Notice of Final Results of Antidumping Duty Administrative Review: Canned Pineapple Fruit From Thailand

DEPARTMENT OF COMMERCE

International Trade Administration

[A-549-813]

Notice of Final Results of Antidumping Duty Administrative

Review: Canned Pineapple Fruit From Thailand

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

SUMMARY: On August 7, 1997, the Department of Commerce published the

preliminary results of its administrative review of the antidumping

duty order on canned pineapple fruit from Thailand. The review covers

shipments of this merchandise to the United States during the period of

review (POR) January 11, 1995, through June 30, 1996.

Based on our analysis of the comments received, and the correction

of certain ministerial errors, these final results differ from the

preliminary results. The final results are listed below in the section

``Final Results of Review.''

EFFECTIVE DATE: February 13, 1998.

FOR FURTHER INFORMATION CONTACT: Gabriel Adler or Kris Campbell, Office

of AD/CVD Enforcement 2, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)

482-1442 and (202) 482-3813, respectively.

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 refer to the

regulations, codified at 19 CFR part 353, as they existed on April 1,

1997.

Background

This review covers three manufacturers/exporters of merchandise

subject to the antidumping order on canned pineapple fruit from

Thailand: Siam Food Products Public Company Ltd. (SFP), The Thai

Pineapple Public Company, Ltd. (TIPCO), and Thai Pineapple Canning

Industry Corp., Ltd. (TPC). On August 7, 1997, the Department of

Commerce (the Department) published in the Federal Register a notice on

Canned Pineapple Fruit from Thailand; Preliminary Results and Partial

Termination of Antidumping Duty Administrative Review (62 FR 42487)

(Preliminary Results). We received case briefs from the three

respondents on September 8, 1997. Maui Pineapple Co., Ltd. (the

petitioner) did not file a case brief. We received a rebuttal brief

from the petitioner on September 17, 1997. Pursuant to a timely request

by SFP and TIPCO, we held a public hearing on October 14, 1997, at

which the three respondents and the petitioner made presentations.

The Department has now completed this administrative review in

accordance with section 751 of the Tariff Act of 1930, as amended.

Scope of the Review

The product covered by this review is canned pineapple fruit

(``CPF''). For purposes of this review, CPF is defined as pineapple

processed and/or prepared into various product forms, including rings,

pieces, chunks, tidbits, and crushed pineapple, that is packed and

cooked in metal cans with either pineapple juice or sugar syrup added.

CPF is currently classifiable under subheadings 2008.20.0010 and

2008.20.0090 of the Harmonized Tariff Schedule of the United States

(HTSUS). HTSUS 2008.20.0010 covers CPF packed in a sugar-based syrup;

HTSUS 2008.20.0090 covers CPF packed without added sugar (i.e., juice-

packed). Although these HTSUS subheadings are provided for convenience

and customs purposes, our written description of the scope is

dispositive.

Comparison of United States Price and Normal Value

For both companies involved in this review, we calculated

transaction-specific U.S. prices (export price (EP) or constructed

export price (CEP), as applicable) and compared them to normal values

(NV) based on either weighted-average third-country market prices or

constructed values (CV). For price-to-price comparisons, we compared

identical merchandise where possible. Where there were no sales of

identical merchandise in the third-country market to compare to U.S.

sales, we made comparisons of similar merchandise based on the

characteristics listed in the Department's antidumping questionnaire.

Export Price and Constructed Export Price

For the price to the United States, we used EP or CEP as defined in

section 772 of the Act. We calculated EP and CEP based on the same

methodology used in the Preliminary Results, except that we corrected

two errors in our computer program with respect to commission offsets

and CEP offsets. Contrary to our intention, the program (1) included

not only U.S. commissions, but also U.S. indirect selling expenses, in

deriving the cap that limits the third-country commission offset, and

(2) granted a CEP offset, where none was appropriate. We have also

modified the program to correct certain ministerial errors identified

by TPC. See Memorandum from Gabriel Adler to Kris Campbell, dated

December 5, 1997, regarding analysis of TPC data for final results.

