[Federal Register Volume 64, Number 109 (Tuesday, June 8, 1999)]
[Notices]
[Pages 30750-30774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13676]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-475-824]


Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Sheet and Strip in Coils From Italy

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

EFFECTIVE DATE: June 8, 1999.

FOR FURTHER INFORMATION CONTACT: Lesley Stagliano or Rick Johnson, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-0190; (202) 482-3818 
respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``the Act''), are references 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 of Commerce 
(``Department'') regulations are to the regulations at 19 CFR part 351 
(April 1998).

Final Determination

    We determine that stainless steel sheet and strip in coils 
(``SSSS'') from Italy are being sold in the United States at less than 
fair value (``LTFV''), as provided in section 735 of the Act. The 
estimated margins of sales at LTFV are shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since the preliminary determination, issued on December 17, 1998 
(see Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Stainless Steel Sheet and Strip in Coils from Italy 
(``Preliminary Determination'') 64 FR 116 (January 4, 1999)), the 
following events have occurred:
    On December 17, 1998, AST submitted its quantity and value 
reconciliation and computer programs for its affiliated U.S. reseller 
(``reseller 001''). On December 28, 1999, Acciai Speciali Terni, S.p.A. 
(``AST'') submitted its response to the Department's December 7, 1998 
supplemental questionnaire. On January 8, 1999, the Department 
requested that AST provide additional information for reseller 001's 
downstream sales. On January 15, 1999, AST submitted its response to 
the Department's January 8, 1999 request. On February 16, 1999, we 
issued a supplemental questionnaire to AST regarding its December 11, 
1998 reseller 001 submission. On February 23, 1999, we received AST's 
response to the Department's supplemental questionnaire.
    On February 24, 1999, AST submitted information regarding 
additional U.S. sales that it had found in preparation of the home 
market verification. On March 5, 1999, the Department rejected AST's 
February 24, 1999 submission on the grounds that it was untimely. On 
March 8, 1999, at the onset of the verification of AST USA, AST 
submitted the additional U.S. sales. The Department rejected these 
sales as soon as they were presented to it. On March 10, 1999, 
petitioners submitted comments and information pertaining to the 
additional U.S. sales. On March 19, 1999, the Department rejected 
petitioners' March 10, 1999 submission because it contained untimely 
new information which was based on U.S. sales data that were previously 
rejected by the Department. On March 16, 1999, AST once again submitted 
information regarding the additional U.S. sales. On March 19, 1999, the 
Department rejected AST's March 16, 1999 submission because it 
contained untimely new factual information, and because it was 
submitted in response to petitioners' March 10, 1999 letter, which the 
Department rejected in its entirety. On March 22, 1999, AST submitted a 
letter stating that according to section 351.104(a)(2)(ii)(A) of the 
Department's regulations, the Department must retain a copy of AST's 
March 16, 1999 response on the official record. On March 30, 1999, the 
Department responded to AST's March 22, 1999 letter stating that 
pursuant to section 351.104(a)(2)(iii) of the Department's regulations 
we would not retain a copy of AST's response to petitioners' rejected 
March 10, 1999 letter, because it was an untimely submission.
    During January, February and March 1999, we conducted sales and 
cost verifications of AST's and its affiliates' responses to the 
antidumping questionnaires in Italy and the United States. On March 15, 
1999 and March 25, 1999, we issued our cost and sales verification 
reports for AST, AST USA, and reseller 001. Petitioners and respondents 
submitted case briefs on April 5, 1999, and April 6, 1999, and rebuttal 
briefs on April 9, 1999, and April 13, 1999. On April 19, 1999, 
petitioners and respondents withdrew their requests for a public 
hearing, dated January 13, 1999 and January 22, 1999, respectively.
    On April 1, 1999, the Department requested that AST provide monthly 
shipment data for 1996, 1997, and 1998 by April 12, 1999. On April 12, 
1999, AST submitted this information.

Scope of the Investigation

    We have made minor corrections to the scope language excluding 
certain stainless steel foil for automotive catalytic converters and 
certain specialty stainless steel products in response to comments by 
interested parties.
    For purposes of this investigation, the products covered are 
certain stainless steel sheet and strip in coils. Stainless steel is an 
alloy steel containing, by weight, 1.2 percent or less of carbon and 
10.5 percent or more of chromium, with or without other elements. The 
subject sheet and strip is a flat-rolled product in coils that is 
greater than 9.5 mm in width and less than 4.75 mm in thickness, and 
that is annealed or otherwise heat treated and pickled or otherwise 
descaled. The subject sheet and strip may also be further processed 
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that 
it maintains the specific dimensions of sheet and strip following such 
processing.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (HTS) at subheadings: 
7219.13.00.30, 7219.13.00.50, 7219.13.00.70, 7219.13.00.80, 
7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05,

[[Page 30751]]

7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 
7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 
7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 
7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 
7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 
7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 
7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 
7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7220.20.10.10, 
7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 
7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 
7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60, 
7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60, 
7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. 
Although the HTS subheadings are provided for convenience and Customs 
purposes, the Department's written description of the merchandise under 
investigation is dispositive.
    Excluded from the scope of this investigation are the following: 
(1) sheet and strip that is not annealed or otherwise heat treated and 
pickled or otherwise descaled, (2) sheet and strip that is cut to 
length, (3) plate (i.e., flat-rolled stainless steel products of a 
thickness of 4.75 mm or more), (4) flat wire (i.e., cold-rolled 
sections, with a prepared edge, rectangular in shape, of a width of not 
more than 9.5 mm), and (5) razor blade steel. Razor blade steel is a 
flat-rolled product of stainless steel, not further worked than cold-
rolled (cold-reduced), in coils, of a width of not more than 23 mm and 
a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5 
percent chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See Chapter 72 of the HTS, ``Additional 
U.S. Note'' 1(d).
    In response to comments by interested parties the Department has 
determined that certain specialty stainless steel products are also 
excluded from the scope of this investigation. These excluded products 
are described below:
    Flapper valve steel is defined as stainless steel strip in coils 
containing, by weight, between 0.37 and 0.43 percent carbon, between 
1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent 
manganese. This steel also contains, by weight, phosphorus of 0.025 
percent or less, silicon of between 0.20 and 0.50 percent, and sulfur 
of 0.020 percent or less. The product is manufactured by means of 
vacuum arc remelting, with inclusion controls for sulphide of no more 
than 0.04 percent and for oxide of no more than 0.05 percent. Flapper 
valve steel has a tensile strength of between 210 and 300 ksi, yield 
strength of between 170 and 270 ksi, plus or minus 8 ksi, and a 
hardness (Hv) of between 460 and 590. Flapper valve steel is most 
commonly used to produce specialty flapper valves in compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of plus-or-minus 2.01 
microns, and surface glossiness of 200 to 700 percent Gs. Suspension 
foil must be supplied in coil widths of not more than 407 mm, and with 
a mass of 225 kg or less. Roll marks may only be visible on one side, 
with no scratches of measurable depth. The material must exhibit 
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm 
over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this investigation. This stainless 
steel strip in coils is a specialty foil with a thickness of between 20 
and 110 microns used to produce a metallic substrate with a honeycomb 
structure for use in automotive catalytic converters. The steel 
contains, by weight, carbon of no more than 0.030 percent, silicon of 
no more than 1.0 percent, manganese of no more than 1.0 percent, 
chromium of between 19 and 22 percent, aluminum of no less than 5.0 
percent, phosphorus of no more than 0.045 percent, sulfur of no more 
than 0.03 percent, lanthanum of less than 0.002 or greater than 0.05 
percent, and total rare earth elements of more than 0.06 percent, with 
the balance iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also 
excluded from the scope of this investigation. This ductile stainless 
steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 
percent cobalt, with the remainder of iron, in widths 228.6 mm or less, 
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic 
remanence between 9,000 and 12,000 gauss, and a coercivity of between 
50 and 300 oersteds. This product is most commonly used in electronic 
sensors and is currently available under proprietary trade names such 
as ``Arnokrome III.'' 1
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    \1\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this investigation. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials (``ASTM'') specification B344 and containing, by weight, 36 
percent nickel, 18 percent chromium, and 46 percent iron, and is most 
notable for its resistance to high temperature corrosion. It has a 
melting point of 1390 degrees Celsius and displays a creep rupture 
limit of 4 kilograms per square millimeter at 1000 degrees Celsius. 
This steel is most commonly used in the production of heating ribbons 
for circuit breakers and industrial furnaces, and in rheostats for 
railway locomotives. The product is currently available under 
proprietary trade names such as ``Gilphy 36.'' 2
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    \2\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this investigation. This high-strength, 
ductile stainless steel product is designated under the Unified 
Numbering System (``UNS'') as S45500-grade steel, and contains, by 
weight, 11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon, 
manganese, silicon and molybdenum each comprise, by weight, 0.05 
percent or less, with phosphorus and sulfur each comprising, by weight, 
0.03 percent or less. This steel has copper, niobium, and titanium 
added to achieve aging, and will exhibit yield strengths as high as 
1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after 
aging, with elongation percentages of 3 percent or less in 50 mm. It is 
generally provided in thicknesses between 0.635 and 0.787 mm, and in 
widths of 25.4 mm. This product is most commonly used in the 
manufacture of television tubes and is currently available under 
proprietary trade names such as ``Durphynox 17.'' 3
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    \3\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical instruments are also 
excluded from the scope of this investigation. These include stainless 
steel strip in coils used in the production of textile cutting tools 
(e.g., carpet knives). 4 This steel is similar to AISI grade 
420 but containing, by weight, 0.5 to 0.7 percent of molybdenum. The 
steel also contains, by weight, carbon of between 1.0 and

[[Page 30752]]

1.1 percent, sulfur of 0.020 percent or less, and includes between 0.20 
and 0.30 percent copper and between 0.20 and 0.50 percent cobalt. This 
steel is sold under proprietary names such as ``GIN4 Mo.'' The second 
excluded stainless steel strip in coils is similar to AISI 420-J2 and 
contains, by weight, carbon of between 0.62 and 0.70 percent, silicon 
of between 0.20 and 0.50 percent, manganese of between 0.45 and 0.80 
percent, phosphorus of no more than 0.025 percent and sulfur of no more 
than 0.020 percent. This steel has a carbide density on average of 100 
carbide particles per 100 square microns. An example of this product is 
``GIN5'' steel. The third specialty steel has a chemical composition 
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, 
molybdenum of between 1.15 and 1.35 percent, but lower manganese of 
between 0.20 and 0.80 percent, phosphorus of no more than 0.025 
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no 
more than 0.020 percent. This product is supplied with a hardness of 
more than Hv 500 guaranteed after customer processing, and is supplied 
as, for example, ``GIN6''. 5
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    \4\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \5\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Period of Investigation

    The period of investigation (``POI'') is April 1, 1997 through 
March 31, 1998.

Critical Circumstances

    On October 30, 1998, petitioners alleged that there is a reasonable 
basis to believe or suspect that critical circumstances exist with 
respect to imports of SSSS from Italy. In accordance with 19 CFR 
351.206(c)(2)(i), we preliminarily determined that critical 
circumstances did not exist with respect to respondent AST, because the 
Department found that the estimated dumping margin was not 15 percent 
or greater, the threshold for the Department to impute knowledge on the 
part of the importer that dumping was occurring when the transactions 
are CEP sales. See Preliminary Determination and discussion below.
    Section 735(a)(3) of the Act provides that the Department will 
determine that critical circumstances exist if: (A)(i) there is a 
history of dumping and material injury by reason of dumped imports in 
the United States or elsewhere of the subject merchandise; or (ii) the 
person by whom, or for whose account, the merchandise was imported knew 
or should have known that the exporter was selling the subject 
merchandise at less than its fair value and that there would be 
material injury by reason of such sales; and (B) there have been 
massive imports of the subject merchandise over a relatively short 
period.
    To determine whether there is a history of injurious dumping of the 
merchandise under investigation, in accordance with section 
735(a)(3)(A)(i) of the Act, the Department considers evidence of an 
existing antidumping order on SSSS from the country in question in the 
United States or elsewhere to be sufficient. We are not aware of any 
antidumping order in any country on SSSS from Italy.
    In determining whether an importer knew or should have known that 
the exporter was selling SSSS at less than fair value and thereby 
causing material injury, the Department normally considers margins of 
15 percent for CEP sales and 25 percent for EP sales sufficient to 
impute knowledge of dumping and of resultant material injury. See 
Notice of Final Determination of Sales Less than Fair Value: Certain 
Cut-to-Length Carbon Steel Plate from the People's Republic of China, 
63 FR 61964, 61967 (November 20, 1997); see also Notice of Final 
Determination of Sales Less Than Fair Value: Manganese Sulphate from 
People's Republic of China 60 FR 52155, 52161 (October 5, 1995).
    In this investigation, AST, which the Department has determined has 
CEP sales, does not have a margin over 15 percent. Based on these 
facts, we determine that the first criterion for ascertaining whether 
critical circumstances exist is not satisfied. Therefore, we determine 
that critical circumstances do not exist with respect to imports of 
SSSS from AST. Because the first criterion is not met, we did not 
analyze the respondent's shipment data to examine whether imports of 
SSSS have been massive over a relatively short period. See e.g., Notice 
of Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Collated Roofing Nails from Korea, 
63 FR 25895, 25898 (May 12, 1997).
    Regarding all other exporters, an ``All Others'' rate has been 
determined (see ``The All Others Rate'', below); because this rate does 
not exceed 15 percent, we determine that critical circumstances do not 
exist for companies covered by the ``All Others'' rate.

Verification

    As provided in section 782(i) of the Act, we verified the sales and 
cost information submitted by the respondent for use in our final 
determination. We used standard verification procedures, including 
examination of relevant sales, accounting, and production records and 
original source documents provided by respondent.

Affiliation

    As explained in the Preliminary Determination, we find that, for 
purposes of this investigation, AST is affiliated with Thyssen AG 
(``Thyssen''). Record evidence established that AST is 75 percent owned 
by a joint venture company, Krupp Thyssen Stahl (``KTS''). KTS, in 
turn, is 40 percent owned by Thyssen Stahl AG (``Thyssen Stahl''), 
itself a wholly-owned subsidiary of Thyssen AG (the remaining sixty 
percent of KTS is controlled by Thyssen's joint-venture partner, Fried. 
Krupp. AG Krupp-Hoesch (Fried. Krupp)). Consequently, Thyssen AG, 
indirectly has a 33.75 percent equity holding in AST and, because this 
is greater than five percent, Thyssen AG is affiliated with AST within 
the meaning of section 771(33)(E) of the Act. See Preliminary 
Determination at 64 FR 118 and Memorandum to the File; ``Affiliation of 
AST and Thyssen AG, and AST and A Thyssen Affiliate (company A),'' 
December 17, 1998 (Affiliation Memorandum).
    In addition, we continue to find that AST is affiliated with 
Thyssen's home market and U.S. sales affiliates. Section 771(33)(F) of 
the Act authorizes the Department to find companies to be affiliated 
where two or more companies are under the common control of a third 
company. Section 771(33) of the statute defines ``control'' as one 
person being ``legally or operationally in a position to exercise 
restraint or direction over the other person.'' The actual exercise of 
control by one person over the other is not required in order to find 
the parties affiliated. In this investigation the nature and quality of 
corporate contact necessitate a finding of affiliation by virtue of 
Thyssen's common control of its affiliates and of AST. The record 
demonstrates that Thyssen, as the majority equity holder in, and 
ultimate parent of, its various affiliates, is in a position to 
exercise direction and restraint over the affiliates' production and 
pricing. As we stated in the Preliminary Determination, ``Thyssen 
retained the ability to control the production and pricing decisions of 
AST through the joint venture of KTS. Because both company A and AST 
are controlled by Thyssen AG within the meaning of section 771(33)(F), 
we have found that AST and company A are affiliated.'' See 64 FR 119. 
For a discussion of AST's affiliated parties,

[[Page 30753]]

see Comment 3 below, the Affiliated Party Memorandum, and Memorandum 
For the File; ``Antidumping Duty Investigation on Stainless Steel Sheet 
and Strip in Coils from Italy--Final Determination Analysis for Acciai 
Speciali Terni SpA'' (Final Analysis Memorandum) May 19, 1999.

Transactions Investigated

    As in the preliminary determination, the Department has determined 
that for U.S. and home market sales the date of invoice is the 
appropriate date of sale because this is the date on which the material 
terms of sale are set. For further discussion see Comment 6.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondent covered by the description in the 
``Scope of the Investigation'' section, above, and sold in the home 
market during the POI, to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. Where there 
were no sales of identical merchandise in the home market to compare to 
U.S. sales, we compared U.S. sales to the next most similar foreign 
like product on the basis of the characteristics and reporting 
instructions listed in the Department's questionnaire.
    As discussed in Comment 8, the Department has considered that sales 
of side-cuts and pup coils to be sales of prime merchandise for the 
purposes of this final determination. For matching purposes, we have 
matched AST's sale of prime merchandise in the home market to sales of 
prime merchandise in the U.S. market. We have also matched sales of 
non-prime merchandise in the home market to sales of non-prime 
merchandise in the U.S. market.

