[Federal Register Volume 61, Number 192 (Wednesday, October 2, 1996)]
[Notices]
[Pages 51411-51421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25242]


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DEPARTMENT OF COMMERCE
[A-412-817]


Notice of Final Determination of Sales at Less Than Fair Value: 
Foam Extruded PVC and Polystyrene Framing Stock From the United Kingdom

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

EFFECTIVE DATE: October 2, 1996.

FOR FURTHER INFORMATION CONTACT: Ellen Grebasch, Dorothy Tomaszewski, 
or Erik Warga, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone:

[[Page 51412]]

(202) 482-3773, (202) 482-0631, or (202) 482-0922, respectively.

THE APPLICABLE STATUTE: Unless otherwise indicated, all citations to 
the Tariff Act of 1930, as amended (``the Act'') are references to the 
provisions effective January 1, 1995, the effective date of the 
amendments made to the Act by the Uruguay Round Agreements Act 
(``URAA'').

FINAL DETERMINATION: We determine that foam extruded PVC and 
polystyrene framing stock (``framing stock'') from the United Kingdom 
is being, or is likely to be, sold in the United States at less than 
fair value (``LTFV''), as provided in section 735 of the Act.

Case History

    Since the preliminary determination in this investigation (Notice 
of Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Foam Extruded PVC and Polystyrene 
Framing Stock From the United Kingdom 61 FR 22021, (May 13, 1996), the 
following events have occurred:
    On May 16, 1996, respondent, Robobond Ltd. (``Robobond''), alleged 
the Department made two ministerial errors in its preliminary 
determination. The Department found that there were errors made in the 
preliminary determination; however, these errors did not result in a 
combined change of at least five absolute percentage points in, but no 
less than 25 percent of, the weighted-average dumping margin calculated 
in the preliminary determination. Accordingly, no revision to the 
preliminary determination was made. (See Memorandum from the Framing 
Stock Team to Barbara R. Stafford, June 6, 1996.)
    On May 16, 1996, the Department issued a supplemental cost 
questionnaire to Robobond. Robobond submitted its response on May 31, 
1996, and June 6, 1996.
    On May 24, 1996, respondent, Magnolia Group Plc. (``Magnolia''), 
withdrew from the investigation.
    In June 1996, we verified the questionnaire responses of Ecoframe 
Plc. (``Ecoframe'') and Robobond. Petitioner and respondents submitted 
case briefs on August 12, 1996, and rebuttal briefs on August 19, 1996. 
On August 22, 1996, petitioners protested that information in 
Ecoframe's rebuttal constituted new information. On August 23, 1996, 
the Department rejected certain new information contained in Ecoframe's 
rebuttal brief. The Department held a public hearing for this 
investigation on August 23, 1996.
    On September 3, 1996, the Department requested certain information 
from Ecoframe regarding its quantity adjustment claim. Ecoframe 
responded on September 5, 1996. Petitioners submitted comments on 
September 9, 1996.

Scope of Investigation

    This investigation covers all extruded PVC and polystyrene framing 
stock regardless of color, finish, width or length. Finished frames 
assembled from foam extruded PVC and polystyrene framing stock are 
excluded. The merchandise under investigation is currently classifiable 
under subheadings 3924.90.20.00; 3926.90.90.90; 3926.90.95.90; and 
3926.90.98.90 of the Harmonized Tariff Schedules of the United States 
(``HTS''). Although the HTS subheadings are provided for convenience 
and customs purposes, our written description of the scope of this 
investigation is dispositive.

Period of Investigation

    The POI is September 1, 1994, through August 31, 1995.

Facts Available

    Section 776(a)(2) of the Act provides that if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information by the deadlines for the submission of 
information or in the form and manner requested, significantly impedes 
a proceeding under the antidumping statute, or provides such 
information but the information cannot be verified, the Department 
shall use facts otherwise available in reaching the applicable 
determination. Because respondent Magnolia withdrew from the proceeding 
following the preliminary determination, Magnolia's questionnaire 
response information on the record is unverifiable. Therefore, we must 
use facts otherwise available with respect to Magnolia.
    Section 776(b) provides that adverse inferences may be used against 
a party that has failed to cooperate by not acting to the best of its 
ability to comply with requests for information. (See also Statement of 
Administrative Action, H.R. Doc. No. 316, 103d Cong., 2d Sess. 870 
(1994) (``SAA'').) Magnolia's failure to participate following the 
preliminary determination and to agree to verification of its 
information on the record demonstrate that Magnolia has failed to 
cooperate to the best of its ability in this investigation. In past 
cases, when a company refuses to provide the information requested in 
the form required, or otherwise significantly impedes the Department's 
investigation, it is appropriate for the Department to assign to that 
company the higher of (a) the highest margin alleged in the petition, 
or (b) the highest calculated rate of any respondent in the 
investigation. (See 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 Cut-to-Length Carbon 
Steel Plate From Belgium 58 FR 37083, (July 9, 1993).) Therefore, the 
Department has determined that, in selecting among the facts otherwise 
available with respect to Magnolia, an adverse inference is warranted. 
As facts otherwise available, we are making an adverse inference and 
assigning to Magnolia the margin calculated based on its submitted 
information at the preliminary determination 1 of 84.82 percent. 
This rate is the higher of the highest margin alleged in the petition, 
or the highest calculated rate of any respondent in the investigation.
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    \1\ Following the preliminary determination minor errors were 
found in the margin program. These errors have been corrected for 
the final determination.
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Fair Value Comparisons

    To determine whether sales of the subject merchandise by 
respondents to the United States were made at less than fair value, we 
compared the export price (``EP'') to the normal value (``NV''), as 
described in the ``Export Price'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(1)(A)(i), we compared the 
weighted-average EP to the weighted-average NV during the POI. In 
determining averaging groups for comparison purposes, we considered the 
appropriateness of such factors as physical characteristics, comparable 
quantities and level of trade.

A. Physical Characteristics

    In accordance with section 771(16) of the Act, we considered all 
products covered by the description in the Scope of Investigation 
section, above, produced in the United Kingdom (``UK'') and sold in the 
home market during the POI, to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. Where there 
were no sales of identical merchandise in the home market to compare to 
U.S. sales, we compared U.S. sales to the next most similar foreign 
like product on the basis of the characteristics listed in the 
Department's antidumping questionnaire. In making the product 
comparisons, we relied on the following criteria (in order of 
preference): material; weight per linear foot; profile

[[Page 51413]]

type; width; finish type (pasta/compo, foil, mylar, laminated/wrapped, 
embossed plain substrate, embossed substrate with foil, embossed 
substrate with mylar, wet system (e.g., paint, or other); and total 
number of finishes.

