Gray Portland Cement and Clinker From Mexico: Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-802]

Gray Portland Cement and Clinker From Mexico: 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 October 3, 1996, the Department of Commerce (the

Department) published the preliminary results of its administrative

review of the antidumping duty order on gray portland cement and

clinker from Mexico. The review covers one manufacturer/exporter,

CEMEX, S.A. de C.V. (CEMEX), and its affiliated party Cementos de

Chihuahua, S.A. de C.V. (CDC), and the period August 1, 1994, through

July 31, 1995. We gave interested parties an opportunity to comment on

the preliminary results. We received comments from petitioners and

respondent. We received rebuttal

[[Page 17149]]

comments from the petitioners and respondent.

EFFECTIVE DATE: April 9, 1997.

FOR FURTHER INFORMATION CONTACT: Nithya Nagarajan or Dorothy Woster,

Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230; telephone: (202) 482-3793.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

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 citations to the Department's regulations are to the

current regulations, as amended by the interim regulations published in

the Federal Register on May 11, 1995 (60 FR 25130).

Background

On October 3, 1996, the Department published in the Federal

Register (61 FR 51676) the preliminary results of its administrative

review of the antidumping duty order on gray portland cement and

clinker from Mexico covering the period August 1, 1994 through July 31,

1995. The Department has now completed this review in accordance with

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

Scope of the Review

The products covered by this review include gray portland cement

and clinker. Gray portland cement is a hydraulic cement and the primary

component of concrete. Clinker, an intermediate material product

produced when manufacturing cement, has no use other than being ground

into finished cement. Gray portland cement is currently classifiable

under the Harmonized Tariff Schedule (HTS) item number 2523.29 and

cement clinker is currently classifiable under HTS item number 2523.10.

Gray portland cement has also been entered under HTS item number

2523.90 as ``other hydraulic cements.'' The HTS subheadings are

provided for convenience and U.S. Customs Service purposes only. Our

written description of the scope of the order remains dispositive.

Verification

In accordance with section 353.25(c)(2)(ii) of the Department's

regulations, we verified information provided by CEMEX and CDC using

standard verification procedures, including on-site inspection of the

manufacturer's facilities, the examination of relevant sales and

financial records, and selection of original documentation containing

relevant information.

Analysis of Comments Received

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

Cement and the National Cement Company of California (petitioners), and

CEMEX and CDC submitted case briefs on November 4, 1996, and rebuttal

briefs on November 27, 1996. A public hearing was held on December 11,

1996.

Revocation of the Underlying Order

Comment 1: CEMEX contends that the antidumping duty order should be

revoked and considered void ab initio due to the Department's alleged

failure to investigate petitioners' standing in the original less-than-

fair-value (LTFV) investigation. Specifically, CEMEX argues that ``[a]t

the time of the original investigation, the relevant U.S. statute that

prescribed the requirement to establish standing to file an antidumping

petition contained no express language addressing the degree of support

necessary for a petition to be filed in a regional industry case * * *

the statute simply required that the petition be filed `on behalf of'

an industry but provided no express guidance on how compliance with

this criterion was to be determined.'' Faced with this lacuna in the

statute, CEMEX asserts, the Department is compelled by the decision in

Murray v. Schooner Charming Betsy, 6 U.S. 64, 2 Cranch 64 (1804), to

reinterpret U.S. law in accordance with the international obligations

of the United States. In the opinion of CEMEX, this means that the

Department is required (in the fifth review) to revisit the issue of

initiation in the original investigation and abide by a July 9, 1992,

ruling by a three-member panel convened under the auspices of the 1947

General Agreement on Tariffs and Trade (``1947 GATT''). See Report of

the Panel, United States--Anti-Dumping Duties on Gray Portland Cement

and Cement Clinker From Mexico, GATT Doc. ADP/82 (July 9, 1992) (``GATT

Report''). According to CEMEX, this panel held that the initiation of

the original investigation contravened the requirements of the 1979

GATT Antidumping Code (``GATT AD Code'') because the Department

``failed properly to ascertain'' that ``all or almost all'' of the

regional industry supported the original petition. If the Department

revisited the issue of initiation in light of the GATT Report, CEMEX

maintains, it would revoke the order ab initio, terminate all

proceedings, and refund ``at the very least, all cash deposits posted

during the POR.''

CEMEX further maintains that the Department has the authority to

revoke the antidumping order at this stage of the proceeding. Citing

Gilmore Steel Corp. v. United States, 583 F. Supp. 607 (CIT 1984),

CEMEX argues that government agencies (like the Department) have the

authority to correct ``jurisdictional defects'' at any time. CEMEX also

argues that the decision in Ceramica Regiomontana S.A. v. United

States, 64 F.3d 1579 (Fed. Cir. 1995) provides ``specific legal

precedent to revoke the order in this case'' and that its failure to

challenge the Department's determination on industry support for the

petition during the original LTFV investigation should be excused given

the ``exception to the doctrine of exhaustion of administrative

remedies upheld in Rhone Poulenc v. United States, 583 F. Supp. 607

(CIT 1984).''

The petitioners claim, in response, that these are the same

arguments the Department considered and rejected in the third

administrative review of this order. Since ``CEMEX has presented no new

arguments or information about any change in circumstances that would

justify a departure from the Department's reasoning in the third

administrative review,'' Petitioners assert that the Department should

reject CEMEX's arguments in this review.

Petitioners note that the GATT Report was never adopted by the GATT

Antidumping Code Committee. Therefore, given the legal framework of the

1947 GATT, it imposed no international legal obligation upon the United

States which might trigger the doctrine of statutory construction

articulated in the Charming Betsy case.

Petitioners also contend that U.S. law takes precedence over the

1947 GATT. ``Accordingly, even adopted GATT panel decisions are not

binding on the United States to the extent that such decisions are

inconsistent with U.S. law or with the intent of Congress.''

Petitioners further note that the Department initiated the

antidumping investigation in accordance with U.S. law. According to

petitioners, neither the courts nor the Congress has required the

Department to affirmatively establish prior to the initiation of

regional-industry cases that the petition is supported by ``all or

almost all'' of the relevant industry. Indeed, petitioners assert, the

Department's longstanding practice of presuming industry support

[[Page 17150]]

for a petition in the absence of evidence to the contrary has been

upheld by numerous courts, including the Court of Appeals for the

Federal Circuit (``Federal Circuit'') in Suramerica de Aleaciones

Laminadas, C.A. v. United States, 966 F.2d 660, 663 (Fed. Cir. 1992).

Finally, petitioners assert that the Department lacks the authority

to revoke the order or otherwise rescind its 1989 initiation of the

LTFV investigation. Quoting from the final results of the third

administrative review, the petitioners argue that CEMEX failed to

challenge the Department's determination on industry support for the

petition before the Court of International Trade (``CIT'') and,

accordingly, under sections 514(b) and 516A(c)(1) of the Act, ``that

determination is final and binding on all persons, including the

Department.''

Department's Position: For the following reasons, CEMEX's arguments

are without merit. First, like the GATT itself, panel reports under the

1947 GATT are not self-executing and thus have no direct legal effect

under U.S. law.

Second, neither the 1947 GATT nor the GATT AD Code obligates the

United States to affirmatively establish prior to the initiation of a

regional-industry case that all or almost all of the producers in the

region support the petition. There certainly is no suggestion in either

instrument that the standing requirements in regional-industry cases

are any more rigorous than the standing requirements in national-

industry cases. Furthermore, a GATT panel report, such as the present

one, has no legal effect or formal status unless and until it is

adopted by the GATT Council or, in the case of antidumping actions, the

GATT Antidumping Code Committee. This follows from the fact that the

1947 GATT has, throughout its history, operated on the basis of

consensus for purposes of decision-making in general and, the

resolution of disputes, in particular. In the present case, it is

undisputed that the GATT Report has never been adopted by the

Antidumping Code Committee. Thus, the recommendations contained in the

report are not binding, do not impose any international obligations

upon the United States, and do not trigger the rule of statutory

construction set forth in the Charming Betsy case.

Third, the object of CEMEX's comment is not the preliminary results

of this review. Rather, CEMEX complains about an event which occurred

over seven years ago--the initiation of the original LTFV

investigation. The time to voice such objections before the Department

was during the investigation. Instead, CEMEX, as well as the other

Mexican cement producers that participated in the original

investigation (Apasco, S.A. de C.V. and Cementos Hidalgo) sat silent

before the Department. See Final Determination of Sales at Less Than

Fair Value, Gray Portland Cement and Clinker From Mexico 55 Fed. Reg.

29244 (1990) (hereinafter ``Final LTFV Determination''). Moreover,

neither CEMEX nor any other party appealed the agency's final

affirmative LTFV determination (including the decision to initiate) to

the appropriate court, and the statute of limitations for doing so has

long expired. See 19 U.S.C. Sec. 1516a(a)(2)(A).

The only party that appealed the Department's final LTFV

Determination was the petitioners. They challenged certain aspects of

the Department's final determination before the CIT and the Federal

Circuit. See Ad Hoc Committee Of AZ-NM-TX-FL Producers of Gray Portland

Cement v. United States, Slip Op. 94-152 (CIT), aff'd, 68 F.3d 487

(Fed. Cir. 1995). CEMEX participated in that litigation as an

intervenor on the side of the Department. On October 10, 1995, the

Federal Circuit issued an opinion which disposed of the last issue in

that case.

Therefore, even if the Department, of its own volition, were to

reinterpret U.S. law in light of the GATT Report, it lacks the legal

authority in this review to revoke the order or otherwise rescind the

initiation of the underlying investigation. As we stated in the final

results of the third administrative review and reaffirm here:

``* * * the Department has no authority to rescind its

initiation of the LTFV investigation. Under sections 514(b) and

516A(c)(1) of the Act, a LTFV determination regarding initiation

becomes final and binding unless a court challenge to that

determination is timely initiated under 516A. Even if judicial

review of a determination is timely sought, the Department's

determination continues to control until there is a resulting court

decision `not in harmony with that determination'.'' See 19 U.S.C.

Sec. 1516a(c)(1).

Gray Portland Cement and Clinker from Mexico; Final Results Third

Review, 60 FR 26865 (1995).

In this case, no one challenged the Department's determination on

standing before the CIT. Therefore, that determination is final and

binding on all persons, including the Department. (emphasis added).

Fourth, no court, including the court in Gilmore Steel, has ever

held that the Department has the authority, in an administrative review

under section 751(a) of the Act, to reach back more than seven years

and reexamine the issue of industry support for the original petition.

Gilmore Steel involved a challenge to the termination of a pending

investigation based upon information obtained in the course of that

investigation. In particular, the petitioner, in that case, contended

that the Department lacked the authority to rescind the investigation

based upon insufficient industry support for the petition after the 20-

day period provided for in section 732(c) of the Act (19 U.S.C.

Sec. 1673a(c)) had elapsed. 585 F. Supp. at 673. In upholding the

Department's determination, the court recognized that administrative

officers have the authority to correct errors, such as ``jurisdictional

defects,'' at anytime during the proceeding. Id. at 674-75. The court

did not state or imply that a change in legal interpretation (in this

case a non-binding one) authorizes administrative officers to reopen

prior agency decisions which are otherwise final. The court simply held

that the administering authority may, in the context of the original

investigation, rescind an ongoing proceeding after expiration of the

20-day initiation period.

Similarly, in Ceramica Regiomontana, S.A. v. United States, 64 F.3d

1579 (Fed. Cir. 1995), the respondent did not ask the Department to

reconsider and rescind a decision made in a prior proceeding. Indeed,

the court's entire analysis was based upon the belief that the prior

decision--the issuance of a countervailing duty order under former

section 303(a)(1) of the Act against ceramic tile from Mexico--was in

accordance with law (i.e., ``properly issued''). Ceramica Regiomontana

concerned the authority of the Department to assess duties pursuant to

a valid order after Mexico became a ``country under the Agreement''

which entitled it to an injury test under section 701 of the Act. The

court held that the Department lacked such authority and ordered the

agency, on remand, to revoke the order as to all unliquidated entries

occurring after this date. Id. at 1583.

CEMEX also errs when it relies on Rhone Poulenc v. United States to

support its claim that ``an exception to the doctrine of exhaustion of

administrative remedies'' permits the ``retroactive application of the

1992 GATT decision.'' 583 F. Supp. 607 (CIT 1984) (a party may raise a

new issue on appeal if the applicable law has changed due to a judicial

decision that arose after the lower court or agency issued the

contested determination). First of all, whether CEMEX's claim is barred

by the

[[Page 17151]]

doctrine of exhaustion of administrative remedies is a matter more

properly decided by a reviewing court or binational panel under Chapter

19 of the North American Free Trade Agreement. Secondly, even if the

issue is timely, the exception claimed by CEMEX does not apply. The

GATT Report is not a judicial decision and it did not change U.S. law.

In fact, as we explain above, it did not even effect a change in the

law on the international plane (i.e., as between Mexico and the United

States).

Finally, we note, as we did in the final results of the third

review, that numerous courts have upheld the Department's practice of

assuming, in the absence of evidence to the contrary, that a petition

filed on behalf of a regional or national industry is supported by that

industry. See, e.g., NTN Bearing Corp. v. United States, 757 F. Supp.

1425, 1427-30 (CIT 1991); Citrosuco Paulista v. United States, 704 F.

Supp. 1074, 1085 (CIT 1988); Comeau Seafoods v. United States, 724 F.

Supp. 1407, 1410-12 (CIT 1994).

Indeed, the very issue raised by CEMEX in this review was before

the Federal Circuit in the Suramerica case. 966 F.2d at 665 & 667. In

Suramerica the appellees challenged the Department's interpretation of

the phrase ``on behalf of'' which applies to both national-and

regional-industry cases. Specifically, the appellees argued that the

Department's practice of presuming industry support for a petition was

contrary to the statute and an unadopted GATT panel report involving

the U.S. antidumping order on certain stainless steel hollow products

from Sweden. In affirming the Department's practice, the Federal

Circuit observed that the phrase ``on behalf of'' was not defined in

the statute. Id. at 666-67. The statute was, in fact, open ``to several

possible interpretations.'' In the opinion of the court, the

Department's practice with regard to standing and industry support for

a petition reflected a reasonable ``middle position.'' 966 F.2d at 667.

While there was a gap in the statute, the court stated, ``Congress did

make [one thing] clear--Commerce has broad discretion in deciding when

to pursue an investigation, and when to terminate one.'' Id.

The court then dismissed the argument that the gap in the statute

must be interpreted in a manner that is consistent with the 1947 GATT

or the GATT panel ruling:

Appellees next argue that the statutory provisions should be

interpreted to be consistent with the obligations of the United States

as a signatory country of the GATT. Appellees argue that the

legislative history of the statute demonstrates Congress's intent to

comply with the GATT in formulating these provisions. Appellees refer

also to a GATT panel--a group of experts convened under the GATT to

resolve disputes--which ``recently rejected [Commerce's] views on the

meaning of `on behalf of.' ''

We reject this argument. First, the GATT panel itself

acknowledged and declared that its examination and decision were

limited in scope to the case before it. The panel also acknowledged

that it was not faced with the issue of whether, even in the case

before it, Commerce had acted in conformity with U.S. domestic

legislation. Second, even if we were convinced that Commerce's

interpretation conflicts with the GATT, which we are not, the GATT

is not controlling. While we acknowledge Congress's interest in

complying with U.S. responsibilities under the GATT, we are bound

not by what we think Congress should or perhaps wanted to do, but by

what Congress in fact did. The GATT does not trump domestic

legislation; if the statutory provisions at issue here are

inconsistent with the GATT, it is a matter for Congress and not this

court to decide and remedy. See 19 U.S.C. Sec. 2504(a); Algoma Steel

Corp. v. United States, 865 F.2d 240, 242 . . . (Fed. Cir. 1989).

Id. at 667-68.

