# Final Determinations of Sales at Less Than Fair Value: Calcium Aluminate Cement, Cement Clinker and Flux From France > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A94-7122 ## Record - **Collection:** Federal Register - **Document type:** Uncategorized Document - **Published:** March 25, 1994 ## Text DEPARTMENT OF COMMERCE International Trade Administration [A-427-812] Final Determinations of Sales at Less Than Fair Value: Calcium Aluminate Cement, Cement Clinker and Flux From France Agency: Import Administration, International Trade Administration, Commerce. EFFECTIVE DATE: March 25, 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 Determinations We determine that calcium aluminate (CA) cement, cement clinker and flux from France are being, or are 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 Investigations The products subject to these investigations constitute two classes or kinds of merchandise: (1) CA cement and cement clinker, and (2) CA flux. The products covered by these investigations include CA cement, cement clinker and flux, other than white, high purity CA cement, cement clinker and flux. These products contain by weight more than 32 percent but less than 65 percent alumina and more than one percent each of iron and silica. CA cement/cement clinker and CA flux have significantly different physical characteristics and end uses. CA cement is a specialty hydraulic non-portland cement used for construction purposes. CA cement clinker is the primary material used as a binding agent in the production of CA cement. CA flux is used primarily as a desulfurizer and/or cleaning agent in the steel manufacturing process. CA clinker produced for sale as flux cannot be used to produce CA cement, and CA clinker used to produce CA cement cannot be used as a flux in the production of steel. CA flux has a chemical composition distinct from CA cement clinker. CA cement clinker contains the hydraulic mineral mono-calcium aluminate, which gives it a molar ratio of lime to alumina of approximately 1:1. In contrast, CA clinker sold as a flux does not contain mono-calcium aluminate; it contains the complex mineral C12A7 (12CaO * 7A12O2), which gives it a molar ratio of lime to alumina of approximately 2:1. This higher lime to alumina ratio gives the CA clinker sold as a flux a lower melting point than CA cement, and also results in extra lime which can bond with sulfur and other impurities in molten steel. Although CA clinker sold as flux has some hydraulic properties, it hydrates too quickly to be used for those properties. These products are currently classifiable under the following Harmonized Tariff Schedule of the United States (HTSUS) subheadings: 2523.30.0000 (for aluminous cement) and 2523.10.0000 (for cement clinker and flux). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of these investigations remains dispositive. Period of Investigations The period of investigation (POI) is October 1, 1992, through March 31, 1993. Case History Since the publication of the notice of preliminary determinations on November 3, 1993 (58 FR 58683), the following events have occurred. On October 29, 1993, the respondent, Lafarge Fondu International (LFI) and Lafarge Calcium Aluminates, Inc. (LCA) (collectively Lafarge), and the petitioner, Lehigh Portland Cement Company (Lehigh), both requested that the Department postpone the final determinations in these investigations. Pursuant to these requests, the Department postponed the final determinations until March 18, 1994 (58 FR 60843, November 18, 1993). On November 8, 1993, Lafarge submitted supplemental responses to the Department's questionnaire for CA flux sales. On November 15, 1993, petitioner requested that the Department collect data on respondent's home market sales of CA flux, objecting to respondent's use of constructed value (CV) based on differences-in- merchandise (difmer) adjustments calculated inclusive of home market bagging costs. (See Comment 11 in the ``Interested Party Comments'' section of this notice.) Subsequently, on November 24, 1993, the Department requested that respondent provide such data. On November 15 and 24, 1993, respectively, Lafarge and Lehigh requested a public hearing. On December 14, 1993, the Department issued a second set of supplemental questionnaires for sales of both classes or kinds of merchandise. Respondent submitted home market sales data for flux and responses to the Department's second set of supplemental questionnaires on December 23 and 29, 1993, respectively. On January 3, 1994, respondent submitted certain corrections to the cost and sales data reported in its previous questionnaire responses. The Department conducted verification of the cost and sales responses of LFI and LCA from January 10 through January 20, 1994, in Paris, France and Chesapeake, Virginia. Petitioner and respondent filed case and rebuttal briefs on February 14 and 18, 1994, respectively. On February 16, 1994, the parties withdrew their requests for a public hearing which was scheduled to take place on February 18, 1994. Such or Similar Comparisons Regarding the CA cement and cement clinker class or kind of merchandise, we have determined that the products covered by this investigation constitute two ``such or similar'' categories of merchandise: CA cement and CA cement clinker. We made fair value comparisons on this basis. Since this investigation was initiated during a period in which certain simplification procedures were in effect (see the preliminary determination), we conducted the home market viability test based on the class or kind of merchandise, rather than on the such or similar category. In order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating foreign market value (FMV), we compared the volume of home market sales of CA cement and cement clinker to the volume of third country sales of CA cement and cement clinker, in accordance with section 773(a)(1)(B) of the Act, and determined that the home market was viable for the CA cement and cement clinker class or kind. During the POI, CA cement clinker was the only product within the cement class or kind which was imported into the United States from France. Because there were no sales of such or similar merchandise (i.e., clinker) in the home market during the POI to compare to U.S. sales, we made comparisons on the basis of CV (see the ``Fair Value Comparisons'' section of this notice), in accordance with section 773(a)(2) of the Act. Regarding the CA flux class or kind of merchandise, we determined that the products covered by this investigation comprise a single ``such or similar'' category of merchandise and that the home market was viable. Where there were no sales of identical merchandise in the home market during the POI to compare to U.S. sales, we made similar merchandise comparisons on the basis of size (i.e., degree of crushing/ screening), in accordance with section 773(a)(1) of the Act (see the ``Fair Value Comparisons'' 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. Fair Value Comparisons To determine whether sales of CA cement and cement clinker, and CA flux from France were made at less than fair value, we compared United States Price (USP) to the 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. For those unreported U.S. cement sales which respondent claimed were made pursuant to certain graduated requirements contracts effective prior to the POI, but for which respondent could not provide documentary evidence substantiating its claim, we based our analysis on best information available (BIA), in accordance with 19 CFR 353.37. As BIA, we used the highest, non-aberrational margin calculated for any of respondent's reported U.S. sales of cement. (See Comment 1 in the ``Interested Party Comments'' section of this notice.) United States Price All of Lafarge's U.S. sales to the first unrelated purchaser took place after importation into the United states. Therefore, we based USP on exporter's sales prices (ESP), in accordance with section 772(c) of the Act. For ESP sales of cement, we included in our final analysis certain reported sales allegedly made under an exclusive supply contract, using the reported, verified date of purchase order as the date of sale. (See Comment 2 in the ``Interested Party Comments'' section of this notice.) For ESP sales of flux, we included in our final analysis certain reported sales made under a contract which expired but which respondent claimed had been subsequently renewed prior to the POI, but for which respondent could not provide documentary evidence substantiating that claim. For these sales, we used the verified date of purchase order (or date of invoice where the purchase order date was unavailable) as the date of sale. (See Comment 9 in the ``Interested Party Comments'' section of this notice.) Furthermore, we excluded certain reported flux shipments made in October 1992 pursuant to a contract effective prior to the POI, the price terms of which were modified in November 1992. (See Comment 10 in the ``Interested Party Comments'' section of this notice.) We calculated USP based on packed or bulk, ex-U.S. warehouse or delivered prices to unrelated customers in the United States. For sales of both classes or kinds of merchandise, we made deductions, where appropriate, for foreign inland freight, foreign brokerage and handling, ocean freight, marine insurance, U.S. brokerage and handling (including harbor maintenance and customs processing fees), unloading costs, and U.S. inland freight charges (including loading, freight to processors' warehouses/transfer freight to warehouses, demurrage and freight to customer charges, where applicable). For sales of CA flux, we recalculated foreign inland freight, foreign brokerage and handling, ocean freight and U.S. inland freight expenses to correct minor clerical errors found at verification. For sales of both classes or kinds of merchandise, we also deducted direct selling expenses including credit and product liability premiums. We recalculated credit expenses to account for discounts, where applicable, and to correct minor clerical errors found at verification with respect to the reported weighted-average short-term interest rate and the reported payment or shipment dates for certain transactions. We also recalculated credit