[Federal Register Volume 64, Number 109 (Tuesday, June 8, 1999)]
[Notices]
[Pages 30592-30624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13681]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-831]


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

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

EFFECTIVE DATE: June 8, 1999.

FOR FURTHER INFORMATION CONTACT: Doreen Chen (Tung Mung); Joanna 
Gabryszewski (Chang Mien); Gideon Katz (YUSCO and Yieh Mau); or Michael 
Panfeld (Ta Chen), Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0408; (202) 482-0780; (202) 482-5255; and (202) 482-0172, 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's 
regulations are to the regulations at 19 CFR part 351 (1998).

Final Determination

    We determine that stainless steel sheet and strip in coils 
(``SSSS'') from Taiwan 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. Additionally, as discussed below, 
we have determined that the application of total adverse facts 
available is warranted with respect to YUSCO and Ta Chen.

[[Page 30593]]

Case History

    Since the amended preliminary determination (Notice of Amended 
Preliminary Determination of Sales at Less Than Fair Value: Stainless 
Steel Sheet and Strip from Taiwan, (Amended Preliminary Determination) 
(64 FR 4070, January 27, 1999)) the following events have occurred. We 
conducted a sales verification of Yieh United Steel Corporation's 
(``YUSCO'') questionnaire response on January 18-22, 1999. We conducted 
a sales and cost verification of Tung Mung Development Co., Ltd's 
(``Tung Mung'') questionnaire response on January 25-29, 1999. We 
conducted a sales and cost verification of Chang Mien Industries Co., 
Ltd.'s (``Chang Mien'') questionnaire response on February 2-6, 1999. 
We conducted a sales verification of Yieh Mau Corporation's (``Yieh 
Mau'') questionnaire response on February 8-9, 1999. Finally, we 
conducted a verification of Ta Chen Stainless Pipe Co., Ltd.''s (``Ta 
Chen Taiwan'') and Ta Chen International's (``TCI'') (collectively ``Ta 
Chen'') middleman dumping questionnaire response on April 5-8,1999 in 
Los Angeles and on April 12-16, 1999 in Taiwan. On April 12, 1999, 
respondents YUSCO, Ta Chen, Chang Mien, and Tung Mung provided this 
monthly shipment data for subject merchandise to the U.S. for 1996, 
1997, and 1998.
    Petitioners and respondents submitted case briefs on April 20, 
1999. On April 22, 1999, petitioners (the only party requesting a 
public hearing) withdrew their request for the public hearing. 
Petitioners and respondents submitted rebuttal briefs on April 26, 
1999.
    On February 5, 1999, Ta Chen submitted a middleman dumping 
questionnaire response. On February 17 and on March 3, 1999, Ta Chen 
submitted additional information. On April 7, 1999, the Department 
requested historical data from respondents regarding exports of subject 
merchandise during the POI to the U.S. for the years 1996, 1997, and 
1998. On April 20, 1999, the Department released a preliminary decision 
on our middleman dumping investigation of Ta Chen. See Memorandum from 
Michael Panfeld to the File entitled ``Ta Chen Stainless Pipe Co., 
Ltd.: Preliminary Middleman Dumping Analysis.'' In that memorandum, we 
preliminarily found that Ta Chen did not engage in middleman dumping 
with respect to purchases from YUSCO. However, we did preliminarily 
find that Ta Chen engaged in middleman dumping with respect to 
purchases from Tung Mung. On May 3, 1999, petitioners and respondents 
submitted a second round of case briefs, focused on middleman dumping 
issues. Petitioners and respondents submitted rebuttals for this second 
case brief on May 7, 1999.

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, 
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

[[Page 30594]]

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 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.

Fair Value Comparisons

    To determine whether sales of SSSS from Taiwan to the United States 
were made at less than fair value, we compared the export price 
(``EP'') to the normal value (``NV''), as described in the ``export 
price'' section of this notice below. In accordance with section 
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs for 
comparison to weighted-average NVs.

Transactions Investigated

Chang Mien

    With respect to home market sales, we have determined that the date 
of the order confirmation is the appropriate date of sale since it is 
the date on which the terms are set and is not changed thereafter, i.e. 
the date which ``established the material terms of sale.'' 19 CFR 
401(i). For a further discussion of this issue, see the date of sale 
discussion for Chang Mien further in the body of this Final 
Determination, and in the Analysis of Chang Mien in the Final 
Determination of Stainless Steel Sheet and Strip in Coils from Taiwan 
Memorandum (``Analysis Memorandum: Chang Mien''), May 18, 1999.
    For U.S. sales, we have determined that the date of invoice is the 
appropriate date of sale since it is the date on which the terms of the 
sale are set and is not changed thereafter. For a further discussion of 
this issue, see the date of sale discussion for Chang Mien, further in 
the body of this final, and in the Analysis Memorandum: Chang Mien.

Tung Mung

    For Tung Mung's U.S. sales, we have used contract date as date of 
sale. With respect to home market sales, we have determined that the 
date of invoice is the appropriate date of sale since it is the date on 
which the terms are set and is not changed thereafter, i.e. the date 
which ``established the material terms of sale.'' 19 CFR 401(i). For a 
further discussion of this issue, see Analysis of Tung Mung in the 
Final Determination of Stainless Steel Sheet and Strip in Coils from 
Taiwan Memorandum (``Analysis Memorandum: Tung Mung''), May 18, 1999. 
For U.S. sales, as a result of verification, we have treated Tung

[[Page 30595]]

Mung's sales to Company X as sales through Ta Chen Taiwan in our 
calculations. See Ta Chen Taiwan Verification Report dated April 28, 
1999 and Analysis Memorandum: Tung Mung.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by respondents, covered by the description in the 
``Scope of 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 August 3, 1998 questionnaire.

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 constructed 
export price (``CEP'') transaction. The NV LOT is that of the starting 
price sales in the comparison market or, when NV is based on 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. 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 Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).
    In this investigation, none of the respondents requested a LOT 
adjustment. To ensure that no such adjustment was necessary, in 
accordance with principles discussed above, we examined information 
regarding the distribution systems in both the United States and Taiwan 
markets, including the selling functions, classes of customers and 
selling expenses for each respondent.

Tung Mung

    Tung Mung claimed that there was only one LOT in the home market. 
Tung Mung reported that in the home market it made sales to 
distributors, service centers, and end-users through one channel of 
distribution. Tung Mung offered freight and delivery arrangements and 
warranty services to all customers in the home market. The Department 
confirmed this information at verification (see Verification Report: 
Stainless Steel Plate in Coils from Taiwan, Less than Fair Value 
Investigation, p. 8). Based on our analysis, for the final 
determination, we determine that Tung Mung had one LOT in its home 
market.
    In the U.S. market, Tung Mung reported that it sold at one LOT 
through two channels of distribution: (1) A foreign distributor, and 
(2) domestic trading companies. In the U.S. market, Tung Mung reported 
only one LOT to customers. Tung Mung reported that it performed 
identical selling functions in the United States and in the home 
market. These selling functions include freight and delivery 
arrangements and warranty services. The Department confirmed this 
information at verification (see Tung Mung sales verification report, 
p. 9). 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 home market and the United States. Therefore, a LOT 
adjustment for Tung Mung is not appropriate.

Chang Mien

    Chang Mien reported two LOTs in the home market and two channels of 
distribution. Within both channels of distribution, the merchandise is 
either shipped immediately to the customer or stored in Chang Mien's 
warehouse. In the home market, Chang Mien stated that it performed 
identical selling activities for both channels of distribution, such as 
providing inventory maintenance, technical advice, warranty services, 
delivery arrangements, and advertising. Although the selling activities 
offered are identical for each of its customers, an additional selling 
activity is performed for those sales which are stored in inventory. 
However, we determine that sales on which inventory maintenance is 
performed do not involve significantly greater resources than sales on 
which inventory maintenance is not performed and, therefore, do not 
constitute a separate LOT. The Department confirmed this information at 
the verification (see Memorandum to the File through Rick Johnson from 
Laurel LaCivita, Chang Mien Industries Co., Ltd., Home Market Sales, 
United States Sales Verification Report; Stainless Steel Plate in Coils 
from Taiwan, Less than Fair Value Investigation (``Chang Mien Sales 
Verification Report''), pp. 4-5). With respect to the final 
determination, the Department determines that Chang Mien's two claimed 
LOTs constitute one LOT. For a further discussion of this issue, see 
Analysis Memorandum: Chang Mien, pp. 7-8.
    In the U.S. market, Chang Mien reported that it sold at one LOT, 
through one channel of distribution, and to one type of customer 
(trading company). For sales in the U.S. market, Chang Mien performed 
the following activities: packing, delivery arrangements (i.e., 
transportation, brokerage and handling, and marine insurance), 
advertising, and warranty services. Based on a comparison of the 
selling activities performed in the United States 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 Chang Mien Sales Verification Report, pp. 4-5). 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 home 
market and the United States. Therefore, a LOT adjustment for Chang 
Mien is not appropriate.

Export Price

    For all respondents (except Ta Chen and YUSCO--see ``Facts 
Available'' section below), we based our calculation on EP, in 
accordance with section 772(a) of the Act, because the subject 
merchandise was sold by the producer or exporter directly to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP methodology was not otherwise indicated. Furthermore, we calculated 
EP based on packed prices charged to the first unaffiliated customer in 
the United States.

[[Page 30596]]

    We made company-specific adjustments as follows:

Tung Mung

    We made deductions from the starting price, where appropriate, for 
the following movement expenses, in accordance with section 
772(c)(2)(A) of the Act: foreign inland freight; containerization 
expenses; brokerage and handling expenses; harbor duty fees, and bank 
charges. Additionally, we added to the U.S. price an amount for duty 
drawback pursuant to section 772(c)(1)(B) of the Act.

Chang Mien

    We made deductions from the starting price, where appropriate, for 
the following movement expenses, in accordance with section 
772(c)(2)(A) of the Act: foreign inland freight; brokerage and 
handling; ocean freight; and marine insurance. Additionally, we added 
to the U.S. price an amount for duty drawback pursuant to section 
772(c)(1)(B) of the Act.

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 for YUSCO, Tung Mung, and Chang Mien. No 
party has contested this decision. For the final determination, we have 
based NV on home market sales.

2. Cost of Production Analysis

    Based on the cost allegation submitted by petitioners in the 
petition, the Department found reasonable grounds to believe or suspect 
that respondents had made sales in the home market at prices below the 
cost of producing (``COP'') the merchandise, in accordance with section 
773(b)(2)(A) of the Act. As a result, the Department initiated an 
investigation to determine whether respondents made home market sales 
during the POI at prices below their respective COPs within the meaning 
of section 773(b) of the Act. See Initiation of Antidumping 
Investigation: Stainless Sheet and Strip In Coils From France, Germany, 
Italy, Japan, Mexico, South Korea, Taiwan, and the United Kingdom, 
(``Initiation Notice'') 63 FR 37521 (July 13, 1998).
    We conducted the COP analysis described below.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus amounts for home market SG&A, interest 
expenses, and packing costs. We relied on the COP data submitted by 
each respondent in its cost questionnaire response. Additionally, we 
made the following adjustments based on our verification findings: (1) 
We made an adjustment to Tung Mung's G&A expenses to account for power 
expenses; and 2) for Chang Mien, we revised costs for three CONNUMs, as 
discussed further in Comment 8.
B. Test of Home Market Prices
    We compared the weighted-average COP for each respondent, adjusted 
where appropriate (see above), 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 in the normal course of trade. On a product-specific 
basis, we compared the COP to home market prices, less any applicable 
movement charges and direct and indirect selling expenses.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of 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), 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, 
in accordance with section 773(b)(2)(D) of the 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.
D. Calculation of CV
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of respondent's cost of materials, fabrication, SG&A, 
interest expenses, profit and U.S. packing costs. In accordance with 
section 773(e)(2)(A) of the Act, we based SG&A and profit on the 
amounts incurred and realized by respondent in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade for consumption in Taiwan.

Price-to-Price Comparisons

    We performed price-to-price comparisons where there were sales of 
comparable merchandise in the home market that did not fail the cost 
test. We disregarded sales to affiliated customers that failed the 
arm's-length test. We made adjustments, where appropriate, for physical 
differences in the merchandise in accordance with section 
773(a)(6)(c)(ii) of the Act.

Tung Mung

    For Tung Mung's home market sales of products that were above COP, 
we based NV on prices to home market customers. We made a deduction for 
inland freight and two post-sale price adjustments (these adjustments 
were reported as a quantity discount and other discounts) pursuant to 
section 351.401(c) of the Department's regulations. We calculated NV 
based on prices to unaffiliated home market customers. In addition, we 
made circumstance-of-sale (``COS'') adjustments for differences in 
direct selling expenses (i.e., credit and warranty expenses), where 
appropriate. In accordance with section 773(a)(6), we deducted home 
market packing costs and added U.S. packing costs. Based on the results 
of verification, we made an adjustment to indirect expenses. See Tung 
Mung Sales Verification Report at p. 14 and Analysis Memorandum: Tung 
Mung, p. 6.

Chang Mien

    For Chang Mien's home market sales of products that were above the 
COP, we based NV on prices to unaffiliated home market customers. We 
made a deduction for inland freight. In its December 4, 1998 
submission, petitioners argued that the Department should deny Chang 
Mien's reported home market credit expense and reclassify Chang Mien's 
claimed advertising expenses as indirect selling expenses. For the 
preliminary determination, the Department accepted Chang Mien's home 
market credit expenses and classified Chang Mien's advertising expenses 
in both the U.S. and home market as direct selling

[[Page 30597]]

expenses. However, based on findings made at verification, we have 
reclassified Chang Mien's claimed advertising expenses as indirect 
selling expenses for the final determination. See Analysis Memorandum: 
Chang Mien at 4. For a further discussion of this issue, see Comment 11 
``Advertising Expenses'' below. Furthermore, based on a pre-verified 
correction, we have adjusted Chang Mien's reported advertising 
expenses. Additionally, for the Final Determination, we will only make 
adjustments for warranty expenses associated with POI sales and have, 
therefore, excluded one of the two warranty expenses claimed by Chang 
Mien. See Comment 12 ``Warranty Expenses'' below. We made COS 
adjustments for direct selling expenses (i.e., credit, warranty and 
bank charges), where appropriate. In accordance with section 773(a)(6) 
of the Act, we deducted home market packing costs and added U.S. 
packing costs.

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 similar merchandise. 
We made adjustments to CV in accordance with section 773(a)(8) of the 
Act. For these EP comparisons, for Tung Mung, we made COS adjustments 
by deducting home market direct selling expenses and adding U.S. direct 
selling expenses.

Currency Conversion

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

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 Taiwan. Section 735(a)(3) of the Act 
provides that if a petitioner alleges critical circumstances, the 
Department will determine on the basis of the information available to 
the Department, whether:

    (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 that there is a history of dumping of the subject 
merchandise, the Department normally considers an existing antidumping 
duty order on SSSS in the United States or elsewhere to be sufficient. 
Petitioners did not provide any information indicating a history of 
dumping of SSSS from Taiwan. Furthermore, we investigated the existence 
of antidumping duty orders on SSSS from Taiwan in the United States or 
elsewhere, and did not find any. On April 7, 1999, we requested 
respondents to submit historical data on exports of subject merchandise 
to the United States for 1996, 1997 and 1998. On April 12, 1999, YUSCO, 
Chang Mien, Tung Mung, and Ta Chen submitted the historical data on 
U.S. exports as requested.
    In determining whether an importer knew or should have known that 
the exporter was selling subject merchandise at less than fair value 
and thereby causing material injury, the Department normally considers 
estimated dumping margins of 25 percent or greater for EP sales to 
impute knowledge of dumping and of resultant material injury. In this 
regard, we note that the ITC preliminarily determined that the domestic 
industry is materially injured or threatened with material injury by 
reason of imports from Taiwan. See Notice: International Trade 
Commission, 63 FR 41864 (August 5, 1999). In this investigation, with 
the exception of YUSCO, we have not established estimated dumping 
margins of 25 percent or greater. Based on these facts, we determine 
that, with the exception of YUSCO, the first criterion for ascertaining 
whether critical circumstances exist is not satisfied. Therefore, we 
determine that there is no basis to find that critical circumstances 
exist with respect to exports of SSSS from Taiwan by all respondents 
except YUSCO (see, e.g., Notice of Preliminary Determination of Sales 
at Less Than Fair Value and Postponement of Final Determination: 
Collated Roofing Nails From Korea, 62 FR 25895, 25898 (May 12, 1997)). 
Because the dumping margins for all companies except YUSCO are below 
the 25 percent threshold, we have not analyzed the shipment data for 
these respondents to examine whether imports of SSSS have been massive 
over a relatively short period.
    For YUSCO, we compared shipment data for the periods December 1997 
through May 1998 and June through November 1998 (the post-petition 
period), and found that YUSCO did not have massive shipments of SSSS to 
the United States in the post-petition period. Therefore, we find that 
critical circumstances do not exist. For a more detailed discussion of 
this analysis, see Analysis Memorandum--YUSCO from Rick Johnson to 
Edward Yang, May 19, 1999.

Verification

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

Application of Facts Available

    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) of the Act, 
facts otherwise available in reaching the applicable determination. 
Thus, pursuant to section 776(a) of the Act, the Department is required 
to apply, subject to section 782(d), facts otherwise available. 
Pursuant to section 782(e), 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.

YUSCO

    We find, based on the evidence set out below in the ``total facts 
available'' section of the notice, that by not reporting a large 
portion of the home market database, YUSCO withheld information that 
had been requested by the Department (i.e., all home market sales of 
the foreign like product) and did not act to the best of its ability in 
providing the requested information. Accordingly, the Department used 
facts available with an adverse inference, as provided for in section 
776(b) of the Act. Since these sales were not reported to the 
Department, this information was clearly not provided in a timely 
manner (i.e., in response to Section B of the Department's 
questionnaire). Furthermore, YUSCO's withholding of

[[Page 30598]]

crucial information which the Department needed to calculate an 
accurate normal value significantly impeded the Department's 
investigation. As a result, we must rely on the facts otherwise 
available.

Ta Chen

    We also determine, in accordance with section 776(a) of the Act, 
that the use of facts available as the basis for the weighted-average 
dumping margin is appropriate for Ta Chen because, despite the 
Department's attempts to verify necessary information provided by Ta 
Chen, the Department could not verify the information as required under 
section 782(i) of the Act. Furthermore, section 782(e) of the Act 
authorizes the Department to decline to consider information that is 
submitted by an interested party that is necessary to the determination 
under certain circumstances, such as when such information is so 
incomplete that it cannot serve as a reliable basis for reaching the 
applicable determination or when such information cannot be verified. 
As discussed below in Comment 23, we determine that information 
provided by Ta Chen in this investigation could not be verified.

Total Facts Available

YUSCO

    Section 773(a)(1)(B) of the Act requires that, in determining 
normal value, the Department use all sales of the foreign like product 
sold for consumption in the exporting country, provided the sales are 
in the usual commercial quantities, made in the ordinary course of 
trade and, to the extent practical, at the same level of trade as the 
export price or constructed export price sale. Our questionnaire 
requires that where the home market is viable, respondents report all 
sales of the foreign like product sold in the home market.
    The Department's antidumping questionnaire issued to YUSCO, at B-1, 
notes that Section B of the questionnaire ``provides instructions for 
reporting your sales of the foreign like product in your home market or 
a third-country market.'' Foreign like product, in turn, is defined in 
the glossary to the antidumping questionnaire as referring ``to 
merchandise that is sold in the foreign market and that is identical or 
similar to the subject merchandise. When used in the questionnaire, 
foreign like product means all merchandise that is sold in the foreign 
market and that fits within the description of merchandise provided in 
Appendix III to the questionnaire (section 771(16) of the Act).'' 
Therefore, it is clear from the instructions in the questionnaire that 
respondent is required to report all sales of subject merchandise in 
the foreign market. Furthermore, in explaining how to report customer 
codes for home market sales, the questionnaire states that, ``(i)f 
known, identify customers that export some or all of their purchases of 
the foreign like product. Explain how you determined which sales were 
for consumption in the foreign market.'' See Questionnaire at page B-8. 
This instruction clearly places an obligation upon a respondent and 
contemplates, in accordance with section 773(a)(1)(B) of the statute, 
that sales for consumption in the home market be reported as home 
market sales. Moreover, the questionnaire specifically asked respondent 
to identify customers that export and explain how it determined what 
sales were for home market consumption.
    The record establishes that YUSCO failed to report a substantial 
portion of sales possibly consumed by home market customers. On pages 3 
and 4 of its November 18, 1998 supplemental questionnaire response, 
YUSCO stated that:

    The majority of YUSCO's home market customers are further 
manufacturers. These further manufacturers produce different types 
of SSSS and/or non-subject merchandise from YUSCO's SSSS, and sell 
to their customers in the home market, U.S., and third countries. As 
stated above, YUSCO states that it does not know which YUSCO's SSSS 
was further manufactured into different types of SSSS or into non-
subject merchandise. Nor does YUSCO claim to know which YUSCO's SSSS 
was finally destined to either the home market, the United States, 
or third countries.