Fair Value Comparisons

    To determine whether sales of SSSS from Italy to the United States 
were made at less than fair value, we compared the constructed export 
price (``CEP'') to the normal value (``NV''), as described in the 
``constructed export price'' and ``normal value'' sections of this 
notice, below. In the preliminary determination, we calculated 
weighted-average EP for some of AST's U.S. sales. However, as discussed 
in Comment 5, the Department has found that all of AST's U.S. sales, 
which were made through AST USA, constitute CEP sales and we have 
therefore compared CEP to NV for those sales. In accordance with 
section 777A(d)(1)(A)(i) of the Act, we calculated weighted-average 
CEPs for comparison to weighted-average NVs.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the comparison 
market at the same level of trade (``LOT'') as the EP or CEP 
transaction. The NV LOT is that of the starting price comparison sales 
in the home market or, when NV is based on constructed value (``CV''), 
that of the sales from which we derive selling, general and 
administrative expenses (``SG&A'') and profit. For EP, the LOT is also 
the level of the starting price sale, which is usually from the 
exporter to the importer. For CEP, it is the level of the constructed 
sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer in the comparison market. If the comparison-
market sales are at a different LOT, and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which NV is based and comparison 
market sales at the LOT of the export transaction, we make a LOT 
adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP 
sales, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the differences in 
the levels between NV and CEP sales affects price comparability, we 
adjust NV under section 773(A)(7)(B) of the Act (the CEP offset 
provision). See Certain Cut-to-Length Carbon Steel Plate from South 
Africa: Notice of Final Determination of Sales at Less Than Fair Value, 
62 FR 61731 (November 19, 1997).
    In order to determine whether NV was established at a different LOT 
than CEP sales, we examined stages in the marketing process and selling 
functions along the chains of distribution between AST and its home 
market customers. We compared the selling functions performed for home 
market sales with those performed with respect to the CEP transaction, 
after deductions for economic activities occurring in the United 
States, pursuant to section 772(d) of the Act, to determine if the home 
market levels of trade constituted more advanced stages of distribution 
than the CEP level of trade.
    In this investigation, AST did not request a LOT adjustment. To 
ensure a LOT adjustment was not necessary and in accordance with 
principles discussed above, we examined information regarding the 
distribution systems in both the United States and Italian markets, 
including the selling functions, classes of customer and selling 
expenses for each respondent.
    For its home market sales, AST reported: (1) three customer 
categories--industrial end-users, white goods manufacturers, and 
service centers/distributors; and (2) two channels of 
distribution'direct factory sales (sales of prime merchandise) and 
warehouse sales (the majority of which are sales of non-prime 
merchandise). AST claimed two levels of trade in the home market based 
solely on the quality of subject merchandise, i.e., prime vs. non-
prime.
    In reviewing AST's LOT in the home market, we asked AST to identify 
the specific differences and similarities in selling functions and/or 
support services between all phases of marketing to customers in the 
home market and the United States. As mentioned above, AST identified 
two channels of distribution in the home market based entirely on 
whether the sale to the customer was of prime or non-prime merchandise. 
For sales of prime merchandise, AST sold to all three of the types of 
customers mentioned above, and provided the same selling functions to 
each of the customer types. Specifically, AST provided freight and 
delivery, credit, technical services, and warranties. For sales of 
mostly non-prime merchandise sold from AST's warehouse, AST performed 
the same selling functions (except for providing warranties) as for 
sales of its prime merchandise, but AST also engaged in the additional 
selling activities of advertising for its mostly non-prime merchandise 
and maintaining inventory of this merchandise at AST's warehouse. 
Because the selling activities engaged in by AST were identical for 
each customer when selling prime merchandise and were identical for 
each customer when selling mostly non-prime from inventory, and because 
the selling activities for both groups of sales were very similar, we 
continue to determine, as we did in the preliminary determination, that 
there exists one level of trade for AST's home market sales.
    For its U.S. sales, AST reported that its affiliated importer, AST 
USA, made sales to two customer categories--industrial end-users and 
service centers, and through three channels of distribution--direct 
factory sales, warehouse sales, and consignment sales. AST claimed two 
levels of trade in the U.S. market based solely on the quality of 
subject merchandise: (1) non-prime; and (2) prime. We examined the 
claimed selling functions performed by AST and its U.S. affiliate, AST 
USA, for

[[Page 30754]]

all U.S. sales. For back-to-back sales made directly to the 
unaffiliated U.S. customer, AST performed the following selling 
functions: it provided technical and warranty services; arranged for 
freight and delivery; and extended credit. For sales which AST reported 
as CEP sales, AST engaged in identical selling activities, providing 
technical and warranty services, freight and delivery and credit.
    Based on a comparison of the selling activities performed in the 
U.S. market to the selling activities in the home market, we conclude 
that there is not a significant difference in the selling functions 
performed in both markets. The Department confirmed this information at 
the verification (see Verification Of Sales of Acciai Speciali Terni 
S.p.A., dated March 25, 1999 (``Verification Report of AST'')). 
Therefore, for the final determination, we determine that there is one 
LOT in the U.S. and that sales to these customers constitute the same 
LOT in the comparison market and the United States. Therefore, a LOT 
adjustment for AST is not appropriate.
    Additionally, as noted in Comment 5, we have classified all of 
AST's U.S. sales as CEP sales. Because we determine that there exists 
only one level of trade for all of AST's sales in both markets, we 
conclude that no CEP offset is warranted for the final determination.

Constructed Export Price

    As discussed in Comment 5, we determine that all of AST's U.S. 
sales are CEP. We calculated CEP based on the packed, duty paid or 
delivered prices to unaffiliated purchasers in the United States. We 
made adjustments to the starting price for price-billing errors, where 
applicable. In addition, we made adjustments to the starting price by 
adding alloy surcharges, and skid charges where appropriate. We also 
made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included, where appropriate, freight 
equalization charges, foreign inland freight, marine insurance, U.S. 
customs duties, U.S. inland freight, foreign brokerage and handling, 
international freight, foreign inland insurance, and U.S. warehousing 
expenses. In accordance with section 772(d)(1) of the Act, we deducted 
those selling expenses associated with economic activities occurring in 
the United States, including direct selling expenses (credit costs and 
warranty expenses), inventory carrying costs, and other indirect 
selling expenses. We also added insurance revenue by allocating it 
across all U.S. sales of subject merchandise. We also made an 
adjustment for profit in accordance with section 772(d)(3) of the Act.

Affiliated-Party Transactions and Arm's-Length Test

    To test whether sales to affiliated parties were made at arm's-
length prices, we compared, on a model-specific basis, the starting 
prices of sales to affiliated and unaffiliated customers, net of all 
movement charges, direct selling expenses, and packing. Where, for the 
tested models of subject merchandise, prices to the affiliated party 
were on average 99.5 percent or more of the price to the unaffiliated 
parties, we determined that sales made to the affiliated party were at 
arm's length. See 19 CFR 351.403(c). In instances where no price ratio 
could be constructed for an affiliated customer because identical 
merchandise was not sold to unaffiliated customers, we were unable to 
determine that these sales were made at arm's-length prices and, 
therefore, excluded them from our LTFV analysis. See Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina (``Certain Cold-Rolled Carbon 
Steel Flat Products from Argentina''), 58 FR 37062, 37077 (July 9, 
1993); Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Emulsion Styrene-
Butadiene Rubber from Brazil, 63 FR 59509 (November 8, 1998), citing to 
Certain Cold-Rolled Carbon Steel Flat Products from Argentina. Where 
the exclusion of such sales eliminated all sales of the most 
appropriate comparison product, we made a comparison to the next most 
similar model.

Normal Value

    After testing home market viability and whether home market sales 
were at below-cost prices, we calculated NV as noted in the ``Price-to-
Price Comparisons'' and ``Price-to-CV Comparison'' sections of this 
notice.
1. Home Market Viability
    As discussed in the preliminary determination, we determined that 
the home market was viable and no parties have contested that decision. 
For the final determination, we based NV on home market sales.
2. Cost of Production Analysis
    As discussed in the preliminary determination, we conducted an 
investigation to determine whether AST made sales of the foreign like 
product in the home market during the POI at prices below its cost of 
production (``COP''). In accordance with section 773(b)(3) of the Act, 
we calculated COP based on the sum of AST's cost of materials and 
fabrication for the foreign like product, plus amounts for home market 
SG&A, interest expenses, and packing costs. We used the information 
from AST's December 2, 1998 supplemental questionnaire response to 
calculate COP. As noted in Comment 25, we have reduced AST's financial 
expenses by Fried. Krupp's short-term income from investments. 
Additionally, we recalculated AST's G&A rate, adding the ``other 
operating expense'' to G&A and removing the expenses that AST had 
reported in other fields. See Comment 26. Lastly, we used the corrected 
variance in the COP calculation for the final determination. See 
Comment 28.
3. Test of Home Market Prices
    As in our preliminary determination, we compared the weighted-
average COP for AST, adjusted where appropriate, to home market sales 
of the foreign like product as required under section 773(b) of the 
Act. In determining whether to disregard home market sales made at 
prices less than the COP, we examined whether (1) within an extended 
period of time, such sales were made in substantial quantities, and (2) 
such sales were made at prices which permitted the recovery of all 
costs within a reasonable period of time. On a product-specific basis, 
we compared the COP to home market prices, less any applicable movement 
charges, billing adjustments, alloy surcharges, skid charges, rebates, 
and direct and indirect selling expenses.
4. Results of the COP Test
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of a respondent's sales of a given product were at prices less 
than the COP, we did not disregard any below-cost sales of that product 
because we determined that the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product during the POI were at prices less than the 
COP, we determined such sales to have been made in ``substantial 
quantities'', pursuant to section 773(b)(2)(c)(i) of the Act, within an 
extended period of time, in accordance with section 773(b)(2)(B) of the 
Act. In such cases, because we compared prices to weighted-average COPs 
for the POI, we also determined that such sales were not made at prices 
which would permit recovery of all costs within a reasonable period of 
time, pursuant to section 773(b)(2)(D) of the

[[Page 30755]]

Act. Therefore, we disregarded the below-cost sales. Where all sales of 
a specific product were at prices below the COP, we disregarded all 
sales of that product. For those U.S. sales of SSSS for which there 
were no comparable home market sales in the ordinary course of trade, 
we compared the CEP to CV in accordance with section 773(a)(4) of the 
Act. See Analysis Memorandum.

Calculation of Constructed Value

    As in our preliminary determination, we calculated CV based on the 
sum of AST's cost of materials, fabrication, selling, general, and 
administrative expenses (SG&A), interest expenses, profit, and packing. 
We calculated the COP included in the calculation of CV as noted above, 
in the ``Calculation of COP'' section of this notice. In accordance 
with section 773(e)(2)(A) of the Act, we based SG&A and profit on the 
amounts incurred and realized by AST in connection with the production 
and sale of the foreign like product in the ordinary course of trade 
for consumption in Italy. For CV, we made the same adjustments 
described in the COP section above.

Price-to-Price Comparisons

    As in our preliminary determination, for AST's home market sales of 
products that were above COP, we calculated NV based on FOB or 
delivered prices to unaffiliated customers or prices to affiliated 
customers that we determined to be at arm's-length. We made adjustments 
for price billing errors, discounts, and rebates where appropriate. We 
made deductions, where appropriate, for foreign inland freight, 
warehousing, and foreign inland insurance expenses, pursuant to section 
773(a)(6)(B) of the Act. In addition, we made adjustments for 
differences in circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made COS 
adjustments, where appropriate, for imputed credit, warranty expenses, 
and technical expenses. Finally, we deducted home market packing costs 
and added U.S. packing costs in accordance with section 773(a)(6) (A) 
and (B) of the Act.

Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Act, we based NV on CV 
if we were unable to find a home market match of such or similar 
merchandise. Where appropriate, we made adjustments to CV in accordance 
with section 773(a)(8) of the Act. For comparisons to CEP, we deducted 
from CV the average home market direct selling expenses.

Currency Conversion

    As in our preliminary determination, we made currency conversions 
into U.S. dollars based on the exchange rates in effect on the dates of 
the U.S. sales, as certified by the Federal Reserve Bank, in accordance 
with section 773A(a) of the Act.

Facts Available

    We determine that the use of partial facts available is appropriate 
for AST in accordance with section 776(a) of the Act, because it failed 
to report all of its U.S. sales made during the POI, and its U.S. 
affiliated reseller's (company A) downstream sales are unreliable. See 
Comments 1 and 2 below.
    Where necessary information is missing from the record, the 
Department must use the facts otherwise available, in accordance with 
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 an 
inference adverse to the interests of that respondent when selecting 
from the facts available. An adverse inference may include reliance on 
information derived from the petition, the final determination, a 
previous administrative review, or other information placed on the 
record. For AST's unreported U.S. sales, we have chosen the highest 
non-aberrational margin from the rest of AST's U.S. sales as partial 
facts available. See Comment 1 below. For company A's downstream sales, 
we have also selected the highest non-aberrational margin from the rest 
of AST's U.S. sales. See Comment 2 below.

The All Others Rate

    For this final determination, since AST was the only respondent, 
the all other's rate is simply the calculated rate for AST.

Interested Party Comments

Comment 1: Application of Facts Available to Additional U.S. Sales

    Respondent argues that the Department should ignore additional U.S. 
sales that AST attempted to report prior to verification. Respondent 
maintains that, in preparing for verification, it discovered additional 
U.S. sales that it had previously failed to report to the Department.
    Respondent argues that its first attempt to file this new 
information, on February 24, 1999, effectively allowed the Department 
eleven days to review the information prior to the beginning of the 
U.S. sales verification at AST U.S.A. Respondent notes that the 
verification team for the sales verification at AST U.S.A. was 
different than the team attending the verification of AST in Italy, and 
argues that this allowed adequate time to review the new information. 
Respondent also notes that the Department did not return the February 
24, 1999 submission until nine days later. Respondent asserts that 
during this period of time the Department had the opportunity to review 
the new information.
    Respondent further argues that petitioners would not have been 
prejudiced by the acceptance of this new information given the timing 
of the February 24, 1999 submission, the verification of AST U.S.A., 
and the deadlines for submission of case briefs.
    Respondent maintains that the additional U.S. sales would not have 
materially affected AST's final margin. Respondent argues that the 
record, as supported through verification, shows that the additional 
U.S. sales constitute a relatively small percentage of AST's total U.S. 
sales during the POI. Respondent asserts that this relatively small 
percentage would have an even more negligible effect if the Department 
were to accept petitioners' argument that order date should be used to 
determine date of sale in the U.S. market.
    Respondent continues that, under established Department precedent 
for investigations, the Department should ignore these additional U.S. 
sales. Respondent points out that the Department's margin calculation 
in an investigation will be used only to determine an estimated dumping 
margin for cash deposit purposes, and also notes that the statute 
requires the Department to use weighted-average U.S. prices rather than 
individual U.S. prices to determine dumping margins. Therefore, 
according to respondent, the Department need not consider every U.S. 
sale in calculating the final dumping margin. Respondent cites several 
cases in which, respondent argues, the Department has either accepted 
and verified similar data or has simply excluded additional sales from 
consideration in determining the margin (citing, e.g., Final 
Determinations of Sales at Less than Fair Value: Antifriction Bearings 
(Other than Tapered Roller Bearings) and Parts Thereof from the Federal 
Republic of Germany (``Antifriction Bearings''), 54 FR 18992, 19039 
(May 3, 1989); Final Determination of Sales at Less Than Fair Value: 
Bicycles from the People's Republic of China (``Bicycles''), 61 FR 
19026 (April 30, 1996); and Final Determination of Sales at Less Than 
Fair Value: Gray Portland Cement and Clinker from Japan (``Gray 
Portland

[[Page 30756]]

Cement and Clinker from Japan''), 56 FR 12156 (March 22, 1991)).
    Respondent argues that if the Department decides not to ignore 
these additional sales and apply facts available, it would be 
inappropriate for the Department to apply adverse facts available in 
this case because respondent argues that it has cooperated fully 
throughout the proceeding. To support its argument, respondent cites to 
Allied-Signal, 996 F.2d at 1188, and Final Results of Antidumping 
Administrative Review: Color Picture Tubes from Japan (``Color Picture 
Tubes''), 62 FR 34201, 34209 (June 25, 1997), where the respondent 
``substantially cooperated'' but simply failed to supply some of the 
information in a timely manner or in the form required.
    Moreover, respondent argues that it did not withhold this 
information, but rather, disclosed this information to the Department 
as soon as it discovered these additional sales and sought repeatedly 
to submit this and more detailed information regarding these sales 
before, during, and after verification. Respondent cites Notice of 
Final Determination of Sales at Not Less Than Fair Value: Stainless 
Steel Bar from Italy (``Stainless Steel Bar''), 59 FR 66921, 66924 
(December 28, 1994) as an analogous situation in which the Department 
in fact was not aware of additional U.S. sales until verification, but, 
nevertheless, the Department still verified that the gross unit prices 
for the unreported sales were comparable to those for reported sales of 
the same products. In that case, respondent notes that the Department 
determined that ``it is reasonable to fill this gap with a neutral 
surrogate'' and ``assigned (the respondent's) overall weighted-average 
calculated margin to these unreported sales.''
    Petitioners contend that, contrary to respondent's assertions, 
substantial evidence on the record demonstrates that AST failed to 
cooperate to the best of its ability to provide information requested 
by the Department and the use of total facts available is therefore 
warranted. First, petitioners claim that respondent has relied 
primarily on ``old law'' cases to support its contention that the 
Department should not apply facts available with an adverse inference. 
However, under the current adverse facts available standard, 
petitioners argue that the Department ``shall'' apply facts available 
when necessary information is not on the record, or a respondent 
withholds information requested by the Department, fails to provide 
such information by the deadline for its submission, significantly 
impedes a proceeding, or provides information that cannot be verified. 
Petitioners maintain that the record demonstrates that respondent has 
withheld information that has been requested by the Department.
    Petitioners argue that the critical question in this case is 
whether the reporting failures by respondent surpass the Department's 
standard for the use of an adverse inference in applying facts 
otherwise available. Petitioners contend that respondent's failure to 
provide complete sales information, while stating ``without detail'' 
that the reporting failure was ``inadvertent'', constitutes a failure 
on the part of respondent to act to the best of its ability to respond 
to the Department's request for information.
    Petitioners assert that the data withheld by respondent is crucial 
to the Department's investigation. Petitioners cite to Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate From South Africa (``CTL Steel Plate''), 62 FR 
61731, 61747 (November 19, 1997), Florex v. United States, 705 F. Supp. 
582, 588 (CIT 1988), and Tatung Co. v. United States, 18 CIT 1137 
(1994) in support of the proposition that the Department and the CIT 
have recognized that the failure to report U.S. sales data is one of 
the most serious errors, if not the most serious error, a respondent 
can commit.
    Petitioners maintain that although AST attempted to submit new 
information on the record, the Department properly rejected the new 
information, citing several cases supporting the rejection of 
information not submitted within regulatory guidelines, including NSK, 
Ltd. v. United States, 798 F.Supp. 721 (CIT 1992). Petitioners take 
issue with respondent's interpretation of Allied Signal. Petitioners 
point out that, in that case, respondent was unable to provide the 
requested data. Petitioners note that AST does not argue that it was 
unable to provide the requested U.S. sales data.
    In rebutting respondent's claim that the Department does not need 
to consider every U.S. sale in calculating the final dumping margin, 
petitioners argue that, given the Department's calculation methodology 
in investigations, in which weighted average prices by the U.S. and 
home market are compared on a control number-specific (``product-
specific'') basis, there could indeed be a significant effect on the 
calculated margin for certain control numbers by excluding a 
``significant'' quantity of U.S. sales.
    Petitioners take issue with respondent's interpretation of certain 
cases in which the Department has not applied an adverse inference when 
information is not submitted. In Antifriction Bearings (54 FR 18992, 
19039), petitioners note that the Department found that respondent had 
not reported sales of one tenth of one percent (by volume) of 33 
percent of the U.S. sales it was required to report. Moreover, the 
Department found, in that case, that the unit prices of the unreported 
sales were nearly three times greater than the unit prices for the same 
products to other customers which were reported in the sales listing. 
According to petitioners, this fact pattern is not present in the 
instant proceeding.
    In Bicycles (61 FR 19026, 19041), petitioners argue, the Department 
allowed the exclusion of a ``minor'' amount of U.S. sales in certain 
extenuating circumstances not present in this investigation. First, in 
Bicycles, respondent had believed the excluded sales to be of non-
subject merchandise. Second, the record in that case permitted the 
Department to calculate a margin on those excluded sales. Third, the 
sales in question represented a minor amount of U.S. sales. Finally, 
the sales at issue in Bicycles were of a higher-priced model. 
Petitioners contend that none of these facts are present in this 
investigation.
    Petitioners state that in Gray Portland Cement and Clinker from 
Japan (56 FR 12156, 12165), the Department determined that respondent's 
sales of bagged cement represented an insignificant portion of total 
U.S. sales. Again, according to petitioners, the same is not true in 
this proceeding.
    In Color Picture Tubes (62 FR 34201), petitioners note that 
respondent Mitsubishi stated that a ``very small number of U.S. sales 
were made of models for which COM data was not available.'' Petitioners 
argue that this is not tantamount to a decision by the Department that 
it ignores unreported U.S. sales and does not resort to facts available 
when U.S. sales data are not reported. In addition, Mitsubishi was 
unable to provide the COM data because they were not available. Again, 
according to petitioners, AST has never claimed that this sales data 
was unavailable.
    In Stainless Steel Bar from Italy (59 FR 66921), petitioners claim, 
the Department's decision not to apply adverse BIA turned ``entirely'' 
on the unique circumstances noted during verification. Moreover, in 
that case, the Department determined that the unreported sales were 
limited in number, and the gross unit prices of the