for those sales that had missing payment dates. For those missing payment dates, we used, as BIA, the date of the final determination as the date of payment. In addition, we reclassified premiums for product liability insurance as direct selling expenses, and deducted them from USP accordingly. (See Comment 15 in the ``Interested Party Comments'' section of this notice.) For sales of both classes or kinds of merchandise, we also deducted indirect selling expenses (including pre-sale warehousing costs incurred in the United States and selling expenses incurred in France on the merchandise exported to the United States for further manufacturing). U.S. indirect selling expenses were recalculated to exclude certain administrative expenses which were determined to be more appropriately classified as general and administrative (G&A) expenses. (See Comment 18 in the ``Interested Party Comments'' section of this notice.) We also deducted imputed inventory carrying costs for the period between production of the clinker/flux in France and shipment of the finished cement/processed flux to the customer in the United States. For sales of CA cement, we recalculated inventory carrying costs for the period between production of the clinker in France and the start of production of the finished cement in the United States, using the verified weighted-average short-term interest rate in France for the POI. (See Comment 4 in the ``Interested Party Comments'' section of this notice.) For sales of CA cement, we also deducted rebates, discounts and warranty expenses, where applicable. For sales of CA flux, we also deducted commissions, where appropriate. In addition, for both classes or kinds of merchandise, we made deductions, where appropriate, for all value added in the United States pursuant to section 772(e)(3) of the Act. The value added consists of the costs associated with further manufacturing the imported products, including a proportional amount of any profit related to further manufacturing. We calculated profit attributable to further manufacturing in the United States by deducting from the sales price all applicable costs incurred in producing the further manufactured products. We then allocated the total profit proportionally to all components of cost. We deducted only the profit attributable to the value added in the United States. In determining the costs incurred to produce the further manufactured products, we included: (1) The costs of manufacture (COM); (2) movement and packing expenses; (3) selling, general and administrative (SG&A) expenses; and (4) interest expenses. For both classes or kinds of merchandise, we relied on the submitted further manufacturing costs except in certain instances where the costs were not appropriately quantified or valued. We reclassified certain administrative expenses which were reported as indirect selling expenses as G&A expenses. We also recalculated financial expenses to exclude the claimed adjustment for short-term interest income. (See Comments 18 and 19, respectively, in the ``Interested Party Comments'' section of this notice.) For CA flux sales, we made an adjustment to U.S. price for the value-added tax (VAT) paid on the comparison sale in France. In Federal-Mogul Corporation and The Torrington Company v. United States, Slip Op. 93-194 (CIT October 7, 1993), the Court of International Trade (CIT) rejected our revised implementation of the Act's instructions on taxes and prohibited us from applying a purely tax neutral margin calculation methodology. Accordingly, we have again changed our practice, as instructed by the CIT, and adjusted USP for tax by multiplying the home market tax rate by the U.S. price at the point in the chain of commerce of the U.S. merchandise that is analogous to the point in the home market chain of commerce at which the foreign government applies the home market consumption tax. In this investigation, the tax levied on the subject merchandise in the home market is 18.6 percent. We calculated the appropriate tax adjustment to be 18.6 percent of USP net of adjustments reflected on the invoice at the time of sale (which, in this case, is the point in the chain of commerce of the U.S. merchandise that is analogous to the point in the home market chain of commerce at which the foreign government applies the home market consumption tax), and added this amount to the USP. We also calculated the amount of the tax adjustment that was due solely to the inclusion of price deductions in the original tax base (i.e., 18.6 percent of the sum of any adjustments, expenses and charges that were deducted from the tax base). We deducted this amount from the net USP after all other additions and deductions had been made. By making this additional tax adjustment, we avoid a distortion that would cause the creation of a dumping margin even when pre-tax dumping is zero. Foreign Market Value For CA cement and cement clinker, we based FMV on the CV data submitted for cement clinker because cement clinker was the only such or similar product within the cement and clinker class or kind which was imported into the United States during the POI, and there were no sales of this product in the home market or to unrelated customers in third countries during the POI. (See the ``Such or Similar Comparisons'' section of this notice.) For CA flux, we based FMV on home market sales prices because we found the home market to be viable for flux sales during the POI, and because the difference-in- merchandise adjustments between the flux products sold to the United States and those sold in the home market do not exceed 20 percent. (See Comment 12 in the ``Interested Party Comment'' sections of this notice.) CV-to-Price Comparisons We calculated CV for cement clinker based on the sum of Lafarge's cost of materials, fabrication, general expenses, U.S. packing costs and profit. We relied on the submitted CV information, except in the following instances where the costs were not appropriately quantified or valued: (1) We adjusted material costs for minor errors presented at verification. We also increased material costs for foreign exchange losses incurred when reporting raw materials. (See Comment 21 in the ``Interested Party Comments'' section of this notice.) (2) We adjusted variable overhead to correct minor errors found at verification. (3) We did not allow the annualization of fixed costs as we had done in the preliminary determination because respondent incorrectly reported labor costs as part of annualized fixed costs, rather than as variable costs for the POI in accordance with the Department's instructions; and because respondent failed to provide an itemization of fixed and variable costs that would allow us to appropriately reclassify labor costs from annualized fixed costs to POI variable costs. As BIA, we used the fixed costs, including the labor costs, incurred during the POI. (See Comment 22 in the ``Interested Party Comments'' section of this notice.) (4) We revised the COM reported to include an amount for depreciation on research and development (R&D) assets which was not originally reported. (See Comment 20 in the ``Interested Party Comments'' section of this notice.) (5) We recalculated financial expenses to exclude the claimed adjustment for short-term interest income. (See Comment 19 in the ``Interested Party Comments'' section of this notice.) (6) We also recalculated home market selling expenses on a class or kind basis. (See Comment 6 in the ``Interested Party Comments'' section of this notice.) In accordance with section 773(e)(1)(B) (i) and (ii) of the Act we included in CV the recalculated general expenses since these expenses were greater than the statutory minimum of ten percent of the COM. We revised respondent's reported profit calculation to reflect verification findings. (See Comment 8 in the ``Interested Party Comments'' section of this notice.) Since this amount was greater than the statutory minimum of eight percent of the sum of the COM and general expenses, we used the recalculated profit for CV purposes. We deducted from CV home market direct selling expenses. We also deducted home market indirect selling expenses capped by the amount of U.S. indirect selling expenses attributable to the cement clinker imported into the United States and further manufactured into finished cement, in accordance with 19 CFR 353.56(b)(2). Price-to-Price Comparisons For sales of flux, we calculated FMV based on packed, ex-factory or delivered prices to unrelated home market customers. We excluded from our analysis those sales made to home market customers on a test basis because they were in unusually small quantities, rather than in the usual commercial quantities, in accordance with 19 CFR 353.46(a)(1). We also excluded from our analysis those sales to a home market customer which were destined for a third country market. (See Comment 16 in the ``Interested Party Comments'' section of this notice.) We made deductions, where appropriate, for rebates. We also deducted home market packing costs which were recalculated to exclude the costs of bagging and G&A expenses. (See Comments 11 and 12 in the ``Interested Party Comments'' section of this notice.) Pursuant to section 773(a)(4)(B) and 19 CFR 353.56(a)(2), we also deducted direct selling expenses including bagging costs, credit, technical service expenses and product liability premiums. (See Comments 11, 13 and 15 in the ``Interested Party Comments'' section of this notice.) We recalculated credit expenses to exclude VAT from the gross unit prices and to correct minor clerical errors found at verification with respect to the credit periods reported for certain transactions. (See Comment 14 in the ``Interested Party Comments'' section of this notice.) We revised respondent's reported technical service expense calculation, treating the verified travel expense portion of the calculation as a direct expense and the verified salary portion as an indirect selling expense. (See Comment 13 in the ``Interested Party Comments'' section of this notice.) In accordance with the decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, Slip Op. 93-1239 (Fed. Cir., January 5, 1994), we made a circumstance-of-sale adjustment for post-sale home market movement expenses, namely inland freight and