    We confirmed this during verification by interviewing 12 members of 
YUSCO's sales department via a written questionnaire. The questions 
concerned the employees' role, knowledge of its customers, and 
knowledge of further-processing. See Facts Available Decision 
Memorandum--YUSCO for a full discussion, as well as Exhibit 7 of the 
YUSCO sales verification report.
    Prior to verification YUSCO submitted a list of ``UZ sales'' which 
were sales made to home market further manufacturers. These customers 
informed YUSCO that the processed SSSS would be exported, but did not 
specify whether the exported product would still be subject 
merchandise. YUSCO claims that these sales should not be used in 
calculating YUSCO's dumping margin because YUSCO knew that its SSSS 
would be finally exported to third countries. Consistent with Notice of 
Final Determination of Sales at Less than Fair Value: Stainless Steel 
Plate in Coils From Taiwan, 64 FR 15493 (March 31, 1999), however, 
these sales must be included in a normal value calculation for YUSCO 
because YUSCO has not demonstrated that it knew that the SSSS from 
these sales was not consumed in the home market. YUSCO thus erroneously 
considered a substantial portion of its sales as third country export 
sales, even though they were sales to unaffiliated home market 
customers. Likewise, YUSCO also did not report a large number of 
indirect export sales, coded ``U*.'' These sales were made to Taiwan 
customers who possibly further manufactured the SSSS and then exported 
it to third countries. Although YUSCO reported the total quantity and 
value of these sales, it did not submit a U* sales listing and it did 
not provide evidence that this merchandise was exported as subject 
merchandise.
    Although YUSCO has provided information regarding total value and 
quantity of its home market sales, it has not explained why it did not 
report a large number of sales to home market customers who possibly 
further manufactured SSSS into non-subject merchandise before export. 
Nor has it reported the individual sales transaction data necessary to 
conduct the dumping analysis.
    As noted above, under section 773(a)(1)(B), normal value is based 
on sales of the like product for consumption in the home market. Thus, 
sales may be excluded from the home market database only if a 
respondent knew or had reason to know that merchandise was not sold for 
home consumption. See INA Walzlager Schaeffler KG v. United States, 957 
F. Supp. 251, 263H (CIT 1997). Therefore, if YUSCO had demonstrated 
that it knew or had reason to know that its sales of subject 
merchandise in the home market were not for consumption in the home 
market, it may have been appropriate for YUSCO to omit these sales from 
its home market sales. In this case, as described above, YUSCO has 
admitted that a large portion of its sales are further processed prior 
to exportation. It is without question that if merchandise sold in the 
home market, even if ultimately destined for export, was consumed in 
the home market in producing non-subject merchandise prior to 
exportation, then it should be reported as part of the home market 
sales database. See, e.g., Certain Hot-Rolled Carbon Steel Flat 
Products From Korea, 58 FR 37176 (July 9, 1993) (Comment 9); Dynamic 
Random Access Memory Semiconductors of One Megabit and Above From the 
Republic

[[Page 30599]]

of Korea, 58 FR 15467 (March 23, 1993). Therefore, YUSCO should have 
reported these sales as home market sales.
    Moreover, substantial evidence reveals that YUSCO's reliance on its 
internal coding system for sales reporting purposes contains an 
additional flaw: namely, this system is not used in accordance with 
YUSCO's own stated guidelines. Specifically, the Department found, in 
SSPC from Taiwan, that a product which, according to YUSCO's 
description, should have been coded as a ``UAS'' sale to the United 
States (irrespective of the Department's ultimate determination that, 
for our purposes, this sale was properly considered to be a home market 
sale), was in fact coded as a domestic sale (see Comment 1 and 2 of 
SSPC from Taiwan). The Department notes that the same system was used 
for the purposes of reporting sales in the instant investigation (see 
YUSCO sales verification exhibit 3, and pages 4 and 6 from YUSCO's 
verification report dated January 28, 1999 in SSPC from Taiwan, which 
has been placed on the record of this investigation). Therefore, 
further doubt is cast upon the reliability of YUSCO's reporting 
methodology.
    Because YUSCO's reliance on this internal classification of home 
market and third country sales for reporting sales to the Department 
was inadequate, by relying on it YUSCO failed to comply to the best of 
its ability with the Department's instructions. Additionally, although 
YUSCO did submit its UZ sales listing late in our investigation, this 
information is grossly incomplete and thus unusable for our dumping 
calculation purposes. Furthermore, because it was submitted on January 
11, 1999, we had no opportunity to issue supplemental questionnaires 
regarding these sales. The UZ sales listing is missing key information, 
such as product characteristics, CONNUMs, customer codes, relevant 
dates, and a number of adjustments. This information is thus so 
incomplete that it cannot serve as a reliable basis for reaching our 
determination of normal value. Finally, because this UZ sales 
information was so incomplete and was submitted too late for the 
Department to seek additional information regarding these sales, we 
find that the submission of these sales cannot reasonably be construed 
as evidence that YUSCO was attempting to cooperate to the best of its 
ability.

Ta Chen

    Generally, and in the process of verification, the Department's 
analysis of the completeness of a respondent's U.S. sales database is 
essential because the database is used to calculate the anti-dumping 
duties. An incomplete U.S. sales database is normally sufficient to 
render a company's response inadequate for the purpose of calculating a 
dumping margin. See, e.g., Persico Pizzamiglio, S.A. v. United States, 
Slip Op. 94-61 (CIT 1994) (Persico) (upholding the Department's use of 
best information available for a respondent who was unable to 
demonstrate the completeness of its U.S. sales at verification).
    Despite our efforts at verification, we were unable to verify 
information which is necessary and must be verified in order for us to 
make a determination under section 731 of the Act. Specifically, we 
were unable to verify the data Ta Chen provided concerning its 
purchases and subsequent U.S. sales of subject merchandise produced by 
YUSCO and Tung Mung. Most significantly, we found that Ta Chen was 
unprepared to demonstrate that the appropriate universe of purchases 
and U.S. resales were reported, that further-manufacturing activities 
in Taiwan were not related to subsequent U.S. sales, and that it had 
reported all expenses related to its purchases. As we have indicated 
above, incompleteness of the U.S. sales database is a critical flaw and 
is a factor which, by itself, forms an adequate basis for our 
determination to use facts available.
    Thus, we have determined that although Ta Chen provided information 
we requested which was necessary for us to perform our analysis, the 
information could not be verified as required by section 782(i) of the 
Act. Thus, in accordance with section 782(e)(2) of the Act, we have 
declined to consider information submitted by Ta Chen because it could 
not be verified. Because we were unable to verify necessary 
information, we were unable to employ our normal middleman dumping 
analysis. Under section 776(a) of the Act, we are required, in reaching 
our determination, to use total facts available because we could not 
verify Ta Chen's data. Thus, for Ta Chen, we have determined that it is 
appropriate to select from the facts otherwise available to the 
Department.

Adverse Facts Available

YUSCO

    Where the Department determines that an interested party has failed 
to cooperate by not acting to the best of its ability to comply with a 
request for information, section 776(b) of the Act provides that the 
Department may use an adverse inference in selecting from the facts 
available. See, e.g., Roller Chain, Other Than Bicycle, From Japan; 
Final Results and Partial Recission of Antidumping Duty Administrative 
Review, 63 FR 63671 (November 16, 1998); Certain Welded Carbon Steel 
Pipes and Tubes From Thailand: Final Results of Antidumping Duty 
Administrative Review, 62 FR 53808, 53819-20 (October 16, 1997). We 
have determined that YUSCO failed to cooperate to the best of its 
ability within the meaning of section 776(b) because YUSCO failed to 
follow the Department's instructions to report all home market sales.
    Section 776(b) of the Act authorizes the Department to use as 
adverse facts available information derived from the petition. Section 
776(c) of the Act provides that, when the Department relies on 
secondary information, such as the petition, as facts available it 
must, to the extent practicable, corroborate that information from 
independent sources that are reasonably at its disposal. The SAA 
clarifies that ``corroborate'' means that the Department will satisfy 
itself that the secondary information to be used has probative value 
(see SAA at 870). The SAA also states that independent sources used to 
corroborate may include, for example, published price lists, official 
import statistics and customs data, and information obtained from 
interested parties during the particular investigation (see SAA at 
870). At the outset of this investigation, the Department examined the 
accuracy and adequacy of the price to price information in the 
petition. We determined that the price to price comparisons and price 
to CV comparisons constituted sufficient evidence of dumping to justify 
initiation. See Initiation Notice at 37527 (estimated margins for 
Taiwan ranged from 8.23 percent to 77.08 percent).
    In order to determine the probative value of the petition margins 
for use as adverse facts available for the purposes of this 
determination, we have examined evidence supporting the petition 
calculations. In accordance with section 776(c) of the Act, to the 
extent practicable, we examined the key elements of the U.S. price and 
normal value calculations on which the petition margin was based and 
compared the sources used in the petition to YUSCO's reported sales 
databases. Based on this analysis, we have successfully corroborated 
the information in the petition regarding price to price comparisons. 
See Facts Available Memorandum--YUSCO. Therefore, we have chosen the 
highest petition margin (based on price-to-price comparisons) for 
Taiwan of 21.10 percent as the basis

[[Page 30600]]

for using total adverse facts available. See comment 2, below, for a 
full discussion of the overall facts available margin.

Ta Chen

    We examined whether Ta Chen had acted to the best of its ability in 
responding to our requests for information, such as U.S. sales data. We 
took into consideration the fact that, as an experienced respondent in 
other investigations and orders, its ability to comply with our 
requests for information could be distinguished from, for example, the 
ability of a less experienced company. Thus, Ta Chen can reasonably be 
expected to know which types of essential data we request in each 
investigation or review, and to be conversant with the form and manner 
in which we require submission of the data.
    In addition to taking into account the experience of a respondent, 
the Department may find it appropriate to examine whether the 
respondent has control of the data which the Department is unable to 
verify or rely upon. The record reflects that Ta Chen was in control of 
the data which was vital to our dumping calculations and which we were 
unable to verify or rely upon. See Facts Available Decision 
Memorandum--Ta Chen from Rick Johnson to Edward Yang, dated May 19, 
1999 (``Facts Available Decision Memorandum-Ta Chen'').
    An additional factor we have considered is the extent to which Ta 
Chen might have benefitted from its own lack of cooperation. The SAA 
states that ``where a party has not cooperated, [the Department] may 
employ adverse inferences about the missing information to ensure that 
the party does not obtain a more favorable result by failing to 
cooperate than if it had cooperated fully.'' Id. at 870. In accordance 
with our policy, we considered the overall effect of Ta Chen's errors. 
In this case, we have determined that the use of the flawed response 
would have yielded a more favorable margin for Ta Chen. See Facts 
Available Decision Memorandum--Ta Chen.
    In light of Ta Chen's familiarity with the Department's practices, 
its control of the necessary data, and the potential benefits it may 
have received, we have determined that Ta Chen failed to act to the 
best of its ability in providing the data we requested. Therefore, in 
accordance with section 776(b) of the Act, we have, on the basis of the 
record in this case, determined that it is appropriate for us to make 
the adverse inference authorized under that subsection of the statute. 
Accordingly, for this final determination, we base Ta Chen's margin on 
adverse facts available.
    In selecting a margin which would appropriately reflect our 
decision to use adverse facts available for Ta Chen, we examined the 
rates applicable to this case throughout the course of the proceeding. 
As adverse facts available, we have selected a rate of 15.34 percent 
for Ta Chen's resales of Tung Mung's and YUSCO's product, which 
reflects the highest rate in Stainless Steel Sheet and Strip in Coils 
from Taiwan: Whether to Initiate a Middleman Dumping Investigation 
(``Middleman Initiation Memo'') dated December 3, 1998. As we discuss 
in Comment 2 below, we have used this rate in calculating an overall 
weighted-average margin for Tung Mung and YUSCO.
    As indicated above, section 776(c) of the Act requires the 
Department to corroborate secondary information used as facts available 
to the extent practicable. Because the facts available applied to Ta 
Chen for this investigation is secondary information within the meaning 
of section 776(c) of the Act, we have, in accordance with section 
776(c), corroborated this information with independent sources.
    In accordance with section 776(c) of the Act, to the extent 
practicable, we examined the key elements of the middleman dumping 
calculations on which the middleman dumping petition was based and 
compared these sources to Ta Chen's reported data. Based on this 
analysis, we are satisfied that this information has probative value. 
See Facts Available Decision Memorandum--Ta Chen. Thus, we have 
determined that information and inferences which we have applied are 
reasonable to use under the circumstances of this determination, in 
accordance with the SAA at 869. Furthermore, there is no reliable 
evidence on the record indicating that this selected margin is not 
appropriate as adverse facts available.

Interested Party Comments

General Issues

Comment 1: Currency Fluctuations

    Petitioners argue that the Department should calculate final 
dumping margins for all respondents using three separate averaging 
periods to account for alleged severe currency fluctuations which 
occurred during the POI. Petitioners charge that there were sudden and 
dramatic drops in the value of the New Taiwan dollar relative to the 
U.S. dollar (from an annualized 9.83 percent drop in the first six 
months of the period of investigation to an annualized 70.60 percent 
drop in the last quarter of 1997). Therefore, to account for these 
sudden currency fluctuations, petitioners urge the Department to 
calculate three separate weighted-average price comparisons for each 
product under investigation; one for the first six months of the POI, 
another for the October 1997 through December 1997 period, and a third 
for the January 1998 through March 1998 period. Petitioners argue that 
the failure to account for the ``severe'' exchange rate fluctuations 
during the POI through the use of three separate periods will result in 
the dilution of pre-existing dumping margins resulting solely from 
exchange rate changes and independent of any pricing changes by 
respondents.
    Petitioners maintain the use of multiple averaging periods to 
account for exchange rate fluctuations is consistent with what 
petitioners claim to be the two goals of the antidumping law: (1) to 
provide relief to domestic industries facing unfair competition, and 
(2) to make fair comparisons. See Smith-Corona Group v. United States, 
713 F.2d 1568, 1575-76 (Fed. Cir. 1983) and Koyo Seiko Co. v. United 
States, 20 F.3d 1156, 1158-59 (Fed. Cir. 1994) (``Koyo Seiko''). 
Petitioners allege that unless the Department calculates separate 
margins for three periods, the macroeconomic conditions unrelated to 
each respondent's competitive pricing policies will unfairly and 
inappropriately mask Taiwan respondents' true margins of dumping. 
Petitioners assert that in several recent antidumping investigations, 
the Department recognized that a rapid currency devaluation may mask 
dumping margins and that multiple averaging periods are appropriate. 
See, e.g., Final Determination of Sales at Less Than Fair Value; 
Stainless Steel Plate in Coils from Korea (``SSPC From Korea''), 64 FR 
15443, 15452 (March 31, 1999) and Final Determination of Sales at Less 
Than Fair Value: Emulsion Styrene-Butadiene Rubber from the Republic of 
Korea (``ESBR from Korea''), 64 FR 14865, 14868 (March 29, 1999). 
Petitioners note that the Department has specifically addressed in its 
regulations the appropriate use of multiple averaging periods to avoid 
the possibility of distortion in the dumping calculation. See Preamble 
to Antidumping and Countervailing Duties; Final Rule, 62 FR 27296, 
27377 (May 19, 1997) (``Preamble'') (stating that [Commerce] should 
address depreciating currencies more fully in its regulations); and 19 
CFR 351.414(d)(3) (stating that Commerce may use shorter

[[Page 30601]]

averaging periods ``when normal values, export prices, or constructed 
export prices differ significantly over the course of the period of 
investigation...''). Petitioners assert that to achieve ``fairness,'' 
which is the goal of the dumping law, the Department must consider 
sudden currency devaluations in calculating dumping margins. 
Petitioners argue that given the significant degree of devaluation of 
the Taiwan dollar that occurred in the last quarter of 1997, 
calculating a single POI weighted-average price for each product is 
inappropriate.
    Petitioners argue that the statute and the SAA authorize the 
Department to rely on modified averaging comparisons where time affects 
sales comparability. Petitioners assert that the Notice of Proposed 
Rulemaking and Requests for Public Comment, 61 FR 7308, 7349 (February 
27, 1996) (``Notice of Proposed Rulemaking''), state that the 
Department will normally calculate an average-to-average comparison by 
weight-averaging sales during the entire period of investigation. 
Petitioners argue that the Department may resort to shorter time 
periods where the normal values, export prices, or constructed export 
prices for sales included in an averaging group differ significantly 
over the course of the POI. Petitioners allege that NV differs 
significantly and dramatically over the course of the POI when exchange 
rates are taken into account.
    Petitioners cite to the Department's reasoning in Notice of Final 
Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol from 
Taiwan (``PVA from Taiwan''), 61 FR 14064, 14069 (March 29, 1996), 
where the Department acknowledged that time affects price 
comparability, and relied on two averaging periods to calculate dumping 
margins. Petitioners note that although PVA from Taiwan involved an 
affirmative change in home market selling practices by respondent, the 
Department held that the change in selling practices enhanced the 
effect of time on price comparability ``because the respondent entered 
into long-term contracts that dramatically reduced NV in the last six 
weeks of the POI.'' Id. Petitioners argue that the need for separate 
averaging periods is even stronger in this investigation than in PVA 
from Taiwan, because the steep decline in NV results from the 
Department's calculation methodology, not from some independent action 
by respondents. Id.
    Petitioners argue that the ``precipitous'' drop at the last quarter 
of 1997 has a strong effect on the dumping calculations since 
respondents' costs for raw materials would be affected by the New 
Taiwan dollar's decline. Petitioners contend that if separate costs 
were available for three periods, it would be almost certain that all 
post-decline NV's would be below respondents' costs and that dumping 
would be found based on a comparison of respondents' U.S. prices to 
their actual ``constructed value'' for that same period. Petitioners 
assert that respondents are more likely to be further reducing U.S. 
prices in response to the Taiwan currency devaluations, whereas under 
the Department's current methodology, no dumping would be found for 
this period.
    Petitioners argue that the Department often departs from ordinary 
comparison methodology to account for extraordinary events. Petitioners 
argue that the courts have recognized that dumping margins should not 
be ``artificially'' created simply because of unforeseen changes in the 
exchange rate, citing, e.g., Melamine Chem., Inc. v. United States, 732 
F.2d 924, 929-932 (Fed. Cir. 1984). In addition, petitioners argue that 
dumping margins should not be eliminated artificially because of 
unanticipated changes in the exchange rate, given that the goal of the 
antidumping law is to protect the domestic industry from unfair trade 
practices, citing Koyo Seiko at 1158. In so arguing, petitioners cite 
to past Department decisions where the Department made adjustments to 
cost to account for extraordinary events that occurred during the 
period of investigation or review (Floral Trade Council v. United 
States, 16 CIT 1014, 106-17 (1992); Notice of Final Determination of 
Sales at Less Than Fair Value: Large Newspaper Presses and Components 
Thereof, Whether Assembled or Unassembled from Japan, 61 FR 38139, 
38153 (July 23, 1996); Final Determination of Sales at Less Than Fair 
Value: Fresh Kiwi Fruit from New Zealand, 57 FR 13695, 13697 (April 17, 
1992)). Petitioners assert that the Department consistently has 
recognized and attempted to minimize the effect of severe currency 
devaluations in dumping calculations, citing Final Determination of 
Sales at Less Than Fair Value: Industrial Nitrocellulose from Brazil, 
55 FR 23120 (June 6, 1990) (to account for hyperinflation, the 
Department calculated a separate foreign market value for each price 
period); Certain Fresh Cut Flowers from Columbia; Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 62 FR 
53297 (October 14, 1997) (holding that calculations should be revised 
to account for the ``devaluation of the Columbian currency''). 
Petitioners contend that the Notice of Proposed Rulemaking (at 7349) 
states that the Department may resort to shorter time periods where 
normal values included in the averaging group differ significantly over 
the POI.
    Petitioners argue that the Department also acknowledges that 
standard weight-averaging procedures are inappropriate under 
extraordinary circumstances by adopting special procedures for exchange 
rate conversions where foreign currencies appreciate vis-a-vis the 
dollar. Petitioners assert that 19 CFR 351.415 permits respondents time 
to adjust their pricing practices so that appreciating currencies do 
not ``create'' dumping margins. Petitioners argue that likewise, 
depreciating foreign currencies should not be used to reduce or 
eliminate margins of dumping. Petitioners argue that if a respondent is 
dumping at a time of stable inflation and currency valuation, dumping 
should not be eliminated because of an extraordinary devaluation of the 
foreign currency that otherwise has no impact on the respondent's 
pricing practices. Petitioners argue that respondents did not take any 
affirmative steps in the latter part of the period of investigation to 
eliminate or minimize its dumping. Petitioners claim that but for the 
rapid and unexpected devaluation of the Taiwan dollar, respondents' 
level of dumping would have been the same. Therefore, petitioners 
argue, the Department has not only the authority, but also the 
obligation, to rely on an alternative method to calculate the dumping 
margins to ensure a fair result.
    YUSCO argues that the Department should reject petitioners' request 
to calculate dumping margins using three separate averaging periods. 
YUSCO argues that petitioners' arguments are based on a ``tortured'' 
calculation of the exchange rate and on inapposite determinations in 
ESBR from Korea and SSPC from Korea. YUSCO asserts that petitioners 
grossly exaggerate the New Taiwan dollar fluctuation.
    YUSCO argues that contrary to petitioners' findings, the New Taiwan 
dollar exchange rates in the last three months in 1997 are within 
normal currency fluctuations addressed by the Department's standard 
rules for currency conversions. YUSCO asserts that section 351.415(c) 
of the Department's regulations state that the Department will ``ignore 
fluctuations in exchange rates.'' YUSCO claims that the New Taiwan 
dollar fluctuated only 12.6 percent in the last three months of 1997. 
Respondent argues that petitioners relied on a misleading calculation 
of a

[[Page 30602]]

yearly change in the New Taiwan dollar exchange rate that never 
occurred. Specifically, YUSCO claims that petitioners' ``annualized'' 
change of 70.6 percent is fictitious and alleges that petitioners 
inflated the denominator of their percentage calculation and 
``irrationally'' extrapolated an inflated one quarter rate change over 
a year in which no such sustained change occurred.
    YUSCO also claims that the Department did not use separate 
averaging periods when moderate currency fluctuation occurred in prior 
proceedings. In so arguing, YUSCO cites Engineered Process Gas Turbo-
Compressor Systems, Whether Assembled or Unassembled and Whether 
Complete or Incomplete, from Japan (``EPGTC from Japan''), 62 FR 24394 
(May 5, 1997), where the Department did not use separate averaging 
periods even though the Japanese yen fluctuated over 25 percent during 
the period of investigation. YUSCO argues that the Department's 
determinations in the South Korean cases petitioners have cited are not 
applicable to the instant case. YUSCO asserts that in SSPC from Korea, 
the Department determined that normal value, in U.S. dollar terms, in 
the last two months differed significantly from normal value in the 
earlier period due to a significant change in the exchange rate. In 
SSPC from Korea, the Department found that ``the won's value decreased 
by more than 40 percent in relation to the dollar in the last two 
months of 1997.'' YUSCO argues that, in contrast, the New Taiwan dollar 
fluctuated only 4.88 percent in the last two months of 1997, and less 
than 13 percent in the last three months of 1997. Finally, YUSCO argues 
that neither the New Taiwan dollar nor the Taiwan economy has ever 
faced the currency crisis similar to the one that South Korea faced in 
1998.
    Chang Mien also argues that petitioners have exaggerated the 
exchange rate fluctuations by annualizing their percentage change. 
Chang Mien assert that on a month-to-month basis, or annually, rather 
than ``annualizing'' individual numbers, the exchange rate between the 
New Taiwan dollar and the U.S. dollar changed approximately 15 percent 
using the Department's own data. Thus, Chang Mien argues, a change in 
the exchange rate on a month-to-month basis rather than on an 
annualized basis reveals that the change was less than ``sudden and 
dramatic.'' Chang Mien alleges that, with the exception of the two 
months from November to December 1997, the change in exchange rate was 
small and not sustained. Chang Mien claims that in the last two months 
of the POI, the New Taiwan dollar began a recovery, appreciating 
against the U.S. dollar.
    Chang Mien disagrees with petitioners' argument that the instant 
situation is comparable to the cases of SSPC from Korea and ESBR from 
Korea. As noted by YUSCO, Chang Mien also contends that in the above 
Korean cases, the Department found more than a 40 percent change in the 
exchange rate in the POI. Moreover, Chang Mien asserts that in SSPC 
from Korea, the Department found not only that there was a precipitous 
drop in the Korean won/U.S. dollar exchange rate, but also that this 
drop continued through the end of the POI, without quick rebound. 
According to Chang Mien, in contrast to the won, the New Taiwan dollar 
fell only 15 percent in the POI and also rebounded significantly in the 
last two months of the POI.
    Chang Mien asserts that petitioners' reading of the Preamble to the 
Department's regulations is misplaced. Chang Mien argues that the 
Preamble instead reads that ``the Department did not change its policy 
regarding the use of the exchange rates.'' Id. Chang Mien contends that 
among the areas the Department did not revise includes the use of 
either the actual exchange rate on a particular day or the use of a 
rolling eight-week average if the daily exchange rate varies by more 
than 2.25 percent from the rolling average. Chang Mien claims that this 
provision of using the rolling average for moderate fluctuations 
effectively takes care of any exchange rate fluctuations affecting 
dumping calculations, such as the fluctuations found in this case.
    Chang Mien disagrees with petitioners' interpretation that the 
provision under 19 CFR 351.414(d)(3) allows the use of shorter 
averaging periods, ``when normal values, export prices, or constructed 
export prices differ significantly over the course of the period of 
investigation * * *'' Chang Mien argues that this provision has no 
relevance to using multiple averaging periods due to rapid currency 
fluctuations. Chang Mien claims that the provision instead relates 
solely with averaging all home market sales, for example, and comparing 
them to an average of all U.S. sales. Further, Chang Mien argues that 
the Court of Appeals for the Federal Circuit has ruled that a 
respondent cannot be held responsible for actions beyond its control, 
citing Melamine Chemicals, Inc. v. United States, 732 F.2d 924 (Fed. 
Cir. 1984).
    Chang Mien argues that the Department should disregard petitioners' 
suggestion to use multiple averaging periods to account for currency 
fluctuations for the following policy reasons. First, Chang Mien 
contends that using this methodology would be prejudicial to 
respondents because it would provide no certainty on how to ensure that 
future sales comply with the antidumping duty statute with regard to 
currency fluctuations. Second, Chang Mien argues that multiple 
averaging periods would result in artificial dumping margins based 
solely on changes in the exchange rates. Third, Chang Mien claims that 
neither petitioners nor the Department have established clear 
guidelines on what constitutes either a severe, abnormal fluctuation or 
sufficient rebound from a severe currency devaluation. Finally, Chang 
Mien asserts this treatment of exchange rate fluctuations suggested by 
petitioners would have a ``nightmarish'' effect on future cases that 
would similarly be affected by exchange rate fluctuations.
    Chang Mien asserts that it is the exchange rate, not price, which 
has fluctuated. Chang Mien contends it does not have any control over 
the exchange rates, nor have petitioners alleged that Chang Mien 
significantly changed its business practices or pricing policy as a 
result of the exchange rate fluctuations. Chang Mien objects to 
petitioners' allegation that the fluctuation of exchange rates in the 
instant case is an ``extraordinary event'' sufficient enough to warrant 
using multiple averaging periods to calculate dumping margin. Chang 
Mien argues that currency fluctuations in the instant case cannot be 
equated with the hyperinflation seen in Brazil and in other antidumping 
cases, citing Industrial Nitrocellulose from Brazil; Final Results of 
Antidumping Duty Administrative Review, 55 FR 23120 (June 6, 1990).
    Finally, Chang Mien asserts that if the Department were to use 
multiple averaging periods, three calculations for the cost of 
production for each period also must be used in the margin calculation. 
Chang Mien argues that petitioners raised the issue of exchange rate 
fluctuations only in their case brief, making it impossible for 
respondents to submit cost of production data for each period within 
the time limits of this proceeding.
    Similar to YUSCO and Chang Mien, Tung Mung argues that the exchange 
rate changes during the POI were not significant enough to warrant 
dividing the period into three periods. Tung Mung argues that 
petitioners' assertion that Tung Mung's costs for raw materials would 
have ``skyrocketed'' as a result of the declining New Taiwan

