[Federal Register Volume 62, Number 132 (Thursday, July 10, 1997)]
[Notices]
[Pages 37014-37027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18114]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-201-805]
Circular Welded Non-Alloy Steel Pipe and Tube From Mexico: Final
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
Review.
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SUMMARY: On December 30, 1996, the Department of Commerce (the
Department) published the preliminary results of its administrative
reviews of the antidumping duty order on circular welded non-alloy
steel pipe from Mexico covering exports of this merchandise to the
United States by certain manufacturers. Based on our preliminary review
of these exports during the period November 1, 1994 through October 31,
1995, we found margins for all reviewed companies. We invited
interested parties to comment on the preliminary results. We received
comments and rebuttals from petitioners and from TUNA and Hylsa
(respondents). We have now completed our final results of review and
determine that the results have changed with respect to one respondent.
EFFECTIVE DATE: July 10, 1997.
FOR FURTHER INFORMATION CONTACT: John Drury, Robin Gray or Linda
Ludwig, Enforcement Group III--Office 8, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Room 7866, Washington, D.C.
20230; telephone (202) 482-0414 (Drury), (202) 482-0196 (Gray), or
(202) 482-3833 (Ludwig).
SUPPLEMENTARY INFORMATION:
Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act) are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all references to the Department's regulations are
to Part 353 of 19 CFR (1997).
Background
The Department published an antidumping duty order on circular
welded non-alloy steel pipe and tube from Mexico on November 2, 1992
(57 FR 49453). The Department published a notice of ``Opportunity to
Request an Administrative Review'' of the antidumping duty order for
the 1994/95 review period on November 1, 1995 (60 FR 55541). On
November 29, 1995, respondent Hylsa S.A. de C.V. (``Hylsa'') requested
that the Department conduct an administrative review of the antidumping
duty order on circular welded non-alloy steel pipe and tube from
Mexico. On November 30, 1995, respondent Tuberia Nacional S.A. de C.V.
(``TUNA'') requested that the Department conduct an administrative
review of this order. We initiated this review on December 8, 1995. See
60 FR 44414 (September 15, 1995).
Under section 751(a)(3)(A) of the Act, the Department may extend
the deadline for completion of administrative reviews if it determines
that it is not practicable to complete the review within the statutory
time limit of 365 days. On July 19, 1996, the Department extended the
time limits for preliminary and final results in this case. See
Extension of Time Limit for Antidumping Duty Administrative Reviews, 61
FR 40603 (August 5, 1996).
The Department is conducting this administrative review in
accordance with section 751 of the Act.
Scope of the Review
The review of ``circular welded non-alloy steel pipe and tube''
covers products of circular cross-section, not more than 406.4
millimeters (16 inches) in outside diameter, regardless of wall
thickness, surface finish (black, galvanized, or painted), or end
finish (plain end, beveled end, threaded, or threaded and coupled).
These pipes and tubes are generally known as standard pipe, though they
may also be called structural or mechanical tubing in certain
applications. Standard pipes and tubes are intended for the low
pressure conveyance of water, steam, natural gas, air and other liquids
and gases in plumbing and heating systems, air conditioning units,
automatic sprinkler systems, and other related uses. Standard pipe may
also be used for light load-bearing and mechanical applications, such
as for fence tubing, and for protection of electrical wiring, such as
conduit shells.
The scope is not limited to standard pipe and fence tubing, or
those types of mechanical and structural pipe that are used in standard
pipe applications. All carbon steel pipes and tubes within the physical
description outlined above are included within the scope of this
review, except line pipe, oil country tubular goods, boiler tubing,
cold-drawn or cold-rolled mechanical tubing, pipe and tube hollows for
redraws, finished scaffolding, and finished rigid conduit. In
accordance with the Final Negative Determination of Scope Inquiry (56
FR 11608, March 21, 1996), pipe certified to the API 5L line pipe
specification, or pipe certified to both the API 5L line pipe
specifications and the less-stringent ASTM A-53 standard pipe
specifications, which fall within the physical parameters as outlined
above, and entered as line pipe of a kind used for oil and gas
pipelines, are outside of the scope of the antidumping duty order.
Imports of these products are currently classifiable under the
following Harmonized Tariff Schedule (HTS) subheadings: 7306.3010.00,
7306.30.50.25, 7306.30.50.32, 7306.30.50.40, 7306.30.50.55,
7306.30.50.85, and 7306.30.50.90. These HTS item numbers are provided
for convenience and customs purposes. The written descriptions remain
dispositive.
Analysis of Comments Received
We invited interested parties to comment on our preliminary results
of the reviews. We received both comments and rebuttals from
petitioners, TUNA, and Hylsa. The
[[Page 37015]]
following is a summary of comments by company.
Hylsa
Comment 1: Stating that Hylsa's responses contained numerous errors
and unverifiable information, petitioners believe that the Department
should base the final results on total facts available under sections
776 and 782 of the Act. Petitioners cite numerous alleged errors and
omissions on the part of Hylsa as support for their contention that the
response as a whole should be rejected and the results based on facts
available. The examples include allegations that Hylsa did not provide
actual dates of payment and thus distorted credit costs; that it failed
to report packing expenses in either market; that it did not properly
report freight charges; that it did not properly match CONNUMs; that
the Department was unable to verify advertising and warranty expenses;
that certain sales traces contained errors; and that comparisons
between actual and theoretical weight were distortive.
In addition, petitioners state that the cost response and the
information found at verification also contained numerous errors,
specifically in the proper allocations and use of costs. The sum of the
errors and the quality of information presented, according to
petitioners, is sufficient for the Department to find that Hylsa failed
to cooperate by not acting to the best of its ability to comply with
the Department's information requests. Petitioners cite Circular Welded
Non-Alloy Steel Pipe from South Africa, 61 FR 24271 at 24274 (May 14,
1996) as precedent to support this course of action.
Hylsa maintains that the verification conducted by the Department
affirmed the overall accuracy of its responses, and that any actual
problems can be easily remedied with minor programming changes. Hylsa
maintains that it has cooperated to the best of its ability to comply
with the Department's requests for information, and that the
application of facts available is not warranted. Hylsa states that,
even if petitioners had been able to demonstrate that Hylsa had not
acted to the best of its ability to comply with the Department's
information requests, section 776(b) of the Act indicates merely that
the Department may make an adverse inference, not that it is obligated
to do so.
DOC Position: We agree with respondent that the final results
should not be based on total facts available. Section 782(e) of the Act
provides that the Department shall not decline to consider information
that is submitted by an interested party and is necessary to the
determination but does not meet all the applicable requirements
established by the Department if: (1) The information is submitted by
the deadline established for its submission; (2) the information can be
verified; (3) the information is not so incomplete that it cannot serve
as a reliable basis for reaching the applicable determination; (4) the
interested party has demonstrated that it acted to the best of its
ability in providing the information and meeting the requirements
established by the Department with respect to the information; and (5)
the information can be used without undue difficulties. Accordingly, in
using the facts available, the Department may disregard information
submitted by a respondent if any of the five criteria has not been met.
While the Department agrees that there are errors and omissions in
Hylsa's responses, we do not believe that the scope and impact of the
errors in question are sufficient to warrant the application of facts
available to the case as a whole. In Circular Welded Non-Alloy Steel
Pipe from South Africa, 61 FR 24271 at 24274 (May 14, 1996), the
Department noted that errors in the sales traces drew into question the
completeness and accuracy of the respondent's remaining sales. The
Department also noted that certain home market and U.S. sales were not
reported, and concluded that ``[t]he misreporting and inaccuracies of
the information were so material and pervasive as to make the responses
unreliable within the meaning of section 782(e)(3) of the Act.'' In
this case, the quantity and value of sales reported are not under
contention. With appropriate corrections, the Department believes that
Hylsa's responses are sufficiently usable for the purpose of margin
calculations. Pursuant to sections 776(a) and 782(d) and (e) of the
Act, the Department will use the facts otherwise available when
necessary. The Department will address each of the comments stated by
petitioners below.
Comment 2: Petitioners contend that the Department should base
Hylsa's home market credit expense on facts available. Petitioners
believe that Hylsa has over-reported or has otherwise distorted home
market credit expense in three different ways. First, petitioners
contend that the calculation of a hypothetical date of payment by Hylsa
for home market sales with multiple payment dates distorts credit
expenses in a hyperinflationary environment. Petitioners believe that
the methodology used by Hylsa is contrary to the Department's
instructions and that Hylsa had the ability to report separate payment
dates without undue burden. Second, petitioners contend that Hylsa
erred in calculating credit expenses by including the IVA (VAT tax) in
the base price for such calculations. In other words, Hylsa included
the VAT tax in the total amount due to them by their customers for the
purposes of calculating the credit expense on each transaction.
Petitioners state that section 773 (a)(6)(B)(iii) requires that the
Department deduct any taxes included in the price of a foreign like
product from normal value so that the Department calculates a tax-
neutral margin. Petitioners cite the Statement of Administrative Action
to the Uruguay Round Agreements Act (``the SAA'') (H. Doc. No. 316
(Vol. 1), 103d Cong., 2d Sess. (1994) at 827) in support of their
contention. Third, petitioners state that the calculation of the credit
expense using a 360-day year for home market sales and a 365-day year
for U.S. sales results in a similar overstatement of home market credit
expenses. Therefore, petitioners believe that the Department should not
deduct home market credit expenses from normal value, nor make a
circumstance-of-sale adjustment, but should deduct corrected U.S.
credit expenses from export price. If the Department does use Hylsa's
reported credit expense, petitioners recommend that the Department
correct for the existing problems by reducing the base rate on which
credit is calculated by the IVA and by applying a credit calculation
based on a 365-day year.
Hylsa answers, first, that it followed the Department's
instructions in the original questionnaire to calculate credit expense
on a transaction-by-transaction basis, and in a supplemental
questionnaire to calculate this expense using monthly interest rates.
