[Federal Register Volume 64, Number 249 (Wednesday, December 29, 1999)]
[Notices]
[Pages 73164-73176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33232]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-560-805]


Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon-Quality Steel Plate Products from 
Indonesia

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

EFFECTIVE DATE: December 29, 1999.

FOR FURTHER INFORMATION CONTACT: Barbara Wojcik-Betancourt or Brian C. 
Smith, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-0629 or (202) 482-1766, 
respectively.
    The Applicable Statute: Unless otherwise indicated, all citations 
to the Tariff Act of 1930, as amended (``the Act''), are references to 
the provisions effective January 1, 1995, the effective date of the 
amendments made to the Act by the Uruguay Round Agreements Act 
(``URAA''). In addition, unless otherwise indicated, all citations to 
the Department of Commerce (``Department'') regulations are to the 
regulations at 19 CFR Part 351 (1999).
    Final Determination: We determine that certain cut-to-length 
carbon-quality steel plate products (``CTL Plate'') from Indonesia are 
being sold in the United States at less than fair value (``LTFV''), as 
provided in section 735 of the Act. The estimated margins are shown in 
the ``Suspension of Liquidation'' section of this notice.

Case History

    Since the preliminary determination (Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Certain Cut-To-Length 
Carbon Quality Steel Plate Products from Indonesia, 64 FR 41206 (July 
29, 1999)) (Preliminary Determination), the following events have 
occurred:
    On July 23, 1999, the Department received Krakatau's response to 
the Department's July 8, 1999, supplemental questionnaire. Even though 
the Department received Krakatau's response three days after the 
questionnaire response deadline, Department officials examined the data 
to determine whether Krakatau fully responded to the Department's 
questionnaire. On July 28, 1999, the Department informed Krakatau that 
it was not going to proceed with verification of Krakatau's response 
because it did not adequately address the sales-related and cost-
related questions. Also, on July 28, 1999, the petitioners 1 
alleged ministerial errors in the preliminary determination. On July 
29, and 30, 1999, Krakatau submitted letters objecting to the 
Department's decision not to conduct verification.
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    \1\ The petitioners are Bethlehem Steel Corporation, Gulf States 
Steel, Inc., IPSCO Steel Inc., Tuscaloosa Steel Corporation, the 
United Steelworkers of America, and the U.S. Steel Group (a unit of 
USX Corporation).
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    On August 4, 1999, PT Gunawan Dianjaya Steel (``Gunawan'') and PT 
Jaya Pari Steel Corporation (``Jaya Pari'') submitted a proposal for a 
suspension agreement to the Department. Department officials 
subsequently met with counsel for Gunawan/Jaya Pari and an official 
from the Indonesian government to discuss the likelihood of a 
suspension agreement (see Memorandum to the File from Wendy Frankel, 
Special Assistant to the Deputy Assistant Secretary, dated August 27, 
1999). In that meeting, Department officials indicated that a 
suspension agreement in this case was unlikely because the proposed 
agreement did not meet the requisite conditions.
    From August 10 through 19, 1999, we conducted verification of 
Gunawan/Jaya Pari's sales and cost responses to the antidumping 
questionnaire. On August 17, 1999, the Department issued the amended 
preliminary determination, correcting certain ministerial errors, and 
postponed the final determination until no later than 135 days after 
publication of the preliminary determination (see Notice of Amendment 
of the Preliminary Determination of Sales at Less Than Fair Value: 
Certain Cut-To-Length Carbon-Quality Steel Plate Products from 
Indonesia, 64 FR 46341, August 25, 1999) (``Amended Prelim'').
    On August 24, 1999, Krakatau requested a hearing. In response to 
numerous improperly filed letters sent by Krakatau between August 12 
and 24, 1999, the Department issued a letter to Krakatau on August 25, 
1999, explaining the procedures for submitting case and rebuttal briefs 
and extending the deadlines for submitting such documents.
    During September and October 1999, we issued our verification 
reports for Gunawan/Jaya Pari. The petitioners and Gunawan/Jaya Pari 
submitted case briefs on October 19, 1999, and rebuttal briefs on 
October 25, 1999. The Department received Krakatau's case brief on 
October 14, 1999, and rebuttal brief on October 25, 1999. On October 
27, 1999, the Department held a public hearing.
    On November 22, 1999, the petitioners alleged that one of the 
respondents either had not reported certain U.S. sales made during the 
period of investigation (``POI'') or had not reported price reductions 
for certain U.S. sales made during the POI. Because we do not have 
sufficient information on the record to substantiate this allegation, 
and because this allegation was made at a very late stage of the 
proceeding, we did not consider it for purposes of this final 
determination. However, if an antidumping duty order is ultimately 
issued in this case, we will

[[Page 73165]]

examine carefully all sales of this company in any future review.

Scope of Investigation

    For purposes of this investigation, the products covered by the 
scope of this investigation are certain hot-rolled carbon-quality 
steel: (1) universal mill plates (i.e., flat-rolled products rolled on 
four faces or in a closed box pass, of a width exceeding 150 mm but not 
exceeding 1250 mm, and of a nominal or actual thickness of not less 
than 4 mm, which are cut-to-length (not in coils) and without patterns 
in relief), of iron or non-alloy-quality steel; and (2) flat-rolled 
products, hot-rolled, of a nominal or actual thickness of 4.75 mm or 
more and of a width which exceeds 150 mm and measures at least twice 
the thickness, and which are cut-to-length (not in coils). Steel 
products to be included in this scope are of rectangular, square, 
circular or other shape and of rectangular or non-rectangular cross-
section where such non-rectangular cross-section is achieved subsequent 
to the rolling process (i.e., products which have been ``worked after 
rolling'')--for example, products which have been beveled or rounded at 
the edges. Steel products that meet the noted physical characteristics 
that are painted, varnished or coated with plastic or other non-
metallic substances are included within this scope. Also, specifically 
included in this scope are high strength, low alloy (``HSLA'') steels. 
HSLA steels are recognized as steels with micro-alloying levels of 
elements such as chromium, copper, niobium, titanium, vanadium, and 
molybdenum. Steel products to be included in this scope, regardless of 
Harmonized Tariff Schedule of the United States (``HTSUS'') 
definitions, are products in which: (1) iron predominates, by weight, 
over each of the other contained elements, (2) the carbon content is 
two percent or less, by weight, and (3) none of the elements listed 
below is equal to or exceeds the quantity, by weight, respectively 
indicated: 1.80 percent of manganese, or 1.50 percent of silicon, or 
1.00 percent of copper, or 0.50 percent of aluminum, or 1.25 percent of 
chromium, or 0.30 percent of cobalt, or 0.40 percent of lead, or 1.25 
percent of nickel, or 0.30 percent of tungsten, or 0.10 percent of 
molybdenum, or 0.10 percent of niobium, or 0.41 percent of titanium, or 
0.15 percent of vanadium, or 0.15 percent zirconium. All products that 
meet the written physical description, and in which the chemistry 
quantities do not equal or exceed any one of the levels listed above, 
are within the scope of this investigation unless otherwise 
specifically excluded. The following products are specifically excluded 
from this investigation: (1) products clad, plated, or coated with 
metal, whether or not painted, varnished or coated with plastic or 
other non-metallic substances; (2) SAE grades (formerly AISI grades) of 
series 2300 and above; (3) products made to ASTM A710 and A736 or their 
proprietary equivalents; (4) abrasion-resistant steels (i.e., USS AR 
400, USS AR 500); (5) products made to ASTM A202, A225, A514 grade S, 
A517 grade S, or their proprietary equivalents; (6) ball bearing 
steels; (7) tool steels; and (8) silicon manganese steel or silicon 
electric steel.
    The merchandise subject to this investigation is classified in the 
HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030, 
7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000, 
7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 
7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050, 
7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000, 
7226.91.8000, 7226.99.0000.
    Although the HTSUS subheadings are provided for convenience and 
Customs purposes, the written description of the merchandise under 
investigation is dispositive.

Period of Investigation

    The POI is January 1, through December 31, 1998.

Facts Available

    Because we did not receive an adequate questionnaire response from 
Krakatau, we could not conduct verification and, therefore, could not 
use its data for the final determination. For the reasons explained in 
detail below, we have applied to Krakatau an adverse facts available 
margin, the highest margin alleged in the petition (52.42 percent), for 
purposes of the final determination.

