Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-807]

Polyethylene Terephthalate Film, Sheet, and Strip From the

Republic of Korea; Final Results of Antidumping Duty Administrative

Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

Review.

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SUMMARY: On July 8, 1994, the Department of Commerce (the Department)

published the preliminary results of administrative review of the

antidumping duty order on polyethylene terephthalate film, sheet, and

strip from the Republic of Korea. The review covers four manufacturers/

exporters of the subject merchandise to the United States for the

period November 30, 1990 through May 31, 1992.

As a result of comments we received, the antidumping margins have

changed from those we presented in our preliminary results.

EFFECTIVE DATE: August 17, 1995.

FOR FURTHER INFORMATION CONTACT: Roy F. Unger, Jr., or Thomas F.

Futtner, Office of Antidumping Compliance, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, D.C. 20230,

telephone: (202) 482-0651/3814.

SUPPLEMENTARY INFORMATION:

Background

On July 8, 1994, the Department published the preliminary results

(59 FR 35098) of administrative review of the antidumping duty order on

polyethylene terephthalate (PET) film from the Republic of Korea (56 FR

25660, June 5, 1991). At the request of petitioners and one respondent,

we held a hearing on September 2, 1994.

Scope of the Review

Imports covered by the review are shipments of all gauges of raw,

pretreated, or primed polyethylene terephthalate film, sheet, and

strip, whether extruded or coextruded. The films excluded from this

review are metallized films and other finished films that have had at

least one of their surfaces modified by the application of a

performance-enhancing resinous or inorganic layer of more than 0.00001

inches (0.254 micrometers) thick. Roller transport cleaning film which

has at least one of its surfaces modified by the application of 0.5

micrometers of SBR latex has also been ruled as not within the scope of

the order.

PET film is currently classifiable under Harmonized Tariff Schedule

(HTS) subheading 3920.62.00.00. The HTS subheading is provided for

convenience and for U.S. Customs purposes. The written description

remains dispositive as to the scope of the product coverage. For most

of the respondents the period of review (POR) covers November 30, 1990

through May 31, 1992. Because Cheil was determined to have a de minimis

margin in the Preliminary Determination of Sales at Less Than Fair

Value (56 FR 16305) (LTFV), Cheil's POR begins on April 22, 1991, when

suspension of its merchandise was first ordered, and runs through May

31, 1992. The Department has conducted this review in accordance with

section 751 of the Tariff Act of 1930, as amended (the Act).

Analysis of Comments Received

We invited interested parties to comment on the preliminary results

of this administrative review. At the request of petitioners and one

respondent, we held a public hearing on September 2, 1994. We received

timely comments from petitioners and all respondents.

General Comments

Comment 1

Petitioners argue that respondents' reported costs for recycled PET

film chip or pellet are not accurate and understate the true costs of

producing PET film from recycled or reclaimed chip. Petitioners argue

that respondents' cost accounting methodologies for recycled PET pellet

are inconsistent with the Federal Circuit decision in IPSCO v. United

States, 965 F.2d 1056, 1059-1061 (Fed. Cir. 1992) (Ipsco Appeal).

Petitioners have also argued that respondents' cost methodology for

recycled PET chips permits possible manipulation of product costs to

the advantage of respondents. Petitioners allege that this could occur

by respondents' use of fewer recycled chips to produce film types that

are not comparison candidates in the administrative review and more

recycled chips to produce film types destined for the U.S. market and

those comparable to the U.S.-destined merchandise. Under this scenario,

according to petitioners, the low cost of recycled PET chips relative

to virgin chips would reduce the cost of the U.S. product and its home

market comparator. Petitioners allege that such cost shifting would

reduce the probability of finding sales in the home market at prices

below the cost of production (COP) and, where no contemporaneous sales

of such or similar merchandise are available for comparison, use of

lower constructed values.

In addition, petitioners allege that Cheil's use of the net

realizable value for recycled PET chips is inaccurate because the

market for recycled PET chips is not a real or significant market.

Petitioners contend that very little recycled PET chip is sold on the

open market and that it is not sold for use in PET film production.

Petitioners argue that respondents violated the Ipsco Appeal

decision which requires that the total actual cost of merchandise

subject to an antidumping duty order be included in the reported cost

of such merchandise. Specifically, petitioners claim that respondents'

reported costs do not capture the costs of production using recycled

chip for the following reasons:

Cheil: Petitioners assert that Cheil's reported cost of recycled

chip on the net realizable value (NRV) of PET pellets is inconsistent

with Korean GAAP. Moreover, petitioners argue, this method results in

the understatement of the true cost of recycled chip. Petitioners argue

that Cheil should base

[[Page 42836]]

the cost of recycled chip on the cost of purchase of replacement virgin

PET chip.

Cheil states that the Department has consistently permitted value-

based costing methodologies for by-products. Cheil argues that its use

of NRV to cost recycled PET chips is consistent with both Korean and

U.S. GAAP. Cheil also argues that the Department is already on record

with the Court of International Trade (CIT) as supporting Cheil's NRV

methodology for costing recycled pellets. Cheil also argues that the

Ipsco Appeal decision deals solely with the questions of how to

allocate costs between joint products, one made to specification and

one which is off-specification, when both products are under

investigation. Respondent claims that recycled pellets are by-products

that are not subject to the COP investigation, and have nothing to do

with the Ipsco Appeal decision.

SKC: Petitioners argue that SKC has understated the cost of

recycled PET pellet by undervaluing the cost of these chips.

Petitioners argue that the Department should require SKC to base

material costs of recycled pellet on the market value of equivalent

volumes of raw, virgin PET chip.

SKC argues that its cost accounting methodology for recycled chip

fully captures all costs associated with recycled chip by valuing

recycled chip based on its actual COP. Respondent states that the

finished film bears the cost of all raw materials consumed in the film

production process, including the cost of raw materials later reclaimed

to produce recycled chip. SKC also argues that its costing of recycled

chip has been found to be reasonable and acceptable by both the

Department and the CIT.

Kolon: Petitioners argue that Kolon has undervalued the cost of

recycled PET film chip by improperly accounting for the fabrication

costs of these chips.

Kolon argues that its methodology for costing recycled chip

properly assigns the full amount of fabrication costs through a work-

in-progress system which captures all costs associated with reclaimed

PET chip. Kolon also argues that the Department's normal practice is to

accept a respondent's cost accounting methodology if the system is

reasonable and does not distort production costs.

DOC Position

While petitioners' argument may have merit, there is no indication

on the record that such cost shifting has occurred. Based on the

evidence in the record, the Department has determined that the Ipsco

Appeal decision does not apply because recycled PET chips are not ``co-

products'' because they do not have a relatively high sales value

compared to the prime product. Nonetheless, because cost shifting is

possible, we will examine this issue in future reviews of PET film from

Korea. On a company-specific basis, we disagree with petitioners for

the following reasons:

Cheil: The above notwithstanding, we believe in this review segment

that Cheil's use of NRV to cost recycled PET film pellets is a

reasonable costing methodology. We agree at this time with Cheil's

characterization of recycled PET film pellets as by-products,

identifiable by their relatively insignificant sales value (see

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Sebacic Acid from the People's

Republic of China, 59 FR 565, January 5, 1994). The Department has, in

the past, permitted the use of NRV to value recycled material inputs to

the production process (see Final Determination of Sales at Less Than

Fair Value, Polyethylene Terepthalate Film, Sheet, and Strip from the

Republic of Korea, 56 FR 16305, June 5, 1991). Finally, the Department

is satisfied that Cheil's use of NRV reasonably reflects the cost of

producing subject merchandise and is in accordance with Korean and U.S.

