[Federal Register Volume 62, Number 136 (Wednesday, July 16, 1997)]
[Notices]
[Pages 38058-38064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18730]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-421-805]


Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From 
the Netherlands; Final Results of Antidumping Administrative Review

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

ACTION: Notice of final results of the antidumping duty administrative 
review; Aramid Fiber formed of poly para-phenylene terephthalamide from 
the Netherlands.

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SUMMARY: On March 7, 1997, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order on aramid fiber formed of poly para-phenylene 
terephthalamide (PPD-T aramid) from the Netherlands. The review covers 
one manufacturer/exporter and the period June 1, 1995 through May 31, 
1996. We gave interested parties an opportunity to comment on our 
preliminary results. Based on our analysis of the comments received, we 
have revised the results from those presented in the preliminary 
results of review.

EFFECTIVE DATE: July 16, 1997.

FOR FURTHER INFORMATION CONTACT: Nithya Nagarajan at (202) 482-0193, 
Eugenia Chu at (202) 482-3964, or Ellen Knebel at (202) 482-0409, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230.

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all references to the

[[Page 38059]]

Department's regulations are to 19 CFR part 353 (1997).

SUPPLEMENTARY INFORMATION:

Background

    The Department published in the Federal Register the antidumping 
duty order on PPD-T aramid from the Netherlands on June 24, 1994 (59 FR 
32678). On June 6, 1996, we published in the Federal Register (61 FR 
28840) a notice of opportunity to request an administrative review of 
the order on covering the period June 1, 1995, through May 31, 1996 
(``POR'').
    In accordance with 19 CFR 353.22(a)(1), Aramid Products V.o.F. 
(Aramid) and Akzo Nobel Fibers Inc. (collectively ``Akzo'' or 
respondent) and petitioner, E.I. du Pont de Nemours and Company 
(petitioner), requested that we conduct an administrative review for 
the POR. We published a notice of initiation of this antidumping duty 
administrative review on August 8, 1996 (60 FR 41373). The Department 
is conducting this administrative review in accordance with section 751 
of the Act.
    On March 7, 1997, the Department published the preliminary results 
of the review. (See 62 FR 10524). The Department has now completed the 
review in accordance with section 751 of the Act.

Scope of the Review

    The products covered by this review are all forms of PPD-T aramid 
from the Netherlands. These consist of PPD-T aramid in the form of 
filament yarn (including single and corded), staple fiber, pulp (wet or 
dry), spun-laced and spun-bonded nonwovens, chopped fiber and floc. 
Tire cord is excluded from the class or kind of merchandise under 
review. This merchandise is currently classifiable under the Harmonized 
Tariff Schedule (HTS) item numbers 5402.10.3020, 5402.10.3040, 
5402.10.6000, 5503.10.1000, 5503.10.9000, 5601.30.0000, and 
5603.00.9000. The HTS item numbers are provided for convenience and 
Customs purposes. The Department's written description of the scope 
remains dispositive.

