[Federal Register Volume 62, Number 191 (Thursday, October 2, 1997)]
[Notices]
[Pages 51629-51635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26196]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-489-501]


Notice of Final Results of Antidumping Duty Administrative 
Review: Certain Welded Carbon Steel Pipe and Tube From Turkey

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

SUMMARY: On May 13, 1997, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order on certain welded carbon steel pipe and tube 
from Turkey. The review covers shipments of this merchandise to the 
United States during the period of review (POR) May 1, 1993, through 
April 30, 1994.
    Based on our analysis of the comments received, and the correction 
of certain ministerial errors, we have changed the preliminary results. 
The final results are listed below in the section ``Final Results of 
Review.''

EFFECTIVE DATE: October 2, 1997.

FOR FURTHER INFORMATION CONTACT:
Charles Riggle or Kris Campbell, Office of AD/CVD Enforcement II, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-0650 and (202) 482-3813, 
respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute and to the 
Department's regulations are references to the provisions as they 
existed on December 31, 1994.

Background

    This review covers two manufacturers/exporters to the United States 
of the subject merchandise, the Borusan Group (Borusan) and Yucelboru 
Ihracat Ithalat ve Pazarlama A.S. (Yucelboru). On May 13, 1997, the 
Department published in the Federal Register the Preliminary Results of 
Administrative Review of the Antidumping Duty Order on Certain Welded 
Carbon Steel Pipe and Tube from Turkey (62 FR 26286) (Preliminary 
Results). We received case and rebuttal briefs from the petitioners \1\ 
and Borusan on June 19, 1997, and June 26, 1997, respectively. 
Yucelboru did not submit a case or rebuttal brief. On August 1, 1997, 
we requested comments from Borusan and the petitioners regarding how we 
intended to calculate importer-specific ad valorem assessment rates for 
Borusan. Since Yucelboru's margin in the preliminary results was de 
minimis, we did not request comments from Yucelboru. On August 5, 1997, 
we received comments on the assessment rate from the petitioners.
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    \1\ The petitioners are Allied Tube & Conduit and Wheatland Tube 
Company.
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    The Department has now completed this administrative review in 
accordance with section 751 of the Tariff Act of 1930, as amended (the 
Act).

Scope of the Review

    Imports covered by this review are shipments of certain welded 
carbon steel pipe and tube products with an outside diameter of 0.375 
inch or more but not over 16 inches, of any wall thickness. These 
products are currently classifiable under the following Harmonized 
Tariff Schedule of the United States (HTSUS) subheadings: 
7306.30.10.00, 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 products, 
commonly referred to in the industry as standard pipe and tube, are 
produced to various American Society for Testing and Materials (ASTM) 
specifications, most notably A-120, A-53 or A-135.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding is dispositive.

Comparison of United States Price and Foreign Market Value

    For both companies involved in this review, we calculated 
transaction-specific U.S. prices (USP) and compared them to foreign 
market values (FMV) based on either weighted-average home market prices 
or constructed values (CV). For price-to-price comparisons, we compared 
identical merchandise, where possible. Where there were no sales of 
identical merchandise in the home market to compare to U.S. sales, we 
made comparisons of similar merchandise based on the characteristics 
listed in the Department's antidumping questionnaire.
    Where sales were made in the home market on a different weight 
basis from the U.S. market (e.g., theoretical versus actual weight), we 
converted all quantities to the same weight basis, using the conversion 
factors supplied by the company, before making our fair value 
comparisons.
    We have determined that Turkey experienced a high rate of inflation 
throughout the POR, as measured by the wholesale price index (WPI) 
published in International Financial Statistics. (See Comment 1 below). 
Therefore, in accordance with our practice, and in order to avoid the 
distortions caused by the effects of this level of inflation on prices, 
we did not apply the Department's 90/60 day rule if we were unable to 
match sales within the same month. Rather, we resorted to CV as the 
basis of FMV. See Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Steel Concrete Reinforcing Bars from Turkey, 62 FR 
9737, 9738 (March 4, 1997) (Rebar from Turkey).
    In accordance with 19 CFR 353.58, we made comparisons at the same 
level of trade, where possible (see Sales Comment 8 below). For 
Borusan, we determined that there was one U.S. level of trade (i.e., 
distributor) and three home market levels of trade: wholesaler/
distributor, retailer, and end-user. Yucelboru had no level of trade 
distinctions in either market.

[[Page 51630]]

United States Price

    We based USP on purchase price in accordance with section 772(b) of 
the Act, because the subject merchandise was sold directly to the first 
unrelated purchaser in the United States prior to importation and the 
exporter's sales price methodology was not indicated by the facts of 
record. We calculated purchase price based on the same methodology used 
in the Preliminary Results, with the following exceptions:

Borusan

    1. We corrected the gross unit price and quantity reported for one 
sales transaction (see Comment 9 below);
    2. We added countervailing duties imposed on the subject 
merchandise to offset export subsidies, pursuant to section 
772(c)(1)(C) of the Act (see Comment 11 below); and
    3. We converted certain direct selling and movement expenses from 
Turkish lira to U.S. dollars using exchange rates based on the date of 
shipment (see Comment 15 below).

