[Federal Register Volume 64, Number 8 (Wednesday, January 13, 1999)]
[Notices]
[Pages 2173-2192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-691]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-822, A-122-823]


Certain Corrosion-Resistant Carbon Steel Flat Products and 
Certain Cut-to-Length Carbon Steel Plate From Canada: Final Results of 
Antidumping Duty Administrative Reviews and Determination To Revoke in 
Part

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

ACTION: Notice of final results of the antidumping duty administrative 
review of certain corrosion-resistant carbon steel flat products and 
certain cut-to-length carbon steel plate from Canada and determination 
to revoke in part.

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SUMMARY: On July 10, 1998, the Department of Commerce (``the 
Department'') published the preliminary results of its administrative 
reviews of the antidumping duty orders on certain corrosion-resistant 
carbon steel flat products and certain cut-to-length carbon steel plate 
from Canada. These reviews cover six manufacturers/exporters of the 
subject merchandise to the United States (three manufacturers/exporters 
of corrosion-resistant carbon steel and four manufacturers/exporters of 
cut-to-length carbon steel plate), and the period August 1, 1996, 
through July 31, 1997. We gave interested parties an opportunity to 
comment on our preliminary results. As a result of these comments, we 
have changed the results from those presented in the preliminary 
results of review.

EFFECTIVE DATE: January 13, 1999.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor (Dofasco, Inc. and 
Sorevco Inc. (collectively, Dofasco)); Eric Scheier (Continuous Colour 
Coat (CCC)); Lesley Stagliano (Algoma Inc. (Algoma)); Gideon Katz, 
(Gerdau MRM Steel (MRM)), A.J. Forsyth and Co., Ltd. (Forsyth) and 
Stelco, Inc. (Stelco) corrosion resistant); Laurel LaCivita (Stelco 
plate); or Maureen Flannery, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
4733.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are to the provisions effective January 1, 
1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to 19 CFR 
part 351 (1998).

Background

    On July 10, 1998, we published in the Federal Register (63 FR 
37320) the preliminary results of the administrative reviews of the 
antidumping duty orders on certain corrosion-resistant carbon steel 
flat products and certain cut-to-length carbon steel plate from Canada 
(Preliminary Results). We gave interested parties an opportunity to 
comment on our preliminary results. We received written comments from 
Algoma, CCC, Dofasco, Stelco, and Forsyth, and from the petitioners 
(Bethlehem Steel Corporation, U.S. Steel Group (a unit of USX 
Corporation), Inland Steel Industries, Inc., Gulf States Steel Inc. of 
Alabama, Sharon Steel Corporation, Geneva Steel, and Lukens Steel 
Company). We have now completed these administrative reviews in 
accordance with section 751(a) of the Act.

Scope of Reviews

    The products covered by these administrative reviews constitute two 
separate ``classes or kinds'' of merchandise: (1) Certain corrosion-
resistant carbon steel flat products, and (2) certain cut-to-length 
carbon steel plate.
    The first class or kind, certain corrosion-resistant steel, 
includes flat-rolled carbon steel products, of rectangular shape, 
either clad, plated, or coated with corrosion-resistant metals such as 
zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based alloys, 
whether or not corrugated or painted, varnished or coated with plastics 
or other nonmetallic substances in addition to the metallic coating, in 
coils (whether or not in successively superimposed layers) and of a 
width of 0.5 inch or greater, or in straight lengths which, if of a 
thickness less than 4.75 millimeters, are of a width of 0.5 inch or 
greater and which measures at least 10 times the thickness or if of a 
thickness of 4.75 millimeters or more are of a width which exceeds 150 
millimeters and measures at least twice the thickness, as currently 
classifiable in the HTS under item numbers 7210.30.0030, 7210.30.0060, 
7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000, 
7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 
7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 
7212.30.5000,

[[Page 2174]]

7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 
7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 
7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. Included in 
this review are corrosion-resistant flat-rolled products of non-
rectangular cross-section where such cross-section is achieved 
subsequent to the rolling process (i.e., products which have been 
``worked after rolling'')--for example, products which have been 
beveled or rounded at the edges. Excluded from this review are flat-
rolled steel products either plated or coated with tin, lead, chromium, 
chromium oxides, both tin and lead (``terne plate''), or both chromium 
and chromium oxides (``tin-free steel''), whether or not painted, 
varnished or coated with plastics or other nonmetallic substances in 
addition to the metallic coating. Also excluded from this review are 
clad products in straight lengths of 0.1875 inch or more in composite 
thickness and of a width which exceeds 150 millimeters and measures at 
least twice the thickness. Also excluded from this review are certain 
clad stainless flat-rolled products, which are three-layered corrosion-
resistant carbon steel flat-rolled products less than 4.75 millimeters 
in composite thickness that consist of a carbon steel flat-rolled 
product clad on both sides with stainless steel in a 20%-60%-20% ratio.
    The second class or kind, certain cut-to-length plate, includes 
hot-rolled carbon steel universal mill plates (i.e., flat-rolled 
products rolled on four faces or in a closed box pass, of a width 
exceeding 150 millimeters but not exceeding 1,250 millimeters and of a 
thickness of not less than 4 millimeters, not in coils and without 
patterns in relief), of rectangular shape, neither clad, plated nor 
coated with metal, whether or not painted, varnished, or coated with 
plastics or other nonmetallic substances; and certain hot-rolled carbon 
steel flat-rolled products in straight lengths, of rectangular shape, 
hot rolled, neither clad, plated, nor coated with metal, whether or not 
painted, varnished, or coated with plastics or other nonmetallic 
substances, 4.75 millimeters or more in thickness and of a width which 
exceeds 150 millimeters and measures at least twice the thickness, as 
currently classifiable in the HTS under item numbers 7208.40.3030, 
7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 
7208.53.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 
7211.14.0030, 7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, 
7212.50.0000. Included in this review are flat-rolled products of non-
rectangular cross-section where such cross-section is achieved 
subsequent to the rolling process (i.e., products which have been 
``worked after rolling'')--for example, products which have been 
beveled or rounded at the edges. Excluded from this review is grade X-
70 plate. Also excluded is cut-to-length carbon steel plate meeting the 
following criteria: (1) 100% dry steel plates, virgin steel, no scrap 
content (free of Cobalt-60 and other radioactive nuclides); (2) .290 
inches maximum thickness, plus 0.0, minus .030 inches; (3) 48.00 inch 
wide, plus .05, minus 0.0 inches; (4) 10 foot lengths, plus 0.5, minus 
0.0 inches; (5) flatness, plus/minus 0.5 inch over 10 feet; (6) AISI 
1006; (7) tension leveled; (8) pickled and oiled; and (9) carbon 
content, 0.3 to 0.8 (maximum).
    With respect to both classes or kinds, the HTS item numbers are 
provided for convenience and Customs purposes. The written description 
remains dispositive of the scope of these reviews.

Fair Value Comparisons

    To determine whether sales of subject merchandise from Canada to 
the United States were made at less than fair value, we compared the 
Export Price (EP) to the Normal Value (NV), as described in the 
``Export Price'' and ``Normal Value'' sections of the preliminary 
results of review notice. On January 8, 1998, the Court of Appeals for 
the Federal Circuit issued a decision in CEMEX v. United States, 133 
F.3d 897 (Fed Cir. 1998). In that case, based on the pre-URAA version 
of the Act, the Court discussed the appropriateness of using 
constructed value (CV) as the basis for foreign market value when the 
Department finds home market sales to be outside the ``ordinary course 
of trade.'' This issue 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. Consequently, the Department has reconsidered its 
practice in accordance with this court decision and has determined that 
it would be inappropriate to resort directly to CV, in lieu of foreign 
market sales, as the basis for NV if the Department finds foreign 
market sales of merchandise identical or most similar to that sold in 
the United States to be outside the ``ordinary course of trade.'' We 
will match a given U.S. sale to foreign market sales of the next most 
similar model when all sales of the most comparable model are below 
cost. The Department will use CV as the basis for NV only when there 
are no above-cost sales that are otherwise suitable for comparison. 
Therefore, in this proceeding, when making comparisons in accordance 
with section 771(16) of the Act, we considered all products sold in the 
home market as described in the ``Scope of Review'' section of this 
notice, above, that were in the ordinary course of trade for purposes 
of determining appropriate product comparisons to U.S. sales. Where 
there were no sales of identical merchandise in the home market made in 
the ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade, based on the characteristics listed in 
Sections B and C of our antidumping questionnaire. We have implemented 
the Court's decision in this case, to the extent that the data on the 
record permitted.

Determination Not To Revoke in Part: Stelco Cut-to-Length Carbon 
Steel Plate and Corrosion-Resistant Carbon Steel Flat Products, and 
Determination To Revoke in Part: Algoma Cut-to-Length Carbon Steel 
Plate

    On August 28, 1997, Algoma submitted a request, in accordance with 
19 CFR 351.222(b), that the Department revoke the order covering cut-
to-length carbon steel plate from Canada with respect to its sales of 
this merchandise. On August 29, 1997, Stelco submitted a request that 
the Department revoke the orders covering cut-to-length carbon steel 
plate and corrosion-resistant steel from Canada with respect to its 
sales of this merchandise. In accordance with 19 CFR 
351.222(b)(2)(iii), these requests were accompanied by certifications 
from Algoma and Stelco that they had not sold the subject merchandise 
at less than NV for a three-year period, including this review period, 
and would not do so in the future. Algoma and Stelco also agreed to 
their immediate reinstatement in the relevant antidumping order, as 
long as any firm is subject to the order, if the Department concludes 
under 19 CFR 351.216 that, subsequent to revocation, they sold the 
subject merchandise at less than NV.
    The Department conducted verifications of Algoma's and Stelco's 
responses for this period of review. In the two prior reviews of this 
order we determined that Algoma and Stelco sold cut-to-length carbon 
steel plate from Canada at not less than NV or at de minimis margins. 
We determine that

[[Page 2175]]

both Algoma and Stelco sold cut-to-length carbon steel plate at not 
less than NV during the instant review period.
    On August 10, 1998, petitioners submitted argumentation opposing 
Algoma's and Stelco's revocation requests. On December 4, 1998, we 
placed on the record of this review the results of research that we 
conducted to help us determine the likelihood of resumed dumping, and 
opened the record for further comment on this issue. See memorandum to 
the file, dated December 4, 1998.
    In determining whether to revoke an antidumping order in part, we 
must conclude pursuant to Sec. 351.222(b)(2), that: (1) The company has 
sold subject merchandise at not less than normal value to the United 
States in commercial quantities for three consecutive reviews; (2) it 
is not likely that the companies eligible for revocation will in the 
future sell the subject merchandise at less than NV; and (3) the 
company agrees to its immediate reinstatement in the order if the 
Department concludes that the company, subsequent to the revocation, 
sold the subject merchandise at less than NV.
    In the present case, the Department has found that Stelco has had 
zero or de minimis dumping margins for three consecutive reviews. 
However, in determining whether the three years of no dumping are a 
sufficient basis to make a revocation determination, the Department 
must be able to determine that the company has continued to participate 
meaningfully in the U.S. market during each of the three years at 
issue. See Pure Magnesium from Canada, 63 FR 26147 (May 12, 1998). This 
practice has been codified by Sec. 351.222(d)(1) of the Department's 
regulations, which state that, ``before revoking an order or 
terminating a suspended investigation, the Secretary must be satisfied 
that, during each of the three (or five) years, there were exports to 
the United States in commercial quantities of the subject merchandise 
to which a revocation or termination will apply.'' 19 CFR 351.222(d)(1) 
(emphasis added). For purposes of revocation, the Department must be 
able to determine that past margins are reflective of a company's 
normal commercial activity. Sales during the POR which, in the 
aggregate, are an abnormally small quantity do not provide a reasonable 
basis for determining that the discipline of the order is no longer 
necessary to offset dumping.
    Based on the current record, we find that Stelco did not sell 
merchandise in the United States in commercial quantities during the 
second administrative review (one of the three consecutive reviews 
cited by Stelco to support its request for revocation). During the POR 
covered by that review (August 1994 though July 1995), Stelco made only 
one sale in the United States. Moreover, this sale was only for 36 tons 
of subject merchandise. By contrast, during the period covered by the 
antidumping investigation, which was only six months long, Stelco made 
several thousand sales totaling approximately 30,000 tons. In other 
words, Stelco's sales for the entire year covered by the second review 
period were only 0.12% of its sales volume during the six-months 
covered by the investigation. Similarly, during the current POR, Stelco 
sold approximately 2000 tons of subject merchandise in the United 
States. While this amount is small in comparison to the amount sold 
prior to issuance of the order, it is over 50 times greater than the 
amount sold during the period covered by the second administrative 
review. Consequently, although Stelco received a de minimis margin 
during the second administrative review, this margin was not based on 
commercial quantities within the meaning of the revocation regulation. 
The number of sales and total sales volume is so small, both in 
absolute terms, and in comparison with the period of investigation and 
other review periods, that it does not provide any meaningful 
information on Stelco's normal commercial experience. Therefore, we 
find that Stelco does not qualify for revocation from the order on 
steel plate under Sec. 351.222(b)(1)(i) and (d)(1).
    We find that Algoma has met all of the requirements for revocation 
under Sec. 351.222(b)(1) of the Department's regulations. As we 
explained in Dynamic Random Access Memory Semiconductors of One 
Megabyte or Above From the Republic of Korea, Notice of Final Results 
of Antidumping Duty Administrative Review and Determination Not To 
Revoke Order In Part, 62 FR 39809, 39810 (July 24, 1997) (DRAMS from 
Korea), in evaluating the issue of likelihood, the Department has 
considered three years of sales in the United States with no dumping 
margins, plus an agreement to reinstatement in the order, to be 
indicative of expected future behavior. Absent other evidence, the 
Department considers such facts to be determinative of the likelihood 
issue.
    Algoma has sold merchandise in the United States at not less than 
NV for three consecutive reviews. Moreover, during each of these 
periods, Algoma's aggregate sales were made in commercial quantities. 
Algoma has also agreed to its immediate reinstatement in the order if 
we conclude, subsequent to the revocation, that Algoma has sold the 
subject merchandise at less than NV. Finally, no party has argued that 
Algoma is not eligible for revocation based on likelihood under 
Sec. 351.222(b)(2)(ii), and we find that there is not sufficient 
support for such a conclusion. Therefore, based on its consecutive 
years of zero or de minimis margins, and reinstatement agreement, and 
in the absence of evidence to the contrary, we conclude that it is not 
likely that Algoma will sell subject merchandise in the United States 
at less than fair value.
    Regarding Stelco's request for revocation with respect to 
corrosion-resistant steel, we note that in the last two administrative 
reviews we determined that Stelco sold corrosion-resistant steel at 
less than NV. 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, 62 FR 12725 
(March 16, 1998) and Certain Corrosion-Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate From Canada: 
Final Results of Antidumping Duty Administrative Reviews, 62 FR 18448 
(April 15, 1997)(1994/95 Canadian Steel). Although the final results of 
these reviews are subject to litigation, that litigation is not yet 
complete. Additionally, as discussed below, we have determined that 
Stelco sold corrosion-resistant steel at less than NV during the period 
covered by this review. Consequently, we determine that because Stelco 
does not have three consecutive years of zero or de minimis margins on 
corrosion-resistant steel, Stelco is not eligible for revocation of the 
order on corrosion-resistant steel under 19 CFR 351.222(b).