GAAP.

SKC: The above notwithstanding, we agree in this review segment

with SKC's costing methodology to account for the cost of recycled PET

film pellets. SKC used its normal cost accounting system for purposes

of this review. This system accounts for the actual cost of recycled

chips by aggregating all direct and indirect costs associated with the

production of recycled chips. Raw materials are used exclusively for

the production of virgin chips; the recycled chips are produced

entirely from scrap film without input of additional raw materials.

Therefore, we are satisfied that the costs of producing the recycled

chip have been fully captured in the cost accounting for the production

of virgin PET film chip.

Kolon: Notwithstanding the above, we agree in this review segment

with Kolon that the costing methodology it reported for reclaimed PET

film pellets is reasonable and not distortive of production costs.

Petitioners themselves have argued in support of Kolon's classification

of reclaimed chips as work-in-process inventory. Petitioners' argument

that reclaimed chips should bear the entire cost of all the stages of

the production process is erroneous; the reclaimed chips do not

normally pass through all phases of the production process (e.g., final

packaging), and thus should not bear the full cost of virgin chips in

the film production process.

In conclusion, for these results of review, we have accepted all

four respondents' costing methodology. In future reviews, however, we

will examine specifically the issue of cost shifting.

Comment 2

Respondents argue that the Department should add home market value-

added taxes (VAT) only to U.S. price (USP), asserting that legislative

history supports the proposition that taxes should not be added to

Foreign Market Value (FMV). Consequently, respondents maintain, the

Department must follow the language of the statute which does not

explicitly require the addition of taxes to home market price, third-

country price, or CV, but does require the addition of these taxes to

USP. Alternatively, respondents argue the Department should adopt the

tax-neutral methodology authorized by the Federal Circuit in Zenith

Electronics Corp. v. United States, 988 F 2nd 1573, 1580-82

(Fed.Cir.1993), and add the actual amount of the VAT to USP.

DOC Position

We disagree with respondents. In Federal-Mogul Corporation and The

Torrington Company v. United States, 834 F. Supp. 1391 (CIT 1993)

(Federal-Mogul), the CIT rejected the Department's past methodology for

calculating an addition to USP under section 772(d)(1)(C) of the Act to

account for taxes that the exporting country would have assessed on the

merchandise had it been sold in the home market. The CIT held that the

addition to USP under section 772(d)(1)(C) of the Act should be the

result of applying the foreign market tax rate to the price of the

United States merchandise at the same point in the chain of commerce

that the foreign market tax was applied to the foreign market sales

(Federal-Mogul, 834 F. Supp. at 1397).

The Department has changed its methodology in accordance with the

Federal-Mogul decision and has applied the new methodology in the final

results of this review. The Department has added to USP the result of

multiplying the foreign market tax rate by the price of the merchandise

sold in the United States at the same point in the chain of commerce

that the foreign market tax was applied to foreign market sales. The

Department has also adjusted the USP tax adjustments and the amount of

tax included in FMV. These adjustments deduct the portions of the

foreign market tax and the USP tax adjustment

[[Page 42837]]

that are the result of expenses that are included in the foreign market

price used to calculate foreign market tax and are included in the

United States merchandise price used to calculate the USP tax

adjustment and that are later deducted to calculate FMV and USP. These

adjustments to the amount of the foreign market tax and the USP tax

adjustment are necessary to prevent our present methodology for

calculating the USP tax adjustment from creating antidumping duty

margins where no margins would exist if no taxes were levied upon

foreign market sales.

This margin-creation effect is due to the fact that the bases for

calculating both the amount of tax included in the price of the foreign

market merchandise and the amount of the USP tax adjustment include

many expenses that are later deducted when calculating USP and FMV.

After making these deductions, the amount of tax included in FMV and

the USP tax adjustment still reflects the amounts of these expenses.

Thus, a margin may be created that is not dependent upon a difference

between adjusted USP and FMV, but is the result of differences between

the expenses in the United States and the home market that were

deducted through adjustments. The Department's policy to avoid the

margin-creation effect is in accordance with the United States Court of

Appeals' holding that the application of the USP tax adjustment under

section 772(d)(1)(C) (19 U.S.C., section 1677a(d)(1)(c)) of the Act

should not create an antidumping duty margin if pre-tax FMV does not

exceed USP (Zenith Electronics Corp. v. United States, 988 F.2d 1573,

1581 (Fed. Cir. 1993)). In addition, the CIT has specifically held that

an adjustment should be made to mitigate the impact of expenses that

are deducted from FMV and USP upon the USP tax adjustment and the

amount of tax included in FMV (Daewoo Electronics Co., Ltd. v. United

States, 760 F. Supp. 200, 208 (CIT, 1991)). However, the mechanics of

the Department's adjustments to the USP tax adjustment and the foreign

market tax amount as described above are not identical to those

suggested in Daewoo.

Comment 3

Petitioners argue that the Department should postpone the final

results of this administrative review until the CIT issues its final

decision in the remand determination of the investigation of PET film

from Korea, which is currently pending before the court (Final Remand

Determination Pursuant to Court Remand, E.I. DuPont de Nemours & Co.,

Inc. v. United States, Court No. 91-07-00487 (December 6, 1993)).

DOC Position

We disagree with petitioners. The Department has a longstanding

practice of issuing final results of administrative review in cases

where litigation is pending in the court system. Delaying the

publication of final results in reviews in which earlier, separate and

distinct segments of the proceeding are subject to pending litigation

would create an unacceptable backlog of administrative reviews and

frustrate efforts to complete reviews on an annual basis.

Comment 4

Petitioners allege that respondents may have improperly avoided

suspension of liquidation on quantities of subject merchandise in

possible circumvention of the antidumping duty order on PET film from

Korea. Petitioners cite an alleged discrepancy between U.S. Customs

Service data on antidumping cash deposits collected in 1993 and the

total sales value reported by respondents for the POR as evidence that

some portion of Korean PET film imports into the United States have not

been entered properly. Respondents deny any evasion of antidumping

duties on subject merchandise.

DOC Position

We disagree with petitioners that there is any credible evidence

that respondents have improperly avoided suspension of liquidation of

entries of subject merchandise. We have confirmed that the sales

information reported by all respondents in this review closely

approximates entry data we have obtained from the U.S. Customs Service.

In addition, petitioners' allegation appears to be based upon a

clerical error in the Department's preliminary calculations for STC

Corporation, which petitioners themselves brought to the Department's

attention. We corrected this clerical error in our final calculations

which resolves the discrepancy between the U.S. Customs data and the

total value of sales reported by respondents for this review.

Company-Specific Comments

Cheil

Comment 5

Petitioners argue that, because Cheil notified the Department that

a commercial dispute regarding one U.S. sale of PET film had been

resolved which required revisions to respondent's U.S. sales database

for that sale, the Department should require respondent to certify that

no other reported U.S. sale is now or has been the subject of a

commercial dispute. Furthermore, petitioners urge the Department to

seek additional information on the one disputed transaction reported to

the Department.

Cheil argues that its candor in reporting the disputed transaction

to the Department indicates respondent's good faith and should not

result in respondent being penalized with burdensome additional

reporting requirements.

