Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar from India

DEPARTMENT OF COMMERCE

(A-533-810)

Notice of Final Determination of Sales at Less Than Fair Value:

Stainless Steel Bar from India

Agency: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: December 28, 1994.

FOR FURTHER INFORMATION CONTACT: V. Irene Darzenta or Katherine

Johnson, Office of Antidumping Investigations, Import Administration,

U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,

Washington, DC 20230; telephone (202) 482-6320 or 482-4929,

respectively.

Final Determination

We determine that stainless steel bar (SSB) from India is being, or

is likely to be, sold in the United States at less than fair value, as

provided in section 735 of the Tariff Act of 1930, as amended (the

Act). The estimated margins are shown in the ``Suspension of

Liquidation'' section of this notice.

Scope of Investigation

The merchandise covered by this investigation is SSB. For purposes

of this investigation, the term ``stainless steel bar'' means articles

of stainless steel in straight lengths that have been either hot-

rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-

finished, or ground, having a uniform solid cross section along their

whole length in the shape of circles, segments of circles, ovals,

rectangles (including squares), triangles, hexagons, octagons or other

convex polygons. SSB includes cold finished SSBs that are turned or

ground in straight lengths, whether produced from hot-rolled bar or

from straightened and cut rod or wire, and reinforcing bars that have

indentations, ribs, grooves, or other deformations produced during the

rolling process.

Except as specified above, the term does not include stainless

steel semi-finished products, cut length flat-rolled products (i.e.,

cut length rolled products which if less than 4.75 mm in thickness have

a width measuring at least 10 times the thickness, or if 4.75 mm or

more in thickness having a width which exceeds 150 mm and measures at

least twice the thickness), wire (i.e., cold-formed products in coils,

of any uniform solid cross sections along their whole length, which do

not conform to the definition of flat-rolled products), and angles,

shapes and sections.

The SSB subject to this investigation is currently classifiable

under subheadings 7222.10.0005, 7222.10.0050, 7222.20.0005,

7222.20.0045, 7222.20.0075 and 7222.30.0000 of the Harmonized Tariff

Schedule of the United States (HTSUS). Although the HTSUS subheadings

are provided for convenience and customs purposes, our written

description of the scope of this investigation is dispositive.

Period of Investigation

The period of investigation (POI) is July 1, 1993, through December

31, 1993.

Case History

Since the publication of the notice of preliminary determination on

August 4, 1994 (59 FR 39733), the following events have occurred.

On August 5, 1994, Grand Foundry Limited (GF) submitted its

response to Section D of the Department's questionnaire. On August 18,

1994, petitioners submitted comments on GF's August 5, Section D

questionnaire response. The Department issued a Section D deficiency

questionnaire on September 9, 1994. On September 16, 1994, respondent

requested an extension of time until October 3, 1994, within which to

respond to the Department's deficiency questionnaire. Petitioners

opposed this request on September 19. On September 20, the Department

granted respondent a partial extension until September 30 to submit its

response.

The Department issued its sales verification outline on August 26,

1994. On August 29, 1994, GF submitted revised U.S. and third country

sales listings correcting certain clerical errors found in preparation

for verification.

On September 28, 1994, petitioners submitted comments for the

verification of GF's Section D response. Respondent submitted its

Section D deficiency response on September 30, 1994. The Department

issued its cost verification outline on October 3, 1994.

Verification of GF's questionnaire responses took place in Bombay,

India, from September 5 through 9, and from October 10 through 14,

1994.

On October 11, 1994, GF submitted certain minor clerical error

corrections/clarifications relevant to the reported cost data which it

found in preparation for verification.

In a letter to the Department on October 27, 1994, Bhansali

Ferromet Bars (P) Ltd. (Bhansali) and Paramount Trading Inc.

(Paramount), a foreign exporter and domestic importer of subject

merchandise, respectively, requested that Bhansali be assigned the

preliminary margin calculated for GF, rather than the ``all others''

rate normally assigned to non-responding foreign producers/exporters.

(See Comment 1 in the ``Interested Party Comments'' section of this

notice.)

The Department's sales and cost verification reports were issued on

November 2, and 3, 1994, respectively.

Neither petitioners nor respondent requested a public hearing in

this proceeding. Case and rebuttal briefs were received on November 10,

and 17, 1994, respectively.

Best Information Available

In accordance with section 776(c) of the Act, we have determined

that the use of best information available (BIA) is appropriate for

Mukand Limited (Mukand). Mukand did not respond to the Department's

questionnaire, and, as such, we find it has not cooperated in this

investigation.

