[Federal Register Volume 61, Number 69 (Tuesday, April 9, 1996)]
[Notices]
[Pages 15772-15782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8681]



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DEPARTMENT OF COMMERCE
[A-401-805]


Certain Cut-to-Length Carbon Steel Plate From Sweden; Final 
Results of Antidumping Duty Administrative Review

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

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

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SUMMARY: On September 19, 1995, the Department of Commerce (the 
Department) published the preliminary results of the administrative 
review of the antidumping duty order on certain cut-to-length carbon 
steel plate from Sweden. This review covers one manufacturer/exporter 
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 review.

EFFECTIVE DATE: April 9, 1996.

FOR FURTHER INFORMATION CONTACT: Elizabeth Patience 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 September 19, 1995, the Department published in the Federal 
Register (60 FR 48502) the preliminary results of the administrative 
review of the antidumping duty order on certain cut-to-length carbon 
steel plate from Sweden (58 FR 44168 August 19, 1993). The Department 
has now completed this administrative review 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 this administrative review constitute one 
``class or kind'' of merchandise: certain cut-to-length plate. These 
products include 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.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments and rebuttal comments from 
SSAB Svenskt Stal AB (SSAB), exporter of the subject merchandise, 
(respondent), 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 and 
respondent, the Department held a hearing on November 1, 1995.
    Comment 1: Respondent contends that the Department has verified 
information on the record to enable the Department to make HM freight 
adjustments for one SSAB subsidiary, SSAB Oxelosund (SSOX). Respondent 
reported its freight expenses based on a standard to actual ratio. 
Respondent claims that the Department verified actual freight costs 
incurred by SSOX but could not verify SSOX's standard freight costs. 
Respondent argues that if the Department refuses to accept the SSOX 
standard freight adjustment, the Department should take actual SSOX 
verified HM freight expenses and calculate a HM freight adjustment by 
dividing the actual aggregate SSOX freight expenses by total tons sold 
during the POR to obtain an actual, per metric ton freight adjustment 
for SSOX HM sales.
    Respondent contends that the Department should not disallow the 
freight adjustment entirely for SSOX home market (HM) sales. Instead, 
respondent asserts, the Department should assign values for this 
adjustment based on verified SSOX actual freight costs. Respondent 
claims that because SSAB incurred freight costs in Sweden, using a zero 
adjustment in the home market and the full adjustment in the U.S. 
market heavily penalizes SSAB. Respondent also claims that applying a 
zero freight adjustment in the home market and a full freight 
adjustment in the U.S. market is contrary to law because doing so 
prevents apples-to-apples price matches between the two markets.
    Respondent argues that the Department should not apply punitive 
best information available (BIA) rates for

[[Page 15773]]
freight adjustments to SSAB. Respondent contends that the Department 
should recognize SSAB's cooperation in this review when selecting BIA. 
Respondent claims that the BIA selected in this review must, as a 
matter of law, lead to the calculation of fair and accurate margins.
    Petitioners cite to Antifriction Bearings (Other than Tapered 
Roller Bearings) and Parts Thereof from France, 57 Fed. Reg. 28360, 
28380 (June 24, 1992) (``AFBs 1992'') to argue that SSAB bore the 
burden of demonstrating that it was entitled to any adjustments. 
Petitioners contend that the Department's consistent practice is to 
disallow a favorable HM expense or adjustment when the respondent fails 
to meet this burden, as they contend SSAB failed here. Petitioners 
maintain that it is the Department's practice to disallow an unverified 
expense in the home market while using BIA for the corresponding U.S. 
expense. Petitioners argue that the purpose of the BIA provision is not 
to lead to calculation of fair and accurate margins, but to enable the 
Department to complete its calculation within the statutory deadlines 
and to encourage full and accurate reporting by respondents. 
Petitioners assert that respondent's suggestion to use SSAB's actual 
freight expenses should be rejected as these averages of the actual 
costs would bear no correlation to the actual, transaction-specific 
costs requested by the Department.
    Department's Position: We agree with respondent in part and have 
made a BIA adjustment for HM freight. While SSAB could not support its 
reported freight adjustment, the Department was presented with evidence 
that SSAB had incurred freight expenses in the home market. At 
verification, we tied actual freight expenses to the actual expense 
SSAB used in its actual-to-standard freight ratio to calculate the 
reported freight expense. See Verification Report at 17 and 26. 
However, the company was unable to support the standard portion of the 
ratio. Therefore, we were unable to use the reported freight expense. 
Instead, we have used the average actual SSOX freight charge, per 
metric ton by rail and by truck, in our final results as best 
information available.
    Petitioners' citation to AFBs 1992 supports our position that an 
adjustment should be made if respondent can show that it did incur the 
expense in question. SSAB did this, even though their reported 
adjustment was not adequately supported. Thus petitioners' references 
to Timken Company v. United States, 673 F. Supp. 495, 513 (CIT 1987), 
LMI-LA Metalli Industriale, S.p.A. v. United States, 712 F. Supp. 959, 
965 (CIT 1989) and Zenith Electronics Corp. v. United States, 755 F. 
Supp. 397, 415 (CIT 1990) are irrelevant because they refer to the use 
of BIA when respondent did not make this basic showing. As BIA, we 
chose to use the average actual freight charge. While this is adverse 
to respondent, it represents a reasonable alternative in the absence of 
supporting information from respondent. See Rhone Poulenc Inc. v. 
United States, 899 F. 2d 1185, 1191 (Fed. Cir. 1990), Olympic Adhesives 
v. United States, 899 F. 2d 1565, 1572 (Fed. Cir. 1990) and Tianjin 
Machinery Import and Export Corporation v. United States, 806 F. Supp. 
1008, 1016 (Ct. Int'l Trade 1992).
    Comment 2: Respondent argues that the Department should apply a 
packing adjustment to SSOX sales in both the U.S. market and the home 
market based on verified packing costs for another SSAB subsidiary, 
SSAB Tunnplat (SSTP). Respondent contends that a zero HM packing 
adjustment is contrary to law as U.S.-HM price comparisons are not 
being made based on an apples-to-apples comparison, citing to Lasko 
Metal Products, Inc. v. United States, 43 F.3d 1442 (Fed. Cir. 1994) 
(``Lasko Metal'') and Koyo Seiko Co., Ltd. v. United States, 746 F. 
Supp. 1108, 1110 (CIT 1990) (``Koyo Seiko''). Respondent contends that 
the failure to apply a BIA packing charge to both markets would also be 
inconsistent with the Department's obligations to obtain fair and 
accurate results in the calculation of antidumping duty margins, citing 
Oscillating Fans and Ceiling Fans From the People's Republic of China, 
56 Fed. Reg. 55271, 55276 (October 25, 1991) (``Oscillating Fans'') and 
Certain Cased Pencils From the People's Republic of China, 59 FR 55625, 
55634 (November 8, 1994) (``Cased Pencils''). Respondent contends that 
the Department should not equate SSOX's inability to produce complete 
packing data through a packing department with a failure of SSOX to 
substantiate its packing costs. Respondents offer as appropriate BIA 
the average cost per metric ton incurred by SSTP for home market and 
export packing that is most comparable to the type of packing engaged 
in by SSOX for HM and U.S. sales. Respondent argues that the Department 
should not use the highest verified SSTP packing charge as the SSOX 
U.S. packing adjustment and a zero BIA rate for SSOX sales in Sweden. 
Respondent considers the Department's preliminary methodology 
``punitive'' and cites AFBs 1992 and Rhone Poulenc to argue against use 
of ``punitive'' BIA. Respondent asserts that the Department should use 
the verified average SSTP packing costs for SSOX sales in both markets 
that are most similar to the type of packing done by SSOX.
    Petitioners contend that the Department should select the highest 
verified HM SSTP packing cost as BIA for U.S. packing.
    Department's Position: We disagree with respondent and have used 
the highest reported U.S. packing expense as BIA. Only SSOX calculated 
the packing expense on U.S. sales because only SSOX had sales of 
subject merchandise to the United States. However, SSOX could not 
support its reported U.S. packing expenses at verification. Therefore, 
we disallowed the U.S. packing expenses as reported but instead used 
SSOX's highest reported U.S. packing expense as BIA.
    Respondent's cites to AFBs 1992 and the tier system outlined in 
that case are offered as an argument against the Department's use of 
``punitive'' BIA. The tier system in AFBs 1992 refers to the 
Department's use of total BIA. In fact, our treatment of packing in 
this case is supported by the definition of partial BIA in AFBs 1992, 
(``Where any adjustments . . . were missing from the sales listings, we 
have denied claims for the adjustments . . . because the respondent has 
failed to satisfy its burden of proof to be entitled to the adjustment. 
We have assigned a value of zero to the claimed adjustments where such 
information is missing . . . If other U.S. adjustment information were 
missing, we used other transactional information in the response to 
estimate these expenses'').
    SSOX did not support its reported HM packing expenses at 
verification. SSTP was able to support its reported HM packing 
expenses. Therefore, we disallowed SSOX's packing expenses for HM sales 
but allowed SSTP's packing expenses as reported.
    Rhone Poulenc, a case cited by Respondent, articulates the key 
justification for using adverse assumptions in our BIA determinations. 
In Rhone Poulenc, the Court recognized that ``[i]n order for the 
agency's application of the best information rule to be properly 
characterized as `punitive,' the agency would have had to reject low 
margin information in favor of high margin information that was 
demonstrably less probative of current conditions. . . The agency's 
approach fairly places the burden of production on the importer, which 
has in its possession the information capable of rebutting the agency's 
inference.'' SSOX failed to provide