[[Page 30757]]

unreported sales were comparable to those for reported sales of the 
same products. In contrast, petitioners argue that in this 
investigation the sales were not limited, and also note that the 
Department did not verify the gross unit prices of the unreported 
sales.
    Petitioners maintain that the discrepancies in the company's U.S. 
sales volume found at verification and the company's inability to 
explain the exclusion of several U.S. sales from its response is 
sufficient evidence of AST's lack of cooperation. Petitioners argue 
that both the Department and the courts consider the omission of U.S. 
sales a serious error (citing Tatung Co. v. United States, 18 CIT 1137, 
1141 (1994)), and that such an omission warrants the use of adverse 
facts available (citing CTL Steel Plate, 62 FR 61731, 61747 (November 
19, 1997). Petitioners also cite to Persico Pizzamiglio, S.A. v. United 
States, 18 CIT 299, 304 (1998), noting that the Department used best 
information available, in large part due to respondent's failure to 
report U.S. sales accurately.
    Department's Position: We agree with petitioners, in part, and have 
applied partial adverse facts available with respect to the additional 
U.S. sales that AST omitted from its response.
    Although we repeatedly gave AST the opportunity to submit data 
pertaining to its sales database, AST did not submit its additional 
U.S. sales until three days prior to the start of the verification of 
AST in Terni, Italy, well after the deadlines for responding to our 
questionnaires. Therefore, contrary to respondent's assertion, there 
can be no reasonable argument that this information was timely 
submitted. Pursuant to section 351.301(c)(2)(ii) of the Department's 
regulations, failure to submit requested information in the requested 
form and manner by the date specified for questionnaire responses may 
result in the use of facts available under section 776 of the Act and 
section 351.308 of the Department's regulations.6
---------------------------------------------------------------------------

    \6\ In initially rejecting AST's submission of additional U.S. 
sales, we erroneously cited section 351.301(b)(1) of the 
Department's regulations because AST submitted them later than seven 
days before the date on which the verification of any person is 
scheduled to begin. The relevant regulation is 351.301(c)(2). We 
subsequently rejected other attempts that AST made to submit this 
information, pursuant to section 351.302(d) of the Department's 
regulations, because it was untimely filed.
---------------------------------------------------------------------------

    Nevertheless, respondent argues that we should have accepted the 
additional U.S. sales information, pursuant to section 782(e) of the 
Act, which provides that the Department shall not decline to consider 
such information if all of the following requirements are met: (1) the 
information is submitted by the established deadline; (2) the 
information can be verified; (3) the information is not so incomplete 
that it cannot serve as a reliable basis for reaching the applicable 
determination; (4) the interested party has demonstrated that it acted 
to the best of its ability; and (5) the information can be used without 
undue difficulties. However, section 782(e) is not applicable in this 
case, because this section only applies to information that is 
submitted by the established deadline. Indeed, timely submission by the 
established deadline is the first requirement for this section to 
apply. As discussed above, AST did not submit this information by the 
deadline for the questionnaire response, and therefore, section 782(e) 
is not applicable.
    According to section 776(a)(2)(B), if an interested party fails to 
provide information in a timely manner or in the form or manner 
requested, the Department shall use facts otherwise available in 
reaching the applicable determination. As explained above, AST failed 
to provide the information for the additional U.S. sales in a timely 
manner. Therefore, pursuant to section 776(a), the Department must use 
facts otherwise available to assign margins to these additional U.S. 
sales.
    Finally, AST argues that if we rely on facts otherwise available, 
an adverse inference is not appropriate. Section 776(b) of the Act 
provides that, if the administering authority ``finds that an 
interested party has failed to cooperate by not acting to the best of 
its ability to comply with a request for information,'' then in 
selecting from the facts available it ``may use an inference that is 
adverse to the interests of that party in selecting from among the 
facts otherwise available.'' We find, based on the evidence set out 
below, AST did not act to the best of its ability in complying with our 
request for sales data. Because AST submitted these sales only three 
days prior to verification, this information was not provided by the 
deadline set for AST's responses to Section C of the Department's 
questionnaire.
    Failure to report significant amounts of import data, such as U.S. 
sales data, indicates a lack of best efforts, unless there are 
extenuating circumstances that explain the failure. There is no 
evidence of such circumstances in this case. As noted in the 
Verification Report of AST USA, AST stated at verification that it did 
not know the reasons why these sales were excluded. See Verification 
Report of AST USA at 2. Furthermore, we note that AST submitted its 
sale reconciliation package on November 12, 1998, the deadline for 
responding to the supplemental questionnaire. If AST had acted to the 
best of its ability, it is reasonable to assume that it would have 
discovered these additional U.S. sales when preparing the 
reconciliation package. Therefore, pursuant to section 776(b) of the 
Act, we have used an adverse inference in selecting a margin for the 
U.S. sales that AST omitted from the response because AST did not act 
to the best of its ability in providing U.S. sales information to the 
Department. As adverse facts available for these unreported U.S. sales, 
we have applied the highest non-aberrational margin calculated from the 
rest of the U.S. sales. See Comment 2 below, and Analysis Memorandum.
    The cases cited by respondent where the Department either accepted 
and verified additional sales data or excluded it from consideration in 
determining the margin are distinguishable from this case. Unlike this 
investigation, the Department, in Antifriction Antifriction Bearings, 
Bicycles and Gray Portland Cement and Clinker from Japan, had 
sufficient time to analyze the additional data submitted by the 
respondent, and determined that the additional sales had no effect, or 
a negligible effect, on the calculated margin. As noted by petitioners, 
Color Picture Tubes concerned a situation where COM data was not 
available for some U.S. sales, not a situation of unreported U.S. 
sales. AST's reference to Stainless Steel Bar also does not apply to 
this case because it concerns a unique circumstance in which the 
Department noted at verification that the gross unit prices of the 
unreported sales were comparable to those for reported sales of the 
same products, and that the unreported sales were limited in number. 
Therefore, respondent's reliance on these cases is misplaced. Moreover, 
as noted in CTL Steel Plate, the Department believes that the failure 
to report U.S. sales data is one of the most serious errors a 
respondent can commit.

Comment 2: Application of Facts Available to Downstream Sales of 
Reseller 001

    Petitioners note that at verification of reseller 001, and contrary 
to AST's claim, the Department found that a portion of its affiliated 
reseller's sales previously identified as having an untraceable 
supplier, were in fact traceable. In addition, petitioners note that 
the number of significant errors found at the reseller's verification, 
including its failure to report early-

[[Page 30758]]

payment discounts and the improper application of prime and non-prime 
designations to its reported sales, warrant the use of adverse facts 
available. Finally, petitioners note that under section 782(e) of the 
Act, AST's reporting of the ``unidentified supplier'' sales by its 
affiliated reseller should be considered untimely, and that, under 
section 776(a), the Department should use facts otherwise available in 
reaching the applicable determination.
    Petitioners argue that AST had the burden to create a complete and 
accurate record and failed to meet this burden, citing Pistachio Group 
of the Ass'n of Food Indus. v. United States, 11 CIT 668, 671 F.Supp. 
31, 39-40 (1987). Petitioners also maintain that respondent in this 
case is not just AST: the investigation directly involves AST's 
affiliates, as well. Thus, contend petitioners, AST's efforts to 
``absolve itself from any responsibility for its affiliates'' reporting 
efforts' should also be rejected.
    Petitioners contend that AST has withheld requested information and 
failed to cooperate to the best of its ability, and that the Department 
should apply total adverse facts available. Petitioners argue that this 
is an investigation of AST and its affiliates as a collective entity 
selling to the United States, not just an investigation of AST's main 
plants. Petitioners cite Koyo Seiko v. United States, 905 F. Supp. 
1112, where the CIT stated that, when parties are affiliated, as AST is 
with reseller 001, the burden of producing information sought by the 
Department rests with the manufacturer, even if the respondent alleges 
that the affiliate is unwilling to cooperate. Petitioners assert that 
AST's affiliate Thyssen, under whose common control AST and reseller 
001 operate, was also affiliated with and controlled reseller 001 and 
could have added its influence to encourage reseller 001 to comply and 
provide the requested information to the best of its ability, which it 
did not do.
    Respondent refutes petitioners' claim that AST and other parties 
have been uncooperative and have not fully participated during the 
investigation, and states that it made every effort to comply with the 
Department's numerous requests for additional information. Respondent 
argues that it does not have operational control over reseller 001, and 
thus, cannot compel, or participate in, the preparation and submission 
of the requested data over which it exercises no control. With regard 
to the unattributed sales, respondent claims that it had no direct 
involvement in the preparation of reseller 001's data and had no 
knowledge of their contents.
    Respondent argues that despite the fact that some errors were 
identified at verification, reseller 001 did not fail verification 
because the errors were isolated and do not undermine the basic 
integrity of the data. Respondent states that the Department should 
consider that reseller 001 developed the cost allocation program 
specifically to respond to the Department's highly detailed reporting 
requirements. Respondent argues that as a service center distributor 
rather than a steel producer, reseller 001 has no need for, and 
therefore had never developed, a computer system linking each and every 
coil or sheet that it sells to a particular input metal product (coil 
or sheet) purchased from a supplier. Respondent asserts that at 
verification reseller 001 demonstrated that the programming problems 
that were encountered were not widespread, but instead were extremely 
isolated. Respondent notes that Exhibit 18 of reseller 001 Cost 
Verification Report, including the complete description of the 
programming errors and a list of the problematic transactions, was 
presented to the Department at the start of the third day of the cost 
verification. Respondent states that had the verifiers truly been 
interested in further testing this listing or learning more about how 
it was generated, they had adequate time to do so.
    Respondent argues that even if, despite evidence to the contrary, 
the Department were to determine that AST had failed to comply with 
requests for information, the Court of International Trade's decision 
in Ferro Union, Inc. v. United States, Slip Op. 99-27 ( CIT March 23, 
1999) (``Ferro Union'') precludes the application of adverse facts 
available in this case. Respondent argues that under the standards set 
by Ferro Union, ``sufficiently impeding the review'' is not a 
sufficient ground to warrant an application of adverse facts available, 
but that the Department must also find that a party failed to ``comply 
to the best of its ability.'' Respondent asserts that if the Department 
determines that the data submitted by reseller 001 is not complete or 
verifiable, it was not due to AST's deliberate recalcitrance. 
Respondent argues that the Department should not use adverse facts 
available because AST simply lacks the ability to respond any more 
completely than it already has.
    Department's Position: We agree with petitioners and find that 
adverse facts available is warranted with regard to sales through AST's 
affiliated U.S. reseller. Section 776(a) of the Act provides that, if 
an interested party withholds information that has been requested by 
the Department, fails to provide such information in a timely manner or 
in the form or manner requested, significantly impedes a proceeding 
under the antidumping statute, or provides information which cannot be 
verified, the Department shall use, subject to sections 782(d) and (e), 
facts otherwise available in reaching the applicable determination.
    In the instant case the use of facts available is warranted for the 
sales in question. The computer programming used by reseller 001 to 
identify its products' physical characteristics and to match each of 
these products with its associated costs were found at verification to 
be accomplishing neither end consistently or accurately. Moreover, both 
the frequency of the errors and the absence on the record of 
information necessary to correct certain of these errors serve to 
undermine the overall credibility of the further-manufacturing response 
as a whole, thus compelling the Department to rely upon total facts 
available for further-manufactured sales by reseller 001. Reliance upon 
facts available is required for these further manufactured sales 
because the submitted data do not permit calculation of the adjustments 
required under section 782(d)(2) of the Act for ``the cost of any 
further manufacture or assembly (including additional material and 
labor) * * *''.
    Although the Department will correct some errors in reported costs 
or will adjust incorrect data with facts otherwise available when the 
errors are relatively minor and easily corrected based on verified data 
on the record (see e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Stainless Steel Round Wire from Taiwan, 64 FR 17336, 
17337 (April 9, 1999), correction of the database is not a viable 
option in this case because of the high percentage of errors found 
through our testing at verification (nearly 40 percent of the items 
tested were found to be in error). In addition, some of these errors 
cannot be corrected using information on the record. More importantly, 
the fundamental and pervasive nature of these errors raises concerns as 
to the validity not only of the data subjected to direct testing, but 
of the remainder of the response as well.
    The Department's antidumping questionnaire put interested parties 
on notice that all information submitted in this investigation would be 
subject to verification, as required by section 783(i) of the Act, and, 
further, that pursuant to section 776 the Department may use the facts 
otherwise available if

[[Page 30759]]

all or any portion of the submitted information could not be verified. 
In addition, in letters dated February 17 and 23, 1999, the Department 
provided reseller 001 with the sales and cost verification agendas it 
intended to follow, both of which repeated the warning that any failure 
to verify information could result in the application of facts 
available. The cost verification agenda identified nine transactions 
that the Department intended to test. Reseller 001 had a full week to 
gather supporting documentation for these nine transactions and to test 
for itself the accuracy of the further manufacturing data. Clearly, 
reseller 001 did not avail itself of these opportunities, since our 
testing at verification revealed that costs for three of the nine 
selected transactions were in error. When the Department then selected 
nine additional transactions for review, four of these were found to 
contain errors. The first step identified in the Department's 
verification agenda calls for the respondent, at the outset of 
verification, to present any errors or corrections found during its 
preparation for the verification. None of the errors discussed here 
were presented by reseller 001 at the outset of verification.
    We disagree with AST's assertion that the numerous errors 
identified by the Department affect only a small number of products out 
of the possible universe of transactions and that the effect of the 
errors is minuscule. As mentioned above, reseller 001 created a 
computer program to respond to the Department's questionnaire which 
sought to match an input coil to each output coil sold and to assign a 
cost for each processing step through which the finished coil 
supposedly passed. As noted, at verification we tested this computer 
program to assess its accuracy and reliability and found that seven of 
eighteen transactions tested contained errors in either the allocation 
of processing costs or in the matching of input coils to output coils. 
In two of these cases reseller 001 had assigned processing costs to 
products which had, in fact, undergone no processing whatever. We note 
that this discrepancy arose from the input coils and output coils 
identified by reseller 001's own computer program. In another 
transaction the combined widths of the finished products were greater 
than the original width of the input coil as identified by the system, 
an obvious physical impossibility that should have been identified by 
reseller 001 as an error. The nature of these errors raises serious 
doubts as to the accuracy of the overall program used to match input 
master coils to output slit coils as sold. Further, several of these 
errors served to understate the costs of further processing by shifting 
portions of these costs to non-further-processed merchandise. Since 
these errors affect the entire population of products sold (i.e., both 
processed and unprocessed products), it is not possible for the 
Department to isolate the problems and adjust for the errors 
accordingly.
    The program also failed to assign properly certain finishing costs. 
Certain coils with a pre-buff finish applied to the underside had no 
finishing costs reported for the additional processing. Finally, other 
transactions contained errors in the application of surcharges for 
processing small quantity orders. In the samples tested reseller 001 
had reported quantity extra charges in excess of what should have been 
reported. This error led to an understating of the variance between the 
costs as allocated for purposes of the response and the costs as 
maintained in the reseller 001's financial accounting system. Once 
again, both errors reduced the costs allocated to further processed 
products, thus creating further doubts as to the accuracy of the 
underlying reporting methodology.
    We also find unpersuasive AST's suggestion that because reseller 
001 had to develop the computer program as a result of the Department's 
highly detailed questionnaire it should therefore be held blameless for 
any errors arising from its implementation of its chosen computer 
logic. The surfeit of errors in reseller 001's data was not the result 
of any unduly burdensome reporting requirements imposed by the 
Department; rather, these shortcomings resulted in their entirety from 
reseller 001's reliance on faulty computer programming and data which 
reseller 001 apparently failed to review prior to verification.
    Finally, we disagree with AST's assertion that reseller 001 was 
able to quantify the extent of the cost errors on the final day of 
verification. First, we note that reseller 001 made no attempt to 
explain or quantify two of the errors discovered by the Department, the 
allocation of processing costs to unprocessed material and the 
misreporting of the small-quantity surcharge. More importantly, due to 
the volume of information that must be verified in a limited amount of 
time, the Department does not look at every transaction, but rather 
samples and tests the information provided by respondents. See, e.g., 
Bomont Industries v. United States, 733 F. Supp. 1507, 1508 (CIT 1990) 
([v]erification is like an audit, the purpose of which is to test 
information provided by a party for accuracy and completeness.'') and 
Monsanto Company v. United States, 698 F. Supp. 275, 281 
(``[v]erification is a spot check and is not intended to be an 
exhaustive examination of a respondent's business.''). It has been the 
Department's long-standing practice that if no errors are identified in 
the sampled transactions, the untested data are deemed reliable. 
However, if errors are identified in the sample transactions, the 
untested data are presumed to be similarly tainted. This is especially 
so if, as here, the errors prove to be systemic in nature. The fact 
remains unchallenged that for two days of a scheduled three-day 
verification we tested a number of further-manufactured transactions to 
assess the reliability of reseller 001's methodology for reporting 
costs and discovered numerous errors. Reseller 001 claimed on the last 
day of verification that it had reviewed its further-manufacturing data 
and isolated the magnitude of these errors. AST's assertion that 
reseller 001 succeeded in identifying all of the errors is 
unsubstantiated, and could not be verified in the time remaining. The 
only way to test this eleventh-hour claim would have been to re-verify 
the entire further-manufacturing database. Moreover, the proper time 
for reseller 001 to check the accuracy of its reported data was before 
these data were submitted, or, at the latest, prior to the start of the 
verification. We presented reseller 001 with the cost verification 
agenda one week in advance precisely to allow it to prepare properly 
for verification. Had reseller 001 reviewed the accuracy of the 
computer program used to report its further manufacturing costs prior 
to verification, it could have identified the errors and presented them 
to the Department on the first day of verification. We consider it 
inappropriate for respondents to expect the Department to retest the 
entire further manufacturing database on the last day of verification 
after the Department uncovers numerous errors as a result of its 
routine testing. Furthermore, the requirements of section 782(d) that 
the Department provide a respondent the opportunity to remedy such 
errors is inapplicable. Rather, as we stated in Certain Cut-to-Length 
Carbon Steel Plate from Sweden,

