[Federal Register Volume 61, Number 246 (Friday, December 20, 1996)]
[Notices]
[Pages 67308-67318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32400]


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

DEPARTMENT OF COMMERCE
[A-588-815]


Gray Portland Cement and Clinker From Japan; Final Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of final results of antidumping duty administrative 
review.

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

SUMMARY: On October 6, 1995, the Department of Commerce (the 
Department) published the preliminary results of review of the 
antidumping duty order on gray portland cement and clinker from Japan. 
The review covers one manufacturer/exporter, Onoda Cement Co., Ltd., 
and the period May 1, 1993, through April 30, 1994.
    We gave interested parties an opportunity to comment on the 
preliminary results. Based on our analysis of the comments received, we 
have changed the final results from those presented in the preliminary 
results of review

EFFECTIVE DATE: December 20, 1996.

FOR FURTHER INFORMATION CONTACT:
David Genovese, Import Administration, International Trade 
Administration, U.S. Department of Commerce, Washington, D.C. 20230; 
telephone (202) 482-4697.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions as they existed prior to January 1, 1995, 
the effective date of the amendments made to the Tariff Act of 1930, as 
amended (the Act) by the Uruguay Round Agreements Act (URAA).

Background

    On May 12, 1994, and May 31, 1994, Onoda Cement Co., Ltd. (Onoda), 
and the Ad Hoc Committee of Southern California Producers of Gray 
Portland Cement (the Petitioner), respectively, requested that the 
Department conduct an administrative review of the antidumping duty 
order on gray portland cement and clinker from Japan (56 FR 21658, May 
10, 1991) for Onoda. We initiated the review, covering the period May 
1, 1993, through April 30, 1994, on June 15, 1994 (59 FR 30770). On 
October 6, 1995, we published the preliminary results of the 
administrative review (60 FR 52368). The Department has now completed 
the administrative review in accordance with section 751 of the Tariff 
Act of 1930, as amended (the Act).

Scope of the Review

    The products covered by this review are gray portland cement and 
clinker from Japan. Gray portland cement is a hydraulic cement and the 
primary component of concrete. Clinker, an intermediate material 
produced when manufacturing cement, has no use other than grinding into 
finished cement. Microfine cement was specifically excluded from the 
antidumping duty order.
    Gray portland cement is currently classifiable under the Harmonized 
Tariff Schedule (HTS) item number 2523.29, and clinker is currently 
classifiable under HTS item number 2523.10. Gray portland cement has 
also been entered under item number 2523.90 as ``other hydraulic 
cements.''
    The HTS item numbers are provided for convenience and Customs 
purposes. The written product description remains dispositive as to the 
scope of the product coverage.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received

[[Page 67309]]

comments from the petitioner and from the respondent. At the request of 
the petitioner and respondent, we held a public hearing on November 20, 
1995.

Comment 1

    Onoda argues that in calculating foreign market value (FMV), the 
Department should deduct home market pre-sale movement expenses either 
in their entirety as direct selling expenses or as indirect selling 
expenses up to the amount of U.S. pre-sale movement expenses. Onoda 
states that it has been the Department's practice since The Ad Hoc 
Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United 
States, 13 F.3d 398 (Fed. Cir. 1994), cert. denied 115 S. Ct. 67 (1994) 
(hereinafter Ad Hoc Committee I), to deduct pre-sale movement expenses 
as direct expenses when the freight expenses are ``incurred in 
positioning the merchandise at [a] warehouse,'' and the warehousing 
expenses are classified as direct expenses. Onoda argues that in this 
review, pre-sale movement expenses should be deducted from FMV as 
direct expenses since the cost of warehousing the cement is a direct 
expense. Onoda argues that warehousing is a direct expense because 
sales of the subject merchandise constitute virtually all of its cement 
sales; therefore, virtually all of Onoda's warehousing expenses are 
associated with the subject merchandise.
    Onoda argues that, alternatively, if the Department decides to 
treat home market pre-sale movement expenses as indirect expenses, in 
purchase price situations, the Department should deduct from FMV home 
market pre-sale movement expenses up to the amount of U.S. pre-sale 
movement expenses. Onoda argues that the Department has the power to 
make such an adjustment pursuant to its authority to make 
circumstances-of-sale (COS) adjustments and under its inherent 
authority to achieve a fair comparison. Onoda further argues that 19 
CFR Sec. 353.56 permits the Department to adjust FMV to account for 
indirect expenses as a COS adjustment and that the Department has the 
power to adjust FMV for indirect expenses under its inherent authority 
to fill in gaps in an area where the statute is silent or ambiguous. 
Onoda cites Timken Company v. United States, 865 F. Supp. 881 (CIT 
1994) (hereinafter Timken) and Smith-Corona Group v. United States, 713 
F.2d 1568 (Fed. Cir. 1983) (hereinafter Smith-Corona) in support of its 
position.
    Moreover, Onoda cites 19 C.F.R. Sec. 353.56(b)(1) and the Final 
Determination of Sales at Less than Fair Value: Polyethylene 
Terephthalate Film, Sheet, and Strip from the Republic of Korea, 56 FR 
16305 (April 22, 1991) (hereinafter PET Film from Korea) as precedent 
for offsetting direct selling expenses in the U.S. market with indirect 
selling expenses in the home market in purchase price situations.
    Petitioner contends that Onoda's argument that pre-sale movement 
expenses should be deducted from FMV as a direct expense has been 
rejected by the Department in a number of Japanese cases, including, 
Polyethylene Terephthalate Film, Sheet and Strip, from Japan, 60 FR 
32,133 (June 20, 1995), Stainless Steel Angle from Japan, 60 FR 16,608 
(March 31, 1995), Granular Polytetraflourethylene Resin from Japan, 60 
FR 5,622 (January 30, 1995), and Tapered Roller Bearings, Four Inches 
or Less in Diameter, and Components Thereof, from Japan, 59 FR 56,035 
(November 10, 1994) (hereinafter TRBs from Japan).
    Petitioner states that contrary to Onoda's assertion, the 
Department requires that pre-sale movement expenses be directly related 
to specific sales in order to be classified as direct expenses. 
Petitioner contends that in situations like this, where the merchandise 
is not dedicated to specific customers but, instead, is kept in 
inventory at the warehouse and is generally available for sale to any 
customer, the pre-sale expenses are indirect because there is no 
specific sale to which the expenses can be directly related. Petitioner 
argues that the Department addressed the issue of whether or not 
Onoda's pre-sale home market transportation expenses are direct 
expenses, in the second review of this case. See Gray Portland Cement 
and Clinker from Japan, 60 FR 43,761 (August 23, 1995) (hereinafter 
Gray Portland Cement and Clinker--Second Review). Petitioner states 
that in the second review of this case, the Department determined that 
Onoda's pre-sale home market movement expenses were indirect expenses.
    Petitioner argues that Onoda's home market distribution system has 
not changed from the second review and that, therefore, the Department 
should continue to consider Onoda's pre-sale home market movement 
expenses as indirect expenses as it did in the preliminary results of 
this review. Petitioner states that the methodology applied in the 
preliminary results of this review and the second review of this case 
(i.e., the methodology outlined in Ad Hoc Committee I) has been applied 
by the Department in a number of Japanese cases where the Japanese 
producers, like Onoda, have a home market distribution system whereby 
products are transported from manufacturing plants to warehouses prior 
to sale.
    Petitioner further contends that the Department's methodology for 
determining whether pre-sale home market movement expenses are indirect 
expenses has been approved by the Court of International Trade (CIT) 
and the Court of Appeals for the Federal Circuit (CAFC) in a number of 
decisions including, Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray 
Portland Cement v. United States, No. 95-1129 (Fed. Cir., October 10, 
1995), Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland 
Cement v. United States, 865 F. Supp. 857 (CIT 1994) (hereinafter, Ad 
Hoc Committee II), Federal Mogul Corp. v. United States, 871 F. Supp. 
443 (CIT 1994), Torrington Co. v. United States, 866 F. Supp. 1434 (CIT 
1994), and Timken Co. v. United States, 855 F. Supp. 399 (CIT 1994).
    With regard to Onoda's argument that in purchase price situations 
the Department should deduct home market pre-sale freight expenses up 
to the amount of the U.S. pre-sale movement expenses, Petitioner states 
that such a methodology would require the Department to overrule the 
CAFC's decision in Ad Hoc Committee I and all of the judicial and 
administrative rulings based on this decision. Petitioner contends that 
in Ad Hoc Committee I, the CAFC plainly stated that because Congress 
drafted the FMV section of the antidumping statute without any 
authority for the deduction of home market pre-sale movement expenses, 
Congress did not intend those expenses to be deducted from FMV under 
any ``inherent'' authority. Petitioner states that this principle is 
supported by the decision of the current Congress, in enacting the 
implementing legislation for the Uruguay Round amendments to the 
antidumping law, to provide expressly for the deduction of pre-sale 
home market movement expenses from FMV.
    With regard to Onoda's argument that the Department has the power 
to adjust FMV for indirect expenses under its inherent authority to 
fill in gaps in an area where the statute is silent or ambiguous, 
Petitioner argues that the Department has recognized that Ad Hoc 
Committee I plainly held that in purchase price comparisons there was 
no ``gap'' with respect to whether pre-sale movement charges could be 
deducted from FMV. Petitioner cites to TRBs from Japan, in which the 
Department stated: ``The Ad Hoc Committee decision states that the 
statute does not give the Department the