[[Page 15774]]
evidence that it was entitled to a packing adjustment. As BIA, we 
allowed no adjustment for home market packing and applied the highest 
reported U.S. packing expense to all U.S. sales. While this information 
is adverse to respondent, it represents a reasonable alternative in the 
absence of supporting information from respondent. See Analysis 
Memorandum.
    Respondent's reference to Oscillating Fans is not relevant here 
because it is a non-market economy case where the Department did not 
have the relevant information regarding selling expenses in the 
surrogate country. Respondent's cite to Cased Pencils is not relevant 
here because it refers to the use of petition data instead of reported 
actual expenses.
    Comment 3: Respondent argues that the Department should not adjust 
all ``via'' sales prices upward. ``Via'' sales are SSAB sales in which 
Tibnor AB (TAB), a related distributor, functions as a sales agent. 
Respondent contends that the Department should adjust the prices of 
only the ``via'' sales determined at verification to have higher 
commission rates than those originally reported to the Department. 
Respondent maintains that not all ``via'' sales incurred the same 
percent commission increase and that the two ``via'' sales that did 
show above reported commissions were against company policy and were 
aberrational.
    Assuming, arguendo, the Department determines it should make an 
upward adjustment to all ``via'' sales prices, respondent contends, 
citing Stainless Steel Bar From Spain, 59 FR 66931, 66935 (December 28, 
1995) (``Stainless Bar 1994''), that the adjustment should be based on 
the ratio established at verification on all sales traces. Respondent 
maintains the Department should apply a ratio based on the verified 
sales traces which reflects the number of sales which the Department 
might reasonably conclude have included a higher commission charge. In 
the alternative, respondent argues that the upward adjustment to all 
``via'' sales prices should be based on the average variances in the 
commission rates found at verification. Respondent contends that such 
an adjustment would recognize the fact that not all of TAB's 
commissions on ``via'' sales were greater than the percentage 
originally reported.
    Petitioners contend that the Department should use as BIA the 
highest reported sale price in each control number sold by TAB. 
Petitioners argue that the error rate of nearly 40 percent in the 
reported price on TAB ``via'' sales, combined with the fact that the 
extent of the misreporting on any given sale is unknown, should lead to 
the rejection of the entire TAB ``via'' database. Petitioners cite 
Bicycle Speedometers From Japan, 48 FR 42289, 42290 (August 9, 1993) 
(``Bicycle Speedometers'') and Gray Portland Cement and Clinker From 
Mexico, 55 FR 29244 (July 18, 1990) (``Mexico Cement 1990'') to argue 
that the Department should apply as BIA the highest price on any sale 
by TAB.
    Department's Position: We disagree with respondent and have applied 
an upward adjustment to all ``via'' sales consistent with our 
preliminary results of review. In all of its questionnaire responses, 
SSAB claimed that TAB's commission on ``via'' sales was a set 
percentage. See, e.g., October 6, 1994 Questionnaire Response at 
Exhibit Z, November 21, 1994 Questionnaire Response at 14, January 13, 
1995 Questionnaire Response at 38 and 39, and February 24, 1995 
Questionnaire Response at 17. At verification we found that TAB's 
commission was not always this percentage. See Sales Verification 
Report at 12 and 24. Since the calculation of the reported gross unit 
price on the ``via'' sales assumed a constant commission percentage, 
the discrepancy in the commission rate also indicated a discrepancy in 
the reported gross unit price. As BIA, we made an adjustment to the 
reported gross unit prices on ``via'' sales that is consistent with 
both the reported information and the information learned at 
verification. See Analysis Memorandum. While this is adverse to 
respondent, it represents a reasonable alternative in the absence of 
supporting information from respondent.
    We disagree with respondent's reliance on Stainless Bar 1994, in 
which the Department discovered a surcharge on one of six sales 
examined at verification and applied its adjustment to only one of 
every six reported sales. In that case, the Department chose its 
methodology because only one discrepancy was found. In the instant 
case, the Department's verfication indicated discrepancies in the 
manner gross unit price was reported by respondent. Additionally, in 
the instant case, discrepancies were found in a higher proportion of 
the sales reviewed than in Stainless Bar 1994.
    We disagree with petitioners' suggestion to apply as BIA for all 
``via'' sales the highest price on any sale by TAB. Petitioners have 
been unable to demonstrate that the Department has used their suggested 
BIA in comparable circumstances. Petitioners' cite to Bicycle 
Speedometers is not relevant here because in that case BIA was applied 
to missing sales which were rejected at verification as untimely. 
Petitioners' cite to Mexico Cement 1990 is not relevant here because in 
that case BIA was applied to unreported home market sales.
    Comment 4: Respondent argues that SSAB sales to TAB are at arm's 
length and must be used by the Department to calculate foreign market 
value (FMV). According to respondent, the record demonstrates that TAB 
pays the same price for subject merchandise, regardless of supplier, 
and prices the resale of plate without regard for supplier. Therefore, 
respondent asserts, it is impossible for SSAB and TAB to mask sales at 
less than fair value by artificially lowering the FMV. Respondent 
maintains that TAB is a company with significant operations and sales 
of a variety of steel and non-steel products throughout Sweden and 
therefore not a shell company. Respondent provided affidavits from SSAB 
and TAB company officials claiming that SSAB and TAB conduct their 
negotiations at arm's length, that SSAB attempts to obtain the highest 
prices possible for subject merchandise sold to TAB, and that TAB 
attempts to obtain the lowest possible price from SSAB for the subject 
merchandise. Additionally, respondent contends that the Department 
should consider the prices at which TAB purchases steel plate from SSAB 
compared to the prices at which TAB purchases steel plate from 
unrelated suppliers, citing Washington Red Raspberry Comm. v. United 
States, 657 F. Supp. 537 (CIT 1987) (``Washington Red Raspberry'').
    Respondent argues, citing NEC Home Electronics, Ltd. v. United 
States, 54 F. 3d 736 (Fed. Cir. 1995) (``NEC 1995''), that the 
Department's arm's-length test, as it applies to SSAB, is an abuse of 
the Department's discretion, is arbitrary and capricious and contrary 
to law. Respondent contends that given TAB's position in the home 
market, the burden imposed on SSAB under the Department's arm's-length 
test is ``almost inherently impossible to satisfy.'' Respondent 
maintains that there is no justification for the Department to resort 
to its statistical arm's-length test. Respondent also argues that the 
Department, by using the current arm's-length test, is not following 
its prior decisions, citing Citizen Watch Co. v. United States, 733 F. 
Supp. 383 (CIT 1990), Timken Co. v. United States, 673 F. Supp. 495 
(CIT 1987), Citrosuco Paulista, S.A. v. United States, 704 F. Supp. 
1075, 1088 (CIT 1988) and Carlisle Tire & Rubber Co. v. United States, 
634 F. Supp. 419 (CIT 1986).
    Petitioners argue that the Department's arm's-length test is lawful