Analysis of the Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results of review. We received comments from respondent and 
petitioner.
    Comment 1: Petitioner argues that in the preliminary results, the 
Department accepted Akzo's reported U.S. indirect selling expenses 
(ISE), which are based upon two factors: (1) Operating expenses per 
financial accounts (excluding financial expenses); and (2) interest 
expenses for Akzo Nobel Inc., a wholly-owned subsidiary of Akzo Nobel 
N.V. of the Netherlands.
    Petitioner claims that both of these components of Akzo's reported 
U.S. ISE are in error, or were not properly verified, and should be 
revised in the final results. First, in petitioner's analysis of Akzo's 
operating expenses, petitioner takes issue with the appearance of a 
line item in Akzo's summary trial balance that relates to an Akzo 
facility in Scottsboro, Alabama. See U.S. Sales Verification Report, 
Exhibit 4, on file in the Central Records Unit (room B-099 of the Main 
Commerce Building). Petitioner asserts that if the subsidiary in 
Scottsboro performed function(s) relating to the production and sale of 
PPD-T aramid fiber in the United States during the period of review, 
then Akzo has failed to provide a full accounting of its U.S. 
activities and their costs.
    Second, petitioner raises concerns over the inclusion of a credit 
on Akzo's trial balance relating to manufacturing cost. Petitioner 
argues that the activities included in this credit have not been 
properly explained by the respondent.
    Third, petitioner alleges that certain amounts have not been 
accounted for in Akzo's reported net U.S. ISE operating expenses during 
the period of review. Petitioner cites U.S. Sales Verification Exhibit 
24 to support its claim.
    Respondent argues that the Scottsboro facility is not involved in 
the manufacture or sale of aramid fiber, and, therefore, the three 
credits appearing on Akzo's summary trial balance relating to 
Scottsboro are legitimately deducted from Akzo Nobel Aramid Product 
Inc.'s operating expenses for antidumping purposes.
    Respondent explains that petitioner's concerns regarding the credit 
relating to manufacturing cost is misplaced. Respondent states that the 
credit in question relates to beaming operations, that the costs 
associated with beaming the subject merchandise were verified by the 
Department and were therefore, properly included in manufacturing 
costs.
    Respondent disagrees with petitioner's allegation referring to U.S. 
Sales Verification Exhibit 24. Respondent explains that a portion of 
the amount petitioner claims was not accounted for was actually related 
to expenses outside the POR. Moreover, respondent claims this expense 
did not relate to the company's indirect selling expense and therefore, 
pursuant to established Department practice, such expenses are not 
properly included in net U.S. ISE as operating expenses. Respondent 
further argues that the POR amount identified by petitioner results 
from the fact that the income/expense booked in the January-May period 
overvalued the anticipated expense of the full year.
    The Department's Position: The Department agrees with respondent 
that the credits on Akzo's trial balance relating to Scottsboro, 
Alabama were properly deducted from Akzo's operating expenses. The 
Department found no evidence to support petitioner's speculation that 
Scottsboro is involved in the production or sale of subject 
merchandise. The facility in Scottsboro, Alabama, Akzo Nobel Industrial 
Fibers Inc., is described in Akzo's responses as a manufacturer of 
polyester and nylon fiber and is part of the Industrial Fibers Business 
Unit. Specifically, Akzo's September 19, 1996 Questionnaire Response 
(Exhibits A-13 and A-14) references Scottsboro two times under the 
Industrial Fibers heading in Akzo's Annual Report. The annual report 
expressly defines the Industrial Fibers Business Unit as being 
responsible for polyester, polyamide and viscose fibers for industrial 
uses. Scottsboro does not appear under any subheading in Akzo's Annual 
Reports that would indicate that Scottsboro produces the subject 
merchandise. None of the information submitted by Akzo regarding Akzo 
Nobel Industrial Fibers Inc. supports the claim that Akzo Nobel 
Industrial Fibers Inc. is involved in the manufacture and sale of 
aramid fiber. See, e.g., Exhibits A-2, A-3 and A-4 of Akzo's September 
19, 1997, Questionnaire Response.
    As explained by Akzo in its questionnaire response and discussed 
with the Department at verification, Akzo Nobel Aramid Products Inc.'s 
Conyers, Georgia facility is responsible for the sale of aramid fiber 
in the United States, Canada and Mexico. During the POR, however, the 
Conyers, Georgia facility was also used to warehouse certain industrial 
fibers for the Industrial Fibers Business Unit of the Fibers Group and 
to accommodate Industrial Fibers' salesmen and technical personnel. 
Because the Industrial Fibers Business Unit (under which the Scottsboro 
facility is categorized) is not involved in the manufacture or sale of 
aramid fiber, any credits that relate to it should be deducted from 
Akzo Nobel Aramid Products Inc.'s operating expenses.
    The Department also verified Akzo's beaming operations. See U.S. 
Sales Verification Report at 15 and Exhibit 28. The Department verified 
that all costs associated with beaming the subject

[[Page 38060]]