B. Comparable Quantities

    In this investigation, Ecoframe requested the Department to make 
fair value comparisons of its sales at comparable quantities. We have 
examined the sales information submitted by Ecoframe and determined 
that this methodology is appropriate. (For further discussion, see 
``Interested Parties' Comments'' section of this notice.) Where there 
were no home market sales of the most similar merchandise at comparable 
quantities to match to U.S. sales, we compared the U.S. sales to the 
weighted-average of the most similar foreign like product.

C. Level of Trade

    Based on our findings at verification, there was no support for 
Robobond's level of trade claim. Therefore, level of trade was not a 
factor in Robobond's final margin calculations. (For further 
discussion, see ``Interested Parties' Comments'' section of this 
notice.)

Export Price

    In accordance with subsections 772 (a) and (c) of the Act, we 
calculated EP for each of the respondents where the subject merchandise 
was sold directly to the first unaffiliated purchaser in the United 
States prior to importation. Use of constructed export price was not 
otherwise warranted based on the facts of record.
    We calculated EP based on the same methodology used in the 
preliminary determination, with the following exceptions:

Robobond

    Adjustments to reported sale terms, payment dates, and 
international freight were made based on verification findings. We made 
adjustments for verified commission expense on certain U.S. sales in 
the final margin calculation. Credit expense was recalculated to 
reflect the verified short-term interest rate. (For details, see 
September 25, 1996, Final Determination Calculation Memorandum for 
Robobond.)

Ecoframe

    Minor adjustments to reported sales data were made based on 
verification findings. (For details, see September 25, 1996, Final 
Determination Calculation Memorandum for Ecoframe.)

Normal Value; Cost of Production Analysis

    In the preliminary determination, the Department found reasonable 
grounds to believe or suspect that each respondent made sales in the 
home market at prices below the cost of producing the merchandise. As a 
result, the Department initiated investigations to determine whether 
the respondents made home market sales at prices below their respective 
COPs during the POI within the meaning of section 773(b) of the Act.
    Before making any fair value comparisons, we conducted the COP 
analysis described below.

A. Calculation of COP

    We calculated the COP based on the sum of each respondent's cost of 
materials and fabrication used in producing the foreign like product, 
plus amounts for home market general and administrative expenses 
(``G&A'') and packing costs in accordance with section 773(b)(3) of the 
Act.

B. Test of Home Market Prices

    We used the respondents' adjusted weighted-average COP to test home 
market prices. We compared the weighted-average COP figures to home 
market sales of the foreign like product as required under section 
773(b) of the Act, in order to determine whether these sales had been 
made at below-cost prices, within an extended period of time, in 
substantial quantities, and were not at prices which permit recovery of 
all costs within a reasonable period of time. On a product-specific 
basis, we compared the COP to the home market prices, less any 
applicable movement charges and direct and indirect selling expenses.

C. Results of COP Test

    In accordance with section 773(b)(2)(C) of the Act, where less than 
20 percent of a respondent's sales of a given product were at prices 
less than the COP, we did not disregard any below-cost sales of that 
product because we considered such below-cost sales not to be made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product during the POI were at prices less than the 
COP, we disregarded those sales because we consider to be made in 
substantial quantities within an extended period of time (in accordance 
with section 773(b)(2)(B) of the Act) and at prices which would not 
permit recovery of all costs, within a reasonable period of time (in 
accordance with section 773(b)(2)(D) of the Act).
    Where there were no above-cost sales available for matching 
purposes, export prices that would have been compared to home market 
prices for these models were compared instead to CV.

D. Calculation of CV

    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of a respondent's cost of materials, fabrication, 
selling, general, and administrative expenses (``SG&A''), profit and 
U.S. packing costs as reported in the U.S. sales databases. In 
accordance with section 773(e)(2)(A) of the Act, we based SG&A and 
profit on the amounts incurred and realized by the respondent in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade, for consumption in the foreign country.

Price to CV Comparisons

    Where we compared CV to export prices, we deducted from CV the 
weighted-average home market direct selling expenses and added the 
weighted-average U.S. product-specific direct selling expenses (where 
appropriate) in accordance with section 773(a)(8) of the Act.

Adjustments to COP and CV

    We based COP and CV on the same methodology used in the preliminary 
determination, with the following exceptions:

Ecoframe

    Minor adjustments to reported costs were made based on verification 
findings. (See Memorandum to the file from Michael Martin dated July 
30, 1996 (``cost verification report'').)

Robobond

    Robobond's reported G&A expense was adjusted to include a figure 
for dividends. An amount for building depreciation expense was added to 
reported total depreciation expense. Robobond's reported depreciation 
expense for equipment was adjusted to reflect depreciation expense 
calculated in accordance with the depreciation methodology historically 
used by the company. (For above-noted adjustments concerning Ecoframe 
and Robobond, see ``Interested Party Comments.'')

Adjustments to Normal Value

    We based normal value on the same methodology used in the 
preliminary determination, with the following exceptions:

Ecoframe

    Minor adjustments to reported sales data were made pursuant to 
verification

[[Page 51414]]

findings. Additionally, credit expense was recalculated to reflect the 
verified short-term interest rate used by Ecoframe.

Robobond

    Minor adjustments to reported sales terms, inland freight, and 
payment dates were made pursuant to verification findings. Certain 
reported direct selling expenses were treated as indirect selling 
expenses. Credit expense was recalculated to reflect the verified 
short-term interest rate used by Robobond.
(For details concerning these adjustments, see ``Interested Party 
Comments'' in this notice.)

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
official exchange rates in effect on the dates of the U.S. sales as 
certified by the Federal Reserve Bank. Section 773A(a) of the Act 
directs the Department to use a daily exchange rate in order to convert 
foreign currencies into U.S. dollars unless the daily rate involves a 
fluctuation. It is the Department's practice to find that a fluctuation 
exists when the daily exchange rate differs from the benchmark rate by 
2.25 percent. The benchmark is defined as the moving average of rates 
for the past 40 business days. When we determine a fluctuation to have 
existed, we substitute the benchmark rate for the daily rate, in 
accordance with established practice. Further, section 773A(b) directs 
the Department to allow a 60-day adjustment period when a currency has 
undergone a sustained movement. A sustained movement has occurred when 
the weekly average of actual daily rates exceeds the weekly average of 
benchmark rates by more than five percent for eight consecutive weeks. 
(For an explanation of this method, see Policy Bulletin 96-1: Currency 
Conversions 61 FR 9434, (March 8, 1996).) Such an adjustment period is 
required only when a foreign currency is appreciating against the U.S. 
dollar. The use of an adjustment period was not warranted in this case 
because the U.K. pound did not undergo a sustained movement, nor were 
there currency fluctuations during the POI.

Verification

    As provided in section 782(i)(1) of the Act, we verified the 
information submitted by respondents for use in our final 
determination. We used standard verification procedures, including 
examination of relevant accounting and production records and original 
source documents provided by respondents.