Second, Hylsa contends that since it extends credit to its customers on
the IVA amount, it should be used in the credit calculation as the
Department did for the preliminary results. Hylsa cites Certain Fresh
Cut Flowers from Mexico, 56 FR 1794 at 1798 (January 17, 1991) and Shop
Towels from Bangladesh, 57 FR 3996 at 4001 (February 3, 1992) in
support of its position. Third, Hylsa states that it adjusted for the
difference in the 360/365 day credit calculations for home market sales
and that the Department verified that adjustment while examining home
market sales traces. Therefore, in respondent's view, no changes should
be made to the credit calculation methodology used by the Department in
the preliminary determination.
DOC Position: We agree in part with petitioners. Concerning the
issue of the
[[Page 37016]]
360/365 days used to calculate credit expense, the worksheet in Exhibit
27 indicates that Hylsa did make the adjustment so that it calculated
credit expense in both markets using the same number of days as the
denominator. As to the inclusion of IVA in the basis for the credit
calculation, while we disagree with petitioners' claims that this is a
tax neutrality issue, the Department believes that the methodology used
by Hylsa is incorrect and should be exclusive of the IVA. Finally, the
Department believes that the calculation of an average date of payment
for home market sales in instances of multiple payments is distortive
and contrary to the instructions of the Department (see discussion
below). Therefore, the Department has used facts available for the
credit expense as outlined below.
Hylsa's statement that the credit expense ``reflects the
opportunity cost when potential revenues from an immediate cash-for-
goods sale are exchanged for receipt of payment after some extended
period'' (Hylsa's March 11 brief at 6) supports the Department's
position on the VAT tax. The collection and payment of the IVA is not a
revenue for the company, but for the government. The calculation of a
credit expense for the company on what is plainly government revenue is
inconsistent with the intent of the adjustment.
In Certain Cut-to-Length Carbon Steel Plate from Brazil, the
Department stated that ``[i]t is not the Department's current practice
to impute credit expenses related to VAT payments. We find that there
is no statutory or regulatory requirement for making the proposed
adjustment.'' Certain Cut-to-Length Carbon Steel Plate from Brazil, 62
FR 18486 at 18488 (April 15, 1997). See also Steel Wire Rope from
Korea, 58 FR 11029 at 11032 (February 23, 1993).
Concerning the reporting of a weighted-average hypothetical date of
payment by Hylsa for certain home market sales, Hylsa has not complied
completely with the Department's requests in this matter. The original
questionnaire states in part that, when calculating credit expense, the
respondent must ``[e]xplain the calculation and any other factors that
affect net credit costs * * * `` (emphasis added). Obviously, multiple
payments will affect net credit costs, especially in economies
experiencing high inflation. Since the Department determined that
Mexico experienced high inflation during the period of review, the
proper reporting of expenses that reflect the effects of inflation is
of paramount importance.
Hylsa did report credit expense on a transaction-specific basis,
and did use monthly interest rates as requested by the Department.
However, Hylsa did not indicate that it received multiple payments
until verification. It was also at verification that Hylsa first
explained its methodology with regard to multiple payments. Of the
three home market sales examined by the Department during verification,
one of these had multiple payment dates. (See Sales Verification
Exhibit 6.) As discovered at verification, Hylsa had the ability to
report each separate payment and calculate a separate credit expense,
but chose not to do so. Given that one-third of the sales traces
examined by the Department contained multiple payments, the potential
for distortion of credit expense using Hylsa's methodology is
significant.
Section 776(b) states that the Department has the authority to use
an adverse inference in selecting from among facts otherwise available
if an interested party has failed to cooperate by not acting to the
best of its ability to comply with a request for information. The
Department believes that the failure to report multiple payments, and
the subsequent calculation of credit expense, constitutes grounds for
the use of adverse facts available under this section. Therefore, as
facts available, we calculated the lowest non-zero reported credit
expense per ton by Hylsa and used this expense in all home market sales
for purposes of calculating normal value. We have not made any
adjustments to the credit expense calculation for U.S. sales for
calculating export price.
Comment 3: Petitioners state that, in accordance with the decision
in the preliminary determination, the Department should not make an
adjustment for a steel supplier rebate.
DOC Position: We agree with petitioners, and have not altered our
decision from the preliminary determination. See Circular Welded Non-
Alloy Steel Pipe from Mexico, 61 FR 68708 at 68710 (December 30, 1996).
Comment 4: Petitioners argue that, to the extent that Hylsa acts as
the importer of record on certain of its U.S. sales of subject
merchandise and/or pays all duties due, the Department should presume
reimbursement under 19 CFR 353.26 and deduct any duties paid by Hylsa
from export price. Petitioners cite section 353.26(a) as applying
directly to Hylsa's responsibilities for the payment of antidumping
duties, stating that ``[w]hen Hylsa pays antidumping duties on its own
behalf it is a producer paying the antidumping duties on behalf of the
importer (itself) within the unambiguous meaning of 19 CFR
353.26(a)(i). There is no requirement in the regulation that the
importer and producer be separate entities.'' In arguing that the
regulation should be applied to non-separate entities, petitioners
state that ``[i]t would be ludicrous to apply the regulation where the
producer and importer are affiliated (i.e., are related closely enough
to be treated as a single entity for the purposes (of) calculating
United States price) but not apply it where the producer and importer
are a single entity in fact.'' Petitioners cite Certain Hot-Rolled Lead
and Bismuth Carbon Steel Products from the United Kingdom, 61 FR 65022
at 65023 (December 10, 1996) (prelim.) (``British Bar'') as
demonstrating that where a producer/exporter and importer are the same
entity, the Department treats them as being ``affiliated'' under the
statutory provision on duty absorption (section 751(a)(4) of the Act).
If a producer/exporter is deemed to be ``affiliated'' with itself for
the purposes of duty absorption, reason petitioners, there is no reason
why the same conclusion cannot be reached for the reimbursement
provision.
Petitioners contend that a requirement that the producer and
importer be separate entities to apply section 353.26 is inconsistent
with both the SAA and Department practice. In citing the SAA,
petitioners concentrate on the statement that Commerce has full
authority to increase duties ``[w]hen an exporter directly pays the
duties due * * *,'' and state that the regulation applies as long as
the producer pays the duties on behalf of the importer. Petitioners
also cite Color Television Receivers from the Republic of Korea, 61 FR
4408 at 4411 (February 6, 1996) as supporting their position.
Petitioners further state that the provisions for duty absorption and
duty reimbursement are separate and do not preclude the Department from
applying section 353.26. Should the Department apply section 353.26,
petitioners urge the Department to deduct the amount of antidumping
duties paid from export price as required by the regulation.
Hylsa counters that when it acts as importer of record, it does
not, under any sense of the word, ``reimburse'' itself or pay the
duties on behalf of another party. In addition, Hylsa states that any
such adjustment must be made against antidumping duties assessed and
reimbursed, rather than against cash deposits of estimated antidumping
duties. Therefore, making any adjustment at this time would be
improper.
[[Page 37017]]
DOC Position: The Department closely analyzed all sales made by
Hylsa to the U.S. during the period of review. In our analysis, we
found that none of the sales where Hylsa acted as its own importer were
sold at less than normal value. Therefore, the issue is moot in this
instance.
Comment 5: Petitioners contend that, as in the preliminary
determination, the Department should not adjust normal value for
additional inland freight. Petitioners believe that the methodology
presented by Hylsa is inaccurate and distortive, given that Hylsa could
not tie specific freight charges to certain sales, that the amount of
total additional inland freight allocated to all home market sales was
questionable due to the non-reporting of certain small freight charges,
and that additional inland freight was allocated to certain home market
sales that would not normally incur freight (e.g., pick-up by the
customer). In addition, petitioners note that the verification report
indicated that it was possible for Hylsa to tie specific freight
charges to specific sales transactions. As a result, petitioners argue
that the Department should not make an adjustment to home market sales.
For the purposes of the cost-price comparison, petitioners believe that
the Department should allocate a minimum amount to all sales where the
reported freight was zero, and increase the overall value of home
market freight by taking the percentage of such sales that had
additional unreported freight, multiplying that by the total freight
charges, and allocating the result over all sales. These extra charges
should be deducted from all home market sales in the cost-price
comparison.
Hylsa contends that while it was possible to tie specific freight
charges to individual sales transactions, the lack of computerized
records of inland freight at the time of the review would have
necessitated a level of preparation that would be unreasonable.
Furthermore, Hylsa asserts that the allocation of additional inland
freight charges to sales that would incur no freight can be corrected
easily by setting the additional inland freight field to zero and
calculating additional freight using the cost methodology advocated by
petitioners in their case brief. Finally, Hylsa states that the
methodology of allocating additional inland freight, using the
corrections mentioned above, is the only reasonable method of making an
adjustment for the freight charges incurred.
DOC Position: We disagree with respondent in part. While the
Department agrees that requiring Hylsa to manually tie specific freight
charges to sales in this proceeding would be an undue burden, due to
the lack of computer records, the problems which still exist with the
data submitted on the record render it impossible to clarify these
freight charges. Even if they could be corrected, there would still be
unacceptable distortions.
As mentioned in the verification report, Hylsa has five separate
categories of freight charges. Additional inland freight was allocated
over all home market sales, regardless of the category of freight
charge. One of the freight categories is for pick-up, which would by
definition not incur a freight charge. Therefore, the allocation of
additional inland freight to these sales is inappropriate. We also note
that the total additional inland freight figure to be allocated is
incorrect, because Hylsa did not take into account certain freight
charges for local delivery sales. While included in Hylsa's calculation
for the total freight, these local delivery charges were not reported
for individual sales. Therefore, the total additional inland freight
figure (total freight incurred by Hylsa minus total freight charged to
customer) is inaccurate. Consequently, we agree with petitioners and
are disallowing the adjustment.
