[Federal Register Volume 61, Number 82 (Friday, April 26, 1996)]
[Notices]
[Pages 18547-18568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10404]



-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-814, A-580-816]


Certain Corrosion-Resistant Carbon Steel Flat Products From 
Korea: Final Results of Antidumping Duty Administrative Review

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

ACTION: Final Results of Antidumping Duty Administrative Review.

-----------------------------------------------------------------------

SUMMARY: On August 24, 1995, the Department of Commerce (``the 
Department'') published the preliminary results of the administrative 
review of the antidumping duty order on certain corrosion-resistant 
carbon steel flat products from Korea. This review covers two 
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 
review.

EFFECTIVE DATE: April 26, 1996.

FOR FURTHER INFORMATION CONTACT:
Charles Rast (Dongbu), Alain Letort (Union) or Linda Ludwig, 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 or fax (202) 482-1388.

SUPPLEMENTARY INFORMATION:

Background

    On August 24, 1995, the Department published in the Federal 
Register (60 FR 44006) the preliminary results of the administrative 
review of the antidumping duty order on corrosion-resistant carbon 
steel flat products from Korea (58 FR 44159--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 indicated, 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 the Review

    These products include 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 20 times the thickness 
or if 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 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

[[Page 18548]]

subsequent to the rolling process (i.e., products which have been 
``worked after rolling'')--for example, products which have been 
bevelled 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 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 percent ratio. These HTS item 
numbers are provided for convenience and customs purposes. The written 
description remains dispositive.
    The POR is February 4, 1993 through July 31, 1994.

VAT Tax Methodology

    In light of the Federal Circuit's decision in Federal Mogul v. 
United States, 63 F.3d 1572 (Fed. Cir. 1995), 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 require 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 Uruguay Round Agreements 
Act (``URAA'') 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-neutral dumping margins.
    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 
calculating tax-neutral dumping margins, the GATT, and the post-URAA 
statute.
    Dongbu has provided information indicating that under Korean law, 
VAT taxes associated with home-market sales are assessed based on the 
price of goods and services at the time of delivery, and that certain 
adjustments made to the price after the goods and services have already 
been delivered do not result in adjustments to VAT taxes already paid.

Verification

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

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments and rebuttal comments from 
Dongbu Steel Co., Ltd. (``Dongbu'') and Union Steel Manufacturing Co., 
Ltd. (``Union''), exports 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''). Union requested a public hearing, but 
subsequently withdrew its request in a timely manner.

Petitioners' Comments

Comment 1

    Petitioners argue that the Department should use alternative 
information on the record to determine the market value of transaction 
handling fees that Dongbu paid to a related party for imported raw 
materials. Petitioners contend that Dongbu did not provide substantive 
evidence to support its claim that the transfer prices paid to the 
related party were at arm's-length or at least equal to the related 
party's actual costs for providing the services. Moreover, the 
petitioners argue that since the Department was unable to test the 
transfer price at verification, the possibility exists that Dongbu may 
have selectively structured these related-party transactions to 
maximize adjustments that would lower Dongbu's production costs of the 
subject merchandise. Thus, the petitioners state that the Department 
should make an adverse inference and increase the costs of raw 
materials based on the comparison of similar arm's-length transaction 
handling fees charged by unrelated parties that Dongbu's U.S. sales 
affiliate (``DBLA'') used to import subject merchandise into the United 
States.
    Dongbu contends that there is no basis for adjusting its raw 
material costs to account for transaction fees paid to a related party 
as suggested by the petitioners. Dongbu states that the services this 
related party provides to the company are not of any tangible

[[Page 18549]]

economic value other than lending its internationally recognized name 
to the transaction. Dongbu additionally states that the arrangement 
between the related party and itself simply reflects an intra-company 
transfer that benefits the related party and its shareholders. 
Therefore, Dongbu believes that the Department should accept the 
submitted transaction fees that the related party charged the company.

Department's Position

    For the final results, we accepted Dongbu's submitted transaction 
fees that were paid to a related party. The transaction fees that 
Dongbu paid to the related party were for assistance in handling and 
processing the related paperwork created by the importation of the 
material. See Dongbu's February 21, 1995 submission at page 12. The 
value of the service was based on a constant percentage of the 
acquisition price of the input. Dongbu was unable to substantiate that 
submitted transaction fees reflected the market value of the service 
provided. At verification, company officials stated they did not obtain 
similar services for the importation of inputs from any other party, 
nor did the related party provide this service to any other entity. See 
Cost Verification Report of Dongbu Steel Co., Ltd. (May 19, 1995) at 
page 12. However, after further review of information on the record, we 
have concluded that the transfer prices submitted by Dongbu did fairly 
represent the amount usually reflected in sales for such services. This 
determination was made by comparing Dongbu's submitted transaction fees 
(expressed as a percentage of the purchase price) to the weighted-
average (also expressed as a percentage of the purchase price) of 
similar arm's-length transaction fees charged by unrelated parties that 
DBLA used to import subject merchandise into the United States. This 
comparison showed that the submitted transaction fees were above the 
weighted-average value charged by unrelated parties. Thus, we accepted 
the submitted transaction fees that were paid to a related party 
because they reasonably reflected a market value.

Comment 2

    Petitioners contend that submitted costs for its research and 
development (R&D) department, raw material department, quality control 
department, and procurement department should be included in Dongbu's 
manufacturing costs rather than in its general expenses. The 
petitioners argue that Dongbu's submitted description of the functions 
performed by these departments sufficiently demonstrates that they were 
manufacturing costs. They add that neither the cost verification report 
nor the accompanying exhibits contained any indication that Dongbu 
attempted to provide additional explanations, documentation, or 
schedules to support its claim that the expenses were general in 
nature. Therefore, the petitioners believe that the Department should 
include all general expenses that are not attributable to Dongbu's 
sales department in the company's cost of manufacturing.
    Dongbu believes that its submitted classification of these 
departmental costs as general expenses is appropriate. The company 
argues that these costs were classified as general expenses on its 
audited income statement because they benefit the entire company as a 
whole. This fact was confirmed by the Department at verification. 
Furthermore, the company argues that reclassifying these cost to 
manufacturing costs would have an inconsequential effect, if any, on 
its cost of production.

Department's Position

    We agree with respondent that, in this case, it is reasonably to 
classify these costs as general expenses, consistent with the company's 
financial statements. For the final results, we accepted Dongbu's 
inclusion of costs from its R&D department, raw material department, 
quality control department and procurement department as general 
expenses. At verification, the Department reviewed Dongbu's associated 
source documentation and noted that these costs were reported as 
general expenses on the company's audited income statement and not as a 
part of its cost-of-sales. Nor were these costs included as part of the 
inventoried costs reported in Dongbu's finished product inventory 
ledgers. In this specific case, we are satisfied that the cost in 
question were properly classified as general expenses. Therefore, we 
are not reclassifying these general expenses to manufacturing costs. 
See Final Determination of Sales at Less Than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products, Certain Corrosion-resistant Carbon 
Steel Flat Products, and Certain Cut to Length Carbon Steel Plate from 
Korea, 58 FR 37176, 37191 (July 9, 1993).

Comment 3

    Petitioners argue that the Department should include foreign 
exchange losses among Dongbu's manufacturing costs to ensure that the 
cost of production is calculated accurately and that the statutory 
minimum amounts for general expenses and profit are properly computed 
for constructed value. The petitioners state that it is the 
Department's normal practice to include foreign exchange gains and 
losses related to the production of subject merchandise in the cost of 
manufacturing and not as G&A expenses.
    Dongbu believes that its net foreign exchange losses were 
appropriately submitted as general expenses and not as costs of 
manufacturing. Dongbu states that it recognizes that it is the 
Department's normal practice to include foreign exchange gains and 
losses related to material purchases in the cost of manufacturing. 
However, Dongbu states that its submitted methodology is consistent 
with the classification of those expenses on its audited income 
statement. Furthermore, Bongbu argues that an adjustment to reclassify 
the costs would only be trivial and needless.

Department's Position

    We agree with both petitioners and respondent in part. Foreign 
exchange losses arising from the purchase of raw materials normally 
should be included in material cost because this is a component of the 
cost of manufacturing. However, in this particular instance we have not 
reclassified these losses from general expenses to cost of 
manufacturing as it would have no impact on the submitted cost of 
production. The slight increase in manufacturing costs the 
reclassification creates is simply offset by coinciding decreases in 
G&A and financing costs. See Final Determination of Sales at Less Than 
Fair Value: Dynamic Random Access Memory Semiconductors of One Megabit 
and Above from the Republic of Korea, 54 FR 15467, 15475 (March 23, 
1993).

Comment 4

    Petitioners contend that the Department should deny all of the 
claimed miscellaneous income offsets (e.g., dividends, gains on 
investments) that were applied against Dongbu's submitted G&A costs. 
The petitioners argue that the Department does not grant offsets in 
excess of actual expenses incurred. Nor is it the Department's practice 
to allow a reduction of G&A costs unless it can be substantiated that 
the offsetting income can be tied to specific expenses related to 
production. The petitioners also contend that Dongbu failed to do both 
of these steps and, therefore, the Department should deny all of 
Dongbu's claimed offsetting adjustments to G&A costs.
    Dongbu contends that it properly offset G&A costs with its various 
miscellaneous income items. Dongbu

[[Page 18550]]

states that it submitted a complete list of miscellaneous income items 
used to offset G&A costs that the Department reviewed each of these 
items during verification. Therefore, the company believes that the 
Department should ignore the petitioners' request and allow the 
miscellaneous income offsets to G&A costs.

Department's Position

    For the final results, we continue to disallow certain non-
production-related income offsets to Dongbu's G&A costs. At 
verification, we reviewed source documentation and obtained 
explanations from company officials on all the income items that were 
used to offset Dongbu's G&A costs. We found that certain revenue items 
(e.g., dividends, gain on investments) were related to investments, and 
not to the production of subject merchandise. Therefore, we denied 
these unrelated income offsets in calculating G&A costs. See Final 
Determination of Sales at Not Less Than Fair Value: Saccharin from 
Korea, 59 FR 58826, 58828 (November 15, 1994).

Comment 5

    Petitioners contend that the Department should exclude Dongbu's 
duty payments from the calculation of the company's G&A and interest 
expense factors. According to the petitioners, the addition of the duty 
to the cost-of-sales figure inappropriately overstates the figure. The 
petitioners argue that Dongbu's duty drawbacks represent a refund of 
import duties incurred in the production of finished merchandise that 
is subsequently exported. Therefore, the cost-of-sales figures in 
Dongbu's audited income statements, which is net of import duties 
refunded on certain export sales, accurately represented Dongbu's final 
cost of manufacturing.
    Dongbu believes that it properly increased its cost-of-sales figure 
to include the duty in order to calculate G&A and interest expense 
factors. Dongbu contends that the increase to its cost-of-sales is 
necessary in order to ensure comparability. Dongbu notes that its 
audited income statement cost-of-sales figure is net of duty drawback, 
while its submitted costs of manufacturing figures include the duty 
because the Department requested that it be submitted in this manner. 
Therefore, the respondent states that any G&A or interest factor that 
is applied to its duty-inclusive cost of manufacturing must itself be 
determined on a duty-inclusive basis.

Department's position

    For the final results, the Department allowed Dongbu to add an 
amount reflecting duties paid to its audited cost-of sales figure which 
was used as the denominator in calculating G&A and interest expense 
factors. The cost-of-sales figure obtained from Dongbu's audited income 
statements was net of duty drawbacks, while the company's submitted 
cost of manufacturing included duties paid on inputs. Therefore, it is 
appropriate for Dongbu to include duty payments in its denominator in 
order to properly allocate both the G&A and interest costs.

Comment 6

    Petitioners assert that the Department's analysis must account for 
the difference between U.S. sales by Dongbu and its U.S. sales 
affiliate, DBLA. They argue that the Department is in error in its 
treatment of DBLA's and Dongbu's sales and request that DBLA's sales be 
treated as exporter's sales price (``ESP'') sales. Petitioners note 
that Dongbu makes sales to the United States through three separate and 
distinct channels: directly to customers in the United States; through 
related and unrelated trading companies in Korea; and through its 
affiliate in the United States, DBLA's, which purchases subject 
merchandise from Dongbu and resells it to unrelated customers in the 
United States. Petitioners assert that Dongbu is incorrect in claiming 
that sales made through each of these channels are purchase-price 
(``PP'') sales. They state that Dongbu's contention implies that if 
sales through each of these channels are treated as such, the U.S. 
prices calculated by the Department will represent prices at the same 
point in the chain of commerce in all cases, and thus implying that the 
charges by DBLA to the first unrelated customer in the United States 
represent the arm's-length prices that Dongbu would charge for the same 
merchandise if sold directly to an unrelated U.S. customer, without the 
involvement of DBLA. Petitioners claim that Dongbu's own sales data 
indicate that there is a systematic and significant difference between 
Dongbu's and DBLA's pricing structure which is the result of the fact 
that DBLA's involvement in the sale of subject merchandise results in 
significant costs which are included in the prices it charges its U.S. 
customers.
    Petitioners also argue that because DBLA's selling prices are 
distinct from Dongbu's, the Department must analyze DBLA's sales 
differently from Dongbu's sales in order to ensure consistency with the 
fundamental purpose of the Tariff Act regarding the calculation of 
United States price. They argue that the Tariff Act identifies two 
types of U.S. sales, purchase price and ESP, and mandates different 
adjustments to each so that United States price is reconstructed at the 
same point in the chain of commerce regardless of whether a U.S. 
affiliate of the manufacturer or exporter is involved in the 
transaction. Citing 19 U.S.C. 1677a(b), petitioners contend that the 
Tariff Act defines purchase price as the price at which merchandise is 
purchased, or agreed to be purchased, prior to the date of importation, 
from either a reseller, manufacturer, or producer of the merchandise 
for exportation to the United States. Conversely, say petitioners, ESP 
is defined as the price at which merchandise is sold or agreed to be 
sold in the United States, prior to or after importation by or for the 
account of the exporter. See 19 U.S. 1677a(c). Thus, ESP is typically 
used when an affiliate of the manufacturer or exporter imports 
merchandise into the United States. Also, petitioners cite Smith Corona 
Group v. United States, 713 F. 2d 1568, 1571-72 (Fed. Cir. 1983), in 
arguing that when a U.S. affiliate of a foreign respondent imports 
merchandise in question, all costs and expenses incurred by the 
affiliate must be deducted from the affiliate's resale price in order 
to derive a United States price that reflects the price that the 
merchandise would command in an arm's-length transaction. They further 
state that this is the case whether the sales are from the importer to 
an independent retailer or directly to the public, as if the affiliate 
had no role in the transaction. Petitioners note that DBLA's role in 
selling subject merchandise results in selling prices that are distinct 
from Dongbu's prices for the same product, and that as a result, DBLA's 
role in selling subject merchandise creates the type of bias that is 
addressed by the provisions of the Tariff Act regarding United States 
price.
    Petitioners also contend that Dongbu's sales through DBLA do not 
meet the statutory definition of purchase price. They argue that the 
Department utilizes a three-part test to determine whether ESP or 
purchase price should be used to determine USP when the sale is made 
prior to the date of importation; and the focus must be on the third 
factor in this test; that is, that if the related party in the United 
States only acts as a conduit between the first unrelated purchaser and 
the seller, the resulting sale is a sale for export to the United 
States. Petitioners contend, however, that

