Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From the Netherlands; Final Results of Antidumping Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-421-805]

Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From

the Netherlands; Final Results of Antidumping Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of the antidumping duty administrative

review; Aramid Fiber formed of poly para-phenylene terephthalamide from

the Netherlands.

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SUMMARY: On March 7, 1997, the Department of Commerce (the Department)

published the preliminary results of its administrative review of the

antidumping duty order on aramid fiber formed of poly para-phenylene

terephthalamide (PPD-T aramid) from the Netherlands. The review covers

one manufacturer/exporter and the period June 1, 1995 through May 31,

1996. We gave interested parties an opportunity to comment on our

preliminary results. Based on our analysis of the comments received, we

have revised the results from those presented in the preliminary

results of review.

EFFECTIVE DATE: July 16, 1997.

FOR FURTHER INFORMATION CONTACT: Nithya Nagarajan at (202) 482-0193,

Eugenia Chu at (202) 482-3964, or Ellen Knebel at (202) 482-0409,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 20230.

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all references to the

[[Page 38059]]

Department's regulations are to 19 CFR part 353 (1997).

SUPPLEMENTARY INFORMATION:

Background

The Department published in the Federal Register the antidumping

duty order on PPD-T aramid from the Netherlands on June 24, 1994 (59 FR

32678). On June 6, 1996, we published in the Federal Register (61 FR

28840) a notice of opportunity to request an administrative review of

the order on covering the period June 1, 1995, through May 31, 1996

(``POR'').

In accordance with 19 CFR 353.22(a)(1), Aramid Products V.o.F.

(Aramid) and Akzo Nobel Fibers Inc. (collectively ``Akzo'' or

respondent) and petitioner, E.I. du Pont de Nemours and Company

(petitioner), requested that we conduct an administrative review for

the POR. We published a notice of initiation of this antidumping duty

administrative review on August 8, 1996 (60 FR 41373). The Department

is conducting this administrative review in accordance with section 751

of the Act.

On March 7, 1997, the Department published the preliminary results

of the review. (See 62 FR 10524). The Department has now completed the

review in accordance with section 751 of the Act.

Scope of the Review

The products covered by this review are all forms of PPD-T aramid

from the Netherlands. These consist of PPD-T aramid in the form of

filament yarn (including single and corded), staple fiber, pulp (wet or

dry), spun-laced and spun-bonded nonwovens, chopped fiber and floc.

Tire cord is excluded from the class or kind of merchandise under

review. This merchandise is currently classifiable under the Harmonized

Tariff Schedule (HTS) item numbers 5402.10.3020, 5402.10.3040,

5402.10.6000, 5503.10.1000, 5503.10.9000, 5601.30.0000, and

5603.00.9000. The HTS item numbers are provided for convenience and

Customs purposes. The Department's written description of the scope

remains dispositive.

Analysis of the Comments Received

We gave interested parties an opportunity to comment on the

preliminary results of review. We received comments from respondent and

petitioner.

Comment 1: Petitioner argues that in the preliminary results, the

Department accepted Akzo's reported U.S. indirect selling expenses

(ISE), which are based upon two factors: (1) Operating expenses per

financial accounts (excluding financial expenses); and (2) interest

expenses for Akzo Nobel Inc., a wholly-owned subsidiary of Akzo Nobel

N.V. of the Netherlands.

Petitioner claims that both of these components of Akzo's reported

U.S. ISE are in error, or were not properly verified, and should be

revised in the final results. First, in petitioner's analysis of Akzo's

operating expenses, petitioner takes issue with the appearance of a

line item in Akzo's summary trial balance that relates to an Akzo

facility in Scottsboro, Alabama. See U.S. Sales Verification Report,

Exhibit 4, on file in the Central Records Unit (room B-099 of the Main

Commerce Building). Petitioner asserts that if the subsidiary in

Scottsboro performed function(s) relating to the production and sale of

PPD-T aramid fiber in the United States during the period of review,

then Akzo has failed to provide a full accounting of its U.S.

activities and their costs.

Second, petitioner raises concerns over the inclusion of a credit

on Akzo's trial balance relating to manufacturing cost. Petitioner

argues that the activities included in this credit have not been

properly explained by the respondent.