[[Page 30603]]

dollar overlooks the fact that much of Tung Mung's raw materials are 
obtained from domestic and imported sources. Tung Mung objects to 
petitioners' argument that Tung Mung failed to take ``affirmative 
steps'' during a period when the New Taiwan dollar was declining, given 
that the decline of a foreign currency in relation to the U.S. dollar 
reduces any dumping margin that might have existed or increases the 
safety margin.
    Department's Position: We disagree with petitioners and have 
continued to use POI averages and our exchange rate model in this final 
determination. While we agree in principle with petitioners that we may 
use averaging periods of less than the POI when normal value, export 
price, or constructed export price varies significantly over the POI 
under 19 CFR 351.414(d)(3), we do not find that normal value or export 
price varied significantly over the POI due to exchange rate 
fluctuations for any of the respondents.
    In cases where there is a precipitous drop in the foreign 
currency's value during the POI, we may find it appropriate to use 
multiple averaging periods to avoid the possibility of a distortion in 
the dumping calculation caused by exchange rate fluctuations. See, 
e.g., SSPC from Korea, where the Department used two averaging periods 
to calculate the dumping margin because there was a precipitous drop in 
the won in relation to the dollar (more than 40 percent in a two month 
period). However, in the instant case, changes in the exchange rate 
were moderate. Using exchange rate data from the Federal Reserve, we 
found that the value of the New Taiwan dollar relative to the U.S. 
dollar declined steadily over the POI and the overall decline in the 
value of the New Taiwan dollar relative to the U.S. dollar was less 
than 20 percent over the POI. Given these facts, we find no basis to 
conclude that the change in the value of the New Taiwan dollar over the 
POI was so significant that it warranted the use of multiple price 
averaging periods.

Comment 2: Independent Rates

    Channel-specific dumping rates are inappropriate and without basis, 
petitioners contend, because the focus of the statute, the Department's 
regulatory regime, and both administrative and judicial precedent is on 
obtaining a single, weighted-average dumping rate for each foreign 
producer or exporter. Petitioners contend that multiple channels 
through which a foreign producer or exporter chooses to ship sales to 
the United States do not entitle them to channel-specific dumping 
rates.
    Petitioners contend that there is no statutory basis for assigning 
a channel-specific rate. Petitioners, citing to sections 777A(c)(1) and 
731(1) of the Act, argue that Congress has charged the Department with 
ascertaining the extent to which subject merchandise is dumped in the 
United States and assigning a single, weighted-average dumping rate to 
each producer or exporter under investigation. Petitioners state that 
there is no language in the statute to the effect that a producer is to 
receive a channel-specific dumping rate. In contrast, petitioners 
assert, the statute contemplates what, at best, might be called a 
``unitary'' rate, reflecting all the given producer's sales to the 
United States regardless of routing and distribution.
    Petitioners argue that given the circumstances in the instant case 
and the Department's discussion of its current regulations, the 
Department should impose a single, weighted-average dumping rate for 
each investigated producer. Petitioners cite the Department's 
discussion in Antidumping Duties: Countervailing Duties, 62 FR 27296, 
27303 (May 19, 1997) (``Final Rule'') with regard to regulation 
351.107:

    The Department also believes it is not appropriate to establish 
combination rates in an AD investigation or review of a producer; 
i.e., where a producer sells to an exporter with knowledge of 
exportation to the United States. In these situations, the 
establishment of separate rates for a producer in combination with 
each of the exporters through which it sells to the United States 
could lead to manipulation by the producer. Furthermore, the 
Department recognizes that in many industries it is not uncommon for 
a producer to sell some amount of merchandise purchased from other 
producers. In such situations, the Department generally intends to 
establish a single rate for such a respondent based on its status as 
a producer, although unusual circumstances may warrant the 
application of a combination rate.

Petitioners state that both YUSCO and Tung Mung have acknowledged that 
they knew the subject merchandise was to be resold by the middleman or 
trading company to the United States, citing YUSCO's and Tung Mung's 
September 8, 1998 responses at A-12 and A-8, respectively. Moreover, 
petitioners allege that there are no unusual circumstances presented in 
the instant investigation that would justify recourse to a combination 
rate alongside a separate rate for YUSCO and Tung Mung.
    Petitioners maintain that relevant precedent further reinforces the 
conclusion that a single, weighted-average dumping rate should be 
assigned to each producer and exporter of the subject merchandise. 
Petitioners maintain that the decision of SSPC from Taiwan with regard 
to separate dumping rates for each producer should not be followed, as 
it is at variance with the Department's express policy and precedent, 
citing Ferrovanadium and Nitride Vanadium from the Russian Federation: 
Notice of Final Results of Antidumping Duty Administrative Review, 
(``Ferrovanadium from Russia'') 62 FR 65656, 65659 (December 15, 1997); 
Final Negative Countervailing Duty Determination: Stainless Steel Plate 
in Coils from the Republic of Korea, (``CVD SSPC from Korea'') 64 FR 
15530, 15532 (March 31, 1999); and Certain Pasta from Italy: Results of 
New Shipper Antidumping Duty Administrative Reviews, (``Certain Pasta 
from Italy'') 64 FR 852853 (January 6, 1999) and 63 FR 53641, 53642-43 
(October 6, 1998). Petitioners state that the Department's findings in 
Certain Pasta from Italy differ from the instant case only in that 
Corex, in its role as a trading company, was not involved in a 
middleman dumping investigation.
    Petitioners argue that the Department has recognized the need of 
assigning producers a single, weighted-average dumping rate, regardless 
of channels used to sell merchandise to the United States, to prevent 
margin manipulation and avoidance of antidumping duties, citing the 
Final Rule at 27303. Petitioners contend that the use of channel-
specific dumping rates, as requested by respondents, would encourage 
respondents to resort to middleman dumping. Petitioners maintain that a 
foreign producer and an unaffiliated middleman could easily engage in 
price manipulation such that respondents could avoid antidumping duties 
by having the producer sell to the middleman at non-dumped prices and 
rely upon the middleman to carry out the dumping in the resale that 
usually is not analyzed by the Department. Moreover, if the producer is 
excluded from the order by virtue of its own separate rate, petitioners 
argue that the producer will be free to accomplish dumping on its own.
    Petitioners maintain that it is this reasoning that causes the 
Department to capture the total amount of dumping through an additional 
analysis of the middleman's dumping. In keeping with this purpose, 
petitioners surmise, the Department should assign a single, weighted-
average dumping rate because the total dumping by these two parties has 
benefitted the subject merchandise imported into the United States. 
Thus,

[[Page 30604]]

even absent an affiliation between the producer and the middleman 
within the meaning of section 771(33) of the Act, petitioners argue 
that the producer and the middleman are ``rightly perceived by the 
Department as having effectively worked in tandem'' in dumping the 
subject merchandise.
    Petitioners also cite Sweaters Wholly or in Chief Weight of Man-
made Fiber from Taiwan: Final Results of Changed Circumstances 
Antidumping Duty Administrative Review, (``Sweaters'') 58 FR 32544, 
32645 (June 11, 1993) as punctuating the notion that the Department 
will assign a single, weighted-average dumping rate to each producer, 
no matter whether the producer's product has gone through a trading 
company like Jia Farn or directly to the United States. In Sweaters, 
the Department stated that:

    The CIT agreed with the Department that the subject of 
antidumping orders is merchandise, not companies, and that only 
merchandise manufactured by Jia Farn was excluded from the order * * 
*''

Petitioners argue that Sweaters buttresses the Department's authority 
to act forcefully within the bounds of the statute to preclude 
circumvention of antidumping duties. Therefore, petitioners submit that 
the Department should use a single, weighted-average dumping rate on 
YUSCO and Tung Mung to prevent possible circumvention of antidumping 
duties.
    YUSCO states that the record does not support a middleman dumping 
finding in this investigation, but in case the Department does find 
middleman dumping, YUSCO should be assigned an independent dumping 
margin. YUSCO, in explaining its reasoning for an independent rate, 
states that the record establishes that YUSCO is an independent 
producer and exporter of SSSS, as it made direct sales to U.S. 
customers during the POI, and that according to section 777A of the 
Act, the Department ``shall determine the individual weighted average 
dumping margin for each known exporter and producer of the subject 
merchandise'' unless such individual rate determination is not 
``practicable.'' Therefore, YUSCO contends that it is entitled to an 
independent deposit rate. Furthermore, since the Department verified 
YUSCO's sales and cost information, the Department should, according to 
YUSCO, have no undue difficulties in calculating this margin. According 
to YUSCO, the Department's decision in Fuel Ethanol from Brazil 
supports this argument since in that case the Department assigned an 
independent deposit rate to a manufacturer based on its sales to the 
United States other than through a trading company.
    YUSCO argues that the Department should disregard petitioners' 
arguments and assign an independent rate to YUSCO based only on dumping 
margins produced from YUSCO's sales other than through Ta Chen.
    First, YUSCO argues that petitioners' arguments are contrary to the 
Department's practice and regulations. YUSCO states that petitioners' 
``knowledge'' standard does not apply to cases when ``unusual 
circumstances may warrant the application of a combination rate,'' as 
stated in the preamble. YUSCO argues that since the Department and 
petitioners have both admitted that middleman dumping is unusual, 
knowledge of destination should be irrelevant to the determination of a 
middleman dumping deposit rate.
    Second, YUSCO disagrees that combination rates offer respondents a 
possibility to circumvent antidumping duties, and that, according to 
the preamble, combination rates are issued in order to prevent 
circumvention.
    Third, YUSCO asserts that petitioners incorrectly state that the 
Department's knowledge test as stated in the preamble supersedes Fuel 
Ethanol from Brazil. YUSCO states that the Department set a standard 
regarding middleman dumping as an exception to the knowledge test in 
Fuel Ethanol from Brazil and that SSPC from Taiwan changes Fuel Ethanol 
only regarding combination rate methodology. According to YUSCO, all 
other aspects of Fuel Ethanol, including the calculation of a 
producer's independent rate, are still applicable. YUSCO states that 
the Department correctly assigned both a combination rate and 
independent rate to YUSCO in SSPC from Taiwan. 
    Finally, YUSCO states that all four cases that petitioners quote 
are irrelevant to this investigation. Ferrovanadium from Russia does 
not apply because it is a non-market economy case. CVD SSPC from Korea 
is also irrelevant, argues YUSCO, since the Department stated that 
combination rates would serve no purpose in that specific case. YUSCO 
also argues that Certain Pasta from Italy is irrelevant, because 
petitioners incorrectly claim that the Department did not assign a 
combination rate to a trading company. In fact, YUSCO notes that the 
trading company was in fact a producer, and the Department specifically 
noted the importance of assigning a combination rate to a producer and 
exporter. Finally, YUSCO argues that Sweaters from Taiwan is irrelevant 
because the issue in that case was not, as petitioners state, possible 
circumvention of antidumping duties by a producer; rather, the issue 
was over whether a company should be considered a producer, an issue 
which YUSCO maintains is irrelevant to the case at hand.
    YUSCO also argues that petitioners' single rate methodology would 
unreasonably and unfairly punish YUSCO and its U.S. customers since 
nothing on the record shows that any of these parties were involved in 
Ta Chen's selling practices. Furthermore, as in Fuel Ethanol from 
Brazil and SSPC from Taiwan, YUSCO claims that the Department should 
not double-count dumping margins generated from sales to Ta Chen when 
calculating a separate rate for YUSCO, since the margins for sales to 
Ta Chen will be incorporated into the YUSCO/Ta Chen combination cash 
deposit rate. YUSCO claims that not double-counting advances fairness 
and administrative efficiency in determining importer-specific 
assessment rates.
    Tung Mung argues that, if the Department does affirm its middleman 
dumping finding, the Department should issue a separate rate for Tung 
Mung. Tung Mung argues that in middleman dumping cases the Department 
has consistently issued separate rates to the producers, citing SSPC 
from Taiwan (assigning two cash deposit rates, one to apply to sales 
made by the producer through the middleman, the other to apply to any 
sale of subject merchandise by the producer other than through the 
middleman). Tung Mung argues that assigning a separate rate for Tung 
Mung is fair and appropriate because the producer should not be 
penalized in making future sales to the United States as a result of 
pricing activities by the unaffiliated middleman that are, by 
definition, completely outside the producer's knowledge or control. 
Tung Mung argues that it should be able to continue to make direct 
sales to the United States without the importer being burdened with 
cash deposits that resulted from Ta Chen's activities. Tung Mung also 
requests that the Department confirm its decision that direct sales 
from Tung Mung to TCI, Ta Chen Taiwan's U.S. affiliate, are not subject 
to the middleman dumping analysis and therefore that such sales in the 
future would not be subject to any middleman dumping rate that the 
Department might issue in its final determination.
    Tung Mung disagrees with petitioners' proposal to issue a single 
rate and argues that petitioners' reasoning is ``fatally'' flawed. Tung 
Mung asserts that the cases relied upon

[[Page 30605]]

by petitioners involved middleman sales but no middleman dumping. Tung 
Mung agrees with petitioners' request to issue a single rate to a 
producer, regardless of which channel it is selling to the United 
States. Tung Mung finds this policy appropriate where the producer 
alone has been found to be dumping, and not the middleman. However, 
Tung Mung challenges petitioners' assertions that the Department has 
changed its policy of giving a separate rate to the producer in 
middleman dumping cases, and instead now applies a single, weighted 
average margin, noting that in SSPC from Taiwan, the Department gave 
one rate to the producer--based in its sales to the middleman--and 
another rate to the producer/middleman combination. Tung Mung asserts 
that petitioners failed to explain how manipulation by the respondents 
is possible in the instant case. Tung Mung distinguishes the instant 
case from CVD SSPC from Korea, where the producer in question was 
selling through five different trading companies. Here, Tung Mung 
argues, there would only be two rates for each producer--one applying 
to its sales to the United States through Ta Chen, the other to the 
remainder of its sales. Thus, Tung Mung argues there would be no 
opportunity for manipulation.
    Tung Mung finds implausible petitioners' claim that the producer 
and middleman can work in tandem in dumping the subject merchandise in 
the United States. Tung Mung argues that this assertion made by 
petitioners has no basis in fact and contradicts the Department's 
practice of giving separate rates to the producer and the middleman in 
middleman dumping cases. Tung Mung argues that petitioners even admit 
the implausibility of price manipulation by the middleman and the 
respondent producer, because by having the middleman carry out the 
dumping in the resale, the middleman would incur substantial losses. 
Thus, Tung Mung argues that the middleman could not engage in such a 
pricing strategy for any length of time.
    In conclusion, Tung Mung submits that the Department should find a 
separate rate for Tung Mung based on direct sales to the United States. 
Further, Tung Mung argues that if that rate is de minimis, Tung Mung 
should be excluded from the order with respect to future sales to the 
United States that do not go through Ta Chen.
    Ta Chen argues that, as the Department determined in SSPC from 
Taiwan, any middleman dumping margin should only apply to sales made by 
Ta Chen Taiwan. According to Ta Chen, TCI, like any other U.S. 
corporation, should be permitted to purchase directly from a Taiwan 
manufacturer at that manufacturer's own dumping rate.
    Department's Position: We agree with petitioners that separate 
channel-specific rates are not appropriate in this case. Accordingly, 
we have determined one rate for Tung Mung merchandise, whether or not 
exported by Ta Chen, and one rate for YUSCO merchandise, whether or not 
exported by Ta Chen.
    In light of the arguments raised by interested parties in this 
proceeding, we have reviewed our findings in SSPC from Taiwan. In 
making that final determination, we notified the U.S. Customs Service 
that, for entries of subject merchandise produced by YUSCO and shipped 
to the United States through Ta Chen, the cash deposit rate would be 
10.20 percent and, for all other entries of subject merchandise 
produced by YUSCO, the cash deposit rate would be 8.02 percent. 
However, in that determination, YUSCO sold the subject merchandise to 
the United States only through Ta Chen and the dumping margin on that 
channel was above de minimis, such that we were not faced with the same 
factual situation in the instant case.
    In the instant case, the factual situation is different. For 
example, both Tung Mung and YUSCO had a small volume of sales to the 
United States not subject to our current middleman investigation. 
Moreover, in the Preliminary Determination, we determined that on an 
overall basis, neither Tung Mung nor YUSCO had estimated dumping 
margins that exceeded the de minimis level such that the possibility of 
exclusion existed for these firms. However, this preliminary finding 
did not include an analysis of middleman dumping. Thus, we recognize 
that, in this final determination, we are examining this issue for the 
first time since Fuel Ethanol from Brazil. 
    Since our finding in Fuel Ethanol from Brazil, the Department has 
adopted new regulations regarding so-called ``combination'' or 
``channel'' rates. Specifically, section 351.107 of the Department's 
regulations was added, codifying our ability to issue channel rates in 
certain circumstances. The preamble to these regulations, which 
discusses our position on issuing channel rates in different factual 
scenarios (see Preamble at 27302-3), notes that we do not generally 
find it appropriate to determine channel rates when investigating 
producers.
    After analyzing all interested party comments, we determine that it 
is appropriate to consider the full range of dumping when reaching a 
determination under sections 733(a) or 735(a) of the Act. This is 
particularly important given the number of sales of subject merchandise 
produced by YUSCO and Tung Mung which are made through Ta Chen, and 
given (in the case of Tung Mung) the identity of the customer(s) in the 
United States to which Tung Mung made its direct sales. See Analysis 
Memorandum: Tung Mung, Attachment 3. and Facts Available Memorandum--
YUSCO at page 1. Under these circumstances, it is inappropriate to 
determine an independent margin for purposes of determining whether 
sales are made at LTFV under section 735(a)(1) or in determining 
eligibility for exclusion under section 735(a)(4) of the Act. However, 
we have taken into consideration the dumping margins attributable to 
both channels in determining the weighted-average dumping margins.
    Therefore, for the final determination, we calculated an overall 
weighted-average margin (taking into account YUSCO's and Tung Mung's 
sales to Ta Chen and other customers, and the middleman dumping of 
YUSCO and Tung Mung merchandise attributable to Ta Chen) as provided 
for under section 735(c)(1)(B)(i) of the Act. We used this overall 
margin for determining whether SSSS from Taiwan is being sold in the 
United States at LTFV, as provided in section 735(a)(1) of the Act. We 
also compared the overall weighted-average margin to our de minimis 
benchmark to determine eligibility for exclusion, as provided in 
section 735(a)(4) of the Act.
    In order to calculate the overall weighted-average margin, we used 
the following methodology. For YUSCO, we first calculated a rate for 
those sales made by YUSCO and Yieh Mau to Ta Chen by summing YUSCO's 
facts available rate and Ta Chen's facts available rate (the sum of 
which equals 36.44 percent). See discussion of these rates in the 
``Facts Available'' section above. We also calculated the total weight 
of these sales. Similarly, we calculated the weight of sales made by 
YUSCO and Yieh Mau to all other customers, and we applied the adverse 
facts available rate of 21.10 percent to these sales. Finally, we 
weight averaged these two rates by the total sales volume. The overall 
margin is 34.95 percent. For further detail, see Analysis Memorandum--
YUSCO. 
    For Tung Mung, we first calculated a rate for those sales made by 
Tung Mung to Ta Chen by summing Tung Mung's

[[Page 30606]]

rate and Ta Chen's facts available rate (the sum of which equals 15.40 
percent). Then, we calculated the margin for other Tung Mung sales, 
which was zero. Finally, we weight averaged these two rates by the 
total value. The overall margin is 14.95 percent. For further detail, 
see Analysis Memorandum--Tung Mung. 

Comment 3: All-Others Rate

    Tang Eng and Chia Far argue that, where the Department makes all 
exporters mandatory respondents but does not calculate a margin for all 
respondents, the Department should calculate the ``all-others'' rate 
for the non-selected respondents as the average of the calculated 
dumping margins, including any de minimis margins and excluding any 
margins based entirely on facts otherwise available. Tang Eng and Chia 
Far assert that this treatment is provided for in the URAA and follows 
Departmental practice. Respondents cite Notice of Preliminary 
Determination of Sales at Less than Fair Value: Honey from the People's 
Republic of China, (``Honey'') 60 FR 14725, 14729 (March 20, 1995) and 
Certain Fresh Cut Flowers From Colombia: Preliminary Results of 
Antidumping Duty Administrative Review, (``Flowers XI'') 64 FR 8059, 
8060-62 (February 18, 1999) as examples of the Department's prior 
treatment of non-selected respondents.
    Petitioners contend that the ``all-others'' rate assigned to Tang 
Eng and Chia Far should exclude any de minimis margins. Petitioner's 
contend that the statute's language is unambivalent in its direction to 
calculate the ``all-others'' rate exclusive of de minimis margins and 
margins based on facts otherwise available. Petitioners cite Flowers 
XI, et al, as examples of Departmental precedent in keeping with this 
statutory requirement.
    Department's Position: We agree with respondents in part. Section 
735(c)(5)(A) of the Act directs us to calculate the ``all-others'' rate 
exclusive of de minimis margins and those margins determined entirely 
on facts otherwise available. Moreover, under this section, the ``all-
others'' rate is established during the less-than-fair-value 
investigation and does not change in subsequent administrative reviews 
conducted under section 751. However, section 735(c)(5)(B) of the Act 
provides for an exception in instances where all margins are either de 
minimis or based on facts otherwise available.
    In the instant case, all margins are either de minimis or based on 
facts otherwise available. Hence, we are not limited to the methodology 
prescribed in section 735(c)(5)(A) of the Act. Therefore, for this 
final determination, we have calculated the ``all-others'' rate based 
on a simple average of the corroborated price-to-price comparisons 
alleged in the petition, as indicated in our Initiation Notice. 
    We disagree with respondents' interpretation of Honey and Flowers 
XI. Flowers XI involves a review conducted under section 751 of the Act 
and did not result in a recalculation of the ``all-others'' rate. 
Rather, Flowers XI describes how the Department established a margin 
for those respondents for which a review was initiated, but were not 
selected for individual review under section 777A(c)(2)(A). Honey is 
not controlling because that investigation was governed by the Act 
prior to the URAA. Moreover, in that determination we did not include 
de minimis margins in our calculation of the all-others rate.

