[Federal Register Volume 63, Number 30 (Friday, February 13, 1998)]
[Notices]
[Pages 7392-7402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3763]



[[Page 7392]]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-549-813]


Notice of Final Results of Antidumping Duty Administrative 
Review: Canned Pineapple Fruit From Thailand

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

SUMMARY: On August 7, 1997, the Department of Commerce published the 
preliminary results of its administrative review of the antidumping 
duty order on canned pineapple fruit from Thailand. The review covers 
shipments of this merchandise to the United States during the period of 
review (POR) January 11, 1995, through June 30, 1996.
    Based on our analysis of the comments received, and the correction 
of certain ministerial errors, these final results differ from the 
preliminary results. The final results are listed below in the section 
``Final Results of Review.''

EFFECTIVE DATE: February 13, 1998.

FOR FURTHER INFORMATION CONTACT: Gabriel Adler or Kris Campbell, Office 
of AD/CVD Enforcement 2, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-1442 and (202) 482-3813, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    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 citations to the Department's regulations refer to the 
regulations, codified at 19 CFR part 353, as they existed on April 1, 
1997.

Background

    This review covers three manufacturers/exporters of merchandise 
subject to the antidumping order on canned pineapple fruit from 
Thailand: Siam Food Products Public Company Ltd. (SFP), The Thai 
Pineapple Public Company, Ltd. (TIPCO), and Thai Pineapple Canning 
Industry Corp., Ltd. (TPC). On August 7, 1997, the Department of 
Commerce (the Department) published in the Federal Register a notice on 
Canned Pineapple Fruit from Thailand; Preliminary Results and Partial 
Termination of Antidumping Duty Administrative Review (62 FR 42487) 
(Preliminary Results). We received case briefs from the three 
respondents on September 8, 1997. Maui Pineapple Co., Ltd. (the 
petitioner) did not file a case brief. We received a rebuttal brief 
from the petitioner on September 17, 1997. Pursuant to a timely request 
by SFP and TIPCO, we held a public hearing on October 14, 1997, at 
which the three respondents and the petitioner made presentations.
    The Department has now completed this administrative review in 
accordance with section 751 of the Tariff Act of 1930, as amended.

Scope of the Review

    The product covered by this review is canned pineapple fruit 
(``CPF''). For purposes of this review, CPF is defined as pineapple 
processed and/or prepared into various product forms, including rings, 
pieces, chunks, tidbits, and crushed pineapple, that is packed and 
cooked in metal cans with either pineapple juice or sugar syrup added. 
CPF is currently classifiable under subheadings 2008.20.0010 and 
2008.20.0090 of the Harmonized Tariff Schedule of the United States 
(HTSUS). HTSUS 2008.20.0010 covers CPF packed in a sugar-based syrup; 
HTSUS 2008.20.0090 covers CPF packed without added sugar (i.e., juice-
packed). Although these HTSUS subheadings are provided for convenience 
and customs purposes, our written description of the scope is 
dispositive.

Comparison of United States Price and Normal Value

    For both companies involved in this review, we calculated 
transaction-specific U.S. prices (export price (EP) or constructed 
export price (CEP), as applicable) and compared them to normal values 
(NV) based on either weighted-average third-country 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 third-country market to compare to U.S. 
sales, we made comparisons of similar merchandise based on the 
characteristics listed in the Department's antidumping questionnaire.

Export Price and Constructed Export Price

    For the price to the United States, we used EP or CEP as defined in 
section 772 of the Act. We calculated EP and CEP based on the same 
methodology used in the Preliminary Results, except that we corrected 
two errors in our computer program with respect to commission offsets 
and CEP offsets. Contrary to our intention, the program (1) included 
not only U.S. commissions, but also U.S. indirect selling expenses, in 
deriving the cap that limits the third-country commission offset, and 
(2) granted a CEP offset, where none was appropriate. We have also 
modified the program to correct certain ministerial errors identified 
by TPC. See Memorandum from Gabriel Adler to Kris Campbell, dated 
December 5, 1997, regarding analysis of TPC data for final results.

Normal Value

    Where NV was based on a third-country price, we used the same 
methodology to calculate NV as that described in the Preliminary 
Results, with modifications for clerical errors with respect to TPC's 
data, and one additional exception. In the preliminary results, we 
erred in automatically basing NV on CV where comparison market sales of 
the most physically comparable product made during the first comparison 
month in the 90/60 day contemporaneity window were found to be below 
cost. For these final results, in accordance with our practice, we have 
revised our computer program to ensure that it searches the entire 90/
60 day contemporaneity window for any sales of the most comparable 
product retained after the cost test, and bases NV on such sales if 
they exist. See TPC Sales Comment 2 below.
    We note, however, that this methodology does not attempt to base NV 
on sales of other, less comparable, models in the event that we find 
all contemporaneous sales of the most comparable model to be below 
cost. On January 8, 1998, the Court of Appeals of the Federal Circuit 
issued a decision in Cemex v. United States, 1998 WL 3626 (Fed. Cir.). 
In that case, based on the pre-URAA version of the Act, the Court 
discussed the appropriateness of using CV as the basis for foreign 
market value (normal value) when the Department finds home market sales 
to be outside the ordinary course of trade. Although the impact of the 
below-cost test on our matching methodology was raised generally (see 
Comment 2, below), the specific issue discussed in Cemex was not raised 
by any party in this proceeding. However, the URAA amended the 
definition of sales outside the ``ordinary course of trade'' to include 
sales below cost. See Section 771(15) of the Act. Because the Court's 
decision was issued so close to the deadline for completing this 
administrative review, we have not had

[[Page 7393]]

sufficient time to evaluate and apply (if appropriate and if there are 
adequate facts on the record) the decision to the facts of this ``post-
URAA'' case. For these reasons, we have determined to continue to apply 
our policy regarding the use of CV when we have disregarded below-cost 
sales from the calculation of NV.
    Where NV was based on CV, we used the same methodology as that 
described in the Preliminary Results, with the following exceptions:

SFP

    1. We modified the margin calculation program to eliminate the 
double-counting of an adjustment to direct labor and overhead expenses;
    2. We revised the calculation of general and administrative (G&A) 
and interest expenses to include data for the fiscal year corresponding 
to the last three months of 1995; and
    3. We revised G&A expenses to exclude ocean freight charges that 
had been improperly included in the original calculation.

TIPCO

    We revised the program to eliminate the double-counting of packing 
expenses in CV.

Cost of Production

    As discussed in the Preliminary Results, we conducted an 
investigation to determine whether the respondents made third country 
sales of the foreign like product during the POR at prices below their 
cost of production (COP) within the meaning of section 773(b)(1) of the 
Act.
    We calculated the COP following the same methodology as in the 
Preliminary Results, except that for SFP we corrected the errors 
discussed with respect to constructed value above, which also pertain 
to COP.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given product were made at prices 
below the COP, we did not disregard any below-cost sales of that 
product because we determined that the below-cost sales were not made 
in ``substantial quantities.'' In accordance with sections 773(b)(2)(B) 
and (C) of the Act, where 20 percent or more of a respondent's sales of 
a given product were made at prices below the COP, we disregarded the 
below-cost sales because such sales were found to be made within an 
extended period of time in ``substantial quantities.'' Based on 
comparisons of third-country prices to weighted-average COPs for the 
POR, we determined, in accordance with section 773(b)(2)(D) of the Act, 
that the below-cost sales of the product were at prices which would not 
permit recovery of all costs within a reasonable period of time. Where 
all contemporaneous sales of a specific product were made at prices 
below the COP, we calculated NV based on CV, in accordance with section 
773(a)(4) of the Act.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
Preliminary Results. We received comments from the three respondents 
and rebuttal comments from the petitioner.