Third, petitioner alleges that certain amounts have not been

accounted for in Akzo's reported net U.S. ISE operating expenses during

the period of review. Petitioner cites U.S. Sales Verification Exhibit

24 to support its claim.

Respondent argues that the Scottsboro facility is not involved in

the manufacture or sale of aramid fiber, and, therefore, the three

credits appearing on Akzo's summary trial balance relating to

Scottsboro are legitimately deducted from Akzo Nobel Aramid Product

Inc.'s operating expenses for antidumping purposes.

Respondent explains that petitioner's concerns regarding the credit

relating to manufacturing cost is misplaced. Respondent states that the

credit in question relates to beaming operations, that the costs

associated with beaming the subject merchandise were verified by the

Department and were therefore, properly included in manufacturing

costs.

Respondent disagrees with petitioner's allegation referring to U.S.

Sales Verification Exhibit 24. Respondent explains that a portion of

the amount petitioner claims was not accounted for was actually related

to expenses outside the POR. Moreover, respondent claims this expense

did not relate to the company's indirect selling expense and therefore,

pursuant to established Department practice, such expenses are not

properly included in net U.S. ISE as operating expenses. Respondent

further argues that the POR amount identified by petitioner results

from the fact that the income/expense booked in the January-May period

overvalued the anticipated expense of the full year.

The Department's Position: The Department agrees with respondent

that the credits on Akzo's trial balance relating to Scottsboro,

Alabama were properly deducted from Akzo's operating expenses. The

Department found no evidence to support petitioner's speculation that

Scottsboro is involved in the production or sale of subject

merchandise. The facility in Scottsboro, Alabama, Akzo Nobel Industrial

Fibers Inc., is described in Akzo's responses as a manufacturer of

polyester and nylon fiber and is part of the Industrial Fibers Business

Unit. Specifically, Akzo's September 19, 1996 Questionnaire Response

(Exhibits A-13 and A-14) references Scottsboro two times under the

Industrial Fibers heading in Akzo's Annual Report. The annual report

expressly defines the Industrial Fibers Business Unit as being

responsible for polyester, polyamide and viscose fibers for industrial

uses. Scottsboro does not appear under any subheading in Akzo's Annual

Reports that would indicate that Scottsboro produces the subject

merchandise. None of the information submitted by Akzo regarding Akzo

Nobel Industrial Fibers Inc. supports the claim that Akzo Nobel

Industrial Fibers Inc. is involved in the manufacture and sale of

aramid fiber. See, e.g., Exhibits A-2, A-3 and A-4 of Akzo's September

19, 1997, Questionnaire Response.

As explained by Akzo in its questionnaire response and discussed

with the Department at verification, Akzo Nobel Aramid Products Inc.'s

Conyers, Georgia facility is responsible for the sale of aramid fiber

in the United States, Canada and Mexico. During the POR, however, the

Conyers, Georgia facility was also used to warehouse certain industrial

fibers for the Industrial Fibers Business Unit of the Fibers Group and

to accommodate Industrial Fibers' salesmen and technical personnel.

Because the Industrial Fibers Business Unit (under which the Scottsboro

facility is categorized) is not involved in the manufacture or sale of

aramid fiber, any credits that relate to it should be deducted from

Akzo Nobel Aramid Products Inc.'s operating expenses.

The Department also verified Akzo's beaming operations. See U.S.

Sales Verification Report at 15 and Exhibit 28. The Department verified

that all costs associated with beaming the subject

[[Page 38060]]

merchandise during the POR were captured in Akzo's reported beaming

charges (REPACKU). See U.S. Sales Verification Exhibit 28. The

Department found no discrepancies and, therefore, agrees with Akzo that

the credit appearing in U.S. Sales Verification Report, Exhibit 4, was

accurately reported.

In addition, the Department verified that the credit amount

associated with the over booking of the anticipated expense that

petitioner claims was not accounted for was actually related to

expenses outside the POR. In addition, the Department verified that

Akzo has properly accounted for its ISE expense items appearing in U.S.

Sales Verification Exhibit 24.

For all of the reasons listed above, the Department has not made

any adjustment to Akzo's total U.S. ISE operating expenses or to its

U.S. ISE operating expense ratio.

