[Federal Register Volume 64, Number 220 (Tuesday, November 16, 1999)]
[Notices]
[Pages 62169-62175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29905]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-484-801]


Electrolytic Manganese Dioxide From Greece: Final Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of final results of antidumping duty administrative 
review

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SUMMARY: On May 10, 1999, the Department of Commerce published the 
preliminary results of the administrative review of the antidumping 
duty order on electrolytic manganese dioxide from Greece. The review 
covers one producer/exporter, Tosoh Hellas A.I.C., during the period of 
review April 1, 1997, through March 31, 1998.
    We gave interested parties an opportunity to comment on the 
preliminary results. After our analysis of the comments received, we 
made no changes for the final results.

EFFECTIVE DATE: November 16, 1999.

FOR FURTHER INFORMATION CONTACT: Hermes Pinilla or Richard Rimlinger, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, Washington, DC 20230; telephone: (202) 482-3477 
or (202) 482-4477, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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

Background

    On May 10, 1999, we published in the Federal Register the 
preliminary results of the administrative review of the antidumping 
duty order on electrolytic manganese dioxide (EMD) from Greece. 
Preliminary Results of Antidumping Duty Administrative Review: 
Electrolytic Manganese Dioxide from Greece, 64 FR 25008 (preliminary 
results). Kerr-McGee Chemical LLC and Chemetals, Inc. (collectively the 
petitioners), submitted their case brief on August 10, 1999. Tosoh 
Hellas A.I.C. (Tosoh), the sole respondent in this review, did not 
submit a case brief. Tosoh submitted its rebuttal brief on August 17, 
1999. The Department has conducted this administrative review in 
accordance with section 751(a) of the Act.

Scope of Review

    Imports covered by this review are shipments of EMD from Greece. 
EMD is manganese dioxide (MnO2) that has been refined in an 
electrolysis process. The subject merchandise is an intermediate 
product used in the production of dry-cell batteries. EMD is sold in 
three physical forms, powder, chip, or plate, and two grades, alkaline 
and zinc-chloride. EMD in all three forms and both grades is included 
in the scope of the order. This merchandise is currently classifiable 
under item number 2820.10.0000 of the Harmonized Tariff Schedule (HTS) 
of the United States. The HTS number is provided for convenience and 
customs purposes. It is not determinative of the products subject to 
the order. The written product description remains dispositive.

[[Page 62170]]

Selection of Comparison Market

    Prior to the issuance of the preliminary results, the petitioners 
alleged that, although viable, Tosoh's home market is not a suitable 
market in which to establish normal value. The petitioners also alleged 
that the EMD grade Tosoh sold in the home market is not a foreign like 
product as set forth in section 771(16)(B) of the Act and that a 
particular market situation exists which warrants the rejection of home 
market sales for consumption as the basis for normal value.
    For our preliminary results we determined that Tosoh's home market 
was appropriate to use in the determination of normal value. In the 
interest of full consideration, however, we requested additional 
information from Tosoh to determine whether the two products in 
question are commercially comparable. See preliminary results. Our 
analysis and conclusions with regard to these issues have been 
addressed below.

Analysis of Comments Received

    Issues raised in the briefs by the petitioners and Tosoh are 
addressed below.