loading charges. We also deducted from FMV home market indirect selling expenses, including inventory carrying costs. The deduction for home market indirect selling expenses was capped by the sum of U.S. indirect selling expenses and U.S. commissions attributable to the flux imported into the United States and further manufactured, in accordance with 19 CFR 353.56(b) (1) and (2). Where there was no U.S. commission applicable to a particular U.S. flux sale, we offset the indirect selling expenses in the United States with a corresponding deduction for indirect selling expenses in the home market, capped by the total indirect selling expenses incurred on the U.S. sale in the manner described above. We included in FMV the amount of the VAT collected in the home market. We also calculated the amount of the tax that was due solely to the inclusion of price deductions in the original tax base (i.e., 18.6 percent of the sum of any adjustments, expenses, charges and offsets that were deducted from the tax base). We deducted this amount after all other additions and deductions had been made. By making this additional tax adjustment, we avoid a distortion that would cause the creation of a dumping margin even when pre-tax dumping is zero. We also made an adjustment for physical differences in the merchandise, in accordance with 19 CFR 353.57. We revised the reported difmer amount to reflect only the verified variable COM, excluding the reported costs of bagging associated with the home market products, and associated G&A expenses and profit. (See Comments 11 and 12 in the ``Interested Party Comments'' section of this notice.) Verification As provided in section 776(b) of the Act, we conducted verification of the information provided by Lafarge by using standard verification procedures, including the examination of relevant sales, cost and financial records, and selection of original source documentation. 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. Interested Party Comments Comment 1 Petitioner argues that certain unreported U.S. CA cement sales alleged by Lafarge to have been made under graduated requirements contracts effective prior to the POI should be included in the Department's final analysis. Petitioner notes that at verification respondent could not provide the Department with any contemporaneous documentation regarding the acceptance of the essential terms of sale by the customers associated with these contracts. Petitioner contends that, despite the fact that respondent believes that these shipments were based on contracts entered into before the POI, the Department could not verify the existence or terms of these alleged contracts. Petitioner also maintains that respondent refused to provide the relevant data requested by the Department with regard to this issue. Petitioner further argues that respondent never demonstrated that the alleged contracts governing these CA cement shipments were made prior to the POI. According to petitioner, the alleged contracts cover time periods much earlier than the POI and in fact constitute unilateral sales proposals made by Lafarge which are not evidence of a binding commitment between the parties as to quantity and price. According to petitioner, Lafarge also has not demonstrated that these shipments were not in excess of the quantity requirements stipulated in the alleged contracts. Petitioner believes that, as BIA, the Department should apply a rate of 198.10 percent, the highest margin alleged in the petition, to account for these sales. Respondent maintains that for these CA cement sales the Department should use the date of the customers' acceptance of the graduated requirements pricing proposals as the date of sale and exclude these sales from its final analysis. Respondent believes its pricing proposals were accepted by the customers when the customers placed initial purchase orders at the prices specified in the proposals. At the time these orders were placed, respondent claims the parties had already orally reached an agreement with LCA regarding the percentage of their requirements they were committed to purchase from LCA in order to qualify for each price level specified in the proposals; the orders provided confirmation of each customer's prior acceptance of LCA's pricing proposal. Because these initial orders were dated prior to the POI, respondent argues that the date of sale for the shipments made during the POI pursuant to these proposals also fell outside the POI and, therefore, these shipments were properly not reported to the Department. Respondent notes, however, that, should the Department disagree with its reasoning and determine that the shipments pursuant to graduated requirements contracts should be included in its analysis, there is no basis for the Department to make adverse inferences or use ``punitive'' BIA. Respondent asserts that it fully disclosed the nature of its graduated requirements contracts to the Department from the start of this case, and it had no reason to believe that it should provide further information about those shipments in the form of a sales listing. Respondent further notes that it provided a summary of the quantity and value of the shipments made during the POI under the graduated requirements contracts in its December 29, 1993, supplemental questionnaire response, and that, at verification, Department verifiers retained as an exhibit a listing of all the POI invoices generated under these contracts with related pricing and other sales data. Respondent argues that, if the Department decides to include these sales in the final determination, the sales data examined at verification should be used to allow proper analysis of these sales. DOC Position We agree with petitioner in part. Despite several requests for information in our questionnaires, Lafarge did not provide documentation regarding customers' acceptance of the graduated requirements pricing proposals. For example, Lafarge did not provide any of the ``initial'' orders allegedly placed pursuant to these graduated requirements pricing proposals. In addition, respondent did not offer any indication of the date on which these ``initial'' orders were placed for purposes of establishing date of sale for these sales. Furthermore, respondent could not provide at verification any contemporaneous documentation or other sufficient evidence regarding acceptance of the terms of sale by customers associated with the subject graduated requirements contracts or indicating a ``meeting of the minds'' between the parties with respect to price and quantity, despite the Department's repeated requests for such evidence. The POI invoices that we examined at verification that were allegedly generated pursuant to the pricing proposals and ``initial'' orders gave no indication of association with the pricing proposals or ``initial'' orders, and respondent provided no other documentation that would establish such a connection. Lafarge submitted in its December 29, 1993, response sample pricing proposals associated with the graduated requirements customers in question. At verification, we were able to examine in detail only one of those pricing proposals. This proposal, dated January 9, 1991, was specifically for 1991 (all the prices and discounts mentioned referenced 1991 only) and was silent on the effective period of the terms it quoted. We also reviewed a letter that was dated January 20, 1994, the last day of verification, and was faxed to the respondent on that day by the customer in question. This letter attempted to show that the January 9, 1991, pricing proposal constituted the date of the agreement regarding the essential terms of sale for all sales made to that customer after that date. This letter also discussed renewal of the pricing arrangement. However, not only was this letter unclear as to exactly what kind of agreement the parties had reached pursuant to the proposal, but it also did not indicate when renewal was discussed. In accordance with the Department's practice, the date of any such renewal would constitute a new date of sale. Also in accordance with our practice, we required some form of documentation attesting to the date of renewal, yet no documentation apart from the faxed letter was provided. Lafarge was also unable to provide any such documentation for the other customers in question. Without some documentary evidence of a renewal prior to the POI, we cannot assume that the terms of the January 1991 pricing proposal were in effect during the POI. See Final Determination of Sales at Less Than Fair Value: Certain Forged Steel Crankshafts from the Federal Republic of Germany, 52 FR 28170, 28172 (July 28, 1987) (Crankshafts from the FRG); and Final Determination of Sales at Less Than Fair Value: Gray Portland Cement and Clinker from Mexico, 55 FR 29244, 29248 (July 18, 1990) (Gray Portland Cement from Mexico). Because we have no such evidence, we have determined that the dates of sale for the shipments at issue are within the POI. Accordingly, we have included them in our final dumping analysis. We do not think, however, that the pricing information contained in the invoice listing referred to by respondent is appropriate for use in our dumping analysis. This data was only submitted at verification to support the reconciliation of Lafarge's reported POI sales with its financial statements (information previously submitted in its responses). For purposes of making CV-to- price comparisons in our dumping analysis, this listing constitutes new information under 19 CFR 353.31(a)(i), and was therefore not timely submitted. It is not the Department's practice to accept new information at verification, because it leaves no opportunity for petitioners to analyze the sales reporting and provide deficiency questions, and no opportunity for petitioners to analyze and comment on these sales. In addressing this issue previously, we have stated: The untimely submission of key information * * * precluded the Department from conducting a reasonable and thorough analysis of this information prior to the verification, just as petitioners were unable to comment on the new [information] * * * The purpose of verification is to establish the accuracy of a response rather than to reconstruct the information to fit the requirements