[Federal Register Volume 63, Number 65 (Monday, April 6, 1998)]
[Notices]
[Pages 16758-16768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8846]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-803]


Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, From the People's Republic of China; Final Results of 
Antidumping Duty Administrative Reviews

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

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

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SUMMARY: On November 12, 1997, the Department of Commerce published the 
preliminary results of its administrative reviews of the antidumping 
duty orders on heavy forged hand tools from the People's Republic of 
China. The period of review is February 1, 1996, through January 31, 
1997.
    We gave interested parties an opportunity to comment on our 
preliminary results. Based upon our analysis of the comments received, 
we have changed the results from those presented in the preliminary 
results of reviews.

EFFECTIVE DATE: April 6, 1998.

FOR FURTHER INFORMATION CONTACT: Matthew Blaskovich or Wendy Frankel, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, D.C. 20230; telephone: (202) 482-4697 or (202) 482-5849, 
respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise stated, 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, as amended (the 
Act) by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department of Commerce's (the 
Department's) regulations are references to the provisions codified at 
19 CFR part 353 (April 1997).

Background

    On November 12, 1997, the Department published in the Federal 
Register the preliminary results of the administrative reviews of the 
antidumping duty orders on heavy forged hand tools, finished or 
unfinished, with or without handles (HFHTs) from the People's Republic 
of China (PRC) (62 FR 60684). We received case and rebuttal briefs from 
the petitioner, O. Ames Co., and its division, Woodings-Verona. We also 
received consolidated case and rebuttal briefs from the respondents. 
One respondent also submitted an additional case brief. The Department 
has now completed these administrative reviews in accordance with 
section 751 of the Act.

Scope of Reviews

    Imports covered by these reviews are shipments of HFHTs from the 
PRC comprising the following classes or kinds of merchandise: (1) 
Hammers and sledges with heads over 1.5 kg (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools, and wedges 
(bars/wedges); (3) picks/mattocks; and (4) axes/adzes.
    HFHTs include heads for drilling hammers, sledges, axes, mauls, 
picks, and mattocks, which may or may not be painted, which may or may 
not be finished, or which may or may not be imported with handles; 
assorted bar products and track tools including wrecking bars, digging 
bars and tampers; and steel wool splitting wedges. HFHTs are 
manufactured through a hot forge operation in which steel is sheared to 
required length, heated to forging temperature, and formed to final 
shape on forging equipment using dies specific to the desired product 
shape and size. Depending on the product, finishing operations may 
include shot-blasting, grinding, polishing, and painting, and the 
insertion of handles for handled products. HFHTs are currently provided 
for under the following Harmonized Tariff System (HTS) subheadings: 
8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically 
excluded are hammers and sledges with heads 1.5 kg (3.33 pounds)in 
weight and under, hoes and rakes, and bars 18 inches in length and 
under. Although the HTS subheadings are provided for convenience and 
customs purposes, our written description of the scope of these orders 
is dispositive.
    These reviews cover five exporters of HFHTs from the PRC, Shandong 
Huarong General Group Corporation (Shandong Huarong), Liaoning 
Machinery Import & Export Corporation (LMC), Fujian Machinery Import & 
Export Corporation (FMEC), Shandong Machinery & Equipment Import & 
Export Corporation (SMC), and Tianjin Machinery & Equipment Import & 
Export Corporation (TMC) (collectively, the respondents). The period of 
review (POR) is February 1, 1996, through January 31, 1997.

[[Page 16759]]

Analysis of the Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received case and rebuttal briefs from the 
petitioner and case and rebuttal briefs filed by the respondents 
collectively, as well as a separate case brief from LMC.

Comment 1: Surrogate Value for Labor

    The petitioner argues that the Department erroneously calculated 
labor costs by using surrogate value data sources in the publication, 
Statistics on Occupational Wages and Hours of Work (SOOW). The 
petitioner asserts that the data is deficient and inappropriate for use 
in this review because (1) the wage and salary rates listed in the SOOW 
are reported on a wide range of rates for a particular activity (e.g., 
the industry segment, ``Manufacture of metal products (except machinery 
and equipment)'') from which the Department calculated a simple 
average; (2) the SOOW excludes fringe benefits payments, thereby 
understating labor values; and (3) this data has never been used before 
in HFHTs or any other antidumping proceeding. The petitioner argues 
that the Department should use data from The Yearbook of Labour 
Statistics (YLS), which provides more specific wage rate data and has 
been used in prior reviews of this proceeding.
    The respondents contend that the labor data presented in the SOOW 
is more appropriate than that available in the YLS for use in this 
proceeding. The respondents note that the SOOW contains considerably 
more contemporaneous data (i.e., from October, 1994 and 1995) than the 
YLS (the latest edition contains data from 1991). Moreover, the 
respondents claim, the SOOW labor data meets or exceeds minimum wages 
of reporting countries, since it includes basic wages, cost-of-living 
allowances and some fringe benefits. The respondents claim that 
contrary to the petitioner's assertions, the SOOW data generally 
results in an overstated HFHTs labor value since the SOOW data is based 
upon wages paid to full-time skilled workers, while the HFHTs industry 
(1) reports labor costs based on ``cap'' valuations, (caps generally 
represent the maximum amount of time spent to produce and pack the 
merchandise); (2) employs mostly unskilled and occasionally part-time 
workers; and (3) is labor intensive, and therefore representative of 
the lower end of the SOOW wage scale. Moreover, the respondents contend 
that the SOOW data is specific to the metal industry, which the YLS 
neglects to address. In addition, the respondents refute the 
petitioner's claim that the SOOW is a new source of data and note that 
the International Labor Office in Geneva, Switzerland, prepares both 
the YLS and the SOOW. Further, according to the respondents, any 
differences in ``total wages'' reported in the SOOW and ``labor costs'' 
in the YLS are minimal. Finally, the respondents claim that the 
petitioner's objection to the Department's use of the SOOW data is 
untimely, because the petitioner neglected to address this issue when 
the Department was soliciting surrogate value data for this 
administrative review.
    DOC Position: We agree with the respondents, in part; however, we 
do not consider the petitioner's comments on our selection of labor 
values used for the preliminary results as untimely. While we have 
considered the shortcomings of the SOOW data (e.g., it does not include 
all fringe benefits), we have determined that for this review period, 
the SOOW data reasonably reflects labor costs for the HFHTs industry.
    It is the Department's aim to use surrogate price data which is: 
(1) an average non-export value; (2) representative of a range of 
prices within the POR if submitted by an interested party, or most 
contemporaneous with the POR; (3) product-specific; and (4) tax-
exclusive. See Final Results of Antidumping Duty Administrative Review; 
Sebacic Acid from the People's Republic of China, 62 FR 10530, 10534 
(March 7, 1997). The data in the SOOW meets all four of these criteria. 
First, it reflects an average non-export value. Second, the October 
1994 and 1995 SOOW data is the most contemporaneous surrogate labor 
data available for India. Third, the SOOW data is specific to the metal 
industry. We used wage rate data included in the category ``Manufacture 
of metal products, except machinery and equipment,'' because this 
category was the best match for the HFHTs industry. Fourth, the SOOW 
data is tax-exclusive. In addition, we disagree with the petitioner 
that the SOOW data understates labor values because, as the respondents 
note, the SOOW data reflects salary rates for skilled, full-time 
workers in generally capital intensive industries, whereas, the HFHTs 
industry utilizes predominately unskilled laborers (often working part-
time) in labor intensive production. Further, we note that 
notwithstanding the petitioner's argument regarding the YLS data, the 
petitioner has not submitted the YLS data on the record for this 
review, and therefore, we are unable to address any specific claims 
with regard to the YLS data. As the SOOW data reasonably reflects labor 
costs in the HFHTs industry, we will continue to use SOOW data in 
calculating labor costs for these final results.