Normal Value

Where NV was based on a third-country price, we used the same

methodology to calculate NV as that described in the Preliminary

Results, with modifications for clerical errors with respect to TPC's

data, and one additional exception. In the preliminary results, we

erred in automatically basing NV on CV where comparison market sales of

the most physically comparable product made during the first comparison

month in the 90/60 day contemporaneity window were found to be below

cost. For these final results, in accordance with our practice, we have

revised our computer program to ensure that it searches the entire 90/

60 day contemporaneity window for any sales of the most comparable

product retained after the cost test, and bases NV on such sales if

they exist. See TPC Sales Comment 2 below.

We note, however, that this methodology does not attempt to base NV

on sales of other, less comparable, models in the event that we find

all contemporaneous sales of the most comparable model to be below

cost. On January 8, 1998, the Court of Appeals of the Federal Circuit

issued a decision in Cemex v. United States, 1998 WL 3626 (Fed. Cir.).

In that case, based on the pre-URAA version of the Act, the Court

discussed the appropriateness of using CV as the basis for foreign

market value (normal value) when the Department finds home market sales

to be outside the ordinary course of trade. Although the impact of the

below-cost test on our matching methodology was raised generally (see

Comment 2, below), the specific issue discussed in Cemex was not raised

by any party in this proceeding. However, the URAA amended the

definition of sales outside the ``ordinary course of trade'' to include

sales below cost. See Section 771(15) of the Act. Because the Court's

decision was issued so close to the deadline for completing this

administrative review, we have not had

[[Page 7393]]

sufficient time to evaluate and apply (if appropriate and if there are

adequate facts on the record) the decision to the facts of this ``post-

URAA'' case. For these reasons, we have determined to continue to apply

our policy regarding the use of CV when we have disregarded below-cost

sales from the calculation of NV.

Where NV was based on CV, we used the same methodology as that

described in the Preliminary Results, with the following exceptions:

SFP

1. We modified the margin calculation program to eliminate the

double-counting of an adjustment to direct labor and overhead expenses;

2. We revised the calculation of general and administrative (G&A)

and interest expenses to include data for the fiscal year corresponding

to the last three months of 1995; and

3. We revised G&A expenses to exclude ocean freight charges that

had been improperly included in the original calculation.

TIPCO

We revised the program to eliminate the double-counting of packing

expenses in CV.

Cost of Production

As discussed in the Preliminary Results, we conducted an

investigation to determine whether the respondents made third country

sales of the foreign like product during the POR at prices below their

cost of production (COP) within the meaning of section 773(b)(1) of the

Act.

We calculated the COP following the same methodology as in the

Preliminary Results, except that for SFP we corrected the errors

discussed with respect to constructed value above, which also pertain

to COP.

Pursuant to section 773(b)(2)(C) of the Act, where less than 20

percent of a respondent's sales of a given product were made at prices

below the COP, we did not disregard any below-cost sales of that

product because we determined that the below-cost sales were not made

in ``substantial quantities.'' In accordance with sections 773(b)(2)(B)

and (C) of the Act, where 20 percent or more of a respondent's sales of

a given product were made at prices below the COP, we disregarded the

below-cost sales because such sales were found to be made within an

extended period of time in ``substantial quantities.'' Based on

comparisons of third-country prices to weighted-average COPs for the

POR, we determined, in accordance with section 773(b)(2)(D) of the Act,

that the below-cost sales of the product were at prices which would not

permit recovery of all costs within a reasonable period of time. Where

all contemporaneous sales of a specific product were made at prices

below the COP, we calculated NV based on CV, in accordance with section

773(a)(4) of the Act.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

Preliminary Results. We received comments from the three respondents

and rebuttal comments from the petitioner.

Sales Issues--General

Provisional Measures Cap

Respondents TPC and SFP argue that the Department erred in the

Preliminary Results by calculating a single duty assessment rate based

on all sales reported for the period of review. The respondents argue

that such a calculation is contrary to the intent of the ``provisional

measures cap'' (section 737 of the Act), which limits the assessment of

duties on entries made between the date of the Department's preliminary

determination and the date of the International Trade Commission's

affirmative injury determination under section 735(b) of the Act (``the

cap period'') to the amounts deposited during this period.