Facts Available

    As we explained in the preliminary results, we determine that the 
use of facts available is appropriate for Forsyth in accordance with 
section 776(a) of the Act, because it failed to report all of its home 
market sales made during the POR.
    Where necessary information is missing from the record, the 
Department may apply facts available under section 776 of the Act. 
Further, where that information is missing because a respondent has 
failed to cooperate to the best of its ability, section 776(b) of the 
Act authorizes the Department to use facts available that are adverse 
to the interests of that respondent, which may include information 
derived from the petition, the final determination, a

[[Page 2176]]

previous administrative review, or other information placed on the 
record. Forsyth did not respond to our repeated requests that it report 
all of its home market sales; rather, it presented arguments as to why 
it could omit many of those sales. As we explained in the preliminary 
determination, we disagree with these arguments. Therefore, we conclude 
that Forsyth has failed to cooperate to the best of its ability.
    As adverse facts available for Forsyth, we are using the highest 
dumping margin from any segment of this proceeding, 68.70 percent. This 
is the rate used as facts available in the LTFV final determination, 
and is found in the petition. See Memorandum to the File ``Preliminary 
Results of Cut-to-Length Carbon Steel Plate from Canada; Corroboration 
of Antidumping Duty Margin Used as Facts Available for A.J. Forsyth'' 
July 2, 1998 (Corroboration Memo).
    Section 776(c) provides that the Department shall, to the extent 
practicable, corroborate ``secondary information'' by reviewing 
independent sources reasonably at its disposal. The Statement of 
Administrative Action (SAA) accompanying the URAA at 870, clarifies 
that ``secondary information'' includes information from the petition 
in the LTFV investigation, the final determination, or information from 
a previous section 751 review of the subject merchandise. The SAA also 
provides that ``corroborate'' means simply that the Department will 
satisfy itself that the secondary information to be used has probative 
value. Id.
    In accordance with this requirement, we corroborated the LTFV 
margin to the extent practicable. We examined the basis of the rates 
contained in the petition. Petitioners based both U.S. price and normal 
value on actual prices from price quotations to U.S. customers and 
price lists for plate sold by respondents. See Petition Requesting the 
Imposition of Antidumping Duties on Imports of Cut-to-Length Carbon 
Steel Plate from Canada, June 30, 1992 and July 14, 1992 (amended 
petition). The price lists and price quotes that support the petition 
margin are independent sources. Furthermore, the Department did not 
receive any information or comment from the respondent or other 
interested parties in this review concerning the U.S. prices and normal 
values contained in the petition, and is aware of no other independent 
sources of information that would enable us to further corroborate the 
margin calculated in the petition. We note that the SAA, at 870, 
specifically states that where ``corroboration may not be practicable 
in a given circumstance,'' the Department may nevertheless apply an 
adverse inference. Based on these reasons, the Department considers the 
LTFV rate used as adverse facts available to be corroborated.

Changes From the Preliminary Results

    The Department is implementing a change in this review in the 
calculation of U.S. credit expense for Algoma, CCC, MRM, and Dofasco, 
to be consistent with the Department's current practice, as outlined in 
Import Administration Bulletin 98.2: Imputed Credit Expenses And 
Interest Rate (February 23, 1998) (Policy Bulletin 98.2).
    It is the Department's practice to calculate the U.S. credit 
expense using a short-term interest rate tied to the currency in which 
the sales are denominated. This interest rate should be based on the 
respondent's weighted-average short-term borrowing experience in the 
currency of the transaction. In cases, such as these, where Algoma, 
CCC, MRM and Dofasco have no short-term borrowings in the currency of 
the transaction, we will use publicly available information to 
establish a short-term interest rate applicable to the currency of the 
transaction. Since we are addressing the U.S. dollar transactions for 
these companies, for these final results we have used the average 
short-term lending rates calculated by the Federal Reserve to impute 
credit expenses. Specifically, we have used the Federal Reserve's 
weighted-average data for commercial and industrial loans maturing 
between one month and one year from the time the loan is made. See 
Final Analysis Memoranda for Algoma, CCC, MRM, and Dofasco, on file in 
room B-099 of the Commerce Department.

Interested Party Comments

Algoma

Comment 1: Credit Expenses
    Petitioners allege that the errors found in the reported credit 
expenses at verification indicate that the information cannot be 
verified. Petitioners also contend that Algoma did not report credit 
expenses to the best of its ability and that, therefore, the Department 
should apply adverse facts available. Petitioners argue that the 
Department cannot rely on Algoma's data to conclude that the credit 
expense errors were isolated because, rather than the Department 
verifying this assertion itself, the Department relied on Algoma to 
independently verify that there were no other errors in its reporting 
of payment dates. Petitioners argue that, unlike in Melamine 
Institutional Dinnerware from Indonesia: Final Determination of Sales 
at Less Than Fair Value, 62 FR 1719, 1723 (January 13, 1997), where the 
Department corrected errors found at verification after verifying that 
the errors were isolated, the Department did not verify that the errors 
in Algoma's reporting of credit expenses were isolated.
    Petitioners contend that the errors discovered by the Department 
during verification were significant because Algoma reported credit 
expenses where it actually received advance payments. Thus, petitioners 
argue, Algoma failed verification, and the Department should apply 
facts available, as it did in Stainless Steel Bars from Spain; Final 
Results of Admin. Review, 59 FR 66931, 66935 (December 28, 1994), 
Circular Welded Non-Alloy Steel Pipe and Tube from Mexico; Final 
Results of Admin. Review, 62 FR 37014, 37016 (July 10, 1997), and 
Svenskt Stal AV v. United States, Ct. No. 96-05-01372 Slip Op., 97-123 
(August 29, 1997). Petitioners also cite section 776(a) of the Act, 
which states that if information provided by a respondent cannot be 
verified, the Department shall use facts available in reaching its 
determination.
    Petitioners assert that Algoma failed to report to the best of its 
ability at verification because it did not disclose the errors in its 
reported credit expenses for the affected home market sales either 
prior to, or at the outset, of verification. Citing 19 U.S. C. 
1677e(b), petitioners state that if a party fails to cooperate by not 
acting to the best of its ability to comply with a request for 
information, the Department may draw an adverse inference in its 
selection of facts otherwise available. In Cut-to-Length Steel Plate 
from South Africa: Final Results of Admin. Review, 62 FR 61731, 61739 
(November 19, 1997), the Department applied the highest credit expense 
reported on a U.S. sale to all U.S. sales when the respondent failed to 
report to the best of its ability.
    Algoma disagrees with petitioners. Algoma notes that the Department 
found two discrepancies at verification involving reported payment 
dates, neither of which was significant. The first error was a 
typographical error in the reported date of payment for a pre-selected 
home market sale. In the second error, Algoma's accounting department 
posted the payment against the date on which the amount was due instead 
of the date on which the cash was received for a sale in which there 
was an advance payment by the customer. Algoma argues that, contrary to 
petitioners' allegation, the other advance payment errors were not 
uncovered by the Department's verification team, but were discovered

[[Page 2177]]

when Algoma searched its entire submission for transactions where the 
customer prepayment was received. Algoma determined that other errors 
of the same type existed and voluntarily disclosed this information to 
the Department on its own initiative during verification.
    Algoma argues that the Department's Sales Verification Report at 
pages 13-14 shows that the Department verified the extent of Algoma's 
credit errors by examining the results of a computer query conducted on 
the sales database, and verified the corrected information. Algoma 
points out that the errors could not have been included in the 
corrections memorandum provided at the beginning of verification 
because Algoma was not aware of them at that time. Algoma further 
argues that the errors at issue were both small in effect and isolated 
in scope. Algoma argues that, because the Department corrected the 
transactions at issue, verified the remainder of Algoma's file, and 
used the corrected information in its preliminary results of review, no 
further action by the Department is appropriate or necessary.
    Department's Position: We agree with Algoma. At verification, we 
reviewed the method by which Algoma searched its database for the 
payment date errors, and we examined the full universe of sales in 
which these errors occurred. Since all of these credit expense errors 
occurred in sales where there were advance payments, we consider these 
errors to be isolated in nature. Therefore, we are making no changes to 
our calculations for the final results of review other than permitting 
Algoma to correct the errors. For further discussion of this issue, 
refer to the November 3, 1998 Memorandum to the File: Final Results of 
the Antidumping Administrative Review of Cut-to-Length (CTL) Carbon 
Steel Plate from Canada (Algoma's Issues Memo).
Comment 2: Freight Expenses
    Petitioners argue that there are a number of U.S. sales for which 
Algoma reported having received freight revenue but for which it did 
not report a corresponding freight expense. Petitioners state that the 
Department should apply to these sales the highest U.S. freight expense 
reported for any U.S. sale as adverse facts available.
    Petitioners argue that it was only after verification was underway 
that Algoma ran an ``internal edit check'' and identified deleted 
freight expense data for some of these sales. Petitioners argue that 
Algoma should have reported this data to the Department before 
verification, since the freight charges for these sales were reported 
in Algoma's November 21, 1997 sales tape, but were ``inexplicably'' 
deleted from its later submissions. Petitioners allege that when Algoma 
deleted the freight charges from its sales tapes in its subsequent 
responses, it did not report the freight expenses to the best of its 
ability. As with Algoma's credit expenses, petitioners argue that 
Algoma's independent analysis of its database provides no justification 
to conclude that the error is ``isolated,'' and that the sample of 
sales verified cannot be considered to be representative of Algoma's 
reporting as a whole. Petitioners contend that because Algoma failed to 
report to the best of its ability, the Department should draw an 
adverse inference and apply the highest U.S. freight expense reported 
for any U.S. sale to the sales in question. Petitioners cite Welded 
Carbon Steel Pipe and Tube from Turkey: Final Results of Administrative 
Antidumping Review, 61 FR 69067, 69073 (December 31, 1996), and Foam 
Extruded PVC from the United Kingdom: Final Results of Administrative 
Antidumping Review, 61 FR 51411, 51414 (October 2, 1996).
    Algoma contends that the Department has already rejected 
petitioners' argument that U.S. freight expenses were misreported. 
Algoma explains that, in unusual instances, a carrier may neglect to 
bill Algoma for transport provided. In these instances, Algoma incurs 
no freight expense, and the proper accounting treatment is to show no 
freight expense. The proper treatment of freight revenue is to report 
it whenever the customer pays for freight. Therefore, Algoma claims, 
for some of the sales petitioners reference, freight expense and 
revenue were correctly reported.
    With respect to sales for which a freight expense was incurred but 
not reported, Algoma further maintains that it was not aware of the 
computer error prior to verification because none of the sales 
preselected by the Department raised the issue. Algoma did not discover 
the error until it began preparing its response to petitioners' 
allegations, after verification commenced. On the night before 
verification, it received petitioners' letter asking the Department to 
examine certain transactions where no freight charges were reported. 
Algoma found that in one of the transactions mentioned in the letter, 
freight revenue was reported, but there was no corresponding freight 
expense. Algoma then conducted a search to identify other such 
transactions. Algoma maintains that the correct information was 
verified by the Department and that no ``discrepancy'' existed because 
the correct data was on the record prior to verification.
    Department's Position: We agree with Algoma. Algoma reported the 
freight expense errors to the best of its ability at verification and 
disclosed them to the Department on its own initiative. At 
verification, we examined the method by which Algoma determined that 
the reported freight expense was in error, and found no reason to 
believe that the errors were indicative of a corrupt database. We also 
found that some of the sales in question were indeed reported 
correctly, and that other sales at issue were correctly reported prior 
to verification. Finally, reliability of these expenses is enhanced by 
the fact that Algoma reported all of them in its initial submission, 
which is on the record. The apparently inadvertent omissions only 
showed up in later submissions of the same information. Since the 
Department found Algoma's database to be reliable, we believe that the 
freight expense errors were isolated in nature. Therefore, we will 
include the corrected data for the freight expense in our final 
calculations. See Algoma's Issues Memo for further discussion of this 
issue.
Comment 3: Inclusion of Certain Sales
    Petitioners argue that certain sales should be included as part of 
the sales database due to a date of sale issue, the details of which 
are proprietary.
    Algoma contends that the Department should continue to exclude 
certain transactions as part of its margin calculation because the 
product type and quantity shipped for these sales (under an agreement) 
was not fixed until the date of shipment (and invoicing). Algoma states 
that these transactions were removed from the original sales tape and 
thereafter reported in a separate data file because their dates of sale 
(invoice date) fell outside of the contemporaneous reporting window. 
Algoma argues that it originally included these sales in its November 
21, 1997 sales listing in the belief that they had been made pursuant 
to a long-term contract that fixed the material terms of sale (e.g., 
product description, price, and quantity) on the date of initial 
agreement between the parties. Algoma alleges, however, that as 
demonstrated at verification, the material terms of sale (i.e., the 
product description and quantities) were amended several times after 
that date.
    Algoma maintains that, in accordance with the Department's long-
standing ``date of sale'' methodology, it is improper to use the date 
of initial agreement as the date of sale for these

[[Page 2178]]

transactions because the material terms of sale were not established 
with finality on that date.
    Department's Position: We agree with Algoma. The material terms of 
these sales were amended, and the date on which these terms became 
fixed (i.e., the date of sale), falls outside of the period of review 
(``POR''). Because this issue is not subject to further summarization, 
see Algoma's Issues Memo for a more detailed proprietary discussion.
Comment 4: Date of Sale
    Petitioners argue that Algoma's date of sale is the order entry 
date rather than the invoice date, because, they claim, both price and 
quantity terms of sale are fixed on the order entry date for both U.S. 
and home market sales. Petitioners maintain that, under Sec. 351.401(i) 
of the Department's regulations, the Secretary may use a date of sale 
other than the date of invoice if the Secretary is satisfied that an 
alternative date more accurately reflects the date on which the 
exporter or producer established the material terms of sale. 
Petitioners base their contention on a reference in the Department's 
verification report to a chart examined at verification in which Algoma 
compared the quantity of merchandise ordered to the quantity of 
merchandise shipped. The report stated, ``there does not appear to be a 
significant difference between the number of pieces shipped and the 
number of pieces ordered.'' (Memorandum to the File: Report on the 
Sales Verification of Algoma Steel Corporation in the 8/1/96-7/31/97 
Administrative Review of the Antidumping Duty Order on Cut-to-Length 
Carbon Steel Plate from Canada (May 22, 1998) (Algoma Sales 
Verification Report)). Petitioners also cite Stainless Steel Bar from 
India: Final Results, 63 FR 3536, 3537 (January 23, 1998), in which the 
Department used the purchase order date as the date of sale because no 
material changes occurred between the purchase order date and the 
invoice date. Petitioners also cite Canned Pineapple Fruit from 
Thailand: Final Results, 63 FR 7392, 7394 (February 13, 1998), and 
Circular Welded Non-Alloy Steel Pipe from Korea: Final Results, 63 FR 
32833, 32836 (June 16, 1998), in which the Department used the contract 
date as the date of sale.
    Algoma argues that the Department's presumption in favor of using 
the invoice date as the date of sale in the preliminary results notice 
is justified. Algoma disagrees with petitioners' argument in favor of 
the order entry date because it relies exclusively on a statement made 
by the Department in the Algoma Sales Verification Report relating to a 
chart that Algoma prepared, and it ignores the facts on which the 
Department based its conclusion. Algoma asserts that the verification 
report also states that the verifiers ``found no discrepancies with 
their (Algoma's) date of sale.'' According to Algoma, the data show 
that the quantity shipped differs from the quantity ordered on a 
regular basis, which is sufficient to sustain the use of invoice date 
in accordance with the Department's practice. Algoma cites the preamble 
to the Department's regulations, published in the Federal Register on 
May 19, 1997, in which the Department stated:

    A preliminary agreement on terms, even if reduced to writing, in 
an industry where renegotiation is common does not provide any 
reliable indication that the terms are truly ``established'' in the 
minds of the buyer and seller. This holds even if, for a particular 
sale, the terms were not renegotiated.