Comment 2: Labor and Paint Factors--Facts Available

    The petitioner contends that the statute, regulations, and 
legislative history are clear with regard to the circumstances meriting 
the Department's use of facts available (FA), and concurs with the 
Department's decision to apply adverse FA in determining LMC's labor 
and paint costs for the production of wedges. However, the petitioner 
objects to the Department's use of LMC's highest reported ``cap'' data 
as FA rather than resorting to an overall adverse FA rate. The 
petitioner cites the Department's October 31, 1997, verification report 
and October 31, 1997, Memorandum to Richard Moreland regarding use of 
FA (FA Memo, 10/31/97) to support its claim that LMC could not 
substantiate the validity of its reported labor and paint consumption 
costs, and thus, the Department should not rely on any of the reported 
data despite its higher cost in relation to other ``cap'' amounts. The 
petitioner argues that using such data would be contrary to Department 
practice and the antidumping statute, as it would allow LMC to profit 
from its lack of cooperation. The petitioner cites to Department and 
court precedent to show that as FA the Department should use the 
highest margin calculated for another producer of wedges in this 
proceeding.
    LMC stresses the fact that its factory is an extremely small 
operation with limited record-keeping abilities, thus the Department 
should apply a less stringent standard in valuing labor and paint 
costs. LMC notes that the amounts it reported were comparable to the 
figures the Department verified for Shandong Huarong, and the 
Department was able to adequately verify all other factor inputs at 
LMC. Therefore, according to LMC, the Department should reasonably 
assume that LMC's reported ``cap'' valuations are representative of its 
labor and paint costs. Further, LMC contests the petitioner's 
recommendation that the Department use total FA, given the 
circumstances. LMC contends that the petitioner's arguments hinge on 
limited situations and precedent where total FA was applied, and are 
not applicable for this proceeding. LMC argues that, at most, the 
Department should use the partial FA as assigned in the preliminary 
results.

[[Page 16760]]

    DOC Position: As indicated in the preliminary results, the 
Department could not verify LMC's reported labor and paint consumption 
figures for the wedge models produced. Therefore, pursuant to section 
776(a) of the Act, we used FA for labor and paint. We disagree with the 
petitioner that our failure to apply a total FA margin is inconsistent 
with the antidumping statute and Department precedent. While the 
statute allows the Department to use FA in reaching the applicable 
determination, it does not indicate what facts the Department must 
employ in applying FA, and does not require the application of total FA 
in every instance.
    In deciding to use partial FA, we note that we adequately verified 
all other factor inputs reported by LMC. As labor and paint constitute 
a relatively small proportion of total costs, the integrity of the 
overall response is not called into question by the labor and paint 
verification problem, and the use of partial FA is appropriate.
    We further note that the cases cited by the petitioner, including 
NSK Ltd. v. United States, 809 F. Supp. 115, 119 (CIT 1992), merely 
affirm the broad discretion granted to the Department in applying FA 
and do not compel the Department to apply total FA under the 
circumstances present in this review.
    On the other hand, the fact that at verification LMC provided 
minimal data for paint consumption and no data for labor consumption, 
despite our requests for information during verification, influenced 
our decision to apply adverse FA. As a result, pursuant to section 
776(b) of the Act, we determined that LMC failed to cooperate by not 
acting to the best of its ability with regard to labor and paint 
factors and we used an adverse inference in applying FA for those 
factors.
    Contrary to the petitioner's arguments, the data we selected as 
adverse partial FA does not reward LMC for failing to cooperate. While 
LMC's reported labor and paint amounts were comparable to those amounts 
verified for Shandong Huarong, the ``cap'' amounts used as adverse FA 
were greater than the highest ``caps'' reported for paint and unskilled 
labor by any other PRC producer of wedges in this review. Thus, by 
using LMC's highest ``cap'' amounts for paint and labor for any of its 
wedges as FA, the Department is satisfied that LMC will not benefit 
from its lack of cooperation.
    Moreover, the statute permits the Department to rely on information 
placed on the record when making an adverse inference in using FA, such 
as the ``cap'' information provided by LMC. See section 776(b)(4) of 
the Act. Therefore, use of partial FA was a reasonable exercise of our 
authority, and we determine that our selection of the highest reported 
``caps'' by the respondent as adverse partial FA was appropriate in 
this case.

Comment 3: LMC Steel Factors

    The petitioner contends that LMC has presented contradictory 
information for the record regarding its steel usage. The petitioner 
contrasts LMC's original questionnaire response, which states, ``[t]he 
steel which is used is either ordinary 1045 grade steel round bar or 
rod or ordinary 1045 grade steel hexagonal bar or rod,'' with LMC's 
supplemental response, which claims that it uses scrap wheels from 
railroad cars. Furthermore, the petitioner alleges, record evidence 
does not demonstrate that LMC uses scrap railroad wheels in the 
production of the subject merchandise, nor was the Department able to 
substantiate the claimed scrap steel usage during verification at LMC's 
supplier. Moreover, the petitioner argues that LMC offered no 
information on the costs of producing the subject merchandise from 
scrap (i.e., scrap railroad wheels). The petitioner argues that given 
these inconsistencies and other errors, the Department should use total 
FA, and assign LMC either the average or the highest margin calculated 
for cooperative respondents of bars/wedges in this proceeding.
    Citing the Notice of Final Determination of Sales at Less Than Fair 
Value; Collated Roofing Nails From the People's Republic of China, 62 
FR 51410 (October 1, 1997) (Nails), LMC notes that the Department will 
accept data which is timely, verifiable, sufficiently complete, 
demonstrated to be provided based on the best of the respondent's 
ability, and can be used without undue difficulties. LMC explained 
that, prior to verification, it corrected the reporting error in its 
original response by stating in its July 24, 1997, supplemental 
submission that it used scrap railroad wheels instead of steel bars to 
produce wedges. In addition, LMC contends that the Department confirmed 
the factory's usage of scrap railroad wheels in the production of the 
subject merchandise. LMC cites the Notice of Final Determination of 
Sales at Less Than Fair Value; Brake Drums and Brake Rotors from the 
People's Republic of China, 62 FR 9160, (February 28, 1997) (Brake 
Drums) to demonstrate that the respondents are not required to submit 
error free responses to avoid the use of FA. LMC contends that the 
Department will use total FA only when a respondent is ``totally 
uncooperative.''
    DOC Position: We disagree with the petitioner's argument that 
record evidence does not sufficiently demonstrate that LMC uses scrap 
railroad wheels in the production of the subject merchandise. During 
the factors verification conducted at the factory of LMC's supplier, we 
confirmed the supplier's use of scrap railroad wheels. See Factors 
Verification Report (LMC), October 31, 1997. In examining the company's 
records we were able to confirm the purchase of scrap railroad wheels, 
and found nothing to indicate the use of other steel inputs during the 
period in question.
    Further, we concur with LMC's claim that it notified the Department 
in a timely fashion regarding an inadvertent error in reporting steel 
inputs. In its July 24, 1997, supplemental questionnaire response, LMC 
stated that it used scrap railroad wheels in the production of the 
subject merchandise. LMC submitted this correction as part of a 
response to the Department's supplemental questionnaire. Therefore, we 
consider the changes made by LMC in reporting for steel inputs to be a 
clarification of the record, consistent with the Department's requests 
for factual information and reporting requirements.