Specifically, our BIA methodology for uncooperative respondents is

to assign the higher of the highest margin alleged in the petition or

the highest rate calculated for another respondent. Accordingly, as

BIA, we are assigning to Mukand the highest margin among the margins

alleged in the petition. See Antifriction Bearings (Other Than Tapered

Roller Bearings) and Parts Thereof from the Federal Republic of

Germany; Final Results of Antidumping Duty Administrative Review (56 FR

31692, 31704, July 11, 1991). The Department's methodology for

assigning BIA has been upheld by the U.S. Court of Appeals for the

Federal Circuit. See, Allied Signal Aerospace Co. v. United States, 996

F.2d 1185 (Fed. Cir. 1993); see also Krupp Stahl, AG et al. v. United

States, 822 F. Supp. 789 (CIT 1993)).

Product Comparisons

We have determined that all products covered by this investigation

constitute a single category of such or similar merchandise. We made

fair value comparisons on this basis. In accordance with the

Department's standard methodology, we first compared identical

merchandise. Where there were no sales of identical merchandise to

compare to U.S. sales, we made similar merchandise comparisons on the

basis of the criteria defined in Appendix V to the antidumping

questionnaire (on file in Room B-099 of the main building of the

Department).

Consistent with our preliminary determination, we altered the order

of the SSB grades specified within the grade criterion of Appendix V of

our questionnaire. This was done to account for certain other SSB

grades which respondent sold in the third country market during the

POI, but which were not taken into account in Appendix V. We also

reversed the order of the size and shape criteria in Appendix V.

Because there were no sales of export-quality merchandise in the home

market during the POI to compare to U.S. sales, we used GF's third

country sales in Germany, in accordance with section 773(a)(1) of the

Act. See the ``Foreign Market Value'' section of this notice. We made

adjustments for differences in the physical characteristics of the

merchandise, in accordance with section 773(a)(4)(C) of the Act. In

accordance with 19 CFR 353.38, we made comparisons at the same level of

trade, where possible.

Fair Value Comparisons

As discussed above, we are using BIA with regard to Mukand. For GF,

we made fair value comparisons as discussed below.

To determine whether sales of SSB from GF to the United States were

made at less than fair value, we compared the United States price

(``USP'') to the foreign market value (FMV), as specified in the

``United States Price'' and ``Foreign Market Value'' sections of this

notice.

We made revisions to respondent's reported data, where appropriate,

based on verification findings. We included in our analysis certain

U.S. sales of subject merchandise which respondent incorrectly deleted

from its August 29, 1994 sales listing. (See Comment 2 in the

``Interested Party Comments'' section of this notice.)

United States Price

We based USP on purchase price (PP), in accordance with section

772(b) of the Act, because the subject merchandise was sold to

unrelated purchasers in the United States before importation and

because exporter's sales price methodology was not otherwise indicated.

We calculated PP based on packed C&F prices to unrelated customers.

In accordance with section 772(d)(2)(A) of the Act, we made deductions,

where appropriate, for foreign brokerage (including containerization,

foreign inland freight and port charges) and ocean freight.

We recalculated credit expenses to account for the verified short-

term interest rate.

Foreign Market Value

In order to determine whether there were sufficient sales of SSB in

the home market to serve as a viable basis for calculating FMV, we

compared the volume of home market sales of SSB to the volume of third

country sales of SSB in accordance with section 773(a)(1)(B) of the

Act. Based on this comparison, we determined that GF had a viable home

market with respect to sales of SSB during the POI. However, based on

GF's claim, which we verified, that sales in its home market made

during the POI consisted only of SSB scrap and rejects and that its

U.S. sales during the same period consisted only of first (or export)

quality SSB, we determined that third country sales would be a more

appropriate basis for FMV. (See April 5, 1994 Decision Memorandum To

Richard W. Moreland From The Team Re: Appropriate Basis for FMV.)

In order to select the appropriate third country in this case, we

examined three factors in accordance with 19 C.F.R. 353.49(b): (1) the

degree of similarity in terms of physical characteristics between the

products sold in the United States and the individual third country

markets; (2) the volume of sales in each third country market relative

to that in the United States; and (3) the similarity of the market

organization and development between the U.S. market and third country

market. Based on these factors, we selected sales to Germany as the

appropriate basis on which to calculate FMV.

Cost of Production

Petitioners alleged that GF made third country sales during the POI

at prices below the cost of production (COP). Based on information

submitted by petitioners in their allegation, and in accordance with

section 773(b) of the Act, we concluded that we had reasonable grounds

to believe or suspect that sales were made below COP. (See June 15,

1994, Decision Memorandum from Richard W. Moreland to Barbara R.

Stafford Re: Petitioners' Allegation of Sales Below the Cost of

Production.)

In order to determine whether third country prices were below COP

within the meaning of section 773(b) of the Act, we performed a

product-specific cost test, in which we examined whether each third

country product sold during the POI was priced below the COP of that

product. See, e.g., Final Determination of Sales at Not Less Than Fair

Value: Saccharin from Korea (59 FR 58826; November 15, 1994) (Saccharin

from Korea). We calculated COP based on the sum of the respondent's

reported cost of materials, fabrication, general expenses and packing

costs, in accordance with 19 CFR 353.51(c). We compared the COP for

each product to the third country price, net of movement expenses.