Comment 1: Foreign Like Product--Like in Component Material

    The petitioners argue that the EMD (i.e., zinc-chloride-grade EMD) 
Tosoh sold in the home market is not a foreign like product as defined 
in section 771(16)(B) of the Act because it is not ``like the exported 
product in component material or materials.'' The petitioners assert 
that the raw materials used in the manufacture of the home market 
product are unlike the raw materials used in the manufacture of the 
merchandise sold to the United States. They argue that the difference 
arises because Tosoh includes the cost of a certain item (the identity 
of which is proprietary information) in its home market variable cost 
of manufacture whereas it does not include the cost of a corresponding 
item in its U.S. variable cost of manufacture. The petitioners contend 
that the Department's 20-percent difference-in-merchandise test will 
not address the differences in materials adequately. In sum, they argue 
that the difference in component materials is such that the merchandise 
is not ``like in component materials'' as required under section 
771(16)(B)(ii) of the Act.
    Tosoh argues that the two types of EMD are ``like'' in component 
materials since they have the same physical structure, are manufactured 
using the same component materials, and meet the same minimum chemical-
property specifications. In addition, according to Tosoh, both types of 
EMD are produced using the same basic production process on the same 
production line. Furthermore, Tosoh contends that the item of concern 
to the petitioners is not a component material and has very little 
bearing on the cost of production of EMD, as demonstrated by the fact 
that the difference in cost of the two EMD types at issue here is well 
within the Department's 20-percent difference-in-merchandise standard. 
Therefore, according to Tosoh, the Department concluded correctly that 
the two EMD types are ``like'' in component materials.
    Department's Position: We continue to find, as we stated in our 
April 29, 1999, Memorandum (see Memorandum to Richard W. Moreland, 
available in our Central Records Unit, Room B-099 (April 29 
Memorandum)), that the product sold in the home market is a foreign 
like product on which we can base normal value under section 771(16)(B) 
of the Act. First of all, the most important component materials (i.e., 
manganese ore, heavy oil, sulfuric acid, etc.) of the U.S. and home 
market products are the same.
    Further, the difference identified by the petitioners is not a 
difference in component materials but rather a difference in the 
equipment used in the manufacturing processes. Although Tosoh listed 
the equipment as a ``raw material,'' this designation was solely for 
accounting purposes because the useful life of the equipment is less 
than one year.
    Finally, our difference-in-merchandise adjustment is based on 
actual physical differences in the products and is calculated on the 
basis of variable manufacturing costs. We include the cost of 
materials, labor, and variable factory overhead as direct manufacturing 
costs in our difference-in-merchandise adjustment, and any distinction 
in such costs between the subject merchandise and the foreign like 
product will be subject to our 20-percent difference-in-merchandise 
test. See Import Administration Policy Bulletin, No. 92.2 (July 29, 
1992). The differences in direct manufacturing cost of the two products 
at issue here, zinc-chloride-grade and alkaline-grade EMD, meet our 20-
percent guideline.
    In conclusion, for these reasons, we find that the subject 
merchandise sold in the home market meets the foreign-like-product 
criterion at section 771(16)(B)(ii) of the Act.

Comment 2: Foreign Like Product--Purposes for Which Used

    The petitioners contend that the home market product is not a 
foreign like product as defined in section 771(16)(B) of the Act 
because it is not ``like in the purposes for which used.'' According to 
the petitioners, the Department made two fundamental errors in 
addressing this question in its April 29 Memorandum.
    First, the petitioners assert, the Department erred by considering 
the relevant use to be the common use of the home market product rather 
than the use of particular sales. In this case, the petitioners claim, 
the EMD sold in the home market was used as an additive in battery 
cells in which natural manganese dioxide (NMD) is the principal cathode 
material. According to the petitioners, in this application, the EMD 
does not act as the principal cathode material but as an enriching 
agent to improve the performance of NMD in these old-fashioned cells. 
Therefore, according to the petitioners, the EMD Tosoh sold in the home 
market is of a lower quality and sells for a lower price than the EMD 
exported by Tosoh to the United States, and was not sold for the same 
purposes for which the EMD sold to the United States was used.
    The petitioners assert that the Department's second error was in 
considering any use as a cathode material in battery applications to be 
sufficient to establish that the exported and home market products are 
alike in the purposes for which used. The petitioners argue that the 
April 29 Memorandum cites no evidential basis or rationale for this 
finding. According to the petitioners, it is the difference in the ways 
in which the types of EMD are used in battery cathodes that 
substantially affects their commercial value.
    Tosoh argues that the petitioners' assertion that the home market 
EMD type is used as an additive to the cathode material and that the 
U.S. EMD type is used unadulterated as the cathode material is 
inaccurate and also irrelevant. Tosoh asserts that, in its 
questionnaire, the Department describes the product covered simply as 
an intermediate product used in the production of dry-cell batteries. 
According to Tosoh, this is how customers use the EMD it sells both in 
the United States and in the home market. In addition, Tosoh asserts 
that, on April 6, 1999, it submitted a letter from its home market 
customer confirming that it used the home market EMD type as 100 
percent of the cathode material in several types of batteries it

[[Page 62171]]

produces. According to Tosoh, even if EMD sold in the home market were 
never used as 100 percent of the cathode material, that would still not 
suffice to demonstrate that the two EMD grades are not ``like'' in the 
``purposes for which used.'' Citing Koyo Seiko v. United States, 66 
F.3d 1204, 1210 (Fed. Cir. 1995), Tosoh asserts that the court held 
unequivocally that ``it is not necessary to ensure that home market 
models are technically substitutable, purchased by the same type of 
customers, or applied to the same end use as the U.S. model.'' In this 
case, according to Tosoh, its home market customer uses Tosoh's EMD in 
the cathode mixture of dry-cell batteries, either as 100 percent of the 
cathode or as a component of the cathode mixture. Tosoh asserts that 
the EMD performs essentially the same function in both types of 
batteries. In closing, Tosoh contends that the petitioners have offered 
nothing to undermine the Department's decision in the preliminary 
results that the two types of EMD have like uses.
    Department's Position: As we stated in our April 29 Memorandum, 
Tosoh's customers use both types of EMD grades as a cathode material, 
which provides the electric charge needed for a battery to perform. The 
petitioners have not brought forth any substantial evidence to 
contradict this fact. Whether Tosoh's home market customer uses its EMD 
in the cathode mixture of dry-cell batteries as 100 percent of the 
cathode or as a component of the cathode mixture is irrelevant. The 
fact still remains that the EMD produced by Tosoh for sale in the home 
market is an intermediate product used in the production of dry-cell 
batteries. Specifically, both products are used as a cathode material 
in dry-cell batteries. See United States International Trade 
Commission's Determination of Electrolytic Manganese Dioxide from 
Greece and Japan, USITC Pub. 2177 (April 1989) at page 3.
    In addition, there is no evidence on the record, nor do the 
petitioners cite to any evidence, that suggests that EMD as a cathode 
material can only have one particular use in battery applications. 
Therefore, our rationale in this regard conforms with the express 
language of section 771(16)(B)(ii) of the Act, and we find that, based 
on the reasons set forth above, the home market product meets the 
foreign-like-product criterion at section 771(16)(B)(ii) of the Act.