Comment 4: Surrogate Values for Steel Scrap

    The petitioner argues that record evidence does not support the 
Department's use of HTS category 7204.4100, or likewise, any scrap 
category in valuing LMC's steel costs. The petitioner claims that 
railroad scrap is a premium quality scrap as opposed to the scrap by-
products included in this category, which comprises the cheapest grades 
of scrap available, generally having a high copper content and, 
therefore, limited usefulness.
    LMC notes that although the petitioner argues that HTS category 
7204.4100 is not the correct HTS category for valuing the steel scrap 
inputs in this case, the petitioner could not propose a more 
appropriate category. LMC contends that the Department is correct in 
using HTS category 7204.4100 in valuating its railroad wheel scrap, 
since this category covers a wide range of steel scrap.
    While LMC asserts that the Department used the correct HTS category 
to value steel inputs, LMC contends that the Department should 
recalculate the surrogate value within the HTS subheading used. LMC 
argues that the March 1996 Indian imports from Germany, Korea, and the 
United Kingdom are small in quantity and

[[Page 16761]]

aberrational in price, and therefore, should be disregarded to avoid 
distorting the per unit scrap value.
    Notwithstanding its above argument, the petitioner contends that, 
should the Department continue to value steel using this HTS category, 
given the high quality and value attributed to scrap railroad wheels, 
the Department should not disregard the March 1996 Indian imports from 
Germany, Korea, and the United Kingdom, as requested by LMC. The 
petitioner notes that LMC has not provided any information which 
demonstrates that such import data is aberrational, but merely is 
seeking to drop the highest scrap values from the import data.
    DOC Position: Section 773(c) of the Act directs the Department to 
value steel used by PRC producers during the POR by using prices of 
comparable steel in a market-economy country. We used the best data 
available, which is the data in HTS category 7204.4100. Despite its 
argument that we should not use this HTS category to value LMC's steel, 
the petitioner has provided no alternative HTS category that would be 
more appropriate for valuing LMC's scrap railroad wheels than HTS 
category 7204.4100. We will, therefore, continue to use this category 
for the final results.
    With respect to the exclusion of data pertaining to small, 
aberrantly priced import quantities from individual countries, we agree 
with the respondents that inclusion of such data potentially may be 
distortive. It is our practice to disregard small-quantity import data 
when the per-unit value is substantially different from the per-unit 
values of the larger quantity imports of that product from other 
countries. See, e.g., Heavy Forged Hand Tools, Finished or Unfinished, 
With or Without Handles, from the People's Republic of China, Final 
Results of Administrative Reviews, 62 FR 11813 (March 13, 1997) 
(Department's response to Comment 2); Tapered Roller Bearings and Parts 
Thereof, Finished or Unfinished, from Romania, Final Results of 
Antidumping Duty Administrative Review, 62 FR 37194 (July 11, 1997) 
(Department's response to Comment 1). Consistent with prior HFHTs 
reviews, we compared the March 1996 Indian data covering imports from 
Germany, the United Kingdom and Korea, with the Indian import data for 
the period February through August 1996 (excluding March), U.S. import 
data for the period January through October 1996, as well as Indonesian 
data for the calendar year 1996. We have determined that this Indian 
import data reflects small-quantity pricing and, therefore, will 
exclude such import data from our surrogate value calculation for these 
final results.

Comment 5: Use of Actual Factor Data or Use of ``Caps'

    Citing Brake Drums (Department's response to Comment 19), LMC 
contends that the Department should apply the verified usage factors 
for coal, steel and ``other inputs'', rather than the respective 
``cap'' amounts reported in its questionnaire response. With respect to 
coal, LMC claimed that the average per-wedge consumption figures 
determined at verification are lower than the reported ``caps'' because 
the ``caps'' were derived during a period when it used less efficient 
coal.
    The petitioner contends the Department should not make 
modifications to the data reporting methodology established for these 
reviews. The petitioner states that LMC, as well as the other 
respondents, have chosen to report their cost data according to a long 
established ``cap'' reporting methodology. The petitioner argues that 
since LMC did not report factor values based on the information 
contained in its books and records, it would not be appropriate for the 
Department to accept the verified data simply because the factory had 
no prior experience with the antidumping process, as argued by LMC.
    DOC Position: During verification, we were only able to derive 
average coal consumption figures for all wedges (as opposed to actual 
model-specific wedge consumption figures) due to LMC's lack of records 
detailing coal consumption on a model-specific basis. See Factors 
Verification Report (LMC), at 7, (October 31, 1997). There is no record 
evidence to indicate that the average verified figures are any more 
accurate with regard to model-specific coal consumption during the POR 
than the reported model-specific ``cap'' amounts. LMC claimed that the 
average wedge consumption figures provided at verification are lower 
than the reported ``caps,'' because the ``caps'' were established 
during a period when less efficient coal was used. However, LMC was not 
able to substantiate this claim. Thus, we have continued to use the 
reported ``caps'' for coal consumption in these final results of 
reviews.
    The purpose of examining the ``caps'' at verification was to 
determine the accuracy of LMC's questionnaire responses. Verification 
is not normally an appropriate venue for the submission of new factual 
information, and we generally collect and use information gleaned at 
verification only when minor discrepancies are found or when we believe 
a respondent's methodology may not have been reasonable but can be 
simply changed. In this case, verification was an opportunity to 
determine whether LMC's and Shandong Huarong's ``caps'' represented a 
reasonable approximation of the factor inputs used in the production 
and distribution of the subject merchandise. 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, 2093, (January 
15, 1997) (Department's response to Comment 4) (AFBs). Our conclusion 
was that there was no reason to believe that the actual data would 
differ significantly from the ``caps''. For instance, as a result of 
verifying LMC's response, we determined that while the steel and 
packing ``caps'' overstated some factor inputs and underestimated 
others, on balance LMC's ``caps'' were a reasonable reflection of its 
actual experience and that any deviation from the reported ``caps'' 
would be insignificant. This is in contrast to the circumstances in 
Brake Drums, where the verified data differed so significantly from the 
reported information that use of the reported data would have distorted 
the margin. See Brake Drums, (Department's response to comment 19).
    LMC's proposal would convert verification, which is an opportunity 
to check the accuracy of information previously submitted, into a data-
gathering exercise. Furthermore, in LMC's case, although we have the 
data to replace the estimated steel and packing ``caps'' with actual 
consumption or usage, the change to our calculations, given the 
advanced stage of these reviews, would impose an unreasonable burden 
with no significant increase in accuracy in light of the results of our 
verification. Therefore, we have used LMC's ``caps'' as reported, 
except paint and labor. See the Department's position to comment 2 for 
a discussion of paint and labor, and AFBs. With regard to LMC's 
comments on ``other inputs,'' we are not sure what specific items LMC 
is referencing, and therefore, are unable to address this issue.
    Comment 6: Surrogate Country Determination for Picks/Mattocks
    The respondents contend that the Department should use a different 
surrogate country in valuing steel inputs for the production of picks/
mattocks. The respondents assert that the Department determined in a 
prior HFHTs review that Indian steel import data prior to 1995 was 
unusable due to the small volume of imports in HTS