62 FR 27349.

    Algoma concludes that, because the terms of sale, in particular the 
quantity shipped, are commonly subject to further negotiation up to the 
date of shipment, the Department's use of the invoice date as the date 
of sale is justified in this case.
    Department's Position: We agree with Algoma. As stated in 
Sec. 351.401(i) of the Department's regulations, we normally use the 
invoice date as the date of sale. At verification, we examined a chart 
comparing the quantity ordered to the quantity shipped/invoiced for a 
certain number of sales, and found that the quantity changed between 
the order date and the invoice date for a number of sales; see Exhibit 
40, page S6506, of the Algoma Sales Verification Report. Therefore, we 
have continued to use Algoma's invoice date as the date of sale in 
accordance with our normal practice. See Memorandum to the File: 
Analysis for Algoma Steel Inc. for the Final Results of the Fourth 
Administrative Review, on file in room B-099 of the Commerce 
Department.
Comment 5: Imputed Credit
    Algoma argues that the Department should include banking fees in 
the Canadian dollar-denominated interest rate used to impute credit 
expenses for home market sales, even though Algoma did not include them 
in its calculations prior to verification. Algoma points out that, at 
the outset of verification, it disclosed to the Department that it had 
omitted certain banking fees that were paid in connection with the 
short-term revolving credit facility from its calculation of the 
Canadian dollar short-term interest expense factor. Algoma claims that 
page 36 of the annual report submitted as part of its Section A 
Response identifies the following bank charges related to short-term 
borrowing made during the POR under Algoma's ``revolving credit 
facility'' which opened in 1995: an amortized ``issuance cost,'' 
``annual fees,'' and ``fees determined by the amount of the unused 
portion of the facility during the course of a given month.''
    Algoma claims that the Department should not consider this 
information as ``new'' because Algoma established on the record well 
before verification that it incurred such banking fees as part of its 
actual total cost of short-term Canadian borrowings under the credit 
facility in question. Algoma claims that it identified the total amount 
of such ``interest and fees on operating line'' incurred during the 
1997 calendar year (overlapping half of the POR) in its first 
supplemental questionnaire response, and reconciled the reported amount 
of these bank charges to its audited financial statement in the second 
supplemental questionnaire response.
    Algoma maintains that petitioners were aware of the credit line, 
and specifically asked the Department to examine the issue at 
verification, and to place the entire credit agreement on the record. 
Furthermore, Algoma argues that the information is not ``new'' because 
not only is it on the record, but it was examined at verification. 
Algoma cites both the Department's sales verification report and cost 
verification report in making its claim that the amount of the bank 
fees was verified in order to reconcile the reported interest payment 
amounts to Algoma's audited financial statements at verification. 
Algoma states that the Department examined and verified the bank fees 
in the cost verification for six of the twelve months of the POR.
    Algoma adds that the Department's normal practice requires it to 
include these costs in Algoma's home market credit expenses, and that 
not doing so would understate Algoma's actual cost of short-term 
borrowing. Algoma cites Certain Cold-Rolled Carbon Steel Plate Products 
from Korea; Final Results of Antidumping Duty Administrative Review, 
Comment 2, 62 FR 781801 (January 7, 1998), and Large Power Transformers 
from Italy; Final Results of Antidumping Duty Administrative Review, 52 
FR 46806 (December 10, 1987), where the Department included bank 
charges incurred as part of respondent's credit expense calculation. 
Algoma also cites Nylon Impression Fabric from Japan; Final Results, 51 
FR 15816 (April 28, 1986).

[[Page 2179]]

    Petitioners contend that because Algoma's home market credit 
expenses failed verification, whether the bank fees are included in 
calculating Algoma's home market credit expenses is irrelevant.
    Petitioners also dispute Algoma's contention that the information 
regarding bank fees was on the record before verification. Petitioners 
claim that the information from Algoma's 1996 Annual Report that was 
included in Algoma's Section A Response did not include data for six 
months of the POR (January 1997 to July 1997). In addition, petitioners 
argue that, in its January 29, 1998 supplemental questionnaire 
response, Algoma referred to the data as ``interest and other fees on 
the operating line'' without detailing the nature of the ``fees.'' 
Petitioners also argue that the only figure that was reconciled was 
Algoma's ``Net Financing Expenses'' for calendar year 1996, and cite 
Algoma's Response to the Department's Second Supplemental Questionnaire 
(March 20, 1998) at Attachment D-43.
    Petitioners contend that the Department neither accepted the 
information on the bank fees, nor verified the data during Algoma's 
sales verification. See Algoma Sales Verification Report at 15. 
Petitioners state that the Department specifically refused to examine 
the fees because they constituted untimely new information, and cite 
the Department's Analysis Memorandum for Algoma for the Preliminary 
Results of the Fourth Administrative Review of Certain Cut-to-Length 
Carbon Steel Plate from Canada for the period August 1, 1996--July 31, 
1997 (July 10, 1998). Petitioners argue that the fact that the 
Department examined the bank fees during the cost verification is of no 
consequence, because the fees were examined solely to confirm Algoma's 
net financing expenses during the 1996 calendar year, not to confirm 
Algoma's short-term interest expenses during the POR (July 31, 1997 
through August 1, 1997).
    Department's Position: We agree with Algoma. The Department 
considers Algoma's revolving credit facility to be short-term 
borrowings. Consequently, the banking fees associated with the 
revolving credit facility are part of the total cost to Algoma of 
short-term Canadian borrowings and therefore, should be included in the 
short-term interest rate used to calculate imputed credit expenses. 
Although the banking fees were not included in Algoma's credit expense 
calculation prior to verification, information pertaining to the nature 
of these banking fees was recorded in Algoma's Annual Reports which 
Algoma submitted prior to verification. In addition, we examined these 
banking fees during verification. Thus, we do not consider the 
information pertaining to the banking fees to be ``new'' information. 
We have recalculated Algoma's imputed home market credit expenses to 
include these banking fees. When we corrected the home market credit 
expense, we noted that there were several missing payment dates in 
Algoma's sales tape. For these sales, we applied the verified average 
number of days between the shipment date and the payment date.
Comment 7: Clerical Errors
    Petitioners claim that the Department made three clerical errors in 
the preliminary results, and therefore should correct them in the final 
results. These errors pertain to the calculation of certain credit 
expenses, the deduction for early payments, and the freight movement 
calculation. In the home market credit expense calculation, petitioners 
claim that the Department omitted billing adjustments, freight revenue, 
and other discounts as part of the gross unit price. Petitioners state 
that, in the definition statement of the total discounts and rebates in 
the model match program, the Department omitted early payments. 
Petitioners point out that, in the margin program, the Department 
placed the parenthesis in the wrong part of the calculation string for 
movement expenses.
    Department's Position: We agree with petitioners regarding all 
three ministerial errors. We have corrected these errors for the final 
results.

Dofasco

Comment 1: Use of ``Partial'' Freight Data
    Petitioners argue that, as in the third review, the Department 
should reject the actual freight data Dofasco submitted for some of its 
sales in favor of the minimum and maximum freight rates to each 
destination, which Dofasco has provided for all sales. Petitioner 
contends that the Department's practice is to disregard sales 
information reported on a selective basis, as stated in Stainless Steel 
Wire Rod from Sweden, 63 FR 40449, 40455 (July 29, 1998) (SSWR from 
Sweden). Petitioner adds that using such ``partial'' information would 
``encourage (respondent) to selectively disclose only that information 
which would benefit its position.'' (Final Results of Administrative 
Review; Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished From Japan, and Tapered Roller Bearings, Four Inches or Less 
in Outside Diameter, and Components Thereof, from Japan, 63 FR 20585, 
20591 (April 27, 1998) (TRBs 1998)). Petitioner also states that, if 
the Department used this information, there would be no incentive for 
respondents to provide complete information (TRBs 1998, citing Nippon 
Pillow Block Sales Co., Ltd. and FYH Bearing Units USA, Inc. v. United 
States, 903 F. Supp. 89, 95 (CIT 1995) and Persico Pizzamiglio, S.A. v. 
United States, No. 92-11-00783, Slip Op. 94-61 at 23 (April 14, 1994)).
    Finally, petitioner claims that the potential for manipulation 
requires that the Department reject ``selectively disclosed information 
* * * even when there is no direct evidence that such manipulation 
actually occurred.'' In support, petitioner cites Final Results of 
Antidumping Duty Administrative Review, Tapered Roller Bearings, Four 
Inches or Less in Diameter, and Components Thereof, from Japan, 59 FR 
56035, 56049 (November 10, 1994) (TRBs 1994), Final Results of 
Antidumping Duty Administrative Review; Certain Cold-Rolled Carbon 
Steel Flat Products from Germany, 60 FR 65264, 65274 (December 19, 
1995) (Steel from Germany), and C.F. Koenig & Bauer-Albert AG v. United 
States, No. 96-10-02298, Slip Op. 98-83 (CIT 1998) at 6.
    Dofasco argues that the Department does not require respondents to 
report freight on an actual sales-specific basis, but in many instances 
has allowed respondents to report freight using alternate methodologies 
when necessary. Dofasco points out that the questionnaire specifically 
allows respondents to report freight on something other than an actual 
sale-by-sale basis ``when to do otherwise would create a significant 
burden because of the manner in which your (the respondent's) 
accounting records are maintained.'' Dofasco adds that, in the third 
administrative review of this order, the Department allowed respondents 
to report estimated freight expenses as long as they were reasonable 
and any differences between the estimated amounts and actual freight 
charges were minor. Respondent cites Final Results of Antidumping 
Administrative Review; Certain Corrosion-Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate from Canada, 63 
FR 12725, 12740 (March 16, 1998) (Third Review Final Results) and Final 
Determination of Sales at Less Than Fair Value; Small Diameter Circular 
Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from 
Italy, 60 FR 31981, 31987 (June 19, 1995).

[[Page 2180]]