Comment 2: Petitioner urges the Department to make an adjustment to

Akzo's U.S. ISE for financial interest expenses. Petitioner notes that,

in the past, the Department has taken the position that a respondent's

net interest expenses should be based upon the financing expenses

incurred on behalf of the consolidated group of companies to which the

respondent belongs because (1) the invested capital resources (debt and

equity) within a consolidated group are fungible, and (2) the

controlling entity within the consolidated group has the power to

determine the specific capital structures of each member unit within

the group. See Aramid Fiber Formed of Poly Para-Phenylene

Terephthalamide from the Netherlands: Final Results of Antidumping

Administrative Review, 61 FR 51,406 (October 2, 1996) at 51,407.

Petitioner argues that Akzo has not explained how the financing

expenses are allocated to Akzo Nobel Aramid Products Inc. or to any of

the other operating units. Petitioner urges the Department to depart

from the way it generally calculates financing expenses, arguing that

the Department's established method does not adequately capture the

true financing costs of the respondent. Petitioner alleges that the

amount of interest expenses that appears on Akzo Nobel Aramid Product

Inc.'s books ``better accounts'' for Akzo's financing costs and

business requirements than the consolidated data taken from Akzo Nobel

Inc.'s financial statement. In addition, petitioner contends that the

Department should revise Akzo Nobel Aramid Product Inc.'s U.S. ISE

financial interest expense factor in the final results to take full

account of its actual short-term borrowing costs in selling PPD-T

aramid fiber in the United States.

Respondent states that Akzo has justified its use of Akzo Nobel

Inc.'s consolidated figures on the ground that the U.S. parent borrows

on behalf of its related companies in the United States and then

charges the various operating units a share of this cost. Akzo's

October 25, 1996, submission at 111. Akzo claims that the only loans

and corresponding interest expense on the books of Akzo Nobel Aramid

Products Inc. and Aramid Products V.o.F. are intercompany loans from

the parent companies Akzo Nobel Inc. and Akzo Nobel N.V. respectively.

Respondent further argues that the only actual interest expense is on

the books of the parent companies because it is only these companies

that actually borrow money. Akzo further explains that during the

consolidation process, the interest expense recorded on the books of

the subsidiaries is rolled into the interest expense of the parent.

Akzo also states that it is the parent that determines the source from

which funds to operate the company are obtained, and it is the parent

alone that borrows money and incurs the actual interest expense when

such funds are needed. Respondent claims that petitioner's speculations

on how and why companies borrow money, as well as how a parent

determines the amount of the loans and interest allocated to the

subsidiary, are misplaced and irrelevant. These are internal decisions

that take into account a variety of factors and the parent incurs the

only actual interest expenses.

Respondent states that the Department's current method of

calculating interest is a well founded practice that should continue to

be followed in determining the final results for this review.

The Department's Position: The Department's preliminary treatment

of Akzo's U.S. interest expense is in accordance with the Department's

long standing practice and its final determinations in the original

less-than-fair-value (``LTFV'') investigation and the first review of

the order, Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide

from the Netherlands, 61 FR 51,406 (Dep't Comm. 1996) (final admin.

rev.).

It is the Department's practice to calculate the respondent's net

interest expense based on the financing expenses incurred on behalf of

the consolidated group of companies to which the respondent belongs. In

general, this practice recognizes the fungible nature of invested

capital resources (i.e., debt and equity) within a consolidated group

of companies. In Cambargo Correa Metais, S.A. v. United States, Slip

Op. 93-163 (CIT August 13, 1993), the Court of International Trade

ruled that the Department's practice of allocating interest expense on

a consolidated basis due to the fungible nature of debt and equity was

reasonable. The Court specifically quoted the following from Final

Determination of Sales at Less than Fair Value: Certain Small Business

Telephone Systems and Subassemblies Thereof from Korea, 54 FR 53,141,

53149 (1989).

The Department recognizes the fungible nature of a corporation's

invested capital resources, including both debt and equity, and does

not allocate corporate finances to individual divisions of a

corporation * * *. Instead, [Commerce] allocates the interest

expense related to the debt portion of the capitalization of the

corporation, as appropriate to the total operations of the

consolidated corporation.

See also, Final Determination of Sales at Less than Fair Value: Certain

Carbon Steel Butt-Weld Pipe Fittings from Thailand, 60 FR 10552, 10557

(February 27, 1995). The controlling entity within a consolidated group

has the ``power'' to determine the capital structure of each member

company within the group. In this case, Akzo Nobel maintains a

controlling interest in Aramid and includes the company in its

consolidated financial statements. See Final Determination of Sales at

Less Than Fair Value: New Minivans from Japan, 57 FR at 21946 (comment

18) (May 26, 1992).