Sales Issues--General

Provisional Measures Cap
    Respondents TPC and SFP argue that the Department erred in the 
Preliminary Results by calculating a single duty assessment rate based 
on all sales reported for the period of review. The respondents argue 
that such a calculation is contrary to the intent of the ``provisional 
measures cap'' (section 737 of the Act), which limits the assessment of 
duties on entries made between the date of the Department's preliminary 
determination and the date of the International Trade Commission's 
affirmative injury determination under section 735(b) of the Act (``the 
cap period'') to the amounts deposited during this period.
    According to the respondents, most of the dumping margins found 
during the period of review occurred with respect to sales of entries 
made during the cap period. The dumping found on these sales exceeded 
both the deposit rate in effect for the cap period and the rates found 
on sales of post-cap entries. The respondents argue that, even if the 
Customs Service (Customs) ultimately applies the cap to cap-period 
entries, the inclusion of these sales in the calculation of a single 
POR assessment rate, which is then applied to entries outside the cap 
period, will shift a portion of the excess liability from the cap 
period onto post-cap period entries, partially vitiating the intended 
effect of the cap. Instead, the respondents argue, the Department 
should calculate separate assessment rates for sales of entries made 
during the cap period and sales of entries made after the cap period.
    The respondents acknowledge that the record contains entry dates 
for only a few of TPC's sales and none of SFP's sales, but claim that 
the record contains other data that would allow the Department to infer 
which sales correspond to data during the cap period. SFP further 
argues that if the Department decides that it must have SFP-specific 
entry data on the record in order to calculate separate assessment 
rates, it should allow SFP to collect such information from importers 
of SFP merchandise and to place the information on the record.
    The petitioner argues that the Department's preliminary results 
correctly calculated a single weighted-average assessment rate based on 
the margins found on all entries during the period of review. According 
to the petitioner, the provisional measures cap has no bearing on the 
assessment of duties on entries after the cap period, because section 
737 of the Act mandates a cap on deposits, not on assessments, with 
respect to entries subject to provisional measures. The petitioner 
contends that assessment of duties is governed instead by section 736 
of the Act, which requires that assessment account for the full amount 
that normal value exceeds the export price, and which contains no 
limitation on the assessment of duties in the post-cap period. The 
petitioner argues that the courts have held that the Department has 
broad discretion in calculating assessment rates, since the Act does 
not specify how duties should be assessed. According to the 
petitioners, the Department's preliminary calculation is consistent 
with sections 736 and 737 of the Act, and the Department is not 
compelled to adopt the methodology proposed by the respondents.
    The petitioner opposes the making of any inference with respect to 
the missing entry dates, arguing that surrogate entry dates would not 
be accurate and would not provide a specific link of sales to entries. 
Further, the petitioner opposes reopening of the record to gather the 
missing entry date data.
    DOC Position: We disagree with respondents. Consistent with our 
established practice, and in accordance with 19 CFR 
351.212,1 we have calculated importer-specific POR-average 
assessment rates by ``dividing the dumping margin found on the subject 
merchandise examined by the entered value of such merchandise for 
normal customs duty purposes.'' The provisional measures cap will be 
applied in this case, as in all cases, to the appropriate entries. 
Those entries will not be assessed final duties in excess of the amount 
of the deposit of estimated antidumping duties, in accordance with 
section 737(a) of the Act. We disagree with respondents that

[[Page 7394]]

section 737(a) also requires a change in our method of calculating duty 
assessment rates. In limiting the amounts to be assessed against 
provisional period entries, we have met our statutory obligation to 
disregard the antidumping duties due on such entries to the extent that 
the amount deposited is lower than the final duty amount. Further, the 
calculation of multiple assessment rates would raise concerns about 
possible manipulation of data to avoid AD duties and unrestrained 
dumping of certain merchandise subject to an order.
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    \1\ While the final regulations do not govern this review, they 
do describe the Department's current practice with respect to 
assessment.
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    Even if it were otherwise appropriate to determine assessment rates 
based on the respondents' proposed methodology, they did not provide 
adequate information to allow a proper application of this methodology. 
SFP and TPC suggest that a return to master-list assessment is not 
necessary in order to achieve their request that we calculate multiple 
assessment rates for each importer. While we agree that the calculation 
of multiple assessment rates does not require a master list, the 
concerns that led us to discontinue the master-list approach 
(difficulties in tying specific entries to specific sales, particularly 
in CEP situations, as well as the practical difficulties, and the 
concomitant increase in the probability of administrative error, in 
assessing based on such ties) are also present regarding the proposals 
submitted by SFP and TPC. In order to calculate multiple assessment 
rates as proposed, we would have to determine the entry dates of the 
sales under review. In this case, the data regarding entry dates is 
largely incomplete, and we have no way to ascertain whether specific 
sales correspond to entries subject to the cap. Such incomplete 
information could lead to manipulation. For instance, a respondent 
could provide entry dates for the sales with the highest dumping 
margins and argue that this should form the basis for the cap-period 
assessment rate, while failing to report entry dates for non-dumped 
sales of provisional period entries, which would then be factored into, 
and could lower, the post-cap rate. The respondents' suggestions for 
estimating entry dates do not adequately allay these concerns.
    Finally, we note that the calculation of a single assessment rate, 
as opposed to multiple rates for each such period, is not biased in 
favor of, or against, respondents. Under some situations, the single 
assessment rate methodology may result in the collection of a lesser 
amount of duties compared with assessment using multiple rates. For 
instance, this would hold true where the dumping rate during the 
provisional period exceeds the cap but is less than the post-cap-period 
dumping rate.

Sales Issues--TPC

Comment 1: Date of Sale
    TPC argues that the Department should have relied on the date of 
invoice as the date of sale for EP sales and third country sales, 
rather than relying on the date of contract. According to TPC, this 
review is subject to the date of sale methodology set forth in the 
Department's proposed regulations, and this methodology bases date of 
sale on the date of invoice, except in rare situations such as those 
involving long-term contracts. TPC contends that the Department 
followed this practice in recent cases on Yarn from Austria and Steel 
Wire Rod from India, and maintains that there were no compelling 
reasons to depart from reliance on the date of invoice in the 
Preliminary Results.
    The petitioner responds that the Department's use of contract date 
as the date of sale is supported by the Department's regulations and 
practice.
    DOC Position: We disagree with TPC that the date of invoice is the 
appropriate date of sale for the sales in question. For these final 
results, we have continued to base date of sale on the date of 
contract.
    TPC is correct that at the time of initiation of this review, the 
Department had a policy of normally relying on the date of invoice as 
the date of sale. See Antidumping and Countervailing Duties: Notice of 
Proposed Rulemaking and Request for Public Comments, 61 FR 7308, 7381 
(February 27, 1996) (``Proposed Regulations''); see also Memorandum 
from Susan G. Esserman to Joseph Spetrini and Barbara Stafford, March 
29, 1996. The general presumption in favor of invoice date continues to 
be our normal practice. As explained in the preamble to the 
Department's final regulations,2 ``in the Department's 
experience, price and quantity are often subject to continued 
negotiation between the buyer and seller until a sale is invoiced.'' 
See Antidumping Duties; Countervailing Duties, 62 FR 27296, 27348 (May 
19, 1997) (``Final Regulations'') at 27348.
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    \2\ While the final regulations do not govern this review, they 
do describe the Department's current practice with respect to date 
of sale.
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    However, this presumption applies ``absent satisfactory evidence 
that the terms of sale were finally established on a different date.'' 
Id. at 27349. This caveat reflects an awareness that, ``[i]n some 
cases, it may be inappropriate to rely on the date of invoice as the 
date of sale, because the evidence may indicate that, for a particular 
respondent, the material terms of sale usually are established on some 
date other than the date of invoice.'' Id. (emphasis added). 
Accordingly, ``[i]f the Department is presented with satisfactory 
evidence that the material terms of sale are finally established on a 
date other than the date of invoice, the Department will use that 
alternative date as the date of sale.'' Id. (emphasis added). For these 
reasons, while section 351.401(i) maintains the general presumption in 
favor of invoice date, it provides for the use of a different date of 
sale where the alternative date ``better reflects the date on which the 
exporter or producer establishes the material terms of sale.''
    The evidence on the record indicates that there were changes to the 
contracted terms of TPC's POR sales for only one out of several hundred 
EP sales, and five out of several hundred third country sales. See 
Memorandum from Case Analysts to Office Director, Regarding 
Verification of CEP sales by TPC (CEP verification report) at 1 (``[W]e 
noted that for virtually all transactions the terms of sale were 
established on the date of contract, and these same terms were applied 
without modification on the date of invoice.'') Thus, while the 
Department's date of sale policy provides that a written agreement may 
not provide a reliable indication that the material terms of sale are 
truly established, even if, for a particular sale, the terms were not 
renegotiated, the fact pattern presented by TPC is one where the 
invoiced terms of virtually all sales are identical to those set in the 
corresponding contracts. In the context of the Department's practice on 
date of sale, it is therefore reasonable to conclude that the material 
terms of the sales in question were usually set on the date of 
contract, and that the date of contract is therefore the appropriate 
basis for the date of sale.
    Finally, we note that TPC anticipated from the outset of this 
review that the Department might reject the use of date of invoice as 
the date of sale. In its initial questionnaire response TPC stated that 
the Department might find the date of contract to be a more appropriate 
date of sale than the date of invoice, and provided the date of 
contract for EP and third-country sales even though the date of 
contract had not been specifically requested by the Department. See 
letter from Dickstein, Shapiro, Morin & Oshinsky to the Department of 
Commerce, Case No. A-549-813 (November 12, 1997), at 21. Subsequently, 
TPC provided, at the Department's request, certain additional third-
country sales needed in order to