[[Page 18551]]

before the Department can accurately determine that the related party 
is just a process of documentation, there must be evidence on the 
record supporting that conclusion. They argue that in this case, there 
is no documentary evidence in the record in support of this claim by 
Dongbu. Citing to Creswell Trading Co., et al. v. United States, 15 
F.3d 1054 (Fed. Cir. 1994) petitioners claim that Dongbu has the burden 
of producing information that proves that point, which it has not done; 
and in the absence of such information, the Department cannot conclude 
that the indirect purchase price sales at issue were made in Korea by 
Dongbu for exportation to the United States. Instead, petitions 
conclude that the Department must determine that the sales were made in 
the United States by DBLA, and that they must be treated as ESP sales.
    Petitioners further argue that the price at which DBLA sells 
subject merchandise to the unrelated purchaser is different from the 
price at which DBLA purchases it from Dongbu. They contend that these 
prices reflect the fact that DBLA performs significant selling 
activities in the United States which require the Department to treat 
the sales in question as ESP sales. Petitioners note also that DBLA 
extends credit to certain customers by permitting them to delay payment 
for subject merchandise; that DBLA identifies customers, negotiates 
prices, and provides some warranty-related services; and that DBLA is 
engaged in marketing activities that include development of downstream 
applications for subject merchandise. Petitioners contend that another 
significant selling function performed by DBLA is the posting of cash 
deposits of antidumping and countervailing duties on behalf of its U.S. 
customers. They argue that in a typical purchase price transaction, the 
U.S. customer, as the importer of record, would be required to deposit 
cash deposits with the U.S. Customs Service upon importation of the 
merchandise, resulting in additional costs. In ESP transactions, 
however, the customer is relieved of this burden and of the risks of 
uncertain future liabilities. Petitioners contend that DBLA's selling 
activities can be demonstrated in several ways. First, the activities 
performed by DBLA are significant in the context of the totality of 
activities required to sell subject merchandise. In other words, DBLA 
performs all of the functions required to sell subject merchandise in 
the United States. Second, the significance of DBLA's selling 
activities, and the economic benefit these provide to DBLA's customers, 
is reflected in DBLA's prices. Finally, petitioners cite declarations 
made by DBLA on Customs Form 7501 which indicate that it was more that 
a processor of sales related documentation.
    Respondent counters these arguments by stating that Dongbu's sales 
through DBLA meet the statutory definition of purchase price sales, and 
that Dongbu's sales thus adhere to the three-part test employed by the 
Department already detailed by petitioners. It argues that the purpose 
of this test is to determine, on the basis of the selling functions 
assumed by the U.S. affiliate, whether the transaction in question 
meets the statutory requirements for purchase price at dictated by 19 
U.S.C. 1677a(b). Respondent argues that there is no dispute regarding 
the first two prongs of this test, as petitioners concede that Dongbu's 
sales through DBLA are shipped directly from Dongbu to the unrelated 
buyer without being introduced into DBLA's inventory and that such 
shipments are customary in the industry. Respondent contends that 
verification reports and associated documents confirm that sales 
through DBLA also meet the third requirement of the test, and that DBLA 
played only a limited role as a processor of sales related 
documentation and as a communications like to the customer.
    Respondent describes DBLA's role in these sales transactions as 
straight forward. Dongbu states that its sales are made by its export 
department in Korea, with DBLA assisting by transmitting customer 
inquires to Korea and issuing sales contracts on Dongbu's behalf if 
orders are accepted. Respondent notes that DBLA facilitates the sales 
by processing the documents needed to ensure that the merchandise is 
delivered in accordance with the negotiated sales terms: that is, 
delivery to the customer after clearance through U.S. Customs and 
payment of brokerage and related charges. In detailing these functions, 
respondent argues that all of the selling activities carried out by 
DBLA in connection with these sales are within the range of activities 
determined by the Department to be consistent with purchase price 
classification in previous cases.
    Regarding petitioners' argument that the Department should classify 
sales through DBLA based upon comparative pricing patterns, respondent 
counters that there is no legal or factual basis for reclassifying 
these sales as ESP. Respondent contends that selling functions, not 
selling prices, are the basis for the Department's classification of 
sales as purchase price or ESP. Specifically, the application of the 
Department's three-pronged test is to determine whether the selling 
functions undertaken by the related U.S. selling agent are of a kind 
that would normally be carried out by the exporter in connection with 
the sales, and that such an analysis must be made with reference to 
terms of the sale itself which establishes the parameters of the U.S. 
affiliate's selling function. Therefore, with regard to Dongbu's sales 
through DBLA, respondent argues that the Department must consider 
DBLA's selling functions in connection with the fact that these 
products are sold to the unrelated U.S. customer on an ex-dock duty-
paid basis and must thus be delivered to the possession of the customer 
after clearance through U.S. Customs. Respondent notes that in this 
case, Dongbu has simply transferred these routine selling functions to 
a related selling agent in the United States, and that the substance of 
the transaction is not changed, which is that they are purchase price 
rather than ESP.

Department's Position

    We agree with respondent and have determined that purchase price is 
the appropriate basis for calculating USP. Typically, whenever sales 
are made prior to the date of importation through a related sales agent 
in the United States, we conclude that purchase price is the most 
appropriate determinant of the USP based upon the following factors: 
(1) The merchandise in question was shipped directly from the 
manufacturer to the unrelated buyer, without being introduced into the 
inventory of the related shipping agent; (2) direct shipment from the 
manufacturer to the unrelated buyers was the customary commercial 
channel for sales of this merchandise between the parties involved; and 
(3) the related selling agent in the United States acted only as a 
processor of sales-related documentation and a communication link with 
the unrelated U.S. buyers. See, e.g., Certain Stainless Steel Wire Rods 
from France: Final Determination of Sales at Less that Fair Value, 58 
FR 68865, 68868-9 (December 29, 1993); Granular Polytetrafluoroethylene 
Resin from Japan: Final Results of Antidumping Duty Administrative 
Review, 58 FR 50343-4 (September 27, 1993). This test was first 
developed in response to the Court of International Trade's decision in 
PQ Corporation v. United States, 652 F. Supp. 724, 733-35 (CIT 1987). 
It has also been used to uphold indirect purchase-price transactions 
involving exporters and their U.S. affiliates. See e.g., Zenith 
Electronics Corp. v. United States,

[[Page 18552]]

Consol. Ct. No. 88-07-00488, Slip Op. 94-146 (CIT 1994).
    We disagree with petitioners' argument in citing to Creswell 
Trading Co., et al. v. United States, 15 F.3d 1054 (Fed. Cir. 1994) 
that Dongbu has not met the burden of producing information that 
demonstrates that the related party in the United States functions only 
as a processor of documentation. Dongbu has placed information on the 
record which we have verified describing the functions of its related 
party. Furthermore, the Department has recognized and classified as 
indirect purchase price sales transactions involving selling activities 
similar to those of DBLA's in other antidumping proceedings involving 
Korean manufacturers and their related U.S. affiliates. See, e.g., 
Final Determination of Sales at Less Than Fair Value; Circular Welded 
Non-Alloy Steel Pipe from the Republic of Korea, 57 FR 42942, 42950-1 
(September 17, 1992). In the present review, we found that: (1) 
Dongbu's sales though DBLA, its related sales agent in the United 
States, are shipped directly from Dongbu to the unrelated buyer without 
being introduced into DBLA's inventory; (2) such shipments are the 
customary channel of distribution for the parties involved; (3) DBLA 
performed limited liaison functions in the processing of sales-related 
documentation and a limited role as a communication link in connection 
with these sales.
    We agree with respondent that we regard selling functions, rather 
than selling prices, as the basis for classifying sales as purchase 
price or ESP. When all three of the criteria described above are met, 
we consider that the exporter's selling functions have been relocated 
geographically from the country of exportation to the United States, 
where the sales agent performs them. We determine that DBLA's selling 
functions are of a kind that would normally be undertaken by the 
exporter in connection with these sales. DBLA's role in the payment of 
cash deposits of antidumping and countervailing duties, extension of 
credit to U.S. customers, the processing of certain warranty claims, 
and project development are consistent with purchase price 
classification and are a relocation of routine selling functions from 
Korea to the United States.

Comment 7

    According to petitioners, the Department is required by law to 
deduct the cost of ``actual'' antidumping and countervailing duties 
from USP when the record demonstrates that those costs are included in 
the prices paid by the first unrelated purchaser. Petitioners contend 
that these duties are costs to Dongbu and must be deducted from the 
price paid by the first unrelated purchaser in order to obtain a fair 
comparison between USP and foreign market value.
    Petitioners assert that the statute provides authority for 
deducting the cost of actual antidumping and countervailing duties 
incorporated in the price used to establish USP. Citing section 
1677a(d)(2)(A), they argue that USP shall be reduced by ``the amount, 
if any, included in such price which is attributable to additional 
costs, charges, and expenses, and United States import duties, incident 
to bringing the merchandise into the United States.'' The costs of 
antidumping and countervailing duties thus fall within the scope of 
this provision as costs, charges, and expenses or as U.S. import 
duties. The former, petitioners note, is a subset of the latter, and as 
a matter of law they must be deducted from the price to the first 
unrelated purchaser. They also argue that the statute provides that USP 
shall be increased by the amount of any countervailing duty imposed to 
offset an export subsidy.
    According to petitioners, the Department must deduct the full 
amount of the countervailing duties paid by Dongbu for those entries 
covered by the first and second annual reviews of the countervailing 
duty order. They claim that none of the arguments for not deducting the 
estimated antidumping duties applies in the case of the countervailing 
duty payments. First, petitioners argue that Dongbu has presented 
evidence that DBLA paid those duties and that they have an impact on 
the price. Second, they contend, there is no danger of double-counting 
since the countervailing duties are not paid to offset past price 
discrimination. In this case, the countervailing duties are paid to 
offset domestic subsidies and have nothing to do with Dongbu's price 
discrimination practices. Thus, petitioners assert that the 
countervailing duties are a cost separate from the payment of 
antidumping duties and should be treated as normal customs duties. 
Also, petitioners claim that since no party requested a review of the 
countervailing duty order at the time of the first or second 
anniversary, those duties have become final duties. They also assert 
that the Department must deduct the cost of antidumping duties equal to 
the amount of the calculated margin.
    Petitioners note that the court acknowledged in Zenith Elec. Corp. 
v. United States, 18 CIT ____, Slip Op 94-146 (September 19, 1994) that 
the deduction from USP of actual antidumping duties remains an open 
issue. Accordingly, contend petitioners, the court expects that the 
Department will approach the payment of actual antidumping duties 
differently than it does the payment of estimated antidumping duties. 
Petitioners cite Final Results of Antidumping Duty Administrative 
Review: Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from 
the United Kingdom, 60 FR 44009 (August 24, 1995), in which they argued 
that the Department should treat actual antidumping duties as a cost. 
Petitioners claim that although the Department rejected their argument, 
the authority cited by the Department in the determination does not 
support its position. Petitioners also note that there has been no 
court decision that the deduction of estimated antidumping duties is 
unlawful, and that all of the cases having to do with this issue have 
upheld the Department's decision not to do so based on the facts of the 
individual case.
    Respondent argues that in the absence of reimbursement, it is 
unlawful and contrary to Department practice to deduct antidumping and 
countervailing duties from USP. Respondent contends that petitioners' 
reading of the statute is contradicted by both long-standing 
administrative and judicial precedent; (e.g., Final Results of 
Antidumping Duty Administrative Review: Certain Hot-Rolled Lead and 
Bismuth Carbon Steel Products from the United Kingdom, 60 FR 44009 
(August 24, 1995), Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof from France, et al.;  Final Results of 
Antidumping Administrative Reviews, 60 FR 10900, 10907 (February 28, 
1995), PQ Corp. v. United States, 652 Supp. 724, 735-37 (CIT 1987), 
Federal-Mogul Corp. v. United States, 813 F. Supp. 856, 872 (1993), and 
Torrington Co. v. United States, Consol. Ct. No. 92-07-00483 (CIT 
1995). Respondent further argues that the Department and the courts 
have long since recognized that such deductions are not authorized 
under the antidumping laws because they are, inter alia, not ``selling 
expenses'' within the meaning of the statute and are inherently 
contingent in nature. Respondent notes that making the required 
adjustment would unlawfully result in the double-counting of dumping 
duties, and would perpetuate dumping orders thereby violating both the 
letter and remedial purposes of the statute. They also state that 
Congress has refused to yield to lobbying by the

[[Page 18553]]

U.S. steel industry for the enactment of legislation that would for the 
first time authorize such a deduction, clearly evincing Congressional 
disapproval of petitioners' position.
    Respondent asserts that petitioners are incorrect in their argument 
that the issue of deducting antidumping and countervailing duties 
should be considered differently in this case because the Department is 
determining ``actual'' rather than ``estimated'' antidumping duties. 
Respondent also states that petitioners are wrong in their extension of 
this argument to Dongbu's countervailing duty deposits on the theory 
that such deposits represent ``actual'' duties because the amounts 
deposited are ``conclusive'' since no party requested an administrative 
review. Respondent notes that the countervailing duty order is 
currently on appeal to the Court of International Trade and liquidation 
of these entries has been suspended pending the outcome of that appeal.
    By assessing duties beyond the actual margins of dumping, according 
to respondent, petitioners' recommended deduction would also violate 
international law as embodied in the WTO antidumping agreement. See 
Final Act Embodying the Results of the Uruguay Round of Multilateral 
Trade Negotiations, April 15, 1994, and Agreement on Implementation of 
Article VI of the General Agreement on Tariffs and Trade 1994, article 
2 para. 4.
    Respondent claims that petitioners are incorrect in arguing that 
their proposal will not result in a double-counting of antidumping 
duties. Rather, respondent asserts it is a ``mathematical certainty'' 
that this will be the result. Respondent argues that the remedial 
purposes of the antidumping laws are presumably fulfilled when a 
foreign respondent is induced to raise its prices to unrelated 
customers in the United States in response to the antidumping order, 
since it is at that level that the foreign producer competes directly 
with U.S. producers. Respondent notes that the concern that has 
traditionally been raised is that the relief intended by the order 
would be ``blunted or denied'' if the related importer ``absorbs'' the 
antidumping duties by being ``reimbursed'' by the foreign producer and, 
as a result, fails to pass the additional expense on the unrelated U.S. 
customer in the form of higher prices. Respondent claims that 
petitioners in this case are claiming that the Department should 
penalize Dongbu for raising its prices to unrelated purchasers. The 
effect of this, according to respondent, would be to create additional 
margins.