merchandise during the POR were captured in Akzo's reported beaming 
charges (REPACKU). See U.S. Sales Verification Exhibit 28. The 
Department found no discrepancies and, therefore, agrees with Akzo that 
the credit appearing in U.S. Sales Verification Report, Exhibit 4, was 
accurately reported.
    In addition, the Department verified that the credit amount 
associated with the over booking of the anticipated expense that 
petitioner claims was not accounted for was actually related to 
expenses outside the POR. In addition, the Department verified that 
Akzo has properly accounted for its ISE expense items appearing in U.S. 
Sales Verification Exhibit 24.
    For all of the reasons listed above, the Department has not made 
any adjustment to Akzo's total U.S. ISE operating expenses or to its 
U.S. ISE operating expense ratio.
    Comment 2: Petitioner urges the Department to make an adjustment to 
Akzo's U.S. ISE for financial interest expenses. Petitioner notes that, 
in the past, the Department has taken the position that a respondent's 
net interest expenses should be based upon the financing expenses 
incurred on behalf of the consolidated group of companies to which the 
respondent belongs because (1) the invested capital resources (debt and 
equity) within a consolidated group are fungible, and (2) the 
controlling entity within the consolidated group has the power to 
determine the specific capital structures of each member unit within 
the group. See Aramid Fiber Formed of Poly Para-Phenylene 
Terephthalamide from the Netherlands: Final Results of Antidumping 
Administrative Review, 61 FR 51,406 (October 2, 1996) at 51,407. 
Petitioner argues that Akzo has not explained how the financing 
expenses are allocated to Akzo Nobel Aramid Products Inc. or to any of 
the other operating units. Petitioner urges the Department to depart 
from the way it generally calculates financing expenses, arguing that 
the Department's established method does not adequately capture the 
true financing costs of the respondent. Petitioner alleges that the 
amount of interest expenses that appears on Akzo Nobel Aramid Product 
Inc.'s books ``better accounts'' for Akzo's financing costs and 
business requirements than the consolidated data taken from Akzo Nobel 
Inc.'s financial statement. In addition, petitioner contends that the 
Department should revise Akzo Nobel Aramid Product Inc.'s U.S. ISE 
financial interest expense factor in the final results to take full 
account of its actual short-term borrowing costs in selling PPD-T 
aramid fiber in the United States.
    Respondent states that Akzo has justified its use of Akzo Nobel 
Inc.'s consolidated figures on the ground that the U.S. parent borrows 
on behalf of its related companies in the United States and then 
charges the various operating units a share of this cost. Akzo's 
October 25, 1996, submission at 111. Akzo claims that the only loans 
and corresponding interest expense on the books of Akzo Nobel Aramid 
Products Inc. and Aramid Products V.o.F. are intercompany loans from 
the parent companies Akzo Nobel Inc. and Akzo Nobel N.V. respectively. 
Respondent further argues that the only actual interest expense is on 
the books of the parent companies because it is only these companies 
that actually borrow money. Akzo further explains that during the 
consolidation process, the interest expense recorded on the books of 
the subsidiaries is rolled into the interest expense of the parent. 
Akzo also states that it is the parent that determines the source from 
which funds to operate the company are obtained, and it is the parent 
alone that borrows money and incurs the actual interest expense when 
such funds are needed. Respondent claims that petitioner's speculations 
on how and why companies borrow money, as well as how a parent 
determines the amount of the loans and interest allocated to the 
subsidiary, are misplaced and irrelevant. These are internal decisions 
that take into account a variety of factors and the parent incurs the 
only actual interest expenses.
    Respondent states that the Department's current method of 
calculating interest is a well founded practice that should continue to 
be followed in determining the final results for this review.
    The Department's Position: The Department's preliminary treatment 
of Akzo's U.S. interest expense is in accordance with the Department's 
long standing practice and its final determinations in the original 
less-than-fair-value (``LTFV'') investigation and the first review of 
the order, Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide 
from the Netherlands, 61 FR 51,406 (Dep't Comm. 1996) (final admin. 
rev.).
    It is the Department's practice to calculate the respondent's net 
interest expense based on the financing expenses incurred on behalf of 
the consolidated group of companies to which the respondent belongs. In 
general, this practice recognizes the fungible nature of invested 
capital resources (i.e., debt and equity) within a consolidated group 
of companies. In Cambargo Correa Metais, S.A. v. United States, Slip 
Op. 93-163 (CIT August 13, 1993), the Court of International Trade 
ruled that the Department's practice of allocating interest expense on 
a consolidated basis due to the fungible nature of debt and equity was 
reasonable. The Court specifically quoted the following from Final 
Determination of Sales at Less than Fair Value: Certain Small Business 
Telephone Systems and Subassemblies Thereof from Korea, 54 FR 53,141, 
53149 (1989).

    The Department recognizes the fungible nature of a corporation's 
invested capital resources, including both debt and equity, and does 
not allocate corporate finances to individual divisions of a 
corporation * * *. Instead, [Commerce] allocates the interest 
expense related to the debt portion of the capitalization of the 
corporation, as appropriate to the total operations of the 
consolidated corporation.