of the Department. Final Result of Sales at Less Than Fair Value; Light-Walled Welded Rectangular Carbon Steel Tubing from Argentina, 54 FR 13913 (April 6, 1989); Final Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products and Cold-Rolled Carbon Steel Flat Products from the Netherlands, 58 FR 37199, 37203 (July 9, 1993). Even if this listing had been submitted seven days prior to verification, in accordance with 19 CFR 353.31(a)(i), it did not contain sufficient data for purposes of dumping analysis. Therefore, because we did not have complete sales information on the record to properly analyze these sales, we used BIA. However, we do not think that use of the petition rate as BIA for these sales, as suggested by petitioner, is warranted. In this case, we are using partial BIA because Lafarge has provided responses to our questionnaires. When we resort to partial BIA, it is our practice to use the highest non-aberrational margin based on respondent's reported sales. This is an adverse figure, yet is based on the respondent's calculated margins. Therefore, we have used as BIA for these sales the highest, non-aberrational margin calculated for any of respondent's reported U.S. sales of cement. Comment 2 Petitioner contends that certain reported U.S. cement sales alleged to have been made under an exclusive supply contract dated outside the POI should be included in the Department's analysis. Petitioner argues that the Department was unable to verify that these sales were in fact made pursuant to a Master Agreement that Lafarge claims was an exclusive supply contract. Accordingly, petitioner maintains that respondent failed verification with respect to these sales. Furthermore, petitioner contends that, even if the Department had been able to verify these sales, respondent never had an exclusive supply contract with this particular customer. Petitioner asserts that the Master Agreement is neither ``exclusive'' nor a ``contract.'' Therefore, petitioner argues that the Department should determine that the appropriate date of sale for these particular sales is the date of invoice, which is within the POI, and the Department should include these sales in its dumping calculation. Respondent maintains that the Department should consider the date of the Master Agreement as the date of sale for the subject sales. Respondent argues that the blanket purchase orders issued by the customer prior to the POI indicates the customer's commitment to purchase its requirements from the respondent for specific products at the specific prices set by the Master Agreement. DOC Position We agree with petitioner. In our deficiency questionnaire of December 14, 1993, the Department specifically asked the respondent to support its assertion regarding the ``exclusivity'' of the Master Agreement. Respondent, in its December 29, 1993, response, could neither demonstrate that the Master Agreement was ``exclusive,'' nor what quantity of the subject merchandise the respondent was agreeing to sell. Rather, Lafarge merely stated that the customer purchased all its requirements for certain cement products from it and that the ``volume commitment'' mentioned in the Master Agreement had been agreed to beforehand. Since we have no documentation demonstrating that a ``meeting of the minds'' regarding both quantity and price occurred before the POI, we cannot assume, based on respondent's word, that the Master Agreement is a requirements contract for purposes of establishing date of sale. (See Crankshafts from the FRG and Gray Portland Cement from Mexico.) Accordingly, we have determined the appropriate date of sale for these particular sales to be the date of purchase order, and we have included them in our final dumping calculations. Comment 3 Petitioner argues that the Department should reverse its preliminary determination that CA cement and CA cement clinker constitute two such or similar categories. According to petitioner, the Department's determination was based on the incorrect premises that: (1) CA cement is not like CA cement clinker in the purposes for which used, and (2) in all past cases involving intermediate and finished products the Department has determined that there should be two such or similar categories. Petitioner contends that there is no question that CA cement and CA cement clinker constitute only one such or similar category pursuant to section 1677(16)(C) of the antidumping statute. According to petitioner, CA cement clinker is like the CA cement it is used to produce, and the difference-in-merchandise adjustment that would be required to make fair value comparisons between home market sales of CA cement and U.S. sales of clinker would be well below the Department's 20 percent difmer guideline. Petitioner further argues that because there is no data on the record for home market sales of CA cement to calculate FMV, the Department should use BIA to determine a margin for Lafarge's sales of both CA cement and CA cement clinker. Petitioner believes that, as BIA, the Department should use 41.23 percent, which is the lowest margin alleged in the petition. Respondent does not believe that there is any reason for the Department to revisit its decision that CA cement and CA cement clinker are different such or similar categories at this late stage in the investigation. Respondent argues that it would be unfair for the Department to penalize it for failing to report information that the Department decided not to request. Furthermore, respondent contends that the statute does not allow the Department to use BIA when the information at issue was never requested. DOC Position We agree with respondent. It was decided early on in these investigations that CA cement and cement clinker constituted two such or similar categories of merchandise in accordance with the definition of similar merchandise under section 771(16)(B)(ii) and (C)(ii) of the Act, which states that the component materials and uses of the products must be ``like.'' (See June 15, 1993, Memorandum from Richard W. Moreland to Barbara R. Stafford Re Such or Similar Categories and attached Memorandum from Stafford to Moreland). In this case, while cement and clinker may be made of similar materials, they are not used for the same purposes. Clinker is used to make cement, and cement is used to bind things together or to create some structure or form. Clinker requires further processing to be like cement in the purposes for which it is used. For these reasons we have held cement and clinker to constitute different such or similar merchandise categories in this and past cement cases. Moreover, contrary to petitioner's assertion, the component materials and uses of products within the class or kind of merchandise subject to investigation are the determinants in establishing categories of such or similar merchandise: The 20 percent difmer rule is not considered by the Department in establishing such or similar categories. Comment 4 Respondent maintains that in the preliminary determination the Department incorrectly deducted from the USP as an indirect selling expense, inventory carrying costs (ICC) based on an inventory period including the time between clinker production in France and production of the finished cement in the United States. Respondent claims that it did not sell clinker to an unrelated party in the United States, but rather to its U.S. subsidiary for further processing into cement. Therefore, the clinker in this case is work-in-process inventory, and the period between the production of the intermediate clinker product and the completion of the finished cement product is part of the production period. Respondent maintains that the Department ordinarily imputes an ICC for finished goods inventory and almost never imputes ICC on work-in-process inventory, except for large, made-to-order goods that are produced as discrete projects. To support its arguments, respondent cites among other cases the 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, March 23, 1993) (DRAMs from Korea) and Color Television Receivers from the Republic of Korea; Final Results of Antidumping Duty Administrative Review (55 FR 26,255, June 27, 1990) (CTVs from Korea). Furthermore, citing Final Determination of Sales at Less Than Fair Value: Offshore Platform Jackets and Piles from Japan (51 FR 11788, April 7, 1986) (OPJPs from Japan) and the Final Determination of Sales at Less Than Fair Value: Mechanical Transfer Presses from Japan (55 FR 335, January 4, 1990) (MTPs from Japan), respondent maintains that in the rare instances in which the Department has imputed ICC on work-in-process inventory, it classifies those costs as part of the COM, not as selling expenses. Petitioner contends that ICC must be calculated to include the time CA cement clinker is produced in France until the time it is further manufactured into cement in the United States. Petitioner argues that both CA clinker and cement will be subject to the scope of any order that may be issued in this case and, therefore, CA clinker cannot be considered work-in-process, as respondent suggests. DOC Position We agree with petitioner. The Department's general practice in all further manufacturing cases has been to begin the inventory carrying period from the time that the product comes off of the production line. (See e.g., Final Determination of Sales at Less Than Fair Value: Stainless Steel Wire Rods from France (58 FR 68865, December 29, 1993) (Wire Rods From France). In this case, we are calculating ICC for the imported product, which is the clinker that is further manufactured into finished cement. We distinguish this case from that of CTVs from Korea, where the product imported into the United States was the finished merchandise; and OPJPs from Japan and MTPs from Japan, where the products were large and made-to-order, unlike the subject merchandise in the instant investigation; and from DRAMs from Korea, where we made no adjustment regarding the imported merchandise only where it merely constituted parts of larger and considerably more complicated modules. Therefore, we have imputed ICC in this case inclusive of the period between production of the clinker in France and shipment to the first unrelated customer in the United States, and have adjusted USP accordingly. Moreover, for