[[Page 16762]]

category 7214.50. Further, given the fact that there is no Indian 
import data for HTS category 7214.50 for the period after March 1996, 
the respondents contend that there is no indication such data will be 
available in the future, thus making this HTS category unreliable as a 
data source and inhibiting the respondents' ability to establish non-
dumped prices for current and future reviews in light of exchange rate 
fluctuations. The respondents state that the Department's statutory 
language allows for a flexible approach to selecting surrogate country 
data, and suggests that there is no reason why the Department needs to 
use the same surrogate country for each of the four distinct hand tool 
product categories.
    The respondents contend that the Department should use Indonesia as 
the surrogate country in valuing steel for picks/mattocks. The 
respondents state that there is considerable Indonesian import data 
specific to the POR as utilized in other antidumping proceedings, which 
the Department should use for this proceeding.
    The respondents argue that, should the Department continue to use 
the Indian import statistics for HTS 7214.50 from the period April 1995 
through March 1996, the Department should disregard Indian imports from 
Austria and Japan, as was done in the prior review since this data is 
too small in quantity and too high in value. The respondents further 
contend that the Department should also disregard Belgian imports in 
its factor valuation. The respondents suggest that the Belgian import 
values are very high compared to imports from Brazil and Saudi Arabia, 
and therefore, may include special bar quality steel (SBQ), a high 
grade of steel, not used to produce the subject merchandise. According 
to the respondents, the Department has consistently determined that 
import data is aberrational and thus, unusable when the imports are too 
small in quantity to be reliable and extremely high in value compared 
to other sources. Finally, the respondents state that if the Department 
continues to use the April 1995 through March 1996 data, it should 
adjust that data for inflation.
    The petitioner contends that the Department should continue to 
value steel using Indian surrogate country data. The petitioner 
emphasizes that the Department has consistently rejected the use of 
Indonesian surrogate data in previous reviews of HFHTs. The petitioner 
further contends that the respondents offer no justification why the 
Department should utilize Indonesian surrogate value data only for 
picks/mattocks, as opposed to other categories of the subject 
merchandise, most of which are made from steel that falls under the 
same HTS subheading. Moreover, the petitioner asserts that there is no 
deficiency in the data; the data encompasses a time frame which 
overlaps the POR by two months. The petitioner also refutes the 
respondents' arguments that the Department's reliance on Indian 
surrogate values has disadvantaged them because of the delay and lack 
of reliability of these statistics. The petitioner notes that all 
countries have delays in issuing import statistics and maintains that 
contrary to the respondents' arguments, the practice of using prior 
year Indian import statistics and adjusting them for inflation, should 
in fact make it easier for PRC producers to establish non-dumped 
prices.
    The petitioner further contends that import data can not be 
rejected on the mere basis that values are too high or low, and notes 
that the Department only rejects aberrational surrogate value data. The 
petitioner also refutes the respondents' speculation that the price 
differential between the current Belgian values and the values from 
other countries proves that the Belgian imports include SBQ steel. 
Moreover, the petitioner contends that no grounds exist for the 
exclusion of the Belgian data, even if it does reflect imports of SBQ 
steel. The petitioner notes that the Department acknowledged in the 
prior review that HTS category 7214.50 includes both merchant quality 
as well as SBQ steel, but it is still the appropriate subcategory to 
use for surrogate steel values for the production of HFHTs since 1045 
carbon steel, the steel actually used in the production of HFHTs, is 
also classified under this HTS subheading. In light of these facts, the 
petitioner concludes that Belgian imports should not be excluded from 
the Department's calculation of steel values. Finally, the petitioner 
claims that the Department should confirm that HTS category 7214.50 
has, in fact, been reclassified as HTS category 7214.99.
    DOC Position: Section 773(c) of the Act directs the Department to 
value steel used by PRC producers during the POR by using prices of 
comparable steel in a market-economy country. See the Department's 
position with regard to comment 4. With the exception of LMC, all of 
the respondents use 1045 carbon steel to produce HFHTs. We verified 
this fact in this review with regard to Shandong Huarong (in prior 
reviews, the identical steel grade was used by the respondents). This 
type of steel is classified under HTS category 7214.50 of the Indian 
import statistics. Therefore, in our preliminary results, we used the 
most recently published Indian surrogate data under this category, 
which provides import values for the period April 1995 through March 
1996. Consistent with Department policy and our practice in prior 
reviews, we inflated the calculated factor value to reflect current 
prices. Moreover, because the respondents have not substantiated their 
claim that the data used for the preliminary results are unreliable, we 
do not agree that we should alter our methodology or use a different 
surrogate country to value steel for the production of picks/mattocks 
for purposes of these final results. Although the respondents assert 
that there is import data more specific to the POR, they have provided 
no record evidence to support their contention that Indonesian 
surrogate value data would be more appropriate in the picks/mattocks 
review. Further, we dispute the respondents' claim that the factor 
value was based on a small volume of Indian imports, when in fact the 
factor value calculated for the prior 1995-1996 HFHTs review was based 
on a considerably smaller import volume.
    Further, we note that as we could not substantiate the petitioner's 
claim that HTS category 7214.50 was reclassified as HTS category 
7214.99, we have continued to value steel using HTS category 7214.50 of 
the Indian import statistics.
    With regard to Indian imports from Austria and Japan, as in the 
prior review, we have determined that the respective import quantities 
are significantly smaller than the imports from other countries during 
the April 1995 through March 1996 period, and the per-unit values 
significantly higher. The Department's policy is to disregard imports 
of small quantities in calculating surrogate values when the per-unit 
value of these imports is at variance with other information on the 
record. See the Department's response with regard to comment 4. We 
therefore have excluded the Japanese and Austrian imports from our 
calculations as the per-unit values of those imports are substantially 
different from the per-unit values of the larger quantity imports under 
that HTS category from other countries. We do not agree with the 
respondents, however, concerning the Belgian imports. Although the per-
unit value of Belgian imports into India under the HTS category are 
higher than the per-unit values of other imports (except from Japan and 
Austria), the quantities of the Belgian imports are comparable to those 
from the remaining countries and there is no information on the record 
to substantiate the

[[Page 16763]]

respondents' claim that these values are in any way aberrational. 
Therefore, we have continued to include them in our factor valuations 
for these final results.