Therefore, for the final results of review, we have relied on

Akzo's submitted interest expense, which is based on Akzo Nobel's

consolidated financial statements, and have not imputed interest

expense on affiliated party loans as suggested by the petitioner.

Comment 3: The petitioner alleges that either Akzo Nobel Inc. or

Akzo Nobel N.V. has reimbursed Akzo Nobel Aramid Products Inc. for

antidumping duty payments. See Petitioner's Case Brief at 14-16. To

support its claim, petitioner refers the Department to an account item

on the summary trial balance of Akzo Nobel Aramid Products Inc.

Petitioner further supports its position by speculating that certain

amounts may be reimbursed by either Akzo Nobel Inc. or Akzo Nobel N.V.

Petitioner requests the Department, pursuant to 19 CFR 353.26 (a),

deduct from Akzo's U.S. price (USP) an amount equal to 66.92% of Akzo's

total reported entries during the POR.

Akzo claims that it is not being reimbursed for antidumping duties

and

[[Page 38061]]

the petitioner's speculation to the contrary does not warrant a

deduction of antidumping duty deposits from Akzo's U.S. price. Akzo

cites the Department's regulations requiring the Department to deduct

from U.S. price the amount of any antidumping duty which the producer

or reseller: (i) Paid directly on behalf of the importer; or (ii)

reimbursed to the importer. 19 CFR Sec. 353.26 (a). Akzo notes that

this regulation also requires the importer to file a certificate, prior

to liquidation, with the U.S. Customs Service attesting to the absence

of any agreement for the payment or reimbursement of any part of the

antidumping duties by the manufacturer, producer, seller or exporter.

19 CFR Sec. 353.26 (c). The regulation provides that the Department may

presume from an importer's failure to file this certificate that the

producer or reseller paid or reimbursed the antidumping duties. 19 CFR

Sec. 353.26 (c). Akzo argues that it is in full compliance with the

Department's regulations. It states that as required by Sec. 353.26

(c), Akzo Nobel Aramid Products Inc. has filed, prior to liquidation,

certifications with Customs attesting to the absence of any agreement

with the manufacturer, producer, seller or exporter (i.e., Aramid

Products V.o.F.) for the payment or reimbursement of antidumping

duties. Further, the respondent claims that Akzo Nobel Aramid Products

Inc. has not entered into such an agreement with Akzo Nobel Inc. or

Akzo Nobel N.V. In support of its arguments, Akzo cites the ruling in

The Torrington Corp. v. United States, 881 F. Supp. 622, 632 (1995)

(hereafter ``Torrington'') that ``once an importer . . . has indicated

on this certificate that it has not been reimbursed for antidumping

duties, it is unnecessary for the Department to conduct an additional

inquiry absent a sufficient allegation of customs fraud.'' Akzo claims

that because it has filed the requisite certification, and because

petitioner has failed to show any customs fraud, the record establishes

that neither Akzo Nobel Inc. nor Akzo Nobel N.V. has reimbursed Akzo

Nobel Aramid Products Inc. for antidumping duty payments.

Akzo further contends that the CIT has affirmed the Department's

longstanding precedent that absent evidence of reimbursement, the

Department has no authority to make the adjustment to U.S. price

requested by the petitioner. Torrington, at 632. Akzo states that,

according to the CIT, the party who requests the reimbursement

investigation must produce some link between the transfer of funds and

reimbursement of antidumping duties. Akzo argues that the petitioner

has failed to meet this burden because petitioner only pointed to an

account title in a financial statement and speculated as to the nature

of that account. Akzo argues that petitioner has failed to establish

any agreement for reimbursement of antidumping duties between either

Akzo Nobel Inc. or Akzo Nobel N.V. and Akzo Nobel Aramid Products Inc.

Respondent argues that Sec. 353.26 (a) applies only if petitioner shows

that the foreign manufacturer either paid the antidumping duty on

behalf of the U.S. importer or reimbursed the U.S. importer for its

payment of the antidumping duty. According to Akzo, the regulation does

not impose upon the Department an obligation to investigate based on

unsupported allegations. Torrington, at 631; see also Tapered Roller

Bearings from Japan, 62 FR at 11,831, comm.2.