Company-Specific Issues

YUSCO/Yieh Mau

Comment 4: Affiliated Party Transactions

    Petitioners argue that the Department should reclassify YUSCO's 
sales to Yieh Mau as affiliated home market sales and include them in 
the Department's arm's-length test of YUSCO's home market sales. 
Petitioners also state that, in the preliminary determination, the 
Department did not conduct an arm's-length test on YUSCO's sales to 
Yieh Mau because it determined that according to the evidence on the 
record, Yieh Mau was not affiliated with YUSCO. Petitioners claim that, 
as discovered at verification, this decision is improper.
    During verification, petitioners argue, the Department confirmed 
that an affiliation exists between YUSCO and Yieh Mau within the 
meaning of section 771(33) of the Tariff Act, since the Department 
found that the same family owns large percentages of both companies and 
is involved in their management, thus making the two companies 
``commonly controlled.'' In addition, petitioners state that an equity 
interest exists between these two firms and that YUSCO has consistently 
referred to Yieh Mau as an affiliated party.
    Petitioners continue by citing the Final Determination of Sales at 
Less Than Fair Value: Stainless Steel Plate from Belgium (``Plate from 
Belgium'') 64 FR 15476 (March 31, 1999), in which, according to 
petitioners, the Department determined that two companies were 
affiliated because they were under common control by another company. 
Petitioners draw a parallel inference with respect to YUSCO's and Yieh 
Mau's common familial control.
    YUSCO states that even if the Department determines that YUSCO and 
Yieh Mau are affiliated, the Department should use YUSCO's sales to 
Yieh Mau in calculating YUSCO's dumping margin and not use Yieh Mau's 
sales, because YUSCO made its sales to Yieh Mau, not through Yieh Mau 
to other customers.
    Department's Position: We agree with petitioners that YUSCO and 
Yieh Mau are properly considered affiliated parties under the statute. 
Section 771(33)(A) of the Act states that persons shall be considered 
affiliated if they are ``members of a family, including brothers and 
sisters (whether by the whole or half blood), spouse, ancestors, and 
lineal descendants.'' Section 351.102(b) of the Department's 
regulations state that, in considering whether control over another 
person exists, the Secretary will consider, among other things, 
corporate or family groupings. At verification we found a significant 
degree of ownership by the same family. We also found that this same 
family is involved in the management of both companies. See YUSCO SSSS 
Sales Verification Report, dated April 12, 1999.
    Given these circumstances, we determine that YUSCO and Yieh Mau are 
affiliated persons under section 771(33)(A) of the Act. Therefore, due 
to our above-described determination to use total adverse facts 
available for YUSCO, we also determine that Yieh Mau shall be subject 
to this decision as well.

Comment 5: Verification Corrections

    Petitioners argue that the Department should disallow Yieh Mau's 
claimed adjustment for home market credit expenses and inventory 
carrying costs since the Department was unable to verify Yieh Mau's 
short-term interest rate. Petitioners contend that Yieh Mau did not 
provide the information that was required by the Department, although 
Yieh Mau possessed documents containing this information and could have 
retrieved these from storage. Therefore, petitioners argue, Yieh Mau 
failed to cooperate to the best of its ability and the Department may, 
according to Section 776(b) of the Tariff Act, use facts available with 
an adverse inference. Furthermore, petitioners cite the SAA, stating 
that the Department ``* * *  may employ adverse inferences about the 
missing information to ensure that the party does not obtain a more 
favorable result by failing to cooperate than if it had cooperated 
fully.''

[[Page 30607]]

    YUSCO did not comment on this issue.
    Department's Position: We agree, in principle, with petitioners, 
that the use of adverse facts available would be warranted under these 
circumstances. However, due to our decision to apply total adverse 
facts available to YUSCO, this issue is moot.

Comment 6: Overall Cost Reconciliation

    YUSCO argues that the Department should not adjust its reported 
costs by the difference between total reported COM and the total COM in 
its accounting system. YUSCO states that the Department verified all of 
its cost data for the POI and did not find discrepancies between 
reported COP and CV data and the material cost, direct labor, and 
overhead cost in its accounting records. Respondent asserts that it 
provided information necessary to quantify the differences between the 
amounts in the accounting records and reported TOTCOMs. YUSCO maintains 
that it quantified the differences between the accounting system and 
reported COMs for: raw material input costs for affiliated 
transactions; usage of processing time instead of production quantity 
as the allocation factor for production costs after the hot rolling 
stage; and recalculation of YUSCO's average material cost based on cost 
of goods used during the POI instead of only inputs purchased during 
the year.
    Respondent contends that petitioners did not argue the validity of 
the difference resulting from reporting costs for the POI verses for 
the fiscal year. Therefore, YUSCO argues that if the Department adjusts 
for the other reconciling items, it should exclude this particular 
difference from the adjustment.
    YUSCO argues that the Department's practice is not to adjust 
reported costs for explained differences between amounts in the 
accounting system and reported costs. YUSCO notes that the Department 
has not adjusted differences in the past which were ``adequately 
explained,'' citing Certain Corrosion-Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate From Canada: 
Final Results of Antidumping Duty Administrative Reviews, 63 FR 12725, 
12736 (March 16, 1998) (Comment 13).
    Petitioners argue that the difference the Department found between 
YUSCO's reported total cost of manufacturing and the amount in its 
accounting records is an unreconciled difference and it should be added 
to the reported costs. Petitioners state that while respondent 
explained the difference as being generated by the three items noted 
above, YUSCO did not quantify the amount of each item. Therefore, 
petitioners conclude that the difference is unreconciled.
    As support for the importance of reconciling the costs, petitioners 
point to Certain Cut-to-Length Carbon Steel Plate from Mexico: Final 
Results of Antidumping Duty Administrative Review, (``CTL'') 64 FR 77, 
78 (January 4, 1999) (Comment 1), where the Department explained the 
role and significance of the cost reconciliation. Petitioners further 
point to the Notice of Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Plate in Coils from Taiwan, (``SSPC from 
Taiwan'') 64 FR 15493, 15498 (March 31, 1999), where the Department 
determined that the unreconciled difference between amounts in the 
accounting records and reported costs should be included in reported 
costs. Petitioners argue that the same determination should be made for 
this investigation.
    Petitioners contend that YUSCO's analysis of the unreconciled 
difference is flawed. First, petitioners argue that YUSCO's calculated 
change in the work-in-process (``WIP'') account is not only related to 
subject merchandise but all WIP in the company and therefore could be 
overstated. Second, petitioners argue that the respondent erred in 
calculating the difference in costs due to the application of the major 
input rule for affiliated input purchases. Petitioners note that the 
difference calculated for the major input rule adjustments should only 
include slab costs and not overhead costs. Petitioners argued the same 
for YUSCO's difference in allocation methodology for the adjustment 
figure: namely, that the difference should only include slab costs. 
Petitioners conclude that once these errors in YUSCO's analysis are 
corrected, the original unreconciled difference remains. Therefore, 
petitioners conclude that the Department should adjust YUSCO's costs to 
include the total unreconciled difference between its costs in its 
accounting system and reported costs of manufacturing.
    Department's Position: We agree with petitioners that any 
unreconciled understatement of YUSCO's reported costs should be added 
to the cost of manufacturing for COP and CV purposes. As articulated in 
CTL, the Department must assess the reasonableness of a respondent's 
cost allocation methodology according to section 773(f)(1)(A) of the 
Act. Before this can be done, however, the Department must ensure that 
the aggregate amount of costs incurred to produce the subject 
merchandise was properly reflected in the reported costs. In order to 
accomplish this, a reconciliation of the respondent's submitted COP and 
CV data to the company's audited financial statements, when such 
statements are available, is performed. YUSCO did not complete this 
reconciliation at verification because it did not identify and quantify 
all differences shown on the reconciliation. As stated in CTL, ``[i]n 
situations where the respondent's total reported costs differ from the 
amounts reported in its financial statements, the overall cost 
reconciliation assists the Department in identifying and quantifying 
those differences in order to determine whether it was reasonable for 
the respondent to exclude certain costs for purposes of reporting COP 
and CV.'' As demonstrated in SSPC from Taiwan, we found that the 
reported costs should have been adjusted for the unreconciled portion 
of the difference between respondent's costs from its accounting system 
and reported costs of manufacturing. While YUSCO attempted to quantify 
the reconciliation differences in the brief, based on the verification 
exhibits, some portions remain unreconciled. However, due to our 
decision to apply total adverse facts available to YUSCO, this issue is 
moot.

Comment 7: Exchange Gains and Losses

    Petitioners argue that YUSCO's net exchange loss related to notes 
payable for the POI should have been included in the financial expense 
rate calculation. According to petitioners, net exchange losses for 
notes payable are costs incurred by the company as a whole for 
financing purposes. Petitioners point to SSPC from Taiwan, where the 
Department determined that the current portion of the net exchange loss 
related to debt should be included in the financial expense rate 
calculation.
    YUSCO did not comment on this issue.
    Department's Position: We agree in principle with petitioners that 
the current portion of the net exchange loss related to notes payable 
should be included in the financial expense rate calculation. As 
explained in Notice of Final Determination of Sales at Less Than Fair 
Value: Fresh Atlantic Salmon from Chile, 63 FR 31430 (June 9, 1998) 
(Comment 24), the Department includes in the cost of production the 
amortized portion of foreign exchange losses resulting from loans. 
However, due to our decision to apply total adverse facts available to 
YUSCO, this issue is moot.

[[Page 30608]]

Chang Mien

Comment 8: Conversion Costs

    Petitioners state that, at verification, the Department discovered 
that Chang Mien failed to include any coils that were processed more 
than once in its rolling mill in Chang Mien's machine time analysis. 
Therefore, petitioners contend, respondent understated the cost of 
production for three CONNUMs and a certain number of coils. Petitioners 
argue that by not providing the Department with data regarding the 
coils in question, Chang Mien did not provide the information that was 
required by the Department. Thus, the Department was not able to 
determine the correct cost of production. Petitioners maintain that, 
pursuant to section 776(a)(2)(D) of the Act, if a respondent provides 
information but the information cannot be verified, the Department 
should resort to the use of fact otherwise available in reaching its 
final determination. Further, petitioners state that if the Department 
finds that a party has failed to cooperate by not acting to the best of 
its ability, the Department ``* * * may use an inference that is 
adverse to the interests of that party in selecting the facts otherwise 
available,'' citing section 776, 1677e(b) of the Act. Petitioners also 
argue that in determining the appropriate measure of adverse facts 
available, the SAA instructs the Department that it ``* * * may employ 
adverse inferences about the missing information to ensure that the 
party does not obtain a more favorable result by failing to cooperate 
than if it had cooperated fully,'' citing the SAA at 870. Petitioners 
contend that since respondent knew that multiple passes resulted in 
additional costs for producing these products but failed to report 
these additional costs, the Department should find that Chang Mien 
failed to cooperate to the best of its ability and, therefore, use an 
adverse inference in selecting facts otherwise available for this final 
determination. Furthermore, petitioners argue that the Department 
should apply the highest cost of production to the three CONNUMs so 
that respondent does not benefit from its lack of cooperation.
    In its rebuttal, petitioners contend that the Department should not 
accept any post-facto argument provided by respondent. Petitioners 
assert that, given that it was the Department which discovered Chang 
Mien's omission during verification, the Department should find that 
Chang Mien failed to cooperate to the best of its ability and resort to 
the use of fact otherwise available in reaching its final 
determination.
    Respondent argues that the Department should not increase the costs 
of labor and overhead for these coils which were processed through two 
passes but for which Chang Mien included cost of production data for 
only one pass. Respondent maintains that it did not fail to cooperate 
to the best of its ability, as petitioners assert. Instead, respondent 
continues, not reporting the second pass of the 23 coils was an 
oversight and for which it subsequently provided documentation during 
the verification. Respondent further contends that, given that these 23 
coils represent a very small percent of all production of subject 
merchandise during the period of review, the Department can ignore, 
under section 19 CFR 351.413 of the Department Regulations, any change 
to the relevant CONNUMs if it believes that there will be no change to 
the dumping margin. Furthermore, respondent argues, one of the three 
CONNUMs in question was not sold in the U.S. and was not used by the 
Department in its calculations for the preliminary determination of 
this case.
    Additionally, respondent asserts that the additional underreported 
costs for the small quantity of coils in question will not result in it 
obtaining a more favorable dumping margin in the Department's final 
determination. Respondent suggests that if, however, the Department 
concludes that it should account for any labor and overhead costs 
associated with a second pass on these coils, the Department should use 
its suggested methodology, which, respondent asserts, the Department 
verified and is contained in the Verification of Cost of Production of 
Chang Mien Report as Exhibit C-11, page 1, item 1. Respondent contends 
that the cold-rolling arrangement specified in the report is similar 
for this particular coil to that mentioned in the Verification of Cost 
of Production of Chang Mien Report, a pass from 3.00 mm to 1.50 mm and 
then from 1.50 mm to 0.40 mm. Respondent indicates that this exhibit 
details the ``working hours'' and ``productivity factor'' for the two 
passes for this coil and that by taking the data from the Verification 
Exhibit C-9, one can calculate the cost for each relevant cost field 
for one-pass and two-pass operations for all production of this 
particular CONNUM. Respondent argues that the Department should only 
add the difference between the two in its calculations. Respondent 
contends that the Department should apply this factor to all production 
of this particular CONNUM and all three CONNUMs in question.
    Respondent reiterates, in its rebuttal, that the omission of the 
additional coils for the second pass was an inadvertent mistake on the 
part of Chang Mien and argues that the verified data should be used to 
correct it in the final determination. Furthermore, respondent notes 
that petitioners did not provide a case precedent to support their 
theory that the Department should treat a minor data problem by 
disregarding the entire cost data submission for the three CONNUMs at 
issue and substituting the highest figures for the entire cost of 
product for these CONNUMs.
    Department's Position: Although petitioners are correct in noting 
that it was the Department which discovered the under-reported costs 
for the second pass of the 23 coils, we agree with respondent that the 
Department should simply recalculate the under-reported production 
costs based on the information gathered at verification. We disagree 
with petitioners that Chang Mien's COP data failed to be verified, and 
we believe that the percentage of coils affected by the respondents' 
omission is insignificant. First, for the three CONNUMs affected by 
this under-reporting, the 23 coils do not greatly impact the calculated 
costs, given the relative proportion of the weight of these coils to 
total weight of all coils used for the COP calculation. See Analysis 
Memo: Chang Mien at page 1. Second, on the issue of COP, we do not 
believe that Chang Mien has failed to cooperate by not acting to the 
best of its ability. Chang Mien cooperated fully with the Department 
verifiers upon the discovery of the under-reported costs during 
verification by providing the raw data for the coils and an excerpt 
from the computer sales listing showing the list of observation numbers 
and CONNUMHs of the coils that received a double pass during the 
verification. Finally, it is the Department's long-standing practice to 
accept certain omissions from the record during verifications if the 
Department believes they are unintentional and minor in magnitude.
    For the above reasons, the Department has recalculated respondent's 
cost of production, without the use of facts available, by including 
the costs associated with the double pass of the 23 coils. The 
Department has calculated the costs using the methodology suggested by 
respondent and using the data which we confirmed at verification. See 
Analysis Memo--Chang Mien.

[[Page 30609]]

Comment 9: Date of Sale

    Petitioners argue that the Department should use the order date for 
the home market and U.S. dates of sale, as opposed to the Department's 
decision in the preliminary determination to use date of invoice as the 
date of Chang Mien's U.S. sales. Petitioners maintain that based on the 
Department's verification of Chang Mien, the date of order confirmation 
is the appropriate date of sale for both home market and U.S. market. 
Petitioners contend that the Department's regulations state that the 
Department will defer to the date of invoice as the date of sale unless 
the record demonstrates that the material terms of sale for home market 
sales are established at a different date. See Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27349 (May 19, 1997). 
Petitioners further contend that in the preliminary determination, the 
Department correctly decided to depart from its preference of the date 
of invoice with regard to Chang Mien's home market sales given that 
Chang Mien usually had no price change or change in quantity for those 
sales between order confirmation date and shipping. Petitioners 
submitted that the same factual pattern exists for Chang Mien's U.S. 
sales and, therefore, petitioners argue, the order of confirmation date 
should serve as the date of sale for Chang Mien's U.S. sales as well. 
Therefore, petitioners argue that the order confirmation date most 
closely reflects commercial reality and the time when the material 
terms of sale are agreed upon for Chang Mien's sales.
    Respondent argues that it routinely produces either too much or too 
little steel for each U.S. order. Because this occurs in the normal 
course of trade, respondent asserts that the Department should continue 
its practice of using the invoice date as the date of sale rather than 
the order date. Respondent argues that the Department's stated policy 
regarding date of sale (``* * * the Secretary normally will use the 
date of invoice'' (19 CFR 351.401(i)) is pertinent to the respondent's 
date of sale scenario and contends that the Department should, 
therefore, enforce its policy with regard to the respondent. Respondent 
also cites the Department's decision regarding date of sale in SSPC 
from Korea, in which the Department stated:

    We do not treat an initial agreement as establishing the 
material terms of sale between buyer and seller when changes to such 
an agreement are common even if, for a particular sale, the terms 
did not actually change.

    Moreover, respondent asserts that the Department acknowledged in 
that case that it will uphold its standard of using the invoice date as 
date of sale as long as the material terms ``are subject to change'' 
(Id.). Respondent states that it provided the Department with an 
exhibit (Exhibit 61, November 27, 1998) comparing quantity ordered with 
quantity actually delivered and asserts that nothing in the 
verification reports refutes any of the data provided in the exhibit. 
Respondent points out that the Department did not attempt to verify any 
of the sales reported in that exhibit to determine whether they were 
beyond the tolerances called for in the orders. Had the Department 
verified this exhibit, respondent argues, it would have been clear that 
changes to the orders were neither infrequent nor abnormal. Had the 
Department verified all of the information available on the record, 
respondent asserts the Department would know that the high level of 
frequency of changes between quantity ordered and quantity actually 
delivered is a normal business practice for the respondent. Therefore, 
respondent concludes, the Department should not change its methodology 
with regard to date of sale in this case and should therefore, use the 
invoice date as the date of sale, rather than the order date, for sales 
to the United States.
    Department's Position: We agree in part with respondent and 
petitioners. In the preliminary determination, the Department relied 
upon the date of the order confirmation as the date of sale for Chang 
Mien's home market transactions. According to Chang Mien's November 27, 
1998 supplemental response regarding home market date of sale, ``there 
usually is no price change or change in quantity between order 
confirmation date (day 0) and shipping [invoice date] (day 1-3).'' See 
Chang Mien's November 27, 1998 supplemental response at 8. This was 
confirmed at verification. See Chang Mien Sales Verification Report at 
5 (``We did not find material changes in the quantity and value terms 
from the order and invoice''). Therefore, with regard to home market 
sales, we agree with petitioners and will continue to use the date of 
order confirmation as the date of purchase for this final 
determination.
    With regard to sales to the United States, the Department 
preliminarily determined that the invoice date was the appropriate date 
of sale. The Department based its decision in part on Chang Mien's 
November 27, 1998 supplemental response, in which the Department relied 
on respondent's assertion that ``[in] approximately 94.5 percent of the 
sales there was a change between the quantity from the date of 
confirmation and the invoice date.'' See Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of the Final 
Determination: Stainless Steel Sheet and Strip in Coils from Taiwan, 64 
FR 101 (January 27, 1999). We disagree with respondent that the 
Department did not attempt to verify any of the sales reported in that 
exhibit to determine whether they were beyond the tolerances called for 
in the orders. During verification, the Department confirmed Chang 
Mien's basic methodology for reporting date of sale as described in 
their questionnaire response. The Department examined eight different 
sales contracts to the United States during the POI. These sales were 
part of the same universe of the sales contained in Chang Mien's 
November 27, 1998 supplemental response. No discrepancies were 
discovered. Given that Chang Mien successfully passed the sales 
verification, there is no record evidence to conclude that the 
Department should find the information submitted in response to the 
Department's request regarding date of sale to be unreliable. The 
Department does not agree with respondent that, for 94.5 percent of the 
sales, there was a change between the quantity from the date of 
confirmation and the invoice date. We have analyzed those sales that 
changed in quantity from the order of confirmation to the invoice date 
in excess of the variation of plus or minus 10 percent of the 
quantities delivered, as stated in Chang Mien's contracts, and found 
that the number of changes is significant and thus, the date of sale 
should continue to be the invoice date. See Chang Mien Sales 
Verification Report at 5 and Analysis Memorandum: Chang Mien. 
Additionally, in the Department's decision regarding date of sale in 
SSPC from Korea, the Department determined that the date of sale was 
the invoice date, or when the final terms of sales were established, in 
keeping with the Department's regulatory preference for using the 
invoice date of sale absent evidence ``that a different date better 
reflects the date on which the exporter or producer establishes the 
material terms of sale.'' See 19 CFR 351.401(i). Therefore, in keeping 
with previous Department decisions and with the Department's policy, we 
agree with respondent and have used, for this final determination, the 
invoice date for sales transactions to the United States.