[[Page 67310]]

authority to deduct home market movement expenses from FMV by invoking 
its inherent power to fill `gaps' in the antidumping statute.'' TRBs 
from Japan, at 56042.
    In a related issue, Petitioner argues that because home market pre-
sale transportation costs should be considered indirect selling 
expenses and because Onoda reported home market pre-sale transportation 
expenses with other direct selling expenses in the field DIRSELH, the 
Department should treat all expenses reported in the DIRSELH field as 
indirect, rather than direct, selling expenses.
    In response, Onoda states that DIRSELH consists of freight expenses 
associated with swap transactions and periodic adjustments made to the 
freight expenses recorded in Onoda's books. Onoda contends that freight 
expenses associated with swap transactions are post-sale rather than 
pre-sale freight expenses since such freight occurs after the sale has 
been made by the other manufacturer. Moreover, states Onoda, while the 
freight costs associated with the tanker freight adjustment include 
pre-sale freight expenses, the Department should still deduct these 
expenses from FMV pursuant to Onoda's aforementioned argument on the 
deduction of pre-sale freight expenses as a direct expense or as an 
indirect expense capped by U.S. pre-sale freight expense.

Department's Position

    We disagree with Onoda. Onoda is correct that since Ad Hoc 
Committee I the Department has deducted pre-sale movement expenses as 
direct expenses when freight expenses are incurred in positioning the 
merchandise at the warehouse, and the warehousing expenses are 
classified as direct expenses. However, as with the first and second 
reviews of this case, the Department has determined that Onoda's 
warehousing expense is an indirect selling expense. The Department's 
determination in the first review that Onoda's warehousing expense is 
an indirect selling expense has been upheld by the CIT in The Ad Hoc 
Committee of Southern California Producers of Gray Portland Cement v. 
United States, 914 F. Supp. 535 (CIT 1995) (hereinafter Southern 
California Producers.). In its decision the CIT stated that:

    Home market expenses for which Commerce makes an allowance, 
must, as a general matter, be directly tied to specific sales or 
specific customers. Hussey Copper, 17 CIT at 1001, 834 F. Supp. at 
421. If the expenses are not directly tied to specific sales, but 
are incurred to advance sales in general, then Commerce may treat 
them as indirect selling expenses * * *
    Upon review, the Court finds that Commerce's decision to 
classify Onoda's home market service station expenses as warehousing 
expenses, and to treat them as indirect selling expenses, is 
supported by substantial evidence and otherwise in accordance with 
law for several reasons. First, Onoda has not earmarked the cement 
held in the service stations for particular sales or particular 
customers; indeed, Onoda admits that the service stations 
temporarily store cement that is awaiting sale. Final Results, 58 
Fed. Reg. 48,828. Second, Onoda failed to submit evidence showing 
that service stations differ from warehouses in their physical 
structure. See Id. Third, some repacking, a job that is 
traditionally done at warehouses, is done at the service stations. 
Id.; Pub. Doc. 107, Conf. Doc. 46. Fourth, Commerce found evidence 
to indicate that the service stations are not entirely necessary to 
transport cement to customers.

Id. at 540-541. The facts of this review are no different from the 
facts in the first review upheld by the CIT. Accordingly, the 
Department continues to view Onoda's warehousing as an indirect expense 
and therefore, we continue to view Onoda's home market pre-sale 
movement charges as an indirect expense.
    The Department also disagrees with Onoda's argument that in 
purchase price situations the Department should deduct from FMV as 
indirect expenses home market pre-sale movement expenses up to the 
amount of U.S. pre-sale movement expenses through the Department's 
inherent authority to fill in gaps in an area where the statute is 
silent or ambiguous. We have determined, in light of Ad Hoc Committee I 
and its progeny, that the Department no longer can deduct home market 
movement charges from FMV pursuant to its inherent power to fill in 
gaps in the antidumping statute. We instead adjust for those expenses 
under the COS provision of 19 CFR Sec. 353.56 and the ESP offset 
provision of 19 CFR Sec. 353.56(b) (1) and (2), as appropriate, in the 
manner described below.
    When USP is based on either ESP or purchase price, we adjust FMV 
for home market movement charges through the COS provision of 19 CFR 
Sec. 353.56(a). Under this adjustment, we capture only direct selling 
expenses, which include post-sale movement expenses and, in some 
circumstances, pre-sale movement expenses. Specifically, we treat pre-
sale movement expenses as direct expenses if those expenses are 
directly related to the home market sales of the merchandise under 
consideration. In order to determine whether pre-sale movement expenses 
are direct, 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, linked to pre-sale warehousing expenses. See Final Results of 
Redetermination Pursuant to Court Remand, dated January 5, 1995 
(pertaining to Slip. Op. 94-151). If the pre-sale warehousing 
constitutes an indirect expense, the expense involved in getting the 
merchandise to the warehouse, in the absence of contrary evidence, also 
must be indirect; conversely, a direct pre-sale warehousing expense 
necessarily implies a direct pre-sale movement expense. See Gray 
Portland Cement and Clinker--Second Review, at 43765; Ad Hoc Committee 
II, 865 F. Supp. 861-862.
    Onoda reported in its questionnaire response of August 22, 1994, 
that it incurred no after-sale warehousing expenses and respondent did 
not claim any warehousing expenses as direct COS expenses. The 
Department interprets this to mean that any warehousing expenses 
incurred are properly classified as pre-sale, indirect selling expenses 
and that the expense of transporting the cement to the warehouse should 
also be treated as an indirect expense. Accordingly, the Department has 
not deducted home market pre-sale movement expenses from FMV for 
comparison to PP sales. However, we deducted post-sale movement 
expenses from FMV as a direct expense.
    Additionally, it is the Department's standard practice when a 
respondent commingles direct and indirect home market expenses in the 
same field to treat that field as an indirect expense. See Gray 
Portland Cement and Clinker--Second Review, at 43766; Antifriction 
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From 
France, et al. 58 FR 39729, 39742 (July 26, 1993). Accordingly, we 
agree with Petitioner that since Onoda reported home market pre-sale 
transportation expenses (which are indirect expenses) with direct 
selling expenses in the field DIRSELH, we should treat all expenses 
reported in the DIRSELH field as indirect, rather than direct, selling 
expenses.