1. 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(c)(1), (d) and (e), facts 
otherwise available in reaching the applicable determination.
    Section 782(c)(1) of the Act provides that, if an interested party 
promptly notifies the Department that it is unable to submit the 
information requested in the requested form and manner, together with a 
full explanation and suggested alternative forms in which such party is 
able to submit the information, the Department shall take into 
consideration the ability of the party to submit the information in the 
requested form and manner and may modify such requirements to the 
extent necessary to avoid imposing an unreasonable burden on that 
party.
    Section 782(d) of the Act provides that, if the Department 
determines that a response to a request for information does not comply 
with the request, the Department will inform the person submitting the 
response of the nature of the deficiency and shall, to the extent 
practicable, provide that person the opportunity to remedy or explain 
the deficiency. If that person submits further information that 
continues to be unsatisfactory, or this information is not submitted 
within the applicable time limits, the Department may, subject to 
section 782(e), disregard all or part of the original and subsequent 
responses, as appropriate.
    Pursuant to section 782(e) of the Act, notwithstanding the 
Department's determination that the submitted information is 
``deficient'' under section 782(d) of the Act, the Department shall not 
decline to consider such information if all of the following 
requirements are satisfied: (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.
    In this investigation, Krakatau failed to provide the information 
necessary to properly calculate a dumping margin, in the form and 
manner requested by the Department. As explained below, in response to 
Krakatau's request for assistance under section 782(c)(1), the 
Department attempted to assist Krakatau under section 782(c)(2) in 
understanding the Department's reporting requirements by visiting its 
facilities to respond to its questions and issuing it various 
supplemental questionnaires and instructional letters prior to the 
preliminary determination. We also provided Krakatau with an 
opportunity to supplement its questionnaire response after the 
preliminary determination in order to

[[Page 73166]]

address numerous deficiencies and omissions of data which rendered its 
previous response inadequate for use in the preliminary determination. 
Krakatau's supplemental response continued to contain numerous 
deficiencies and omissions of data, and did not provide alternative 
methodologies, which prevented the Department from conducting 
verification and using its data in the final determination. Thus, 
pursuant to sections 776(a)(2)(A) and (B) of the Act, and having 
satisfied the requirements under sections 782(c)(2), (d) and (e), the 
Department must apply facts otherwise available in this case.

2. Selection of Facts Available

    Section 776(b) of the Act provides that adverse inferences may be 
used in selecting from the facts available if a party has failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information. Section 776(b) also authorizes the Department 
to use as adverse facts available information derived from the 
petition, the final determination from the LTFV investigation, a 
previous administrative review, or any other information placed on the 
record. Section 776(c) of the Act requires the Department to 
corroborate, to the extent practicable, secondary information used as 
facts available. Secondary information is defined as ``information 
derived from the petition that gave rise to the investigation or 
review, the final determination concerning the subject merchandise, or 
any previous review under section 751 concerning the subject 
merchandise.'' See the Statement of Administrative Action (``SAA'') at 
870.
    In this case, Krakatau, a pro se company, had requested the 
Department's assistance in responding to the questionnaire under 
section 782(c) of the Act. In response to Krakatau's request for 
assistance, the Department helped Krakatau to understand the reporting 
requirements. The Department's assistance in this regard included 
sending staff to Krakatau's facilities in Jakarta, Indonesia, to 
clarify and elaborate on the Department's reporting requirements 
contained in the questionnaire and numerous subsequent Departmental 
letters instructing Krakatau of the Department's reporting requirements 
in general and informing it of its reporting deficiencies in 
particular. Krakatau was provided numerous opportunities and extensions 
of time to fully respond to the Department's questionnaire (see 
Preliminary Determination at 64 FR 41207, 41209). However, despite the 
assistance offered by the Department's staff, Krakatau failed to 
provide a questionnaire response that addressed the most important 
deficiencies identified by the Department in its May 27 and July 8, 
1999, supplemental questionnaires. Moreover, Krakatau failed to provide 
a reasonable explanation for its failure to comply with these standard 
requests for information. Accordingly, the Department finds that 
Krakatau did not act to the best of its ability to provide the 
information requested, despite the extensive assistance provided by the 
Department. Therefore, we have used an adverse inference in selecting 
the facts available to determine Krakatau's final margin.
    In the preliminary determination, recognizing Krakatau's effort to 
comply with the Department's information requests and in light of its 
claimed reporting difficulties up until that time, the Department 
assigned Krakatau the simple average of the margins contained in the 
petition under section 776(b) of the Act, which the Department 
corroborated, to the extent practicable, from independent sources 
reasonably at its disposal under section 776(c) of the Act (see 
Preliminary Determination at 64 FR 41209, and Memorandum to the File 
regarding the Facts Available Rate and Corroboration of Secondary 
Information dated July 19, 1999). However, for the final determination, 
we have determined it is more appropriate to assign Krakatau the 
highest margin in the petition, 52.42 percent, which is also higher 
than the rate calculated for the only other respondent in this 
investigation, because Krakatau did not provide an adequate response 
that the Department could verify and use in the final determination, 
despite the numerous opportunities and extensive assistance afforded to 
it by the Department as explained above. (See Krakatau Comment 1 in the 
``Interested Party Comments'' section of this notice for further 
discussion.) We continue to find this margin corroborated for the 
reasons discussed in the preliminary determination.

Fair Value Comparisons

    We made our fair value comparisons in the manner described in the 
preliminary determination (see Preliminary Determination at 64 FR 
41209). Gunawan/Jaya Pari argued that the Department should use two 
averaging periods in its margin calculations to account for the effect 
of low inflation during the second half of the POI. We continued to 
find that Indonesia experienced significant inflation throughout the 
POI, as measured by the Wholesale Price Index, published in the 
September 1998--September 1999 issues of International Monetary Fund's 
(``IMF's'') International Financial Statistics (see Memorandum from the 
Team to the File, ``Inflation Data Used and Statistical Analysis 
Performed for Determining Whether High Inflation Was Present During the 
Period of Investigation,'' dated December 13, 1999). For the reasons 
discussed in detail in Comment 1 of the ``Gunawan/Jaya Pari Interested 
Party Comments'' section of this notice below, we continued to use 
monthly averages within one averaging period for purposes of this final 
determination

Product Comparisons

    We made our product comparisons using the same methodology as in 
the preliminary determination (see Preliminary Determination at 64 FR 
41209).

Level of Trade

    Consistent with our preliminary determination, we continue to find 
that no level of trade (``LOT'') adjustment under section 773(a)(7)(A) 
of the Act is warranted because the U.S. sales and home market sales 
made by Gunawan and Jaya Pari were at the same LOT (see Preliminary 
Determination at 64 FR 41210).

Export Price

    As in the preliminary determination, for both Gunawan and Jaya 
Pari, we used export price (``EP'') methodology, in accordance with 
section 772(a) of the Act, because the merchandise was sold directly to 
the first unaffiliated purchaser in the United States prior to 
importation and constructed export price (``CEP'') methodology was not 
otherwise indicated.

Gunawan/Jaya Pari

    We calculated EP using the same methodology as in the preliminary 
determination, with the following exceptions:
    Based on our verification findings, we made the following revisions 
to Gunawan's U.S. sales database: (1) for some sales, we deducted an 
amount from EP for Indonesian port handling charges and loading 
charges; (2) we revised the reported U.S. inland freight expenses from 
the factory to the port of exportation to reflect actual expenses for 
all sales; (3) we corrected an amount reported for a quantity discount 
noted for one sales invoice; and (4) we corrected an amount reported 
for bank charges noted for a different sales invoice (see September 16, 
1999,

[[Page 73167]]

Gunawan verification report for further discussion).
    Based on our verification findings, we made the following revisions 
to Jaya Pari's U.S. sales database: (1) we revised the reported U.S. 
inland freight expenses from the factory to the port of exportation to 
reflect actual expenses for all sales; (2) and we corrected the 
reported advertising expenses because Jaya Pari used an incorrect 
allocation factor (see September 23, 1999, Jaya Pari verification 
report for further discussion).

Normal Value

    After testing home market viability and whether home market sales 
were made at prices below the cost of production (``COP''), we 
calculated normal value (``NV'') as noted in the ``Price-to-Price 
Comparisons'' and ``Price-to-CV Comparisons'' sections of this notice. 
As noted in the preliminary determination, we did not conduct an arm's-
length test on affiliated party transactions because we continued to 
find that Gunawan and Jaya Pari met the criteria for collapsing 
affiliated companies. Therefore, we continued to treat Gunawan and Jaya 
Pari as a single entity for purposes of our analysis (see Preliminary 
Determination at 64 FR 41209-41210).