    Dofasco denies that it has selectively reported actual freight, 
arguing that it has been consistently forthcoming with the Department 
about its inability to track actual freight for all of its sales. 
Dofasco asserts that it has reported actual freight for those carriers 
that bill Dofasco through an electronic data interface system, which 
enables Dofasco to calculate via computer the actual cost for each coil 
shipped to these companies. Because some carriers do not use this 
system, Dofasco states, it would be burdensome to report actual freight 
for all those carriers not using the system. Furthermore, Dofasco adds, 
the Department has verified these facts, and found no discrepancies. 
Therefore, petitioners' allegations with respect to ``potential 
manipulation'' are misplaced.
    Department's Position: We disagree with petitioners. In the third 
administrative review, we did not use respondents's actual freight data 
because we found that the computerized system it used to bill its 
customers for freight was not working properly, and there was nothing 
on the record to demonstrate the accuracy of the freight expenses as 
reported. See Third Review Final Results, 63 FR at 12739. In the 
current review, we verified the accuracy of Dofasco's response 
regarding its freight billing system and found no discrepancies. Thus, 
we have used Dofasco's reported actual freight expenses for those sales 
for which this data was available. Because we verified this expense to 
our satisfaction, we do not consider Dofasco's data to be ``selective'' 
or ``partial,'' nor do we believe that Dofasco attempted to manipulate 
the margin outcome by reporting its freight data in the manner that it 
did.
    We note that in the TRBs cases cited by petitioners, the Department 
had reason to believe that the respondents' data was incomplete, unlike 
here. In SSWR from Sweden, we found at verification that the respondent 
could have reported transaction-specific data, but reported average 
figures instead. We therefore rejected the reported average figures in 
favor of transaction-specific information. In contrast, we have 
concluded that Dofasco has reported transaction-specific data for as 
many sales as possible, as stated above. We therefore have not changed 
the preliminary results with respect to freight expenses.
Comment 2: EP vs. CEP Sales
    Petitioners argue that the Department should treat all sales made 
through Dofasco's U.S. subsidiary as constructed export price (CEP) 
sales, in accordance with the Department's practice when an affiliate 
involved in the sales process as something more than a ``processor of 
sales-related documentation'' or a ``communications link.'' In support, 
petitioners cite: Final Determination of Sales at Less Than Fair Value; 
Stainless Steel Wire Rod from Spain, 63 FR 40391, 40395 (July 29, 1998) 
(Stainless Steel Wire Rod from Spain); and Preliminary Results of 
Antidumping Duty Administrative Review; Roller Chain Other than Bicycle 
from Japan, 63 FR 25457 (May 18, 1998)(Roller Chain from Japan). 
Petitioners detail evidence from the proprietary record, specifically 
the Department's Report on the Sales Verification of Dofasco Inc. (May 
28, 1998) (Dofasco Sales Verification Report), which they claim 
demonstrates that Dofasco USA (DUSA) performed sales functions that 
render CEP treatment appropriate.
    Petitioners point out that, in the Final Results of Antidumping 
Duty Administrative Reviews: Certain Cold-Rolled and Corrosion-
Resistant Carbon Steel Flat Products from Korea (Steel from Korea), 63 
FR 13170 (March 18, 1998), the Department found that just because the 
affiliate's role ``is not autonomous with respect to the sales 
process,'' this does not mean that its ``role in the process is 
ancillary.'' Thus, petitioners state, even if the Department were to 
find that DUSA had no independent sales negotiating authority, that 
fact would not be dispositive. Furthermore, petitioners state, the 
Department has recently made clear that it will ``consider the sale to 
be CEP unless the record demonstrates that the U.S. affiliate's 
involvement in making the sale is incidental or ancillary.'' (Steel 
from Korea, 63 FR at 13177, 13182-83.) Petitioners conclude that 
Dofasco has failed to submit any evidence to support such a finding.
    Dofasco argues that the Department correctly determined that 
Dofasco properly classified its U.S. sales through DUSA as export price 
(EP) sales. Dofasco points out that the Department has made the same 
determination in all three previous reviews. As the facts during this 
review are almost exactly the same as in the previous reviews, Dofasco 
argues, the Department should continue to classify the DUSA sales as EP 
sales.
    Dofasco cites the preamble to the Department's new regulations, 
which states that the Department considers transactions to be EP 
whenever: (1) The producer or exporter ships the merchandise directly 
to the unaffiliated purchaser without it being introduced into the U.S. 
affiliate's inventory; and (2) the affiliated entity acts only as a 
processor of documentation and a communication link between the foreign 
respondent and the unaffiliated purchaser (62 FR 27296, 27351). Dofasco 
maintains that the last factor has been interpreted by the Department 
as turning largely upon the extent to which the affiliate is involved 
in negotiating the sales, a role which the Department has stated must 
be ``incidental or ancillary.'' Steel from Korea at 63 FR 13183. 
Furthermore, Dofasco states, the Department has never suggested that 
merely signing contracts is sufficient to characterize the U.S. 
subsidiary's role as being more than ``incidental or ancillary.'' 
Rather, the Department has recently elucidated that this threshold is 
passed only when the U.S. affiliate is ``substantially involved in the 
sales process (e.g., negotiating prices), or if the affiliate ``played 
a major role in negotiating and bringing about the sale, from the 
bidding stage through the final contract.'' See Roller Chain from 
Japan, 63 FR at 25457, and Certain Cut-to-Length Carbon Steel Plate 
from Germany, 62 FR 18390, 18391-92 (April 15, 1997), respectively.
    Dofasco states that, unlike the respondents in these cases, the 
Department consistently has found that DUSA's role in the sales process 
is not ``substantial'' or more than ``incidental or ancillary.'' 
Respondent cites the Dofasco Sales Verification Report at 4. Respondent 
argues that petitioners mischaracterized proprietary sections of the 
verification report in order to support their position that DUSA's role 
in the sales process was substantial enough to warrant CEP treatment. 
Dofasco concludes that nothing has changed since the first, second, and 
third administrative reviews that should alter the Department's 
previous determination that sales through DUSA were EP sales.
    Department's Position: We have not changed our preliminary results 
with respect to this issue. As we stated in the third review final 
results, we do not believe that the criteria for CEP treatment as 
stated in Steel from Korea have been met in this case. In that notice, 
we explain that CEP treatment is appropriate where certain facts 
indicate ``that the subject merchandise is first sold in the United 
States by or for the account of the producer or exporter.'' Such a 
finding requires that: (1) The merchandise was shipped directly from 
the manufacturer to the unaffiliated U.S. customer; (2) this was the 
customary commercial channel between the parties; and (3) the function 
of the U.S. affiliate is limited to that of a ``processor of sales-
related documentation'' and a ``communications link'' with the

[[Page 2181]]

unrelated U.S. buyer. We also stated that where the factors indicate 
that the activities of the U.S. affiliate are ancillary to the sale 
(e.g., arranging transportation or customs clearance, and invoicing), 
we will treat the transactions as EP sales. Furthermore, when the U.S. 
affiliate has more than an incidental involvement in making sales (e.g. 
solicits sales, negotiates contracts or prices) or providing customer 
support, we treat the transactions as CEP sales. See Third Review Final 
Results, discussing Steel from Korea. We do not find that DUSA has more 
than an incidental involvement in the sales process.
    We agree with petitioners' argument that, pursuant to Steel from 
Korea, even if the Department were to find that DUSA had no independent 
sales negotiating authority, that fact would not be dispositive that 
DUSA's role in the sales process was ancillary. As in Steel from Korea, 
we have considered the totality of the evidence regarding Dofasco's 
sales process. Unlike in Roller Chain from Japan and Stainless Steel 
Wire Rod from Spain, cited by petitioners, we find that the evidence 
does not suggest that DUSA's role in the selling process was anything 
beyond an ancillary role. In those cases we found that the U.S. selling 
agents' involvement in the sales process was extensive when compared to 
that of the exporters, and that the majority of selling functions 
occurred in the United States. As much of the information regarding 
DUSA's selling functions is proprietary, see the Final Results Analysis 
Memorandum on file in room B-099 of the Commerce Department.
    Finally, we note that petitioners have not presented any new 
arguments with respect to this issue, nor is the fact pattern with 
respect to sales made through DUSA significantly different from past 
reviews. We again verified Dofasco's sales and distribution process, 
and found nothing to support petitioners' arguments. Therefore, we have 
treated Dofasco's sales to the United States as EP sales in these final 
results.
Comment 3: Clerical Error--Movement Expenses
    Petitioners argue that, for certain sales, the Department failed to 
include, in U.S. movement expenses per unit freight expenses Dofasco 
incurred when shipping subject merchandise from a warehouse or 
processor to its U.S. customers. For certain sales, Dofasco reported 
these freight expenses in the computer field INLFWCU, a variable 
petitioners allege the Department failed to include in its calculation 
of total movement expenses. Respondents agree with petitioners.
    Department's Position: We agree that we failed to account for this 
additional freight variable in the calculation, and have made the 
necessary correction for the final results of review.
Comment 4: Clerical Error--Freight Expenses
    Petitioners claim that, for certain sales, the Department's 
computer program incorrectly calculates movement expenses. Petitioner 
states that the program is meant to deduct actual freight in lieu of 
maximum freight, unless actual freight is set to missing. For certain 
observations, however, the program fails to correctly execute this 
operation.
    Respondent agrees with petitioners, stating that, for both U.S. and 
home market variables, Dofasco mistakenly set the actual freight 
variables to zero instead of setting them to missing in the computer 
program.
    Department's Position: We agree, and have revised the computer 
program accordingly.
Comment 5: Clerical Error--Packing
    Petitioners claim that U.S. packing expenses were twice multiplied 
by the rate for conversion to U.S. dollars in the Department's margin 
calculation program. Respondent agrees with petitioners.
    Department's Position: We agree, and have revised the computer 
program accordingly.

CCC

Comment 1: Valuation of Major Input
    Petitioners argue that CCC improperly reported the value of steel 
substrate purchased from Stelco by reporting transfer prices rather 
than market prices, and that the Department should therefore adjust the 
value of CCC's steel substrate to reflect market prices. Petitioners 
claim that CCC's questionnaire response indicates that CCC purchased 
identical substrate from an affiliated and unaffiliated party. 
Therefore, petitioners state, section 773(f)(2) of the Act requires the 
Department to disregard the transfer price paid for the major input, 
and to base the value of the input ``on the information available as to 
what the amount would have been if the transaction had occurred between 
persons who are not affiliated.'' Petitioners argue that the Department 
should therefore adjust the price reported by CCC to reflect the 
difference between the transfer and market prices shown on these two 
invoices, as it did in Final Determination of Sales at Less Than Fair 
Value: Ferrosilicon from Brazil, 61 FR 59411 (November 22, 1996); 
Notice of Final Determination of Sales at Less Than Fair Value: Fresh 
Atlantic Salmon From Chile (Salmon from Chile), 63 FR 31434 (June 9, 
1998); and Final Results of Antidumping Duty Administrative Reviews on 
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts 
Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden 
and the United Kingdom (AFBs January 1997), 62 FR 2081 (January 15, 
1997).
    Petitioners claim that the evidence on the record shows that the 
substrate CCC purchased from Stelco, an affiliated party, and from a 
third, unaffiliated party were identical. Petitioners argue that CCC 
has neither explained the differences it claims existed between the 
Stelco and third-party substrate, nor cited to any part of the record 
where the differences are reflected.
    CCC argues that, as stated in its January 29, 1998 questionnaire 
response, it does not purchase identical merchandise from Stelco and 
from other suppliers. CCC claims that the invoices provided in the 
questionnaire response were the only two that CCC could find that would 
show the comparability of Stelco and third-party substrate, and argues 
that one cannot infer from the two invoices alone that all Stelco 
substrate was sold at below-market prices. Therefore, CCC argues, the 
Department should continue to use transfer prices to value substrate 
purchased by CCC.
    CCC argues that a closer examination of the two invoices shows that 
Stelco offered CCC an allowance or discount on this purchase and that, 
without this discount, the Stelco and the third-party invoice prices 
are equal. CCC claims that the Department accepted respondent's 
argument that a price differential between transfer price and market 
price was due to a verified early payment discount, and continued to 
calculate costs using the discounted transfer price even though the 
transfer price was lower than the related market price in Final 
Determination of Sales at Less Than Fair Value: Porcelain-On-Steel 
Cookware from Mexico, 63 FR 38373 (July 16, 1998) (Cookware from 
Mexico).
    Department's Position: We agree with petitioners, in part, and have 
adjusted all transfer prices reported by CCC to reflect market prices.
    Sections 773 (f)(2) and (3) of the Act stipulate that major inputs 
purchased from affiliated parties may be valued at the highest of 
market value, transfer price or the affiliate's cost of

[[Page 2182]]

production. In AFBs January 1997, the Department found that ``in the 
case of a transaction between affiliated persons involving a major 
input, we will use the highest of the transfer price between the 
affiliated parties, the market price between unaffiliated parties, and 
the affiliated supplier's cost of producing the major input.'' 62 FR 
2081; see also 19 CFR 351.407(b).
    CCC has argued that the substrates on the two invoices it provided 
are not identical and cannot be compared. It is unclear whether the 
differences between the products on the invoices are substantial enough 
that they cannot be compared without adjustment. However, assuming the 
differences between the merchandise on the two invoices is significant, 
it is CCC that provided these invoices in order to substantiate its 
claim that its transfer price from its affiliate Stelco was equivalent 
to a market price. CCC now attempts to impeach the very comparison of 
invoices it urged the Department to make. If the differences between 
the merchandise covered by the two invoices were significant enough 
that the invoice prices should only have been compared after some 
adjustment, then CCC should have quantified the difference or provided 
some other means for the Department to adjust for the difference and 
make the comparison. See Sec. 351.401(b)(1). If the Department cannot 
make this comparison, then there is no evidence on the record to 
support CCC's claim that its inputs purchased from Stelco were at or 
above market value, and this claim must be rejected. If, on the other 
hand, petitioners are correct that there are no differences between the 
merchandise on the two invoices which would preclude comparison, then a 
comparison of the two shows that prices of the Stelco input are lower 
than the price from the unaffiliated supplier.
    With regard to CCC's claim that we should use the price of the 
input from Stelco because, disregarding a discount Stelco granted, the 
Stelco price is the same as the price from the unaffiliated supplier, 
we disagree. The Department has long recognized that discounts must be 
taken into account in determining what the true price is. For example, 
in AFBs January 1997, 62 FR at 2090, we explained that, in identifying 
the true starting price, the Department must first adjust the gross 
price for any discounts, rebates, or other price adjustments. As 
discussed in adjusting our final regulation, the Department must 
consider discounts in identifying the ``net outlay of funds by the 
purchaser.'' See Antidumping Duties, Countervailing Duties; Final Rule, 
62 FR 27296, 27300 (Final Rule) and 19 CFR 351.102 (definition of price 
adjustment) and 19 CFR 351.401(c). The same principles apply when 
identifying the actual transfer price for the major input rule; such 
transfer price must reflect any discounts, rebates or other price 
adjustments in order to determine CCC's net outlay of funds for the 
input.
    CCC's reliance on Cookware from Mexico is misplaced. In that case 
the Department clearly stated that it was not accounting for price 
adjustments because it could only determine that they had been offered, 
and not whether they had actually been granted. By contrast, in the 
present case it is clear that Stelco actually granted the discount to 
CCC.
    Since the final price for the Stelco invoice is less than the final 
price on the third-party, market price invoice, we have valued CCC's 
steel input for these final results by adjusting CCC's reported 
transfer prices to reflect the ratio between the final prices on these 
two invoices.
Comment 2: Imputed U.S. Credit
    Petitioners argue that the surrogate interest rate used by the 
Department to value CCC's U.S. credit expense should be increased by a 
premium to reflect CCC's actual borrowing experience in the home 
market. Petitioners argue that, in LMI-LaMettali Industriale, S.p.A. v. 
United States 912 F.2d 455 (Fed. Cir. 1990) (LMI), the Court ruled that 
the surrogate U.S. dollar-denominated interest rate used by the 
Department to impute U.S. credit expense must conform with ``commercial 
reality.'' Petitioners note that the Department's Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate from Sweden, 61 FR 15772 (April 9, 1996) explains that 
determining whether a surrogate rate conforms with commercial reality 
takes into account the many ``varied factors that determine at what 
rate a firm can borrow funds, such as the size of the firm, its 
creditworthiness, and its relationship with the lending bank.'' 
Petitioners argue that, based on CCC's home market borrowing history 
(as explained in CCC's November 17 and January 30 questionnaire 
responses), CCC would not have received the prime rate in the United 
States, defined by the International Monetary Fund as the ``(r)ate that 
the largest banks charge their most creditworthy business customers on 
short-term loans.'' Therefore, petitioners argue that basing CCC's 
imputed U.S. credit expenses on the prime rate would not conform with 
``commercial reality.'' Petitioners argue that the Department should 
add a premium to the average U.S. prime rate and recalculate CCC's 
imputed U.S. credit expense accordingly. Petitioners state that in the 
Final Determination of Sales at Less Than Fair Value: Oil Country 
Tubular Goods from Austria, 60 FR 33555 (June 28, 1995) (OCTG), the 
Department used the New York State prime rate plus one percent as a 
surrogate rate to impute U.S. credit expenses where the respondent had 
no U.S. dollar-denominated borrowings.
    Finally, petitioners claim that the Department's calculation of the 
average U.S. prime interest rate was erroneous. Petitioners argue that 
the calculation should be based on a 360-day year, not a 365-day year.
    CCC disagrees that the Department should add a premium to CCC's 
surrogate interest rate and that the Department should use the average 
U.S. prime rate as a basis upon which to calculate CCC's imputed 
credit. CCC notes that the Department's Policy Bulletin 98.2 instructs 
the Department to use ``the Federal Reserve's weighted-average data for 
commercial and industrial loans maturing between one month and one year 
from the time the loan is made,'' rather than the prime rate when a 
respondent has no short-term borrowings in the United States. CCC adds 
that the Department used the Federal Reserve's weighted-average data 
for commercial and industrial loans for CCC in the previous review of 
corrosion-resistant steel from Canada. CCC argues that use of the 
Federal Reserve's weighted-average data for commercial and industrial 
loans would conform with petitioners' demands that the rate used 
``comport with `commercial reality,' '' as it was the prime rate's 
failure to meet with commercial reality that led the Department to 
reject its use in the Policy Bulletin, and adopt a more realistic 
average of commercial and industrial loan rates.
    CCC states that the Department should also reject petitioners' 
suggestion to increase the prime rate by a premium. First, CCC argues 
that the premium was derived from CCC's proprietary home market 
borrowing rate, and therefore has no bearing on what CCC's rate would 
be in the United States. CCC cites LMI and the Department's Policy 
Bulletin 98.2, which it claims establishes clear guidelines against the 
use of an interest rate in the home market as a surrogate for the 
calculation of credit in the U.S. market. Further, CCC argues that OCTG 
is factually unique in several ways: (1) It was the exporter's U.S. 
sales agent who customarily charged customers an interest rate of prime 
plus a one percent premium for late revenue; (2) the rate