the portion of the ICC costs which reflect the period between production of the clinker in France and the start of production of the finished cement in the United States, we recalculated the reported ICC using the short-term interest rate prevailing in France during the POI. Comment 5 Respondent argues that the Department should use the U.S. warehousing costs included in the reported U.S. indirect selling expenses for CA cement sales. Contrary to what is suggested in the sales verification report, Lafarge maintains that the reported pre-sale warehousing costs for one warehouse are consistent with the prices shown in the warehousing contract examined at verification, and the pre-sale warehousing costs included in the reported indirect selling expenses were based on the actual costs incurred and paid by Lafarge, not on the per ton cost stated in the contract. DOC Position We agree. Upon further examination of the documentation reviewed at verification, we noted that the verified per unit U.S. indirect selling expenses, reported inclusive of pre-sale warehousing costs, were based on actual costs incurred. Thus, we have deducted from USP the reported pre-sale warehousing costs as indirect selling expenses. Comment 6 Petitioner maintains that indirect selling expenses included in the CV of CA clinker should be recalculated to include indirect selling expenses allocated to CA cement as shown in Exhibit 6 of petitioner's case brief because clinker is of the same class or kind of merchandise as cement. Respondent argues against such a recalculation because the channels of distribution and sales process for CA clinker differ substantially from those of CA cement. Because the CV of clinker is intended to provide a surrogate for a home market sales price for clinker based on the costs and expenses that would be incurred in producing and selling clinker in the home market, Lafarge appropriately included in CV only the selling expenses that would be incurred in selling clinker. DOC Position We disagree with respondent. Section 773(e)(1)(B) of the Act provides that CV should include, among other things, ``an amount for general expenses * * * equal to that usually reflected in sales of merchandise of the same general class or kind as the merchandise under consideration.'' We have recalculated indirect selling expenses to include home market indirect selling expenses for cement using verified information on the record. We consider cement indirect selling expenses to be representative of selling expenses of the general class or kind of merchandise, i.e., all CA products sold within the home market country. Comment 7 Petitioner asserts that the Department should make an adjustment to the G&A expense reported in the CV for clinker to include the amortization of patents and trademarks which respondent had not included in the reported G&A amount. Respondent argues that the amortization of patents and trademarks was included in the reported G&A expenses. DOC Position We agree with respondent. Upon review of the verification exhibits we found that the reported depreciation costs included the amortization of patents and trademarks. (See Exhibit 14 and Cost Verification Report at 12). Comment 8 Petitioner argues that, for purposes of calculating the CV for clinker in the final determination, the Department should use the BIA profit ratio that the Department calculated for the preliminary determination. Petitioner does not believe the Department should use the reported profit ratio because this calculation includes data on sales of non-subject merchandise. Petitioner argues that this profit ratio expands beyond the CA cement and cement clinker class or kind and, therefore, should not be used. Petitioner further maintains that in past cases the Department has consistently rejected the use of profit based on merchandise other than of the class or kind subject to investigation. Respondent contends that the antidumping statute does not require the Department to use the profit on the ``class or kind'' of merchandise in its CV calculations. Rather, respondent states that the statute directs the Department to use the profit rate on the ``general class or kind,'' indicating an intent that the Department have flexibility in choosing the appropriate profit rate, and not be limited solely to the profit on the merchandise comprising the ``class or kind.'' DOC Position We agree with respondent. In accordance with section 773(e)(1)(B), we have used the verified profit rate for all CA products, including the subject merchandise, sold in France because it represents the profit experience on sales of the general class or kind of merchandise in the home market. Comment 9 Petitioner contends that certain reported U.S. flux sales made under an expired master order allegedly renewed prior to the POI should be included in the Department's analysis as sales made during the POI. Petitioner argues that the master order expired prior to the POI and was not renewed prior to the POI as respondent claims. Despite respondent's claim that prior to the POI the parties ``evidenced a clear intent to continue the contract under the terms specified in the expired master order'' but failed to renew the contract due to internal delays, there is no evidence on the record to support respondent's position. Petitioner argues that implicit renewal of the contract is not legally binding (i.e., there was no binding agreement between the parties as to any essential terms of sale at the time shipments of CA flux were made to this customer during the POI). According to petitioner, any shipments made to this customer during the POI were individual spot sales with dates of sale established by the date of the invoices issued for particular shipments. Respondent argues that the Department should use the date of the master order as the date of sale for sales made pursuant to this contract (which it claims was renewed prior to the POI), and exclude them from the dumping analysis in the final determination. Although the original contract expired prior to the POI, Lafarge claims that the customer continued to purchase from LCA after that date in accordance with the sales terms set in the original contract. Moreover, respondent maintains that the orders placed by the customer during the POI continued to reference the purchase order numbers from the expired master order. According to respondent, the customer indicated its intent to re-issue the master order, but had not yet done so because of internal delays. Based on these facts, respondent maintains that the shipments to this customer during the POI continued to be governed by the terms of the original master order even if there was no formal written agreement to that effect. DOC Position We agree with petitioner. The effective date of the subject master order was prior to the POI. At verification, LCA could not provide any documentation indicating renewal of the subject master order prior to the POI. Without some documentary evidence of a renewal of the master order prior to the POI, we cannot assume, based on respondent's word, that the essential terms enumerated in the original master order (which expired three months prior to the POI) governed the subject flux shipments made during the POI. (See Crankshafts from the FRG and Gray Portland Cement from Mexico.) Therefore, we have included these sales in the final determination, using the verified date of purchase order (or date of invoice where the date of purchase order was unavailable) as the date of sale. Comment 10 Respondent argues that certain reported flux shipments made in October 1992 pursuant to a contract claimed to be effective prior to the POI, but the price terms of which were modified in November 1992, should not be included in our final dumping analysis. Respondent claims that the date of the November 1992 price modification notice should be used as the date of sale for subsequent sales made to this customer during the POI. Therefore, respondent asserts that all shipments made after the November price modification should be included in the Department's final dumping calculations, while those POI shipments made prior to the November price modification should be excluded from the final determination. DOC Position We agree. Respondent reported all sales/shipments of flux to the customer in question pursuant to purchase orders issued during the POI, because (1) it was unable to locate the original master order for that customer allegedly dated prior to the POI and (2) the original price terms changed in November 1992. At verification, although we were unable to locate the original master agreement or blanket purchase order for the subject customer, we did find a ``change order'' dated November 2, 1992, which stipulated a change in price terms effective on that date. We also examined invoices issued to this customer shortly before and after the November 2 change order date. Based on our examination of these invoices, we found that the invoices confirmed LCA's acceptance of the November 2 change order, because the price per ton LCA charged the customer changed after that date. In accordance with these verification findings, we have included in our final dumping analysis only those shipments made after the November 1992 price modification, using the November 2, 1992, change order date as the date of sale for these shipments. Comment 11 Respondent argues that CV should be the basis for FMV because including home market bagging costs in variable COM would cause the difmer adjustment to exceed 20 percent. Respondent states that the bags used in the home market are not merely packing for shipment, but rather consumer required packaging; therefore, their costs must be treated as part of COM. Respondent argues that it would be contrary to the Department's past practice to classify these bags as packing ``incidental'' to the shipment of the merchandise. To support its arguments, respondent cites the FMV Calculations performed pursuant to the 1992 Suspension Agreement in the antidumping duty investigation on gray portland cement and clinker from Venezuela; Final Determination of Sales At Less Than Fair Value: Porcelain-on-Steel Cooking Ware from Taiwan (51 FR 36425, October 10, 1986) (Porcelain-on-Steel Cooking Ware from Taiwan); Final Determination