Comment 10: Surface Finishes

    Petitioners argue that Chang Mien's claims that there is a 
difference between

[[Page 30610]]

surface finishes in their product description as defined between 
surface finish code 9 (hot-rolled, annealed and pickled, grinding) and 
code 1 (hot-rolled, annealed and pickled) should not be honored. 
Petitioners contend that, based on Chang Mien's own description of code 
1 and code 9, the Department should consolidate codes 1 and 9 into a 
single finish code, because the grinding in the initial phase of 
production does not affect the ultimate finish of the merchandise. 
Furthermore, petitioners argue that the Department should consolidate 
finish code 10 (cold-rolled, not annealed and pickled) with code 3 
(cold-rolled). Petitioners state that Chang Mien's description of the 
code 10 finish ``refers to material which has not completed production 
because, there were so many defects, that it already has been 
classified as non-prime material.'' See Supplemental Questionnaire 
Response of Chang Mien Industries, Co., Ltd., dated November 27, 1998 
at 7. This description, petitioners assert, indicates that code 10 is 
cold-rolled material that Chang Mien has defined as non-prime 
merchandise, and petitioners argue that the designation of non-prime 
merchandise is not relevant in the finish characteristic. Therefore, 
petitioner concludes, the Department should consolidate the finish code 
10 with finish code 3 in the final determination.
    Respondent indicates that at verification, Chang Mien demonstrated 
to the Department that finishes 1 and 9 should not be consolidated 
because there were physical differences between the two. The 
differences, respondent states, were readily apparent from a visual 
inspection and explained in detail to the cost verifier. Respondent 
further contends that for the same reasons, code finishes 3 and 10 
should not be combined. In addition, respondent argues, since finish 10 
is not a completely produced product, the mechanical properties are 
different from finish 3 products. Lastly, respondent argues, that it 
would not make sense to combine a second quality sheet product, which 
has not completed the production process because they have so many 
defects, to first quality finished product. For this reason, respondent 
contends, finish 10 should not be compared to U.S. sales, as it is an 
unfinished product, and should be ignored.
    Department's Position: With regard to Chang Mien's finish codes 1 
and 9, we agree with petitioners and are continuing to treat these two 
codes as one combined group. For the application in the margin 
calculation of this decision, see Analysis Memorandum: Chang Mien. 
First, we note that finish codes 1 and 9 are nearly identical, as both 
products are hot-rolled, annealed and pickled. Furthermore, regardless 
of whether there is some difference in the physical appearance between 
products which have been subject to grinding (a matter about which 
there is no determinative record evidence), there is no record evidence 
to conclude that any alleged difference in physical appearance affects 
the product's end-use, or that such a difference is reflected in 
relatively higher production costs or prices. In any event, as we note 
below in Comment 14, in general, our model match criteria does not 
consider the number of processing steps undertaken for each coil. 
Moreover, we note that respondent did not raise this issue on the 
record when the Department requested public comments on its proposed 
product concordance.
    With regard to finish codes 3 and 10, we find no reason to deviate 
from the Department's preliminary determination, in which we treated 
these two categories as separate codes. Unlike in the case of grinding, 
the Department generally recognizes that annealing and pickling are 
processing steps which significantly alter the physical appearance of a 
product, and generally affects product end-use, cost, and sales price. 
With regard to the definition of the merchandise as prime or non-prime, 
we note that in this case, this distinction is largely irrelevant to 
our analysis. That is, if the merchandise were indeed secondary, it 
would be separated from prime merchandise in our model match analysis, 
minimizing the impact of any decision to collapse the two codes (given 
that, as a rule, secondary merchandise, which is sold at reduced 
prices, fails the Department's cost test). However, in fact we dispute 
respondent's categorization of code 10 finish products as second 
quality sheet, as respondent itself has classified many sales of code 
10 as prime merchandise. See Analysis Memorandum: Chang Mien pp. 6-7. 
Therefore, the record does not support Chang Mien's assertion that this 
merchandise is second quality.

Comment 11: Advertising Expenses

    Petitioners argue that Chang Mien's claimed direct advertising 
expenses should be denied as a direct selling expense and reclassified 
as indirect selling expenses. Petitioners state that during 
verification, the Department examined various advertising expenses, and 
petitioners argue that Chang Mien could not demonstrate that it 
incurred direct advertising expenses on behalf of its customers. 
Petitioners further argue that the Department's questionnaire 
specifically states that in order to qualify for direct advertising 
expenses, respondent must have assumed advertising expenses on behalf 
of its customer, citing the Department's Questionnaire at p. B-28. 
Petitioners contend that the verified documents indicate that the 
claimed advertising expenses were general information on the company or 
products produced by the company, and hence Chang Mien did not 
demonstrate that it incurred advertising expenses to advertise to its 
customer's customers, citing Chang Mien's Questionnaire response to 
sections B-D at 26. Therefore, petitioners assert, for the final 
determination, the Department should deny Chang Mien's home market and 
U.S. market claim for direct advertising expenses and reclassify these 
expenses as indirect selling expenses.
    Respondent states that the primary purpose of the advertising 
expense in periodicals and via the sample books for distribution to 
U.S. and home market customers is to assist its customers, who are 
distributors, to obtain new customers. Respondent further asserts that 
virtually all U.S. customers are distributors and not end-users and 
that they already buy from Chang Mien. These forms of advertising, 
respondent states, assist current customers to obtain new customers and 
show potential customers, via the sample book, the quality of Chang 
Mien's products. The same, respondent asserts, is true in the home 
market. Respondent states that advertising in periodicals also directly 
discusses the subject merchandise and is directed to the potential 
customers who would contact a distributor of Chang Mien steel. Given 
that the Department's verification team found no discrepancies when 
they inspected the advertising, respondent argues, the claimed 
advertising expenses should remain as a direct expense in the 
Department's final determination.
    Department's Position: We agree with petitioners. We reviewed Chang 
Mien's claimed advertising expenses at verification and found that most 
of these promotional expenses were not incurred in marketing to Chang 
Mien's customers/end-users. See Sales Verification Report: Chang Mien 
at 11-12. Contrary to Chang Mien's assertion that it incurs advertising 
expenses on behalf of its customers/end-users, at verification Chang 
Mien indicated that they did not know whether distributors (Chang 
Mien's domestic customers) gave the sample book to the distributors' 
customers. Id. The Department examined various advertising documents, 
including advertising in the

[[Page 30611]]

Taiwan Import Export Company List, advertising in the local newspaper, 
advertising in the Metal Bulletin Magazine, brochure advertising, and 
the Stainless Steel Sample Book. See Chang Mien Sales Verification 
Report at 11, 12. Based on this review, we found that these 
advertisements were more general in nature and offered a variety of 
information on the company or products produced by the company. 
Moreover, Chang Mien did not demonstrate to the Department that the 
claimed direct advertising expenses were incurred to advertise to its 
customer's customers. In Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Plate in Coils from South Africa, 64 FR 15459 at 
43 (March 31, 1999), the Department concluded that print advertising 
expenses which are general in nature and ``intended to promote either 
the benefits of stainless steel generally, or Columbus's image as a 
reliable supplier of high-quality stainless steel'' do not represent 
expenses incurred by the respondent on behalf of its customers that can 
be claimed as a COS adjustment. Therefore, we conclude that Chang 
Mien's print advertising expenses are aimed primarily at its customers. 
As such, these expenses do not represent expenses assumed by Chang Mien 
on behalf of its customers, and do not merit treatment as a direct 
expense.

Comment 12: Home Market Warranty Claims

    Petitioners argue that Chang Mien has double counted its claimed 
warranty expenses by counting (1) claims on subject merchandise where 
the sale and the warranty claim occurred during the period of 
investigation and (2) claims that were incurred during the period of 
investigation for sales prior to the period. See Chang Mien 
Questionnaire response to sections B-D at 27. Petitioners assert that 
not only has respondent claimed an adjustment for non-POI sales, it 
also has claimed both types of warranty expenses for some sales. The 
Department, petitioners argue, should only accept warranty claims 
incurred on POI sales and deny the warranty claims on non-POI sales.
    Respondent states that the Department has a long-standing policy of 
using all direct, variable warranty expenses incurred in the POI when 
calculating this cost. It further states that the Department is fully 
aware that warranty claims may be made for merchandise long after it is 
sold and, respondent asserts, the Department has consistently used all 
warranty costs incurred in the POI, regardless of sales dates, in its 
calculations. Respondent cites the Department's decision in Certain 
Cold-Rolled Carbon Steel Flat Products From the Netherlands: Final 
Results of Antidumping Duty Administrative Review, 63 FR 13204, 13205 
(March 18, 1998), in which the Department stated:

    As noted in AFBs 1997, the Department has long recognized that 
warranty expenses cannot be reported on a transaction specific basis 
and an allocation is necessary * * * Accordingly, for the final 
results of this review, we have calculated warranty expenses as a 
separate direct variable expense * * * We allocated the expense to 
the metric tonnage sold.

Respondent asserts that to be consistent with the above stated 
decision, and based on the verified findings by the Department, that 
the Department should deduct all actual, variable warranty expenses 
incurred in the POI in its final determination of this case.
     Department's Position: We agree with petitioners. Chang Mien has 
provided transaction-specific warranty claims, and thus an allocation 
of POI warranty expenses to POI sales is not warranted. The allocation 
of warranty expenses applies to situations where it is not possible to 
tie POR/POI warranty expense to POR/POI sales. The Department has 
recognized that in certain situations, warranty expenses cannot be 
reported on a transaction-specific basis, due to time lags between the 
warranty expenses incurred and sales associated with the warranty. 
Therefore, where warranty expenses cannot be reported on a transaction-
specific basis, an allocation of POR/POI warranty expenses to POR/POI 
sales is deemed necessary. See Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From France, et. al.; Final 
Results of Antidumping Duty Administrative Review, 62 FR 2081, 2095 
(January 15, 1997). Here, respondent provided transaction-specific 
warranty expenses, which were revised at verification. We verified 
documentation supporting that the warranty expense reported in the 
field WARR2H is associated with a non-POI sale. Therefore, because we 
have transaction-specific information with regard to warranty expenses, 
we only made adjustments for POI warranty expenses associated with POI 
sales.

Comment 13: Financial Expenses

    Petitioners state that at verification, the Department found that 
Chang Mien recalculated its financial expense ratio to ``exclude non-
financial items,'' thereby changing its financial expense ratio from 
its reported ratio in the September 24, 1998 submission. See Cost 
Verification Report: Chang Mien, at 2. Petitioners argue that for the 
final determination, the Department should recalculate Chang Mien's 
financial expense ratio to reflect all financial items. Petitioners 
further assert that the Department should consider interest expenses, 
losses on foreign exchange rate, loss on inventory valuation, and other 
losses. Id. Additionally, petitioners argue, interest income, 
investment income, miscellaneous income, rental income, and gains and 
losses on land value, should be excluded because they are either (1) 
not short-term interest income or (2) are not related to the production 
or sale of the merchandise and are more like investments.
    In its rebuttal brief, Chang Mien contends that petitioners are 
incorrect in their arguments regarding the financial expense ratio. 
Respondent states that at verification, the Department found, in 
Verification Exhibit C-8, that items 7101 (interest income) and 7102 
(investment income) are short-term and related to production. 
Therefore, Chang Mien argues, they should not be excluded from the 
calculations. Additionally, respondent asserts, the Department did not 
find any discrepancies with this reported data. Chang Mien maintains 
that given that it had already excluded miscellaneous income, rental 
income, and gains and losses on land value in its revised data, no 
further changes should be made to these items. Furthermore, respondent 
argues that if this information were excluded again, it would result in 
double counting this data. Chang Mien concludes by stating that the 
changes noted by the Department in its verification report should be 
used in the Department analysis for the final determination because (1) 
this information was verified and, (2) the reported figures in the 
verified information are calculated in accordance with Taiwanese 
Generally Accepted Accounting Principle (GAAP).
     Department's Position: We agree with petitioners. During the cost 
verification, Chang Mien submitted corrections to its financial expense 
to exclude non-fianancial items. We have reviewed these items and 
concluded that most were inappropriately excluded from financial 
expenses. Therefore, we have revised our calculations to include all 
financial expenses. To obtain the revised financial expense ratio, we 
deducted short term income and the loss and sale of fixed assests from 
total non-operating expenses. See Final Analysis Memo: Chang Mien, pp. 
4-5.

[[Page 30612]]

Tung Mung

Comment 14: Model Match

    Tung Mung argues that the Department improperly treated certain 
types of coil as identical merchandise, by overlooking important 
distinctions in physical characteristics between the coil types at 
issue. Tung Mung asserts that the Department's selection of matching 
criteria to define identical merchandise must be based on ``meaningful 
physical characteristics,'' and may consider both price differences in 
the marketplace and cost in order to identify such ``meaningful 
physical characteristics.'' Emulsion Styrenene-Butadiene Rubber from 
Mexico; Final Determination of Sales at Less Than Fair Value, (``ESBR 
from Mexico''), 64 FR 14872, 14875 (March 28, 1999). Tung Mung 
maintains that the differences between the two types of coil at issue 
are ``meaningful'' enough to warrant treatment as separate products.
    Tung Mung argues that the types of coils at issue differ 
significantly in terms of quality, use and price. First, Tung Mung 
claims that one type of sheet at issue develops unsightly lines, known 
as ``Luder's Lines,'' when drawn or stretched, and is therefore not 
used in applications where the sheet is visible in the final product. 
Second, Tung Mung argues that this type of coil is less expensive to 
produce and sold for a lower price. Tung Mung asserts that the 
difference in cost of producing the two products at issue was verified 
by the Department and results from the difference in the number of 
times the sheet goes through the mill, citing the Verification Report 
at p. 18. In addition, Tung Mung asserts that Tung Mung's sales tape 
shows that the two products sell for different prices. Therefore, Tung 
Mung argues that it was improper for the Department to treat the two 
products as identical and requests that the Department treat these two 
types of coil as separate products in the final determination.
    Petitioners did not comment on this issue.
    Department's Position: We disagree with Tung Mung and did not treat 
the coils at issue separately based on Tung Mung's reported finishes. 
As stated by respondent, the coils at issue differ by the number of 
processing steps undertaken for each coil. In general, our model match 
criteria do not consider the number of processing steps undertaken for 
each coil. Rather, it focuses on physical differences between products. 
However, it is important to note that products undergoing different 
processing steps will generally not match in any event, based on the 
model matching criteria which the Department has established for this 
investigation. Indeed, in this case, treating the coils at issue 
separately has no practical effect since the coils do not match based 
on other physical characteristics (which, it should be noted, rank 
higher in the Department's product concordance). See Questionnaire, 
Appendix V. Therefore, for the final determination, we did not treat 
the products in question separately.

Comment 15: Normal Value

    Petitioners argue that the Department should use all six price 
components in the home market in calculating normal values as the 
Department did in the preliminary determination. Tung Mung indicated 
that it uses a combination of up to six tiers of prices to establish 
the price for a single coil. See September 24, 1998 Questionnaire 
Response at p. B-1. Petitioners note that Tung Mung stated in its 
response that its home market prices for one coil can consist of up to 
six price components. Petitioners also note that Tung Mung urged that 
the Department limit the normal value to only the first three price 
categories of the coil price and not consider the other three price 
categories which pertain to tail-end and untrimmed edges. Petitioners 
object to Tung Mung's suggestion in its Questionnaire Response (see 
September 24, 1998 Questionnaire Response at B-2) to consider only the 
first three price categories of the coil for determining normal value, 
by arguing that tail-end and untrimmed edges are integral sections of a 
home market coil, and therefore prices for these parts of the coil 
should be considered in calculating normal values to be compared with 
U.S. sales. In addition, petitioners argue that home market warranty 
expenses should also be calculated based on the weight of all six price 
components of the home market coil rather than only the three price 
components suggested by Tung Mung. We also continue to calculate 
warranty expenses based on all six price categories of the coils.
    Tung Mung did not comment on this issue.
    Department's Position: We agree with petitioners and have continued 
to use the actual selling price of the coils as reflected in the 
invoice to the customer in calculating normal value. Respondent has 
indicated that the invoice price represents the weighted-average of all 
six price categories of the coils. See September 24, 1998 Questionnaire 
Response at p. B-2.

Comment 16: U.S. Warranty Expenses

    Petitioners argue that Tung Mung's U.S. warranty expenses should be 
adjusted to include warranty expenses for U.S. sales which occurred 
during the POI but pertained to products sold prior to the POI. 
Petitioners argue that the adjustment is justified under the holding of 
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, 
from Japan and Tapered Roller Bearings, Four Inches or Less in Outside 
Diameter, and Components Thereof, from Japan: Final Results of 
Antidumping Duty Administrative Review and Termination in Part 
(``Tapered Roller Bearings from Japan''), 62 FR 11825, 11839 (March 13, 
1997). Petitioners maintain that the Department has long recognized 
that there is usually a time lag between the initial sale and any 
subsequent warranty claim because customers may not discover damaged 
goods until a later time. Id. Petitioners assert that the Department 
has held that where warranty expenses generally cannot be reported on a 
transaction-specific basis due to the time lag between the warranty 
claim and initial sale, an allocation of warranty expenses is 
necessary. Id. Therefore, petitioners argue that warranty expenses for 
U.S. sales should include warranty expenses occurring during the POI, 
even if they pertain to products sold outside of the POI.
    Tung Mung argues that its single aberrational warranty claim made 
with respect to 1996 sales to the United States should not be used as a 
surrogate for warranty expense incurred on 1997 sales. Tung Mung 
contends that the Department accepts variable warranty expenses 
incurred during the POI as a ``surrogate'' for expenses actually 
incurred on sales during the POI, ``provided such expenses reasonably 
reflect the firm's historical experience with respect to warranty 
claims,'' citing Notice of Final Determination of Sales at Less than 
Fair Value: Foam Extruded PVC and Polystyrene Framing Stock from the 
United Kingdom, 61 FR 51411, 51418 (October 2, 1996). Tung Mung 
maintains that the Department does not use this methodology where to do 
so would produce distorted results, citing Color Television Receivers 
from Korea; Final Results of the Antidumping Duty Administrative 
Review, 53 FR 24975 (July 1, 1988).
    Tung Mung asserts that to base warranty claims paid in 1997 on 1996 
sales would distort the calculation of the warranty adjustment. Tung 
Mung argues that more than ninety percent of the total amount of the 
warranty

[[Page 30613]]

expense at issue was due to a single claim. Tung Mung claims that the 
total amount of warranty claims paid in 1997 with respect to U.S. sales 
was aberrational compared to Tung Mung's general warranty experience. 
According to Tung Mung, the amount on the single claim was three times 
the amount paid by Tung Mung with respect to all home market warranty 
claims, despite the fact that home market sales during the POI were ten 
times as high as U.S. sales. Tung Mung asserts that there is no 
difference between the products sold to various markets which would 
account for such a huge swing. In fact, Tung Mung claims that the only 
difference would be whether or not the coils are trimmed, which Tung 
Mung claims has no bearing on the size or quantity of warranty claims. 
In addition, Tung Mung alleges that there is no difference in Tung 
Mung's warranty policy with respect to different markets. In sum, Tung 
Mung argues that the aberrational claim is not reflective of Tung 
Mung's normal experience and should not be used in the calculation of 
the warranty adjustment.
    Tung Mung argues that the Department frequently uses actual 
warranty experience with respect to sales during the POI in cases 
involving steel, rather than the surrogate method. Tung Mung claims 
that in general, because steel is further processed quickly, warranty 
claims are made within a few months of sale. Tung Mung contends that 
since generally there is no significant lag in claims for merchandise 
such as steel, there is no reason for the Department to use the 
surrogate method. Tung Mung claims that, at verification, Tung Mung 
demonstrated that no claims had been made with respect to the coils 
sold to the U.S. market, many months after the close of the period of 
investigation.
    Department's Position: We disagree with petitioners. Tung Mung 
provided warranty claim information on a transaction-specific basis; 
thus, an allocation of POI warranty expenses to POI sales is not 
warranted. The allocation of warranty expenses applies to situations 
where it is not possible to tie POR/POI warranty expense to POR/POI 
sales. The Department has recognized that in certain situations, 
warranty expenses cannot be reported on a transaction-specific basis, 
due to time lags between the warranty expenses incurred and sales 
associated with the warranty. Therefore, where warranty expenses cannot 
be reported on a transaction-specific basis, an allocation of POR/POI 
warranty expenses to POR/POI sales is deemed necessary. Antifriction 
Bearings (Other than Tapered Roller Bearings) and Parts Thereof From 
France, et. al.; Final Results of Antidumping Duty Administrative 
Review, 62 FR 2081, 2095 (January 15, 1997). Here, respondent stated 
that it reported warranty claims on a transaction-specific basis and 
this fact was confirmed at verification. See Questionnaire Response at 
p. B-31; Verification Exhibit 8. We verified documentation supporting 
the fact that the warranty expense at issue is associated with a non-
POI sale. We also examined documentation showing that there were no 
warranty expenses associated U.S. POI-sales were incurred in 1997 and 
1998. See Verification Exhibit 8. Therefore, because we have 
transaction-specific information with regard to warranty expenses, we 
only made adjustments for POI warranty expenses associated with POI 
sales.

Comment 17: Duty Drawback

    Petitioners argue that Tung Mung failed to provide sufficient 
evidence demonstrating that it meets the two prong test required for 
duty drawback adjustments; therefore, the Department should reject Tung 
Mung's claims for duty drawback adjustments. Petitioners note that it 
is the Department's practice to allow an upward adjustment to U.S. 
price for duty drawback only if the respondent meets the following 
requirements: (1) That there is a link between the import duty and the 
rebate granted; and (2) that the respondent has sufficient imports of 
raw materials used in the production of the final exported product to 
account for the drawback received on the export product, citing Certain 
Welded Carbon Steel Pipe and Tube from Turkey: Final Results of 
Antidumping Duty Administrative Review, 61 FR 69077 (December 31, 1996) 
(``Pipe and Tube from Turkey''); Oil Country Tubular Goods from Korea: 
Final Results of Antidumping Duty Administrative Review, 64 FR 13169, 
13172 (March 17, 1999). Petitioners assert that the Department has 
rejected duty drawback adjustment claims in their entirety where 
respondent failed to satisfy either part of Department's two-part test. 
Petitioners assert that the Department has denied a duty drawback 
adjustment to U.S. price where it is found that the respondent's duty 
drawback was based on the FOB sales prices of its finished goods for 
export and exceeded substantially the amount of customs duties it paid 
to import raw materials directly, citing Stainless Steel Round Wire 
from India; Final Determination of Sales at Less than Fair Value, 64 FR 
17319, 17320 (April 9, 1999). Petitioners argue that the Department has 
made it clear that the respondent must document a direct link between 
duties paid and rebates received and that there are sufficient imports 
of raw materials to account for the drawback claim, citing Pipe and 
Tube from Turkey at 69078. Petitioners claim that Tung Mung has not 
sufficiently documented its claimed adjustment for duty drawback and 
therefore adjustments for duty drawback should be denied.
    In both its case and rebuttal briefs, Tung Mung argues that it has 
satisfied the two-prong test for allowing a duty drawback adjustment, 
thus the Department should make an adjustment for the entire duty 
drawback adjustment claimed by Tung Mung. Tung Mung argues that the 
two-prong test for duty drawback adjustments does not require that each 
individual drawback payment be physically matched to imported raw 
materials. Furthermore, Tung Mung maintains that the Department 
recognizes the fungibility of material, as does U.S. law in the U.S. 
duty drawback program, citing 19 U.S.C. section 1313(b).
    Tung Mung claims that it has fulfilled the requirements of the two-
prong test for duty drawback adjustments. Tung Mung asserts that at 
verification it demonstrated the direct link between the import duty 
and the drawback, by providing examples of the documentation required 
to obtain duty drawback, including the drawback application form which 
is required to list the specific importation(s) with respect to which 
the drawback is claimed. In addition, Tung Mung claims that the Taiwan 
Ministry of Finance verifies each duty drawback application to ensure 
that the amount is not excessive.
    Tung Mung argues that if it is determined that Tung Mung is not 
entitled to a duty drawback adjustment, the Department should treat the 
duty drawback payment as an offset to cost since as demonstrated at 
verification, duty drawbacks reduced Tung Mung's cost of production. 
Tung Mung cites Solid Urea from Germany; Final Results of Antidumping 
Duty Administrative Review, 62 FR 61271 (November 17, 1997), which held 
that an adjustment cost with respect to government benefits received 
was appropriate where the benefits are linked to specific costs. Tung 
Mung argues that the instant case is distinguishable from Stainless 
Steel Round Wire from India, where the government payment at issue was 
not related to the amount of import duty paid, but instead was based on 
the selling price of the finished goods. Tung Mung finds that case 
different from the

[[Page 30614]]

instant case in that the Department specifically found that the 
benefits received by respondent substantially exceeded the amount of 
import duties paid. Tung Mung asserts that at verification it 
demonstrated that duty drawback payments are recorded in its cost 
accounting records, which demonstrates that the duty drawback payments 
are associated with raw material costs.
    Department's Position: We disagree with petitioners' argument that 
Tung Mung's reported duty drawback adjustment should be disallowed. At 
verification, Tung Mung provided adequate information to support its 
claimed duty drawback adjustment. Specifically, at verification, we 
examined documentation for selected sales showing a direct link between 
duties paid and rebates received and that there are sufficient imports 
of raw materials to account for the drawback claim. See Verification 
Exhibit 4. At verification Tung Mung demonstrated that the sales tied 
to the duty drawback adjustment, and furthermore, that the expenses 
traced to Tung Mung's accounting ledgers. See Verification Exhibit 4. 
Moreover, we examined duty drawback applications which showed the 
quantities imported and quantities on which drawbacks were paid. Id. We 
noted that petitioners have made no specific allegations that the 
quantities appearing in the verification exhibit are insufficient. 
Therefore, since Tung Mung has sufficiently demonstrated that it meets 
the two-prong test for duty drawback adjustments, we will accept the 
claimed adjustments. Certain Welded Carbon Steel Pipe and Tube from 
Turkey: Final Results of Antidumping Duty Administrative Review, 61 FR 
69077, 69078 (Dec. 31, 1996).