Yucelboru

    1. We converted certain movement expenses from Turkish lira to U.S. 
dollars using exchange rates based on the date of shipment.
Foreign Market Value
    Where FMV was based on home market price, we used the same 
methodology to calculate FMV as that described in the Preliminary 
Results, with the following exceptions:

Borusan

    1. We deducted home market direct selling expenses and added U.S. 
direct selling expenses as a COS adjustment to FMV (see Comment 14 
below); and
    2. We indexed home market packing expenses before deducting them 
from FMV and indexed U.S. packing expenses before adding them to FMV 
(see Comment 13 below).

Yucelboru

    1. We deducted home market direct selling expenses and added U.S. 
direct selling expenses as a COS adjustment to FMV; and
    2. We indexed home market packing expenses before deducting them 
from FMV and indexed U.S. packing expenses before adding them to FMV.
    Where FMV was based on CV, we used the same methodology for Borusan 
as that described in the Preliminary Results, with the following 
exceptions:
    1. We adjusted the calculated interest expenses to avoid double 
counting imputed credit and inventory carrying expenses (see Comment 5 
below);
    2. We indexed all material costs (see Comment 3 below); and
    3. We deducted home market direct selling expenses and added U.S. 
direct selling expenses as a COS adjustment to FMV (see Comment 14 
below).

Cost of Production

    As discussed in the Preliminary Results, we conducted an 
investigation to determine whether Borusan or Yucelboru made home 
market sales during the POR at prices below its cost of production 
(COP) within the meaning of section 773(b) of the Act (see also Comment 
2 below). We disregarded individual below-cost sales of models for 
which greater than 10 percent and no more than 90 percent of sales were 
sold at less than COP over an extended period of time. We disregarded 
all sales of models with greater than 90 percent of sales at less than 
COP over an extended period of time.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments and rebuttal comments from 
the petitioners and Borusan, but did not receive any comments from 
Yucelboru.
    Comment 1: Inflation. Borusan argues that Turkey did not experience 
hyperinflation until the last four POR months (January through April, 
1994). Accordingly, Borusan argues that the Department should limit the 
application of its hyperinflationary methodology to sales made during 
these months. Citing Final Determination of Sales at Less Than Fair 
Value: Certain Fresh Cut Flowers from Peru, 52 FR 7000, 7002 (March 6, 
1987) (Flowers from Peru), Borusan states that the Department that 
previously limited its hyperinflationary methodology in this manner 
where a country experiences high inflation for a only a few months 
during the POR. As support for its position, Borusan claims that 
Turkey's inflation rate for 1993 was 56 percent, which is below the 
Department's established threshold of 60-65 percent (citing, inter 
alia, Import Administration Policy Bulletin Number 94.5, ``Differences 
in Merchandise Calculation in Hyperinflationary Economies'' (March 25, 
1994) at 1, n.1).
    The petitioners respond that the Department appropriately applied 
its hyperinflationary methodology to the entire POR. Citing Final 
Results of Administrative Review: Certain Fresh Cut Flowers from 
Colombia, 61 FR 42833, 42845 (August 19, 1996) (Flowers from Colombia), 
the petitioners note that, contrary to Borusan's claim that the 
hyperinflationary threshold is 60 percent, the Department recently 
stated that economies are considered hyperinflationary where annual 
inflation is greater than 50 percent. The petitioners assert, 
therefore, that the 56 percent inflation rate for 1993 cited by Borusan 
is hyperinflationary.
    The petitioners further add that Borusan provided no justification 
for why the Department should differentiate between certain months 
within the review period and state that no justification exists 
because, in this case, the POR inflation rate exceeds 125 percent. 
Regarding the precedent cited by Borusan for such a differentiation, 
the petitioners note that Flowers from Peru was an investigation and 
content that, consequently, the Department's practice of using 
aggregate comparison market prices and costs in investigations (as 
opposed to monthly prices in reviews) makes investigations more 
appropriate proceeding for using a hyperinflationary methodology for 
only part of the period.
    DOC Position: We agree with the petitioners. Although Import 
Administration Policy Bulletin Number 94.5 states that ``an economy is 
deemed to be hyperinflationary if its monthly or annual inflation rates 
are greater than 5 percent and 60 percent, respectively,'' in recent 
cases we have considered inflation rates lower than 60 percent to 
warrant application of our high-inflation methodology to avoid the 
distortions that may be caused by such inflation. See Flowers from 
Colombia, at 42845 and Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Pasta from Turkey, 61 FR 30309, 30314 (June 
14, 1996) (Pasta from Turkey). Thus, even if we were to split the POR 
into 1993 and 1994 segments as requested by Borusan, we would find high 
inflation to exist for the entire period, since the inflation rate was 
greater than 50 percent during both 1993 and 1994.
    We further note with respect to Borusan's proposal to break the POR 
into discrete periods that, although not dispositive of this issue, we 
routinely examine the entire review period when determining whether 
high inflation exists. Borusan has provided no compelling rationale to 
depart from this methodology other than citing inflation rates for the 
two periods. See Pasta from Turkey, at 30314, and Notice of Final 
Results of Antidumping Duty Administrative Review: Certain Welded 
Carbon Steel Pipe and Tube from Turkey, 61 FR 69067, 69068 (December 
31, 1996) (the 1994-95 Review). With respect to the one case cited by 
Borusan where the Department treated one portion of the period as 
inflationary and the other portion as non-inflationary,