[[Page 15775]]
and the Department should continue to exclude sales to TAB. Petitioners 
assert that price comparability is the single criterion for determining 
whether to use related party sales. Petitioners maintain that the 
Department's related party methodology is a reasonable means of 
effecting the intent of the statute and the regulation. Petitioners 
contend that by adjusting prices for all of the statutorily required 
adjustments, and by making comparisons between related and unrelated 
buyers at the same level of trade, the Department's test takes into 
account all identifiable factors that could result in differences in 
prices between related and unrelated buyers. Petitioners argue that the 
respondent's affidavits were subjective and cannot establish that the 
prices charged by SSAB to TAB were at arm's length. Petitioners assert 
that whether SSAB can manipulate TAB's resale prices is irrelevant to 
the determination required by the Department's regulations and that the 
only relevant inquiry concerns the comparable levels of prices on 
SSAB's sales to TAB and to persons not related to SSAB. Petitioners 
maintain that the Department's related party methodology represents a 
reasonable interpretation of the regulation. Petitioners argue that the 
Department's determination not to include SSAB's sales to TAB in the 
calculation of FMV was correct and should be adhered to in the final 
results.
    Department's Position: We agree with petitioners. The CIT held in 
Usinor Sacilor v. United States, 872 F. Supp. 1001, 1003-1004 (CIT 
1994) that ``[g]iven the lack of evidence showing any distortion of 
price comparability, the court finds the application of Commerce arm's-
length test reasonable.'' The arm's-length test compares the prices of 
related and unrelated party sales. All identifiable factors that could 
result in price differences are considered (e.g., level of trade, 
rebates, discounts, taxes, freight, insurance, credit, packing), 
ensuring that the resulting prices are comparable.
    We disagree with respondent's argument that the Department is not 
following its prior decisions by using this test. This test was 
established in the original investigation of the flat-rolled steel 
cases and has been applied in subsequent reviews and investigations 
since that time. See, e.g., Certain Flat-Rolled Carbon Steel Products 
from Canada, 58 FR 37099, 37117 (July 9, 1993), Certain Hot-Rolled 
Carbon Steel Flat Products from Japan, 58 FR 37154, 37158 (July 9, 
1993) (``Japan Flat-Rolled'') and Certain Corrosion-Resistant Carbon 
Steel Flat Products from Germany, 60 FR 65264 (December 19, 1995).
    Additionally, we disagree with respondent's argument that the test 
is too stringent. Because of the Department's inherent and well founded 
reluctance to rely on prices between related parties in its analysis, 
the Department's test must be stringent. See Japan Flat-Rolled. 
    Respondent's reference to NEC 1995 is not relevant here. In NEC 
1995, the CAFC determined that the standard for proving entitlement to 
a level-of-trade adjustment unreasonably precluded respondent from 
proving the adjustment. However, the arm's-length test uses SSAB's own 
data, not that of an unrelated party and/or a competitor, as was 
required in proving the level-of-trade adjustment in NEC 1995.
    By way of contrast to the 1987 case, Washington Red Raspberry, 
which SSAB cited to argue that we should compare SSAB's prices to TAB 
with other suppliers' prices to TAB, we refer to the 1989 case, 
affirmed by the CIT in 1994, Television Receivers, Monochrome and Color 
From Japan, 54 FR 35517, 35522 (August 28, 1989) (``Televisions 1989'') 
(affirmed in NEC Home Electronics v. United States, Slip Op. 94-70 (CIT 
1994)). In Televisions 1989, the Department stated ``prices charged by 
other manufacturers to unrelated distributors do not demonstrate that 
sales were at arm's length because products and production costs may 
differ from company to company.'' There are many variables that control 
a company's pricing behavior, including the size, location, cost 
structure, and financial condition of a firm as well as its specific 
strategy to favor its own related suppliers.
    Comment 5: Respondent argues that the Department should not 
disregard any SSAB HM sales on the grounds that the sales are below the 
cost of production (COP). Respondent asserts that the cost test used in 
the preliminary determination is based upon narrow ``model'' costs and 
prices in a way that is inconsistent with the application of the ``10-
90-10'' test the Department has historically used for disregarding 
below-cost sales. Respondent maintains that the Department should 
broaden the base for comparing costs and prices. Respondent points out 
that if there is only one sale of a particular control number in one 
month of the POR, and that sale is below-cost, the sale is 
automatically excluded because it was sold over an ``extended period of 
time,'' and, this sale was made ``in substantial quantities'' because 
it exceeded the Department's ten-percent threshold. Respondent suggests 
that the Department can correct this anomaly by reducing the number of 
product characteristics it uses to differentiate control numbers. 
Alternatively, respondent asserts that the Department can modify its 
``substantial quantities'' test to account for the fact that certain 
control numbers may have only a few transactions during the POR. 
Respondent also suggests that the Department could apply a threshold 
percentage, such as a minimum 20 percent of all sales, before 
disregarding any below cost sales. Respondent claims that the current 
methodology does not give a respondent notice or fair opportunity to 
take steps to ensure there are no sales below cost.
    Petitioners maintain that the Department is correct in conducting 
its analysis on a model-specific basis. Petitioners assert that the 
Department has wide discretion in defining models and that the 
Department has not abused this discretion. Petitioners argue that 
SSAB's argument regarding the ``over-detailed'' nature of the model 
definition is without merit and should be rejected.
    Department's Position: We disagree with respondent and applied our 
cost test in a manner consistent with Department practice, i.e., on a 
model-specific basis. See Department's Policy Bulletin 92/3. The 
Department has followed this practice consistently for over three 
years. The cost test is intended to avoid basing FMV on below-cost 
sales. Because FMV is determined on a model-specific basis, the 
Department applies the cost test on a model-specific basis, as well.
    Comment 6: Respondent argues that the Department should either 
disregard the value-added tax (VAT) or apply a tax-neutral VAT 
methodology to SSAB sales. Respondent maintains that its customers do 
not incur any additional costs for VAT as the VAT they ``pay'' is 
reimbursed to them by the government. Respondent requests that the 
Department disregard the VAT or adjust for the VAT by using the actual 
amount of the VAT, rather than the VAT rate, thereby applying a tax-
neutral methodology. Respondent contends that the current methodology 
artificially inflates the absolute dollar margins that would have to be 
paid by respondent, even though the percentage margin remains the same.
    Petitioners argue that the Department's preliminary results 
methodology remains a reasonable interpretation of the statutory 
language. Petitioners contend that the methodology conforms to the 
statute and it does not contravene legislature intent or place the 
domestic industry at a disadvantage.
    Department's Position: In light of the Federal Circuit's decision 
in Federal