Department's Position

    We disagree with petitioners. In Final Results of Antidumping Duty 
Administrative Review: Certain Hot-Rolled Lead and Bismuth Carbon Steel 
Products from the United Kingdom (``UK Lead and Bismuth''), 60 FR 
44009, 44010 (August 24, 1995), petitioners made arguments similar to 
those presented here--that ``actual'' antidumping duties are a 
``selling expense'' and that the Department has not previously 
considered whether to deduct ``actual'' expenses under section 
772(d)(2)(A). In UK Lead and Bismuth, we responded that ``[a]ntidumping 
duties are intended to offset the effect of discriminatory pricing 
between the two markets. In this context, making an additional 
deduction from USP for the same antidumping duties that correct this 
price discrimination would result in double-counting. Therefore, we 
have not treated cash deposits of estimated antidumping duties as 
direct selling expenses.'' Id. at 44010. See also color Television 
Receivers from the Republic of Korea, Final Results of Administrative 
Review, 58 FR 50333, 50337 (September 27, 1993); and Antifriction 
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from 
France, et al.; Final Results of Antidumping Administrative Reviews, 60 
FR 10900, 10906 (February 28, 1995).
    We also disagree with petitioners' extension of their argument to 
Dongbu's countervailing duty deposits on the basis that the amounts 
deposited are ``conclusive'' since no party has requested an 
administrative review. In fact, the countervailing duty order is 
currently on appeal to the Court of International Trade and liquidation 
of these entries has been suspended pending the outcome of that appeal. 
These entries will be liquidated only in accordance with a final and 
conclusive court decision in that proceeding, as in accordance with 19 
U.S.C. 1516a(e). In other words, the amount that will be collected, if 
any, is uncertain at this time.
    As our verification report indicates, there is no evidence that 
Dongbu's related importer in the U.S. is being reimbursed by Dongbu.

Comment 8

    Petitioners argue that Dongbu improperly calculated credit expenses 
for home-market sales using gross unit prices. They argue that Dongbu's 
reported credit expenses are overstated because Dongbu failed to 
account for rebates when calculating the credit expenses. Petitioners 
contend that Dongbu calculates per-unit credit expenses for home-market 
sales differently than is done by the Department, which calculates 
credit expenses based on selling prices that are net of discounts and 
rebates. See Final Determination of Sales at Less Than Fair Value; 
Fresh Cut Roses from Colombia, 60 FR 6980 (February 6, 1995). 
Therefore, according to petitioners, Dongbu's use of an adjusted gross 
unit price is not in accordance with Department practice, and results 
in an artificially inflated credit expense. Petitioners continue this 
point by stating that the Department should reduce Dongbu's claimed 
home-market credit expenses to account for rebates paid to certain 
home-market customers in order to be consistent with its established 
practice of calculating credit expenses using prices net of discounts 
and rebates. To accomplish this, they explain, the Department should 
reduce the reported credit expense by the amount of the rebate, 
expressed as a percentage of gross unit price.
    Respondent argues that petitioners are in error, and that home-
market credit expenses are not overstated. According to respondent, 
petitioners' allegation relies upon the Department's final 
determination in Fresh Cut Roses from Colombia, and while it is true 
that the Department in that case adjusted one respondent's credit 
figures downward to account for certain discounts discovered late in 
the proceeding, there is no mention in the case of similar treatment 
being required in the case of rebates. Respondent further notes that 
this distinction between discounts and rebates, with respect to credit 
calculations, is not inconsequential. Also, the fact that rebates are 
paid after the sale, has no bearing on the final price paid by the 
customer. In these cases, the final price paid is one that is net of 
the rebate itself. But, when it comes to calculating credit expenses, 
the emphasis on the rebate being paid ``after'' rather than at the time 
of the sale is dispositive of this issue, according to Dongbu.
    Respondent also argues that the imputation of credit cost is based 
on the principal of the ``time value of money.'' See LMI-La Metalli 
Industriale S.p.A. v. United States, 912 F.2d 455 (Fed. Cir. 1990). 
Respondent asserts that the value to the seller is a function of the 
amount of the account being financed, the period of time that the 
account is being financed, and the relevant cost of borrowing that 
could be used to finance the account. Respondent argues in the case of 
a discount, the amount financed over this period is the purchase price 
less the discount, and it is appropriate

[[Page 18554]]

to deduct this amount from the gross unit price in determining the 
imputed cost of credit. In the case of rebates, Dongbu states the 
amount is not likely to have accrued at the time of sale but instead, 
over a longer period of time.
    Respondent claims it would thus be improper to deduct rebate 
amounts from gross unit price in determining imputed credit expenses 
because the amount being financed over the credit period is the gross 
unit price rather that the gross unit price less an undertermined 
rebate.

Department's Position

    We agree with respondent. Dongbu's rebates are often accrued after 
payment has been made. More often than not, rebate amounts are not 
determinable until after payment of the account has been made. 
Accordingly, it would be improper in these cases to deduct rebate 
amounts from gross unit price in determining imputed credit costs 
because the amount being financed over the credit period (i.e., from 
shipment to payment) is the gross unit price, and not the gross unit 
price less an undertermined rebate. We agree with respondent that it is 
appropriate in the case of a discount to calculate imputed credit costs 
on gross unit price net of discounts (since that amount is determined 
at the time of sale and shipment). However, particularly in the case of 
rebates that are not precisely known at the time of sale, it would be 
inappropriate to deduct this undetermined amount from gross unit price 
in calculating credit expenses.

Comment 9

    Petitioners argue that Dongbu's freight charges for home-market 
sales should be reduced by the amount of the intra-company transfer of 
funds between Dongbu and Dongbu Express. They assert that 
transportation services for Dongbu's home-market sales are provided by 
unrelated trucking companies pursuant to contracts with Dongbu's 
wholly-owned subsidiary, Dongbu Express; and that as such, Dongbu's 
payment to Dongbu Express for those services is nothing more than ``an 
internal price constructed for bookkeeping purposes.'' Petitioners 
contend that the Department should revise these expenses to exclude 
markups charged by Dongbu Express on the grounds that such markups 
represent intra company transfers of funds. They cite Final 
Determination, Rescission of Investigation, and Partial Dismissal of 
Petition High Information Content Flat Panel Displays and Display Glass 
Therefor from Japan, 56 FR 32376 (July 16, 1991), and Final Results of 
Antidumping Duty Administrative Review: Color Picture Tubes from Japan, 
55 FR 37915 (September 14, 1990), in arguing that the Department has 
previously disregarded the same type of mark-up paid to Dongbu Express 
when calculating adjustments to foreign market value, and that the 
Department attempts to value sales-related services at actual market 
rates, rather than at the rates established between related parties.
    Respondent counters that there is no basis for reducing the 
reported home- market inland freight charges, and that petitioners' 
position ignores the circumstances under which these services are 
provided. Respondent argues that Dongbu contracts for freight services 
through a freight forwarder that has the expertise and volume of 
business to obtain regular service and competitive rates, an 
arrangement made by many other businesses that also do not own their 
own trucking fleet. These services provided by Dongbu Express have 
value, and as such the payment of a mark-up is expected and consistent 
with similar commercial transactions. According to respondent, the 
additional administrative costs incurred by Dongbu Express in arranging 
for shipment, as well as a reasonable return to Dongbu Express, are 
simply part of the value of the trucking service. Thus, respondent 
states, if the Department is to obtain a reasonable measure of the 
``actual market rates'' for the freight services, as petitioners 
contend, there must be reflected in the reported charge some amount for 
the valuable freight forwarding services provided by Dongbu Express. 
Dongbu asserts it has demonstrated that the mark-up charged by Dongbu 
Express reflects a reasonable amount for profit, and that this mark-up 
is equivalent to that included by Dongbu Express in its charges to 
unrelated parties.

Department's Position

    We disagree with petitioners. We find that the mark-ups charged by 
Dongbu Express to Dongbu were commercially reasonable charges for the 
services provided by Dongbu Express. Although the Department does not 
have a standard policy requiring it to deduct related-party mark-ups in 
all cases, in Final Determination, Rescission of Investigation, and 
Partial Dismissal of Petition: High Information Content Flat Panel 
Displays and Display Glass Therefor from Japan, 56 FR 32376, 32393 
(July 16, 1991), the Department rejected the price between related 
parties not only because there was a mark-up, but because it was 
determined that the reported amount reflected a price constructed for 
``internal bookkeeping purposes'' rather than a market value. Also, in 
Final Results of Antidumping Administrative Review: Color Picture Tubes 
from Japan, 55 FR 37915, 32922-23 (September 14, 1990), the Department 
acknowledged and accepted the respondent's argument that an 
administrative fee paid by the respondent to its related shipper 
reflected additional services that would have been sustained by either 
another trucking company or the respondent directly. In the present 
review, we verified the arm's-length nature of Dongbu's freight charges 
by reviewing invoices from the trucking company to Dongbu Express; the 
unit prices on those invoices were lower than those charged by Dongbu 
Express to Dongbu. Therefore, we find no basis for reducing home-market 
inland freight charges.

Comment 10

    Petitioners argue that Dongbu's Korean inland freight charges for 
certain U.S. sales appear to be below arms's-length rates, and that the 
Department must revise the reported charges for the final results of 
this review. According to petitioners, Dongbu informed the Department 
prior to verification that certain sales were shipped to the United 
States from either Pusan or P'ohang, and not from Inch'on, as 
originally reported. Petitioners state that Dongbu revised the reported 
charges for these sales, many of which represent payments by Dongbu to 
Dongbu Express at amounts less than those made by Dongbu Express to 
unrelated trucking companies for the same transactions. They assert 
that the discrepancy between the amount charged by unrelated parties 
for transporting the subject merchandise between Inch'on and P'ohang 
(or Pusan), and the revised amounts reported by Dongbu, indicates that 
not all of Dongbu's reported inland freight charges for U.S. sales were 
at arm's-length rates. Therefore, the Department must adjust for these 
amounts accordingly.
    Respondent counters these arguments by reporting that the example 
cited by petitioners involves freight charges imposed by an unrelated 
trucking company, and not Dongbu Express as asserted. It says this 
``discrepancy'' claimed by petitioners also explains why the freight 
amount charged with respect to this sale, and the other shipments 
identified by petitioners is lower than would have been expected given 
the schedule of freight charges paid by Dongbu Express. According to 
respondent, the commercial invoices and bill of lading show in this 
instance that ocean freight companies sometimes request at the last 
minute that a

[[Page 18555]]

manufacturer agree to change the port of exportation to another port 
that may be located farther from the factory than originally agreed to 
with the understanding that the ocean freight company will absorb any 
additional freight cost. Such was the case with the sale cited by 
petitioners, according to respondent. Dongbu argues that it paid no 
more than it originally contemplated.

Department's Position

    We agree with respondent. The discrepancy identified by petitioners 
involves freight charges imposed by an unrelated trucking company and, 
as we determined at verification, the Department has not found any 
transactions for which there is an indication that the rates charged 
for freight were not at arm's-length. As our verification report 
indicates, we reviewed invoices from the unrelated trucking company to 
Dongbu Express that included unit prices, which, from the evidence 
observed, reflected prices below which Dongbu pays to Dongbu Express. 
On this basis, we accept the foreign freight charges as reported for 
purposes of the final results.

Comment 11

    According to petitioners, the amounts reported by Dongbu and used 
by the Department to determine the market rates for Dongbu's foreign 
brokerage and handling charges are incorrect. They reject the amounts 
used for the following reasons: that the evidence presented by Dongbu 
that freight charges are provided at arm's-lengh rates is irrelevant to 
whether the same company also provides unloading charges at arm's-
length rates; and, that Dongbu has not demonstrated that Dongbu Express 
provides freight services at arm's-length rates. On this basis, argue 
petitioners, the Department must determine the value of unloading 
charges incurred in Korea using alternative information, specifically, 
the highest reported brokerage and handling charge for any U.S. sales.
    Respondent argues that there is no substance or merit to the 
allegation that Dongbu Express provided freight services on anything 
other than an arm's-length basis. It asserts that petitioners are 
equally wrong in claiming that it is inappropriate or unreasonable for 
the Department to accept the reported freight charges based upon the 
overwhelming evidence that Dongbu Express provides other more valuable 
services at arm's-length rates. Respondent cites Final Determination of 
Sales at Less Than Fair Value; Certain Hot-Rolled Carbon Steel Flat 
Products, Certain Cold-Rolled Carbon Steel Flat Products, and Certain 
Corrosion-Resistant Carbon Steel Flat Products from Japan, 58 FR 37154 
(1993) (Comment 15) in asserting that the Department, when the arm's-
length methodology is unavailable, very often will assess the 
circumstances generally to determine whether the rates charged are 
likely to be commercial. In that case, Dongbu notes, the Department had 
only time and resources available to it to conduct a verification of 
two of the four companies to which the respondent paid freight charges. 
As a result, respondent states, the Department decided to accept the 
reported charges because there was no ``indication that their freight 
expenses were inaccurate.'' Also cited by respondent is Final 
Determinations 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 Korea, 58 FR 37176 (1993) 
in arguing that the Department also showed a reasonable flexibility in 
accepting alternative means of verifying the arm's-length nature of 
services for which there were no ready unrelated comparisons.

Department's Position

    We disagree with petitioners. Although the Department generally 
prefers to demonstrate that a related-party service was provided at 
arm's-length by contrasting those rates with charges for comparable 
services provided by unrelated companies, the Department does not 
automatically resort to best information available when that 
methodology is unavailable. Verification is the Department's means of 
testing information; it is not intended, nor is it possible, that every 
single item be examined during verification. See Monsanto Co. v. U.S., 
698 F. Supp. 275, 281 (CIT 1988). As our verification report indicates, 
we performed an arm's-length test on Dongbu's related party, Dongbu 
Express, and found that inland freight charges charged by an unrelated 
party were less than those charged by Dongbu Express. Thus, we believe 
Dongbu's brokerage and handling expenses to be at arm's-length.

