[Federal Register Volume 62, Number 72 (Tuesday, April 15, 1997)]
[Notices]
[Pages 18448-18468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9425]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-822 & A-122-823]


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

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

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

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SUMMARY: On October 4, 1996, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
reviews of the antidumping duty orders on certain corrosion-resistant 
carbon steel flat products and certain cut-to-length carbon steel plate 
from Canada. These reviews cover four manufacturers/exporters of the 
subject merchandise to the United States and the period August 1, 1994 
through July 31, 1995. We gave interested parties an opportunity to 
comment on our preliminary results. Based upon our analysis of the 
comments received, we have changed the results from those presented in 
the preliminary results of review.

    We determine that sales have been made below normal value (``NV'') 
by various companies subject to these reviews. Thus, we will instruct 
U.S. Customs to assess antidumping duties based on the difference 
between the export price (``EP'') or constructed export price (``CEP'') 
and the NV.

EFFECTIVE DATE: April 15, 1997.

FOR FURTHER INFORMATION CONTACT: Robert Bolling (Continuous Colour Coat 
(``CCC'')), Eric Johnson (Dofasco Inc. and Sorevco Inc. (``Dofasco'')), 
Greg Weber (Algoma, Inc. (``Algoma'')), N. Gerard Zapiain (Stelco, Inc. 
(``Stelco'')), or Jean Kemp, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-3793.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the statute refer to 
the provisions effective January 1, 1995, the effective date of the 
amendments made to the Tariff Act of 1930 (the Act) by the Uruguay 
Round Agreements Act (URAA). In addition, unless otherwise indicated, 
all citations to the Department's regulations are to the current 
regulations, as amended by the interim regulations published in the 
Federal Register on May 11, 1995 (60 FR 25130).

Background

    On October 4, 1996, the Department published in the Federal 
Register (61 FR 51892) the preliminary results of its administrative 
reviews of the antidumping duty orders on certain corrosion-resistant 
carbon steel flat products and certain cut-to-length carbon steel plate 
from Canada. We gave interested parties an opportunity to comment on 
our preliminary results. We received written comments on November 4, 
1996 from Algoma, CCC, Dofasco/Sorevco, Stelco and from the 
petitioners: Bethlehem Steel Corporation, U.S. Steel Group (a Unit of 
USX Corporation), Inland Steel Industries Inc., Gulf States Steel Inc. 
of Alabama, Sharon Steel Corporation, Geneva Steel, and Lukens Steel 
Company. We received rebuttal comments on November 12, 1996 from 
interested parties.
    As we noted in the preliminary results of review, on February 28, 
1996, the petitioners requested that the Department determine whether 
antidumping duties had been absorbed by Algoma, Dofasco, and Stelco 
(for corrosion-resistant only) during the POR, pursuant to section 
751(a)(4) of the Act. Section 751(a)(4) provides that the Department, 
if requested, will determine during an administrative review initiated 
two years or four years after

[[Page 18449]]

publication of the order whether antidumping duties have been absorbed 
by a foreign producer or exporter subject to the order if the subject 
merchandise is sold in the United States through an importer who is 
affiliated with such foreign producer or exporter. Section 751(a)(4) 
was added to the Act by the URAA.
    For transition orders as defined in section 751(c)(6)(C) of the 
Act, i.e., orders in effect as of January 1, 1995, Sec. 351.213(j)(2) 
of the Department's proposed regulations provides that the Department 
will make a duty absorption determination, if requested, for any 
administrative review initiated in 1996 or 1998. See, Notice of 
Proposed Rulemaking and Request for Public Comments, 61 FR 7308, 7366 
(February 27, 1996) (``Proposed Regulations''). The commentary to the 
proposed regulations explains that reviews initiated in 1996 will be 
considered initiated in the second year and reviews initiated in 1998 
will be considered initiated in the fourth year. Id. at 7317. Although 
these proposed regulations are not yet binding upon the Department, 
they do constitute a public statement of how the Department expects to 
proceed in construing section 751(a)(4) of the amended statute. This 
approach assures that interested parties will have the opportunity to 
request a duty absorption determination on entries for which the second 
and fourth years following an order have already passed, prior to the 
time for sunset review of the order under section 751(c). Because the 
orders on corrosion-resistant carbon steel flat products and cut-to-
length carbon steel plate from Canada have been in effect since 1993, 
these are transition orders. Therefore, based on the policy stated 
above, the Department will first consider a request for a duty 
absorption determination for reviews of these orders initiated in 1996. 
Because these reviews were initiated in 1995, we have not considered 
the issue of absorption in these reviews. However, if requested, we 
will do so in the next reviews.
    Under the Act, the Department may extend the deadline for 
completion of administrative reviews if it determines that it is not 
practicable to complete the reviews within the statutory time limit of 
365 days. On April 1, 1996, the Department extended the time limits for 
the preliminary and final results in this case. See, Extension of Time 
Limit for Antidumping Duty Administrative Reviews 61 FR 14291 (1996).
    We have now completed the administrative reviews in accordance with 
section 751 of the Act.

Scope of Reviews

    The merchandise under review is certain corrosion-resistant carbon 
steel flat products and certain cut-to-length carbon steel plate. 
Although the Harmonized Tariff Schedule of the United States (HTSUS) 
subheadings are provided for convenience and customs purposes, the 
written description of the merchandise under investigation is 
dispositive.

I. Certain Corrosion-Resistant Carbon Steel Flat Products

    These products include flat-rolled carbon steel products, of 
rectangular shape, either clad, plated, or coated with corrosion-
resistant metals such as zinc, aluminum, or zinc-, aluminum-, nickel-or 
iron-based alloys, whether or not corrugated or painted, varnished or 
coated with plastics or other nonmetallic substances in addition to the 
metallic coating, in coils (whether or not in successively superimposed 
layers) and of a width of 0.5 inch or greater, or in straight lengths 
which, if of a thickness less than 4.75 millimeters, are of a width of 
0.5 inch or greater and which measures at least 10 times the thickness 
or if of a thickness of 4.75 millimeters or more are of a width which 
exceeds 150 millimeters and measures at least twice the thickness, as 
currently classifiable in the HTSUS under item numbers 7210.30.0030, 
7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 
7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 
7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 
7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 
7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 
7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 
7217.90.5090. Included in this review are corrosion-resistant flat-
rolled products of non-rectangular cross-section where such cross-
section is achieved subsequent to the rolling process (i.e., products 
which have been ``worked after rolling'')--for example, products which 
have been beveled or rounded at the edges. Excluded from this review 
are flat-rolled steel products either plated or coated with tin, lead, 
chromium, chromium oxides, both tin and lead (``terne plate''), or both 
chromium and chromium oxides (``tin-free steel''), whether or not 
painted, varnished or coated with plastics or other nonmetallic 
substances in addition to the metallic coating. Also excluded from this 
review are clad products in straight lengths of 0.1875 inch or more in 
composite thickness and of a width which exceeds 150 millimeters and 
measures at least twice the thickness. Also excluded from this review 
are certain clad stainless flat-rolled products, which are three-
layered corrosion resistant carbon steel flat-rolled products less than 
4.75 millimeters in composite thickness that consist of a carbon steel 
flat-rolled product clad on both sides with stainless steel in a 20%-
60%-20% ratio.

II. Certain Cut-to-Length Carbon Steel Plate

    These products include hot-rolled carbon steel universal mill 
plates (i.e., flat-rolled products rolled on four faces or in a closed 
box pass, of a width exceeding 150 millimeters but not exceeding 1,250 
millimeters and of a thickness of not less than 4 millimeters, not in 
coils and without patterns in relief), of rectangular shape, neither 
clad, plated nor coated with metal, whether or not painted, varnished, 
or coated with plastics or other nonmetallic substances; and certain 
hot-rolled carbon steel flat-rolled products in straight lengths, of 
rectangular shape, hot rolled, neither clad, plated, nor coated with 
metal, whether or not painted, varnished, or coated with plastics or 
other nonmetallic substances, 4.75 millimeters or more in thickness and 
of a width which exceeds 150 millimeters and measures at least twice 
the thickness, as currently classifiable in the HTSUS under item 
numbers 7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 
7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000, 7210.70.3000, 
7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 7211.90.0000, 
7212.40.1000, 7212.40.5000, 7212.50.0000. Included in this review are 
flat-rolled products of non-rectangular cross-section where such cross-
section is achieved subsequent to the rolling process (i.e., products 
which have been ``worked after rolling'')--for example, products which 
have been beveled or rounded at the edges. Excluded from this review is 
grade X-70 plate.
    The period of review (POR) is August 1, 1994, through July 31, 
1995.

[[Page 18450]]

Analysis of Comments Received

Algoma

Comment 1
    Petitioners argue that Algoma's method of reporting costs is 
distortive and should be rejected because Algoma allocated rolling 
costs based on the average rolling cost of only one of its two mills 
that produces subject merchandise. Petitioners argue that the 
Department has consistently required that respondents report COP and CV 
based on the actual costs incurred. Petitioners point to the 
Department's antidumping questionnaire which states that COP and CV 
figures ``should be calculated based on the actual costs incurred by 
your company during the period of review * * * as recorded under its 
normal accounting system.'' Petitioners also cite IPSCO, Inc. and IPSCO 
Steel, Inc. v. United States, 687 F. Supp. 633, 639 (CIT 1988) which 
quotes F.W. Myers & Co., Inc. v. United States, 376 F. Supp. 860, 873 
(CIT 1974) in stating ``value determinations made in antidumping cases 
`must be based upon proof of actual costs of prices--not estimates, 
approximations or averages. ' Petitioners argue that Algoma did not 
weight-average the actual rolling costs of each mill. As the 
Department's antidumping questionnaire at D-2 states, ``If you produce 
the merchandise under review at more than one facility, you must report 
COP and CV based on the weighted-average of costs incurred at all 
facilities.'' Petitioners cite Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From Italy, 60 FR 10959, 
10962 (February 28, 1995): ``if a respondent produces subject 
merchandise at more than one facility, the reported COM should be the 
weighted-average manufacturing costs from all facilities.'' Petitioners 
claim that Algoma's methodology resulted in the misreporting of COP and 
CV.
    Petitioners also claim that Algoma's methodology causes all 
comparisons of non-identical merchandise to be erroneous. Petitioners 
argue that Algoma's failure to report actual costs--whether under or 
overstated--means that the difference in merchandise tests are invalid. 
Petitioners claim that the 20-percent test, which the Department uses 
to determine if a non-identical home market product is sufficiently 
similar to the U.S. product for a price comparison, will not operate 
properly due to Algoma's flawed methodology. Therefore, petitioners 
argue that where non-identical sales are being matched, there is no way 
to ensure that the comparison is being made with merchandise that is 
comparable as required by the statute. Thus, petitioners argue that 
since costs are overstated, the DIFMER adjustment will always be 
incorrect. Petitioners cite Certain Pasta from Turkey, 61 FR 30309, 
30311 (June 14, 1996) which states, ``Insofar as DIFMER data is based 
on cost information {that is flawed}, the effect of these physical 
differences cannot be determined by the Department.''
    Petitioners also argue that Algoma's attempts to justify its 
allocation system must be rejected. Petitioners specifically point to 
Algoma's claim that its accounting system does not record costs at a 
sufficient level of detail that would permit direct calculation of 
actual costs incurred at the 106'' mill that relate only to the subject 
merchandise. Petitioners argue that there are few, if any, accounting 
systems that maintain costs in the normal course of business in a 
manner that mirrors the Department's reporting requirements. 
Petitioners point to Sec. 351.308 of the Department's Proposed 
Regulations which state, ``not all information that needs to be 
produced during the course of a proceeding is kept in the ordinary 
course of business (e.g., worksheets), and failure to provide such 
information may be deemed to violate the `best of ability' standard.'' 
Petitioners go on to say that all respondents--including Algoma--are 
required to construct methodologies for reporting purposes that result 
in the reasonable allocation of actual costs.
    Finally, petitioners argue that Algoma's distortive allocation 
methodology leaves the Department with no alternative but to reject COP 
and CV and apply total facts available. Petitioners claim, pursuant to 
section 776(b) of the statute, that the Department should select the 
most adverse margin available as the final weighted-average margin for 
this review. However, petitioners argue, if the Department decides not 
to apply total adverse facts available, then it should apply facts 
available with regard to the comparison of non-identical merchandise. 
In selecting partial facts available, they argue, the Department should 
follow its own established practice and add an upward DIFMER adjustment 
equal to 20 percent of TCOMU to normal value for each comparison of 
non-identical products. Petitioners cite two Department decisions, Gray 
Portland Cement and Clinker from Mexico, Results of Redetermination 
Pursuant to Court Remand, and Tapered Roller Bearings, and Certain 
Components Thereof, from Japan, 56 FR 26054, 26057 (June 6, 1991), in 
which the Department added an upward DIFMER adjustment of 20 percent as 
best information available. Accordingly, petitioners feel the 
Department should apply the same remedy in this situation.
    Algoma argues that although they were unable to report actual 
rolling costs for the 106'' mill, the Department must examine any cost 
allocation to determine if it is reasonable. Respondent cites Floral 
Trading Council v. U.S., 822 F. Supp 766, 772 (CIT 1993) and Welded 
Stainless Steel Pipe from Malaysia, Final Determination of Sales at 
Less Than Fair Value, 59 FR 4023, 4027 (January 28, 1994) in which the 
Department accepted allocation methods as reasonable. Respondent 
asserts that the Department should continue to accept Algoma's rolling 
cost allocation method because it did so in the first review of this 
case, Certain Steel Products from Canada: Final Results of 
Administrative Review, 61 FR at 13817. In that decision, the Department 
accepted Algoma's rolling cost calculation methodology stating, 
``Algoma's reporting of rolling costs incurred at only one of its 
manufacturing facilities is reasonable, considering (1) The nature of 
its cost accounting system, (2) Algoma's verified inability to 
determine specific rolling costs based upon the gauge of materials 
being manufactured at either facility, and (3) the conservative 
methodology adopted by Algoma.'' Respondent contends that same 
rationale is fully supported by the record in this review and leads to 
the conclusion that Algoma's method for calculating rolling costs is 
reasonable.
    Additionally, respondent asserts that Algoma explicitly sought the 
Department's guidance on whether to use the same rolling cost 
calculation methodology as in the first administrative review and that 
the Department instructed Algoma to use the same methodology. 
Respondent argues Algoma does not track rolling costs by width and 
gauge in the normal course of business. In addition, a very large 
percentage of the products produced on the 166'' Plate Mill and a very 
small percentage of the products produced on the 106'' Strip Mill 
constitute subject merchandise. Respondents contend, in light of those 
two verified facts, Algoma had only three reasonable alternatives in 
assigning rolling costs to a particular category of subject 
merchandise: It could either assign the average Strip Mill rolling 
costs, assign the average Plate Mill rolling costs, or assign a mixture 
of the two. Respondents argue that since the 106'' Strip Mill average