Finally, we note that Hylsa does maintain computer records that
would allow the company to tie freight charges to individual sales, but
that these records are usually destroyed after a short period of time.
The Department intends to examine this issue more closely in future
reviews.
Comment 6: Petitioners argue that the Department should not adjust
normal value for either advertising or warranty expenses. Petitioners
cite the verification report as indicating that the Department was
unable to verify the accuracy of these expenses.
Hylsa argues that Verification Exhibit 25 demonstrates that the
expenses were calculated accurately and that the Department verified
their accuracy.
DOC Position: We agree with petitioners. Hylsa prepared
verification Exhibit 25 and submitted it late on the last day of
verification. As stated in the verification report, ``[t]he
verification team sampled the calculation of advertising and warranty
for this sale. After attempting to calculate advertising and warranty
expenses, the company indicated that it could not reconcile the amounts
reported for this transaction. Company officials submitted a hand-
written calculation sheet which they stated showed the correct
calculation for these expenses.'' (Sales Verification Report, sales
trace at 20.) The verifiers did not have sufficient time to check the
accuracy and completeness of the worksheet. Therefore, we are
disallowing these adjustments.
Comment 7: Petitioners assert that the Department must adjust all
home market sales prices and adjustments for A-500 pipe to a
theoretical weight basis for comparison to the U.S. price. Petitioners
point to the verification report as affirming the fact that Hylsa made
sales of A-500 pipe in one market on a theoretical weight basis and in
the other on an actual weight basis. Since the variance between actual
and theoretical weight could be as much as ten percent, petitioners
advocate a specific adjustment based on the actual size of the pipe
sold in the home market.
Hylsa counters that petitioners assume that all pipe sold in the
home market is undersized, and that petitioners wish to penalize Hylsa
for information that it does not have on actual weights. In fact, Hylsa
states that pipe sold in the home market can be undersized or oversized
and still be within tolerance specifications. Therefore, no adjustment
should be made.
DOC Position: We disagree with petitioners. Hylsa is correct in
stating that the tolerances for A-500 pipe allow for both the under-
and over-statement of weight on a theoretical basis. Information on the
record is insufficient to indicate that Hylsa systematically produces
pipe which is undersized. Consequently, we are not making any
adjustment.
Comment 8: Petitioners assert that the Department must use facts
available for both U.S. and home market packing expenses. Petitioners
note that, while Hylsa claims that it uses only three straps for
packing a bundle of merchandise, the verification team observed
identical merchandise with different numbers of straps per bundle.
Petitioners also refer to Hylsa's U.S. product brochure, which
indicates that a bundle of pipe could have between six and eight straps
(see April 22, 1996 Section A questionnaire response, Exhibit 18).
Finally, petitioners state that Hylsa had the ability to calculate
actual packing costs. As facts available, petitioners advocate that the
Department calculate one packing cost for three straps for home market
sales, and a separate one for eight straps for U.S. sales.
Hylsa states that it could not report a separate packing cost for
different types of pipe. Regardless of the number of straps per bundle,
Hylsa maintains that the costs of packing for both the home and U.S.
markets are identical. Hylsa questions the observations of the
[[Page 37018]]
verification team, and states that the problem was not brought to the
attention of company officials. Therefore, Hylsa maintains that there
are a number of scenarios that could disprove the observations of the
team. Such scenarios include the possibility that the bundles may have
been wrapped with less than the normal number of straps while the pipes
were still in process, or that the pipes were bundled with fewer straps
than should have been used. Finally, Hylsa notes that the number of
straps per bundle is eight only when the bundle in question is double-
length pipe. Since the cost of packing is the same in both markets,
Hylsa continues to maintain that no further adjustment is necessary.
DOC Position: We agree with petitioners in part. As noted in the
sales verification report at 31, Hylsa stated that ``[i]n all
instances, each bundle of pipes is supposed to have three straps.
However, during the plant and storage facility tour, we noted that two
bundles of identical merchandise had different types of packing. One
bundle had three straps, while a second one had five. Company officials
had no explanation as to why this difference existed.'' On the other
hand, the U.S. product brochure indicates that six straps per bundle
are used for normal lengths of pipe for ASTM A-53 and A-500 (Hylsa
April 22 Sec. A response, Exhibit 18 at 7 and 20) (``Hylsa uses high
strength galvanized metal straps, 1.25 in (31.8 mm) wide. Single
Length: 6 Straps (double straps on each end and 2 single straps
distributed at the middle)''). Eight straps are used for double
lengths, according to the brochure. We also note that the brochure
states that A-500 is oiled and wrapped in paper. Information on the
record therefore indicates that the number of straps (and possibly
other packing materials) is different depending upon the market. Since
the number of straps is different, it is reasonable to assume that
labor and materials costs will be greater with the greater number of
straps. Therefore, total packing costs for each market are different.
Section 776(b) states that the Department has the authority to use
an adverse inference in selecting from among facts otherwise available
if an interested party has failed to cooperate by not acting to the
best of its ability to comply with a request for information. The
Department believes that the failure to report packing costs for both
markets constitutes grounds for the use of adverse facts available
under this section. Therefore, in accordance with section 776(b) of the
Act, the Department has examined cost verification Exhibit 19 and taken
the total historical peso figures for all cost centers involved in
packing, summed the total, and divided it by the total production of
pipe and tube as derived from sales Exhibit 19. The result is a per-ton
peso cost, which we have applied as adverse facts available to home
market sales and doubled for U.S. market sales.
Comment 9: Petitioners believe that the Department should make a
circumstance-of-sale adjustment for certain differences in discounts
between the U.S. and Mexico under 19 CFR 353.56. The differences, argue
petitioners, are clearly attributable to the differences between the
two markets with respect to the higher rates of interest in Mexico and
the attendant higher cost of carrying accounts receivable.
Hylsa states that petitioners assume that discounts are adjustments
to a price which has already been determined, while in reality they
determine the actual price. Hylsa cites previous Department rulings
that categorized discounts as reductions in the prices paid by
consumers, and not circumstances-of-sale adjustments. In particular,
Hylsa points to Industrial Belts from Italy, 57 FR 8295 (March 9, 1992)
to support its position.
DOC Position: We agree with respondent, and have not made any
circumstance-of-sale adjustments for differences in discounts. As
Industrial Belts from Italy states, ``[c]ash discounts represent
reductions in the price paid by the customer; they are not circumstance
of sale adjustments.'' (57 FR 8295, Comment 3). The CIT decision in
Mantex v United States, 841 F. Supp. 1290 at 1300 (CIT 1993) also
supports this position: ``This Court has consistently interpreted the
``directly related'' standard (under section 353.56(a)(1)) to require
(an interested party) to show the item for which the claim a COS
adjustment accounts for the differences in the prices of the sales
under review. In other words, to be entitled to a COS adjustment, an
(interested party) must demonstrate a `` `causal link' * * * between
the differences in circumstances of sale and the differential between
United States price and foreign market value''.'' Petitioners have not
established this link.
Comment 10: Petitioners believe that the Department should not
compare U.S. sales to home market sales which received the co-export
rebate, and that the Department may exclude such sales because they are
not sold for consumption in the exporting country and/or are not made
within the ordinary course of trade. As proof, petitioners cite the
nature of the co-export rebate program that these sales are neither
home market sales nor sales within the ordinary course of trade. The
fact that the price is lower for such sales, conditioned upon export of
a non-subject product, is evidence enough that these sales are not
normal home market sales and should be excluded.
Specifically, petitioners argue that the program is not a rebate at
all, but a separate price list for customers that prove they have
exported the transformed product to the U.S. Therefore, the co-export
price is not ``the price at which the foreign like product is first
sold * * * for consumption in the exporting country'' within the
section 773(a)(1)(B)(i) of the Act. Petitioners reason that since the
statute does not define `consumption in the exporting country, the
Department may give that phrase meaning at its discretion within the
antidumping law. In citing Chevron U.S.A. v. Natural Resources Defense
Council, 467 U.S. 837, 842-43 (1984), petitioners argue that the
meaning of ``consumption in the exporting country'' is ambiguous and
that the Department should not apply a rigid and unchanging set of
criteria to each and every case when deciding whether or not a product
is ``consumed'' in the exporting country. Rather, the Department should
examine each case and set of circumstances with the intention of
upholding the purpose of the antidumping statute, which is to prevent
injurious price discrimination on sales to the U.S. from foreign
countries.
Alternatively, petitioners argue that co-export sales were not made
in the ordinary course of trade. In defining ordinary course of trade
as ``the conditions and practices, which for a reasonable period of
time prior to the exportation of subject merchandise, have been normal
in the trade under consideration with respect to merchandise of same
class or kind,'' petitioners assert that the normal practice for
Hylsa's sales of standard pipe is to provide different prices for the
same product in the foreign market based upon subsequent re-export of a
transformed product. Petitioners further outline a set of criteria for
consideration of whether standard pipe is outside of the ordinary
course of trade based on the criteria that the Department used in
Laclede Steel Co. v. United States, Slip Op. 95-144 (CIT, August 11,
1995), 17 ITRD 2184 at 2187. That case involved sales of circular
welded non-alloy steel pipe from Korea. Those criteria included
differences in prices, profit, the number of customers who purchase
[[Page 37019]]
the product, the types of assurances given to these customers, the
basis of how the merchandise is sold, whether the end-users of the
merchandise are different from other sales, the quantity and size of
the sales, the percentage of such sales to all sales in the home
market, and the type of markings. According to petitioners, the co-
export rebate sales differ in price, the percentage of home market
sales, profitability, and the number of customers. Additionally,
petitioners propose that dual invoicing and the recording of such sales
on the ledgers separate from other domestic sales means that the
bookkeeping system is different for these sales.