In response to petitioner's argument concerning whether GAAP

permits a company to recognize anticipated refunds from the U.S.

government, Akzo states that it had a reasonable expectation of

obtaining significant refunds of the dumping deposits from the U.S.

Customs Service through the administrative review process. Akzo argues

that the LTFV margin established that the deposit rate was not tied

entirely to pricing analyses, but was largely attributable to imputed

costs based on a corporate structure that no longer exists. Moreover,

upon issuance of the antidumping order, Akzo claims that it ceased

making the lower-priced sales that contributed to the LTFV margin and

cash deposit rate.

Akzo states that, in support of its reimbursement allegation,

petitioner focuses on the April 1996, publication of the preliminary

results of the first administrative review as providing the first

possible indication of antidumping duty liability. The sales subject to

that review, Akzo claims, were concluded in May 1995, which Akzo claims

allowed it sufficient time to fairly estimate the antidumping duty

liability associated with such sales for its 1995, financial statement

and December 31, 1995, trial balance. Accordingly, Akzo claims that

petitioner's speculation of reimbursement of antidumping duties must be

rejected and no punitive inferences taken with regard to the

calculation of Akzo's U.S. prices.

The Department's Position: The Department agrees with Akzo. The

Department's regulations require the Department to deduct from U.S.

price the amount of any antidumping duty which the producer or reseller

(i) paid directly on behalf of the importer or (ii) reimbursed to the

importer. 19 C.F.R.Sec. 353.26 (a)(1996). Absent evidence of

reimbursement, the Department has no authority to make the adjustment

to U.S. price. Torrington, 881 F. Supp. at 632, citing Brass Sheet and

Strip From Sweden, 57 F.R. 2706, 2708 (Dep't Comm. 1992) (final admin.

rev.) and Brass Sheet and Strip From the Republic of Korea, 54 Fed.

Reg. 33,257, 33,258 (Dep't Comm. 1989) (final admin.rev.). In the

instant review, we found no evidence of inappropriate financial

intermingling between Akzo Nobel Aramid Products, Inc. And Akzo Nobel

Inc. or Akzo Nobel N.V. The Department verified that Akzo Nobel Aramid

Products, Inc. is responsible for all cash deposits and duties

assessed. The evidence cited by petitioner, (much of which is

proprietary) does not constitute evidence of reimbursement. At

verification, we found no evidence that the account referenced by

petitioner was in any way related to reimbursement. Further, Akzo Nobel

Aramid Products Inc. has filed the required certifications with Customs

attesting to the absence of any agreement with the manufacturer,

producer, seller, or exporter (i.e., Aramid Products V.o.F.) for the

payment or reimbursement of antidumping duties. The Department found no

evidence that Akzo Nobel Aramid Products Inc., has entered into such an

agreement with Akzo Nobel Inc. or Akzo Nobel N.V. (For a more detailed

discussion of this issue, see the memorandum to the file dated July 7,

1997). Based upon the above, we find that 19 C.F.R. Sec. 353.26 is not

applicable in this case.

Comment 4: The petitioner argues that the Department should include

Akzo's third party payments as part of Akzo's home market indirect

selling expenses because such payments cannot be tied to specific sales

transactions. The petitioner also argues that, if the Department

continues to treat the payments as direct selling expenses, it should

not apply the adjustment to sales made in the POR because the third

party did not make any claims for such payments and because the

calculated rate for direct selling expenses was based upon the previous

year's sales.

Akzo argues that the Department properly treated home market third

party payments as direct selling expenses, just as it treated U.S.

third party payments. Akzo states that it made third party payments as

an incentive for companies to specify the use of its products in their

goods. The respondent claims that Akzo only made third party payments

after purchases of the subject

[[Page 38062]]

merchandise in a converted form were made. Akzo claims that petitioner

advances no theory regarding why Akzo would make such payments other

than to further the sale of the subject merchandise to Akzo's direct

customers. Akzo argues that the petitioner is mistaken that the

Department requires third-party payments to be transaction specific and

tied to particular sales to qualify as direct selling expenses. Akzo

claims that the Department normally accepts claims for home market

direct selling expenses as direct adjustments to price if it determines

that a respondent reported the expense:

on an allocated basis, provided that it was not feasible for the

respondent to report the expense on a more specific basis and the

allocation does not cause unreasonable distortions (i.e., was likely

to have been granted proportionately on sales of scope and non-scope

merchandise).