Comment 2

    Onoda argues that the Department should not include home market 
sales of bagged cement in the FMV calculation since it only sold bulk 
cement in the United States. Onoda argues that comparing bulk sales to 
bagged sales in this case contravenes the Department's past practice of 
comparing, whenever possible, sales of identically packed

[[Page 67311]]

merchandise. Onoda cites to the Final Determination of Sales at Less 
Than Fair Value: Gray Portland Cement and Clinker from Japan, 56 FR 
12,156 (March 22, 1991), Final Determination of Sales at Less Than Fair 
Value: Fresh Kiwifruit from New Zealand, 57 FR 13,695 (April 17, 1992) 
(hereinafter, Kiwifruit from New Zealand), Final Determination of Sales 
at Less Than Fair Value: Gray Portland Cement and Clinker from Mexico, 
55 FR 29,244 (July 18, 1990) (hereinafter Cement from Mexico), and the 
concurrence memorandum for Gray Portland Cement and Clinker from 
Venezuela, 56 FR 56,390 (November 4, 1991) (hereinafter Cement from 
Venezuela), in support of its position.
    Petitioner argues that Onoda made this same argument in the second 
review and that the Department determined in the second review that it 
was appropriate to compare bulk sales in the United States to bulk and 
bagged sales in the home market after adjusting for differences in 
packing costs. See Gray Portland Cement and Clinker--Second Review, at 
43763. Petitioner argues that home market sales of bagged cement should 
be included in the calculation of FMV since the technical 
specifications for cement sold in bags and in bulk are identical. 
Moreover, asserts Petitioner, Onoda has made no attempt to demonstrate 
that bagged cement is sold in different distribution channels or at 
different levels of trade than bulk cement, or that sales of bagged 
cement are not in the ordinary course of trade.

Department's Position

    We agree with the petitioner. As we stated in the second review of 
this case, there is no physical difference between the bagged and bulk 
cement sold in Japan. The only difference is the manner in which the 
merchandise is packed. Since packing is not a criterion for 
comparability, and because there is no physical difference between bulk 
and bagged cement sold in the home market, we did not exclude home 
market sales of bagged cement from our calculations of FMV. See Gray 
Portland Cement and Clinker--Second Review, at 43763.
    In the second review of this case, we determined that the cases 
cited by Onoda in support of its argument did not construct a standard 
whereby the Department will not make bulk-to-bag comparisons. Further, 
the LTFV investigation of this case is distinguishable from both the 
second and present case. In the LTFV investigation, bagged cement was 
sold in the United States, not in the home market, and the amount sold 
in the United States was ``insignificant.'' Accordingly, in the LTFV 
investigation, we did not require Onoda to report U.S. sales of bagged 
cement and we did not use bagged sales in our margin calculations. In 
the second review of this case, and in this review, bagged cement was 
sold in the home market and the amount was not insignificant. 
Accordingly, Onoda was required to report bagged sales and such sales 
were included in the Department's margin calculations.
    We conclude here, as we did in the second review of this case, that 
the cases cited by Onoda do not stand for the proposition that the 
Department must always compare bulk-to-bulk and bag-to-bag sales, and 
that packing is not a criterion for matching types of cement. 
Therefore, we compared sales of bulk cement in the United States to 
sales of both bulk and bagged cement in the home market, and made the 
appropriate adjustments to reflect the packing costs associated with 
bagged cement.

Comment 3

    Onoda argues that in the preliminary results of review, the 
Department improperly classified a commission paid to an unrelated 
trading company as a ``document handling fee'' (i.e., as a movement 
expense that was directly deducted from U.S. price). Onoda states that 
its sales to the United States are made through an unrelated trading 
company which purchases the cement from Onoda at a discount and then 
resells the cement at the pre-discount price to Lone Star Northwest 
(LSNW), a party related to Onoda. Onoda claims that the payment the 
trading company receives (i.e., the difference between what the trading 
company pays Onoda and what LSNW pays the trading company for the 
cement) is a commission compensating the trading company for arranging 
transportation and providing other services in support of cement sold 
to the United States.
    Onoda asserts that under the antidumping law, payments for a wide 
range of services may qualify for treatment as commissions. Onoda, 
citing to Chapter 8, page 26 of the Department's antidumping manual, 
states that the services provided by a commissionaire may vary from the 
level of minimal services in facilitating communication to substantive 
services including maintaining inventory and providing support in all 
areas of the sales transactions. Similarly, Onoda cites to Final 
Determination of Sales at Less Than Fair Value: Coated Groundwood Paper 
from France, 56 FR 56,380 (November 4, 1991) to argue that the 
``Department treats payments for `ensuring that production, shipping, 
and deliveries meet . . . scheduling requirements, taking title to the 
merchandise, performing sales accounting and collection functions, 
arranging for the provision of technical services, and participating in 
trade shows and other events' as commission.'' See Onoda's case brief 
at page 10, fn 14.
    Onoda, citing to Final Determination of Sales at Less Than Fair 
Value and Final Determination of Sales at Not Less Than Fair Value: 
Certain Carbon Steel Products from Austria, 50 FR 33,365 (August 19, 
1985) (hereinafter Carbon Steel Products from Austria), states that the 
Department has, in the past, treated payments like that which Onoda 
pays to the trading company as commissions. Onoda states that in Carbon 
Steel Products from Austria, the Department stated the following:

    Home market purchasers contact [the respondent] to establish 
price and terms of sale. Once the parties have agreed on the terms 
of sale, the purchaser designates a trading company to handle the 
paperwork. [The respondent] then sells to the trading company at a 
reduced price and the trading company resells to the purchaser at 
the full price. Under these facts, the payments are clearly 
commissions paid to the trading company for services rendered in 
connection with the sale. (emphasis added by Onoda)

    Onoda also argues that the payment to the trading company does not 
affect the final price to the U.S. customer, and, therefore, it should 
not be deducted from U.S. price as a discount. Onoda cites to Carbon 
Steel Products from Austria and the Final Determinations 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 Flat Products from Belgium, 58 FR 37,083 (July 9, 
1993), in support of its position.
    Petitioner argues that the role of the trading company has not 
changed since the LTFV investigation in which ``Onoda minimized the 
role of the trading company in the sales process, stating that the 
trading company `arranged the freight and takes care of the shipping,' 
but that otherwise it was a `bystander'.'' See Petitioner's Case Brief, 
at 16. Petitioner states that since the trading company merely arranged 
for the shipment of merchandise that had already been sold, the 
Department should continue to treat payments to the trading company as 
a movement expense. Petitioner cites to Certain Internal-Combustion, 
Industrial Forklift Trucks from Japan, 57 FR 3,167 (January 28, 1992), 
accord Certain Internal-Combustion, Industrial Forklift Trucks

[[Page 67312]]

from Japan, 59 FR 1,374 (January 10, 1994), Mechanical Transfer Presses 
from Japan, 55 FR 335 (January 4, 1990), in support of its argument.
    Petitioner argues that the Department classifies payments to 
trading companies as commissions only if the services provided by the 
trading company involve selling the merchandise (i.e., finding and 
cultivating customers, marketing the product, negotiating transactions, 
retaining customers, etc.). Petitioner cites to Oil Country Tubular 
Goods from Austria, 60 FR 33,551 (June 28, 1995) (hereinafter OCTG from 
Austria), Stainless Steel Angle from Japan, 60 FR 16,608 (March 31, 
1995) (hereinafter SSA from Japan), and Sweaters Wholly or in Chief 
Weight of Man-Made Fiber from Taiwan, 55 FR 34,585 (August 23, 1990) 
(hereinafter Sweaters from Taiwan), in support of its position.
    Petitioner argues that alternatively, the Department could classify 
payments to the trading company as discounts on sales to the United 
States. Petitioner asserts the Onoda classified the payment as a 
discount in its August 22, 1994, questionnaire response. Petitioner 
cites to Industrial Phosphoric Acid from Israel, 52 FR 25,440 (July 7, 
1987), accord Mirrors in Stock Sheet and Lehr End Sizes from the United 
Kingdom, 51 FR 43,411 (December 2, 1986), and Portland Hydraulic Cement 
from Japan, 48 FR 41,059 (September 13, 1983), to argue that Department 
precedent supports this approach.