Comment 18: U.S. Price

    Petitioners argue that Tung Mung failed to report gross unit price 
for U.S. sales in the currency in which the transaction was incurred, 
which petitioners claim is contrary to the Department's longstanding 
practice. In addition, petitioners allege that the reporting of these 
sales in New Taiwan dollars causes distortions to the gross unit price 
and the margin calculation. Petitioners charge that Tung Mung's 
reporting of gross unit price has an expansive effect, affecting 
multiple variables such as gross unit price, total value, bank charges, 
credit expenses, indirect selling expenses, and domestic inventory 
carrying costs. Petitioners assert that the Department's questionnaire 
instructs respondents to report all revenues and expenses in the 
currency in which the transaction was incurred; moreover, petitioners 
argue that this method of reporting is in accordance with the 
Department's longstanding practice, citing Stainless Steel Wire Rod 
from Korea; Final Determination of Sales at Less than Fair Value 
(``Wire Rod from Korea''), 63 FR 40404, 40413 (July 29, 1998).
    Petitioners argue that Tung Mung has not demonstrated that it meets 
the exceptions to the requirement of reporting expenses and revenues in 
the currency in which the transaction was incurred. Petitioners note 
that in Steel Wire Rod from Canada; Final Determination of Sales at 
Less Than Fair Value (``Steel Wire Rod from Canada''), 63 FR 9182, 9185 
(February 24, 1998) the Department permitted respondent to report 
certain freight expenses in Canadian dollars because (1) respondent 
provided advance notification to the Department that it could not 
report the currency, in which the freight expense was incurred and (2) 
the Department verified that respondent used a daily rate when these 
expenses were recorded in its accounting records. Petitioners assert 
that Tung Mung has not met either of these requirements. Rather, 
petitioners assert that Tung Mung stated that it records the sales 
amount using the customer's exchange rate. Petitioners find Tung Mung's 
statement confusing, given that U.S. transactions were paid in U.S. 
dollars because there would be no need to note an exchange rate on its 
payment. Moreover, petitioners assert that Tung Mung would not have 
been burdened to report sales in the appropriate currency, since it 
only involved a few number of transactions.
    Petitioners cite Certain Corrosion Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel from Canada; Final 
Results of Antidumping Duty Administrative Review (``Certain Corrosion 
Resistant Carbon Steel from Canada''), 63 FR 12726, 12727 (March 16, 
1998) as another case in which the Department made an exception to the 
requirement of reporting an expense in which the transaction was 
incurred. In Certain Corrosion Resistant Carbon Steel from Canada, the 
Department allowed respondent to report expenses in the currency in 
which the transaction was not incurred because the Department found 
that the exchange rate has been stable during the period of review. 
Petitioners argue that the circumstances of Certain Corrosion Resistant 
Carbon Steel from Canada are contrary to that of the instant case 
because the exchange rate for New Taiwan dollars has been unstable 
during the POI. Therefore, petitioners assert that Tung Mung failed to 
cooperate to the best of its ability by not reporting gross unit price 
in the currency in which it was incurred. Consequently, petitioners 
submit that the Department should apply partial adverse facts available 
and apply Tung Mung's highest non-aberrant dumping margin to Tung 
Mung's U.S. direct sales.
    Tung Mung argues that petitioners' claim that the Department should 
apply facts otherwise available to Tung Mung's U.S. Sales to a certain 
customer should be rejected. Tung Mung asserts that petitioners are 
mistaken in their claim that Tung Mung could not have invoiced its U.S. 
customers in NT dollars. Tung Mung asserts that although Tung Mung 
received payment in U.S. dollars, for each sale to the certain customer 
it issued both a commercial invoice expressed in U.S. dollars and also 
a Government Uniform Invoice in NT dollars, citing the Verification 
Report at p. 9. Tung Mung claims that it was the NT dollar figure from 
the Government Uniform Invoice that was entered into Tung Mung's books. 
Tung Mung further argues that the Department cannot apply adverse facts 
available because Tung Mung informed the Department that it had 
received payment for the sales in U.S. dollars and the Department did 
not ask it to change the information on the sales tape. Tung Mung 
argues that the Department cannot apply adverse facts available unless 
a respondent has specifically failed to cooperate with a request for 
information, citing 19 CFR 351.308(a). Therefore, Tung Mung argues that 
petitioners' suggestion that the Department use an adverse inference 
with respect to these sales is misplaced.
    Department's Position: We agree with petitioners that the 
Department's standard questionnaire requires all parties to ``report 
the sale price, discounts, rebates and all other revenues and expense 
in the currencies in which they were earned or incurred.'' See 
Questionnaire at B-20. The Department accepted respondent's method of 
reporting these expenses for the preliminary determination. The 
Department has in limited circumstances allowed exceptions to this 
rule. See Corrosion Resistant Steel from Canada and Steel Wire Rod from 
Canada. In Corrosion Resistant Steel, the Department allowed respondent 
to report U.S. gross unit price in Canadian dollars based on the 
reasoning that the Canadian dollar was stable and the Department 
verified that respondent maintained expenses in Canadian dollars in its 
accounting records. As discussed earlier in this notice in Comment 1, 
we determined that the

[[Page 30615]]

New Taiwan dollar was relatively stable. Moreover, during our review of 
U.S. sales traces, we verified that Tung Mung maintains its records in 
its domestic currency, New Taiwan dollars (as with Corrosion Resistant 
Steel from Canada) and found no discrepancies in Tung Mung's reporting 
of sales. See Verification Report at p. 9 and Exhibit 2. Moreover, a 
review of the sales traces reveals that the difference between the 
exchange rate recorded on Tung Mung's GUI invoice and the Department's 
exchange rate data is negligible. See Analysis Memorandum: Tung Mung at 
p. 6. Therefore, we did not apply facts available to respondent's gross 
unit price for not reporting the U.S. price in U.S. dollars.

Comment 19: U.S. Packing Expenses

    Petitioners argue that the Department should apply partial adverse 
facts available for variable and fixed overhead packing expenses. 
Petitioners argue that Tung Mung has provided conflicting statements 
regarding Tung Mung's inability to report variable and fixed overhead 
packing expenses. Petitioners argue that Tung Mung was instructed twice 
by the Department, in the questionnaire and in the supplemental 
questionnaire, to report the unit cost of packing, including variable 
and fixed overhead expenses, yet failed to do so, stating that ``it 
would be extremely difficult and time consuming for Tung Mung to 
segregate packing expenses in the manner requested,'' citing the 
Supplemental Questionnaire at 23. However, petitioners note that Tung 
Mung gave a different statement at verification where Tung Mung said 
that it did not report packing overhead because ``it didn't think that 
it was required to since packing was sub-contracted labor,'' citing the 
Verification Report at p. 10. Petitioners charge that Tung Mung failed 
to cooperate to the best of its ability since it was aware the 
Department's requirement to report packing overhead expenses and failed 
to provide a verifiable reason for its inability to report such 
expenses. Petitioners therefore argues that Department should apply 
partial adverse facts available to variable and fixed overhead expenses 
associated with additional export packing.
    Respondent argues that the Department should not add overhead 
expense to packing costs and should reject petitioners' argument to 
apply adverse facts available in adjusting Tung Mung's reported export 
packing costs for overhead. Tung Mung asserts that it does not pay 
benefits to the individuals who perform packing labor and regards these 
individuals as independent contractors. For this reason, Tung Mung 
believed that it was unnecessary to include overhead in packing costs. 
Tung Mung claims that its statement made in its response that ``it 
would be extremely difficult and time-consuming to separate packing 
expenses in the manner requested by the Department'' did not refer to 
the breakout of overhead expenses, but rather to the Department's 
request that Tung Mung provide the basic cost of packing that is used 
for all coils, whether sold domestically or exported. Tung Mung alleges 
that any overhead attributable to expenses other than employee benefits 
would be extremely small, given the fact that the area occupied by the 
packing operations was ``tiny'' and the equipment used in packing 
minimal.
    Tung Mung asserts that it has been fully cooperative through the 
course of this proceeding. Tung Mung argues against petitioners' 
proposed ``facts available'' adjustment of applying the highest 
calculated percentage difference between the reported material cost and 
total cost of manufacturing, insisting that this would be distortive. 
Specifically, Tung Mung claims that petitioners' proposed adjustment 
includes costs that are not incurred in export packing and also double 
counts certain expenses. Tung Mung claims that Tung Mung claims that 
the full manufacturing conversion costs include direct labor costs, as 
well as all personnel benefits for the manufacturing workers. Tung Mung 
asserts that the full manufacturing conversion costs include 
depreciation incurred on all of the manufacturing activities performed 
at Tung Mung. Tung Mung also claims that packing is part of the final 
production process. Tung Mung alleges that the Department routinely 
ignores adjustment of small magnitude and that should the Department 
determine an adjustment is warranted, the Department has all the data 
on the record necessary to perform an adjustment.
    Department's Position: We agree with petitioners and adjusted 
packing expense to include packing overhead by adopting the adjustment 
method proposed in petitioners' case brief on April 20, 1999. The 
Department's Questionnaire requires that respondents include the cost 
of labor, materials and overhead in packing unit cost. See 
Questionnaire at p. B-27 and C-31. Although Tung Mung used 
subcontracted labor for packing, Tung Mung admitted that packing 
operations were performed at the premises of Tung Mung. Thus, it can be 
inferred that Tung Mung incurred overhead expenses attributable to 
packing other than personnel benefits. Tung Mung erroneously assumed 
that there was no need to provide the overhead expenses. Furthermore, 
Tung Mung failed to justify the claim that the collection of these 
expenses is burdensome. Therefore, we agree with the petitioners that 
the use of partial adverse facts available is appropriate in this case. 
As to the use of the adjustment proposed by the petitioners, we believe 
it is a reasonable approximation of the overhead component of the 
packing cost. Tung Mung did not provide any alternative adjustment 
method to correct for the unreported overhead expenses. We disagree 
with Tung Mung that the record contains information that can be used 
for this adjustment without undue difficulties on the part of the 
Department. Therefore, for this final determination, we have 
recalculated Tung Mung's reported U.S. packing expenses. See Analysis 
Memorandum: Tung Mung, p. 5.

Comment 20: Direct Selling Expenses

    Petitioners argue that Tung Mung failed to provide direct selling 
expenses associated with visits to U.S. customer's customers. 
Petitioners note that at verification, the sales manager for Tung Mung 
made a statement indicating that he had visited the U.S. customer and 
met with Tung Mung's customer's U.S. customers to discuss merchandise 
quality. Petitioners argue that Tung Mung should have reported expenses 
incurred for its customer's customer in its reported direct selling 
expenses. Petitioners assert that since Tung Mung knew that it incurred 
these expenses on behalf if its customer, the Department should find 
that Tung Mung failed to cooperate to the best of its ability. 
Therefore, citing section 776(a)(2)(A), petitioners argue that the 
Department should apply partial adverse facts available and use Tung 
Mung's Sales Department expenses reported in computer field DINDIRSU as 
a U.S. direct selling expense.
    Tung Mung argues that petitioners' claim that Tung Mung failed to 
provide direct selling expenses with respect to a sales trip taken by 
the company's sales manager to visit TCI's U.S. customers is unfounded. 
Tung Mung argues that record facts do not demonstrate that the sales 
manager's trip was taken during the period of investigation. Moreover, 
Tung Mung asserts that total business expenses, which were reported in 
the September 24, 1998 response and later confirmed at verification, 
shows that total business expenses are ``hardly enough'' to support a 
business trip to the United States. Tung Mung further

[[Page 30616]]

contends that the verification report makes no indication that the 
expense at issue was incurred with respect to specific sales, which 
would require the travel expenses to be treated as direct selling 
expenses. Tung Mung asserts that the Department's regulation 351.410(c) 
defines `direct selling expenses' as ``expenses * * * that result from, 
and bear a direct relationship to, the particular sale in question.'' 
Tung Mung objects to petitioners' suggestion to apply adverse facts 
available by treating Tung Mung's indirect expenses as direct selling 
expenses for US sales because the details of Tung Mung's business trip 
expenses incurred in connection with export are on the record. Tung 
Mung argues that even if the Department was justified in applying 
adverse facts available, the business trip expenses for export sales 
reported on the record should be the maximum amount used.
    Department's Position: We disagree with petitioners that there is 
sufficient record evidence to infer that respondent withheld 
information regarding direct selling expenses incurred on behalf of its 
customers. The sales manager's statement (that he had visited the 
customer at issue and met with Tung Mung's customer's U.S. customers to 
discuss merchandise quality) at verification was not made in response 
to questions relating to selling expenses, but related to the 
verification team's questions regarding Tung Mung's knowledge of the 
ultimate destination of home market sales. See Verification Report at 
p. 8. There is no evidence to indicate that the sales manager's 
statement was anything but general in nature or referred specifically 
to an actual expense directly related to specific sales (whether or not 
within the POI). As respondent notes, the Department's regulations 
define `direct selling expenses' as ``expenses * * * that result from, 
and bear a direct relationship to, the particular sale in question.'' 
See 19 CFR section 351.410(c). We do not have any evidence showing that 
the statement made at verification directly relates to a particular 
sale, and we verified that business trip expenses were adequately 
accounted for, we will not adjust direct selling expenses alleged 
travel expenses related to U.S. sales.

Comment 21: Year-End Adjustments

    Petitioners argue that the Department should include all year-end 
adjustments in the calculation of Tung Mung's cost of production and 
constructed value. Petitioners assert that Tung Mung stated that it had 
a net year-end adjustment. Petitioners argue that Tung Mung stated that 
it did not include the year-end adjustment in its reported cost of 
production, but considered the year-end adjustment in the denominator 
of the general and administrative and financial expense calculation. 
Petitioners allege that the result of Tung Mung's reporting is that 
there is an ``apples-to-oranges'' comparison. Petitioners claim that 
the percentages of general and administrative expenses and financial 
expenses as a percentage of cost of sales have been lowered due to the 
consideration of the year-end adjustment in the cost of goods sold, and 
these percentages are being applied to an understated cost of 
manufacture (due to the lack of consideration of the year-end 
adjustment). Therefore, petitioners argue that the Department should 
recalculate reported cost of manufacture to include the net year-end 
adjustments.
    Tung Mung did not comment on this issue.
    Department's Position: We disagree with petitioners. At 
verification, we determined that the year-end accruals and adjustments 
at issue are minimal, accounting for a small percent increase in Tung 
Mung's reported costs. See Verification Report at p. 13. In addition, 
the effect of the year-end accruals and adjustments on reported costs 
is offset by Tung Mung's over-reporting of costs, which was discovered 
at verification. See Verification Report at p. 11. Since the year-end 
adjustments at issue are minimal, we did not recalculate reported cost 
of manufacture to include the net year-end adjustments, as proposed by 
petitioners.

Comment 22: General and Administrative Expenses

    Petitioners argue that the Department should recalculate Tung 
Mung's general and administrative (``G&A'') expenses to reflect all of 
Tung Mung's G&A expenses. Petitioners charge that Tung Mung based its 
G&A expense ratio only on expenses within the stainless steel division. 
Petitioners claim that Tung Mung's G&A ratio fails to account for 
expenses from the parent group. Petitioners argue that the Department 
twice requested information on how Tung Mung computed its company's G&A 
expense ratio, and Tung Mung refused to provide the requested data. 
Petitioners allege that Tung Mung's reported G&A ratio is artificially 
low as evidenced by the fact that the G&A ratio is lower than the cost 
of goods sold ratio (without elaborating further). Petitioners argue 
that Tung Mung's claim that its parent, Tuntex Group did not incur any 
G&A expenses on behalf of Tung Mung is both undocumented and dubious. 
Specifically, they point out that it is unlikely that the Tuntex Group 
did not incur any G&A expenses on behalf of Tung Mung, given that 
Tuntex Group has a board of directors, a Tuntex Group chairman, the 
Group Chairman's office, a Project Department, and a Chairman, all of 
which overlook the Tuntex Group, including Tung Mung. Thus, petitioners 
urge the Department to recalculate G&A expense to account for expenses 
incurred on behalf of Tung Mung by the Tuntex Group. Petitioners argue 
that the Department, at a minimum, should base G&A expenses on the cost 
of goods sold ratio.
    Tung Mung objects to petitioners' claim that Tung Mung's G&A 
expenses were incorrectly reported. Tung Mung asserts that its 
``parent'' group, Tuntex Group, is not a corporate entity, but rather 
consists of several companies that are loosely affiliated through cross 
shareholdings. Tung Mung maintains that the Department verified 
financial statements and confirmed that Tung Mung is not consolidated 
with the Tuntex Group. See Verification Report at p. 3. Tung Mung also 
asserts that petitioners overlook the fact that Tung Mung reported that 
it pays a portion of the salary of the Chairman and his support staff, 
and that this expense is included in Tung Mung's G&A expenses, citing 
the November 12, 1998 Supplemental Response at 35, n.36. Tung Mung 
contends that this expense was confirmed at verification. Tung Mung 
argues that petitioners' proposed ratio for G&A is incorrect because it 
represents Tung Mung's reported corporate-wide figure for selling, 
general and administrative expenses. Tung Mung argues that the 
divisional G&A expense is more appropriate since Tung Mung's other 
division is completely unrelated to subject merchandise.
    Department's Position: We agree with respondent. At verification, 
we confirmed that Tung Mung has included G&A expenses incurred with 
respect to the Tuntex Group in its reported G&A. We reviewed this 
calculation at verification and found it to be reflective of the actual 
cost incurred for the types of services that the parent group 
performed. We also confirmed at verification that the Tuntex Group is 
not a corporate entity but rather group of loosely affiliated companies 
with cross-shareholdings. As such, Tung Mung did not have consolidated 
financial statements. See Verification Report at p 3. Therefore, for 
the final determination, we did not recalculate Tung Mung's G&A to 
include additional parent group expenses.

[[Page 30617]]

Ta Chen

Comment 23: Facts Available

    Petitioners state that section 776(a)(2) of the Act provides that 
if an interested party (1) withholds information that has been 
requested by the Department, (2) fails to provide such information in a 
timely manner or in the form or manner requested, (3) significantly 
impedes a determination under the statute, or (4) provides such 
information, but the information cannot be verified, the Department 
shall, subject to sections 782(c)-(e) of the Act, use facts otherwise 
available in reaching its determination. In this investigation, 
petitioners argue, Ta Chen has tolled all of these provisions.
    Petitioners cite three examples in the record that, petitioners 
contend, are evidence that Ta Chen withheld information that was 
requested by the Department. Petitioners first point to Ta Chen's 
failure to provide requested output from computer programs used to 
prepare the response and to test the completeness of Ta Chen's universe 
of U.S. sales. Petitioners assert that, as a result, the Department was 
unable to perform the completeness test of its reconciliation 
procedure. Petitioners also point to Ta Chen's inability to prove that, 
for sales allegedly made directly from a third party to TCI, payment 
was made directly to that third party by TCI. Rather, petitioners point 
to record evidence showing that TCI paid Ta Chen Taiwan and did not 
respond to the Department's request for Ta Chen to prove otherwise. 
Petitioners suggest that Ta Chen had ample time to respond given that 
the payment was made a significant period of time before verification. 
Finally, petitioners cite to Ta Chen's failure to disclose information 
on so-called ``triangle trades'' including a description of this sales 
process, the complete acquisition price, Ta Chen Taiwan's interest and 
banking fees, and TCI's banking fees.
    Petitioners contend that Ta Chen failed to provide information in a 
timely manner or in the form required. Petitioners cite two instances 
where the Department suspended verification until Ta Chen was able to 
produce a general ledger and a subsidiary ledger. Petitioners note that 
the Department had instructed Ta Chen to prepare these documents in 
advance of verification. Petitioners also cite Ta Chen's failure to 
produce a further-manufacturing agreement and its failure to support a 
reconciliation between its general ledger and its invoice register. 
Petitioners also note that Ta Chen failed to provide a full translation 
of its most recent financial statements with regard to two affiliated 
party transactions.
    Petitioners contend that Ta Chen significantly impeded the 
Department's investigation of middleman dumping. Petitioners cite Ta 
Chen's multiple requests for extensions, delays by Ta Chen in 
submitting its data, and the ultimate failure by Ta Chen to provide 
reliable information as a basis for its conclusion that the Department 
has been forced to severely limit its analysis period for the final 
determination. Petitioners assert that the Department has exceeded its 
normal practice by providing Ta Chen with opportunity after opportunity 
to cooperate. However, according to petitioners, Ta Chen's behavior has 
been uncooperative. Petitioners argue that the Department's 
verifications disclosed that Ta Chen engaged in a pattern of 
withholding factual information, submitting inaccurate and unverifiable 
sales and cost data, submitting information in an untimely manner or 
not in the form requested, and refusing to provide certain information 
requested at verification. Petitioners contend that Ta Chen further 
impeded the Department's investigation by submitting unexplained major 
changes to its data in a March 3, 1999 submission. Petitioners describe 
unexplained changes in the following fields: marine insurance, U.S. 
duty expenses, Taiwanese bank charges, Los Angeles and other warehouse 
expenses, transportation expenses, early payment discounts, supplier 
invoice dates, customer code, sale terms, gauge, finish, and 
constructed value information. Petitioners state that these unexplained 
changes cast doubt on Ta Chen's willingness to cooperate. Petitioners 
state that, singularly, these actions would warrant the application of 
total adverse facts available. However, in total, the Department has no 
other option but to assign a margin to Ta Chen based on total adverse 
facts available. However, if the Department should attempt to calculate 
a margin based on submitted data, petitioners argue that the Department 
should reject Ta Chen's unexplained March 3, 1999 data changes.
    Petitioners assert that Ta Chen provided information that could not 
be verified and provide several examples of this type of information. 
Petitioners point to the alleged direct sales from a third party to 
TCI. Petitioners point to proprietary record evidence that, it 
contends, supports the conclusion that the sale was made through Ta 
Chen Taiwan and contradicts Ta Chen's claims that these were direct 
sales. Petitioners also cite record evidence that TCI's invoicing 
system and auditor's adjustments were not verified by the Department. 
Other examples cited by petitioners include: Ta Chen's inability to 
demonstrate that it did not further-manufacture SSSS that was 
subsequently sold in or to the United States and that it could not 
because it did not record the further-manufacturing activity in its 
accounting system; Ta Chen's failure to demonstrate that merchandise 
involved in a triangle trade was purchased from a vendor other than 
YUSCO or Tung Mung; Ta Chen's inability to account for yield loss on 
sales that were further-manufactured in the United States; Ta Chen's 
failure to report charges incurred upon opening a letter of credit; and 
Ta Chen's failure to inform the Department that there were additional 
sales made after its ``self-selected'' cut-off date. Petitioners also 
cite other examples of information that the Department ``was not able'' 
to verify.
    Petitioners state that, by themselves, the deficiencies discovered 
by the Department at verification would warrant the use of facts 
available. In combination, they warrant the use of total adverse facts 
available. Petitioners contend that these deficiencies are so material 
and have such a significant impact that the Department should determine 
that Ta Chen failed to act to the best of its ability in this 
investigation and has been uncooperative. Petitioners argue that it is 
not practicable to provide Ta Chen ``with an opportunity to remedy or 
explain the deficiencies'' discovered at verification as called for 
under section 782(d) of the Act because the deficiencies cut at the 
basic core of Ta Chen's data. Therefore, the Department should 
disregard Ta Chen's response and assign Ta Chen a margin based on facts 
available under section 776(a) of the Act.
    Petitioners argue that meeting any one of the provisions under 
section 776(a) of the Act is, subject to sections 782 (c)-(e) of the 
Act, grounds for the Department to disregard a respondent's response 
and assign a margin based on facts available. Petitioners assert that, 
for the reasons discussed above, the Department should determine that 
all four provisions of section 776(a) have been met and that Ta Chen 
has not acted to the best of its ability to cooperate with the 
Department's investigation.
    In this situation, petitioners contend, section 776(b) of the Act 
authorizes the application of an adverse inference in choosing among 
facts otherwise available. Petitioners state that the Statement of 
Administrative Action (``SAA'') accompanying the URAA offers the 
following guidance: the