DOC Position

We agree with Cheil. It made its timely submission to the

Department of the revisions for the one disputed U.S. sale without

urging from either the Department or petitioners. These data appear

complete. Therefore, we see no need to require Cheil to provide any

additional information on this transaction or to provide any type of

certification that other reported U.S. sales have not been the subject

of commercial disputes.

Comment 6

Petitioners argue that the Department improperly included the

Korean VAT in Cheil's net home market price before conducting the COP

test. Petitioners argue that the Department should have subtracted the

VAT from the net home market price prior to the COP test.

Cheil agrees with petitioners that the Department should deduct

Korean VAT before conducting the COP test. Additionally, Cheil argues

that the Department mistakenly subtracted respondent's home market

credit expense and home market packing expense from the reported net

home market price. Cheil contends that this distorted the COP test,

because the net home market price without packing and credit expense

was compared to a COP which included these expenses.

DOC Position

We agree with petitioners and Cheil. Accordingly, we have revised

the calculations for Cheil to ensure that, in conducting the COP test,

we compared home market prices which did not include Korean VAT, home

market credit, and home market packing expenses with COPs which were

also net of these expenses.

Comment 7

Petitioners assert that the Department may not have analyzed all of

Cheil's U.S. purchase price sales, contending that the number of

transactions in the calculations were fewer than Cheil reported. Cheil

also contends that the Department's analysis of U.S. purchase price

sales may be incomplete.

[[Page 42838]]

DOC Position

We agree with petitioners and respondent. We have ensured that our

calculations include all of Cheil's purchase price transactions during

the POR.

Comment 8

Cheil contends that the Department included direct selling expenses

in total general expenses for purposes of calculating constructed value

(CV) while deducting direct selling expenses to derive USP. Cheil

argues that an adjustment should be made to ensure ``apples-to-apples''

comparisons when calculating FMV based upon CV.

DOC Position

We agree with Cheil that, in cases where we used CV as the basis of

comparison, we did not accurately adjust CV to ensure an apples-to-

apples comparison. In these final results we have adjusted CV by

deducting direct selling expenses to ensure proper comparisons with USP

when FMV is based upon CV in accordance with section 773(a)(1) of the

Act.

Comment 9

Cheil argues that the Department should deduct home market

inventory carrying costs from net home market price calculations

because the Department deducted U.S. inventory costs from USP.

DOC Position

We agree with respondent. Because Cheil incurred inventory carrying

costs in the home market appropriate for deduction, and the Department

had deducted U.S. inventory carrying costs from USP, we have deducted

home market inventory carrying costs from the net home market price

calculations.

Comment 10

Petitioners argue that Cheil incurred post-sale warehouse expenses

for U.S. sales which it did not report. Cheil responds that it has

reported all post-sale warehousing expenses and inventory carrying

costs which it incurred during the POR.

DOC Position

We agree with Cheil. There is no evidence that there are additional

post-sale warehousing expenses or inventory carrying costs which Cheil

did not report.

SKC

Comment 11

SKC contends that the Department should offset interest income it

earned on sales of PET film pursuant to a written arrangement with

Anacomp, Inc. (Anacomp) against imputed credit expenses because the

interest income reduces SKC's cost of extending credit to its

customers. Citing Certain Hot-Rolled Carbon Steel, Certain Cold-Rolled

Carbon Steel Flat Products from Japan, 58 FR 37154 (July 9, 1993)

(Certain Hot-Rolled Carbon Steel), SKC asserts that this has been the

Department's practice. Petitioners argue that the precedent SKC cites

is not relevant to SKC's relationship with Anacomp and that the

Department was correct in rejecting SKC's interest income offset.

DOC Position

We believe that the situation in Certain Hot-Rolled Carbon Steel

was different from the situation existing between SKC and Anacomp. In

Certain Hot-Rolled Carbon Steel the situation involved ``opportunity

benefits'' derived from pre-payments, while Anacomp's payments to SKC

are deferred. However, we agree with respondent that interest income

which SKC received from Anacomp reduces SKC's cost of extending credit

to its U.S. customers and should be offset against SKC's U.S. credit

expense (see Certain Internal-Combustion, Industrial Forklift Trucks

from Japan, 57 FR 3167 (January 28, 1992)(Forklifts from Japan)).

Consistent with our practice in Forklifts from Japan, failure to adjust

SKC's imputed U.S. credit expense for interest income received from

Anacomp would overstate SKC's U.S. credit expense and distort our

dumping analysis.

Comment 12

Petitioners argue that SKC's reporting methodology concerning sales

to one of its U.S. customers, Anacomp, was incorrect in several

respects. First, petitioners assert that SKC reported the wrong date of

sale for these sales.

Second, petitioners contend that SKC's sales to Anacomp may not be

at arm's-length prices. If these sales are not at arm's-length prices,

petitioners argue that respondent reported USP incorrectly.

Third, petitioners assert that SKC's reported imputed credit

expense was incorrect because it was based on wrong dates of payment

and on an inaccurate short-term borrowing rate. Petitioners argue that

the reported payment date is incorrect because of certain invoices on

which payment was outstanding. Petitioners argue that, because SKC

based its reported short-term borrowing rate in part on the Euro-dollar

rate, it is inappropriate for use in calculating U.S. interest expense.

Petitioners also allege that SKC may have inaccurately reported the

actual sale price of subject merchandise to Anacomp. Petitioners allege

that respondent overstated USP for these sales by calculating USP on

rolls of PET film based on nominal weight instead of actual weight.

Finally, petitioners argue that SKC may have classified certain

models of PET film sold in the home market as identical which are not

truly identical. As evidence for this assertion, petitioners note that

certain models of prime- and off-grade film are priced the same.

SKC argues that petitioners' allegations regarding its U.S. sales

to Anacomp are unfounded for the following reasons: (1) it reported the

proper date of sale for these transactions, (2) it has a commercial,

arm's-length relationship with Anacomp, (3) it properly reported credit

expenses and interest revenues associated with these sales, (4) it

reported accurate, actual prices for these sales, and (5) it correctly

identified home market sales of comparable merchandise.

DOC Position:

Regarding the date of sale for Anacomp sales, we disagree with

petitioners. It is our long-standing policy for our date-of-sale

analysis to set the ``date of sale'' as the date upon which price and

quantity terms are established as set forth in our questionnaire

instructions (see Certain Forged Steel Crankshafts from the United

Kingdom, Final Determination of Sales Below Fair Value, 52 FR 32951

(September 1, 1987)). In the case of purchase agreements or contracts,

that date is routinely the date of execution of the sales agreement

(see Comment 3 (Date of Sale) in Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof from the Federal Republic of

Germany, 54 FR 18992 (May 3, 1989)). In this case, the date SKC

reported was the first date the basic terms of the sale, such as price

and quantity, were determined. Thus, we are satisfied that the date of

sale SKC reported is correct and needs no modification.

Regarding SKC's relationship with Anacomp, we disagree with

petitioners. There is nothing on the record in this review which

indicates any relationship between Anacomp and respondent other than a

commercial, arm's-length relationship. Indeed, the agreement between

Anacomp and SKC which SKC included in its April 19, 1993, supplemental

sales questionnaire response clearly indicates that the

[[Page 42839]]

relationship is at arm's-length. Lacking any credible evidence to the

contrary, we consider Anacomp to be an unrelated U.S. customer in

accordance with section 771(13) of the Act. This section of the Act

defines a related party as (1) an agent of the manufacturer, (2) a

party which owns or controls interest in the manufacturer, (3) a party

which is owned or controlled by the manufacturer, or (4) a party which

owns or controls 20 percent or more of the manufacturer. There is

nothing on the record which indicates that these conditions apply to

the relationship between Anacomp and SKC.