Comment 3: Foreign Like Product--Commercial Value Criterion

    The petitioners argue that the home market product is not a foreign 
like product under section 771(16)(B) of the Act because it is not 
``approximately equal in commercial value to'' the exported product. 
The petitioners argue first that the Department should find that the 
home market product is not approximately equal in commercial value to 
the exported product as facts available because Tosoh did not respond 
fully to the Department's request for information regarding its sales 
of all alkaline-grade and all zinc-chloride-grade EMD in the three 
largest markets in which it sold both grades of EMD. According to the 
petitioners, Tosoh interpreted the Department's request too narrowly in 
its May 5, 1999, submission by not including the three largest third-
country markets to which it sold both any type of zinc-chloride-grade 
EMD and any type of alkaline-grade EMD. The petitioners contend that 
Tosoh reported only one third-country market in which it sold one 
particular type of alkaline-grade EMD and one particular type of zinc-
chloride-grade EMD. According to the petitioners, Tosoh manufactures 
several types of both zinc-chloride-grade EMD and alkaline-grade EMD. 
The petitioners assert that, in view of the limited number of battery 
producers, the chances of there being markets in which Tosoh sold any 
one of its alkaline-grade EMD and any one of its zinc-chloride-grade 
EMD are much higher than the chances of there being markets in which 
Tosoh sold any two specific designations (i.e., EMD sub-grades) of its 
EMD. Therefore, according to the petitioners, because Tosoh did not 
respond adequately to the Department's request, the Department should 
use as facts available the petitioners' information, which, the 
petitioners claim, demonstrates that zinc-chloride-grade EMD is not 
approximately equal to alkaline-grade EMD in commercial value.
    Second, the petitioners contend that, even if the Department 
accepts Tosoh's May 5, 1999, response, the record demonstrates that the 
two products in question are not ``approximately equal in commercial 
value.'' According to the petitioners, the record demonstrates that the 
particular type of zinc-chloride-grade EMD Tosoh sold to its third-
country customer is not sold for use as the cathode in dry-cell 
batteries. The petitioners contend that this is significant to the 
Department's assessment of the evidence of the third-country sales 
information Tosoh provided.
    Tosoh argues that it has supplied the Department with conclusive 
evidence that the two types of EMD at issue here, when sold in a third-
country market, are equal in commercial value. Tosoh argues that the 
petitioners' complaint regarding its submission of third-country price 
information is unfounded. According to Tosoh, the Department addressed 
the petitioners' assertions fully and correctly in its July 27, 1999, 
Memorandum, in which the Department reaffirmed its preliminary decision 
that the two types of EMD at issue here ``are commercially comparable'' 
and stated that the information Tosoh submitted on May 5, 1999, 
supports the Department's preliminary results.
    In addition, Tosoh contends that the petitioners have attempted to 
read the Department's third-country sales information request more 
broadly than it was written, asserting that the Department's request 
should be read to ask for sales data for countries in which any 
combination of Tosoh's grades of EMD are sold. According to Tosoh, such 
a reading flatly contradicts the Department's and the petitioners' own 
stated intention in requesting third-country sales information, which 
was to determine the price comparability of the type of EMD sold to the 
United States vis-a-vis the home market, which the petitioners were 
questioning with respect to the sales in Greece and the United States 
during the review period. Tosoh asserts that the Department requested 
information regarding ``both types of grades'', which refers to the 
types of EMD grades sold in the U.S. and home markets during the review 
period. Morever, Tosoh contends that no other types of EMD are really 
relevant from the standpoint of testing whether the types of EMD sold 
in Greece and to the United States during the review period are 
``approximately equal in commercial value.''
    Tosoh asserts further that, because it has provided complete and 
accurate information in response to the Department's requests regarding 
the sole market in which both types of EMD grades were sold during the 
review period, there is no basis for the application of facts available 
in this case. Furthermore, Tosoh contends that, because it has 
cooperated fully with the Department's information requests, there is 
also no basis for the application of an adverse inference in this case.
    Department's Position: We continue to find, as we stated in our 
July 27, 1999, Memorandum (see Memorandum to Richard W. Moreland, 
available in our Central Records Unit, Room B-099 (July 27 
Memorandum)), that the two EMD grades (i.e., alkaline and zinc-
chloride) are ``approximately equal in commercial value'' as set forth 
in section 771(16)(B)(iii) of the Act. We find that Tosoh responded 
appropriately