According to the respondents, most of the dumping margins found

during the period of review occurred with respect to sales of entries

made during the cap period. The dumping found on these sales exceeded

both the deposit rate in effect for the cap period and the rates found

on sales of post-cap entries. The respondents argue that, even if the

Customs Service (Customs) ultimately applies the cap to cap-period

entries, the inclusion of these sales in the calculation of a single

POR assessment rate, which is then applied to entries outside the cap

period, will shift a portion of the excess liability from the cap

period onto post-cap period entries, partially vitiating the intended

effect of the cap. Instead, the respondents argue, the Department

should calculate separate assessment rates for sales of entries made

during the cap period and sales of entries made after the cap period.

The respondents acknowledge that the record contains entry dates

for only a few of TPC's sales and none of SFP's sales, but claim that

the record contains other data that would allow the Department to infer

which sales correspond to data during the cap period. SFP further

argues that if the Department decides that it must have SFP-specific

entry data on the record in order to calculate separate assessment

rates, it should allow SFP to collect such information from importers

of SFP merchandise and to place the information on the record.

The petitioner argues that the Department's preliminary results

correctly calculated a single weighted-average assessment rate based on

the margins found on all entries during the period of review. According

to the petitioner, the provisional measures cap has no bearing on the

assessment of duties on entries after the cap period, because section

737 of the Act mandates a cap on deposits, not on assessments, with

respect to entries subject to provisional measures. The petitioner

contends that assessment of duties is governed instead by section 736

of the Act, which requires that assessment account for the full amount

that normal value exceeds the export price, and which contains no

limitation on the assessment of duties in the post-cap period. The

petitioner argues that the courts have held that the Department has

broad discretion in calculating assessment rates, since the Act does

not specify how duties should be assessed. According to the

petitioners, the Department's preliminary calculation is consistent

with sections 736 and 737 of the Act, and the Department is not

compelled to adopt the methodology proposed by the respondents.

The petitioner opposes the making of any inference with respect to

the missing entry dates, arguing that surrogate entry dates would not

be accurate and would not provide a specific link of sales to entries.

Further, the petitioner opposes reopening of the record to gather the

missing entry date data.

DOC Position: We disagree with respondents. Consistent with our

established practice, and in accordance with 19 CFR

351.212,1 we have calculated importer-specific POR-average

assessment rates by ``dividing the dumping margin found on the subject

merchandise examined by the entered value of such merchandise for

normal customs duty purposes.'' The provisional measures cap will be

applied in this case, as in all cases, to the appropriate entries.

Those entries will not be assessed final duties in excess of the amount

of the deposit of estimated antidumping duties, in accordance with

section 737(a) of the Act. We disagree with respondents that

[[Page 7394]]

section 737(a) also requires a change in our method of calculating duty

assessment rates. In limiting the amounts to be assessed against

provisional period entries, we have met our statutory obligation to

disregard the antidumping duties due on such entries to the extent that

the amount deposited is lower than the final duty amount. Further, the

calculation of multiple assessment rates would raise concerns about

possible manipulation of data to avoid AD duties and unrestrained

dumping of certain merchandise subject to an order.

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\1\ While the final regulations do not govern this review, they

do describe the Department's current practice with respect to

assessment.

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Even if it were otherwise appropriate to determine assessment rates

based on the respondents' proposed methodology, they did not provide

adequate information to allow a proper application of this methodology.

SFP and TPC suggest that a return to master-list assessment is not

necessary in order to achieve their request that we calculate multiple

assessment rates for each importer. While we agree that the calculation

of multiple assessment rates does not require a master list, the

concerns that led us to discontinue the master-list approach

(difficulties in tying specific entries to specific sales, particularly

in CEP situations, as well as the practical difficulties, and the

concomitant increase in the probability of administrative error, in

assessing based on such ties) are also present regarding the proposals

submitted by SFP and TPC. In order to calculate multiple assessment

rates as proposed, we would have to determine the entry dates of the

sales under review. In this case, the data regarding entry dates is

largely incomplete, and we have no way to ascertain whether specific

sales correspond to entries subject to the cap. Such incomplete

information could lead to manipulation. For instance, a respondent

could provide entry dates for the sales with the highest dumping

margins and argue that this should form the basis for the cap-period

assessment rate, while failing to report entry dates for non-dumped

sales of provisional period entries, which would then be factored into,

and could lower, the post-cap rate. The respondents' suggestions for

estimating entry dates do not adequately allay these concerns.