We agree with petitioners that SKC's reported date of payment for

unpaid invoices should be changed. SKC reported an arbitrary date as

the date of payment for certain invoices in calculating imputed credit

expense on U.S. sales to Anacomp. The date which SKC reported as the

date of payment was not the actual payment date for these sales because

these sales had still not been paid. The dates of payment SKC reported

for these sales were the last dates of payment on the record prior to

responding to our supplemental questionnaire. Because these data were

incomplete, we have determined for these final results, in accordance

with section 776(c) of the Act, that the application of best

information available to the payment date of these sales is warranted.

Based upon the record in this review, we have identified the date we

received SKC's response to our supplemental questionnaire, April 19,

1993, as the last day we can determine with any certainty that these

sales were still unpaid. Therefore, we have used SKC's supplemental

questionnaire response date as the date of payment for these sales (see

Brass Sheet and Strip from Sweden, Final Results of Antidumping Review,

60 FR 3617, 3620-21, Comment 4 (January 18, 1995)).

We disagree with petitioners' allegation that SKC's reported short-

term interest rate for sales to Anacomp was incorrect. The loans SKC

classified as ``Eurodollar loans'' used to calculate its short-term

borrowing rate were short-term loans from U.S. banks denominated in

U.S. dollars, the interest rate of which is set by the bank using the

Eurodollar market as a benchmark. In essence, therefore, these loans

are U.S. loans from a U.S. bank used to finance U.S. operations. Thus,

we do not believe that they are distortive of short-term borrowing

rates in the United States.

Regarding the sale price of merchandise SKC sold to Anacomp, we

disagree with petitioners. There is no evidence on the record to

support petitioners' allegation that SKC's reported prices on sales to

Anacomp may be overstated based on the formula used to determine the

weight of particular rolls of PET film. Petitioners' calculations

purporting an inaccurate weight for certain rolls of subject

merchandise are apparently based upon incorrect roll lengths. Once the

proper roll lengths are substituted for the inaccurate lengths, the

petitioners' alleged discrepancy disappears. In addition, petitioners'

allegation that SKC sold film to Anacomp at widths different from those

reported to the Department is without any supporting evidence.

We disagree with petitioners on the identification of identical

merchandise sold in the home market. Petitioners' argument that

respondent sold off-specification PET film to home market customers as

prime-grade film is without any supporting evidence on the record of

this review. Although petitioners cite as evidence that the price of

one particular prime-grade film is the same as the price of a certain

off-grade film, the Department finds this comparison to be meaningless

unless one takes into consideration the relative thickness of the film

in question. In general, the thinner the film, whether prime- or off-

grade, the more expensive it is. The two models of film petitioners

used in their argument are not of comparable thickness. When films of

comparable thickness are compared, SKC's price for prime-grade film is

significantly higher than its price for off-grade film.

Comment 13

Petitioners argue that SKC's reported costs for producing subject

merchandise are not reliable. Petitioners contend that respondent

incorrectly used product-specific costs instead of the average costs in

SKC's own cost accounting system. Petitioners urge the Department to

reject SKC's reported product-specific costs and use average costs

until the Department is able to verify the accuracy of the reported

product-specific costs.

SKC argues that its reported costs are accurate and it has not

changed its cost methodology since the Department verified its COP data

in the original LTFV investigation.

DOC Position

We disagree with petitioners. SKC's normal cost accounting system

calculates a single, average COP for all models of PET film. SKC

derived the reported product-specific costs in order to comply with the

Department's instructions in the COP/CV questionnaire. When petitioners

challenged the Department's acceptance in the LTFV investigation of

SKC's cost methodology before the CIT, the Department explained its

acceptance of respondent's methodology, stating that ``there is no

basis to doubt the reliability of SKC's product specific cost

accounting methodology'' (Defendant's Memorandum In Opposition to

Plaintiffs' Motion for Judgement Upon the Administrative Record, April

2, 1992, at 58, E.I. DuPont de Nemours & Co., Inc. v. United States,

Court No. 91-07-00487). Moreover, petitioners' contention that the

Department must verify respondent's cost data is erroneous. The

Department determined, pursuant to 19 C.F.R. section 353.36(a)(v), that

no verification of SKC was necessary in this present administrative

review because SKC was verified in the original investigation.

Furthermore, we considered the following factors in evaluating SKC's

costing methodology: (1) SKC's methodology is unchanged from the

original investigation, (2) the Department thoroughly verified the

accuracy of SKC's information in the original investigation, and (3)

there is no evidence on the record of this review which would indicate

that SKC's reported product-specific costs are inaccurate. Thus, we

have accepted SKC's product-specific costs.

Comment 14

Petitioners argue that SKC's cost methodology undervalues the costs

of off-specification PET film. Petitioners assert that SKC has

manipulated the allocation of materials cost for PET film in such a way

that assigns a lower cost for off-grade film than for prime-grade film.

They argue that such manipulation of costs contravenes the Federal

Circuit's decision in Ipsco Appeal, which reversed a lower court ruling

requiring the Department to allocate shared processing costs between

prime and off-grade merchandise based on the relative sales value.

Petitioners contend that the Federal Circuit ruling means that the

costs for prime and off-grade PET film must be the same. As evidence

for the allegation of SKC's manipulation of costs, petitioners allege

that SKC's cost of one particular model of off-grade PET film is lower

than the average cost of manufacture for all types of film, whether

prime- or off-grade.

SKC argues that it has applied a cost methodology that assigns

equal costs to the prime- and off-grade PET film in accordance with the

Ipsco Appeal.

[[Page 42840]]

DOC Position

We disagree with petitioners. SKC changed its cost methodology for

purposes of this administrative review, reportedly to conform to the

Federal Circuit's ruling in the Ipsco Appeal. Evidence on the record

indicates that SKC properly reported the full cost of manufacturing

off-grade PET film without any allocation of costs between prime- and

off-grade PET film.

According to its questionnaire response, SKC does not allocate

shared processing costs between prime- and off-grade film at any point.

Petitioners' example of one model of off-grade film is not helpful

because there are numerous models of prime- and off-grade film which

SKC sold during the POR. Due to the numerous models of PET film SKC

sold of both grades, other models exist with costs above the average,

as well as models with costs below the average. Thus, we believe that

SKC's one off-grade film model with costs below the average cited by

petitioners is not indicative of SKC's undervaluation of other off-

grade film models. Therefore, we have accepted SKC's cost methodology.

Comment 15

SKC contends that the Department erred in deducting direct U.S.

selling expenses directly from USP on exporter's sale price (ESP)

sales. Respondent argues that the Department should treat these

expenses as circumstance-of-sale adjustments to the FMV, citing Koyo

Seiko Co. v. United States, 819 F. Supp. 1096 (CIT 1993), NTN Bearing

Corp. of America v. United States, 747 F. Supp. 726 (CIT 1990), and

Timken Co. v. United States, 673 F. Supp. 495 (CIT 1987).

DOC Position

We disagree with SKC. Our deduction of direct selling expenses from

USP in an ESP situation is consistent with our longstanding

administrative practice, is in accordance with section 353.41(e)(2) of

our regulations, and has been upheld by the Court of Appeals for the

Federal Circuit in Koyo Seiko Co., Ltd. v. United States, 36 F. 3d 1565

(Fed. Cir. 1994) (Koyo Seiko).