See also, Final Determination of Sales at Less than Fair Value: Certain 
Carbon Steel Butt-Weld Pipe Fittings from Thailand, 60 FR 10552, 10557 
(February 27, 1995). The controlling entity within a consolidated group 
has the ``power'' to determine the capital structure of each member 
company within the group. In this case, Akzo Nobel maintains a 
controlling interest in Aramid and includes the company in its 
consolidated financial statements. See Final Determination of Sales at 
Less Than Fair Value: New Minivans from Japan, 57 FR at 21946 (comment 
18) (May 26, 1992).
    Therefore, for the final results of review, we have relied on 
Akzo's submitted interest expense, which is based on Akzo Nobel's 
consolidated financial statements, and have not imputed interest 
expense on affiliated party loans as suggested by the petitioner.
    Comment 3: The petitioner alleges that either Akzo Nobel Inc. or 
Akzo Nobel N.V. has reimbursed Akzo Nobel Aramid Products Inc. for 
antidumping duty payments. See Petitioner's Case Brief at 14-16. To 
support its claim, petitioner refers the Department to an account item 
on the summary trial balance of Akzo Nobel Aramid Products Inc. 
Petitioner further supports its position by speculating that certain 
amounts may be reimbursed by either Akzo Nobel Inc. or Akzo Nobel N.V. 
Petitioner requests the Department, pursuant to 19 CFR 353.26 (a), 
deduct from Akzo's U.S. price (USP) an amount equal to 66.92% of Akzo's 
total reported entries during the POR.
    Akzo claims that it is not being reimbursed for antidumping duties 
and

[[Page 38061]]