Interested Party Comments

Robobond

    Comment 1: Final Determination Based on Adverse Facts Available
    Petitioner asserts that Robobond has misled the Department during 
the course of this investigation through a series of omissions, 
discrepancies, and misrepresentation of data provided on the record. 
While certain misstatements and inaccuracies in the information 
supplied by Robobond may be inadvertent, petitioner maintains that 
other instances appear to be deliberate attempts by Robobond to mislead 
the Department and to manipulate and distort the results of this 
proceeding. Petitioner submits that the cumulative impact of the 
omissions and misrepresentations attributable to Robobond render 
Robobond's responses inherently unreliable as a whole. As such, 
petitioner requests the Department to reject Robobond's responses for 
the final determination and assign it a margin based on the most 
adverse facts available.
    Robobond counters that there is no merit whatsoever in petitioner's 
claims that Robobond misled the Department. Robobond maintains that its 
sales and cost of production data were successfully verified, and those 
topics for which discrepancies were noted involve only minor issues 
which can easily be corrected for the final determination. Accordingly, 
Robobond urges the Department to reject petitioner's allegations.

DOC Position

    Certain discrepancies and omissions in Robobond's reported sales 
and cost data were discovered during verification (see e.g., comment 6 
below, regarding missing accounting records). However, the 
discrepancies and omissions do not warrant the use of adverse facts 
available. Such errors will be addressed individually. (See, e.g., 
Certain Corrosion-Resistant Carbon Steel Flat Products from Korea; 
Final Results of Antidumping Duty Administrative Review 61 FR 18558 
(April 26, 1996).)

Comment 2: International Freight

    For certain sales observations where international freight was 
incorrectly reported as zero, Robobond argues that these omissions were 
clerical errors, consistent with criteria recently announced in Certain 
Fresh Cut Flowers from Ecuador; Final Results of the Antidumping Duty 
Administrative Review, 61 FR 37044, (July 16, 1996) 2 
(``Flowers''). According to Robobond, the omission of international 
freight from these sales constitutes inadvertent errors that satisfy 
the test set forth in Flowers and should be treated accordingly.
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    \2\ ``* * * We will accept corrections of clerical errors under 
the following conditions: (1) The error in question must be 
demonstrated to be a clerical error, not a methodological error, an 
error in judgement, or a substantive error; (2) the Department must 
be satisfied that the corrective documentation provided in support 
of the clerical error allegation is reliable; (3) respondent must 
have availed itself of the earliest reasonable opportunity to 
correct the error; (4) the clerical error allegation, and any 
corrective documentation, must be submitted to the Department no 
later than the due date for the respondent's administrative case 
brief; (5) the clerical error must not entail a substantial revision 
of the response; and (6) the respondent's corrective documentation 
must not contradict information previously determined to be accurate 
at verification.'' (pages 37044-37045)
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    Further, Robobond contends that the use of the highest reported per 
unit international freight figure would unnecessarily overstate the 
actual international freight cost associated with the sales in 
question. Robobond notes that application of the highest reported 
figure is inconsistent with the Department's actions regarding errors 
in international freight described in the sales verification report for 
Ecoframe, the other UK respondent in this investigation.
    Alternatively, if the Department does not decide that these 
omissions constitute clerical errors, Robobond suggests that the 
Department apply a weighted-average freight expense from the initial 
invoice or invoices to the correcting invoice as a more reasonable 
method of adjustment.
    Petitioner argues that Robobond's failure to report international 
freight for certain U.S. sales clearly does not constitute an 
inadvertent error, but was either a methodological error, error in 
judgement, or substantive error, within the definition given in 
Flowers. Petitioner requests that the Department reject Robobond's 
claims for the correction of clerical errors because Robobond has not 
satisfied the test set forth in Flowers, and assign the highest 
reported international freight rate per linear foot to these sales 
transactions.

DOC Position

    The test set forth in Flowers defines a clerical error as being 
``not a methodological error, an error in judgement, or a substantive 
error.'' In the case of the one invoice (4275), where international 
freight was not reported for one out of 23 line items, we agree with 
Robobond's assessment that this was a clerical error. The fact that 
international freight was reported for all line items listed on the 
invoice except for one (amounting to 6% of total sales

[[Page 51415]]

value and 9% of total footage of the invoice) indicates that this 
movement expense was inadvertently missed when compiling the database. 
Accordingly, we have treated this omission as a clerical error for the 
final determination.
    With respect to the other six invoices in question, we determine 
that the omission does not constitute a clerical error. The omission of 
international freight figures for certain reported sales resulted where 
certain product line items listed on the delivery notes (and 
transported to the customer) were overlooked by invoicing staff when 
preparing the original sales invoice. Subsequently, additional invoices 
were issued to account for the missed product line items on the 
original invoice. When compiling the sales database, however, Robobond 
neglected to account for international freight for these six invoices 
even though it was known that international freight was provided for 
these sales. This omission occurred consistently for six invoices which 
were issued under similar circumstances. In all six instances, the 
actual invoice document noted the error and, in most cases, referred to 
the original sales invoice. Accordingly, we find that Robobond did not 
act to the best of its ability to comply with the Department's request 
for information. Therefore, pursuant to section 776(b) of the Act, we 
are applying the highest international freight figure reported for 
merchandise listed in the original invoice for the six invoices in 
question.

Comment 3: Error in Calculating International Freight

    For sales listed on one sales invoice (invoice 4331), petitioner 
notes that the international freight figure was understated because the 
amount of the expense was incorrectly billed to the U.S. customer at a 
lower rate. Therefore, petitioner requests that the Department make a 
correction to account for this understatement.

DOC Position

    We agree with petitioner and have corrected this error accordingly.

Comment 4: Exclusion of Certain Reported Sales

    Robobond asserts that certain reported sales should not be 
considered in the final margin calculation because those transactions 
are not sales to the ``first unaffiliated U.S. customer.'' According to 
Robobond, these sales were of merchandise initially sold to a U.S. 
customer, but portions of these sales were not paid for and, 
subsequently, they were directed to another U.S. customer. Robobond 
requests that these sales be excluded from the final margin 
calculation. Alternatively, if the Department were to include these 
sales in its final margin calculation, Robobond requests that the 
Department use a weighted-average international freight cost of the 
initial invoice to calculate the freight cost for the subsequent sale.
    Petitioner counters that the sales in question should be considered 
in the final margin calculation. According to petitioner, the initial 
sales to the U.S. customer were not actually concluded because the 
customers did not pay for the merchandise or keep the merchandise. 
Petitioner requests the Department reject Robobond's argument and 
consider applying international freight for these reported sales based 
upon facts available.

DOC Position

    We agree with petitioner. The transactions in question were sales 
by Robobond of returned goods to the first unaffiliated U.S. customer. 
Accordingly, these sales are included in the final margin calculation.
    Additionally, Robobond's argument for using weighted-average 
international freight fails to address the fact that the cost to 
transport the merchandise from the UK to US was not reported for these 
sales even though such freight costs were incurred by Robobond. We do 
not consider the omission of the known freight expense for all five 
invoices to be a clerical error and, accordingly, we find that Robobond 
did not act to the best of its ability to comply with the Department's 
request for information. Therefore, pursuant to section 776(b) of the 
Act, we have applied the highest reported international freight figure 
per linear foot.