Comment 16

SKC argues that the Department made several clerical errors in the

difference-in-merchandise adjustment and model match sections of the

calculations.

DOC Position

The Department agrees with SKC's allegations and has revised the

calculations accordingly for the final results of review.

Comment 17

SKC argues that the Department improperly compared a COP which

includes home market packing and interest expenses to home market sales

prices which were net of these expenses.

DOC Position

We agree with respondent and have revised our calculations

accordingly.

Comment 18

SKC comments that the Department failed to subtract U.S. movement

costs, packing, and selling expenses from the calculation of profit for

further-manufactured sales. According to SKC, this failure resulted in

overstated total profit and profit attributable to further

manufacturing.

DOC Position

We agree with respondent and have revised our calculations

accordingly.

Comment 19

SKC argues that the Department failed to adjust CV for direct and

indirect selling expenses, imputed credit, and commissions.

DOC Position

We agree with respondent and have adjusted the calculations

accordingly.

Kolon

Comment 20

Petitioners argue that the Department's methodology failed to

capture all costs associated with Kolon's inventory carrying costs and

warehousing costs for ESP sales. Petitioners allege that Kolon's

reported inventory carrying costs and warehousing costs are not

accurate, due, in part, to an improper accounting of these costs

associated with merchandise which entered the United States prior to

the POR. Petitioners also allege that Kolon did not report warehousing

expense and inventory carrying costs for some ESP sales. Kolon counters

that its reported inventory and warehousing cost figures accurately

capture all costs associated with its ESP sales.

DOC Position

We disagree with petitioner. Kolon reported inventory carrying

costs and warehousing costs based on the total costs its U.S.

subsidiary incurred during the POR. Kolon reported these costs based on

POR expenses and allocated the total POR expenses over the total value

of sales during the POR. Because Kolon based its methodology on the

total expenses and invoices during the POR, its calculations were not

affected by the inclusion or exclusion of merchandise that entered the

United States prior to the POR.

Comment 21

Petitioners argue that Kolon should have reported warehousing costs

for certain ESP sales as direct selling expenses instead of labeling

them as indirect selling expenses. Petitioners maintain that Kolon

incurred ``after-sale'' warehousing expenses on those ESP sales where

the date of sale preceded the date of shipment. Kolon argues that it

properly reported its warehousing expenses as indirect selling expenses

because it did not necessarily incur post-sale warehousing expenses on

these types of sales and it could not link directly any additional

warehousing costs to specific sales.

DOC Position

We disagree with petitioners. Petitioners have not demonstrated

that Kolon incurred post-sale warehousing expenses for ESP sales whose

date of sale preceded the date of shipment. In addition, Kolon

maintained a general inventory during the POR. Therefore, in cases

where Kolon stored subject merchandise in public warehouses, its

warehousing costs were fixed and could not be identified with specific

sales or invoices. We are satisfied that Kolon reported these expenses

properly as indirect selling expenses.

Comment 22

Petitioners maintain that the Department may have used a database

with the incorrect number of Kolon's home market sales during the POR.

DOC Position

We agree with petitioners. We have ensured that our calculations

for Kolon rely on the correct number of transactions.

Comment 23

Petitioners argue that the Department incorrectly performed its

sales-below-cost test by comparing the COP for each model of PET film

which excluded VAT to a net home market sales price which included VAT.

Kolon agrees with petitioners and also maintains that the

Department incorrectly subtracted home market credit expense from the

home market price prior to the COP test.

DOC Position

We agree with petitioners and Kolon. We have revised our

calculations accordingly.

[[Page 42841]]

Comment 24

Petitioners argue that Kolon impermissibly, and without the consent

of the Department, limited its reported home market sales to only those

which it claimed were identical to U.S. sales. Petitioners argue that

this contravenes the Department's questionnaire instructions and

interferes with the Department's ability to conduct its own product

comparisons.

Kolon argues that it consulted with Department officials with

regard to reporting only identical home market sales and received

permission to do so. Kolon also notes that the revised home market

sales listing it submitted to the Department included both identical

and similar merchandise.

DOC Position

We disagree with petitioners. The questionnaire instructions in

this review stated clearly that respondents may not be required to

report all home market sales if they made contemporaneous sales of

identical merchandise in the home market during the POR. Kolon properly

requested permission from the Department to report only home market

sales of identical merchandise, and the Department granted permission

to do so in a letter dated July 15, 1993. Furthermore, petitioners'

arguments ignore the fact that the Department ultimately required

respondent to revise the submitted home market database to include all

home market sales of identical and similar merchandise.

Comment 25

Petitioners argue that the Department erroneously accepted Kolon's

reported eight percent statutory minimum profit for purposes of

calculating CV. Petitioners maintain that Kolon's profit percentage was

higher than the statutory minimum and that the Department should use

petitioners' estimate of Kolon's profit as best information available

(BIA).

Kolon argues that it properly reported the statutory eight percent

profit in accordance with the Department's regulations because its

profit listed on its audited financial statements, and verified by the

Department, was less than eight percent.

DOC Position

We disagree with petitioners. During verification of respondent's

COP/CV data in Korea, we checked that Kolon had properly reported the

statutory minimum for profit, in accordance with section

773(e)(1)(B)(ii) of the Act and 19 CFR 353.50(a)(2), given the

company's records on profit from sales of subject merchandise. We

believe that petitioners' assertion that Kolon's profit is higher than

the statutory minimum is based on insufficient evidence.

Furthermore, Kolon had contemporaneous home market matches for all

of its U.S. sales during the POR and none of Kolon's home market sales

were found to have been made below the COP. Thus, in our analysis of

respondent's response, there was no need to use CV (see section

773(b)(2) of the Act).

Comment 26

Petitioners argue that Kolon reported its direct and indirect

selling expenses for CV/COP in a manner contradictory to the provisions

of 19 CFR 353.50. Petitioners maintain that Kolon's reporting of

average home market selling expenses does not conform to the

regulation's requirement that such information be based on the selling

expenses for the class or kind of subject merchandise sold in the home

market.

Kolon argues that it complied with the Department's regulations by

basing its reported selling expenses on the home market sales of each

model of PET film sold during the POR.

DOC Position

We disagree with petitioners. The section of the Department's

regulations petitioners cite states that CV shall include general

expenses ``. . . usually reflected in the sales of merchandise of the

same class or kind . . .'' (emphasis added). See 19 CFR 353.50(a)(2).

It is clear that the wording of this regulatory provision leaves some

discretion to the Department in determining whether a respondent's

reported selling expenses for CV are reasonable. Based upon a

successful and thorough verification of Kolon's selling expenses in

Korea, we are satisfied that the general, selling, and administrative

expenses reflect the expenses for the class or kind of merchandise.

Moreover, we note that this section of the regulations pertains

only to CV, not COP. The questionnaire instructions in this review

clearly indicated that selling expenses reported for COP should be

based on the actual expenses for each model of subject merchandise.

Finally, Kolon based its reported selling expense for each sale on

the average expense rate of the home market sales departments involved

in the sales. Thus, we are satisfied that the selling expenses Kolon

reported represent average expenses for all home market sales of

subject merchandise.