[[Page 7395]]

base our third-country sales analysis on contract date. Thus, our 
determination that the contract date is the appropriate date of sale 
for EP and third-country sales does not prejudice TPC, because we had 
all information to perform our analysis basing the date of sale on the 
contract date for these transactions.
Comment 2: Matching of Sales in Contemporaneity Window
    TPC argues that the Department erred in comparing U.S. sales to 
constructed value in instances where there were above-cost third-
country sales of the most physically comparable product within the 90/
60 day contemporaneity window. According to TPC, the Department's 
practice in model matching is, first, to search for above-cost 
comparison market sales of the most comparable product in the month of 
the U.S. sale and, if no such sales are found, to search three months 
back and two months after the month of the U.S. sale for any above-cost 
sales of that product (the 90/60 day contemporaneity window). TPC 
argues that the Department, contrary to its practice, immediately 
resorted to constructed value if comparison market sales of the most 
comparable product in the month of the U.S. sale were below cost, 
without searching for above-cost sales of that product elsewhere within 
the 90/60 day window.
    The petitioner did not address this comment.
    DOC Position: We agree with TPC. The Department's practice in past 
proceedings, which we have continued to follow in this review (see 
Normal Value, above), is to search the 90/60 day contemporaneity window 
to determine whether, based on the cost test, we disregarded all sales 
of the best model for comparison before resorting to CV. See 
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts 
Thereof From France, Germany, Italy, Japan, Singapore, and the United 
Kingdom; Final Results of Antidumping Duty Administrative Reviews, 62 
FR 2081, 2111-12 (January 15, 1997) (``AFBs VI''). We have revised the 
Department's margin calculation program accordingly for these final 
results of review. Although SFP and TIPCO did not comment on this issue 
in their case briefs, the error identified by TPC was also contained in 
the programs used for calculation of the dumping margins of the other 
two respondents, and we have corrected those programs as well.
Comment 3: Calculation of CEP Profit
    TPC argues that the Department erred in calculating CEP profit, 
because it calculated a ratio of total profit to total selling expenses 
that did not include imputed selling expenses, and applied that ratio 
to a U.S. selling expense figure that included imputed selling 
expenses. According to TPC, this treatment is inconsistent and 
overstates profit on U.S. selling activities.
    The petitioner responds that the Department's calculation was 
consistent with the statute and the Department's practice.
    DOC Position: We disagree with TPC. For these final results, we 
continued to exclude imputed selling expenses in deriving total actual 
profit. We included these expenses in the pool of U.S. selling expenses 
used to allocate a portion of total actual profit to each sale.
    The preamble to the Final Regulations addresses this issue 
directly. In response to a comment that we should include imputed 
expenses in the total selling expenses used to derive total profit in 
order to avoid double counting, we stated, ``We have not adopted this 
suggestion, because the Department does not take imputed expenses into 
account in calculating cost. Moreover, normal accounting principles 
permit the deduction of only actual booked expenses, not imputed 
expenses, in calculating profit.'' Final Regulations at 27354.
    Our policy regarding imputed expenses in the CEP profit calculation 
was explained in greater detail recently in AFBs VI, as follows:

    Sections 772(f)(1) and 772(f)(2)(D) of the Tariff Act state that 
the per-unit profit amount shall be an amount determined by 
multiplying the total actual profit by the applicable percentage 
(ratio of total U.S. expenses to total expenses) and that the total 
actual profit means the total profit earned by the foreign producer, 
exporter, and affiliated parties. In accordance with the statute, we 
base the calculation of the total actual profit used in calculating 
the per-unit profit amount for CEP sales on actual revenues and 
expenses recognized by the company. In calculating the per-unit cost 
of the U.S. sales, we have included net interest expense. Therefore, 
we do not need to include imputed interest expenses in the ``total 
actual profit'' calculation since we have already accounted for 
actual interest in computing this amount under section 772(f)(1).
    When we allocated a portion of the actual profit to each CEP 
sale, we have included imputed credit and inventory carrying costs 
as part of the total U.S. expense allocation factor. This 
methodology is consistent with section 772(f)(1) of the statute 
which defines ``total United States Expense'' as the total expenses 
described under section 772(d) (1) and (2). Such expenses include 
both imputed credit and inventory carrying costs.

AFBs VI at 2127. This policy is also described in a recent policy 
bulletin. See Import Administration Policy Bulletin number 97/1, issued 
on September 4, 1997, concerning the Calculation of Profit for 
Constructed Export Price Transactions, at 3 and note 5. As in the 
Preliminary Results, we have followed this policy for these final 
results of review.
Comment 4: Level of Trade/CEP Offset
    TPC argues that the Department erred in finding that CEP sales in 
the U.S. and third-country market were made at the same level of trade 
and in denying TPC a CEP offset. According to TPC, sales in the U.S. 
and third-country market would be at the same level of trade only if no 
adjustments were made for the activities of the U.S. reseller. However, 
TPC maintains, the level of trade for CEP sales must be determined 
after making adjustments for the reseller's activities, so that CEP 
sales necessarily were made at a less advanced level of trade than its 
third-country sales. TPC contends that since a level of trade 
adjustment is not possible, the Department should grant TPC a CEP 
offset.
    The petitioner argues that adjustments to CEP for U.S. selling 
expenses do not automatically warrant a CEP offset, and contends that 
TPC has failed to demonstrate the existence of different levels of 
trade in the U.S. and third-country market, so that a CEP offset is not 
warranted.
    DOC Position: We disagree with TPC. In the Preliminary Results, we 
expressly stated that, consistent with the statute, we had determined 
the level of trade for CEP sales after excluding those selling 
activities related to the expenses deducted under section 772(d) of the 
Act. Once these selling activities (which included warehousing, co-op 
advertising, and sales visits to customers) were excluded, we found 
that the selling functions performed for TPC's sales in the two markets 
were essentially the same, irrespective of channel of distribution, and 
were limited to the processing of sales-related documentation, 
invoicing, and collection of payment. See Preliminary Results at 42489. 
Since all of TPC's sales were made at the same level of trade, no level 
of trade adjustment or CEP offset is warranted in the calculation of 
TPC's antidumping margin.
Comment 5: TPC's Alleged Clerical Errors
    Warranties: TPC argues that the Department erred in its 
recalculation of warranty expenses incurred by affiliated reseller MC 
Foods, Inc. (MFI) based on verification findings. According to TPC, the 
Department should have recalculated warranty expenses incurred