[[Page 15776]]
Mogul v. United States, CAFC No. 94-1097 (1995), the Department has 
changed its treatment of HM 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 HM 
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 HM 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 U.S. price rather than subtracted 
from HM 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.
    Comment 7: Respondent argues that TAB resales of subject 
merchandise in Sweden require a level-of-trade adjustment if compared 
with SSOX sales in the United States. Respondent contends that if TAB 
resales are used in the final results, it must be recognized that a 
third level of trade exists for SSAB in Sweden, i.e., indirect sales 
out of inventory by TAB to small end-users. Respondent maintains that 
there are no sales by SSAB in the United States that are at the same 
level of trade as TAB's sales. Respondent contends that if the 
Department finds that TAB sales to small end-users must be used to 
match sales in the United States, the Department must apply a level-of-
trade adjustment to the TAB prices, citing Stainless Steel Bar From 
Spain, 59 FR 66931 (December 28, 1994) (``Stainless Bar 1994''). 
Respondent maintains that significant additional costs are incurred 
with respect to TAB sales to small end-users. Respondent argues that 
there are correlations between selling expenses and level of trade and 
between prices and level of trade as in Stainless Bar 1994.
    Respondent suggests that the Department should make the level-of-
trade adjustment based on the weighted-average price differential, in 
Sweden, between levels of trade. Alternatively, respondent suggests 
that the adjustment should be cost-based, reflecting the additional 
expenses incurred by TAB in handling, stocking and reselling the 
subject merchandise. Respondent maintains that SSAB provided supporting 
documentation regarding these additional costs that the Department 
verified.
    Petitioners contend that SSAB has not overcome the presumption that 
its end-user customers are at the same level of trade. Petitioners 
argue that evidence shows that SSAB also incurs the same types of 
expenses in selling merchandise to certain end-users as TAB does 
selling to its customers. Petitioners maintain that the Department has 
held that the number of sales is not a determinant of level of trade. 
Additionally, petitioners argue that differences in quantities sold are 
not a factor in distinguishing level of trade, but rather are addressed 
by statute through a quantity discount adjustment. Petitioners assert 
that SSAB also failed to show that any differences in the selling 
functions of SSAB and TAB at each claimed level of trade affected the 
prices charged or the expenses incurred. Petitioners argue that SSAB 
has provided insufficient information to rebut the presumption that its 
functionally indistinguishable end-user customers should be classified 
at a single level of trade. Petitioners maintain that SSAB has failed 
to demonstrate that there is little or no overlap between SSAB and TAB. 
Petitioners argue that because the end-user purchasers in this case are 
functionally equivalent and the functions performed by SSAB and TAB in 
selling to them are identical, the Department should continue to 
classify all end-users at the same level of trade for the final 
results.
    Additionally, petitioners argue that even if a level of trade 
distinction is incorrectly made, no adjustment is warranted. 
Petitioners maintain that to be granted a level-of-trade adjustment, 
SSAB must show that differences in the selling functions of SSAB and 
TAB at each level of trade affected the prices charged or the expenses 
incurred. Petitioners assert that SSAB also failed to meet its burden 
of quantifying the amount of its claimed level-of-trade adjustment.
    Department's Position: We agree with petitioners. Respondent has 
failed to support its contention that the Department should distinguish 
between ``small'' and ``large'' end-users. To grant a level-of-trade 
adjustment, there must be a significant correlation between prices and 
selling expenses on one hand, and levels of trade on the other. See 
``Matching at Levels of Trade,'' Import Administration Policy Bulletin 
92/1, Department of Commerce (July 29, 1992) (``Policy Bulletin 92/
1''). In addition, respondent failed to show that SSAB and TAB have 
different types of customers.
    Respondent cites to Stainless Bar 1994 to support its arguments. 
However, in that case, there was ``little or no overlap'' between the 
customers falling into each category of end-user. In the instant case, 
SSAB was unable to provide a consolidated customer list to show 
``little or no overlap'' between