Comment 12

    While supporting the Department's decision to apply partial BIA to 
Union because of the respondent's inability, at verification, to 
properly document home-market product characteristics, petitioners 
contend the Department should have resorted to total BIA. Petitioners 
argue, failure to verify Union's product characteristics taints not 
only union's product comparisons, but also Union's cost-of-production 
(``COP'') and constructed-value (``CV'') data, since those data are 
reported on the basis of specific control numbers, and each control 
number (``CONNUM'') is defined by a unique set of unverified product 
characteristics. To derive the per-ton cost of each CONNUM reported in 
its response, petitioners state that Union allocated costs on the basis 
of the total quantity produced of that CONNUM. If the home-market 
product characteristics used as a basis for defining CONNUMs are 
suspect, then the production quantities and cost allocations based on 
those CONNUMs are unreliable according to petitioners. They claim that, 
in a number of cases where the use of unverified data would have 
rendered meaningless any calculation employing that data, or where the 
Department was unable to verify a respondent's home-market product 
characteristics, the Department has resorted to total, rather than 
partial, BIA. In addition, petitioners note that the Department has 
routinely resorted to total BIA where a respondent has destroyed, or 
has been unable to produce, documents supporting critical aspects of 
its submitted data. Petitioners point out that the Court of 
International Trade (``CIT'') has recognized that parties who initiate 
unfair trade proceedings--as did Union by requesting this review--bear 
the burden of maintaining and retaining records relevant to the 
proceeding. See e.g., Krupp Stahl AG v. United States, 822 F. Supp. 789 
(CIT 1993) (``Krupp Stahl''). Petitioners contend that Union's data 
deficiency, which was caused by its failure to retain relevant 
production records and customer correspondence in a review that it 
requested, is every bit as pervasive and significant as in prior cases 
where the Department has resorted to BIA. According to petitioners, 
when this data deficiency is combined with the Department's inability 
to verify the accuracy of Union's home-market date of sale and Union's 
failure to report accurate dates of sale for a significant percentage 
of its U.S. sales, the Department has no alternative but to resort to 
total BIA in its final results in petitioners' view.
    Petitioners cite Krupp Stahl in support of their contention that 
the choice of which information to use as BIA must not reward a 
respondent. Petitioners take issue with the Department's partial BIA 
approach, and the Department's presumption that the largest possible 
adjustment to the prices of comparable products is no more than 20 
percent of the cost of manufacturing

[[Page 18556]]

(``COM'') of that product. Petitioners claim that the Department can 
have no idea of the extent to which improper matches may understate FMV 
because some or all home-market products may be improperly matched. 
Therefore, petitioners state, any sales of any product in Union's home-
market database could theoretically be compared to U.S. price, and the 
record shows that price differences between U.S. and Korean sales are 
in fact far greater than the adjustment preliminarily used by the 
Department. According to petitioners, the Department has therefore 
rewarded, rather than penalized, Union for its improper record-keeping 
procedures. Should the Department fail to use total BIA in its final 
results, the Department will invite manipulation and circumvention of 
the antidumping process by respondents, petitioners say. under the 
partial BIA methodology employed by the Department, petitioners claim a 
respondent could request a review and then destroy critical supporting 
documentation associated with any sale under the guise that such 
destruction is its normal business practice and assign to such sales 
the product characteristics it desires to ensure the most favorable 
price-to-price comparisons, secure in the knowledge that the Department 
will cap any BIA adjustment at a mere 20 percent of the product's COM. 
Similarly, petitioners argue, knowing that COP/CV data will not be 
adjusted despite the Department's inability to verify home-market 
product characteristics, respondents could simply assign costs to 
specific CONNUMs as they desire to ensure the most favorable outcome. 
For all of the above reasons, petitioners urge the Department to apply 
total BIA to Union for the final review results.
    Respondent rejects petitioners' claim that there are pervasive and 
significant data deficiencies. It states that the Department verified 
home-market date of sale and that the Department has already adjusted 
the data with regard to U.S. date of sale. Union states that there is 
no evidence on the record indicating that the home-market codes are 
wrong. It notes that product code questions for home-market sales have 
no implications for any of the cost data.
    Respondent states that petitioners' reliance on Cold-Rolled 
Stainless Steel Sheet from Germany and Krupp Stahl is misplaced. In 
that case, Union states, all records had been destroyed, preventing it 
from preparing a response to the Department's questionnaire and 
preventing the Department from conducting a verification. In this case, 
Union claims only two types of documents are at issue: mill 
certificates and customer correspondence. In Union's view, respondent 
had no reason to suspect that these documents, which it does not 
normally retain, would be deemed necessary at verification. Union 
concludes that the precedents ``underscore that the use of total BIA is 
appropriate only for a noncooperative respondent or a respondent whose 
submission is so fundamentally flawed that it cannot be used even with 
partial BIA.'' See, e.g., Antifriction Bearings, (Other Than Tapered 
Roller Bearings) and Parts Thereof from France, 60 FR 10900. Thus, 
respondent states that the Department must reject petitioners' request 
to use total BIA.
    Respondent notes that the statement in the verification report that 
the Department was ``unable to verify the accuracy of the product code 
system for [Union's] home-market sales, or determine the basis behind 
Union's coding of certain model-match characteristics,'' upon which 
petitioners rest their claim for application of total BIA, is 
contradicted by factual evidence on the record. Union asserts that, as 
part of the verification, the Department: (1) Repeatedly tied the 
product codes reported on Union's tape to the product codes used on 
commercial invoices maintained in the normal course of business; (2) 
traced the reported invoice data, including the product code, from the 
commercial invoice to Union's sales ledgers, and thus into the audited 
financial accounting system; (3) compared the product codes with 
Union's product manual, and found no discrepancies; and (4) repeatedly 
checked product codes for U.S. sales (which are the same product codes 
used in the home-market) against mill certificates. Union also asserts 
that the decision memorandum forwarded to the Assistant Secretary 
failed to mention the first three of these facts. Rather, Union avers, 
the Department's memorandum gives central status to two types of 
documents--mill certificates and customer notifications--on no basis 
other than the fact that these documents were not retained. Union also 
claims that, by not notifying the company during verification of its 
concerns with regard to product characteristics, the Department 
deprived Union of an opportunity to address those concerns.
    Union, citing recent cases (see e.g., Brass Sheet and Strip from 
Canada, and Oil Country Tubular Goods from Korea), argues that the 
Department routinely relies on commercial documentation, such as 
invoices and sales ledgers, to verify internal product codes, and does 
not normally tract product codes to production records.
    Union maintains that there exists on the record production 
information, viewed by the Department at verification, supporting its 
internal product characteristics. The Department, according to Union, 
examined post-POR mill certificates. In addition, Union claims that the 
Department's cost verifiers ascertained that Union used a single 
product coding system, which enabled them to test the quality and 
specifications of input materials to the quality and specifications of 
the finished product. It is Union's view that the Department's 
verifiers could have tied Union's product codes to its inventory 
withdrawal records and to entries into the finished goods inventory, 
which in turn could have been tied to production records such as 
inspection cards and daily production reports, but they did not do so. 
Alternatively, Union suspects the Department could have reconciled 
total sales to total inventory entries or withdrawals, thereby 
confirming that the amount sold of a given product matched the total 
amount produced and entered into finished goods inventory, but it did 
not.
    Respondent reiterates that there is only one internal product 
coding system used for home-market sales, U.S. sales and cost of 
manufacturing. Respondent claims it is beyond dispute that the 
Department verified both the U.S. sales data and cost data, which 
confirms the integrity of the entire internal product coding system, 
even if the Department was not fully satisfied that could tie home-
market sales to mill certificates or customer correspondence.
    Union also asserts that its recordkeeping practices do not differ 
significantly from Dongbu's, which, like Union, did not retain home-
market mill certificates or customer correspondence. Even if Union had 
kept records in a significantly different manner from Dongbu's Union 
cites Coated Groundwood Paper from Finland; Final Determination of 
Sales at Less Than Fair Value (56 FR 56363--November 4, 1991) as an 
example where the Department relied on very different documentation to 
verify two respondents' respective product characteristics. In that 
case, Union claims the Department relied upon Metsa-Serla's product 
coding sheet to verify that respondent's product characteristics. It 
says Metsa-Serla was not penalized because it was unable to provide 
mill orders and the other respondent, UPM/Rupola, was.
    Union states that the purported difficulty in verifying home-market 
product characteristics is limited to

[[Page 18557]]

those defined based on the internal product codes in Union's sales 
ledgers. Union claims that the majority of the reported product 
characteristics are not derived from the internal product code. The 
product code was used as a basis of only 5 product characteristics out 
of 11. Even when the product code was relevant, it was generally 
relevant for only some distinctions within a product characteristic 
(e.g., the distinction between different types of paints).
    Union states that the record of this review does not provide any 
explanation or reasoned basis for the Department's product hierarchy. 
Under those circumstances, it is Union's opinion that the Department 
may not lawfully use partial BIA even if Union fails to support its 
product distinctions sufficiently.
    Even assuming certain product characteristics could not be 
verified, Union argues, the Department's conclusion that the maximum 
possible adjustment for differences in physical characteristics of the 
merchandise (``difmer'') is necessary to account for the worst case is 
unwarranted. The Department could have drawn an adverse inference with 
respect to the specific product characteristics at issue.
    Petitions dispute Union's suggestion that only a minority of 
product characteristic variables were derived from the internal product 
code. Petitioners point out that the verification report specifically 
says the opposite in three different places, and that Union never 
attempted to clarify or rebut these statements. Union's claim that 
certain product characteristics were derived from the product's name, 
is a non sequitur in petitioners' view. They argue that while these 
physical characteristics may be associated with the product name, that 
alleged fact in no way demonstrates that the product actually produced 
and sold possesses the physical characteristics attributable to it by 
virtue of its product name. Petitioners add that such a demonstration 
could only have been effected by providing the Department with 
production records indicating the physical characteristics of the 
products produced and sold (e.g., production orders or mill 
certificates), which Union failed to do. In any event, petitioners 
argue, even if a minority of Union's reported product characteristics 
were derived from its internal product code, it would be reasonable to 
limit application of partial BIA to specific product characteristics, 
because Union's home-market sales, cost, and constructed-value data 
would still be tainted. Petitioners suggest, the Department could use 
as partial BIA the highest VCOMH reported in Union's database for 
purposes of calculating the difmer adjustment as well as COP and CV.
    Respondent denies that the Department's preliminary results reward 
Union and urges the Department to reject the notion that, absent any 
evidence of manipulation, a 20 percent difmer adjustment would provide 
future respondents with an incentive to manipulate the model-match 
process.
    Union argues that even if the Department justifiably determined 
that Union's product characteristics had inadequately been verified, 
its decision to resort to partial BIA was wrong, since the statute 
affords the Department broad discretion to base FMV on CV. Because 
Union's CV data was verified and reflects the cost of the products sold 
in the United States, and the Department's stated policy is to use as 
much of a respondent's data as possible, the Department had a 
responsibility to use Union's own, verified data rather than using a 
flat, across-the-board difmer of 20 percent as BIA. Respondent notes, 
that a comparison of U.S. price to CV is totally unaffected by the 
perceived problems with the verification of product characteristics and 
suggests that in light of the Department's concerns, the use of CV is 
``the obvious alternative.''
    Petitioners counter that Union's CV database is just as tainted by 
the failure adequately to verify product characteristics as Union's 
sales database. Union, they claim, mistakenly believes that, because 
the product characteristics associated with the merchandise sold by 
Union in the U.S. market are not in the dispute, the costs associated 
with producing that merchandise are also not in dispute. Petitioners 
state that, due to the Department's inability to verify the accuracy of 
Union Steel's reported home-market product characteristics, the 
physical characteristics of the products whose production levels Union 
used in calculating the unit cost of each given product are either 
unknown or unreliable.
    Petitioners also affirm that the statute does not give the 
Department discretion to use CV as FMV when home-market sales data is 
not verified. They note the statute provides that the Department may 
use CV when home-market sales are found to be below cost in significant 
numbers and when there are no matchable numbers in the home-market 
because they exceed the 20 percent difmer test. In those situations, 
petitioners observe, the Department has before it otherwise usable and 
properly verified data which cannot be used in margin calculations. In 
this case, however, the Department did not have home-market sales data 
that was otherwise usable according to petitioners. Petitioners argue 
that when the Department is unable to verify submitted data, as it was 
in this case, the statute requires the Department to resort to BIA, 
which is always an adverse inference. In this case, they claim using 
Union's CV data is not adverse to Union and would reward Union.
    Petitioners counter that the record is unclear as to whether the 
Department ``repeatedly'' tied the product codes to sales and 
production documents, as claimed by Union. Even if the Department did 
repeatedly perform each of these tasks cited by Union, petitioners 
argue that none of these tasks (i.e., tying product codes from sales 
invoice to sales tape, tracing invoice data to sales ledgers, checking 
product codes against a product code key, checking U.S. product 
characteristics against mill test certificates) in any way confirmed 
that products sold in the home-market possessed the physical 
characteristics reported by Union.
    Petitioners claim that the statute requires the Department to 
verify the accuracy of the data submitted, not some proxy thereof. They 
note that Union has admitted on the record that its home-market 
customers are somewhat less concerned than U.S. customers with the 
accuracy of product specifications. Therefore, petitioners argue, 
verification of U.S. product characteristics cannot serve as proxy or 
surrogate for verification of home-market product characteristics. 
Petitioners allege that, to the extent that the internal product code 
was the basis for matching home-market products to U.S. products, Union 
had an incentive to ensure that the product code assigned to an 
individual home-market sale resulted in the most favorable match. 
Petitioners claim that Union does not seem to recognize that submitted 
data must be verified not to its own satisfaction, but to the 
Department's.
    Petitioners also argue that the verification reports cited by Union 
as evidence that the Department normally applies a lower standard for 
verification of product characteristics than was the case here are all 
inapposite. In those cases, petitioners claim, the Department was not 
verifying the accuracy of product characteristics as reflected by 
product codes, but rather whether the merchandise was in-scope versus 
out-of-scope, or whether the respondent had completely reported all 
sales of the subject merchandise. In those cases,