[[Page 7396]]

by affiliated reseller Mitsubishi International Corporation (MIC), not 
those incurred by MFI. Further, the expenses in question should have 
been decreased rather than increased.
    The petitioner does not address TPC's claim.
    DOC Position: We disagree with TPC that the Department should have 
recalculated warranty expenses incurred by affiliated reseller MIC, 
rather than those incurred by MFI. In the list of clerical error 
corrections presented at the outset of verification, TPC explained that 
it was necessary to make a correction to warranty expenses by one of 
its affiliated resellers, but incorrectly identified the reseller as 
MIC. See CEP verification report at Exhibit LA-1. In fact, in verifying 
warranty expenses, we found that the correction applied to MFI warranty 
expenses (and not to MIC expenses), and resulted in a small decrease of 
the MFI warranty expense ratio. See CEP verification report at exhibit 
LA-16. In the preliminary results, the Department was therefore correct 
in seeking to recalculate the MFI warranty expense ratio. However, we 
agree with TPC that the adjustment should have resulted in a decrease, 
rather than an increase, to those expenses. See Id., containing 
worksheet recalculating the expenses. We have revised the MFI warranty 
expenses accordingly for these final results.
    U.S. Direct Selling Expenses: TPC argues that certain revisions to 
TPC's U.S. sales database that were presented at verification with 
respect to bank fees were not properly implemented in the preliminary 
results of review. According to TPC, the spreadsheet presented at 
verification to revise the bank fees was incorrectly captioned, and 
this error was not detected by the Department when incorporating the 
revised data into the preliminary margin calculation program, resulting 
in adjustment to a different expense (billback expense).
    The petitioner does not address this issue.
    DOC Position: We agree with TPC. At verification, TPC indicated 
that an error had been made in the calculation of bank fees, which 
correspond to variable ``DDIRSELU'' in TPC's sales database. However, 
the revised spreadsheet presented by TPC was incorrectly captioned 
``DIRSELU'', a variable name that corresponds to billback expenses, 
which are unrelated to bank fees. Despite this error, the record 
indicates that the correction in question, as verified by the 
Department, should have been made to bank fees and not to billback 
expenses. We have revised the margin calculation program accordingly.
    U.S. Indirect Selling Expenses: TPC argues that the Department 
erred in the manner in which it increased indirect selling expenses 
incurred by affiliated reseller MIC on U.S. sales to account for 
certain unreported selling expenses. According to TPC, the expenses 
reported in the sales database under the indirect selling expense field 
(INDIRSU) included certain expenses that do not concern the under-
reported expenses, namely handling and storage expenses. In the 
preliminary results, the Department increased the INDIRSU field by the 
ratio of the unreported selling expenses to the reported selling 
expenses. TPC argues that by doing so, the Department inadvertently 
increased the handling and storage expenses as well. TPC requests that 
the Department recalculate the indirect selling expenses so as not to 
increase the handling and storage expenses.
    The petitioner argues that the Department correctly calculated 
indirect selling expenses, and maintain that there is no evidence on 
the record to support the correction proposed by TPC.
    DOC Position: We agree with TPC. The record shows that the expenses 
reported in the indirect selling expense field included unrelated 
brokerage and handling expenses, and that these expenses varied by 
warehouse. See TPC's November 12, 1996 questionnaire response at 139; 
see also CEP verification report at Exhibit LA-31. For these final 
results, we have revised the indirect selling expenses so as not to 
increase the reported brokerage and handling expenses.
    Inventory Carrying Costs: TPC argues that the Department erred in 
implementing a correction to inventory carrying costs presented by TPC 
at verification. According to TPC, these expenses varied by warehouse 
location, and the Department erred in identifying the Kansas warehouse.
    The petitioner argues that there is no evidence on the record for 
TPC's claim that the warehouse in question was incorrectly identified.
    DOC Position: We agree with TPC. In its preliminary results of 
review, the Department's program erroneously referred to the Kansas 
warehouse as ``Kansas'', but TPC identified this warehouse using other 
codes. We have revised the program to correct this error for the final 
results.
    International Freight: TPC argues that the Department, in 
attempting to correct errors in TPC's reported international freight 
expenses for CEP sales that were identified by TPC at the outset of 
verification, made the following three errors: (1) the Department 
identified the destination based on the field DESTINU (which provides 
the location of the end customer) rather than WARLOC (which provides 
the location of the warehouse the merchandise was actually shipped to), 
(2) the Department did not apply a weight factor to the reported 
freight rates to convert the freight expenses to a standard 20 oz. case 
equivalent weight basis (the basis on which prices and adjustments are 
used in the program), and (3) the Department incorrectly applied the 
rate for eight-ounce merchandise to shipments to a single warehouse, 
rather than all warehouses.
    The petitioner argues that there is no basis in the record to 
support TPC's allegation with respect to the third error described 
above.
    DOC Position: We agree with TPC on all three points. We note, with 
respect to the third error, that TPC demonstrated at verification that 
the rate for shipments of eight-ounce merchandise applied to all 
shipments, irrespective of destination. See CEP verification report at 
Exhibit S-41.
    CEP Selling Expenses: TPC argues that the Department incorrectly 
double counted inventory carrying expenses in the calculation of CEP 
selling expenses, and also deducted these expenses twice from U.S. 
price.
    The petitioner does not comment on this claim.
    DOC Position: We agree with TPC, and have revised the final results 
accordingly.
    U.S. Commissions: TPC argues that the Department improperly treated 
U.S. commissions incurred on CEP sales in the margin calculation 
program, by both deducting such commissions from U.S. price and adding 
the same commissions to normal value.
    The petitioner disagrees that commissions were double counted, and 
argue that U.S. commissions were deducted from normal value in the form 
of a commission offset.
    DOC Position: We agree with TPC that we double counted U.S. 
commissions incurred on CEP sales in the preliminary results by 
subtracting these commissions from U.S. price and adding them to NV. 
The commission offset alluded to by petitioners consists of home market 
indirect selling expenses, capped by the amount of U.S. commissions. 
Although such an offset, when capped by U.S. expenses, results in a 
deduction from normal value in the amount of the U.S. expenses, the 
actual adjustment is for home market expenses rather than U.S. 
commissions. We have revised the margin calculation program 
accordingly. We note that the language suggested by TPC to correct this 
error pertains only to price-to-price comparisons. Since an identical 
error

[[Page 7397]]

was made for price-to-CV comparisons, we have also corrected this 
error.
    Entered Values: TPC argues that the Department should incorporate 
into the margin calculation program revised entered value data that 
were presented at the outset of verification.
    The petitioner does not comment on TPC's request.
    DOC Position: We agree with TPC, and have incorporated the revised 
entered value information.