[[Page 18451]]

rolling costs are overwhelmingly determined by non-subject merchandise, 
using the average 106'' mill rolling cost, or a mixture of costs from 
both mills, would have caused the rolling cost calculation to be driven 
by the cost of rolling non-subject merchandise. Therefore, Algoma used 
the average rolling cost of the 166'' mill--where only products with 
gauges falling within the definition of subject merchandise are 
rolled--as a surrogate for the average rolling cost of the 106'' mill. 
Respondent argues that this is a conservative methodology based on the 
verified fact that rolling costs on the 166'' mill were higher than 
rolling costs on the 106'' mill. Based on the facts above, respondents 
argue that Algoma's rolling cost methodology should again be determined 
reasonable by the Department.
    Concerning petitioners' argument that Algoma's methodology renders 
the DIFMER adjustment inaccurate, respondent argues that these 
arguments are based on conclusions that are untrue. Respondent provides 
calculations for the potentially affected matches, which they argue 
demonstrate that it would be mathematically impossible for the cost 
reporting methodology to yield a distortion in the results of the 
DIFMER test.
    Department's Position. We agree with respondent. Consistent with 
the final results of the first review, Certain Steel Products from 
Canada: Final Results of Administrative Review, 61 FR at 13817, 
Algoma's cost reporting methodology is reasonable, considering (1) we 
verified its cost accounting system, (2) Algoma's verified inability to 
determine specific rolling costs based upon the gauge of the material 
being manufactured at either facility, (3) the conservative methodology 
adopted by Algoma and verified by the Department, and (4) respondent's 
compliance with Department instructions on cost reporting methodology 
in this review.
    Petitioners state that it is the responsibility of any respondent 
to construct methodologies for reporting purposes that result in the 
reasonable allocation of costs. The Department determined that Algoma's 
cost accounting system computes one average rolling cost for all 
products rolled on the 166'' Plate Mill and one average rolling cost 
for all products rolled on the 106'' Strip Mill. Moreover, the 
Department verified that a very large percentage of the products 
produced on the 166'' mill and a very small percentage of the products 
produced on the 106'' mill are subject merchandise. Therefore it was a 
reasonable and non-distortive methodology for Algoma to use the average 
cost of the 166'' mill as a surrogate for the rolling cost of the 106'' 
mill. Accepting this methodology is made more reasonable by the fact 
that the average rolling cost of the 166'' mill is higher than the 
average rolling cost of the 106'' mill, thus insuring a conservative 
costing methodology. However, this difference in rolling costs is not 
so great as to cause significant distortions to the DIFMER.
    Regarding petitioners' claim that the Department should reject 
Algoma's COP and CV data and apply total facts available, respondent 
has acted to the best of its ability and provided the Department with a 
reasonable methodology that has been verified. Moreover, the Department 
provided guidance on Algoma's cost reporting methodology and 
respondents complied with that guidance. Regarding petitioners' claim 
that the Department should apply facts available with regard to the 
comparison of non-identical goods, once again, respondent has provided 
a reasonable methodology and the DIFMER is, therefore, reliable. 
Respondent has demonstrated that for the product comparisons in 
question Algoma's cost methodology would not cause the 20-percent 
DIFMER test to yield inaccurate results. In addition, while it is 
possible that the allocation method could change the DIFMER adjustment 
amount slightly for some product comparisons, the insignificant degree 
of the possible difference is not enough to render the allocation 
method unreasonable and invalid. Based on the above arguments, the 
verified record, and previous Department decisions, we find that 
Algoma's cost allocation methodology, productivity matrices, exclusion 
of certain runs, and DIFMER adjustments are accurate and reasonable.
Comment 2
    Petitioners argue that the record shows that Algoma sold subject 
merchandise at two different levels of trade. Petitioners contend that 
in determining whether customers are at separate levels of trade, the 
Department reviews the selling activities performed by the seller for 
each type of customer. Petitioners assert that Algoma stated that it 
sold subject merchandise to ``two very different types of customers'': 
steel service centers (SSCs) and end-users. Petitioners state that 
Algoma specifically stated in its July 11 supplemental response that it 
performed selling functions for end-users that are not ``routinely 
performed'' for SSCs. In addition, Algoma stated that it performed some 
of the selling functions identified by the Department ``mainly for end 
users.'' Petitioners assert that this is significant because the 
Department has previously found differences in these types of selling 
functions to be important in distinguishing separate levels of trade. 
See, Antifriction Bearings from France, 61 FR at 35720.
    Petitioners argue that the Department accepted Algoma's claim that 
all sales are at one level of trade based on the Department's 
``examin{ation} and verif{ication} of the selling functions'' 
identified by Algoma. Petitioners note, however, that Algoma did not 
report its selling functions on the record until two months after 
verification. Therefore, Petitioners contend, there is no possible way 
for the Department to have ``examined and verified'' Algoma's selling 
functions. Even if the Department were to rely on Algoma's unverified 
descriptions of selling functions, Petitioners argue that the 
Department must still find that Algoma sold to two levels of trade. 
Petitioners assert that such a conclusion is mandated because the 
functions undertaken by Algoma for its end-user customers are 
significantly different from those engaged in for the SSC customers.
    Therefore, Petitioners argue that the Department must make a level 
of trade adjustment. Petitioners contend that the statute requires that 
``to the extent practicable,'' U.S. sales should be compared to home 
market sales at the same level of trade, 19 U.S.C. section 1677b 
(a)(1)(B). When a U.S. sale is compared to a home market sale at a 
different level of trade, however, the Department is required to 
determine if a level of trade adjustment should be made, 19 U.S.C. 
section 1677b(a)(7)(A). Petitioners argue that an adjustment must be 
made under the statute where the difference in level of trade affects 
price comparability. Petitioners claim that the Department set forth 
its methodology for making this determination in Antifriction Bearings 
from France, 61 FR at 35719. Petitioners argue that the difference in 
level of trade between sales to SSCs and end-users does affect price 
comparability. Petitioners present a number of calculations that they 
contend demonstrate a pattern of consistent price difference between 
the different levels of trade in the home market based on both the 
number of models and the quantity of sales. Accordingly, petitioners 
argue that a level of trade adjustment is warranted.
    Respondent contends that the Department correctly concluded in the 
preliminary results that Algoma sells plate products at one level of 
trade.

[[Page 18452]]

Respondent asserts that conclusion is fully supported by the verified 
record in this review, and the Department should reach the same 
conclusion in the final results of review. Respondent points to the 
Department's preliminary analysis memorandum, which states that the 
Department ``examined and verified the selling functions'' performed by 
Algoma for its two customer classes: end-users and steel service 
centers (SSCs). Based on the verified information, the Department 
concluded in its analysis memorandum that ``Algoma's selling activities 
were substantially similar for both classes of customers for sales of 
subject merchandise and warrant one level of trade.'' Respondent states 
that Algoma determined that it sold plate products at only one level of 
trade, by comparing the services performed for plate customers to those 
performed for purchasers of sheet products, its largest product line. 
For sheet products, Algoma engages in very different levels and types 
of selling functions for service centers and fabricators. Respondent 
states for plate products, however, those services are rarely 
performed. Respondent also asserts that on those rare occasions when 
services like just-in-time delivery are performed for plate customers, 
they are mainly performed for end-users. Respondent points to Algoma's 
July 11 supplemental questionnaire response which states that ``(w)hile 
Algoma does perform some selling functions for end-users in plate trade 
that are not routinely performed for SSCs, in Algoma's view the 
activity is not so significant as to cause plate end-users to be a 
level of trade different from SSCs.
    Respondent also asserts that the Department's preliminary decision 
that Algoma sells plate products to only one level of trade is 
consistent with other recent decisions. Respondent points to the final 
determination in Certain Pasta from Italy, 61 FR 30326, 30337-39, and 
30342-43 (June 14, 1996) (quoting Proposed Regulations), which states 
that ``small differences in the functions of the seller will not alter 
the level of trade.'' Respondent claims Algoma has demonstrated that 
the selling functions performed for various customer classes of the 
subject merchandise are ``sufficiently similar'' to justify a finding 
of one level of trade, as was the case for many of the respondents in 
that case. In addition, respondent asserts that the Department should 
disregard petitioners'' calculations that suggest that a price 
discrepancy exists between levels of trade. Respondent claims that 
petitioners'' calculations hardly constitute the ``significant 
correlation between prices and selling expenses on one hand, and levels 
of trade on the other,'' required to make a level of trade adjustment. 
See, Steel Plate from Sweden, 61 FR 15772, 15776 (April 9, 1996) (Final 
Review). Based on the above comments and previous Department decisions, 
respondent contends that the Department is correct in finding that 
Algoma sold plate products at one level of trade and, thus, there is no 
need for the Department to make a level of trade adjustment.
    Department's Position. The Department agrees with respondent that 
Algoma sold plate products at one level of trade and, thus, no level of 
trade adjustment is warranted.
    In order to determine whether sales in the comparison market are 
made at more than one level of trade, the Department must find that 
sales have been made at different stages in the marketing process, or 
the equivalent. We make this determination on the basis of a review of 
the distribution system, including selling functions, class of 
customer, and the level of selling expenses for each type of sale. 
Different stages of marketing necessarily involve differences in 
selling functions, but differences in selling functions, even 
substantial ones, are not alone sufficient to establish a difference in 
the level of trade. While customer categories such as ``distributor'' 
and ``wholesaler'' may be useful in identifying different levels of 
trade, they are insufficient in themselves to establish that there is a 
difference in the level of trade. See, Antifriction Bearings (other 
than Tapered Roller Bearings) and Parts Thereof from France, et al: 
Final Results of Antidumping Administrative Reviews, 62 FR 2081, 2105 
(January 15, 1997).
    An examination of Algoma's selling activities--the selling 
functions and the level of selling expenses--for Algoma's two customer 
classes indicates that while Algoma occasionally may perform some 
services for end-users that it does not perform for SSCs, these 
differences in terms of selling functions and level of selling expenses 
are not great enough to warrant a finding of different levels of trade. 
As respondent noted in Certain Pasta from Italy, 61 FR 30326, 30337-39, 
and 30342-43 (June 14, 1996), small differences in selling functions do 
not warrant a different level of trade. Petitioners' arguments on price 
comparability are moot because the Department has determined that only 
one level of trade exists.
    Finally, the Department disagrees with petitioners'' contention 
that the Department did not review Algoma's selling activities at 
verification because Algoma submitted some of its selling activity 
information after verification. Prior to verification, there was enough 
information on the record concerning Algoma's selling activities for 
the Department to determine whether these activities were 
``substantially similar'' for Algoma's two customer classes: end-users 
and steel service centers (SSCs). Moreover, prior to verification, 
petitioners notified the Department of their concerns and requested 
that the Department carefully analyze and test all of Algoma's selling 
functions and differences in these selling functions between end-users 
and SSCs. At verification, the Department examined the differences in 
selling activities between end-users and SSCs. Algoma's supplemental 
response concerning level of trade, requested by the Department and 
submitted after verification, presented no evidence to contradict this 
determination and does not invalidate the information which was 
verified.
Comment 3
    Petitioners claim that Algoma's failure to provide plate qualities 
for certain sales warrants the application of adverse facts available. 
For the preliminary results, respondent identified plate quality as 
``structural'', ``pressure vessel'', or ``other.'' Algoma reported 
``other'' as the plate quality for a number of its prime home market 
sales and for some of its prime U.S. market sales as well. Petitioners 
argue that Algoma's incomplete reporting of plate quality has 
undermined the Department's model match program. For this reason, 
petitioners assert the Department should apply facts available to all 
U.S. sales where plate quality has been identified as ``other.''
    Petitioners state that Algoma attempted to justify its reporting 
method by claiming that its method was consistent with industry 
standards and practices. According to Algoma, any plate not falling 
into either the structural or pressure vessel quality categories, is 
appropriately considered ``other.'' Petitioners claim, however, that 
there are, in fact, other plate quality categories recognized in the 
steel industry. Petitioners point to the Iron and Steel Society's 
authoritative Steel Products Manual which mentions four other ``quality 
descriptions'' for steel plate.
    Petitioners contend that the Court of International Trade (CIT) has 
specifically stated that respondents must provide complete information 
regarding the physical characteristics of subject merchandise. In 
Timken Co. v. United States, 630 F. Supp. 1327, 1338 (CIT 1986), the 
CIT stated, ``It is of

[[Page 18453]]

particular importance that the administering agency itself make the 
required determination of what constitutes most similar merchandise, 
rather than delegating that responsibility to an interested party.'' In 
the same case, the CIT states that ``accepting a foreign manufacturer's 
assertions as to what constitutes most similar merchandise without 
obtaining the complete data needed to determine the appropriateness of 
those assertions'', would ``violate the spirit of the statutory 
requirement.''
    Petitioners contend that because of Algoma's incomplete reporting, 
the Department should apply adverse facts available because of the 
Department's repeated requests and Algoma's repeated refusals to 
provide this information. Petitioners assert that the Department should 
apply the most adverse margin to all United States sales where plate 
quality has been reported as ``other.''
    Respondent claims that Petitioners' arguments are misplaced because 
Algoma has properly reported, and the Department has verified and 
accepted, the three categories of plate quality reported by Algoma in 
this review. In response to the Department's first supplemental 
questionnaire, Algoma explained that it:

``followed the Department's instructions in separating subject 
merchandise into the categories of `structural,' `pressure vessel' 
or `other' in the PLQUALH/U fields. Consistent with industry 
standards and practices, the only `quality' types recognized for 
plate products are structural and pressure vessel. Any plate not 
falling into one of the two categories is appropriately considered 
`other,' and therefore was included by Algoma in the `other' 
category. The types of plate that may not meet the structural or 
pressure vessel qualities, and therefore are appropriately 
considered `other,' include floor plate, chemical grades, and non-
prime plate.