Finally, petitioners state that even if the Department does not
consider these sales to be outside of the ordinary course of trade, it
has the authority under 19 CFR Sec. 353.44(b) or (c) to exclude sales
from consideration if their inclusion would not serve the purposes of
the antidumping statute. It then states, without further elaboration,
that the exclusion of co-export sales would be consistent with the
statute in this case.
Hylsa counters that the merchandise is clearly sold for consumption
in the home market, and that such consumption occurs (i.e., a
transformation of the product) prior to exportation. Hylsa also
maintains that other aspects of the sales, such as the quality
assurance, size of pipe, etc., are the same as other home market sales.
Finally, Hylsa notes that this program has been in existence for some
time and that the Department verified it during the original
investigation without making any further adjustments. Therefore, these
are ordinary home market sales and should be used in the calculation.
DOC Position: The Department closely analyzed all sales made by
Hylsa to the U.S. and in the home market during the period of review.
In our analysis, we found that none of the co-export sales by Hylsa in
the home market were used for the purposes of calculating normal value.
Specifically, they did not occur in the same months as the U.S. sales
and were not used for matching purposes. Therefore, the issue is moot
in this instance.
Comment 11: Petitioners state that, due to its finding that Mexico
experienced high inflation during the period of review, the Department
must compare U.S. sales to home market sales made in the same month.
DOC Position: We agree with petitioners and have correspondingly
adjusted the programming to compare U.S. sales to home market sales
made in the same month.
Comment 12: Petitioners note that the home market database for
Hylsa shows certain sales that are outside of the reporting window.
Petitioners request that the Department exclude these sales from its
analysis.
Hylsa notes that these are all co-export rebate sales, and that, in
following the guidelines set forth by the Department, the first invoice
date is reported as well as the second invoice date. Hylsa explains
that it is for this reason that these sales appear to be outside of the
reporting window. Hylsa argues that the actual date of sale is the
second invoice date, which is within the reporting window; therefore
the sales should not be excluded.
DOC Position: We agree with respondent. The Department has
consistently set the date of sale as the date when all terms of the
sale are finalized. Due to the nature of the co-export rebate program,
certain items (e.g. freight) might be modified or changed at the time
that the second invoice is issued. Therefore, we are not excluding
these sales on the basis of the date of the original invoice.
Comment 13: Hylsa states that the unit prices which it reported for
U.S. sales are net of movement charges. Therefore, respondent argues
that the Department should not deduct these charges a second time.
Hylsa indicates that its questionnaire response of June 24, 1996, for
this, the third administrative review, makes plain that the unit price
on U.S. sales listings is net of movement charges. It also points to
documents observed at verification, which indicate that the invoice
format breaks out the movement expenses. Hylsa provides an equation in
its case brief which it states proves that the gross unit price is
reported net of movement charges.
Petitioners note that the record is unclear, but that Hylsa's
responses strongly suggest that movement charges are included in the
unit price. Petitioners in particular point to Hylsa's May 30, 1996
submission as making statements in two instances that, in effect, the
gross unit prices of the U.S. sales were not net of movement charges.
While petitioners acknowledge that one verification exhibit seems to
indicate that the unit price is net of movement expenses, it also
stated that just because ``a single sale (Verification Exhibit 30)
appears to be listed without freight charges * * *'' does not mean that
the Department should assume that all other U.S. sales have the same
circumstances.
DOC Position: We reviewed Hylsa's questionnaire responses, the
verification report and the accompanying exhibits, and both Hylsa's and
petitioners' briefs on the issue. We can find no record of a June 24,
1996 submission by Hylsa for this review, as it references in its March
3, 1997 brief. There is, however, a June 24, 1996 submission for the
first and second reviews. Furthermore, an examination of Hylsa's May
30, 1996 submission for this review presents an unclear picture. In
describing the gross unit price for the U.S. sales, Hylsa stated that
the gross unit price ``[r]epresents the invoiced price to the customer
for one meter of material.''
At verification, the Department examined two sales by Hylsa to the
United States. Only one of these sales shows U.S. inland freight
charges on the invoice. As Hylsa noted in its March 3, 1997 brief, the
gross unit price reported to the Department for this one sale is net of
U.S. movement charges.
For these final results, the Department will not deduct U.S.
movement expenses for this single U.S. sale. Otherwise, the Department
will not deviate from its methodology in the preliminary results of
review of deducting inland freight charges from all of Hylsa's U.S.
sales where the reported terms of sale indicated that freight was
included in the price paid by the customer. This methodology is
consistent with Hylsa's statements on the record that the gross unit
price is the priced for one meter of pipe invoiced to the customer, and
with the terms of sale reported to the Department.
Comment 14: Petitioners argue that, since Hylsa did not report
packing costs for either market, and U.S. packing costs are
significantly different from those in the home market, the Department
should assign additional packing costs to constructed value on a facts
available basis. Barring the assignment of additional packing costs,
petitioners maintain that the Department should base the entire
constructed value figures on facts available. As previously stated,
petitioners rely in part on the observations of the verification team
as written in the verification report and on Hylsa's product brochure
to note that the difference between packing costs in the U.S. and home
market could be as great as 8/3 (eight straps used for bundling as
opposed to three). Petitioners also assert that Hylsa was able to
calculate packing costs, but chose not to do so. Finally, petitioners
state that all sales that must be compared to constructed value should
receive the original investigation rate as facts available.
Hylsa asserts, first, that it was not possible to calculate packing
for each individual product. Second, Hylsa states
[[Page 37020]]
that the Department's verification team did not raise the issue of
apparently identical merchandise with different straps and that it was
thus unable to substantiate whether the bundles in question were indeed
the same merchandise or in the same stage of production. Regardless,
Hylsa states that only the total aggregate cost of packing is important
to them and that there is no difference between the packing methods
used for identical merchandise sold in both markets. In addition, Hylsa
states that its brochure indicates that eight straps are used only for
bundles of double-length pipe. Finally, Hylsa states that the
Department can calculate normal value by using packed home-market
prices to compare to a packed U.S. price since the two packing costs
are identical.
DOC Position: We agree with petitioners. As partial adverse facts
available, we have calculated an average per-ton cost of packing in the
home market (as discussed in comment 8 above) and doubled it in the
U.S. market for the purposes of calculating both normal value and
export price. Rather than having no packing cost for the U.S., we have
included a figure that is twice that of the calculated packing cost in
the home market. For Cost of Production (``COP'') and Constructed Value
(``CV''), since the cost of packing is already incorporated indirectly
into the RCOM and CVCOP figures, we have not added additional packing
to the TOTCOM but have added half of the PACKU costs to CV to reflect
the doubling of packing costs in the United States.
Comment 15: Petitioners state that, since Hylsa did not report all
freight costs, or assign the freight costs properly when it had the
means to do so, the Department should base the entire cost-price
comparison on facts available and assume that all home market sales
were made at less than the cost of production. Barring this action,
petitioners believe that the Department should assign a minimum freight
cost to certain home market sales and increase the overall freight
charges by the percentage of home market sales with additional
unreported freight and deduct this from all home market sales.
Hylsa maintains that while it is able to assign freight accurately
on a transaction-specific basis, to do so would be labor intensive and
would not be a reasonable reporting option. In addition, Hylsa believes
that ``minor'' adjustments by the Department to the reported additional
inland freight charges will correct many of the extant problems.
DOC Position: As stated above, we agree with petitioners in part.
While we agree with Hylsa that assigning additional inland freight
accurately on a transaction-specific basis would be an undue burden for
this review, we believe that the reporting of all inland freight is
distortive for the reasons cited in comment 5 above. As noted in the
sales verification report (at 19), Hylsa had the ability to accurately
report certain types of freight unrelated to the additional inland
freight. In particular, the company did not report freight charges for
local delivery. Therefore, as adverse facts available, we are
increasing the movement expenses deducted from home market sales in the
cost/price comparison by a minimum freight charge where the reported
freight charge was zero for local delivery sales.
Comment 16: Petitioners argue that respondent's cost and
constructed values should be rejected as not properly capturing
accurate costs for the period. Petitioners cite a number of alleged
problems in support of their argument. First, petitioners state that
Hylsa did not calculate monthly costs of production properly. Rather
than calculating the costs based on the cost of iron ore through to the
finished pipe production, which petitioners believe is the proper
method of calculating said costs, petitioners allege that Hylsa used
the cost of coil transferred from the flat-rolled division and built
its cost calculation from that point. Petitioners note that this does
not represent a fully loaded monthly cost of production.
Second, petitioners maintain that the adjustments to the monthly
cost of the flat coil products were based on average annual data,
rather than monthly replacement costs, and thus result in a mis-
allocation of costs. Third, petitioners argue that Hylsa did not
correctly calculate the costs for iron ore purchased from affiliated
suppliers. Petitioners cite a loss made by one supplier in one month of
1995 and the effects of inflation.
Fourth, petitioners argue that Hylsa did not include scrap costs in
raw materials but rather in overhead. Petitioners assert that this
means that the coil cost adjustments in Appendix D-10 of the November
5, 1996 submission are not being applied to a fully yielded material
cost. Fifth, petitioners note that all costs were based on a single
average monthly coil cost (for all characteristics and grades of coil),
which, the petitioners assert, means Hylsa's cost are distorted since
thinner coil used for thinner pipe costs more than thicker coil for
thicker pipe.
Sixth, petitioners maintain that the flat products division
allocated all indirect costs in 1995 based on budgeted direct costs for
that year. Petitioners note that budgeted costs for 1995 were based on
the actual costs for 1994. Petitioners point out that actual direct
costs for 1995 were available at the time Hylsa submitted its section D
response. Petitioners maintain that Hylsa should have allocated
indirect steelmaking and rolling costs using its actual direct costs
for 1995, and that the failure to use these figures distorts the
reported costs, but it is impossible to determine how much.