Ordinary Course of Trade

Comment 2: CEMEX contends that the Department improperly concluded

that CEMEX's home market sales of Type II cement were outside the

ordinary course of trade. In particular, CEMEX contends that the

ordinary course of trade provision does not contemplate the elimination

of an entire category of identical or similar merchandise from the

calculation of normal value. Pointing to language in the statute and

the Statement of Administrative Action for the URAA, CEMEX asserts that

references to ``sales,'' ``transactions,'' and ``types of

transactions'' evidence congressional intent to bar the Department from

disregarding ``an entire merchandise category, particularly a category

of merchandise identical to the merchandise sold in the United

States.'' Rather, CEMEX maintains that the purpose behind the ordinary

course of trade provision is to exclude certain individual sales or

transactions of comparison merchandise which are unrepresentative of

sales in general.

CEMEX suggests that the Department has confused the ordinary course

of trade provision with the ``fictitious market'' provision, which

according to CEMEX, has sufficient scope to serve as the basis for

excluding an entire category of such or similar merchandise. This is

because, CEMEX contends, the fictitious market provision refers to

sales made to create a ``fictitious market'' and thus, by its nature,

may encompass all home market sales as opposed to merely individual

sales or transactions. CEMEX argues that the ordinary course of trade

provision, on the other hand, is limited to excluding only certain home

market sales of comparison merchandise.

CEMEX concludes that if the Department continues to interpret the

statute as permitting the entire universe of identical merchandise to

be disregarded, the statute requires the Department to rely upon normal

value calculated on the basis of constructed value rather than home

market prices of similar merchandise. This is because, CEMEX maintains,

19 U.S.C. Sec. 1677(b)(a)(4) provides that if ``normal value cannot be

determined by use of home market prices, the (Department) should resort

to constructed value.''

In addition, CEMEX claims that even if the Department continues to

apply the ordinary course of trade provision to determine whether to

exclude CEMEX's universe of home market sales of identical merchandise,

the administrative record demonstrates that CEMEX's home market sales

of Type II cement were made within the ordinary course of trade during

the fifth administrative review. To support this argument, CEMEX

maintains that the Department should focus on the actual sale terms and

practices surrounding the sales of Type II cement as compared to other

cement types subject to the order (Type I cement and Type V cement.) In

this regard, CEMEX notes that shipping terms for all cement types were

identical (C.I.F. or F.O.B.) which is ``indicative'' of sales in the

ordinary course of trade. Moreover, CEMEX notes that all pre-sale

freight expenses absorbed by CEMEX for Type II sales were incurred in

precisely the same manner as pre-sale freight expenses for all other

cement types, including Type I cement.

CEMEX further argues that the Department should not have focused on

shipping distances to the customer. According to CEMEX, shipping

distance is not a relevant factor in the ordinary course of trade

determination. Moreover, CEMEX contends, even if shipping distance was

relevant ``the administrative record established that it was not

extraordinary to ship cement distances greater than what Department has

characterized as an optimum maximum distance of 150 miles from a given

plant and to absorb such transportation costs.''

Next, CEMEX argues that in the current review, relative

profitability was

[[Page 17152]]

the only factor supporting a finding that home market sales of Type II

cement were outside the ordinary course of trade. CEMEX contends,

however, that this fact is an insufficient basis to determine that

sales of Type II cement are outside the ordinary course of trade and

was given too much weight in the preliminary determination. CEMEX

argues that ``divergent profit levels are neither necessary nor

sufficient to sustain an `outside the ordinary course of trade

decision' absent other supporting factors.'' Citing Certain Welded

Carbon Steel Standard Pipes and Tubes from India, CEMEX notes that

``the Department has not imposed a requirement that sales be made at a

different level of profit in order to be considered outside the

ordinary course of trade.'' 56 FR At 64,755. Likewise, in Certain

Circular Welded Carbon Steel Pipes and Tubes from Thailand, 61 FR 1328

(1996), CEMEX maintains the Department ``reversed (a) preliminary

finding that sales * * * were outside the ordinary course of trade * *

* despite the existence of a profit disparity between the two types of

pipe analyzed.''

CEMEX also argues that the fact that home market sales of Type II

cement promote CEMEX's corporate image does not indicate that such

sales are outside the ordinary course of trade. According to CEMEX,

promotion of corporate image is not a relevant factor in the

Department's ordinary course of trade determination.

CEMEX also argues that the relative sales volume of Type II cement

as compared to other cement types is not indicative of Type II cement

being sold outside the ordinary course of trade. In particular, CEMEX

argues, Department precedent establishes that low relative sales volume

is a factor indicative of sales outside the ordinary course trade only

in situations where there is no bona fide demand or ready market for

the product. For example, in Certain Circular Welded Carbon Steel Pipes

and Tubes from Thailand, CEMEX asserts that the Department found

certain sales to be in the ordinary course of trade not withstanding

low relative sales volume because there was a bona fide demand for the

product in the home market. CEMEX maintains that the administrative

record in this case establishes both a significant volume of home

market sales for Type II cement in absolute terms and the existence of

a bona fide home market demand of Type II cement. Therefore, CEMEX

maintains ``the existence of a bona fide home market for Type II cement

negates any possible inference that a low sales volume relative to

other cement types indicates that such sales are outside the ordinary

course of trade.''

Likewise, CEMEX argues that the historical sales trends indicate

that CEMEX's home market sales of Type II cement were made within the

ordinary course of trade. CEMEX contends that it began to manufacture

and sell Type II cement in Mexico in the mid 1980's, at the same time

manufacture and sale of Type II cement began for export. This is

consistent, CEMEX maintains, with the definition of ordinary course of

trade which provides ``the conditions and practices for which, for a

reasonable time prior to the exportation of the merchandise which is

the subject of an investigation, have been normal in the trade under

consideration.''

Petitioners maintain that the Department correctly applied the

statute by excluding all home market sales of Type II cement from

normal value. In particular, petitioners argue that CEMEX incorrectly

asserts that the statute and the SAA preclude the Department from

excluding an entire category of sales. Rather, petitioners explain,

``Congress nowhere expressed a limitation on the number of sales or

transaction that may be excluded from normal value.'' Therefore,

petitioners conclude that the sales or transactions in question may be

a handful of sales or all the sales of a particular type of

merchandise.

Petitioners also argue that the Department correctly applied the

statute by basing normal value on sales of Type I cement. Petitioners

note that in CEMEX S.A. v. United States, Slip Op. 95-72, at 24-28 (CIT

1995), the court rejected the Department's use of the constructed value

of Type II cement as the basis for foreign market value, rather than

home market sales of Type I cement, after the Department excluded Type

II sales as outside the ordinary course of trade. Petitioners point out

that the court found the use of similar merchandise was dictated by the

statute. Therefore, petitioners conclude that constructed value can

only be used if the Department determines that the normal value of the

subject merchandise cannot be determined on the basis of home market

sales of the foreign like product. In other words, petitioners argue

that ``as long as there are home market sales of similar merchandise

within the ordinary course of trade--in this case sales of Type I

cement--the Department is required to compare those sales to CEMEX's

U.S. sales.'' Finally, petitioners point out that the statutory

provision cited by CEMEX (19 U.S.C. 1677(b)(1)) directs the Department

to use constructed value only when all sales of the comparison

merchandise are disregarded as being below cost.

In addition, petitioners argue that there is sufficient evidence on

the record to support the Department's determination that sales of Type

II cement are outside the ordinary course of trade. First, petitioners

note that the Department correctly found in the preliminary results

that CEMEX's home market shipping arrangements for Type II cement were

unusual compared to its shipments of other types of cement. In

particular, petitioners argue that during the period of review, CEMEX

shipped Type II cement greater distances and absorbed the freight

expense. To support this claim petitioners point out that prior to the

antidumping order, CEMEX produced Type II cement at 11 plants

throughout Mexico. In direct response to the antidumping order,

however, petitioners claim that CEMEX radically altered its production

and distribution arrangements for Type II cement by consolidating

production at Hermosillo despite the fact that home market demand for

this cement type is centered in the Mexico City area.

Petitioners assert that CEMEX's claim that shipping terms were

identical for all cement types is misleading. Petitioners argue that

CEMEX's claim is ``merely an attempt to divert the Department's

attention from the fact that CEMEX's shipping arrangements for Type II

cement--not its `shipping terms'--were highly unusual compared to sales

of other cement types.'' Quoting the CIT in the CEMEX case, petitioners

argue, ``the statute ... focuses not on the company's similarity of

product treatment but on whether the treatment of the particular

product at issue, here Types II and V cement, is `normal in trade.' ''

Slip Op. 95-72 at 10. Petitioners point out that CEMEX makes all of its

long distance sales of Type II cement C.I.F. Moreover, a significant

number of CEMEX's plants sold Type I cement on a F.O.B. basis. In

addition, petitioners argue that CEMEX's statement that shipping

distances are not relevant to the ordinary course of trade

determination is both factually and legally wrong. First, petitioners

contend that the record demonstrates that CEMEX consolidated production

at Hermosillo in direct response to the antidumping order with the

intention of circumventing the order. Further, petitioners state that

``as a matter of law, shipping distances--like all other `conditions

and practices' relevant to the trade under consideration with respect

to merchandise of the same class or kind, 19 U.S.C. Sec. 1677(15) are

plainly relevant to the Department's consideration of sales outside the

[[Page 17153]]

ordinary course of trade.'' Again citing the CEMEX case, petitioners

argue that ``it is not unusual for the court to consider shipping

arrangements in determining whether sales are outside the ordinary

course of trade.'' Slip Op. 95-72, at 10, citing Porcelain-On-Steel

Cookware From Mexico, 51 Fed. Reg. 36 435, 36 437 (1986.)

Petitioners also distinguish the current fifth review from the

administrative reviews involving antifriction bearings from Thailand.

Petitioners argue that shipping distances were raised as an issue by

the petitioner in that case. Moreover, petitioners note that bearings

are not fungible commodities with a low value ratio; therefore, there

is no reason to believe that the bearings are not ordinarily shipped

long distances.

Petitioners also argue that there is no evidence on the record to

support CEMEX's argument that shipping distances of Type II cement are

not extraordinary compared to sales of other cement types. For example,

petitioners contend that there is no information on the record to show

that Type V cement has always been shipped long distances. Moreover,

petitioners note, Type V sales were found to be outside the ordinary

course of trade in the second administrative review; therefore, sales

of Type V hardly buttress CEMEX's claim that Type II sales were within

the ordinary course of trade. Likewise, petitioners maintain that CEMEX

has not cited specific instances in the record demonstrating that Type

I and pozzolanic cement is normally shipped long distances.

Additionally, petitioners argue that ``CEMEX's manipulation of its

production and distribution arrangements for Type II cement to increase

the freight cost continue to result in CEMEX attaining an unusually low

profit on Type II sales during the fifth review period'' in comparison

to profits on all cement types. Moreover, petitioners contend that the

Department did not just look at profit when making its ordinary course

of trade determination in the preliminary results; rather, the

Department considered all pertinent factors. Therefore, petitioners

question CEMEX's statement that relative profitability is the only

factor supporting the Department's determination of sales outside the

ordinary course of trade because it fails to explain how the other four

factors vanished from the record of the review. Finally, petitioners

maintain that the ``Department correctly determined in the preliminary

results that, based on the evidence of record in this review, the five

factors the Department relied upon in the second administrative review

in determining that CEMEX's sales of Type II cement were outside the

ordinary course of trade continued to be present during the fifth

review period.''

Petitioners also argue that the Department was correct in its

finding that sales of Type II cement have a promotional quality to

them. Petitioners points out that the Department requested information

regarding the promotional aspect of Type II cement sales on July 9,

1996, but CEMEX failed to provide it. This determination is further

supported by the fact that Type II was found to be sold for promotional

reasons in the second review, and CEMEX conceded the promotional aspect

of Type II cement in the fourth review. Moreover, petitioners contend

``CEMEX's case brief does not contest the Department's finding that

CEMEX continued to sell Type II cement for reasons other than profit.''

In addition, petitioners argue that CEMEX restricted sales of Type

II cement during the fifth review period. Petitioners contend that

after the imposition of the antidumping order, CEMEX restricted sales

of Type II cement to only those customers that specifically requested

it and could demonstrate a need. According to petitioners the fact that

CEMEX ``artificially restricted its home market sales of Type II

cement'' is further established by the uncontested evidence that CEMEX

produced Type II Low Alkali (LA) cement at no fewer than six plants

other than the one at Hermosillo prior to the antidumping order.

Moreover, petitioners maintain that CEMEX ``produced cement meeting the

specifications of Type II LA cement at plants other than Campana and

Yaqui during the period of review, but that it restricted sales of

cement reported as Type II cement by selling the cement as Type I or

Type I modified cement.''

Department's Position: Consistent with the preliminary

determination, in examining CEMEX's reported home market sales, the

Department has determined that CEMEX's sales of Type II cement were

outside the ordinary course of trade during the fifth review. Section

773(A)(1)(B) of the Act states that the normal value of the subject

merchandise is ``the price at which the foreign like product is first

sold (or, in absence of a sales, offered for sale) for consumption in

the exporting country, in the usual commercial quantities and in the

ordinary course of trade.'' Section 771(15) defines ordinary course of

trade as ``the conditions and practice which, for a reasonable time

prior to the exportation of the subject merchandise have been normal in

the trade under consideration with respect to merchandise of the same

class or kind.'' The SAA, which accompanied the passage of the URAA,

further clarifies this portion of the statute, stating: ``Commerce may

consider other types of sales or transactions to be outside the

ordinary course of trade when such sales or transactions have

characteristics that are not ordinary as compared to sales or

transactions generally made in the same market.'' SAA, at 164. Thus,

the statute and SAA are clear that a determination of whether sales

(other than those specifically addressed in section 771(15)) are in the

ordinary course of trade must be based on an analysis comparing the

sales in question with sales of merchandise of the same class or kind

generally made in the home market, i.e., (the Department must consider

whether certain cement home market sales are ordinary in comparison

with other home market sales of cement.)

An ordinary course of trade determination requires evaluation of

sales in each review on ``an individual basis taking into account all

of the relevant facts of each case.'' Nachi-Fujikishi Corp. v. United

States, 798F. Supp. 716, 719 (CIT 1992). This means that the Department

must review all circumstances particular to the sales in question.

Therefore, in the fifth review the Department considered the totality

of circumstances surrounding CEMEX's reported home market sales. A full

discussion of our conclusions, requiring reference to proprietary

information, is contained in a Department memorandum in the official

file for this case (a public version of this memorandum is on file in

room B-099 of the Department's main building). Generally, however, we

have found: (1) The volume of Type II home market sales is extremely

small compared to sales of other cement types, (2) shipping distances

and freight costs for Type II home market sales were significantly

greater than for sales of other cement types, with CEMEX absorbing

these costs, and (3) CEMEX's profit on Type II sales is small in

comparison to its profits on all cement types. In addition, there are

two items, historical sales trends and the ``promotional quality'' of

Type II cement sales, which were cited previously as factors in the

second review ordinary course analysis, but which are not discussed

above. On July 9, 1996 the Department issued a questionnaire that

requested CEMEX to support its position that home market Type II cement

sales are in the ordinary course of trade by addressing, among

[[Page 17154]]

other things, ``historical sales trends'' and ``marketing reasons for

sales other than profit.'' CEMEX's response addressed all items in the

questionnaire except these two items. Thus, the Department assumes that

the facts regarding these items have not changed since the second

review and that: (a) CEMEX did not sell Type II until it began

production for export in the mid-eighties, despite the fact that a

small domestic demand for such existed prior to that time; and (b)

sales of Type II cement continue to exhibit a promotional quality that

is not evidenced in CEMEX's ordinary sales of cement.