Comment 7: Ocean Freight

    The respondents contend that the source used by the Department to 
calculate the ocean freight rate between Qingdao/Dalian and Los Angeles 
for these reviews was inappropriate because the rate used was based on 
proprietary information and is not available to all shippers. The 
respondents argue that the proprietary nature of this data puts other 
shippers at a disadvantage since they do not have access to this 
information. Further, the respondents claim that this rate is highly 
inflated since it was based on sample shipments and is not 
representative of other shipments of the subject merchandise, even 
those made by the same shipper. In addition, the respondents assert 
that this rate should not be used, since shipments identified on record 
as going to Los Angeles may in fact go to the adjacent port of Long 
Beach.
    The other source used by the Department to calculate ocean freight 
charges was based on Federal Maritime Commission (FMC) data used in 
Brake Drums. Although the respondents do not contest the use of these 
rates, they request that the Department make downward adjustments to 
these rates in order to account for price changes between July/August 
1995 (the period from which the data was derived) and the POR, by using 
indices from the Bureau of Labor Statistics, Division of International 
Prices, U.S. Department of Labor.
    The petitioner contends that the record disproves the respondents' 
claims that the source used to derive ocean freight charges for the Los 
Angeles route is proprietary since this information is contained in the 
October 31, 1997 public memorandum to the file regarding surrogate 
value selection for the preliminary results of these administrative 
reviews. The petitioner also contends that the Department must rely on 
verified record evidence regarding U.S. ports of entry, and disregard 
the respondents' new claim that Long Beach may be the actual port of 
entry on shipments destined for Los Angeles. The petitioner questions 
the integrity of the respondents' port of entry claims, and therefore, 
asserts that the Department should use as FA, Los Angeles as port of 
entry for all shipments to the United States. In addition, the 
petitioner contends that the respondents' request that the Department 
adjust the FMC rates based on publicly available indices is untimely, 
since such data should have been presented when the Department 
solicited publicly available information on surrogate values. Moreover, 
the petitioner notes that the respondents provide no details on what 
these indices are or how they are maintained, and so there is no 
reasonable basis upon which to determine if they are even relevant to 
these reviews of HFHTs.
    DOC Position: The ocean freight rate derived for shipments from 
Qingdao and Dalian to Los Angeles is public information derived from 
phone conversations with company officials at SeaLand Services, an 
international freight company. In our October 30, 1996, memorandum to 
the file in the prior administrative review of HFHTs, we inadvertently 
treated this as proprietary information. We have since confirmed with 
SeaLand Services officials that this is public information. See Memo to 
the File (March 12, 1998); Telephone Conversation between Department 
officials and SeaLand Services. Therefore, the respondents' assertion 
that this is not publicly available information is misplaced. Further, 
the respondents claim that certain shipments destined for Los Angeles 
may have instead been delivered to the adjacent port of Long Beach. We 
examined shipping and sales documentation during verification, and 
found no merchandise destined for Los Angeles diverted to Long Beach. 
Since nothing on the record demonstrates that certain shipments were 
diverted to Long Beach, we will continue to rely on record evidence 
regarding port of entry data and apply the appropriate freight charge.
    Finally, with respect to the respondents' argument that the FMC 
rates used by the Department are overstated, the respondents have not 
provided any information on the record to substantiate this claim nor 
to demonstrate why it would be appropriate to adjust such rates based 
on certain indices from the U.S. Department of Labor. Therefore, we are 
not making any adjustments to the FMC rates used to calculate ocean 
freight for these final results of reviews.

Comment 8: Double-Counting Freight and Energy Costs as Part of SG&A, 
Overhead and Profit

    The respondents contend that the Department overstated normal value 
by double-counting freight and energy costs. Specifically, the 
respondents argue that in addition to the separately stated freight and 
energy costs included in normal value, freight and energy costs were 
included in the selling, general and administrative expenses (SG&A), 
factory overhead, and the profit elements of normal value (i.e., the 
financial statement used to compute selling, general and administrative 
expenses (SG&A), factory overhead, and profit ratios already include 
freight and energy costs either in the raw materials and energy costs 
themselves or in the ``other expenses'' category of SG&A). Therefore, 
the respondents argue, in order to avoid double-counting, and in 
accordance with the methodology used in Brake Drums (Department's 
position to comment 10), the Department should compute company-specific 
SG&A, factory overhead and profit amounts by multiplying the ratios 
used to compute these factors against the total sum of direct materials 
and direct labor, rather than the sum of direct materials, freight, 
direct labor, and energy.
    The petitioner asserts that the Department correctly calculated and 
applied the ratios used to compute SG&A, factory overhead, and profit. 
The petitioner points out that the Indian financial statements used to 
compute these ratios did not separately report freight and freight 
related expenses. Thus, the petitioner claims it is reasonable to 
conclude that freight expenses were included within the direct costs 
(e.g., materials and labor) reported in the financial statements. The 
petitioner asserts that because the Department included material and 
energy costs in the denominator of the ratio used to compute SG&A, 
factory overhead, and profit ratios the Department was correct to 
include them in the constructed value elements to which these ratios 
were applied. The petitioner further asserts that Brake Drums only 
applies if freight and freight related items are reported in the SG&A 
category of the financial statement used to derive the SG&A, factory 
overhead, and profit ratios. The petitioner maintains that the Indian 
financial data did not indicate that freight expenses were included as 
part of SG&A, and therefore, the Department's conclusion that these 
expenses were included as part of the direct costs was reasonable and 
appropriate.
    DOC Position: We agree with the petitioner. In Brake Drums, the 
Department computed the overhead and SG&A ratios by using expenses 
listed on an Indian producer's financial statement that included 
freight (and delivery) expenses. By contrast, in this case, the 
respondents have provided no record evidence to suggest that the 
``other expenses'' category under SG&A on the financial statements from 
the Reserve Bank of India Bulletin includes freight. Therefore, we have 
no reason to believe

[[Page 16764]]

that we have double-counted freight expenses in our calculation of 
normal value.
    Furthermore, we disagree with the respondents' claim that the 
Department double counted energy costs because we excluded energy costs 
from the surrogate overhead expenses that were used to calculate the 
overhead, SG&A, and profit ratios. Therefore, applying these ratios to 
factors that included energy costs did not overstate energy costs.