Comment 27

Petitioners argue that the Department should reexamine Kolon's

characterization and reporting of U.S. sample sales. Petitioners allege

that Kolon has not demonstrated that samples it gave to U.S. customers

free of charge are properly exempted from being reported in the U.S.

sales listings. Petitioners also questioned the appropriateness of

Kolon's reporting the cost of free samples as indirect selling

expenses.

Kolon argues that its treatment of sample sales was consistent with

past Department practice and that it properly excluded samples it gave

to U.S. customers at no charge from its sales listing, and included

their costs in Kolon's reported indirect selling expenses in accordance

with Departmental practice set forth in Granular Polytetrafluroethylene

Resin from Japan, 58 FR 50343, 50345 (September 27, 1993) (Granular

PTFE from Japan).

DOC Position

We agree with petitioners. As set forth in Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof From France, et.

al; Final Results of Antidumping Duty Administrative Reviews, Partial

Termination of Administrative Reviews, and Revocation in Part of

Antidumping Duty Orders, 60 FR 10900 (February 28, 1995), there is

neither a statutory nor a regulatory basis for excluding any U.S. sales

from review. The statute requires the Department to analyze all U.S.

sales within the POR (see 19 U.S.C. 1675(a)(2)(A)).

The Department does, however, have the authority to omit certain

zero-price samples from our analysis if it can be determined that these

samples were not used for commercial consumption (see Granular PTFE

from Japan). We believe that Granular PTFE from Japan is not applicable

in this case. In that case the sample goods were provided for testing.

Due to the nature of the product, once tested, the sample could not be

returned. Although a transfer of ownership had occurred, the product

had not been used for commercial consumption, and thus could not be

said to have been ``sold.'' In this case, there is no evidence on the

record that Kolon's U.S. samples are destroyed or rendered unusable, as

in Granular PTFE from Japan. In addition, based upon the evidence on

the record, we are not convinced that these zero-priced samples were

commercially insignificant. Accordingly, we have deducted the cost of

these samples from Kolon's indirect selling expenses and included the

sample rates in our analysis for the final results of review (see also

Tapered Roller Bearings, Four

[[Page 42842]]

Inches or Less in Diameter, and Components Thereof from Japan, 59 FR

56035).

Comment 28

Petitioners note a typographical error in the Department's computer

program which affected the calculation of Kolon's COP for home market

sales. Petitioners note clerical errors in the computer program for

Kolon's ESP sales. As a result, petitioners assert that the Department

did not analyze a small number of respondent's ESP sales properly and

the Department did not deduct Kolon's export selling expenses from USP.

Finally, Kolon notes that the Department used the incorrect variable

for interest expense in calculating CV.

DOC Position

We agree with petitioners and Kolon. The variable name for Kolon's

total cost of manufacture in our purchase price computer program should

be ``TOTCOM'' instead of ``OTCOM.'' We have corrected this

typographical error for these final results. We have also corrected the

ESP calculations and ensured that all of Kolon's ESP sales were

analyzed for the final results of review. Finally, we have revised our

calculations using Kolon's correct interest expense variable in

calculating CV.

STC

Comment 29

STC argues that the Department should exclude U.S. sales of

damaged, obsolete and B-grade merchandise from its margin analysis

because they are unrepresentative of STC's usual PET film sales and

arbitrarily distort the margin analysis.

In support of its claim that the Department should exclude one sale

of damaged merchandise from analysis, STC cites past Department

practice where sales of secondary quality, scrap, or damaged

merchandise have been excluded from the margin analysis. STC also notes

that the Department determined, at verification, that STC's sale of

damaged film was aberrant in nature. Alternatively, STC argues the

Department should exclude this sale as outside the scope of the

antidumping duty order, because the film was damaged in transit and

entered into the United States as PET film scrap, and not as A-grade

film subject to the antidumping duty order. STC also argues that if the

Department does not exclude the sale from the scope of the order or

from its analysis, the Department should adjust expenses upward to

reflect insurance reimbursement for in-transit damage. In addition, STC

argues that the damaged film should not be compared to CV, as was done

in the preliminary results, but instead to the home market model which

is identical in all respects except for the damage.

Similarly, STC maintains that the Department should exclude STC's

U.S. sale of obsolete merchandise from its margin analysis. STC claims

that because this pre-production lot of PET film had quality problems

and was, as a result, warehoused for three years, STC was ultimately

forced to sell this film as scrap. Accordingly, STC argues that this

sale is unrepresentative of its sales in the United States. STC also

notes that this sale in the United States constituted only a small

percentage of its U.S. sales and cites previous Department practice

where sales which account for a very small percentage of U.S. sales by

volume have been disregarded. Alternatively, STC argues that the

Department should exclude this sale because this merchandise entered

the United States before the antidumping duty order went into effect.

Finally, STC argues that its three U.S. sales of B-grade film

should also be excluded from the margin analysis for several reasons:

(1) they constitute only a small percentage of STC's total sales

(excluding value-added sales); (2) B-grade film is not normally sold in

the U.S. market; and (3) these sales were made only at the customers'

request.

DOC Position

We disagree with STC. There is no provision in the antidumping

statute or regulations which provides for the exclusion of sales when

determining dumping margins. The CIT, in IPSCO v. United States, 687 F.

Supp. 633, 640 (CIT 1988), stated that ``. . . if Congress intended to

require the administering authority to exclude all sales made outside

the `ordinary course of trade' from its determination of the United

States price it could have provided for such an exclusion in the

definition of United States price, as it has in the definition of

foreign market value. It has not done so.''

Additionally, it is longstanding Department practice to include all

U.S. sales in its dumping calculations except in instances where title

does not transfer or in the case of statistical sampling (see Color

Television Receivers from the Republic of Korea, 58 FR 50333 (1993)).

We also disagree with STC's request that, in the event we do not

exclude the sale of damaged film, we adjust its USP to reflect

insurance reimbursement. The antidumping statute clearly permits

additions to USP in only four instances, none of which apply to the

insurance reimbursement additions sought by STC (see section 772(d)(1)

of the Act). These four instances set forth in the statute allow

additions to USP for U.S. packing/shipping expenses, rebated or

uncollected import duties, rebated or uncollected taxes, and

countervailing duties imposed on the merchandise. The Department has a

consistent practice of strictly interpreting these provisions and

denying requests for upward adjustments to USP (see Oil Country Tubular

Goods from Israel, 52 FR 1511 (1987)).

Finally, we disagree with STC's assertion that the sale of obsolete

films should not be included in our dumping analysis because the

merchandise entered prior to the POR. In accordance with our

questionnaire instructions and longstanding practice, the Department

bases its ESP calculations on sales of subject merchandise, regardless

of entry date. The sale in question occurred in May 1992, during the

POR. In addition, there is nothing on the record which proves that this

sale entered before the effective date of the antidumping duty order or

as anything other than PET film. Therefore, we have included this sale

in our dumping analysis.

Comment 30

STC claims that the Department substantially overstated STC's COP

and CV. First, STC claims that the Department failed to revise STC's

1992 fixed overhead costs based on verified data. According to STC,

this revision was necessary due to the result of a change in the method

by which STC computed depreciation. STC explains that, in 1992, it

switched from an accelerated (i.e., declining balance) to a straight-

line method of depreciation. Although documentation supporting this

change was included in STC's COP questionnaire response, STC

acknowledges that it failed to report its fixed overhead costs using

the straight-line method. STC argues that it identified this clerical

error and the Department verified it on the first day of verification.