For the reasons stated above, the Department has determined that

CEMEX's home market sales of Type II cement during the current review

are not representative of its sales of such or similar merchandise in

Mexico. We note that while our decision is based solely upon the facts

established in the record of the fifth review, those facts are very

similar to the facts which led the Department to determine in the

second review that home market sales of Type II cement were outside the

ordinary course of trade. This determination, as noted above, was

affirmed by the CIT in the CEMEX case. (``Commerce's determination that

CEMEX's sales were outside the ordinary course of trade involved a

weighing of data and is supported by substantial evidence.'' CEMEX,

Slip Op. 95-72 at 14.

The Department disagrees with CEMEX's argument that the ordinary

course of trade provision in the statute precludes the exclusion of an

entire category of sales. Importantly, the statute provides no limits

on the number of sales or transactions that may be excluded from normal

value. Moreover, the SAA notes that ``Commerce will interpret section

771(15) in a manner which will avoid basing normal value on sales which

are extraordinary for the market in question, particularly when the use

of such sales would lead to irrational or unrepresentative results.''

As petitioners point out and the Department agrees, failure to exclude

all sales of Type II cement would violate this intent because normal

value would be based on Type II sales despite evidence that those sales

were made under unusual and unrepresentative conditions.

The Department also disagrees with CEMEX's claim that if the

Department continues to disregard all Type II sales, the statute

requires the Department to base normal value on constructed value

rather than home market prices of similar merchandise. In examining the

universe of CEMEX's home market sales, the Department has found that

sales of Type II cement are extraordinary, unusual, and

unrepresentative transactions, and, therefore, are outside the ordinary

course of trade. As a result, such sales could not constitute the

foreign like product. However, sales of Type I cement are usable for

identifying the foreign like product, and subsequently in calculating

NV. In situations where identical product types cannot be matched, the

statute expresses a preference for basing normal value on similar

merchandise (see section 773(a)(1)(A) of the Act and section 353.46(a)

of the Department's regulations). Gray Portland Cement and Clinker from

Mexico, 58 Fed. Reg. 47253, 47255 (1993); see also CEMEX, Slip Op. 95-

72 at 26. ``Constructed value should only be used where Commerce has

made a determination that the exporter's home market prices are

inadequate or unavailable for the purposes of calculating FMV.'' CEMEX,

Supra at 26, citing H.R. Rep. No. 317, 96th Cong., 1st Sess. 76 (1979).

In the fifth review, there are home market sales of similar merchandise

(Type I cement) as well as sales of identical merchandise (Type II

cement.) For the reasons stated above, we have not based our

calculation of normal value upon market sales of Type II cement.

However, the Department has followed the dictates of the statute and

our regulations and compared sales of similar merchandise (i.e., Type I

cement) to the product sold in the United States, adjusted for DIFMER

(see Comment 6, below).

Comment 3: Petitioners claim that CEMEX established a fictitious

niche market for home market sales of Type II cement. In particular,

petitioners argue that CEMEX, in reaction to the antidumping order,

created an artificial and highly restricted niche market and channel

for Type II cement with the intention of manipulating normal value of

identical merchandise ``to mask the fact that the average home market

price of the entire class of subject merchandise covered by the order

(including Type I cement and pozzolanic cement) continued to greatly

exceed the U.S. price of the imported merchandise.'' As a result,

petitioners claim that CEMEX's dumping is disguised.

CEMEX, on the other hand, argues that the Department was correct

not to initiate a fictitious market investigation during the context of

the fifth administrative review. CEMEX maintains that since the

Department disregarded ``CEMEX's home market sales of Type II cement in

the preliminary results on the basis of their being outside the

ordinary course of trade, other basis for disregarding those sales,

such as (petitioner's) fictitious market allegation and its allegation

that Type II cement was sold at prices below production costs, became

moot and did not have to be further addressed by the (Department) in

the preliminary results.''

Department's Position: Since the sales in question have been found

to be outside the ordinary course of trade, and accordingly will not be

used in the calculation of normal value, it is not necessary for us to

address this issue for these final results.

Collapsing

Comment 4: CDC contends that the Department's decision to collapse

it and CEMEX is contrary to administrative practice and is not

justified by the record. CDC concedes that it is affiliated with CEMEX;

however, CDC does not believe that the two affiliated companies should

be collapsed. CDC asserts that collapsing two affiliated parties is the

exception, not the rule. CDC asserts that the Department's policy is

based on the principle that a company's liability under the antidumping

law should be based on the company's own pricing decisions. The

Department has consistently relied on factors other than percentage

ownership and common board members, the two factors relied upon in this

case, when considering whether to collapse two companies. CDC cites

Nihon Cement Co. v. United States, 17 CIT 400 (1993), in which the

Department summarizes the factors it considers to be relevant in its

determination to collapse affiliated entities, and FAG Kugelfischer

Georg Schafer KGaA v. United States, 932 F. Supp. 315 (CIT 1996), in

which the court reversed the Department's decision to collapse two

sister companies because it determined that there was not a strong

possibility of price manipulation.

CDC asserts that the possibility of price manipulation which could

undermine the effectiveness of the order is insignificant. CDC centers

its argument around the three factors the Department considers to be

evidence of the potential for price manipulation: stock ownership,

management/director overlap, and intertwined business operations. CDC

contends that stock ownership does not necessarily indicate control.

CDC claims the record establishes that CEMEX has no control over CDC's

business operations, as evidenced by the following factors: (1) Sales

listings for sections B and C demonstrate that there is no correlation

[[Page 17155]]

in CEMEX and CDC's pricing. (2) CDC has its own facilities,

distribution, sales, and marketing network in Mexico and in the United

States. CDC states that it does not share information with CEMEX on

possible sales opportunities in the U.S. or Mexico. (3) There is no

coordination between CEMEX and CDC of sales, pricing, or marketing

policies in the Mexican market; CDC claims that because of the regional

nature of the cement market, the natural markets of CDC and CEMEX do

not overlap. Moreover, CDC claims that the high cost of freight and the

fact that CDC's facilities are in the land-locked state of Chihuahua

prohibits CDC from switching its production to meet the needs of

CEMEX's U.S. and Mexican customers. (4) No commercial transactions

between CDC and CEMEX support a ``strong possibility'' of price

manipulation. In addition, the companies do not supply any material

inputs for the subject merchandise to each other. (5) The companies are

listed separately on the Mexican stock exchange.

CDC argues that in the absence of any possibility of price

manipulation, there is no policy reason in this case to collapse CEMEX

and CDC. CDC claims that it cannot increase its operations beyond its

natural geographic markets of Chihuahua in Mexico, and Texas and New

Mexico in the United States, due to prohibitively high freight costs.

CDC also asserts that the possibility of price and production

manipulation is small, due to the corporate structure. CDC claims it is

being penalized for occurrences of dumping over which it has no

control, but which it must pay for. CDC contends that as the Department

has full access to both CDC and CEMEX pricing, cost and production

information through its questionnaires and verification, it could

decide to collapse the companies in future annual reviews if warranted

by evidence of manipulation. CDC insists that there would be no

incentive for its owners or managers to agree to any plan that would

result in unpredictable monetary liability for CDC's past imports.

Petitioners contend that the Department's preliminary results

analyzed all relevant factors and correctly determined that CEMEX and

CDC should be collapsed. Petitioners note that cement is a bulk

commodity which cannot be distinguished from producer to producer; thus

the potential for production manipulation is much greater for cement

than for differentiated products. Petitioners argue that both CEMEX and

CDC produce the subject merchandise, and have similar production

facilities that could be easily retooled to restructure manufacturing.

Petitioners stress that the correct focus of analysis is the

potential for future price manipulation, and that CEMEX's and CDC's

relationship harbors significant potential for price manipulation, as

evidenced by the following factors: (1) According to petitioner,

CEMEX's level of stock ownership of CDC is more than sufficient to

warrant collapsing the two companies. Petitioners hold that CDC has not

established on the record that CEMEX has no ability to influence CDC's

pricing and production decisions, either at present or in the future.

(2) Petitioners claim control over the board of directors is not

necessary to warrant collapsing; however, the cross-board membership

between CEMEX and CDC clearly presents ``potential sharing of

information.'' (3) The record contains substantial evidence of

intertwined business operations between CEMEX and CDC. (4) Petitioners

contend that ``control'' of one party over another is not a condition

precedent to a decision to collapse affiliated parties. Petitioners

cite Nihon Cement, 17 CIT at 425, Notice of Final Determination of

Sales at Less than Fair Value: Certain Pasta from Italy, 61 FR 30326,

30352 (June 14, 1996) (``Certain Pasta From Italy''), and Certain Hot-

Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel

Flat Products, and Certain Corrosion-Resistant Carbon Steel Flat

Products From Japan, 58 Fed. Reg. 37154, 37159 (1993) (``Japanese

Steel''), to support this argument. (5) Petitioners refute CDC's claim

that price manipulation between CEMEX and CDC is unlikely to occur

because CDC could not extend its market beyond its current geographical

area. Moreover, petitioners state that CDC and CEMEX could easily

maximize their combined profits by increasing CDC's shares of U.S.

sales and increasing CEMEX's share of Mexican sales.

Department's Position: The Department agrees with CDC that it must

consider all relevant factors when collapsing two affiliated parties.

Section 351.401(f) of the Proposed Rules, 61 FR at 7330, describes the

Department's current policy regarding when it will treat two or more

affiliated producers as a single entity (i.e., ``collapse'' the firms)

for purposes of calculating a dumping margin. In order for the

Department to treat two or more producers as a single entity, (1) The

producers must be affiliated; (2) the producers must have production

facilities that are sufficiently similar so that a shift in production

would not require substantial retooling; and (3) there must be a

significant potential for the manipulation of price or production.

First, because CEMEX indirectly owns more than five percent of the

outstanding voting shares of CDC, the Department considers CEMEX and

CDC to be affiliated within the meaning of section 771(33) (F) of the

Act. The Department also finds that CEMEX and CDC are affiliated within

the meaning of section 771(33)(G) of the Act, as detailed in the

Proposed Regulations. CEMEX is ``in a position to exercise restraint or

direction'' over CDC via the following means of control: (1) cross-

board of directors membership between CEMEX and CDC and/or its

affiliates and (2) joint activities between CDC and CEMEX. In addition,

both CEMEX and CDC manufactured Type I and Type II cement during the

period of review. Second, as CDC and CEMEX have similar production

processes and facilities, a shift in production would not require

substantial retooling. Record evidence for the fifth administrative

review also reveals intertwined business operations between CDC and

CEMEX. (A complete analysis surrounding the Department's decision to

collapse CDC and CEMEX, requiring reference to proprietary information,

is contained in the Department's Memorandum from Roland L. MacDonald to

Joseph A. Spetrini, dated March 24, 1997, located in the official file

for this case.

A public version of this memorandum is on file in room B-099 of the

Department's main building.)

Third, no aspect of CDC and CEMEX's affiliation via stock ownership

and cross board members, nor the location of their facilities and

distribution network, precludes the potential for price manipulation.

Given the level of common ownership and cross board members, which

provides a mechanism for the two parties to share pertinent pricing and

production information, similar production facilities that would not

require substantial retooling, as well as intertwined business

operations, the Department finds that if CDC and CEMEX are not

collapsed, there is significant potential for price manipulation which

could undermine the effectiveness of the order.

Level of Trade (LOT)/ CEP Offset

Comment 5: Petitioners argue that a CEP offset adjustment should

not be granted. Petitioners cite the SAA which establishes two

conditions for a CEP offset: first that ``different functions at

different levels of trade are established under section 773

(a)(7)(A)(i)''; and second, that the ``data do not form an appropriate

basis for determining a level of trade adjustment under section 773

[[Page 17156]]

(a)(7)(A)(ii).'' Petitioners assert that it is not sufficient for a

respondent to establish that sales in the home and U.S. markets are at

different levels of trade, thus satisfying the first criteria.

Petitioners state that the respondent must also establish that the

different levels of trade affect the comparability of prices, based on

19 U.S.C. 1677b(a)(7)(A)(ii). Petitioners assert that neither CDC nor

CEMEX has satisfied the criteria, and are not entitled to a CEP offset

adjustment.

CDC argues that under the URAA, the CEP offset should be granted

when there is an unquantifiable difference in level of trade between

the home and U.S. markets. The Department must consider those

differences in selling functions that exist after the deduction from

the U.S. price of selling expenses associated with selling functions in

the United States. CDC asserts that the Department verified that the

majority of selling functions performed in the home market were not

performed for CEP sales; thus the home market LOT is different from,

and more advanced than the CEP LOT, which satisfies the first criteria

for the CEP offset. Second, CDC asserts that under section

773(a)(7)(A), a price adjustment can only be quantified where there are

at least two different levels of trade in the home market. As the

Department found that CDC reported only one level of trade in the home

market, CDC claims it has satisfied the second criteria for a CEP

offset (i.e., the available data does not provide an appropriate basis

for a LOT price adjustment).

Similarly, CEMEX argues that its claim for a level of trade

adjustment should be analyzed under 19 U.S.C. 1677b(a)(7)(B), which

authorizes the CEP offset. The Department's Proposed Regulations at 19

CFR 351.412(b)(2) instruct the Department to ``identify the level of

trade based on the price after the deduction of expenses and profit

under section 772(d) of the Act.'' CEMEX claims that while the starting

prices for U.S. and home market sales were initially made at the same

level of trade, significant differences in selling functions exist

between U.S. and home market sales, when the CEP, with all indirect

selling expenses incurred for selling functions deducted under the

statute, is compared to normal value.

Department's Position: In accordance with section 773(a)(7)(A) of

the Act, to the extent practicable, we determine normal value for sales

at the same level of trade as the U.S. sales (either export price (EP)

or constructed export price (CEP)). When there are no sales at the same

level of trade we compare U.S. sales to home market sales at a

different level of trade. The normal value (NV) level of trade is that

of the starting-price sales in the home market. When NV is based on

constructed value (CV), the level of trade is that of the sales from

which we derive selling, general and administrative expenses, and

profit.

For both EP and CEP the relevant transaction for level of trade is

the sale from the exporter to the importer. While the starting price

for CEP is that of a subsequent resale to an unaffiliated buyer, the

construction of the EP results in a price that would have been charged

if the importer had not been affiliated. We calculate the CEP by

removing from the first resale to an independent U.S. customer the

expenses specified in section 772(d) of the Tariff Act and the profit

associated with these expenses. These expenses represent activities

undertaken by, or on behalf of, the affiliated importer. As such they

tend to occur after the transaction between the exporter and the

importer for which we construct CEP. Because the expenses deducted

under section 772(d) represent selling activities in the United States,

the deduction of these expenses normally yields a different level of

trade for the CEP than for the later resale (which we use for the

starting price). Movement charges, duties and taxes deducted under

section 772(c) do not represent activities of the affiliated importer,

and we do not remove them to obtain the CEP level of trade.

To determine whether home market sales are at a different level of

trade than U.S. sales, we examine whether the home market sales are at

different stages in the marketing process than the U.S. sales. The

marketing process in both markets begins with goods being sold by the

producer and extends to the sale to the final user, regardless of

whether the final user is an individual consumer or an industrial user.

The chain of distribution between the producer and the final user may

have many or few links, and each respondent's sales occur somewhere

along this chain. In the United States this is generally to an importer

whether independent or affiliated. We review and compare the

distribution systems in the home market and U.S. export markets,

including selling functions, class of customer, and the extent and

level of selling expenses for each claimed level of trade. Customer

categories such as distributor, OEM, or wholesaler are useful as they

are commonly used to describe levels of trade by respondents; however,

without substantiation, these categories are insufficient to establish

that a claimed level of trade is valid. An analysis of the chain of

distribution and of the selling functions substantiates or invalidates

claimed customer classification levels. If the claimed customer levels

are different, the selling functions performed in selling to each level

should also be different. Conversely, if customer levels are nominally

the same, the selling functions performed should also be the same.

Different levels of trade necessarily involve differences in selling

functions, but differences in selling functions, even substantial ones,

are not alone sufficient to establish a difference in the level of

trade. A different level of trade is characterized by purchasers at

different places in the chain of distribution and sellers performing

qualitatively or quantitatively different functions in selling to them.