Comment 5: Affiliated Party

    Petitioner asserts that an unreported affiliated party was 
disclosed at verification. Robobond counters that the status of the 
alleged affiliated party was thoroughly examined at verification where 
it was found that the company in question was dissolved prior to the 
POI and, therefore, should not be considered a factor in determining 
whether to base the final determination on facts available.

DOC Position

    We agree with Robobond. Company records from the U.K. Registrar of 
Companies were examined for all listed shareholders of Robobond, Robam, 
D&J Simons, Ltd., D&J Simons & Sons, Ltd, Danant Holdings and Gransim 
Properties. As noted in the verification report, no discrepancies were 
discovered concerning the corporate structure and affiliated parties 
reported by Robobond. Therefore, this issue does not require further 
consideration for purposes of the final determination.

Comment 6: Accounting Records

    Petitioner contends that Robobond's accounting records were 
incomplete to the extent that the Department was precluded from 
verifying the accuracy of Robobond's questionnaire responses and, in 
particular, reconciling Robobond's reported quantity and value of sales 
during the POI. Because of this deficiency at verification, petitioner 
requests the Department to reject Robobond's responses and determine 
that the most adverse inference is warranted in the selection of facts 
otherwise available for purposes of the final determination.
    Robobond counters that the Department's verification report makes 
no mention of any major discrepancies in its review of company sales 
and accounting records for the POI. Robobond maintains that to the 
extent that accounting records were incomplete, this did not hinder the 
Department's verification. Further, Robobond notes that, according to 
the verification report, nominal ledger daybooks and sales invoice 
files were available for verifying completeness.

DOC Position

    We consider Robobond's reported volume and value of sales to be 
verified as complete and accurate for purposes of this investigation. 
While the missing accounting records are a cause for concern, as noted 
in the Department's verification report, source records and nominal 
ledger daybooks were available for review and used for reconciling 
Robobond's reported volume and value of sales and testing completeness 
of Robobond's reported sales of subject merchandise made during the 
POI. Therefore, there is no basis for making a final determination in 
this proceeding based solely upon facts available.

Comment 7: Level of Trade

    Petitioner contends that Robobond made statements supporting its 
level of trade claim that were subsequently proven false at 
verification. According to petitioner, such misleading statements 
reflect Robobond's consistent equivocation on the record of this 
proceeding and, therefore, the Department should use facts available 
for the final determination.
    Robobond maintains that it stated nothing false on the record of 
this proceeding. According to Robobond, all statements made concerning 
its sales

[[Page 51416]]

process, size of orders, and inventory maintenance in support of its 
level of trade claim were accurate. Robobond requests the Department to 
dismiss petitioner's assessment of these statements.

DOC Position

    We did not grant Robobond's level of trade claim for the 
preliminary determination because it did not provide sufficient 
information to indicate that separate levels of trade existed (see May 
3, 1996, Decision Memorandum from the Team to Deputy Assistant 
Secretary Barbara Stafford). Verification failed to disclose any 
evidence to support Robobond's claim that its sales were made at 
different levels of trade. Therefore, the Department has rejected 
Robobond's alleged level of trade claim.

Comment 8: Treatment of Commission Expense

    Petitioner contends that there is no reasonable basis to conclude 
that no other commission payments were made for sales of subject 
merchandise during the POI because Robobond's accounting records were 
incomplete. Therefore, for the final determination, petitioner requests 
the Department to apply a commission expense to all sales made during 
the three-month period of the POI for which the accounting records were 
incomplete.
    Robobond submits that it properly reported relevant commission 
expense data prior to verification, in accordance with the Department's 
regulations, and notes that the verification report disclosed no 
discrepancies regarding this subject. Therefore, Robobond argues an 
application of a commission expense to U.S. sales as facts available is 
unwarranted.

DOC Position

    The commission expense was reported by Robobond to the Department 
prior to verification. As noted in the verification report, with the 
exception of the reported commission payment, no evidence of any other 
commission payments were discovered to be linked to any POI sales of 
the subject merchandise. Therefore, we have considered the verified 
commission expenses relating to U.S. sales observations in the final 
margin calculation.

Comment 9: Home Market Direct Selling Expenses

Bank Charges (Returned Check Fees)
    Petitioner asserts that the sales verification revealed that the 
returned check fees, reported by Robobond as direct selling expenses, 
were not the actual expenses charged by the bank. The difference 
between the reported and verified amounts for this expense, petitioner 
contends, was grossly overstated and, as such, should be rejected as a 
direct selling expense.
    Robobond contends that the actual difference between the reported 
and verified amounts was insignificant when compared to the total value 
of home market POI sales. Robobond argues the difference cannot be 
characterized as an ``extreme overstatement'' of the expense. 
Therefore, the Department should reject petitioner's arguments.

DOC Position

    As stated in the verification report, the returned check fees 
reported by Robobond were not the actual amounts charged by the bank 
for returned checks. However, the Department was able to verify the 
actual returned check fees charged to Robobond. We agree with Robobond 
that the difference between what was reported and what was verified is 
negligible in proportion to the home market sales database and does not 
warrant the use of facts otherwise available. We have therefore 
corrected this field in Robobond's database to reflect the verified 
amounts of returned check fees.
Freight Revenue (credit notes clearing customer accounts that were 
incorrectly billed for freight)
    Petitioner asserts that verification revealed Robobond over-
credited certain customers for freight, thereby improperly inflating 
the adjustment to normal value. Therefore, petitioner argues the 
Department should reject freight revenue as a direct selling expense.
    Robobond contends that it reported the amount actually credited to 
the customer's account when the freight charges were removed. 
Therefore, Robobond argues that it appropriately reported the actual 
credits incurred and the Department should adjust the normal value 
accordingly.

DOC Position

    We agree with petitioner, in part. At verification, it was revealed 
that, due to the nature of the expense, the freight credit should not 
exceed the amount reported for freight revenue. Where this situation 
occurred in Robobond's database, we find that Robobond did not act to 
the best of its ability to comply with the Department's request for 
information. Therefore, pursuant to section 776(b) of the Act, we have 
used, as the facts available, zero in this expense field. However, the 
remaining freight revenue was verified. Accordingly, this error does 
not warrant rejecting the entire expense.
Shortage Credits
    Petitioner cites Robobond's submissions stating that there were no 
referenced invoices on the face of the credit notes issued by Robobond 
for shortages. Petitioner argues that verification found this statement 
to be false and, as such, the Department should reject this adjustment 
as a direct selling expense.
    Robobond contends that the allocation methodology is correct, in 
that Robobond believed that these credit notes incorrectly identified 
the applicable invoice. Therefore, allocating the credit notes on a 
customer-specific basis, Robobond contends, is an acceptable 
methodology.