[[Page 15777]]
SSAB and TAB customers. SSAB's and TAB's customer code lists include 
some of the same customers. See TAB's November 21, 1994 Questionnaire 
Response at Exhibit 1, SSAB's November 21, 1994 Questionnaire Response 
at Exhibit 17 and SSAB's January 13, 1995 Questionnaire Response at 
Exhibit 19.
    In addition, respondent's assertion that SSAB and TAB perform 
different functions with respect to end-user customers is not supported 
by information on the record. Respondent argues that TAB incurs 
additional expenses by maintaining inventory and marketing and 
distributing the merchandise. SSAB also incurs these expenses when 
selling to end-users. See SSAB's October 6, 1994 Questionnaire Response 
at 15-16. In Carbon and Alloy Steel Wire Rod From Canada, 59 FR 18791, 
18794 (April 20, 1994) the Department stated that comparisons are made 
at distinct, discernable levels of trade based on the function each 
level of trade performs, such as end-user, distributor and retailer. 
SSAB failed to prove that end-use is associated with functional 
differences.
    As the Department's standard for making a level-of-trade adjustment 
is based on price and selling expense differences, SSAB's argument 
regarding differences in average quantity and number of sales is 
irrelevant here. See Antifriction Bearings from France, et al, 60 FR 
10900, 10940 (February 28, 1995) (``AFBs 1995'') and ``Policy Bulletin 
92-1.'' In Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, From Japan and Tapered Roller Bearings, Four Inches or Less 
in Outside Diameter, and Components Thereof, From Japan, 58 FR 64720 
(December 9, 1993), the Department did not grant a respondent a level-
of-trade adjustment because ``although Koyo demonstrated that net 
prices vary between levels of trade, it did not provide evidence that 
this variation in price was the result of different costs incurred at 
different levels of trade.'' See also AFBs 1995 and Laclede Steel Co. 
v. United States, Slip Op. 94-160 (decided October 12, 1994). We 
repeatedly requested information supporting SSAB's claims for a 
distinction between the different levels of trade at verification which 
SSAB did not provide. See Sales Verification Report at 37.
    Because we did not make a level-of-trade distinction, we are not 
addressing respondent's and petitioners' arguments regarding the 
quantity of such an adjustment.
    Comment 8: Respondent argues that the Department should adjust FMV 
for SSAB sales that incurred a small-quantity surcharge. Respondent 
maintains that the quantity surcharge should be removed from the HM 
price to reflect the quantity differential between the sales in the 
U.S. and home market, thereby ensuring an apples-to-apples comparison. 
Respondent contends that there is no requirement that respondent apply 
a quantity surcharge to all qualifying sales. Respondent maintains that 
it reported each of the quantity surcharges on a transaction-by-
transaction basis, and the amount of the surcharge is reflected on each 
customer invoice.
    Petitioners argue that SSAB has not demonstrated that its sales 
satisfied the requirements for a quantity discount. Petitioners assert 
that a respondent must show that it consistently applied the discount 
or quantity surcharge. Petitioners maintain that SSAB has also failed 
to demonstrate that the quantity extras reflect production cost 
savings. Petitioners assert that in the final results, the Department 
should deny SSAB's requested adjustment.
    Department's Position: We agree with petitioners. Respondent was 
unable to demonstrate that it met either criteria required by 19 CFR 
353.55(b). We found at verification that the surcharge was not 
consistently applied, as required by 19 CFR 353.55(b)(1). See 
Verification Report at 11-12, 16, and 24-25. SSAB was also unable to 
provide documentation demonstrating that the different quantities are 
directly associated with cost differentials. See Hussey Copper, Ltd. v. 
United States, 834 F. Supp. 413, 428 (CIT 1993) and Brass Sheet and 
Strip From Germany, 60 FR 38542, 38544 (July 27, 1995). Therefore, we 
did not adjust FMV for SSAB sales for a quantity surcharge.
    Comment 9: Respondent argues that Plat Depan sales are outside the 
ordinary course of trade and must be disregarded by the Department, 
citing Gray Portland Cement and Clinker From Mexico, 60 FR 26865, 26868 
(May 19, 1995) (``Mexico Cement 1995''). Respondent maintains that the 
ordinary course of trade for SSAB in Sweden, including the ordinary 
course of trade for TAB, involves the sale of prime merchandise at 
premium prices. Respondent contends that Plat Depan was established 
primarily to sell non-prime plate or odd-size prime plates at low 
prices. Respondent asserts that the demand for merchandise sold by Plat 
Depan in Sweden is marginal when compared with mainstream sales by SSAB 
and TAB.
    Petitioners argue that the Department cannot analyze any of the 
factors normally considered because SSAB chose not to report Plat 
Depan's sales. Petitioners assert that because there is no evidence 
that these sales were made outside the ordinary course of trade, they 
must be considered sales made in the ordinary course of trade. 
Petitioners contend that the Department should consider respondent's 
failure to report these sales in determining whether to use total BIA.
    Department Position: We agree with petitioners in part and have 
treated Plat Depan prime sales as sales within the ordinary course of 
trade. Company officials indicated at verification that certain sales 
of prime merchandise were made through Plat Depan during the POR. 
Additionally, company officials did not provide requested information 
supporting their claim that these sales were outside the ordinary 
course of trade. See Verification Report at 29. Without additional 
information, which was not provided by respondent, we were unable to 
conclusively determine that SSAB sales through Plat Depan's were 
outside the ordinary course of trade. Moreover, Mexico Cement 1995 was 
a case in which the Department applied total BIA to a company which was 
unable to supply basic information about whether its sales were in the 
ordinary course of trade, not a case asking for the exclusion of 
particular sales. Hence, it is not pertinent to the issue raised in 
this comment.
    As in the preliminary results, we assumed that any unmatched U.S. 
sales would have matched to the unreported home market sales, including 
Plat Depan's sales of prime merchandise. As BIA, we applied SSAB's 
final margin determined in the LTFV investigation to any unmatched U.S. 
sales. See Comment 11 and Analysis Memorandum.
    Comment 10: Respondent argues that the Department's computer 
program executes the COP test after merging the SSOX and SSTP sales 
with the TAB sales. As a result, respondent contends that the pool of 
unrelated sales to which the price of a related-party sale is being 
compared includes not only the sales of SSOX and SSTP, but also the 
downstream sales by TAB. Respondent maintains that this is contrary to 
the logic of the statistical test, and not in keeping with the 
Department's practice. Respondent asserts that the Department should 
execute the arm's-length test in two steps to correct the error.
    Department's Position: We agree with respondent that an error was 
made in combining the SSAB and TAB databases and have corrected this 
error for these final results. See Analysis Memorandum.
    Comment 11: Petitioners argue that the pervasive defects in SSAB's 
HM

[[Page 15778]]
database require application of total BIA. Petitioners contend that the 
errors cannot be corrected using information on the record and that 
when viewed cumulatively, these errors render SSAB's data unusable and 
require the use of total BIA. Petitioners argue that SSAB failed to 
include a significant, but unknown, number of HM sales in its reported 
HM sales database. Petitioners assert that the Department did not 
consider the possible effect of the unreported sales on the FMV of the 
individual products. Petitioners contend that correct reporting might 
have led to changes in model matches and/or FMVs of the matched 
products. Petitioners maintain that the Department cannot be certain 
that the calculated FMVs represent SSAB's sales prices in the home 
market, or that any dumping margin it may calculate based on such 
prices is accurate.
    Petitioners argue that the Department could not verify twelve of 
the 24 HM sales examined at verification due to errors in gross unit 
prices, discounts, commissions, ``via'' sales, and credit 
documentation. Petitioners also assert that large portions of SSAB's 
other HM sales and cost data were unverifiable including unverified 
inland freight costs, unverified packing charges, misreported rebates 
and missing costs of production.
    For these reasons, petitioners argue that the Department must apply 
total BIA. Petitioners maintain that to do otherwise would conflict 
with the Department's practice in the past and current investigations, 
violate the Department's statutory mandate to use verified information 
and to obtain representative, undistorted results, and invite 
respondents to control the outcome of investigations by selectively 
providing the Department with information.
    Respondent argues that the sales and cost data submitted to the 
Department were, with few and minor exceptions, verified as reported by 
SSAB to the Department. Respondent contends that the record evidence 
does not support a decision by the Department to discard the database 
provided by SSAB and to resort to total BIA in this review. Respondent 
argues that while it did not report certain HM downstream sales, these 
sales were of minor importance and were not needed to find matches to 
SSAB sales in the United States. Respondent contends that the 
Department views downstream sales as expendable in situations where the 
volume of downstream sales is minor when compared with total HM sales 
and the ``main'' sales by a respondent can be expected to provide 
adequate comparisons to U.S. sales. Respondent asserts that it is clear 
that limited omissions from the downstream sales listing are of 
correspondingly limited importance in accurately calculating any 
antidumping margins that may exist. Respondent maintains that this is 
particularly true considering the Department's decisions in other steel 
reviews to completely excuse respondents from reporting any HM 
downstream sales.
    Respondent also contends that the fact that TAB dropped inactive 
customers from the database is evidence of the fact that these 
customers could not have accounted for any significant portion of total 
SSAB sales during the POR, or of total TAB sales, of subject 
merchandise. Respondent maintains that the fact that TAB did not 
manually search through its files to locate purged customer sales to 
determine if some sales included subject merchandise cannot support the 
use of total BIA in this review.
    Additionally, respondent argues that the fact that downstream sales 
by SSAB subsidiaries Plat Depan and Dickson were not reported does not 
justify the use of total BIA. Respondent argues that Plat Depan sales 
are limited to seconds and odd-size prime plate and are outside the 
ordinary course of trade. Respondent asserts that any Dickson resales 
were of non-subject merchandise. Furthermore, respondent argues that 
the volume of Plat Depan and Dickson sales is very small when compared 
with total downstream sales.
    Respondent asserts that all twenty-four HM sales traced by the 
Department were verifiable, allowing for minor deficiencies, none of 
which, either individually or in the aggregate, support petitioners' 
argument that SSAB reported sales should be disregarded and total BIA 
should be used by the Department. Respondent argues that all gross unit 
prices reported to the Department by SSAB were accurately and 
consistently reported, and supported at verification by, SSAB's records 
kept in the normal course of business. Respondent maintains that the 
record does not support petitioners' argument that SSAB's sales were 
unverifiable and cannot support the use of total BIA in this review. 
Respondent also maintains that its database does not contain pervasive 
errors.
    Department's Position: We disagree with petitioners' argument for 
application of total BIA. Section 776(c) of the Tariff Act requires the 
Department to use BIA ``whenever a party or any other person refuses or 
is unable to produce information requested in a timely manner or in the 
form required, or otherwise significantly impedes an investigation.'' 
Respondent generally cooperated with our requests for information and 
provided the information requested in a timely manner and in the form 
required. Therefore, application of total BIA was not warranted in this 
case. However, we applied partial BIA where respondent failed to 
satisfy its burden of proof to be entitled to an adjustment and where 
errors were found at verification. See e.g., Comments 1, 2, 3, 13, and 
20 and Analysis Memorandum. This BIA methodology is consistent with 
Department practice. See e.g., AFBs 1992.
    The bulk of petitioners' arguments refers to errors in the 
downstream database. The errors in the downstream database identified 
by petitioners have been corrected, where possible (e.g., missing COP 
information). See Analysis Memorandum. However, due to the flaws of the 
downstream reporting methodology, the Department rejected respondent's 
allocation methodology. See our preliminary results at 48503. In 
addition, some of the errors were not correctable (e.g., unreported 
sales through Plat Depan and TAB). Finally, the record indicates that 
for the overwhelming majority of U.S. sales, the unreported downstream 
sales would not have been potential matches. For these reasons, the 
Department has applied BIA to all U.S. sales for which there is no HM 
match. See Analysis Memorandum.
    Comment 12: Petitioners contend that there are export sales in the 
HM sales database. Additionally, petitioners assert that SSAB selected 
sales regardless of whether the sale was in a foreign currency and even 
if the billing address was abroad. Petitioners maintain that the 
standard for whether to include sales as HM sales is whether the 
respondent knew that the sales were to be exported at the time of the 
sale.
    Respondent argues that it did not include export sales in the HM 
database. Respondent contends that the two verified sales cited by 
petitioners as evidence that the HM sales database includes export 
sales are sales clearly delivered in the home market and do not support 
petitioners' position. Respondent argues that as with the fact that it 
invoiced certain sales in a currency other than the Swedish Kronor 
(SEK), the fact that certain HM sales may include an exporter's 
declaration does not establish that SSAB knew the sales were for 
consumption outside Sweden. Respondent argues that a review of the 
verified sales, the reasons for reporting HM sales in non-SEK currency 
and the fact that the