When we compare home market sales at a different level of trade

than U.S. sales, we make a level of trade adjustment, if the difference

in level of trade affects price comparability.

We determine any effect on price comparability by examining sales

at different levels of trade in a single market (i.e., the home

market). Any price effect must be manifested in a pattern of consistent

price differences between home market sales used for comparison and

sales at the equivalent level of trade of the export transaction. To

quantify the price differences, we calculate the difference in the

weighted average of the net prices of the same models sold at different

levels of trade. Net prices are used because any difference will be due

to differences in level of trade rather than other factors. The average

percentage difference between these weighted averages is used to adjust

the normal value when it is different from the level of trade of the

export sale. If there is no pattern, then the difference in level of

trade does not have a price effect, and no adjustment is necessary.

In terms of granting a CEP offset, the statute also provides for an

adjustment to normal value if it is compared to U.S. sales at a

different level of trade, provided the normal value is more remote from

the factory than the CEP sales, and we are unable to determine whether

the difference in levels of trade between CEP and NV affects the

comparability of their prices. This latter situation can occur where

there is no home market level of trade equivalent to the U.S. sales

level, or where there is an equivalent home market level, but the data

are insufficient to support a conclusion on price effect. This

adjustment, the CEP offset, is identified in section 773(7)(B) and is

the lower of the: (1) Indirect selling expenses on the home market

sale; or (2) indirect selling expenses deducted from the starting

[[Page 17157]]

price used to calculate CEP. The CEP offset is not automatic each time

export price is constructed. The CEP offset is made only when the level

of trade of the home market sale is more advanced than the level of

trade of the U.S. (CEP) sales and there is not an appropriate basis for

determining whether there is an effect on price comparability.

In implementing this principle in this review, we examined

information regarding the selling activities of the producers/exporters

associated with each stage of marketing, or the equivalent. However, we

were unable to utilize the analysis submitted by the respondent (CEMEX

and CDC) due to the fact that it reported the selling functions

performed by the producer/exporter to the unaffiliated purchaser in the

home market, as compared to the selling functions performed by the

related reseller to the unaffiliated purchaser in the U.S. market. The

statute directs the Department to determine normal value at the level

of trade of the CEP sales, which includes any CEP deductions under

section 772(d) of the Act, (i.e, the price as reflected by the ``sale''

from the producer/exporter to the U.S. affiliate). As such, the CEP

reflects a price exclusive of those selling expenses and profit

associated with economic activities in the United States. See SAA at

823.

In reviewing the selling functions reported by CEMEX and CDC, we

considered the selling functions performed by CEMEX and CDC to its

customers in the home market (as reported in the variables, INVCARH,

INDIRSH, and DISWARH), and the selling functions performed by CEMEX and

CDC, in the home market on its ``sales'', to its affiliated reseller in

the United States (as reported in the variables, DINVCARH, DINDIRSU,

and DISWARU). In analyzing whether separate LOTs existed in this

review, we found that no single selling activity in the cement industry

was sufficient to warrant a separate LOT (see Notice of Proposed

Rulemaking and Request for Public Comments, 61 FR 7307 (February 27,

1996). For this review, we determined that the following selling

functions and activities occur in relation to CEMEX and CDC's sales of

cement: (1) Inventory maintenance, (2) presale warehousing, and (3)

other indirect selling expenses. We did not consider packing

arrangements to be a selling function since packing is accounted for in

the Department's calculations as a separate adjustment.

CEMEX

CEMEX claimed that it has two LOTs in the home market--bulk sales

and bagged sales of cement. It also reported two LOTs in the U.S.

market--sales of bulk cement to end-users and ready-mixers. We disagree

with CEMEX that there are two LOTs in the home market and two LOTs in

the U.S. market. Therefore, based on our practice, as stated in Steel

from Canada, we have determined, for the reasons described below, that

CEMEX sells to one level of trade in the home market and one level of

trade in the U.S. market.

First, we looked for different stages of marketing. We found that

there is one stage of marketing--sales of cement shipped to end-users

and ready mixers in bulk and bagged form. After determining the number

of marketing stages, we then examined whether the selling functions

performed by the seller support CEMEX's claimed LOTs or the marketing

stages determined by the Department. For the claimed LOTs in the home

market, we did not find that there were two distinct sets of selling

functions performed by the seller. Rather, we found one distinct set of

selling functions performed by CEMEX which reflect the one stage of

marketing determined by the Department. Both in terms of their amount

and nature. CEMEX essentially performed the same selling functions in

the home market on both its end-users and ready-mixer sales.

Specifically, these functions were pre-sale warehousing (DISWARH and

DISWARU), inventory maintenance (INVCARH and DINVCARU), and other

indirect selling functions (INDIRSH and DINDIRSU).

Next we examined the selling functions performed by CEMEX with

respect to both markets to determine if U.S. sales can be matched to

home market sales at the same LOT. For the U.S. market, CEMEX reported

that all sales were made on a CEP basis. The level of trade of the U.S.

sales is determined for the CEP rather than for the starting price. In

the instant review, the CEP sales reflect certain selling functions

such as inventory maintenance, pre-sale warehouse expenses, and

indirect selling expenses incurred in the home market for the U.S.

sale. As explained above, these same selling functions are also

reflected in CEMEX's home market sales to end-users and ready-mixers.

Therefore, the selling functions performed for CEMEX's CEP sales are

not sufficiently different from those performed for CEMEX's home market

sales to consider CEP sales and home market sales to be at a different

level of trade. Although there may be differences between the marketing

stages, these differences are not borne out by an analysis of the

selling functions for the home market and CEP sales, which are largely

the same. Therefore, we have determined that there are no differences

in levels of trade and neither a level of trade adjustment nor a CEP

offset was warranted in the instant review.

CDC

CDC has claimed two levels of trade in the home market--sales of

bulk cement to end-users and ready-mixers, and bagged cement sales to

end-users. CDC has also reported two LOTs for its U.S. sales--bulk

cement to end-users and ready-mixers. We disagree with CDC that there

are two LOTs for its home market sales and two LOTs for its U.S. sales.

Therefore, based on our practice, as stated Steel from Canada, we have

determined, for the reasons described below, that there is one level of

trade in the home market and one level of trade in the U.S. market.

First, we looked for different stages of marketing. We found that

there is one stage of marketing--sales of cement shipped to end-users

and ready-mixers in bulk and bagged form. After determining the number

of marketing stages, we then examined whether the selling functions

performed by the seller support CDC's claimed LOTs or the marketing

stages determined by the Department. For the claimed LOTs in the home

market, we did not find that there were two distinct sets of selling

functions performed by the seller. Rather, we found one distinct set of

selling functions performed by CDC which reflect the one stage of

marketing determined by the Department. Both in terms of their amount

and nature, CDC essentially performs the same selling functions in the

home market on both its end-user and ready-mixer sales. Specifically,

these functions were pre-sale warehousing (DISWARH and DISWARU),

inventory maintenance (INVCARH and DINVCARU), and other indirect

selling functions (INDIRSH and DINDIRSU).

Next we examined the selling functions performed by the seller with

respect to both markets to determine if U.S. sales can be matched to

home market sales at the same LOT. For the U.S. market, we examined

those sales that CDC reported were made on a CEP basis. The level of

trade of the U.S. sales is determined for the CEP rather than for the

starting price. In the instant review, the CEP sales reflect certain

selling functions such as inventory maintenance, pre-sale warehouse

expenses, and indirect selling expenses

[[Page 17158]]

incurred in the home market for the U.S. sale. As explained above,

these same selling functions are also reflected in CDC's home market

sales to end-users and ready-mixers. Therefore, the selling functions

performed for CDC's CEP sales are not sufficiently different from those

performed for CDC's home market sales to consider CEP sales and home

market sales to be at a different level of trade. Although there

appears to be differences between the marketing stages, this difference

is not borne out by an analysis of the selling functions for the home

market and CEP sales, which are largely the same. Therefore, we have

determined that there are no differences in levels of trade and neither

a level of trade adjustment nor a CEP offset was warranted in the

instant review.

Although we are ``collapsing'' CEMEX and CDC as explained above

(see Comment 4), we are not comparing CEMEX home market sales to CDC

U.S. sales, nor are we comparing CDC home market sales to CEMEX U.S.

sales. This is due to the fact that there were enough comparable sales

(i.e., CEMEX to CEMEX, and CDC to CDC) to enable the Department to make

an accurate comparative analysis.

Differences in Merchandise (DIFMER)

Comment 6: CDC asserts that the Department incorrectly weight-

averaged CDC's DIFMER with that of CEMEX. CDC claims that the

Department's decision to weight-average DIFMER information penalizes

CDC unfairly, when CDC fully cooperated with the Department.

Petitioners argue that the Department should use an adverse 20

percent DIFMER adjustment based on facts available for CDC as well as

for CEMEX. Petitioners claim that CDC failed to provide a detailed

listing of all expenses in order to satisfy its burden of isolating and

quantifying the costs solely attributable to physical differences in

merchandise

Department's Position: As noted in CDC's home market verification

report, the Department verified that CDC uses the same kiln for

production of Type I and Type II cement. Moreover, CDC provided a

detailed listing of differences in raw material inputs and variable

overhead at all facilities for Type I and Type II cement, which

sufficiently explained the differences in costs attributable to the

physical differences of Type I and Type II cement. Differences in plant

efficiencies are not an issue for CDC, as CDC produces both Type I and

Type II cement at only one plant, and has based its DIFMER on the

differences between costs of production at this single facility. In

short, CDC sufficiently isolated and quantified its costs solely

attributable to the physical differences in comparison merchandise, and

has calculated DIFMER using the variable cost of manufacturing

information from the one plant which produced both Type I and Type II

cement. As CDC and CEMEX have been ``collapsed'' for purposes of this

review (see Comment 4 above), the Department holds that it

appropriately weight-averaged CDC and CEMEX's DIFMER information,

consistent with its calculation of monthly weight-averaged costs for

use in the cost of production analysis.

Comment 7: CEMEX claims that the Department improperly made a

DIFMER adjustment based on facts available equal to 20 percent of total

cost of manufacturing. CEMEX claims that it has established that there

were physical differences between Type I and Type II by providing all

supporting documentation for the reported weight-averaged VCOM for Type

I and Type II for each plant, which the Department then verified. CEMEX

also claims that the Department's own reporting requirements for COP

and CV require the weight-averaged costs incurred at all facilities to

be reported, and that the Department has granted claimed DIFMER

adjustments in other cases when such adjustments were based on weighted

average costs at several facilities. Therefore, CEMEX should not be

penalized for not being able to exclude from its DIFMER data costs

associated with differences in production efficiencies at the different

plants. CEMEX cites Gray Portland Cement and Clinker from Japan, 60 FR

43761, 762-763 (1995), in which the Department granted the respondent a

DIFMER adjustment, as the Department was satisfied that the respondent

reasonably tied cost differences to physical differences in

merchandise, not withstanding reported differences in plant

efficiencies. CEMEX further contends that even if the Department relies

on facts available, alternate facts available should be used. CEMEX

contends that the Department's upward adjustment of 20 percent is

punitive, when verified information established CEMEX's entitlement to

a downward adjustment. Moreover, it is the Department's policy to use

verified information to the greatest extent possible. CEMEX proposes

one of the following alternatives for its DIFMER adjustment: 1) As

CEMEX claimed a downward adjustment, the Department should make no

DIFMER adjustment; 2) the Department could limit the DIFMER adjustment

to only those components it believes are attributable solely to

differences in physical characteristics and the production process

(i.e., base the DIFMER adjustment only on verified raw material

differences); 3) the Department could use verified cost differences

from only one plant (i.e., the Yaqui plant, which produces both Type I

and Type II); or 4) the Department could substitute CDC's verified

DIFMER for CEMEX.

Petitioners maintain that CEMEX did not provide information to

isolate the costs attributable solely to physical differences in

merchandise, as opposed to plant efficiencies, despite repeated

Department requests for such information. Petitioners rebut CEMEX's

claim that its reported DIFMER adjustment information is similar to the

DIFMER information in Japanese Cement. Petitioners argue that the

DIFMER information provided in the Japanese case was vastly more

detailed (respondent's information included actual chemical and

physical characteristics, as well as plant-by-plant and product-by-

product cost data) than the information provided by CEMEX. Furthermore,

whereas in the Japanese case no record evidence demonstrated that cost

differences were attributable to factors other than physical

differences between the products, CEMEX has indicated on the record

that the costs of its products vary from plant to plant according to

the availability of raw material inputs. In the same exhibit,

petitioners note that CEMEX also indicates that cost is affected by the

amount of energy required to grind the clinker. Petitioners concede

that there are physical differences between Type I and Type II cement;

however, the tighter specifications, longer grinding time, and higher

kiln temperatures for Type II cement result in higher variable costs of

producing Type II cement. Therefore, any DIFMER adjustment should be

unfavorable to CEMEX.

Petitioners further argue that the Department correctly selected an

adverse 20 percent DIFMER adjustment as facts available. Petitioners

note that the court affirmed the Department's use of a 20 percent

DIFMER adjustment as BIA in the second review. Petitioners further

insist that the Department must apply an adverse DIFMER adjustment as

facts available under 19 U.S.C. 1677e(b) because CEMEX failed to comply

with the Department's requests for information. Finally, petitioners

dismiss CEMEX's argument that any DIFMER adjustment would be small

(less than 3 percent of total manufacturing costs), as well as CEMEX's

suggestions for alternate choices of facts available because these

amounts do not represent

[[Page 17159]]

the use of adverse facts available, which petitioners argue is required

in this case due to CEMEX's failure to cooperate.

Department's Position: We have reconsidered our decision in the

preliminary results of this review determination in which we applied an

adverse 20 percent DIFMER adjustment to CEMEX's reported home market

sales of Type I cement due to the fact that upon review of the

administrative record, we found evidence to support CEMEX's claim for a

DIFMER adjustment based on cost differences at the Yaqui facility.

Evidence on the record shows that CEMEX's Yaqui facility produces both

Type I and Type II cement using a single production line. Therefore,

consistent with the Department's treatment of CEMEX's affiliated party,

CDC, we have allowed CEMEX a DIFMER adjustment based on the differences

between the variable costs incurred by CEMEX in producing Type I and

Type II cement at its Yaqui facility. Although CEMEX's claimed DIFMER

adjustment was based on the weight-averaged difference in variable

costs from all its facilities, the DIFMER adjustment utilized in this

instant review is based on the differences in the variable cost of

manufacturing incurred at a single producing facility. By relying on

the differences in variable costs incurred at a single facility, we

have accounted for differences in plant efficiencies if they are the

source of the cost differences identified by CEMEX. Cost differences at

the single facility are more likely to be due to differences in

material inputs and the physical differences which result from

different production processes.

First, the Department compared the Type II cement sold in the

United States with the Type I cement sold in the home market. The

specific differences in costs among the cement types are due to varying

costs of the inputs, including material inputs (limestone, clay,

silica, etc.), fuel inputs (fuel oil, coal, etc.) and electricity

(mixing, grinding, burning, etc.). For example, Type I cement contain

clinker, gypsum, and minor grinding agents, whereas Type II cement

contains, clinker, gypsum, minor grinding agents, and additives.

Additionally, Type I cement has a lower tricalcium aluminate level than

Type II.

Second, for the purposes of this final analysis, the Department

utilized the verified cost of producing Type II cement at the Yaqui

facility and found these costs to be an accurate representation of the

relevant variable costs of production as reflected in CEMEX's actual

cost accounting records and compared the costs of producing Type II to

the costs of producing Type I cement at the same facility. Therefore,

the calculated DIFMER adjustment is based on the relative costs of

producing Type I and Type II cement at a single facility. Given the

fact that physical differences between types of cement arise from

differences in the production process (e.g., amount and duration of

heat), and from differences in component materials, we are satisfied

that CEMEX has reasonably tied cost differences to physical differences

in merchandise.