[[Page 18558]]

according to petitioners, the Department was provided with other 
documentation, including documentation furnished by the customer, such 
as purchase orders and order confirmations. Further, as Union has 
conceded, the verification techniques employed in a given instance are 
dependent on the specific facts of each case. Petitioners state that 
the Department has considerable latitude in conducting verification and 
``[t]he decision to select a particular method of verification rests 
solely within [the Department's] sound discretion.'' See Floral Trade 
Council v. United States, 822 F. Supp. 766 (CIT 1993). Petitioners 
stress that Union, as the requester of the review, has only itself to 
blame for not preserving vital documentation months after the review 
had started. In addition, petitioners note that Union gave the 
Department reason to distrust the company's reported product 
characteristics by placing on the record a report, prepared by a 
private consulting firm in Union's employ, which stated that the 
respondent was incapable of tracing its production records to 
individual shipments.
    Petitioners claim that Union's post hoc explanation of the 
production records it allegedly maintained does not demonstrate the 
accuracy of its reported home-market product codes. Petitioners allege 
that the explanation furnished by Union with regard to post-POR records 
allegedly examined by the Department's verifiers constitutes new 
factual information that should be stricken from Union's case brief. 
Petitioners argue that explanation does not exist anywhere on the 
record, nor is it clear that verification reports or exhibits support 
that purported explanation. Consequently, petitioners request that this 
explanation be stricken from the record and ignored on the grounds that 
it is untimely submitted. In any event, these materials were examined 
by petitioners for the limited purpose of ascertaining the accuracy of 
Union's reported date of sale in the home-market. Therefore, 
petitioners claim any assertion that these materials support home-
market product characteristics is post hoc and unverified.
    Petitioners also deny that the cost verification supports the 
validity of Union's internal product coding system. They claim that the 
cost verifiers did not ascertain whether the reported internal codes 
accurately reflected the characteristics of products produced and sold. 
Rather, petitioners say, the verifiers tested input costs on the basis 
of the specifications of Union's internal product code and physical 
dimensions. It is unclear, petitioners note, whether the products that 
Union reported as coming off its production line actually possessed the 
physical characteristics represented by the internal product code 
assigned to them in the accounting records maintained with respect to 
production. Finally, petitioners argue, the fact that the accuracy of 
the internal code may have verified with respect to one market (the 
United States) does not mean it verified with respect to the other 
(Korea). Even if the Department incorrectly concluded that the accuracy 
of Union's internal product code with respect to products produced for 
the home-market was verified, the accuracy of the codes appearing on 
self-generated commercial invoices for home-market sales remains 
unverified. Petitioners object to Union's suggestion that the 
Department could have employed alternative verification techniques, 
thereby trying to usurp the Department's role. They note that the 
verification outline clearly put the respondent on notice as to the 
goals of the verification and as to the type of supporting 
documentation Union would be required to produce. It was therefore 
``unconscionable'' for Union to destroy records that would have allowed 
the Department to verify the accuracy of the most critical component of 
antidumping analysis--the product characteristics assigned to each 
control number, according to petitioners. It is incumbent upon a 
respondent to volunteer to the Department's verifiers information as to 
what sort of documentation is available to permit verification. It 
would appear that by inserting the consulting firm's report on the 
record of the verification, Union was fully aware of the problem posed 
by verifying home-market product characteristics. Yet it was not until 
the case brief that Union volunteered the existence of documents which 
it claims would have permitted such a verification. Union had 
repeatedly denied that production records could be tied to shipment 
records. Union also suggests post hoc that inventory records could have 
been used to verify product characteristics, yet the consulting firm's 
report states outright that these records are inaccurate. If the 
product code could not be verified for home-market sales, petitioners 
suggest, it is doubtful that the accuracy of the product codes in the 
inventory records could have been verified. Petitioners affirm that 
there is no requirement that the Department inform a respondent, during 
verification, of errors and deficiencies discovered during same.
    Petitioners dispute Union's contention that the Department's 
preliminary decision to use BIA was arbitrary because it was based on a 
comparison of Union's recordkeeping practices with Dongbu. Petitioners 
find this ``strange,'' since in its case brief, Union itself compared 
its recordkeeping practices to those of other respondents in non-flat-
rolled-steel cases in an attempt to demonstrate the validity of its 
records. As to Union's contention that, in fact, its recordkeeping 
practices differ little from Dongbu's, petitioners point out that Union 
officials or counsel were not present at Dongbu's verification, that 
Dongbu never asserted (as Union did) that it was incapable of tracing 
production to shipment, that it was able to show certain production 
records to the Department, and that Dongbu had not destroyed all of its 
home-market production records relating to the POR.

Department's Position

    We disagree with petitioners that the Department should have 
restored to total BIA. The Department applies total BIA when a 
respondent refuses to provide the information requested in a timely 
manner or in the form required, or otherwise significantly impedes a 
proceeding. See Antifriction Bearings (Other than Tapered Roller 
Bearings) and Parts from France, et al.; Final Results of Antidumping 
Administrative Reviews, 60 FR 10900, 10908 (February 28, 1995), Allied-
Signal Aerospace Co. v. United States, 996 F.2d 1185 (Fed. Cir. 1993); 
NTN Bearing Corp. of America v. United States, Slip Op. 93-129 (CIT 
July 13, 1993). The Department considers the errors and inconsistencies 
in Union's submission to be of such a nature that they do not warrant 
the use of BIA, as discussed below. With respect to U.S. date of sale 
discrepancies, we agree with respondent that this has already been 
addressed in the preliminary results by using date of shipment as date 
of sale.
    We agree with respondent that the case cited by petitioners 
regarding the destruction of records are not applicable to this 
instance. In Krupp Stahl AG v. United States, 822 F. Supp. 789 (CIT 
1993), for instance, respondent purposefully destroyed all records for 
the POR, making it impossible for them to respond to our questionnaire 
or enable us to verify any submitted information. That is not the case 
with Union. Following its normal procedures, Union did not retain mill 
certificates or other documents needed to verify home-market product 
characteristics. However, all other documentation was maintained and

[[Page 18559]]

there is no evidence that respondent's failure to retain certain 
records was intended to impede our ability to conduct this proceeding.
    Union's claim that the difficulty in verifying home-market product 
characteristics was limited to those defined by the internal product 
code is partially correct. The internal product code did serve as the 
basis for categorizing many of the corrosion-resistant model-match 
variables; however, it was the basis for a majority of the variables, 
rather than just the five referenced by respondent. In fact, five of 
the six most important variables in the model-match hierarchy were 
derived from the internal product code, and Union's methodology for 
categorizing an additional variable (Yield strength) on specific sales 
was not explained to the Department. Since Union did not maintain 
records of any correspondence with its home-market customers prior to 
shipment indicating the product being sought, and the description of 
products sold in the home market and appearing on the commercial 
invoices was only the internal product code, with the exception of 
thickness and width, the Department was required to verify that the 
product code represented an accurate reflection of the product sold and 
shipped. The fact that Union did not preserve production records for 
its home-market sales, such as mill certificates, which would provide 
this detailed information on products produced and which would like 
these products to specific sales, prevented the Department from 
determining the accuracy of this system.
    With respect to Union's claims that the Department relies on 
commercial documentation, such as invoices and sales ledgers, to verify 
internal product codes, we note that Union's invoices--unlike those for 
many companies do not contain a detailed product description of the 
product sold. Neither did Union maintain any customer correspondence or 
any documentation which contained such a detailed product description. 
With respect to the cases cited by Union, we note that the reference in 
Brass Sheet and Strip from Canada was not relevant to verifying product 
characteristics as it involved a volume and value trace. The reference 
to Small Diameter Circular Seamless Carbon and Alloy Steel Standard, 
Line and Pressure Pipe from Brazil and Germany was also not relevant to 
the present case, as Mannesmann used universal product codes. No such 
claim was made by Union; indeed Union consistently referred to its 
codes as ``internal'' codes.
    Union's allegation that the internal product code was the same as 
that used for U.S. sales and the Department was able to verify its 
accuracy is irrelevant. Products sold in the U.S. had commercial 
invoices with detailed descriptions of the product sold, and the 
necessary mill certificates that could be used to confirm these product 
descriptions. In addition, products sold in the two markets possess 
different physical and mechanical characteristics, are made to 
different specifications, and are coded differently in the internal 
product code.
    We note that Union, in its case brief of October 2, 1995 (at 15 et 
seq.), almost seven months after the verification and five months after 
the sales verification report (``SVR'') was issued, suggests that the 
Department could have used alternative verification techniques to 
verify Union's home-market product characteristics. If that were true, 
respondent could have suggested these techniques during the 
verification itself, but did not do so. Only the respondent is in a 
position to know what documentary evidence there exists in its 
possession; it is the respondent's responsibility to determine, prior 
to the verification, what documentary evidence exists in its records 
supporting the information previously supplied to the Department, and 
to provide such documentary evidence to the Department's verifiers. It 
is not the responsibility of the Department's verifiers to guess what 
records might be in the respondent's possession and to suggest to the 
respondent how it might best document the information provided in the 
questionnaire responses. We note further that, at verification, Union 
entered as a verification exhibit a consulting report stating that 
Union's production and inventory records are inaccurate. See Union's 
SVR of May 16, 1995, at 10. This calls into question the possibility of 
successfully employing the alternative techniques Union is now 
advocating. Finally, contrary to Union's claim, it is not true that at 
verification the Department examined post-POR mill certificates as well 
as ``factory inspection cards'' for certain home-market sales within 
the POR.
    Union's assertion that its recordkeeping practices do not differ 
significantly from Dongbu's is also incorrect. Dongbu, like most other 
parties in these flat-rolled steel proceedings, did maintain mill 
certificates on at least some of its home-market sales during the POR. 
Dongbu also retained various customer correspondence containing product 
descriptions. While it is not the Department's practice to mandate that 
respondents keep their records in a particular manner, in this case all 
of this information, as well an any alternative documentation which 
could have served to verify reported product characteristics, was 
lacking for Union, or not brought to the Department's attention.
    As a result of our analysis of all comments received following our 
preliminary results and a re-evaluation of the information on the 
record for this proceeding, we are changing the methodology from that 
used in the preliminary results. Because Union's reported home-market 
product characteristics were not verifiable, it was not possible for 
the Department to make reliable price-to-price comparisons. Under such 
circumstances, the use of total BIA normally would be warranted in 
calculating FMV. In this particular case, however, the Department has 
concluded that it would be inappropriate to use total BIA for the 
following reasons:

--Union's normal business practice at the time was not to retain 
certain production records, such as mill certificates;
--there is no evidence on the record that Union deliberately refrained 
from retaining those records with the purpose of impeding the 
Department's ability to conduct this proceeding;
--we were able to verify product characteristics of the merchandise 
sold in the U.S. market and to link specific U.S. sales to control 
numbers; and
--CV was associated with specific control numbers.
Accordingly, we have used CV to determine FMV, in accordance with 
section 773(a)(2) of the Act. In any future review of this order, 
however, the Department expects Union to retain any and all records, 
including production records, necessary to permit the Department to 
verify Union's home-market product characteristics.

    We disagree in part with petitioners' assertion that the CV cost 
data are not viable because production quantities were used to allocate 
costs. While it is true that the quantities of each control number sold 
were used to reconcile total costs to respondent's financial 
statements, these quantities were not used to build up individual costs 
by control number. Instead, Union used average material costs based on 
withdrawals from inventory. The weighted-average costs were then 
applied to a specific control number, and therefore, the final 
production quantity of that control number was not relevant. For 
fabrication costs, Union used the pass-through quantities for each 
process to accumulate and allocate

[[Page 18560]]

costs to a specific control number. Again, the final production 
quantity was not used to allocate costs, and therefore, is irrelevant. 
Thus, we are satisfied that Union's method of assigning a cost to a 
specific control number is reasonable and that total costs (i.e., 
materials, labor, overhead) were allocated to either home-market, 
third-country, or U.S. merchandise.
    In calculating FMV on the basis of CV, we did not use the statutory 
minimum eight-percent profit. Section 773(e)(1)(B)(ii) of the Act 
requires that, as a component of CV, an amount for profit shall be used 
that is equal to that usually reflected in the sales of the merchandise 
made by producers in the country of exportation, except that the amount 
of profit shall not be less than 8 percent of the sum of such general 
expenses and cost. In this instance we were unable to determine the 
actual amount of Union's profit because the profit component of Union's 
reported CV data is derived from Union's home-market COP database, 
which, as we explained above, is not usable because we could not verify 
Union's home-market sales product characteristics. Because these 
product characteristics could not be verified, we were unable to match 
specific sales to specific costs; thus, it was not possible to 
determine the actual profit for specific products based on a 
transaction-by-transaction build up. Consequently, because of this 
failure of verification, the Department, pursuant to section 776(c) of 
the Act, resorted to the use of BIA in order to determine the profit 
component to be used in calculating CV. As partial BIA, we have used 
the weighted-average profit for all above-cost home-market sales.
    In order to determine which sales were made at prices above the 
COP, we calculated a simple average COP based on all home-market sales. 
We were unable to calculate a weighted-average COP because we could not 
link Union's COP database to individual home-market sales as Union's 
home-market sales product characteristics could not be verified. After 
calculating the simple average COP, we compared that cost to each 
individual home-market sale to determine which sales were made at 
prices above the COP.
    Once we had determined which home-market transactions were made at 
prices above the simple average COP, we calculated the transaction-
specific profit for those sales. This was done by first calculating the 
sales value of each individual home-market transaction (i.e., net price 
times sales quantity). From each sales value we subtracted the value of 
the COP for that particular transaction to determine the transaction-
specific profit (i.e., sales value minus simple average COP times sales 
quantity). Finally, we weight-averaged the transaction-specific profits 
for purposes of deriving an overall profit percentage for use in the CV 
calculation. We were able to weight-average profit because we verified 
the quantities and prices of Union's individual home-market sales 
transactions.
    Given Union's home-market data deficiencies, we determined that 
this approach was a reasonable means to calculate the profit component 
of CV. We used as much of Union's verified data as possible. However, 
where verified data were not available, we resorted to partial BIA, 
still using Union's data but in a more adverse manner than if the data 
in question had not failed to verify. We concluded that adopting this 
partial BIA approach, rather than using the statutory minimum profit, 
comported with the statute, the Department's practice, and with Court 
precedent. As the Department has previously noted, ``the noncomplying 
respondent cannot find itself in a better position as a result of 
failing to comply with the Department's information request than had 
the respondent provided the Department with complete, accurate and 
timely data.'' Replacement Parts for Self-Propelled Bituminous Paving 
Equipment From Canada; Final Results of Antidumping Duty Administrative 
Review, 56 FR 47451, 47453 (September 19, 1991). See also National 
Steel Corp., et al. v. United States, 870 F. Supp. 1130, 1135 (CIT 
1994) (approving use of adverse partial BIA when only part of the 
submitted information is deficient).
    Finally, we agree with petitioners that certain statement made by 
Union its in its case brief and rebuttal brief constitute new factual 
information within the meaning of section 353.31(a)(3) of the 
Department's regulations, and have stricken this information from the 
record. We have also stricken from the record references made by Union 
to the DKI verification report in the concurrent proceeding involving 
certain cold-rolled carbon steel flat products from Korea. That is a 
separate proceeding, and the information in question is not on the 
record of this case.
    As we are not using total BIA, comments regarding the choice of a 
total BIA margin are moot.

Comment 13

    Petitioners contend that Union Steel's submitted COP and CV data 
must be revised to reflect product-specific costs. According to 
petitioners, Union improperly assigned the same cost of manufacturing 
to multiple products in its COP and CV databases when these products' 
physical characteristics differed in yield strength and, or, width. The 
petitioners argue that these products with the same COM figures are not 
identical products and, therefore, should have distinct production 
costs. Thus, to avoid any manipulation of cost, the petitioners request 
that the Department adjust Union's cost data to eliminate the 
distortion caused by inappropriate cost allocations.
    Union contends that its cost data was reported to an appropriate 
degree of specificity. Union states that the petitioners claim is made 
without any substantial support because the Department's hierarchy is 
not based on physical characteristics alone, and that there are no 
reasons to expect any given company to track possible small differences 
in costs that may be associated with different classifications in the 
hierarchy. Additionally, the Department's hierarchy classification 
chose to conform to commercial practices rather than production 
characteristics which cause some products to have similar costs of 
manufacturing. Furthermore, Union states the Department thoroughly 
verified product costs by control number and found no discrepancies.