Tapered Roller Bearings from Japan, 62 FR at 11, 839, comm.9.

Akzo states that it has reported its third party payment expense on

a non-distortive, allocated basis by dividing the total payment over

the total quantity of all eligible sales, i.e., sales of a specific

product, to a specific customer. For this reason, Akzo believes that

there is no basis for the Department to deny Akzo's claim for a direct

selling expense.

Akzo claims it has reported in its questionnaire response that its

third party payments are identical to the programs verified by the

Department during the course of the original LTFV investigation. Akzo

notes that the Department accepted its allocation methodology without

verification during the first administrative review. Akzo states that,

in the second review, it has reported third party payments on home

market sales in the same manner as in the original LTFV investigation

and first review. Akzo states that payments were made to the very same

company in the first review as in the current review. The respondent

notes that the Department accepted this approach in the previous

administrative review and in the instant review verified the underlying

data. According to Akzo, the Department made reference to this issue in

its Home Market Sales Verification Report at 9. Akzo argues that it

adopted the identical allocation methodology for its third party

payments made in the U.S. market as in the home market. According to

Akzo, the petitioner has not raised any objection to Akzo's identical

third party payment methodology in the U.S. market because these

payments are included in the margin calculation to reduce U.S. price.

Akzo argues that, if the Department agrees with petitioner's objection

to the home market methodology, it must adopt the same position for the

identical U.S. market methodology. However, Akzo argues that the

Department properly used Akzo's legitimate third party payments in the

home market to reduce home market prices, and that the Department

should maintain this decision in the calculation of the final results.

The Department's Position: We agree that Akzo has properly included

home market third party payments in its direct selling expenses. The

Department requires third party payments to be transaction-specific and

tied to particular sales to qualify as direct selling expenses. The

Department normally accepts claims for home market direct selling

expenses as direct adjustments to price on an allocated basis, provided

that it was not feasible for the respondent to report the expense on a

more specific basis and the allocation does not cause unreasonable

distortions (i.e., the allocation of direct selling expenses was likely

to have been granted proportionately on sales of scope and non-scope

merchandise). See Tapered Roller Bearings from Japan, 62 FR at 1,839,

comm.9. The Department verified that Akzo was not able to report the

expense on a more specific basis. See Home Market Sales Verification

Report at 9. Therefore, the Department accepted the allocation

methodology that is consistent with the Department's position in the

LTFV investigation and the first administrative review. Akzo has

reported its third party payment expense on a non-distortive, allocated

basis by dividing the total payment over the total quantity of all

eligible sales, i.e., sales of a specific product, to a specific

customer. For this reason, the Department will continue to treat home

market third party payments as direct selling expenses.

We verified that Akzo's third party payments are based upon total

purchases of converted Aramid product from Aramid's direct customers

(the converters who provide additional finishing or further

manufacturing to Aramid's products). During verification, the

Department verified the third party payment programs and reviewed

letter agreements between the parties, credit notes issued to the third

party payment recipient and purchases by the direct customer and found

no discrepancies. See Home Market Sales Verification Report, Exhibit

16. The Department also verified that Akzo made third party payments as

an incentive for companies to specify the use of its products in their

goods, and that Akzo only made third party payments after purchases of

the subject merchandise in a converted form were made. For the above

reasons, the Department has determined that it is appropriate to

include home market third party payments in its direct selling

expenses.

Comment 5: The petitioner argues that the Department did not carry

out its intention to remove from the pool of potential home market

matches the sales that failed the arm's-length test and suggests the

Department correct its mistake in the final results. In addition, the

petitioner makes two arguments--one methodological, and one

computational--regarding the model matching methodology applied for the

preliminary results of the review. First, the petitioner claims that

the Department mistakenly applied a model-match program in which the

earliest home market sale found within the Department's 90/60 day

window is used for comparison, rather than the home market sale that

``most closely'' corresponds to the U.S. sale. Second, petitioner

claims that the Department improperly resorts to constructed value if

the first home market sale selected for comparison is below-cost, even

though other suitable above-cost home market sales are available for

comparison.