In those months where a calculated DIFMER adjustment could not be

determined for CEMEX's Yaqui facility, we have utilized the relevant

DIFMER adjustment for CEMEX's affiliated party, CDC, as the facts

otherwise available.

Comment 8: Respondent claims that the Department incorrectly

quantified and calculated the DIFMER adjustment in its preliminary

results. CDC and CEMEX claim that the Department incorrectly omitted

CDC's July, 1995, DIFMER information from its calculations. CEMEX also

argues that the Department incorrectly calculated CDC's DIFMER, and

that the correct calculation should subtract the variable cost of

manufacturing of Type I cement (VCOMH) from the variable cost of

manufacturing Type II (VCOMU). CEMEX further claims that because the

individual DIFMER percentages were calculated by dividing DIFMER by the

total cost of manufacturing for the U.S. product (Type II) (TOTCOMU),

the DIFMER percentage should be multiplied by the total cost of

manufacturing for Type II.

Petitioners argue that DIFMER information for CDC and CEMEX should

be weight averaged based on relative production quantities of Type I,

not Type II cement. Petitioners argue that the appropriate methodology

is to base the weight average on the relative production of the product

used as the basis for normal value (i.e., Type I cement). Petitioners

argue that the Department correctly applied the DIFMER percentage to

the cost of manufacture of the home market comparison product, Type I

cement.

Department's Position: We agree that CDC's July 1995 cost data, as

provided in the response, was incorrectly omitted from the DIFMER

calculation. We have accounted for this error in our final results. We

agree with respondents that DIFMER is correctly calculated by

subtracting the variable cost of manufacturing for the product sold in

the home market (Type I) from the variable cost of manufacturing for

the product sold in the U.S. market (Type II). Following standard

Department practice, this difference in variable cost of manufacturing

is not to exceed 20 percent of the total cost of manufacturing of the

product sold in the U.S. market. We disagree with petitioners that CDC

and CEMEX's DIFMER should be weight-averaged based on relative

production quantities of Type I cement. Because the individual DIFMER

percentages were calculated by dividing differences in variable

manufacturing costs by the total cost of manufacturing for the U.S.

product (Type II), CDC and CEMEX's DIFMER information should be weight-

averaged by the relative production of Type II cement. Finally, the

Department has recalculated the DIFMER adjustment to normal value for

its final results. The weight averaged DIFMER percentage has been

multiplied by the total cost of manufacturing of the U.S. product (Type

II) used in the comparison to normal value. This amount was then added

to normal value.

Cost of Production (COP)

Comment 9: Petitioners contend that COP should be based entirely on

facts available because CEMEX failed to provide the costs incurred at

all of its plants during the period of review. Petitioners argue that

CEMEX failed to provide any cost data (including shutdown costs) for

the Atoyac plant for the entire period of review. Because CEMEX did not

even provide information on the tons produced at the Atoyac plant, the

Department cannot weight average the reported costs with those of other

producing plants. Petitioners argue that the Department should base the

cost of manufacture for the Atoyac plant on the highest monthly cost of

manufacture reported for any other plant.

CEMEX states that in its May 20, 1996, supplemental cost

questionnaire response, it provided costs for the Atoyac plant for

those months in which there was production. CEMEX contends that any

shutdown costs incurred while the Atoyac plant was producing cement

were included in CEMEX's production cost for that period. CEMEX further

contends that it reported other incidental costs of the shutdown as

general and administrative expenses on the company's financial

statements.

Department's Position: We agree with CEMEX. At verification we

reviewed CEMEX's reported costs of production and found only minor

errors as stated in our verification report dated July 22, 1996. In

addition, as stated in the same verification report, we verified that

all costs associated with the shutdown of the Atoyac facility were

properly reported as a component of cost of

[[Page 17160]]

manufacturing, and the incidental costs were captured in the reported

general and administrative expenses. Therefore, we are utilizing the

verified costs that were reported to the Department.

Comment 10: Petitioners argue that the Department should

recalculate CEMEX's reported financial expenses to include all foreign

exchange translation losses on long-term foreign currency denominated

debt. Petitioners assert that the Department's failure to do so is

inconsistent with its past practice, and distorts actual interest

expense. Citing Certain Pasta from Italy; Semiconductors from the

Republic of Korea; Certain Flat Rolled Steel Products and Plate from

Korea; and Micron Technology, Inc. v. United States, petitioners assert

that the Department should include all costs incurred during the period

of review, including those losses that are deferred to a future time.

CEMEX argues that there is no basis in law or administrative

practice to attribute all foreign exchange translation losses to

interest expense. CEMEX argues that it treated foreign exchange losses

associated with foreign currency denominated debt incurred to purchase

foreign subsidiaries as a reduction of the foreign exchange gain

recognized on the translation of the subsidiaries financial statements.

According to CEMEX, this comported with Mexican GAAP, the Statement of

International Accounting Standards No. 21, and Financial Accounting

Standards Board No. 52. CEMEX argues that if the Department decided

that foreign exchange loss on the debt associated with assets held

outside Mexico should be included in cost of production, then both the

foreign exchange gain and the associated loss should be included in the

reported income and cost of production. CEMEX argues that unlike in

Micron Technology Inc. v. United States, CEMEX's independent auditor

determined that the foreign currency losses reflected in CEMEX's

financial statement were loans directly related to foreign assets

located in countries other than the U.S. or Mexico.

Department's Position: We agree in part with CEMEX and in part with

petitioners. The Department has included foreign-exchange translations

gains and losses in net interest expense. The translation gains and

losses at issue are related to the cost of acquiring debt and thus are

related to production and are properly included in the calculation of

CEMEX's consolidated financing expense. The CIT has upheld this

practice, stating in Micron that ``[t]o the extent that respondent's

translation losses resulted from debt associated with production of the

subject merchandise, such losses are a legitimate component of COP.''

See Micron at 33. In addition, in the past we have found that

translation losses represent an increase in the actual amount of cash

needed by respondent to retire their foreign-currency-denominated loan

balances. See, e.g., Notice of Final Determination of Sales at Less

than Fair Value: Fresh Cut Roses from Ecuador, 24 FR 7019, 7039

(February 6, 1995). Using the same reasoning, for purposes of these

final results we have included CEMEX's net gains on foreign-currency

translations in COP as an offset to financing cost, since the gains

represent a decrease in the actual amount of cash needed by respondent

to retire their foreign-currency-denominated loan balances. Therefore,

we have included total gains and losses associated with foreign-

currency denominated debt in the calculation of consolidated financing

expense.

Comment 11: Petitioners contend that CEMEX's claimed monetary

position gain as an offset to financial expense should not be granted.

Petitioners claim that CEMEX's total monetary position gain is based on

transactions with unconsolidated affiliates, notably loans from

Cementos del Norte and CEMEX Control, that are not at arm's length.

Furthermore, petitioners argue that denying the offset would be

consistent with the Department's well-established practice of denying

interest income on long-term investments as an offset to interest

expense. Petitioners claim that the monetary position gain earned by

CEMEX from electing to hold long-term debt reflects income derived from

investment-type activities that are unrelated to the product under

review.

CEMEX argues that the Department was correct to include CEMEX's

claimed monetary position gain in the calculation of net financial

expense. CEMEX argues that the Department's actions in this review were

in accord with the Department's practice, as established in the first

and second administrative reviews of this case, as well as in

Porcelain-on-Steel Cookware from Mexico. CEMEX further argues that

Cementos del Norte and CEMEX Control are included in CEMEX's

consolidated financial statements and the effect of transactions

between these entities are eliminated in consolidation. CEMEX also

dismisses petitioners' argument that the Department should treat

monetary gain like interest income on long-term investment. CEMEX

argues that monetary gains are related to liabilities and financial

expenses, and are completely unrelated to assets that generate short-

term and long-term interest revenue. Because monetary position gains

are generated by liabilities, the Department should treat monetary

position gain in the same way that it treats interest expenses that

arise from those same liabilities (i.e., include them in the

calculation of net financial expense).

Department's Position: We agree with CEMEX. It is the Department's

longstanding practice to calculate the respondent's net interest

expense based on the financing expenses incurred on behalf of the

consolidated entity, CEMEX. In general, this practice recognizes the

fungible nature of invested capital resources (i.e., debt and equity)

within a consolidated group of companies. In Camargo Correa Meais, S.A.

v. United States, Slip Op. 93-163 (CIT 1993), the Court of

International Trade ruled that the Department's practice of allocating

financial 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 Fed. Reg. 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.''

Furthermore, the SAA and the URAA do not address any specific

change in the Department's practice of calculating financing expense.

Therefore, consistent with the approach outlined in Gray Portland

Cement and Clinker from Mexico; Final Results Antidumping Duty

Administrative Review, 58 FR 25803, 25806 (1993), and Gray Portland

Cement and Clinker from Mexico: Final Results of Antidumping Duty

Administrative Review, 58 FR 47253 (1993), we have included the effect

of the monetary gain in our calculation of the financing costs of

CEMEX.

Comment 12: Petitioners argue that CDC's foreign exchange

transaction gains should not be attributed to interest expense.

Petitioners contend that the Department only includes foreign exchange

transaction gains as an offset to interest expense if the gains are

directly related to the subject merchandise (for example, if the gains

are realized from the importation of raw materials or other inputs

needed to

[[Page 17161]]

produce the merchandise). Petitioners claim that CDC has made no effort

to link its foreign exchange transaction gains to the subject

merchandise.

CDC counters that these monetary gains are translation gains, and

not transaction gains, as petitioners have claimed. CDC argues that in

Silicomanganese from Venezuela, 59 FR 55436, 55440 (1996), the

Department determined that exchange gains and losses on financial

assets and liabilities should be included in COP and CV. CDC explains

that it has characterized this offset on the record as holdings in

dollars related to overall operations. CDC elected to hold a portion of

its assets in a foreign currency to hedge against devaluation of the

local currency. CDC argues that details in its financial statements

showing net exchange rate differences show that there is no basis for

petitioners' concern that CDC's foreign exchange gains may have been

generated entirely from transactions related to non-comparison or out-

of-scope merchandise.

Department's Position: We disagree with petitioners' assertion that

monetary position gains should be limited to the portion that can be

specifically tied to the cost of producing the subject merchandise. The

Department has long held the view that financing expenses are fungible.

Accordingly, consistent with past Departmental practice, we do not

distinguish whether interest expense is related or unrelated to the

merchandise under review (see, e.g., Final Determination of Sales at

Less than Fair Value; Steel Wire Rope from Korea, 58 FR 11035 (1993)).

Therefore, we have used CDC's reported financial expenses including

monetary corrections allocated over the cost of goods sold for all

products.

Furthermore, the SAA and the URAA do not address any specific

change in the Department's practice of calculating financing expense.

Therefore, consistent with the approach outlined in Gray Portland

Cement and Clinker from Mexico; Final Results Antidumping Duty

Administrative Review, 58 FR 25803, 25806, (1993), and Gray Portland

Cement and Clinker from Mexico: Final Results of Antidumping Duty

Administrative Review, 58 FR 47253 (1993) we have included the effect

of the monetary gain in our calculation of the financing costs of CDC.

Comment 13: Petitioners claim that the Department should use

partial facts available because CDC and CEMEX failed to demonstrate

that transfer prices for raw material inputs purchased from affiliated

producers were at arm's length and reflected market value. Moreover,

petitioners claim that CEMEX and CDC have not demonstrated that the

affiliated party costs are fully-absorbed costs of production, because

they do not demonstrate that reported costs included revalued

depreciation, profit-sharing expenses, depletion expenses, and

financial expenses. As partial facts available, petitioners suggest

that the Department add an amount for profit to reported transfer

prices. Petitioners suggest that this amount be determined by

multiplying the profit rate in CEMEX's consolidated financial

statement, by reported cost of production.

CEMEX argues that the Department should disregard petitioners'

argument based on the fact that CEMEX provided all information that the

Department requested with respect to raw material inputs, intermediate

product costs, and transfer prices. CEMEX argues that petitioners'

argument should be disregarded because the level of input materials

purchased from affiliated parties is far below the level at which such

purchases are considered by the Department to be material inputs and

can be considered to have a significant impact on the overall cost of

manufacture. In addition, CEMEX argues that its current reporting

methodology is consistent with that used in all prior reviews,

therefore the Department should not use facts available as a basis for

calculating raw material input costs.

CDC argues that in accordance with the statutory requirements of 19

U.S.C. Sec. 1677b(f)(3) and the Department's questionnaire, it

demonstrated that raw material inputs were purchased at arm's length.

CDC argues that for certain major inputs purchased from affiliates, it

provided transfer prices when the transfer price was greater than the

cost of production. In addition, it also provided the production costs

for those inputs where the average production cost was higher than the

purchase price from the affiliated party. CDC dismisses petitioners'

claim that the Department should have obtained market values in

addition to transfer prices and costs of production information. CDC

asserts that it fully complied with the Department's request to provide

cost of production information for all major inputs of production and,

therefore, the Department should utilize the cost of production

reported by CDC.

Department's Position: As noted in Antifriction Bearings (Other

than Tapered Roller Bearings) and Parts Thereof from France, et al;

Final Results of Antidumping Administrative Reviews, 62 FR 2081, 2115

(January 15, 1997), Section 773(f)(2) of the Tariff Act, which refers

to both minor and major inputs, states that, with regard to calculating

COP and CV * * *

A transaction * * * between affiliated persons may be

disregarded if, the amount representing that element does not fairly

reflect the amount usually reflected in sales of merchandise under

consideration in the market under consideration.

To the extent practicable, the Department generally prefers the use

of the transfer price of inputs purchased from an affiliated supplier

in determining COP and CV, provided that the transaction occurred at an

arm's-length price. In determining whether a transaction occurred at an

arm's-length price, we generally compare the transfer between the

affiliated parties to the price of similar merchandise between two

unaffiliated parties. If transactions of similar merchandise between

two unaffiliated parties are not available, we may use the affiliated

supplier's cost of production for that input as the information

available as to what the amount would have been if the transaction had

occurred between unaffiliated parties.

In the case of a transaction between affiliated persons involving a

major input, we will use the highest of the transfer price between the

affiliated parties, the market price between unaffiliated parties, and

the affiliated supplier's cost of producing the major input.

In the instant review CEMEX and CDC have provided all raw material

input data in accordance with the Department's methodology as discussed

above. In addition, the Department verified that respondent's reported

cost of production included either the higher of production costs or

transfer prices for raw material inputs purchased from affiliated

parties. Market prices for the raw material inputs were unavailable.

Therefore, in accordance with prior practice, the Department has

utilized CEMEX and CDC's reported cost of production in its analysis.

Comment 14: Petitioners argue that fixed overhead and labor costs

should be reallocated based on the clinker content of the finished

cement type. Whereas CEMEX based the allocation of variable overhead

costs on clinker volume, it allocated fixed overhead and labor on tons

produced of finished product. Petitioners claim that this allocation

methodology understates the actual cost of producing Type I cement by

shifting disproportionate amounts of the direct labor and fixed

overhead costs to the production of pozzolonic and other types of

cement, which contain less amounts of clinker. Petitioners maintain

that the production of clinker

[[Page 17162]]

incurs substantially more direct labor and fixed overhead costs than

either the acquisition or production of pozzolanic cement. In

particular, pozzolanic cement is never calcined in a kiln, unlike

clinker. Petitioners maintain that the kiln is a cement plant's

greatest capital asset, and that this stage constitutes a substantial

cost of production.

CEMEX rebuts petitioners' argument that fixed overhead and labor

should be reallocated based on clinker content of the finished cement

type. CEMEX claims that it followed the Department's instructions by

submitting fixed overhead costs that were based on the methods used in

the normal course of business to allocate costs to various cement

products. CEMEX also notes that the Department verified the accuracy of

CEMEX's reported fixed costs. In addition, CEMEX claims that it

provided an analysis showing that it was reasonable to use CEMEX's

methodology in its May 20, 1996, response and demonstrated that the

effect on the overall weighted-average fixed costs for Type I cement

was minimal.