[[Page 51631]]

wholesale price index data compiled by the International Monetary Fund 
(IMF) indicate that the inflation rate for the period designated as 
non-inflationary in that case exceeded 50 percent. As such, the finding 
in Flowers from Peru, which was made over ten years ago, conflicts with 
our current practice.
    Comment 2: Initiation of Cost Investigation. Borusan argues that 
the Department improperly initiated a sales-below-cost investigation 
because: (1) The petitioners' cost allegation was not submitted until 
14 months after the deadline set forth in 19 CFR 353.31(c)(ii); and (2) 
the allegation contained serious methodological flaws. With respect to 
the issue of timeliness, Borusan contends that, even though the 
issuance of the questionnaire and the submission of the response both 
occurred after the regulatory deadline for filing COP allegations (120 
days after initiation of the review), the petitioners should not be 
excused for filing the COP allegation an additional six months after 
the submission of the sales questionnaire response (citing Notice of 
Final Results of Antidumping Duty Administrative Review: Certain Forged 
Steel Crankshafts From the United Kingdom, 60 FR 52150, 52153 (October 
5, 1995) (Crankshafts from the U.K.)). Borusan adds that the allegation 
was insufficient because it: (1) Deducted credit expenses from the HM 
prices while including them in the costs, and (2) excluded downstream 
HM sales by related resellers from the analysis. Borusan contends that 
because the sales-below-cost investigation was improperly initiated, 
the Department should ignore the results of the cost test (citing Koyo 
Seiko, Ltd. v. United States, 806 F. Supp. 1008 (1992)).
    The petitioners maintain that because the Department did not issue 
its questionnaire in this review until 254 days after publication of 
the notice of initiation, the 120-day time limit does not apply, and 
the Department was free to establish any reasonable date as the 
deadline for the sales-below-cost allegation. The petitioners state, 
however, that the Department did not establish a new deadline for 
filing a COP allegation. The petitioners add that the computerized 
version of Borusan's initial sales questionnaire response (filed in May 
1995) was unreadable, as acknowledged by Borusan, and state that 
Borusan did not submit a readable computer tape until September 1995. 
Finally, the petitioners contend that the COP allegation itself is 
accurate because: (1) Non-investment interest expenses are in fact not 
included in the COPs, and (2) the exclusion of reseller sales is in 
accord with Borusan's claims during the POR that the Department should 
not consider such sales in its dumping analysis.
    DOC Position: We agree with the petitioners. Regarding the 
timeliness of the sales-below-cost allegation, section 353.31(c)(1)(ii) 
of our regulations authorizes the Secretary to determine a new time 
limit beyond the general 120-day limit for alleging sales below cost 
if, in the Secretary's view, a relevant response is untimely or 
incomplete. In this respect, we find that a number of factors warrant 
our acceptance of the petitioners' allegation. The Department delayed 
issuance of the sales questionnaire until February 24, 1995, and the 
computerized version of Borusan's initial questionnaire response 
submitted on May 25, 1995, was unreadable. Therefore, the petitioners 
did not initially have the requisite data with which to make the 
allegation until a readable computerized version of Borusan's 
questionnaire response was submitted on September 29, 1995. Once the 
petitioners received the necessary data, they filed their allegation on 
January 11, 1996, which was within a reasonable time after receiving 
readable computer data under the circumstances of this case. During the 
period September 29, 1995, to January 11, 1996, there were closures at 