[[Page 62172]]

to our April 28, 1999, request concerning whether the two products 
(i.e., alkaline-grade and zinc-chloride-grade EMD) are commercially 
comparable. Per our request, Tosoh provided us with information 
concerning the quantity and value of two specific EMD grade types sold 
in one third-country market. The two specific EMD grade types are 
identical to the EMD grade types sold in the U.S. and home markets 
during the review period. Therefore, since the two EMD grades types 
reported by Tosoh are relevant for our purpose in considering whether 
the two products in question are commercially comparable, we did not 
request additional information. See July 27 Memorandum. Moreover, given 
the fact that, in this review, we were addressing the issue of whether 
these two specific EMD grades were commercially comparable, we find 
that Tosoh's response to our request was reasonable. Thus, we find that 
Tosoh complied fully with our request for third-country information. In 
addition, since Tosoh complied with our request, we find no reason to 
apply facts available in this regard.
    Moreover, we are not persuaded by the petitioners' assertion and 
evidence that Tosoh's zinc-chloride-grade EMD sales to its third-
country customer were not used as a cathode mixture in the production 
of dry-cell batteries. As we stated in our July 27 Memorandum, Tosoh 
provided an affidavit from its Director of Sales in which he states 
that, during the review period, Tosoh's third-country customer 
purchased EMD from Tosoh for use as a cathode mixture in the 
manufacture of primary (i.e., non-rechargeable) dry-cell batteries.
    In addition, the information Tosoh submitted on May 5, 1999, in 
response to our questions indicates that the prices of the two products 
are comparable and therefore are approximately equal in commercial 
value. See July 27 Memorandum. For these reasons, we find that the home 
market product meets the foreign-like-product criterion at section 
771(16)(B)(iii) of the Act.

Comment 4: Home Market Viability/Particular Market Situation

    The petitioners argue that the five-percent viability test should 
not be regarded as conclusive of home market viability in this case 
because of the very small volume of U.S. sales in the review period. 
The petitioners assert that, in reflexively applying the five-percent 
test without further analysis in these circumstances, the Department 
ignored its own regulations and the Statement of Administrative Action 
(SAA), H. Doc. 103-316, vol. 1, 103d Cong., 2d sess., 822 (1994), both 
of which state that the five-percent test is not conclusive in every 
case. According to the petitioners, the SAA states that use of the 
five-percent viability test is particularly inappropriate where there 
are ``thin'' home market sales. The petitioners argue that, for the 
final results, the Department must address the following 
considerations: the Department cannot apply the difference-in-
merchandise test as contemplated by the statute to adjust for 
differences in the physical characteristics of the product sold in 
Greece; the home market sales involve sales of EMD for an unusual use; 
Tosoh's home market is so small that sales in the market can have no 
material effect on the company's profitability and therefore are 
incidental to Tosoh. These facts, according to the petitioners, coupled 
with the export orientation of Tosoh, provide another basis for finding 
a particular market situation and relying on third-country sales in the 
determination of normal value.
    Citing the Department's decision to use third-country sales in the 
Final Determination of Sales at Less Than Fair Value; Fresh Salmon From 
Chile, 63 FR 31418 (June 9, 1998) (Salmon from Chile), the petitioners 
contend that, like the Chilean salmon producers, Tosoh was established 
to make export sales and, as the Department found of the Chilean salmon 
industry, Tosoh's growth has been almost entirely export driven. 
According to the petitioners, the Department did not address this 
consideration in its April 29 Memorandum. Furthermore, the petitioners 
contend that the record demonstrates that the home market sales are in 
fact not representative and not an appropriate basis for determining 
normal value because they consist of a very small percentage of Tosoh's 
reported production volume and sales volume. According to the 
petitioners, this sales base is too small to constitute a viable home 
market.
    Finally, according to the petitioners, the SAA notes that the 
change in the viability test from a comparison between home market 
sales volume and third-country sales volume to a comparison between 
home market sales volume and the U.S. sales volume was made to prevent 
the use of ``thin'' home markets as the basis for identifying dumping. 
According to the petitioners, such a ``thin'' home market clearly 
exists in this case and it should not be used as the basis for 
determining normal value. Therefore, the petitioners request that the 
Department find that Tosoh's home market sales in the review period are 
not viable, in spite of meeting the five-percent test.
    Tosoh asserts that the petitioners' argument that the Department 
should depart from its statutory test and instead judge the viability 
of the home market based on the size of the Greek market relative to 
sales to third countries is incorrect under current law. Tosoh argues 
that the petitioners' citation of the SAA at 821 is misplaced. 
According to Tosoh, contrary to the petitioners' assertion, the SAA 
makes clear that it is precisely the new law's requirement of using 
U.S. sales as the viability benchmark that will prevent the use of 
``thin'' home markets as the basis for identifying dumping. Moreover, 
Tosoh contends that the ``thinness'' discussed in the SAA refers to a 
situation where a high volume or value of home market sales compared to 
third-country sales would, under the old law, lead to a finding of 
viability even though home market sales were very small relative to 
U.S. sales and thus could interfere with a reasonable comparison of 
U.S. prices to home market prices. Thus, according to Tosoh, the SAA 
makes clear that the shift to U.S. sales as the viability benchmark 
solves the ``thinness'' problem the petitioners suggest in this case.
    According to Tosoh, contrary to the petitioners' assertions, no 
such unusual situation is present in this case. In addition, Tosoh 
argues that the vast number of cases in which a single U.S. sale forms 
the basis for an administrative review indicates that there is nothing 
unusual about the size of the U.S. sale here that would justify a 
departure from the normal statutory test. Tosoh contends that the 
petitioners have not cited a single case in which the Department 
determined that a small volume of U.S. sales warranted rejection of an 
otherwise viable home market.
    In addition, Tosoh argues that there is nothing unusual or 
extraordinary about the Greek market that does not permit a proper 
price comparison. Tosoh asserts that the petitioners have not provided 
any evidence that a particular market situation exists in this case to 
warrant rejecting its viable home market. Tosoh argues further that the 
petitioners raise no concerns regarding the difference-in-merchandise 
adjustment, the home market uses of EMD, or the size and nature of home 
market sales that establish a particular market situation in this case. 
For these reasons, Tosoh requests that the Department disregard the 
petitioners' request that the five-percent home market viability test 
be abandoned in this administrative review.
    Department's Position: We continue to find, as we stated in our 
preliminary results, that there is no particular