Respondent also asserts that at verification, the Department verified 
the plate qualities reported by Algoma.
    In response to petitioners' cite to the Iron and Steel Society 
publication, respondent contends that the additional plate qualities 
mentioned by the publication are both out of date and not applicable to 
Algoma. Respondent also asserts that the very same publication supports 
Algoma's understanding by listing as typical, in ``Typical Standard 
Specifications,'' only structural and pressure vessel qualities.
    Respondent argues that based on the facts above and the verified 
record, the Department should not change its decision regarding plate 
quality categories in making its final determination.
    Department's Position. We agree with respondent. Algoma classified 
all plate that did not fall within the structural or pressure vessel 
qualities, as ``other.'' The Department fully verified the plate 
qualities reported by Algoma during the period of review. The 
Department agrees this practice is consistent with industry standards. 
In addition, this classification does not undermine the Department's 
model match program. Petitioners' cite to Timken Co. v. United States 
is not relevant to this issue because the Department has accepted and 
verified Algoma's reporting of qualities; therefore Algoma's response 
cannot be considered incomplete. In addition, petitioners' mention of 
the Iron and Steel Society's Steel Products Manual is also irrelevant. 
That publication quotes additional plate qualities that are not 
relevant to this review and that in no way would affect model matches. 
Furthermore, since Algoma properly reported all plate qualities, there 
is no need to consider petitioners' argument for the use of adverse 
facts available. Based on the verified record and industry standards, 
the Department fully accepts Algoma's reporting of plate qualities.
Comment 4
    Petitioners argue that the Department erred in accepting as a 
movement charge deductible from normal value under section 
773(a)(6)(B)(ii) of the statute Algoma's reported freight expenses, 
which Algoma incurred in transporting merchandise to a further 
processor. Petitioners argue that the Department has consistently 
treated such expenses as a cost of manufacturing, and not a movement 
charge. Therefore, the Department should disallow Algoma's claim for a 
freight adjustment for all further processed sales.
    Petitioners state that the Department requires respondents to 
establish that they are entitled to favorable adjustments to normal 
value. Petitioners cite The Timken Company v. United States, 673 F. 
Supp. 495, 513, (CIT 1987), in which the Court ``plac(es) the burden of 
establishing adjustments on a respondent that seeks the adjustments and 
that has access to the necessary information.'' Petitioners contend 
that Algoma has failed to establish that it is entitled to a favorable 
adjustment to normal value. Petitioners assert that Algoma defends its 
reporting by claiming that its freight expenses were incurred ``post-
sale'' and hence should be classified as movement charges. However, 
petitioners claim that the freight expenses in question were incurred 
in transporting unfinished merchandise for further processing, and 
thus, they are properly classified as cost of manufacturing, and not a 
movement charge. Therefore, petitioners argue, whether the freight 
expenses were incurred pre-sale or post-sale is irrelevant. Petitioners 
cite Certain Carbon Steel Flat Products from Canada, 58 FR 37099, 37118 
(comment 61) (July 9, 1993), which states ``pre-sale freight charges 
for unfinished merchandise should not be considered a movement 
charge.'' The Department decision goes on to say, ``(f)reight between a 
factory and the further processor of a work in progress is not a 
deductible adjustment . . .'' Similarly, petitioners argue, the 
Department has consistently treated the freight from the U.S. port to a 
further manufacturing plant as a cost of further manufacturing, and not 
a freight expense. See, Gray Portland Cement and Clinker from Japan, 60 
FR 43761, 43768 (Aug. 23, 1995).
    Therefore, based on the reasons above petitioners argue that the 
Department should disallow Algoma's claim for a freight adjustment for 
all further processed sales.
    Respondent claims that petitioners' arguments are based on the 
incorrect assumption that these freight expenses are pre-sale freight 
expenses. Respondent contends that under the recently amended 
antidumping law, all freight expense incurred from the producer to the 
processor and from the processor to the customer, should be deducted 
from normal value. Section 773 (a)(6)(B)(ii) states that an adjustment 
to normal value is appropriate for ``the amount, if any, included in 
the price . . . attributable to any additional costs, charges, and 
expenses incident to bringing the foreign like product from the 
original place of shipment to the place of delivery to the purchaser.'' 
Respondent cites the Statement of Administrative Action (SAA) at 827, 
which also explains that under that new section movement charges are to 
be deducted from normal value. According to respondent, Algoma's 
movement charges from the plant to the processor and then to the 
customer fall within that statutory provision and thus are properly 
deducted from normal value. Respondent also claims that petitioners' 
citations to the decisions by the Department under the old law are 
irrelevant to this review in light of the change in the law and the 
Department's practice.
    Department's Position. We agree with respondent. The freight from 
Algoma to the further processor is a movement charge deductible 
pursuant to 773 (a)(6)(B)(ii) because it is not freight incurred in the 
process of

[[Page 18454]]

manufacturing subject merchandise but freight incurred in sending 
subject merchandise for further processing at the customer's request as 
part of the sale. Algoma performs this further processing on a small 
percentage of sales as a courtesy to the customer and is not part of 
its actual production of subject merchandise which is being used for 
comparison in this review. Moreover, it would be unfair to respondent 
to compare ex-factory prices in the U.S. market with home market prices 
that include freight. In order to insure that a proper comparison is 
made with ex-factory home market products and ex-factory U.S. market 
products, all ex-factory freight expenses need to be excluded from the 
price. Based on the information in the record, the Department has 
determined that the respondent has satisfied its burden of establishing 
its entitlement to the adjustment under Timken. Petitioners' cite to 
Certain Carbon Steel Flat Products from Canada is irrelevant because 
that case involved the pre-sale transfer of a work-in-process. In 
addition, petitioners' cite to Gray Portland Cement and Clinker from 
Japan is inappropriate because it deals with the cost of further 
manufacturing in the United States which is not relevant to this case.
Comment 5
    Petitioners argue that Algoma should not be allowed a freight 
adjustment for sales in which it inadvertently reported actual freight 
in the accrued freight field. Throughout this review, Algoma has 
claimed that it had reported an accrued freight expense amount in the 
INLFACH field of its sales tape. Petitioners state that according to 
Algoma, the amount reported in this field was not based on the freight 
expenses actually incurred, rather it was based on the expected freight 
charge at the time the products were shipped. Petitioners contend that 
Algoma claimed, for the first time, four months after verification, 
that for certain sales it had ``inadvertently'' reported the actual 
amount for inland freight in the accrued freight field (INLFACH) and 
that the Department had verified this claim.
    Petitioners argue that respondent's claims were untimely, 
unsupported by the record and must be rejected by the Department. Again 
petitioners point to the Timken case which places the burden of 
establishing adjustments on respondents. Petitioners claim that there 
is no mention whatsoever in the verification reports of the Department 
having verified (or even having been notified of) Algoma's claim. 
Moreover, petitioners assert, there is no mention of Algoma's 
``inadvertent'' reporting in the Corrections Memorandum that Algoma 
submitted at the outset of verification. Therefore, petitioners 
contend, the Department has no alternative but to deny Algoma's claimed 
freight adjustment for all sales where freight expenses are reported in 
the INLFACH field of the sales database.
    Respondent argues that the Department's preliminary results 
correctly concluded that Algoma properly reported actual freight 
expense. Respondent contends that as Algoma explained to Department 
officials during verification, due to an oversight, Algoma reported the 
actual amount for inland freight associated with those transactions in 
the accrued freight (INLFACH) field. Respondent asserts that this fact 
does not affect the freight expense calculation and has been fully 
explained to the Department.
    Respondent states that at verification, Algoma demonstrated that 
the freight expense reported for these sales transactions was fully 
accounted for and properly included in Algoma's sales tape, but it 
merely appeared in the wrong field. Respondent claims the Department 
verified this by examining two of the preselected sales traces. 
Respondent states that in the sales verification exhibits, Algoma 
provided the Department with freight invoices and calculations 
confirming that the freight reported in INLFACH represented the actual 
freight expense incurred for the shipment to the customer. Respondent 
claims that Algoma did not identify this issue in its Corrections Memo 
mentioned by petitioners because no correction was necessary. 
Respondent asserts that whether the amounts appeared in the actual or 
accrued expense field had absolutely no affect on the margin 
calculation. Therefore, respondent argues, the Department should 
continue to accept Algoma's explanation for the final determination.
    Department's Position. We agree with respondent. Whether the actual 
freight is reported in the actual freight field (INLFTCH) or the 
accrued freight field (INLFACH) has no effect on the margin 
calculation. For the preliminary and final determinations, freight 
expense was calculated by adding the actual freight field and the 
accrued freight field together. Thus, whether the actual freight 
expense was in the actual field or the accrued field is not important, 
since they are combined into one freight expense. This fact renders 
this argument moot as long as the actual freight amounts were reported 
and verified in one of the two fields. As stated in the Department's 
verification reports and documented by verification exhibits, the 
freight amounts were verified by the Department and found to be 
accurate.
Comment 6
    Petitioners argue that a circumstance-of-sale adjustment for credit 
expense should not be allowed for sales where Algoma failed to report 
payment dates. Petitioners assert that throughout this review, Algoma 
made numerous revisions and corrections to its data tapes. Algoma, 
however, never updated its sales tape to include the payment dates that 
were missing from its initial sales tape. Petitioners claim that 
respondent failed to do this even though the missing information became 
available to Algoma during the course of this review. Petitioners 
assert that Algoma's failure to report complete payment date 
information has made it impossible for the Department to calculate 
accurately Algoma's credit expenses.
    Petitioners argue that Algoma's justification for incomplete 
reporting must be rejected. Respondent stated that it did not provide 
the missing payment dates because ``at no time during this review did 
the Department request that Algoma update its sales tape to include 
payment date information.'' Petitioners cite the Department's decision 
in Brass Sheet and Strip from Canada, 61 FR 46618, 46620 (September 4, 
1996). Petitioners contend, as with the respondent in Brass Sheet and 
Strip, Algoma failed to provide information that had been specifically 
requested by the Department and which was in respondent's possession. 
Petitioners argue for the reasons above, the Department must deny 
respondent's claim for a circumstance of sale adjustment for credit 
expenses for all sales with missing payment dates.
    Respondent contends that Algoma reported all requested payment date 
information and that information was fully verified by the Department. 
Respondent states that as Algoma demonstrated during verification, 
payment dates were not reported on Algoma's sales tape for orders that 
were unpaid at the time Algoma created the tape. Respondent asserts 
that this is customary practice and at no time during the review did 
the Department request that Algoma update its sales tape to include 
payment date information. Respondent also states that the Department 
carefully verified and gathered supporting documentation on those 
transactions which petitioners requested the Department verify as 
``bona fide.'' Respondent argues that since Algoma has complied with 
all the Department's requests for information,

[[Page 18455]]

the Department should reject petitioners' arguments.
    Department's Position. We agree with respondent. The Department 
never requested the updated payment dates from Algoma. In addition, the 
alternative methodology Algoma used of substituting in an average 
number of days outstanding for the unknown date is reasonable and has 
been verified. Based on these facts, the Department will allow the 
circumstance-of-sale adjustment for all sales with missing payment 
dates.
Comment 7
    Petitioners claim that Algoma should not be allowed to use the U.S. 
prime rate in calculating its U.S. credit expense, but instead, Algoma 
should use a rate more consistent with commercial reality. Petitioners 
cite the case La Metalli Industriale v. United States, 912 F.2d 455 
(Fed. Cir. 1990), which states the cost of credit ``must be imputed on 
the basis of usual and reasonable commercial behavior.'' Petitioners 
argue that since Algoma could not qualify for the Canadian prime rate 
in any of its home market borrowings, Algoma would not be able to 
qualify for the U.S. prime rate. Therefore, petitioners claim the U.S. 
prime rate does not reflect the commercial reality of borrowing in the 
United States for Algoma. They cite Certain Corrosion-Resistant Carbon 
Steel Flat Products from Australia; Final Results of Antidumping Duty 
Administrative Reviews, 61 FR 14049, 14054 (March 29, 1996) (Steel from 
Australia) and Final Results of Antidumping Duty Administrative Review; 
Certain Cut-to-Length Carbon Steel Plate from Sweden, 61 FR 15772, 
15780 (April 9, 1996) (Steel from Sweden). In Steel from Australia and 
Steel from Sweden, the Department stated that, in the absence of U.S. 
dollar borrowings, a reasonable surrogate for imputing U.S. credit 
expense must be used. Petitioners argue that the fact that Algoma could 
not qualify for the Canadian prime rate provides substantial evidence 
that Algoma could not qualify for the U.S. prime rate.
    Therefore, petitioners suggest that the U.S. prime rate be adjusted 
to reflect this fact, or in the alternative, the Department could use 
Algoma's adjusted home market interest rate. In Canada, Algoma 
qualified for loans of .5%, 1.0%, and 1.5% above the Canadian prime 
rate. Therefore, petitioners state that 1.5% should be added to the 
U.S. prime rate to reflect Algoma's commercial reality of borrowing in 
the United States. The alternative is to adjust the home market 
interest rate to account for currency fluctuations. Petitioners cite 
Certain Fresh Cut Flowers from Colombia, 61 FR 42833, 42848 (August 9, 
1996) in which this method was used in the absence of U.S. dollar 
borrowings.
    Respondent argues that the use of the Federal Reserve prime short-
term lending rate is consistent with Department practice. Respondent 
cites two cases, Canned Pineapple Fruit from Thailand: Final 
Determination of Sales at Less than Fair Value, 60 FR 29553, 29558 
(June 5, 1995) and Brass Sheet and Strip from Germany: Final Results of 
Antidumping Duty Administrative Review, 60 FR 38542, 38545 (July 27, 
1995), in which the U.S. prime rate was used to compute U.S. credit 
expense in the absence of any borrowing in U.S. dollars. Respondent 
also cites Section C of the Department's questionnaire which states 
``if you have not borrowed in U.S. dollars, use a U.S. published 
commercial bank prime short-term lending rate.'' Respondent also cites 
Steel from Australia and Steel from Sweden. Respondent states that in 
both cases the Department concluded that the Federal Reserve rate in 
effect over the POR was a ``reasonable surrogate'' for an actual dollar 
interest rate. In both cases the Department chose the average short-
term lending rate as calculated by the Federal Reserve. Each quarter 
the Federal Reserve collects data on loans made during the first full 
week of the mid-month of each quarter by sampling 340 commercial banks 
of all sizes. The sample data are used to estimate the terms of loans 
extended during that week to all insured commercial banks. This rate 
represents a reasonable surrogate for an actual dollar interest rate 
because it is calculated based on actual loans to a variety of actual 
customers.
    Also, respondent states that the Department itself has recognized 
that the use of Aexternal ``external'' information, such as the Federal 
Reserve rate, is preferred over an adjusted home market interest rate 
in deriving computed credit costs. The Department states in its 
September 6, 1994 Memorandum re: Proposed Change In Policy Regarding 
Interest Rates Used In Credit Calculations that the Department's 
preference is to get the interest rate for both currencies concerned, 
rather than making an adjustment to the home market interest rate to 
account for exchange rate fluctuations. Therefore, respondent argues 
that the Federal Reserve commercial bank prime short-term interest rate 
should be used when calculating Algoma's credit expense.
    Department's Position. We agree, in part, with respondent and 
petitioners that commercial reality can be more accurately reflected by 
a surrogate U.S. short-term interest rate. Consistent with Department 
practice in Steel from Sweden and Steel from Australia, we are 
selecting the U.S. average short-term lending rate as reported by the 
Federal Reserve. This ``survey rate'' reflects the average short-term 
lending rate of 340 U.S. banks given over the quarter. Given the 
absence of actual short-term borrowing in the United Stated by Algoma 
during the POR, this average is the best measure of the short-term cost 
of funds in the United States during the POR.
Comment 8
    Respondent claims that the Department's model match program failed 
to match U.S. products of a certain grade to home market products of 
the same grade. Also, respondent claims that the Department's margin 
program incorrectly modified the billing adjustment value for an 
invoice on which a rounding difference was identified at Algoma's 
verification.
    Department's Position. The Department agrees with respondent in 
both cases and has made the appropriate corrections for the final 
results.