Sales Issues--TIPCO

Comment 1: Knowledge of Final Destination
    TIPCO argues that the Department erred in disregarding certain U.S. 
sales based on a finding that the producer that supplied TIPCO with the 
merchandise involved in these sales knew the merchandise was destined 
for export to the United States. According to TIPCO, the manufacturer 
knew that its merchandise was destined for export, but did not know 
with certainty that it would be exported to the United States. TIPCO 
argues that the Department should therefore regard the sales in 
question as subject to TIPCO's antidumping margins, rather than the 
margins corresponding to the manufacturer of the merchandise.
    The petitioner argues that the evidence on the record supports a 
conclusion that the manufacturer knew that its merchandise was destined 
for the United States.
    DOC Position: We agree with the petitioner. The Department found at 
verification that the manufacturer of the merchandise in question was 
responsible for labeling, packing, and loading of the merchandise into 
containers. The labels applied by the manufacturer were standard U.S. 
market labels, listing U.S. distributors and nutrition facts as 
required by U.S. government regulations. Moreover, as explained by 
TIPCO officials at verification, CPF products with such labels are 
exported exclusively to the U.S. market. See Memorandum from Case 
Analysts to Office Director, Regarding Verification of Sales by TIPCO, 
July 30, 1997, at 5-6. Since the manufacturer was clearly in possession 
of information indicating the destination of the subject merchandise, 
we have determined that the manufacturer knew, or should have known, 
the ultimate destination of the subject merchandise purchased by TIPCO. 
Therefore, we have continued to exclude these sales from TIPCO's margin 
calculation for purposes of the final results of this review.
Comment 2: Use of CV for Certain U.S. Sales of Other Producers' 
Merchandise
    TIPCO argues that the Department erred in comparing certain U.S. 
sales of merchandise produced by other manufacturers to constructed 
value, rather than comparing these sales to third-country sales of 
identical or similar products produced by TIPCO. TIPCO acknowledges 
that it did not sell merchandise produced by these suppliers to the 
third-country market (Germany) during the POR. However, according to 
TIPCO, it is more logical to compare the selling prices of other 
producers' merchandise to the selling prices of identical or similar 
TIPCO merchandise than to the costs of TIPCO merchandise.
    The petitioner argues that the Department properly used CV for 
comparison to the sales in question. According to the petitioner, the 
Department did not learn of the identity of the producers of that 
merchandise until verification, and was thus unable to collect 
information on third-country sales involving merchandise produced by 
the same suppliers. The petitioner contends that there is therefore no 
basis for comparison of the U.S. sales in question to third-country 
sales of merchandise produced by TIPCO.
    DOC Position: We disagree with TIPCO. The statutory definition of 
foreign like product requires sales of merchandise produced by the same 
manufacturer as that involved in the U.S. sales. See section 771(16) of 
the Act. Given this requirement, the record does not contain evidence 
that there are third-country sales of a foreign like product that would 
serve as a proper basis for comparison of the merchandise produced by 
the other manufacturers. Because TIPCO did not inform the Department 
until verification that certain of its U.S. sales involved merchandise 
produced by other manufacturers, and did not identify any sales of such 
merchandise in the comparison market, there is no foreign-like product 
to which the sales in question can be compared. Further, because TIPCO 
did not report the cost of the merchandise produced by the other 
manufacturer, there is no basis on which to calculate a constructed 
value using the actual cost of that merchandise. Therefore, the only 
alternative left to the Department is to compare the U.S. sales in 
question to the constructed value reported by TIPCO with respect to 
merchandise produced by TIPCO.
Comment 3: Double-Counting of Packing Charges
    TIPCO argues that the Department double-counted packing in the 
calculation of constructed value.
    The petitioner does not address TIPCO's comment.
    DOC Position: We agree with TIPCO, and have revised the margin 
calculation program to eliminate the double-counting of packing in the 
calculation of constructed value.

Cost Issues--General

    Fruit Cost Allocation Methodology: Respondents SFP and TIPCO claim 
that the Department's decision to allocate joint production costs 
(including fruit costs) using a net realizable value (NRV) methodology 
is unlawful. According to the respondents, the courts have disallowed 
the use of value-based data to allocate shared costs, finding that such 
allocations undermine the statutory requirement that production costs 
serve as an independent yardstick by which to judge the fairness of 
prices. Specifically, the respondents argue that the Court of Appeals 
for the Federal Circuit (CAFC) ruled in IPSCO Inc. v. United States, 
965 F.2d 1056 (CAFC 1992)(IPSCO) that value-based cost allocations are 
unlawful, and the Court of International Trade (CIT) applied this 
ruling to the present case in The Thai Pineapple Public Co., Ltd. et 
al. v. United States, 946 F. Supp. 11 (CIT November 8, 1996), appeal 
filed May 15, 1997 (TIPCO). The respondents argue that, based on these 
precedents, the Department should accept an allocation of joint fruit 
costs on the basis of the weight of fruit used.
    In the alternative, SFP argues that the Department should accept 
the allocation basis used in its normal accounting system during the 
POR. SFP points out that after the Department rejected the weight-based 
allocation of fruit costs in the original investigation (because such 
an allocation did not capture qualitative differences among different 
parts of a pineapple), SFP changed the manner in which fruit costs were 
allocated in its normal accounting system during the period of the 
first review, so as to ensure that qualitative differences among 
different parts of the fruit were properly reflected.
    TIPCO adds that, even if an NRV methodology were a permissible 
basis for allocation of costs, the Department incorrectly calculated 
the NRV ratios based on sales prices and costs incurred during a five-
year period prior to the POR, instead of using TIPCO's submitted POR 
NRV costs. TIPCO argues that if the Department insists on

[[Page 7398]]

using a value-based methodology, it should, at a minimum, base any such 
methodology solely on NRV ratios derived from costs and revenues during 
the POR.
    In addition, TIPCO argues that the Department improperly applied 
NRV ratios to shared ``upstream'' labor and overhead expenses, which 
were incurred in the production of both CPF and juice. TIPCO contends 
that such expenses are not dependent on qualitative differences among 
raw material inputs, and should be allocated on a weight basis.
    The petitioner argues that the Department's practice fully supports 
the use of a value-based allocation for shared costs, and that an NRV 
methodology results in a more reasonable and accurate allocation of 
costs than a weight-based methodology. The petitioner further argues 
that the new methodology used by SFP in its normal accounting system 
was in fact a weight-based method, and was therefore unreliable.
    In addition, the petitioner contends that the use of an NRV 
methodology is entirely consistent with court rulings that establish 
that the Department's allocation methodologies must reflect actual 
production costs based on a company's normal (i.e., historical) 
allocation formulas consistent with generally accepted accounting 
principles. According to the petitioner, the use of POR data to 
calculate NRV ratios (as advocated by TIPCO) would be inappropriate 
given that the cost allocation methodologies followed during the POR 
represented a change from the historical allocation bases.
    The petitioner also claims that the Department properly allocated 
TIPCO's shared labor and overhead costs using an NRV methodology. The 
petitioner notes that the NRV ratios were derived in order to allocate 
all pre-split-off costs, including labor and overhead, and that labor 
and overhead cost data were used to derive the NRV ratios.
    DOC Position: We agree with the petitioner. The Department's long-
standing practice, now codified at section 773(f)(1)(A) of the Act, is 
to rely on data from a respondent's normal books and records if they 
are prepared in accordance with home country generally accepted 
accounting principles (GAAP) and reasonably reflect the costs of 
producing the merchandise. Also, as described in section 773(f)(1)(A) 
of the Act, the Department must consider whether reported allocations 
``have been historically used by the exporter or producer.''
    In the Preliminary Results, we found that the respondents had 
abandoned their historical fruit cost allocation methodologies during 
the POR. See Preliminary Results at 62 FR 42487, 42490. We carefully 
reviewed each of the new cost allocation methodologies to determine 
whether they were in accordance with home country GAAP and whether they 
allocated costs reasonably. We determined that the newly adopted fruit 
cost allocation methodologies were based on the relative weight of the 
fruit contained in the CPF produced. Id. As discussed in the final 
determination in the underlying investigation, the allocation of 
pineapple fruit costs among products solely on the basis of weight 
(i.e., a quantitative factor) is inappropriate. See Final Determination 
of Sales at Less Than Fair Value: Canned Pineapple Fruit from Thailand, 
60 FR 29553, 29561 (June 5, 1995) (Final Determination).\3\ Since the 
newly adopted allocation methodologies do not incorporate any measure 
of the qualitative factor of the different parts of the pineapple, we 
find that such methodologies do not reasonably reflect the costs 
associated with production of canned pineapple fruit. A reasonable 
fruit cost allocation methodology is one that reflects the 
significantly different quality of the fruit parts that are used in the 
production of CPF versus those used in the production of juice 
products. Id. An allocation methodology based on net realizable value 
data recognizes these differences while a weight-based approach does 
not.
---------------------------------------------------------------------------