We relied on the submitted COP data except in the following

instances where the costs were not appropriately quantified or valued:

1. We increased the reported nickel costs by excluding inventory on

hand at December 31, 1993, which we determined more accurately

reflected the COP during the POI;

2. We recalculated wastage related to the centerless grinding and

smooth turning processes to reflect the correct recovery amounts;

3. We increased fixed overhead amounts to reflect minor corrections

found at verification;

4. We recalculated the general and administrative (G&A) expense and

financial expense ratios to reflect results for the year ended March

31, 1994;

5. We eliminated the income tax provision amount included in the

G&A expense calculation; and

6. We recalculated third country indirect selling expenses in

accordance with verification findings.

In accordance with section 773(b) of the Act, we also examined

whether GF's third country sales were made below COP in substantial

quantities over an extended period of time, and whether such sales were

made at prices that would permit the recovery of all costs within a

reasonable period of time in the normal course of trade.

To satisfy the requirement of section 773(b)(1) that below cost

sales be disregarded only if made in substantial quantities, the

following methodology was used: For each product where less than ten

percent, by quantity, of the third country sales made during the POI

were made at prices below the COP, we included all sales of that model

in the computation of FMV. For each product where ten percent or more,

but less than 90 percent, of the third country sales made during the

POI were priced below COP, we excluded from the calculation of FMV

those third country sales which were priced below COP, provided that

the below cost sales of that product were made over an extended period

of time. Where we found that more than 90 percent of the respondent's

sales of a particular product were at prices below the COP and were

made over an extended period of time, we disregarded all sales of that

product and calculated FMV based on constructed value (CV), in

accordance with section 773(b) of the Act.

In accordance with section 773(b)(1) of the Act, in order to

determine whether below-cost sales had been made over an extended

period of time, we compared the number of months in which below-cost

sales occurred for each product to the number of months in the POI in

which that product was sold. If a product was sold in three or more

months of the POI, we did not exclude below-cost sales unless there

were below-cost sales in at least three months during the POI. When we

found that sales of a product only occurred in one or two months, the

number of months in which the sales occurred constituted the extended

period of time; i.e., where sales of a product were made in only two

months, the extended period of time was two months, where sales of a

product were made in only one month, the extended period of time was

one month. (See Saccharin from Korea).

We examined GF's product-specific COP data, as corrected based on

our findings at verification, and found no sales below COP.

Constructed Value-to-Price Comparisons

For one U.S. sales comparison, where the variable costs of the

differences in physical characteristics of the merchandise exceeded 20

percent, we used constructed value (CV) as the basis for FMV, in

accordance with section 773(a)(2) of the Act. Pursuant to section

773(e) of the Act, we calculated constructed value (CV) based on the

sum of the cost of materials, fabrication, general expenses, U.S.

packing costs and profit. In accordance with section 773(e)(1)(B) (i)

and (ii) of the Act we: 1) included the greater of respondent's

reported general expenses or the statutory minimum of ten percent of

the cost of manufacture (COM), as appropriate; and 2) used the greater

of respondent's actual profit or the statutory minimum of eight percent

of the sum of COM and general expenses.

We relied on the submitted CV data, but made the same modifications

numbered 1-5 under the ``Cost of Production'' section of this notice.

Pursuant to 19 C.F.R. 353.56(a)(2), we made circumstance-of-sale

adjustments, where appropriate, for differences in credit expenses and

bank charges (including bank interest, courier charges and commissions)

between the U.S. and third country markets. We recalculated credit

expenses to reflect the verified short-term interest rate. We deducted

third country commissions and added U.S. indirect selling expenses

(which were recalculated based on verification findings) capped by the

amount of third country commissions in accordance with 19 CFR

353.56(b).

Price-to-Price Comparisons

For all other U.S. sales comparisons, in accordance with 19 C.F.R.

353.46, we calculated FMV based on CIF or C&F prices charged to

unrelated customers in Germany.

In light of the Court of Appeals for the Federal Circuit's (CAFC)

decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland

Cement v. United States, 13 F.3d 398 (Fed. Cir. 1994), the Department

no longer can deduct home market movement charges from FMV pursuant to

its inherent power to fill in gaps in the antidumping statute. Instead,

we will adjust for those expenses under the circumstance-of-sale

provision of 19 C.F.R. 353.56(a) and the exporter's sales price offset

provision of 19 C.F.R. 353.56(b)(2), as appropriate. Accordingly, in

the present case, we deducted post-sale movement charges from FMV under

the circumstance-of-sale provision of 19 C.F.R. 353.56(a). This

adjustment included home market foreign brokerage (including

containerization, foreign inland freight, loading and port fees), ocean

freight, and marine insurance.