Department's Position

    We disagree with Onoda. If the trading company provides services 
related to the movement of the merchandise, the Department considers 
the payment the trading company receives for such services as a 
movement expense which is deducted directly from U.S. price. See 
Forklift Trucks from Japan, at 3178. The Department considers a payment 
to a trading company to be a commission if the trading company provides 
services related to the sale of the merchandise. See Chapter 8, page 26 
of the Department's antidumping manual. In this case, the trading 
company is not involved in the sale of the merchandise to the customer. 
Rather, LSNW sells cement to the United States. The price of the cement 
is set by LSNW, in consultation with Onoda. After the terms of the sale 
are negotiated between LSNW, Onoda, and the U.S. buyer, Onoda hires the 
trading company to arrange shipment of the cement. Clearly, the work 
performed by the trading company (i.e., arranging for transportation of 
the cement) is a movement expense rather than a commission. This is 
supported by Onoda's statement in its case brief of November 6, 1995 at 
page 11, where Onoda states that the trading company ``is primarily 
responsible for arranging transportation of cement.'' Additionally, in 
its supplemental questionnaire response of October 31, 1994 at page 30, 
Onoda clarifies the role of the trading company, stating, that the 
trading company does not take physical possession of the merchandise; 
it is not a freight-forwarder, although it does coordinate with the 
broker and with arranging the shipments; and, it is not the importer of 
record. Again, the service provided by the trading company is to 
arrange for shipment, after the sale between Onoda, LSNW and the U.S. 
customer has been completed.
    Onoda's cite to Carbon Steel Products from Austria is accurate; 
however, the Department's practice has evolved since 1985. 
Specifically, the Department has recognized that commissions paid to 
trading companies have certain characteristics: (1) they are agreed 
upon in writing; (2) they are earned directly on sales made, based on 
flat rates or percentage rates applied to the value of individual 
orders; (3) they take into consideration the expenses which a trading 
company must incur to cultivate and maintain successful relationships 
with purchasers; and, (4) they take into consideration the sales and 
marketing services performed by a trading company in lieu of an 
exporter/manufacturer establishing its own larger sales force. See OCTG 
from Austria, at 33554. Again, the trading company in this case does 
not cultivate and maintain relationships with purchasers nor does it 
perform sales and marketing services. Rather, the trading company is 
paid to arrange for shipment of the cement after it has been sold and 
the terms set.
    Moreover, Onoda's cite to Groundwood Paper from France is 
misleading in that the quote cited is not attributable to the 
Department, but rather to the respondent who argued that a markup to a 
related party should not be considered a commission because the related 
party ``performs a number of additional selling and administrative 
functions not undertaken by commission agents, including ensuring that 
production, shipping, and deliveries meet printers' scheduling 
requirements, taking title to the merchandise, performing sales 
accounting and collection functions, arranging for the provision of 
technical services, and participating in trade shows and other 
events.'' See Groundwood Paper from France, at 56381. In that case, 
although the Department granted the deduction as a commission, it 
focused its response on the related-party nature of the commission 
rather than the actual services performed for the commission payment. 
Moreover, in the instant case, the only function performed by the 
trading company is to arrange for shipment of the merchandise.
    We do agree with Onoda that the payment to the trading company 
should not be considered a discount since the payment to the trading 
company does not reduce the final price to the U.S. customer. See 
Carbon Steel Products from Austria, at 33366.
    Accordingly, for these final results of review, we have continued 
to treat the payment to the trading company as a movement expense and 
have deducted this expense directly from U.S. price.

Comment 4

    Onoda argues that in performing the calculations for determining 
whether Onoda made home market sales below cost, the Department 
erroneously double-counted the expenses reported in the DIRSELH field 
on the sales tape (i.e., the Department included the field DIRSELH in 
its calculation of COP, and the Department deducted the DIRSELH field 
from the home market price that was used in the cost test). Onoda 
asserts that the Department should revise its COP calculations for the 
final results to make only one of these adjustments. The Department 
should either (1) include the DIRSELH field in the COP and not deduct 
it from the home market price used in the cost test, or (2) the 
Department should not include the DIRSELH field in COP and deduct the 
DIRSELH field from the home market price used in the cost test.
    Petitioner agrees with Onoda and has no objection to the 
Department's correcting the COP test in the manner suggested by Onoda 
so that the DIRSELH field is either included in COP or deducted from 
the net price compared to COP, but not both.

Department's Position

    We agree with Onoda and Petitioner. For these final results, we 
included the DIRSELH field in the COP and did not deduct the field 
DIRSELH from the home market price used in the cost test.

Comment 5

    Petitioner argues that the Department should use best information 
available (BIA) to account for unreported downstream sales by related 
distributors that failed the arm's-length test rather than drop such 
sales from the analysis.

[[Page 67313]]

Petitioner argues that the Department has repeatedly asked for this 
information, and Onoda has refused to provide it. Petitioner, citing to 
Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Carbon Steel Products from Argentina, 58 FR 37,062 (July 9, 
1993) (hereinafter Steel from Argentina), argues that the Department 
has stated in the past that when a related seller fails the arm's-
length test, the need for downstream sales becomes evident.
    Moreover, states Petitioner, citing to Gray Portland Cement and 
Clinker from Mexico, 60 FR 26,865 (May 19, 1995) (hereinafter Cement 
from Mexico) and Certain Malleable Cast Iron Pipe Fittings from Brazil, 
60 FR 41,876 (August 14, 1995) (hereinafter Pipes from Brazil), it is 
the Department, not respondent which determines what information is to 
be provided for an administrative review, and, respondent should not be 
allowed to control the results of the review by providing only partial 
information.
    Petitioner hypothesizes that given the Department's prior practice 
of applying BIA for unreported downstream sales only to establish FMVs 
for those U.S. sales left without adequate matches when non-arm's-
length sales are excluded, Onoda could have reasonably concluded that 
refusing to report downstream sales in this review would carry no 
risks. Under such circumstances, asserts Petitioner, the Department 
should resort to BIA for unreported downstream sales lest Onoda be 
rewarded for ``stonewalling'' and refusing to respond. Petitioner, 
citing to Silicon Metal from Argentina, 58 FR 65,336 (December 14, 
1993), states that Onoda should not be placed in a better position as a 
result of non-compliance than it would have occupied had it provided 
the Department with complete, accurate, and timely data. Petitioner 
concludes that based on the foregoing, the Department should report to 
BIA for unreported downstream sales, and as BIA, the Department should 
use the highest net home market price otherwise reported by Onoda and 
verified by the Department. Alternatively, the Department should apply 
as BIA the weighted-average price of all related-party home market 
sales that passed the arm's-length test, increased by the standard 
distributor mark-up.
    Onoda argues that it cooperated with the Department in every aspect 
of this administrative review, but that it was unable to report 
downstream sales because none of the related distributors is 
consolidated with Onoda, and Onoda does not have the power to compel 
its minority-owned distributors to report information on their sales to 
unrelated customers. Onoda states that in the LTFV investigation and 
the first and the second review of this case, the Department has not 
required it to report downstream sales; rather, the Department has 
simply applied an arm's-length test to determine whether to include 
sales to the related distributors in the FMV calculations. Moreover, 
Onoda asserts that there are other cases in which the Department has 
not required the reporting of downstream sales if the respondent 
demonstrates that the sales to the related parties were made on an 
arm's-length basis. Onoda cites to Certain Corrosion Resistant Carbon 
Steel Flat Products from Australia; Preliminary Results of Antidumping 
Duty Administrative Review, 60 FR 42,507 (August 16, 1995), in support 
of its position. Further, asserts Onoda, it is not the Department's 
practice to resort to BIA when there are sufficient home market sales 
to unrelated customers to provide matches for all of a respondent's 
U.S. sales. Onoda cites to Steel from Argentina and 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 Product, and 
Certain Cut-to-Length Carbon Steel Plate from France, 58 FR 37,125 
(July 9, 1993) (hereinafter Steel from France), in support of its 
position.
    Onoda concludes that because there were more than enough home 
market sales to unrelated parties to provide matches for all of Onoda's 
U.S. sales during the POR, any sales to the related distributors which 
are found not to be at arm's-length should simply be dropped from the 
FMV calculation.