Finally, petitioners believe that the allocation of product-
specific costs in the tubular products division by tonnage, rather than
by processing time or some other manner that acknowledges the extra
time needed to produce small diameter pipe, distorts the tube
processing costs. The sum of these errors and omissions, according to
petitioners, materially distorts the reported costs of production and
constructed value figures to the point that it renders them unusable
for the final results. Therefore, the Department should assign to Hylsa
the margin from the original investigation.
Respondent counters by stating that, contrary to petitioners'
claims, Hylsa began its calculation with the Flat Product division's
actual costs of manufacturing steel coil in each month. The
calculation, according to Hylsa, was based on the actual amounts paid
by the Flat Products division for raw materials inputs in the current
month, as well as actual fabrication costs incurred in the month.
Respondent notes that G&A and exchange gains and losses on purchases
were added to get a fully loaded cost of manufacturing for coil for the
month. Once this cost is transferred to the tubular products division,
respondent notes that it is used as the basis for calculating the
reported cost of materials for pipe production, as well as to determine
the scrap loss at each production stage. In summary, the respondent
asserts that the calculation is based on all actual costs incurred by
Hylsa starting with raw materials purchased from outside suppliers.
Respondent also counters that the costs of a raw material supplied
by an affiliate have been properly calculated. Respondent notes that
one affiliated iron ore supplier was profitable throughout the period
and for all of 1995. Respondent notes that there was a loss in only one
month and that the loss was not due to unrealistically low transfer
prices but an unscheduled disruption of production. Respondent goes on
to point out that the suppliers unit costs were 50 percent above
average during that month, since fixed costs were allocated over a
small quantity. Respondent argues that the
[[Page 37021]]
Department has held that fixed costs should be calculated in a manner
to avoid disruption of production quantities. The respondent cites Gray
Portland Cement and Clinker from Mexico, 58 FR 47253 at 47256
(September 8, 1993) and Gray Portland Cement and Clinker from Japan, 56
FR 12156 at 12165 (March 22, 1991). Respondent argues that the
Department should examine whether the affiliate recovered its costs
over an extended period of time rather than base the affiliates
profitability on one distortive month. Since the affiliate earned a
profit on eleven of the twelve months in the POR and for the year as a
whole, respondent argues that there is no reason to disregard the
transfer prices reported by Hylsa.
Respondent also states that it properly calculated the scrap cost
based on actual cost of steel coil obtained from the flat products
division. Respondent notes that it calculated the scrap loss amount for
each process by applying the percentage scrap loss rate to the adjusted
steel coil costs. The result is ``fully yielded materials costs.'' The
fully yielded cost of actual material was reported in direct materials
costs, the respondent notes, while the fully yielded cost of materials
lost during production was included in the overhead costs of the
appropriate process and allocated to products as they passed through
the production process.
Finally, respondent states that it used the normal accounting
system and normal cost calculations for both the Tubular (regarding
allocation based on tonnage rather than time) and Flat Rolled
(regarding differentiation of coil costs by size of coil and allocation
of certain overhead costs by standard percentages) divisions in
calculating its reported costs. Respondent refers to section 773(f)(1)
of the Act as evidence that the statute generally directs the
Department to use a company's normal cost accounting system, and to
Erasable Programmable Read-Only Memories from Japan, 51 FR 39680, 39688
(October 30, 1986) as evidence that the Department is generally
reluctant to deviate from a company's normal system.
Respondent argues that it in no way hid or mis-described the
methodologies used in its normal cost calculations. In closing,
respondent notes that its normal accounting system does not result in
the amount of distortion that petitioners suggest. Respondent notes its
product-specific cost calculation does allocate overhead based on
tonnage; however, the pipe sizes in each process are limited.
Respondent argues that Hylsa does not assign the same pipe forming
costs to all sizes of pipe. Respondent contends that each forming mill
is a separate process and each handles a limited range of pipe sizes.
DOC Position: We disagree with petitioners that Hylsa's COP and CV
should be rejected. We address each of petitioners comments below.
We found that Hylsa did report the actual cost of manufacturing
coil by the flat products division and not the transfer price. It
adjusted the cost of coil manufacturing by the flat product division's
exchange loss, its G&A, and another loss adjustment from a related
supplier, since these items were not included in the flat product
division's COM.
Second, while the above-mentioned exchange loss and G&A adjustments
to COM for coil were based on annual rather than monthly data, the data
were taken from constant currency financial statements. G&A is a period
expense, so using an entire year eliminates seasonal fluctuations.
Moreover, the respondent's use of constant currency financial
statements in determining the G&A expense ratio neutralizes the effects
of inflation in the calculation.
Regarding the adjustments for loss by an iron ore producing
affiliate, we asked the respondent to report the higher of the transfer
price, market price or cost for all major inputs obtained from
affiliated parties (including iron ore). The respondent used transfer
price with one adjustment for loss. The loss adjustment was based on a
constant currency financial statement, which takes into account the
effects of inflation. The respondent noted that another supplier's loss
in one month was caused by an unscheduled disruption.
We have asked for monthly reporting in this case to account for the
effects of inflation. We have taken reported conversion costs and
indexed them to the end of the period, weight-averaged them, and then
indexed the average unit cost for each product back to the month in
question. This approach accounts for inflation and smooths out the
conversion costs over the reporting period. We therefore have allowed
Hylsa to apply the same approach to the loss adjustment by the
affiliated supplier. Since the constant currency financial statements
indicate no loss for the year, we are not making an adjustment.
With respect to the issue of scrap cost accounting, the scrap used
as input to the coil manufacturing process would be reported in direct
materials. The scrap yield costs (less related revenue) were reported
in variable overhead. The scrap yield percentage at the first stage was
divided by cumulative yield and multiplied by the adjusted input coil
costs (direct materials costs). The result was reported in variable
overhead.
Regarding the accounting for various costs, it is the Department's
practice to calculate costs based on the records of the producer if
such records are kept in accordance with the GAAP of the producing
country and reasonably reflect the costs associated with the production
of the merchandise. See New Minivans from Japan, 57 FR 21937, Comment
21 (``The Department typically allows individual respondent companies
to report the production costs of subject merchandise as valued under
their normal accounting methods and following GAAP of their home
country.'') At verification, the Department verified Hylsa's cost
methodology and, based on the information on the record, found that it
was in accordance with Mexican GAAP.
We found at verification that Hylsa's pipe and tube division keeps
in its records one cost for hot-rolled coil. Hylsa's flat product
division's reported costs were based on its accounting system.
Therefore, the allocation of indirect costs is based on Hylsa's books
kept in the normal course of business. Regarding allocation of product-
specific costs on the basis of tonnage rather than time, based on the
information on the record, we found that Hylsa's methodology was in
again accordance with Mexican GAAP. In all three cases, we found no
evidence that this methodology materially distorts the production costs
for sales during this period of review. However, we intend to continue
to examine these issues closely in future reviews.
The respondent also used surface area to allocate zinc costs. Once
again, the Department normally calculates costs based on the records of
the producer if such records are kept in accordance with the GAAP of
the producing country and reasonably reflect the costs associated with
the production of the merchandise.
For the above-mentioned reasons, the Department agrees with
respondent and has used the submitted cost of production figures
Comment 17: Petitioners argue that the Department should reject
Hylsa's COP/CV response as unverified. Petitioners state that at the
outset of verification Hylsa submitted a revised cost database that
allegedly corrected errors. Petitioners note that this database did not
correct an error in production quantities identified by the Department
at verification. Petitioners state that the Department could not
[[Page 37022]]
verify the first database, after which Hylsa submitted another database
which also corrected other un-described minor errors. Petitioners argue
that it is the Department's policy not to accept ``substantially new''
information at verification. Petitioners cite as precedent Circular
Welded Carbon Steel Pipes and Tubes from Thailand, 51 FR 3384, 3386
(January 27, 1986). Petitioner note that the Department's regulations
state that new factual information will not be accepted more than 180
days after the initiation of the review. Petitioners assert that the
Department should therefore base the final results on facts available.
Respondent counters that its errors were not intentional and do not
call into question the integrity of Hylsa's response. Respondent notes
that the product specific cost calculation, used to calculate
individual pipe product costs, was not operational during 1995 because
of a change in Hylsa's accounting system. Respondent asserts that to
report costs to the Department Hylsa had to convert the product
specific cost calculation to work with new accounting numbers on the
new system, in place of old accounting numbers, and that this matching
process took a lot of effort. Respondent notes that for a variety of
reasons Hylsa was unable to completely check all account conversions
before verification. Respondent goes on to note that some minor
mistakes were discovered and promptly brought to the Department's
attention. The respondent further argues that in the end it was able to
provide corrected cost calculations. Respondent cites Ferrosilicon from
Brazil, 59 FR 732, 736 (January 6, 1994) as precedent for accepting
corrections to errors ``as long as those errors are minor and do not
exhibit a pattern of systematic misstatement of fact.''
DOC Position: We disagree with petitioners that Hylsa's cost
response should be rejected as unverified. The practice of the
Department is to accept minor corrections at the start of verification.
When we received the first revised database at the outset of
verification, Hylsa noted that it contained all minor error corrections
which were due mainly to the account number conversion as cited by
respondent above.
The Department accepted a revised database (fixing the first and
second set of minor errors, as well as the production quantity error)
from the respondent, since the first and second set of errors were
minor in nature and the production quantity error appeared to be
inadvertent. In Ferrosilicon from Brazil, the Department found that the
respondents mistakes found during the course of the investigation, when
taken as a whole, did not support a claim of respondent's non-
cooperation. The Department also stated in that case that it followed
its practice of correcting errors found at verification as long as
those errors are minor and do not exhibit a pattern of systemic
misstatement of fact. Therefore in the present case, we are continuing
to use Hylsa's revised cost database.