1. Cost of Production Analysis

    As discussed in the preliminary determination, we conducted an 
investigation to determine whether Gunawan/Jaya Pari made sales of the 
foreign like product in the home market during the POI at prices below 
the COP within the meaning of section 773(b)(1) of the Act. We 
calculated COP based on the same methodology used in the preliminary 
determination on a model-specific basis, except where we modified the 
margin calculation program to reflect certain adjustments and updated 
cost data based on verification findings (see Final Calculation 
Memorandum, dated December 13, 1999). Specifically, we relied on the 
respondents' COP and CV amounts except as follows:
    A. We adjusted the reported nominal monthly depreciation expense 
figures to reflect each month's currency levels.
    B. We adjusted the reported costs based on the corrections provided 
by Gunawan and Jaya Pari at the first day of verification.
    C. We revised Jaya Pari's reported per-unit variable and fixed 
overhead to include the company's year-end audit adjustments.
    D. We recalculated the yield adjustment factor applied to direct 
labor, variable and fixed overhead by dividing the rupiah/kilogram cost 
by the yield adjustment factor, rather than multiplying by the yield 
adjustment factor.
    E. For those months in which Jaya Pari had no production, we 
allocated the factory overhead and labor costs incurred to the months 
where production occurred.
    F. For months in which Gunawan and Jaya Pari had no purchases of 
slabs, as a surrogate cost, we used the most recent previous month's 
average purchase price indexed for inflation. However, we used 
Gunawan's average purchase price for slab in January 1998 as a 
surrogate for Jaya Pari's January 1998 slab costs.
    G. We revised the scrap offset by indexing the monthly scrap sales 
revenue before calculating an annual average, and then calculated the 
scrap offset for each month by indexing the annual average back to each 
month.
    H. We revised Jaya Pari and Gunawan's reported general and 
administrative (``G&A'') expense and interest expense by indexing each 
month's nominal G&A expense, interest expense, and cost of sales figure 
for inflation. We excluded the interest on accounts receivable included 
in ``other income'' as an offset in the G&A expense calculation.
    I. We recalculated Gunawan and Jaya Pari's total indexed foreign 
exchange gains attributable to accounts payable as a percentage of the 
indexed cost of sales and multiplied this percentage by the total cost 
of manufacturing (``COM'') of each product control number.
    J. We corrected the error made in calculating total COM based on 
the petitioners' comments on page 23 of their case brief.
    K. We corrected our calculation of the indexed, weight-averaged 
costs based on the petitioners' comments on pages 23 and 24 of their 
case brief.
    L. We revised Gunawan's reported conversion costs to account for 
cost differences associated with rolling products of different 
thicknesses. In making this adjustment, we have applied adverse facts 
available to Gunawan's reported conversion costs, as explained in 
detail below.
    Gunawan allocated monthly conversion costs to all products based on 
total production quantities each month. This assignment of conversion 
costs does not allow for the accurate accounting of cost differences 
between products. For example, products with different thicknesses 
require different amounts of processing (i.e., reduction). Critical to 
the Department's calculation of a dumping margin is the establishment 
of proper comparisons between prices of similar products sold in 
Indonesia and the United States. Without accurate difference-in-
merchandise (``DIFMER'') cost data for the various products, the 
Department cannot properly account for the differences in physical 
characteristics and associated price differences between products sold 
in Indonesia and the United States. Additionally, without costs that 
accurately account for cost differences associated with physical 
differences (e.g., differences in thickness) for each product sold in 
Indonesia, we cannot conduct a meaningful cost test to evaluate whether 
products have been sold in Indonesia at less than the COP.
    Gunawan responded to Sections B, C and D of the antidumping duty 
questionnaire on April 26, 1999. On May 21, 1999, the Department issued 
a supplemental questionnaire requesting further clarification of 
Gunawan's method of allocating conversion costs. The Department 
received Gunawan's response to the supplemental questionnaire on June 
14, 1999, in which Gunawan indicated that it could not provide more 
product-specific costs. At verification, we found that there were 
differences in the amount of reduction required to produce a given 
thickness of plate. Therefore, we believe that Gunawan could have 
developed a way of differentiating costs based on the reduction 
necessary to produce the various thicknesses of plate.
    Because Gunawan did not submit the conversion cost data as 
requested, we have determined that it did not act to the best of its 
ability. Therefore, application of adverse facts available is warranted 
in accordance with section 776(b) of the Act (see standard for the 
application of facts available set forth above in ``Facts Available'' 
section of this notice). However, because the company was otherwise 
cooperative, we have not drawn the most adverse inference. (See e.g., 
Krupp Stahl AG v. U.S., 822 F. Supp. 789, 793 (Ct. Int'l Trade 1993), 
which referenced a Court of Appeals' opinion sanctioning the 
Department's practice to take into account the level of respondents' 
cooperation; and Notice of Final Determination of Sales at Less Than 
Fair Value: Steel Wire Rod from Germany, 63 FR 8953, 8955 (February 23, 
1998).) Specifically, we have relied on the reported control-number-
specific direct material costs and variable overhead costs. However, 
for the fixed overhead costs, we identified the largest expense 
(depreciation) and allocated the portion attributable to rolling based 
on reduction time. We first calculated the average reduction required 
to produce

[[Page 73168]]

all thicknesses of plate and then compared the average reduction to 
each thickness reported. We found that one thickness of plate required 
more reduction on average than all other plates produced. We calculated 
the percentage difference between the average reduction and the 
reduction required to produce this thickness of plate and increased the 
depreciation expense attributable to rolling by this percentage.
    Pursuant to section 773(b)(2)(C), where less than 20 percent of the 
respondents' sales of a given product were made at prices below 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 the respondents' sales of a 
given product were made at prices below the COP, we disregarded the 
below-cost sales because such sales were found to be made within an 
extended period of time in ``substantial quantities'' in accordance 
with sections 773(b)(2)(B) and (C) of the Act, and because the below 
cost sales of the product were at prices which would not permit 
recovery of all costs within a reasonable period of time, in accordance 
with section 773(b)(2)(D) of the Act.
    We found that, for certain grades of CTL plate, more than 20 
percent of Gunawan/Jaya Pari's home market sales within an extended 
period of time were at prices less than the COP. Further, the prices 
did not provide for the recovery of costs within a reasonable period of 
time. We therefore excluded these sales and used the remaining sales as 
the basis for determining NV if such sales existed, in accordance with 
section 773(b)(1) of the Act. For those U.S. sales of CTL plate for 
which there were no comparable home market sales in the ordinary course 
of trade, we compared EPs to CV, in accordance with section 773(a)(4) 
of the Act.

2. Calculation of CV

    We calculated CV using the same methodology as in the preliminary 
determination, except where we made certain adjustments, as discussed 
above, and updated cost data based on verification findings and revised 
our calculation of CV profit based on the petitioners' comments on 
pages 23 and 24 of their case brief (see ``Cost of Production 
Analysis'' section of this notice and Final Calculation Memorandum, 
dated December 13, 1999 for further discussion).

Price-to-Price Comparisons

    For price-to-price comparisons, we calculated NV based on the same 
methodology used in the preliminary determination, with the following 
exceptions based on verification findings: (1) we corrected the amount 
reported for commissions for certain Gunawan home market sales; (2) we 
determined that Gunawan's reported early payment discounts are, in 
fact, billing adjustments and deducted these reported amounts, where 
applicable, from the gross unit price; (3) we corrected the amounts 
reported for advertising expenses for all of Jaya Pari's home market 
sales; and (4) for one Jaya Pari sales invoice, we corrected the amount 
reported for inland freight from the plant to the customer (see 
September 16, 1999, Gunawan verification report, September 23, 1999, 
Jaya Pari verification report, and Comment 2 in the ``Interested Party 
Comments'' section of this notice for further discussion).

Price-to-CV Comparisons

    For price-to-CV comparisons, we applied the same general 
methodology used in the preliminary determination (see Preliminary 
Determination at 64 FR 41212).

Critical Circumstances

    Section 735(a)(3) of the Act provides that if a petitioner alleges 
critical circumstances, the Department will determine whether there is 
a reasonable basis to believe or suspect that:
    (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.
    As noted in the preliminary critical circumstances determination, 
we are not aware of any existing antidumping order in any country on 
CTL plate from Indonesia. Therefore, we examined whether there was 
importer knowledge. In determining whether an importer knew or should 
have known that the exporter was selling the subject merchandise at 
less than its fair value and thereby causing material injury, the 
Department normally considers margins of 25 percent or more for EP 
sales (and margins of 15 percent or more for CEP sales) sufficient to 
impute knowledge of dumping (see Notice of Final Determinations of 
Sales at Less Than Fair Value: Brake Drums and Brake Rotors from the 
People's Republic of China, 62 FR 9160 (February 28, 1997); and Notice 
of Final Determination of Sales at Less Than Fair Value: Stainless 
Steel Sheet and Strip in Coils from Japan, 64 FR 30574 (June 8, 1999) 
(Stainless Steel Sheet and Strip in Coils from Japan)). All respondents 
in this proceeding have made EP sales to the United States.
    The Department's final margin for Gunawan and Jaya Pari exceeds 25 
percent (see ``Suspension of Liquidation'' section below). Therefore, 
we continue to determine that importers knew or should have known that 
Gunawan and Jaya Pari made sales of the subject merchandise at prices 
below fair value. As to the knowledge of injury from such dumped 
imports, in the present case, the International Trade Commission 
(``ITC'') preliminarily determined that there is reasonable indication 
that the U.S. CTL plate industry is experiencing present material 
injury. Therefore, we continue to find that the ``importer knowledge of 
dumping and material injury'' criterion is met with respect to CTL 
plate from Indonesia.
    Because we have found that the first statutory criterion is met 
with regard to Gunawan and Jaya Pari, we must consider the second 
statutory criterion: whether imports of the merchandise have been 
massive over a relatively short period. According to 19 CFR 351.206(h), 
we consider the following to determine whether imports have been 
massive over a relatively short period of time: (1) volume and value of 
the imports; (2) seasonal trends (if applicable); and (3) the share of 
domestic consumption accounted for by the imports.
    When examining volume and value data, the Department typically 
compares the export volume for equal periods immediately preceding and 
following the filing of the petition. Under 19 CFR 351.206(h), unless 
the imports in the comparison period have increased by at least 15 
percent over the imports during the base period, we will not consider 
the imports to have been ``massive.'' The Department examines shipment 
information submitted by the respondent or import statistics when 
respondent-specific shipment information is not available.
    To determine whether imports of subject merchandise have been 
massive over a relatively short period, we compared Gunawan/Jaya Pari's 
export volume for the four months subsequent to the filing of the 
petition (March-June 1999) to that during the four months prior to the 
filing of the petition (November 1998-February 1999). These