Department's Position

    We disagree with Petitioner. As Onoda points out, it is the 
Department's practice to drop from our FMV calculations sales to home 
market related parties which have failed the arm's-length test. If 
sales to a related party in the home market are determined not to be at 
arm's-length, and the Department does not have information pertaining 
to downstream sales (because respondent has refused or is unable to 
provide such information), it is the Department's practice to resort to 
BIA. However, the Department will only resort to BIA if it cannot find 
a home market match for a U.S. sale (i.e., there are no home market 
sales to unrelated parties or to related parties that have passed the 
arm's-length test to match to a U.S. sale) and that sale would be 
matched to a non-arm's length sale.
    In this case, the Department did not include those home market 
sales to related parties which were not made at arm's-length prices. In 
order to determine whether these sales were made at arm's-length 
prices, we calculated a weighted-average price of the home market sales 
for each related party. Where the weighted-average price charged to a 
related party was less than the weighted-average price charged to all 
of Onoda's unrelated customers, we determined that those related party 
sales were not made at arm's-length prices, and removed those sales 
from our FMV calculation.
    We agree with Petitioner that the Department has stated in the past 
that when a ``related seller fails the arm's-length test, the need for 
downstream sales becomes evident.'' However, as fully explained in 
Steel from Argentina:

    As outlined in the preliminary determinations, when the 
respondents could not, or would not, report downstream sales, we 
applied margins based on BIA to any U.S. sale matched only to a sale 
to a related reseller in the home market that failed the arm's-
length test, and we will continue to do so for these final 
determinations. In other words we did not simply disregard the fact 
that respondents failed to report downstream sales. Once a related 
reseller fails the arm's-length test, the need for downstream sales 
becomes evident, but only as an alternative to the sale to that 
related reseller. The integrity of FMV is not seriously challenged 
because in all other cases U.S. sales are matched to unrelated party 
sales in the home market or to related party sales at arm's length. 
(emphasis added)

Id. at 37083. In the instant case, all U.S. sales were matched to 
unrelated-party sales in the home market or to related-party sales that 
were conducted in an arm's-length manner.
    We agree that the Department, not respondent, determines what 
information is to be provided and that respondent should not be allowed 
to control the results of review by providing partial information. 
However, in the instant case, these principles have not been breached. 
The Department requested information, and the respondent did not 
provide it. In this instance, BIA was not necessary since all U.S. 
sales were matched to unrelated-party sales in the home market or to 
related-party sales that were conduced in an arm's-length manner. 
Accordingly, the Department did determine what information was to be 
provided and respondent has not been allowed to control the results of 
the review.

[[Page 67314]]

    We also agree that Onoda should not be placed in a better position 
due to non-compliance with a request for information. As stated above, 
it is the Department's practice to require downstream sales information 
when a related party fails the arm's-length test and the Department 
does not have home market matches for U.S. sales. If the Department 
does have home market matches for U.S. sales, the Department drops 
related party sales that failed the arm's length test, as was the case 
here. Under these circumstances, Onoda does not benefit from its 
noncompliance since U.S. sales were matched with home market sales to 
unrelated parties and to related parties at prices determined to be on 
an arm's-length basis.
    Accordingly, for these final results, as with the preliminary 
results, we have not resorted to BIA to account for unreported 
downstream sales by related distributors that have failed the arm's-
length test. Rather, we have dropped these sales from our analysis of 
FMV.

Comment 6

    Petitioner argues that because Onoda failed to report distributor 
rebates and prompt payment discounts (PPDs) on a transaction-specific 
basis and these adjustments were not granted as a fixed and constant 
percentage of sales on all transactions for which they were reported, 
these adjustments should be classified as indirect selling expenses.
    Petitioner argues that the Department requested that Onoda report 
rebates and discounts on a transaction specific basis but that Onoda 
responded that: (1) its central accounting system is ``unable to tie 
the rebates and discounts to specific sales'' and (2) rebates and 
discounts were allocated over all sales because Onoda's accounting 
system ``is unable to identify the specific distributors which earned 
the rebates and discounts.'' (See Onoda's October 31, 1994 Deficiency 
questionnaire Response at 16-17.) Petitioner also argue that Onoda's 
rebate calculations inappropriately allocated rebates granted on sales 
of non-comparison merchandise (i.e., gray portland cement other than 
Type N cement) over all sales of gray portland cement, including sales 
of comparison merchandise.
    Petitioner argues that at verification the Department found that no 
written rebate contracts exist between the distributor and Onoda. 
Instead, Onoda informs the distributor verbally about rebates. Also at 
verification, the Department noted that Onoda's records do not reflect 
which distributors actually received rebates. Accordingly, argues 
Petitioner, Onoda's rebates and discounts were not granted as a fixed 
and constant percentage of sales on all transactions for which they are 
reported. Petitioner states that contrary to being fixed and constant, 
Onoda did not grant rebates and/or discounts on every reported home 
market sale.
    Citing to Smith Corona, Torrington Co. v. United States, 832 F. 
Supp 379 (CIT 1993) (hereinafter Torrington), Koyo Seio Co. v. United 
States, 796 F. Supp. 1526 (CIT 1992) (hereinafter Koyo Seiko), and SKF 
USA Inc. v. United States, 874 F. Supp 1395 (CIT 1995), Petitioner 
argues that because Onoda's rebates and discounts were not actually 
paid on all sales, and the expenses could not be directly correlated 
with the sales to which they actually related, the Department should 
deny Onoda's claim for a direct adjustment to price for rebates and 
discounts. Petitioner argues that to adjust home market prices downward 
without any evidence that any rebate or discount was even granted in 
the months in which U.S. sales were made, has the potential to result 
in a severe distortion when calculating FMV.
    Petitioner argues that Onoda's only argument in support of its 
allocation methodology is that the Department accepted the same 
methodology in previous reviews. Petitioner asserts, however, that the 
Department's findings in previous reviews, based on different factual 
records, are irrelevant. Petitioner argues that antidumping 
administrative reviews are separate and distinct proceedings, and the 
results of this review must be in accordance with law and based on 
substantial evidence in the record of this review.
    With specific regard to PPDs, Petitioner states that the Department 
should make no adjustment to FMV for such discounts because they were 
allocated over sales of non-subject merchandise (i.e., white cement). 
Petitioner asserts that this methodology distorts the prices used to 
calculate Onoda's dumping margin. Petitioner argues that because the 
total amount of PPDs reported by Onoda includes PPDs granted on sales 
of non-subject merchandise, Onoda's claim for any PPD adjustment to FMV 
(either direct or indirect) must be rejected.
    With specific regard to rebates, Petitioner argues that Onoda 
included in its rebate amounts rebates paid to distributors to sell 
cement manufactured by two cement manufacturers who rely on Onoda to 
sell their products under Onoda's label. Petitioner contends that these 
rebates should not be included in the rebate amount because Onoda 
charges (i.e., is reimbursed by) the two manufacturers for these 
rebates.
    Onoda argues that the Department's general policy always has been 
to favor the reporting of transaction-specific information but that the 
Department has accepted Onoda's allocation methodology in prior 
administrative reviews of this case and the CIT and CAFC have, on 
numerous occasions (e.g., Torrington and Smith-Corona), upheld the 
Department's authority to treat allocated rebates and discounts as 
direct expenses.
    Onoda asserts that an allocation methodology is appropriate in this 
case because Onoda grants rebates based on a distributor's sales for an 
entire six-month period rather than on specific sales transactions. 
Moreover, asserts Onoda, its sales records simply do not permit it to 
report transaction-specific information and its central accounting 
system is unable to tie the rebates and discounts to specific sales. 
Onoda, citing to Final Determinations of Sales at Less Than Fair Value: 
Professional Electric Cutting Tools and Professional Electric Sanding/
Grinding Tools from Japan, 58 FR 30,144 (May 26, 1993), states that the 
Department has held in prior cases that a respondent should not be 
required to submit information it does not maintain, nor should it be 
required to report information which would be unduly burdensome to 
provide. Accordingly, asserts Onoda, the Department should not penalize 
Onoda for not reporting information which it does not maintain in its 
central accounting system.
    With regard to Petitioner's claim that Onoda inappropriately 
allocated rebates over non-comparison merchandise, Onoda asserts that 
the subject merchandise covered by the antidumping duty order includes 
all types of gray portland cement, not just Type N cement. Moreover, 
argues Onoda, it offers rebates on all of its home market sales of gray 
portland cement to distributors not just on home market sales of Type N 
cement. Consequently, in calculating the per unit distributor rebates, 
Onoda allocated the rebates only over sales to distributors of gray 
portland cement in the home market.
    Onoda asserts that there is no requirement that Onoda allocate its 
rebates over the specific product (Type N cement) which serves as the 
model match for sales to the United States. Onoda, citing to 
Torrington, asserts that while the CIT has held that the Department may 
deny adjustments for rebates if they include rebates on non-subject 
merchandise, the CIT has permitted allocations over the subject 
merchandise.