CCC

Comment 1
    Petitioners state that CCC utilized Stelco's costs of producing 
steel substrate in its cost of production (COP) and constructed value 
(CV) data because the Department treated Stelco as an affiliated 
supplier to CCC in the first review. Petitioners note that CCC's 
reported transfer prices for Stelco substrate were different than the 
reported costs. Petitioners, therefore, argue that under the Tariff 
Act, CCC would have been required to utilize Stelco's transfer prices 
in reporting COP and CV. Petitioners state that sections 773(f)(2) and 
(3) of the Act provide that major inputs purchased from affiliated 
parties must be valued at the higher of market value, transfer price or 
the affiliate's cost of production. Therefore, petitioners state that 
the Department must recalculate CCC's COP and CV to account for the 
difference between Stelco's costs of production and transfer prices for 
the final results.
    Respondent states that the antidumping law does not require the use 
of the higher of transfer price or cost. It requires the use of cost 
whenever the prices between related parties cannot be demonstrated to 
be at arm's length. Respondent notes that it has

[[Page 18456]]

always reported its cost of steel substrate at the cost of production 
incurred by Stelco, since the original investigation, and the 
Department used these costs in the last administrative review. 
Respondent argues that the Department has interpreted the antidumping 
law to require the use of cost to value inputs by related parties 
whenever the transfer prices between them could not be shown to have 
been made at arm's length. In addition, respondent states that the 
transfer price whether higher or lower than the cost of production is 
not relevant if the transfer price could not be shown to have been an 
arm's length price. Respondent argues that petitioners have not argued 
that Stelco's prices to CCC are at arm's length. Therefore, respondent 
states that there is no basis in the law for using's Stelco's prices to 
CCC to establish the cost of Stelco's substrate to CCC. Additionally, 
respondents states that the facts of the record do not support use of 
the transfer prices as the cost of production.
    Department's Position. We agree with petitioners. Under section 773 
(f)(2) and (3) of the Act, major inputs purchased from affiliated 
parties may be valued at the higher of market value, transfer price or 
the affiliate's cost of production. In the Final Results of Antidumping 
Administrative Review: Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof from France, Germany, Italy, Japan, 
Singapore, and the United Kingdom, 62 FR 2,081, 2,115 (January 15, 
1997) the Department found ``that in the case of a transaction between 
affiliated persons involving a major input, we will use the highest of 
the transfer price between the affiliated parties, the market price 
between unaffiliated parties, and the affiliated supplier's cost of 
producing the major input.'' There is no market price on the record for 
this input. Therefore, the Department's analysis was focused on 
transfer prices and cost of production. However, since CCC did not 
provide the Department with specific information on transfer prices by 
model (i.e., control number), the Department could not perform the 
comparison on a model by model basis. Therefore, the Department 
compared CCC's average transfer price for all models to the average 
total cost of manufacture for all models. The Department found that 
CCC's average total cost of manufacture was higher than its average 
transfer price. Therefore, for the final results, the Department finds 
that substrate from Stelco will be valued at the cost of production. In 
addition, we disagree with respondent that the Department has 
interpreted the antidumping law to require the use of cost to value 
inputs by related parties only where the transfer price between the 
parties could not be shown to have been made at arm's length. Even 
where prices are demonstrated to have been made at arm's length, under 
section 773(f)(3) of the Act, where such prices are for major inputs 
and are below the cost of production, the Department may disregard such 
prices and base the value of the major input on its cost.
Comment 2
    Petitioners argue that CCC failed to report its general and 
administrative (G&A) expense in the manner requested by the Department. 
Petitioners state that the Department's questionnaire required CCC to 
reconcile reported costs to the company's audited financial statements 
for the year that most clearly corresponds to the POR. In addition, 
petitioners note that CCC's fiscal year data encompasses a full nine 
months of the POR, and that administrative and sales expenses in CCC's 
financial statements can be reconciled to its audited financial 
statements. Petitioners state that CCC used the G&A expenses for the 
POR. Therefore, petitioners argue that the Department should 
recalculate G&A expenses using a fiscal year period and not a POR 
period.
    Respondent states that the Department should continue to calculate 
G&A expenses based on the POR financial statement data rather than 1995 
fiscal year data. Respondent notes that it believes that using 1995 
fiscal year data would be improper for several reasons. First, the 
Department's past practice has been to use CCC's expenses for the POR 
to calculate the G&A ratio. Second, the Department requires that fiscal 
year G&A calculations be end-of-year adjustments which are fully 
incorporated in the POR costs, which respondent states it has done. 
Lastly, the respondent notes that all of its monthly financial 
statements can be reconciled with the appropriate audited financial 
statements and the audited financial statements are drafted using the 
monthly financial statements, which would negate petitioners argument 
that the Department should use fiscal year 1995 costs since they can be 
reconciled to the audited financial statement. Also, respondent states 
that it provided a reconciliation of G&A costs to the aggregated 
monthly financial statements. Therefore, the Department should continue 
to follow its methodology and calculate G&A costs based on the POR 
expenses as reported in the POR financial statement.
    Department's Position. We agree with petitioners. It is the 
Department's normal practice to calculate G&A expenses based on full-
year G&A and cost of sales figures as reported in the audited financial 
statement which most closely corresponds to the POR. (See, Certain 
Pasta from Italy, Final Determination of Sales at Less than Fair Value, 
61 FR 30326, 30363 (June 14, 1996).) While respondent argues that the 
Department should continue to calculate G&A expenses based on POR 
financial statement data, the Department may change its position on a 
specific issue taken in prior proceedings as long as it provides an 
explanation for the change (see, Rust v. Sullivan, 500 U.S. 173, 186-
187 (1991).) Although CCC submitted G&A expenses in the last 
administrative review based on costs from monthly financial statements 
for the POR, that methodology was not the Department's normal practice 
for calculating G&A expenses. Furthermore, there is no basis in this 
record to justify deviating from the Department's normal practice. 
Consequently, we are following our normal practice in this review, 
which is to calculate G&A expense based on CCC's 1995 annual audited 
financial statements. (See, Furfuryl Alcohol from Thailand, Final 
Determination of Sales at Less Than Fair Value, 60 FR 22557, 22560, 
(May 8, 1995).) However, to avoid double-counting, the Department 
subtracted indirect selling expenses and movement expenses from the 
general and administrative expenses (i.e., the numerator) reported in 
the audited financial statements.
Comment 3
    Petitioners argue that CCC incorrectly calculated interest expense 
and failed to reconcile that value to the amount of interest reported 
in its audited income statement. Petitioners note that CCC reduced its 
financial statement interest expense by an unexplained amount when it 
calculated its interest expense ratio. Petitioners state that the 
Department only allows an offset to interest expense for short-term 
interest income that is related to production operations. Moreover, 
petitioners argue that for the Department to allow the short-term 
interest income offset it is the respondent's responsibility to prove 
that interest income was short-term and related to production 
operations. Therefore, petitioners argue that the Department should 
recalculate CCC's interest expense using its 1995 audited financial 
statements.
    Respondent states that it reported only the interest expense it 
paid during the year. Respondent notes that the

[[Page 18457]]

interest it excluded from total interest expense was not paid during 
the year. Respondent argues that based on the relationship between the 
two parties that it is appropriate to exclude this interest expense. 
Therefore, CCC contends it excluded the interest in accordance with 
Department practice.
    Department's Position. It is the Department's standard practice to 
calculate interest expense based on audited financial statements which 
most closely correspond to the POR. (See, Notice of Final Determination 
of Sales at Less Than Fair Value: Canned Pineapple Fruit from Thailand, 
60 FR 29553, 29569 (June 5, 1995)) Only short-term interest income 
directly related to general operations of the company may be used as an 
offset to interest expense. (See, Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof from the Federal Republic of 
Germany, Final Results of Antidumping Duty Administrative Review, 56 FR 
31734 (July 11, 1991)) The reduction CCC made to its interest expense 
was not interest income; rather, it was an exclusion of certain 
interest expenses which it had not paid. The Department calculates the 
interest expense based on the total interest a company incurs (accrual 
basis) and not simply the interest it paid (cash basis). Section 
773(f)(1)(a) specifies that costs will be calculated based on records 
kept in accordance with generally accepted accounting principles 
(GAAP). Financial statements prepared on the accrual basis are GAAP, 
while financial statements prepared on the cash basis are not GAAP. 
Therefore, for the final results, we have recalculated interest expense 
based on CCC's 1995 interest expense from annual audited financial 
statements which were prepared on the accrual basis and in accordance 
with GAAP.
Comment 4
    Petitioners argue that for one control number (CONNUM) CCC reported 
inconsistent cost information. Petitioners state that CCC reported its 
variable and total costs of manufacture differently in its sales and 
costs listings. Moreover, CCC's cost data was not verified, therefore 
it is not possible to determine which set of calculations is correct. 
Therefore, petitioners argue that the Department should utilize the 
higher of the two values for calculating COP and CV, as facts 
available.
    Respondent states that the cost data for the one U.S. sale falling 
within this particular CONNUM should be corrected. Respondent states 
that it originally improperly reported this sale as a temper rolled 
product. However, during the course of verification, CCC states it 
discovered that this sale was a non-temper rolled product. 
Additionally, respondent states that it corrected the final sales 
database for this CONNUM, but inadvertently failed to do so in its cost 
database because of a computer glitch.
    Respondent opposes the petitioners' argument that because the 
Department did not conduct a full cost verification, it should use an 
adverse inference and apply the higher costs for all sales falling 
within this CONIUM in the U.S. and home markets. Respondent notes that 
this would be unfair. Respondent argues that the Department reviewed 
two CONNUMs during verification and verified its VCOM and TCOM 
calculations of these two CONNUMs with no discrepancies. Respondent 
argues that facts available are used where the requested information is 
missing or cannot be used because it has not been provided, was 
provided late, or the Department could not verify the information. 
Respondent states that it provided the information in a timely manner 
and was able to verify the costs. Therefore, no basis exists to 
substitute the higher temper rolled costs for the non-temper rolled 
costs.
    Department's Position. We agree with the respondent. At 
verification, the Department discovered that the control number for 
this sale was incorrectly reported. The Department then allowed the 
respondent the opportunity to correct its database (See, Verification 
Report, Pre-Selected U.S. Sale EP1 Exhibit 10). While respondent 
corrected the sales information for this control number, it failed to 
correct its cost information. In addition, the Department verified 
CCC's methodology for calculating the variable cost of manufacturing 
(VCOM) and the total cost of manufacturing (TCOM) and found that its 
methodology was reasonable (see, Verification Report, CONNUM Cost 
Traces). Therefore, for the final results, the Department has corrected 
CCC's cost information (i.e., VCOM and TCOM) in the U.S. database for 
this CONNUM in the model match program.
Comment 5
    Petitioners state that section 772(c) of the Act provides that in 
calculating EP or CEP, a deduction must be made to account for duties, 
including antidumping duties, paid by the respondent or its related 
party, as supported by C.J. Tower & Sons v. United States, 71 f.2d 438, 
445 (C.C.P.A. 1934). Thus, conclude petitioners, the statute requires 
that the Department must deduct antidumping duties paid by the 
respondent on U.S. sales.
    Petitioners state that in Federal-Mogul Corp. v. United States, the 
plaintiff challenged the Department's decision not to deduct estimated 
antidumping duty deposits under the predecessor provision to section 
772(c)(2)(A). Petitioners contend that the Department argued that this 
provision applied only to deduction of ``normal'' import duties. 
Petitioners also state that, the Department argued in the alternative, 
not deducting estimated antidumping duties (as opposed to duties 
actually to be assessed) had been its longstanding practice. The CIT 
affirmed the Department's refusal to deduct estimated AD duties, but 
did not adopt the Department's reasoning that section 772 applied only 
to ``normal'' import duties, and that antidumping duties were not 
normal import duties within the meaning of the statute (813 F. Supp. 
872). Thus, petitioners maintain that section 772 requires the 
Department to deduct any import duties (including antidumping duties) 
that can be accurately determined at the time the Department calculates 
dumping margins.
    Petitioners state that the legislative history to the URAA does not 
suggest that Congress rejected the construction of section 772(c)(2)(A) 
urged by petitioners. Petitioners continue that the Senate Finance 
Committee recognized that the Court of International Trade was 
considering this issue, and directed the Department to abide by the 
outcome of that litigation (see, S. Rep. No. 412, 103d Cong., 2d Sess. 
64 (1994)). Therefore, state petitioners, Congress did not intend to 
ratify the Department's not having treated duties as a cost in the 
URAA, but recognized that the issue would be resolved through the 
judicial process.
    Petitioners state that the difference calculated between normal 
value and EP or CEP on each sale by the Department's margin program is 
equal to the AD duties to be paid by the importer. Once this difference 
is calculated, they argue, it should then be deducted from EP or CEP 
for use in calculating final margins.
    Respondent asserts that the Department should once again reject 
petitioners' argument to deduct AD duties in its margin calculation and 
that the Department did not deduct AD duties from EP and CEP sales in 
the first administrative review. Respondents contend that petitioners 
failed to offer any argument as to why the Department should reach a 
different conclusion in this review. Respondent continues that in 
numerous determinations over many years, the Department has 
consistently

[[Page 18458]]

refused to deduct AD duties from EP and CEP sales and should continue 
to do so. Respondent contends that while petitioners'' argue that 
section 772(c)(2)(A) requires the Department to deduct AD duties from 
EP and CEP sales, there are no U.S. rulings in direct support of their 
interpretation. Respondent states that the Department has consistently 
rejected petitioners'' argument and that the most succinct rationale 
for the Department's policy is contained in Carbon Steel Flat Products 
from the Netherlands, 61 FR 48465 (September 13, 1996)). It states, in 
part, ``it is the Department's longstanding position that antidumping 
and countervailing duties are not a cost within the meaning of 19 
U.S.C. section 1677(a)(d). . . . Unlike normal duties, which are an 
assessment against value, antidumping duties derive from the margin of 
dumping or the rate of subsidization found. Logically, antidumping and 
countervailing duties cannot be part of the very calculation from which 
they are derived.''
    Respondent concludes that the Department's practice is clear, and 
that the CIT has consistently affirmed the decision not to deduct AD 
duty deposits from EP and CEP sales. Additionally, respondent states 
that the URAA House Ways and Means Committee Report and the SAA 
explicitly state that the new duty absorption provision is not intended 
to provide for the treatment of antidumping duties as a cost. Thus, 
states respondent, the Department should continue to refuse to deduct 
AD duties from Stelco's EP and CEP sales.
    Department's Position. We disagree with petitioners. As we stated 
in the final results of the first administrative review of this order. 
The Department does not deduct antidumping duties from the U.S. price, 
because they do not qualify for deduction as ``normal import duties, 
under section 772 and because such a deduction would double-count the 
dumping margin. See, Certain Corrosion-Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate from Canada: 
Final Results of Antidumping Duty Administrative Review, 61 FR 13815 
(March 28, 1996) (Comment 23): note that the applicable provision of 
the statute, 1677a(d)(2)(A), in that review was recodified under the 
URAA as 1677a(c)(2)(A). Nothing in the SAA or in the legislative 
history of the URAA compels the Department to reconsider that decision. 
Furthermore, there have been no intervening judicial interpretations 
suggesting that the Department reconsider its interpretation of the 
statute as it applies to this case.