    [w]e believe [respondent] SSAB has misconstrued the notice 
provisions of section 782(d) of the [Tariff] Act. Specifically, we 
find SSAB's arguments that the Department was required to notify it 
and provide an opportunity to remedy its verification failure are 
unsupported. The provisions of section 782(d) apply to instances 
where ``a response

[[Page 30760]]

to a request for information'' does not comply with the request. 
Thus, after reviewing a questionnaire response, the Department will 
provide a respondent with notices of deficiencies in that response. 
However, after the Department's verifiers find that a response 
cannot be verified, the statute does not require, nor even suggest, 
that the Department provide the respondent with an opportunity to 
submit another response.

Certain Cut-to-Length Carbon Steel Plate from Sweden, 62 FR 18396, 
18401, April 15, 1997.
    In this case a partial correction is not a viable option, because 
of both the high percentage of errors found through our sample testing 
and the fact that some of the errors cannot be corrected with 
information on the record. Therefore, pursuant to section 776(a) of the 
Act, facts otherwise available are applicable to the downstream sales 
of reseller 001.
    Respondent, in citing Ferro Union, argues that if the data 
submitted by reseller 001 is not complete or verifiable, it was not due 
to AST's deliberate recalcitrance, and therefore, adverse facts 
available are not applicable because AST complied to the best of its 
ability and could not respond any more completely than it already had. 
However, not only do such fundamental errors as found at verification 
raise concerns as to the validity of the data not directly tested, but 
they also demonstrate that the respondent failed to act to the best of 
its ability to report such information. Indeed, a reasonable check by 
company officials could have shown that (1) products that underwent no 
further processing were being assigned further-processing costs, (2) 
further-processed products were not being assigned further-processing 
costs, (3) coils passing through certain processes were not being 
allocated any cost for the process, and (4) the output width of slit 
coils generated by a given master coil exceeded the original width of 
that input coil.
    Where CEP transactions (in this case, the downstream sales) are 
involved, respondents are required, in accordance with section 772 of 
the Act, to report sales data for the sales to the first unaffiliated 
purchaser. As discussed above, we find that AST, as the respondent, did 
not cooperate by failing to comply to the best of its ability to 
provide the CEP sales information requested by the Department. 
Therefore, pursuant to section 776(b) of the Act, we have used an 
adverse inference in calculating the margin for reseller 001's 
downstream sales (see below).
    With respect to the unattributed downstream sales reported by 
reseller 001, we determine, pursuant to section 776(a) of the Act, that 
it is appropriate to apply facts otherwise available to these sales, 
because these sales were unverifiable. In addition, pursuant to section 
776(b) of the Act, where an interested party has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information from the administering authority, the Department may use an 
inference that is adverse in selecting from among the facts otherwise 
available. At verification, we found that reseller 001 could have 
supplied the Department with the supplier names for these unattributed 
sales. As discussed above, where CEP transactions, (in this case, the 
unattributed downstream sales) are involved, respondents are required, 
in accordance with section 772 of the Act, to report sales data for the 
sales to the first unaffiliated purchaser. Therefore, we determine that 
pursuant to section 776(b), the use of adverse facts available is 
appropriate for the entirety of the data submitted by reseller 001. As 
adverse facts available, we have assigned the highest non-aberrational 
margin calculated for this final determination to the weighted-average 
unit value for sales reported by reseller 001. To determine the highest 
non-aberrational margin we examined the frequency distribution of the 
margins calculated from AST's reported data. We found that roughly 28 
percent of AST's transactions fell within a reasonably narrow range of 
20 to 29 percent; we selected the highest of these as reflecting the 
highest non-aberrational margin. Further detail on our selection of the 
facts-available margin is contained in the Analysis Memorandum. We then 
multiplied the resulting unit margin by the total quantity of resales 
of subject merchandise by reseller 001. This total quantity includes 
that material affirmatively verified as being of AST origin, as well as 
a portion of the merchandise of unidentified origin allocated to AST. 
See Analysis Memorandum. Since we are relying on verified data for use 
as adverse facts available for these unattributed sales, corroboration 
under 776(c) is not necessary.

Comment 3: Affiliation Between AST and Reseller 001

    Respondent argues that the Department should not consider AST to be 
affiliated with a certain U.S. reseller (``reseller 001'') which is 
indirectly wholly-owned by Thyssen AG, and therefore, reseller 001's 
downstream sales should not be included in the margin calculation for 
the purposes of the final determination. Respondent argues that, for 
the purposes of assessing whether the requisite direct relationship 
exists, the appropriate inquiry in this case is whether AST and 
reseller 001 (and not AST and Thyssen) are affiliated under the 
statute, because during the POI AST did not sell subject merchandise or 
the foreign like product to Thyssen or any Thyssen affiliate other than 
reseller 001. In this regard, respondent maintains that neither AST nor 
reseller 001 directly or indirectly owns, controls, or holds the power 
to vote 5% or more of the other company's outstanding voting shares, 
and the two companies do not share a direct bilateral control 
relationship that allows one company to control the other company. 
Respondent asserts that the Department did not find affiliation under 
19 USC 1677(33)(G) (section 771(33)(G) of the Act) in a case involving 
what respondent believes to be similar relationships (see Certain Cold-
Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: 
Final Results of Antidumping Duty Administrative Reviews (``Certain 
Cold-Rolled and Corrosion Resistant Carbon Steel Flat Products from 
Korea''), 62 FR 18404-01 (April 15, 1997).
    Respondent asserts that AST and reseller 001 cannot be deemed to be 
affiliated unless they directly or indirectly control, are controlled 
by, or are under common control with another party. Respondent argues 
that the Department improperly concluded, in the preliminary 
determination, that Thyssen has the ability to control AST. Respondent 
argues that, in this case, it is Krupp, not Thyssen, which controls the 
operations of KTS and AST. Thus, according to respondent, Thyssen does 
not have the potential to impact AST's production, pricing, and cost 
decisions. Respondent asserts that record evidence supports this 
``market reality.'' Specifically, respondent notes that, by its terms, 
the KTS Shareholders Agreement ensures that Thyssen does not have the 
ability to control KTS' operational decisions, and that the ability to 
make such decisions rests solely with Krupp. Moreover, respondent 
argues that Krupp's industrial control over KTS is also reflected in 
the financial structure of the company.
    Respondent maintains that, similarly, Krupp controls AST, and 
Thyssen does not have the ability to control AST. Respondent points to 
the composition of AST's Board of Directors during the POI in support 
of this argument.
    Respondent asserts that the Department, in its affiliation 
memorandum of December 15, 1998, erred in relying upon the ``now-
repealed

[[Page 30761]]

`related parties' provision'' in the pre-URAA statute to posit that 
``arguably a minority equity interest of over 20 percent would be 
tantamount to control under the statute.'' Respondent argues that 19 
U.S.C. 1677(33)(F) (section 771(33)(F) of the Act) replaces the 
`related parties'' provision with the ``affiliated persons'' provision. 
According to respondent, the fact that Congress might have intended the 
Department to consider a broader range of relationships under the 
relevant portion of the new statute does not ipso facto mean that 
Congress intended for the Department to apply the ``repealed `related 
parties' '' provision standards in resolving affiliation issues.
    Respondent also asserts that the Department erred in relying on 
Queen's Flowers and Asociacion Colombiana de Exportadores de Flores v. 
United States, because neither of these cases addressed whether two 
companies' respective subsidiaries were affiliated by virtue of their 
parent companies' participation in a joint venture.
    With regard to the KTS Shareholders Agreement between Krupp and 
Thyssen Stahl, respondent argues that, in its affiliation memorandum, 
the Department ignored the provisions in the KTS Shareholders Agreement 
which, according to the respondent, establish Krupp's control over KTS. 
For example, AST asserts that there is nothing in the preamble, in 
which the purpose of the KTS joint venture is defined, to suggest that 
Thyssen Stahl has the actual or potential ability to control KTS. 
Respondent also argues that the Department draws an erroneous inference 
by equating the ability to affect a party with the ability to control 
that party. Respondent objects to the Department's statement that 
Thyssen Stahl retains the authority to control KTS operations based on 
Paragraph 2 of the Shareholders Agreement. In addition, respondent 
argues that the Department incorrectly focused on the corporate 
structure of KTS, as opposed to the operational structure, in 
concluding that ``Thyssen Stahl's 40 percent holding in KTS is 
critical'' to certain appointments at KTS. Finally, respondent asserts 
that the Department fails to note that Paragraph 5 of the Shareholders 
Agreement allows only for minority representation of Thyssen.
    Respondent argues that the KTS joint venture's existence does not, 
in and of itself, establish affiliation between the joint venture 
partners' respective subsidiaries. Respondent asserts that petitioners 
have incorrectly argued that Mitsubishi Heavy Industries, Ltd. v. 
United States (15 F. Supp. 2d 807, 831 (CIT 1998)) stands for the 
proposition that it is ``impossible'' for the respective subsidiaries 
of two companies participating in a joint venture not to be affiliated. 
In fact, respondent maintains that the court did not address the issue 
presented in this case: namely, whether the two companies' respective 
subsidiaries were affiliated by virtue of their parent companies' 
participation in a joint venture. In the instant proceeding, respondent 
argues that even if Krupp and Thyssen were deemed to be affiliated with 
each other, such affiliation would not necessarily flow through to the 
companies' respective subsidiaries ``merely'' by virtue of the KTS 
joint venture.
    Petitioners argue that the Department has correctly evaluated AST's 
affiliations in this investigation. First, petitioners assert that 
because Thyssen owns 100 percent of reseller 001, the Department should 
find that reseller 001 is essentially an operating arm of Thyssen and 
that the reseller 001 is affiliated with AST just as Thyssen is 
affiliated with AST. Therefore, petitioners conclude that, because 
reseller 001 is an ``operating arm'' of the Thyssen ``family'' 
including Krupp Thyssen Stainless GmbH (``KTS''), which indirectly owns 
more than 5 percent of AST, AST and reseller 001 are affiliated 
pursuant to 19 U.S.C. 1677(33)(E) (section 771(33)(E) of the Act).
    Second, petitioners contend that respondent has confused the 
discussion by misusing the terms ``direct'' and ``indirect'' ownership. 
Petitioners argue that the direct relationship referred to by 
respondent in fact clearly may be achieved through the indirect 
ownership of 5 percent of another company. Moreover, petitioners argue 
that the indirect relationship referred to by respondent analogously 
may involve direct control.
    Third, petitioner argues that the fact that AST did not sell 
stainless steel sheet or strip to Thyssen or any other Thyssen 
affiliate other than reseller 001 is irrelevant in considering the 
affiliation relationships at issue here.
    Petitioners believe that Thyssen's large ownership share in AST, as 
well as other factors, demonstrate its potential to impact business 
decisions. Petitioners assert that the Department properly recognized 
that Thyssen need not be a majority shareholder in a company for the 
Department to determine that control exists. Petitioners cite to the 
Final Determination of Certain Cut-to-Length Carbon Steel Plate from 
Brazil, 62 FR 18486, 18490 (April 15, 1997) as support for the 
Department's position that ``even a minority shareholder interest, 
examined within the totality of other evidence of control, can be a 
factor that (the Department) consider(s) in determining whether one 
party is in a position to control another.''
    Petitioners also claim that evidence of actual control is not 
required under the statute: instead, the ability to control is 
sufficient, where the company has ``the potential to impact decisions 
concerning the production, pricing, or cost of the subject merchandise 
or foreign like product'' (citing 19 CFR 351.102(b)). In this regard, 
petitioners point to other indicators of Thyssen's control over AST, 
beyond the ``substantial'' shareholdings in AST through KTS by Thyssen 
Stahl AG and Thyssen AG. According to petitioners, another indicator is 
that AST is publicly described and well-known as a member of both the 
Krupp and Thyssen ``groups.'' Furthermore, petitioners claim that the 
record demonstrates that the two industrial groups have had a high and 
increasing degree of cooperation and coordination.
    Petitioners claim that the agreement's nominal structure to give 
Krupp ``operational and industrial control over KTS'' is not 
dispositive. Petitioners argue that the preamble to the regulations 
makes clear that the proper inquiry is whether one firm is ``in a 
position to exercise restraint or direction,'' regardless of whether 
such control is actually exercised. In this regard, petitioners argue 
that the very nature of a joint venture agreement is to operate a 
business for mutual benefit, and with a large degree of consensus. It 
would be unreasonable, according to petitioners, for Thyssen to enter 
into such a joint venture if it did not expect that venture to be 
responsive to Thyssen's own commercial interests to some extent. 
Furthermore, petitioners conclude that it would also be reasonable to 
expect that Thyssen would be able to insist that KTS would undertake 
its own operations in a manner consistent with Thyssen's interests. 
Also, petitioners contend that the recent merger of Krupp and Thyssen 
confirms the closely allied interests of the two firms.
    Petitioners argue that respondent's reliance on Certain Cold-Rolled 
and Corrosion Resistant Carbon Steel Flat Products from Korea is 
misplaced. Petitioners assert that the situation in the Korean case 
shows only that Krupp is not necessarily affiliated with reseller 001.
    Department's Position: We disagree with AST. As we discussed in our 
Preliminary Determination and the accompanying Affiliation Memorandum, 
we have determined that

[[Page 30762]]

AST is affiliated with Thyssen Stahl and Thyssen. Section 771(33)(E) of 
the Act provides that the Department shall consider companies to be 
affiliated where one company owns, controls, or holds, with the power 
to vote, five percent or more of the outstanding shares of voting stock 
of the other company. Where the Department has determined that a 
company directly or indirectly holds a five percent or more equity 
interest in another company, the Department has deemed these companies 
to be affiliated. Respondent's reference to Certain Cold-Rolled and 
Corrosion Resistant Carbon Steel Flat Products from Korea is not 
applicable in this case because in that case, the Department found no 
record evidence indicating that either POSCO (supplier) or Union 
(respondent), directly or indirectly, own or control five percent or 
more of any of the other party's securities, and are not under the 
common control of any party.
    We examined the record evidence to evaluate the nature of AST's 
relationship with Thyssen Stahl and Thyssen and have determined that 
AST is affiliated with Thyssen and Thyssen Stahl. Evidence establishes 
that AST is 75 percent owned by a joint venture company, Krupp Thyssen 
Stahl (``KTS''). KTS, in turn, is forty percent owned by Thyssen Stahl 
AG (``Thyssen Stahl''), itself a wholly-owned subsidiary of Thyssen AG 
(the remaining sixty percent of KTS is controlled by Thyssen's joint-
venture partner, Fried. Krupp. AG Krupp-Hoesch (Fried. Krupp)). 
Consequently, Thyssen AG has a 33.75 percent equity holding in AST. On 
December 17, 1998 we placed publicly available data on the record for 
this investigation that confirmed both the foregoing shareholding 
interests and that Thyssen Stahl is a wholly-owned subsidiary of 
Thyssen. This information was submitted on October 20, 1998 by 
petitioners in the concurrent stainless steel sheet and strip case from 
Germany. Consequently, AST, as the 75 percent owned subsidiary of KTS, 
is affiliated Thyssen Stahl and its parent company Thyssen pursuant to 
section 771(33)(E). See Stainless Steel Wire Rod From Sweden, 63 FR 
40449, 40453 (July 29, 1998).
    In addition, we have determined that AST is affiliated with 
reseller 001. Contrary to respondent's claim that the Department relied 
upon the ``now-repealed ``related parties'' provision,'' we have found 
that AST is affiliated with reseller 001 under section 771(33)(F) of 
the Act. See Affiliation Memorandum. Section 771(33)(F) of the Act 
provides that the Department shall consider companies to be affiliated 
where two or more companies are under the common control of a third 
company. The statute defines control as being in a position legally or 
operationally to exercise restraint or direction over the other entity. 
See 771(33) of the Act. Actual exercise of control is not required by 
the statute. See ADD, CVD; Final Rule, 62 FR 27295, 27348 (May 19, 
1997). In this investigation, the nature and quality of the 
relationship between corporations require a finding of affiliation by 
virtue of Thyssen's common control of reseller 001 and of KTS. Such a 
finding is consistent with the Department's determinations in Carbon 
Steel Plate From Brazil, 62 FR at 18490, and Stainless Steel Wire Rod 
From Sweden, 63 FR at 40452.
    We also agree with petitioners that record evidence demonstrates 
that Thyssen, as the majority equity holder and ultimate parent company 
of reseller 001, is in a position to exercise direction and restraint 
over this affiliate. Thyssen also holds indirectly a substantial equity 
interest in AST, plays a significant role in AST's operations and 
management and, thus, enjoys several avenues for exercising direction 
or restraint over AST's business activities (see the Affiliation 
Memorandum).
    In sum, Thyssen's substantial equity ownership in AST and reseller 
001, along with other reasons based on information which is proprietary 
(see Affiliation Memorandum), supports a finding that AST and reseller 
001 are under the common control of Thyssen.