    \3\ Although, as noted above, this aspect of the Final 
Determination was overturned by the CIT in TIPCO, it is currently on 
appeal before the CAFC.
---------------------------------------------------------------------------

    We disagree with respondents' arguments that the Court of Appeals 
for the Federal Circuit (CAFC) ruled in IPSCO Inc. v. United States, 
965 F.2d 1056 (CAFC 1992)(IPSCO) that value-based cost allocations are 
unlawful. IPSCO involved the Department's use of an appropriate 
methodology for allocating costs between two grades of steel pipe. 
There were no physical differences between the two grades of pipe, only 
differences in quality and market value. Furthermore, the same 
materials, labor, and overhead went into the manufacturing lot that 
yielded both grades of pipe. Given these facts, the Department, in its 
final determination for the underlying case, allocated production costs 
equally between the two grades of pipe, reasoning that because they 
were produced simultaneously, the two grades of pipe in fact had 
identical production costs.
    This aspect of the case was upheld in IPSCO, based on the CAFC's 
holding that the Department ``computed constructed value according to 
the unambiguous terms of [the Act].'' IPSCO at 1061. While the CAFC 
noted, in deferring to the Department's ``consistent and reasonable 
interpretation of section 1677b(e),'' that the allocation of costs 
based on relative value resulted in an unreasonable circular 
methodology (i.e., because the value of the pipe became a factor in 
determining cost which became the basis for measuring the fairness of 
the selling price of pipe), nowhere did the appellate court indicate 
that use of an allocation methodology based on relative value was 
legally impermissible. Id. On the contrary, IPSCO suggests that the 
courts will defer to the Department's preference for reliance on a 
respondent's normal allocation methodologies, particularly when there 
are significant differences in the raw materials. The Department's 
reasoning in the instant case (i.e., that the use of the pineapple 
cylinder in production of CPF and the use of the shells, cores, and 
ends, in production of juice and concentrate, requires a value-based 
allocation basis) is thus fully consistent with IPSCO.
    We disagree with SFP that its normal accounting system during the 
POR allocated fruit costs in a manner that accounted for qualitative 
differences in the different parts of the fruit. Due to the proprietary 
nature of the facts at issue, our analysis of SFP's normal allocation 
methodology is contained in the proprietary version of a memorandum in 
the Department's Central Records Unit. See Memorandum from William 
Jones through Cathie Miller to the File, Regarding SFP Fruit Cost 
Allocation (December 5, 1997). As discussed in that memo, we have 
determined that SFP's normal allocation methodology during the POR does 
not ``reasonably reflect'' the cost of producing the merchandise and we 
cannot employ this method in our COP analysis. Alternatively, we have 
applied the NRV methodology used for the preliminary results in our 
calculations for these final results.
    In response to TIPCO's argument that NRV ratios, to be used at all, 
should have been based on POR data, we continue to believe that we 
correctly relied upon historical data in calculating the NRV ratios 
used in the Preliminary Results. The NRV is commonly defined as the 
predicted selling price in the ordinary course of business less 
reasonably predictable costs of completion and disposal. See Cost 
Accounting: A Managerial Emphasis at 550 (Horngren, 9th ed.

[[Page 7399]]

1997). In order to calculate NRV ratios for the Preliminary Results, it 
was necessary to compare historical cost and sales data for pineapple 
fruit products over a period encompassing several years prior to the 
antidumping proceeding, and also to include data for markets where 
allegations of dumping had not been lodged. We therefore collected 
company-specific historical data from 1990 through 1994 and used this 
information to perform our calculations and adjust the allocation of 
shared costs.
    Finally, with respect to the allocation of TIPCO's joint labor and 
overhead costs, we continue to believe that these costs should be 
allocated in the same manner as the costs of purchasing fruit. The 
Department recognizes that a ``joint production process occurs when 
`two or more products result simultaneously from the use of one raw 
materials as production takes place.' '' See Polyethylene Terephthalate 
Film, Sheet and Strip from the Republic of Korea; Final Results of 
Antidumping Duty Administrative Review and Notice of Revocation in 
Part, 61 FR 58374, 58376 (November 14, 1996) (PET Film) (quoting 
Keeler, Management Accountants' Handbook, Fourth Ed. at 11:1). 
Moreover, a joint production process produces two distinct products and 
the essential point of that process is that the raw material, labor and 
overhead costs prior to the initial split-off requires an allocation to 
the final products. See Management Accountant's Handbook at 11:1. CPF 
and juice result from a joint production process because they both rely 
on the use of a single raw material, pineapple fruit. From the time 
when the fruit is purchased or grown until the fruit is processed in 
the Ginaca machine (which separates the fruit into its various parts), 
CPF and juice share the joint raw material, labor, and overhead costs. 
(After the Ginaca machine separates the fruit (i.e., the ``split-off 
point''), the cored pineapple cylinders are processed into CPF, and the 
remaining portions of the pineapple (i.e., the shells, cores and ends) 
are processed separately in order to extract pineapple juice.) Since 
all costs up to the split-off point are joint costs, and since, as 
discussed above, there are qualitative differences in the different 
parts of the pineapple, all such costs (including labor and overhead) 
must be allocated in a manner that reflects those differences. 
Accordingly, it would be inappropriate to allocate the labor and 
overhead costs on a weight basis, as urged by TIPCO. Instead, for these 
final results we continue to allocate these costs on the basis of NRV 
ratios, since such an allocation reasonably reflects qualitative 
differences that exist between the joint raw materials used to produce 
CPF and juice.