Dofasco

Comment 1
    Petitioners argue that Dofasco failed to use its normal cost 
accounting system to prepare the response as required by the 
questionnaire. Petitioners maintain that the system which Dofasco, Inc. 
chose to use, the PaYs system (a management system), is not audited and 
therefore cannot be used to report costs. Petitioners also state that 
the Department's questionnaire requires respondent to contact the 
official in charge before submitting the response to Section D of the 
questionnaire in the event that respondent does not intend to use its 
normal cost accounting system and cost allocation methods to compute 
COP and CV for the merchandise under review. The Department, therefore, 
should use adverse facts available.
    Dofasco asserts that it submitted actual, fully-absorbed product 
costs. According to Dofasco, it relied on its normal cost accounting 
system for the POR costs, and the PaYs system was used only to 
calculate product costs. Dofasco further notes that the PaYs system, as 
an allocative system, does not require an audit opinion.
    Department's Position. The Department's Questionnaire states that 
the ``COP and CV figures that you report in the response (to Section D 
of the Questionnaire) should be calculated based on the actual costs 
incurred by your company during the period of review as recorded under 
its normal accounting system.'' See, Department's Second Administrative 
Review Antidumping Questionnaire (September 14, 1995), page D-1. The 
Questionnaire further states that these figures must reconcile to the 
actual cost reported in the company's costs accounting system and to 
accounting records used by the company to prepare its financial 
statements.
    Significantly, the Department verified that the COP and CV figures 
reported in Dofasco's response were in fact based on the actual costs 
incurred by Dofasco during the period of review. Furthermore, we 
reconciled these actual costs to Dofasco's accounting records used by 
the company to prepare its financial statements. Therefore, we 
determined that the actual costs from Dofasco's process cost accounting 
system formed the basis of Dofasco's response. The overriding concern, 
then, becomes the allocation methodologies employed by respondents.
    Dofasco utilized a management cost system to perform the 
allocations of its actual costs. Petitioners question the integrity of 
such an allocation system, citing Certain Hot-Rolled Carbon Steel Flat 
Products from Korea. Specifically, petitioners note that the Department 
stated in that case that reliance on ``a management cost system which 
has not been audited and is not used for the preparation of the 
financial statements or for any purposed outside internal deliberations 
of the company does not assure the Department that such costs have been 
stated in accordance with generally accepted accounting principles, or 
that all costs have been appropriately captured by the system.'' See, 
Certain Hot-Rolled Carbon Steel Flat Products from Korea, 58 FR 37176, 
37186 (July 9, 1993).
    However, we note that the circumstances surrounding the 
Department's decision in Hot Rolled Steel from Korea and this case are 
significantly different. First, in Hot-Rolled Steel from Korea, the 
Department found at verification that respondent was unable to 
reconcile its reported per unit costs to company documents maintained 
and used in the ordinary course of business. In contrast, at 
verification, Dofasco reconciled its actual costs to documents 
maintained and used in the ordinary course of business, such as the 
grade code cost table (Cost Verification Report, page 4) the corporate 
order history database (Cost Verification Report, pp. 4-5), and 
therefore the PaYs system.
    Second, while the respondent in Hot-Rolled Steel from Korea 
reconciled (with adjustments) the total costs of production from its 
management system with the total costs of production used in its 
financial accounting system and its audited financial statement, 
respondent could not support the adjustments it made to the financial 
statement system. Dofasco's reported production costs, in contrast, 
tied to its financial accounting system and to its audited financial 
statements (see, e.g., page 3 of the Cost Verification Report), and the 
Department found no inappropriate adjustments to Dofasco's financial 
statement system.
    Finally, we note that the Department's remedy in Hot-Rolled Steel 
from Korea was to upwardly revise respondent's costs by the difference 
between the financial accounting system total costs and the submitted 
management system total costs. However, the Department verified that 
Dofasco modified PaYs to include all costs (except for the minor 
discrepancies discussed at Comments 2 and 3 below). See, e.g., the 
Department's review of Dofasco's reported costs for fixed overhead 
expense (page 14 of the Cost Verification Report), and for inventory 
change (page 15 of the Cost Verification Report).

[[Page 18459]]

    Petitioners have also cited Certain Carbon Steel Flat Products from 
Brazil, 58 FR 37091 (July 9, 1993) and Erasable Programmable Read Only 
Panels from Japan, 51 FR 39680 (October 30, 1986) as further evidence 
that the Department expects respondent to base its response on its 
normal cost accounting system. However, because we determined that 
Dofasco's costs tied to its normal cost accounting system, respondents 
have fulfilled that expectation.
    Petitioners stress that, as an unaudited system, errors in the 
program will remain uncorrected, and that the costs generated by the 
system are not necessarily formulated in accordance within generally 
accepted accounting principles. 19 U.S.C. section 1677b(f) states that 
``costs shall normally be calculated based on the costs of the exporter 
or producer...if such records are kept in keeping with the generally 
accepted accounting principles of the exporting country.'' In this 
respect, Dofasco has responded to the Department's request for 
information in accordance with the statute. The Department found at 
verification that Dofasco's costs were in fact based on audited costs, 
and thus were costs based on records kept in accordance with the 
generally accepted accounting principles of Canada. See, e.g., Cost 
Verification Report at pp. 7-12, 14-15, 18-19. As respondent has noted 
in its rebuttal brief, the PaYs system allocates costs from Dofasco's 
cost accounting system to specific Departmentally-defined products 
(``control numbers''). Thus, the Department's role at verification with 
regard to this allocation system was to (1) ensure that the costs 
forming the basis of the allocation were audited costs; and (2) to 
examine the parameters on which the allocations were based. As 
discussed above, the Department verified that the reported costs were 
actual and audited. Furthermore, at verification we examined several 
allocations made by the PaYs system (see, pages 5 and 9 of the Cost 
Verification Report) to confirm that these allocations were used in 
Dofasco's normal course of business, have been used historically by 
Dofasco, and reasonably reflect and accurately capture all actual costs 
in producing the product under review, as required by the SAA (at 834-
835).
    Regarding respondent's obligation to contact the official in charge 
before submitting the response to Section D of the questionnaire in the 
event that respondent does not intend to use its normal cost accounting 
system and cost allocation methods to compute COP and CV for the 
merchandise under review, we note that respondent's reported costs tie 
to its normal cost accounting system. Furthermore, the PaYs system is a 
cost accounting system used by Dofasco for management accounting and 
cost control purposes (see, Cost Verification Report, page 4) which 
reconciles completely with the financial accounting system. Therefore, 
we do not find that Dofasco was obliged to notify the Department of its 
methodology prior to submission of its response.
Comment 2
    Petitioners maintain that the PaYs system and Dofasco's normal cost 
accounting system have different yield loss rates, and such a 
difference affects the accuracy of reported costs. Petitioners also 
argue that the yield loss calculated for the PaYs system was in part 
due to the inclusion of impossible yields on certain individual orders.
    Dofasco asserts that the difference in yield loss was due to three 
factors. First, Dofasco states that the yield loss for PaYs was based 
on home market orders, as requested by the Department, while the yield 
loss under Dofasco's normal accounting system is based on total 
shipments since separate inventories are not kept for the home market 
versus other destinations. Second, Dofasco noted that the yield loss 
for PaYs is based on production over the period of review, while the 
yield loss under Dofasco's normal accounting system is based on 
shipments over the period of review. Finally, Dofasco stated that PaYs 
tracks weights by operation, thus separating galvalume from galvanized 
material, while under Dofasco's normal accounting system galvalume and 
galvanized material are kept in common inventory accounts to the end of 
cold rolling.
    Department's Position. At verification, the Department reviewed 
Dofasco's narrative explanation of the yield loss. See, Cost 
Verification Report, pg. 20. Petitioners do not contest the rationale 
offered by Dofasco to explain differences between the yield loss rates 
and the Department has accepted the rationale as reasonable. However, 
as petitioners have noted, an examination of the data placed on the 
record indicates that, in addition to the three reasons put forward by 
Dofasco explaining the differences in yield loss rates, inaccurate data 
also affected the yield loss rates generated by PaYs. As petitioners 
also note, Dofasco did not provide a numerical reconciliation of the 
difference at verification. Additionally, Dofasco has not offered an 
explanation of the apparently aberrational data to which petitioners 
have pointed in their case brief.
    Section 776(a)(1) of the Act stipulates that if the necessary 
information is not available on the record * * * the administering 
authority and the Commission shall, subject to section 782(d), use the 
facts otherwise available in reaching the applicable determination 
under this title. Therefore, for the final results of review, the 
Department has calculated the difference between Dofasco's reported 
yield loss rate after excluding sales orders which incorporate 
inaccurate data. As facts otherwise available, the Department considers 
the error for this group of products to be representative of Dofasco's 
reporting of all subject merchandise. Because the effect of the error 
was to over-report produced weight, the corresponding yield loss rate 
was under-reported by the PaYs system. Thus, we have upwardly adjusted 
Dofasco's reported cost of manufacture on all models by the percentage 
difference between the reported yield loss rate and the corrected yield 
loss rate. See, Memorandum to the File: Analysis Memorandum for the 
Final Results of Review--Second Administrative Review of Certain 
Corrosion-Resistant Carbon Steel Flat Products from Canada (Dofasco), 
page 7.
Comment 3
    Petitioners maintain that the PaYs system fails to account for 
changes in work-in-process inventory (``WIP''), and that Dofasco failed 
to include these costs in its reported costs.
    Dofasco responds that, because the costs incorporated into PaYs 
originate from the normal process cost accounting system, changes in 
WIP have been included in PaYs. Further, Dofasco asserts that the 
Department verified that Dofasco adjusted for inventory change, both 
finished and in process.
    Department's Position. We agree with petitioners. Contrary to 
respondent's assertion with regard to what the Department verified, at 
verification the Department reconciled WIP to Dofasco's financial 
statements, and verified Dofasco's reported actual costs for work-in-
process and finished inventory. See, Cost Verification Report at page 
3. There is no discussion in the verification report showing that 
Dofasco provided a reconciliation of WIP to the costs included in 
Dofasco's computer submission to the Department.
    While there is no evidence that WIP has been included in Dofasco's 
reported costs through PaYs, the record contains evidence of Dofasco's 
WIP change for the POR. See, Exhibit 7 of the Cost Verification Report. 
Because inventories for all WIP rose for the POR, the effect

[[Page 18460]]

is that Dofasco overstated its costs for the period by a small amount. 
See, Analysis Memorandum, pg. 7 and Attachment 2. We have adjusted 
Dofasco's cost of manufacture accordingly.
Comment 4
    According to petitioners, despite the Department's repeated 
requests, Dofasco failed to provide an inventory cost reconciliation. 
Petitioners insist that Dofasco should have been able to reconcile its 
10 normal cost accounting product groupings to the over-1000 
Departmentally-defined ``products.'' Petitioners argue that no company 
is expected to maintain its costs using the Department's narrow product 
definition.
    Petitioners allege that Dofasco failed to prepare the necessary 
reconciliation: specifically, multiplying the reported costs by the 
quantity and reconciling the total to the financial statements. 
Petitioners state that: (1) While individual costs used by PaYs are 
derived from the same source documents as the financial statements, 
nevertheless it does not follow that per unit costs of manufacture 
(COMs) calculated by PaYs will equal the per unit costs maintained for 
purposes of the financial statements; and (2) items presented at 
verification failed to demonstrate that Dofasco had submitted fully-
absorbed product costs. Petitioners assert that, barring use of adverse 
facts available, the Department should request reconciliations again, 
and verify them.
    Dofasco argues that the PaYs system correctly accounts for changes 
in inventory, and that Dofasco has reconciled its reported costs. 
Furthermore, the Department verified these costs, by reconciling (1) 
the financial statements (which include inventory values) to the normal 
cost accounting system, and (2) the normal cost accounting system to 
PaYs. In addition, Dofasco claims that for certain ``PRODUCTS'' 
(Departmentally defined models) selected by the Department, it provided 
a detailed reconciliation of the normal cost accounting system to PaYs, 
and a reconciliation of PaYs to PRODUCT costs.
    Department's Position. In its original questionnaire and in a 
supplemental questionnaire, we asked for an inventory cost 
reconciliation, for selected models. Specifically, we asked Dofasco to 
perform the reconciliation from the per-unit cost of the product 
Dofasco records for inventory movements from work-in-process to 
finished goods inventory to the COM submitted in the COP/CV response. 
In response to this request, Dofasco provided a thorough explanation in 
its submission to the Department as to why such a reconciliation was 
not possible, explaining adequately why its ten normal, internal 
product categories for corrosion-resistant products do not lend 
themselves to a reconciliation with specific, Departmentally-defined 
models.
    Nonetheless, at verification, the company reconciled numerous costs 
from the audited financial statements, to plant operating statements, 
to Dofasco's Section D response, to the PaYs system, and to submitted 
COP/CV data. Additionally, at verification, we reviewed the cost build-
up for two specific models. See, Cost Verification Report, pp. 5-6. 
Petitioner cites Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof from Germany, 56 FR 31692, 31707 (July 11, 
1991) and the Department's statement that ``verification depends 
precisely on tying amounts reported in the responses to the company's 
internal accounting and financial statements. Failure to demonstrate 
such a relationship results in a failed verification.'' In this case, 
the Department upholds this principle. Actual cost expenditures, as 
reported in Dofasco's Section D response, have been tied to Dofasco's 
plant operating statements, financial statements, normal accounting 
records, and, through PaYs, to the submitted COP/CV. See, e.g., the 
discussion of Dofasco's variable overhead expense in the Cost 
Verification Report, pp. 11-12. Therefore, the Department determines 
that costs have been accurately captured and that the cost amounts 
reported in the response reconcile to the company's financial 
statements.
Comment 5
    Petitioners argue that Dofasco improperly calculated its interest 
expense factors. Petitioners state that Dofasco did not include certain 
expenses in the calculation of total interest expense. According to 
petitioners, Dofasco also improperly included a profit sharing figure 
in its cost of sales. Finally, petitioners maintain that Dofasco 
improperly adjusted for trade accounts receivable for the CV interest 
expense. Petitioners assert that Dofasco should conform the CV interest 
expense to its COP expense calculation.
    Dofasco contends that it did include the proper expenses in its 
consolidated interest expense calculation, and that it properly 
included profit sharing in general and administrative expenses only. 
With regard to an adjustment for trade accounts receivable, Dofasco 
argues that the Department's policy on this issue was elucidated 3 1/2 
months after Dofasco's submission of its Section D response. Therefore, 
Dofasco maintains that it was not an ``error'' by Dofasco to report the 
CV interest expense in the manner it did.
    Department's Position. The expenses that petitioners maintain have 
been excluded from the interest expense calculation have in fact been 
included in respondent's calculation of interest. See, Dofasco, Inc.'s 
response to Section D Supplemental, Exhibit Supp. I.8, ``Calculation of 
Interest'' for 1995, which shows that the expenses in question have 
been included in one of the components of Dofasco's calculation.
    With regard to the amount for profit sharing, verification exhibit 
33, page B3 shows that the cost of sales figure reported on page B1 
does not include profit sharing, but does include the cost of sales 
figure used in Dofasco's calculation shown on page A1. Furthermore, the 
cost of sales figure reported on page B1 indicates that it is a figure 
calculated before certain adjustments, including that for profit 
sharing.
    Finally, with regard to the calculation of interest expense for CV, 
we agree with Dofasco that its response methodology does not constitute 
an ``error,'' as the Department had not made clear respondents' 
requirements under the new statute at the time of Dofasco Inc.'s 
Section D submission. Nevertheless, the Department has stated in 
Certain Pasta from Italy that the statute requires interest expense to 
be computed in the same way for COP and CV, and that an accounts 
receivable offset for CV interest expense is not permitted. Therefore, 
for the purposes of calculating interest expense for the final results 
of review, we have revised Dofasco's calculation of interest expense 
for CV to remove the offset for trade accounts receivable.
Comment 6
    Petitioners state that Dofasco should treat sales through Dofasco's 
U.S. subsidiary as constructed export price sales, because Dofasco USA 
(DUSA) played a significant role in the sales process, incurred 
expenses connected with its U.S. and further manufacturing activities, 
and because the circumstances regarding ownership and control of the 
merchandise sold in the U.S. prior to delivery to customers were such 
that these sales should be considered CEP sales.
    Petitioners argue that, in the event that the Department does not 
classify all DUSA sales as CEP sales, then it must