the petitioner's speculation to the contrary does not warrant a 
deduction of antidumping duty deposits from Akzo's U.S. price. Akzo 
cites the Department's regulations requiring the Department to deduct 
from U.S. price the amount of any antidumping duty which the producer 
or reseller: (i) Paid directly on behalf of the importer; or (ii) 
reimbursed to the importer. 19 CFR Sec. 353.26 (a). Akzo notes that 
this regulation also requires the importer to file a certificate, prior 
to liquidation, with the U.S. Customs Service attesting to the absence 
of any agreement for the payment or reimbursement of any part of the 
antidumping duties by the manufacturer, producer, seller or exporter. 
19 CFR Sec. 353.26 (c). The regulation provides that the Department may 
presume from an importer's failure to file this certificate that the 
producer or reseller paid or reimbursed the antidumping duties. 19 CFR 
Sec. 353.26 (c). Akzo argues that it is in full compliance with the 
Department's regulations. It states that as required by Sec. 353.26 
(c), Akzo Nobel Aramid Products Inc. has filed, prior to liquidation, 
certifications with Customs attesting to the absence of any agreement 
with the manufacturer, producer, seller or exporter (i.e., Aramid 
Products V.o.F.) for the payment or reimbursement of antidumping 
duties. Further, the respondent claims that Akzo Nobel Aramid Products 
Inc. has not entered into such an agreement with Akzo Nobel Inc. or 
Akzo Nobel N.V. In support of its arguments, Akzo cites the ruling in 
The Torrington Corp. v. United States, 881 F. Supp. 622, 632 (1995) 
(hereafter ``Torrington'') that ``once an importer . . . has indicated 
on this certificate that it has not been reimbursed for antidumping 
duties, it is unnecessary for the Department to conduct an additional 
inquiry absent a sufficient allegation of customs fraud.'' Akzo claims 
that because it has filed the requisite certification, and because 
petitioner has failed to show any customs fraud, the record establishes 
that neither Akzo Nobel Inc. nor Akzo Nobel N.V. has reimbursed Akzo 
Nobel Aramid Products Inc. for antidumping duty payments.
    Akzo further contends that the CIT has affirmed the Department's 
longstanding precedent that absent evidence of reimbursement, the 
Department has no authority to make the adjustment to U.S. price 
requested by the petitioner. Torrington, at 632. Akzo states that, 
according to the CIT, the party who requests the reimbursement 
investigation must produce some link between the transfer of funds and 
reimbursement of antidumping duties. Akzo argues that the petitioner 
has failed to meet this burden because petitioner only pointed to an 
account title in a financial statement and speculated as to the nature 
of that account. Akzo argues that petitioner has failed to establish 
any agreement for reimbursement of antidumping duties between either 
Akzo Nobel Inc. or Akzo Nobel N.V. and Akzo Nobel Aramid Products Inc. 
Respondent argues that Sec. 353.26 (a) applies only if petitioner shows 
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. According to Akzo, the regulation does 
not impose upon the Department an obligation to investigate based on 
unsupported allegations. Torrington, at 631; see also Tapered Roller 
Bearings from Japan, 62 FR at 11,831, comm.2.
    In response to petitioner's argument concerning whether GAAP 
permits a company to recognize anticipated refunds from the U.S. 
government, Akzo states that it had a reasonable expectation of 
obtaining significant refunds of the dumping deposits from the U.S. 
Customs Service through the administrative review process. Akzo argues 
that the LTFV margin established that the deposit rate was not tied 
entirely to pricing analyses, but was largely attributable to imputed 
costs based on a corporate structure that no longer exists. Moreover, 
upon issuance of the antidumping order, Akzo claims that it ceased 
making the lower-priced sales that contributed to the LTFV margin and 
cash deposit rate.
    Akzo states that, in support of its reimbursement allegation, 
petitioner focuses on the April 1996, publication of the preliminary 
results of the first administrative review as providing the first 
possible indication of antidumping duty liability. The sales subject to 
that review, Akzo claims, were concluded in May 1995, which Akzo claims 
allowed it sufficient time to fairly estimate the antidumping duty 
liability associated with such sales for its 1995, financial statement 
and December 31, 1995, trial balance. Accordingly, Akzo claims that 
petitioner's speculation of reimbursement of antidumping duties must be 
rejected and no punitive inferences taken with regard to the 
calculation of Akzo's U.S. prices.
    The Department's Position: The Department agrees with Akzo. The 
Department's regulations require the Department to deduct from U.S. 
price the amount of any antidumping duty which the producer or reseller 
(i) paid directly on behalf of the importer or (ii) reimbursed to the 
importer. 19 C.F.R.Sec. 353.26 (a)(1996). Absent evidence of 
reimbursement, the Department has no authority to make the adjustment 
to U.S. price. Torrington, 881 F. Supp. at 632, citing Brass Sheet and 
Strip From Sweden, 57 F.R. 2706, 2708 (Dep't Comm. 1992) (final admin. 
rev.) and Brass Sheet and Strip From the Republic of Korea, 54 Fed. 
Reg. 33,257, 33,258 (Dep't Comm. 1989) (final admin.rev.). In the 
instant review, we found no evidence of inappropriate financial 
intermingling between Akzo Nobel Aramid Products, Inc. And Akzo Nobel 
Inc. or Akzo Nobel N.V. The Department verified that Akzo Nobel Aramid 
Products, Inc. is responsible for all cash deposits and duties 
assessed. The evidence cited by petitioner, (much of which is 
proprietary) does not constitute evidence of reimbursement. At 
verification, we found no evidence that the account referenced by 
petitioner was in any way related to reimbursement. Further, Akzo Nobel 
Aramid Products Inc. has filed the required certifications with Customs 
attesting to the absence of any agreement with the manufacturer, 
producer, seller, or exporter (i.e., Aramid Products V.o.F.) for the 
payment or reimbursement of antidumping duties. The Department found no 
evidence that Akzo Nobel Aramid Products Inc., has entered into such an 
agreement with Akzo Nobel Inc. or Akzo Nobel N.V. (For a more detailed 
discussion of this issue, see the memorandum to the file dated July 7, 
1997). Based upon the above, we find that 19 C.F.R. Sec. 353.26 is not 
applicable in this case.
    Comment 4: The petitioner argues that the Department should include 
Akzo's third party payments as part of Akzo's home market indirect 
selling expenses because such payments cannot be tied to specific sales 
transactions. The petitioner also argues that, if the Department 
continues to treat the payments as direct selling expenses, it should 
not apply the adjustment to sales made in the POR because the third 
party did not make any claims for such payments and because the 
calculated rate for direct selling expenses was based upon the previous 
year's sales.
    Akzo argues that the Department properly treated home market third 
party payments as direct selling expenses, just as it treated U.S. 
third party payments. Akzo states that it made third party payments as 
an incentive for companies to specify the use of its products in their 
goods. The respondent claims that Akzo only made third party payments 
after purchases of the subject

[[Page 38062]]

merchandise in a converted form were made. Akzo claims that petitioner 
advances no theory regarding why Akzo would make such payments other 
than to further the sale of the subject merchandise to Akzo's direct 
customers. Akzo argues that the petitioner is mistaken that the 
Department requires third-party payments to be transaction specific and 
tied to particular sales to qualify as direct selling expenses. Akzo 
claims that the Department normally accepts claims for home market 
direct selling expenses as direct adjustments to price if it determines 
that a respondent reported the expense:

on an allocated basis, provided that it was not feasible for the 
respondent to report the expense on a more specific basis and the 
allocation does not cause unreasonable distortions (i.e., was likely 
to have been granted proportionately on sales of scope and non-scope 
merchandise).