[[Page 15779]]
Department fully verified the completeness and destinations of the HM 
sales reported by SSOX and SSTP demonstrates that the HM sales database 
does not include export sales. Accordingly, respondent contends, the 
configuration of the HM sales database does not support the use of 
total BIA in this review.
    Department's Position: We agree with petitioners and have excluded 
SSAB's foreign currency sales for these final results. A review of the 
SSOX HM sales traces revealed that only the sales made in currencies 
other than SEK contained exporter declarations certifying country of 
origin. See Verification Exhibits OX-27 and OX-29. None of the SEK-
denominated sales had this declaration. See Verification Exhibits OX-
25, OX-26, OX-28, OX-30-OX-33. The fact that the declarations appeared 
only on the non-SEK sales verified by the Department, and not on any of 
the SEK sales verified by the Department supports the contention that 
SSAB knew or should have known that these sales were destined for 
locations outside of Sweden. However, our exclusion of these sales does 
not call into question the completeness of SSAB's reporting. We 
verified that SSAB coded these sales in its database as domestic sales 
because the domestic sales code was based on SSAB's shipping 
destination.
    Comment 13: Petitioners argue, citing AFBs 1995, that the 
Department should not treat SSAB's unverified HM 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 such a rebate is justified. Therefore, 
petitioners conclude that SSAB's claimed adjustments must be denied.
    Respondent argues that the Department properly deducted SSAB 
rebates from the HM price. Respondent contends that to the extent 
rebates are offered, the rebates are negotiated and the customer 
becomes aware of the rebates through these negotiations that occur 
before the sales. Respondent argues that the fact that no documents 
were available to establish that the customers were aware of the terms 
and conditions before the sales cannot be used as a basis for 
penalizing SSAB by totally disregarding HM rebates. Respondent 
maintains that to totally disregard the rebates would, in effect, 
create a zero BIA rate for rebates in the HM because certain documents 
requested at verification do not exist and that this would be contrary 
to law. Respondent asserts that the Department is fully justified in 
treating SSAB's HM rebates as post-sale price adjustments.
    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 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 1995. As SSAB 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. See Verification Exhibits OX-22 and TP-16. Additionally, the 
existence of the rebates since the beginning of the administrative 
review indicates that the use of these ``rebates'' reflects SSAB's 
normal business practice. Nevertheless, in AFBs 1995, 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.'' 
Information on the record of this review indicates that these 
adjustments were made and reported on a customer-specific, not 
transaction-specific, basis. See Verification Report at Exhibits OX-22 
and TP-16. Accordingly, the Department will treat them as indirect 
selling expenses.
    Finally, the Department disagrees with petitioners' assertion that 
reclassification undermines the Department's policy with respect to 
rebates. Rebates are typically 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. See AFBs 1995.
    Comment 14: Petitioners maintain that the Department erroneously 
calculated HM credit expense. Petitioners argue that because SSAB 
failed to give the Department appropriate interest rates and failed to 
provide any suitable alternative, the Department must disallow SSAB's 
reported HM credit expense, citing Light-Walled Welded Rectangular 
Carbon Steel Tubing From Taiwan, 54 FR 5532, 5536 (February 3, 1989) 
(``Steel Tubing''). Petitioners contend that if the Department does not 
disallow the credit expense and instead recalculates the expense using 
BIA, it must select an appropriately adverse BIA interest rate. 
Petitioners contend that a consolidated interest rate should be used. 
Petitioners suggest that the Department use as BIA the lowest HM rate 
reported by SSAB during each of the three years covered by the POR.
    Respondent argues that it fully cooperated with the Department and 
reported actual borrowing rates incurred for each SSAB company involved 
in the sale of subject merchandise during the POR. Respondent argues 
that the Department used SSAB's internal borrowing rate because it was 
lower than the prevailing market rate in Sweden. Respondent maintains 
that if the Department decides to modify the methodology used in the 
preliminary results, it should use the prevailing external Swedish 
borrowing rates to calculate SSAB's imputed credit expenses in the home 
market. Respondent also maintains that it could not report any other 
interest rate as no other interest rate existed, and therefore, the 
Department may not resort to adverse or punitive BIA interest rates.
    Department's Position: We disagree with petitioners' argument that 
we should deny SSAB's credit expense entirely. Petitioners' cite to 
Steel Tubing is not relevant here. In that case, the Department 
disallowed the reported credit expense because respondent was unable to 
determine and document which HM sales incurred credit expense, and we 
determined that the use of any average expense for all sales would be 
highly distortive. In the instant case, SSAB's subsidiaries were able 
to prove that SSAB was entitled to a credit adjustment. We also 
disagree that we should select the lowest reported interest rate, as 
requested by petitioners, because adverse BIA is not called for here. 
See U.H.F.C. Co. v. United States, 916 F. 2d 689, 701 (Fed. Cir. 1990). 
The only short-term borrowing data that existed in this review was 
short-term borrowing data based upon interest rates extended by SSAB-
Stockholm. See Verification Report at Exhibits OX-23, TP-14 and TABS-3.
    However, we agree with petitioners' argument that we should have 
used a consolidated interest rate in our recalculation of SSAB's credit 
expense, rather than separate rates for each subsidiary. One lending 
institution, SSAB-Stockholm, provided all funds to the subsidiaries. 
Therefore, a consolidated rate for the lending institution as a whole 
more accurately reflects SSAB's interest expense than the individual 
rates granted on specific loans to subsidiaries. As we stated in 
Ferrosilicon from Brazil, 59 FR 732, 736 (January 6, 1994), the cost of 
capital is