[[Page 62173]]

market situation within the meaning of section 773(a)(1)(C)(iii) of the 
Act which would prevent a proper price comparison nor is there any 
situation which warrants a departure from the normal statutory five-
percent viability test. The petitioners have conflated two separate 
issues: (1) Whether the normal five-percent threshold is the proper 
test in this case, and (2) whether there is a particular market 
situation that justifies rejecting the home market even though it meets 
the five-percent threshold. Under section 773(a)(1)(C)(ii) of the Act, 
the five-percent benchmark shall be applied in ``normal'' situations. 
As noted in the SAA, ``(i)n unusual situations, however, home market 
sales constituting less than five-percent of sales to the United States 
could be considered viable and home market sales constituting more than 
five-percent of sales to the United States could be considered not 
viable.'' SAA at 821. While we agree with the petitioners' assertion 
that our five-percent viability test is not conclusive in every case, 
we find that in this case there is no unusual situation which makes 
application of our normal statutory five-percent viability test 
inappropriate. See SAA at 821. Nor have we found any evidence of a 
particular market situation that would prevent a proper comparison with 
export price or constructed export price. See section 773(a)(1)(C)(iii) 
of the Act. As we stated in our April 29 Memorandum, pursuant to 
section 773(a) of the Act, we will use sales in the home market as the 
basis for calculating normal value unless one of the conditions in 
section 773(a)(1)(C) of the Act applies, in which case we may use 
third-country sales as a basis for normal value. We have not found that 
any one of the conditions stipulated in section 773(a)(1)(C) of the Act 
applies in this case.
    In addition, we are not persuaded by the petitioners' argument that 
Tosoh's home market consists of a very small percentage of the total 
volume and value of Tosoh's sales. The petitioners' argument relies on 
the old statutory viability test, comparing home market to third-
country sales, despite the fact that Congress eliminated this language 
from the new statute. Under the new statute, for viability purposes, 
the relevant comparison is between home market and U.S. sales. Because 
Congress removed the old test, it would make no sense to allow the 
petitioners to revive it merely by using the language of ``particular 
market situation.'' Such a reading would be inconsistent with the 
express language of the SAA and the statute. See SAA at 821 and section 
773(a)(1)(C) of the Act.
    Furthermore, as we stated in our April 29 Memorandum, unlike our 
findings in Salmon from Chile, the record in this case does not 
demonstrate that the EMD which Tosoh sold in its home market has severe 
defects or is of poor quality. In addition, in Salmon from Chile, the 
Department found that the home market producers sold the salmon 
directly from the factory on an ``as available'' basis; in other words, 
there was not a regular market for the ``off-quality'' salmon in Chile. 
See Salmon From Chile, 63 FR 31418 (June 9, 1998). That situation 
simply does not exist in this case, where both zinc-chloride-grade and 
alkaline-grade EMD are sold through similar channels of distribution 
and are used exclusively in dry-cell batteries. Moreover, Tosoh 
guarantees the quality of its products, regardless of EMD grade, and 
EMD grades meet the general specifications customers require. 
Therefore, we continue to find no evidence to suggest that the home 
market sales are incidental to Tosoh.
    Regarding the petitioners' assertion that we are unable to rely on 
our difference-in-merchandise adjustment because of differences between 
the products, see our response to comment 1. With respect to the 
petitioners' assertion that the home market product has an unusual use, 
see our response to comment 2.
    In conclusion, based on the reasons set forth above, we find that 
the market for EMD in Greece is viable within the meaning of section 
773(a)(1)(C)(ii) of the Act. In addition, we find that there is no 
particular market situation within the meaning of section 
773(a)(1)(C)(iii) of the Act which warrants a departure from our normal 
statutory five-percent viability test.