of Sales At Less Than Fair Value: Certain Stainless Steel Cooking Ware from the Republic of Korea (51 FR 42873, November 26, 1986) (Stainless Steel Cooking Ware from Korea); and Washington Red Raspberry Commission v. United States (859 F.2nd. 898, 905 (Fed. Cir. 1988)). Furthermore, respondent argues that the bags used for home market packing have a number of special features unrelated to shipment: (1) they have built-in handles that facilitate use of a crane to lift the bag into the ladle or furnace of a steel mill; (2) they are constructed of non-permeable polymer material that protects the flux from contaminants in the steel mill environment and can vaporize in the steel melt without toxic emissions or undesirable residues; and (3) they come in varying sizes which allows the customer to control the amount of flux introduced into the steel melt. Respondent claims that its home market customers specifically order the bagged product, and they willingly pay more for it because they perceive that it provides additional value. In addition, respondent maintains that, because the bags are part of the merchandise purchased by home market customers and their costs are significant relative to the overall manufacturing costs of the product, it must set prices taking into account the SG&A and profit attributable to the bagging which are also significant. However, because the Department does not normally include SG&A and profit in packing or difmer adjustments, respondent contends that the Department's comparison of prices for bagged flux sold in the home market and bulk flux exported to the United States will not account for these factors and will therefore be distortive. Therefore, respondent argues that CV should be used instead of home market prices for purposes of calculating FMV for flux sales. Petitioner argues that bagging costs associated with home market flux sales should not be included in the calculation of the difmer adjustment because they represent packing costs related to shipment of the merchandise to the home market customer, rather than variable COM. Petitioner contends that such an inclusion is contrary to Department policy which states that the difmer adjustment is limited only to costs directly attributable to differences in the physical characteristics of the merchandise and that in this case all physical differences in the CA flux occur before the bagging/packing stage. Petitioner further claims that, contrary to respondent's assertion, the bagging/packing at issue is not consumer packing which serves an advertising, promotional and educational function at the point of sale to the retail end-user. Rather, using bags is another way of handling and shipping flux in bulk quantities. To buttress its argument, petitioner cites Final Determination of Sales at Less Than Fair Value: Pads for Woodwind Instrument Keys from Italy (58 FR 42295, August 9, 1993) (Pads from Italy), Final Determination of Sales at Less Than Fair Value: Industrial Phosphoric Acid from Israel (52 FR 25440, July 7, 1987) (Phosphoric Acid from Israel); and Preliminary Determination of Sales at Less Than Fair Value: Gray Portland Cement and Clinker from Venezuela (56 FR 56390, November 4, 1991) (Gray Portland Cement and Clinker from Venezuela). Petitioner claims that both respondent's CA flux marketing expert in France and petitioner's CA flux marketing expert in the United States agree that when a customer does not have a dedicated bulk storage silo system, the CA flux must be shipped to that customer in bags. Petitioner also contends that respondent's claims that the design of its bags adds value to the customer are not relevant to the determination of whether the bagging costs can be deducted as a packing expense. Petitioner further argues that respondent's cite to the suspension agreement concerning Gray Portland Cement and Clinker from Venezuela where the Department treated bagging costs as part of COM for purposes of calculating an FMV at or over which a Venezuelan cement producer/ exporter would have to sell in the United States is not relevant because calculation of a difmer adjustment was not at issue in that investigation. Petitioner points out that in the Venezuelan cement investigation the Department made fair value comparisons of bulk cement sold to the United States with cement sold in Venezuela in 50 to 100 pound sacks, but did not make a difmer adjustment for packing/bagging. Instead, it adjusted for home market bagging costs by deducting them from FMV and adding the U.S. packing costs to FMV pursuant to its normal practice. In addition, petitioner notes that the normal packing adjustment in this case would include all fixed costs as well as variable costs of bagging/packing and thus would not distort fair value comparisons as would the inclusion of only variable bagging/packing costs in the difmer adjustment, as respondent suggests. According to petitioner, any claimed price distortions attributable to SG&A and profit associated with bagging/packing will be minimal because Lafarge subcontracts these services (i.e., the fees it pays to subcontractors would cover fixed costs such as G&A expenses, and any selling costs would be included in normal circumstance-of-sale adjustments). Petitioner concludes that, even if packing costs are included in the difmer adjustment, the Department should still use the home market sales data submitted by Lafarge after the preliminary determination rather than CV for fair value comparisons because the U.S. and home market flux products sold during the POI are comparable and the 20 percent difmer guideline is not an inflexible rule. DOC Position We agree with petitioner in part. At verification, respondent explained that flux is placed in special bags pursuant to customer orders because home market customers do not have the appropriate facilities for handling and measuring flux for use in their steel production process. Bagged flux is not sold from inventory. Flux can be sold in bulk form without the specialty bags, and is sold as such to the United States and the majority of third country markets. The fact that customers (in the home market or otherwise) have the choice to buy the flux without the special bagging strongly suggests that the bagging is not an integral part of the product covered by the scope of the investigation and, therefore, should not be considered part of variable COM and included in the difmer adjustment. This is in contrast to the situation in Washington Red Raspberry Commission v. United States, where the subject merchandise [raspberries] would be unrecognizable and completely unusable without the containers in which it was sold. Characterizing the bagging costs as variable COM as suggested by respondent is not justifiable in this case. Respondent has not been able to explain to our satisfaction how bagging costs contribute to differences in the physical characteristics of the merchandise, as directed by 19 CFR 353.57. (See also the Department's July 29, 1992 Policy Bulletin (No. 92.2), which states that any difmer adjustment must be tied to such differences.) The 1986 less than fair value determinations cited by respondent are inapposite. Stainless Steel Cooking Ware from Korea reflected our prior practice regarding the inclusion of difference in consumer packing in making difmer adjustments, which was changed in the 1992 Policy Bulletin cited above. Likewise, in Porcelain-on-Steel Cookware from Taiwan, we merely said that consumer packaging was not a cost incidental to shipment. We did not say that it constituted an integral physical part of the merchandise under investigation. As noted above, in difmer analysis, we focus only on the differences in physical characteristics of the merchandise. The merchandise in this instance is CA flux. Bagging does not change the physical characteristics of flux and, therefore, it was not included in the difmer calculation. In the FMV Calculations performed pursuant to the Suspension Agreement in Venezuelan cement, we were not examining the differences in the physical characteristics per se of the subject merchandise. Therefore, respondent's reliance on Venezuelan cement is inapposite. We also do not consider bagging costs as representative of normal packing costs. Rather, it appears to us that Lafarge could not sell the flux to the home market customers without incurring these special bagging costs. While we agree with petitioner that Pads from Italy is applicable here (in that difmer adjustments are based on the variable cost of manufacture only), petitioner's reliance on Phosphoric Acid from Israel is misplaced, because the bagging for flux is clearly distinguishable from the drums used for packing (and accounted for in packing costs) in Phosphoric Acid from Israel. Therefore, we do not consider bagging in this case to be a pre-shipment expense, but rather a condition of sale. For these reasons, we have treated these bagging costs as direct selling expenses, rather than as part of variable COM or packing for purposes of the final determination. (See March 9, 1994, Memorandum from V. Irene Darzenta to Richard W. Moreland Re. Treatment of Bagging Costs Associated with Home Market Sales of Flux.) Because the difmer that resulted from exclusion of these costs from variable COM was less than 20 percent, we used the reported, verified home market flux sales as the basis for FMV and deducted bagging costs as direct selling expenses from FMV accordingly. Comment 12 Petitioner states that the difmer adjustment is also incorrect because respondent included fixed costs (i.e., G&A) and profit in its calculation. Petitioner asserts that if the Department includes bagging in the difmer adjustment, it should recalculate the amount of the difmer to include only variable costs. Finally, petitioner maintains that the reported packing expenses, inclusive of bagging costs, should be adjusted to avoid double- counting G&A expenses. DOC Position For the reasons stated in the DOC Position to Comment 11 above and in accordance with the Department's normal methodology, we have recalculated the difmer adjustment to exclude bagging costs and include only variable COM. However, upon further review of the documentation examined at verification, we note that the G&A expenses included in the reported packing