Pursuant to 19 C.F.R. 353.56(a)(2), we made further circumstance-

of-sale adjustments, where appropriate, for differences in credit

expenses and bank charges (including bank interest, courier charges and

commissions) between the U.S. and third country markets. We

recalculated credit expenses to reflect the verified short-term

interest rate. We deducted third country commissions and added U.S.

indirect selling expenses capped by the amount of third country

commissions in accordance with 19 CFR 353.56(b). We recalculated U.S.

indirect selling expenses in accordance with our findings at

verification.

We also deducted third country packing and added U.S. packing

costs, in accordance with section 773(a)(1) of the Act. We made

adjustments, where appropriate, for differences in the physical

characteristics of the merchandise, in accordance with section

773(a)(4)(C) of the Act.

Currency Conversion

We made currency conversions based on the official exchange rates

in effect on the dates of the U.S. sales as certified by the Federal

Reserve Bank of New York. See 19 C.F.R. 353.60(a).

Verification

As provided in section 776(b) of the Act, we conducted verification

of the information provided by GF by using standard verification

procedures, including the examination of relevant sales, cost and

financial records, and selection of original source documentation.

Interested Party Comments

Comment 1: Bhansali and Paramount, a foreign exporter and domestic

importer of subject merchandise, respectively, requested in a letter to

the Department on October 27, 1994, that Bhansali be assigned the

preliminary margin calculated for GF (2.67 percent), rather than the

``all others'' rate normally assigned to non-respondent foreign

producers/exporters. Bhansali and Paramount believe this treatment to

be appropriate because: (1) Bhansali procures the raw materials for SSB

production from the same sources as GF, and like GF, converts the

material into SSB; and (2) the all others rate includes the BIA margin

for Mukand which did not cooperate in the investigation. They contend

that ``penalizing'' Bhansali with the all others rate would be denying

them ``equal protection'' and ``due process.''

Petitioners believe that the Department should retain the

preliminary ``all others'' rate (11.85 percent) for Bhansali's and

Paramount's SSB exports to the United States. Petitioners state that

the two interested parties appear to rest their request on the fact

that Bhansali procures raw materials from the same source as GF and

subsequently converts the material into SSB. They assert that this

argument ignores the fact that the Department is required to verify all

information upon which it relies in calculating antidumping margins in

an investigation. Moreover, petitioners point out that as interested

parties, Bhansali and Paramount could have requested the Department to

permit Bhansali to appear as a voluntary respondent and, thereby,

receive a separate dumping rate based on its own verified data.

Petitioners also point out that both companies may request an

administrative review of Bhansali's exports and, thereby, obtain a

company-specific rate for Bhansali's shipments to the United States.

Furthermore, petitioners assert that the Department has repeatedly

used BIA in calculating the ``all others'' rate for non-responding

companies, even when there is only one respondent and when the rate

reflects the most adverse BIA. According to petitioners, the Department

has been reluctant to modify the all others rate calculation absent

compelling circumstances. To support its arguments, petitioners cite,

among other Department rulings, the Final Determination of Sales at

Less Than Fair Value: Steel Wire Rope from India, 56 FR 46285

(September 11, 1992) and Final Determination of Sales at Less Than Fair

Value: Certain Paper Clips from the People's Republic of China, 54 FR

51168 (October 7, 1994).

DOC Position: We agree with petitioners. The Department assigns

company-specific rates to those companies which were either mandatory

respondents or accepted as voluntary respondents. See Notice of Final

Determination of Sales at Less Than Fair Value: Certain Forged

Stainless Steel Flanges from India, 58 Fed. Reg. 68853, 68857 (Dec. 29,

1993) (``Steel Flanges''); Antidumping; Oil Country Tubular Goods from

Canada; Final Determination of Sales at Less Than Fair Value, 51 Fed.

Reg. 15029 (Apr. 22, 1986). In this case, Bhansali was neither named by

the Department as a mandatory respondent nor did it request treatment

as a voluntary respondent. It is our practice to assign the ``all

others'' rate to companies which either were not named as mandatory

respondents or did not request voluntary status. See Floral Trade

Council v. United States, 822 F. Supp. 766, 768 (CIT 1993); See Steel

Flanges at 68857. The Department applies the ``all-others'' rate to

these companies because they did not provide company-specific

information necessary to calculate individual rates. Given the fact

that Bhansali, as a foreign exporter, was given the opportunity to

request treatment as a voluntary respondent, and, thereby, could have

participated in the investigation and receive a company-specific rate,

we believe that Bhansali was not denied equal protection and was

afforded due process. In addition, because both Bhansali and Paramount

will be able to request an administrative review, if an order is issued

in this case, we believe that these parties have not been denied due

process. We disagree with Bhansali that we could use GF's data to

calculate a company-specific rate because there is no evidence on the

record that GF's data is the same as its own and the Department must

verify all information upon which it relies in calculating a margin.