Finally, we note that the calculation of a single assessment rate,

as opposed to multiple rates for each such period, is not biased in

favor of, or against, respondents. Under some situations, the single

assessment rate methodology may result in the collection of a lesser

amount of duties compared with assessment using multiple rates. For

instance, this would hold true where the dumping rate during the

provisional period exceeds the cap but is less than the post-cap-period

dumping rate.

Sales Issues--TPC

Comment 1: Date of Sale

TPC argues that the Department should have relied on the date of

invoice as the date of sale for EP sales and third country sales,

rather than relying on the date of contract. According to TPC, this

review is subject to the date of sale methodology set forth in the

Department's proposed regulations, and this methodology bases date of

sale on the date of invoice, except in rare situations such as those

involving long-term contracts. TPC contends that the Department

followed this practice in recent cases on Yarn from Austria and Steel

Wire Rod from India, and maintains that there were no compelling

reasons to depart from reliance on the date of invoice in the

Preliminary Results.

The petitioner responds that the Department's use of contract date

as the date of sale is supported by the Department's regulations and

practice.

DOC Position: We disagree with TPC that the date of invoice is the

appropriate date of sale for the sales in question. For these final

results, we have continued to base date of sale on the date of

contract.

TPC is correct that at the time of initiation of this review, the

Department had a policy of normally relying on the date of invoice as

the date of sale. See Antidumping and Countervailing Duties: Notice of

Proposed Rulemaking and Request for Public Comments, 61 FR 7308, 7381

(February 27, 1996) (``Proposed Regulations''); see also Memorandum

from Susan G. Esserman to Joseph Spetrini and Barbara Stafford, March

29, 1996. The general presumption in favor of invoice date continues to

be our normal practice. As explained in the preamble to the

Department's final regulations,2 ``in the Department's

experience, price and quantity are often subject to continued

negotiation between the buyer and seller until a sale is invoiced.''

See Antidumping Duties; Countervailing Duties, 62 FR 27296, 27348 (May

19, 1997) (``Final Regulations'') at 27348.

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\2\ While the final regulations do not govern this review, they

do describe the Department's current practice with respect to date

of sale.

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However, this presumption applies ``absent satisfactory evidence

that the terms of sale were finally established on a different date.''

Id. at 27349. This caveat reflects an awareness that, ``[i]n some

cases, it may be inappropriate to rely on the date of invoice as the

date of sale, because the evidence may indicate that, for a particular

respondent, the material terms of sale usually are established on some

date other than the date of invoice.'' Id. (emphasis added).

Accordingly, ``[i]f the Department is presented with satisfactory

evidence that the material terms of sale are finally established on a

date other than the date of invoice, the Department will use that

alternative date as the date of sale.'' Id. (emphasis added). For these

reasons, while section 351.401(i) maintains the general presumption in

favor of invoice date, it provides for the use of a different date of

sale where the alternative date ``better reflects the date on which the

exporter or producer establishes the material terms of sale.''

The evidence on the record indicates that there were changes to the

contracted terms of TPC's POR sales for only one out of several hundred

EP sales, and five out of several hundred third country sales. See

Memorandum from Case Analysts to Office Director, Regarding

Verification of CEP sales by TPC (CEP verification report) at 1 (``[W]e

noted that for virtually all transactions the terms of sale were

established on the date of contract, and these same terms were applied

without modification on the date of invoice.'') Thus, while the

Department's date of sale policy provides that a written agreement may

not provide a reliable indication that the material terms of sale are

truly established, even if, for a particular sale, the terms were not

renegotiated, the fact pattern presented by TPC is one where the

invoiced terms of virtually all sales are identical to those set in the

corresponding contracts. In the context of the Department's practice on

date of sale, it is therefore reasonable to conclude that the material

terms of the sales in question were usually set on the date of

contract, and that the date of contract is therefore the appropriate

basis for the date of sale.

Finally, we note that TPC anticipated from the outset of this

review that the Department might reject the use of date of invoice as

the date of sale. In its initial questionnaire response TPC stated that

the Department might find the date of contract to be a more appropriate

date of sale than the date of invoice, and provided the date of

contract for EP and third-country sales even though the date of

contract had not been specifically requested by the Department. See

letter from Dickstein, Shapiro, Morin & Oshinsky to the Department of

Commerce, Case No. A-549-813 (November 12, 1997), at 21. Subsequently,

TPC provided, at the Department's request, certain additional third-

country sales needed in order to

[[Page 7395]]

base our third-country sales analysis on contract date. Thus, our

determination that the contract date is the appropriate date of sale

for EP and third-country sales does not prejudice TPC, because we had

all information to perform our analysis basing the date of sale on the

contract date for these transactions.