Second, STC argues that the Department's decision to adjust labor

cannot be reconciled with the evidence it verified. STC claims that the

Department successfully verified the completeness and accuracy of STC's

reporting and allocation of labor expenses incurred by a wholly-owned

subsidiary in the production of PET film. However, STC asserts, the

Department readjusted reported labor costs to include labor costs

actually reported in STC's general ledger in the preliminary results

with no explanation.

[[Page 42843]]

STC requests that the Department use STC's labor costs as reported in

its questionnaire response in its calculations without adjustment.

DOC Position

We agree with STC concerning its revisions to STC's reported fixed

overhead costs. STC submitted corrected data at the beginning of

verification for its reported fixed overhead costs resulting from STC's

change in methodology in calculating its depreciation costs from a

declining balance to a straight-line method in 1992. Accordingly, we

have revised our calculations to include the correct amount for

depreciation costs in our calculations.

We disagree with STC concerning our decision to adjust STC's

reported labor costs. STC's wholly-owned subsidiary produces only PET

film subject to this review. We verified that labor expenses were

incurred by the subsidiary. However, in its questionnaire response, STC

allocated a portion of these expenses away from the production of PET

film, claiming that some of the subsidiary's workers performed other

work for STC. We could not verify that any of these allocated labor

expenses were billed by the subsidiary to STC. Nor could we verify that

any of the subsidiary's laborers performed production tasks for STC. We

used the labor expenses as incurred by the subsidiary and recorded in

its financial statements. Therefore, we used in our calculations only

those labor costs we were able to verify.

Comment 31

STC argues that the Department's test for sales made at prices

below the COP is fundamentally flawed. First, STC claims that, in

accordance with the Department's practice and judicial precedent, the

Department should have allowed an adjustment for start-up costs. STC

cites previous Departmental practice in Fresh Kiwifruit from New

Zealand; Preliminary Results of Antidumping Administrative Review, 59

FR 23691 (May 6, 1994) (Kiwifruit), where the Department accounted for

start-up costs because they were justified, supported, and quantified.

STC disputes the Department's decision in the preliminary results of

review to deny this adjustment because these costs were not actually

reflected in STC's financial records. STC notes that cost data reported

to the Department often differs from the type of data maintained in the

ordinary course of trade, citing product-specific, as opposed to

average costs and adjustments, for imputed credit costs as examples.

STC also notes that its start-up cost allocation is consistent with

GAAP in that only costs incurred above expected per unit overhead costs

were capitalized up to the point that STC was able to reach its normal

production volume. Finally, STC notes the Department's past practice,

which has been upheld by the courts, of amortizing start-up costs even

where the respondent companies have expensed their pre-production

costs.

STC also argues that the Department's decision to apply its

standard test for sales made at below-cost prices for an extended

period of time is arbitrary and unjustified in light of STC's

protracted start-up difficulties. STC claims its only option was to

sell at the prevailing market price despite its high start-up costs

until its costs decreased and sales increased to a point where it could

recover earlier start-up costs. STC maintains that using the

Department's standard measure for an extended period of time in a

competitive market is patently unfair to new entrants, particularly to

one facing the unusual circumstances that confronted STC.

Finally, STC argues that the Department failed to consider whether

STC could recover all costs of production over a ``reasonable period of

time,'' in spite of recent court decisions requiring the Department to

consider factors such as: (1) How far below cost the sales are; (2) how

much, if at all, costs of production are expected to decline; (3) the

period of time over which they are expected to decline; and (4) the

reasons why, based on record evidence, these costs will not be

recovered over time. In light of STC's claim that it expects to recover

all of its costs within one year, STC urges the Department to

reconsider its determination in the preliminary results and allow STC

an adjustment to COP for start-up costs.

DOC Position

We disagree that an adjustment for STC's start-up costs must be

allowed for the final results and believe that STC's cite in its

comments to the preliminary results in Kiwifruit is misplaced. In the

case of Kiwifruit we adjusted for set-up rather than start-up costs.

The set-up cost adjustment accounted for the historical development

cost of the kiwifruit orchard which had been expensed as incurred. We

captured these costs so that they could be properly amortized over the

productive life of the orchard. Adjusting for start-up costs refers to

capitalizing excessive current costs and amortizing them over future

production. Further, STC's cites to judicial precedent do not refer to

start-up costs, specifically, but to the basis of certain adjustments.

In addition, STC's reported start-up costs could not be documented by

actual company records because the calculations for these costs were

based upon a theoretical one-hundred percent capacity utilization rate.

Therefore, we have not accepted STC's claim for a start-up cost

adjustment.

With regard to our test for sales made below cost for an extended

period of time, we disagree with STC. It is our longstanding practice

to define an extended period of time as three months. However, due to a

clerical error, the number of months in our preliminary calculations

was incorrect. For the final results, we have corrected the test to

consider three months to be an extended period of time, as is our

standard practice.

We also disagree with STC's assertion that, because STC maintains

that it will recover all costs within one year, the Department should

include home market sales of subject merchandise found to have been

made below the COP. The CIT, in Toho Titanium v. United States, 670 F.

Supp. 1019, 1021 (1987), clearly stated that the Department must be

able to demonstrate that the prices which are below cost during the POR

are at such a level that those prices would permit not only sufficient

revenue to cover future costs, but also exceed future costs to a degree

which permits the recovery of past losses. The simple line graphs STC

submitted in its questionnaire response, purporting to show increasing

capacity utilization and decreasing costs, are not adequate in detail

or documentation to make a definite conclusion which satisfies the

statute. In addition, we were unable to test the validity of the charts

STC submitted, because STC did not clarity the assumptions on which the

graphs were based. This evidence does not justify including STC's

below-cost sales in our dumping analysis. Therefore, we excluded STC's

below-cost sales for the final results of review.

Comment 32

STC argues that the Department must apply the provisional measures

deposit cap and, if STC's dumping margin is greater than the cash

deposit or bond rate for entries between the Department's preliminary

and final determinations in the LTFV investigation, the Department must

instruct the Customs Service to disregard the difference.

DOC Position

We agree. Although we changed our policy concerning the provisional

[[Page 42844]]

measures deposit cap in October 1992 to apply only to cash deposits

associated with antidumping duty orders, our policy affected only those

entries which were subject to a preliminary determination of sales-at-

less-than-fair-value published after July 29, 1991. Therefore, because

the preliminary determination in this case was published on November

30, 1990, and in accordance with 19 CFR 353.23, if the cash deposit or

bond required between the affirmative preliminary and final

determination is different from the dumping margin in the

administrative review, we will instruct the Customs Service to

disregard the difference to the extent that the cash deposit or bond is

less than the dumping margin, and to assess antidumping duties equal to

the dumping margin calculated in this administrative review if the cash

deposit or bond is more than the dumping margin for entries during the

period between the preliminary and final determination in the original

investigation.

Comment 33

STC argues that the Department should adhere to the court's

numerous rulings and add U.S. direct selling expenses to FMV, not

deduct U.S. direct selling expenses from USP, as was done in the

preliminary results of review.

DOC Position

We disagree with respondent. See our response to Comment 15.

Comment 34

Petitioners argue that the Department overstated the value of U.S.

sales for STC's further-processed imports which results in an

understatement of the percentage margin of dumping as published in the

preliminary results.

DOC Position

We agree. The overstatement of the value for further-manufactured

sales was due to an improper conversion which we have corrected for the

final results. See our response to Comment 42 for further information

on this conversion error.