Tapered Roller Bearings from Japan, 62 FR at 11, 839, comm.9.
    Akzo states that it has reported its third party payment expense on 
a non-distortive, allocated basis by dividing the total payment over 
the total quantity of all eligible sales, i.e., sales of a specific 
product, to a specific customer. For this reason, Akzo believes that 
there is no basis for the Department to deny Akzo's claim for a direct 
selling expense.
    Akzo claims it has reported in its questionnaire response that its 
third party payments are identical to the programs verified by the 
Department during the course of the original LTFV investigation. Akzo 
notes that the Department accepted its allocation methodology without 
verification during the first administrative review. Akzo states that, 
in the second review, it has reported third party payments on home 
market sales in the same manner as in the original LTFV investigation 
and first review. Akzo states that payments were made to the very same 
company in the first review as in the current review. The respondent 
notes that the Department accepted this approach in the previous 
administrative review and in the instant review verified the underlying 
data. According to Akzo, the Department made reference to this issue in 
its Home Market Sales Verification Report at 9. Akzo argues that it 
adopted the identical allocation methodology for its third party 
payments made in the U.S. market as in the home market. According to 
Akzo, the petitioner has not raised any objection to Akzo's identical 
third party payment methodology in the U.S. market because these 
payments are included in the margin calculation to reduce U.S. price. 
Akzo argues that, if the Department agrees with petitioner's objection 
to the home market methodology, it must adopt the same position for the 
identical U.S. market methodology. However, Akzo argues that the 
Department properly used Akzo's legitimate third party payments in the 
home market to reduce home market prices, and that the Department 
should maintain this decision in the calculation of the final results.
    The Department's Position: We agree that Akzo has properly included 
home market third party payments in its direct selling expenses. The 
Department requires third party payments to be transaction-specific and 
tied to particular sales to qualify as direct selling expenses. The 
Department normally accepts claims for home market direct selling 
expenses as direct adjustments to price on an allocated basis, provided 
that it was not feasible for the respondent to report the expense on a 
more specific basis and the allocation does not cause unreasonable 
distortions (i.e., the allocation of direct selling expenses was likely 
to have been granted proportionately on sales of scope and non-scope 
merchandise). See Tapered Roller Bearings from Japan, 62 FR at 1,839, 
comm.9. The Department verified that Akzo was not able to report the 
expense on a more specific basis. See Home Market Sales Verification 
Report at 9. Therefore, the Department accepted the allocation 
methodology that is consistent with the Department's position in the 
LTFV investigation and the first administrative review. Akzo has 
reported its third party payment expense on a non-distortive, allocated 
basis by dividing the total payment over the total quantity of all 
eligible sales, i.e., sales of a specific product, to a specific 
customer. For this reason, the Department will continue to treat home 
market third party payments as direct selling expenses.
    We verified that Akzo's third party payments are based upon total 
purchases of converted Aramid product from Aramid's direct customers 
(the converters who provide additional finishing or further 
manufacturing to Aramid's products). During verification, the 
Department verified the third party payment programs and reviewed 
letter agreements between the parties, credit notes issued to the third 
party payment recipient and purchases by the direct customer and found 
no discrepancies. See Home Market Sales Verification Report, Exhibit 
16. The Department also verified that Akzo made third party payments as 
an incentive for companies to specify the use of its products in their 
goods, and that Akzo only made third party payments after purchases of 
the subject merchandise in a converted form were made. For the above 
reasons, the Department has determined that it is appropriate to 
include home market third party payments in its direct selling 
expenses.
    Comment 5: The petitioner argues that the Department did not carry 
out its intention to remove from the pool of potential home market 
matches the sales that failed the arm's-length test and suggests the 
Department correct its mistake in the final results. In addition, the 
petitioner makes two arguments--one methodological, and one 
computational--regarding the model matching methodology applied for the 
preliminary results of the review. First, the petitioner claims that 
the Department mistakenly applied a model-match program in which the 
earliest home market sale found within the Department's 90/60 day 
window is used for comparison, rather than the home market sale that 
``most closely'' corresponds to the U.S. sale. Second, petitioner 
claims that the Department improperly resorts to constructed value if 
the first home market sale selected for comparison is below-cost, even 
though other suitable above-cost home market sales are available for 
comparison.
    Akzo contends that both of these arguments should be rejected. Akzo 
asserts that the first argument petitioner makes is incorrect on the 
grounds that the Department applied a long-standing practice rooted in 
the statutory definition of such or similar merchandise. Respondent 
argues that petitioner's second argument regarding the use of CV is 
similarly flawed because the Department has issued policy papers which 
set forth a model matching methodology that contradicts petitioner's 
claim that the Department improperly resorted to constructed value if 
the first home market sale selected for comparison is below-cost, even 
though other suitable above-cost home market sales are available for 
comparison. Import Administration Policy Bulletin No. 92/4 (Dep't Comm. 
12/15/92) entitled ``The Use of Constructed Value in COP Cases.''
    The Department's Position: The Department did carry out its 
intention to remove the sales that failed the arm's length test from 
its preliminary model match program. The petitioner's contrary 
conclusion was due to the Department's shortened print command. In the 
``print setup'' of the preliminary ``arm's length'' computer program, 
the Department specified (when printing out customer numbers), that 
only six digits of the eight digit reference numbers were to be 
printed, even though the respondent's eight digit code