[[Page 73169]]

periods were selected based on the Department's practice of using the 
longest period for which information is available from the month that 
the petition was submitted through the date of the preliminary 
determination.
    Based on our analysis, we find that the increase in imports was not 
greater than 15 percent with respect to Gunawan/Jaya Pari, as our 
verification findings indicate that these companies had no exports of 
subject merchandise to the United States during the period March-June 
1999 (see July 9, 1999, submission; page nine of September 16, 1999, 
Gunawan verification report; and page eight of September 23, 1999, Jaya 
Pari verification report). Therefore, we do not find critical 
circumstances with respect to Gunawan/Jaya Pari.
    Because the margin we have assigned to Krakatau is 52.42 percent, 
and thus exceeds 25 percent, we have imputed knowledge of dumping to 
Krakatau. However, information on the record sufficiently establishes 
that Krakatau's exports of subject merchandise to the United States 
have not increased massively since the filing of the petition. U.S. 
Customs import data indicate that Gunawan/Jaya Pari accounted for the 
vast majority of imports of subject merchandise into the United States 
during the POI. Moreover, since the filing of the petition, U.S. 
Customs import data do not indicate evidence of massive imports of 
subject merchandise from Indonesia (see July 19, 1999, Memorandum to 
the File Regarding Import Statistics Used for Preliminary Critical 
Circumstances Determination). Thus, we continue to determine that no 
critical circumstances exist for Krakatau.
    Because the margin for all other Indonesian exporters/producers of 
the subject merchandise is 42.36 percent (i.e., Gunawan/Jaya Pari's 
margin), and thus exceeds 25 percent, we have imputed knowledge of 
dumping to ``All Others.'' However, we considered that the increase in 
imports was not greater than 15 percent with respect to Gunawan/Jaya 
Pari. We also considered U.S. Customs data on overall imports from 
Indonesia of the products at issue. Based on our review of Gunawan/Jaya 
Pari's shipment data and the U.S. Customs import data, we find that 
imports from all non-investigated exporters (i.e., ``all others'') were 
also not massive during the relevant comparison periods. Given these 
factors, the Department determines that there are no critical 
circumstances with regard to ``all other'' imports of CTL Plate from 
Indonesia (see Stainless Steel Sheet and Strip in Coils from Japan at 
64 FR 30585).

Currency Conversion

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

Verification

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

Interested Party Comments

Gunawan/Jaya Pari Comments

Comment 1: Application of the High-Inflation Methodology to the POI

    The respondents contend that the Department should divide the POI 
into two separate parts when accounting for the effect of inflation on 
the COP in order to make a fair comparison between home market costs 
and home market prices and between home market sales and U.S. sales. 
Specifically, the respondents state that the IMF wholesale price 
indices indicate that the Indonesian economy was experiencing 
hyperinflation only in the first six months of the POI, based on 
applying the Department's monthly and annual high inflation benchmarks 
of five and 50 percent, respectively. In support of their position, the 
respondents cite to the Preliminary Results of Antidumping Duty 
Administrative Review and Extension of Final Results of Administrative 
Review: Gray Portland Cement and Clinker from Mexico, 64 FR 48778, 
48783 (September 8, 1999) (Cement). The respondents further note that 
the inflation rate in Indonesia declined significantly during the 
fourth quarter of the POI and continued to decline after the POI. The 
respondents also point out that section 777A(d)(1)(A) of the Act and 
section 351.414(d)(3) of the Department's regulations grant the 
Department the authority to use averaging periods less than the POI 
when NV, EP (or CEP) varies significantly over the POI, and that the 
Department has exercised its authority in prior antidumping duty cases 
to apply shorter weighted-average periods to investigations involving a 
country experiencing high inflation. In support of this position, the 
respondents cite to numerous cases where the Department split the POI 
or period of review (``POR'') for various reasons (see, e.g., 
Preliminary Results of Antidumping Duty Administrative Review: Certain 
Pasta from Turkey, 64 FR 43157, 43158 (August 9, 1999) (Pasta); Final 
Determination of Sales at Less Than Fair Value: Certain Preserved 
Mushrooms from Chile, 63 FR 56613, 56620 (October 22, 1998) 
(Mushrooms); Final Results of Antidumping Duty Administrative Review: 
Certain Fresh Cut Flowers from Colombia, 62 FR 53287, 53299 (October 
14, 1997) (Flowers from Colombia); Final Determination of Sales at Less 
Than Fair Value: Fresh Cut Roses from Colombia, 60 FR 6980, 6993 
(February 6, 1995) (Roses); and Final Determination of Sales at Less 
Than Fair Value: Salmon from Chile, 63 FR 31432 (June 9, 1998) 
(Salmon)). Furthermore, the respondents state that the Department has 
recognized in prior antidumping duty cases that it should not apply the 
high inflation methodology to the period in which no high inflation 
exists, and as a result, the Department has separated the POI into 
high-inflation and non-high-inflation periods. In addition, the 
respondents claim that the Department has stated in previous high 
inflation cases that the monthly averaging method is not dispositive 
when examining the entire POI to determine high inflation. In support 
of these positions, the respondents cite to the Final Determination of 
Sales at Less Than Fair Value: Certain Fresh Cut Flowers from Peru, 52 
FR 7000, 7002 (March 6, 1987) (Flowers from Peru); Final Results of 
Antidumping Duty Administrative Review: Ferrosilicon from Brazil, 61 FR 
59407, 59408 (November 22, 1996) (Ferrosilicon); and Final Results of 
Antidumping Duty Administrative Review: Certain Welded Carbon Steel 
Pipe and Tube from Turkey, 62 FR 51629, 51630 (October 2, 1997) (Pipe 
and Tube from Turkey). Therefore, the respondents claim that the 
Department has recognized in the past that under certain circumstances, 
the appropriate high inflation period may not be the entire POI, which 
applies in this case, as well. Finally, the respondents claim that the 
Department has in practice determined shorter-than-POI, weighted-
average periods to avoid distortive effects on dumping margins. In 
support of this claim, the respondents cite to the Final Determination 
of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in 
Coils from the Republic of Korea, 64 FR 30664, 30676 (June 8, 1999) 
(Steel Sheet and Strip); Final Determination of Sales at Less Than Fair 
Value: Static Random Access Memory Semiconductors from Taiwan,

[[Page 73170]]