the Department due to the Federal budget crisis and a blizzard (i.e., 
November 15 through 21, 1995, and December 16, 1995, through January 
11, 1996). These extenuating circumstances were clearly beyond the 
petitioners' control. In addition, the petitioners requested an 
extension for filing their allegation. This is unlike the facts in 
Crankshafts from the U.K., where the petitioners failed to make an 
allegation of sales-below-cost until filing their case brief, even 
though they had access to the data that would have enabled them to file 
a timely allegation. Id., at 52153.
    Regarding the merits of the allegation, section 773(b) of the Act 
requires that the Department make a sales below cost determination 
whenever it has reasonable grounds to believe or suspect that sales in 
the home market have been made at prices below the cost of production. 
As stated in our December 4, 1996, ``Petitioners' Allegation of Sales 
Below the Cost of Production Memorandum'' (COP Allegation Memorandum), 
we found that the data submitted by the petitioners, which was based on 
information contained in Borusan's questionnaire responses, provided 
reasonable grounds to believe or suspect that Borusan had made below-
cost sales.
    Borusan's claims notwithstanding, we determined that the 
methodology used by petitioners gave us reason to suspect that sales 
were made below cost. Because petitioners excluded non-investment 
interest expenses from the SG&A component of COP, thereby understating 
Borusan's actual costs, they made a corresponding adjustment to price 
by subtracting credit expenses. Based on this analysis there was a 
considerable number of sales made below cost. Furthermore, for a 
significant number of these sales the price/cost differential was such 
that, even if credit expenses were added back into the price 
calculation, we had reason to believe that these would have been below-
cost sales.
    Second, we did not include sales made by Borusan's related 
resellers in our analysis of the cost allegation because neither we nor 
the petitioners could determine from Borusan's response the additional 
costs incurred by the related resellers. Therefore, we did not find it 
appropriate to include these sales in our analysis of whether to 
initiate a below-cost investigation. See COP Allegation Memorandum. 
Moreover, the sales we did examine were ``representative of the broader 
range of foreign models which may be used to determine FMV for the 
various U.S. models'' and our analysis of the below-cost allegation 
regarding these sales indicated that there was a sufficient basis to 
initiate a below-cost investigation. See Import Administration Policy 
Bulletin No. 94/1, ``Cost of Production--Standards for Initiation of 
Inquiry'' (March 25, 1994).
    Comment 3: Exclusion of Material Costs from WPI Adjustment to COP. 
The petitioners allege that the Department erroneously excluded some, 
but not all, raw materials from the indexing of the cost of 
manufacturing (COM). Specifically, the petitioners claim that the 
Department failed to subtract varnish and coupling costs from the total 
monthly COM figures before indexing. The petitioners contend that the 
Department should index the rest of the COM, calculate a weighted 
average, then deflate the average and add direct materials costs, 
including the varnish and coupling costs, to calculate the monthly COM.
    Borusan concurs with the petitioners that the Department should 
subtract varnish and coupling costs before indexing and calculating the 
COM.
    DOC Position: We disagree with both parties. In cases involving 
high inflation, it is our general practice to index all costs, whether 
they are reported on a replacement cost or historical cost basis. In 
the Preliminary Results, the coil, zinc, varnish and coupling costs all 
should have been