Department's Position: We agree with CEMEX. The reported fixed

overhead costs and labor costs were reported in accordance with

Departmental methodology and verified by the Department during the

course of the cost verification. Accordingly, we accepted CEMEX's

submitted methodology which valued the cost of fixed overhead and labor

on the tons produced of finished cement.

Comment 15: Petitioners claim that CEMEX and CDC incorrectly

granted themselves a ``startup adjustment'' by amortizing their costs

over a period beyond the POR for operations at the Tepeaca and

Samalayuca plants, rather than including them as reported startup

costs. Petitioners claim that the burden is on respondents to establish

their entitlement to a startup adjustment (i.e., to demonstrate that

production levels were limited by technical factors associated with the

initial phase of commercial production). Petitioners claim that CDC and

CEMEX failed to do so for both plants mentioned above, thus the

Department should include all costs incurred by these plants in the

calculation of cost of production. Furthermore, petitioners state that

CDC used clinker purchased from other affiliated plants at Samalayuca

and that the Department should adjust these clinker costs to reflect

arm's length transactions.

CEMEX contends that it properly reported all start-up costs for the

Tepeaca plant. CEMEX states that the Tepeaca plant only produced Type I

cement during the first two months of production and never in

commercial quantities. Therefore, calculating a cost of producing Type

I at Tepeaca was not possible. In addition, CEMEX states that the

cement produced by Tepeaca was sold through the Atotonilco plant and

valued at the weighted-average cost of producing Type I cement by all

CEMEX's plants. CEMEX argues that the cost of producing Type I cement

at the new, efficient Tepeaca plant would presumably be lower than the

cost of producing cement at the older plants. Therefore, by not

including the cost of producing cement at the Tepeaca plant, CEMEX

claims it is overstating the overall weighted-average cost of

production.

CDC asserts that the Samalayuca plant did not produce any cement

during the POR. Therefore CDC did not include ``start-up'' costs for

the Samalayuca plant and did not grant itself a ``start-up'' adjustment

by amortizing the cost.

Department's Position: We agree with respondents. As stated in the

Department's verification report, the Type I cement produced at Tepeaca

and Samalayuca was only produced in testing quantities and not in

commercially viable quantities. In addition, the Department verified

that any start-up costs associated with the cost of producing the Type

I cement at Tepeaca was transferred to the Atotonilco facility and was

properly reported in CEMEX's cost of manufacturing. Second, due to the

fact that CDC's Samalayuca facility was not fully operational during

the POR (a fact verified by the Department), and did not incur any

start-up costs, and therefore, we were not able to include the cost of

producing cement at Samalayuca in our cost analysis. For purposes of

the instant review, we are utilizing the costs reported by CDC and

CEMEX and substantiated at verification in our final analysis.

Comment 16: Petitioners argue that the Department should include

CDC's employee profit sharing expense in COP as a labor expense. In the

preliminary results, these expenses were treated as part of G&A.

Petitioners note that the treatment of profit sharing expense affects

the calculation of DIFMER, which is a percentage of manufacturing

costs; while labor expenses are included in manufacturing costs, G&A is

excluded.

CDC responds that in light of the Department's previous decisions

regarding profit sharing distributions, CDC does not disagree with the

principle of including the profit sharing distributions in this case as

labor costs. However, CDC states that its unconsolidated income

statement shows that this expense is not included in cost of sales, and

must be added to cost of goods sold before calculating the G&A factor,

the CEP profit factor, the interest factor, and any other factor

calculated as a percentage of cost of sales. CDC asserts that the

Department must use this revised G&A factor if it adds employee profit

sharing to labor costs.

Department's Position: In the final results of Porcelain-on-Steel

Cookware From Mexico, 61 FR 54620 (1996), the Department included

employee profit-sharing expense in COP and CV because it ``relates to

the compensation of direct labor, a factor of production.'' The

Department agrees with petitioners and respondents that employee profit

sharing should be included as a direct labor cost and not as part of

G&A. Accordingly, cost of production, constructed value, DIFMER, the

CEP profit factor, and the interest factor have been recalculated for

the final results with the correct amounts for employee profit-sharing

included as a direct labor expense. We have also changed our

calculation of CEMEX's employee profit sharing expenses. In our

preliminary determination, we included employee profit sharing in G&A,

however, in our final analysis we have included employee profit sharing

as a portion of direct labor expense not as a part of G&A.

Normal Value

Comment 17: Petitioners argue that the Department should deny CEMEX

a freight deduction for home market sales of bulk Type I cement.

Petitioners base this argument on the following assertions; (1) CEMEX

did not report freight expenses on a transaction-specific, customer-

specific, plant, or company-specific basis. Petitioners contend that

freight expenses vary greatly from transaction to transaction depending

on the location of the plant, warehouse and customer, as well as the

mode of transportation used. The Department requested this information

in its November 1, 1995 questionnaire and its April 12, 1996, letter.

Petitioners note that CEMEX provided no explanation for its refusal to

provide such information. (2) CEMEX did not separate freight expenses

from plant to warehouse and from plant/warehouse to customer. (3) For

most bulk sales, CEMEX failed to report freight expenses specific to

Type I cement. Petitioners claim that CEMEX's calculated freight factor

was based on multiple types of cement for several companies. Moreover,

petitioners found that the shipment volumes used to calculate the

[[Page 17163]]

freight factor greatly exceeded the actual volume of bulk Type I cement

shipped, indicating that other types of cement were included in the

calculation. Petitioners also point to the Department's redetermination

on remand in the second administrative review of this order in which

the agency denied any adjustment where CEMEX's freight factor was based

on multiple cement types. (4) CEMEX included affiliated-company freight

expenses into the freight factor and failed to segregate expenses from

affiliated and unaffiliated companies. Furthermore, CEMEX failed to

demonstrate that transfer prices charged to CEMEX by affiliates were at

arm's length. Petitioners suggest that the Department disallow CEMEX's

home market freight deduction for companies whose freight factor

included affiliated freight charges. (5) CEMEX failed to demonstrate

that its allocation methodology is not distortive. Petitioners argue

that CEMEX did not demonstrate that its freight factors excluded Type

II cement, which necessarily distorts the freight allocation.

Petitioners also contend that CEMEX failed to demonstrate that

inclusion of non-subject merchandise in the freight allocation is not

distortive.

CEMEX, in turn, argues that the Department appropriately deducted

CEMEX's freight expenses on home market sales of Type I bulk cement in

the calculation of normal value.

CEMEX argues that the Department verified CEMEX's reported inland

freight expense, and that computing freight expense on a plant-specific

basis, as suggested by petitioners, would not result in a more precise

calculation of normal value.

Department's Position: We agree with CEMEX. The Department has

allowed a deduction for freight expenses for Type I bulk sales because

the reported expenses provided are in accordance with Departmental

methodology, consistent with the company's accounting practices, and

were substantiated at verification. (See July 22, 1996 Verification

Report). CEMEX has reported home market bulk Type I freight in

accordance with their accounting system and provided the data on a

company, cement type, and presentation specific basis. In fact, the

manner in which CEMEX reported the freight expenses, as verified by the

Department, tends to understate the per ton freight amounts deducted

from normal value. Based on our findings at verification, the

Department determined that respondent's reported freight costs for

sales of Type I bulk cement are not distortive and provide a

conservative estimate of actual transaction specific freight expenses.

Therefore, we are granting CEMEX the home market freight adjustment for

bulk Type I sales.

Comment 18: Petitioners argue that a credit expense adjustment

should not be granted because CEMEX and CDC have failed to prove that

its use of aggregate data to calculate credit expense is not

distortive. Petitioners contend that the total sales and total accounts

receivable data used by CEMEX and CDC to calculate average credit days

outstanding includes non-comparison, outside the ordinary course, and

out of scope merchandise for all customer categories and for affiliated

and unaffiliated customers. Petitioners claim that CEMEX and CDC have

also failed to use a transaction-specific, or even customer-specific

allocation methodology. Petitioners argue that, as demonstrated in

Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts

Thereof From France, et al., 58 FR 39729, 39747 (1993); Industrial

Belts and Components and Parts Thereof, Whether Cured or Uncured From

Japan, 58 FR 30018, 30023 (1993); and NSK Ltd. v. United States, 896 F.

Supp. 1263, 1274-76 (CIT 1995), the Department normally requires

transaction-specific methodology in the calculation of credit expense

and allows customer specific allocation methodology only in exceptional

cases.

CEMEX asserts, in response, that the Department properly granted

CEMEX's claimed credit expense adjustment, regardless of whether the

days were calculated on a transaction-specific basis or as average days

outstanding. CEMEX insists that it simply could not report actual

payment dates for all transactions. CEMEX notes that the Department

accepted and verified CEMEX's calculation of average credit days

outstanding for those sales for which transaction-specific data were

not available. CEMEX also notes that its calculation methodology for

average credit days outstanding based on total accounts receivable (as

opposed to customer-specific credit day calculations) is fully

consistent with the Department's administrative practice, as evidenced

in recent decisions in Fresh Cut Flowers from Mexico, 61 FR 40604

(1996), and Color Television Receivers from Korea, 56 FR 12701, 12708

(1991). To confirm that CEMEX's average credit day calculation was non-

distortive, CEMEX compares the average number of credit days it

calculated with the average number of credit days based on the August

9, 1996, home market sales tape.

CDC asserts that the guiding principle in evaluating this argument

must be the standard established in the statute for differences in

circumstance of sale, such as credit expenses--that is, the adjustment

must be established ``to the satisfaction of the administering

authority.'' 19 U.S.C. Sec. 1677b(a)(6)(C). CDC states that the

proposed rules (which petitioners refer to in their brief) simply

reiterate the Department's preference for transaction-specific

adjustments, and states the general rule that any alternative reporting

must not be distortive.

CDC claims that the Department may accept averages (as CDC has

provided) when a respondent can demonstrate that its books and records

do not permit reporting of the costs on an individual-sale basis, and

can demonstrate that the claimed adjustment is based upon a reasonable

allocation of costs involved. See Color Picture Tubes From Canada, 52

FR 44161 (1987). CDC states that given its accounting methods and the

way in which its customers make payments, transaction-specific

reporting is not feasible, and CDC had little alternative but to

calculate an average credit period for home market sales. CDC asserts

that in Antifriction Bearings (Other Than Tapered Roller Bearings) and

Parts Thereof From France, et al. (``AFBs''), 58 FR 39729 (1993) (

which petitioners cite in their brief), the respondent's accounting

system in that case permitted it to calculate customer-specific credit

periods, unlike CDC in this case. In Industrial Belts and Components

and Parts Thereof, Whether Cured or Uncured, From Japan, 58 FR 30018,

30023 (1993), CDC notes that the Department accepted the respondent's

weighted average allocation over the POR. Finally, CDC asserts that

there is no evidence in the record that the average method it used is

distortive.

Department's Position: We agree with respondent. The Department has

allowed CEMEX's and CDC's claimed credit expense adjustment for the

following reasons. For the purposes of calculating imputed credit

costs, it is our practice to calculate the number of credit days based

on the number of days between the date of shipment and the date of

payment. If actual payment dates are not readily accessible, we

normally allow respondents to base the number of credit days on the

average age of accounts receivables. See, e.g., Color Television

Receivers from the Republic of Korea; Final Results of Antidumping Duty

Administrative Review, 56 FR 12701, 12708 (Comment 28)(1991). Based on

our findings at verification, the Department determined that

respondent's use of the average age of accounts receivables to

calculate credit expenses is reasonable (See Fresh Cut

[[Page 17164]]

Flowers from Mexico; Final Results of Antidumping Duty Administrative

Review, 61 FR 6812 (Comment 2) (1996)).

Comment 19: Petitioners object to the Department's decision to

grant CDC's so-called ``other'' adjustments. The Department categorized

the other adjustments in the same manner as rebates and deducted them

as a direct expense. Petitioners argue that CDC has not demonstrated

that it is entitled to such an adjustment. ``Other'' adjustments

include three types of post-sale adjustments to selling price: (1) A

``concrete pavers incentive discount'' provided to CDC's ready-mix

customers as an incentive for municipalities to use concrete as a

pavement material; (2) a price protection adjustment for all bulk

cement customers in CDC's Juarez market in order to meet competition

from other cement producers in that market; and (3) billing errors

corrected subsequent to the sale.

Petitioners claim that the Department erred in granting an

adjustment for these items for the following reasons. (1) The

Department's uniform practice is to disallow a respondent's claim for a

rebate unless the respondent provides a written agreement or other

documentation that its customers were aware prior to the sale of both

the conditions to be fulfilled to qualify for the rebate, and the

amount of the rebate. Petitioners claim that CDC has provided no such

documentation. (2) CDC has not reported expenses on a transaction-

specific basis. Petitioners argue that the reported other adjustments

merely represent an average of three different types of post-sale

adjustments, none of which can be tied to a particular transaction. (3)

Petitioners claim that at least one of the other adjustments is a

direct selling expense for which an indirect selling adjustment may not

be granted, similar to the adjustment claimed by the respondent and

rejected by the court in Torrington Co. v. United States, 82 F.3d 1039

(Fed. Cir. 1996). (4) Petitioners claim that the ``concrete pavers

discount'' granted to CDC's customers actually benefits the downstream

customers on purchases of concrete, a product outside the scope of this

review.

In response, CDC asserts that it does not collect as revenue the

gross price listed on its invoices. CDC asserts that a normal value

based on anything other than the revenue generated from a sale is

unfair. CDC states that its claimed adjustments are product-specific

and customer-specific. CDC claims that while it is unable to tie the

adjustments to the specific invoices, there is no question that the

adjustments are directly related to sales of the subject merchandise.

As adjustments directly related to the sales and directly affecting the

price at which the subject merchandise is sold, the so-called ``other''

adjustments are properly treated as an adjustment to gross price.

Department's Position: We agree with CDC. The Department has

allowed CDC's claimed adjustments because these adjustments were

reported in accordance with Departmental methodology and substantiated

at verification. (See July 22, 1996 Verification Report.) As stated in

the verification report, CDC was able to allocate these adjustments on

a customer specific basis for the month in which the sale occurred.

Therefore, we are granting CDC these adjustments.

Comment 20: Petitioners argue that CEMEX's rebate adjustment should

not be granted. CEMEX failed to provide information and sample

documentation on its rebate policy and claimed adjustment. Petitioners

claim that the Department cannot, therefore, determine whether the

claimed rebates are direct or indirect expenses or whether they relate

to specific sales. Petitioners also note that CEMEX admitted at

verification that a large number of rebates were not granted on a

transaction-specific basis. Thus, petitioners suggest, the Department

should, at most, accept the rebates as an indirect selling expense.

CEMEX asserts that the Department properly deducted its reported

post-sale billing adjustments and post-sale rebates, allocated on a

company specific basis, from the calculation of normal value. CEMEX

states that the transaction-specific post-sale price adjustments

reported as rebates were fully verified by the Department. CEMEX

dismisses petitioners' suggestion that its customer-specific rebates

are, at most, an indirect selling expense because they are not

allocated on a transaction-specific basis. CEMEX counters that it has

properly claimed these rebates as direct adjustments to price. Relying

on Corrosion Resistant Carbon Steel Flat Products from Canada, 61 FR

13821 (1996), CEMEX asserts that rebates allocated on a customer-

specific basis may be treated as adjustments to price in the same

manner as rebates reported on a transaction-specific basis. In addition

to being customer-specific, CEMEX maintains that the allocation at

issue was made on a product-specific basis (Type I or Type II) and by

method of distribution (bagged or bulk). Moreover, CEMEX argues that

the calculation did not include non-subject merchandise, and that a

customer-specific allocation methodology ensures that the rebates are

directly related to sales of the merchandise at issue. Even if the

Department determines that rebates can be direct adjustments to price

only if they are incurred on a transaction-specific basis, CEMEX argues

that rebates should still be deducted from normal value as indirect

selling expenses pursuant to the CEP offset.