[[Page 2183]]

had no connection to interest rates offered to the company in the home 
market; and (3) this rate represented the rate commonly used in the 
United States at that time. CCC also notes that the Department in OCTG 
rejected the possibility of using the home market interest rate.
    Department's Position: We agree with CCC. For these final results, 
we have used the Federal Reserve's weighted-average data for commercial 
and industrial loans, instead of the prime rate, which we used for the 
preliminary results.
    As discussed in Policy Bulletin 98.2, prior to a 1990 ruling by the 
Court of Appeals for the Federal Circuit (CAFC) in LMI, the Department 
had a practice of using a respondent's home market borrowing rates to 
impute both U.S. and home market credit expenses. In LMI, the CAFC 
ruled that the cost of credit ``must be imputed on the basis of usual 
and reasonable commercial behavior.'' In ruling on the specific facts 
of LMI, the CAFC did set forth certain general principles; it stated 
that ``the imputation of credit cost * * * is a reflection of the time 
value of money,'' that it ``must correspond to a * * * figure 
reasonably calculated to account for such value during the gap period 
between delivery and payment,'' and that it should conform with 
``commercial reality.''
    In developing a consistent, predictable policy establishing a 
preferred surrogate U.S. dollar interest rate in all cases where 
respondents have no U.S. dollar short-term loans, we have employed 
three criteria: (1) The surrogate rate should be reasonable; (2) it 
should be readily obtainable and predictable; and (3) it should be a 
short-term interest rate actually realized by borrowers in the course 
of ``usual commercial behavior'' in the United States. The Policy 
Bulletin states that the use of unadjusted home market borrowing rates 
to impute credit expenses on U.S. sales does not recognize the effect 
of currency changes between date of shipment and date of payment on 
repatriating revenue and that therefore, unadjusted home market 
borrowing rates are not an accurate measure of the value of the loan 
made by the seller to the purchaser if the sale (the loan) is made in 
U.S. dollars.
    In Steel from Sweden and in Certain Corrosion-Resistant Carbon 
Steel Flat Products from Australia; Final Results of Antidumping Duty 
Administrative Reviews, 61 FR 14049, 14054 (March 29, 1996), the 
Department selected the average short-term lending rates calculated by 
the Federal Reserve as surrogate U.S. interest rates. Each quarter, the 
Federal Reserve collects data on loans made during the first full week 
of the mid-month of each quarter by sampling 340 commercial banks of 
all sizes. The sample data are used to estimate the terms of loans 
extended during that quarter at all insured commercial banks. These 
Federal Reserve rates meet the three criteria discussed above. They 
represent a reasonable surrogate for respondents' U.S. dollar borrowing 
rates because they are calculated based on a variety of actual dollar 
loans to U.S. customers, and because they are readily available to all 
interested parties and are easy to obtain. Therefore, we have used the 
Federal Reserve's weighted-average data for commercial and industrial 
loans maturing between one month and one year from the time the loan is 
made to impute credit during the POR for CCC.
    We disagree with petitioners' argument that CCC's rate should be 
increased by a premium based on home market borrowings. In support of 
their claim that the rate should be increased by a premium, petitioners 
cite to OCTG. However, the methodology used in OCTG has limited 
applicability because it was developed using facts specific to that 
particular case. In OCTG, the Department found that the New York prime 
rate plus one percent reflected the manner in which the respondent's 
related U.S. sales agent measured the time value of late revenue as an 
ordinary business practice. Additionally, as stated in the Policy 
Bulletin, home market borrowings should not be used to impute U.S. 
credit.
    We disagree with petitioners' argument that the calculation should 
be based on a 360-day year rather than a 365-day year. Petitioners made 
no substantive argument in favor of a 360-day year or against a 365-day 
year. Because the Department has no policy that would compel such a 
change, we have continued to calculate imputed credit based on a 365-
day year.
Comment 3: Allocation of Post-Sale Price Adjustments
    Petitioners argue that the Department should not accept CCC's post-
sale price adjustments (PSPAs) in either the home market or the U.S. 
market. Petitioners argue that PSPAs must be allocated over only those 
sales on which they were incurred in order to qualify as an adjustment 
to price in the Department's antidumping calculations, and that CCC did 
not comply satisfactorily with the Department's information requests. 
Petitioners argue that the Department should reject CCC's claim that 
its PSPAs have been reported on a transaction-specific basis. 
Petitioners argue that CCC has failed to satisfy its burden to document 
and support its entitlement to report PSPAs on an allocated basis. They 
claim that in some cases CCC allocated PSPAs on invoices or work orders 
regardless of whether the adjustment applied to all transactions 
recorded on the invoice or work order. Furthermore, petitioners claim 
that CCC has failed to demonstrate that it was not feasible to report 
the PSPAs on a transaction-specific basis, and has, in fact, tied some 
PSPAs to specific sales transactions. Petitioners maintain that because 
CCC was able to report some of its PSPAs on a transaction-specific 
basis, CCC could therefore have reported all of its PSPAs in this 
manner. Because CCC did not do so, petitioners contend that CCC did not 
act to the best of its ability in responding to the Department's 
request for information. Petitioners argue that CCC failed to 
demonstrate its entitlement to those adjustments and, therefore, the 
Department should deny the PSPAs sought by CCC to home market and U.S. 
prices based on Timken Co. v. United States, 673 F. Supp. at 513 
(Timken) and sections 782(d) and (e) of the Act. Petitioners claim that 
section 782(d) of the Act allows the Department to disregard 
information submitted by a respondent when it does not comply 
satisfactorily with a request for information after being informed of 
the deficiency and being provided an opportunity to remedy it. 
Petitioners also state that section 782(e) of the Act provides that the 
respondent must demonstrate that ``it acted to the best of its ability 
in providing the information'' and that ``the information can be used 
without undue difficulties.'' Petitioners claim that when a respondent 
has improperly allocated PSPAs for home market sales, it is the 
Department's practice to disallow all claimed adjustments to price for 
those sales, as indicated in: Final Results of Antidumping Duty 
Administrative Reviews; Antifriction Bearings (Other than Tapered 
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, 
Singapore, and the United Kingdom (AFBs 1996), 61 FR 66472, 66498 
(December 17, 1996); Final Results of Antidumping Duty Administrative 
Reviews; Antifriction Bearings (Other than Tapered Roller Bearings) and 
Parts Thereof from France, 63 FR 33320 (June 18, 1998) (AFBs 1998); and 
TRBs 1998.
    Petitioners maintain that the Court's decision in AK Steel Corp., 
et al. v. United States, Court No. 96-05-01312, Slip Op. 98-106 (CIT 
July 23, 1998) (AK Steel) to uphold CCC's method of

[[Page 2184]]

reporting PSPAs demonstrates the Court's presumption that allocations 
of PSPAs are suspect because of the possible distortion to prices and 
dumping margins caused by such allocations. Petitioners argue that the 
Court upheld CCC's method of reporting PSPAs only after finding that 
documentation obtained at verification allowed the Department to 
analyze the details of the allocations to determine whether they were 
distortive, and that because no such documentation has been provided in 
this review, the Department should not allow CCC's reporting 
methodology.
    Petitioners claim that the ability to report some, but not all, 
PSPAs on a transaction-specific basis creates the potential for 
manipulation, and cite the CIT's ruling in Koenig & Bauer-Albert AG v. 
United States, Court No. 96-10-02298, Slip. Op. 98-83, that the 
Department may deny favorable adjustments sought by a respondent based 
not only on actual evidence of price manipulation, but also on the 
potential for manipulation. Petitioners also cite Steel from Germany 
and Tapered Roller Bearings, Four Inches or Less in Diameter, and 
Components Thereof, from Japan, 59 FR 56035 (November 10, 1994) to this 
effect. Petitioners assert that, for some customers, CCC applied 
adjustments across all sales (including subject and non-subject 
merchandise) when they could only tie the credit or debit note to a 
particular customer. Petitioners claim that this reporting methodology 
has increased the potential for distortion.
    Petitioners claim that the Department's new regulations (see Final 
Rule, 62 FR 27296) concerning allocated PSPAs are contrary to the 
Department's longstanding practice and the URAA which, petitioners 
state, nowhere permits respondents to report inaccurate prices. 
However, petitioners argue that, even under its new regulations, the 
Department must continue to deny CCC its claimed PSPAs.
    Petitioners claim that an allocation of a PSPA over several sales 
or invoices could distort the prices if the sales covered were of 
different control numbers (CONNUMs) or were made in different months. 
In such a situation, the prices of the sales receiving their share of 
the allocated credit would not be weight-averaged in calculating normal 
value for a particular month. Thus, all sales that receive an 
allocation of credit would have an incorrect gross unit price, which 
will in turn distort the dumping margin. Petitioners argue that because 
each of the adjustments is a given percentage of the unit price, all 
those sales which have had the adjustment allocated to them, even 
though they were not in the group of sales to which the adjustment is 
correctly attributed, have been modified by that percentage. 
Petitioners maintain that the potential for distortion by allowing 
credit to be allocated over sales with different CONNUMS or months of 
sale is present in CCC's case as well. Petitioners argue that the 
criteria applied in AFBs 1998 is flawed because it puts the burden on 
the petitioners to prove the existence of distortions.
    CCC argues that its reported PSPAs should again be accepted by the 
Department as they were in the second and third administrative reviews 
because they are allocated as specifically as possible and are not 
distortive. CCC notes that the Department rejected petitioners' 
arguments concerning CCC's PSPAs in the second and third administrative 
reviews. CCC states that the Department verified CCC's methodology in 
the second administrative review and found that CCC applied its PSPAs 
using the most precise methodology possible, and in a manner not 
unreasonably distortive.
    CCC disagrees with petitioners' assertion that CCC never explained 
why it was able in some instances to tie credit and debit notes to 
specific invoices and work orders, and in others it was not. CCC notes 
that it stated in its November 17, 1997 questionnaire response, and its 
January 29, 1998 and March 23, 1998 supplemental questionnaire 
responses, that in instances where a credit or debit note is allocated 
over all sales to a customer rather than to a specific invoice or work-
order, it is because the credit or debit note only referenced a 
customer and did not reference a work order or invoice. CCC maintains 
that its PSPAs are transaction-specific, stating that when a specific 
credit or debit note was applied to more than one invoice and/or work 
order, it was because the credit or debit note applied to those 
invoices and/or work orders, and that the information available to CCC 
on the credit or debit note permitted no more specific allocation. CCC 
cites Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, from Japan and Tapered Roller Bearings, Four Inches or Less 
in Outside Diameter and Components Thereof, from Japan, 63 FR 2558 
(January 15, 1998) as an instance in which the Department accepted 
respondent's explanations of why more specific reporting was not 
possible as evidence of fact.
    CCC maintains that there is no evidence, as petitioners allege, 
that CCC is attempting to manipulate that data, and that the record 
evidence such as the number of positive adjustments in the home market 
and negative adjustments in the U.S. market shows that, on the 
contrary, CCC is not trying to manipulate the data. CCC cites the 
Department's regulations at Sec. 351.401(g)(1) as stating that the 
Department ``may consider allocated expenses and PSPAs when 
transaction-specific reporting is not feasible provided (that) * * * 
the allocation method does not cause inaccuracies or distortions' and 
at Sec. 351.401(g)(3) as stating that ``(i)n determining the 
feasibility of transaction-specific reporting or whether an allocation 
is calculated on as specific a basis as is feasible, the Secretary will 
take into account the records maintained by the party in question in 
the ordinary course of business.''
    CCC argues that the Department's decision to accept CCC's claimed 
PSPAs is consistent with its decisions in numerous other cases, 
including AFBs 1998, and Certain Cut-To-Length Carbon Steel Plate From 
Brazil: Final Results of Antidumping Duty Administrative Review, 63 FR 
12744 (March 16, 1998).
    CCC disagrees that the Court in AK Steel upheld the Department's 
acceptance of the adjustments only after finding that the documentation 
obtained at verification allowed the Department to analyze the details 
of the allocations.
    Furthermore, CCC argues that such argumentation is moot because it 
submitted all of the requested documentation in this review, and 
because a verification was not conducted. CCC states that the 
Department's methodology was upheld in The Timken Co. v. United States, 
Court No. 97-04-00562, Slip. Op. 98-92 (CIT July 2, 1998) (Timken 
1998). CCC also disagrees with petitioners that the Department's 
current practice is at odds with the URAA, stating that the Department 
noted in AK Steel that the URAA reaffirmed the Department's practice of 
allowing allocated post-sale PSPAs. CCC argues that in the Timken 1998 
case, the Department stated that (1) post-URAA law directs it to accept 
information that may not have met its previous requirements and that 
(2) it had determined, based in part on previous verifications, that 
CCC was incapable of providing data on a transaction-specific basis and 
that CCC's reported data was reliable. CCC concludes that, based on 
evidence on the record in this proceeding as well as the precedents in 
this proceeding and the law, the Department should accept CCC's PSPAs.
    Department's Position: We agree with CCC. In light of the 
Department's determinations in recent cases and the