We also disagree with Bhansali's argument not to include the BIA

rate in the all-others rate calculation. It is the Department's

practice to calculate the all-others rate based on the average of the

margins assigned to all companies under investigation. See Steel

Flanges at 68858. Consequently, we included the BIA rate in calculating

the all-others rate.

Comment 2: Petitioners argue that the seven sales that were deleted

from GF's revised August 29, 1994, U.S. sales listing should be

included in the Department's final margin analysis. Petitioners assert

that these sales, shipped under two invoices, were made pursuant to a

purchase order dated within the POI. Despite the fact that the purchase

order was ultimately canceled, a portion of the order was shipped to

the U.S. customer. Accordingly, petitioners maintain that the subject

transactions should be returned to the revised sales listing from which

they were removed.

Respondent states that it is indifferent as to whether these sales

are included in the Department's analysis. GF asserts that it submitted

the necessary data for these sales so that the Department may consider

them in its analysis, if appropriate. However, GF points out that it

had a legitimate basis to believe that such sales should be excluded.

According to respondent, by explicit agreement between GF and the U.S.

customer after purchase order issuance, the quantity shipped greatly

differed from the quantity ordered. In other words, a significant term

of sale changed after the date of purchase order and, in fact, after

the date of shipment. Under the Department's practice for determining

date of sale, when the buyer and seller agree on a change in the terms

of sale after the purchase order, the new date of sale is the date on

which the change in terms was agreed upon. In the case of the subject

sales, respondent maintains that the new date of sale is the date of

shipment which falls outside the POI.

DOC Position: We agree with petitioners. We verified that these

sales should not have been deleted from respondent's U.S. sales

listing. While we found that the purchase order at issue was cancelled

in June 1994, we also found that a portion of the order had been

shipped under two invoices in February and April 1994, prior to order

cancellation. The terms of sale, as specified in the original purchase

order dated within the POI, did not change until after the two

shipments were made. Therefore, we consider the subject sales to be

appropriately included in the sales listing and, accordingly, have used

them in our final analysis.

Comment 3: For certain U.S. sales made to one U.S. customer during

the POI, GF reported two different prices--purchase order price

(reported under the variable ``GRSUPRU'' in the U.S. sales listing) and

invoice price (reported under the variable ``INVPRU in the U.S. sales

listing). In its August 29, 1994, submission and at verification,

respondent explained that the difference between the two prices was an

offset granted by GF to the customer which related to pre-POI shipments

made under the International Price Reimbursement Scheme (IPRS)1.

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\1\ Under the IPRS, which expired prior to the POI for stainless

steel products, the Indian government compensated exporters for the

higher cost of using domestic versus imported materials in the

production of export products.

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Petitioners contend that for these transactions, the prices

reported under the ``INVPRU'' variable (i.e., the price charged minus

the IPRS offset), rather than the ``GRSUPRU'' variable, (i.e., the

price agreed upon by the parties), should be used by the Department as

the basis of U.S. price in its final margin calculations. Petitioners'

contention is premised primarily on the following: (1) the Department

verified that INVPRU was the actual price paid by the customer; and (2)

GF did not provide sufficient evidence to the Department at

verification to substantiate its claim that the difference between the

two prices related to the effects of the IPRS on pre-POI shipments.

(For a detailed summary of petitioners' comments, see December 16,

1994, Final Concurrence Memorandum from the Team to Barbara R. Stafford

at 8-9.)

Respondent claims that for the transactions at issue, GRSUPRU, not

INVPRU, is the actual total price charged and paid to GF by the U.S.

customer, and, therefore, GRSUPRU should be used as the basis of U.S.

price in the Department's final analysis. According to GF, GRSUPRU and

INVPRU differ for one U.S. customer because of commitments made between

GF and that customer with respect to pre-POI shipments that related to

the IPRS. Contrary to suggestions in the Department's sales

verification report, respondent claims that there was no price change

between the purchase order and invoice with respect to these few sales.

If the Department concluded that there was a change in price, the date

of sale would be affected. In this case, the date of sale would have

been the date of shipment since the alleged price change was first

reflected in the invoice issued after shipment, which for several

transactions occurred after the POI. Respondent asserts that, contrary

to a statement in the Department's verification report, GF's

allocations of certain charges (i.e., bank interest charges, indirect

selling expenses and imputed credit expenses) applicable to the subject

sales were correct; that is, it was correct to use GRSUPRU in its

allocation methodology since that is the actual price paid for those

sales. (For a detailed summary of respondent's comments, see December

16, 1994, Final Concurrence Memorandum from the Team to Barbara R.

Stafford at 7-8.)

DOC Position: We agree with respondent. It appears that the

inconsistencies in the Department's sales verification report resulted

in confusion between the parties concerning the definition of, and

difference between, GRSUPRU and INVPRU. In our sales verification

report on page 19, we noted that our examination of source

documentation revealed ``no discrepancies'' with respondent's claim.