Department's Position

    For the final results, we accepted Union's control-number-specific 
costs. We found that Union's cost data was allocated to a sufficient 
level of product detail following the Department's section D 
questionnaire instructions. Following these instructions, it is 
possible for some of Union's control numbers to have similar cost of 
manufacturing for products that varied only in yield strength and 
width. Specifically, the determination of a product's manufacturing 
costs that are associated with yield strength is based mainly on the 
carbon content and possibly any micro alloying elements of the raw-
material input. A raw material input with a higher carbon level will 
produce a product with a higher yield strength. However, even though 
raw-material inputs may vary in carbon content, their acquisition cost 
can be identical. Additionally, Union weight-averaged its raw materials 
based on other industry characteristics of the raw material input than 
the carbon content (i.e., commercial quality, drawing quality and ASTM 
grade). Hence, it is possible for some of Union's products that are in 
different strength bands to have no cost differential. As for 
petitioners' concern that the cost of

[[Page 18561]]

manufacturing should differ for products with different width, we are 
satisfied that the respondent reasonably allocated costs associated 
with width differentials. For certain types of cost, Union used 
processing times to allocate fabrication costs by deriving an average 
cost. This average cost was then applied to specific control numbers. 
Therefore, due to this averaging it is possible for identical products, 
with the exception of width, to have the same cost of manufacturing.

Comment 14

    Petitioners contend that the conversion factor used by Union to 
convert home-market sales of sheet reported in theoretical-weight terms 
to actual-weight terms was flawed, because Union was unable to document 
the basis for its formula at verification and because the formula, by 
Union's own admission, was based on incomplete data covering only a 
portion of the POR. Petitioners suggest instead that the Department 
apply a conversion factor derived from the lowest ratio experienced by 
Union on the basis of information on the record.
    Respondent counters that the Department was able to verify the 
theoretical-to-actual weight conversion factor. Union states that the 
sales verification report was inaccurate on this point, and that it 
explained the nature of the discrepancy immediately following the 
issuance of the report.

Department's Position

    Because we based FMV on CV, this comment is moot.

Comment 15

    Petitioners argue the Department should deny Union's claimed 
circumstance-of-sale adjustment for inventory carrying costs, since 
during verification Union prevented the Department's staff from 
actually examining the area in the mill where the physical inventory is 
stored. Petitioners claim that allowing the claimed adjustment would 
only reward Union's obstructiveness.
    Respondent retorts that these costs were fully verified. Union 
notes that it does not have a distinct warehouse for finished goods, 
and the verification team did examine inventory areas at the mill.

Department's Position

    We disagree with petitioners. During the sales verification, the 
Department's verifiers mistakenly understood that there was a separate 
area in Union's mill dedicated to storing inventory. The cost verifies, 
however, understood differently, and ascertained that steel coils were 
being stored on the mill floor. The department also verified Union's 
calculation of inventory carrying costs and traced the figures to 
Union's accounting records. The Department, therefore, believes there 
is sufficient information on the record in support of this adjustment.

Comment 16

    Petitioners claim that the Department should treat Union's U.S. 
sales through Union America (``UA'') as ESP transactions for purposes 
of the final results. Petitioners base this claim on three broad 
reasons: (1) Union's U.S. sales through UA do not meet the statutory 
definition of purchase-price transactions; (2) the limited factual 
information on the record only supports a conclusion that the subject 
sales are ESP transactions; and (3) declarations made on Customs form 
7501 clearly indicate that UA is the purchaser of the imported 
merchandise.
    In determining whether a U.S. sales transaction meets the statutory 
definition of purchase price, the Department looks at whether (a) the 
merchandise was shipped directly from the manufacturer to the first 
unrelated purchaser in the United States, without being introduced into 
the inventory of the related shipping agent; (b) direct shipment from 
the manufacturer to the unrelated parties was the customary commercial 
channel for sales of the merchandise between the parties involved; and 
(c) the related selling agent in the United States acted only as a 
processor of sales-related documentation and a communications link with 
the unrelated U.S. buyers. Petitioners claim that the first two factors 
may be indicia pointing to the conclusion that sales took place in a 
foreign country for exportation to the United States, but are not 
dispositive of the issue. In the steel industry, petitioners contend, 
these factors are not informative because most international shipments 
are shipped directly to the customer and not carried in inventory. 
Therefore, even if the merchandise is shipped directly to the customer 
and not placed in inventory in the United States, more evidence is 
needed to conclude that a sale is a purchase-price transaction, 
according to petitioners. Under the circumstance, they argue, the focus 
must be on the third factor of the Department's test.
    Petitioners contend that the record evidence demonstrates that UA 
acts as more than a mere processor of sales-related documentation on 
behalf of Union's U.S. purchasers. They report that UA is involved in 
the following activities: the arrangement and payment for warehousing 
expenses on U.S. sales; the financing of U.S. sales; and the hiring of 
commission agents and entrance into commission arrangements with same. 
Petitioners state that UA reported substantial inventories of steel 
products in 1993, and that UA will, for certain warranties, 
independently authorize a compensatory cash discount without contacting 
Union. Petitioners further report the following: that UA has the 
authority to grant rebates; that UA is engaged in advertising on behalf 
of Union; that UA assumes the seller's risk pursuant to the terms of 
the invoices issued to U.S. customers; that UA is the carrier of 
Union's marine insurance policy and pays the premium for that 
insurance; that UA is the importer of record and pays U.S. duties, 
brokerage, and handling on U.S. sales; that UA pays Union the transfer 
price for the merchandise and in turn is paid by the U.S. customer, 
thereby bearing the risk of non-payment by U.S. customers; and that UA 
takes title to the merchandise at the time it is loaded in Korea.
    Petitioners assert that UA repeatedly declared on Customs form 7501 
(``Entry Summary'') that it purchased the merchandise. Therefore, the 
transaction between Union and UA is a purchase ``for export to the 
United States,'' so that the transactions between UA and its unrelated 
purchasers are necessarily sales ``in the United States'' meeting the 
definition of ESP transactions, in petitioners' view. They add that UA 
entered the merchandise in question for appraisement at its 
``transaction value,'' which is defined as ``the price actually paid or 
payable for the merchandise when sold for exportation to the United 
States.'' If the importer of record (UA) has entered the merchandise at 
the price established between the related parties as the transaction 
value, then by definition the sale was for export to the United States 
and the sale between UA and the first unrelated U.S. purchaser cannot 
also be the sale for export to the United States. It follows, say 
petitioners, that the latter sale must be an ESP transaction.
    Respondent answers that the Department properly treated the vast 
majority of Union's U.S. sales through Union America as purchase price 
sales. The terms of sales are set prior to importation. Union claims 
that petitioners concede that the merchandise in question was shipped 
directly from the manufacturer to the unrelated buyer, without being 
introduced into inventory of the related shipping agent, and direct 
shipment was the customary channel of distribution.

[[Page 18562]]

    With regard to whether UA acted only as a processor of sales-
related documentation and a communications link, Union cites the 
following: UA does not warehouse the imported merchandise; UA does not 
sell from inventory; UA does not finance U.S. sales; UA does not have 
the authority to authorize a cash discount for warranty claims; Union 
Steel sets guidelines for hiring of any commission agents; UA does not 
enter into rebate agreements; UA does not engage in any significant 
advertising on behalf of Union; Union Steel ultimately assumes the 
seller's risk pursuant to the terms of the invoices issued to U.S. 
customers; UA's procurement of marine insurance is a normal function of 
related selling agent; and that UA's role as the importer of record and 
payment of U.S. duties, brokerage, and handling on U.S. sales is a 
normal function of a related selling agent. Union further states that 
although UA issues commercial invoices as Union's proxy, it merely 
processes sales-related documentation, Union Steel bearing the final 
responsibility for the transaction. Union notes that whether or not UA 
takes title to the merchandise at the time of loading in Korea is 
irrelevant, since it must take title of the merchandise in order to 
resell it to an unrelated customer in the United States. Thus, in 
respondent's view, Union has strictly limited the role of UA to that of 
a conduit for Union's sales and processors of sales-related 
documentation and these sales should be treated as purchase price.

Department's Position

    We agree with respondents. We determined that purchase price was 
the appropriate basis for calculating USP. Typically, whenever sales 
are made prior to the date of importation through a related sales agent 
in the United States, we conclude that purchase price is the most 
appropriate determinant of the USP based upon the following factors: 
(1) The merchandise in question was shipped directly from the 
manufacturer to the unrelated buyer, without being introduced into the 
inventory of the related shipping agent; (2) direct shipment from the 
manufacturer to the unrelated buyers was the customary commercial 
channel for sales of this merchandise between the parties involved; and 
(3) the related selling agent in the United States acted only as a 
processor of sales-related documentation and a communication linked 
with the unrelated U.S. buyers. See, e.g., Certain Stainless Steel Wire 
Rods from France; Final Determination of Sales at Less than Fair Value, 
58 FR 68865, 68868-9 (December 29, 1993); Granular 
Polytetrafluoroethylene Resin from Japan: Final Results of Antidumping 
Duty Administrative Review, 58 FR 50343-4 (September 27, 1993). These 
criteria were first developed in response to the Court of International 
Trade's decision in PQ Corporation v. United States, 652 F. Supp. 724, 
733-35 (CIT 1987). It has also been considered in cases with indirect 
purchase-price transactions involving exporters and their U.S. 
affiliates. See, e.g., Zenith Electronics Corp. v. United States, 
Consol. Ct. No. 88-07-00488, Slip Op. 94-146 (CIT 1994).
    Furthermore, the Department has recognized and classified as 
indirect purchase price sales transactions involving selling activities 
similar to those of UA's in other antidumping proceedings involving 
Korean manufacturers and their related U.S. affiliates. See, e.g., 
Final Determination of Sales at Less Than Fair Value; Circular Welded 
Non-Alloy Steel Pipe from the Republic of Korea, 57 FR 42942, 42950-1 
(September 17, 1992). In the present review, for sales considered to be 
purchase price in the preliminary results we found that: (1) Union's 
sales through UA, its related sales agent in the United States, are 
most always shipped directly from Union to the unrelated buyer and only 
rarely are introduced into UA's inventory; (2) Union's customary 
channel of distribution is direct shipment, although certain limited 
sales are normally introduced into UA's inventory; (3) UA performed 
limited liaison functions in the processing of sales-related 
documentation and a limited role as a communication link in connection 
with these sales. UA's role, for example, in extending credit to U.S. 
customers, processing of certain warranty claims, limited advertising, 
processing of import documents, and payment of cash deposits on 
antidumping and countervailing duties, appears to be consistent with 
purchase-price classification. These selling services as an agent on 
behalf of the foreign producer are thus a relocation of routine selling 
functions from Korea to the United States. In other words, we 
determined that UA's selling functions are of a kind that would 
normally be undertaken by the exporter in conneciton with these sales. 
More specifically, we regard selling functions, rather than selling 
prices, as the basis for classifying sales as purchase price or ESP. 
While in some cases certain merchandise sold by Union was entered into 
UA's inventory, this merchandise was sold prior to the importation of 
the merchandise, but not from UA's inventory. When all three of the 
factors already described for sales made prior to the date of 
importation through a related sales agent in the United States are met, 
we regard those selling functions of the exporter as having been 
relocated geographically from the country of exportation to the United 
States, where the sales agent performs them. The substance of the 
transaction or the functions do not change whether these functions are 
performed in the United States or abroad. In this case, Union has 
transferred these routine selling functions to its related selling 
agent in the United States and the substance of the transaction is 
unchanged.

Comment 17

    Petitioners contend the Department must deduct actual 
countervailing and antidumping duties from USP when they are paid by 
the respondent or related parties because (1) the plain language of the 
statute requires this conclusion; (2) court decisions are also 
consistent with this conclusion; and (3) the record evidence 
demonstrates that UA is paying for countervailing and antidumping 
duties on behalf of Union's U.S. sales and that those costs are 
included in the price to the first unrelated party.
    With respect to the first point, petitioners cite section 772(d)(2) 
of the Act, which provides in relevant part that ``the purchase price 
and the exporter's sales price shall be * * * reduced by--except as 
provided in paragraph (1)(D), * * * United States import duties, 
incident to bringing the merchandise from the place of shipment in the 
country of exportation to the place of delivery in the United States'' 
(19 U.S.C. 1677a(d)). Antidumping and countervailing duties are plainly 
import duties ``incident to bringing the merchandise from the place of 
shipment in the country of exportation to the place of delivery in the 
United States.'' The language of the statute does not indicate that 
antidumping and countervailing duties are to be excluded from the 
phrase ``import duties.'' Moreover, petitioners say, when this 
provision is read in conjunction with section 772(d)(1)(D) of the Act, 
the conclusion that antidumping and countervailing duties constitute 
``import duties'' under section 772(d)(2)(A) is inescapable. Section 
772(d)(1)(D) provides that USP shall be increased by the amount of any 
countervailing duty imposed to offset an export subsidy. By including 
the phrase ``except as provided in paragraph (1)(D)'' in section 
772(d)(2)(A), the drafters clearly understood the subsection's 
reference to

[[Page 18563]]

``import duties'' as including countervailing duties imposed to offset 
an export subsidy. This exception was necessary to ensure that the 
statute was consistent with Article VIpara. 5 of the General Agreements 
on Tariffs and Trade (``GATT''), which prohibits the assessment of both 
antidumping and countervailing duties to compensate for the same cause 
of unfairly low-priced imports, whether by dumping or as a result of an 
export subsidy. Had the exception not been inserted, an amount would be 
added to USP by section 772(d)(1)(D) and deducted by section 
772(d)(2)(A). Therefore, petitioners believe, Congress contemplated 
that antidumping and countervailing duties were to be treated as 
``import duties'' and deducted from USP.
    With respect to the second point, petitioners argue that the 
Department must also deduct the cost of antidumping duties equal to the 
amount of the calculated margin. In Federal-Mogul Corp. v. United 
States, 813 F. Supp. 856, 872 (CIT 1993), according to petitioners, the 
court recognized that section 772(d)(2)(A) of the Act requires the 
Department to deduct any import duties that can accurately be 
determined at the time the Department is calculating the current 
dumping margins. In this case, once the final results are issues, 
Union's antidumping duties will actually be determined. Therefore, 
petitioners urge the Department, in its final results, to deduct the 
difference between FMV and USP (i.e., the actual duty amount) from USP 
before the final margin is calculated.
    With respect to the third point, petitioners cite the verification 
report as evidence that Union America is incurring the cost of 
antidumping and countervailing duties on behalf of Union, and that 
those costs are passed on to the first unrelated purchaser in the 
United States.
    Petitioners state that the Department must deduct the full amount 
of the countervailing duties paid by UA for those entries covered by 
the first administrative review of the countervailing duty order on the 
subject merchandise. Since no party requested a review of this order, 
those duties have become final and they represent a calculable cost to 
Union apart from the payment of the estimated antidumping duty deposit. 
Therefore, petitioners claim, the payment of countervailing duties must 
be treated as actual import duties for purposes of calculating Union's 
dumping margin.
    Union replies that the Department has repeatedly rejected the 
notion of treating AD/CVD duties as expenses to be deducted from U.S. 
price. Union adds that, in Antifriction Bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof from France, et al.; Final Results 
of Antidumping Duty Administrative Reviews, Partial Termination of 
Administrative Reviews, and Revocation in Part of Antidumping Duty 
Orders, 60 FR 10900 (February 28, 1995), the Department stated as 
follows:

    We agree with respondents that making an additional deduction 
from USP for the same antidumping duties that correct for price 
discrimination between comparable goods in the U.S. and foreign 
markets would result in double-counting. Thus, we have not deducted 
antidumping duties or antidumping duty-related expenses from ESP in 
this case.