[[Page 18461]]

at least classify those DUSA sales for which there has been further 
manufacturing as CEP transactions. Petitioners allege that in this same 
situation, the Department ruled in Certain Cold-Rolled and Corrosion-
Resistant Carbon Steel Flat Products from Korea that such sales should 
be considered CEP sales.
    Petitioners also maintain that, in the event that the Department 
does not classify all further manufactured sales as CEP sales, it must 
at least classify those DUSA sales for which the date of sale occurred 
after importation as CEP sales.
    Dofasco states that the Department properly determined that U.S. 
sales through DUSA were export price transactions. Dofasco notes that 
the Department and the Court have held that sales through a U.S. 
affiliate are export price transactions if the merchandise is sold 
directly to U.S. customers without physically entering the affiliate's 
inventory. Dofasco goes on to state that the sales constitute a 
customary commercial channel of trade, and the U.S. affiliate only 
acted as a paper processor and communications link for those sales. 
Dofasco argues that the merchandise sold did not enter DUSA's physical 
inventory for storage awaiting sale to a customer, and that Dofasco 
negotiated the prices charged and was responsible for marketing and 
sales development. Dofasco notes that the Department has held 
(including in the first review of this case) that the circumstances 
surrounding the further processing of some of the merchandise sold 
through a U.S. affiliate do not indicate that those sales were CEP 
transactions. Dofasco also stresses that the further processing was not 
undertaken on the account of the producer or exporter, or the 
affiliated party in the United States.
    Department's Position. We agree with respondent. The Department, in 
the first administrative review of this proceeding, noted that 
Dofasco's sales through DUSA were purchase price (now referred to as 
export price) transactions. The Department noted that ``while the 
Department usually finds further manufacturing of merchandise occurs in 
the context of ESP (now CEP) sales, and while 19 U.S.C. section 
1677a(e)(3), discussing adjustments to ESP, is the only explicit 
reference to further manufacturing in the statute, it would clearly be 
a mistake to define the sale as an ESP sale simply because there is 
further manufacturing.'' See, Memorandum for Roland MacDonald: 
Administrative Review of Corrosion Resistant Carbon Steel Flat Products 
from Canada: Categorization of sales of Dofasco, Inc. (``Memorandum for 
Roland MacDonald''), page 2 (July 12, 1995) (Public Version). While 
this decision was made under the pre-URAA governing statute, there are 
no differences under the post-URAA statute with regard to the statutory 
basis for this determination.
    Thus, in the first administrative review the Department based its 
decision with regard to the DUSA sales on three factors: (1) While DUSA 
took title to the steel, it did not take the steel into physical 
inventory; (2) because DUSA had no facilities in the United States, it 
was clear that the channel of delivery was directly from Dofasco to the 
customer, or to an unrelated processor of the customer's choosing; and 
(3) DUSA was nothing more than a processor of paper and communications 
link. See, Memorandum for Roland MacDonald, page 3 (July 12, 1995) 
(Public Version).
    In the current administrative proceeding, the only change in 
circumstances is the establishment of a separate DUSA office in the 
United States. Hence, the Department must review the basis of its 
earlier decision in light of this changed circumstance. Specifically, 
we must determine: (1) Whether DUSA takes physical inventory of subject 
merchandise at the new location; (2) whether the channel of delivery is 
customary (i.e., still from Dofasco to the customer); and (3) whether 
the new office performs a role more significant than that of a 
processor of documents and communications link.
    With regard to whether DUSA takes physical inventory of subject 
merchandise at the new location, Dofasco has stated for the record that 
neither Dofasco nor DUSA own or lease any U.S. warehousing facilities. 
See, Dofasco's Supplemental Sales Response, pp. 23-24 (January 18, 
1996). Petitioners do not dispute this fact. Rather, petitioners argue 
that the fact that DUSA does not own a warehouse has no legal 
significance. Instead, petitioners stress that the ``critical fact'' is 
that the merchandise is in the United States prior to being sent to the 
ultimate customer, under circumstances which warrant the Department's 
determination that such sales are CEP sales.
    Despite petitioners' assertions, as the Department noted in the 
first administrative review (Memorandum for Roland MacDonald, page 3 
(Public Version)), the Department has long required that the 
merchandise be taken into physical inventory, rather than mere 
financial (accounting) inventory. See, Certain Steel from France, 58 
FR, 37134 (1993) (sale is PP where U.S. subsidiary takes title but does 
not warehouse merchandise in the ordinary course of business); 
Polyethylene Terephthalate (``PET'') Film, Sheet and Strip from Japan, 
56 FR 16300, 16303 (1991) (sale is PP where subsidiary takes financial 
but not physical inventory). Therefore, we find no reason to reverse 
our decision based on this criterion.
    With regard to whether the channel of delivery is customary, the 
Department determined in the first administrative review that because 
DUSA has no facilities in the United States, it is clear that the 
channel of delivery is directly from Dofasco to the customer, or to an 
unrelated processor of the customer's choosing. While DUSA now has an 
office in the United States, the Department has verified for the 
current review that Dofasco's channels of delivery through DUSA remain 
the same as for the prior review period. Petitioners suggest that the 
mere existence of this U.S. office serves to establish that the ``use 
of DUSA as was done during the POR is not the customary channel of 
trade.'' See, Petitioners' Case Brief at 38. However, petitioners have 
not shown that the channel of delivery is in any way different from the 
previous review period. Indeed, there is no record evidence that 
subject merchandise is now being shipped to the U.S. affiliate (or to a 
warehouse dictated by the customer) from the subsidiary location in the 
United States, or that the channel of shipment is otherwise different 
from the first administrative period. Therefore, there is no reason to 
reverse our decision in the last administrative review based on this 
criterion.
    With regard to the last criterion, whether DUSA plays a role more 
significant than that of a processor of documents and communications 
link, petitioners make several arguments. First, petitioners state 
that, by virtue of maintaining U.S. operations, DUSA incurred 
significant expenses in connection with its activities, such as 
salaries of its personnel and general and administrative expenses to 
support them. Petitioners argue that deducting such expenses from the 
U.S. price in CEP situations is one of the statutory requirements 
intended to ensure fair comparisons in an antidumping analysis. Second, 
petitioners maintain that the record shows that DUSA was an active 
participant in the negotiating and selling process, citing letters with 
customers which are on the record of this review. Finally, petitioners 
state that certain other support functions performed by DUSA add to the 
significance of its role as a seller.
    Petitioners suggest that the existence of a U.S. operation which 
incurs

[[Page 18462]]

``significant'' expenses requires the Department, by statute, to treat 
sales through this U.S. affiliate as CEP sales in order to deduct such 
expenses from the U.S. price. However, we disagree that the level of 
the expenses, by itself, should be a criterion. Rather, the significant 
consideration is whether the U.S. affiliate's function is more than 
acting as a communications link between the unaffiliated customer and 
the exporter. We have stated this in numerous other cases in which the 
Department has considered whether there are circumstances in which 
sales through U.S. affiliates should be treated as export price (or, 
under the pre-URAA law, purchase price) transactions. See, e.g., 
Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 61 
FR 18547; Stainless Steel Wire Rod from France 58 FR 68865; and New 
Minivans from Japan 21 FR 21937. The Department's three criteria for 
determining the treatment of sales through a U.S. affiliate as EP or 
CEP are appropriate for making this determination.
    With regard to petitioners' interpretation of DUSA's role in the 
negotiating and selling process, the record evidence does not prove 
that the terms and conditions of a specific contract (see, Attachment 
I.10 of the January 18, 1996 Supplemental Questionnaire Response, APO 
Version) were negotiated by DUSA, nor does the evidence contradict 
Dofasco's explanation regarding the contract's circumstances (see, 
Respondent's Rebuttal Brief (APO Version), pg. 25). Moreover, numerous 
documents have been placed on the record, including those taken at 
verification, demonstrating DUSA's role vis-a-vis Dofasco, Inc.'s role 
in sales negotiations. See, e.g., exhibit 2 of the Sales Verification 
Report; and Attachments I.6, I.8, and I.9 of Dofasco's Supplemental 
Questionnaire Response (January 18, 1996). These documents support 
respondent's claim that Dofasco, Inc. was primarily responsible for 
conducting sales activities with U.S. clients.
    Finally, concerning petitioners' assertion that certain other 
support functions performed by DUSA add to the significance of its role 
as a seller, we believe that the affiliate's status with regard to 
title, its involvement in warehousing and further processing, and the 
performance of certain selling functions do not warrant rejection of 
Dofasco's EP classification of these sales. First, with regard to 
title, these circumstances are no different than in the first review. 
See, Memorandum for Roland MacDonald at page 3. Second, petitioners 
have not accurately described DUSA's role with regard to warehousing 
and further processing. Thus, petitioners' cite to Large Newspaper 
Printing Presses from Germany does not provide an applicable precedent. 
Finally, because the Department verified that DUSA continued to perform 
the same functions as a sales facilitator as it did during the first 
administrative review (see, Dofasco Sales Verification Report, August 
6, 1996, pg. 2), we do not regard the performance of the selling 
function cited by petitioners (see, Page 36 of petitioners' Case Brief) 
as adding to the significance of DUSA's role.
Comment 7
    Petitioners claim that Dofasco failed to report freight charges for 
numerous U.S. sales, and that by doing so, Dofasco failed to act to the 
best of its ability in preparing its response. Therefore, petitioners 
argue that the Department should use the highest freight rate as 
partial facts available for these sales, citing PVC and Polystyrene 
Framing Stock from the United Kingdom, 61 FR 51411, 51415 (October 2, 
1996).
    Dofasco asserts that petitioners' contention that it failed to 
report any freight charges for U.S. sales is wrong, because the freight 
expense is contained in computer fields other than the ones specifying 
the maximum freight charge for U.S. transactions.
    Department's Position We agree with respondents that, for the large 
majority of the sales in question, Dofasco has in fact reported freight 
charges as required by the Department. As noted by Dofasco in its 
rebuttal brief, in many instances it has reported maximum freight 
charges in the computer field for freight from Dofasco to the 
warehouse. Additionally, the Department verified that Dofasco reported 
actual freight in the computer fields for warehousing, further 
processing, and freight-out.
    However, for several of these transactions, Dofasco failed to 
report any freight charges. See, Analysis Memorandum at page 4. For 
these sales, as partial facts available we have assigned the maximum 
freight value for that destination (consistent with Dofasco's reporting 
methodology of using the maximum value for each destination), or, in 
the event there was no maximum freight value for that destination 
anywhere on the database, we have assigned the highest maximum freight 
value for any destination.
Comment 8
    Petitioners argue that the Department should deduct antidumping 
duties paid by Dofasco USA which were reimbursed by Dofasco. According 
to petitioners, the fact that Dofasco USA had more liabilities than 
assets is evidence that it must have been reimbursed antidumping duties 
paid on U.S. imports. Petitioners state that this is contrary to the 
statute.
    Dofasco contends that no evidence exists to support petitioners' 
allegation that Dofasco pays antidumping duties on behalf of Dofasco 
USA or reimburses Dofasco USA for antidumping duties. Dofasco claims 
that the language of the reimbursement provision, as well as the 
Department's interpretation of that regulation, indicates that in order 
to trigger the regulation, affirmative evidence (``evidence beyond a 
mere allegation'') must exist. According to Dofasco, because 
petitioners have failed to establish a link between intracorporate 
transfers of funds and the reimbursement of antidumping duties, the 
Department should not rule that reimbursement exists.
    Department's Position. We agree with respondents. In this case, 
petitioners have provided no evidence showing that the Dofasco directly 
pays antidumping duties or reimburses Dofasco USA specifically for such 
duties. Even if Dofasco USAs financial records could be construed to 
show that there has been an intracorporate transfer of funds, such a 
transfer is likewise insufficient evidence of reimbursement of duties. 
As the Department stated in AFBs from France, ``the antidumping law 
does not . . . prohibit  related parties  from transferring money to 
one another.'' See, Final Results of Antidumping Administrative Review: 
Antifriction Bearings (Other than Tapered Roller Bearings) and Parts 
Thereof from France, 57 FR 28360, 28371 (June 24, 1992). The Department 
clarified this point before the Court of International Trade, in 
Torrington Co. v. United States (881 F. Supp. at 629):
    Commerce states 19 CFR 353.26 mandates a deduction to USP, not when 
there is any transfer between related parties, but rather, when there 
is reimbursement of antidumping duties. Commerce asserts that it has 
consistently held that absent evidence of reimbursements, it has no 
authority to make such an adjustment to U.S. price.
    Thus, we do not find that reimbursement of antidumping duties 
exists in this case.
Comment 9
    Petitioners argue that the Department must deduct antidumping 
duties paid by the respondent or related parties, pursuant to section 
772(c)(2)(A) of the Act. Specifically, petitioners argue that

[[Page 18463]]

the phrase ``import'' used in this provision included antidumping and 
countervailing duties.
    Dofasco asserts that the Department has consistently determined not 
to deduct antidumping duties from US price and should continue to do so 
for the final results.
    Department's Position. We agree with respondents. See, CCC comment 
5 supra.
Comment 10
    Respondents allege certain clerical errors were made in the 
computer program used to calculate Dofasco's margin. Specifically, 
Dofasco claims that the Department made errors by: (1) Failing to 
follow the established product hierarchy in the model match program; 
(2) improperly calculating the weighted-average home market values 
where there are two or more most similar products in the home market; 
(3) failing to combine a customer category for Sorevco, Inc. in the 
same manner as was done for Dofasco Inc.'s customer categories 
(petitioners made the same claim); (4) erroneously including customer 
category in the model match program; (5) erroneously including sales in 
its model match which were excluded in the margin calculation program; 
(6) failing to exclude, from the margin calculation program, sales 
outside the ordinary course of trade, and those outside the window 
period (petitioners made the same claim); (7) incorrectly calculating 
entry value for those sales in which Dofasco was unable to provide an 
entry value figure; (8) including certain repetitive language in the 
program; (9) not eliminating sales of a given product to affiliated 
customers when no sales of that same product were made to unaffiliated 
customers in the pattern of price differences program; (10) performing 
an incorrect mathematical computation in calculating constructed value 
profit; (11) erroneously matching sales within the same month at 
different levels of trade before matching sales at the same level of 
trade within the 90/60 day window period; and (12) improperly including 
sales which had failed the arm's-length test in calculating indirect 
selling expenses and constructed value profit.
    Petitioners additionally claimed that the Department made a 
clerical error by including the minimum freight field for expenses used 
to calculate cost instead of the maximum freight field.
    Department's Position. We agree with all comments made by Dofasco 
and petitioners, and have corrected our program for the final results.

Stelco Inc.