[[Page 2185]]

facts on the record, we accept CCC's price adjustments.
    Section 351.401(c) of the Department's regulations states that the 
Department, ``(i)n calculating export price, constructed export price, 
and normal value (where normal value is based on price), will use a 
price that is net of any price adjustment, as defined in 
Sec. 351.102(b), that is reasonably attributable to the subject 
merchandise or the foreign like product (whichever is applicable).'' 
PSPAs are defined in the regulations at Sec. 351.102(b) as ``any change 
in the price charged for subject merchandise or the foreign like 
product, such as discounts, rebates and post-sale PSPAs, that are 
reflected in the purchaser's net outlay.''
    With regard to the fact that CCC allocated these adjustments, we 
note that Sec. 351.401(g)(1) of the Department's regulations directs us 
to ``consider allocated expenses and PSPAs when transaction-specific 
reporting is not feasible, provided (we are) satisfied that the 
allocation method used does not cause inaccuracies or distortions.'' 
This policy has been upheld in Timken 1998. Although CCC allocated 
price adjustments on a customer invoice- or work order-specific basis, 
we determine that CCC acted to the best of its ability in reporting 
this information. While the Department stated in Final Rule 62 FR at 
27344 that respondents should not be ``allowed to eliminate dumping 
margins by providing PSPAs `after the fact,' '' there is no evidence on 
the record in these reviews that demonstrates that this is occurring.
    In recent AFBs cases, we addressed the relevance of Torrington Co. 
v. United States, 82 F.3d 1039, 1047-51 (Fed. Circ 1996) (Torrington 
I), to the allocation of adjustments. We noted that, while the CAFC in 
its decision in Torrington I questioned whether PSPAs constituted 
expenses (see Torrington I at n.15), the Court maintained that, if the 
adjustments were expenses, they had to be treated as direct selling 
expenses. Significantly, ``the CAFC did not find that such PSPAs could 
not be based on allocations'' (AFBs October 1997 62 FR at 54050).
    We have not found CCC's allocation methodologies to be unreasonably 
distortive. During the POR, CCC granted credit or debit notes to 
certain customers. CCC calculated adjustment factors by dividing the 
total price adjustments paid to a given customer by the total POR sales 
to that customer. CCC grants these price adjustments to customers in 
two ways: (1) On the basis of their overall sales to the particular 
customer; or, (2) over a specific invoice to a customer.
    Where CCC granted the price adjustment to a customer on the basis 
of its overall sales, then there is no distortion in attributing the 
adjustment to the sales on which it was earned. See, Final Rule, 62 FR 
at 27347 and Smith Corona, 713 F.2d at 1580.
    Where CCC granted the price adjustment on an invoice, CCC has 
claimed that it cannot tie the credit/debit note to the particular 
invoice. Therefore, it has allocated such notes by customer. First, 
where a price adjustment is granted on an entire invoice, it is 
appropriate to attribute the amount of the adjustment to all 
merchandise on the invoice. Where an invoice covers several articles of 
merchandise, an adjustment granted on the entire invoice cannot be tied 
to any specific article.
    Further, where a respondent has acted to the best of its ability, 
and cannot provide information about adjustments on a basis more narrow 
than customer-specific allocations, the Department has concluded that 
such an allocation may be reasonable. See e.g., AFBs January 1997, at 
2096 (comment 9).
    We disagree with petitioner's interpretation of the applicability 
of section 782(d) and 782(e) of the Act to CCC's reporting methodology. 
In explaining why it was not able to tie credit notes to individual 
transactions, CCC has complied satisfactorily with the request for that 
information. Thus, there is no longer a deficiency in CCC's data. CCC 
also demonstrated that ``it acted to the best of its ability in 
providing the information.'' Lastly, the information can clearly be 
used ``without undue difficulties.''
    We agree with petitioners that the burden lies with respondents to 
place necessary information on the record. It is the responsibility of 
the respondent to demonstrate that its methodology is not unreasonably 
inaccurate or distortive. However, we believe that CCC has met that 
burden with the explanations provided in their submissions for this 
review period, and through verification of sales made in the second 
administrative review. CCC has stated that adjustments are allocated 
across the invoices, work orders, or customers to which they apply, and 
that it cannot report adjustments on a more specific basis. There is 
nothing on the record to indicate that either of these statements is 
not based in fact.
    With regards to CCC's allocations of these price adjustments over 
nonsubject merchandise, we have in the past accepted allocations over 
nonsubject merchandise as provided for in 19 CFR 351.401(g)(4). First, 
if a respondent grants and reports a price adjustment as a fixed 
percentage of the sales to which it pertains, the fact that this pool 
of sales may include non-scope merchandise does not distort the amount 
of the adjustment the respondent granted and reported on sales of 
subject merchandise because the same adjustment percentage applied to 
both scope and non-scope merchandise. Second, with respect to CCC's 
price adjustments granted on invoices, CCC's in-scope and out-of-scope 
merchandise is sufficiently similar in terms of its value, physical 
characteristics, and the manner in which it is sold that we cannot 
presume the adjustments would be granted disproportionately between the 
two. Consequently, even if an invoice covered out-of-scope merchandise, 
CCC's allocation is still reasonable and not distortive. See Final 
Rule, 62 FR at 27348 (May 19, 1997).
    We disagree with petitioners argument that the Court's decision in 
AK Steel upholding CCC's method of reporting PSPAs demonstrates the 
Court's presumption that allocations of PSPAs are suspect because of 
the possible distortion to prices and dumping margins caused by such 
allocations. In AK Steel, the Court upheld the Department's finding 
that CCC's allocation of the credit note across sales made pursuant to 
the work-order identified on the form was sufficiently specific, and 
that based on the facts on the record, a more specific methodology was 
not possible. In this review we again conclude, based on the 
information on the record, that CCC's allocation of the credit note 
across sales made pursuant to the work-order identified on the form was 
sufficiently specific.
    The Court in AK Steel also disagreed with plaintiff's argument that 
the flaw in CCC's allocation methodology caused it to report all sales 
involved incorrectly. Plaintiffs in AK Steel claimed there that the 
methodology used by CCC had an averaging effect on prices, i.e., the 
transactions that did not involve the coil received price reductions 
when there was in fact no reduction in price, and the transaction that 
did involve the coil did not receive the full amount of the credit.
    The Court, however, found plaintiffs' arguments unpersuasive and 
agreed with the Department that CCC's PSPA methodology was acceptable 
under the circumstances.
    We disagree with petitioners' claim that because CCC's allocations 
were not verified in this review, they are not acceptable.
    The fact that CCC was not verified in this review does not require 
an adverse inference in this case. Furthermore, we

[[Page 2186]]

found at verification during the second review that CCC's methodology 
was reasonable and not distortive, and that CCC's reporting was as 
specific as possible. Since CCC's reporting methodology is the same as 
it has been in the past, we are accepting CCC's allocations. This 
concurs with the Court's ruling in Timken that the Department may 
determine, based in part on institutional knowledge attained in 
previous verifications, that a respondent is incapable of providing 
data on a transaction-specific basis, and that its data is reliable.
    We find that CCC's allocation methodologies are not unreasonably 
distortive, nor are they potentially distortive, as we are satisfied 
that each adjustment was granted in proportion to the value of each 
sale to which it applied.
Comment 4: Currency Conversion Error
    Petitioners note that the Department made a currency conversion 
error in calculating PACKINGU and, as a result, in the calculation of 
CVPROFIT, TOTCV and FUPDOL.
    Department's Position: We agree with petitioners and have corrected 
the currency conversion accordingly.

Forsyth

Comment 1: Adverse Facts Available
    Forsyth claims that the Department's decision to assign the margin 
based on total adverse FA did not reflect the level-of-trade 
information that Forsyth provided on the record, and did not take into 
account any meaningful consideration of either Forsyth's ability to 
provide corporate sales-specific data on a large number of small 
transactions or Forsyth's request that the Department conduct 
verification. Forsyth claims that the Department's rejection of 
Forsyth's level-of-trade argument, which characterized Forsyth's 
distribution division services as product-related rather than sales-
related, is not supported by the record. Forsyth claims that its 
distribution division services are intimately linked to the ability of 
those divisions to sell products to a unique class of customers.
    Petitioners argue that the Department correctly applied adverse 
facts available since Forsyth repeatedly refused to report its 
distribution division sales. Petitioners argue that the Department only 
excludes home market sales from a respondent's reporting requirements 
due to level of trade differences, if ever, in the context of 
downstream sales, and that Forsyth's distribution division sales are 
not downstream sales. Petitioners cite Certain Cut-to-Length Carbon 
Steel Plate From Brazil: Final Results of Antidumping Duty 
Administrative Review, 62 FR 18486, 18491 (April 15, 1997).
    While petitioners claim that the Department's level-of-trade 
analysis was unnecessary, since all home market sales were not 
reported, they argue that record evidence supports the Department's 
level-of-trade determination. They cite section 773(a)(7)(A) of the Act 
and Sec. 351.412 of the Department's regulations to argue that a 
difference in level of trade can only exist where there is a difference 
in selling functions. Petitioners further cite SSWR from Sweden at 
40455, which states that the burden is on respondent to demonstrate 
that its categorizations of level of trade are correct.
    Department's Position: We agree with petitioners. Forsyth failed to 
report a majority of its home market sales of subject merchandise and 
did not prove a difference in level of trade between its U.S. sales and 
its home market distribution division sales. We have thus continued to 
base Forsyth's antidumping duty margin on adverse facts available. See 
``Facts Available'' section of this notice, and Certain Corrosion-
Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon 
Steel Plate from Canada: Preliminary Results of Antidumping Duty 
Administrative Reviews and Intent to Revoke in-Part, 63 FR 37320, 37327 
(July 10, 1998).

Stelco

Comment 1: The Time Frame for Making a Request for Revocation
    Petitioners argue that the Department should deny Stelco's request 
for revocation since Stelco did not file its request for revocation 
during the anniversary month of the publication of the antidumping 
order, as required by Sec. 351.222(e) of the Department's regulations. 
Petitioners argue that Sec. 351.222(f) allows the Department to 
consider such a request only if the request is timely.
    Petitioners argue that Samsung Elec. Co. v. United States 
(Samsung), 946 F. Supp. 5, 8 (CIT 1996) establishes the obligation to 
request revocation during the anniversary month as a ``mandatory, 
bright line requirement.'' (Emphasis added by petitioners.) Petitioners 
note that not only did Stelco fail to make its request in a timely 
fashion, but that it also failed to request an extension or provide any 
explanation for its failure to meet the statutory deadline for a 
revocation request. Therefore, since Stelco failed to pass the bright 
line test established in Samsung, petitioners argue that the Department 
should deny Stelco's request for revocation.
    Petitioners point out that the Department highlighted the 
importance of submitting timely requests in Electrolytic Manganese 
Dioxide from Japan; Final Results of Antidumping Duty Administrative 
Review, 58 FR 28551 (May 14, 1993) (EMD). In EMD, petitioners failed to 
file a timely cost of production (COP) allegation because the 
Department had failed to process their administrative protective order 
(APO) application in a timely fashion. Although the Department 
acknowledged the delay in processing the petitioners' APO applications, 
the Department refused to consider the petitioners' untimely COP 
allegation because the petitioners could have preserved their right to 
submit a timely COP allegation by requesting an extension of the 
regulatory deadline. Since petitioners elected not to request an 
extension of the deadline for filing a COP allegation, the Department 
did not examine the untimely allegation, but merely enforced the 
regulatory deadlines. Petitioners conclude that the Department should 
reject Stelco's request for revocation as untimely just as it rejected 
petitioners' cost allegation in the EMD case.
    Petitioners note that Stelco contends in its June 12, 1998 
submission that the Department considered an untimely request for 
revocation on the part of Frutopic, a respondent in Frozen Concentrated 
Orange Juice from Brazil; Final Results and Termination in Part of 
Antidumping Duty Administrative Review; Revocation in Part of the 
Antidumping Duty Order, 56 FR 52510 (October 21, 1991) (Orange Juice). 
Stelco contends that the untimely request was considered because it was 
filed only four days after the regulatory deadline. Petitioners point 
out, on the contrary, that Frutopic filed an extension request on the 
last day of the anniversary month in question, explained why it needed 
the extension, and was granted an ``explicit extension of time to 
submit the revocation request.'' See, Orange Juice, 56 FR 52510 
(October 21, 1991). Petitioners further point out that Frutopic in 
effect demonstrated ``good cause'' when requesting its extension by 
explaining in detail why it needed one, even though the regulations 
explicitly allowing extensions for ``good cause'' was not introduced 
until 1997.
    Petitioners argue that the necessity of showing ``good cause'' to 
obtain an extension under Sec. 351.302(b) is not a toothless 
requirement. Petitioners point out that in Stainless Steel Bar from 
India; Final Results of Antidumping Duty Administrative Review, 63 FR

[[Page 2187]]