[[Page 15780]]
fungible, therefore, calculating interest expense based on consolidated 
statements is the most appropriate methodology. We have used the 
average reported interest rate during each of the three years as a 
reasonable surrogate for the consolidated interest rate in our 
recalculation of the credit expense.
    Comment 15: Petitioners argue that the Department should classify 
mill-edge plate from the SSOX plant as prime merchandise. Petitioners 
maintain that the Department has identified several factors that 
indicate whether a product is secondary or non-prime merchandise and 
SSOX's sales of mill-edge plate do not meet these criteria for non-
prime merchandise. Petitioners maintain that there were price 
differences between SSOX's mill-edge plate and otherwise identical 
prime trim-edge plate. Petitioners assert that there is no evidence 
that mill-edge plate is defective. Petitioners note that SSAB has 
complete records for all sales of SSOX mill-edge plate. Petitioners 
also note that SSOX mill-edge plate is a significant portion of the 
total quantity of subject merchandise from SSOX reported on the HM 
sales database.
    Respondent argues that SSOX mill-edge plate is second-choice 
merchandise and should not be reclassified as prime merchandise. 
Respondent contends that petitioners have miscalculated record data 
related to SSOX HM sales in their price and quantity arguments. 
Respondent asserts that SSOX mill-edge plate accounts for only a small 
portion of total SSOX sales. Respondent asserts that the record 
evidence demonstrates that SSOX mill-edge plate is defective and that 
SSOX does not have complete records on mill-edge plate.
    Department's Position: We agree with petitioners in part and have 
reclassified certain mill-edge plate sales as sales of prime 
merchandise. Mill-edge plate is plate with edges that have not been 
further processed after rolling in the mill, in contrast to trim-edge 
plate which is created by shearing or flame-cutting the edges of mill-
edge plate to produce a product with trimmed edges. Generally, 
identical prime (or identical non-prime merchandise) could have either 
a mill edge or a trim edge. In our preliminary results, we determined 
that all sales of SSOX mill-edge plate should be regarded as sales of 
secondary merchandise. We included in this decision all downstream 
sales of SSOX mill-edge plate. For these final results, only SSOX's 
direct sales of mill-edge plate to unrelated parties were considered 
non-prime merchandise.
    SSOX company officials explained how they determined which of the 
reported sales were prime and non-prime or secondary merchandise. See 
Verification Report at 6. SSOX does not keep records for rejected plate 
and keeps limited records for mill-edge plate. SSOX does no testing on 
mill-edge plate and does not give customers quality certifications for 
mill-edge plate. See Verification Report at 7. Additionally, SSOX does 
not maintain records on certain characteristics of mill-edge plate.
    On the other hand, TAB does not maintain inventory of non-prime 
merchandise for quality assurance reasons. See Verification Report at 
28. Instead, TAB established Plat Depan to inventory and sell its non-
prime merchandise. Because TAB cannot sell non-prime merchandise, we 
concluded that any sales of mill-edge plate through TAB must be sold as 
prime merchandise. For the final results, we have treated sales of SSOX 
mill-edge plate through TAB as prime plate in our calculations.
    Comment 16: Petitioners contend that U.S. credit expenses must be 
recalculated correctly using a HM interest rate. Petitioners argue that 
both the Department's practice and the holdings of reviewing courts 
confirm that the use of a U.S. interest rate to calculate credit is 
appropriate only where a party had U.S. borrowings from an unrelated 
party or has otherwise shown that it had access to funds at U.S. 
interest rates. See LMI-LA Metalli Industriale v. United States, 912 F. 
2d 455, 460 (Fed. Cir. 1990), Gray Portland Cement and Clinker from 
Japan, 60 FR 43761, 43767 (August 23, 1995) and Certain Carbon Steel 
Flat Products from France, 58 FR 37125, 37133 (July 9, 1993). Moreover, 
petitioners maintain that the Department should use an adverse BIA 
rate. Petitioners argue that SSAB failed to give the Department 
acceptable data, yet it was rewarded with a favorable BIA rate. 
Petitioners contend that if the Department does use a U.S. interest 
rate as BIA, the U.S. prime rate would be a more appropriate selection.
    Respondent contends that for purposes of calculating an imputed 
credit expense on U.S. sales, the Department correctly used the average 
commercial paper rate for the POR. Respondent maintains that SSAB 
companies had access to the lower U.S. interest rates through the 
related U.S. subsidiary, Swedish Steel, Inc. Respondent asserts that 
the Department should use the same credit adjustment to U.S. sales that 
was used in the preliminary results.
    Department's Position: When a respondent has no U.S. borrowings, it 
is no longer the Department's practice to substitute home market 
interest rates when calculating U.S. credit expense and U.S. inventory 
carrying costs. Rather, the Department will now match the interest rate 
used for credit expenses to the currency in which the sales are 
denominated. The Department will use the actual borrowing rates 
obtained by a respondent, either directly, or through related 
affiliates. Where there is no borrowing in a particular currency, the 
Department may use external information about the cost of borrowing in 
that currency. See Brass Sheet and Strip From Germany 60 FR at 38545,46 
(1995)). Because respondent did not supply the Department with an 
actual U.S. borrowing rate, for the preliminary results, we turned to 
external information and applied the average of the Federal Reserve 
Statistical Release one-month commercial paper rates in effect during 
the POR to calculate U.S. credit expenses and inventory carrying costs.
    For the final results, we have reconsidered our use of the 
commercial paper rate. SSAB provided no evidence that it would have had 
access to commercial paper rates in the United States during the POR. 
There is no clear evidence on the record of this review that SSAB had 
access to specific U.S. rates.
    In the of U.S. dollar borrowings, we need to arrive at a reasonable 
surrogate for imputing U.S. credit expense. There are many and varied 
factors that determine at what rate a firm can borrow funds, such as 
the size of the firm, its creditworthiness, and its relationship with 
the lending bank. Without actual U.S. dollar borrowings and without 
substantial evidence on the record indicating what rates a firm is 
likely to have received if it had borrowed dollars, it is impossible to 
predict the rate at which a company would have borrowed dollars. 
Therefore, we chose the average short-term lending rate as calculated 
by the Federal Reserve. Each quarter the Federal Reserve collects data 
on loans made during the first full week of the mid-month of each 
quarter by sampling 340 commercial banks of all sizes. The sample data 
are used to estimate the terms of loans extended during that week at 
all insured commercial banks. This rate represents a reasonable 
surrogate for an actual dollar interest rate because it is calculated 
based on actual loans to a variety of actual customers.
    For these reasons, we have recalculated SSAB's imputed U.S. credit 
expense based on the average lending rate during the POR, as published 
by the