Comment 1
    Because Stelco reported the cost of painting steel coils by its 
affiliate Baycoat in lieu of reporting the price charged by Baycoat to 
Stelco, petitioners urge the Department to: (i) Draw an adverse 
inference based on Stelco's failure to cooperate; (ii) utilize the most 
adverse facts otherwise available to recalculate COP and CV; and, (iii) 
use an adverse adjustment to normal value with respect to the 
comparison of nonidentical merchandise. Petitioners state the 
Department was fully justified in rejecting Stelco's use of 
manufacturing costs as the value of painting services provided to 
Stelco by its affiliate Baycoat.
    Petitioners cite section 773 (f)(2) and (3) of the Tariff Act of 
1930 (``the Act'), as amended, which states that when valuing inputs 
supplied to a respondent by affiliated suppliers the value reported for 
a transaction must be the value of such input (i.e., transfer price) 
provided such price reflects the price commonly charged in the market. 
Petitioners state that the cost of producing the input may only be used 
for a major input where it is greater than the market value. 
Petitioners assert the facts on the record of this case establish that 
(1) painting was a major input; (2) the prices charged to Stelco by 
Baycoat were at market value; and, (3) the transfer prices were higher 
than the cost of production.
    Petitioners argue that prior determinations did not bind the 
Department because of a significant change in the law. Between the time 
of the first review and the current proceeding sections 773(f) (2) and 
(3) of the Act were amended and now clearly apply to both cost of 
production and constructed value, whereas under the old law different 
rules applied. Petitioners argue that Stelco's acknowledgment in their 
submissions that prices from Baycoat were market prices establish that 
the prices were at fair (i.e., market) value.
    Petitioners also claim Stelco had more than adequate notice of the 
change in the law through the new statute, the statement of 
administrative action, the new questionnaire, and the Department's 
request for transfer prices in the supplemental questionnaire.
    Petitioners cite section 776(b) of the Act, as amended, to support 
their contention that the Department use an adverse inference. 
Petitioners state that the fact that transfer prices examined by the 
Department differed from the reported costs is compelling evidence that 
Stelco withheld transfer price information and failed to provide 
information in the form or manner requested. Petitioners argue 
Department practice is to use an adverse inference where a respondent 
has not cooperated to the best of its ability. Petitioners cite the 
Preliminary Results of Antidumping Duty Administrative Review: Granular 
Polytetrafluoroethylene Resin from Italy, 61 FR 51266, 51267 (October 
1, 1996) (Resin from Italy) and the Preliminary Results of Antidumping 
Duty Administrative Review: Roller Chain, Other Than Bicycle, From 
Japan, 61 FR 28,168, 28,169 (June 4, 1996) (Roller Chain from Japan) to 
support their contention the Department has used the most adverse 
information when choosing among alternative facts available.
    Petitioners reason that applying an adjustment factor to the 
difference in merchandise data does not constitute an adverse inference 
either. Petitioners suggest the highest difference in merchandise 
adjustment that can be added to normal value and still result in 
comparable merchandise is 20 percent of the total cost of 
manufacturing. Petitioners cite the Final Results of Antidumping 
Administrative Review: Tapered Roller Bearings, Four Inches or Less in 
Outside Diameter and Certain Components Thereof, from Japan, 56 FR 
26,054, 25,055, 25,058 (June 6, 1991), and Gray Portland Cement and 
Clinker from Mexico, Results of Redetermination Pursuant to Court 
Remand at 13 (February 1, 1996) (remand determination), CEMEX, S.A. v. 
United States, Slip Op. 96-132, LEXIS 147, at 10-11 (CIT, 1996) to 
support the use of a 20-percent difference in merchandise adjustment.
    Respondent states the Department's preliminary results on this 
issue reverses the methodology that was specifically accepted in the 
original final determination and first review. Stelco argues the 
Department's determination is unsupported by any of the usual criteria 
for changing methodologies established in prior determinations. Stelco 
asserts there has been no change in the law and no significant mistake 
in the earlier determination. Stelco cites Shikoku Chemical 
Corporation, et al., v. United States, 795 F.Supp. 417 (CIT 1992) which 
held that principles of fairness prevented Commerce from changing its 
methodology where key facts had not changed to justify a new approach 
and respondents had relied on the old method of calculating the 
adjustment. Stelco further contends that in this same review the 
Department preliminarily accepted Dofasco's use of the cost of painting 
by Baycoat. Stelco argues that

[[Page 18464]]

the invoiced prices from Baycoat are inappropriate to use because they 
have not been shown to be indicative of market prices or arm's length 
prices. Stelco states that Baycoat sells only to its two shareholders, 
Stelco and Dofasco, and therefore no unaffiliated transactions exist 
with which to establish the arm's length nature of the transactions. 
Stelco cites the Final Determination of Sales at Less Than Fair Value: 
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts 
Thereof from the Federal Republic of Germany, 54 FR 18,992, Appendix B 
(May 3, 1989) (AFB's from Germany) where the Department stated that 
lacking arm's length prices for components to compare to transfer 
prices, for CV purposes, the Department generally used the cost of the 
components as representative of the value reflected in the market under 
consideration. Stelco points out that under the shareholder agreement, 
each partner shares in the profit or loss from Baycoat at year-end. 
Stelco cites AFB's from Germany, to support its claim that when 
transfer prices from a joint venture company are used, the transfer 
price must be adjusted by any loss incurred by the joint venture 
company because the loss of the joint venture must be absorbed by the 
participants in the joint venture. Lastly, Stelco asserts if the 
Department considered paint a major input, it failed to provide Stelco 
with adequate notice and an opportunity to provide transfer price 
information.
    Department's Position. The Department agrees with petitioners that 
sections 773(f) (2) and (3) of the Act directs Commerce to value inputs 
supplied by affiliated persons at the transfer price between the 
entities provided that such a price reflects the price commonly charged 
in the market and, for major inputs, is not below the cost of producing 
the input. In the Final Results of Antidumping Administrative Review: 
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts 
Thereof from France, Germany, Italy, Japan, Singapore, and the United 
Kingdom, 62 FR 2,081, 2,115 (January 15, 1997) the Department found 
``that in the case of a transaction between affiliated persons 
involving a major input, we will use the highest of the transfer price 
between the affiliated parties, the market price between unaffiliated 
parties, and the affiliated supplier's cost of producing the major 
input.'' Stelco identified painting as a major input in its section D 
response to the antidumping questionnaire. Therefore, the Department 
agrees that painting services provided to Stelco by its affiliate, 
Baycoat, should be valued at the invoice price between the two 
companies provided that the invoice price represents a price commonly 
charged in the market. The Department agrees with petitioners that 
valuing this input at cost would only be appropriate where cost is 
higher than the transfer price. See, section 773(f)(3) of the Act. Our 
verification established that the transfer price was higher than the 
cost of painting services for sample transactions. Furthermore, Stelco 
acknowledged that Baycoat's selling prices were set at prevailing 
market rates and above cost in their response to the supplemental 
section D questionnaire response.
    Since Stelco did not report transfer prices for each control number 
as requested, we have increased the reported cost of painting by the 
average difference between the transfer price from the sampled painting 
invoices obtained at the verification and the painting cost reported 
for the final results. Section 776(a) of the Act states in part that a 
determination may be made on the basis of facts available if necessary 
information is not available on the record or if any interested party 
fails to provide such information by the deadlines for submission of 
the information or in the form and manner requested.
    The Department disagrees with petitioners that applying the ratio 
representing the difference between the cost and transfer price to the 
painting cost reported as part of the variable cost of manufacture does 
not appropriately adjust cost for the difference in merchandise 
calculation. The difference in merchandise calculation will account for 
the cost difference between paint services valued at cost and at 
transfer price by taking into account that the transfer price for 
painting exceeds the cost.
    The Department disagrees with respondent's allegation that the 
Department's preliminary results were unsupported by any of the usual 
criteria for changing methodologies established in prior determinations 
such as a change in the law or a significant mistake made in the 
earlier determination. The Department is not bound by prior 
determinations because the law changed with the enactment of the 
Uruguay Round Agreements Act which amended the Act and made affiliated 
party transactions (i.e., the transactions disregarded and major input 
rules) apply to both cost of production and constructed value, whereas 
these rules previously applied only to the calculation of constructed 
value.
    The Department disagrees with Stelco's reference to AFB's from 
Germany which Stelco contends supports the acceptance of transfer 
prices with an appropriate reduction for profits on inputs transferred 
from the affiliated party. In AFB's from Germany we compared the 
transfer prices to the cost of production and found that the cost of 
production of the affiliated inputs was higher than the transfer 
prices. The Department used cost for the affiliated inputs in that case 
because the transfer prices were below the cost of production. 
Mathematically, this was done by adjusting the transfer price upward by 
the losses at the affiliate. This is consistent with our practice in 
this case where we compared the transfer price of painting to the cost 
of painting and found that the transfer price exceeded the cost. The 
Department used the transfer price because it is higher than the cost 
of production of the major input. Section 773(f)(3) of the Act allows 
the Department to use the cost of production of a major input where it 
is greater than the transfer price.
    The Department has determined that Stelco had adequate notice of 
the change in the law through the new statute, the SAA, and through our 
request for transfer prices in the original questionnaire and the 
supplemental cost questionnaire.
    Finally, in order to be consistent in our treatment of painting 
services Baycoat provided for its other owner, Dofasco, for these final 
results, we have recalculated the input value of Baycoat's painting 
services based on transfer price. See, Dofasco's Analysis Memorandum at 
page 7.
Comment 2
    Petitioners argue Stelco's general and administrative expense 
(``G&A'') should be recalculated based entirely on the unconsolidated 
income statement. Petitioners state the Department incorrectly combined 
selected unconsolidated data with consolidated data (i.e., sundry 
income and expense) in the preliminary results and consequently 
calculated an inaccurate G&A expense rate. Petitioners state that 
Stelco started with the amount of sundry expense reported in its 
consolidated financial statements and adjusted the consolidated amount 
for certain items specifically related to other consolidated entities. 
Petitioners take issue with a consolidating entry reducing 
unconsolidated sundry expense. Petitioners claim that Stelco provided 
no reasonable explanation for why this offset to unconsolidated sundry 
expense should be allowed.

[[Page 18465]]

Petitioners state the offset is not supported by any record evidence 
and must be disallowed.
    Stelco responds that petitioners'' argument with regard to lack of 
record evidence is inconsistent with the Department's preliminary 
determination and verification report. Stelco asserts the methodology 
for calculating the sundry expense reported using the consolidated 
sundry income and expense figure as a starting point was fully 
documented in its submissions and was not identified as deficient in 
the Department's verification report. Stelco states the Department 
verified and traced all the amounts included in Stelco's G&A expense 
calculation and used these figures in its preliminary determination. 
Stelco concludes that there is no basis to resort to facts available 
since they have cooperated fully with the Department's requests for 
information.
    Department's Position. Petitioners state correctly that the 
Department's normal practice is to use G&A expenses from the 
unconsolidated income statement. See, the Final Results of Antidumping 
Administrative Duty Review: Ferrosilicon from Brazil, 61 FR, 59,407, 
59,411 (November 22, 1996) and Final Determination of Sales at Less 
Than Fair Value: Certain Hot Rolled Carbon Steel Flat Products, Certain 
Cold-Rolled Carbon Steel Flat Products, and Certain Corrosion Resistant 
Carbon Steel Flat Products from Japan, 37154, 37166 (July 9, 1993). 
However, the Department disagrees with petitioners' assertion that the 
Department randomly combined unconsolidated and consolidated G&A data 
and consequently computed an incorrect G&A rate. The Department based 
G&A on Stelco's unconsolidated data. The Department adjusted a 
component of G&A, the unconsolidated sundry income/expense account, for 
intercompany transactions which effectively overstated the balance of 
this account. The Department has determined it would be inappropriate 
to use the unconsolidated sundry income/expense account without 
adjustment because this would double count income/expenses which were 
subsequently eliminated during consolidation. During consolidation, 
profits/losses from intercompany transactions are eliminated in order 
to recognize profits/losses from transactions only with unaffiliated 
companies. For the final results, the Department has computed a G&A 
rate based on Stelco's unconsolidated G&A expenses and cost of sales, 
adjusted as noted above.
Comment 3
    Petitioners contend that Stelco USA's slitting expenses must be 
treated as a further manufacturing cost because slitting costs 
represent further processing charges incurred in the United States 
pursuant to section 772 (d)(2) of the Act. Petitioners state that 
section 772 (d)(2) of the Act requires that adjustments to U.S. price 
be made for ``the cost of any further manufacture or assembly 
(including additional material and labor), . . . .''
    Department's Position. The Department agrees with petitioners that 
certain CEP sales which were slit in the United States qualify as 
further manufacturing as defined section 772(d)(2) of the Act. 
Therefore, for all sales where the computer variable DIRSELU is greater 
than zero, we have designated the variable SALETYPE as ``FMG'' and have 
added DIRSELU to the variable FURMANU for these final results.
Comment 4
    Petitioners, citing Final Results of an Antidumping Duty 
Administrative Review: Gray Portland Cement and Clinker from Japan, 58 
FR 48,826, 48,829 (Comment 8) (September 20, 1993) state that the 
Department has held and the Court of International Trade has affirmed 
that freight incurred in moving merchandise from the U.S. port to a 
further processor should be treated as a further manufacturing cost, 
and that the Department did not do so in its preliminary results. 
Petitioners claim that this practice was affirmed in The Ad Hoc 
Committee of Southern California Producers of Gray Portland Cement v. 
the United States, 914 F. Supp. 535, 541. Petitioners conclude that for 
all sales with SALETYPE ``FMG'', the Department should add USOTREU, 
INLFTC1U and INLFTC2U to FURMANU.
    Department's Position. We agree with petitioners. There is no 
record information with regard to movement expenses as a condition of 
sale. Thus, we have made appropriate computer program adjustments for 
all sales with SALETYPE ``FMG'' to have added USOTREU, (INLFTC1U * 
EXRATE) and INLFTC2U to FURMANU.
Comment 5
    Stelco disagrees with the Department's decision at the preliminary 
results of review to exclude payments to governments other than income 
taxes (a component of general and administrative expenses) from their 
calculation of cost of sales which was used as the denominator in the 
financing expense ratio. Stelco objects to the assertion that the cost 
of sales figure it provided was not based on the actual accounting 
records of the company. Stelco asserts that its cost of sales figure is 
derived directly from its accounting records albeit in a different 
format from the published income statement which aggregates general 
ledger accounts in summary form. Stelco argues that payments to 
governments other than income taxes and corporate services (components 
of general and administrative expenses) relate directly to the cost of 
production and therefore should be included in the cost of sales 
denominator.
    Department's Position. We disagree with Stelco. Stelco argues that 
the consolidated cost of sales used as the denominator in the financing 
expense rate should include corporate services and payments to 
governments other than income taxes. Summarized in the caption 
corporate services are costs of administration, legal, information 
system and treasury services. Summarized in the caption payments to 
governments other than income taxes are non-income-based levied by 
Canadian federal, provincial, regional and municipal governments such 
as property taxes, business taxes, and capital taxes. Corporate 
services and payments to governments other than income taxes are 
periodic expenses general in nature related to the company as a whole. 
The Department has determined these expenses are properly classified as 
general and administrative expense items which should be excluded from 
cost of sales. As explained in the Final Determination of Sales at Less 
Than Fair Value: Certain Pasta from Italy, 61 FR, 30,326, 30,349 (June 
14, 1996), the financial expense rate should be calculated on a basis 
consistent with the cost of manufacturing (``COM'') figures to which 
they are applied. The reported COMs do not include general and 
administrative expenses so cost of sales should not include any general 
and administrative expenses. We have therefore recalculated the 
financing expense rate for the final results excluding corporate 
services and payments to governments other than income taxes from the 
denominator, cost of sales.
Comment 6
    Petitioners allege the Department made several errors in the margin 
program utilized in the preliminary results. Petitioners state the 
Department omitted the variable SOTHMAT at line 294 of the margin 
program when calculating TOTCOM. Petitioners argue