DOC Position

    Verification revealed that the shortage credit notes could be 
accurately tied to specific invoices. Therefore, we have allocated the 
credit notes to the applicable invoices.
Return Freight Charges (freight charges for merchandise returned to 
Robobond)
    Robobond asserts that it adequately tied certain returned freight 
charges (DIRSEL7B) to the appropriate customer. Regarding the remaining 
returned freight charges (DIRSEL7A), Robobond contends that the freight 
company did not provide sufficient documentation to link the freight 
charges to a specific customer. Therefore, the charges were allocated 
over total sales during the POI. Robobond argues that the methodology 
used is legitimate and the adjustments should be accepted as direct 
selling expenses for the final determination.
    Petitioners argue that because the returned freight charges listed 
in DIRSEL7A could not be tied to sales within the POI, the expense 
should be considered indirect. As for the returned freight charges 
listed in DIRSEL7B, Petitioners believe that the credit notes did not 
adequately establish that they were tied to sales within the POI and as 
such should be considered indirect.

DOC Position

    We agree with petitioner in part. The antidumping questionnaire 
directs respondents to report those expenses which can be directly tied 
to a sale within the POI as direct selling expenses. Where an expense 
cannot be tied to a sale within the POI, the expense is considered 
indirect. Therefore, we treated the returned

[[Page 51417]]

freight charges which were not tied to a sale within the POI as 
indirect selling expenses for purposes of the final determination. As 
for the remaining returned freight expenses (i.e., those expenses tied 
to a specific customer) we determine that the documentation provided at 
verification adequately established that the expenses were tied to 
sales during the POI. Accordingly, we have considered these to be 
direct selling expenses for purposes of the final determination.
Freight Credit (credit notes issued by the freight company to Robobond)
    Petitioner argues that Robobond failed to tie the credit notes 
issued by the freight company to specific sales during the POI. As 
such, petitioner contends that these expenses should be considered 
indirect.

DOC Position

    We agree with petitioner in part. The antidumping questionnaire 
directs respondents to report those adjustments which can be directly 
tied to a sale within the POI as direct. Where an adjustment cannot be 
tied to a sale within the POI, it is considered indirect. Therefore, we 
treated the freight credits which were not tied to a sale within the 
POI (DIRSEL6A) as indirect selling expenses for purposes of the final 
determination. As for the remaining freight credits (DIRSEL6B), we 
determine that the documentation provided at verification adequately 
established that the revenues were tied to sales during the POI. 
Accordingly, we have considered these to be direct for purposes of the 
final determination. (See Memorandum to the File from the Framing Stock 
Team, September 25, 1996, for a discussion of specific freight credit 
notes.)
Bankruptcy Credit Notes (credit notes issued to clear the accounts of 
customers that went bankrupt)
    Robobond contends that the Department should accept the bankruptcy 
credit notes reported in its database as a direct selling expense. 
Robobond cites Daewoo Electronics Company Ltd. v. United States, 712 F. 
Supp. 931, 938 (CIT 1989), aff'd in part and rev'd in part on other 
grounds, 6 F.3d 1511 (Fed. Cir. 1993), cert. Denied, 114 S. Ct. 2672 
(1994) and Color Television Receivers from the Republic of Korea 61 FR 
4,408, February 6, 1996) as supporting its position that these credit 
notes have been accepted in the past as bad debt expense which is 
treated as a direct selling expense.
    Petitioners argue that the credit notes could not be tied to sales 
within the POI and, therefore, should be considered an indirect selling 
expense.

DOC Position

    We agree with Robobond. The Department verified the bad debt 
expenses and found these expenses to be incurred with respect to sales 
of the subject merchandise and to specific customers which went 
bankrupt during the POI. Furthermore, we found no discrepancies with 
respect to the allocation methodology. We have therefore, accepted 
these expenses as direct selling expenses for purposes of the final 
determination.
Accounts Receivable (credit notes to clear the outstanding balance of 
customer's accounts)
    Petitioner contends that Robobond deliberately attempted to 
manipulate the sales database by issuing credit notes to clear the 
outstanding balance of certain customers. Petitioner argues that the 
Department should reject the credit notes as a direct selling expense. 
Instead, petitioner contends, the Department should calculate the 
imputed credit expense on the total amount of the credit notes, for 
each customer, from September 1, 1994, through the present and apply 
that credit expense to every sale made by Robobond to the customer in 
question as the facts otherwise available.
    Robobond disputes petitioner's interpretation as unreasonable and 
contends the use of the facts otherwise available is not justified 
because none of the criteria of Section 776(a)(2) of the Act are 
applicable in this situation. Finally, Robobond asserts that if the 
Department disagrees with the classification of these credit notes as 
direct selling expenses it should simply treat them as indirect.

DOC Position

    The documentation regarding the accounts in question was thoroughly 
examined at verification. While we do not find evidence that the data 
were manipulated for the purposes of this proceeding, the credit notes 
in question could not be tied to specific sales during the POI. We have 
therefore treated this expense as indirect.
Remaining Credit Notes
    Petitioner contends that the discrepancies found during the review 
of the randomly sampled credit notes additionally call into question 
the reliability and credibility of Robobond's responses. Petitioner 
argues that, due to the abundant discrepancies found at verification, 
the Department should assign to Robobond a margin based on the facts 
otherwise available.
    Robobond argues that it correctly reported its credit notes and 
that the Department should disregard petitioner's claim.

DOC Position

    We disagree with petitioner. Verification revealed minor errors 
with respect to two credit notes. These errors have been corrected for 
the final determination. As for not using total adverse facts 
available, see, interested party comment 1.

Comment 10: Home Market Warranty Claims (based on credit notes)

    Robobond asserts that the questionnaire directs respondents to 
report warranty expenses on a product-specific basis. If this is not 
possible, Robobond continues, the respondent should use a broader 
allocation basis (i.e., a customer-specific basis), not a narrower 
invoice-specific basis (i.e., tying warranty credit notes to specific 
sales during the POI). Robobond cites Antifriction Bearings and Parts 
Thereof from Germany: Final Results of AD Administrative Review 56 FR 
31692, (July 11, 1991) (``AFBs from Germany''), to support its claim 
that the methodology used is consistent with the Department's 
established practice regarding warranty expenses. Moreover, Robobond 
argues that it would have been impractical and unduly burdensome to 
report warranty expenses on an invoice-specific basis. Therefore, 
Robobond contends that it correctly reported its warranty expenses and 
the Department should adjust normal value accordingly.
    Petitioner argues that Robobond was unable to produce historical 
warranty expense information. Additionally, not all of the warranty 
credit notes could be tied to sales within the POI (i.e., on an 
invoice-specific basis). Therefore, the Department should reject 
Robobond's reported warranty expenses. Further, petitioner contends 
that AFBs from Germany does not support Robobond's argument, instead it 
confirms that Robobond ignored the Department's stated policy regarding 
warranty expenses in that the acceptance of surrogate product-specific 
data is acceptable only when the respondent has provided the Department 
with historical warranty expense data with which to measure the 
reasonableness of the product-specific data.