[[Page 67315]]

    With regard to Petitioner's argument that Onoda's rebates and 
discounts were not granted as a fixed and constant percentage of sales 
on all transactions for which they were reported, Onoda contends the 
Department made no such finding at verification and that the record 
evidence leads to a contrary conclusion. Onoda cites to its August 22, 
1994 Questionnaire Response at B-4, to argue that the distributor 
rebates that it granted were given according to a fixed schedule on the 
basis of the total volume of cement purchased by each distributor. 
Similarly, argues Onoda, the PPD was applied as a fixed percentage, and 
all of Onoda's home market sales were eligible for the discount. Onoda 
asserts that the Department verified Onoda's cost and sales information 
and the total amount of the rebates and discounts and, therefore, it is 
appropriate to grant a full adjustment for these expenses.
    With regard to Petitioner's argument that the Department should not 
adjust home market prices downward without any evidence that any rebate 
or discount was even granted in the months in which U.S. sales were 
made, Onoda claims that its methodology precludes the possibility that 
rebates and discounts have been applied to sales which did not receive 
them. First, argues Onoda, the rebates were given only on sales to 
distributors, and, therefore, were only allocated to sales to 
distributors. Accordingly, argues Onoda, if there were no sales to 
distributors in a given month, then no rebates would be applied to the 
sales in that month. Second, argues Onoda, rebates were given on all of 
its distributors sales, even if a distributor only purchased one ton of 
cement during the period. Therefore, asserts Onoda, there is no 
possibility that a rebate would have been reported for a particular 
sale when no rebate was actually given on that sale. Third, argues 
Onoda, the distributor rebates were not given based on the volume of 
individual transactions. Rather, states Onoda, the distributor rebates 
were calculated based on the aggregate volume of the sales made to the 
distributors over a six-month period. Therefore, a portion of the total 
rebates should be allocated to each sale made during that six-month 
period. Consequently, argues Onoda, there is no possibility that any 
distributor sales within a particular month did not receive a rebate.
    Finally, argues Onoda, the Department must calculate FMV based on 
weighted-average monthly prices. Thus, the Department will calculate 
FMV by dividing the total value of sales for the month over the total 
volume of sales for the month. Regardless of whether the rebates and 
discounts granted on sales during the month are allocated or reported 
on a transaction-specific basis, the total value of the sales will not 
be affected. Therefore, argues Onoda, the fact that the rebates and 
discounts cannot be matched to specific transactions does not distort 
the FMV calculation.
    Onoda argues that contrary to Petitioner's assertion, it did not 
include PPDs paid on non-subject merchandise in the reported PPD 
adjustment. Onoda argues that, as in the first and second reviews, it 
gave PPDs on sales of both gray and white cement during the POR but 
that Onoda's central accounting system does not permit it to trace 
these discounts to individual transactions. Consequently, in 
calculating the per unit discounts, Onoda allocated the total discounts 
over total sales of cement and not just sales of gray portland cement. 
Onoda asserts that this methodology was upheld by the CAFC in Smith 
Corona and CIT in Torrington Co. v. United States, 818 F. Supp. 1563, 
1577 (CIT 1993) (hereinafter Torrington II).
    Onoda argues that the total amount of rebates granted should not be 
reduced by the amounts reimbursed by other manufactures. Onoda argues 
that sales of cement manufactured by the two other producers were 
included in Onoda's reported volume and value if the cement was sold 
under the Onoda brand. Because cement produced by the other 
manufacturers are reported on the sales tape, the rebates reimbursed by 
the producers must be included in the total rebate amount in the 
allocation calculation. Onoda contends that Petitioner's methodology 
would artificially inflate the net price and would distort the total 
income Onoda and the other producer received because, while the amount 
of rebates would be reduced, the volume of cement sold would remain the 
same. This would reduce the rebate adjustment thereby inflating FMV in 
the Department's calculations.

Department's Position

    We agree with Petitioner. It is our practice to make a direct 
adjustment to the home market price for rebates and discounts if (a) 
they were reported on a transaction-specific basis or (b) they were 
granted as a fixed and constant percentage of sales on all transactions 
for which they were reported. See Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof from France, et al., 60 FR 
10,900, 10929 (February 28, 1995) (hereinafter AFBs from France); NSK 
Ltd. v. United States, 896 F. Supp. 1263, 1271 (CIT 1995) (hereinafter 
NSK); and Torrinngton at 387. The rationale for this practice is that 
we only accept direct adjustments to price if actual amounts are 
reported for each transaction. Discounts and rebates based on 
allocations are not allowable as direct adjustments to price since 
allocated price adjustments have the effect of partially averaging 
prices by diluting discounts or rebates on some sales, inflating them 
on others, and attributing them to sales which received no such 
discounts. Just as we do not normally allow respondents to report 
average prices, we do not allow average direct additions or 
subtractions to price. Although we usually average FMVs on a monthly 
basis, we require individual prices to be reported for each sale.
    In this case, Onoda took the total amount of rebates granted to 
distributors of gray portland cement and divided this amount by total 
sales of gray portland cement by all distributors for a six-month 
period. This amount was then applied to the home market unit price to 
calculate the amount of rebate to allocate to each sale of Type N 
cement. Onoda's rebate adjustment fails to provide actual amounts that 
were discounted or rebated on each individual sale. Under this 
methodology there is no way to determine which discount or rebate was 
applied to each particular sale. Onoda's allocation methodology 
presents the very type of flaws discussed above.
    Although we verified that the rebates granted to distributors were 
given according to a fixed schedule, we found that Onoda's rebate were 
not granted as a fixed and constant percentage of sales but rather 
varied based on the volume of cement sold by a distributor. If one 
distributor sold more cement than another distributor it received a 
higher rebate per metric ton. Thus, consistent with our practice 
discussed above, because Onoda did not report discounts or rebates on 
either a transaction-specific basis or as a fixed and constant 
percentage of sales, we have disallowed its claim as a direct 
adjustment to FMV.
    Onoda is correct in its statement that in Torrington and Smith-
Corona the courts have upheld the Department's authority to treat 
allocated rebates and discounts as direct expenses. However, in order 
for allocated price adjustments to be regarded as a direct deduction 
from FMV, the allocation methodology employed by respondent must ``be 
directly correlated with specific merchandise'' (i.e., results in the 
calculation of the actual amount incurred on each individual sale). See

[[Page 67316]]

Torrington at 390; AFBs from France at 10929.
    Onoda calculated its PPD in a fashion similar to its rebate 
calculation. Accordingly, we have also disallowed a direct deduction 
from FMV for PPDs. Moreover, Onoda included non-subject merchandise in 
its calculation of PPDs. It is the Department's practice to disallow an 
adjustment which relies on a methodology that includes discounts, 
rebates, and other price adjustments paid on out-of-scope merchandise. 
See AFBs from France at 10935; Torrington II at 1578. Therefore, since 
Onoda's prompt payment discounts were given for and allocated over 
sales of non-subject merchandise, we have made no adjustment to FMV for 
Onoda's prompt payment discounts.
    Finally, Onoda's argument that the Department should allow these 
deductions in this review since it permitted them in prior reviews is 
without merit. The Courts have recognized that antidumping 
administrative reviews are separate and distinct proceedings, and the 
results of this review must be in accordance with law and based on 
substantial evidence in the record of this review. See, e.g., 
Torrington Co. v. United States, 786 F. Supp. 1027, 1028 (CIT 1992).
    Accordingly, based on the foregoing, we have not adjusted FMV for 
Onoda's claimed rebates and PPDs.