Cost Issues--TPC

Comment 1: Calculation of Average Cost for POR
    TPC argues that the Department should have calculated a separate 
cost of production for each fiscal year for which sales in the 
comparison market were compared to costs (i.e., 1994, 1995, and 1996), 
rather than calculating a single average cost for the POR on the basis 
of 1995 and 1996 data. TPC contends that the calculation of a single 
average cost for the POR is not required by statute, and maintains that 
the Department has calculated separate fiscal year costs in other cases 
where the use of a single average cost would have created a distortion. 
TPC argues that calculation of separate fiscal year costs is necessary 
in this case in order to account for substantial increases in the cost 
of fresh pineapple and interest expenses from year to year. According 
to TPC, the calculation of a single average cost for the POR in the 
Preliminary Results distorted the price-cost comparison in such a way 
that sales early in the period appear to be below cost, while sales 
late in the period appear to have high profit margins. TPC further 
claims that this result was exacerbated because the Department did not 
include 1994 cost data in the calculation of the single average POR 
cost. TPC argues that a distortion also arises because its merchandise 
is held in inventory, so that, for instance, sales in early 1995 are 
made out of inventory produced in 1994. According to TPC, prices are 
determined based on the cost of inventory, and therefore a comparison 
of sales in early 1995 to average costs in 1995 would create a 
distortion. TPC argues that, instead, the Department should assign 
fiscal year costs to sales taking into account the average inventory 
period for each product.
    The petitioner responds that it would be contrary to law and the 
Department's practice to rely on costs outside the POR. The petitioner 
points out that in the underlying investigation, the Department 
explicitly determined to use costs for the POI and not costs for the 
period before the POI, and that in the investigation the Department 
rejected arguments similar to those made by TPC in this review. 
According to the petitioner, the Department generally does not analyze 
the holding period in determining the appropriate reporting period for 
cost information, and TPC has offered no new arguments beyond those 
raised by the respondents in the underlying investigation. The 
petitioner further argues that the prevailing market conditions during 
the period reflected steady prices despite increasing costs, so that 
there is no evidence that a distortion arises from the comparison of 
prices to an average POR cost.
    DOC Position: We disagree with TPC. The Department's normal 
methodology with respect to the averaging of costs is to calculate a 
single weighted-average cost for the entire period of investigation or 
review, except in unusual cases where there are substantial changes in 
cost, e.g., cases involving high-inflation economies. See Circular 
Welded Non-Alloy Steel Pipe and Tube From Mexico; Final Results of 
Antidumping Duty Administrative Review, 62 FR 37014, 37024 (July 10, 
1997); see also Final Determination of Sales at Less Than Fair Value: 
Certain Welded Stainless Steel Pipes and Tubes From Taiwan, 57 FR 53705 
(November 12, 1992). This methodology is reasonable and in accordance 
with law, and has been consistently followed regardless of whether the 
costs of production inputs during the period were higher or lower than 
the costs in other periods. See, e.g., Final Determination of Sales at 
Less than Fair Value: Stainless SteelBar From Spain, 59 FR 66931 
(December 28, 1994)(the Department declined to accept the petitioner's 
argument that the appropriate cost period was that period prior to the 
period of investigation, which reflected higher costs).
    The Department believes that, absent strong evidence to the 
contrary, the cost structure during the POR (or period of 
investigation) is representative and can be used to calculate an 
estimate of the cost of production of that foreign like product in the 
ordinary course of business. Thus, although the statute grants the 
Department latitude in determining the appropriate cost reporting 
period, the Department has consistently required and used the per-unit 
weighted-average costs incurred during the POR.
    The Department has departed from its normal practice of using POR 
weighted-average costs in certain rare situations where cost and price 
averages calculated over the entire period did not permit an 
appropriate comparison. See, e.g., Notice of Preliminary Determination 
of Sales at Less Than Fair Value and Postponement of Final 
Determination: Static Random Access Memory Semiconductors From Taiwan, 
62 FR 51442, 51444 (October 1, 1997); Final Determination of Sales at 
Less

[[Page 7400]]

Than Fair Value: Erasable Programmable Read Only Memories (EPROMs) from 
Japan, 51 FR 39680, 39682 (October 30, 1986); Final Determination of 
Sales at Less Than Fair Value: Dynamic Random Access Memory 
Semiconductors of One Megabit and Above From the Republic of Korea, 58 
FR 15467, 15476 (March 23, 1993). However, we find that the pineapple 
industry did not experience significant price movements over the POR, 
and therefore we continue to believe that the costs incurred during the 
POR are reasonably representative of TPC's cost experience and the most 
relevant data to analyze whether current sales permit recovery of 
costs.
    As for the ``significant'' increase in the cost of the raw material 
input that TPC claims to have experienced during the POR, we note that 
as with all commodities, price fluctuations in the raw pineapple are to 
be expected, as prices are dependent upon the supply and demand of that 
commodity. TPC has not identified, and we do not know of, any past case 
where the Department has abandoned its normal POR cost methodology on 
the basis of a fluctuation in the price of raw material inputs. 
Further, TPC's assertion that the cost of pineapple fruit increased 
substantially during the POR is misleading. While TPC is correct that 
the average cost of pineapple fruit was higher at the end of the POR 
than it was at the beginning of the POR, the average monthly costs 
fluctuated both upward and downward throughout the POR. Moreover, in 
its brief, TPC understates the 1994 average cost of pineapple fruit, 
relying on an average cost of pineapple for 1994 that included costs 
for nine months before the earliest 1994 sale it was required to 
report.
    We are also unpersuaded by TPC's argument that its interest 
expenses increased substantially over the period, thus warranting 
calculation of separate costs for each fiscal year. The increase in 
interest rates noted by TPC is greatest when comparing the average 
interest expenses for 1994 to those for 1995. However, the interest 
expense ratio reported by TPC for 1995 is not, on its face, 
aberrational, whereas the interest expense ratio for 1994 (which TPC 
has treated as proprietary, and therefore cannot be disclosed in this 
notice), is strikingly low. See TPC case brief at 7.
    As for TPC's additional argument that the average POR cost relied 
upon in the Preliminary Results is distorted by the exclusion of 1994 
fiscal year costs from the average, we note that the Department's 
practice is to base its cost calculation on fiscal years overlapping 
the POR. No part of the TPC 1994 fiscal year overlaps the POR. Although 
third-country market sales in the last three months of 1994 might serve 
as a comparison basis for U.S. sales at the beginning of the POR under 
the Department's 90/60 day window for matching, we are unpersuaded that 
this is a sufficient reason to depart from the Department's practice. 
We have therefore continued to base the calculation of the weighted-
average cost for the POR on 1995 and 1996 costs.
    In sum, we find no compelling reason to depart from the 
Department's normal practice and to calculate separate costs for each 
fiscal year. We have continued to rely on a single weighted-average 
cost for the POR, based on 1995 and 1996 costs.

Cost Issues--SFP

Comment 1: Adjustment to Direct Labor and Overhead
    SFP states that the Department inadvertently included a direct 
labor and overhead adjustment in its calculation of SFP's COP and CV. 
SFP argues that the adjustment would have been appropriate if the 
Department had used SFP's unadjusted costs, as reflected in its normal 
accounting records; but since the Department accepted SFP's revised 
allocation of labor and overhead costs, the adjustment is not 
necessary.
    The petitioner claims that SFP is mistaken in claiming that the 
Department included the direct labor and overhead adjustment in the 
calculation of COP and CV for the preliminary results.
    DOC Position: We agree with the respondent. The direct labor and 
overhead adjustment was included in the Department's calculation of 
SFP's cost of manufacturing used in the preliminary results. This can 
be confirmed by adding the materials, labor and overhead amounts shown 
in the cost calculation memo and comparing them to the cost of 
manufacturing also reported in that memo. Further, since the Department 
accepted SFP's revised allocation of labor and overhead costs, the 
adjustment in question was not necessary. We have revised labor and 
overhead costs accordingly for these final results.
Comment 2: Adjustments to Year-End Physical Inventory
    SFP claims that the Department incorrectly included SFP's year-end 
inventory count adjustments in the calculation of COP and CV. SFP 
argues that these adjustments were recorded to correct for errors that 
occurred in tracking CPF inventory movement from production to semi-
finished goods inventory, and then to finished goods inventory and 
sales. According to SFP, the Department's use of actual production 
quantities in its cost calculations has already accounted for a portion 
of its year-end adjustments, and the remaining adjustments are 
irrelevant to the cost of manufacturing since these adjustments are 
related to post-production inventory movement. SFP argues that in the 
alternative, if the year-end adjustments are included, the Department 
should use SFP's original, uncorrected production figures as the 
starting point for the calculation of unit costs.
    The petitioner argues that SFP's original production figures 
contained errors and therefore should not be used for unit cost 
calculations. The petitioner further argues that SFP's year-end 
adjustments were not reflected in its submitted cost data, and that the 
Department therefore correctly revised SFP's production costs to 
include the adjustments.
    DOC Position: We agree with the petitioner. The submitted cost data 
did not include any of SFP's year-end inventory adjustments, and the 
inventory tracking errors involved costs that arose throughout the POR. 
SFP accumulated these costs and reported them in the inventory amount 
on its balance sheet. These costs were not reflected on SFP's income 
statement until the end of 1996, when year-end adjustments were 
applied, nor were they included in the reported costs. Therefore, we 
have continued to include the year-end adjustments in our cost 
calculations for the final results. In applying the adjustments, we 
have pro-rated the total amount between the first six months of 1996 
and the last six months of 1996 on the basis of production quantities.
Comment 3: Appropriate Period for G&A and Interest Expenses
    SFP argues that the Department incorrectly calculated G&A and 
interest expenses. According to SFP, the Department's long-standing 
policy is to calculate G&A expenses from the audited financial 
statements which most closely correspond to the POR. SFP had two sets 
of financial statements during the POR, reflecting the fact that SFP 
changed its fiscal period to the calendar year at the end of 1995. The 
first set of financial statements covered the period October 1994 
through September 1995, and the second set covers the last three months 
of 1995 (the ``stub'' year). In the preliminary results, the Department 
based G&A and interest expenses on the first of these financial 
statements only.