Comment 4: Home Market Selling Expenses

    Petitioners argue that if the Department does not resort to facts 
available for AST's unreported home market downstream sales in the 
final determination, the Department should not allow the selling 
expenses that AST has claimed for these sales. Petitioners maintain 
that AST claimed expenses relating to the downstream sales 
notwithstanding the fact that AST did not report the prices for those 
downstream sales. For example, petitioners contend that the technical 
service expense claimed by AST on it sales to affiliated resellers was 
most likely incurred as a result of services provided to the reseller's 
customers rather than the reseller.
    Respondent argues that the Department should reject petitioners' 
request to disallow AST's reported selling expenses for sales to 
affiliated resellers in the home market. Respondent asserts that this 
claim is unsupported by fact or law because it implies that the 
Department should disregard the conclusions drawn from the Department's 
arm's-length test.
    Department's Position: We disagree with petitioners. The Department 
continues to find that it is appropriate to calculate normal value 
based on AST's sales to the affiliated resellers rather than the 
affiliates' resales as long as AST's sales to the home market resellers 
pass the Department's arm's length test. Section 351.403(d) of the 
Department's regulations states that, ``the Secretary normally will not 
calculate normal value based on the sale by an affiliated party if 
sales of the foreign like product by an exporter or producer to 
affiliated parties account for less than five percent of the total 
value (or quantity) of the exporter's or producer's sales of the 
foreign like product in the market in question or if sales to the 
affiliated party are comparable.'' Since AST's sales through all of its 
affiliated resellers except one are made at arm's length (i.e., are 
``comparable''), and since the circumstances surrounding this lone 
exception are such that the Department determines it is most 
appropriate to simply exclude these sales from our margin calculation 
(see Final Analysis Memorandum), we determine that it is appropriate to 
calculate normal value based on AST's sales to its affiliates. As part 
of this calculation, the Department reviewed AST's claimed direct 
selling expenses for its home market sales to the affiliated resellers 
during the home market verification (i.e., credit, warranty, and 
technical service expenses) and found that the expenses were properly 
reported (that is, the expenses ``result from, and bear a direct 
relationship to, the particular sale in question'' (section 351.410(c) 
of the Department's regulations (emphasis added)). See Verification 
Report of AST at pg. 28. Regardless of petitioners' assertion 
(unsupported by record evidence) that AST's reported technical service 
expenses were likely incurred as a result of services provided to the 
resellers' customers, the fact remains that these technical service 
expenses were directly related to the sales in question. Therefore, 
based on the Department's verification findings and the fact that 
petitioners have not cited to any tangible evidence to support their 
assertion, we have continued to make a circumstance of sale adjustment 
for AST's claimed direct selling expenses for it sales to home market 
affiliated resellers.

Comment 5: CEP/EP

    Petitioners assert that the Department should determine that all of 
AST's U.S. sales were constructed export price

[[Page 30763]]

transactions. Petitioners state that AST's description of its sales 
procedures indicates that AST USA is involved in every aspect of the 
sales process for AST's direct U.S. sales: AST USA is contacted by the 
U.S. customer; AST USA negotiates orders with the U.S. customers; AST 
USA negotiates with AST concerning the purchase order and the order 
confirmation; AST USA negotiates with AST concerning the purchase order 
and the order confirmation; AST USA issues the order confirmations to 
the U.S. customers; AST USA invoices the U.S. customers; and AST USA 
provides technical and warranty services to the U.S. customers.
    Petitioners argue it is the Department's policy that, if the U.S. 
affiliate had more than an incidental involvement in making sales or 
performed other selling functions, the sales should be treated as CEP 
sales. In support of this, petitioners cite Certain Cold-Rolled and 
Corrosion Resistant Steel from Korea: Final Results of Antidumping Duty 
Administrative Review 63 FR 13170, 13172 (March 18, 1998) (``Carbon 
Steel Products from Korea''), where the Department determined that the 
respondent's sales were CEP sales because the U.S. affiliate was first 
contacted by interested customers and because the U.S. affiliate signed 
the sales contracts and engaged in other sales support functions. 
Petitioners assert that similar to this case, in Carbon Steel Products 
from Korea, the respondent claimed that the U.S. sales were EP sales 
because the respondent, not the U.S. affiliate, approved all sales 
prices. Petitioners point out that the Department determined that this 
approval process does not make the U.S. affiliate's role in the sales 
process incidental or ancillary. In addition, petitioners cite Extruded 
Rubber Thread from Malaysia: Final Results of Antidumping Duty 
Administrative Review, 63 FR 12752 (March 16, 1998); Small Diameter 
Circular Seamless Carbon and Alloy Steel Standard, Line and Pressure 
Pipe from Germany: Preliminary Results of Antidumping Duty 
Administrative Review, 62 FR 47446, 47448 (September 9, 1997); Notice 
of Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Brake Drums and Brake Rotors from 
the People's Republic of China, 61 FR 53190, 53194 (October 10, 1996); 
Certain Cut-to-Length Carbon Steel Plate from Germany: Final Results of 
Antidumping Duty Administrative Review, 62 FR 18390, 18392 (April 15, 
1997); and Oil Country Tubular Goods from Mexico: Final Results of 
Antidumping Duty Administrative Review, 64 FR 13962, 13966 (March 23, 
1999); and Sebacic Acid from the People's Republic of China; Final 
Results of Antidumping Duty Administrative Review, 62 FR 10530, 10532 
(March 7, 1997), in which, petitioners claim, the Department 
reclassified respondents' U.S. sales as CEP transactions because 
significant selling functions were performed in the United States.
    Petitioners argue that information obtained by the Department 
during verification showed that AST USA, rather than AST, is contacted 
by the U.S. customers, negotiates the terms of sales to the U.S. 
customers, sets the prices to these customers, and performs support 
activities related to the U.S. sales. Additionally, petitioners state 
that the verification report explains that there is no interaction 
between AST and the U.S. customers regarding specific sales 
transactions, and that AST's activities with U.S. customers is limited 
to participation in a biannual golf outing that is arranged by AST USA.
    Respondent claims that petitioners ignore the Department's final 
determination in Notice of Final Determination of Sales at Less Than 
Fair Value: Stainless Steel Wire Rod from Italy, 63 FR 40422 (July 29, 
1998), where the respondent (Cogne Acciai Speciali S.r.L, ``CAS'') 
produced and sold subject merchandise in the U.S. market through a 
channel of distribution similar to that of AST's back-to-back (EP) 
sales. Respondent argues that in this case, the Department determined 
that CAS's sales through AST USA were EP sales because the sales 
process for these sales was nearly identical to that of CAS's sales 
through CAS USA.
    Respondent asserts that the determination of classifying sales as 
EP or CEP depends on more than a U.S. affiliate's involvement in the 
transactions, and that it additionally depends on the following three 
criteria: whether (1) the merchandise is shipped directly to the 
unaffiliated buyer without entering the affiliate's inventory; (2) this 
procedure is the customary sales channel between the parties; and (3) 
the affiliate in the United States acts only as a processor of 
documentation and a communications link between the foreign producer 
and the unaffiliated buyer. Respondent maintains that AST's back-to-
back sales meet all of these criteria, and should therefore be 
classified as EP sales. Moreover, respondent argues that the Court of 
International Trade has affirmed the Department's finding of EP 
(formerly purchase price ``PP'') classification where the U.S. 
affiliate engaged in activities that were at least equal to, if not 
greater than, those undertaken by AST USA in the following cases: 
Outokumpu Copper Rolled Products v. United States; E.I. DuPont de 
Nemours & Co. v. United States; Zenith Electronics Corp. v. United 
States; and Independent Radionic Workers v. United States.
    Respondent asserts that, as mentioned in the AST USA verification 
report, AST gives the final approval of a sale which is outside of the 
pricing guidelines that AST has approved is done by AST. Citing 
Preliminary Results of Antidumping Duty Administrative Review: Small 
Diameter Circular Seamless Carbon and Alloy Steel Standard Line and 
Pressure Pipe from Germany, 62 FR 47446, 47448 (September 9, 1997), 
respondent contends that knowledge of and influence over final price 
terms for U.S. sales has played an important and decisive role in 
determining whether such U.S. sales are properly treated as EP or CEP 
sales.
    Respondent concludes by stating that the Department should reject 
petitioners' argument to change AST's EP sales to CEP sales because it 
would go against the Department's three-part test, mentioned above, and 
it is not consistent with the distinction between EP and CEP sales set 
forth in the statute.
    Department's Position: We agree with petitioners. Section 772(b) of 
the Act defines CEP as ``the price at which the subject merchandise is 
first sold (or agreed to be sold) in the United States before or after 
the date of importation by or for the account of the producer or 
exporter of such merchandise or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter, as adjusted.'' Based on the Department's practice, when an 
affiliate in the United States is involved in the sales process, as is 
the case here, the Department presumes the sales to be CEP unless the 
following three criteria are met: (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 involved; 
and (3) the function of the U.S. selling agent was limited to that of a 
``processor of sales-related documentation'' and a ``communications 
link'' with the unaffiliated U.S. buyer. Where all three criteria are 
met, indicating that the activities of the U.S. selling agent are 
ancillary to the sale, the Department has determined the sales to be EP 
sales. Where one or more of these conditions are not met, indicating 
that the U.S. sales agent is substantially involved in

[[Page 30764]]

the U.S. sales process, the Department has classified the sales in 
question as CEP sales (see, e.g., Viscose Rayon Staple Fiber from 
Finland: Final Results of Antidumping Duty Administrative Review, 63 FR 
32820, 32821 (June 16 1998); Certain Cold-Rolled and Corrosion-
Resistant Carbon Steel Flat Products from Korea: Final Results of 
Antidumping Duty Administrative Reviews, 63 FR 13170 (March 18, 1998)). 
In this case, the crucial distinction lies in the last factor, i.e., 
whether the entity in the United States acted only as a processor of 
documentation and a communication link. This factor entails a fact-
based analysis to determine whether the entity in the United States is 
actually engaged in significant selling activities, in which case CEP 
applies, or is merely performing ancillary functions for a foreign 
seller, in which case EP is appropriate.
    Our analysis of the facts indicates that, while AST's U.S. sales 
meet the first two conditions, they fail to meet the third one. AST USA 
is substantially involved in the process of selling AST merchandise in 
the United States. The Department looks at the totality of the evidence 
to determine whether an agent's role in the sales process is beyond an 
ancillary role. See e.g. Final Determination at Less Than Fair Value: 
Extruded Rubber Thread from Malaysia, 64 FR 12967-01 (March 16, 1999), 
and Final Determination at Less Than Fair Value: Stainless Steel Plate 
in Coils from the Republic of Korea, 64 FR 15444-01, (March 31, 1999). 
At verification, we found that AST USA is contacted by the U.S. 
customer; AST USA negotiates the order with the U.S. customers; AST USA 
negotiates with AST concerning the purchase order and the order 
confirmation; AST USA issues the order confirmations to the U.S. 
customers; AST USA invoices the U.S. customers; and AST USA provides 
technical and warranty services to the U.S. customers. Additionally, 
although CEP treatment may still be appropriate even if AST has final 
approval authority, we note that AST was unable to provide any evidence 
at verification that it did anything other than accept purchase orders 
(without altering the essential terms of sales). See Verification 
Report of AST at 13. Additionally, at verification, we found that there 
was substantial AST USA involvement in developing clients, for example, 
through its lead role in organizing the golf tournaments. See 
Verification Report of AST at 14. Therefore, even if the agent's role 
is not autonomous with respect to the final sales terms as respondent 
claims, this does not mean that its role in the process is ancillary. 
(See Carbon Steel Products from Korea, 63 FR 13170 (March 18, 1998); 
and Final Results of Administrative Review: Industrial Nitrocellulose 
from the United Kingdom, 64 FR 6609, 6612, (February 10, 1999).) 
Because the selling activities of AST USA were more than ancillary to 
the sales process in the U.S., i.e., the function of AST USA is not 
limited to that of a ``processor of sales-related documentation'' and a 
``communications link'' with the unaffiliated U.S. buyer, we determine 
that in accordance with section 772(b) of the Act, CEP methodology is 
required.

Comment 6: Order Date/Invoice Date

    Petitioners claim that the Department should use the order date as 
the date of sale for all of AST's U.S. sales. Petitioners state that 
the facts of this case parallel Final Results of Antidumping Duty 
Administrative Review: Circular Welded Non-Alloy Steel Pipe from the 
Republic of Korea, 63 FR 32833, 32835 (June 16, 1998) (``Circular WNASP 
from Korea'') a case in which the Department determined the order date 
to be the proper date of sale. Petitioners claim that information 
contained in AST's questionnaire response and from AST's verification 
reports supports the proposition that the material terms of sale (i.e., 
price and quantity) are set on the order date for both AST's warehouse 
sales and back-to-back sales that are made to order and, therefore, 
that the order date is the proper date of sale for those U.S. sales. 
Petitioners assert that even if the Department determines that the date 
of sale for simple CEP sales out of inventory can be determined by 
invoice date, consistent with the Department's practice, the nature of 
further-manufactured sales orders and the additional time lag 
engendered by the sales process requires that the date of sale be 
determined as the date of the confirmation or change order.
    Respondent argues that for the final determination, the Department 
should use the invoice date for all home market sales and for CEP 
sales, and the shipment date for EP sales, as it did in the Preliminary 
Determination. Respondent cites section 351.401(i) of the Department's 
Final Antidumping Regulations, (1998), noting that the Department's 
stated practice is to ``use invoice date as the date of sale unless the 
record evidence demonstrates that the material terms of sale, i.e., 
price and quantity, are established on a different date.'' Respondents 
argue that if a date other than the invoice date is to be used for the 
final determination, petitioners bear the burden of demonstrating that 
another date is more appropriate.
    Respondent claims that AST demonstrated that in a large percentage 
of its home market sales (based on quantity) during the POI, the price 
and/or quantity changed between order and invoice date. Respondent 
argues that petitioners have offered no evidence to support their 
assertions that ``an allowance of plus or minus ten percent of the 
quantity order is common in the industry for sales of stainless steel 
sheet and strip'' and that ``adjusting the agreed upon price by an 
alloy surcharge formula is generally accepted as part of the sales 
process for sales of stainless steel products.'' Respondent adds that 
petitioners have not demonstrated that AST's sales adhere to these 
industry-wide practices. Respondent contends that at verification, AST 
demonstrated that large-volume customers will not accept a quantity 
that is ten percent higher or lower than the ordered quantity. 
Respondent also argues that AST demonstrated that, irrespective of 
alloy surcharges, the negotiated price may change between order 
confirmation date and invoice date.
    Respondent argues that petitioners offer no legal authority 
supporting their position that the Department should ignore post-order 
confirmation changes because such changes are common in the industry. 
Respondent argues that the existence of an industry practice to accept 
changes in price and/or quantity up until the date of invoice 
establishes that invoice date is the appropriate date of sale. 
Additionally, respondents contend that at verification, the Department 
verified that for a certain percentage of its reported POI home market 
sales (based on quantity), the price changed between order confirmation 
date and invoice date for reasons unrelated to the alloy surcharge.
    Respondent asserts that AST's inability to perform an analysis of 
the frequency of price and quantity changes between order and invoice 
date for the U.S. market does not indicate that order date or 
confirmation date is the appropriate date of sale for AST's U.S. sales. 
Respondent points out that in all of the U.S. sales that the Department 
verified, either the quantity invoiced was different from the quantity 
set forth in both the order and order confirmation, the price changed 
between order confirmation date and invoice date for reasons unrelated 
to the alloy surcharge, or both.
    Department's Position: We agree with respondent. We found no 
evidence on the record to indicate that order date is the appropriate 
date of sale. As noted by

[[Page 30765]]

respondent, under the Department's regulations, we normally use date of 
invoice as the date of sale unless record evidence shows that the 
material terms of sale are established prior to that date. See 19 CFR 
351.401(i). However, we may use another date, such as date of order 
confirmation, if that date better reflects the date on which the 
material terms of the sale were established. In adopting this 
regulation, we explained that the purpose was, whenever possible, to 
establish a uniform event which could be used as the date of sale. 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27348-49 (May 19, 1997). We further explained that we do not 
automatically treat an initial agreement as establishing the material 
terms of sale between the buyer and seller when changes to such an 
agreement are common, even if, for a particular sale, the terms did not 
actually change. See Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Plate in Coils (``SSPC'') from the Republic of 
Korea, 64 FR 15450 (March 31, 1999). Consequently, our analysis focuses 
on whether changes are sufficiently common to allow us to conclude that 
initial agreements should not be considered to finally establish the 
material terms of sale. At verification of AST USA, we found that the 
price and/or quantity (excluding price changes resulting from changes 
in the alloy surcharge) changed from the order date to the invoice date 
for all of the sales traces, thus supporting AST's contention that 
certain material terms of sale (e.g., price and quantity) are subject 
to change until the invoice date. See Verification Report of AST USA, 
Exhibits 7-10.
    Petitioners' reference to Circular WNASP from Korea is misplaced, 
because in that case, evidence showed that the material terms of sale 
in the United States were set on the contract date, and subsequent 
changes rarely occurred. In this case, based on the Department's 
findings at verification and the record evidence indicating that the 
material terms of sale often change up to invoice date, the Department 
is satisfied that the date of invoice is the most appropriate measure 
of when AST establishes the material terms of sale. Accordingly, we 
have continued to use invoice date as the date of sale for AST's CEP 
sales for the final determination. As stated above, the Department has 
determined that all of AST's U.S. sales are CEP. Therefore, we have 
used the invoice date for all of AST's home market and U.S. sales 
(unless invoice date is after shipment date, in which case the 
Department will use shipment date). See section 351.401(i) of the 
Department's regulations.