DOC Position

    We agree with Robobond. As stated in AFBs from Germany:


[[Page 51418]]


    With respect to warranty expense, our past practice has been to 
accept variable warranty expenses which were incurred during the 
review period as a surrogate for such expenses actually incurred on 
sales during the review period, provided such expenses reasonably 
reflect the firm's historical experience with respect to warranty 
expenses. We use a surrogate expense amount because warranty 
commitments for sales under review may not reach fruition until 
after the review period is over. Therefore, the Department does not 
require a sale-by-sale breakdown of direct warranty expenses, just a 
reasonable allocation of these expenses.

(AFBs from Germany, 56 FR at 31723.)
    In this case, as in AFBs in Germany, we are satisfied that the 
accounting system of Robobond prevents reporting these expenses on a 
sale-by-sale basis or compiling historical data. Therefore, we have 
determined that the verified allocation for warranty expense is 
accurate, reasonable, and complete.

Comment 11: Home Market Credit Expense

    Robobond argues that the Department should accept the verified home 
market short-term interest rate reported in its questionnaire response 
to calculate home market credit costs.
    Petitioner contends that the Department should not accept the 
reported short-term interest rate and should instead base credit 
expense on the equivalent interest rate plus 1.5 per cent (i.e., for 
U.S. sales, the U.S. prime rate plus 1.5 per cent and for home market 
sales, the U.K. interest rate equivalent to the U.S. prime rate plus 
1.5 per cent).

DOC Position

    We agree with Robobond. The documentation regarding the Robobond's 
short-term interest rate agreement was thoroughly examined at 
verification--no discrepancies were noted. We have therefore used the 
reported interest rate in our final calculations.

Comment 12: Depreciation

    Petitioner asserts that Robobond should not be permitted to 
selectively change its depreciation methodology during the POI in order 
to lower costs. Petitioner notes that Robobond's May 31, 1995, 
financial statement indicates that this change in accounting 
methodology reduced the company's depreciation expense and POI 
production costs by a significant amount. According to petitioner, the 
change in depreciation methodology was made well after this 
investigation was initiated. Moreover, petitioner notes that Robobond 
has continued to depreciate all other categories of assets on the basis 
of its normal accelerated depreciation methodology and the company's 
parent and sister companies also continue to use an accelerated 
methodology on all of their assets. Expenditures for plant and 
machinery, the only class of assets subject to the change in 
depreciation methodology, increased in the fiscal year ending May 31, 
1995. Robobond's change in depreciation methodology is nothing more 
than an after-the-fact attempt to artificially reduce production costs.
    Respondent maintains that the Department should use Robobond's 
submitted plant and machinery depreciation expense because it 
accurately reflects the company's POI depreciation expense. Robobond 
argues that the accelerated depreciation methodology it followed in the 
past reflected the uncertainty of any given asset's useful life, while 
Robobond was developing the subject merchandise. However, with the 
establishment of its new facility and equipment, Robobond maintains 
that it has the right to adopt a depreciation methodology more 
representative of the assets' useful lives. Moreover, the methodology 
adopted by Robobond is an acceptable methodology under the generally 
accepted accounting principles (``GAAP'') of the UK. Robobond further 
argues that under section 773(f)(1)(A) the Department must calculate 
costs ``based on the records of the exporter or producer of the 
merchandise'', if those records are in accordance with the country's 
GAAP and reasonably reflect the costs associated with the production of 
the subject merchandise.

DOC Position

    We disagree with Robobond. Section 773(f)(1)(A) of the Act states 
that ``[c]osts shall normally be calculated based on the records of the 
exporter or producer of the merchandise, if such records are kept in 
accordance with the generally accepted accounting principles of the 
exporting country (or the producing country where appropriate) and 
reasonably reflect the costs associated with the production and sale of 
the merchandise.'' Further, as explained in the SAA, ``[t]he exporter 
or producer will be expected to demonstrate that it has historically 
utilized such allocations, particularly with regard to the 
establishment of appropriate amortization and depreciation periods and 
allowances for capital expenditures and other development costs.'' SAA 
at 834.
    In this instance, Robobond historically used an accelerated 
depreciation methodology in preparing its financial statements. 
Notwithstanding this long-established practice, Robobond has now 
changed to a straight-line depreciation method in its financial 
statements (as reflected in Robobond's May 31, 1995, statements), which 
were completed after the filing of the petition in this proceeding. 
Moreover, this change in methodology is limited solely to calculating 
depreciation expense for equipment; all other assets continue to be 
depreciated according to the historically utilized methodology. Also, 
Robobond's financial statements, prepared by outside auditors, do not 
provide any business reason for this change.
    In past cases, where respondents have switched accounting 
methodologies following the initiation of an investigation, the 
Department has closely examined such modifications and has rejected 
those changes which do not reasonably reflect costs and which redounds 
to the benefit of the respondent in the proceeding. (See, e.g., Final 
Determination of Sales at Less Than Fair Value: Certain Hot-Rolled 
Carbon Steel Flat Products, Certain Cold-Rolled Steel Flat Products, 
Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain 
Cut-to-Length Carbon Steel Plate From Brazil, 58 FR 37091 (July 9, 
1993); Amended Order and Final Determination of Sales at Less Than Fair 
Value: Ferrosilicon From Venezuela, 60 FR 64018 (December 13, 1995).)
    Where changes in historically-utilized company practice are made 
contemporaneous to the investigation, the burden plainly is on the 
respondent to show that the change was made for business reasons other 
than the AD proceeding and that the new methodology reasonably reflects 
the company's costs of producing subject merchandise. In such 
circumstances, the fact that a changed methodology is permissible under 
GAAP will not automatically justify the change if there is no 
legitimate business reason.
    Robobond asserts that the change in depreciation methodology was 
due to the opening of a new production facility at the beginning of the 
fiscal year. However, the company's records and other record 
information do not provide evidence in support of this assertion. As to 
Robobond's assertion that the change in methodology was in accordance 
with the UK's GAAP, Robobond has presented no information in support of 
its arguments that the straight-line depreciation methodology more 
reasonably reflects costs than its historically-used accelerated 
methodology, which also is in accordance with UK's GAAP. With

[[Page 51419]]

regard to Robobond's comments on useful life, we note that both methods 
use the same estimate of useful life; however, the accelerated method 
allocates more of the expense in the early years. Additionally, the 
notes to Robobond's May 31, 1995, financial statements state that the 
change in depreciation methodologies reduces the depreciation expense 
relative to the expense calculated according to the historically-
utilized methodology.
    In sum, in light of the evidence of record, we find that Robobond 
has not met its burden on this issue. The record evidence does not 
reflect that this methodological change was done for business reasons. 
Although Robobond provided post-hoc rationalizations for the change, it 
did not provide record evidence from a time period prior to the 
initiation of the investigation to show that the change was made for 
business reasons. Additionally, the SAA indicates that the exporter 
will be expected to demonstrate that it has historically utilized such 
accounting practices. Robobond has not historically used the straight-
line method of depreciation in its accounting records. Further, 
Robobond did not consistently apply this change in methodology to all 
of its asset categories.
    For purposes of the final determination, we therefore are adjusting 
Robobond's reported depreciation expense to reflect depreciation 
calculated according to its historically-utilized method.