Comment 6: U.S. Price

    The petitioners assert that Tosoh has not provided the amount of a 
post-sale rebate contemplated by the sales contract with the 
unaffiliated U.S. purchaser. According to the petitioners, the amount 
the Department deducted as a price adjustment in its preliminary 
calculation is not an amount provided by Tosoh and it assumes that no 
change in the dumping margin will be made in the final results or as a 
result of any court's review of the final results. Moreover, the 
petitioners argue that the Department cannot base its determination on 
such an assumption, which pre-judges the results of the Department's 
proceedings and the court's review. According to the petitioners, 
Tosoh's pricing provision is designed to allow a subsequent price 
change that would not be considered in the calculation of the dumping 
margin and therefore is designed to subvert the antidumping law. The 
petitioners contend that the Department must find that the U.S. price 
in the review period is indeterminate and that it therefore must use 
facts available to determine the dumping margin. The petitioners 
suggest that the Department use the margin it established in the 
underlying antidumping investigation as facts available for this 
review.
    Tosoh argues that the petitioners' assertion that the U.S. sales 
price is ``indeterminate'' and that the Department should therefore use 
facts available to determine the dumping margin is erroneous. Tosoh 
contends that it has submitted all the information necessary for the 
Department to calculate the U.S. sales price. Tosoh argues further that 
the petitioners have distorted the clear meaning of the express terms 
of the U.S. sale in this case. According to Tosoh, under those terms, 
the U.S. customer retains the right to a refund of the antidumping duty 
deposit up to the amount by which the net U.S. price is determined in 
this review to exceed normal value but in no event in an amount greater 
than the deposit itself. According to Tosoh, the contract provision 
ensures that, after any refund is paid, the transaction will be 
completed at a non-dumped price.
    Tosoh asserts that, in reaching the preliminary results, the 
Department simply reduced the U.S. sales price by the maximum possible 
antidumping duty deposit refund amount, treating the reduction as a 
price adjustment. Thus, according to Tosoh, the U.S. sales price is 
final and determinate and there is no basis for resorting to facts 
available as the petitioners suggest.
    Department's Position: Using the information Tosoh submitted on 
July 7, 1998, and on September 14, 1998, we established Tosoh's U.S. 
price to the unaffiliated U.S. purchaser. In addition, since we also 
identified the maximum antidumping duty amount Tosoh agreed to refund 
the U.S. purchaser, we reduced Tosoh's U.S. price by this amount in our 
calculations to arrive at a U.S. price net of any adjustments. Since we 
deducted the maximum possible refundable antidumping duty amount 
stipulated in the contract from the U.S. gross unit price, our 
calculation reflects the most conservative approach in deriving U.S. 
price. Therefore, we find that the U.S. price is not an 
``indeterminate'' price as the petitioners contend.
    In addition, since Tosoh has reported all the necessary information 
needed to calculate U.S. price accurately and

[[Page 62174]]

cooperated fully with our requests for information, we find no reason 
to apply facts available in this regard.