[[Page 30618]]

Department ``may employ adverse inferences about the missing 
information to ensure that the party does not obtain a more favorable 
result by failing to cooperate than if it had fully cooperated'' 
(emphasis added). Petitioners state that, under section 776(b), the 
Department has a range of options.
    Petitioners believe that the most reasonable option is a margin 
based on the highest estimated dumping margin listed in the Initiation 
Notice, after adjusting for the actual dumping margins of Ta Chen's 
supplier; such that the combined vendor/middleman margin will equal 
77.08 percent. Petitioners do not believe that the Department should 
choose the highest margins indicated in its middleman dumping 
allegation if those alleged margins are lower than any calculated 
margin based on Ta Chen's incomplete reporting, because to do so would 
reward Ta Chen for failing to cooperate. Therefore, petitioners argue 
that the Department should assign a margin to Ta Chen of 77.08 percent, 
less its vendor's individual margin, for the final determination.
    Petitioners argue that Ta Chen itself was to blame for its 
significant failures at verification. Petitioners point to the 
verification outline's notice to Ta Chen that it should prepare 
documentation in advance and that if it was not prepared, the 
Department would move to another topic and might have to consider the 
item unverified due to time constraints. Petitioners cite the above-
mentioned two instances were Ta Chen failed to prepare ledgers in 
advance at the home market verification. Likewise, petitioners contend, 
Ta Chen was not prepared to document auditor's adjustments at the U.S. 
verification. Petitioners assert that this behavior continued and cites 
several other instances in which Ta Chen was not prepared to support 
its response at verification.
    Petitioners dispute Ta Chen's claim that the so-called ``triangle 
trade'' sales are ``canceled sales.'' Petitioners state that the 
Department examined purchase orders, invoices, payment notices, 
associated expenses, and supporting ledger entries for these sales. 
Petitioners argue that the completion of a commercial transaction 
cannot reasonably be referred to as a ``canceled sale.'' Regardless, 
petitioners note, Ta Chen failed to disclose the ``triangle sales.''
    Petitioners disagree with Ta Chen in its view that direct sales 
made through Company X did not go through Ta Chen Taiwan. Petitioners 
point to record evidence that Ta Chen Taiwan was involved in this 
transaction. Moreover, petitioners point out that Ta Chen is basing its 
claim on exhibits that refer to Company Y and not Company X, which 
petitioners assert is a different company with a similar name.
    Petitioners also disagree with Ta Chen's ``verification comments.'' 
For example, petitioners argue that: Ta Chen's reporting methodology 
contradicted the Department's instructions in the questionnaire and 
supplemental questionnaire; Ta Chen was required to report all of its 
resales and should have provided a more reasonable database; Ta Chen 
did not disclose or report a yield loss on further-manufactured sales; 
Ta Chen was unprepared to completely trace merchandise that underwent 
further-manufacturing in Taiwan; Ta Chen failed to provide proof of 
payment for marine insurance; Ta Chen failed to report certain bank 
charges; and Ta Chen failed to report all purchases in its Section D 
database. In sum, petitioners argue, Ta Chen's behavior can be 
characterized as (1) withholding information requested by the 
Department; (2) failing to provide information in a timely manner; (3) 
impeding the determination; and (4) providing unverifiable information. 
Therefore, petitioners argue, the Department should apply the highest 
margin published in the Initiation Notice for the final determination.
    Ta Chen argues that it was cooperative. Ta Chen states that it 
advised the Department at the outset that it would have difficulties in 
answering the questionnaire in a short time period and requested a 
simplified reporting requirement on December 10, 1998. Ta Chen contends 
that its February 5, 1999 and February 17, 1999 responses contained the 
equivalent level of information compared to its reporting in SSPC from 
Taiwan. Ta Chen states that its March 3, 1999 submission was filed to 
help expedite matters, address petitioners' concerns, and correct 
errors. In Ta Chen's opinion, it believes that the Department found no 
unexplained methodological changes between the March 3 and February 5, 
1999 submissions at verification.
    Ta Chen states that petitioners' claim that its March 3, 1999 
submission contains unexplained changes misses the mark. Ta Chen claims 
that the change to its reported Los Angeles warehousing expenses was de 
minimis. Ta Chen claims that its reported U.S. transportation costs 
were reported for Los Angeles warehouse sales that underwent further 
manufacturing in accordance with its February 5, 1999 submission (at 
pages 2 and 52). Ta Chen also disputes petitioners' claims with regards 
to: U.S. warehousing charges, early payment discounts, supplier invoice 
dates, customer codes, terms of sale, gauge, finish, and control 
number.
    Ta Chen argues that the Department's own verification outline and 
procedure expressly permit a respondent to submit some new factual 
information. Thus, Ta Chen disagrees with petitioners that the 
Department lawfully advised Ta Chen that ``it would not accept any new 
factual information from Ta Chen.'' Ta Chen contends that the 
information presented at the start of verification was no more than 
minor corrections/clarifications of its prior submissions. Moreover, Ta 
Chen argues, given the peculiarities of the middleman investigation, 
under section 351.301(b)(1) of the Department's regulations, Ta Chen 
would have had to submit changes/clarifications in December 1998, which 
was before its original questionnaire response was even due.
    Ta Chen takes issue with petitioners' interpretation of the 
verification results. For example, Ta Chen argues that all of its U.S. 
sales are made by TCI and thus, completeness is largely an issue for 
TCI not Ta Chen Taiwan. Ta Chen states that petitioners focus on a 
particular completeness test, whereas Ta Chen believes that the 
Department had already reconciled a bridge worksheet to the response 
via another exercise. Ta Chen also argues that it was not required to 
report ``triangle trade'' sales because, Ta Chen contends, ``triangle 
trades'' were not sales per se because title never transferred to 
Company X. Ta Chen argues that the terms of sale were ``FOB Los 
Angeles'' and that the merchandise had already been reinvoiced back to 
TCI before it reached the port. Thus, Ta Chen argues, title was never 
transferred, citing Nissho Iwai American Corp. v. U.S., 982 F.2d 505 
(Fed. Cir. 1992) (Nissho Iwai) and ``What Every Member of the Trade 
Community Should Know About Bona Fide Sales and Sales for Exportation'' 
U.S. Customs Service, November 1996; et al. Moreover, Ta Chen argues 
that there is a doctrine of transitory transactions in tax law which Ta 
Chen believes would support the view that, at most, the ``triangle 
trade'' represents a canceled sale. Ta Chen disagrees with 
petitioners'' interpretation of record evidence for marine insurance 
and ocean freight for sales made through Company X. Regardless, Ta Chen 
argues, even if this evidence proves that Ta Chen Taiwan provided 
insurance or facilitated shipping, the sale would still occur between 
Company X and TCI and thus, does not subject it to a middleman

[[Page 30619]]

investigation. Ta Chen also comments on numerous other aspects of its 
verifications, without argument.
    Ta Chen argues that petitioners' suggested dumping margin, based on 
the highest rate alleged in the petition, is unlawful. Ta Chen argues 
that that rate was for manufacturers and, since middleman dumping 
methodology is different from the Department's normal dumping analysis, 
the petition rate is not applicable rendering its use unlawful and 
contrary to Department precedent. Moreover, if the Department finds 
that the verified dumping rates of all the manufacturers are below the 
petition rate, then the petition rate is neither probative nor 
corroborated. Rather, Ta Chen argues, it has been discredited and its 
use is unlawful according to court precedent. Ta Chen also argues that 
petitioners themselves have admitted that its alleged middleman dumping 
rate is wrong. Ta Chen also notes that the allegation was based on a 
price quote of a third party which, Ta Chen asserts, indicates that it 
was a direct sale with no middleman involvement, and that the source of 
the U.S. price quote for the middleman allegation was not disclosed. 
Thus, Ta Chen argues, the alleged middleman dumping margin was not 
probative or corroborated and fails to meet the statutory requirements.
    Department's Position: We agree with petitioners in part. In this 
case, as noted above (see ``Facts Available''), we have determined to 
use facts available because we were unable to verify Ta Chen's 
response. Furthermore, in using facts available, we are employing an 
inference adverse to the interests of Ta Chen because we have 
determined that Ta Chen has failed to act to the best of its ability in 
responding to our requests for necessary information (see ``Adverse 
Facts Available'' above). Given the circumstances in this case, we 
disagree with petitioners that rates derived from our Initiation Memo 
would apply to a middleman situation because those estimates are based 
on our normal dumping methodology, whereas here, Ta Chen would have 
been subject to our middleman dumping methodology as defined in SSPC 
from Taiwan. Thus, for this final determination, as adverse facts 
available, we have selected a rate of 15.34 percent for Ta Chen's 
resales of Tung Mung's and YUSCO's merchandise, which reflects the 
highest rate from our Middleman Initiation Memo.
    In this case, the inability to verify the completeness of Ta Chen's 
databases, particularly the U.S. sales database, is crucial and is a 
factor which, by itself, forms an adequate basis for our determination 
to use facts available. However, our attempted verifications yielded 
additional flaws in Ta Chen's response, providing further bases for our 
decision to employ facts available. For example, we found that Ta Chen 
did not report a particular type of sales process called ``triangle 
trading,'' or report its associated expenses and that Ta Chen could not 
support its claim that a sale to TCI was not YUSCO's or Tung Mung's 
merchandise. Ta Chen could not demonstrate that merchandise further-
manufactured in Taiwan was not shipped to the United States as subject 
merchandise. For a complete listing of all flaws, see Facts Available 
Decision Memorandum--Ta Chen. In this regard, we note that Ta Chen's 
assertions regarding the verification findings are unsupported by 
record evidence, and as such remain mere assertions. Because of the 
gravity and the magnitude of the flaws in Ta Chen's response, we have 
determined that Ta Chen's information is unverifiable, and that there 
is no record evidence demonstrating that errors in Ta Chen's reporting 
of certain of its U.S. sales are limited and correctable. Thus, as 
explained above, we must use facts available in determining a margin 
for Ta Chen, as required under section 776(a) of the Act.
    We also agree with petitioners that an adverse inference is 
warranted in determining a margin for Ta Chen because, as required 
under section 776(b), we find that Ta Chen has not acted to the best of 
its ability in responding to our requests for information. As noted 
above, Ta Chen has participated in numerous reviews and verifications 
in other antidumping proceedings and is aware of the type of 
information we require. However, despite Ta Chen's specific 
understanding of verification procedures, based not only on information 
provided in the verification outline, but also through their successful 
completion of verification in SSPC from Taiwan a mere four months prior 
to these verifications, Ta Chen has failed to substantiate at 
verification a fundamental element of its response: a complete purchase 
and sales reconciliation. We also find that, at verification, Ta Chen 
failed to produce, in a timely manner, documentation that was within 
its control, such as general and subsidiary ledgers, because this 
documentation was requested in our verification outlines (see 
Antidumping Duty Investigation of Stainless Steel Sheet and Strip in 
Coils from Taiwan; Ta Chen's Sales Verification Outline (``Verification 
Outline'' dated March 30 and April 5, 1999) . Ta Chen's comments 
regarding ``triangle trade'' sales and other verification findings are 
not persuasive that Ta Chen has failed to act to the best of its 
ability in responding to our requests for necessary information. Ta 
Chen's argument that ``triangle trade'' sales are not really ``sales'' 
and therefore it need not report them is incorrect. Ta Chen's reliance 
on tax law and U.S. Customs rulings is misplaced, because we are 
concerned with determining if Ta Chen sold merchandise at a price below 
its total acquisition costs. Our determinations are subject to Title 
VII of the Act rather than the Internal Revenue Code or U.S. Customs 
Bulletins and thus, Ta Chen should have reported these transactions. 
Furthermore, we note that Ta Chen made numerous other errors in its 
response that worked in its favor. See Facts Available Decision 
Memorandum--Ta Chen. 
    As we have indicated above, in accordance with our policy, we 
considered the overall effect of the errors to ensure that Ta Chen does 
not obtain a more favorable result by failing to cooperate than if it 
had cooperated fully. Thus, an additional factor we have considered is 
the extent to which Ta Chen might have benefitted from failing to 
cooperate fully if we had not made our determination on the basis of 
facts available. See SAA at 870. In this case, we have determined that 
the use of the flawed response would have yielded a more favorable 
margin for Ta Chen. See Facts Available Decision Memorandum--Ta Chen. 
Thus, for this final determination, we have applied adverse facts 
available to Ta Chen in accordance with section 776(b) of the Act.

Comment 24: Indirect Selling Expenses

    Petitioners argue that the methodology preliminarily employed by 
the Department to compute the middleman dumping margin has not captured 
the full amount of dumping. In the event that the Department does not 
use total adverse facts available, petitioners request that the 
Department make several changes to its methodology.
    Petitioners believe that the Department's methodology understates 
the extent of the losses incurred by Ta Chen on its resales. First, 
petitioners argue that the Department should include TCI's total 
operating and financing expenses, and not Ta Chen's ``incorrectly'' 
reported indirect selling expenses, as part of Ta Chen's net U.S. 
price. Petitioners claim that Ta Chen's reported indirect selling 
expenses do not include a number of expenses that are general in 
nature. Further,

[[Page 30620]]

petitioners maintain that verification proved that TCI's reported 
indirect selling expenses were distortive and understated. Petitioners 
cite SSPC from Taiwan, in which TCI ``admitted'' that it had 
erroneously excluded certain expenses from its indirect selling 
expenses and the Department recalculated TCI's indirect selling 
expenses based on the overall operating costs of TCI as a percentage of 
sales. Additionally, petitioners argue that the Department should deny 
Ta Chen's claimed interest income offset because Ta Chen has not 
demonstrated that this interest income was short-term in nature.
    Petitioners claim that the Department not only asked Ta Chen to 
allocate total G&A over total cost of sales, but also pointed out 
severe deficiencies in Ta Chen's response and asked Ta Chen for 
complete responses. Petitioners also argue that Ta Chen should have 
revised its G&A figures in accordance with the final determination in 
SSPC from Taiwan. Nevertheless, according to petitioners, the record is 
clear with respect to Ta Chen Taiwan's sales, accounting, general 
management, and legal departments' involvement in SSSS sales to TCI, 
and therefore the Department must recalculate Ta Chen Taiwan's G&A 
expenses by allocating total G&A over total cost of sales.
    Ta Chen argues that the dumping margin calculation should be based 
on the Ta Chen Taiwan G&A figures for coil only, as reported in Ta 
Chen's questionnaire response. If the Department does not do so, 
however, it should at least remove attorney fees for dumping work from 
Ta Chen's G&A costs. Ta Chen argues that it was not given an 
opportunity to revise its initial reporting of Ta Chen Taiwan interest 
costs and G&A. It cites Ferro Union, Inc. & Asoma Corp. v. U.S., Slip 
Op. 99-27 at 41 & 44 (CIT March 23, 1999) in which the court held that 
the Department cannot expect a respondent to foresee the interpretation 
of a new term or methodology which is undergoing development, and that 
before resorting to facts available, the party must have a chance to 
remedy deficient submissions.
    Department's Position: Based on our decision to apply total adverse 
facts available, this issue is moot.

Comment 25: Total Acquisition Cost and U.S. Price

    The Department, according to petitioners, must revise its middleman 
dumping calculations for Ta Chen by comparing a normal value with an 
appropriately adjusted U.S. resale price as required by the statute. 
Petitioners claim that the legislative history of section 772 of the 
Act recognizes the Department's discretion to analyze each middleman 
resale so that dumping would not be masked. Petitioners further argue 
that the Trade Agreements Act of 1979 overturned the ruling in Voss 
International Corp. v. United States (``Voss'') in which the court 
rejected the administering authority's practice of setting purchase 
price as the producer's price to an unrelated middleman when the 
producer is aware that the middleman will resell the subject 
merchandise to the United States. Petitioners continue that Congress, 
according to H.R. Rep. No. 317, supra, at 75; S. Rep. No. 249, supra, 
at 94, (``Senate Report'') thus did not grant discretion to the 
Department to equate middleman dumping with the amount by which the 
middleman's adjusted resale price falls below the middleman's total 
acquisition cost. Rather, Congress ruled that the price between a 
producer and an unaffiliated middleman will serve as the basis for 
purchase price as long as the producer knows that the merchandise is 
intended for resale in the United States, and that the Department must 
take into account any middleman dumping along with dumping by the 
producer. Petitioners claim that the Department confirmed this in Fuel 
Ethanol from Brazil.
    Petitioners argue that once the Department confirms that a 
middleman has made a substantial amount of its resales at prices 
substantially below its total acquisition costs, the Department must 
employ a statutorily defined normal value and U.S. price to compute the 
extent of the middleman's dumping. Petitioners state that Ta Chen's 
dumping margin must be calculated by comparing Ta Chen's constructed 
value with its net U.S. price, and that middleman dumping is not equal 
to the difference between Ta Chen's total acquisition cost and resale 
price. Petitioners express the need for a foreign referent market to 
provide a benchmark for a respondent's activity in the U.S. market, as 
prescribed in section 777A of the Act. Petitioners also argue that the 
Department's reliance on section 773 of the Act is not justified in 
measuring the amount of dumping by the middleman, since this section 
deals with the calculation of the cost of production of a respondent's 
home market sales, not the respondent's U.S. sales. Moreover, this 
section defines ``normal value'' with reference to home market prices 
or constructed value, and therefore, argue petitioners, a middleman's 
total acquisition costs for U.S. resales cannot satisfy this definition 
of normal value.
    Furthermore, petitioners claim that the Department failed to 
calculate a proper U.S. price for Ta Chen based on constructed export 
price in its preliminary middleman dumping analysis because the 
Department failed to consider U.S. credit expenses, U.S. inventory 
carrying costs, in-transit inventory carrying costs, and CEP profit, as 
prescribed in section 772 of the Act. Petitioners further note that 
values for most of these expenses are not on the record and that this 
is another reason for the Department to resort to total adverse facts 
available.
    Petitioners claim that the methodology directed by the statute for 
computing middleman dumping is essentially the methodology followed by 
the Department in computing dumping when transshipment is involved, and 
cite the Notice of Final Determination of Sales at Less Than Fair 
Value: Sulphur Dyes, Including Sulphur Vat Dyes, from India 58 FR 11835 
(March 1, 1993) to illustrate their point.
    Ta Chen argues that middleman dumping may not be lawfully 
calculated on the basis of constructed value since, according to 
legislative history, the Antidumping Manual, and court precedent, 
middleman dumping is selling below acquisition cost and related selling 
expenses, citing SSPC from Taiwan, Fuel Ethanol from Brazil; Final 
Determination of Sales at Less Than Fair Value, 51 FR 5572, 5573 & 5577 
(February 14, 1986); Steel Wire Strand for Prestressed Concrete from 
Japan; Notice of Final Court Decision and Amended Final Results of 
Antidumping Duty Administrative Review, 62 FR 60688 (November 12, 
1997); Certain Forged Steel Crankshafts from Japan; Final Determination 
of Sales Note Less Than Fair Value, 52 FR 36984 (October 2, 1987); and 
Mitsui v. U.S., (``Mitsui'') 18 CIT 185 (CIT March 11, 1994). Moreover, 
Ta Chen argues that petitioners' arguments contradict one another as 
petitioners cite authority to that effect that, at most, middleman 
dumping can only be based on the middleman's actual expenses and 
whether the middleman is selling below actual cost. Department's 
Position: Based on our decision to apply total adverse facts available, 
this issue is moot.

Comment 26: Ministerial Errors

    Petitioners claim that the Department should correct several 
ministerial errors in the preliminary determination calculations. 
First, petitioners argue that the U.S. further manufacturing variable 
should not be converted to a character variable because, as such, these 
expenses were not deducted from the

[[Page 30621]]

U.S. gross unit price. Secondly, petitioners argue that the Department 
should format the control number field to ten digits so that the 
``edge'' product characteristic can be considered. Thirdly, petitioners 
maintain that missing values for L.A. warehousing expenses should be 
set to zero. Finally, petitioners assert that the Department should 
base its final determination on the February 5 data file, with the 
exception of those changes in the March 3 data file that have been 
explained by Ta Chen.
    Ta Chen did not comment on these issues.
    Department's Position: Based on our decision to apply total adverse 
facts available, this issue is moot.

Comment 27: Exchange Rate

    Ta Chen argues that the focus of a middleman dumping investigation 
is whether a middleman makes an actual profit or loss on the 
transactions, and thus, as stated in Fuel Ethanol from Brazil, the 
Department must use a proper exchange rate to make such a conclusion. 
Ta Chen claims that the Department should use the exchange rate for the 
date TCI receives payment from the U.S. customer since that rate 
indicates the actual profit or loss on the transaction from the 
perspective of a Taiwan trading company. Furthermore, Ta Chen argues 
that since the Department's regulations do not address the issue of 
middleman dumping, the Department should not use the rate from TCI's 
U.S. sale simply because the regulations say to do so.
    Petitioners did not comment on this issue.
    Department's Position: Based on our decision to apply total adverse 
facts available, this issue is moot.

Comment 28: Bank Charges

    Ta Chen claims that there should be no adjustment for bank charges 
in the CREDIT1U and CREDIT2U data fields since they are associated with 
internal movement of funds received from customer payments between 
affiliated Ta Chen entities.
    Petitioners did not comment on this issue.
    Department's Position: Based on our decision to apply total adverse 
facts available, this issue is moot.