Comment 18: Petitioners assert that Hylsa misreported G&A expenses
by reporting the G&A only for the Tubular Products division rather than
the company as a whole. Petitioners cite to the Cost Verification
report at 2 and 36-37. The petitioners note that Hylsa did this even
though Hylsa claims that for coil cost reporting purposes the Tubular
and Flat Product divisions are not separate entities. Petitioners argue
that it is the Department's policy to use the G&A for the entire
operating entity. Petitioners believe that G&A has thus been
misreported, and asserts that if the Department does not base the final
results on facts available, it should adjust G&A costs based on the
reported unconsolidated G&A for Hylsa and corporate charges from the
parent companies.
Hylsa counters that it reported G&A expenses on a ``layered''
calculation that allocated G&A expenses for each company and division
over the sales to which those G&A expenses related. Hylsa argues that
petitioners' argument mis-describes Hylsa's G&A calculation and is also
contrary to the Department's established practice.
Hylsa states that there may have been some confusion due to the
fact that the allocated G&A expenses of the Flat Products division were
not included in the G&A expenses reported in the original cost
submission. However, Hylsa states that the G&A expenses related to the
Flat Products division were included in the cost of the coil produced
and subsequently included into the Tubular Products division's cost of
materials. Furthermore, Hylsa states that the Department has never held
that G&A expenses at all levels of a corporation should be lumped
together and allocated over the total cost of goods sold.
Hylsa asserts that the Department has routinely adopted a layered
approach in the past that allocates G&A expenses at each corporate
level over the cost of goods sold at the same level, citing Flat Panel
Displays from Japan, 56 FR 32376, 32398-99 (July 16, 1991) as an
example. Therefore, Hylsa argues that there is no basis for rejecting
the G&A calculation.
DOC Position: We agree with petitioners that an adjustment to
Hylsa's G&A is necessary. In the preliminary results of this review, we
calculated an adjusted G&A as follows: Hylsa's unconsolidated G&A less
corporate charges from Hylsa's parents, divided by Hylsa's
unconsolidated cost of goods sold; plus a portion of the two parent
companies' G&A (as calculated by Hylsa). We allowed the deduction of
corporate charges from Hylsa's G&A since we were separately including a
portion of each parent's G&A into the calculation. The Department's
questionnaire stated that G&A expenses relate to the activities of the
company as a whole rather than to the production process alone. It also
stated that Hylsa should include an amount for administrative services
performed on the company's behalf by its parent company. For these
reasons, we are continuing to make the adjustment, as describe above,
that we made in the preliminary results of this review.
Comment 19: Petitioners argue that Hylsa did not report costs for
adding lead to the galvanizing pot and for amortized costs of replacing
the pot. Therefore, the petitioners assert that an appropriate
adjustment to the reported galvanizing costs in COP and CV is
necessary.
DOC Position: We agree with petitioners that respondent did not
include these costs. In the preliminary results of this review, we made
an adjustment to variable overhead in COP and CV to account for these
costs. We have continued to make this adjustment in this final
determination.
Comment 20: Petitioners maintain that the Department must adjust
the July 1995 costs for capitalized fixed costs for Plant 2.
Specifically, petitioners believe that Hylsa did not include any fixed
costs for this plant due to it being in a start-up period. Therefore,
the Department should substitute fixed costs for a period at the end of
the start-up period in accordance with section 773(f)(1)(C)(iii) of the
Act. Otherwise, July 1995 costs are understated.
Hylsa responds that it reported the July 1995 costs according to
its normal accounting practices and Mexican GAAP. Under the statute,
the Department is required to use the costs as recorded in a
respondent's normal accounting records. Since Hylsa reported the costs
using its normal accounting records, there should be no adjustment.
Finally, Hylsa argues that the revision advocated by petitioners would
have an ``insignificant'' effect upon the Department's calculation.
However, should the Department decide to apply December 1995 costs
to
[[Page 37023]]
the July coils, Hylsa believes that the Department should restate the
nominal December costs to eliminate the effects of inflation.
DOC Position: We agree with petitioners. It is the Department's
practice to calculate costs based on the records of the producer if
such records are kept in accordance with the GAAP of the producing
country and reasonably reflect the costs associated with the production
of the merchandise. In this case, the costs to produce the merchandise
for July are not fully reflected in reported costs, since no fixed
costs are reported for plant #2 in July. After a further review of
verification exhibits, we have found that products were also sourced
from plant #2 in other months as well and no fixed costs were reported
for those months either. The first month for which fixed costs are
reported by Hylsa is in December.
While this practice appears to conform with Mexican GAAP, we
determine that it does not reasonably reflect the costs associated with
production of the subject merchandise. Since this is the only
information we have as to the fixed costs of plant #2, we have used the
December unit fixed costs as a surrogate for July and other months for
which no fixed costs were reported. Even if the effect of this
adjustment is insignificant as respondent argues, we are still making
the adjustment to ensure that all costs are reasonably reflected. In
agreement with respondent, we have indexed these costs back to each
applicable month by the CPI, which is used in other indexing throughout
this review. The increase in unit coil costs in each month was then
further yielded by the flat products division's exchange loss and G&A
and the further loss adjustment made by Hylsa. The total increase in
coil costs after other yields was added to the reported cost of
manufacturing.
TUNA
Comment 21: As with Hylsa, petitioners argue that the Department
should presume reimbursement on the part of TUNA to Acerotex, since the
two parties are affiliated and TUNA apparently exercises control over
the operations of Acerotex. Additionally, petitioners state that
Acerotex has virtually no other function in U.S. sales other than to
post the cash deposit for estimated antidumping duties. In return for
this function, Acerotex receives a commission that is far less than the
amount of cash deposits posted. Because mechanisms for reimbursement
exist and the fact that TUNA can exercise control over Acerotex (and
thus manipulate prices in such away that the result would be
circumvention) petitioners argue that the Department should collapse
the two entities into one for the purposes of reimbursement analysis
and presume reimbursement. Petitioners cite Color Television Receivers
from the Republic of Korea, 61 FR 4408 at 4411 (February 6, 1996) in
support of their contention.
TUNA states that the Department did a thorough examination of
Acerotex's books and found no evidence of reimbursement or an agreement
to reimburse. TUNA further states that presuming reimbursement based on
affiliation or what might happen in the future is improper as a matter
of law. In addressing Korean TVs, TUNA states that the citation does
not support petitioners' position but in fact supports its contention
that the Department cannot presume reimbursement.
DOC Position: We agree with respondent. Section 353.26 of the
Department's regulations requires the Department to deduct from United
States price (now EP or CEP) the amount of any antidumping duty paid,
or reimbursed, by the producer or exporter, thereby increasing the
amount of the duty ultimately collected. 19 CFR 353.26(a) (1996). The
Department has interpreted this regulation as applying regardless of
whether the importer is affiliated to the producer or exporter.
As the Department stated in Korean TVs, however, ``[t]his does not
imply that foreign exporters automatically will be assumed to have
reimbursed related U.S. importers for antidumping duties by virtue of
the relationship between them.'' 61 FR at 4411. The regulation requires
``evidence beyond mere allegation that the foreign manufacturer either
paid the antidumping duty on behalf of the U.S. importer, or reimbursed
the U.S. importer for its payment of the antidumping duty.'' Federal-
Mogul Corp., 918 F. Supp. at 393 (citing Torrington Co. v. United
States, 881 F. Supp. 622, 631 (CIT 1995)).
In the present review, we found no evidence of inappropriate
financial intermingling between TUNA and Acerotex. The Department
verified that Acerotex is responsible for all cash deposits.
Petitioners are correct that Acerotex had established a general ledger
provision in its accounting records with respect to antidumping duties.
However, we found no evidence that this account was in any way related
to reimbursement of these duties.
In Korean TVs, the Department specifically stated that it would not
presume reimbursement between affiliated parties absent a clear and
irrefutable reimbursement agreement between them. The Department found
neither evidence of an agreement between TUNA and Acerotex for
reimbursement of antidumping duties, nor the actual reimbursement of
these duties between the two affiliated parties. Collapsing the two
companies together for the purposes of reimbursement, as petitioners
advocate, would be contrary to past practice. While the Department does
sometimes ``collapse'' affiliated parties for purposes of the margin
calculation, the Department has consistently treated such parties as
separate entities when examining the question of reimbursement.
Consequently, we are not presuming reimbursement.
Comment 22: Petitioners state that the Department must compare U.S.
sales to home market sales made in the same month, due to the effects
of high inflation.
TUNA states that, should the Department index for sales that are
not within the same month, it should use the index used in indexing
costs and also index the VCOM used to calculate the DIFFMER adjustment.
DOC Position: We agree with petitioners, and have adjusted the
programming accordingly. See also Comment 11. Because we matched each
U.S. sale to home market sales in the same month, all VCOM and DIFFMER
figures properly reflect costs for that month. Therefore, we are not
making any further adjustment.
Comment 23: Petitioners state that the Department should reaffirm
its preliminary determination and not grant a level-of-trade
adjustment. Petitioners state that the Department was correct in
finding that there was not a ``consistent'' price differential between
home market sales at different levels of trade. While there may have
been differences, they varied greatly from month to month and did not
indicate a consistent pattern of price differentials over the entire
POR, even adjusting for inflation.
TUNA argues that petitioners are incorrect and that information in
its case brief demonstrates that there is in fact a consistent price
difference based on different levels of trade.
DOC Position: We agree with petitioners. While we found that two
distinct levels of trade exist, our analysis does not show a pattern of
consistent price differences between the two levels. In fact, the
differences fluctuate greatly from month to month. Therefore, we are
not changing our position from the preliminary results of review.