Comment 35

STC argues that the Department should not have subtracted imputed

expenses in conducting its COP test. STC, citing previous Department

practice, claims that the Department's test for calculating sales made

at prices below COP does not typically subtract imputed expenses, such

as credit expenses, in conducting its sales-below-cost comparison of

home market sales and cost of production.

DOC Position

We agree and have conducted the COP test without subtracting

imputed expenses for the final results of review (see Color Television

Receivers from Taiwan; Final Results of Administrative Review, 56 FR

65218 (December 16, 1991)).

Comment 36

STC argues that the Department understated STC's actual home market

credit expenses by assigning a much shorter average period for

outstanding credit than that which STC experienced and by using an

artificially low home market interest rate. STC requests that the

Department use the payment periods it reported in the questionnaire

response.

DOC Position

We disagree with STC. Although STC claimed, in its November 3,

1992, questionnaire response, that it provided a longer credit period

to unrelated end-users in the home market of subject merchandise, we

determined at the home market sales verification that the actual credit

period was significantly shorter (see Verification Report of the

Questionnaire Responses of STC Corporation in the First Antidumping

Administrative Review of Polyethylene Terephthalate (PET) Film from the

Republic of Korea, at 10-11 (April 21, 1994) (STC Verification

Report)). We verified the shorter credit period by tracing home market

sales. Accordingly, we adjusted our calculations to reflect this

actual, shorter credit period.

In addition, STC claimed a higher home market interest rate than we

were able to document during our home market sales verification. STC

company officials claimed that the higher rate reflected the added

expense of its lenders' requirements that STC borrow compensatory funds

deposited at a zero or low rate of interest. However, because STC was

unable to provide documentation during verification on the calculation

method it used to arrive at the higher interest rate, we used in our

calculations the actual interest rates we were able to verify (see STC

Verification Report at 10-11).

Comment 37

STC claims that the Department did not use the corrected figures

for average days in inventory in its calculations of STC's home market

inventory carrying expense which STC provided to the Department during

the home market sales verification in Korea.

DOC Position

We agree with respondent. Accordingly, we have revised our

calculations for the final results of review to include the correct

home market inventory carrying costs.

Comment 38

STC argues that the Department did not adjust the home market price

for indirect selling expenses incurred in the home market. STC asserts

that, because further-manufactured sales are ESP sales, the Department

should make an offset to FMV for STC's home market indirect selling

expenses up to the amount of STC's U.S. indirect selling expenses and

commissions on STC's further-manufactured sales as well as regular ESP

sales.

DOC Position

We agree with respondent that we should have allowed an ESP offset

to FMV for U.S. further-manufactured sales (see Certain Internal-

Combustion Forklift Trucks from Japan, 53 FR 12552 (April 15, 1988))

and we have revised our calculations accordingly.

Comment 39

STC argues that the Department mistakenly did not subtract credit

expenses from FMV when based on CV. STC argues that the Department

should correct this oversight by deducting credit expenses from CV.

DOC Position

We disagree with STC. Even though STC did report credit expenses

separately from its reported total CV in answering the questionnaire

response, we did not include these expenses in our calculation of CV.

Therefore, no adjustments to CV are necessary for the final results of

this review.

Comment 40

STC requests that the Department correct the following clerical

errors: (1) STC asserts that the Department neglected to convert STC's

FMV from a per-kilogram to a per-pound basis for comparisons to its

purchase price sales, (2) STC discovered, and presented during

verification, that its duty drawback figures should have been higher

than previously reported in its U.S. sales listing and requested that

the Department use the revised duty drawback figures in its analysis,

(3) STC argues that the Department neglected to use the correct

interest rate when calculating its U.S. subsidiary's (STCA) interest

expense (STC claims that the Department used the old reported rate and

did not use the revised rate presented by STC during verification),

[[Page 42845]]

and (4) STC maintains that the Department used STC's erroneously

reported pre-sale warehousing expense instead of the correct expense.

STC acknowledged that it originally reported a pre-sale warehousing

expense which was incorrect by one decimal space.

DOC Position

We agree that clerical errors were made in all four instances and

have revised our calculations accordingly.

Comment 41

STC asserts that the Department inappropriately treated STCA's pre-

sale U.S. warehousing expenses as a direct selling expense. Because

these expenses are incurred prior to the sale of the merchandise to

unrelated parties and cannot be linked to any particular sale, STC

maintains that they should be treated as indirect expenses.

DOC Position

We agree with STC. Because these expenses were incurred prior to

STC's sale of the merchandise and cannot be directly linked to

individual sales, we have treated STCA's pre-sale U.S. warehousing

expense as indirect selling expenses for the final results of review.

Comment 42

STC argues that the Department incorrectly calculated the net price

for STC's further-manufactured sales by neglecting to apply the value-

added ratio to the net USP and U.S. price adjustments. STC claims that,

in calculating the net USP for further-manufactured sales, the

Department failed to convert USP and U.S. price adjustments from a per-

roll basis to a per-PET film pound equivalent basis. In addition, STC

asserts that the Department subtracted the entire profit amount from

the price of the further-manufactured sales, instead of only that

portion of profit attributable to the further-manufacturing process.

Finally, STC argues that the Department neglected to add duty drawback

to USP for further manufactured sales. STC requests that the Department

modify its calculations accordingly.

DOC Position

We agree with STC. We have applied the value-added ratio to net USP

and to the U.S. price adjustments for further-manufactured sales of

subject merchandise. We also included calculations to convert net USP

for further-manufactured sales and U.S. price adjustments to a per-

pound basis. We also recalculated profit and deducted only that portion

attributable to the further-manufacturing process. Finally, we added

duty drawback to USP for the final results of review.

Final Results of Review

Upon review of the comments submitted, the Department has

determined that the following margins exist for the periods indicated:

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

Percent

Manufacturer/exporter margin

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

November 30, 1990 through May 31, 1992:

SKC Limited................................................ 0.80

Kolon Industries........................................... 0.94

STC Corporation............................................ 16.87

April 22, 1991 through May 31, 1992:

Cheil Synthetics........................................... 0.06

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

The Customs Service shall assess antidumping duties on all

appropriate entries. Individual differences between USP and FMV may

vary from the percentages stated above. The Department will issue

appraisement instructions concerning each respondent directly to the

U.S. Customs Service.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise, entered, or withdrawn

from warehouse, for consumption on or after the publication date of

these final results of administrative review, as provided for by

section 751(a)(1) of the Tariff Act: (1) The cash deposit rate for the

reviewed firms will be the rates outlined above, except for Cheil,

which, because its weighted-average margin is de minimis, the cash

deposit rate will be zero percent; (2) for previously reviewed or

investigated companies not listed above, the cash deposit rate will

continue to be the company-specific rate published for the most recent

period; (3) if the exporter is not a firm covered in this review, a

prior review, or in the original LTFV investigation, but the

manufacturer is, the cash deposit rate will be the rate established for

the most recent period for the manufacturer of the merchandise; and (4)

if neither the exporter nor the manufacturer is a firm covered in this

or any previous review conducted by the Department, the cash deposit

rate will be 4.82%, the all others rate established in the LTFV

investigation.

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

This notice serves as the final reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d). Timely written notification or

conversion to judicial protective order is hereby requested. Failure to

comply with the regulations and the terms of the APO is a sanctionable

violation.

This administrative review and notice are in accordance with

section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR

353.22.

Dated: August 10, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-20436 Filed 8-16-95; 8:45 am]

BILLING CODE 3510-DS-P