Comment 13: G&A Expense

    Petitioner contends that there is ample evidence on the record that 
the various companies owned by the Simons family are related for 
purposes of this dumping investigation. According to petitioner, in 
such situations, the Department normally combines the G&A expense of 
all related companies and then allocates the aggregate total across the 
consolidated cost of sales of those companies. In addition, petitioner 
notes that Robobond submitted for the record on June 6, 1996, the D&J 
Simons and Sons, Ltd. financial statements for the fiscal year ending 
October 31, 1995. The end of D&J Simons & Sons' 1995 fiscal year 
extends approximately seven weeks beyond the initiation of this 
investigation. The Department normally derives G&A and financial 
expense ratios from data contained in the financial statements for the 
fiscal year that most closely corresponds with the POI. However, 
petitioner argues that these financial statements cannot be used 
because Robobond has manipulated the information contained in them. 
Specifically, petitioner notes that the historical amounts paid for 
compensation decreased significantly in the October 31, 1995, financial 
statements. Furthermore, it appears that some compensation was 
purposefully shifted to dividends rather than normal methods in order 
to further reduce period costs.
    Robobond counters that the Department should use Robobond's 
submitted G&A expense because they accurately represent the POI expense 
associated with the subject merchandise. Robobond maintains that its 
reported G&A expense included its own expense, as well as, those G&A 
expenses incurred by affiliates on its behalf. Additionally, Robobond 
notes that the Department verified that Robobond identified all G&A 
expenses incurred by affiliates on the company's behalf. According to 
Robobond, the fact that its affiliates neither produce nor sell the 
subject merchandise defeats any presumption that the remaining G&A 
expenses incurred by the affiliates are incurred on behalf of Robobond.

DOC Position

    We agree with respondent in part. Verification showed no evidence 
to indicate that Robobond misreported its G&A expenses for itself or 
any of its affiliates.
    While petitioner is correct in observing that directors' 
compensation as reported was significantly lower in Robobond's October 
31, 1995, financial statement than in previous years, it appears that 
Robobond reallocated the difference in directors' compensation to its 
pension fund, which is captured along with directors' salaries in 
Robobond's reported G&A. Additionally, dividends were issued to 
Robobond's shareholders as another portion of the directors' 
compensation package.
    Additionally, where a manager/owner in a closely-held company could 
potentially reallocate costs through the issuance of dividends in lieu 
of directors' salaries, we reviewed the Robobond's past practices on 
issuing dividends and found that Robobond has never issued dividends in 
prior years. This change in policy reallocates directors' compensation 
to dividends. Further, this change in policy on issuing dividends 
occurred following the initiation of this investigation. For purposes 
of the final determination, we have adjusted Robobond's reported G&A 
figure to include dividends.

Comment 14: Building Depreciation

    To avoid double counting for the same type of expense, Robobond 
contends that the Department should include in COP and CV only building 
maintenance and not building depreciation. Robobond notes that, under 
UK accounting principles, a company may not report depreciation on a 
freehold building (i.e., an estate held in fee) if it elects to 
maintain the building in a manner that preserves or extends its useful 
life and to record, as current expense, the cost of maintaining the 
buildings. Accordingly, Robobond requests that the Department include 
only building maintenance expense in calculating Robobond's COP 
because: (1) Building maintenance expenses are recorded in Robobond's 
normal cost accounting records, and (2) Robobond does not record 
building depreciation in its normal course of business.

DOC Position

    As noted in the previous comment concerning depreciation, Section 
773(f)(1)(A) of the Act directs the Department to calculate COP based 
on the company's records if those records are in accordance with the 
country's accepted practice and reasonably reflect the costs associated 
with the production of the subject merchandise. While the UK accounting 
principles do not require companies to depreciate buildings, U.S. 
accounting principles require building depreciation as a means of cost 
allocation. Under UK GAAP the cost of the building is never recognized 
as an expense, however, U.S. GAAP recognizes both the cost of the 
building and the maintenance as expenses, in order to properly match 
the expenses to revenues. Routine building maintenance expense, 
therefore, does not capture associated building depreciation. In this 
instance, we find that the accounting principles of the UK do not 
reasonably reflect the costs associated with the production of the 
subject merchandise. For the final determination, we have included 
building maintenance expenses and building depreciation expense in 
calculating Robobond's COP.
Ecoframe

Comment 15: Start-Up Costs

    Petitioner argues that the Department should not make a startup 
adjustment to Ecoframe's cost of production. Petitioner contends that 
Ecoframe failed to provide sufficient evidence that it meets the 
criteria under Section 773(f)(1)(C)(ii) of the Act. Specifically, 
petitioner argues that Ecoframe failed to establish that it was still 
in the start-up phase during the POI and that production levels were 
limited by technical factors associated with the initial phase of 
commercial production.

[[Page 51420]]

Petitioners argue that the POI in this case starts nine months after 
Ecoframe commenced production of framing stock and was therefore well 
into full operation during the POI.
    Petitioner argues that the yield loss information provided by 
Ecoframe is not evidence of technical factors associated with the 
initial phase of commercial production. Further petitioner's own 
analysis indicates that these yield losses are a normal part of routine 
production, and are most probably indicative of the degree of 
ornateness of the profiles produced. The more ornate the profile the 
higher the yield loss. Finally, petitioner argues that respondent must 
demonstrate that production levels were limited by technical factors 
associated with the initial phase of commercial production and not by 
factors unrelated to start-up such as chronic production problems, 
demand, or business cycle.
    Ecoframe argues that it provided sufficient information to warrant 
a startup adjustment to the cost of production. Specifically, Ecoframe 
points to the fact that the plant had been operational for less than 
two years by the end of the POI and at that time even the major U.K. 
manufacturer of framing stock was still producing substandard moulding. 
Ecoframe also contends that numerous technical factors were limiting 
initial production during the POI. Therefore, the Department should 
make a startup adjustment to Ecoframe's cost of production.

DOC Position

    We agree with petitioners. According to section 773(f)(1)(C)(ii) of 
the Act adjustments ``shall be made for startup operations only where--

    (I) a producer is using new production facilities or producing a 
new product that requires substantial additional investment, and
    (II) production levels are limited by technical factors 
associated with the initial phase of commercial production.
    For purposes of subclause (II), the initial phase of commercial 
production ends at the end of the startup period. In determining 
whether commercial production levels have been achieved, the 
administering authority shall consider factors unrelated to startup 
operations that might affect the volume of production processed, 
such as demand, seasonality, or business cycles.''