Comment 8: Sample U.S. Transaction

    The petitioners claim that Tosoh did not provide the Department 
with information regarding the consideration paid with respect to a 
U.S. sample transaction. According to the petitioners, the record 
demonstrates that the purchaser made payments to Tosoh or its related 
trading company in connection with a sample transaction. The 
petitioners assert that, because Tosoh did not provide information 
regarding the payments made in connection with this transaction, the 
Department should use the margin found in the original investigation as 
facts available to establish the dumping margin on this shipment.
    Tosoh argues that, to the best of its knowledge, the merchandise 
involved in the sample shipment was destroyed in its entirety during 
testing by the customer and, as reported in Tosoh's July 7, 1998, 
questionnaire response, the gross unit price for this transaction was 
zero. Citing NSK, Ltd. v. United States, 115 F. 3d 965 (Fed. Cir. 
1997), Tosoh argues that such a transaction is considered a sample sale 
under existing law and therefore is not included in the calculation of 
U.S. price. Tosoh argues further that it has provided the Department 
with full, accurate, and certified information regarding these 
transactions, including a description of the transaction process and 
documentation of the terms of the transaction. Therefore, according to 
Tosoh, there is no basis for the Department to apply facts available or 
make any adverse inference in its final results of review with regard 
to this transaction.
    Department's Position: Based on the information Tosoh provided in 
its responses, we have determined that no consideration was provided 
for Tosoh's reported U.S. zero-priced transaction. Although the 
customer was required to pay the cost of certain services related to 
the sample transaction in question (the nature of these services is 
proprietary information), this does not constitute consideration with 
respect to the subject merchandise itself. In addition, the small 
quantity involved and the fact that Tosoh's sample transaction was used 
for testing purposes and destroyed in the process supports Tosoh's 
claim that this was a sample transaction. Therefore, because Tosoh 
responded fully to our supplemental questions regarding a zero-priced 
sample transaction and we find no reason to apply facts available to 
this shipment, we did not calculate a margin on the U.S. sale which 
Tosoh designated as a zero-priced sample.

Comment 9: Credit Expense

    The petitioners argue that Tosoh did not provide a credit expense 
calculation using the number of days between date of shipment to the 
customer and date of payment as directed by the Department in its 
questionnaire. According to the petitioners, the calculation Tosoh 
provided takes into account only the number of days from the date of 
entry into the United States to the date of payment. Therefore, 
according to the petitioners, the Department should recalculate the 
reported credit expense, adding to the reported credit days the number 
of days from shipment from Greece to date of entry.
    Tosoh argues that the petitioners' proposed methodology for 
calculating credit expenses should be rejected because it would count 
certain imputed expenses that are not associated with commercial 
activity in the United States (i.e., the expense associated with the 
time between date of shipment from Greece and the date of entry into 
the United States) and, therefore, result in an improper calculation.
    Department's Position: In this case, the record indicates that the 
invoice date postdates the date of shipment of the merchandise from 
Greece to the unaffiliated U.S. customer. Consistent with our decision 
in Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat 
Products from Korea; Final Results of Antidumping Duty Administrative 
Reviews, 64 FR 12927, 12935, March 16, 1999 (Steel from Korea), we have 
used the date of shipment as the date of sale. Furthermore, we have 
calculated credit expense based on the time between date of shipment 
and payment by the unaffiliated U.S. customer (see Steel from Korea).

Comment 10: Inventory Carrying Costs

    The petitioners argue that, in its preliminary results, the 
Department accounted for Tosoh's inventory carrying costs in 
calculating normal value but disregarded those same costs in 
calculating CEP. According to the petitioners, the result of this 
disparate treatment is an unbalanced comparison and they request that 
the Department treat inventory carrying costs the same in both markets 
for the final results of this review.
    Tosoh responds that the petitioners' assertion that the Department 
should deduct from the U.S. price the inventory carrying costs incurred 
in Greece is incorrect as a matter of law since the regulations state 
that only those expenses associated with commercial activities 
occurring in the United States are deducted from the U.S. price. Tosoh 
argues that the expenses to which the petitioners refer (i.e., 
inventory carrying costs incurred in Greece) were not associated with 
economic activities occurring in the United States and thus the 
Department determined properly not to deduct such expenses from the 
U.S. price. Tosoh argues further that all indirect selling expenses 
associated with home market sales, including inventory carrying costs, 
were deducted from normal value correctly as part of the CEP offset.
    Department's Position: As we stated in our response to comment 9, 
section 351.402(b) of the regulations directs us to make adjustments to 
CEP for expenses associated with commercial activities in the United 
States that relate to the sale to an unaffiliated purchaser, no matter 
where or when paid. It also states that we will not make an adjustment 
for any expense that is related solely to the sale to an affiliated 
importer in the United States. Therefore, since this expense (i.e., 
inventory carrying costs incurred in Greece) was not associated with 
commercial activities in the United States, we did not deduct it from 
U.S. price.