Comment 9: Inland Freight

    Citing Sigma Corporation v. United States, 117 F. 3d 1401 (Fed. 
Cir., July 7, 1997) (Sigma), the respondents argue that the 
Department's method of calculating inland freight (i.e., using the 
distance from the supplier to the factory without comparing it to the 
distance from the port to the factory) is invalid. The respondents 
argue that in accordance with the Department practice subsequent to 
Sigma (see e.g., Natural Bristle Paintbrushes and Brush Heads From the 
People's Republic of China; Preliminary Results of Antidumping Duty 
Administrative Review, 62 FR 60228 (November 7, 1997) (Paintbrushes), 
the Department should amend inland freight expenses for each of the 
respondents to reflect the shorter of the distance between a) the 
closest PRC port and the factory or b) the PRC input supplier and the 
HFHT factory.
    Further, the respondents contend that the Department should not 
increase normal value for inland freight expenses where the PRC 
producer is located at or near a port, since material inputs were 
transported over only very short distances. Again, citing Sigma, the 
respondents note that the cost of some inland freight in the exporting 
country is included in the import values, since the merchandise has to 
be transported from the factory to the port of export. The respondents 
claim that these inherent freight costs offset any inland freight costs 
incurred in the PRC for factories located in or near a port city. Thus, 
the respondents conclude that adding additional freight expenses to NV 
would result in double-counting.
    The petitioner notes that in Sigma, the Court of Appeals for the 
Federal Circuit (CAFC) assumed that the PRC producer chooses between 
imports and internally produced merchandise on the basis of delivered 
price. The petitioner argues that this assumption only makes sense if 
the full delivered cost is used. Thus, the petitioner argues, if the 
Department adopts the lesser distance approach discussed above, it 
should include in normal value import duties on material inputs. The 
petitioner notes, however, that the Department has excluded surrogate 
country import duties from factor values in the past on the grounds 
that the factors of production methodology constructs a value for 
exported merchandise where duties have been rebated under duty drawback 
laws. However, the petitioner asserts that the respondents are not 
eligible for duty drawback on HFHTs because they cannot determine 
whether they produce HFHTs using domestic or imported steel and, thus, 
they do not choose suppliers based on the potential of duty drawback.
    The petitioner contests the respondents' argument that foreign 
freight costs inherently included in surrogate country import values 
``offset'' the inland freight costs incurred in the country of import. 
Regardless of a factory's location, the petitioner argues that there 
are still expenses related to transporting the merchandise from the 
port to the factory (e.g., unloading at the port, loading onto inland 
freight transportation vessel, and unloading at the factory). 
Referencing the Department's determination in the 1993-1994 HFHTs 
reviews, the petitioner goes on to argue that a per-mile charge does 
not fully capture freight charges for short distances because the fixed 
costs of loading and unloading will constitute a higher proportion of 
total freight cost than on long hauls. In the 1993-1994 reviews, the 
Department used the freight cost for shipping goods between 25-100 
kilometers (km) as the cost for shipping goods less than 100 km. For 
these instant reviews, the petitioner urges the Department to apply the 
same methodology.
    DOC Position: The CAFC's decision in Sigma requires that we revise 
our calculation of source-to-factory surrogate freight values for those 
material inputs that are valued based on CIF import values in the 
surrogate country. The Sigma decision states that the Department should 
not use a methodology that assumes import prices do not have freight 
included and thus values the freight cost based on the full distance 
from the domestic input supplier to producer in all cases. Accordingly, 
we have added to CIF surrogate values from India a surrogate freight 
cost using the shorter of the reported distances from either (1) The 
closest PRC port to the HFHT factory, or (2) the domestic input 
supplier to the HFHT factory. Where the same input is sourced by the 
same producer from more than one source, we used the shorter of the 
reported distances for each supplier. See Final Determination of Sales 
at Less Than Fair Value: Certain Cut To Length Carbon Steel Plate From 
the People's Republic of China, 62 FR 61964, 61977 (November 20, 1997). 
In addition, we determined in the 1993-1994 HFHTs review that the fixed 
costs of loading and unloading short hauls will form a higher 
proportion of the total cost than long hauls, so minor differences in 
the distances shipped should not have a significant effect on the total 
cost. Therefore, where a producer is located at or near a port, we have 
determined that certain freight charges (e.g., loading and unloading) 
are still incurred, and thus, have included inland freight expenses to 
reflect the respective distance between the producer and the port, even 
if that distance was less than 25 kilometers.
    Finally, we disagree with the petitioner's suggestion that the 
Department add import duties to calculate the factor values for steel. 
The Department values inputs used by NME producers by determining the 
cost or price of the input in a market economy that is at a level of 
economic development comparable to that of the NME. See section 
773(c)(4) of the Act. Since the Department's NME methodology is aimed 
at constructing the value of the merchandise for export, it is 
appropriate to use the costs the surrogate producer would face in 
producing merchandise for export. In this regard, when the Department 
uses import prices to value an input, the price of the input is 
adjusted to make it a delivered price by adding an amount for freight. 
See Pure Magnesium From the People's Republic of China: Final Results 
of Antidumping Duty New Shipper Review, 63 FR 3085, 3087 (January 21, 
1998). However, consistent with our standard practice, we do not add 
Indian import duties to the values reported in the published Indian 
import statistics as those duties would have been rebated upon export 
of the finished products. See Certain Cased Pencils From the People's 
Republic of China: Notice of Final Determination of Sales at Less Than 
Fair Value, 59 FR 55625, 55634 (November 8, 1994); Certain Helical 
Spring Lock Washers From the People's Republic of China: Final 
Determination of Sales at Less Than Fair Value, 58 FR 48833, 48841 
(September 20, 1993)(Lock Washers). We note that the cases cited by the 
petitioners, including Lock Washers, do not support adding import 
duties to the factor values. As Sigma only required the Department to 
alter its method of valuing foreign inland freight, we will

[[Page 16765]]

follow the Department's practice of not adding import duties to factor 
values.

Comment 10: Exchange Rate Conversion

    The respondents contend that in accordance with Section 773A(a) of 
the statute, the Department should convert factor values in rupees to 
U.S. dollar values using the exchange rate in effect on the date of the 
U.S. sale. In the preliminary determination, the Department converted 
factor values to U.S. dollar values using the average exchange rate for 
the POR.
    DOC Position: We agree with the respondents. We converted Indian 
rupees into U.S. Dollars using daily exchange rates in accordance with 
section 773A(a) of the Act.

Comment 11: Surrogate Values for Packing Materials

    The respondents claim that the Department used inappropriate 
surrogate values for certain packing materials (i.e., pallets, paper 
cartons and big iron knots or buttons--the case briefs refer to these 
items interchangeably). First, the respondents contend that during the 
period used to value pallets (February, through August 1996), Indian 
imports under the appropriate HTS category were very small, resulting 
in an overstated surrogate value for pallets. Consistent with the 
Department's practice in previous HFHTs reviews (see 1994-1995 and 
1995-1996 reviews), the respondents urge the Department to disregard 
the Indian imports because of the limited quantity imported during the 
POR. As an alternative, the respondents ask that the Department use 
data from another surrogate country or value pallets by inflating the 
value used in the 1995-1996 HFHTs review.
    The respondents further contend that the HTS category 4819.10, used 
to value cartons, covers many products that range widely in value. In 
addition, some of the imports are very small, indicating that they are 
not commercial shipments but samples or special orders. For these 
reasons, and the significant increase in the average value of Indian 
entries under this HTS subheading since the 1994-1995 review, the 
respondents request that the Department disregard all such imports that 
are less than one-half metric ton (or 500 kilograms). Furthermore, the 
respondents request that the Department compare the resulting value 
with values derived from other surrogate countries to determine if the 
value is aberrational.
    Finally, the respondents contend that the iron knots utilized by 
the respondents are not similar to any of the metal packing material 
classified in HTS category 8309.90.09, which was used to value iron 
knots. Thus, the respondents contend that the Department grossly 
overvalued iron knots for the preliminary determination.
    The petitioner claims that the import volume (155 pallets) that the 
Department used to compute the surrogate value for pallets is much 
closer to the volume actually used by the respondents in these reviews 
than the 1993 import volume (33,423 pallets) the respondents suggest 
the Department use to compute this surrogate value, and therefore, more 
accurately reflects the price the respondents would have paid for this 
item.
    The petitioner refutes the respondents' argument regarding the 
calculation of Indian surrogate values for paper cartons, noting that 
since individual cartons weigh a very small amount, what appears to be 
a small number by weight is actually a significant number of cartons.
    Finally, the petitioner argues that the Department should reject 
the respondents' claim regarding the Indian surrogate values for iron 
buttons because it is unsupported by any record evidence, and because 
the respondents provide no alternative method for this valuation.
    DOC Position: We have carefully reviewed the information on the 
record of these reviews with regard to our calculation of surrogate 
values for pallets, paper cartons and iron knots. With respect to 
pallets, we compared the Indian import data with the Indian import data 
used in the prior review and with the Indonesian import data for the 
calendar year 1996. (U.S. data is reported in number of pallets rather 
than by weight, and therefore is not comparable.) We have determined 
that the quantities of Indian and Indonesian imports were very small in 
comparison to Indian imports in the prior period. Therefore, for these 
final results we have used the values from the 1995-1996 reviews and 
indexed them forward to the POR.
    We do not agree with the respondents' assertions concerning paper 
cartons. We have compared the Indian import data for the HTS category 
used to value cartons for these reviews to the U.S. and Indonesian 
import data for the calendar year 1996, and to the Indian data used in 
the prior review period. We note that the data used for the current 
review does not represent a small quantity of imports in comparison to 
the Indian data from the prior review. Although the U.S. and Indonesian 
import quantities were much larger than the Indian imports, the per-
unit values do not indicate that the smaller quantity Indian imports 
are aberrantly priced.
    With respect to the respondents' assertion that the Department 
erroneously valued iron knots, we note that we used the most 
appropriate data available. Respondents did not provide any evidence to 
support their contention that this HTS category is inappropriate.
    Therefore, for these final results, we will inflate the surrogate 
value used for pallets for the 1995-1996 review, but will continue to 
use the Indian surrogate values used in the preliminary results for 
paper cartons and iron knots.

