
Algoma Steel Inc.......................      2/4/93-7/31/94         1.82
Manitoba Rolling Mills.................      2/4/93-7/31/94         0.02
Stelco, Inc............................      2/4/93-7/31/94         0.92
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between United States price and foreign market value may 
vary from the percentages stated above. The Department will issue 
appraisement instructions directly to the Customs Service. Stelco's 
rate for corrosion-resistant and Manitoba Rolling Mill's rate for plate 
are de minimis.
    Furthermore, the following deposit requirements will be effective, 
upon publication of this notice of final results of review for all 
shipments of certain corrosion-resistant carbon steel flat products and 
certain cut-to-length carbon steel plate from Canada entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date, as provided for by section 751(a)(1) of the Act: (1) The cash 
deposit rates for the reviewed companies will be the rates for those 
firms as stated above (except that if the rate for a particular product 
is de minimis i.e., less than 0.5 percent, a cash deposit rate of zero 
will be required for that company); (2) for previously investigated 
companies not listed above, the cash deposit rate will continue to be 
the company-specific rate published for the most recent period; (3) if 
the exporter is not a firm covered in this review, or the original 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will continue to be 18.71 percent for 
corrosion-resistant steel and 61.88 percent for cut-to-length plate, 
the all others rate established in the LTFV investigations. See Amended 
Final Determination, 60 FR 49582 (September 26, 1995).
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with section 353.34(d) of the Department's 
regulations. Timely notification of return/destruction of APO materials 
or conversion to judicial protective order is hereby requested. Failure 
to comply with the regulations and the terms of an APO is a 
sanctionable violation.

[[Page 13834]]

    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: March 20, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-7462 Filed 3-27-96; 8:45 am]
BILLING CODE 3510-DS-P