Comment 7: CEP Offset

    Respondent argues that AST's final margin calculation should 
include a CEP offset, based on respondent's assertion that the 
Department failed to consider that AST's sales to its affiliated U.S. 
distributor, AST USA, are at a less advanced level of trade than the 
level of trade (LOT) of AST's home market sales.
    First, respondent argues that its home market sales are made at a 
more remote level of trade than its CEP sales. Respondent claims that 
most home market sales are direct factory sales which AST manufactures 
to order. Respondent argues that in the home market, AST is responsible 
for the entire chain of distribution for the foreign like product, from 
production in the plant through delivery to the local distributor, end-
user, or service center. Respondent notes that in this regard, AST 
S.p.A. has established a large, complex distribution system.
    Respondent argues that, by contrast, AST's CEP sales are warehouse 
sales. Respondent asserts that the LOT for these sales is properly 
based on the transaction between AST and AST USA, not AST USA and the 
first unrelated U.S. customer. Respondent continues by asserting that, 
in order to identify different levels of trade, the Department compares 
starting prices in the U.S. and home markets. Respondent asserts that, 
in this case, the requisite comparison reveals that the starting prices 
in Italy and the United States are vastly different. In support of its 
argument, respondent notes that AST's U.S. and home market sales to the 
first unaffiliated customer are at the same level or trade because: (1) 
AST S.p.A's home market sales and AST USA's CEP sales are at the same 
point in the chain of distribution; (2) AST S.p.A's Italian customer 
and AST USA's U.S. customers are in the same customer categories; and 
(3) AST S.p.A and AST USA provide the same selling services for CEP 
sales. Respondent argues that the CEP adjustments made under 19 USC 
1677a(d) (section 772(d) of the Act) remove all of AST USA's marketing, 
sales and distribution expenses, thereby altering the LOT of its CEP 
sales to a less remote link in the chain of distribution.
    Finally, respondent argues that, in applying the CEP offset, the 
Department should deduct AST's indirect selling expenses and technical 
services expenses from normal value, since available data do not 
indicate whether the purported difference in LOT affect price 
comparability.
    Petitioners maintain that the Department should reject respondent's 
request that the Department apply a CEP offset to respondent's final 
margin calculation, based on the fact that the Department preliminarily 
concluded that there was no difference in LOT between AST's sales in 
the U.S. and home markets.
    Petitioners argue that respondent did not request a LOT adjustment 
or a CEP offset prior to the preliminary determination, and that 
respondent's request for a CEP offset is not supported by substantial 
evidence, including evidence of differences in selling functions. 
Petitioners argue that the burden was on respondent to prove its 
entitlement to a LOT adjustment or CEP offset, and to have provided the 
Department new evidence to demonstrate the appropriateness of such an 
adjustment, citing section 773(f)(1)(A) and the Statement of 
Administrative Action accompanying H.R. 5110 (H.R. Doc. No. 316, Vol. 
1, 103d Cong., 2d Sess. (1994), at 829 (``SAA'')); Final Rule, 62 FR 
27370; and Mitsubishi Heavy Industries, Ltd. v. United States, Slip Op. 
98-82 (CIT 1998). Petitioners maintain that AST did not provide such 
new evidence.
    Petitioners argue that the Department examined the LOT that existed 
following the adjustments specified under 19 U.S.C. 677a(d) (section 
772(d) of the Act), and properly determined that those adjustments to 
the price at which AST USA sold subject merchandise did not alter the 
channels of trade or selling functions upon which a determination 
regarding level of trade difference is based in this investigation. 
Petitioners also argue that the Department's verifications confirmed 
that essentially the same selling functions were offered by AST for 
both its home market and U.S. sales.
    Petitioners continue that the Department clearly stated in its 
preliminary determination that it made the adjustments called for by 19 
U.S.C. section 1677a(d) prior to examining LOT. Finally, because a 
difference in LOT must exist prior to granting a CEP offset, 
petitioners assert that no CEP offset may be granted in this 
investigation.
    Department's Position: We disagree with respondent. For the 
preliminary determination, the Department thoroughly reviewed the 
channels of distribution and selling functions performed for sales in 
the home and U.S. market and determined that all sales were made at one 
level of trade (including its analysis whether NV was

[[Page 30766]]

established at a different LOT than CEP sales). See Preliminary 
Determination (64 FR 120-121), and Notice of Final Determination of 
Sales at Less Than Fair Value: Stainless Steel Round Wire from Korea, 
64 FR 17342, 17344 (April 9, 1999), specifically, AST provided freight 
and delivery, credit, technical services, and warranties for its home 
market sales of prime merchandise. Also, for sales of mostly non-prime 
merchandise sold from its warehouse, AST performed essentially the same 
selling functions. While it did not provide warranties for non-prime 
merchandise, it did perform other selling functions for those sales 
(advertising and maintaining inventory of this merchandise at AST's 
warehouse), which were not performed for sales of prime merchandise. 
For the preliminary determination (and as upheld in this final 
determination, see discussion in ``Level of Trade'' section above), the 
Department found that there was one LOT for AST's home market sales 
because the selling activities for both groups of sales were very 
similar. See Preliminary Determination (64 FR 120). For all of its U.S. 
sales, AST engaged in identical selling activities, providing technical 
and warranty services, freight and delivery and credit. As explained 
above, the Department compared the selling functions performed for home 
market sales with those performed with respect to the CEP transaction, 
after deductions for economic activities occurring in the United 
States, pursuant to section 772(d) of the Act, to determine if the home 
market levels of trade constituted more advanced stages of distribution 
than the CEP level of trade. Based on our analysis of the chains of 
distribution and selling functions performed for sales in the home 
market and CEP sales in the U.S. market, we continue to find that both 
are made at the same stage in the marketing process and involve 
substantially similar selling functions.
    Absent significant differences in selling functions, we do not 
determine that there are different LOTs, and therefore, we do not even 
reach the issue of a LOT adjustment or CEP offset. Furthermore, AST has 
not provided any substantial evidence which would counter the 
Department's preliminary determination, but rather only stated that the 
starting prices between home market sales, which are direct factory 
sales, and AST's CEP sales, which are warehouse sales, are notably 
different. Because the Department has found there to be just one LOT, 
the difference in prices is irrelevant to our LOT analysis.
    Moreover, in the original questionnaire, the Department requested 
that respondent ``explain why you believe a level of trade adjustment 
is appropriate and provide worksheets demonstrating the calculation of 
the adjustment as attachments to your response.'' See Questionnaire at 
pg. B-23, dated August 3, 1998. AST did not claim any LOT adjustment or 
CEP offset in its questionnaire response, nor provide any explanation 
for such a claim.

Comment 8: Side Cuts/Pup Coils

    Respondent asserts that side cuts and pup coils are non-prime 
merchandise, and therefore sales of this merchandise should not be 
compared with sales of prime merchandise. First, respondent argues that 
it has submitted record evidence demonstrating that the U.S. steel 
industry, including petitioners, markets and sells side cuts and pup 
coils as non-prime merchandise. Therefore, respondent argues that the 
burden is with petitioners to demonstrate that such products are not 
legitimately classified as non-prime merchandise.
    Second, respondent argues that side cuts and pup coils suffer 
defects during the production process and at other times prior to 
delivery to the customer.
    Third, respondent states that side cuts and pup coils are not 
produced to order and do not otherwise meet customers' specifications, 
such as finish, width and/or weight specifications.
    Fourth, respondent argues that side cuts and pup coils are used in 
applications for which knowledge of certain of the product's 
characteristics is unimportant. These applications would include such 
non-prime applications as strappings, bands, brackets and washers for 
side cuts, and hog feeders, pig pens, fertilizers, spreaders and 
roofing and siding for pup coils.
    Fifth, respondent asserts that the sales process for side cuts and 
pup coils differs significantly from sales of prime merchandise. For 
example, respondent notes that its side cut and pup coil sales are all 
done from inventory (as opposed to its direct factory sales that were 
produced for a specific customer to that customer's specifications).
    Finally, respondent maintains that side cuts and pup coils are sold 
at a discount, with no warranties.
    Petitioners respond that AST has not provided any information to 
support its claim that all of its sales of pup coils and side cuts were 
sales of non-prime merchandise. Petitioners argue that the only 
difference between pup coils and a regular coil is the size of the 
coil, not the quality of the product. Similarly, petitioners argue that 
making a coil narrower does not convert that merchandise into secondary 
material simply because it was separated from the mother coil.
    Petitioners argue that respondent did not identify any physical 
defect in pup coils and side cuts in AST's record description of non-
prime merchandise, and furthermore, that the submitted description 
distinguished pup coils and side cuts from ``second quality 
merchandise.''
    Petitioners further submit that the Department's investigation of 
respondent's classification of secondary merchandise at verification 
does not support a finding that side cuts and pup coils are of 
secondary quality.
    Petitioners also take issue with respondent's claim that pup coils 
and side cuts are second quality material because they were not 
produced to order, but instead were inventory sales from the warehouse, 
given the percentage of respondent's U.S. sales which were warehouse 
sales. Petitioners also argue that the limited applications of pup 
coils and side cuts cannot define these products as secondary, given 
that prime merchandise is also produced within certain weight and size 
tolerances and therefore is also ``limited to certain uses.''
    Petitioners further argue that the absence of a warranty does not 
mean that the product is defective. Likewise, petitioners believe that 
the fact that these sales were made at a discount does not demonstrate 
that these sales are of secondary merchandise, especially given the 
fact that, according to petitioners, one would expect discounts on 
merchandise for which there is no warranty.
    Department's Position: We agree with petitioners that AST's sales 
of pup coils and side-cuts should be considered sales of prime 
merchandise. As noted in the Department's April 19, 1995 Memorandum 
from Roland L. MacDonald to Joseph A. Spetrini, the Department defines 
non-prime (or secondary merchandise) as ``steel which has suffered some 
defect during the production process, or at any time before delivery to 
the customer.'' In its submissions to the Department, AST identified 
side-cuts and pup coils as secondary merchandise, but did not identify 
the physical defect or damage associated with each sale of pup coils 
and side-cuts, as specifically requested by the Department. See 
Supplemental Questionnaires dated October 23, 1998 and December 7, 
1998, in which we requested that AST create a separate computer field 
that would identify the specific reason why each sale was designated 
non-prime merchandise. AST submitted its offering list of

[[Page 30767]]

secondary merchandise (see Exhibit 18, November 12, 1998 response); 
however, the defects of the merchandise were not identified for many of 
the coils on this list. At verification, we examined AST USA's invoices 
to its unaffiliated U.S. customers for sales of pup coils and side-
cuts, and noted that there was no indication that the merchandise 
listed on the invoice was damaged or defective. See Verification Report 
of AST USA, Exhibit 20.
    With respect to respondent's argument that side cuts and pup coils 
are not produced to order and do not otherwise meet customers' 
specifications, such as finish, width and/or weight specifications, we 
believe that respondent is confusing the issue. Specifically, as 
respondent has noted, side cuts and pup coils are not produced to 
order, and are sold from inventory. Therefore, the customers that 
respondent is referring to are, in fact, the purchasers of side cuts 
and pup coils from inventory. Record evidence taken from verification 
reveals that certain information such as the dimensions of the product, 
is provided to these customers for the merchandise sold from inventory. 
See Verification Report of AST USA, at pg. 7, and Exhibit 20. There is 
no evidence on the record which would support a finding that these 
specifications, i.e., those provided in the inventory list, are 
inaccurate or otherwise do not meet the specifications of these 
customers.
    Regarding respondent's assertion that it has submitted record 
evidence demonstrating that the U.S. steel industry, including 
petitioners, markets and sells side cuts and pup coils as non-prime 
merchandise, whether side cuts and pup coils are sold in the ``seconds 
market'' is in no way dispositive with regard to the Department's 
ultimate classification of this merchandise. We note that for example, 
the same exhibit offered by AST is in support of its claim that side 
cuts and pup coils are secondary merchandise, also shows that ``excess 
prime'' is sold by that particular company as a ``secondary product.'' 
See AST's November 12, 1998 submission, Exhibit 10. In this regard, the 
Department has clearly stated its position that excess prime also known 
as prime overruns is treated by the Department as prime merchandise. 
This is precisely because this merchandise contains no defects. (See, 
e.g., Certain Corrosion-Resistant Carbon Steel Flat Products From 
Australia; Final Results of Antidumping Duty Administrative Reviews, 61 
FR 14049-01 (March 29, 1996)). Therefore, we determine that side-cuts 
and pup coils be considered prime merchandise for the final 
determination.

Comment 9: Floor Plate

    Respondent argues that floor plate should be excluded from the 
scope of this investigation. Respondent maintains that, to the best of 
its knowledge, the U.S. industry does not manufacture this product (and 
has not done so for at least two years), and furthermore, this product 
does not compete with any product manufactured in the United States.
    Petitioners argue that the Department should reject respondent's 
request to exclude floor plate from the scope of this investigation. 
First, petitioners argue that respondent's ``apparent belief'' that the 
domestic industry must be currently producing a particular type of 
product in order for that product to remain within the scope of the 
case is wrong. Petitioners point out that one possible reason for 
opposing an exclusion request is that a domestic producer previously 
manufactured the product and may have ceased production due to the 
competitive impact of unfairly traded imports, or a domestic producer 
may be interested in producing the product but is unable to enter the 
market due to the low prices of the unfairly traded imports. 
Petitioners argue that one domestic producer was producing floor plate 
until recently, and assert that another is considering manufacturing 
floor plate in the future.
    Department's Position: We uphold our preliminary determination to 
include floor plate as part of the scope of subject merchandise. 
Despite AST's arguments, the plain language of the petition's scope 
covers merchandise described as floor plate if it is less than 4.75 mm 
in thickness. The scope specifically describes the subject merchandise 
as a ``flat-rolled product in coils that is greater than 9.5 mm in 
width and less than 4.75 mm in thickness.'' We also note that the 
Department's model match criteria place significant emphasis on both 
the rolling process (hot-versus cold-rolled) and surface finish 
(including ``patterns in relief,'' such as the diamond pattern 
characteristic of floor plate). See page 8 of the Memorandum to Joseph 
A. Spetrini from Robert James regarding the Antidumping Duty 
Investigations on Stainless Steel Sheet and Strip in Coils from France, 
Germany, Italy, Japan, Mexico, South Korea, Taiwan, and the United 
Kingdom; Scope Issues, dated December 14, 1998.
    In a similar case where a respondent requested an exclusion for a 
particular type of SSWR from the scope, the Department determined not 
exclude this merchandise because petitioners did not agree to the 
exclusion. See Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Wire Rod from Canada, 63 FR 9182 (February 24, 1998). 
In the Final Determination of Sales at Less Than Fair Value: Stainless 
Steel Wire Rod from Japan, 63 FR 40434-01 (July 29, 1998), the 
respondent asserted that a particular grade of SSWR should be excluded 
from the scope because it had not been sold it in the United States 
during the POI or at any other time, and that this grade of SSWR 
allegedly was not, and could not be, manufactured in the United States. 
The Department determined that the fact that a specific grade of SSWR 
is not currently produced in the United States does not constitute 
grounds for exclusion from the scope of the investigation, and 
therefore did not exclude it from the scope. Therefore, consistent with 
the Department's current practice, we will continue to include floor 
plate in the scope of this investigation for purposes of the final 
determination.