Comment 2: Matching of Sales in Contemporaneity Window

TPC argues that the Department erred in comparing U.S. sales to

constructed value in instances where there were above-cost third-

country sales of the most physically comparable product within the 90/

60 day contemporaneity window. According to TPC, the Department's

practice in model matching is, first, to search for above-cost

comparison market sales of the most comparable product in the month of

the U.S. sale and, if no such sales are found, to search three months

back and two months after the month of the U.S. sale for any above-cost

sales of that product (the 90/60 day contemporaneity window). TPC

argues that the Department, contrary to its practice, immediately

resorted to constructed value if comparison market sales of the most

comparable product in the month of the U.S. sale were below cost,

without searching for above-cost sales of that product elsewhere within

the 90/60 day window.

The petitioner did not address this comment.

DOC Position: We agree with TPC. The Department's practice in past

proceedings, which we have continued to follow in this review (see

Normal Value, above), is to search the 90/60 day contemporaneity window

to determine whether, based on the cost test, we disregarded all sales

of the best model for comparison before resorting to CV. See

Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts

Thereof From France, Germany, Italy, Japan, Singapore, and the United

Kingdom; Final Results of Antidumping Duty Administrative Reviews, 62

FR 2081, 2111-12 (January 15, 1997) (``AFBs VI''). We have revised the

Department's margin calculation program accordingly for these final

results of review. Although SFP and TIPCO did not comment on this issue

in their case briefs, the error identified by TPC was also contained in

the programs used for calculation of the dumping margins of the other

two respondents, and we have corrected those programs as well.

Comment 3: Calculation of CEP Profit

TPC argues that the Department erred in calculating CEP profit,

because it calculated a ratio of total profit to total selling expenses

that did not include imputed selling expenses, and applied that ratio

to a U.S. selling expense figure that included imputed selling

expenses. According to TPC, this treatment is inconsistent and

overstates profit on U.S. selling activities.

The petitioner responds that the Department's calculation was

consistent with the statute and the Department's practice.

DOC Position: We disagree with TPC. For these final results, we

continued to exclude imputed selling expenses in deriving total actual

profit. We included these expenses in the pool of U.S. selling expenses

used to allocate a portion of total actual profit to each sale.

The preamble to the Final Regulations addresses this issue

directly. In response to a comment that we should include imputed

expenses in the total selling expenses used to derive total profit in

order to avoid double counting, we stated, ``We have not adopted this

suggestion, because the Department does not take imputed expenses into

account in calculating cost. Moreover, normal accounting principles

permit the deduction of only actual booked expenses, not imputed

expenses, in calculating profit.'' Final Regulations at 27354.

Our policy regarding imputed expenses in the CEP profit calculation

was explained in greater detail recently in AFBs VI, as follows:

Sections 772(f)(1) and 772(f)(2)(D) of the Tariff Act state that

the per-unit profit amount shall be an amount determined by

multiplying the total actual profit by the applicable percentage

(ratio of total U.S. expenses to total expenses) and that the total

actual profit means the total profit earned by the foreign producer,

exporter, and affiliated parties. In accordance with the statute, we

base the calculation of the total actual profit used in calculating

the per-unit profit amount for CEP sales on actual revenues and

expenses recognized by the company. In calculating the per-unit cost

of the U.S. sales, we have included net interest expense. Therefore,

we do not need to include imputed interest expenses in the ``total

actual profit'' calculation since we have already accounted for

actual interest in computing this amount under section 772(f)(1).

When we allocated a portion of the actual profit to each CEP

sale, we have included imputed credit and inventory carrying costs

as part of the total U.S. expense allocation factor. This

methodology is consistent with section 772(f)(1) of the statute

which defines ``total United States Expense'' as the total expenses

described under section 772(d) (1) and (2). Such expenses include

both imputed credit and inventory carrying costs.

AFBs VI at 2127. This policy is also described in a recent policy

bulletin. See Import Administration Policy Bulletin number 97/1, issued

on September 4, 1997, concerning the Calculation of Profit for

Constructed Export Price Transactions, at 3 and note 5. As in the

Preliminary Results, we have followed this policy for these final

results of review.