[[Page 7401]]

SFP argues that the Department should have also included in its 
calculation the expenses shown in SFP's stub year 1995 financial 
statements. SFP argues that in Steel Products from Canada the 
Department included expenses from a period of less than a full year in 
its G&A and interest expense calculations. See Certain Corrosion-
Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon 
Steel Plate from Canada; Final Results of Antidumping Duty 
Administrative Reviews, 61 FR 13815, 13829-30 (March 28, 1996).
    The petitioner argues that the Department followed its normal 
practice when it calculated SFP's G&A expenses using the audited 
financial statements for the fiscal year ending in September 1995. The 
petitioner claims that the Department's use of full year annual data to 
calculate SFP's G&A expenses was consistent with the methodology used 
in Final Determination of Sales at Less Than Fair Value: Furfuryl 
Alcohol from Thailand, 60 FR 22557, 22560-61 (May 8, 1995), where the 
Department stated that because of their nature as period costs, and due 
to the irregular manner in which many companies record G&A expenses, 
the Department generally looks to a full-year period in computing G&A 
expenses for COP and CV.
    DOC Position: We agree with SFP. While stub year 1995 encompasses 
only three months, it represents an audited fiscal period (thus 
properly reflecting all costs related to this period), and falls 
entirely within our POR. We have therefore recalculated SFP's G&A and 
interest expense rates for these final results using both the audited 
financial statements for the year ending September 30, 1995, as well as 
the audited financial statements for the ``stub year'' ending December 
31, 1995.
Comment 4--Movement Charges in G&A Expenses
    SFP claims that the Department improperly included ocean freight 
charges in the calculation of G&A expenses. SFP argues that these 
charges are direct selling expenses, not G&A expenses. SFP further 
argues that all of its sales during the POR were made on an FOB 
Thailand basis, so that any ocean freight expenses are unrelated to 
subject merchandise.
    The petitioner argues that the Department properly included ocean 
freight charges in the calculation of G&A expenses. The petitioner 
claims that SFP classifies these costs as G&A expenses in its 
accounting system and thus they should be included in the G&A expense 
calculation.
    DOC Position: We agree with SFP. Ocean freight charges are properly 
classified as a movement expense and thus should not be included in the 
calculation of G&A expenses. Accordingly, we have corrected the G&A 
expense calculation for these final results by excluding the ocean 
freight charges.

Cost Issues--TIPCO

Comment 1: Foreign Exchange Gains and Losses on Accounts Receivable
    TIPCO claims that the Department erred when it removed foreign 
exchange gains from the calculation of G&A expenses. TIPCO contends 
that a portion of the excluded exchange gains were related to loans and 
purchase transactions and therefore should be allowed as an offset to 
TIPCO's G&A expenses. TIPCO also argues that the remaining exchange 
gains are akin to gains on financing activity and thus should be 
treated in a manner similar to interest income on short-term financial 
assets. Therefore, TIPCO argues, the Department should apply the 
remaining exchange gains as an offset to interest expenses.
    The petitioner argues that the Department properly followed its 
stated policy when it excluded foreign exchange gains earned on 
accounts receivable from the calculation of TIPCO's G&A expenses. See, 
e.g., Notice of Final Determination of Sales at Less than Fair Value: 
Certain Pasta from Italy, 61 FR 30326, 30364 (June 14, 1996). The 
petitioner also notes that it is Department practice to exclude foreign 
exchange gains on accounts receivable from the calculation of net 
interest expenses. See, e.g., Notice of Final Determination of Sales at 
Less than Fair Value: Silicomanganese from Venezuela, 59 FR 55436, 
55440 (November 7, 1994). The petitioner claims that TIPCO did not 
provide any information or explanation in support of its claim that 
exchange gains on accounts receivable were related to financing 
activities and, therefore, these amounts should be excluded from the 
calculations of TIPCO's G&A expenses and net interest expenses for the 
final results.
    DOC Position: We agree with the petitioner. It is Department 
practice to include foreign exchange gains and losses on financial 
assets and liabilities in our COP and CV calculations, provided that 
the gains and losses are related to the company's production. Since the 
foreign exchange gains and losses incurred on accounts receivable are 
related to the sales function, rather than to production, these amounts 
should not be included in the calculations of COP and CV. Accordingly, 
we have excluded these amounts from G&A expenses and net interest 
expenses for the final results. However, we have included foreign 
exchange gains and losses incurred on loans in the calculation of COP 
and CV, as TIPCO demonstrated that these gains and losses were related 
to the company's financing activities.
Comment 2: Calculation of Profit for CV
    TIPCO argues that the Department failed to include packing in the 
revenue and cost components of the CV profit calculation. According to 
TIPCO, the profit realized on sales must be allocated over the entire 
cost experience, and packing is a component of cost of goods sold.
    The petitioner argues that the Department was correct in excluding 
packing from the profit calculation for TIPCO, because the home market 
net price and COP net price calculated by the Department did not 
include packing.
    DOC Position: We agree with the petitioner. In the Preliminary 
Results, we calculated the profit rate in the margin program exclusive 
of packing. Therefore, the profit rate is correctly applied to a cost 
of manufacturing and general expense amount exclusive of packing. 
Accordingly, we have not revised the profit calculation for these final 
results.

Final Results of Review

    As a result of our review, we determine that the following margins 
exist for the period January 11, 1995, through June 30, 1996:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
Siam Food Products Public Company Ltd......................        12.85
The Thai Pineapple Public Company, Ltd.....................        27.85
Thai Pineapple Canning Industry Corp., Ltd.................        21.54
------------------------------------------------------------------------

    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. As discussed above, 
because the number of transactions involved in this review and other 
simplification methods prevent entry-by-entry assessments, we have 
calculated exporter/importer-specific assessment rates. With respect to 
both EP and CEP sales, we divided the total dumping margins for the 
reviewed sales by the total entered value of those reviewed sales for 
each importer. We will direct Customs to assess the resulting 
percentage margins against the entered Customs values for the subject

[[Page 7402]]

merchandise on each of that importer's entries under the relevant order 
during the review period. While the Department is aware that the 
entered value of the reviewed sales is not necessarily equal to the 
entered value of entries during the POR (particularly for CEP sales), 
use of entered value of sales as the basis of the assessment rate 
permits the Department to collect a reasonable approximation of the 
antidumping duties which would have been determined if the Department 
had reviewed those sales of merchandise actually entered during the 
POR.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of these 
final results of this administrative review, as provided by section 
751(a) of the Act: (1) The cash deposit rate for SFP, TIPCO, and TPC 
will be the rate established above; (2) for merchandise exported by 
manufacturers or exporters not covered in this review but covered in 
the original less than fair value (LTFV) investigation, the cash 
deposit will continue to be the company-specific rate published in the 
final determination of the LTFV investigation; (3) if the exporter is 
not a firm covered in this review or the LTFV investigation, but the 
manufacturer is, the cash deposit rate will be that established for the 
manufacturer of the merchandise in these final results of review or the 
LTFV investigation; and (4) if neither the exporter nor the 
manufacturer is a firm covered in this review or the LTFV 
investigation, the cash deposit rate will be 24.64 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 also 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 CFR 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 CFR 353.22.

    Dated: February 3, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-3763 Filed 2-12-98; 8:45 am]
BILLING CODE 3510-DS-P