Department's Position: We agree with CEMEX. The Department has

allowed CEMEX's claimed rebate adjustments because the data was

submitted in accordance with Departmental methodology and was

substantiated at verification. While the Department prefers that

discounts, rebates and other price adjustments be reported on a

transaction-specific basis, the Department has long recognized that

some price adjustments are not granted to customers on that basis, and

thus cannot be reported on that basis. Generally, ``we have accepted

claims for discounts, rebates, and other billing adjustments as direct

adjustments to price if we determined that the respondent, in reporting

these adjustments, acted to the best of its ability and that its

reporting methodology was not unreasonably distortive.'' Antifriction

Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from

France, et al., Final Results of Antidumping Duty Administrative

Reviews, 62 FR 2081 (January 15, 1997).

Furthermore, the Department disagrees with petitioners' argument

that the rebates at issue were not granted on a transaction-specific

basis. These rebates were reported on a customer-specific basis for

cement sold in a specific form, bag or bulk, and applied equally (as a

fixed percentage of price) to all invoices for a given month. The

Department does not agree with petitioners that respondent's

methodology is sufficient to warrant treatment of the adjustments as

indirect expenses in the home market. In this case, the amount of the

``allocation'' is limited to a few specific transactions, all to the

same customer, and typically within a very limited period of time. Thus

the danger of unreasonable distortions, which is the averaging effect

on prices, is extremely limited in this case. This case is similar to

situations, permitted by the Department as direct adjustments, in which

a rebate is granted on a limited number of purchases by a single

customer. Because CEMEX's method of reporting its rebate is reasonable,

the Department has allowed it as a direct adjustment.

Comment 21: Petitioners assert that partial facts available should

be used for

[[Page 17165]]

unreported downstream sales by CEMEX's affiliated distributors.

Petitioners assert that there is no downstream sales data used in the

calculation of normal value for affiliated customers failing the arm's

length test. Moreover, petitioners claim that the excluded sales

account for a percentage of total home market sales during the period

of review that could potentially distort the calculation of normal

value. Petitioners claim the use of facts available is appropriate

because CEMEX did not act to the best of its ability to provide

downstream sales data. Petitioners suggest that the Department use the

highest normal value calculated for CEMEX to an unaffiliated

distributor as adverse facts available for the excluded downstream

sales.

CEMEX rebuts the petitioners' argument that the Department should

substitute the highest calculated normal value for all sales made to

CEMEX's affiliated distributors that do not pass the arm's length test.

CEMEX contends that reporting downstream sales was not necessary, as

these sales represented a small amount of home market sales, and would

not have measurably increased the number of value matches between U.S.

and home market sales. CEMEX argues that the questionnaire states that

downstream home market sales need not be reported in cases where

resales by affiliates constitute ``a small percentage of your total

sales in the comparison market.'' CEMEX states that in this case, sales

to affiliated distributors were of a percentage sufficient to satisfy

this requirement.

CEMEX further argues that petitioners' suggestion that the

Department substitute the highest calculated normal value is unduly

harsh. In cases where downstream sales are small and sufficient price

comparisons can be made without the use of the additional downstream

sales, the Department will apply partial adverse facts available only

in those cases in which there is no normal value match. CEMEX refers to

various cold rolled carbon steel cases, which it believes established

this general rule.

Department's Position: We agree with CEMEX. Consistent with our

methodology in Brass Sheet and Strip from Germany 61 FR 49727 (1996),

the Department has not included unreported downstream sales in the home

market because these sales constitute an amount sufficiently small not

to distort the calculation of normal value. Therefore, the Department

has not relied on partial facts available for these sales.

Comment 22: CEMEX argues that pricing comparisons should be made

between the same class of customer in each market. CEMEX claims that

the Department's analysis memo for the preliminary results correctly

indicated that the Department intended to calculate monthly normal

value for each customer category, but failed to do so in the computer

program. CEMEX states that it has established distinct customer

classifications in both markets, and that there are significant price

differences between such customer categories.

Petitioners argue that the Department should not average prices by

customer category for the following reasons. (1) There is no basis in

the statute or the SAA for averaging prices by customer category in

administrative reviews. (2) CEMEX has not demonstrated that it is

necessary to compare prices by customer category. Petitioners assert

that the preamble to the Department's proposed regulations conditions

the comparison of prices by customer category upon a showing that

``prices within a single level of trade, defined by seller function,

[were] affected by the class of customer * * *'' Petitioners rebut

CEMEX's claim that the amount of discount offered varies by customer,

noting that CEMEX stated in its March 15, 1996 questionnaire response

that ``the discounts granted did not vary by type of customer.''

Department's Position: We agree with the petitioners. As stated in

the level of trade section of this notice (see Comment 5, above), the

Department has determined that CEMEX sold at one level of trade in the

home market. Therefore, we have not calculated normal values for each

customer category as requested by CEMEX and have used our standard

methodology for comparing normal value to U.S. price for purposes of

this final results of review.

Comment 23: CEMEX asserts that calculation of normal value should

be limited to home market sales of bulk cement. CEMEX argues that home

market sales of bagged Type I cement are made through different

channels of distribution than home market bulk cement sales. As prices

differ between distribution channels, including home market bagged

cement sales in normal value would be distortive, and represents an

abrupt departure from past administrative practice in the second,

third, and fourth reviews, as well as in cement cases pertaining to

Venezuela, Gray Portland Cement and Clinker from Venezuela, 56 FR 56390

(1991) and Japan, Gray Portland Cement and Clinker from Japan, 56 FR

12156 (1991).

Petitioners respond that the Department correctly included bagged

Type I cement in the calculation of normal value. Petitioners state

that Type I bagged and bulk cement are identical in all regards except

for packing. Petitioners state that inclusion of bagged cement sales in

the normal value calculation is consistent with both Department

precedent (petitioners cite Japanese Cement) and the statute.

Petitioners claim that, except in instances prescribed by the statute,

the Department is not authorized to exclude sales of the comparison

merchandise from normal value. Petitioners argue that the Department's

comparison of home market sales of both bulk and bagged cement to U.S.

sales of only bulk Type I cement does not represent ``an abrupt

departure'' from the Department's practice because ``in the second,

third, and fourth reviews, the Department reached no definitive

conclusion on this issue.'' Petitioners claim that the Department

departed from practice in the original investigation by comparing only

bulk cement sales, and has properly corrected its error in this review.

Department's Position: We agree with petitioners. The Department

has included the entire universe of Type I sales in its calculation of

normal value because bulk and bagged sales constitute identical

merchandise. The only difference between these products is the

packaging; therefore, the Department has made an adjustment for

packaging differences. In addition, as stated in the level of trade

section of this notice (see Comment 5, above), the Department has

determined that CEMEX sold at one level of trade in the home market;

therefore, comparing by discreet channel of distribution is not

warranted as there is only one level of trade and one channel of

distribution in that level. Therefore, we have not calculated normal

values for each channel of distribution as requested by CEMEX and have

used our standard methodology for comparing normal value to U.S. price

for purposes of this final results of review.

Comment 24: CEMEX asserts that the Department should use the inland

freight expenses reported for Type I bagged sales. CEMEX claims that

reporting freight expenses on a plant-specific basis does not change

the accuracy of the normal value calculation. CEMEX also claims that it

reported inland freight expense by cement type at the greatest level of

detail available. CEMEX asserts that the Department should use the

verified freight information for bagged sales, and use the inland

freight expense for Type I bulk sales as facts available for the non-

sampled companies.

[[Page 17166]]

Petitioners respond that the Department correctly disallowed

CEMEX's reported deduction of home market freight for Type I bagged

cement. Petitioners maintain that CEMEX failed to cooperate with the

Department's requests for plant-specific sales adjustment information.

Furthermore, freight expenses were not reported on a transaction-

specific, customer-specific, point-of-sale-specific, or plant-specific

basis. Petitioners also state that CEMEX failed to separate freight

expenses from plant to warehouse and from plant/warehouse to customer;

failed to report freight expenses specific to Type I cement; and failed

to report whether freight was provided by affiliated freight companies,

or whether such freight charges were at arm's length. Finally,

petitioners contend that the Department correctly denied CEMEX's

freight adjustment for Type I bagged cement because CEMEX did not

demonstrate that inclusion of out-of-scope merchandise in the freight

allocation is non-distortive.

Department's Position: We agree with petitioners and have not

allowed CEMEX's adjustment for freight on sales of bagged Type I cement

in the home market. For the same reasons stated in our preliminary

determination (October 3, 1996), the Department relied on partial facts

available, in accordance with section 776(a) of the Act, because

despite our attempts, the Department could not verify the information

as required under section 782(i) of the Act. In addition, even after

repeated requests by the Department, CEMEX refused to provide home

market freight expenses for bagged Type I sales on a plant-specific

basis. CEMEX, in a March 11, 1996 letter to the Department, proposed

reporting bagged sales and transaction specific data, including plant-

specific freight costs, if the Department was willing to sample sales

of bagged cement in the home market. After considerable discussion and

analysis, the Department determined that sampling was reasonable if the

data provided was based upon a representative sample. The Department

chose the plants to sample and provided CEMEX with explicit

instructions in a March 27, 1996 letter outlining the methodology and

the plants which we were sampling. Upon receipt of the database on

April 30, 1996, it was discovered that CEMEX had not reported freight

costs for bagged sales on a plant-specific basis for the plants

selected in our sample and had reported the data on a company-wide

basis. This called into question the validity of our sample; therefore,

the Department issued a supplemental questionnaire, and CEMEX's

response, submitted on May 24, 1996, stated that the freight data could

not be provided on a plant-specific basis and they were providing the

data on a company-wide basis. Due to the fact that CEMEX's reported

data was inconsistent with the Department's explicit instructions, we

are disallowing CEMEX's claimed home market bagged freight adjustment

for purposes of this final results of review.

Comment 25: CEMEX argues that the Department should use the actual

daily exchange rates for the hyper-inflationary period (January-July

1995), rather than the rates computed by the exchange rate model.

Department's Position: We agree with CEMEX. The Department's

proposed regulations at section 351.415 state: ``[t]his [exchange rate]

model is not suitable for use with hyper-inflationary currencies. In

these cases, we intend to use the daily rate absent compelling evidence

that a fluctuation or sustained movement in the currency's value has

occurred.'' The actual daily exchange rate has been used in the final

results for all currency conversions for the hyper-inflationary portion

of this review (i.e., January-July 1995). In the case of hyper-

inflationary currencies, not using the actual daily exchange rates

could result in distortions in the margin calculations.

Comment 26: CEMEX asserts that the Department had no basis to

disregard CEMEX's reported interest rate. CEMEX claims that there is no

evidence on the administrative record that the Department requested

CEMEX to revise its interest rate calculation to exclude long term

loans. CEMEX claims that it did not have any short-term loans during

the period of review, and that it provided the Department with two

alternative short term rates--the Mexican treasury rate and the

Interbank interest rate.

Petitioners argue that the Department properly resorted to facts

available in calculating CEMEX's home market interest rate. Petitioners

rebut CEMEX's assertion that use of facts available was unwarranted

because the Department ``did not request CEMEX to provide additional

interest rate data or request CEMEX to `change their calculation'.''

Petitioners note that in its first and second supplemental

questionnaires (dated February 14, 1996 and April 12, 1996,

respectively), the Department requested worksheets showing how CEMEX

calculated its monthly short-term debt. Petitioners assert that CEMEX

failed to provide the Department with the requested information on the

debt figures underlying CEMEX's interest rate calculation. Furthermore,

petitioner argues that CEMEX contradicts itself by claiming in its case

brief that it ``did not have any short term loans during the POR'',

when the original and supplemental questionnaire responses indicate

that CEMEX calculated the short-term interest rate based on its ``short

term debt''. Furthermore, petitioners note that CEMEX's 1995 annual

report shows peso denominated short term bank loans and notes payable.

Petitioners dismiss CEMEX's assertion that the Department should use

its reported interest rate because it is based on ``the current portion

(short term) of CEMEX's long term loans'' (CEMEX case brief at 87), as

an attempt to ``relabel'' the underlying figures used in the

calculation, and that CEMEX still failed to provide any information

about its methodology for calculating these source figures.

Department's Position: We agree with petitioners. CEMEX incorrectly

included the long-term interest rate in its reported calculation. The

Department has used the interest rate reported by CDC as a surrogate

value for CEMEX's interest rate as facts available because it is a

short-term market interest rate and was substantiated at verification.

Comment 27: Petitioners argue that CDC's freight adjustment should

be denied. Petitioners assert that CDC failed to demonstrate that

freight charges from affiliated companies were at arm's length. In

addition, CDC did not segregate affiliated and unaffiliated expenses.

Petitioners note that CDC ignored the Department's request, in the

November 1, 1995 questionnaire, that CDC explain how it calculated the

freight cost for each sale and provide the total expense incurred by

type of expense (e.g., fuel).

In response, CDC claims that it explained in its questionnaire

responses the freight calculation for each sale, and that it provided

information regarding expenses. CDC also claims that it provided

information to support the arm's length nature of the freight charges

from affiliated companies. CDC states that the Department verified that

the reported freight charges are at arm's length by comparing unrelated

and related transactions. Finally, CDC asserts that it did not

segregate unaffiliated companies' expenses because it did not use the

services of any unaffiliated companies.

Department's Position: We agree with CDC. The Department has

allowed a deduction for freight expenses due to the fact that CDC

reported its freight expenses in accordance with Departmental

instructions and these expenses were substantiated at

[[Page 17167]]

verification. (See July 22, 1996 Verification Report.) Based on our

findings at verification, the Department has determined that CDC's

reported freight costs were at arm's length and therefore appropriately

utilized in calculating normal value. Therefore, for the instant

review, we have utilized all reported home market freight expenses in

our final results of review.

Export Price/Constructed Export Price

Comment 28: Petitioners maintain that the Department should include

all expenses associated with U.S. sales in calculating CEP profit.

Specifically, petitioners claim that the Department should revise its

calculation of total U.S. expenses to include imputed credit expense,

inventory carrying costs, indirect selling expenses incurred in the

home market, home market inventory carrying costs, and home market

warehousing expenses incurred for the U.S. sale. Petitioners assert

that, according to 19 U.S.C. Sec. 1677a(f)(1) and (2)(A), profit is

determined by multiplying the total actual profit by the ratio derived

by dividing the ``total United States expenses'' by the ``total

expenses.'' Total United States expenses are defined by 19 U.S.C.

Sec. 1677a(f)(2)(B) to include all the expenses that the Department is

required to deduct in calculating CEP. These include any of the

expenses ``generally incurred by or for the account of the producer or

exporter, or the affiliated seller in the United States, in selling the

subject merchandise.'' Petitioners contend that the fact that certain

expenses listed above were incurred in the home market does not affect

whether they should be deducted from CEP or included in the ``total

U.S. expenses'' for purposes of the CEP profit calculation. In

particular, petitioners note that indirect selling expenses, inventory

carrying costs, and warehousing expenses incurred in the home market

for the sale to the U.S. are the same types of expenses that the

Department deducted from CEP in Pasta from Italy, and Printing Presses

from Germany.

CEMEX argued in its original brief that the Department should

include in the calculation of CEP profit, foreign indirect selling

expenses, as these are expenses associated with the U.S. sale. In

addition, CEMEX argued that U.S. ``other'' transportation expenses and

indirect selling expenses associated with further manufactured sales

should also be included in the CEP profit calculation. However in their

rebuttal brief, CEMEX reversed its position and agreed with the

Department's methodology in the preliminary determination and stated

that the Department properly calculated CEP profit by not including

indirect selling expenses, pre-sale warehousing expenses, and inventory

carrying costs, incurred in the home market for the sale to the U.S.

affiliate.