[[Page 38063]]

was properly being read by the computer and used in the calculations. 
Petitioner may have been confused by a six digit customer reference 
number printed in the program output when in actuality the customer 
numbers had eight digits. For clarity, the Department has changed the 
print command in the final arm's length computer program so that eight 
digit customer codes are printed out, rather than being cut off at six 
digits. The result of this print command change is that in the final 
model match and final margin programs (which read in the output of the 
arm's length program), all eight digits of the customer code will be 
printed in the program outputs.
    The Department has continued to use its model match program which 
finds the most similar home market model (CONNUMH), based on physical 
characteristics, that is within the 90/60 day window and passes the 
difference in merchandise (DIFMER) test. The Department relies on its 
margin calculation program to find the most contemporaneous match of a 
given home market model. The model match program generates home market 
month (MONTHH) data. However, the (MONTHH) data that appears in the 
model match output is not read into the Department's margin program, 
and does not influence the final margin calculations.
    Consistent with the Department's practice, we resorted to 
constructed value if the first best home-market sale selected for 
comparison was below-cost, even though other suitable above-cost home 
market sales were available for comparison. See Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof from France, et 
al. (57 FR 28360, 28373); (``although section 773(b) expresses a 
preference for using sales rather than CV as the basis of FMV, it does 
not instruct the Department to use the next most similar merchandise as 
the basis for FMV, but rather it requires the use of CV''); see also 
Certain Circular Welded Carbon Steel Pipes and Tubes from Thailand (61 
FR 1328, 1331). (The Department rejects the position that, prior to 
using CV, the Department should have exhausted all three alternative 
matches provided in the company concordance.)
    Comment 6: The petitioner states that the Department should 
amortize goodwill expenses over a period that covers the POR. The 
petitioner contends that, unless the Department includes this amount, 
it will improperly understate the actual cost of producing PPD-T aramid 
fiber during the POR. The petitioner argues that in the prior review 
the Department adjusted Akzo's costs to account for revalued assets and 
excluded the entire amount of Akzo's goodwill amortization from general 
expenses to avoid double counting the expense and to recognize that any 
goodwill remaining after adjustment to the revalued assets was not part 
of Aramid's production costs. The petitioner believes that the 
Department's treatment of Akzo's goodwill expenses in the first review 
is not supported by substantial evidence on the record and is contrary 
to law.
    The petitioner states that proper treatment of Akzo's goodwill 
expenses requires that these costs be amortized over a period that 
includes the current review. The petitioner contends that the 
preliminary results fail to take such expenses into account. Petitioner 
argues that unless Akzo's cost of production is revised in the final 
results to include an amount for amortized goodwill expenses, the 
Department once again will improperly understate Akzo's cost of 
producing PPD-T aramid fiber during the period of review.
    Akzo states that the proper treatment of the goodwill that arose 
from the purchase of Aramid Products was the focus of the first 
administrative review, and that the Department spent a significant 
amount of time gathering and analyzing all aspects of the purchase. At 
the end of the analysis, the Department determined that, for cost 
calculation purposes, it was more appropriate to isolate those 
components of goodwill that pertained to assets used in the production 
of subject merchandise. See Aramid Fiber Formed of Poly Para-Phenylene 
Terephthalamide from the Netherlands, (61 FR 51,406). Akzo states that 
it complied with the decision presented in the first administrative 
review in preparing the response for this review, and that the 
Department complied with the petitioner's request to verify. Akzo cites 
Cost Verification Exhibits 36 and 37, which were used to verify the 
submitted depreciation expense for Emmen and Delfzijl. Akzo suggests 
that no circumstances warrant deviation from the well-reasoned decision 
in the first administrative review.
    The Department's Position: The Department agrees with Akzo. As 
explained at length in the final results of the first administrative 
review, the Department determined to accept Akzo's accounting method 
for the amortization of goodwill expense as reasonable. The Department 
spent a significant amount of time gathering and analyzing all aspects 
of the facts surrounding the goodwill issue during the first 
administrative review. At the end of its analysis, the Department 
determined that, for cost calculation purposes, it was more appropriate 
to isolate those components of goodwill that pertained to assets used 
in the production of subject merchandise. See Aramid Fiber Formed of 
Poly Para-Phenylene Terephthalamide from the Netherlands, 61 FR 51,406. 
The Department verified that Akzo complied with the Department's 
determination on goodwill in the first administrative review in 
preparing its response for the instant review. Cost Verification 
Exhibits 36 and 37 were used to verify the submitted depreciation 
expense for Emmen and Delfzijl. See Cost Verification Report to the 
File, dated February 21, 1997.
    Comment 7: The petitioner suggests the following corrections be 
made to the preliminary margin program: (1) Correct the customer code 
or other aspects of the programming so that sales to the affiliated 
customer that failed the arm's-length test are properly excluded; (2) 
correctly apply the warranty-rate factor reported by Akzo; (3) use the 
highest value for the specific U.S. expense reported by Akzo in its 
data base to fill in missing U.S. expense data rather than use zeros; 
(4) at lines 3581 to 3584 of the preliminary program, petitioner 
recommends that the Department not divide guilder (NLG)-denominated 
home market variables by the conversion factor (2.2046 lbs/kg) before 
adding them to corresponding NLG-denominated U.S. variables; (5) 
petitioner recommends not duplicating conversions at lines 3727 to 3730 
of the preliminary margin program, because these weight conversions 
already had occurred at lines 3488, 3716, 3489, and 3490; (6) at line 
3757 petitioner recommends that the Department convert credit reported 
in Akzo's constructed value data base (CREDCV) from a per-kilogram to a 
per pound amount before making subtractions; and (7) at line 3734 of 
the preliminary margin program, petitioner recommends the correction of 
a currency conversion error in adding a dollar denominated U.S. packing 
variable (PACKU) to a NGL-denominated components of constructed value 
(CV).
    Akzo recommends that, in calculating foreign movement expenses 
(line 3500), the Department convert the international freight costs 
from guilders to dollars before adding these costs to dollar 
denominated insurance costs to arrive at the value for foreign movement 
expenses. Akzo did not make any further recommendations regarding the 
Department's preliminary margin program. In addition, Akzo did not 
object to any of petitioner's