[[Page 51632]]

indexed in order to derive indexed weighted-average COMs that include 
raw materials costs. In high-inflation cases, it is normally the 
Department's practice to request that respondents report their material 
costs on a monthly replacement cost basis (i.e., the costs to the 
producer to replace the materials in the month consumer). See Final 
Results of Antidumping Duty Administrative Review: Ferrosilicon from 
Brazil, 61 FR 59407, 59408 (November 22, 1996). This data reflects the 
increases in materials costs from month to month due to inflation.
    However, in accordance with our practice, we still need to index 
all monthly replacement costs forward to the end of the POR in order to 
calculate a POR weighted-average COM, which applies to both 
inflationary and non-inflationary cases. We then deflate this POR 
average COM to derive a cost for each month that is based on a POR 
weighted average. This monthly cost is then compared to sales in that 
month. It we did not index costs in this manner, our calculations could 
be affected by monthly changes, other than inflation, that affect these 
costs (i.e., price fluctuations due to material shortages).
    Comment 4: Use of Production Quantity. The petitioners maintain 
that the Department should use monthly production quantities contained 
in Borusan's post-verification data submission rather than sales 
quantities to weight-average the indexed COP.
    Borusan claims that the Department did in fact use production 
quantities to weight average the COP in the preliminary results and 
therefore no correction is required.
    DOC Position: We agree with Borusan. In the Preliminary Results, we 
used the production quantities contained in Borusan's March 31, 1997, 
data submission to weight-average COP (see lines 22436, 22437, 22561 
and 22562 of Department's SAS margin program used in the Preliminary 
Results). The preliminary results calculation memorandum erroneously 
stated that we used the sales quantity to weight-average the indexed 
conversion costs. See Analysis for Borusan Group (Calculation 
Memorandum)(May 8, 1997). We have continued to use the production 
quantities to weight-average the COP in the final results.
    Comment 5: Interest Expense--Inclusion of Foreign Exchange Gains 
and Losses. Borusan claims that the Department should exclude foreign 
exchange losses from the interest expense calculation used in the COP/
CV calculations. Maintaining that these losses are primarily losses on 
foreign currency loans due to the high inflation experienced in Turkey 
and the devaluation of the Turkish Lira, Borusan contends that the 
losses should be treated as an inflation adjustment and not as a cost 
of production.
    The petitioners maintain that Borusan should not be allowed to 
exclude foreign exchange losses from its costs on the basis that a 
significant portion of the foreign exchange losses resulted from 
inflation. The petitioners contend that the Department already adjusts 
for the inflation effects of each cost element by using its 
hyperinflationary methodology to calculate infation-adjusted costs. 
They further contend that the Department's practice, as set forth in 
Rebar from Turkey, is to include these losses in the COP/CV financial 
expenses even where the economy is considered hyperinflationary. The 
petitioners also note that the Department's verification report 
indicates that the interest expenses obtained were to be adjusted using 
wholesale price indices for the preliminary results but that no 
adjustment was made.
    In addition, the petitioners argue that the Department should 
disallow Borusan's reported foreign exchange gains as an offset to 
interest expense because, contrary to the Department's policy for 
allowing this offset, the foreign exchange gains resulted primarily 
from export sales and not from the importation of raw materials.
    DOC Position: We agree with the petitioners that we should include 
Borusan's foreign exchanges losses and exclude Borusan's reported 
foreign exchange gains in calculating the COP/CV. With respect to 
foreign exchange losses, we have included this expense in our COP/CV 
interest expense calculation. The cost verification report notes that 
Borusan's foreign exchange losses are incurred on dollar-denominated 
debt. Further, as noted by Borusan, these losses are reflected in its 
income statement. The Department has clearly established that 
translation losses on dollar-denominated loans, as reflected in a 
company's income statement, are appropriately included in the cost of 
production because they reflect an actual increase in the amount of 
local currency that will have to be paid to settle these loans. See 
Final Determination of Sales at Less Than Fair Value: Fresh Cut Roses 
from Ecuador, 60 FR 7019, 7039 (February 6, 1995)(Roses from Ecuador). 
We not that although hyperinflation was largely responsible for the 
depreciation of the Turkish Lira, the inflation factor has been 
accounted for by indexing the interest expense for inflation using 
WPIs. See Calculation Memorandum.
    With respect to foreign exchange gains, we have not included such 
gains in the interest expense calculation, consistent with our findings 
in other segments of this proceeding. See the 1994-95 Review at 69072. 
The record evidence demonstrates that the foreign exchange gains at 
issue result from export sales transactions. See Exhibit 13 of the cost 
verification report. Our practice is to include foreign exchange gains 
as an offset to finance expenses if they are related to the cost of 
acquiring debt for purposes of financing production operations, and to 
exclude this item if it relates to sales. See Rebar from Turkey, at 
9741, and Pasta From Turkey, at 30324. In this case, we find that 
foreign exchange gains are related to sales, not production; therefore, 
they should not be used as an offset for calculating home market 
interest expenses.
    Comment 6: Imputed Credit Expense in Constructed Value/Offset to 
Trade Receivables and Finished Goods Inventory Portion of Interest 
Expense. Borusan alleges that the Department failed to adjust the CV 
interest expense factor to offset the imputed credit expense with that 
portion of actual finance expenses related to the financing of trade 
receivables. Borusan maintains that the Department's past practice, as 
set forth in Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Butt-Weld Pipe Fitting from Taiwan 58 FR 28556, 28560 
(May 14, 1993) (Fittings from Taiwan), is to include imputed credit 
costs in CV and offset the actual finance expenses by an amount 
attributed to financing trade receivables in order to avoid double 
counting of finance expenses. Therefore, Borusan contends that the 
Department should adjust the interest rate factor used for CV.
    The petitioners respond that it is not clear that the Department 
included imputed credit expenses in the CV in the preliminary results; 
therefore, the Department must first ensure that it has included 
imputed credit costs (and inventory carrying costs) in CV before making 
any offset for trade receivables financing.
    DOC Position: In the Preliminary Results, we correctly included 
imputed credit expenses and inventory carrying expenses in the CV. The 
inclusion of these imputed expenses in the CV is in accordance with our 
established practice prior to the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA) effective January 1, 1995. See. 
e.g., Final Determination of Sales at Less Than Value: Certain All-
Terrain Vehicles from Japan, 54 FR 4864, 4867 (January 31,

[[Page 51633]]