13622 (March 20, 1998), Mukand, the respondent, requested a one-day 
extension to file its case brief on the day the brief was due. 
Petitioners note that the Department was not satisfied with Mukand's 
explanation that it was not able to file the brief in a timely fashion 
due to ``technical difficulties'' and requested and received a more 
extensive explanation before granting the extension. Petitioners argue 
that the Department should not hold Stelco to a lesser standard for 
requesting a revocation than it held Mukand for filing a case brief.
    Finally, petitioners contend that Stelco's September 8, 1998 
request for revocation should not be considered an ``amendment'' to 
Stelco's August 29, 1997 request for an administrative review. 
Petitioners point out that the Department's regulations [no cite given] 
allow a timely revocation request to be considered to include a request 
for administrative review, but there is no similar provision allowing a 
request for review to automatically include a revocation request.
    Therefore, petitioners contend that the Department cannot ignore 
the time limits imposed by its own regulations. Since Stelco did not 
comply with the deadlines for requesting a revocation in accordance 
with Sec. 351.222(e) or requesting an extension in accordance with 
Sec. 351.302(b) of the Department's regulations, petitioners argue that 
the Department should reject Stelco's untimely request for a 
revocation.
    Stelco argues that both the antidumping statute and the 
Department's regulations are silent as to the time frame for accepting 
requests for revocation. Stelco notes that section 751(d)(1) of the 
Act, the only relevant statutory provision, states: ``the 
administrative authority may revoke, in whole, or in part, a 
countervailing duty or antidumping duty order for finding * * * after a 
review under subsection (a) or (b) of this section.'' Therefore, Stelco 
argues that Congress did not specify any procedure, or identify any 
criteria that must be considered, other than conducting a review, in 
determining whether to revoke a particular antidumping duty order.
    Stelco claims that the regulations are also silent as to the issue 
of how the Department should handle a revocation request made outside 
of the anniversary month. They note that Sec. 351.222(e)(1) of the 
Department's regulations states: ``During the third and subsequent 
anniversary months of the publication of the antidumping order or 
suspension of an antidumping investigation, an exporter or producer may 
request in writing that the Secretary revoke an order or terminate a 
suspended investigation.'' Stelco argues that section provides the 
month within which an exporter or producer may choose to request 
revocation, and is silent as to how revocation requests received during 
other months should be handled. Stelco notes that there are no 
requirements in the regulations that the Department reject an untimely 
request for revocation.
    Stelco argues that the Department has discretion to accept an 
untimely revocation request. It notes that Samsung states that 
``Commerce has not routinely accepted revocation requests under 19 CFR 
353.23 [now 19 CFR 351.222] after the regulatory deadline'' Samsung, 
946 F.Supp. at 9 (emphasis added), and interprets this passage to 
indicate that on some occasions the Department does accept late 
requests for revocation.
    Stelco argues that the following cases demonstrate that the 
Department has discretion to accept untimely requests for revocation: 
Certain Fresh Cut Flowers from Colombia; Final Results of Antidumping 
Duty Administrative Reviews, 61 FR 42833, 42863 (August 19, 1996), in 
which the Department declined to revoke not because the request was 
untimely (emphasis added by Stelco) but because the respondent failed 
to meet all substantive criteria for revocation; Polyethylene 
Terephthalate Film from Korea: Preliminary Results of Antidumping duty 
Administrative Review, Intent to Revoke the Order in Part and 
Termination in Part, 61 FR 36032, 36033 (July 9, 1996), in which the 
Department permitted the respondent to amend its timely revocation 
request one year after making the original request; EMDs, in which 
Stelco claims that the Department pointed out that its regulatory 
deadline ``is a discretionary, not a mandatory, deadline'' (emphasis 
added by Stelco) (see EMDs, 58 FR 2855, 28553 (May 14, 1993).
    Finally, Stelco notes that petitioners' contention that the 
Department should reject Stelco's request for revocation rests on 
procedural technicalities, without providing any substantive factors 
which the Department should weigh in deciding whether to accept the 
request for consideration. Stelco notes that the request for revocation 
was submitted five working days late, and did not pose an 
administrative burden since it was submitted well before the 
publication of the notice of initiation. Stelco further notes that 
petitioners did not raise any objections to the timeliness of the 
revocation request until June 5, 1998, nine months after the revocation 
was made.
    Department's Position: We disagree with petitioners that the 
Department should automatically deny Stelco's request for a revocation 
solely on the basis that the request for revocation was filed one week 
after the end of the anniversary month.
    Petitioners argue that Samsung established the obligation to 
request revocation during the anniversary month as a ``mandatory, 
bright line requirement'' without distinguishing between the facts in 
the Samsung litigation and in the current review. However, the Samsung 
case involved a revocation request which was four-and-one-half years 
late. The underlying rationale for the Court's decision was based on 
administrative efficiency. Samsung states ``(t)he burden placed on 
Commerce by the submission of factual information after a deadline is 
relatively light compared to the administrative burden imposed on 
Commerce by an untimely request for revocation.'' The Court goes on to 
note that in response to a request for revocation, Commerce must 
initiate and conduct an entire investigation and that ``(i)f the 
plaintiff could command Commerce to conduct such an investigation at 
its whim rather than only once per year, Commerce's administrative 
efficiency would be adversely affected.''
    Stelco's situation is clearly distinguished from the plaintiff's in 
Samsung. Unlike the situation in Samsung, the reviews of this order 
have been conducted in a timely fashion. At the time of the initiation 
of this fourth review, Stelco had established a history of a zero and a 
de minimis margin in the second and third reviews. Both the Department 
and petitioners were, and had been, aware of that history, and thus 
were aware that Stelco could be eligible for revocation. Stelco amended 
its request for review to include a request for revocation five working 
days, not four-and-one-half years, after a timely request for review. 
The amendment was accepted by the Department and its timeliness was not 
even questioned by petitioners until nine months after initiation 
(Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in Part, 62 FR 50292, (September 
25, 1998)). On July 10, 1998, the Department issued its preliminary 
results of review, noting that Stelco made a request for revocation in 
an amendment to its request for review on September 8, 1998. See 
Preliminary Results, 63 FR at 37321. In that notice, we set forth the 
arguments and record evidence concerning Stelco's revocation and 
expressed our intention to revoke the

[[Page 2188]]

order with respect to Stelco if the preliminary findings were upheld in 
the final results of review (Preliminary Results at 37321).
    Consequently, by initiating the review without rejecting the 
untimeliness of Stelco's request for revocation, and by giving full 
consideration to Stelco's request in the preliminary results of review, 
the Department effectively granted Stelco an extension of its deadline 
to file its request for revocation as permitted under 19 CFR 
351.302(b). In addition, because Stelco's request for revocation was 
filed well before the review was initiated, it did not impose an 
additional burden on the conduct of the administrative review and 
petitioners were not deprived of effective notification of Stelco's 
request. Finally, the fairness of considering Stelco's untimely request 
for revocation in the face of two years of de minimis margins, 
outweighs the burden imposed by Stelco's untimely and unopposed request 
for revocation.
    We disagree with Stelco's contention that both the antidumping 
statute and the Department regulations are silent as to the time for 
accepting requests for revocation. Section 351.222 of the Department's 
regulations clearly specifies that a producer or exporter may request 
revocation during the ``third and subsequent annual anniversary months 
of the publication of the antidumping order * * *'' (Final Rule, 62 FR 
27296 (May 19, 1997).) Section 351.222(f) reinforces the importance of 
the timeliness of the request for revocation by stating: ``(u)pon 
receipt of a timely request for revocation * * *'' (Final Rule 62 FR at 
27400). Samsung further argues that, ``even if the regulation does not 
provide a bright line requirement as to the year of filing, it still 
provides a bright line test as to the month of filing and Commerce also 
would retain discretion to discount stale information.'' Therefore, 
both the Department's regulations and practice have established the 
anniversary month as the time period in which to file a request for 
revocation. In this instance, however, the Department has effectively 
granted an extension by accepting Stelco's amended request for review.
Comment 2: The Merits of Stelco's Request for Revocation
    Petitioners argue that if the Department considers Stelco's request 
for revocation, it should deny the request on the merits of its case. 
Petitioners claim that Stelco cannot demonstrate that it is not likely 
to sell the subject merchandise at less than NV in the future as 
required by section 351(b)(2)(ii) of the Department's regulations.
    Petitioners allege that before the Department can conclude that 
Stelco is not likely to dump if the order is revoked, Stelco must show 
that it can successfully export normal commercial quantities without 
resorting to dumping. Petitioners note that the preamble to the 
Department's final regulations states: the underlying assumption behind 
a revocation based on the absence of dumping or countervailable 
subsidization is that a respondent, by engaging in fair trade for a 
specified period of time, has demonstrated that it will not resume its 
unfair trade practice following the revocation of an order. If the 
respondent is not selling in commercial quantities characteristic of 
that company for the duration of the specified period, petitioners 
argue, this assumption becomes weaker. (See Final Rule, 62 FR 27296, 
27326 (May 19, 1997).)
    Petitioners additionally point out that Sec. 351.222(d)(1) of the 
Department's regulations requires that ``(B)efore revoking an order * * 
*, the Secretary must be satisfied that, during each of the three * * * 
years, there were exports to the United States in commercial quantities 
of the subject merchandise to which a revocation * * * will apply.'' 
(See Final Rule, 62 FR 27296, 27400 (May 19, 1997).) Petitioners 
contend that Stelco cannot demonstrate that it is not likely to resume 
dumping in accordance with this regulation because it cannot 
demonstrate that it made sales in commercial quantities during each of 
the past three years. Petitioners have provided proprietary charts 
demonstrating the volume and value of the subject merchandise sold in 
the United States during each of the four administrative reviews which 
quantify the extreme decline in Stelco's sales since the original 
investigation.
    Petitioners also note that the Department has refused to revoke an 
antidumping duty order with respect to a particular respondent because 
that respondent's U.S. sales of the subject merchandise fell 
substantially after the imposition of the antidumping duty order. (See 
Brass Sheet and Strip from Germany; Final Results of Antidumping Duty 
Administrative Review and Determination Not to Revoke in Part (BSS 
Germany), 61 FR 49727, 49731 (September 23, 1996) and Pure Magnesium 
from Canada; Preliminary Results of Antidumping Administrative Review 
and Notice of Intent not to Revoke Order in Part (Pure Magnesium), 63 
FR 26147 (May 12, 1998).)
    Petitioners point out that the Department's memoranda to the file 
show that the Bureau of Labor Statistics producer price index (BLS 
index) for carbon steel plate dropped by 3.2 percent from September to 
October of this year, and the Statistics Canada producer price index 
for carbon steel sheet, strip, and plate dropped 2 percent from August 
to September of this year and remained at a depressed level in October. 
Petitioners add that this weakening in both the U.S. and Canadian 
markets occurred just as Stelco is reportedly completing a substantial 
upgrade of its plate mill that will double its current plate production 
capacity. Petitioners cite a Calgary Herald newspaper article 
describing the project (``Stelco to Revamp Main Hamilton Mill,'' 
Calgary Herald at D5 (March 19, 1997).) Petitioners claim that Stelco's 
doubling of capacity at a time when U.S. and Canadian prices are 
falling places pressure on Stelco to dump plate in the U.S. market. 
Thus, petitioners argue, revocation of the order would make resumed 
dumping likely.
    Petitioners claim that Stelco cannot demonstrate that it is not 
likely to resume dumping in the future based on the information which 
is currently on the record in the instant administrative review. 
Consequently, petitioners contend that the Department must solicit 
information from petitioners and Stelco concerning: (1) The total 
quantity by weight and by value and numbers of Stelco's U.S. plate 
sales for the second and third review periods and the period for the 
initial investigation; (2) currency movements between the U.S. dollar 
and the Canadian dollar; and (3) conditions and trends in the U.S. and 
Canadian steel industries.
    Stelco disputes petitioners' contention that it did not import 
``normal commercial quantities'' over the past three successive review 
periods. Stelco claims that each and every one of its sales made after 
the imposition of the antidumping order were ``bona fide'' 
transactions.
    Stelco contends that petitioners' argument that the Department must 
deny Stelco's revocation request because it did not import ``normal 
commercial quantities'' over the past three successive review periods 
is incorrect for two reasons. First, Stelco contends that the 
Department has never defined ``normal commercial quantities'' and has 
held commercial quantities to constitute as little as a single shipment 
(See BSS Germany). Second, Stelco argues that a decrease in the volume 
of merchandise following the imposition of an antidumping duty order is 
relevant only in determining whether a respondent is able to compete in 
the

[[Page 2189]]

U.S. market without dumping, and does not automatically require the 
Department to reject a revocation request. Stelco argues that the 
Department's examination of a respondent's ``ability to compete in the 
U.S. market without dumping'' is only one factor in a multi-factor 
{revocation} analysis, including the ``respondent's prices and margins 
in the preceding periods * * *, the conditions and trends in the 
domestic and home market industries, (and) currency movements.'' (See 
Brass Sheet and Strip from Canada: Preliminary Results of Antidumping 
Duty Administrative Review and Notice of Intent to Revoke Order in 
Part, 63 FR 6519, (February 9, 1998) (BSS Canada); BSS Germany, and 
Pure Magnesium.
    Stelco argues that the Department has often noted that a 
respondent's lack of dumping over the course of three years is 
``generally predictive of future behavior.'' (See Pure Magnesium, 63 FR 
26147, 26149 (May 12, 1998).) However, Stelco admits that in some prior 
cases, the Department has also examined other factors when determining 
the likelihood of future dumping, such as: (1) Conditions and trends in 
the domestic and home market industries, (2) currency movements, and 
(3) the ability of a respondent to compete in the U.S. market without 
dumping. Stelco argues that the record supports its contention that it 
is unlikely to resume dumping in the future.
    Stelco contends that factual information and forecasts by industry 
analysis on the record demonstrates unequivocally strong demand in the 
U.S. and Canadian markets eliminating any economic reason for Stelco to 
sell the subject merchandise at depressed prices in the U.S. market.
    Stelco also argues that exchange rate information on the record 
indicates that the Canadian dollar has been stable or depreciating, 
thereby making it unlikely that Stelco will sell merchandise to the 
U.S. at dumped prices.
    Finally, Stelco argues that its recent pricing trends (i.e. its 
three-year history of not dumping), which is also on the record, 
indicate that Stelco is able to compete in the U.S. market without 
selling at dumped prices.
    Additional comments and information regarding the likelihood of 
future dumping by Stelco were added to the record on December 4 and 
December 9, 1998. See ``Determination Not to Revoke,'' above.
    Department's Position: We agree with petitioners that Stelco has 
not sold subject merchandise in commercial quantities at not less than 
normal value for three consecutive years, as required by 
Sec. 351.222(b)(2)(i) and (d)(1) of the Department's regulations. 
Therefore, we are not revoking the antidumping order on steel plate 
with respect to Stelco. For further details, see the ``Determination 
Not to Revoke'' section above.
    Stelco's argument that, in BSS Germany, the Department determined a 
single sale to be in commercial quantities is not determinative in the 
instant case. First, the determination of what constitutes commercial 
quantities must be made on a case-specific basis. Here, a single sale 
of only 36 tons of steel plate is so insignificant in comparison with 
the volume of sales prior to the imposition of the antidumping order, 
as well as in comparison with subsequent review periods, as to fail to 
constitute a commercial quantity. Second, the determination in BSS 
Germany was based on a finding of ``likelihood'' of resumed dumping, 
and not on a finding that the company did not have three consecutive 
years of sales in commercial quantities at not less than NV.
    Stelco has argued that the Department examines a number of items in 
determining whether to revoke an antidumping order. However, 
respondents must meet the threshold criterion of three consecutive 
years of sales in commercial quantities at not less than NV in order to 
be eligible for revocation. When that criterion has been met, and the 
record contains evidence regarding the likelihood of resumption of 
dumping, then the Department looks to additional indicators, such as 
the condition of the U.S. and domestic markets. See BSS Germany and BSS 
Canada. As noted above, this additional step was not necessary in this 
case.
    Because Stelco is ineligible for revocation under 
Sec. 351.222(b)(2)(i), based on the fact that it has not had three 
consecutive years of sales in commercial quantities at not less than 
NV, we need not address comments regarding U.S. and Canadian market 
conditions, or Stelco's planned mill expansion.
    Regarding Stelco's request for revocation with respect to 
corrosion-resistant steel, we note that, in the last two administrative 
reviews, we determined that Stelco sold corrosion-resistant steel at 
less than NV. 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, 62 FR 12725 
(March 16, 1998) and Certain Corrosion-Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate From Canada: 
Final Results of Antidumping Duty Administrative Reviews, 62 FR 18448 
(April 15, 1997)(1994/95 Canadian Steel). Although the final results of 
these reviews are subject to litigation, that litigation is not yet 
complete. Additionally, as discussed below, we have determined that 
Stelco sold corrosion-resistant steel at less than NV during the period 
covered by this review. Consequently, we determine that, because Stelco 
does not have three consecutive years of zero or de minimis margins on 
corrosion-resistant steel, Stelco is not eligible for revocation of the 
order on corrosion-resistant steel under 19 CFR 351.222(b).
Comment 3: Clerical Errors
    Petitioners claim that the model match program used to calculate 
the results of review does not account for all plate qualities that 
Stelco has reported. Petitioners proposed the addition of two lines of 
computer code to remedy the omission.
    DOC position: We agree and have corrected the error to include all 
qualities of plate that were reported by Stelco.
Comment 4: Major Input Rule
    Stelco argues that there is no factual or legal basis for the 
Department's decision to increase Stelco's submitted actual costs of 
production for painting services supplied by Baycoat for corrosion-
resistant products. Stelco maintains that the Department erroneously 
used the transfer price from Baycoat instead of Baycoat's reported cost 
of production to value Baycoat's painting services. Stelco asserts that 
the WTO Antidumping Agreement and section 773(f)(1) of the Act provide 
that the Department must examine and calculate a particular exporter's 
cost of manufacture.
    Stelco also claims that its actual cost for Baycoat's painting 
services is not equal to the total invoice price, but rather that it is 
equal to the total invoice price minus half of Baycoat's profits, since 
Baycoat is jointly owned by Stelco and Dofasco. Stelco points to a 
draft remand determination on this issue in which the Department states 
that the return of profit is independent of the number or value of 
sales of painting services to Stelco.
    Stelco argues that the statutory language of the ``major input 
rule'' does not require the Department to increase an affiliated 
supplier's actual cost of production in valuing its major inputs. 
Stelco claims that in 1994/95 Canadian Steel, the Department determined 
that the major input rule required the Department to value inputs 
supplied by affiliates at the transfer price provided