The SAA also states ``any determination of the appropriate startup 
period involves a fact-intensive inquiry.'' This includes a 
consideration of ``factors unrelated to startup operations that may 
have affected the volume of production processed, such as demand, 
seasonality, or business cycles.'' The SAA further states that the 
``start-up [period] will be considered to end at the time the level of 
commercial production characteristic of the merchandise, producer, or 
industry concerned is achieved. The attainment of peak production 
levels will not be the standard for identifying the end of the start-up 
period, because the start-up period may end well be for a company 
achieves optimum capacity utilization.'' SAA at 836 (emphasis added). 
Moreover, ``[t]o determine when a company reaches commercial production 
levels, Commerce will consider first the actual production experience 
of the merchandise in question.'' SAA at 836.
    In this case, although Ecoframe was using new production facilities 
and techniques, the Department does not have sufficient information on 
the record to determine when the start-up period ended and the 
commercial production period began. Specifically, Ecoframe did not 
submit a production level analysis demonstrating that it had not yet 
reached full commercial production levels. Such an analysis would 
include information distinguishing the production levels, the product 
cost levels, and the prices during the start-up phase and the 
commercial phase. Furthermore, the analysis would have to address 
``factors unrelated to start-up operations that may have affected the 
volume of production processed, such as demand, seasonality, or 
business cycles.'' SAA at 837.
    Ecoframe only provided information that its yield losses decreased 
dramatically in March 1996. The start-up adjustment is not intended to 
adjust for high yield losses experienced by respondent, but rather it 
is intended to state product costs at amounts realized when commercial 
production levels are reached. Yield losses are only one factor that 
would have to be considered in such an analysis. In this regard, the 
SAA states that ``Commerce will not extend the start-up period so as to 
cover improvements and cost reductions that may occur over the entire 
life cycle of a product.'' This suggests that improvements in product 
yields over time do not constitute ``start-up costs.'' SAA at 836.
    In sum, we reject Ecoframe's claim for a start-up adjustment 
because it did not demonstrate the existence of a start-up phase that 
warrants such treatment under section 773(f)(1)(C)(ii) of the Act.

Comment 16: Quantity Adjustment

    Ecoframe stated that all its products are custom products and as 
such are made to order. Because everything is made to order, Ecoframe 
contends, numerous factors reduce the unit cost of the product as the 
order size increases. Therefore, in order to make an accurate 
comparison the Department must match at comparable quantities. Where a 
match at comparable quantities is not possible, an adjustment should be 
made to account for the price differences based on order size.
    Petitioner contends that Ecoframe's request is untimely and 
unsupported by evidence on the record. Specifically, petitioner cites 
19 CFR 353.55(b) which states that the calculation of normal value 
based on sales with quantity discounts will occur if:

    (1) During the period examined or during a more representative 
period, the producer or reseller granted quantity discounts of at 
least the same magnitude on 20 percent or more of sales of such or 
similar merchandise for the relevant country; or
    (2) The producer or reseller demonstrates to the Secretary's 
satisfaction that the discounts reflect saving specifically 
attributable to the production of different quantities.

    Petitioner argues that Ecoframe's responses fail to demonstrate a 
clear and direct correlation between price differences and quantities 
sold or costs incurred.

DOC Position

    We agree with Ecoframe in part. Information on the record 
demonstrates that the prices between the different quantity bands were 
sufficiently varied to warrant comparisons at comparable quantity 
bands, where possible as outlined in Ecoframe's September 5, 1996, 
submission (see ``Fair Value Comparisons'' section of this notice). 
Ecoframe, however, did not provide sufficient information to warrant a 
quantity adjustment where a comparison sale at a comparable quantity 
was not available.

Comment 17: Credit Expense Calculation

    Ecoframe asserts that the method for verifying the reported rate 
used for calculating the home market credit expense is highly 
inaccurate. Because the bank calculates the interest on a daily basis, 
the balance changes daily and, therefore, the interest expense charged 
may be above or below the average interest rate. According to Ecoframe, 
a more appropriate way to check Ecoframe's interest expense is to 
compare it with Ecoframe's agreement with the bank, which notes the 
interest rate given to Ecoframe.

DOC Position

    For checking the reported interest rate used for figuring credit 
expense for home market sales, we calculated the short-term interest 
for the POI based on

[[Page 51421]]

the quarterly interest expense and outstanding balances which resulted 
in an actual interest rate of approximately two percentage points 
higher than the interest rate reported by Ecoframe. It is important to 
note that Ecoframe's interest rate agreement with its UK bank was never 
submitted to the Department prior to verification or presented at 
verification for review. For purposes of the final determination, we 
are calculating credit expense for home market sales based on the 
quarterly interest expense and outstanding balances examined at 
verification.

Suspension of Liquidation

    In accordance with section 735(c) of the Act, we are directing the 
Customs Service to continue to suspend liquidation of all entries of 
the subject merchandise that are entered, or withdrawn from warehouse, 
for consumption on or after May 13, 1996, the date of publication of 
our preliminary determination in the Federal Register. Because Robobond 
received a de minimis final dumping margin, entries of subject 
merchandise from Robobond are excluded from these instructions. We will 
instruct the Customs Service to require a cash deposit or the posting 
of a bond equal to the weighted-average amount by which the NV exceeds 
the export price, as indicated in the chart below. This suspension of 
liquidation will remain in effect until further notice.

------------------------------------------------------------------------
                                             Weighted-average margin    
         Exporter/manufacturer                     percentage           
------------------------------------------------------------------------
Ecoframe..............................  20.01                           
Robobond/Simons.......................  de minimis                      
Magnolia..............................  84.82                           
All Others............................  20.01                           
------------------------------------------------------------------------

    Pursuant to section 733(d)(1)(A) and section 735(c)(5) of the Act, 
the Department has not included zero and de minimis weighted-average 
dumping margins and margins determined entirely under section 776 of 
the Act, from the calculation of the ``all others'' deposit rate.

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. As our final determination is affirmative, 
the ITC will determine, within 45 days, whether these imports are 
causing material injury, or threat of material injury, to an industry 
in the United States. If the ITC determines that material injury, or 
threat of material injury, does not exist, the proceeding will be 
terminated and all securities posted will be refunded or canceled. If 
the ITC determines that such injury does exist, the Department will 
issue an antidumping duty order directing Customs officials to assess 
antidumping duties on all imports of the subject merchandise entered, 
or withdrawn from warehouse, for consumption on or after the effective 
date of the suspension of liquidation.
    This determination is published pursuant to section 735(d) of the 
Act.

    Dated: September 25, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-25242 Filed 10-1-96; 8:45 am]
BILLING CODE 3510-DS-P