Comment 24: Petitioners argue that the Department's position in the
[[Page 37024]]
preliminary determination of excluding home market sales with missing
or negative values from consideration was incorrect. Instead,
petitioners argue that such sales should be based on facts available.
Petitioners believe that the verification of TUNA uncovered numerous
small errors and omissions, which in their totality compel the use of
facts available.
TUNA responds that the Department's treatment of home market sales
with missing or negative values is consistent with past practice and
reasonable. Therefore, no changes should be made. TUNA notes that the
sales disregarded are those with zero values in the QTYH and GRSUPRH
fields, and that the total number of sales under consideration is
seven; an extremely small number in comparison to the entire home
market data set. Finally, of the seven with missing values, TUNA notes
that none of these was used in the calculation of normal value.
Therefore, petitioners' statement that it was impossible to state what
prejudicial effect these sales would have is incorrect.
DOC Position: We agree with respondent. While the Department did
discover small errors and omissions during verification, most of these
were corrected easily and do not merit, in our opinion, the use of
facts available (except as otherwise noted). Finally, the seven sales
in question were not used in the calculation of normal value since they
did not match in the month of a U.S. sale and thus have no impact on
the margin. Therefore, this issue is moot.
Comment 25: TUNA contends that the Department erred in conducting a
sales-below-cost investigation. The basis for this error, according to
TUNA, is that petitioners' request was untimely. TUNA takes issue with
the Department's August 7, 1996 decision memorandum regarding the
initiation of this cost investigation, particularly with the
Department's decision that TUNA's initial section A, B and C responses
were both untimely and incomplete and therefore the 120-day deadline
for filing a below-cost allegation did not apply (19 CFR 353.31(c)(1)).
TUNA contends that its responses were timely and complete, and that
they were filed prior to the allegation of sales below cost. Finally,
TUNA states that petitioners failed to preserve their right to submit a
cost allegation by failing to submit an extension request prior to the
expiration of the 120-day deadline.
Petitioners claim that the Department properly initiated a sales-
below-cost investigation. First, petitioners state that the cost
investigation has already proven the validity of the initial
allegation. Second, petitioners state that portions of the filing made
by TUNA occurred subsequent to the expiration of the 120-day deadline.
Using TUNA's logic, petitioners claim, any respondent that delays its
filing until after the expiration of the 120-day time limit is immune
from a below-cost investigation.
DOC Position: We agree with petitioners that its allegation was not
untimely. As stated in our cost initiation memorandum of August 8,
``[w]ith respect to the respondent's claim that petitioners''
allegation was untimely filed, we note that TUNA's questionnaire
response was not received until after the 120-day deadline for COP
allegations set out by 19 CFR 353.31(c)(ii).'' The Department's
established practice in such situations is to use its discretion in
determining what constitutes a reasonable time limit for making a sales
below cost allegation. See Certain Forged Steel Crankshafts From the
United Kingdom, 60 FR 52150 at 52153 (Oct. 5, 1995). See also
Memorandum from Linda Ludwig to Richard Weible, August 8, 1996 at 3).
Therefore, the cost investigation was properly initiated.
Comment 26: TUNA asserts that the Department erred in disregarding
certain below-cost sales without first determining whether all costs
were recovered ``within a reasonable period of time.'' TUNA states that
the margin program used by the Department had no test for determining
recovery of costs, and that the Department should include program
language that will perform the test and account for inflationary
effects.
Petitioners state that the Department properly applied the test in
the margin calculation program, and has already accounted for the
effects of inflation by having monthly historical costs indexed to
December, summed, averaged, then indexed back by month.
DOC Position: We disagree with respondent. As we stated in our
preliminary results, ``[w]here 20 percent or more of a respondent's
sales of a given product during the POR were at prices less than the
COP, we found that sales of that model were made in `substantial
quantities' within an extended period of time, in accordance with
sections 773(b)(2) (B) and (C) of the Act, and were not at prices which
would permit recovery of all costs within a reasonable period of time,
in accordance with section 773(b)(1)(B) of the Act.''
Section 773(b)(2)(D), cited by TUNA in its case brief, states the
following: ``Recovery of costs.--If prices which are below the per unit
cost of production at the time of sale are above the weighted average
per unit cost of production for the period of investigation or review,
such prices shall be considered to provide for recovery of costs within
a reasonable period of time.'' This section therefore defines
``reasonable period of time'' as outlined in section 773(b)(1)(B) as
being the period of review or investigation.
In a non-inflationary economy, the Department calculates a single
weight-average cost of production per product for the entire POR. By
inference, any sales which are below the per unit cost of production at
the time of sale would remain below the weighted average per unit cost
of production for the POR, since the cost of production would not
change over the POR. The only time that the cost of production might
change within the same POR is in cases where a respondent has provided
multiple costs of production per product within a single POR. In such
instances, sales below the per unit cost of production for one reported
cost period might be above the average per unit costs for the entire
POR.
In this case, TUNA did report multiple per unit costs for the same
product. Specifically, in accordance with instructions from the
Department, TUNA reported monthly per unit costs for each product due
to the effects of high inflation. However, as noted by petitioners, the
Department did index each of these per unit costs for inflation and
then calculated a weight-average, per unit cost for the POR as it would
normally do in a non-inflationary review. Therefore, the Department has
already compared individual home market sales to a weighted average
cost for the entire POR. Thus, as explained above, we have performed a
recovery of cost test which takes into account the effects of
inflation. For these reasons, no further test is necessary.
Comment 27: Petitioners state that the COP and CV in the final
results should be based on facts available, saying that problems found
at verification render TUNA's cost and CV data unusable. Petitioners
note that TUNA allocated finishing line costs on the basis of weight,
since TUNA claimed that finishing takes the same time regardless of the
diameter for each pipe, since each has the same length. Petitioners
argue that this proposition is wrong. The petitioners assert that while
each individual pipe may have the same length, pipe of different
diameters have different total lengths per ton and a different number
of pieces per ton. Therefore, the petitioners assert that smaller
diameter pipe will require more finishing time and expense. Petitioners
argue that despite the fact that the
[[Page 37025]]
Department found all costs are being absorbed on a macro basis, those
costs are being allocated inaccurately in a way that benefits TUNA and
prejudices an accurate dumping margin calculation. The petitioners note
the same problem exists for threading line expenses. The petitioners
argue that TUNA originally claimed that it allocated these costs by
time, but now states that such an allocation is not possible because
time is not recorded by diameter. Petitioners assert that TUNA could
have allocated threading time over the total number of pieces threaded,
which would have provided a more accurate allocation than weight.
Petitioners further state that varnishing line allocations were also
based on weight and suffer the same defect as threading and finishing
allocations. The petitioners argue that the amount of time it takes to
varnish a particular type of pipe depends on either the number of
pieces varnished or the surface area of the pipe, further arguing that
an allocation based on number of pieces varnished would be the most
accurate.
Petitioners further assert that TUNA rounded zinc consumption,
which may have caused an under-or over-allocation of galvanizing costs.
In addition, petitioners note that when the Department found that it
could not reconcile TUNA's reported packing costs with those in the
sales response, TUNA revised the cost exhibit to match the figures in
the sales response. The petitioners argue that TUNA incorrectly based
its packing labor on historical rather than indexed replacement costs.
Also, petitioners argue that TUNA indexed coil prices using the
consumer price index rather than the wholesale price index. Petitioners
assert that since wholesale prices were growing faster than consumer
prices during the period, the use of the consumer price index tends to
understate the indexed monthly costs. The petitioners argue that the
Department generally prefers the wholesale or producer price indices
for costs other than labor costs. The petitioners assert that if the
Department does not base the final results on the facts available, it
should re-index costs using the wholesale price index.
The petitioners assert that these problems are not insignificant
and seriously prejudice the calculation of COP and CV. The petitioners
argue that the Department should determine that the necessary
information is not on the record and that COP and CV could not be
completely verified as a result, and therefore the petitioners further
assert that the Department should base its final results on facts
available pursuant to sections 776(a) and 782(e) of the Act.
TUNA asserts that, except for a few minor errors, the Department
verified the accuracy of the reported information. TUNA states that use
of weight-based allocations of fabrication expenses is reasonable and
has been used by the Department in the past. TUNA cites Certain Welded
Stainless Steel Pipes from Taiwan, 57 FR 53705 (November 12, 1992), in
which, TUNA notes, the Department allocated direct labor and factory
overhead costs based on the relative weight of each pipe. TUNA asserts
that the Department concluded that allocating fabrication expenses
equally over production tonnage was a reasonable allocation base
because these costs are primarily a function of tonnage, not steel type
or size. TUNA further notes that in its final determination in Pipe
from Taiwan, the Department stated that such an allocation did not
materially affect the cost calculation because labor and factory
overhead represented a small part of the total cost of production. TUNA
also cites Welded Stainless Steel Pipe from Malaysia, 59 FR 4023 at
4026-27 (January 28, 1994), in which the Department determined that
allocation of processing costs was reasonable. TUNA argues that the
Department's conclusion in past proceedings that a weight-based
allocation is reasonable applies equally in this review. TUNA notes
that the cases cited are also for welded pipe. TUNA also notes that the
costs involved represent a small part of both the total processing
costs and total cost of production.
Furthermore, TUNA argues that there is no evidence that the use of
weight-based allocations is distortive. TUNA further notes that its
methodology is used in its normal course of business. TUNA argues that
the unsupported theory that allocating fabrication expenses might be
distortive does not provide a legitimate basis for rejecting its
methodology. TUNA cites The Timken Company v. United States, 809 F.