Union states that the Department disagreed with petitioners' claim that 
antidumping duties constitute a selling expense, and notes that the 
Department's practice has been upheld by the courts. Finally, Union 
denies that the intent of Congress has been that AD/CVD duties be 
deducted from USP, citing the Statement of Administrative Action that 
accompanied the URAA that the law ``is not intended to provide for the 
treatment of antidumping duties as a cost.''

Department's Position

    We agree with respondent. See DOC Position to Petitioners' Comment 
7 supra.

Comment 18

    Because on three separate occasions the Department requested 
information from Union regarding its early-payment discount policies 
for U.S. customers, and Union failed to provide the requested 
information, petitioners argue that the Department should adopt BIA 
with respect to those discounts. Petitioners suggest, as a reasonable 
adverse inference, that the Department assume that Union granted an 
early-payment discount on any transaction where payment was received 
before the due date.
    Union claims that it was fully responsive to the Department with 
regard to information about this discount and that it was fully 
verified. Union states that its discount ``policy'' does not matter; 
all that matters is that it did extend early-payment discounts, that it 
did report them, and that they were verified.

Department's Position

    We agree with respondent. Although the Department did ask Union, on 
more than one occasion, to state it policy with respect to early-
payment discounts in the U.S. market and did not receive an answer, the 
Department was able to ascertain that Union in fact extended certain 
early-payment discounts, and to verify to its satisfaction the amount 
of such discounts. See Union's SVR of May 16, 1995, at 33.

Comment 19

    Petitioners point out that, although Union provided revised COP/CV 
information to the Department at verification, Union did not submit 
this information in computer format after the verification and that, as 
a consequence, the Department inadvertently failed to include these 
revisions in its margin calculations for the preliminary results. 
Accordingly, the Department must incorporate Union's revised, verified 
COP/CV data in its final results.

Department's Position

    We agree with petitioners. We requested that Union provide us with 
its revised, post-verification COP/CV data. Union provided us with the 
data consistent with the methodology we are employing in these final 
results.

Comment 20

    Petitioners argue that the Department must revise Union's reported 
G&A expenses to account for expenses incurred by the Dongkuk Steel Mill 
(``DSM'') group as a whole. In prior cases, the Department has adjusted 
a respondent's submitted data to include an allocated portion of the 
parent company's expenses. The record in this case, petitioners assert, 
clearly indicates that expenses were incurred at the headquarters or 
DSM group level (e.g., chairman's salary, group product brochures, 
group training center, and personnel welfare center, office costs, 
security expenses, entertainment expenses, etc.).
    Since Union failed to furnish complete information regarding these 
expenses, petitioners argue that the Department should, as BIA, 
increase Union's calculated G&A expense by the ratio of all G&A 
expenses incurred at DSM over the consolidated DSM group's cost-of-
sales.
    Union contends that the Department should reject the petitioners 
proposed combination of DSM's and Union's G&A expenses. Union argues 
that there is no parent-subsidiary relationship between the two 
entities and that there are no DSM general expenses to attribute to 
Union's activities. Union also counters that Dongkuk Steel Mill was a 
respondent in the 1993 antidumping investigation of Certain Cut-to-
Length Carbon Steel Plate from the Republic of Korea, and in that case 
the Department concluded that Dongkuk Steel Mill's G&A expenses were 
appropriately

[[Page 18564]]

allocated to Dongkuk Steel Mill's activities and not to a group. 
Additionally, Union contends that the petitioners' proposed adjustment 
is a specific question to the review of cold-rolled, which is a totally 
different proceeding. Therefore, since the Department failed to request 
this information for this review, it cannot use a BIA adjustment based 
on the failure to provide the information.

Department's Position

    We disagree with petitioners. For the final results, we did not 
combine Dongkuk Steel Mill and Union's general and administrative 
costs. It is the Department's normal practice to include a portion of 
the G&A expense incurred by affiliated companies on the reporting 
entity's behalf in total G&A expenses for COP and CV purposes. However, 
in this specific case, we did not identify and allocable parent company 
costs after reviewing the information on the record. See e.g., Final 
Determination of Sales at Less Than Fair Value: Small Diameter Circular 
Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from 
Italy, 60 FR 31981, 31992 (June 19, 1995); Final Determination of Sales 
at Less Than Fair Value: Welded Stainless Steel Pipe from Malaysia, 59 
FR 4023, 4027 (January 28, 1994).

Respondents' Comments

Dongbu

Comment 1

    According to respondent, the Department is required to make an 
additional upward adjustment to USP to account for export subsidies 
subject to countervailing duties. Citing Article VIpara.5 of the 
General Agreement on Tariffs and Trade (Uruguay Round Agreements Act, 
Pub. L. 103-465, Th. section 101 (approving the Final Act Embodying the 
Results of the Uruguay Round of Multilateral Trade Negotiations, Annex 
1A 1(a)), respondent states that it provides that ``[n]o product * * * 
shall be subject to both antidumping and countervailing duties to 
compensate for the same situation for dumping or export 
subsidization.'' This provision was implemented into U.S. law by 
section 772(d)(1)(D) of the Tariff Act of 1930, amended, 19 U.S.C. 
1677a(d)(1)(D). Thus, argues respondent, purchase price and exporter's 
sales price shall be increased by the amount of any countervailing duty 
imposed on the merchandise to offset the export subsidy. Respondent 
also asserts that, during the original less-than-fair value 
investigation of flat-rolled carbon steel products from Korea, the 
Department made upward adjustments to USP of this type. See Final 
Determinations 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 Korea, 58 FR 37176 
(1993). Dongbu states that such an adjustment is required both for 
assessment purposes and for purposes of determining the cash deposit 
rate applicable to future entries. As reported in the Final 
Determinations, the level of export subsidies determined in the final 
countervailing duty determination for corrosion-resident products was 
0.10 percent ad valorem. Because Dongbu has made deposits reflecting 
these amounts in conjunction with the entries of corrosion-resident 
flat products under review in this proceeding, Dongbu claims it is 
therefore entitled to a further adjustment of USP in this amount.
    Petitioners agree with respondent provided that the Department 
fully implements the statute, which they assert also requires under 
section 772(d)(2)(A) of the Act that USP also be reduced by ``(A) 
except as provided in paragraph (1)(D), the amount if any, included in 
such price, attributable to any additional costs, charges and expenses, 
and United States import duties, incident to bringing the merchandise 
from the place of shipment in the country of exportation to the place 
of delivery in the United States'' (19 U.S.C. 1677a(d)). Thus, 
petitioners argue that if the Department adds the amount of the export 
subsidy to USP, it should also treat the remaining part of the 
countervailing duties paid on those shipments as costs, charges and 
expenses, and United States import duties in accordance with the 
statute.

Department's Position

    We agree with petitioners and respondent in their arguments that 
Dongbu is entitled to a 0.10 percent ad valorem adjustment to the USP. 
However, we disagree with petitioners regarding their contention that 
if the amount of the export subsidy is added to USP, the remaining 
portion of the countervailing duties paid on those shipments must also 
be treated as costs, charges and expenses, and United States import 
duties. As noted earlier in our comments, we determined in Certain Hot-
Rolled Lead and Bismuth Carbon Steel Products from the United Kingdom; 
Final Results of Antidumping Duty Administrative Review (60 FR 44009, 
44010--August 24, 1995) that making an additional adjustment to USP for 
the same antidumping duties that correct the price discrimination 
between the U.S. and home markets would result in double-counting, and 
inconsistency with administrative and judicial precedent. The same 
principle applies with regard to countervailing duties. Deducting such 
duties as a cost would negate the purpose of their being added to USP 
in the first place.

Union

Comment 1

    Union contends that the Department erroneously included a small 
number of U.S. sales as ESP transactions in its preliminary 
calculations. Because the merchandise in question was entered into the 
United States prior to the POR, Union requests that these transactions 
be removed from the final margin calculations.
    Petitioners support the Department's finding that these 
transactions are subject to review. They note that these transactions 
occurred after importation, clearly making them ESP transactions. 
Petitioners quote from the Department's questionnaire, which states 
that for ESP transactions, respondents must report all sales to 
unrelated purchasers which occurred during the period of review. As 
this merchandise was resold in the United States during the POR it is 
covered, according to petitioners.

Department's Position

    We have reviewed our position on this issue and now agree with 
respondent. In accordance with section 751 of the Act, the Department 
is required to determine the FMV and PP or ESP of each entry of subject 
merchandise during the relevant review period. Because there can be a 
significant lag between entry date and sale date for ESP sales, it has 
been the Department's practice to examine U.S. ESP sales during the 
review. See e.g., Gray Portland Cement and Clinker from Japan; Final 
Results of Antidumping Duty Administrative Review (58 FR 48826--
September 20, 1993), where the Department did not consider ESP entries 
which were sold after the POR. The CIT has upheld the Department's 
practice in this regard. See The Ad Hoc Committee of Southern 
California Producers of Gray Portland Cement v. United States, CIT Slip 
Op. 95-195, December 1, 1995 (``Ad Hoc''). Although the CIT, in Ad Hoc, 
accepted that ``consideration of all sales, rather than entries, made 
during the period of review may result in the consideration of entries 
made prior to the suspension of liquidation,'' Ad Hoc is not a case in 
which the respondent linked specific sales during the POR to specific 
entries

[[Page 18565]]

prior to the suspension of liquidation. Ad Hoc at 19 (emphasis added).
    The Department has adopted an exception to its practice of 
examining all U.S. sales during the period of review. That exception 
applies when a respondent is able to demonstrate, to the satisfaction 
of the Department, that the merchandise covered by a particular sale 
entered prior to the suspension of liquidation pursuant to the 
Department's preliminary determination in the LTFV investigation. See 
e.g., High Tenacity Rayon Filament Yarn from Germany: Preliminary 
Results of Antidumping Duty Administrative Review (59 FR 32181, 32182--
June 22, 1994), where specific sales were excluded when linked to pre-
suspension entries. Merchandise proven to have entered the U.S. prior 
to the suspension of liquidation (and in the absence of an affirmative 
critical circumstances finding) is not subject merchandise within the 
meaning of section 771(25) of the Act.
    In this review, Union claimed that certain merchandise was not 
subject to review because it entered the United States prior to the 
period of review but was sold by Union's affiliated U.S. company to the 
first unrelated purchaser during the period of review. The Department 
verified that Union tied certain sales during the period to entries of 
merchandise prior to the suspension of liquidation. Because Union has 
demonstrated that certain merchandise entered the United States prior 
to the suspension of liquidation, we excluded sales of that merchandise 
from our analysis.

Comment 2

    Union argues the Department improperly reclassified U.S. sales 
involving post-importation slitting and embossing as ESP transactions. 
Union believes this reclassification was improper because the terms of 
sale, including stateside slitting and embossing, were negotiated by 
Union in Korea before the exportation of the merchandise.
    Petitioners reply that it is the Department's practice to consider 
U.S. sales through a related U.S. subsidiary prior to importation as 
purchase-price (``PP'') sales only if three criteria are satisfied: (1) 
The merchandise was shipped directly from the foreign producer to the 
unrelated U.S. purchaser without first being introduced into the 
inventory of the related U.S. selling agent; (2) the customary channel 
for such sales was direct shipment from the producer to the unrelated 
purchaser; and (3) the related U.S. selling entity acted only as a 
processor of sales-related documentation and a communication link to 
unrelated buyers. See, e.g., Coated Groundwood Paper from Finland; 
Final Determination of Sales at Less Than Fair Value (56 FR 56363--
November 4, 1991) and New Minivans from Japan; Final Determination of 
Sales at Less Than Fair Value (57 FR 21937--May 26, 1992). Petitioners 
argue that Union's post-importation sales of slit and embossed 
merchandise fail to satisfy these criteria, and that these sales should 
be treated as ESP transactions.

Department's Position

    We agree with petitioners. We are continuing to treat these sales 
as ESP transactions, because record evidence shows that (1) The 
merchandise was not shipped directly to the first unrelated U.S. 
purchaser; (2) direct shipment from Union to the unrelated purchaser 
was not the normal channel for these sales; and (3) arranging and 
paying for slitting and embossing goes beyond the functions usually 
associated with processing sales-related documentation and serving as a 
communication link to unrelated buyers.

Comment 3

    Union claims that the Department erred in (1) Concluding that Union 
had understated its U.S. credit expenses by not including bank charges 
therein, and (2) increasing Union's U.S. credit expenses by the amount 
of those charges. In fact, Union maintains, it included its U.S. bank 
charges in U.S. brokerage and handling expenses, so that they were 
double-counted by the Department. In addition, Union claims, the 
Department compounded its error by mistakenly dividing two years' worth 
of interest expenses by 18 months' worth of short-term borrowings.
    Union urges the Department, for purposes of the final results, to 
follow its own practice and treat bank charges as selling expenses. 
Union claims to have reported its bank charges on a sale-by-sale basis, 
which is the most accurate form of reporting. Also, respondent asserts, 
including bank charges in an interest-rate calculation is illogical, 
since a bank charge need not be connected to the time value of money, 
but can simply consist of a flat fee for services rendered.
    Petitioners reply that Union's claims regarding double-counting are 
unsubstantiated. Petitioners note that Union's claims that it included 
transaction-specific bank charges in its reported U.S. brokerage and 
handling expenses is not supported by any sample calculations or 
documents. Petitioners state that it is the Department's practice to 
include bank charges in credit expenses when they are not elsewhere 
reported. Because of the absence of specific data pertaining to bank 
charges alone, petitioners agree that the Department had no alternative 
but to use Union's combined interest and bank charge data for the two 
fiscal years.

Department's Position

    We agree with petitioners and respondent in part. Because there is 
no evidence on the record supporting Union's claims that it included 
bank charges in its reported brokerage and handling expenses, we have 
increased Union's reported credit expenses to account for these bank 
charges. We acknowledge our error, however, in dividing two years' 
worth of interest expenses by 18 months' worth of short-term 
borrowings, and have corrected this error for purposes of these final 
results.

Comment 4

    Union disagrees with the Department's treatment of its home-market 
warehousing expenses as indirect selling expenses, and contradicts the 
Department's statement that these expenses were evenly allocated 
across-the-board to all home-market sales. In fact, Union affirms that 
all warehousing expenses other than labor were traced to the particular 
areas devoted to subject and non-subject merchandise, because Union 
separately warehouses subject and non-subject merchandise, and thus can 
determine the proportion of warehousing expenses attributable to each. 
Union also maintains that a selling expense is not indirect simply 
because it occurs prior to sale. For these reasons, and because the 
warehousing expenses in question are attributable to a later sale of 
the subject merchandise, Union requests that the Department treat these 
warehousing expenses as direct for purposes of the final results.
    Petitioners respond that Union stores three broad, distinct types 
of merchandise in the same warehouse--cold-rolled, corrosion-resistant, 
and pipe products. Petitioners state that Union did not link specific 
warehousing charges to specific sales, but rather allocated costs based 
on the square footage dedicated to each product type and on the total 
quantity of each product type warehoused. Petitioners believe that the 
Department's preliminary results correctly denied Union's claim that 
these expenses be classified as direct.