Comment 7

    Petitioner, citing to Antifriction Bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof from Japan, 58 FR 39,729 (July 26, 
1993) (hereinafter AFBs from Japan) and accord Tapered Roller Bearings 
and Parts Thereof, Finished and Unfinished, from Japan, and Tapered 
Roller Bearings, Four Inches or Less in Outside Diameter, and 
Components Thereof, from Japan, 58 FR 64,720 (December 9, 1993), argues 
that the Department should have included the depreciation of idle 
machinery in Onoda's cost of production. Petitioner, citing to Small 
Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line, and 
Pressure Pipe from Italy, 60 FR 31,981 (June 19, 1995), states that the 
Department's practice requires that this cost be included in Onoda's 
COP because the machinery was temporarily idle, not permanently idle 
and due to be sold or scraped.
    Onoda states that it has no objection to Petitioner's suggestion 
that the Department add the depreciation of idle assets on Onoda's COP.

Department's Position

    The Department agrees with Petitioner. In AFBs from Japan, we 
stated:

    We include in the fully absorbed factory overhead the 
depreciation of equipment not in use or temporarily idle. While 
Japan's accounting methodology does provide that depreciation for 
idle equipment may be stopped, we do not accept this accounting 
method because idle fixed assets are a cost to the company.

Id. at 39756.
    Accordingly, for these final results, we have included the 
depreciation of idle machinery in Onoda's COP.

Comment 8

    Petitioner argues that the Department should exclude from its 
calculation of FMV sales in which other cement manufacturers shipped 
cement from their inventory to Onoda's customers (with the sale 
recorded by Onoda) as well as sales of cement purchased by Onoda from 
other manufacturers.
    Petitioner, citing to section 773(a)(1)(A) of the Act, states that 
the FMV of imported merchandise shall be the price ``at which such or 
similar merchandise is sold, or in the absence of sales, offered for 
sale in the . . . country from which exported.'' Petitioner, citing to 
section 771(16) (A), (B), and (C) of the Act, states that ``such or 
similar'' in turn, is defined as merchandise ``produced in the same 
country by the same person'' as the merchandise that is the subject of 
the investigation. Petitioner, citing to Antifriction Bearings (Other 
Than Tapered Roller Bearings) and Parts Thereof from France, et al., 57 
FR 28,360 (June 24, 1992); accord Canned Pineapple Fruit from Thailand, 
60 FR 2,734 (January 11, 1995); Titanium Sponge from Japan, 57 FR 557 
(January 7, 1992) and Brass Sheet and Strip from Japan, 53 FR 23,296 
(June 21, 1988), argues that based on the definition of ``such or 
similar'' merchandise, it has been the Department's policy to exclude 
sales of merchandise produced by a manufacturer other than the 
respondent from the calculation of FMV for the respondent.
    Petitioner contends that the Department should be able to exclude 
such merchandise since Onoda identifies sales of merchandise produced 
by other manufacturers. Petitioner notes that Onoda has not separately 
identified sales of cement produced by two unrelated manufacturers 
(i.e., the two manufacturers referred to in comment 6 above) based on 
the claim that they cannot separately identify these sales. Petitioner 
argues that this claim is inconsistent with Onoda's ability to identify 
the amount of rebates it paid with respect to sales of cement 
manufactured by the two manufacturers. Petitioner contends that if 
Onoda can identify the amount of rebates paid with respect to sales of 
merchandise produced by the two manufacturers, Onoda should be able to 
identify these sales. Accordingly, argues Petitioner, the Department 
should require Onoda to identify sales of cement manufactured by the 
two manufacturers so that such sales can be excluded from the 
calculation of FMV. Petitioner contends that this is necessary since 
using sales of merchandise produced by one manufacturer to calculate 
another manufacturer's FMV could distort FMV (i.e., manufacturers 
generally have different costs of production resulting in a possible 
price differential).
    Onoda states that it does not object if the Department wishes to 
drop the sales of cement which are indicated on the sales tape as 
having been produced by other manufacturers and shipped directly to 
Onoda's customer (i.e., not commingled with Onoda cement). However, 
Onoda states that it cannot provide a revised sales tape indicating 
which of the remaining sales were resales of cement manufactured by two 
specific cement producers. Onoda states that it cannot provide a 
revised sales tape because it cannot identify which sales contained 
cement produced by the two manufacturers. Onoda states that cement it 
purchased from the two manufacturers was intermixed with Onoda cement 
and was sold under the Onoda brand name. Accordingly, states Onoda, 
while it knows the total amount of the two manufacturers' cement that 
it sold, it sales records cannot trace this cement to individual 
transactions. Onoda allocates a portion of its total rebates to the two 
manufacturers based on the total volume of the two manufacturers' 
cement that it sold. Accordingly, asserts Onoda, the fact that it can 
determine the amount of the total rebates allocated to the two 
manufacturers does not mean that Onoda can provide a revised sales tape 
which indicates which individual sales were of cement produced by the 
two manufacturers. Moreover, argues Onoda, due to the intermixing of 
the cement, it prices the cement produced by Onoda and the other 
manufacturers in exactly the same manner. Accordingly, argues Onoda, 
there is no merit to Petitioner's allegations that including such sales 
in the FMV calculation could result in distortion.

[[Page 67317]]

Department's Position

    In AFBs from France the Department stated:

    In accordance with the definition of such or similar merchandise 
in section 771(16)(B)(i), we have not considered merchandise known 
to have been produced in the facilities of one manufacturer to be 
such or similar to the merchandise produced in the facilities of 
another manufacturer, even if the merchandise is physically 
identical or physically similar and is sold by the same person.

Id. at 28367. Accordingly, for these final results of review, we have 
excluded from our calculation of FMV those sales that Onoda could 
indicate were produced by other manufacturers.
    Although Onoda's home market sales listing also includes sales that 
commingled Onoda-produced cement with cement produced by manufacturers 
other than Onoda, we continue to find it reasonable to use this sales 
listing because (1) we verified that Onoda was unable to indicate which 
sales were sales of commingled cement and (2) the commingled sales were 
sold under the Onoda name necessitating that Onoda price such sales as 
if they were Onoda-produced cement. In contrast, in the cases cited by 
Petitioner in support of excluding the commingled sales from the 
calculation of FMV, the respondent was able to identify the commingled 
sales. Onoda's inability to identify commingled sales is not 
inconsistent with Onoda's ability to identify the amount of rebates it 
paid with respect to cement manufactured by these two producers because 
its allocation methodology was based upon the total volume of cement 
sold rather than individual transactions.
    In other cases where the respondent has been unable to identify 
commingled sales, the Department has utilized a weighting methodology 
in order to neutralize the effect of including commingled sales. See, 
Certain Cut-to-Length Carbon Steel Plate From Sweden, 60 FR 48502 
(September 19, 1995). As in those cases, in this case, we applied to 
the reported home market quantities a ratio of the volume of Onoda-
produced cement to the combined total volumes of Onoda-produced and 
purchased cement sold on a biannual basis for the fiscal year. These 
ratios were derived from verified rebate documents which indicated, on 
a six-month basis for Onoda's fiscal year (i.e., April 1993-September 
1994 and October 1993-March 1994), the total amount of cement sold, the 
amount of Onoda-produced cement sold and the amount that was 
manufactured by other producers. Additionally, since the POR is May 1, 
1993-April 30, 1994, we applied the ratio for the October 1993-March 
1994 period to Onoda's April 1994 sales.