However, in an earlier section of our verification report on page 6 and

at the top of page 19, respectively, we incorrectly suggested that, for

certain sales made to one U.S. customer during the POI, there were

price ``changes'' between the purchase order and invoice due to the

effects of the IPRS, and that INVPRU referred to the ``actual price GF

charged the U.S. customer'' which differed from the original purchase

order price. We also incorrectly suggested on page 20, that because GF

used GRSUPRU, not INVPRU, to calculate bank interest charges, imputed

credit and indirect selling expenses, these expenses were

``overstated'' for the affected sales.

Based upon further review of the source documentation provided at

verification, we believe that the difference between GRSUPRU and INVPRU

reported for the affected sales resembles a kind of ``rebate'' given by

GF to the U.S. customer on pre-POI shipments which was accounted for in

the final invoice price for the affected POI shipments. We consider a

rebate to be a return of a previous amount paid for goods. This

``rebate'' was the vehicle by which respondent paid back what it owed

the customer on pre-POI shipments in lieu of direct cash payments, and

bore no relation to POI sales. Furthermore, we view GRSUPRU as the

price that the customer would have otherwise paid for the subject

sales, but for the ``rebate'' related to pre-POI shipments made under

the IPRS. (For a complete discussion of this issue, see December 16,

1994, Final Concurrence Memorandum from the Team to Barbara R. Stafford

at 7-10.)

Comment 4: Petitioners contend that certain bank charges incurred

on third country sales should be allocated over invoice value, rather

than weight, because they are based on the value of the merchandise.

Petitioners maintain that by allocating these charges on the basis of

weight, respondent has overstated them, thereby understating the net

third country sales price. As best information available, petitioners

suggest decreasing all third country bank charges based on the

percentage difference between the per unit bank charge calculated by

value and that calculated by weight for a sample transaction to more

accurately reflect GF's true bank cost experience.

Respondent argues that petitioners cite no record evidence for

their assertion. Respondent maintains that the record clearly indicates

that the subject bank charges (i.e., courier charges) are fixed charges

that do not vary with transaction value. Furthermore, respondent

emphasizes that it reported other bank charges (i.e., bank interest

charges) which were allocated by value.

DOC Position: We agree with respondent. GF claimed in its response

and we verified that the subject bank charges were assessed on the

basis of weight, not value. Therefore, we have used the verified bank

charges in our analysis and made deductions to FMV, where appropriate.

(See November 2, 1994, Sales Verification Report at page 12).

Comment 5: Petitioners claim that GF incorrectly allocated its

ocean freight and foreign brokerage charges on third country sales over

net weight rather than gross weight. Since these expenses are incurred

on the total weight of the shipments, petitioners contend that they

should be allocated over gross weight. Petitioners add that although

the differences between gross and net weight for most transactions in

the third country sales listing are not substantial, for two invoices

the differences are significant. Accordingly, petitioners argue that

the movement expenses for all reported third country sales related to

the two invoices should be decreased by the percentage difference

between the net and gross weights.

Respondent contends that net weight is the weight of SSB actually

shipped; in contrast, gross weight includes packing materials.

According to respondent, movement costs should be allocated over net

weight so that the movement costs are fully absorbed by the SSB

actually shipped. To allocate some movement costs to the packing

materials would understate per unit movement costs. Furthermore, GF

points out that it allocated movement costs over net weight for both

U.S. and third country movement charges. If movement costs incurred on

third country sales were allocated over gross weight, then for

consistency purposes, movement costs incurred on U.S. sales should also

be allocated over gross weight. Consequently, the reallocation would

affect U.S. and third country sales equally, with no net impact on the

Department's dumping margin calculation.

DOC Position: We agree with respondent. Respondent claimed and we

verified that the subject movement charges were properly allocated over

net or actual weight of the subject merchandise, not gross weight.

Therefore, we have made deductions to FMV, where appropriate, for the

verified movement charges. (See November 2, 1994, Sales Verification

Report at page 13).

Comment 6: Petitioners argue that raw material costs should not be

reduced by the revenues generated from sales of duty-free advance

import licenses.2 Petitioners contend that the Department should

disallow this reduction in GF's raw material costs for several reasons.

First, they maintain that these revenues are unrelated to the

production and sale of the subject merchandise because they reflect

earnings gained from the sale of the unused portion of the import

licenses. Second, the unused capacity was purchased by a company, the

function of which was unrelated to the production of subject

merchandise. Third, GF incurred no expenses in selling this unused

capacity, as the purchaser incurred all costs related to the

importation of the material. According to petitioners, the Department

has consistently refused to allow an adjustment to respondent's costs

of production for income that is unrelated to the production and sale

of the subject merchandise. Among other cases, petitioners cite the

final determination of Certain Stainless Steel Wire Rods from France

(58 FR 68865; December 29, 1993) to support its argument.

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\2\ These licenses allow Indian exporters to import duty-free

raw materials that are used in the production of export products.