63 FR 8909, 8925 (February 23, 1998) (SRAMs); Final Determination of 
Sales at Less Than Fair Value: Dynamic Random Access Memory 
Semiconductors of One Megabit and Above from the Republic of Korea, 58 
FR 15467, 15476 (March 23, 1993) (DRAMS); and Final Determination of 
Sales at Less Than Fair Value: Erasable Programable Read Only Memories 
from Japan, 51 FR 39680, 39682 (October 30, 1986) (EPROMs from Japan).
    The petitioners contend that Indonesia did experience high 
inflation during the second half of the POI, and that even if it had 
not, the Department's normal practice is to apply its high inflation 
methodology to the entire POI, not just to a particular segment of that 
period. The petitioners also maintain that the calculation performed by 
the respondents to determine whether high inflation existed in the 
second half of the POI is flawed because it did not include July 1998's 
inflation figure, nor did it take into account the compounding effects 
of inflation.
    DOC Position: We agree with the petitioners. Based on the 
respondents' request, we have examined the issue of whether the 
Department should apply its high-inflation methodology based on whether 
Indonesia experienced high inflation throughout the POI. As a matter of 
practice, when the Department uses its high-inflation methodology, we 
index the costs reported in each POI month, even if inflation was 
absent during certain portions of the period for which the costs were 
reported (i.e., the POI), and make sales comparisons on a monthly 
average basis, rather than on a POI average basis, in order to minimize 
the effects of inflation on our analysis.
    The reason for this methodology is that in order to calculate a 
weighted-average cost for the POI, all monthly costs during the POI 
must be restated on an equivalent currency value basis using inflation 
indices during that period. The POI weighted-average cost is then 
restated to the currency value of each respective POI month in order to 
minimize the distortive impact of inflation. The Department's high-
inflation methodology does not increase actual costs, but rather, 
allows the Department to calculate the weighted-average period cost 
from monthly data that is stated in different currency levels. See 
Final Results of Antidumping Duty Administrative Review: Certain Welded 
Carbon Steel Pipe and Tube from Turkey, 63 FR 35190 (June 29, 1998)
    Although the Department's past practice has been to treat an 
economy as hyperinflationary if the annual inflation rate is greater 
than 50 percent, since Pipe and Tube from Turkey the Department has 
modified its practice and used a 25 percent per annum inflation rate as 
a general guide for assessing the impact of inflation on an economy and 
for determining whether an economy experienced high inflation rather 
than hyperinflation during the POI or POR (see Preliminary 
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet 
and Strip in Coils from South Korea, 64 FR 137, 139 (January 4, 1999)). 
The Department's use of this benchmark was illustrated in Cement where 
the Department found that a 16 percent Mexican annual inflation rate 
did not warrant application of the Department's high-inflation 
methodology (see Cement at 64 FR 48778). In Pipe and Tube from Turkey, 
where the POR extended from May 1, 1993, through April 30, 1994, the 
Department indicated that it separately examined the inflation rate 
during two segments of the POR because each segment covered portions of 
different years and we had to determine what the annual inflation rate 
was during the POR. In this context, the Department applied its then 
existing benchmark of 50 percent to determine whether high inflation 
existed in either 1993 or 1994. The Department did not restrict its 
examination of the issue to quarters within a year, but instead 
examined the two years in their entirety, which overlapped the POR and 
the months in the POR as a whole, in order to determine whether Turkey 
should be treated as hyperinflationary during the POR. Moreover, in 
Pipe and Tube from Turkey, the Department expressed a clear preference 
not to break the POR into discrete periods for high-inflation analysis, 
and stated that its finding in Flowers from Peru, made over 10 years 
ago, where the Department split the POI in its application of inflation 
methodology, was not a reflection of the Department's more recent 
practice in conducting inflation analysis. Rather, the Department 
stated a desire to examine the high-inflation issue by examining and 
considering the entire review period. The respondents in this case 
claim that a decline in the inflation rate in the fourth quarter of 
1998 and a continuing decline in the inflation rate during the first 
quarter of 1999 are compelling reasons for departing from this 
methodology. The Department disagrees that it should perform its high-
inflation analysis on a quarterly basis or consider the impact of 
inflation during periods extending past a POI or POR.
    Though the facts in our case are different from those present in 
Ferrosilicon, where the Department determined not to apply its high-
inflation methodology, the methodology employed in the present case is 
consistent with the one in Ferrosilicon in that the existence or 
absence of high inflation during the relevant portion of the review or 
investigatory period was the single most important contributing factor 
in determining whether to apply the high-inflation methodology to the 
POI or POR as a whole. Moreover, the approach taken in Ferrosilicon for 
examining whether high inflation existed during the POR as a whole 
(i.e., focusing on the annualized rate of inflation over the entire POR 
or POI rather than quarters or abbreviated time periods) is also 
consistent with Pipe and Tube from Turkey, which, as noted above, is 
more relevant to our particular situation (see Ferrosilicon at 59408).
    Unlike in Flowers from Colombia, Mushrooms, Salmon and Roses, the 
issue in our case is not whether to adjust or exclude certain cost 
items which have a significant impact on home market prices without 
applying our high-inflation methodology. In the present case, our 
current practice of applying an annualized benchmark to determine the 
existence of high inflation during the POI shows that Indonesia 
experienced high inflation during the entire POI at a level which 
requires the use of the Department's high-inflation methodology (see, 
Memorandum from the Team to the File, ``Inflation Data Used and 
Statistical Analysis Performed for Determining Whether High Inflation 
Was Present During the Period of Investigation,'' dated December 13, 
1999). No individual adjustments are necessary beyond those warranted 
by the application of the Department's high-inflation methodology. 
Accordingly, we have continued to apply our high inflation methodology 
to the entire POI.
    Since we have determined that inflation existed throughout the POI, 
there is no need to consider splitting the POI into two averaging 
periods under 19 CFR 351.414(d)(3).
    The effect of currency devaluations resulting from the Asian 
financial crisis of 1997, as opposed to the existence or absence of 
inflation, was the principal reason for splitting up the POI in the 
more Korean case involving Steel Sheet and Strip. In that case, the 
Department determined that the precipitous drop in the value of the 
home market currency caused significant differences in home market 
prices and, thus, warranted the POI split. As for the recent Taiwanese 
case involving SRAMs, the Department did use shorter averaging periods 
to avoid distortive effects due to declining costs and prices. The 
Department did

[[Page 73171]]

not, however, apply different methodologies to different parts of the 
POI. Finally, as is the case with the Department's outdated 
inflationary analysis and decision made in Flowers from Peru, decisions 
made by the Department in EPROMs from Japan are also not a reflection 
of the Department's current practice with respect to the inflation 
issue. Accordingly, the Department has continued to apply its high-
inflation methodology over the entire POI in this case.

Comment 2: Home Market Early Payment Discount

    The petitioners contend that the Department should disallow 
Gunawan's early payment discount because it constitutes a post-sale 
price adjustment that is not part of Gunawan's normal business 
practice. Specifically, the petitioners maintain that information in 
Gunawan's response indicates that Gunawan grants the discount in 
question to its home market customers on a discretionary basis, and 
that the discount percentage is not specified on documentation, or 
linked to the quantity or value of the sale. Rather, the petitioners 
allege that the discount is set by Gunawan's sales department on an ad 
hoc basis since the customer is unaware at the time of sale of any 
terms or conditions it must meet to receive the discount. Finally, the 
petitioners contend that the Department should disallow this adjustment 
to NV because Gunawan failed to demonstrate at verification that the 
discount was part of its normal business practice. In support of their 
position, the petitioners cite to numerous cases where the Department 
granted a post-sale price adjustment if it reflected the respondent's 
normal business practice. See, e.g., Final Results of Antidumping Duty 
Administrative Review: Certain Corrosion-Resistant Carbon Steel Flat 
Products from Japan, 64 FR 12951, 12958 (March 16, 1999); Final Results 
of Antidumping Duty Administrative Review: Gray Portland Cement and 
Clinker from Mexico, 64 FR 13148, 13167 (March 17, 1999); Final Results 
of Antidumping Duty Administrative Review: Antifriction Bearings and 
Parts Thereof from France, 63 FR 33320, 33327 (June 18, 1998) and 60 FR 
10900, 10930 (February 28, 1995); and the Final Results of Antidumping 
Duty Administrative Review: Certain Corrosion-Resistant Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate from Canada, 61 
FR 13815, 13823 (March 28, 1996).
    Gunawan maintains that the Department should continue to allow 
Gunawan's early payment discount because the Department verified that 
the ad hoc method by which Gunawan grants the discount is its normal 
business practice. Gunawan also states that the Department examined at 
verification Gunawan's policy for granting this discount and its 
reporting of this discount in the sales listing, and found no 
discrepancies in its reported discount programs. With regard to the 
administrative cases relied upon by the petitioners, Gunawan points out 
that this proceeding is an investigation and that the likelihood that 
it can manipulate its dumping margin by granting the discount in the 
future is not germane to a LTFV proceeding.
    DOC Position: We agree in part with Gunawan. After reviewing data 
referenced in the Gunawan sales verification report (i.e., verification 
exhibit 30), we note that the record evidence indicates the post-sale 
adjustment, referred to as an ``early payment discount'' by both 
Gunawan and the petitioners, is actually a billing adjustment 
associated with defective merchandise sold in the home market. Based on 
the invoices examined at verification, the Department found that the 
disputed amounts were noted on credit memos which were issued after the 
sale invoices were sent to home market customers, and that the credits 
were mostly associated with claims of defective merchandise which was 
not returned to Gunawan. Therefore, we are treating the amounts at 
issue as billing adjustments and deducting them, where applicable, from 
the gross unit price. Finally, the above-referenced administrative 
cases relied upon by the petitioners have no applicability in this case 
because, unlike those cases where the issue was whether a respondent 
granted rebates in its normal course of business, the issue in this 
proceeding is whether to make a deduction to Gunawan's home market 
price based on credit memos noting returns of defective merchandise 
which Gunawan issues to its customers in the normal course of business.