Supp. 121, 124 (CIT 1992), in which the court rejected petitioner's
argument that respondent's allocation methodology should be rejected
because petitioner offered no evidence to show that Koyo's information
was unreliable, nor had petitioners offered any data more probative
than Koyo's. In addition TUNA notes that the fact that there might be
other equally valid ways to allocate fabrication expenses does not
provide a legitimate basis for rejecting TUNA's verified response. TUNA
also asserts that the Court of International Trade has stated that
allocation is necessarily an inexact science and is simply a way to
estimate costs incurred by the firm to manufacture the product. Such
costs vary even among firms in the same industry (Floral Trade Council
v. United States, 822 F. Supp. 766, 722 (CIT 1993)).
Concerning zinc, TUNA maintains that any distortion created by the
rounding of its zinc consumption is immaterial. TUNA notes that there
is no evidence to conclude that consumption was systematically rounded
up or down and that rounding caused any inaccuracy. TUNA argues that
even in the worst case scenario the effect on materials costs per
metric ton would be negligible.
TUNA argues that petitioners misinterpret the verification of its
packing expenses. TUNA asserts that it based its packing costs on
historical costs after conferring with the Department. As to the
inflation indices, TUNA states that the index used is the same as that
used under Mexican GAAP to prepare annual financial statements and the
same as it uses in the ordinary course of business. In addition, TUNA
asserts that petitioners have no evidence that its index is inaccurate.
DOC Position: We disagree with the petitioners' contention that the
methodologies used by TUNA to prepare its COP/CV responses warrant
wholesale rejection of those responses and the use of facts available.
Section 776(a)(1) of the Act states that if necessary information is
not available on the record, the Department ``[s]hall, subject to
section 782(d), use the facts otherwise available in reaching the
applicable determination under this title.''
We conducted numerous tests, described in our cost verification
report, which supported the overall reasonableness of the reported
data. Since TUNA's reported costs are in general reliable, we find that
the application of total facts available is not warranted. Below, we
discuss each of the points raised by petitioners as enumerated above.
Regarding the allocation of finishing line, threading line, and
varnishing line costs on the basis of weight, we agree with respondent.
In this instance, the costs at issue represent only a small portion of
the total production cost of the subject merchandise. Thus, there is no
evidence on the record of this review that would suggest that TUNA's
normal allocation method would materially distort costs in this review
period. Moreover, the Department's December 17, 1996, cost verification
report indicates that adequate records of time by diameter were not
kept by TUNA for threading and varnishing and, therefore,
[[Page 37026]]
it was not possible for the company to allocate costs in the manner
suggested by petitioners. Accordingly, we find TUNA's allocation
methodology is reasonable in light of the specific circumstances of
this case.
With regard to zinc consumption, we agree with respondent. Even if
the zinc consumption was overestimated as petitioner contends, the
effect on the company's total zinc material costs would be negligible.
With regard to the packing labor being reported on a historical
basis, we disagree with petitioners. For purposes of cost, the packing
labor is deducted from other costs and reported separately in a packing
field. When this deduction is made, the other conversion costs are on a
historical basis (reported in the currency value of the month in which
they are incurred); therefore, the packing labor must also be on a
historical basis for a proper deduction.
Finally, regarding the use of the consumer price index for indexing
coil costs, we agree with respondent. We found that TUNA uses the
consumer price index in its normal course of business and it is
required by Mexican GAAP to prepare constant currency financial
statements. As such, the consumer price index has been used throughout
the response for materials costs, conversion costs, G&A, and interest.
We do not find it unreasonable to use the index accepted by Mexican
GAAP to index costs in this case.
Comment 28: Petitioners state that the Department should adjust
July 1995 materials cost for a credit that did not relate to raw
materials purchases, as it did in the preliminary determination.
DOC Position: We agree with petitioners and have continued to make
the adjustment that we made in the preliminary results of this review.
Comment 29: Petitioners note that TUNA amortized major maintenance
and shutdown costs over the remainder of the year and that, at
verification, TUNA provided a reallocation of those costs to months in
which they were incurred. The petitioners urge that the Department use
reallocated costs if it relies on TUNA's submitted costs for the final
results.
DOC Position: We agree with petitioners. TUNA submitted a revised
cost database (containing the reallocated major maintenance and
shutdown costs to the months in which they were incurred) after
verification and before the preliminary results. We used the
reallocated costs in our preliminary results of review and have
continued to use them in this final results of review.
Comment 30: Petitioners state that the Department should base G&A
on TUNA's G&A, rather than the rate for all group companies. The
petitioners note that for the preliminary results, the Department
calculated a revised G&A percentage, and petitioners assert the
Department should apply this rate in the final results as well.
DOC position: We agree with petitioners and, as in the preliminary
results of this review, have continued to use the revised G&A (for TUNA
only) percentage.
Comment 31: Petitioners assert that TUNA recorded all foreign
exchange rate gains and losses as part of financing costs and was
unable to differentiate foreign exchange gains and losses on raw
materials purchases from other types of foreign exchange gains and
losses. Therefore, petitioners state that all exchange rate gains and
losses should be excluded from the calculation of interest expense.
TUNA contends that it properly accounted for exchange rate gains
and losses in the interest expense calculation. TUNA points to the cost
verification report as affirming that it had excluded gains or losses
relating to receivables from the interest expense calculation, citing
cost verification Exhibit 37 as illustrating how gains and losses
relating to carrying receivables were excluded from the calculation.
TUNA notes that it removed from the total net interest expense the
gain/loss in monetary position and on foreign exchange related to
accounts receivable. TUNA concludes that petitioners have apparently
misinterpreted the line item ``exchange (gain) loss customers'' as
representing all foreign exchange gains and losses, not just those
associated with receivables. TUNA notes that petitioners' argument is
therefore based on erroneous analysis and should be disregarded.
DOC Position: We disagree with petitioners that all exchange rate
gains and losses should be excluded from the calculation of interest
expense.
It is the Department's normal practice to distinguish between
exchange gains and losses from sales transactions and exchange gains
and losses from purchase transactions. Accordingly the Department does
not include exchange gains and losses on accounts receivable. The
Department includes, however, foreign exchange gains and losses on
financial assets and liabilities in its COP and CV calculation where
they are related to the company's production. Financial assets and
liabilities are directly related to a company's need to borrow money,
and we include the cost of borrowing in our COP and CV calculations.
See, e.g., Small Diameter Circular Seamless Carbon and Alloy Standard,
Line and Pressure Pipe from Italy, 60 FR 31981 at 31991 (June 19,
1995). Also, it is the Department's normal practice that foreign
exchange gains and losses on the purchase of raw materials used in
production of subject merchandise relate directly to the acquisition of
input materials and should be included in the cost of manufacture. See,
e.g., Silicomanganese from Venezuela, 59 FR 55436 (November 7, 1994).
In the present case, TUNA has excluded from reported costs exchange
gains/losses related to customers, i.e. those related to accounts
receivable or sales transactions. It included exchange gains/losses
related to purchase of raw materials as part of interest expense rather
than cost of manufacturing, because it does not distinguish between
exchange gains and losses on raw materials and exchange gains and
losses on other payables in its normal course of business. Since the
company did not include exchange gains and losses on accounts
receivable / sales in its reported costs and since it cannot
distinguish exchange gains and losses related to raw materials from
those related to other payables, we have made no adjustment to
respondent's interest expense calculation.
Comment 32: Petitioners state that since all of TUNA's costs appear
to be presented on a theoretical weight basis, the Department should
not make an adjustment to reported costs for differences between actual
and theoretical weight. The petitioners note that TUNA could not state
definitely whether the reported costs were based on actual or
theoretical weights, finally settling on claiming that it had reported
costs on an actual weight basis and presented a conversion factor. The
petitioners note that TUNA did not document its conclusion with
records. The petitioners assert that the record reveals costs were
allocated on a theoretical weight basis. The petitioners note that
while the unit costs were based on actual costs of acquisition,
allocations were based on nominal dimensions of the pipe produced.
Therefore, the petitioners assert such allocation is based on
theoretical weight.
DOC Position: We agree with petitioners. While unit costs were
based on actual costs of acquisition, allocations were often made on
nominal dimensions of the pipe produced. Therefore, we have not made
any adjustment.
[[Page 37027]]
Final Results of the Review
As a result of this review, we determine that the following
weighted-average dumping margins exist:
Circular Welded Non-Alloy Steel Pipes and Tubes
------------------------------------------------------------------------
Weighted-
Producer/manufacturer/exporter average
margin
------------------------------------------------------------------------
Hylsa...................................................... 2.99
TUNA....................................................... 1.77
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and foreign market value may
vary from the percentages stated above. The Department will issue
appraisement instructions directly to the Customs Service. Furthermore,
the following deposit requirements will be effective upon publication
of this notice of final results of review for all shipments of circular
welded carbon steel pipe from Mexico 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 company will be the rate for that firm as stated
above; (2) for previously reviewed or investigated companies not listed
above, the cash deposit rate will continue to be the company-specific
rate published for the most recent period; (3) if the exporter is not a
firm covered in this review, or the original less than fair value
(LTFV) investigation, but the manufacturer is, the cash deposit rate
will be the rate established for the most recent period for the
manufacturer of the merchandise; and (4) if neither the exporter nor
the manufacturer is a firm covered in this review, the cash rate will
be 36.00 percent. This is the ``all others'' rate from the LTFV
investigation. These deposit requirements, when imposed, shall remain
in effect until publication of the final results of the next
administrative review.
This notice serves as a final reminder to importers of their
responsibility under Sec. 353.26 of the Department's regulations to
file a certificate regarding the reimbursement of antidumping duties
prior to liquidation of the relevant entries during this review period.
Failure to comply with this requirement could result in the
Secretary's presumption that reimbursement of antidumping duties
occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with Sec. 353.34(d) of the Department's regulations.
Timely notification of return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of an APO is a sanctionable
violation.
This administrative review and notice are in accordance with Sec.
751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and Sec. 353.22.
Dated: June 30, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18114 Filed 7-9-97; 8:45 am]
BILLING CODE 3510-DS-P