Akzo contends that both of these arguments should be rejected. Akzo

asserts that the first argument petitioner makes is incorrect on the

grounds that the Department applied a long-standing practice rooted in

the statutory definition of such or similar merchandise. Respondent

argues that petitioner's second argument regarding the use of CV is

similarly flawed because the Department has issued policy papers which

set forth a model matching methodology that contradicts petitioner's

claim that the Department improperly resorted to constructed value if

the first home market sale selected for comparison is below-cost, even

though other suitable above-cost home market sales are available for

comparison. Import Administration Policy Bulletin No. 92/4 (Dep't Comm.

12/15/92) entitled ``The Use of Constructed Value in COP Cases.''

The Department's Position: The Department did carry out its

intention to remove the sales that failed the arm's length test from

its preliminary model match program. The petitioner's contrary

conclusion was due to the Department's shortened print command. In the

``print setup'' of the preliminary ``arm's length'' computer program,

the Department specified (when printing out customer numbers), that

only six digits of the eight digit reference numbers were to be

printed, even though the respondent's eight digit code

[[Page 38063]]

was properly being read by the computer and used in the calculations.

Petitioner may have been confused by a six digit customer reference

number printed in the program output when in actuality the customer

numbers had eight digits. For clarity, the Department has changed the

print command in the final arm's length computer program so that eight

digit customer codes are printed out, rather than being cut off at six

digits. The result of this print command change is that in the final

model match and final margin programs (which read in the output of the

arm's length program), all eight digits of the customer code will be

printed in the program outputs.

The Department has continued to use its model match program which

finds the most similar home market model (CONNUMH), based on physical

characteristics, that is within the 90/60 day window and passes the

difference in merchandise (DIFMER) test. The Department relies on its

margin calculation program to find the most contemporaneous match of a

given home market model. The model match program generates home market

month (MONTHH) data. However, the (MONTHH) data that appears in the

model match output is not read into the Department's margin program,

and does not influence the final margin calculations.

Consistent with the Department's practice, we resorted to

constructed value if the first best home-market sale selected for

comparison was below-cost, even though other suitable above-cost home

market sales were available for comparison. See Antifriction Bearings

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

al. (57 FR 28360, 28373); (``although section 773(b) expresses a

preference for using sales rather than CV as the basis of FMV, it does

not instruct the Department to use the next most similar merchandise as

the basis for FMV, but rather it requires the use of CV''); see also

Certain Circular Welded Carbon Steel Pipes and Tubes from Thailand (61

FR 1328, 1331). (The Department rejects the position that, prior to

using CV, the Department should have exhausted all three alternative

matches provided in the company concordance.)

Comment 6: The petitioner states that the Department should

amortize goodwill expenses over a period that covers the POR. The

petitioner contends that, unless the Department includes this amount,

it will improperly understate the actual cost of producing PPD-T aramid

fiber during the POR. The petitioner argues that in the prior review

the Department adjusted Akzo's costs to account for revalued assets and

excluded the entire amount of Akzo's goodwill amortization from general

expenses to avoid double counting the expense and to recognize that any

goodwill remaining after adjustment to the revalued assets was not part

of Aramid's production costs. The petitioner believes that the

Department's treatment of Akzo's goodwill expenses in the first review

is not supported by substantial evidence on the record and is contrary

to law.

The petitioner states that proper treatment of Akzo's goodwill

expenses requires that these costs be amortized over a period that

includes the current review. The petitioner contends that the

preliminary results fail to take such expenses into account. Petitioner

argues that unless Akzo's cost of production is revised in the final

results to include an amount for amortized goodwill expenses, the

Department once again will improperly understate Akzo's cost of

producing PPD-T aramid fiber during the period of review.

Akzo states that the proper treatment of the goodwill that arose

from the purchase of Aramid Products was the focus of the first

administrative review, and that the Department spent a significant

amount of time gathering and analyzing all aspects of the purchase. At

the end of the analysis, the Department determined that, for cost

calculation purposes, it was more appropriate to isolate those

components of goodwill that pertained to assets used in the production

of subject merchandise. See Aramid Fiber Formed of Poly Para-Phenylene

Terephthalamide from the Netherlands, (61 FR 51,406). Akzo states that

it complied with the decision presented in the first administrative

review in preparing the response for this review, and that the

Department complied with the petitioner's request to verify. Akzo cites

Cost Verification Exhibits 36 and 37, which were used to verify the

submitted depreciation expense for Emmen and Delfzijl. Akzo suggests

that no circumstances warrant deviation from the well-reasoned decision

in the first administrative review.