Comment 3: Depreciation Expenses

    The petitioners state that the Department should adjust Gunawan's 
depreciation expenses to account for the effects of inflation and to 
permit a more appropriate matching of costs and prices based on 
equivalent currency units. The petitioners argue that Gunawan's 
reported depreciation expenses are based on the nominal value of 
assets, since they were last revalued, and reflect neither the 
inflation experienced in Indonesia since the last revaluation nor the 
inflation experienced during the POI. The petitioners argue that the 
Department should adjust the depreciation expenses for the effects of 
inflation occurring prior to the POI, as well as for the effects of 
inflation during the POI.
    The respondents argue that the Department has already taken into 
account the effects of inflation by indexing the total amount of 
reported fixed overhead expenses (i.e., the account in which 
depreciation expense was recorded) in its cost calculation and, 
therefore, should not further index for inflation. According to 
respondents, further indexing the monthly amount of depreciation 
expense will result in double counting. The respondents argue that the 
Department's long-standing practice is to rely on data from a 
respondent's normal books and records if they are prepared in 
accordance with the generally accepted accounting principles (``GAAP'') 
of the exporting country.
    DOC Position: We agree with the petitioners, in part. The 
depreciation expense at issue is included in fixed overhead expense. 
Because the depreciation expense reported for each month was based on 
fixed assets values recorded in currency levels at the beginning of the 
POI, it is not enough to index each monthly depreciation expense from 
that month to the end of the period. Each monthly depreciation expense 
must be indexed, on a monthly basis, to account for the full change in 
currency value between the beginning and the end of the POI, before an 
average COP for the period can be calculated. The reported monthly 
depreciation expense figures are all stated in the currency level of 
the first month of the POI and, therefore, must all be indexed for 
inflation on a monthly basis over the full POI. In this case, the 
monthly inflation rates during the POI were significant.
    We disagree with the petitioners that the nominal monthly 
depreciation expenses should be adjusted for inflation that occurred 
prior to the POI. We note that one of the two collapsed respondents 
revalued their assets during the last quarter of 1998 and the other 
revalued its assets in 1996. Inflation in Indonesia since this pre-POI 
revaluation has not been significant. Thus, we do not consider it 
appropriate to adjust the pre-POI fixed asset valuations as recorded in 
their normal books and records. For the final determination, we have 
indexed the monthly depreciation expense to account for the high 
inflation during, but not prior to, the POI.

[[Page 73172]]

Comment 4: First-Day Verification Corrections

    The petitioners argue that the Department should, pursuant to 19 
CFR 351.301(b), reject the undisclosed and untimely major modifications 
contained in Gunawan's August 24, 1999 and Jaya Pari's September 1, 
1999 submissions. The petitioners argue that it is the Department's 
longstanding policy not to accept the submission of new information at 
verification unless: (1) The need for that information was not evident 
previously, (2) that information makes minor corrections to information 
already on the record, or (3) that information corroborates, supports, 
or clarifies information already on the record. According to the 
petitioners, the corrections submitted by Gunawan and Jaya Pari on the 
first day of verification significantly affect the financial expense 
calculation and the foreign exchange gains and losses on accounts 
payable. The petitioners claim that these ``major'' modifications 
cannot be characterized as ``minor corrections'' and, therefore, should 
be rejected as new information.
    The respondents argue that the Department should reject the 
petitioners' claim that the corrections submitted by Gunawan and Jaya 
Pari at verification constitute an untimely submission of new factual 
information. The respondents argue that these minor corrections were 
made timely on the first day of verification and included worksheets 
showing the effects of the corrections which the Department verified. 
The respondents argue that the corrections were minor in nature and 
significance, and were related only to exchange gains and losses, which 
represent a minor part of the total reported costs. The respondents 
argue that these corrections went in both positive and negative 
directions, which in turn had an insignificant impact on the margin 
calculation, and, therefore, the Department should include these 
corrections in its calculation of the respondents' dumping margin in 
the final determination.
    DOC Position: We agree with the respondents that the corrections 
presented on the first day of verification were minor and were of the 
type typically identified by the respondents during preparation for 
verification. These corrections were minor in that they affected only 
specific accounts, did not change the reporting methodology, and 
corroborated, supported, and clarified information already on the 
record. Therefore, we have included the corrections for purposes of the 
final determination.

Comment 5: Slab Costs

    The petitioners argue that the Department should adjust the 
respondents' reported slab costs. The petitioners argue that where 
Gunawan and Jaya Pari had no purchases of slabs in a given month, the 
Department should construct a current monthly cost by using the most 
recent preceding month's cost, adjusted for the effects of inflation, 
instead of the unadjusted slab costs reported by the respondents. In 
addition, the petitioners disagree with the respondents' claim that all 
slab costs were denominated in U.S. dollars. According to the 
petitioners, it is not clear from the record how much of the slab 
purchases were made in U.S. dollars or Indonesian rupiah. The 
petitioners argue that as a surrogate for Jaya Pari's January 1998 mild 
slab costs the Department should use Gunawan's January 1998 mild slab 
purchases, because Gunawan's average January purchase price is more 
representative of January slab costs than is the price reported by Jaya 
Pari, a price from the previous year.
    The respondents argue that the Department should not adjust the 
purchase price of slab for inflation, but instead use the slab costs as 
reported. The respondents are opposed to the petitioners' argument that 
the respondents' reported slab costs for a month in which there were no 
purchases should be adjusted by the Indonesian inflation indices. The 
respondents argue that when they produce subject merchandise in a month 
in which there are no purchases, they are consuming slab from 
inventory, which was purchased in previous months. Therefore, they 
argue that the cost of slab in any given month was equal to the slab 
cost of the previous month, irrespective of inflation in Indonesia 
because they did not incur any additional acquisition costs for these 
slabs. Accordingly, the Department should not revalue the slab costs 
for those months in which there were no purchases.
    The respondents also argue that the Department should not use 
Gunawan's January 1998 mild slab purchase price as a surrogate for Jaya 
Pari's January 1998 mild slab costs as suggested by the petitioners. 
The respondents state that they purchased all of their material inputs 
in U.S. dollars from sources outside of Indonesia and there were no 
significant price increases during the POI. The respondents argue that 
because the acquisition cost of slabs in U.S. dollars is not affected 
by Indonesian market conditions and is also not affected by inflation, 
no adjustments should be made to the slab purchase price.
    Lastly, the respondents argue that since the IMF's wholesale price 
indices show that Indonesia has not had high inflation subsequent to 
July 1998, the Department's high-inflation methodology should not be 
applied to costs during the period from July through December 1998.
    DOC Position: We agree with the petitioners that replacement cost 
(i.e., the purchase price for the current month) should be used to 
value slabs for Gunawan and Jaya Pari. Moreover, we agree that for 
those months in which there were no slab purchases, the preceding 
month's purchase price, adjusted for the effects of inflation, should 
be used. In cases where the respondent experiences inflation in the 
comparison market during the POI, the Department requires the 
respondent to report current costs for the calculation of COP and CV. 
This methodology entails valuing any materials used to produce the 
subject merchandise at the average purchase price of those materials 
during the month of consumption (i.e., the normal inventory value of 
consumed raw materials is replaced by the average monthly purchase 
price for those materials).
    We disagree with the respondents that all purchases of slabs were 
made in U.S. dollars. In fact, some purchases, and all of the 
miscellaneous acquisition fees, were made in rupiah. Moreover, we 
disagree that when slab purchases are made in U.S. dollars the book 
value is not affected by inflation. This is because the U.S. dollar-
denominated purchase price is converted to rupiah in the month of 
purchase. Since the company was experiencing high inflation during the 
POI, its currency was losing value in relation to the U.S. dollar and, 
therefore, in Indonesian rupiah terms the slabs were increasing in 
price.
    We also agree with the petitioners that it is more appropriate to 
use Gunawan's weighted-average, per-unit purchase price in January 1998 
for mild slab as a surrogate for Jaya Pari's January 1998 mild slab 
costs. Gunawan's average January purchase price is more representative 
of January slab costs than the price Jaya Pari paid months ago. Simply 
indexing the price paid in the previous period would only account for 
increases in the purchase price due to inflation, but would not reflect 
other market-based pressures on slab prices. We note further that Jaya 
Pari has been collapsed with Gunawan as a single respondent for margin 
calculation purposes, and also that it purchased slab from Gunawan 
during the POI. Therefore, we find that it is appropriate

[[Page 73173]]

to used Gunawan's slab cost as a surrogate for Jaya Pari's slab cost in 
January 1998.
    Finally, we disagree with the respondents' argument that the 
Department's high-inflation methodology should not be applied to the 
period from July through December 1998. First, we note that the IMF's 
wholesale price indices show that Indonesia continued to experience 
inflation through September 1998. Second, our practice is to use the 
high-inflation methodology for the entire POI if a country experiences 
a significant level of inflation throughout that period, as was the 
case in Indonesia. The Department's high-inflation methodology does not 
increase costs, but rather, allows the Department to calculate the 
weighted-average period cost from monthly data that is stated in 
different currency levels. Therefore, we have continued to apply the 
high-inflation methodology in our calculation of the POI costs.