Department's Position: Consistent with our methodology outlined in

the discussion of foreign indirect selling expenses (See Comment 31,

below) we will continue to use the same methodology for calculating CEP

profit in our final results, as was done for the preliminary results.

Due to the fact that indirect selling expenses incurred in Mexico,

inventory carrying costs incurred in Mexico, and pre-sale warehousing

expenses incurred in Mexico are expenses associated with the sale of

the merchandise from the producer/exporter to the affiliated importer,

these expenses are not considered U.S. selling expenses as defined by

section 772(f)(2)(B) of the Act. The statute defines ``total United

States expenses'' for use in the CEP profit calculation as ``the total

expenses deducted in subsection (d)(1) and (2)'' (i.e., those expenses

``generally incurred by or for the account of the producer or exporter,

or the affiliated seller in the United States, in selling the subject

merchandise * * *''). By definition, these are not expenses incurred by

the producer/exporter for sale of the merchandise to the affiliated

importer. Thus, the Department will not include for purposes of the CEP

profit calculation, those expenses not considered as an adjustment to

CEP under subsection (d)(1) and (2) (see Comment 31, below), that is,

the indirect selling expenses incurred by CEMEX in the home market for

the sale to the affiliated importer: foreign indirect selling expense,

presale warehousing expense, and foreign inventory carrying cost.

For those expenses associated with further manufacturing, the

Department is substituting the surrogate value of CEP sales for further

manufactured sales (see Comment 30, below) and is therefore not

including those expenses associated with further manufactured sales in

the calculation of CEP profit.

Comment 29: Petitioners state that the Department should

recalculate CDC's credit expense based on its standard practice of

using the difference between the shipment date and the payment date for

each sale. CDC had calculated number of days outstanding based on the

difference between the date of invoice and the date of payment.

CDC agrees with Petitioners that CDC's U.S. credit days outstanding

should be recalculated based upon the difference between the date of

payment and the date of the bill of lading, which represents the

shipment date.

Department's Position: We agree with petitioners and CDC, and have

revised CDC's U.S. credit days outstanding and U.S. credit expense.

Comment 30: CEMEX argues that its CEP sales through the Long Beach

terminal should be excluded from the calculation of average net U.S.

price for further manufactured sales. CEMEX believes that the

Department should limit the calculation for the average net U.S. price

to the geographic area in which the further manufactured product was

sold, (e.g., the Arizona region).

Petitioners contend that CEMEX's argument is contrary to language

in the statute which requires the Department to use all of CEMEX's non-

further manufacturing sales in the calculation of the surrogate CEP.

Petitioners refer to 19 U.S.C. 1677a(e)(1) & (2) which states that the

surrogate price is ``[t]he price of identical subject merchandise sold

by the exporter or producer to an un affiliated person'' or ``[t]he

price of other subject merchandise sold by the exporter or producer to

an un affiliated person.'' Petitioners claim that this language

requires the Department to use as the surrogate price the price at

which CEMEX--the exporter or producer--sold the merchandise in the

United States. Petitioners claim that the statute does not permit the

Department to carve up the universe of U.S. sales in the calculation of

the surrogate price.

Department's Position: We agree with petitioners, and have

substituted as the surrogate value for further manufactured sales the

CEP for all sales made by CEMEX, the exporter and producer, to

unaffiliated customers in the U.S., as required by the statute at 19

U.S.C. 1677 a(e)(1) & (2).

Comment 31: CEMEX argues that the Department should not deduct

indirect selling expenses incurred in the country of manufacture from

the calculation of net U.S. price. CEMEX claims that the SAA states at

153 that the deductions from the U.S. price for CEP sales under section

772(d) represent expenses ``associated with economic activities in the

United States.'' Furthermore, CEMEX cites the preamble to the proposed

regulations, which states that ``[c]onsistent with the SAA at 823, the

Department will make deductions under 772(d) for those expenses

enumerated in the Act which are due to economic activities in the

United States * * * the foreign seller's expenses associated with

selling to the affiliated reseller in the United States would not be

deducted under 772(d) * * *'' 61 FR 7331. CEMEX claims that the

indirect selling expenses it incurred in Mexico (indirect

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selling expense, inventory carrying cost, and presale warehousing

expense) included only those expenses associated with selling to the

affiliated reseller, and are not related to economic activity in the

United States. CEMEX claims that deducting indirect selling expenses

incurred in Mexico is inconsistent with the Department's practice.

Furthermore, CEMEX contends that deducting foreign indirect

expenses is inconsistent with the intent of the statute, which as

described in the SAA at 153, seeks to construct an export price that is

``* * * as closely as possible, a price corresponding to an export

price between non-affiliated exporters and importers.'' CEMEX claims

that expenses not incurred on behalf of an importer should not be

deducted to construct a price that an unaffiliated importer would be

willing to pay, just as the same expenses are never deducted from a

true export price.

Petitioners counter that the statute clearly directs the Department

to deduct ``any * * * expenses generally incurred by or for the account

of the exporter or producer or the affiliated seller in the United

States, in selling the subject merchandise * * *'' Petitioners cite the

House report from the URAA, which states that ``[n]ew sections

772(d)(1) and 772 (d)(2) retain current U.S. law with respect to the

deduction made for direct and indirect expenses * * *'' (H.R. Rep. No.

826, 103rd Cong., 2d Sess. 79 (1994)). Petitioners assert that the

Senate report similarly indicates that Congress intended the deduction

of indirect selling expenses in calculating CEP to be made in the same

manner as it was made in calculating ESP under the pre-1995 law.

Petitioners assert that the Department's prior practice of deducting

from ESP all foreign indirect selling expenses related to U.S. sales

was affirmed by the CIT. Petitioners also cite the Department's

proposed regulations at 351.402(b): the Department ``will make

adjustments to constructed export price under section 772(d) of the Act

for expenses associated with commercial activities in the United

States, no matter where incurred.'' Petitioners contend that the

proposed regulations are consistent with the statute and legislative

history. Petitioners further argue that recent determinations decided

under the new law in Certain Pasta from Italy and Large Newspaper

Printing Presses from Germany, support the subtraction from CEP of all

those selling expenses incurred in the home market to support export

sales.

Petitioners argue that nothing in the language of the SAA or the

preamble to the Department's proposed regulations, which CEMEX relies

upon as the basis for its argument, directs the Department not to

deduct expenses incurred in the home market on U.S. sales. Petitioners

claim that the preamble is highly ambiguous in its reference to

circumstances of sale adjustments, as such an adjustment may only be

granted for direct, not indirect selling expenses. Moreover, the

preamble does not provide a complete listing of those expenses

considered to be associated with selling to the affiliated reseller.

Petitioners rebut CEMEX's argument that language in the SAA at 823

intends CEP to reflect as closely as possible a price corresponding to

an export price between non-affiliated exporters and importers.

Petitioners state that the statute at 19 U.S.C. 1677a(d)(1) clearly

requires the Department to account for the expenses incurred by the

foreign producer or exporter. Finally, Petitioners contend that CEMEX's

interpretation of the statute would open a loophole in the law which

would allow respondents to avoid deduction of any selling expense by

shifting offshore all selling activities relating to U.S. sales, or by

shifting U.S. selling expenses from the books of their U.S. affiliates

to those of the offshore parent companies.

Department's Position: Section 772(d)(1) of the Act instructs the

Department to deduct from CEP ``the amount of * * * the expenses

generally incurred by or for the account of the producer or exporter,

or the affiliated seller in the United States, in selling the subject

merchandise.'' Section 351.402(b) of the proposed regulations states

that the Secretary will make adjustments to CEP under section 772(d) of

the Act for expenses associated with commercial activities in the

United States, no matter where incurred. The CEP is, by definition, the

price obtained after removing from the first resale to an independent

U.S. customer, profit and the activities for which expenses are

deducted under section 772(d). Section 772(d) defines expenses to be

deducted from CEP as those expenses representing activities undertaken

by the affiliated importer to make the sale to the unaffiliated

customer. As such they tend to occur after the transaction for which

export price is constructed and the Department has properly deducted

these expenses in calculating the CEP for comparison purposes.

In the instant review, we disagree with petitioners. The Department

does not deduct indirect expenses incurred in selling to the affiliated

U.S. importer under section 772(d) of the Act. See Notice of Final

Determination of Sales at Less than Fair Value: Certain Pasta from

Italy, 61 FR 30326, 30352 (1996). As stated clearly in the SAA, section

772(d) of the Act is intended to provide for the deduction of expenses

associated with economic activities occurring in the United States. See

SAA at 823. The Department, upon analysis, has determined that the

indirect selling expenses involved in this case relate solely to the

sale to the affiliated importer. For example, presale warehousing

(DISWARU), inventory carrying costs (DINVCARU), and indirect selling

expenses (DINDIRSU), occurred in the home market prior to exportation

and relate solely to the sale to the affiliated importer and are not

assumed by the producer/exporter on behalf of the U.S. affiliate for

the ultimate sale to the unaffiliated customer. Due to the fact that

the expenses under discussion are not associated with U.S. economic

activity (the sale to the unaffiliated customer) and are incurred by

the producer/ exporter for the sale to U.S. affiliate, we have not

deducted these expenses as indirect selling expenses for calculation of

the net U.S. price in this final results of review.

Arm's Length

Comment 32: Petitioners contend that the Department should modify

the arm's length test to account for inflation by calculating and

comparing monthly prices, rather than period-wide averages.

CDC responds that the Department has conducted its standard arm's

length test comparing period-wide prices in several cases where the

home market experienced hyper-inflationary conditions. CDC claims that

there is no basis in the record for the distortion petitioners fear

would result from an arm's length test that does not account for hyper-

inflation, because affiliated and unaffiliated customers made purchases

on a regular basis throughout the POR.

Department's Position: Consistent with previous hyper-inflationary

situations in Small Diameter Circular Seamless Carbon and Alloy Steel,

Standard, Line, and Pressure Pipe from Brazil, 60 FR 31960, 31965

(1995) and Certain Welded Carbon Steel Pipe and Tube from Turkey, 61 FR

69071 (1996), the Department will continue to use its standard arm's

length test comparing period-wide average prices to affiliated and

unaffiliated customers.

Comment 33: CEMEX argues that the Department should perform the

arm's length test comparing CEMEX's sales to each affiliated party with

all sales to unaffiliated customers in the same customer category, and

channel of

[[Page 17169]]

distribution. CEMEX argues that the Department's test is distortive as

it compares affiliated-party sales to an inappropriate group of sales

to unaffiliated customers. CEMEX relies on Certain Hot-Rolled Carbon

Steel Products from France, 58 FR 37062 (1993), where the Department

allegedly performed the arm's length test using only sales of the

identical product to the same customer category in situations where

sales of identical products occurred at both the same and different

levels of trade. CEMEX also argues that the arm's length test should be

conducted within the same channel of distribution, i.e., comparing

sales of bagged sales to bagged sales, and bulk sales to bulk sales.

Petitioners argue that no basis exists for performing the arm's

length test by customer category or channel of distribution.

Petitioners state that the SAA only permits the Department to compare

prices by customer category in an investigation and not in an

administrative review. Petitioners also argue that CEMEX's reliance on

the Department's arm's length methodology in the flat-rolled steel

investigations is misplaced. In those investigations, petitioners

assert, the Department performed the arm's length test by comparing

sales made at the same level of trade, which under the law at that

time, was determined by customer category. Petitioners state that under

current law, level of trade is determined by selling functions.

Finally, petitioners maintain that CEMEX failed to establish that its

prices varied significantly by customer category or channel of

distribution.

Department's Position: We agree with the petitioners. As stated

under the level of trade section of this notice (see Comment 5: above),

the Department has determined that CEMEX sold at one level of trade in

the home market; therefore comparing by discreet channel of

distribution or customer category is not warranted as there is only one

level of trade and one channel of distribution in that level. We have

not revised our arm's length test and have compared sales to affiliated

customers to sales to unaffiliated customers for purposes of this final

results of review.

Facts Available

Comment 34: Petitioners argue that CEMEX's dumping margin should be

based entirely on facts available because CEMEX has significantly

impeded this administrative review. Petitioners claim that CEMEX failed

to cooperate on several occasions with Department requests for Type I

bulk and bagged cement sales information, and misrepresented its burden

for providing Type I bagged cement sales data. Furthermore, petitioners

hold that CEMEX further impeded the review by refusing to provide the

Department with certain plant-specific data (i.e., selling expense

information) which CEMEX claimed it could provide under the sampling

methodology it devised. Petitioners assert that CEMEX's database is

``irreparably flawed,'' as it contains only partial transaction-

specific data on CEMEX's home market sales of Type I bagged cement.

Citing to Fresh Cut Flowers from Mexico and Certain Pasta from

Turkey, petitioners argue that the Department's practice is to apply

total adverse facts available when a respondent ``significantly

impedes'' a proceeding. Petitioners assert that the Department should

find that CEMEX significantly impeded this review for the reasons

stated above. Petitioners suggest that the Department use as total

adverse facts available the highest margin calculated in any previous

administrative review (i.e., the 109.43 percent margin calculated on

remand for the second administrative review).

CEMEX counters that the Department's final determination must be

based on evidence contained in the verified administrative record.

CEMEX claims that the Department recognized it was a cooperative

respondent by successfully conducting extensive verifications in the

home and U.S. markets of the information that CEMEX provided. CEMEX

states that petitioners' appeal for total facts available confirms its

``unrelenting desire'' for the Department to impose the highest

mathematically possible antidumping margin to CEMEX. CEMEX states that

petitioners should not be permitted to ``usurp the DOC's authority'' by

insisting upon the imposition of total facts available.

Department's Position: Section 782(e) of the Act provides that the

Department shall not decline to consider information that is submitted

by an interested party and is necessary to the determination but does

not meet all the applicable requirements established by the Department

if

(1) the information is submitted by the deadline established for

its submission,

(2) the information can be verified,

(3) the information is not so incomplete that it cannot serve as a

reliable basis for reaching the applicable determination,

(4) the interested party has demonstrated that it acted to the best

of its ability in providing the information and meeting the

requirements established by the Department with respect to the

information, and,

(5) the information can be used without undue difficulties.

We find that the information provided by CEMEX was submitted within

the deadlines established by the Department, the information submitted

was verified, the information provided is not incomplete and can serve

as a reliable basis for reaching our current determination, CEMEX has

demonstrated that it acted to the best of its ability to provide the

information required by the Department, and we are able to use the

submitted data without undue difficulties. In addition, the Department

conducted extensive verification of CEMEX's home market sales, U.S.

sales, cost of production, and found that the information provided was

accurate and usable for purposes of a preliminary and final

determination. Therefore, we are not basing this determination on facts

otherwise available and have used the CEMEX's submitted data, except

where noted above, in reaching our determination.

Reimbursement

Comment 35: Petitioners contend that the Department should

determine that CEMEX has reimbursed Sunbelt Cement, its U.S. affiliated

party, for antidumping duties. Petitioners note that CEMEX's 1995

annual report shows an unexplained long-term intra-corporate receivable

account from Sunbelt Enterprises. Petitioners contend that at

verification, Sunbelt implied that its earnings were sufficient to

cover its antidumping duty cash deposit. However, based on the sum of

Sunbelt, PCC's, Fenton's and Sunward's earnings before interest and

taxes during the POR, as reported on their income statement summaries,

petitioners infer that Sunbelt does not appear to be capable of paying

antidumping cash deposits without significant assistance from CEMEX.

Petitioners recommend that the Department assess double the amount of

antidumping duties calculated in this review upon liquidation of

entries of the subject merchandise.

CEMEX argues that petitioners failed to provide any evidence that

CEMEX reimbursed its U.S. subsidiary, Sunbelt Cement, for antidumping

duties. CEMEX states that Sunbelt Enterprises is a holding company for

CEMEX's operations in Spain, the Caribbean, Venezuela, and the United

States. Furthermore, CEMEX states that the Department inquired into

Sunbelt's payment of antidumping duties at verification. CEMEX argues

that the mere existence of a loan between

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