[[Page 2190]]

that the transfer price reflects market value and was not below the 
cost of production. Stelco also refers to the Draft Remand 
Determination for Article 1904 Binational Panel Review USA-97-1904-03 
(August 4, 1998), in which the Department stated that ``the normal 
application of these provisions dictates that transfer price is the 
appropriate basis for Stelco's cost of production with respect to the 
Baycoat inputs.'' Stelco argues that in H.R. Rep. No. 40, 100th Cong., 
1st Sess., pt. 1, at 137 (1987), Congress did not intend for this 
provision to be used to increase costs beyond a company's actual cost 
of production. In addition, Stelco claims that Torrington Co. v. United 
States (``Torrington'') (881 F. Supp 622, 642-643 (CIT 1995)) and SKF 
USA Inc. v. United States (``SKF'') (888 F. Supp 152, 156 (CIT 1995)) 
supports its contention that a COP valuation is appropriate when it is 
below transfer price.
    Stelco further argues that the major input rule does not apply to 
affiliated suppliers that are collapsed with the respondent. Stelco 
refers to C. Marsh and J. Miller, Use and Measurement of Production 
Costs Under U.S. Antidumping Law (September 19, 1995) to illustrate 
that pursuant to consolidation rules under generally accepted 
accounting principles, companies within a consolidated group record 
actual costs incurred for inter-company purchases and sales. Stelco 
also refers to Certain Forged Steel Crankshafts from the United 
Kingdom, 61 FR 54613, 54614 (October 21, 1996) (Crankshafts) and Steel 
from Korea in which the Department did not apply the major input rule 
with regard to transactions between divisions of the same corporation. 
To show that Department precedent mandates the collapsing of Stelco and 
Baycoat, Stelco cites Preliminary Results of Antidumping Administrative 
Review: Sulfanilic Acid from the People's Republic of China, 61 FR 
25196, 25197 (May 20, 1996); Final Determinations of Sales at LTFV: 
Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled 
Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel 
Flat Products, and Certain Cut-to-Length Carbon Steel Flat Products 
from Japan, 58 FR 37154 (July 9, 1993); Nihon Cement Co., Ltd. v. 
United States, 17 C.I.T. 400 (1993).
    Finally, Stelco argues that a June 4, 1998 binational panel ruling 
specifically rejected the Department's use of invoice prices from 
Baycoat as the value of the painting service that Stelco obtains from 
Baycoat. See Decision of the Panel: North American Free Trade 
Agreement, Article 1904 Binational Panel Review, USA-97-1904-3 (June 4, 
1998) at 10 (Panel Decision) (Public Document).
    Petitioners argue that the Department correctly used the transfer 
price to value the painting services received from Baycoat. Petitioners 
further ague that the statute makes no provision for the rejection of 
transfer price where such price exceeds the input's cost of production 
and there is no evidence that the transfer price is below market value. 
They further argue that the legislative history of the major input rule 
shows that the phrase ``amount represented as the value of [the] 
input'' refers to the transfer price, and that a conference committee 
report gives a similar definition. See H. Conf. Rep. No. 100-576 at 
595, reprinted in 1988 U.S.S.C.A.N. 1547, 1628. Petitioners also 
contend that the Court of International Trade, has construed 
subsections (f)(2) and (f)(3) to require a comparison of market value 
and cost with transfer price. See Timken Co. v. United States, Consol. 
Court No. 96-12-02686, Slip Op. 97-164 (CIT Dec. 3, 1997) at 30-31. 
Petitioners argue that the binational review unequivocally sustained 
the discretion of the Department to use the unadjusted Baycoat invoice 
price as the valuation of Baycoat's painting services.
    Petitioners contend that the transfer price is the appropriate 
valuation under the Department's regulations, specifically 19 CFR 
351.407(b), which says that the Department will determine the value of 
a major input purchased from an affiliated person based on the higher 
of the price paid, the market value, or the cost of production. 
Furthermore, petitioners argue that there is no provision in the 
statute or any precedent that would permit any adjustment for profit 
made to the transfer price. Petitioners also note that in the normal 
course of business Stelco records its costs for the Baycoat services at 
the transfer price.
    Petitioners argue that Stelco's assertion that the Department 
should treat Stelco and its affiliated suppliers as a single entity is 
baseless. Petitioners state that Stelco has failed to establish that 
Baycoat is a ``division'' of Stelco, and that the requirements for 
collapsing Baycoat and Stelco into one entity have not been satisfied. 
Finally, petitioners assert that there is no precedent for any 
exceptions to the application of the major input rule.
    Department's Position: We agree with petitioners that it is 
appropriate to use the transfer price to value Stelco's major inputs. 
Under section 773(f)(2) of the Act, the Department's current practice 
is to request information on both the transfer price and the market 
value of the input and to choose the higher of the two valuations. 
Pursuant to section 773(f)(3) of the Act, the Department may alter this 
valuation only in those cases where the input is ``major'' and the 
value determined under section 773(f)(2) is lower than the COP of the 
inputs. All parties agree that the inputs in question are major inputs 
within the meaning of section 773(f)(3); we have determined that the 
value determined under section 773(f)(2) is not lower than the COP of 
the inputs.
    In Torrington and SKF, which concerned the calculation of CV, the 
Department had not requested or received information on the transfer 
prices of the inputs. The CIT did not say that the Department was 
prohibited from requesting the transfer prices of the inputs; rather, 
it said that the Department was within its discretion to choose to rely 
on cost information. Here, because of the Department's current policy, 
the Department requested and received the transfer prices of the 
inputs. These transfer prices are greater than Baycoat's COP.
    The policy applied here was the policy applied by the Department in 
the second review of this case and is currently reflected in 19 CFR 
351.403(b). The Department held in the second administrative review 
that the statute directs it ``to value inputs supplied by affiliated 
persons at the transfer price between the entities provided that such a 
price reflects the price commonly charged in the market and, for major 
inputs, is not below the cost of producing the input.'' See 1994/95 
Canadian Steel at 62 FR 18464.
    Stelco also argues that it and Baycoat should be treated as a 
single entity for determining cost of production. However, Stelco has 
not established either that Baycoat is a ``division'' of Stelco or that 
the requirements for ``collapsing,'' under 19 CFR 351.401(f), have been 
satisfied with respect to Baycoat. In Crankshafts, respondent argued 
that because it and its affiliated supplier were ``both unincorporated 
operating divisions within a single entity, * * * they are parts of the 
same company and share a common steel COP.'' The Department ruled that 
the record evidence indicated that they were divisions of the same 
corporation, as opposed to distinct, although affiliated, legal 
entities, and found that the major input rule did not apply on that 
basis. Unlike the respondent in Crankshafts, Stelco does not contend 
that Baycoat is an actual division of Stelco with no independent legal 
existence. Rather, Stelco contends that it and Baycoat should be 
treated as a single entity solely for purposes of the

[[Page 2191]]

major input rule. As petitioners point out, the Department rejected a 
similar argument in Mechanical Transfer Presses from Japan 55 FR 335 
(January 4, 1990) in which respondent maintained that its wholly-owned 
subsidiaries ``function(ed) as divisions.'' The Department noted that 
the ``wholly-owned subsidiaries are separate legal entities,'' as 
opposed to mere divisions, and thus applied the major input rule. The 
subsidiary in question here, Baycoat, is clearly a separate legal 
entity and thus the rule of Crankshafts does not apply.
    Steel from Korea represents another instance where we have 
determined that the major input rule does not apply. In that case we 
disregarded the major input rule for transactions between producers of 
the subject merchandise where we had determined that such producers 
should be collapsed for purposes of analyzing sales. The criteria 
applied for determining whether sales collapsing is appropriate do not 
apply, however, in cases where the affiliated supplier does not have 
the capacity to produce the subject merchandise. See 19 CFR 351.401(f). 
In this review, it is clear that Baycoat does not produce subject 
merchandise. We agree with petitioners that Stelco has not established 
a basis for the treatment of Stelco's affiliated suppliers as 
``collapsed'' entities. Furthermore, a year-end profit distribution 
does not function as an adjustment to price. The entitlement to a 
profit distribution arises from the ownership interest, not from the 
sale.
    The binational panel agreed with the Department ``that subsection 
(f)(3) does not require the rejection of the transfer price'' and ruled 
that ``on the face of the statute, the Department is within its 
discretion to utilize the transactions between Stelco and Baycoat'' as 
the cost for Baycoat's services. See Panel Decision at 10. For these 
reasons, the Department has allowed no adjustments to the transfer 
price between Stelco and Baycoat.
Comment 5: Clerical Errors
    Both Stelco and petitioners claim that the Department made clerical 
calculation errors in the preliminary determination. Stelco argues that 
the Department failed to apply reported billing adjustments, the CEP 
offset adjustment, and appropriate currency conversions for advertising 
expenses and inventory carrying costs. With regard to the recalculation 
of Stelco's painting costs, Stelco claims that the Department 
incorrectly recalculated Stelco's yield loss, used an incorrect TCOM 
variable, and did not complete the programming language needed to 
ensure that the Baycoat adjustment was applied only to Baycoat orders.
    Petitioners claim that the Department neglected to include the home 
market interest revenue variable in the arm's length test, incorrectly 
defined the DIFFCODE variable used for matching in the model match, and 
incorrectly converted U.S. packing expense into U.S. dollars.
    Department's Position: We agree with Stelco and with petitioners 
and have corrected the clerical errors described above.

Final Results of Review

    As a result of our review, we determine the dumping margins (in 
percent) for the period August 1, 1996, through July 31, 1997 to be as 
follows:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Corrosion-Resistant Steel:
  Dofasco..................................................         0.98
  CCC......................................................         2.26
  Stelco...................................................         2.73
Cut-to-Length Plate:
  Algoma...................................................        *0.23
  MRM......................................................         0.00
  Stelco...................................................         0.00
  Forsyth..................................................       68.70
------------------------------------------------------------------------
* De minimis.

    The Department will determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. For assessment 
purposes, we have calculated importer-specific ad valorem duty 
assessment rates for the merchandise based on the ratio of the total 
amount of antidumping duties calculated for the examined sales during 
the POR to the total quantity of sales examined during the POR. 
Individual differences between U.S. 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 these final results for all shipments of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the publication date as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for each reviewed 
company will be the rates stated above (except that no deposit will be 
required for firms with zero or de minimis margins, i.e., margins less 
than 0.5 percent); (2) for exporters not covered in this review, but 
covered in the LTFV investigation or a previous review, the cash 
deposit rate will continue to be the company-specific rate published 
for the most recent period; (3) if the exporter is not a firm covered 
in this review, a previous review, or the original LTFV investigation, 
but the manufacturer is, the cash deposit rate will be the rate 
established for the most recent period for the manufacturer of the 
merchandise; and (4) the cash deposit rate for all other manufacturers 
or exporters will continue to be the ``all others'' rate established in 
the LTFV investigations, which were 18.71 percent for corrosion-
resistant steel products and 61.88 percent for plate (see Amended Final 
Determination, 60 FR 49582 (September 26, 1995)). These deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative reviews.
    We are revoking the antidumping duty order on certain cut-to-length 
carbon steel plate from Canada with respect to Algoma and Stelco, in 
accordance with section 751(d) of the Act and 19 CFR 353.25(a)(2). This 
revocation applies to all entries of the subject merchandise from 
Canada entered, or withdrawn from warehouse, for consumption on or 
after August 31, 1997. The Department will order the suspension of 
liquidation ended for all such entries and will instruct the Customs 
Service to release any cash deposit or bonds. The Department will 
further instruct the Customs Service to refund with interest any cash 
deposits on entries made on or after August 31, 1997.

Notification of Interested Parties

    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 351.402(f) 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 the antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d)(1)(1997). Timely written 
notification of the 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.
    These administrative reviews and notices are in accordance with 
section

[[Page 2192]]

751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.213 and 19 
CFR 351.221(b)(5).

    Dated: January 4, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-691 Filed 1-12-99; 8:45 am]
BILLING CODE 3510-DS-P