Comment 29: Interest Costs

    Ta Chen claims that it would be double counting to include both 
TCI's and Ta Chen Taiwan's interest costs, since all of Ta Chen 
Taiwan's interest costs with regard to coil are passed through to TCI 
and affect TCI's debt burden. If, however, the Department does include 
Ta Chen Taiwan interest costs, Ta Chen argues that the Department 
should reduce those costs for short-term interest income.
    Petitioners claim that the Department should calculate Ta Chen 
Taiwan's interest expenses for the constructed value calculation based 
on Ta Chen's Taiwan's financial statement because Ta Chen Taiwan was 
intimately involved in the purchase and resale of SSSS. Petitioners 
claim that the Department's allocation of Ta Chen Taiwan's total 
interest expenses over Ta Chen Taiwan's total cost of sales would be 
consistent with SSPC from Taiwan and the questionnaire instructions.
    Department's Position: Based on our decision to apply total adverse 
facts available, this issue is moot.

Comment 30: Substantial Margins

    Ta Chen states that the preliminary decision offers no rationale 
concerning why a 2.68 percent channel rate should be considered 
substantially below cost, given that two percent is considered de 
minimis under the current standard for dumping margins. Moreover, as in 
the SSPC from Taiwan decision, any dumping margin should only apply to 
Ta Chen Taiwan since TCI, a U.S. company, should be permitted to 
purchase direct from a Taiwan manufacturer at the manufacturer's own 
dumping rate.
    Tung Mung also argues that the rate found by the Department for 
middleman dumping, 2.61 percent, is not ``substantial.'' Tung Mung 
argues that it would be inappropriate to find that an entity that is 
not involved in the substance of the transaction, but is merely acting 
as a communications channel, is engaged in dumping. Tung Mung asserts 
that, in any event, a margin of 2.61 percent cannot be considered 
``substantial'' within the meaning of the statute. Tung Mung argues 
that under the holding of Fuel Ethanol from Brazil, the Department must 
find that a substantial portion of the middleman's sales are at prices 
``substantially'' below its acquisition costs. Tung Mung notes that in 
the present case, the Department found that Ta Chen's losses on its 
sales of Tung Mung merchandise amounted to 2.61 percent, which the 
Department deemed to be ``substantial.'' Tung Mung argues that this 
margin is only a fraction over the de minimis limit of two percent, and 
thus can hardly be deemed ``substantial.''
    Petitioners argue that the Department should find that Ta Chen sold 
a substantial portion of its resales in the United States at prices 
substantially below its total acquisition costs. Petitioners state that 
the evidence in this case points to Ta Chen's selling a substantial 
volume of its resales at prices substantially below its total 
acquisition costs, as was the case in Mitsui. Petitioners also state 
that, as in SSPC from Taiwan, there can be no single threshold which 
constitutes substantial losses with regard to middleman dumping, 
because each case involves a unique set of circumstances and thus a 
fixed numerical guideline defining substantial losses should not be 
created.
    Department's Position: We agree with petitioners. There can be no 
single threshold which constitutes substantial losses with regard to 
middleman dumping because each case involves a unique set of 
circumstances. In this case, we find that 15.34 percent for Ta Chen's 
purchases from Tung Mung and YUSCO, as well as the 2.61 percent 
calculated for Ta Chen with regard to Tung Mung's merchandise in the 
Preliminary Decision, constitute substantial losses. The Department has 
stated its general position in SSPC from Taiwan at page 15504. 
Moreover, because we are assigning Ta Chen a significantly higher loss 
percentage for this final determination, we believe that there can be 
no question but that such losses must be considered substantial.

Comment 31: Agency

    Ta Chen contends that the transactions involving the subject 
merchandise do not fall within the ambit of any middleman dumping 
provision for the following reasons: (1) the transactions involve a 
direct sale between a Taiwanese manufacturer and an unaffiliated U.S. 
buyer; and (2) the Department cannot determine that middleman dumping 
is occurring because there is no middleman. Ta Chen explains that Ta 
Chen is merely a processor of paperwork and a communications link and 
is acting as an agent of TCI, Ta Chen's U.S. affiliate. Ta Chen claims 
that TCI initiates all purchase requests from YUSCO and Tung Mung and 
uses Ta Chen as a facilitator due to language barriers and time zone 
differences. Ta Chen further claims that there is a straight pass-
through of the purchase price from YUSCO to TCI such that TCI incurs 
both the risk and the profit or loss on the sale.
    Ta Chen states that the Department must recognize commercial law 
principles in its administration of the antidumping laws, citing NSK v. 
United States, 115 F. 3d 965 (Fed. Cir. 1997). Ta Chen claims that U.S. 
commercial law considers the following factors in determining whether 
an intermediary is

[[Page 30622]]

acting as an agent or as a buyer: (1) (W)hether the intermediary could 
or did provide instructions to the seller; (2) whether the intermediary 
was free to sell the items at any price it desired; (3) whether the 
intermediary could or did select its own customers; and (4) whether the 
intermediary could or did order the merchandise and have it delivered 
for its own inventory. Ta Chen claims that the Department generally 
follows this analysis in determining whether sales through a U.S. 
subsidiary should be treated as EP or CEP transactions, citing 
Stainless Steel Wire Rod from Spain, 63 FR 40391, 40395. Ta Chen 
maintains that if the intermediary cannot perform these tasks and if 
there is a simultaneous passage of title and risk of loss from the 
seller to the intermediary to the buyer, then the intermediary is 
acting as an agent.
    Ta Chen claims that an analysis of the record demonstrates that 
none of the aforementioned four factors exist in the instant case and 
thus, Ta Chen is acting as an agent. First, Ta Chen Taiwan claims that 
in all instances it acts on behalf of TCI with regard to U.S. sales. 
Second, Ta Chen claims that Ta Chen Taiwan was not permitted to sell 
the items to other distributors in the United States, and had no 
control over the U.S. prices of coil. Third, Ta Chen claims that TCI 
alone selected the U.S. customers to which it would subsequently sell 
the imported products. Fourth, Ta Chen claims that coil was shipped 
directly from YUSCO or Tung Mung to TCI for TCI's warehouse inventory, 
and therefore Ta Chen Taiwan does not maintain inventory for any 
products for U.S. sale. Finally, Ta Chen claims that title was 
transferred immediately from Tung Mung or YUSCO to TCI. Ta Chen argues 
that the above facts prove that TCI is the true buyer from YUSCO or 
Tung Mung, and Ta Chen Taiwan is merely TCI's buyer's agent. Moreover, 
TCI argues that the sales are direct sales between YUSCO or Tung Mung 
and TCI.
    Ta Chen argues that the antidumping statute only applies to 
producers and exporters; therefore, Ta Chen contends, TCI should not be 
subject to the dumping determination. Ta Chen states that the Act 
directs the Department to determine the individual weighted average 
dumping margin of each known exporter and producer of the subject 
merchandise, and also cites AK Steel Corp. v. U.S., Slip Op. 98-159 at 
20-23 (CIT November 23, 1998) in support of this position. Ta Chen 
argues that it is well established under Department precedent that if 
suppliers sell to a trading company and had knowledge, at the time they 
sold their merchandise, that those sales were destined for the United 
States, the Department finds that suppliers are effectively acting as 
exporters and therefore uses their [suppliers] pricing structure to 
measure dumping activity, citing Antifriction Bearings from France, 57 
FR 28360 (1992). Ta Chen argues that the manufacturers, Tung Mung and 
YUSCO, had knowledge that all sales to TCI were destined for the United 
States. In this regard, Ta Chen argues, YUSCO and Tung Mung are the 
exporters under Department practice.
    Ta Chen argues that middleman dumping is a narrowly defined 
exception to the Department's general practice to use the producer's 
price to the U.S. in the dumping analysis. Ta Chen argues that this 
exception does not apply in this case. Ta Chen points to the 
legislative history of the Trade Agreements Act of 1979 as support that 
middleman dumping is limited to the issues involved in Voss 
International v. United States, (``Voss'') C.D. 4801 (May 7, 1979), 
citing Senate Report. Ta Chen argues that the legislative history 
regarding middleman dumping analysis instructs that where a producer 
knows that the merchandise was intended for sale to an unrelated 
purchaser in the United States under terms of sale fixed on or before 
the date of [U.S.] importation, the producer's sale price to an 
unrelated middleman will be used as the purchase price (``Purchase 
price'' may be used if transactions between related parties indicate 
that the merchandise has been sold prior to importation to a U.S. buyer 
unrelated to the producer.'' See Senate Report). Ta Chen argues that 
the instant case is distinct from Voss because YUSCO's and Tung Mung's 
terms of sale were fixed before exportation. Ta Chen concludes that the 
middleman dumping exception as delineated in Voss does not apply in the 
instant case, and therefore, the Department does not have the authority 
to investigate Ta Chen nor does it have the authority to use TCI's U.S. 
resale prices in the calculation of a dumping margin.
    Notwithstanding this conclusion, Ta Chen argues that if the 
Department wishes to take on a broader view of its ability to 
investigate middleman dumping, in the instant case there is no sale to 
a middleman outside the United States who then makes the first sale to 
the United States. Ta Chen again cites to the Senate Report at 93-94:

    Regulations should be issued, consistent with present practice, 
under which sales from the foreign producer to middlemen and any 
sales between middleman before sale to the first unrelated U.S. 
purchaser are examined to avoid below cost sales by the middlemen. 
Emphasis added in Ta Chen brief)

Ta Chen also cites to Fuel Ethanol at 5577 as further support. Ta Chen 
claims that YUSCO and Tung Mung sell directly to TCI, an unaffiliated 
U.S. customer, and therefore, there is no middleman. Ta Chen argues 
that Department precedent demonstrates that middleman dumping is found 
where a foreign manufacturer sells to a trading company located in the 
foreign manufacturer's home market or third country which in turn is 
``selling to U.S. purchasers below its acquisition or purchase cost,'' 
citing Fuel Ethanol at 5573 & 5576-77. Ta Chen asserts that the 
Department has never found middleman dumping where a foreign 
manufacturer sells to an unaffiliated U.S. company. Ta Chen argues TCI 
purchased coil from the Taiwan manufacturer; thus, a ``middleman'' as 
defined by Fuel Ethanol does not exist.
    Ta Chen argues that the Department's decision in SSPC from Taiwan 
is contrary to the Department's own practice, U.S. commercial law 
principles and commercial reality. Ta Chen contends that the SSPC from 
Taiwan decision implies the finding that invoicing or transfer of title 
to an entity alone is sufficient to show that a sales transaction 
occurred. Ta Chen argues that this is contrary to law, citing FAG 
(U.K.) Ltd. v. U.S., Slip Op. 98-133 at 15, n. 5 (CIT September 16, 
1998) (finding that ``mere passage of title alone does not effect a 
sale'' if one party controls the transaction and the other to whom 
title passed is only acting as an agent of the controlling party, 
citing AK Steel Corp., et. al. v. U.S., Slip Op. 98-159 at 7-16 (CIT 
Nov. 23, 1998); J.C. Penney v. U.S., 451 F. Supp. 973, 986 (1978); and 
Synthetic Methionine from Japan, 52 FR 10600, 10601 (1987).
    Second, Ta Chen charges that the decision in SSPC from Taiwan 
implies that simply because the agent is involved in the sales 
negotiation or initially incurs costs (which are then passed onto the 
buyer), it can be found that the sale is made to the agent. Ta Chen 
argues that this assumption found in SSPC from Taiwan also contradicts 
law and commercial reality. Ta Chen argues that the courts have 
acknowledged that negotiating sales and incurring expenses on behalf of 
the buyer are services characteristic of buying agents, citing Jay-Arr 
Slimware Inc. v. U.S., 681 F. Supp. 875, 878 (CIT 1988); J.C. Penney v. 
U.S., 451 F. Supp. 973, 984 (1978); Monarch Luggage Co. v. U.S., 715 F. 
Supp. 1115, 116-7 (CIT 1989); and Rosenthal-Netter, Inc. v. U.S., 679 
F. Supp. 21, 23 (CIT 1988).

[[Page 30623]]

    Third, Ta Chen finds that SSPC from Taiwan contradicts law by 
suggesting that middleman dumping can be found where there is a sale 
from the Taiwan producer to TCI, with Ta Chen Taiwan acting only as an 
agent. Ta Chen points out that SSPC from Taiwan cites to no supporting 
legal authority except Voss, which as argued earlier by Ta Chen, does 
not apply to the instant case.
    Ta Chen argues that based on shipping terms, the transaction 
between the seller and the intermediary is not a bona fide sale. TCI 
argues that where the merchandise is shipped directly from the seller 
to the ultimate consignee, as opposed to being shipped from the seller 
to the intermediary and then to the ultimate consignee, the terms of 
sale may indicate that simultaneous passage of title occurred. 
According to TCI, an intermediary is considered to hold title only 
momentarily, if ever, and does not bear the risk of loss according to 
the term of sale. As such, TCI argues that based on the shipping terms, 
a bona fide sale would not appear to exist between the seller and 
intermediary, but rather between the seller and the U.S. ultimate 
consignee, with the intermediary potentially serving as an agent, 
citing Nissho Iwai. In addition, TCI notes that TCI's financial 
statements indicate that TCI is ``engaged in the business of sales of 
coils * * *'', citing March 3, 1999 Questionnaire Response. TCI also 
notes that Ta Chen Taiwan's financial statement indicate that Ta Chen 
Taiwan manufactures stainless steel pipe and fitting products and there 
is no mention that Ta Chen Taiwan sells coil, citing their February 17, 
1999 submission at Exhibit 6.
    Tung Mung argues that the Department should not find middleman 
dumping in this case because Ta Chen Stainless Steel Pipe Co., Ltd, is 
not a middleman. Tung Mung argues that the verifications of Tung Mung 
and Ta Chen made clear that Tung Mung's true customer is Ta Chen 
International, Ta Chen's U.S. affiliate. Tung Mung maintains that TCI 
makes its own decisions on what materials to purchase, based on its 
assessment of market conditions in the United States, and simply uses 
Ta Chen Taiwan as a communications link. Tung Mung asserts that 
verification results of Ta Chen Taiwan show that pricing decisions are 
being made by TCI, a U.S. corporation, rather than Ta Chen Taiwan. Tung 
Mung argues that the Department confirmed at verification that TCI uses 
Ta Chen Taiwan as an intermediary, instead of buying directly from the 
manufacturer, because of differences in time zones and language 
barriers, citing TCI Verification Report at p. 6.
    Petitioners assert that, according to the record, the Taiwanese 
producers' U.S. sales of subject merchandise were in all instances to 
Ta Chen Taiwan, not to Ta Chen International. Petitioners point to 
several verification findings with regard to sales functions and 
corporate structure which, petitioners claim, demonstrate that Ta Chen 
Taiwan was intimately involved in each purchase and intra-company 
resale to TCI of YUSCO's and Tung Mung's products. Petitioners maintain 
that these verification results prove that Ta Chen Taiwan purchased the 
subject merchandise from YUSCO and Tung Mung and acted as a middleman 
in connection with the resale of YUSCO's and Tung Mung's subject 
merchandise in the United States.
    Petitioners find suspect Ta Chen's explanation for those sales 
where the invoicing did not go through Ta Chen Taiwan. Petitioners note 
that Ta Chen claims that these sales are ``direct sales'' to TCI; 
however, petitioners argue that Ta Chen provides no supporting evidence 
for this claim. Petitioners point out that the record evidence 
contradicts Ta Chen's assertions that the sales at issue were direct 
sales to TCI. Petitioners note that Ta Chen stated that the sales in 
question were direct sales since a certain party directly invoiced TCI. 
Petitioners further note that when the Department asked TCI to prove 
that it directly paid the certain party, TCI could not, citing TCI 
Verification Report at page 17. Petitioners note that the documentation 
indicated that the party paid was in fact Ta Chen Taiwan. Moreover, 
petitioners maintain that other documents retrieved at verification 
support that the payee was in fact Ta Chen Taiwan, despite Ta Chen's 
claim at verification that Ta Chen Taiwan was indicated as the payee as 
a result of a typographical error.
    Petitioners cite Industrial Nitrocellulose from the United Kingdom; 
Final Results of Antidumping Duty Administrative Review, 64 FR 6609, 
6622 (February 10, 1999), where the Department found that a U.S. 
selling agent was substantially involved in the sale process for the 
foreign company because its duties as the foreign company's agent 
included sales and solicitation and price negotiation. Likewise in this 
investigation, petitioners argue, Ta Chen Taiwan negotiated with YUSCO 
and Tung Mung the terms of sale and performed other sales functions 
associated with these sales. Thus, petitioners argue, the role of Ta 
Chen Taiwan was substantial and entailed much more than paper 
processing and aiding communications between YUSCO and Tung Mung and 
TCI. Petitioners conclude that the Department should find that TCI 
therefore acted as a middleman in the resale of the subject merchandise 
into the U.S. and include in the Department's dumping calculations the 
full extent of dumping caused by Ta Chen's pricing to its unaffiliated 
U.S. customers.
    Department's Position: We disagree with Ta Chen that it is not the 
middleman for resales of YUSCO's and Tung Mung's merchandise into the 
U.S. market. Evidence plainly establishes that for the purposes of 
conducting a middleman dumping investigation, there were sales of 
subject merchandise between YUSCO and Ta Chen and between Tung Mung and 
Ta Chen which, in turn, Ta Chen resold into the United States through 
its U.S. affiliate, TCI. We find the activity engaged in by Ta Chen as 
that of a classic middleman and therefore subject to our scrutiny.
    Where a producer sells its merchandise to an unaffiliated 
middleman, it has been the Department's long-standing practice normally 
to select as the U.S. price the price between the foreign producer and 
the unaffiliated middleman, provided that the foreign producer knew or 
had reason to know that its merchandise was destined for export to the 
United States. See Antifriction Bearings From France, 57 FR 28360 
(1992)(Comment 18). However, if the middleman is reselling below cost, 
the sale between the producer and the middleman may not be an 
appropriate basis for establishing the total margin of any dumping that 
may have occurred. The legislative history to the 1979 Act makes clear 
that Congress recognized that middlemen may also be engaged in dumping 
and acknowledged that the Department had authority to investigate 
``sales from a foreign producer to middlemen and any sales between 
middlemen before sale to the first unrelated U.S. purchaser * * * to 
avoid below cost sales by the middlemen.'' See H.R. Rep. No. 317, 96th 
Cong., 1st Sess. 75 (1979); and the Senate Report. Therefore, there is 
no question that the Department has the authority to depart from its 
normal practice, where circumstances warrant, and investigate whether 
dumping is being masked or understated by middlemen. See Fuel Ethanol 
(the legislative history of the 1979 Act sustained the Treasury 
Department's practice of using the price between the manufacturer and 
unrelated trading company for exports to the U.S. when the manufacturer 
knew the destination at the time of sale to the exporter, but

[[Page 30624]]

was not intended to bar us from looking at all facets of the 
transaction). Where the Department determines that a substantial 
portion of the middleman's resales in the United States was made at 
below the middleman's total acquisition costs and the middleman 
incurred substantial losses on those resales, middleman dumping has 
occurred and the margin calculation is adjusted accordingly, i.e., we 
look to the middleman's first sale to an unaffiliated customer. See 
Amended Preliminary Determination; Fuel Ethanol.
    Ta Chen acknowledges that the Department has the authority to 
conduct middleman dumping investigations but offers various arguments 
against applying middleman dumping to Ta Chen. Ta Chen mainly argues 
that if there was not a sale between YUSCO and Ta Chen, but Ta Chen 
merely acted as a selling agent for its wholly-owned U.S. affiliate, 
TCI, there can be no middleman and thus no middleman dumping.
    Here, the verified evidence establishes that YUSCO and Tung Mung 
made sales to Ta Chen, not directly to TCI (although Tung Mung did have 
a small number of direct sales to TCI, we are not considering them to 
be subject to our middleman investigation). Contrary to Ta Chen's 
assertions otherwise, Ta Chen did take legal title to the merchandise. 
Even though YUSCO and Tung Mung shipped the merchandise fob to TCI at a 
port in Taiwan, a purchaser need not take physical possession of 
merchandise to have legal title. Here, Ta Chen negotiated the sale with 
YUSCO and Tung Mung, signs a sales contract with YUSCO and Tung Mung, 
was invoiced by YUSCO and Tung Mung, paid YUSCO and Tung Mung for the 
merchandise, entered these sales into Ta Chen's book, and undertook 
various other activities involved in exporting and transporting the 
merchandise. See Exhibits 6 and 8 of Tung Mung's Verification Report 
dated April 12, 1999, page A-10 of Tung Mung's questionnaire response 
dated September 8, 1998. See also pages 5, 13 and Exhibit 9 of YUSCO's 
Sales Verification report dated April 12, 1999. Thus, the evidence is 
sufficient to establish that Ta Chen was acting as a middleman within 
the meaning of the antidumping law.
    Further, trading companies such as Ta Chen have typically been the 
focus of the Department's investigation into middleman dumping 
allegations because most often trading companies engage in the 
``successive resales from the foreign producer to the first unrelated 
U.S. buyer,'' thus prompting our scrutiny. See, e.g., Electrolytic 
Manganese Dioxide From Japan, 58 FR 28551 (May 14, 1993); Fuel Ethanol; 
PC Strand From Japan: Final Results of Redetermination Pursuant to 
Court Remand, Court. No. 90-12-00633 (August 5, 1994); see also 
Consolidated International Automotive, Inc. v. United States, 809 F. 
Supp. 125, 130 (CIT 1992).
    We also disagree that we should examine Ta Chen's role in the 
transaction chain by applying the criteria we normally use to determine 
if U.S. sales are EP or CEP sales. For a more complete discussion of 
this issue, see SSPC from Taiwan, Comment 6.
    Finally, given that we find that Ta Chen is a middleman, the 
question Ta Chen raises regarding the geographical location of the 
middleman is moot, since Ta Chen is located in the exporting country 
and hence clearly within the ambit of a middleman dumping 
investigation. See e.g., Antidumping Manual, Chapter 7 at 5 (if the 
Department receives a documented allegation that the trading company 
located in the exporting country or a third country is reselling to the 
United States at prices which do not permit the recovery of its total 
acquisition costs, we will initiate a middleman dumping investigation).

Suspension of Liquidation

    In accordance with section 735(c)(1)(B) Act, we are directing the 
U.S. Customs Service to suspend liquidation of all entries of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of the final 
determination in the Federal Register. The all-others rate reflects an 
average of the corroborated non-de minimis margins alleged in the 
petition. The Customs Service shall require a cash deposit or the 
posting of a bond equal to the estimated amount by which the normal 
value exceeds the U.S. price as shown below. These suspension-of-
liquidation instructions will remain in effect until further notice. 
The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                       margin
                                                             percentage
------------------------------------------------------------------------
Tung Mung/Ta Chen.........................................         14.95
Tung Mung.................................................         14.95
Chang Mien................................................          0.98
YUSCO/Ta Chen.............................................         34.95
YUSCO.....................................................         34.95
All Others................................................         12.61
------------------------------------------------------------------------

Since the final weighted average margin percentage for Chang Mien is de 
minimis, Chang Mien will be excluded from an antidumping order, if 
issued, on stainless steel sheet and strip in coils from Taiwan as a 
result of this investigation.

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 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 to assess antidumping 
duties on all imports of the subject merchandise entered 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. 99-13681 Filed 6-7-99; 8:45 am]
BILLING CODE 3510-DS-P