1989). However, we failed to adjust the interest expense in order to 
avoid double counting that portion of the interest expense that 
corresponds with the imputed credit expense or with the imputed 
inventory carrying expenses, (i.e., financing of trade receivables and 
financing of finished goods inventory). For these final results, we 
offset the reported interest expense by an amount attributable to 
financing trade receivables and finished goods inventory. See Fittings 
from Taiwan at 28560. We calculated the offset as a percentage of trade 
receivables and finished goods inventory to total assets, using the 
balance reported in the audited financial statements. We then used this 
ratio to reduce the interest rate used to calculate finance expenses in 
our CV calculation.
    Comment 7: Depreciation. The petitioners allege that Borusan 
incorrectly calculated its depreciation because it did not index its 
monthly depreciation expenses forward to equivalent terms. Rather, the 
petitioners allege that Borusan calculated this expense by adding the 
monthly amounts in its accounting records and then dividing the total 
by 12. Instead of calculating a simple average, the petitioners contend 
that Borusan should have inflated each monthly depreciation figure to 
December 1993 so they would be expressed in equivalent terms. The 
inflated figures should have then been summed and the result divided by 
12 to obtain an inflation-adjusted monthly average that is then 
deflated to derive depreciation costs for each month. The petitioners 
further maintain that Borusan incorrectly deflated the simple monthly 
average calculated for depreciation, as noted in the Cost Verification 
report, and assert that the Department should deflate the monthly 
average depreciation using the calculation formula shown in 
verification exhibit M1.
    Borusan responds that the Department should not recalculate the 
average monthly depreciation figure by expressing it in December 1993 
terms because, as noted in Borusan's financial statements, the 
depreciation amount is already stated in December 1993 terms. Borusan 
contends that the petitioners' recommended approach would result in a 
double indexing of this cost. Also, Borusan states that the manner in 
which it converted this December 1993 depreciation amount to monthly 
POR amounts is correct. With respect to the second point, Borusan notes 
that the data used by the Department in the preliminary results, based 
on Borusan's March 31, 1997, post-verification submission, already 
incorporated the required correction to Borusan's depreciation 
adjustment in the manner prescribed in the verification report.
    DOC Position: We agree with Borusan. At our request, Borusan 
submitted revised COP and CV databases on March 31, 1997, in which the 
depreciation adjustment was recalculated in accordance with our 
instructions. The revised data were used in the preliminary results. 
See Calculation Memorandum, at 4. Furthermore, Borusan's depreciation 
expenses were stated in December 1993 terms in accordance with Turkish 
law. Note 2 of Borusan's audited financial statements for 1992 and 1993 
states that ``Turkish commercial practice and tax legislation require 
that financial statements be prepared in accordance with the historical 
cost convention with the sole exception of the optional revaluation of 
fixed assets on the basis of indices published on an annual basis by 
the Ministry of Finance.'' Note 3(f) of the financial statements 
indicates that property, plant and equipment were revalued on December 
31, 1993 using the Ministry of Finance's officially published index of 
58.4 percent. See Exhibit 4 of Borusan's questionnaire response dated 
May 8, 1995. Specifically, each month's depreciation expense was 
originally reported in December 1993 cost terms, and was then deflated 
to each month. See page 25 and Exhibit M-1 of the cost verification 
report. Therefore, consistent with our established practice, we have 
not adjusted further Borusan's depreciation expense because the 
reported depreciation expense had already been adjusted for inflation 
when the assets were revalued based on the Ministry's index. See Rebar 
From Turkey at 9748.
    Comment 8: Level of Trade. Borusan contends that the Department's 
decision in the Preliminary Results to collapse certain levels of trade 
(LOTs) was in error. Borusan claims that it sells to five separate LOTs 
in the home market: (1) direct mill sales to trading companies (LOT 1); 
(2) direct mill sales to industrial end-users (LOT 2); (3) downstream 
sales to local wholesalers (LOT 3); (4) downstream sales to retailers 
(LOT 4); and (5) downstream sales to industrial end-users (LOT 5). 
Borusan argues that the Department's decision to collapse LOT 1 with 
LOT 3, and to collapse LOT 2 with LOT 5, is based on a fundamental 
misunderstanding of Borusan's reported LOTs and cannot be justified by 
the evidence contained on the administrative record in the review.
    Borusan contends that it met its burden of justifying its claimed 
LOTs through the information submitted in its questionnaire response. 
Moreover, Borusan maintains that the Department provided insufficient 
explanation in the preliminary results for collapsing these LOTs. 
Alternatively, if the Department rejects this argument, Borusan 
requests that the Department use the same LOTs as it did in the 1994-95 
Review.
    The petitioners contend that Borusan did not adequately 
differentiate or document the asserted five levels of trade, despite a 
specific request by the Department in a supplemental questionnaire for 
such differentiation and documentation.
    DOC Position: We agree with the petitioners. As in the Preliminary 
Results, we treated Borusan's reported LOTs 1 and 3 as one LOT, and we 
treated reported LOTs 2 and 5 as one LOT.
    In determining the number of LOTs under the pre-Uruguay Round 
Tariff Act, we examine the function of the respondent's customers and 
determine where in the distribution chain the customers fall (i.e., 
wholesaler, retailer, end-user). See Import Administration Policy 
Bulletin No. 92/1, ``Matching at Levels of Trade,'' (July 29, 1992), at 
2; and Final Results of Antidumping Duty Administrative Reviews: 
Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-
to-Length Carbon Steel Plate from Canada, 61 FR 13815, 13825 (March 28, 
1996). It is the respondent's responsibility to distinguish its claimed 
LOTs in this manner.
    Applying this standard to the instant proceeding, the information 
provided by Borusan does not indicate that LOTs 1 and 3 are distinct, 
nor does it adequately distinguish LOTs 2 and 5. LOT 1 involves direct 
sales by Borusan to trading companies. LOT 3 involves related party 
resales to wholesalers. Evidence contained in Borusan's February 26, 
1996, submission indicates that there is significant overlap in the 
functions performed and the place in the chain of distribution for the 
customers (trading companies and wholesalers) involved in claimed LOTs 
1 and 3. For instance, certain trading companies sell directly to 
retailers; these trading companies have the same function in the chain 
of distribution as wholesalers, i.e., both function as resellers of the 
subject merchandise to retailers. Thus, the fact that claimed LOT 1 
involves direct sales while claimed LOT 3 involves resales does not 
establish that separate LOTs in fact exist for these sales, absent 
evidence that the customers involved in these two groups of sales 
occupy different places in the chain of distribution. Because the 
information provided by Borusan does