expenses were not double-counted. Notwithstanding this fact, we have also excluded from the packing adjustment the reported G&A expenses. Comment 13 Petitioner believes that the claimed adjustment for home market technical service expenses should be denied or reduced. Petitioner maintains that the Department should deny the claimed direct adjustment for home market technical service expenses, because these expenses cannot be directly tied to specific sales made during the POI. According to petitioner, services such as those provided by respondent for purposes of determining new uses for a product in future production aimed at increasing future sales levels constitute goodwill or sales promotion, and as such are not directly related to the sales under consideration. Petitioner also argues that technical service expenses attributable to test sales made during 1992 that are considered to be outside of the ordinary course of trade should be excluded from the adjustment; however, because the Department did not verify data that would permit their exclusion, the Department should deny the adjustment in toto. Nonetheless, if the Department determines that an adjustment is warranted, petitioner urges that it should only deduct the reported travel expenses and not the reported salary expenses comprising respondent's technical service expense calculation because salaries are considered fixed costs which are incurred whether or not the services are provided. Respondent contends that technical service expenses should be treated as direct selling expenses in accordance with past Department and court decisions. Respondent notes that the technical services performed by LFI in France consist of visits to customers to review and help analyze the customers' test data and to work with the customer to make more efficient use of flux in its steel operations. Lafarge emphasizes that the customer needs to know from the time he makes his purchase that LFI's technical staff will be available to provide this analysis for him on an on-going basis. According to respondent, these types of services are not provided by LCA in the United States because LCA's U.S. flux customers perform this technical service using their own personnel. Respondent argues further that an adjustment for technical service salaries is appropriate where the technical service personnel provide functions that the customer would otherwise have to perform himself. DOC Position We agree with respondent in part. Lafarge provides the technical support to its home market customers because they have not yet developed the systems required to perform these services themselves. Without Lafarge's technical support, the customers cannot analyze and make appropriate adjustments in their steel production processes to optimize performance of CA flux in their operations. Given the nature of the steelmaking industry, it is reasonable to believe that, while these technical service expenses could not be directly tied to specific sales of flux, they would not otherwise have been incurred but for the sale of flux. It is the Department's practice to allow, as a direct selling expense, claims for services rendered in assisting the customer in solving problems with products purchased during the POI to the extent that the variable costs can be segregated from the fixed costs. In general, variable technical service costs include travel expense, while fixed technical service costs include salaries. (See e.g., Final Determination of Sales at Less Than Fair Value: Brass Sheet and Strip from Italy, 52 FR 816, January 9, 1987; and Final Determination of Sales at Less Than Fair Value: Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from the Federal Republic of Germany, 54 FR 18992, May 3, 1989.) Therefore, in accordance with our practice, we have treated travel expenses associated with technical services as direct selling expenses, and we have treated salary expenses as indirect selling expenses and deducted them from FMV accordingly. We made no adjustment to these amounts for expenses related to test sales that may have been made in 1992, because we did not have sufficient information on the record to allow us to do so accurately. Comment 14 Petitioner claims that the adjustment for home market credit expenses should be denied or reduced. Petitioner believes that an adjustment for this expense should not be permitted because, of the sales verified, over one-quarter had incorrect shipment/payment dates. If the Department allows this expense, petitioner argues that it should be recalculated exclusive of VAT because Lafarge did not incur any credit expense for payment of the VAT. Respondent maintains that the Department should not deny or reduce home market credit expenses. It argues that the errors found at verification with respect to shipment/payment dates were minor and clerical in nature, and do not have a significant effect on the Department's analysis. According to respondent, by extending credit, Lafarge agrees to forego immediate payment of the total invoice amount which includes the price for the goods and applicable VAT taxes. It, therefore, loses the interest that could have been earned on the total invoice amount. Respondent asserts that the foregone interest represents the opportunity cost of extending credit. Respondent further asserts that, because this opportunity cost includes foregone interest on VAT, the foregone interest on VAT must be included in the credit adjustment. DOC Position We disagree in part with both petitioner and respondent. We have determined that a credit adjustment in general is warranted in this case. The errors found at verification with respect to the credit period reported for two home market transactions were clerical and minor in nature and related to sales made either out of the ordinary course of trade or to a third country which we have excluded from our analysis. (See the ``Foreign Market Value'' section of this notice.) However, we have also determined that there is no statutory or regulatory basis for including VAT in the credit adjustment. While there may be an opportunity cost associated with extending credit on the payment of invoice value inclusive of VAT, that fact alone is not a sufficient basis for the Department to make an adjustment. We note that virtually every expense associated with less than fair value comparisons is paid for at some point after the cost is incurred. Accordingly, for each post-service payment, there is also an opportunity cost. Thus, to allow the type of adjustment suggested by respondent would imply that in the future the Department would be faced with the impossible task of trying to determine the opportunity cost of every freight charge, rebate, and selling expense for each sale reported in respondent's database. This exercise would make our calculations inordinately complicated, placing an unreasonable and onerous burden on both respondents and the Department. (See e.g., Final Determination of Sales at Less Than Fair Value: Sulfur Dyes, Including Sulfur Vat Dyes, from the United Kingdom, 58 FR 3253, January 8, 1993.) Consequently, we have recalculated home market credit expenses to exclude the VAT included in the gross unit prices used in the original calculation. Comment 15 Petitioner argues that home market product liability costs are indirect rather than direct selling expenses because they are not directly related to sales made during the POI. Respondent disagrees, stating that these premiums are directly related to sales because the premium is assessed on sales value. According to respondent, each additional sale results in an additional product liability premium expense. DOC Position Because these premiums are assessed based on sales value, we have determined that these expenses are characteristic of direct expenses. We note that the U.S. product liability premium rates reported for U.S. sales of flux and cement were also based on sales value. Therefore, we have treated both home market and U.S. product liability expenses as direct selling expenses for purposes of the final determination, and have adjusted FMV and USP accordingly. Comment 16 Petitioner claims that those sales made to a home market customer that were destined for export should not be included as home market sales in the Department's analysis. Petitioner states that the Department verified that Lafarge knew that certain sales of CA flux were to be exported to a third country at the time of sale to the home market customer. Accordingly, petitioner argues that these sales should not be included in the Department's FMV calculation. DOC Position We agree and have excluded these sales from our analysis. Comment 17 Petitioner believes that for purposes of calculating profit related to the value added in the United States, U.S. brokerage and handling (including merchandise processing and harbor maintenance), U.S. unloading, U.S. loading and U.S. freight to processors costs, where applicable, should be attributed to the COM of CA clinker and flux in the United States because these expenses are incurred only after the product has arrived in the United States. Petitioner further believes that certain U.S. selling expenses (e.g., credit, warranty, indirect selling expenses, inventory carrying costs and product liability expenses) should also be included as part of U.S. further manufacturing costs. Respondent does not believe that the Department should consider these charges and expenses to be part of U.S. further manufacturing costs, as petitioner requests. Lafarge contends that petitioner's argument is inconsistent with the antidumping statute and was put forth by petitioner solely to increase the profit allocated to further manufacturing and, as a result, the adjustment to USP. DOC Position We disagree with petitioner. Because U.S. brokerage and handling, and U.S. unloading and loading costs, are incurred on the imported merchandise prior to the commencement of further manufacturing in the United States, we find that they do not form part of the value added in the United States. Regarding the costs of freight to processors' warehouses associated with flux sales, we find that they do form part of the costs of further manufacturing the imported flux in the United States because these costs are incurred to transport