Comment 6: G&A Expenses

    The petitioners argue that the Department should exclude Gunawan's 
``other income,'' resulting from interest on accounts receivable, as an 
offset in the calculation of its G&A expense factor. The petitioners 
argue that this interest on accounts receivable was from a company that 
did not pay its invoices on time and is not related to Gunawan's 
production operations.
    The respondents argue that the Department should not exclude 
interest income from accounts receivable, which was included in ``other 
income,'' from the calculation of G&A expenses because it is directly 
related to subject merchandise. Alternatively, the respondents argue 
that this interest income should be deducted from the respondents' 
indirect selling expenses.
    DOC Position: We agree with the petitioners that the interest on 
accounts receivable, which was included in ``other income,'' should not 
be used as an offset in the G&A expense calculation. Interest income 
earned on accounts receivable is treated as an adjustment to the 
selling price. The Department's standard questionnaire directs a 
respondent to report such interest income in a separate field on the 
sales database in order to allow for the adjustment to the selling 
price. Accordingly, we have disallowed this interest income on accounts 
receivable as an offset to G&A expense. We do agree with the 
respondents that the interest income should be deducted from the 
respondents' indirect selling expenses and have done so for the final 
margin calculation.

Comment 7: Scrap Sales

    The petitioners argue that because of the high inflation 
experienced in Indonesia, the Department should first index the monthly 
scrap sales revenue before calculating an annual average.
    The respondents agree that the Department should first index the 
monthly amounts of scrap before calculating an average, but argue that 
the indexing should be limited to data for the period from January 
through June 1998.
    DOC Position: We agree with the petitioners that because of the 
high inflation experienced in Indonesia, we should first index the 
monthly scrap sales revenue before calculating an annual average. 
Gunawan calculated the scrap offset by dividing the total scrap sales 
revenue for the year by the total quantity of plate produced during the 
year. Since the monthly scrap sales revenue that was summarized to 
obtain the total scrap sales revenue was in different currency levels, 
we have first indexed the monthly amounts using the Wholesale Price 
Index as reported in the International Financial Statistics before 
calculating an annual average. We then calculated the scrap offset for 
each month by indexing the annual average back to each month. Finally, 
we disagree with the respondents concerning their argument that the 
indexing should be limited to the period from January through June 
1998, consistent with our decision to apply high-inflation methodology 
to the entire POI. See DOC Position to Comment 1 above for further 
discussion.

Comment 8: Foreign Exchange Loss on Accounts Payable

    The respondents argue that the Department should not include the 
exchange losses on accounts payable attributable to the purchase of 
slab in the calculation of the COP. The respondents argue that, because 
costs included in CV are eventually converted into U.S. dollars, the 
Department should base slab purchase costs on the U.S. dollar-
denominated purchase price to avoid the conversion from U.S. dollars to 
Indonesian rupiah and back to U.S. dollars which creates a loss that 
does not exist in dollar terms. The respondents argue that the exchange 
loss on accounts payable arose solely from different exchange rates 
used between the date of recording purchases in their books and the 
date of payment. The respondents also argue that the Department should 
exclude this exchange loss since it was only a ``book'' loss which did 
not add to the real COP.
    In addition to the above argument, the respondents state that by 
indexing the slab purchase price and then including the exchange loss 
on accounts payable from the purchase of slab, the Department has 
double counted costs in the calculation of the COP. The respondents 
state that they are being made to record exchange losses in their books 
due to the Indonesian rupiah depreciating against the U.S. dollar 
which, in turn, was due to inflation in the Indonesian economy.
    The petitioners argue that the Department should continue to 
include the respondents' foreign exchange losses on accounts payable in 
the calculation of COP and CV. They argue that the respondents must 
convert their slab costs into Indonesian rupiah since their normal 
books and records are maintained in Indonesian rupiah, and as a result 
of doing so, they realize exchange gains and losses on accounts 
payable. The petitioners state that these foreign exchange gains and 
losses on accounts payable are a result of the Indonesian rupiah 
depreciating between the time slab is purchased and the time payment is 
made. The petitioners claim that this is a real economic loss, which is 
recognized by the respondent and is recorded in their financial 
accounting system. The petitioners argue that the conversion of these 
Indonesian rupiah costs back into U.S. dollars for purposes of 
calculating CV does not create the loss, it is simply a convention of 
the dumping analysis. In addition, the petitioners argue that the 
Department has consistently held that foreign exchange losses on 
accounts payable must be included in costs. See Notice of Final 
Determination of Sales at Less Than Fair Value: Steel Wire Rod From 
Trinidad & Tobago, 63 FR 9177, 9182 (February 24, 1998) (Steel Wire 
Rod).
    DOC Position: We disagree with the respondents. Foreign exchange 
losses realized in connection with accounts payable should be included 
in the COP and CV calculations. See Notice of Final Determination of 
Sales at Less Than Fair Value: Stainless Steel Round Wire from Korea, 
64 FR 17342 (April 9, 1999) and Steel Wire Rod at 63 FR 9182. The 
foreign exchange losses on accounts payable were a result of the 
Indonesian rupiah depreciating between the time the slab was purchased 
and the time the payment was made. In simple terms, when the payment is 
made it takes more Indonesian rupiah than the original amount recorded 
for the purchase. This is a real economic loss, which was recognized by 
the respondents and was recorded in their financial accounting system. 
The Department includes these losses in the COM because they are the

[[Page 73174]]

direct result of purchasing inputs for the manufacturing process. We 
also disagree with the respondents' argument that if the slabs were 
purchased in U.S. dollars and paid out of the company's U.S. dollar 
reserves, there is no exchange loss. Even if the payment of slabs were 
made from U.S. dollar reserves, there is still an exchange loss on the 
payment of the slabs, because the originally agreed upon price in 
rupiah terms has increased. We further note that any exchange gain on 
U.S. dollar reserves would be included by the Department in the 
calculation of financial expense.
    Moreover, we disagree with the respondents' assertion that the 
Department has double counted costs by both including the exchange 
losses and indexing the monthly slab costs in its calculation of the 
COP and CV. The indexing simply allows the Department to calculate an 
average period cost from monthly amounts that are denominated in 
different currency levels. The average cost is then restated in 
currency levels for each month in which a sale took place. The 
inclusion of the foreign exchange loss recognizes that the respondent 
paid a higher amount for the slab than originally recorded.

Comment 9: Foreign Exchange Gains on Accounts Receivable

    The respondents argue that the Department should include the 
foreign exchange gains from accounts receivable as an offset to the 
foreign exchange loss from accounts payable. The respondents argue 
that, by excluding this offset amount, the Department departed from the 
objectives and principles of GAAP, which is to ensure that each company 
fairly presents its financial position, operating position and any 
change to its financial position. The respondents state that in their 
normal financial practices, the companies do not manage specific 
accounts, but instead manage their net exposed position. Therefore, any 
change in relative currency values will be offset with no cost to the 
company. The respondents argue that if the gains on accounts receivable 
were excluded, a distortion in the real financial position of the 
company would occur because the cost of exchange losses actually 
suffered would be overstated.
    The petitioners argue that the Department should not include 
foreign exchange gains from accounts receivable in the calculation of 
the respondents' costs. They state that it is the Department's practice 
to include foreign exchange gains and losses on financial assets and 
liabilities in the COP and CV calculations, provided that the gains and 
losses are related to the company's production operations. Since the 
foreign exchange gains and losses incurred on accounts receivable are 
related to sales operations, rather than to production, the petitioners 
maintain these amounts should not be included in the calculation of COP 
and CV. See Notice of Final Results of Antidumping Duty Administrative 
Review: Canned Pineapple Fruit From Thailand, 63 FR 7392, 7401 
(February 13, 1998) and Steel Wire Rod at 63 FR 9182.
    DOC Position: We agree with the petitioners that foreign exchange 
gains and losses arising from sales transactions should not be included 
in the calculation of COP and CV. The Department's longstanding 
practice is to exclude exchange gains and losses on accounts 
receivable. See, e.g., Notice of Final Results of Antidumping Duty 
Administrative Review: Circular Welded Non-Alloy Steel Pipe and Tube 
from Mexico, 62 FR 37014,37026 (July 10, 1997) (Comment 31) (where the 
Department did not include exchange gains and losses on accounts 
receivables, because these gains and losses related to selling 
activities rather than production activities); and Pipe and Tube from 
Turkey at 62 FR 51629-01 (October 2, 1997). The Department normally 
includes in its calculation of COP and CV foreign exchange gains and 
losses resulting from transactions related to a company's manufacturing 
operations (e.g., purchases of inputs). See, e.g., Final Determination 
of Sales Less Than Fair Value: Polyethylene Tenephthalate Film, Sheet, 
and Strip From the Republic of Korea, 56 FR 16305, 16313 (April 22, 
1991). We do not consider foreign exchange gains and losses arising 
from sales transactions to relate to manufacturing activities of a 
company. Accordingly, for the final determination we included in COP 
and CV exchange gains and losses arising from purchase transactions 
(accounts payables) (see Comment 8), but disallowed exchange gains and 
losses arising from sales transactions.