[[Page 51634]]

not indicate such differences in the chain of distribution, we 
determined that LOTs 1 and 3 are appropriately considered as one level 
for this review.
    Our decision to collapse reported LOTs 2 and 5 is based on the same 
principle. Claimed LOT 2 involves direct sales to end users, while 
claimed LOT 5 involves related party resales to end users. As with 
claimed LOTs 1 and 3, our examination of the record evidence indicates 
that there is a significant overlap in the function of the customers in 
the chain of distribution for these claimed levels (end users in both 
cases). We therefore have collapsed LOT 2 with LOT 5. See Final 
Determination of Sales at Less Than Fair Value: Certain Carbon and 
Alloy Steel Wire Rod from Canada, 59 FR 18791, 18794 (April 20, 1994).
    Finally, as to Borusan's argument that we use the same LOTs used in 
the 1994-95 Review, the criteria upon which we examined Borusan's LOT 
argument in 1994-95 Review cannot be applied to this review because 
those criteria apply to cases administered under the URAA. See also 
Statement of Administrative Action (SAA) accompanying the URAA at 829-
831.
    Comment 9: Gross Unit Price Correction. The petitioners contend 
that the Department should correct the gross unit price reported for 
the first sales transaction examined at verification (i.e., SVE M.1) 
based on its findings.
    Borusan maintains that the Department found at verification that 
the gross unit price reported for the sales transaction was correct.
    DOC Position: We agree with the petitioners. The gross unit price 
reported for the sales transaction at issue is incorrect because that 
price is based on an incorrect weight amount noted in the sales 
invoice. Although Borusan reported the weight listed in the invoice, 
that weight was incorrectly calculated based on formulas used to 
convert feet to metric tons. Therefore, we have corrected this error in 
the sales database.
    Comment 10: Verification Corrections. The petitioners state that 
the Department should ensure that the errors noted in Borusan's March 
31, 1997, submission have been corrected in the final data used in this 
proceeding.
    Borusan states that the Department used sales and cost databases 
that incorporated data corrections contained in its March 31, 1997, 
submission. Therefore, Borusan contends that there is no need for the 
Department to make any additional changes to Borusan's sales and cost 
information in the final results.
    DOC Position: We agree with the petitioners and have ensured that 
the sales and costs databases that we are using for the final results 
incorporate all corrections from verification. In the course of 
examining whether the corrections noted in the March 31, 1997, 
submission were in fact included in the sales and cost databases, we 
found that certain corrections noted in verification exhibit A1, 
regarding customer-specific quantity rebates granted on 1993 sales, 
were not included in the home market database. We have corrected this 
for the final results.
    Comment 11: Countervailing Duty Adjustment. Borusan maintains that 
the Department erred in not making an upward adjustment to U.S. price 
for countervailing duties as required by section 772(d)(1)(D) of the 
Act.
    The petitioners did not comment on this issue.
    DOC Position: We agree with Borusan. Since the countervailing 
duties in question concern export subsidies, we have added to the U.S. 
price an amount for said duties (i.e., the actual amount paid in CVD). 
This amount was determined by multiplying the 7.26 ad valorem rate by 
the C&F value net of ocean freight expenses and CVD. See Exhibit O1 of 
the cost verification report.
    Comment 12: Imputed Interest on VAT Payments. Borusan argues that 
the Department failed to allow a circumstance of sale (COS) adjustment 
for financing expenses incurred on making VAT payments in the home 
market. Borusan maintains that it must finance its payment of VAT 
taxes, and that this expense represents a carrying expense incurred by 
Borusan until it receives payment for the invoiced amount (inclusive of 
VAT) for sales made to its home market customers. Borusan contends that 
there is no discernible difference between adjusting for credit 
expenses accrued in connection with sales and financing costs incurred 
on VAT payments. Therefore, Borusan states that section 353.56 of the 
Department's regulations authorizes the Department to make an 
adjustment to account for the carrying costs incurred in financing VAT 
payments.
    The petitioners respond that the claimed adjustment does not 
constitute a COS adjustment as defined in section 353.56 of the 
Department's regulations. The petitioners cite to the 1994-95 Review 
where the Department disallowed a COS adjustment for the same VAT 
drawback claimed by Borusan in the present case.
    DOC Position: We agree with the petitioners, and, consistent with 
our treatment of this item in other segments of this proceeding, have 
disallowed a COS adjustment for imputed interest resulting from delayed 
refunds of VAT paid on inputs. See the 1994-95 Review, at 69076. 
Allowing Borusan such an adjustment would involve imputing an expense 
incurred not between Borusan and its customers, but between Borusan, 
its supplier, and the government. ``[W]hile such a[n expense] may 
affect the notion of true economic cost to [the respondent], it tells 
us nothing about the difference in prices that result from the 
different circumstances of sale.'' See Federal-Mogul Corp. v. United 
States, 839 F. Supp. 881, 885 (November 30, 1993).
    Further, to the extent that Borusan incurs such an expense, it is 
incurred regardless of whether Borusan actually makes such a sale. In 
other words, there is no direct relationship between the imputed 
expense and the sales being examined. Accordingly, there is no basis 
for making a COS adjustment.
    Comment 13: Indexation of Packing Expenses. Borusan contends that 
the Department should have indexed the packing expenses in connection 
with home market and U.S. sales because the Department found that 
Turkey experienced hyperinflation during the POR.
    The petitioners argue that the Department should not index packing 
expenses because the packing costs contain a large component of raw 
materials which are already reported on a replacement cost basis.
    DOC Position: We agree with Borusan and have indexed Borusan's 
packing expenses in both markets. Because the timing of packing 
materials purchases in a hyperinflationary economy may result in an 
over- or under-statement of net prices, our practice is to index all 
packing costs in the manner done for COM. See Pasta From Turkey, at 
30323, and the 1994-95 Review, at 69071.
    Moreover, as noted above in Comment 3, in accordance with our 
practice, all costs, including materials, are indexed in 
hyperinflationary economy cases. Therefore, we do not accept the 
petitioners' argument that packing costs should not be indexed because 
some of the packing expenses are reported on a replacement cost basis.
    Comment 14: Direct Selling Expenses. Borusan argues that the 
Department incorrectly deducted direct selling expenses from U.S. price 
and added these expenses to FMV, thus double counting the expenses. 
Borusan cites to section 773(a)(4) of the Act in support of its 
argument.
    The petitioners did not comment on this issue.