Comment 10: REBATE2H

    Petitioners state that the adjustments reported in field REBATE2H 
should be rejected because the expenses included in this field do not 
qualify as rebates. Petitioners assert that the verification results 
demonstrate that the Department should disallow AST's claim for 
REBATE2H for several reasons. First, petitioners state that respondent 
has used an inappropriate period for calculating REBATE2H, since the 
period begins two months after the start of the POI and finishes two 
months after the POI. Second, petitioners state that this field 
includes credit notes granted for sales of non-subject merchandise and 
for sales that were outside the POI. Third, petitioners argue that when 
AST stated that its claimed REBATE2H amounts included expenses for 
returns and for technical claims for defective merchandise, it did not 
explain whether these claims involved double counting of its claimed 
home market warranty expenses or home market technical service expenses 
as it should have. Fourth, petitioners contend that certain price 
adjustments, including alloy surcharges, were accounted for in AST's 
home market sales listing, and therefore, should not be accounted for 
as part of AST's rebates. Finally, petitioners argue that AST included 
all credit notes in its calculation of the REBATE2H amounts, and did 
not evaluate the credit notes to determine whether the credit notes 
applied to sales during the POI or to sales of SSSS. Therefore, 
petitioners

[[Page 30768]]

claim that AST overstated the rebates that may have been provided for 
sales of SSSS during the POI instead of excluding credit notes that 
were not related to such sales. In conclusion, petitioners argue that 
the Department should, therefore, not allow AST's claimed REBATE2H for 
its final analysis.
    Respondent argues that as explained in AST's Section B Response, 
the expenses reported in REBATE2H represent post-sale price adjustments 
other than claims reported in other fields. Although AST states that 
the expenses reported in REBATE2H may alternatively be classified as 
billing adjustments rather than rebates, the expenses are appropriately 
deducted from the home market price.
    Citing Final Results of Antidumping Duty Administrative Review: 
Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-
to-Length Carbon Steel Plate from Canada (``Carbon Steel Flat Products 
and Carbon Steel Plate from Canada''), 61 FR 13815, 13822, (March 28, 
1996), respondent states that the Department recognizes that 
adjustments such as those included in REBATE2H are not always granted 
on an invoice-specific basis, and accepts such adjustments if they are 
tied to a specific group of invoices. AST claims that REBATE2H was 
calculated on a customer-specific basis, and as such, was calculated 
and reported on the specific group of invoices associated with AST's 
stainless steel sheet and strip customers. AST contends that therefore 
AST properly calculated REBATE2H in accordance with Departmental 
policy.
    Respondent asserts that petitioners' argument that AST double 
counted technical and warranty claims is factually inaccurate because 
AST provided the Department with revised REBATE2H calculations at 
verification (see Verification Report of AST at 1-2) which eliminated 
any potential double counting. Respondent states that exhibit 16 of the 
verification report was an exhaustive list of different types of credit 
notes issued by AST, not the credit notes included in the calculation 
of REBATE2H; therefore, there is no basis for petitioners' argument 
that credit notes were double counted in the calculation of REBATE2H.
    Respondent argues that the Department must reject petitioners' 
claim that the calculation of REBATE2H was based on an incorrect time 
period. Respondent maintains that, as explained to the Department at 
verification, there is a lag period of two months between shipments and 
the issuance of credit notes. Respondent contends that it was necessary 
to shift the period forward by two months to ensure that credit notes 
associated with sales during the POI were captured.
    Respondent asserts that for all of the reasons mentioned above, the 
Department should reaffirm its preliminary determination with respect 
to REBATE2H and subtract this amount in the calculation of normal 
value.
    Department's Position: We agree with respondents that REBATE2H is 
more properly considered as price adjustments rather than rebates, and 
that the expenses are appropriately deducted from the home market 
price. At verification, we reviewed substantial information to conclude 
that REBATE2H consisted of after-sale price adjustments. See 
Verification Report of AST pp. 1,2 & 24. Furthermore, we determine that 
AST's methodology for reporting credit notes for the period beginning 
two months after the start of the POI, and ending two months after the 
end of the POI is reasonable, as there is no evidence on the record 
which contradicts AST's claim regarding a two-month lag period, and 
there is no reason to believe that respondent's methodology is in any 
way distortive. The information gathered in Exhibit 39 of the 
Verification Report of AST confirmed the reasonableness of using the 
two-month period. Furthermore, we determine that AST's reporting 
methodology by customer groupings is also reasonable. While the 
Department prefers that discounts, rebates and other price adjustments 
be reported on a transaction-specific basis, the Department has long 
recognized that some price adjustments are not granted on that basis. 
This case is similar to situations in which the Department has 
permitted as direct adjustments, rebates granted on a customer-specific 
basis. See Carbon Steel Flat Products and Carbon Steel Plate from 
Canada, 61 FR 13815, 13822. We reviewed the revised calculations at 
verification and noted no discrepancies. See Verification Report of AST 
at 24. Therefore, for the final determination, we have deducted 
REBATE2H from the home market price.

Comment 11: Home Market Freight

    Petitioners argue that the Department should make corrections for 
AST's overstatement of freight costs for its sales in Italy. 
Petitioners state that at verification, the Department compared the 
freight charges that AST reported in its questionnaire response to the 
freight charges in AST's freight contracts and discovered that the 
freight costs in the questionnaire response were higher than the 
freight rates shown in the freight contracts, and that AST claimed that 
the costs were higher because of the accruals that AST made at the end 
of the year. Petitioners maintain that because AST was given the 
opportunity to prove this claim at verification, and failed to do so, 
the Department should correct AST's overstatement of its freight costs 
by reducing the freight costs reported by AST for its home market sales 
by an amount verified by the Department at verification.
    Respondent argues that petitioners' argument reflects a 
misunderstanding of this expense, and explains that in reporting its 
home market freight expense, AST first calculated the contract freight 
charge associated with deliveries to various destinations, then 
adjusted the contractual freight expense to reflect the difference 
between the contractual per-kilogram freight expense and the actual 
per-kilogram freight expense. AST states that for shipments less than 
28 tons, it incurs the same fixed freight charge as it would for a 
shipment weighing 28 tons, and for shipments over 28 tons, it is 
charged the negotiated rate per-kilogram. AST argues that it adjusted 
AST's contractual freight expense to account for the incremental 
freight charge associated with shipment weights that are less than the 
minimum weight called for in the contract.
    Department's Position: We agree with petitioners. At verification, 
we traced the freight expense reported in AST's response to AST's 
contractual agreements, and found that the two were different. See 
Verification Report of AST at 26. We do not accept AST's claim that it 
adjusts its contractual freight expense to account for the incremental 
freight charge associated with shipment weights that are less than the 
minimum contract weight called for in the contract, because when we 
gave AST the opportunity to provide the year-end reconciliation of 
actual and accrued freight expenses at verification, AST failed to do 
so. See Verification Report of AST at 26 and 28. Therefore, the 
Department considers these additional amounts unverified, and we have, 
for the final determination, reduced the freight costs reported by AST 
for its home market sales by an amount examined by the Department at 
verification (see Final Analysis Memorandum).

Comment 12: Technical Service Expenses

    Respondent argues that the Department should not deduct technical 
service expenses incurred in Italy from CEP. Respondent argues that the 
technical service expenses reported in its response are indirect 
selling

[[Page 30769]]

expenses associated with its Technical Services Department in Italy, 
and are therefore not an appropriate adjustment to CEP.
    Petitioners argue that the Department should treat respondent's 
technical service expenses in the home market and in the U.S. market in 
the same manner (i.e., either both as direct, or both as indirect 
selling expenses), because respondent calculated these expenses in the 
same manner. Furthermore, petitioners argue that the verification of 
AST USA shows that economic activity occurred in the U.S. with regard 
to technical service expenses, and therefore, the costs for the 
activities should be deducted from the price for respondent's CEP 
sales.
    Department's Position: Contrary to AST's claim that all technical 
service expenses reported in its response are associated with its 
Technical Services Department in Italy, we found at the verification of 
AST USA that a portion of technical service expenses relate to economic 
activity in the United States and are, in fact, incurred in the United 
States by AST USA. Specifically, at verification we found that AST USA 
partially paid for the salary of an AST USA employee who was 
responsible for providing customers with technical advice. See 
Verification Report of AST USA at 23. However, there is insufficient 
data to allocate these additional technical expenses because AST failed 
to provide it. Therefore, for purposes of the final determination, we 
are continuing to deduct technical service expenses as reported in 
AST's December 28, 1998 response from AST's CEP sales.
    We note that AST's technical service expenses, as reported for both 
markets, are more appropriately considered to be indirect selling 
expenses, because they are fixed expenses that are incurred whether or 
not a particular sale is made. See The Department's AD Manual, page 34, 
35. For example, we note that a portion of these reported expenses are 
payroll expenses, which are typically an indirect selling expense. 
Therefore, for purposes of the final determination, we have allocated 
AST's technical service expenses over sales of subject merchandise in 
the home market as indirect selling expenses.

Comment 13: U.S. Warranty

    Respondent argues that the Department, in its preliminary 
determination, incorrectly double-counted warranty expenses for U.S. 
sales. Respondent asserts that, by treating expenses reported in two 
separate fields (BILLADJU and WARRU) as direct selling expenses, the 
Department double-counted warranty by counting both the amount credited 
to the customer by AST USA and the amount credited to AST USA by AST.
    Petitioners reply that information on the record shows that 
treatment of billing adjustments and warranty expenses as direct 
selling expenses does not involve double-counting of warranty expenses. 
Specifically, petitioners argue that respondent's November 12, 1998 
submissions indicate that AST had separated its warranty expenses from 
the amounts reported in the billing adjustment field of its U.S. sales 
listing. Petitioners also argue that the verification reports do not 
substantiate respondent's claim that the Department verified that the 
expenses reported in the U.S. warranty expense field of its U.S. sales 
listing represent AST's payments to AST USA for claims made by U.S. 
customers.
    Department's Position: We agree with respondent. As stated in AST's 
original response, U.S. warranties, if incurred, are included in the 
billing adjustment field (see pg. C-37 of AST's Section C Response, 
dated September 28, 1998). This is confirmed by the fact that, in 
comparing AST's original and supplemental U.S. sales databases, we note 
that the BILLADJU field remained the same after AST reported WARRU in 
the supplemental questionnaire. Therefore, it is clear that (1) AST 
reported warranty expenses in the BILLADJU field; and (2) AST did not 
transfer the expense included in BILLADJU for warranties to the WARRU 
field. At verification we examined the BILLADJU field for each sales 
trace and, with the exception of one clerical error, we found no 
discrepancies. See Verification Report of AST USA, Exhibits 7-10. 
Additionally, at verification, we confirmed that AST reimburses AST USA 
for the credit issued to AST USA's customers for warranties. 
Specifically, we examined documentation showing that AST USA issues a 
credit to its customer, and then deducts the claim amount credited to 
the customer from its payment to AST. See Exhibit 6A of the 
Verification Report of AST USA. Therefore, to ensure that we do not 
double count warranties, we have only deducted BILLADJU from the U.S. 
price for purposes of the final determination.

Comment 14: Insurance Revenue

    Respondent argues that the Department incorrectly failed to add 
transaction-specific insurance revenue to U.S. price in its preliminary 
determination. First, respondent argues that the Department incorrectly 
characterized insurance claim sales as ``merchandise destined for sale 
as prime material.'' Respondent claims that, to the contrary, because 
the merchandise was damaged in transit, the sale reported to the 
Department was a sale of damaged second quality material. Second, 
respondent claims that the Department's statement that AST ``still 
incurred a loss on prime merchandise'' is incorrect, as respondent 
claims that any loss associated with these sales is a loss associated 
with sales of second quality merchandise, given that it was damaged in 
transit. Respondent adds that any question of whether a loss or profit 
was incurred is in any event irrelevant to the Department's 
determination of sales at less than normal value.
    Respondent maintains that, conversely, transaction-specific 
insurance proceeds are directly relevant here. Respondent argues that 
the insurance proceeds reported in the response relate directly to the 
specific transactions identified as insurance claim sales. Respondent 
cites the Department's preliminary results of review in Ferrosilicon 
from Brazil (62 FR 54085, upheld in principle in the final) as a case 
in which the Department ``added the amount of marine insurance revenue 
which was collected by Minasligas with regard to one U.S. sale'' as 
support for its argument.
    Petitioners assert that the Department correctly treated the costs 
associated with the damaged sales as indirect selling expenses. 
Petitioners argue that the expenses incurred for the damaged 
merchandise were associated with the shipment and sale of prime 
merchandise, as the Department preliminary determined.
    Department's Position: We agree with respondent in part. For the 
claims that AST reported in its original response, we have added the 
transaction-specific insurance revenue to AST's U.S. sales' price. At 
verification, we reviewed the actual final settlement amount for an 
insurance claim that AST reported as ``pending'' in its responses to 
the Department. See Verification Report of AST USA, pp. 2-3. Since we 
confirmed this amount, and found no discrepancies, we have used the 
actual final settlement amount received for this insurance claim to 
calculate the total insurance revenue applied to these transactions.
    Regarding the additional insurance revenue amount that AST 
presented the Department at the onset of verification, we do not agree 
with petitioners. We consider this additional insurance revenue to be 
directly applicable to all sales of subject merchandise, because in the 
absence of these sales, the claim

[[Page 30770]]

would not have been made, and the revenue would not have been received. 
At verification, we examined the receipts of AST's claim reimbursements 
and found no discrepancies. We also examined an invoice of subject 
merchandise for which AST received part of this additional insurance 
revenue and found no discrepancies. See Verification Report of AST USA 
at 3. Therefore, petitioners' assertion that these insurance proceeds 
must relate to sales that occurred prior to the POI is unfounded, as 
there is no record evidence to support this assertion, and the record 
evidence which does exist supports a different finding. We note that 
unlike our treatment of insurance revenue as discussed above, we must 
treat this additional insurance revenue differently based on the 
verified fact that AST was unable to tie this insurance revenue to 
specific transactions. Therefore, since this additional claim was 
received during the POI, and was found to be satisfactory at 
verification, we determine that it is relevant to use for purposes of 
calculating total insurance revenue. For purposes of the final 
determination, we have allocated this additional insurance revenue over 
all sales of subject merchandise.

Comment 15: Revised Credit Calculations

    Petitioners contend that the Department should use the revised 
shipment dates presented by AST at verification to calculate imputed 
credit expenses for some of AST's U.S. sales. Citing Carbon Steel 
Products from Korea at 63 FR 13173, petitioners argue that the 
Department's general practice is that the date of sale should not occur 
after the date the merchandise was shipped to the customer. Moreover, 
petitioners state that the Department generally calculates imputed 
credit expenses based on the period from the date of shipment to the 
date of payment. Therefore, petitioners maintain that the Department 
should calculate revised imputed credit expenses for the sales where 
respondent reported incorrect shipment dates. See Verification Report 
of AST USA, Exhibit 1.
    Respondent did not comment on this issue.
    Department's Position: As noted in Exhibit 1 of the Verification 
Report of AST USA, AST USA incorrectly reported, as the shipment date, 
the shipment date from AST USA to its customer, instead of the shipment 
date from AST to AST USA for certain sales. We reviewed the corrected 
information for these sales at verification and found it to be 
accurate. According to Departmental policy, we calculate imputed credit 
based on the period of date of shipment to the date of payment. See 
Policy Bulletin No. 98.2: ``Imputed Credit Expenses and Interest 
Rate,'' dated February 23, 1998. Therefore, for the final 
determination, we will use the corrected information to calculate 
imputed credit for the sales where AST incorrectly reported incorrect 
shipment dates.

Comment 16: Mill Edge Discount

    Petitioners argue that the Department should adjust AST's U.S. 
sales database to include the mill edge discount that was reviewed at 
the U.S. sales verification of AST USA.
    Respondent did not comment on this issue.
    Department's Position: We agree with petitioners, and have used the 
mill edge discount that was reviewed at the U.S. sales verification of 
AST USA for purposes of the final determination. See Final Analysis 
Memorandum.

Comment 17: U.S. Packing

    Petitioners argue that the Department should make an adjustment for 
AST's failure to report packing costs on a transaction-specific for its 
U.S. sales. Noting that for its U.S. sales AST calculated a weighted-
average packing cost for all U.S. sales, petitioners claim that the 
Department's verification findings indicate that AST could have 
reported the actual packing costs for its U.S. sales on a transaction-
specific basis as the packing list and the packing code were listed on 
the confirmation for each U.S. sale. Petitioners state that in its 
antidumping questionnaire the Department requested that AST provide the 
unit cost of packing for each packing type and report this unit cost 
for each U.S. sale. Petitioners claim that because AST maintained this 
information but failed to report it, the Department should substitute 
the highest U.S. packing cost reported by AST during verification for 
the average packing cost reported by AST for its U.S. sales.
    Respondent argues that it properly reported a weighted-average 
packing cost for its U.S. sales. Respondent maintains that the section 
of the AST U.S. sales verification report cited by petitioners in their 
case brief does not support petitioners' claim that AST could have 
reported actual packing costs for U.S. sales. Respondent notes that in 
its U.S. sales listing it reported the invoiced transaction between AST 
USA and the customer and that the order confirmation between AST USA 
and the customer does not contain a packing material code. Respondent 
contends that the fact that the order confirmation between AST and AST 
USA contains a transaction-specific packing material code does not ipso 
facto mean that it can track packing expenses related to U.S. sales on 
a transaction-specific basis. On the contrary, respondent asserts that 
it cannot track this information.
    Respondent claims that U.S. sales made from warehouses may consist 
of either multiple or partial shipments from AST to AST USA and are not 
linked to specific order confirmations sent from AST when the material 
was originally imported. Similarly, respondent contends that its 
consignment sales in the United States consist of multiple shipments 
from AST, thereby reflecting multiple order confirmations, and that 
back-to-back sales in the United States may be dispatched to multiple 
customers, but are listed on a single confirmation sheet issued by AST 
to AST USA. Thus, respondent argues that the fact that packing type is 
specified on the order confirmation issued by AST to AST USA has no 
bearing on AST USA's ability to report a packing type on a transaction-
specific basis. Respondent claims that upon loading the coils for 
shipments to the United States, coil types are often mixed, which 
limits its ability to relate individual shipments with the original 
order confirmation.
    Respondent also maintains that the petitioners' argument ignores 
the fact that in an investigation the Department is required to base 
U.S. price on average rather than transaction-specific prices, which 
limits the need for transaction-specific adjustments. Finally, citing 
Ferro Union Slip Op. 99-27 (CIT March 23, 1999), respondent holds that 
the supplemental information relied upon as facts available must have 
probative value. In this case, respondent argues that the facts 
available adjustment proposed by petitioners fails to meet this 
standard as the proposed packing expense is based on a packing type 
used by less than three percent of export shipments and must therefore 
be rejected.
    Department's Position: We agree with respondent. At verification, 
we reviewed AST's calculation methodology and found no discrepancies 
with what it reported to the Department. See Verification Report of AST 
USA at 3-4. Although we found that AST was able to identify the packing 
materials code on the confirmation that AST sent back to AST USA for 
each proposed sale, evidence we gathered at verification does not 
support a finding that the packing material code appears on the invoice 
from AST USA to the customer, or that

[[Page 30771]]

AST can reasonably track and report the information. Therefore, for 
purposes of the final determination, we accept AST's reported packing 
cost for its U.S. sales.