[[Page 38064]]

aforementioned suggested corrections in its rebuttal briefs.
    The Department's Position: The Department agrees with both 
petitioner and respondent and has addressed all of the suggestions in 
its final margin program. For further explanation see Calculation 
Memorandum, July 7, 1997.

Final Results of Review

    As a result of our review, we determine that the following 
weighted-average margin exists:

------------------------------------------------------------------------
                                                                 Margin 
           Manufacturer/exporter             Period of review  (percent)
------------------------------------------------------------------------
Akzo......................................     6/1/95-5/31/96      26.25
All Other.................................     6/1/95-5/31/96      66.92
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and normal value may vary from the 
percentage stated above. The Department will issue appraisement 
instructions on each exporter 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 PPD-T aramid fiber from the Netherlands entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date, as provided by section 751(a)(1) of the Act: (1) The cash deposit 
rate for the reviewed company will be the rate listed 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, a prior review, or the original 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) for all other producers and/or exporters of 
this merchandise, the cash deposit rate shall be 66.92 percent, the 
``all others'' rate established in the LTFV investigation (59 FR 32678, 
June 24, 1994). These deposit requirements shall remain in effect until 
publication of the final results of the next administrative review.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and subsequent assessment 
of double antidumping duties.

Notification to Interested Parties

    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 19 CFR 353.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: July 7, 1997.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18730 Filed 7-15-97; 8:45 am]
BILLING CODE 3510-DS-P