[[Page 51635]]

    DOC Position: We agree with Borusan and have corrected this error 
in the final results. To make the COS adjustment, we have deducted home 
market direct selling expenses from FMV and then added U.S. direct 
selling expenses to FMV.
    Comment 15: Conversion of Certain Direct Selling and Movement 
Expenses. Borusan contends that the Department incorrectly converted 
certain direct selling and movement expenses from Turkish Lira to U.S. 
dollars by using exchange rates based on dates of sale rather than on 
dates of shipment.
    The petitioners did not comment on this issue.
    DOC Position: We agree with Borusan. In accordance with our 
practice, we have corrected the error by using exchange rates based on 
the date of shipment to convert expenses from Turkish lira to U.S. 
dollars. See Final Determination of Sales at Less Than Fair Value: 
Silicon Metal From Brazil, 56 FR 26977, 26980 (June 12, 1991) (Comment 
3).
    Comment 16: Assessment Rate. On August 1, 1997, we informed Borusan 
and the petitioners that we intended to calculate importer-specific ad 
valorem assessment rates on entered value. Since our antidumping 
questionnaire did not request Borusan to submit entered values in its 
questionnaire response, we informed the parties that we would calculate 
entered values by subtracting international freight charges from the 
gross unit prices reported in the U.S. sales database.
    The petitioners contend that to calculate the entered values the 
Department should also subtract from the gross unit prices the discount 
that Borusan grants its customers.
    Borusan did not comment on this issue.
    DOC Position: We agree with the petitioners. We have removed all 
discounts from gross unit prices to calculate entered values.

Final Results of Review

    As a result of our review, we determine that the following margins 
exist for the period May 1, 1993, through April 30, 1994:

------------------------------------------------------------------------
                                                                Margin  
           Manufacturer/exporter              Review period   (percent) 
------------------------------------------------------------------------
Borusan....................................  5/1/93-4/30/94         4.01
Yucelboru..................................  5/1/93-4/30/94         0.00
------------------------------------------------------------------------

    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. The Department will 
issue appraisement instructions directly to Customs.
    For Yucelboru, a cash deposit rate of zero will be effective for 
all its shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of these 
final results of this administrative review, as provided by section 
751(a) of the Act.
    For Borusan, the cash deposit rate will continue to be 2.57 
percent, the rate effective since May 16, 1997, which was published in 
the Notice of Amended Final Results of Antidumping Duty Administrative 
Review: Certain Welded Carbon Steel Pipe and Tube from Turkey, 62 FR 
27013 (May 16, 1997).
    For merchandise exported by manufacturers or exporters not covered 
in this review but covered in the original less-than-fair-value (LTFV) 
investigation or a previous review, the cash deposit will continue to 
be the most recent rate published in the final determination or final 
results for which the manufacturer or exporter received a company-
specific rate; if the exporter is not a firm covered in this or a prior 
review or the original investigation, but the manufacturer is, the cash 
deposit rate will be that established for the manufacturer of the 
merchandise; and if neither the exporter nor the manufacturer is a firm 
covered in this or any previous review, the cash deposit rate will be 
14.74 percent, the ``all others'' rate established in the LTFV 
investigation.
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.
    This notice also serves as final reminder to importers of their 
responsibility 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 is the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 C.F.R. 353.34(d). Failure to 
comply is a violation of the APO.
    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 C.F.R. 
353.22.

    Dated: September 25, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-26196 Filed 10-1-97; 8:45 am]
BILLING CODE 3510-DS-M