[[Page 18466]]

that the Department included sales which failed the related party arm's 
length test in the CV profit calculation which is incorrect since these 
sales are outside the ordinary course of trade. Petitioners urge the 
Department to exclude such sales in calculating CV profit. Petitioners 
argue that in line 1131 of the constructed value portion of the program 
that the Department used an ampersand instead of an asterisk in the 
formula. Petitioners assert the Department omitted the variable SOTHMAT 
at line 1140 of the constructed value portion of the program. 
Petitioners also state the Department added asterisks to lines 1139 and 
1143 making these lines inoperable and recommend removing the 
asterisks. Petitioners note the Department defined Stelco's total cost 
of manufacture for CV purposes as TOTCOMU whereas in subsequent lines 
of programming, however, the Department used the term TOTCOM instead. 
Petitioners advocate replacing TOTCOM with TOTCOMU in lines 1145, 1146, 
1148 and 1149 of the final margin program. Petitioners observe that in 
line 1150 the Department reduced CV by TOTCOM which was incorrect. 
Petitioners state the Department should correct line 1150 to read CV = 
TOTCV-DSELCV. Petitioners note that the Department failed to convert 
inland freight charges listed under ``INLFTC1U,'' which were reported 
in Canadian currency.
    Petitioners also claim that in implementing the CEP offset, the 
Department failed to cap the offset by the amount of U.S. indirect 
selling expenses. Petitioners recommend amending the computer program. 
However, respondent contests petitioners' claim, stating that the 
Department properly capped this offset. Additionally, respondent 
contends that petitioners' proposed correcting language attempts to 
obtain a change in calculation methodology not related to the capping 
of the CEP offset.
    Department's Position. The Department agrees with petitioners in 
all cases noted in the comment above, except the one pertinent to the 
CEP offset. The Department has thus made all appropriate corrections to 
its margin calculations for these final results.
Comment 7
    Petitioners argue that because Stelco had neither requested nor 
established entitlement to a CEP offset, the Department should not have 
made such an adjustment. To qualify for a CEP offset, state 
petitioners, referring to section 773(a)(7)(B) of the statute and the 
Statement of Administrative Action (``SAA'') at 830, a respondent must 
first establish that different levels of trade exist between home 
market and U.S. sales. Then, if the data do not provide an adequate 
basis for LOT adjustment and normal value is established at a more 
advanced stage of distribution than the CEP, the Department is required 
to reduce normal value by the CEP offset. Petitioners maintain that 
Stelco did not demonstrate all of the conditions which would entitle it 
to the CEP offset granted by the Department as a surrogate for a LOT 
adjustment. Petitioners contend that Stelco has not established that 
different LOTs exist, it has not claimed an LOT adjustment, nor has it 
requested a CEP offset. Petitioners conclude that use of a CEP offset 
was unwarranted and should not be used in the final determination.
    Respondent replies that the Department properly fulfilled its 
statutory mandate in granting Stelco a CEP offset. Respondent agrees 
that it must submit LOT data to demonstrate that it is entitled to a 
CEP offset. Once appropriate LOT data is submitted, states respondent, 
section 773(a)(7)(B) requires that the Department grant a CEP offset as 
long as two conditions are met: (1) When normal value is established at 
a level of trade which constitutes a more advanced stage of 
distribution than the level of trade of the constructed export price; 
and (2) the data available do not provide an appropriate basis to 
determine a level of trade adjustment. Respondent concludes that if the 
Department finds that the LOT data submitted by respondent satisfies 
both statutory criteria, normal value shall be adjusted accordingly.
    Respondent also contests petitioners' apparent claim that a 
respondent must claim a LOT adjustment in order for the Department to 
conduct an LOT analysis. Respondent states that section 773(a)(7)(A) 
requires the Department to pursue an LOT analysis in all instances, and 
that the Department acted properly in doing so.
    Respondent maintains that despite petitioners' claims, the record 
is replete with LOT data submitted by Stelco and that the Department 
had all the factual information it needed for its LOT analysis, and 
consequently had all the information to support its use of a CEP 
offset. Accordingly, respondent argues, the Department should reaffirm 
its decision to grant Stelco a CEP offset adjustment.
    Department's Position. We agree with respondent. Section 
773(a)(1)(B) requires that Commerce, to the extent practicable, 
establish normal value based on home market (or third country) sales at 
the same level of trade as the constructed export price or the starting 
price for the export price. If Commerce is able to compare sales at the 
same level of trade, it will not make any level of trade adjustment or 
constructed export price offset in lieu of a level of trade adjustment.
    When sales in the U.S. and foreign markets cannot be compared at 
the same level of trade, an adjustment to normal value may be 
appropriate. Section 773(a)(7)(A) provides that, after making all 
appropriate adjustments to export price or constructed export price and 
normal value, Commerce shall adjust normal value to account for any 
differences in these prices that are demonstrated to be attributable to 
differences in the level of trade of the comparison sales in each 
market. This adjustment may either increase or decrease normal value. 
Commerce will grant such adjustments only where: (1) There is a 
difference in the level of trade (i.e., there is a difference between 
the actual functions performed by the sellers at the different levels 
of trade in the two markets); and (2) the difference affects price 
comparability.
    In order to determine whether Stelco's sales in the comparison 
market are at a different level of trade than the export price or CEP, 
we examined whether the comparison sales were at different stages in 
the marketing process than the export price or CEP. We made this 
determination on the basis of a review of the distribution system in 
the comparison market, including selling functions, class of customer, 
and the level of selling expenses for each type of sale. Different 
stages of marketing necessarily involve differences in selling 
functions, but differences in selling functions, even substantial ones, 
are not alone sufficient to establish a difference in the level of 
trade. While customer categories such as ``distributor'' and 
``wholesaler'' may be useful in identifying different levels of trade, 
they are insufficient in themselves to establish that there is a 
difference in the level of trade.
    Our discussion of the specific selling functions that we examined, 
as well as our Stelco-specific findings in this regard, are contained 
in our preliminary results.
    The effect on price comparability is measured by examining price 
differences between goods sold to different levels of trade in the 
foreign market where normal value is being established. Commerce 
measures any effect on price comparability by determining if there is a 
pattern of price differences between sales at the different levels of 
trade in the foreign market.

[[Page 18467]]

    Any adjustment under section 773(a)(7)(A) will be calculated as the 
percentage by which the weighted-average prices at each of the two 
levels of trade differ in the market used to establish normal value. An 
effect on price comparability must be identified and measured by 
observed differences between prices at different levels of trade. The 
Department will isolate the price effect, if any, attributable to the 
sale at different levels of trade, and will ensure that expenses 
previously deducted from normal value are not deducted a second time 
through a level of trade adjustment.
    Only where different functions at different levels of trade are 
established under section 773(a)(7)(A)(i), but the data available do 
not form an appropriate basis for determining a level of trade 
adjustment under section 773(a)(7)(A)(ii), will Commerce make a CEP 
offset adjustment under section 773(a)(7)(B). In the case of Stelco, 
there is only one home market level of trade for the subject 
merchandise and that level of trade is different from the level of 
trade of the CEP. Therefore, Stelco's home market sales do not provide 
an appropriate basis for determining a level-of-trade adjustment. 
Moreover, we have determined that data from Dofasco (the other company 
in this proceeding with multiple levels of trade) does not form an 
appropriate basis for determining whether a level of trade adjustment 
is appropriate because none of Dofasco's home marketlevels of trade are 
sufficiently similar to Stelco's CEP level of trade. See, Stelco 
Analysis Memorandum at Attachment 1. Therefore, because Stelco's home 
market sales are at a more advanced stage of distribution than the 
level of trade of the CEP and the data available do not provide an 
appropriate basis to determine a level-of-trade adjustment, we have 
made a CEP offset adjustment. This adjustment is ``capped'' by the 
amount of indirect expenses deducted in calculating CEP under section 
772(d)(1)(D).
Comment 8
    Petitioners argue that the Department improperly excluded imputed 
expense (i.e., credit expenses and inventory carrying costs) from the 
calculation of total United States expenses for the purpose of 
determining profit on CEP sales. Petitioners state that credit expenses 
and inventory carrying costs are deducted under section 772(d)(1) of 
the Act. Accordingly, conclude petitioners, these amounts must be 
considered a part of ``total United States expenses'' and must be 
included in the allocation factor for such expenses.
    Department's Position. We agree with petitioners. Section 772(d)(3) 
requires that we deduct an amount of profit allocated to the expenses 
described in sections 772(d) (1) and (2). Section 772(d)(1) (B) and (C) 
state that the price used to establish constructed export price shall 
also be reduced by expenses that result from, and bear a direct 
relationship to, the sale, such as credit expenses, guarantees and 
warranties; (and) any selling expenses that the seller pays on behalf 
of the purchaser. We have thus corrected our margin calculation program 
to include imputed expenses in the calculation of total United States 
expenses for this purpose. In computing the total CEP profit for 
allocation, we included any below-cost sales in determining the total 
revenues earned by Stelco and excluded any sales to affiliated parties 
that were found to have been made at non-arm's-length prices.
Comment 9
    Petitioners state that section 772(c) of the Act provides that in 
calculating EP or CEP, a deduction must be made to account for duties, 
including antidumping duties, paid by the respondent or its affiliated 
party, as supported by C.J. Tower & Sons v. United States, 71 f.2d 438, 
445 (C.C.P.A. 1934). Thus, conclude petitioners, the statute requires 
that the Department must deduct antidumping duties paid by the 
respondent on U.S. sales.
    Petitioners state that in Federal-Mogul Corp. v. United States, the 
plaintiff challenged the Department's decision not to deduct estimated 
antidumping duty deposits under the predecessor provision to section 
772(c)(2)(A). Petitioners contend that the Department argued that this 
provision applied only to deduction of ``normal'' import duties. 
Alternatively, say petitioners, the Department argued that not 
deducting estimated antidumping duties (as opposed to duties actually 
to be assessed) had been its longstanding practice. The CIT affirmed 
the Department's refusal to deduct estimated AD duties, but did not 
adopt the Department's reasoning that section 772 applied only to 
``normal'' import duties, and that antidumping duties were not normal 
import duties within the meaning of the statute (813 F. Supp. 872). 
Thus, petitioners maintain that section 772 requires the Department to 
deduct any import duties (including antidumping duties) that can be 
accurately determined at the time the Department calculated dumping 
margins.
    Petitioners state that the legislative history to the URAA does not 
suggest that Congress rejected the construction of section 772(c)(2)(A) 
urged by petitioners. Petitioners continue that the Senate Finance 
Committee recognized that the Court of International Trade was 
considering this issue, and directed the Department to abide by the 
outcome of that litigation (see, S. Rep. No. 412, 103d Cong., 2d Sess. 
64 (1994)). Therefore, state petitioners, Congress did not intend to 
ratify the Department's not having treated duties as a cost in the 
URAA, but recognized that the issue would be resolved through the 
judicial process.
    Petitioners state that the difference calculated between normal 
value and EP or CEP on each sale by the Department's margin program is 
equal to the AD duties to be paid by the importer. Once this difference 
is calculated, state petitioners, it is then deducted from EP or CEP as 
a cost for use in calculating final margins.
    Respondent asserts that the Department should once again reject 
petitioners'' argument to deduct AD duties in its margin calculation 
and that the Department did not deduct AD duties from EP and CEP sales 
in the first administrative review. Respondent contends that 
petitioners failed to offer any argument as to why the Department 
should reach a different conclusion in this review. Respondent 
continues that in numerous determinations over many years, the 
Department has consistently refused to deduct AD duties from EP and CEP 
sales and should continue to do so. Respondent continues that 
petitioners argument that section 772(c)(2)(A) requires the Department 
to deduct AD duties from EP and CEP sales notwithstanding, there are no 
U.S. rulings in direct support of their interpretation. Respondent 
states that the Department has consistently rejected petitioners 
argument as supported in Carbon Steel Flat Products from the 
Netherlands (61 FR 48465 (September 13, 1996)). It states, in part, 
``it is the Department's longstanding position that antidumping and 
countervailing duties are not a cost within the meaning of 19 U.S.C. 
section 1677(a)(d). . . . Unlike normal duties, which are an assessment 
against value, antidumping duties derive from the margin of dumping or 
the rate of subsidization found. Logically, antidumping and 
countervailing duties cannot be part of the very calculation from which 
they are derived.''
    Respondent concludes that the Department's practice is clear, and 
that the CIT has consistently affirmed the its decision not to deduct 
AD duty deposits

[[Page 18468]]

from EP and CEP sales. Also, respondent states that the URAA House Ways 
and Means Committee Report and the SAA explicitly state that the new 
duty absorption provision is not intended to provide for the treatment 
of antidumping duties as a cost. Thus, states respondent, the 
Department should continue to refuse to deduct AD duties from Stelco's 
EP and CEP sales.
    Department's Position. We agree with respondent. See, CCC comment 
5, supra.

Final Results of Reviews

    As a result of our review of the comments received, we have changed 
the results from those presented in preliminary results of review. 
Therefore, we determine that the following margins exist as a result of 
our review:

------------------------------------------------------------------------
                                                                Margin  
          Manufacturer/exporter              Time period      (percent) 
------------------------------------------------------------------------
Corrosion-Resistant Steel:                                              
    Dofasco.............................     8/1/94-7/31/95         0.56
    CCC.................................     8/1/94-7/31/95         1.58
    Stelco..............................     8/1/94-7/31/95         0.55
Cut-to-Length Plate:                                                    
    Algoma..............................     8/1/94-7/31/95     \1\ 0.37
    Stelco..............................     8/1/94-7/31/95            0
------------------------------------------------------------------------
\1\ This is a de minimis margin.                                        

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and normal value may vary from the 
percentages stated above. The Department will issue appraisement 
instructions directly to the Customs Service. Furthermore, the 
following cash deposit requirements will be effective upon publication 
of these final results for all shipments of this merchandise, entered 
or withdrawn from warehouse for consumption on or after the publication 
date, as provided for by section 751(a)1) of the Act: (1) the cash 
deposit rates for the reviewed companies will be the rates for those 
firms as stated above (except that if the rate for a particular product 
is de minimis i.e., less than 0.5 percent, a cash deposit rate of zero 
will be required for that company); (2) for previously investigated 
companies not listed above, the cash deposit rate will continue to be 
the company-specific rate published for the most recent period; (3) if 
the exporter is not a firm covered in this review, or the original 
investigation, but the manufacturer is, the case deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) the case deposit rate for all other 
manufacturers will be the ``all others'' rate made effective by the 
final results of the 1993-1994 administrative review of these orders 
(see, Certain Corrosion-Resistant Carbon Steel Flat Products and 
Certain Cut-to-Length Steel Plate from Canada; Final Results of 
Antidumping Administrative Reviews, 61 FR 13815 (March 28, 1996)). As 
noted in those final results, these rates are the ``all others'' rates 
from the relevant LTFV investigations which were 18.71 percent for 
corrosion-resistant steel products and 61.88 percent for plate (see, 
Amended Final Determination, 60 FR 49582 (September 26, 1995)). These 
deposit requirements shall remain in effect until publication of the 
final results of the next administrative reviews.
    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 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)(1). 
Timely written notification of the 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 
Sec. 353.22 of the Department's regulations.

    Dated: April 2, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-9425 Filed 4-14-97; 8:45 am]
BILLING CODE 3510-DS-P