Krakatau Comments

Comment 1: Application of Facts Available

    Krakatau maintains that the Department's use of facts available in 
its case violates Articles 2.2.1.1 and 6.8 of the Antidumping Duty 
Agreement of the World Trade Organization because the Department could 
have used its questionnaire response to arrive at a calculated margin 
for Krakatau without undue difficulties. Krakatau further maintains 
that the Department's insistence that Krakatau provide costs on a 
control-number-specific basis based on its cost records and Krakatau's 
inability to provide such costs are no justification for rejecting 
Krakatau's response and applying facts available.
    The petitioners maintain that the Department should assign Krakatau 
the higher of the highest dumping margin alleged in the petition or 
calculated in the final determination, rather than the simple average 
of the dumping margins alleged in the petition, because Krakatau has 
not provided an adequate questionnaire response. The petitioners argue 
that if the Department assigns Krakatau the simple average of the 
petition dumping margins, Krakatau might receive a lower rate than it 
might otherwise have received if it had cooperated, thus rewarding 
Krakatau for not providing complete and accurate information in a 
timely manner.
    DOC Position: We agree with the petitioners. We did not request 
that Krakatau provide cost and sales information that other respondents 
in numerous antidumping duty proceedings have not been able to provide, 
without undue hardship, in response to the Department's antidumping 
duty questionnaire. Furthermore, Krakatau was given significant 
guidance and assistance by the Department throughout this 
investigation, but was unable to provide the Department with an 
adequate response that could be verified and used in the final 
determination. Consequently, the Department has no choice but to 
continue to resort to facts available with respect to Krakatau in the 
final determination as explained in detail below.
    We provided Krakatau with numerous opportunities and guidance 
throughout this proceeding to enable it to submit its cost and sales 
data on a control-number-specific basis, as requested by the 
Department's questionnaire, for purposes of calculating a margin for 
Krakatau based on its own data. Despite the Department's numerous 
attempts to assist Krakatau, Krakatau failed to provide critical 
information needed for calculating a margin, thereby rendering its 
information severely deficient and unusable. Specifically, prior to the 
preliminary determination, the Department issued Krakatau a number of 
instructional letters, including a second supplemental questionnaire 
which was explicit regarding the information the Department needed from 
Krakatau in order to further consider its response for verification and 
the final determination (see July 8, 1999, letter from the Department 
to Krakatau). In the July 8, 1999, letter, the Department requested for 
each sales control number, production costs and

[[Page 73175]]

sales expenses unique to the control number, along with worksheets 
showing how Krakatau arrived at its calculations for the requested 
costs and sales expenses. Moreover, we requested Krakatau to provide 
the costs for each control number on a monthly basis since evidence 
suggested that Indonesia experienced high inflation throughout the POI. 
In addition, the July 8, 1999, letter provided Krakatau with step-by-
step instructions for submitting the requested information noted above. 
The July 8, 1999, letter also stated that if Krakatau could not 
establish a unique cost for each product, it must describe in detail 
the reason it could not provide such information. In summary, this 
letter was designed to assist Krakatau and give Krakatau one final 
opportunity to comply with the Department's reporting requirements 
because the Department was fully aware that Krakatau was a pro se 
company and had requested assistance in a timely manner under section 
782(c)(1) of the Act. Having received the Department's assistance in 
this regard under section 782(c)(2) of the Act, the ultimate burden was 
on Krakatau to supply the Department with the requested information.
    In its response to the Department's July 8, 1999, letter, Krakatau 
(1) did not report control-number-specific, monthly costs (critical for 
making fair value comparisons); (2) did not provide the requested 
worksheets necessary for determining whether it properly reported its 
sales expenses on a per-unit basis; and (3) did not explain in detail 
why it was not able to provide the sales and cost information the 
Department routinely requests and receives from respondents in other 
antidumping duty cases. Furthermore, Krakatau offered no alternative 
methodologies for meeting the Department's request for information 
given its alleged inability to provide such information in the manner 
requested by the Department. Rather, Krakatau continued to report a 
standard sales expense amount irrespective of the POI month for each 
control number reported in its home market and U.S. sales listings 
without showing or explaining its calculation methodology, and one 
standard production cost for each POI month which did not differentiate 
between control numbers. With these significant deficiencies still 
present in Krakatau's July 23, 1999, supplemental response, we notified 
Krakatau on July 27, 1999, that the Department was unable to conduct a 
meaningful verification of its response and that the supplemental 
information Krakatau submitted on July 23, along with the information 
previously submitted on June 25, 1999, did not provide the Department 
with an appropriate basis on which to calculate an antidumping duty 
margin for Krakatau in the final determination (see July 27, 1999, 
letter from the Department to Krakatau).
    Because Krakatau did not provide an adequate response that the 
Department could verify and use in the final determination, despite 
numerous opportunities and assistance afforded to it by the Department, 
the Department does not consider Krakatau to have cooperated to the 
best of its ability in this proceeding. Therefore, the Department has 
relied on adverse facts available in accordance with section 776(b) of 
the Act in making its final determination with respect to Krakatau. 
Accordingly, the Department has assigned Krakatau the highest dumping 
margin alleged in the petition, which is higher than the margin 
calculated for Gunawan/Jaya Pari. See also ``Facts Available'' section 
of this notice.

Comment 2: Exclusion From Investigation

    Krakatau claims that its negligible exports of subject merchandise 
to the U.S. market during the POI could not possibly cause or threaten 
material injury to the domestic industry. Therefore, Krakatau maintains 
that the Department should not impose antidumping duties on Krakatau's 
U.S. exports of the subject merchandise.
    The petitioners did not comment on this issue.
    DOC Position: We disagree with Krakatau. The ITC, not the 
Department, determines whether imports of the subject merchandise from 
Indonesia have caused or threaten material injury to the domestic 
industry. Therefore, Krakatau's argument is not one in which the 
Department has jurisdiction to address. The Department determines 
whether dumping exists. If we find dumping and the ITC finds material 
injury, we must impose antidumping duties.

Comment 3: Adequacy of Questionnaire Response

    Krakatau claims that it did not know how to report its information 
in the format requested by the Department's original and supplemental 
questionnaires because it was unfamiliar with the requirements of the 
U.S. antidumping duty law and because it could not afford the services 
of a consultant to prepare its response due to the adverse impact of 
the Indonesian economic crisis on its operations. Instead, Krakatau 
points out that it used its own resources to respond to the 
Department's questionnaires to the best of its ability. In addition, 
Krakatau alleges that the Department's guidance was inadequate in terms 
of assisting it in reporting its cost and sales information in the 
format requested by the Department. Therefore, Krakatau maintains that 
the Department should not resort to facts available with respect to 
Krakatau because Krakatau was unable to provide the Department with 
certain requested information (i.e., assigning product control numbers 
and reporting control number-specific costs) for which Krakatau did not 
maintain or record in its accounting records.
    The petitioners did not comment on this issue.
    DOC Position: We disagree with Krakatau. As discussed in the 
Department's position to Comment 1, the Department provided Krakatau 
with numerous opportunities to submit in a timely manner critical cost 
and sales information in the format requested in the Department's 
antidumping duty questionnaire. In the final supplemental questionnaire 
the Department issued to Krakatau on July 8, 1999, the Department 
provided Krakatau with the actual calculation steps it needed to follow 
in order to report its sales expenses in the manner requested by the 
antidumping duty questionnaire. Additionally, in the supplemental 
questionnaire, the Department outlined for Krakatau how it could comply 
with the Department's request to report monthly, control-number-
specific cost data based on Krakatau's description of its own cost 
records. Krakatau failed to provide the requested information despite 
the Department's assistance efforts. In addition to these detailed 
explanations and guidelines, we took the unusual step of sending a 
Department official to Jakarta to answer any questions Krakatau staff 
had concerning the contents of the Department's questionnaires. Having 
received this assistance, the burden was on Krakatau to provide the 
requested information. It did not. Therefore, the Department has no 
alternative but to resort to adverse facts available in Krakatau's 
case. (See ``Comment 1 above and ``Facts Available'' section of this 
notice for discussion of adverse facts available rate assigned to 
Krakatau.)

Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, we are 
directing the Customs Service to continue to suspend liquidation of all 
entries of subject merchandise that are entered, or withdrawn from 
warehouse, for

[[Page 73176]]

consumption on or after the date of publication of the final 
determination in the Federal Register. The Customs Service shall 
continue to require a cash deposit or 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
------------------------------------------------------------------------
Gunawan/Jaya Pari..........................................        42.36
PT Krakatau Steel..........................................        52.42
All Others.................................................        42.36
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. As our final determination is affirmative, 
the ITC will, within 45 days, determine whether these imports are 
materially injuring, or threaten material injury to, the U.S. industry. 
If the ITC determines that material injury, or threat of material 
injury does not exist, the proceeding will be terminated and all 
securities posted will be refunded or canceled. If the ITC determines 
that such injury does exist, the Department will issue an antidumping 
duty order directing Customs officials to assess antidumping duties on 
all imports of the subject merchandise entered 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: December 13, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-33232 Filed 12-28-99; 8:45 am]
BILLING CODE 3510-DS-P