Comment 11: Level of Trade

    The petitioners argue that no level-of-trade adjustment is 
appropriate in this case because the CEP deductions do not remove all 
the selling functions related to the sale in the U.S. market. The 
petitioners assert that, because Tosoh did not report selling functions 
provided by its parent company in Japan, the Department cannot make a 
level-of-trade adjustment in this case.
    Tosoh argues that it reported all appropriate selling expenses. 
According to Tosoh, its parent company in Japan did not incur any 
direct selling expenses associated with Tosoh's sale of EMD in the 
United States during the review period.
    Tosoh argues further that any involvement by its parent company in 
Japan in price discussions would be reported as indirect selling 
expenses, which the Department would disregard in the margin 
calculation. For these reasons, according to Tosoh, the Department 
should disregard the petitioners' assertions regarding level of trade.
    Department's Position: We find no indication that Tosoh did not 
report all the selling expenses it incurred during the review period 
properly. Any selling functions which Tosoh's parent company in Japan 
may have provided

[[Page 62175]]

were reported as indirect selling expenses incurred in the country of 
manufacture and not related to commercial activities for sales made in 
the United States. In addition, we did not make a level-of-trade 
adjustment in our calculations as the petitioners contend. As we stated 
in our analysis memorandum for the preliminary results, since Tosoh's 
CEP sales constitute a different level of trade from its home market 
level of trade, we could not match Tosoh's CEP sales to the same level 
of trade in the home market nor could we determine a level-of-trade 
adjustment based on Tosoh's home market sales of merchandise under 
review. Furthermore, since we have no other information that provides 
an appropriate basis for determining a level-of-trade adjustment, we 
made a CEP offset adjustment to normal value. The CEP offset was the 
sum of indirect selling expenses incurred on the home market sales up 
to the amount of indirect selling expenses deducted from the U.S. sale 
under section 772(a)(1)(D) of the Act. See Analysis Memorandum dated 
April 29, 1999.

Comment 12: Direct Selling Expenses

    The petitioners contend that Tosoh has not reported all the direct 
selling expenses related to the U.S. sale. According to the 
petitioners, the Department has not made the necessary inquiries to 
determine all the direct selling expenses that relate to the sale 
concerned.
    Tosoh argues that the petitioners' speculation that it has not 
reported all selling activities is without merit. Tosoh contends that 
it has reported all applicable expenses to the best of its ability. 
Therefore, according to Tosoh, no further inquiry by the Department is 
necessary.
    Department's Position: We find no indication to suggest that Tosoh 
did not report all the direct selling expenses it incurred during the 
review period properly. In addition, the petitioners have not provided 
any evidence to suggest otherwise. Therefore, we have accepted Tosoh's 
reported direct selling expenses.

Comment 13: Indirect Selling Expenses

    The petitioners argue that the Department should make deductions 
from U.S. price for expenses incurred by Tosoh's affiliated parties in 
Japan that are not deductible as direct selling expenses.
    Tosoh argues that the petitioners' assertion that the Department 
should deduct indirect selling expenses from CEP is incorrect. 
According to Tosoh, the petitioners' suggested methodology would 
require the deduction of indirect expenses not associated with 
commercial activity in the United States and, therefore, is 
impermissible under the Department's practice.
    Department's Position: As we stated in our response to comment 9, 
section 351.402(b) of the regulations directs us to make adjustments 
for expenses associated with commercial activities in the United States 
that relate to the sale to an unaffiliated purchaser, no matter where 
or when paid. It also states that we will not make an adjustment for 
any expense that is related solely to the sale to an affiliated 
importer in the United States. Therefore, since this expense (i.e., 
indirect selling expenses incurred by affiliated parties in Japan) was 
not associated with commercial activities in the United States, we did 
not deduct it from U.S. price under section 772(a)(1) of the Act.

Final Results of Review

    As a result of our analysis of the comments received, we determine 
a weighted-average margin of 0.00 percent for Tosoh for the period 
April 1, 1997, through March 31, 1998. The Department will issue 
appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements shall be effective 
upon publication of this notice of final results of review for all 
shipments of EMD from Greece, entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided for by 
section 751(a)(1) of the Act: (1) The cash-deposit rate for Tosoh will 
be 0.00 percent; (2) for previously investigated or reviewed companies 
not listed above, the cash-deposit rate will continue to be the 
company-specific rate published for the most recent period; (3) if the 
exporter is not a firm covered in this or any previous reviews or the 
original less-than-fair value (LTFV) investigation, but the 
manufacturer is, the cash-deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; and (4) 
if neither the exporter nor the manufacturer is a firm covered in this 
review, the cash-deposit rate will continue to be 36.72 percent, the 
``all-others'' rate established in the LTFV investigation (54 FR 15243, 
April 17, 1989).
    The deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305. Timely notification of return/
destruction of APO materials or conversion to judicial protective order 
is hereby requested. Failure to comply with the regulations and the 
terms of an APO is a sanctionable violation.
    We are issuing and publishing this determination in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: November 8, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-29905 Filed 11-15-99; 8:45 am]
BILLING CODE 3510-DS-P