the imported flux to and among the processors' warehouses for further manufacture. For U.S. cement sales, however, such transfer freight costs represent costs incurred to transport the already further manufactured clinker (i.e., the finished cement) to the warehouses from which the finished product is ultimately sold to U.S. customers. No freight to processors costs are incurred on U.S. cement sales because the further processing occurs at Lafarge's plant which is located at the U.S. port of importation. Regarding U.S. selling expenses, these expenses are incurred to sell both the imported and further manufactured products. Therefore, adding these expenses to U.S. further manufacturing costs, as petitioner suggests, would disproportionately increase the U.S. value added for purposes of calculating profit. (See e.g., Wire Rods from France.) Of the expenses at issue, we have only included costs of freight to processors associated with U.S. flux sales as part of U.S. value added in our final profit calculation. Comment 18 Petitioner claims that the Department should recalculate respondent's U.S. indirect selling and G&A expenses for both cement and flux sales. Petitioner argues that, based on the Department's instructions, LCA's administration costs should have been reported as G&A (rather than indirect selling expenses), allocated based on cost of sales and included in the U.S. COM. According to petitioner, the Department should reduce the reported indirect selling expenses and the corresponding ESP cap. Respondent maintains that LCA's calculation correctly assigned its administrative expenses to its operations. According to Lafarge, because LCA's administrative staff supports LCA's sales operations as well as factory operations, a portion of LCA's administrative expenses should be considered sales administration and treated as an indirect selling expense. Respondent notes, however, that it would not object if the Department reduces the amount of administrative expenses assigned to the products under investigation under petitioner's proposal. Respondent contends that if the Department accepts petitioner's argument that U.S. indirect selling expenses and G&A should be recalculated, it should revise petitioner's calculations to use the correct, verified figures. DOC Position We agree with petitioner on the need to reclassify LCA's administrative expenses. Because these expenses are more appropriately characteristic of G&A expenses, we have reclassified them from indirect selling to G&A expenses based on verified data on the record. Comment 19 Petitioner argues that no offset to financial expenses should be allowed for the short-term interest income claimed by Lafarge for purposes of calculating clinker CV and clinker and flux further manufacturing costs. Petitioner contends that the Department was unable to verify that the interest income reported was short-term in nature. Nor could the Department verify whether the reported interest income was related to the manufacture of the subject merchandise, according to petitioner. Respondent asserts that the Lafarge corporate policy is not to invest in assets which produce other than short-term interest income. Accordingly, respondent maintains that all interest income earned by respondent's parent company Lafarge Coppee was short-term in nature, and an offset to interest expense should be allowed for the entire reported short-term interest income amount. DOC Position We agree with petitioner. The Department normally allows an offset to financial expenses for interest income earned on short-term investments of working capital related to the production of the subject merchandise. The Department does not offset interest expense with interest income earned on long-term investments related to activities unrelated to the manufacturing process. Because we were unable to verify the nature of the interest income reported, we have disallowed the financial expense offset claimed by Lafarge. Comment 20 Petitioner notes that the Department discovered at verification that the depreciation of R&D assets was not included in the R&D expenses reported for purposes of calculating clinker CV. Petitioner states that the Department should include this depreciation in the reported R&D expenses. DOC Position We agree and have adjusted the R&D expenses reported for purposes of calculating clinker CV to reflect the inclusion of depreciation for R&D assets. We note that this adjustment also affected the total reported COM of the imported clinker and flux used in the calculation of U.S. value added profit. Comment 21 Petitioner asserts that exchange rate gains and losses should be added to raw material costs for purposes of calculating clinker CV. According to petitioner, during verification the Department discovered that Lafarge had not reported the foreign exchange gains and losses related to the importation of raw materials used to produce the subject merchandise. DOC Position We agree, based on our findings at verification, that Lafarge did not report these foreign exchange gains and losses. Accordingly, we have added these gains and losses to the reported raw material costs for purposes of calculating clinker CV for the final determination. We note that this adjustment also affected the total reported COM of the imported clinker and flux used in the calculation of U.S. value added profit. Comment 22 Petitioner argues that, because LFI repeatedly refused to separately report its labor costs and classify them according to Department practice as variable costs for purposes of calculating clinker CV and total flux and clinker COM used in the calculation of U.S. value added profit, the Department must resort to BIA to determine these costs. As BIA, petitioner asserts that the Department should not annualize any fixed costs but rather use only the fixed costs reported for the POI. Petitioner argues that this is a reasonable BIA methodology given the Department's inability to break out the labor costs from fixed costs and properly treat the labor costs as variable costs. Respondent contends that LFI's labor costs have the characteristics of fixed costs since the number of workers working at LFI's plants is generally constant and the total pool of labor costs tends not to vary with production levels. LFI also asserts that labor costs are distorted by fluctuations in monthly production volumes as a result of plant shut-downs for maintenance. According to respondent, the use of fixed costs for the POI would distort the Department's CV and further manufacturing cost calculations. LFI states that, under the logic of the preliminary determination, fixed labor costs should be based on the reported annual period. DOC Position We agree with petitioner. Lafarge normally records labor costs for clinker and flux as a fixed cost. Respondent followed its normal accounting system for the response and reported labor as a fixed cost for the year 1992. This methodology differs from the Department's normal practice where labor is considered a variable cost and as such would be reported on a weighted-average basis for the POI. In the preliminary determination the Department accepted the annualization of fixed costs because LFI claimed that periodic shut- down expenses incurred for maintaining its furnaces created significant aberrations in monthly production costs. In order to eliminate the effect of these distortions, we allowed LFI to report fixed costs on an annual weighted-average basis. However, it was not until verification that the Department first discovered that labor costs were included in the reported annualized fixed costs. The Department's Section D and E questionnaires for clinker and flux identified direct and indirect labor as costs that should be reported as variable costs for response purposes. The questionnaires also specifically requested that LFI itemize the expenses included in fixed and variable costs. LFI did not itemize its variable or fixed costs or otherwise identify how it treated its labor costs in response to the Department's requests. Because LFI was not responsive to the Department's requests for information and incorrectly classified labor costs as fixed costs, and since there was no information on the record to permit the accurate reclassification of labor costs, we have disallowed the annualization of fixed costs and have used only the reported fixed costs for the POI as BIA for purposes of the final determination. 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 CA cement and cement clinker from France and to begin the suspension of liquidation of all entries of CA flux from France 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 CA cement and cement clinker are as follows: ------------------------------------------------------------------------ Weighted- Producer/manufacturer/exporter average margin percentage ------------------------------------------------------------------------ Lafarge................................................. 18.91 All Others.............................................. 18.91 ------------------------------------------------------------------------ The less than fair value margins for CA flux are as follows: ------------------------------------------------------------------------ Weighted- Producer/manufacturer/exporter average margin percentage ------------------------------------------------------------------------ Lafarge................................................. 31.08 All Others.............................................. 31.08 ------------------------------------------------------------------------ ITC Notification In accordance with section 735(d) of the Act, we have notified the International Trade Commission (ITC) of our determinations. As our final determinations are 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 CA cement, cement clinker and flux from France 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. These determinations are published pursuant to section 735(d) of the Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4). Dated: March 18, 1994. Paul L. Joffe, Acting Assistant Secretary for Import Administration. [FR Doc. 94-7122 Filed 3-24-94; 8:45 am] BILLING CODE 3510-DS-P --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-7122. Public record. Not legal advice.