Indian exporters may also sell their license capacity to other (non-

exporting) companies which may not have obtained such a license

directly from the government.

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Furthermore, petitioners assert that GF's revenues from sales of

unused license capacity were earned in a period outside the POI.

According to petitioners, since these revenues are unrelated to the

production or sale of subject merchandise and were earned outside the

POI, they should not be allowed as offsets to direct raw material

costs.

GF argues that the subject revenues should be considered in the

calculation of raw material costs, as they are directly related to raw

material purchases. According to GF, they exist only because GF used

domestic, instead of imported, material to produce the SSBs for export.

Respondent argues that, if not for these import license revenues, it

would not make sense for the company to purchase domestic raw materials

which have a higher cost than imported materials.

Furthermore, GF asserts that the Indian Government Import License

Program replaced the prior IPRS which had the same purpose and effect

(i.e., compensating Indian exporters for the higher cost of using

domestic material). Respondent points out that during the IPRS

program's existence, it was well-established by Department precedent

that raw material costs should be adjusted downward for IPRS

reimbursements. GF cites Forged Stainless Steel Flanges from India (58

FR 68853, 68558 (Comment 10) December 29, 1993) to support its claim.

Similarly, respondent maintains that raw material costs should be

reduced by the amount of revenues received from license sales which are

permitted under the Indian Government Import License Program.

In addition, respondent asserts that the import licenses were

secured during the POI, which makes them applicable to POI production.

Therefore, benefits from the sale of import licenses are related to,

and were accrued during, the POI, regardless of when these benefits are

posted in the company's books.

DOC Position: We agree with respondent that the license fee

revenues relate to purchases of raw materials for GF's export sales

made during the POI. GF purchased raw materials in the domestic market

to produce exported SSB. At the same time, GF sold its unused license

capacity in a related transaction in order to reduce its overall raw

material costs for exported products. Based on our understanding of the

license program, GF had to demonstrate that the raw material amount

covered by the import license was used in exported products, even if

the license amount was sold to another party. GF was able to sell its

import licenses only because it was able to satisfy its export

obligation under the license by using domestically sourced raw

materials, instead of imported raw materials, to produce its exported

products. Therefore, the revenues GF received from the sale of its

import licenses are directly related to its purchases of domestic raw

materials and represent an appropriate offset to GF's raw materials

costs.

Comment 7: Petitioners argue that the nickel costs reported by GF

should be adjusted to account for a decline in nickel costs at the end

of the POI. They contend that the respondent's calculation of average

POI material costs should not have included the declining nickel

purchase prices at the end of the POI (December 1993). Petitioners

argue that it is unreasonable to assume that the nickel purchased by GF

in December 1993 was used in the production of subject merchandise

during the POI, given the time necessary to import the nickel and

convert it into wire rods or bars for use in SSB production.

Accordingly, GF's nickel costs should be recalculated to exclude those

purchases of nickel that could not have been used in production of the

subject merchandise before the end of the POI.

Respondent argues that it is possible that the nickel purchased in

December 1993 was used in SSB production during the POI. Respondent

states that the reason for the fall in nickel prices was mainly because

the early POI nickel purchases were from domestic sources while the

later POI nickel purchases were imports which are cheaper than

domestically produced nickel. Furthermore, GF states that its financial

accounting records do not track when purchased materials are actually

used in production. Consequently, GF does not know whether the wire rod

it receives from the contractor is made from an earlier or later supply

of nickel. According to respondent, only the POI weighted-average

approach can be reconciled with GF's financial statements.

DOC Position: We agree with petitioners. Respondent's methodology

for calculating weighted-average POI nickel costs failed to adequately

account for the beginning POI inventory values and was based on

quantities in excess of quantities used. In order to reasonably account

for these deficiencies, we excluded from the weighted-average nickel

cost calculation, the quantity purchased in excess of consumption (i.e.

ending inventory), valued at the most recent purchase price. This

approach most accurately values the nickel used in production.

Comment 8: Petitioners contend that GF has understated its reported

labor costs by the number of times material passes through a particular

process. Since one bar can pass through a particular processing center

more than once, petitioners argue that the total weight of material

processed in that center will be greater than the finished good weight

by a factor equal to the number of times it passes through that

processing center. Accordingly, the Department should increase GF's

reported labor costs by an appropriate factor in order to properly

account for GF's actual labor experience with respect to the subject

merchandise.

Respondent maintains that it properly calculated labor costs by

considering the cost for each time a particular bar passes through a

production process and accounting for the per unit cost of that process

by the number of times the bar passes through that process. GF asserts

that the Department reviewed its allocation methodology at verification

and noted that it appeared reasonable.

DOC Position: We agree with respondent. GF's reported calculation

methodology first computed a labor cost for each time a particular bar

passed through a particular process. The ``per pass'' cost was then

multiplied by the number of times a certain model passed through the

particular process. We have determined that GF's labor cost methodology

is reasonable, because it properly accounts for the cumulative cost of

processing labor, and accordingly we conclude that no adjustment is

warranted.