The Department's Position: The Department agrees with Akzo. As

explained at length in the final results of the first administrative

review, the Department determined to accept Akzo's accounting method

for the amortization of goodwill expense as reasonable. The Department

spent a significant amount of time gathering and analyzing all aspects

of the facts surrounding the goodwill issue during the first

administrative review. At the end of its analysis, the Department

determined that, for cost calculation purposes, it was more appropriate

to isolate those components of goodwill that pertained to assets used

in the production of subject merchandise. See Aramid Fiber Formed of

Poly Para-Phenylene Terephthalamide from the Netherlands, 61 FR 51,406.

The Department verified that Akzo complied with the Department's

determination on goodwill in the first administrative review in

preparing its response for the instant review. Cost Verification

Exhibits 36 and 37 were used to verify the submitted depreciation

expense for Emmen and Delfzijl. See Cost Verification Report to the

File, dated February 21, 1997.

Comment 7: The petitioner suggests the following corrections be

made to the preliminary margin program: (1) Correct the customer code

or other aspects of the programming so that sales to the affiliated

customer that failed the arm's-length test are properly excluded; (2)

correctly apply the warranty-rate factor reported by Akzo; (3) use the

highest value for the specific U.S. expense reported by Akzo in its

data base to fill in missing U.S. expense data rather than use zeros;

(4) at lines 3581 to 3584 of the preliminary program, petitioner

recommends that the Department not divide guilder (NLG)-denominated

home market variables by the conversion factor (2.2046 lbs/kg) before

adding them to corresponding NLG-denominated U.S. variables; (5)

petitioner recommends not duplicating conversions at lines 3727 to 3730

of the preliminary margin program, because these weight conversions

already had occurred at lines 3488, 3716, 3489, and 3490; (6) at line

3757 petitioner recommends that the Department convert credit reported

in Akzo's constructed value data base (CREDCV) from a per-kilogram to a

per pound amount before making subtractions; and (7) at line 3734 of

the preliminary margin program, petitioner recommends the correction of

a currency conversion error in adding a dollar denominated U.S. packing

variable (PACKU) to a NGL-denominated components of constructed value

(CV).

Akzo recommends that, in calculating foreign movement expenses

(line 3500), the Department convert the international freight costs

from guilders to dollars before adding these costs to dollar

denominated insurance costs to arrive at the value for foreign movement

expenses. Akzo did not make any further recommendations regarding the

Department's preliminary margin program. In addition, Akzo did not

object to any of petitioner's

[[Page 38064]]

aforementioned suggested corrections in its rebuttal briefs.

The Department's Position: The Department agrees with both

petitioner and respondent and has addressed all of the suggestions in

its final margin program. For further explanation see Calculation

Memorandum, July 7, 1997.

Final Results of Review

As a result of our review, we determine that the following

weighted-average margin exists:

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

Margin

Manufacturer/exporter Period of review (percent)

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

Akzo...................................... 6/1/95-5/31/96 26.25

All Other................................. 6/1/95-5/31/96 66.92

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

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between export price and normal value may vary from the

percentage stated above. The Department will issue appraisement

instructions on each exporter directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of this notice of final results of review for all

shipments of PPD-T aramid fiber from the Netherlands entered, or

withdrawn from warehouse, for consumption on or after the publication

date, as provided by section 751(a)(1) of the Act: (1) The cash deposit

rate for the reviewed company will be the rate listed above; (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 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) for all other producers and/or exporters of

this merchandise, the cash deposit rate shall be 66.92 percent, the

``all others'' rate established in the LTFV investigation (59 FR 32678,

June 24, 1994). These deposit requirements shall remain in effect until

publication of the final results of the next administrative review.

This notice serves as a final reminder to importers of their

responsibility under 19 CFR 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 subsequent assessment

of double antidumping duties.

Notification to Interested Parties

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 of

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: July 7, 1997.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-18730 Filed 7-15-97; 8:45 am]

BILLING CODE 3510-DS-P