Comment 12: Marine Insurance

    Citing to the Notice of Final Determination of Sales at Less Than 
Fair Value; Melamine Institutional Dinnerware Products from China, 62 
FR 1708, 1710 (January 13, 1997) (Melamine), the respondents contend 
that the Department should value marine insurance based on value of the 
subject merchandise and not according to weight. The respondents 
further contend that marine insurance rates should not be indexed 
(adjusted for inflation), because although the value of the property 
being insured is increasing, it is not clear that the insurance rates 
have increased.
    The petitioner notes that in Melamine, the Department calculated 
marine insurance on the value of the subject merchandise because the 
record of that review demonstrated that marine insurance was incurred 
on a value basis. In these reviews, the petitioner contends, the 
respondents provide no evidence to show they incurred marine insurance 
based on the value of the merchandise, thus, the Department should not 
divert from the methodology used in the preliminary results of these 
reviews and in previous HFHTs reviews of calculating marine insurance 
based on the weight of the merchandise.
    DOC Position: We have carefully reviewed the record in this review 
and have determined that one respondent, LMC, incurred this expense on 
the value of the merchandise. However, the record does not provide 
conclusive evidence that the other respondents incurred marine 
insurance expenses based on the value of the merchandise. In prior 
HFHTs reviews, we have valued marine insurance based on weight because 
record evidence indicated that is how these charges were incurred. In 
the current reviews, with the exception of LMC, the respondents have 
not submitted any evidence to the contrary. Thus, for these final 
results, we will continue to value marine insurance expenses based on 
weight for all

[[Page 16766]]

respondents except for LMC. Where we valued marine insurance expense by 
using surrogate value amounts based on weight from a prior period, we 
will inflate these surrogate values to reflect POR price levels. Where 
we used surrogate values for marine insurance based on value, there is 
no need to inflate the values since they already represent current POR 
values.

Comment 13: FMEC--Ocean Freight

    FMEC argues that the ocean freight charge used by the Department in 
these reviews is highly inflated and should be revised using a rate 
based on publicly available data.
    The petitioner notes that FMEC provides no support for its argument 
with regard to ocean freight.
    DOC Position: We agree with the petitioner that FMEC has not 
substantiated its contention that the ocean freight rate used by the 
Department in these reviews was inflated. In addition, we note that the 
rates used are based on publicly available data. See the Department's 
position with regard to comment 7. Therefore, we have not revised our 
ocean freight calculations for these final results.

Comment 14: Shandong Huarong--Ocean Freight

    Noting that it shipped subject merchandise using a market economy 
carrier, Shandong Huarong asserts that the Department should use the 
actual cost of these shipments rather than a surrogate value, for these 
expenses, regardless of the fact that it payed the shipper in Chinese 
currency (Renminbi). Shandong Huarong acknowledges that the 
Department's practice in NME reviews has been to require that the 
carrier be a market-economy shipper and that the payment be made in 
hard currency for the Department to use those actual expenses. However, 
Shandong Huarong contends the Department's second condition (i.e., that 
payment be made in a market-economy currency) is no longer important 
since the service originated in the PRC, and therefore should be paid 
for with local currency. Shandong Huarong states that the Department 
can compare the converted rates to other publicly available ocean 
freight rates, to determine whether these rates are reasonable.
    The petitioner contends the Department should not abandon its 
established methodology of only using the actual price of an input if 
the NME manufacturer purchases the input from a market-economy supplier 
and pays in a convertible currency. According to the petitioner, there 
is no assurance that using prices paid to market-economy suppliers in 
Renminbi are free from the same distortions that render prices of 
inputs purchased within the PRC unusable.
    DOC Position: It is the Department's established practice to use 
the actual cost of a service in its calculations for an NME proceeding 
only when the service is provided by a market economy vendor and paid 
for in a convertible currency. See Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, From the People's Republic of China; 
Final Results of Antidumping Duty Administrative Reviews, 61 FR 65527, 
655541 (December 13, 1996), and Sulfanilic Acid From the People's 
Republic of China; Final Results of Antidumping Duty Administrative 
Review, 61 FR 53711, 53716 (October 15, 1996). Although Shandong 
Huarong utilized a market-economy shipper for certain shipments, it 
paid a PRC trading company for the service in Renminbi, and, therefore, 
did not meet the latter condition. Therefore, we will continue to use a 
surrogate cost in valuing shipments utilizing PRC freight forwarders.

Comment 15: Shandong Huarong--Steel Factors

    Shandong Huarong requests that the Department use the verified 
amounts for steel and packing material inputs, rather than its reported 
``caps.'' Shandong Huarong points out that the actual steel and steel 
scrap consumption amounts vary significantly from the ``caps.'' 
Asserting that the statute requires the Department to use verified 
data, Shandong Huarong notes that the Department corrects data for 
errors found at verification. More specifically, Shandong Huarong 
points out that ``in the past the Department corrected the ``cap'' 
figures by using the verified numbers.''
    The petitioner contends that the Department should rely upon 
Shandong Huarong's record data if differences between the ``caps'' and 
actual data are not significant. However, noting that it is established 
Department policy only to allow corrections for minor errors discovered 
at verification, the petitioner contends that should differences 
between reported ``caps'' and verified actual amounts be significant, 
then the Department should reject the data on record and resort to FA.
    DOC Position: We disagree with Shandong Huarong's claim that use of 
actual steel consumption data collected during verification is 
warranted, as opposed to use of its reported steel ``caps.'' As a 
result of verifying Shandong Huarong's response, we determined that any 
deviations from its reported ``caps'' were insignificant, and 
therefore, we determined that on balance, Shandong Huarong's reported 
``caps'' reflected a reasonable estimate of its actual costs. In 
addition, we note that there is no record evidence to support Shandong 
Huarong's contentions that we adjusted reported ``caps'' in prior 
reviews to reflect differences found at verification. In Melamine, we 
note that although adjustments were made as a result of verification 
findings, respondents in that case reported predominately actual costs, 
in contrast to the ``cap'' reporting methodology used in the HFHTs 
review proceedings. Verification in that case was to verify the actual 
costs, not to determine if what had been reported represents a 
reasonable estimate of actual costs. Therefore, for these final 
results, we will continue to use the reported ``caps'' with regard to 
Shandong Huarong's steel inputs. See the Department's response with 
regard to comment 5 for further discussion of this issue.

Comment 16: Shandong Huarong--Inland Freight

    Shandong Huarong states that the price it paid to local suppliers 
of steel included freight charges, thus, the Department should use the 
verified information and not add additional freight charges to the 
price Shandong Huarong paid for steel.
    The petitioner contends that Shandong Huarong did not offer 
evidence to support its argument that the steel price it paid included 
freight. The petitioner recommends that the Department continue to 
include a surrogate value for freight in its calculation of normal 
value.
    DOC Position: We disagree with Shandong Huarong. As the Department 
values the steel inputs used by PRC producers in a comparable market-
economy, its argument that domestic steel prices are inclusive of 
freight charges is irrelevant. Therefore, we have made no adjustments 
to Shandong Huarong's freight charges, with the exception of our change 
in valuing freight in accordance with Sigma. See the Department's 
position with regard to comment 9.