Comment 9: Petitioners argue that the Department should revise the

total production quantity used by GF in calculating certain costs by

removing the quantity of inspection wastage, or second quality product.

According to petitioners, the quantity of inspection wastage and

secondary grade product should not be included in the allocation base

because, by definition, these products did not meet inspection

standards and were inferior in quality. The fact that these inferior

products could not recover the entire raw material costs, let alone the

processing costs, further indicates to petitioners that these products

should not be treated as standard products in calculating GF's cost of

production. Instead, petitioners maintain that the costs associated

with these inferior products should be absorbed by the standard

products. Accordingly, petitioners contend that, in its final

determination, the Department should revise the total production

quantity by removing the quantity for inspection wastage.

Respondent argues that costs were properly allocated over all

saleable products, including second-quality SSB. According to

respondent, the costs to produce the lower quality bars were the same

as those to produce higher quality bars which went through the same

production process. In addition, respondent points out that at

verification the Department reviewed the allocation methodology for

variable expense items and noted it to be reasonable.

DOC Position: We agree with respondent and have made no adjustment.

When the finished bar comes out of production, it is examined and

classified as either export quality or inspection wastage (i.e., second

quality) by inspection teams. The same manufacturing factors go into

the production of both export quality and second quality stainless

steel bar. Other than quality and market value there is no difference

between these products. We have determined that the circumstances in

this case are similar to those in Certain Carbon and Alloy Steel Wire

Rod From Canada, 59 FR 18797 (April 20, 1994), where we allowed the

respondent to allocate production costs over both prime and non-prime

merchandise. See also, IPSCO, Inc. v. United States, 965 F 2d 1057

(Fed. Cir. 1990). We note that, in this context, inspection wastage (or

second quality) and non-prime merchandise are synonymous.

Comment 10: Petitioners contend that the Department should revise

GF's direct material cost by adding a portion of the excise tax paid by

GF to the total cost of direct materials. In petitioners opinion, the

deductions to direct material costs GF claimed for excise and sales

taxes which were refunded to GF upon exportation of the finished

products are overstated because GF sold products in the domestic market

during the POI. Because these products were not exported, GF was not

eligible for excise and sales tax refunds on their sale. Therefore,

petitioners maintain, the Department should revise GF's reported direct

material costs to account for the overstatement of tax refunds.

Respondent asserts that petitioners' arguments are irrelevant

because this case concerns the costs of product sold to the United

States and Germany, and not in the home market. GF also points out that

when GF sells in the home market, GF charges the excise or sales taxes

to its customer, meaning that GF ultimately does not incur such costs.

DOC Position: We agree with respondent. We observed at verification

that GF charged its domestic customers for sales and excise taxes they

had paid on raw materials and, therefore, ultimately did not incur any

cost for these taxes. We also observed that sales and excise taxes were

refunded upon exportation of the subject merchandise. Consequently, we

find no evidence on the record of an overstatement of tax refunds as

claimed by petitioners.

Suspension of Liquidation

In accordance with section 733(d)(1) of the Act, we are directing

the Customs Service to continue to suspend liquidation of all entries

of SSB from India that are entered, or withdrawn from warehouse, for

consumption on or after the date of publication of this notice in the

Federal Register. The Customs Service shall require a cash deposit or

posting of a bond equal to the estimated margin amount by which the FMV

of the subject merchandise exceeds the USP, as shown below. The less

than fair value margins for SSB are as follows:

------------------------------------------------------------------------

Weighted-

average

Producer/manufacturer/exporter margin

percentage

------------------------------------------------------------------------

Grand Foundry.............................................. 3.87

Mukand..................................................... 21.02

All Others................................................. 12.45

------------------------------------------------------------------------

ITC Notification

In accordance with section 735(d) of the Act, we have notified the

International Trade Commission (ITC) of our determination. As our final

determination is affirmative, the ITC will determine whether these

imports are materially injuring, or threaten material injury to, the

U.S. industry within 45 days.

If the ITC determines that material injury or threat of material

injury does not exist, the proceedings will be terminated and all

securities posted as a result of the suspension of liquidation will be

refunded or cancelled.

However, if the ITC determines that such injury does exist, we will

issue an antidumping duty order directing Customs officers to assess an

antidumping duty on SSB from India entered or withdrawn from warehouse,

for consumption on or after the date of suspension of liquidation.

Notification to Interested Parties

This notice serves as the only reminder to parties subject to

administrative protective order (APO) in these investigations of their

responsibility covering the return or destruction of proprietary

information disclosed under APO in accordance with 19 CFR 353.34(d).

Failure to comply is a violation of the APO.

This determination is published pursuant to section 735(d) of the

Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).

Dated: December 19, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-31802 Filed 12-27-94; 8:45 am]

BILLING CODE 3510-DS-P