[[Page 18566]]

Department's Position

    We agree with petitioners. Union did not tie warehousing expenses 
to specific sales, but merely allocated them. The amount reported by 
Union on its computer tape for this expense in Korean won is identical 
for all sales transactions where a warehousing expense was claimed, 
regardless of the length of time the merchandise was actually 
warehoused. Therefore, we do not consider these expenses to be direct.

Comment 5

    Union disagrees with the Department's treatment of pre-sale inland 
freight expenses in the home market as indirect. Union argues that the 
Department must examine the facts of each case to determine whether 
warehousing and pre-sale freight are so linked that they must 
necessarily be treated in the same fashion. In the final results of 
redetermination on remand (January 5, 1995) pursuant to The Ad Hoc 
Committee on AZ-NM-TX-FL Producers of Gray Portland Cement v. United 
States, Slip Op. 94-151 (1994), the Department noted that ``warehousing 
and movement expenses are, for analytical purposes, inextricably 
linked'' and ``if pre-sale warehousing is an indirect expense, then, in 
the absence of contrary evidence, pre-sale movement expenses should 
also be treated as an indirect expense.'' Earlier in the case, the 
Court had stated that ``if the pre-sale warehousing expense in this 
case is not shown to be a direct expense, then it follows that the cost 
of transporting the cement to the warehouse is also not shown to be a 
direct expense.''
    Union argues that in this case, pre-sale freight and warehousing 
are not inextricably linked. Union claims that pre-sale freight was 
constant, since the merchandise was moved over the same route for all 
sales. Therefore, each ton sold from the warehouse led to an exactly 
identified increment to costs--the amount of the pre-sale freight--and 
the expense was incurred on a one-on-one basis with each unit of 
subject merchandise sold. Therefore, Union maintains the expense in 
question is clearly direct.
    Petitioners respond that the Department correctly determined that 
Union's pre-sale freight expenses were indirect. Petitioners state that 
the Department's standard is clear: pre-sale warehousing and freight 
expenses are inextricably linked; thus, in the absence of contrary 
evidence, if pre-sale warehousing is an indirect expense, so too must 
be pre-sale freight. Petitioners note that it is always true that each 
ton shipped leads to an additional charge for freight, but this does 
not mean that pre-sale freight is always direct selling expense.

Department's Position

    In the preliminary review results, the Department stated that it 
``considers pre-sale movement expenses as direct selling expenses only 
if the movement expenses in question are directly related to the home-
market sales under consideration. In order to determine whether pre-
sale movement expenses are direct under the facts of a particular case, 
the Department examines the respondent's pre-sale warehousing expenses, 
since the pre-sale movement charges incurred in positioning the 
merchandise at the warehouse are, for analytical purposes, inextricably 
linked to pre-sale warehousing expenses. If the pre-sale warehousing 
constitutes an indirect expense, the expense involved in getting the 
merchandise to the warehouse must also be indirect. Conversely, a 
direct pre-sale warehousing expense necessarily implies a direct pre-
sale movement expense. We note that, although pre-sale warehousing 
expenses in most cases have been found to be indirect selling expenses, 
these expenses may be deducted from FMV as a circumstance-of-sale 
adjustment in a particular case if the respondent is able to 
demonstrate that the expenses are directly related to the sales under 
consideration.'' The Department is continuing to treat Union's pre-sale 
home-market inland freight expenses as indirect, because Union did not 
distinguish between pre- and post-sale warehousing expenses or 
demonstrate that these expenses were directly related to the sales 
under consideration.

Comment 6

    Union argues that the Department should differentiate Union's 
painted products according to specific paint types, because (1) there 
are significant cost, price, and commercial differences among Union's 
painted products; (2) these differences demonstrate that union's 
customers perceive significantly different applications for such 
products; and (3) if the Department compares different paint types, it 
must make an appropriate difmer adjustment.
    Petitioners state the Department was correct not to revise the 
existing paint categories for the preliminary results of this review 
and should also reject this argument for the final results. Petitioners 
note that Union's arguments do not address the criteria used by the 
Department to establish categories of products and determine whether 
certain products may be compared and are not supported by the record 
evidence. Petitioners state that Union ignores that the primary basis 
for creating product categories is physical characteristics. Thus, 
according to petitioners, the Department can accept Union's proposed 
paint categories only if Union demonstrates that the physical 
characteristics of the various paint types are so dissimilar that the 
paint types cannot be compared--which Union has not done. Petitioners 
cite Koyo Seiko Co. v. United States, Slip Op. 94-1363 at 15 (Fed. Cir. 
Sept. 20, 1995) which states that in the presence of significant 
physical similarities, products do not have to be ``technically 
substitutable, purchased, by the same types of customers, or applied to 
the same end use'' in order to be compared. Petitioners add that the 
record does not support Union's contention that its different paint 
types exhibit significant differences in cost or price.
    Petitioners reject the notion of making a difmer adjustment for 
difference in paint types. Petitioners state that it is the 
Department's position in these flat-rolled proceedings that it will not 
make adjustments to account for differences between physical 
characteristics of U.S. and home-market products when the products are 
identified by the same control number. If products have the same 
control number, according to petitioners, they are in effect identical 
for purposes of this review and no difmer adjustment should be granted.

Department's Position

    We agree with petitioners. As stated in our internal memorandum of 
August 10, 1995, discussing our preliminary results of review, Union 
provided insufficient and non-compelling information to support the 
necessity for differentiating additional types of painted products. 
Union did not demonstrate how each of the proposed additional paint 
types possesses physical characteristics that are significantly 
different from those of the other proposed paint types, and how each 
paint type is intended for significantly different applications and 
uses. Therefore, we did not create additional paint categories for 
purposes of these final results. Union's request that we make a difmer 
adjustment for different paint types within the same control number is 
moot because we are using CV as the basis for FMV.

Comment 7

    Union argues that the Department should not combine the financing 
expenses of Union Steel with those of other member companies of the

[[Page 18567]]

Dongkuk chaebol or group (i.e., DSM and DKI) because this collapsing of 
interest expense is entirely at odds with the Department's practice. 
Union states that it is the Department's established policy to 
calculate interest expense from the costs of borrowing incurred by the 
respondent and its related parties only when the companies are 
consolidated in the normal course of business. Union states that there 
are two fundamental reasons for this. First, the accounting 
practicality of consolidating different companies, particularly with 
respect to cost of goods sold, demands that an audited consolidated 
statement be generated in the normal course of business. Second, the 
parent into which the subsidiary is consolidated is assumed to control 
the financing decisions of the subsidiary. See Final Determination of 
Sales at Less Than Fair Value; Small Diameter Circular Seamless Carbon 
Allow Steel, Standard, Line and Pressure Pipe from Italy (60 FR 31918, 
31900--June 19, 1995). Furthermore, Union asserts that the Department 
has explicitly decided that the company should not be collapsed with 
respect to the instant review, which concerns corrosion-resistant 
merchandise. The collapsing decision in the review of cold-rolled 
products was made in the context of that review, which is a separate 
and distinct proceeding. Therefore, Union states that it should be 
treated as a ``stand-alone'' entity and the Department should follow 
the precedent set with respect to other Korean chaebols. See, e.g., 
Final Determination of Sales at Less than Fair Value; Dynamic Random 
Access Memory Semiconductors of One Megabit and Above from the Republic 
of Korea (58 FR 15467, 15475--March 3, 1993); Final Determination of 
Sales at Less than Fair Value; Polyethylene Terephthalate Film, Sheet, 
and Strip from the Republic of Korea (56 FR 16305, 16313--April 22, 
1991).
    Additionally, Union states that the Department's calculation of its 
financing factor was incorrect because it failed to offset DKI and 
DMS's financing costs with short-term interest income. The respondent 
argues that the Department's calculation only offset Union's financing 
costs with short-term interest income. Therefore, the Department's 
calculation did not make an appropriate ``apples-to-apples'' 
comparison.
    Petitioners contend that the Department properly combined Union's 
interest expense with the interest expense of other numbers of the 
Dongkuk chaebol. petitioners state that this decision is consistent 
with the Department's normal practice because the companies are under 
common control and produce similar subject merchandise. As for the 
respondent's concern that collapsing relates only to the parallel cold-
rolled proceeding and not to the instant review, petitioners state that 
for this specific issue the collapsing of Union, DKI and DSM is 
necessary. Petitioners contend that capital acquisition costs are 
fungible and that any borrowing by Union, DKI, or DSM may be used for a 
variety of beneficial purposes for the group as a whole. Therefore, 
petitioners believe that the Department should continue to use the 
combined interest expenses of Union, DKI and DSM it its calculation for 
the final results of this instant review.
    Petitioners also state that the Department deducted an appropriate 
short-term interest income figure in its net financing factor 
calculation. Furthermore, they state that the respondent's argument of 
requiring an apples to apples comparison is inappropriate in this 
circumstance because symmetrical results are not necessary in this step 
of the net financing calculation.

Department's Position

    For the final results, we calculated a combined net interest factor 
using Union's, DSM, and DKI's audited financial figures obtained from 
verification exhibits, respondent's submissions and public records. 
This methodology of calculating a single net interest factor is 
consistent with our longstanding practice for computing interest 
expense in cases involving parent subsidiary corporate relationships. 
DSM's ownership interest in Union and DKI places the parent in a 
position to influence Union's financial borrowing and overall caption 
structure. We note that, contrary to Union's assertions that Union is 
an independent company and not controlled by DSM, the two companies 
share common directors and related stockholders. Based on this 
information, it is difficult to see how Union's operations are 
independent of its parent to such an extent that we should ignore our 
normal practice of computing interest. See Final Determination of Sales 
at Less Than Fair Value; Certain Carbon Steel Butt-Weld Pipe Fittings 
from Thailand (60 FR 10552, 10557--February 27, 1995). Additionally, we 
find it appropriate to collapse the financing costs of these three 
companies in this instant review because we consider that the financing 
costs of the parent and its subsidiaries to be fungible.
    Additionally, we agree with the respondent in that it is the 
Department's practice to allow a respondent to offset financial 
expenses with interest earned from the general operations of the 
company. See e.g., Timkin v. United States, 582 F. Supp. 1040, 1048 
(CIT 1994). The Department does not, however, offset interest expense 
with interest income earned on long-term investments. See Final 
Determination of Sales at Less Than Fair Value; Small Diameter Circular 
Seamless Carbon and Alloy Steel, Standard, line and Pressure Pipe from 
Italy (60 FR 31981, 31991--June 19, 1995). Therefore, for the final 
results we offset the combined financing costs by the respective short-
term interest income of the three entities.

Comment 8

    Union argues that the Department should not include the company's 
``special depreciation'' that was reported as an extraordinary item on 
its audited financial statement in the cost of production of subject 
merchandise. Union contends that the Department's established policy 
with respect to this kind of expense is to exclude the cost because it 
relates solely to tax law and represents no real additional cost to the 
company. See Final Determination of Sales at less than Fair Value; 
Stainless Steel Angles from Japan (60 FR 16608, 16617--March 31, 1995) 
(``Angles''). Therefore, Union believes that the Department should 
follow the precedent established in that determination and remove the 
special depreciation from Union's production costs.
    Petitioners argue that the Department should continue to include 
Union Steel's accelerated depreciation costs in its calculation of the 
company's COP and CV. Petitioners contend the Department does not have 
an established policy of excluding accelerated depreciation as a cost 
of production. To support their argument, petitioners state that in 
recent determination the Department rejected a similar contention made 
by the respondent and included the company's accelerated depreciation 
charges in the calculation of COP and CV. See Final Determination of 
Sales at Less Than Fair Value; Canned Pineapple Fruit from Thailand (60 
FR 29553, 29560--June 5, 1995). Furthermore, petitioners contend that 
the cost should be included in COP and CV because it is reported on 
Union's financial statements that are in accordance with generally 
accepted accounting principles (``GAAP '') in Korea.

Department's Position

    We disagree with the respondent and have included Union's entire 
special depreciation as a production cost for these final results. 
Unlike in Angels

[[Page 18568]]

where the respondent company used special financial accounting 
treatment to reflect only its regular depreciation (i.e., non-tax 
depreciation) as a cost in its audited income statements for that year, 
Union recorded the full special depreciation charge as a cost in its 
audited income statement in accordance with Korean GAAP. We note that 
it is the Department's normal practice to use costs recorded in normal 
books and records of the respondent unless it can be shown that such 
costs do not reasonably reflect the amounts incurred to produce the 
subject merchandise. See, e.g., Final Determination of Sales at Less 
Than Fair Value; Oil Country Tubular Goods from Argentina (60 FR 33539, 
33548--June 28, 1995); High-Tenacity Rayon Filament yarn from Germany; 
Final Results of Antidumping Duty Administrative Review (59 FR 15897, 
15898--March 28, 1995).

Final Results of Review

    As a result of this review, we have determined that the following 
margins exist for the period February 4, 1993, through July 31, 1994:

         Certain Corrosion-Resistant Carbon Steel Flat Products         
------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Producer/manufacturer/exporter                   margin  
                                                              (percent) 
------------------------------------------------------------------------
Dongbu.....................................................         1.50
Union......................................................        10.74
------------------------------------------------------------------------

    The Department shall determine, and the U.S. 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 review for all 
shipments of certain corrosion-resistant carbon steel flat products 
Korea entered, or withdrawn from warehouse, for consumption on or after 
the publication date, as provided for by section 751(a)(1) of the 
Tariff Act: (1) The cash deposit rates for the reviewed companies named 
above which have separate rates will be the rates for those firms as 
stated 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 a 
firm covered in this review or the original less-than-fair-value 
(``LTFV'') 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 17.70 percent, 
which is the ``all others'' rate in the LTFV investigation.
    Article VIpara.5 of the General Agreement on Tariffs and Trade 
provides that ``(n)o product * * * shall be subject to both antidumping 
and countervailing duties to compensate for the same situation of 
dumping or export subsidization.'' This provision is implemented by 
section 772(d)(1)(D) of the Act. Since antidumping duties cannot be 
assessed on the portion of the margin attributable to export subsidies, 
there is no reason to require a cash deposit or bond for that amount. 
Accordingly, the level of export subsidies as determined in Final 
Affirmative Countervailing Duty Determinations and Final Negative 
Critical Circumstances Determinations; Certain Steel Products from 
Korea (58 FR 327328--July 9, 1993), which is 0.10 percent ad valorem, 
will be subtracted from the cash deposit rate for deposit or bonding 
purposes.
    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 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 a 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.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22 
of the Department's regulations.

    Dated: April 16, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-10404 Filed 4-25-96; 8:45 am]
BILLING CODE 3510-DS-M