Comment 17: SMC--Inland Freight

    SMC claims the Department should use the freight rate applicable 
for distances between 100 and 250 KM, and not the rate for 250-500 KM 
distances, to value the freight on subject merchandise shipments from a

[[Page 16767]]

particular producer that is 250 km from SMC.
    The petitioner contends that given that both rates apply to the 
distance in question, the Department made a reasonable selection and 
should continue to use the rate for 250-500 KM in its final 
determination.
    DOC Position: We agree with the petitioner that both rates apply to 
the distance in question. Therefore, we have determined to average the 
two rates applicable for distances of 250 kilometers (i.e., the rate 
applicable for distances between 100 and 250 km and the rate applicable 
for distances between 250 and 500 km).

Comment 18: Ministerial Error Allegations

    The respondents alleged that the Department made the following 
ministerial errors: (1) Shandong Huarong claims that the Department 
erred by triple counting the cost of transporting coal for certain 
suppliers; (2) SMC claims that the Department erred in including 
brokerage, handling and ocean freight charges on an FOB Qingdao sale; 
and (3) TMC claims that the Department made a data entry error on 
certain inland freight distances.
    The petitioner requests that the Department reject these 
corrections as they constitute new factual information.
    DOC Position: We do not agree that any of these issues constitutes 
new information. We have reviewed the margin programs and determined 
that we inadvertently made data entry errors with regard to the first 
two items above, and have made the appropriate corrections for these 
final results. However, with regard to the third item, we do not agree 
that we incorrectly entered certain freight distances for TMC because 
we simply used the distances TMC reported for the transactions in 
question in our calculations. Further, we determined that there is 
nothing on the record to indicate that those distances were 
inaccurately reported.

Comment 19: SMC's Own Data Entry Errors

    SMC purports to have discovered several inadvertent data entry 
errors on its part with regard to net weight, inland freight distance 
and gross unit prices for seven observations. SMC requests that the 
Department accept these data corrections now for incorporation into the 
final results of reviews.
    The petitioner requests that the Department reject these 
corrections as they constitute new factual information.
    DOC Position: The Department will accept corrections of clerical 
errors made in a party's submission under the following conditions: (1) 
The error in question must be demonstrated to be a clerical error, not 
a methodological error, an error in judgment, or a substantive error; 
(2) the Department must be satisfied that the corrective documentation 
provided in support of the clerical error allegation is reliable; (3) 
the respondent must have availed itself of the earliest reasonable 
opportunity to correct the error; (4) the clerical error allegation, 
and any corrective documentation, must be submitted to the Department 
no later than the due date for the respondent's administrative case 
brief; (5) the clerical error must not entail a substantial revision of 
the response; and (6) the respondent's corrective documentation must 
not contradict information previously determined to be accurate at 
verification. See Certain Fresh Cut Flowers From Colombia; Final 
Results of Antidumping Duty Administrative Reviews, 61 FR 42833, 42834 
(August 19, 1996) (modifying Department policy in response to NTN 
Bearing Corp. v. United States, 74 F. 3d 1204 (Fed. Cir. 1995)).
    While we note that SMC alleges a clerical, rather than a 
substantive error, we are not satisfied that the information provided 
by SMC is reliable. In its case brief, SMC merely noted various errors 
contained in it submissions without supplementing the allegation with 
corroborating or substantiating documentation. We do not agree with 
SMC's claim that the nature of the error is ``obvious on its face'' 
since SMC has provided no documentation for the record which would 
support that contention. Therefore, we are denying SMC's request that 
we revise alleged data entry errors.

Other Ministerial Errors

    We have also corrected an inadvertent error in calculating net U.S. 
price regarding Shandong Huarong for the preliminary results. We have 
corrected this error by deducting the foreign inland freight expense 
from U.S. price for these final results.

Final Results of Review

    As a result of our review, we have determined that the following 
margins exist:

------------------------------------------------------------------------
                                                                 Margin 
           Manufacturer/exporter               Time period     (percent)
------------------------------------------------------------------------
Shandong Huarong General Group                                          
 Corporation:                                                           
    Bars/Wedges...........................     2/1/96-1/31/97      34.00
Liaoning Machinery Import & Export                                      
 Corporation (LMC):                                                     
    Bars/Wedges...........................     2/1/96-1/31/97       2.94
Fujian Machinery Import & Export                                        
 Corporation (FMEC):                                                    
    Axes/Adzes............................     2/1/96-1/31/97       5.11
    Hammers/Sledges.......................     2/1/96-1/31/97       5.71
Shandong Machinery Import & Export                                      
 Corporation (SMC):                                                     
    Bars/Wedges...........................     2/1/96-1/31/97      38.30
    Hammers/Sledges.......................     2/1/96-1/31/97      19.31
    Picks/Mattocks........................     2/1/96-1/31/97      32.38
Tianjin Machinery Import & Export                                       
 Corporation (TMC):                                                     
    Axes/Adzes............................     2/1/96-1/31/97       1.96
    Hammers/Sledges.......................     2/1/96-1/31/97      27.60
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between United States price and normal value may vary from 
the percentages stated above. The Department will issue appraisement 
instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of reviews for all 
shipments of HFHTs from the PRC entered, or withdrawn from warehouse, 
for consumption on or after the publication date of these final 
results, as provided for by section 751(a)(1) of the Act: (1) The cash 
deposit

[[Page 16768]]

rates for the reviewed companies named above, all of which have 
separate rates, will be the rates for those firms as stated above for 
the classes or kinds of merchandise listed above; (2) for axes/adzes 
from SMC, which are not covered by these reviews, the cash deposit rate 
will be the rate established in the most recent review of that class or 
kind of merchandise in which SMC received a separate rate; (3) for 
bars/wedges and picks/mattocks from TMC and FMEC, which are not covered 
by these reviews, the cash deposit rate will be the rate established in 
the most recent review of those classes or kinds of merchandise in 
which these respondents received a separate rate; and (4) the cash 
deposit rates for non-PRC exporters of the subject merchandise from the 
PRC will be the rate applicable to the PRC supplier of that exporter. 
For all other PRC producers or exporters of HFHTs not covered by these 
review proceedings, the PRC-wide rates are 44.41 percent for hammers/
sledges, 66.32 percent for bars/wedges, 108.2 percent for picks/
mattocks and 21.93 percent for axes/adzes.
    This notice serves as a final reminder to importers of their 
responsibility under section 353.26 of the Department's regulations to 
file a certificate regarding reimbursement of antidumping duties prior 
to liquidation of the relevant entries during this review period. 
Failure to comply with this requirement could result in the Secretary's 
presumption that reimbursement of antidumping duties occurred and the 
subsequent assessment of double antidumping duties.
    This notice also serves as a reminder to the parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with section 353.34(d) of the Department's 
regulations. Timely notification of return/destruction of APO materials 
or conversion to judicial protective order is hereby requested. Failure 
to comply with the regulations and the terms of an APO is a 
sanctionable violation.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: March 27, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-8846 Filed 4-3-98; 8:45 am]
BILLING CODE 3510-DS-P