Comment 9

    Petitioner argues that Onoda is not entitled to a difference-in-
merchandise (difmer) adjustment for the cost differences between U.S. 
model Type I and home market model Type N. Petitioner argues that Onoda 
has failed to meet the criterion for a difmer adjustment that was 
articulated in the Department's Policy Bulletin No. 92.2 and in other 
antidumping cases. According to petitioner, respondents are entitled to 
a difmer adjustment only if they show that the difference in cost 
between the two models is attributable to the difference in physical 
characteristics of the merchandise. Petitioner relies upon plant-by-
plant variable cost of manufacture data for Type N cement to argue that 
the weighted-average difmer adjustment reported by Onoda is largely 
attributable to differences in efficiencies between Onoda's various 
production facilities and not to cost differences associated with the 
physical characteristics of the merchandise.
    Petitioner argues that the Department's rationale for granting a 
difmer adjustment in the first and second reviews of this case does not 
support granting a difmer adjustment in this review. Petitioner asserts 
that there is ample evidence that the cost differences between Type I 
and Type N cement are attributable to differences in efficiencies 
between Onoda's plants. Accordingly, petitioner requests that the 
Department deny Onoda's difmer adjustment.
    Onoda argues that it followed the exact same procedure in preparing 
its difmer adjustment in this segment of the proceeding as it did in 
the LTFV investigation and the first and second reviews. Onoda asserts 
that the Petitioner has presented no new arguments or evidence which 
would justify a change in the Department's prior decisions in this 
case. Onoda states that in its August 22, 1994, Questionnaire Response 
and October 31, 1994, Deficiency Response, it has fully documented its 
difmer claim, which is based on differences in both the physical and 
chemical characteristics of the comparable types of cement. Onoda 
states that these differences include differences in the amounts of 
clinker and gypsum, and differences in fineness and compressive 
strength between Type I and Type N. Onoda states that other differences 
between Type I and Type N include both material inputs (e.g., 
limestone, clay, silica, fuel inputs, fuel oil, coal, and anthracite) 
and energy, due to the different fineness and compressive strengths of 
these comparable cement types.
    Onoda asserts that in its August 22, 1994, Questionnaire Response 
it provided detailed charts setting out the variable costs of producing 
comparable types of cement and that the Department verified these 
charts and tied them directly to Onoda's cost accounting system in the 
LTFV investigation and in this review. Onoda notes that during the LTFV 
investigation and in this review, the Department verified the difmer 
data, and granted the difmer adjustment in calculating the dumping 
margin. Furthermore, Onoda observes that in the LTFV investigation and 
in this review, the Department was satisfied that Onoda had reasonably 
tied cost differences to physical differences. Additionally, Onoda 
notes that the Department determined in the final results of the first 
and second reviews that evidence on the record did not establish that 
any differences in plant efficiencies were the source of the cost 
differences.
    Additionally, Onoda argues that the only way it can calculate the 
difmer adjustment is to weight-average the variable costs to produce 
Type N cement at all plants and compare that amount to the variable 
costs to produced Type I cement at the single plant where it produce 
Type I cement. Onoda argues that this methodology of weight-averaging 
costs across all plants is consistent with Departmental practice.
    Furthermore, argues Onoda, the evidence on the record of this 
proceeding parallels exactly the type of evidence that was on the 
record of the prior proceedings. Onoda states that the factories 
producing Type I and Type N cement are the same factories that were 
producing these cement types since the original investigation. 
Moreover, states Onoda, the production processes used to produce these 
types of cement are virtually unchanged, as are the physical 
specifications and characteristics of the cement. Additionally, Onoda 
states that it has also calculated and reported the difmer adjustment 
in exactly the same manner as it has in all other prior proceedings of 
this case.
    Thus, according to Onoda, there is no reason for the Department not 
to grant the difmer adjustment in this review.

Department's Position

    Consistent with the Department's practice in the LTFV investigation 
and the first and second reviews of this case, we have allowed the 
difmer adjustment claimed by Onoda. As we stated in the

[[Page 67318]]

first and second reviews, although Onoda's plants may have different 
efficiencies, evidence on record does not establish that any 
differences in plant efficiencies are the source of the cost 
differences identified by Onoda. Rather, cost differences are due to 
differences in material inputs and the physical differences which 
result from different production processes.
    First, as stated previously, the Department compared Type I cement 
in the United States with Type N cement in the home market. The 
specific differences in cost between Type I and Type N were due to the 
varying costs of the inputs, including material inputs (limestone, 
clay, silica, etc.), fuel inputs (fuel oil, coal, anthracite, etc.) and 
electricity (mixing, grinding, burning, etc.). For example, Type I 
cement contains clinker, gypsum and minor grinding agents. In contrast, 
Type N cement contains clinker, gypsum, minor grinding agents and 
additives. Furthermore, Type I cement contains a higher percentage of 
clinker and gypsum than Type N cement. Moreover, Type I, on average, 
has a slightly higher percentage of silicon dioxide.
    Second, as noted in the LTFV investigation, ``we verified Onoda's 
claimed difference in merchandise adjustment and found it to be an 
accurate representation of the relevant variable costs of production as 
reflected in its actual cost accounting records. Given the fact that 
physical differences between types of cement arise from differences in 
the production process (e.g., amount and duration of heat), and from 
differences in component materials, we are satisfied that Onoda has 
reasonably tied cost differences to physical differences'' (see Gray 
Portland Cement and Clinker--LTFV Investigation at 12161). We also 
verified the information supplied by Onoda with regard to its difmer 
adjustment in this review and did not note any discrepancies. 
Additionally, with regard to the weighted-average methodology employed 
by Onoda, the Department specifically requested that Onoda report is 
cost of manufacture information on a weighted-average basis (see the 
Department's questionnaire at page 60: ``If the subject merchandise is 
manufactured at more than one facility, the reported COM should be the 
weighted-average manufacturing cost from all facilities'').
    The Department's determination that Onoda is entitled to a difmer 
adjustment for differences between Type I and Type N cement has been 
upheld by the CIT in the first review of this case (See Supra Southern 
California Producers). In affirming the Department's decision to grant 
the difmer adjustment, the Court stated:

    Upon review, the Court finds that Commerce's determination that 
price differences between U.S. and home market models were caused by 
differences in the physical characteristics of the merchandise 
compared, and Commerce's concomitant decision to grant a difference 
in merchandise adjustment to Onoda, are supported by substantial 
evidence and otherwise in accordance with law. First, evidence 
submitted by Onoda shows that U.S. models contain different 
materials than type N * * * In addition * * * U.S. models are 
produced in a different manner, i.e. with a different amount and 
duration of heat than type N, and that this causes differences in 
the chemical and physical composition of the cements * * * Further * 
* * Commerce verified that Onoda was entitled to a difference in 
merchandise adjustment.

Id. at 545 (cites omitted).
    Accordingly, we have allowed Onoda's claimed difmer adjustment.

Final Results of Review

    Based on our analysis of comments received, and the correction of 
clerical errors, we have determined that a final margin of 30.12 
percent exists for Onoda for the period May 1, 1993, through April 30, 
1994.
    The Department will instruct the U.S. Customs Service to assess 
antidumping duties on all appropriate entries. Individual differences 
between USP and FMV may vary from the percentage stated above. The 
Department will issue appraisement instructions directly to the U.S. 
Customs Service.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of these 
final results of administrative review, as provided by section 
751(a)(1) of the Act: (1) the cash deposit rate for Onoda will be 30.12 
percent; (2) for merchandise produced by manufacturers or exporters not 
covered in this review but covered in a previous review or the original 
less-than-fair-value (LTFV) investigation, the cash deposit rate will 
continue to be the rate published in the most recent final results or 
determination for which the manufacturer or exporter received a 
company-specific rate; (3) if the exporter is not a firm covered in 
this review, earlier reviews, or the original investigation, but the 
manufacturer is, the cash deposit rate will be that established for the 
manufacturer of the merchandise in these final results of review, 
earlier reviews, or the original investigation, whichever is the most 
recent; and (4) the ``all others'' rate, as established in the original 
investigation, will be 70.23 percent.
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 CFR 353.22.

    Dated: December 13, 1996.
Jeffery P. Bialos,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-32400 Filed 12-19-96; 8:45 am]
BILLING CODE 3510-DS-M