Comment 18: International Freight

    Petitioners contend that the Department should use partial facts 
available for AST's failure to submit correct amounts for ocean freight 
charges on U.S. sales. Petitioners argue that AST submitted a table 
showing a range of shipment-by-shipment ocean freight charges, but only 
reported one international freight charge in its original U.S. sales 
listing. Petitioners state that AST attempted to justify its failure to 
submit the detailed portion-by-portion movement expenses requested in 
the Department's questionnaire (i.e., an amount for factory to port 
costs, an amount for port charges, an amount for ocean freight, etc.), 
by stating that its freight broker charged AST a total movement expense 
that reflects the costs associated with moving the SSSS from the 
factory to the port, loading the SSSS onto the ship, shipping the 
merchandise, and insuring the merchandise. Petitioners contend that 
although AST stated that the broker charged AST a fixed percentage of 
the expense incurred as a service fee, AST did not identify the fixed 
percentage or provide an amount for this service fee. Petitioners argue 
that in its November 12, 1998 submission, AST stated that it revised 
its reported freight costs for U.S. sales to reflect transaction 
specific international freight expenses, however, AST reported only one 
amount to cover all of the international freight costs for its 
individual U.S. sales in Italian Lira per pound in the U.S. sales 
database. Additionally, petitioners argue that during verification, the 
Department discovered that the transaction-specific freight costs in 
AST's November 12, 1998 U.S. sales listing misstate the actual freight 
costs because AST failed to include freight costs for transport from 
the factory to the port, and AST's freight costs contained other 
errors.
    Petitioners state that there are several problems with AST's 
attempt to resubmit the freight costs reported in AST's initial U.S. 
sales listing. (1) Because AST failed to provide the detailed freight 
cost information requested by the Department's antidumping 
questionnaire (i.e., cost for shipment from factory to port, cost for 
port charges and handling fees, costs for ocean freight, etc.), it is 
unclear whether the freight costs reported in AST's September 28, 1998 
questionnaire response include costs incurred to transport the SSSS 
from the factory to the port of export. (2) It is unclear how the cost 
that AST's freight broker charged AST to transport the SSSS from the 
factory to the port could have been omitted from its reported freight 
costs, because AST stated that its freight broker charged AST a total 
movement expense that reflected all of the movement charges (including 
freight from the factory to the port), and AST stated that it reported 
the actual amount charged by the broker to AST.
    Citing Notice of Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Plate in Coils from Belgium (``SSPC from 
Belgium''), 64 FR 15476, 15485 (March 31, 1999), where the Department 
assigned the highest reported freight costs as partial facts available 
to calculate international freight expenses for U.S. sales when the 
respondent failed to provide sufficient information to calculate 
movement charges for U.S. sales, petitioners claim that the Department 
should assign the highest non-aberrational freight charge reported by 
AST as partial facts available to calculate international freight 
expenses for U.S. sales.
    Respondent argues that contrary to petitioners' claim that the 
Department ``discovered'' AST's international freight expense was 
underreported, AST advised the Department that the earlier-reported 
ocean freight expense had been inadvertently understated and provided a 
correct weighted-average ocean freight expense at the beginning of 
verification. Respondent states that AST originally reported a correct 
weighted-average ocean freight expense to the Department, however, in 
subsequent submissions, AST inadvertently used an incorrect key to 
calculate the ocean freight expense.
    Respondent claims that petitioners' assertion that AST failed to 
provide sufficient detail regarding its reported ocean freight expense 
is unfounded because AST provided individual invoices from its freight 
forwarder relating to U.S. shipments during the POI, in a supplemental 
response. In addition, AST states that each bill of lading included in 
its supplemental response indicated the terms of delivery, which 
indicates that the prepaid freight expense includes insurance and 
loading charges associated with the shipped merchandise. AST states 
that these invoices were the basis for the international freight 
expenses, and reflect all costs charged by AST's freight forwarder. 
Therefore, respondent states that petitioners' claim that AST did not 
``provide any information on the service fee that AST's freight broker 
charges AST for arranging shipments to the U.S.'' is meritless.
    Department's Position: We agree with respondent. Petitioners' 
reliance on SSPC from Belgium is misplaced. In that case, ALZ (the 
respondent) withheld information concerning its affiliation with 
Transaf, a company in charge of various brokerage/handling and 
international freight services for ALZ's U.S. sales. In addition, ALZ 
did not provide, in a timely fashion, information regarding the extent 
of which Transaf handled the brokerage/handling and international 
freight services. In contrast, AST did not withhold information 
pertaining to its ocean freight expense. We note that AST originally 
reported a correct weighted-average ocean freight expense in a timely 
fashion. See Exhibit 5 of AST's Section C Response, dated September 28, 
1998. At verification, AST explained that when preparing supplemental 
responses, it used the wrong key field ``chart number'' instead of 
``file number'' to determine international freight incurred on sales of 
subject merchandise. By using this key, AST inappropriately included 
shipments destined for third countries as well as for the United 
States. See Verification Report of AST at 2. At verification, we 
verified the revised weighted-average freight expenses, and found no 
reason to question the accuracy of AST's revisions. Therefore, for 
purposes of the final determination, we have used the revised weighted-
average freight expenses submitted at verification. See Analysis 
Memorandum for further discussion of this issue, as it contains 
proprietary information.

Comment 19: Verification Corrections

    Respondent asserts that the Department's final determination should 
reflect corrections made at verification. Other than these items 
addressed in comments 25 and 27 below, these corrections are to: (1) 
AST's revised ``other movement'' expenses; and (2) price and quantity 
data for five U.S. sales. Additionally, respondent argues that the 
Department should use the actual final settlement amount for an 
insurance claim in calculating a transaction-specific adjustment for 
insurance revenue. Finally, respondent argues that the Department 
should account for an additional amount in insurance revenues 
associated with merchandise damaged in transit. Respondent suggests 
that the Department could either allocate these revenues over all other 
second quality sales reported by AST, or, alternatively, the Department 
could

[[Page 30772]]

treat these proceeds as a reduction to AST's reported selling expenses.
    Petitioners argue that the Department should use data examined 
during verification to calculate costs associated with the two 
shipments that were damaged in transit to the United States. Because 
petitioners' argument regarding which data to use involves proprietary 
data, please see the Final Analysis Memorandum for a more complete 
summary. Furthermore, petitioners argue that the Department should not 
accept the non-transaction specific insurance proceeds claim that AST 
presented at verification. Petitioners claim that respondent has 
claimed these insurance proceeds as non-transaction specific proceeds 
simply because they related to sales that occurred prior to the period 
of investigation. Petitioners argue that there is no basis for treating 
revenues associated with sales outside the POI as an offset to selling 
expenses incurred for sales during the POI. Furthermore, petitioners 
claim that respondent failed to submit certain cost information 
associated with a claim. Finally, petitioners claim that this 
information was significant new information and a new claim submitted 
at the beginning of verification. Petitioners argue that the purpose of 
verification is to confirm information rather than to accept new 
claims.
    Department's Position: Regarding AST's revised other movement 
expenses, the Department has used the other movement expense factor 
that was reviewed at verification for the final determination. At 
verification, we confirmed that AST originally reported the other 
movement expense factor correctly in its responses to the Department; 
however, it did not correctly apply this factor to the calculation of 
the USOTHTRU field in its submissions to the Department. Therefore, we 
have applied the correct factor to calculate the USOTHTRU field for our 
final margin calculation.
    Regarding the five U.S. sales for which AST presented the 
Department with revised price and quantity data at verification, the 
Department has used the corrected information in its calculation of the 
margin for the final determination.
    We have used the actual final settlement amount for the insurance 
claim reviewed at verification to calculate the total insurance revenue 
amount. In addition, we have included the other insurance claims that 
AST presented to us at the onset of verification. Refer to Comment 14 
for the discussion of the Department's application of insurance 
revenue.

Comment 20: Ministerial Error Corrections

    Petitioners request that the Department correct the three 
ministerial errors made in calculating the preliminary dumping margins 
for AST that Petitioners identified in their December 28, 1998 letter 
to the Department.
    Respondents did not comment on this issue.
    Department's Position: As recommended in the Ministerial Error 
Memorandum to Edward Yang from Lesley Stagliano, dated January 6, 1999, 
the Department has corrected these three ministerial errors regarding 
general and administrative expenses and interest expenses, indirect 
selling expenses, and the cost of goods sold.

Cost of Production/Constructed Value

Comment 21: Below Cost Sales and Cost Recovery Test

    AST argues that in the preliminary determination, the Department 
found certain of its home market sales were made below cost without 
considering whether such sales permitted the recovery of costs. As a 
result, AST alleges that the Department overstated the number of below-
cost sales and inflated AST's preliminary determination margin. Before 
disregarding any of its home market sales as having been made below 
cost in the final determination, AST asserts that the Department must 
assess the degree to which AST was able to recover its costs on a 
product-specific basis.
    AST argues that the Department should not disregard its below cost 
sales. AST states that the language of section 773(b)(2)(D) of the Act 
was intended to represent only an example of a situation in which 
below-cost sales would be considered as providing for the recovery of 
costs within a reasonable period of time. AST states further that 
Congress intended that below-cost sales be included in normal value in 
situations where other sales compensated for the losses incurred. AST 
asserts that the Department should only disregard below-cost sales in 
situations where the foreign producer incurs an overall loss. AST 
suggests that the Department compare average prices to average costs to 
determine, on a product-specific basis, whether costs of the below-cost 
sales were recovered.
    Petitioners argue that the plain language of section 773(b)(2)(D) 
of the Act does not support AST's argument. Petitioners argue that, had 
Congress intended that the Department only disregard below-cost sales 
where the foreign producer experiences an overall loss, it would have 
implemented that policy in the language of the statute. Instead, 
petitioners assert that section 773(b)(2)(D) limits including sales 
below cost in normal value to situations where prices which were below 
the per-unit cost of production at the time of sale are above the 
weighted-average per-unit cost of production for the period of 
investigation. Petitioners argue that AST's position is in conflict 
with the language of section 773(b)(2)(D) of the Act.
    Department's Position: We agree with petitioners. Section 
773(b)(2)(D) is explicit in providing that prices shall be considered 
to provide for recovery of costs within a reasonable period of time if 
such prices which are below cost at the time of sale are above the 
weighted-average per-unit cost of production for the period of 
investigation. Accordingly, as we stated when we issued the proposed 
antidumping duty regulations to implement the provisions of the Uruguay 
Round Agreements Act, ``. . . the Department's cost recovery test must 
consist of an analysis involving individual prices for specific below-
cost sales transactions.'' (See Antidumping Duties; Countervailing 
Duties: Notice of Proposed Rulemaking and Request for Public Comments, 
61 FR 7308, 7337 (February 27, 1996).) The cost recovery test relied on 
in this case conforms with the statute and with the Department's 
regulations. For the reasons stated above, AST's proposed cost recovery 
test does not conform with section 773(b)(2)(D) of the Act.

Comment 22: Asset Depreciable Lives

    AST asserts that, in the preliminary determination of the companion 
countervailing duty (``CVD'') investigation, the Department rejected 
AST's reported average asset useful life. In the preliminary 
antidumping determination, respondent notes that the Department made no 
such finding. AST argues that the failure to apply a consistent average 
useful life methodology in both the antidumping and the CVD 
investigations resulted in higher calculated duties for AST in both 
investigations.
    Petitioners assert that the average useful life methodologies for 
dumping and subsidy analyses are different because they are used for 
different purposes. In an antidumping proceeding, the Department 
examines the average useful life of each asset reported by the foreign 
producer, confirms that the reported useful lives are those used in 
preparing the financial statements of the companies, and relies on 
those amounts in its COP calculations. In CVD, the Department's

[[Page 30773]]

focus is the determination of the appropriate allocation period for 
subsidies. These different purposes are responsible for the 
Department's relying on different methodologies when analyzing average 
useful lives of assets in antidumping and CVD proceedings.
    Department's Position: We agree with the petitioners. Section 
773(f)(1)(A) and the SAA provide that if the records kept by an 
exporter or producer are in accordance with U.S. Generally Accepted 
Accounting Principles (``GAAP'') of the exporting (or producing) 
country and reasonably reflect costs, the Department will rely on them 
for calculating costs (SAA at 834). The SAA also provides that we will 
consider whether the producer historically used the methods reported to 
the Department prior to the investigation and in the normal course of 
its business operation (Id., at 835).
    AST's reported depreciation was from the records it used to prepare 
its financial statements, which were consistent with GAAP. Moreover, 
those records were consistently used in the course of AST's business 
and reasonably reflected the company's costs. Therefore, for purposes 
of the Department's antidumping analysis, relying on AST's records is 
in conformity with both the Act and the SAA.

Comment 23: Subsidies as a Reduction to Cost

    AST argues that the Department should reduce AST's reported COP and 
CV by the amounts of its grants and subsidies. AST claims that by not 
reducing its reported costs by the countervailed grants and subsidies, 
the Department overstates the number of home market sales disregarded 
as below cost which, in turn, would overstate both the normal value and 
the dumping margin. AST cites Final Determination of Sales at Less Than 
Fair Value: Aramid Fiber Formed of Poly-Phenylene Terephthalamide from 
the Netherlands, 59 FR 23684, 23689-90 (May 6, 1994) (``Aramid 
Fiber''), as authority for the Department to offset the company's 
production costs by the amount of grants and other subsidies found to 
be countervailable.
    Petitioners refute AST's reliance on the Aramid Fiber 
determination. That case did not concern companion antidumping and 
countervailing duty proceedings. The Department only stated that 
petitioners were free to submit a petition for a CVD investigation 
alleging that subsidies had been received. The Department stated that 
it would not self-initiate a CVD investigation.
    Department's Position: AST first raised this issue in its case 
brief. During the course of the antidumping investigation, the company 
did not proffer any information concerning the subsidies it received or 
about how these subsidies were used. The record in this investigation 
does not support a conclusion that the grants and subsidies received by 
AST contains no details or facts surrounding the subsidies or grants 
received by AST, nor do we have quantifyable amounts relating to 
production activities. Accordingly, no offset to production costs for 
the claimed grants or subsidies is deemed appropriate.

Comment 24: Income Offset to Financial Expenses

    AST notes that in calculating its financial expense rate for the 
preliminary determination, the Department disallowed AST's reported 
financial income offset on the grounds that AST failed to establish 
that the offset was generated from short-term sources. AST argues that 
the Department has since verified the accuracy of the amount reported 
as an offset to Fried. Krupp's financial expenses at the cost 
verification of KTN and that we should use this short-term interest 
income as an offset to AST's financial expenses.
    Petitioners state that the public version of the cost verification 
report for KTN indicated that Fried. Krupp's short-term interest income 
offset was verified. Petitioners also note that the cost verification 
report stated that the Department encountered problems verifying the 
exchange gains which were claimed as offsets to interest expense. 
Petitioners urge the Department to use the financial expense ratio as 
recalculated in the cost verification report for the final 
determination.
    Department's Position: We agree with AST and petitioners. Based on 
our verification findings, the interest income used as an offset to 
finance expenses was appropriately classified as short-term. Fried. 
Krupp's 1997 consolidated financial statements distinguished between 
interest earned from long-term sources and short-term sources. 
Accordingly, we included this interest income earned from short-term 
assets, less the amounts relating to trade-receivables, as an offset to 
financial expenses. Additionally, based on our verification findings, 
Fried. Krupp was unable to substantiate its offset to financial 
expenses for exchange gains. Therefore, we have not allowed the 
exchange gains as an offset to interest expense.

Comment 25: G&A Expenses

    Petitioners note that the Department's cost verification report 
states that AST excluded from its reported G&A expenses, those expenses 
it had recorded as ``other operating expenses.'' Petitioners assert 
that the Department should revise AST's G&A expenses to include these 
amounts.
    AST requests that the Department remove certain indirect expenses 
and certain technical expenses from its reported G&A because those 
expenses were reported in other computer fields, resulting in them 
being double-counted.
    Department's Position: We recalculated AST's G&A rate, adding the 
``other operating expenses'' to G&A and removing the expenses that AST 
had reported in the other fields.

Comment 26: Double Counting Packing Expenses

    AST asserts that in calculating the dumping margin in its 
preliminary determination, the Department overstated the number of home 
market sales below cost by not excluding packing costs from the 
reported home market manufacturing costs while, simultaneously, 
subtracting packing costs from the home market price.
    Petitioners argue that AST did not provide any information or cite 
to any information on the record that indicated that its reported 
manufacturing costs included packing costs.
    Department's Position: We agree with AST that the standard costs 
include packing. At the cost verification, we reviewed the 1997 and 
1998 standard costs used in the cost build-ups for three different 
product control numbers. In each case, the standard cost sheets show 
that the standard cost included packing. See AST Cost Verification 
Report Exhibit B7, B8 and B9. Thus, we did not include packing in our 
total cost of production figure for the sales below cost test in the 
final determination.

Comment 27: Variance

    At the beginning of the cost verification, AST submitted a 
correction to its cost variance. AST also asserts that it had 
incorrectly applied the variance to factory overhead in its previous 
submissions to the Department.
    Petitioners did not comment on this issue.
    Department's Position: We agree with AST and used the revised 
variance in the COP calculation for the final determination.

Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, we are 
directing

[[Page 30774]]

the Customs Service to continue to suspend liquidation of all entries 
of subject merchandise from Italy that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of the 
preliminary determination in the Federal Register. The Customs Service 
shall continue to require a cash deposit or posting of a bond equal to 
the weighted-average amount by which the normal value exceeds the U.S. 
price as shown below. These instructions suspending liquidation will 
remain in effect until further notice. The weighted-average dumping 
margins are as follows:

------------------------------------------------------------------------
                                                               Weighted-
                                                                average
                    Exporter/manufacturer                       margin
                                                               (percent)
------------------------------------------------------------------------
AST.........................................................       11.17
All Others..................................................       11.17
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (``ITC'') of our determination. As our 
final determination is affirmative, the ITC will, within 45 days, 
determine whether these imports are materially injuring, or threaten 
material injury to, the U.S. industry. If the ITC determines that 
material injury, or threat of material injury does not exist, the 
proceeding will be terminated and all securities posted will be 
refunded or canceled. If the ITC determines that such injury does 
exist, the Department will issue an antidumping duty order directing 
Customs officials to assess antidumping duties on all imports of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the effective date of the suspension of 
liquidation. This determination is issued and published in accordance 
with sections 735(d) and 777(i)(1) of the Act.
    Dated:May 19, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-13676 Filed 6-7-99; 8:45 am]
BILLING CODE 3510-DS-P