[[Page 15781]]
Federal Reserve. See Analysis Memorandum.
    Comment 17: Petitioners argue that the Department must make an 
adjustment for SSAB's U.S. selling expenses. Petitioners contend that 
SSAB reported the amount of its U.S. selling expenses, but failed to 
include any of these expenses in its computer sales data. Petitioners 
maintain that SSAB should have included these as direct selling 
expenses. Petitioners contend that the evidence shows that these 
expenses (e.g., expenses incurred by Swedish Steel and SSAB's New 
Orleans-based salesperson) resulted at least in part from, and could 
have been tied to, specific sales. Petitioners argue that since at 
least some of SSAB's U.S. selling expenses were direct in nature, the 
Department should follow its standard practice and make the adverse 
assumption that all selling expenses in the U.S. market were direct 
expenses and adjust FMV for U.S. direct selling expenses.
    Respondent argues that the Department should not treat SSAB 
indirect U.S. selling expenses as direct selling expenses. Respondent 
argues that there is no basis in fact or law upon which the Department 
could treat SSAB's indirect U.S. selling expenses as direct expenses 
that require an across-the-board adjustment to the foreign market 
value. Respondent contends that there is no evidence in this record 
that any of these expenses are directly related to any SSAB sales in 
the United States.
    Department's Position: We agree with respondent. There is no 
information on the record to support petitioners' claim that these 
expenses (e.g., travel expenses incurred by the New Orleans-based 
salesperson) could be tied to specific sales.
    Comment 18: Petitioners argue that the Department must deduct 
antidumping deposits paid by SSAB 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 U.S. import duties. According to 
petitioners, antidumping deposits 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.
    Respondent asserts that there is no evidence in the record to 
support the claim that SSAB is paying antidumping duties on imports of 
subject merchandise or reimbursing any party for antidumping duties 
paid on such imports.
    Department's Position: We disagree with petitioners. 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 between purchase price and exporter's sales price 
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 19: Petitioners argue that the higher of the margin from 
the investigation or the highest non-aberrant margin should be selected 
as BIA for unmatched U.S. sales. Petitioners contend that the 
Department has a practice of applying the highest non-aberrant margin 
as BIA in investigations when U.S. sales are unmatched because of the 
respondent's failure to report HM sales. Petitioners argue that the 
statutory directive to use BIA serves to compensate for the 
Department's inability to compel the parties under investigation to 
respond to its requests for information. Petitioners contend that for 
BIA to be effective, the BIA margin selected by the Department must be 
less desirable to the respondent than that which it would have obtained 
if the party had responded fully. Petitioners argue that the highest 
non-aberrant methodology is reasonable because it is based on 
respondents' verified sales data and it induces respondents to report 
complete and accurate data for all sales.
    Respondent maintains that the Department applied the correct BIA 
margin rate to SSAB's U.S. sales that did not have matching HM sales. 
Respondent asserts that the Department correctly based the partial BIA 
rate on the highest margin rate applied to SSAB in the original 
investigation. Respondent argues that the Department should not use the 
highest non-aberrant margin as partial BIA in this review because it 
would unfairly punish SSAB, a cooperative respondent throughout the 
review, who submitted timely, complete, and accurate information. 
Respondent maintains that the number of errors in SSAB's submission is 
small and the number of sales affected are small in quantity, 
therefore, the Department is not justified in using the highest non-
aberrant margin that is the most adverse partial BIA in this review.
    Department's Position: We disagree with petitioners. As we 
determined in the preliminary results, certain sales were not reported 
in SSAB's downstream database, but the sales affected were minimal in 
quantity relative to the size of the entire database and to the pool of 
potential matches. As a result, consistent with Department practice, we 
did not apply the highest transaction-specific margin as BIA, but 
instead applied the higher of SSAB's final weighted-average margin from 
the less-than-fair-value (LTFV) investigation and SSAB's final 
weighted-average margin from this review to the U.S. sales with no HM 
matches. See AFBs 1995. Contrary to the position taken by the 
petitioners, this approach was approved by the CIT in National Steel 
Corp. v. United States, 870 F. Supp. 1130 (CIT 1994). See also Usinor 
Sacilor v. United States, 872 F. Supp. 1000, 1007 (CIT 1994). Since the 
margin from the LTFV investigation was higher, we used that rate as BIA 
on unmatched U.S. sales for these final results.

[[Page 15782]]

    Comment 20: Petitioners argue that since all of the sales by SSAB 
in the United States were purchase price sales, there is no associated 
inventory carrying expense and therefore, in calculating constructed 
value for the final results the Department should not reduce the 
financing expense by a factor for the inventory carrying costs 
attributable to HM merchandise.
    Respondent asserts that recalculation of the constructed value 
adjustment will have zero effect on the margin. Respondent maintains 
that the record evidence demonstrates that the Department never used, 
and should not need to use, constructed value in this review.
    Department's Position: We agree with respondent. Due to certain 
problems in the reported data (See Comments 11 and 20), we used BIA 
instead of constructed value data in our calculations. Therefore, no 
recalculation is necessary.
    Comment 21: Petitioners argue that the Department should reconsider 
its BIA for the cost of production values for certain products. 
Petitioners maintain that it is the Department's consistent policy to 
use the highest reported COP when a respondent has failed to report COP 
for one or more products. Petitioners maintain that the Department 
requested COP information and SSAB failed to provide it. Petitioners 
argue that the Department need not make a second or third request for 
the same information to apply a suitably adverse BIA.
    Respondent argues that the Department correctly calculated COP for 
the sales with missing cost values. Respondent asserts that there is no 
basis for any adverse BIA in the Department's calculation of cost for 
the subset of HM sales with missing COP. Respondent maintains that the 
control numbers with missing cost data are an insignificant portion of 
the total sales provided by SSAB. Respondent argues that the use of the 
average COP based on the most similar HM sales for the control numbers 
with missing costs is reasonable and unbiased. Respondent asserts that 
it accurately represents the use of BIA.
    Department's Position: We disagree with petitioners. Our 
methodology produces a reasonable surrogate for the missing values. We 
did not resort to BIA because respondent did not have the opportunity 
to correct the cost information.
    Comment 22: Petitioners argue that the Department incorrectly 
entered the percentage of the 1994 adjustment to TAB's sales quantities 
in its margin calculation program.
    Respondent asserts that this change would have zero impact on the 
antidumping margin calculation.
    Department's Position: We agree with petitioners that the 
Department used the incorrect percentage of TAB's sales quantities in 
the arm's-length test. We have corrected the error for the final 
results. See Analysis Memorandum.
    Comment 23: Petitioners argue that the Department's recoding of 
certain plate characteristics did not have the desired effect because 
the Department did not make a similar change to the control numbers. 
Petitioners contend that the Department must recalculate the COP for 
each of the newly-collapsed control numbers.
    Respondent asserts that the net effect of this change is 
negligible.
    Department's Position: We agree with petitioners that COP should be 
recalculated to account for the collapsing of certain characteristics. 
We have made this adjustment to our computer programs for the final 
results. See Analysis Memorandum.
    Comment 24: Petitioners argue that the Department inadvertently 
included certain duty and moving expenses in the incorrect location in 
the computer program. Petitioners argue that since the statute requires 
that these expenses be deducted from USP rather than added to FMV, 
these expenses should be included in the calculation of total foreign 
movement expenses. See 19 U.S.C. Sec. 1677 b(a)(6)(A). Petitioners also 
contend that the Department did not deduct one duty expense for a 
merchandise processing fee imposed by the U.S. Customs Service. 
Petitioners argue that this should be included in the calculation of 
foreign movement expenses.
    Department's Position: We agree with petitioners and have corrected 
these errors in our final results. See Analysis Memorandum.

Final Results of Review

    As a result of our review, we have determined that the following 
margin exists:

------------------------------------------------------------------------
                                                                Margin  
     Manufacturer/exporter               Time period          (percent) 
------------------------------------------------------------------------
SSAB...........................  2/4/93-7/31/94............         8.28
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. The Department 
shall issue appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements shall be effective 
upon publication of this notice of final results of administrative 
review, for all shipments of the subject merchandise from Sweden that 
are 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 rate for SSAB will be the rate established above; 
(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 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 24.23 percent, the all others rate established in the final 
determination of the LTFV investigation. See Final Determination of 
Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate 
From Sweden, 58 FR 37213 (July 9, 1993).
    The 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 written 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.
    This administrative review 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: April 1, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-8681 Filed 4-8-96; 8:45 am]
BILLING CODE 3510-DS-P