Comment 4: Level of Trade/CEP Offset

TPC argues that the Department erred in finding that CEP sales in

the U.S. and third-country market were made at the same level of trade

and in denying TPC a CEP offset. According to TPC, sales in the U.S.

and third-country market would be at the same level of trade only if no

adjustments were made for the activities of the U.S. reseller. However,

TPC maintains, the level of trade for CEP sales must be determined

after making adjustments for the reseller's activities, so that CEP

sales necessarily were made at a less advanced level of trade than its

third-country sales. TPC contends that since a level of trade

adjustment is not possible, the Department should grant TPC a CEP

offset.

The petitioner argues that adjustments to CEP for U.S. selling

expenses do not automatically warrant a CEP offset, and contends that

TPC has failed to demonstrate the existence of different levels of

trade in the U.S. and third-country market, so that a CEP offset is not

warranted.

DOC Position: We disagree with TPC. In the Preliminary Results, we

expressly stated that, consistent with the statute, we had determined

the level of trade for CEP sales after excluding those selling

activities related to the expenses deducted under section 772(d) of the

Act. Once these selling activities (which included warehousing, co-op

advertising, and sales visits to customers) were excluded, we found

that the selling functions performed for TPC's sales in the two markets

were essentially the same, irrespective of channel of distribution, and

were limited to the processing of sales-related documentation,

invoicing, and collection of payment. See Preliminary Results at 42489.

Since all of TPC's sales were made at the same level of trade, no level

of trade adjustment or CEP offset is warranted in the calculation of

TPC's antidumping margin.

Comment 5: TPC's Alleged Clerical Errors

Warranties: TPC argues that the Department erred in its

recalculation of warranty expenses incurred by affiliated reseller MC

Foods, Inc. (MFI) based on verification findings. According to TPC, the

Department should have recalculated warranty expenses incurred

[[Page 7396]]

by affiliated reseller Mitsubishi International Corporation (MIC), not

those incurred by MFI. Further, the expenses in question should have

been decreased rather than increased.

The petitioner does not address TPC's claim.

DOC Position: We disagree with TPC that the Department should have

recalculated warranty expenses incurred by affiliated reseller MIC,

rather than those incurred by MFI. In the list of clerical error

corrections presented at the outset of verification, TPC explained that

it was necessary to make a correction to warranty expenses by one of

its affiliated resellers, but incorrectly identified the reseller as

MIC. See CEP verification report at Exhibit LA-1. In fact, in verifying

warranty expenses, we found that the correction applied to MFI warranty

expenses (and not to MIC expenses), and resulted in a small decrease of

the MFI warranty expense ratio. See CEP verification report at exhibit

LA-16. In the preliminary results, the Department was therefore correct

in seeking to recalculate the MFI warranty expense ratio. However, we

agree with TPC that the adjustment should have resulted in a decrease,

rather than an increase, to those expenses. See Id., containing

worksheet recalculating the expenses. We have revised the MFI warranty

expenses accordingly for these final results.

U.S. Direct Selling Expenses: TPC argues that certain revisions to

TPC's U.S. sales database that were presented at verification with

respect to bank fees were not properly implemented in the preliminary

results of review. According to TPC, the spreadsheet presented at

verification to revise the bank fees was incorrectly captioned, and

this error was not detected by the Department when incorporating the

revised data into the preliminary margin calculation program, resulting

in adjustment to a different expense (billback expense).

The petitioner does not address this issue.

DOC Position: We agree with TPC. At verification, TPC indicated

that an error had been made in the calculation of bank fees, which

correspond to variable ``DDIRSELU'' in TPC's sales database. However,

the revised spreadsheet presented by TPC was incorrectly captioned

``DIRSELU'', a variable name that corresponds to billback expenses,

which are unrelated to bank fees. Despite this error, the record

indicates that the correction in question, as verified by the

Department, should have been made to bank fees and not to billback

expenses. We have revised the margin calculation program accordingly.

U.S. Indirect Selling Expenses: TPC argues that the Department

erred in the manner in which it increased indirect selling expenses

incurred by affiliated reseller MIC on U.S. sales to account for

certain unreported selling expenses. According to TPC, the expenses

reported in the sales database under the indirect selling expense field

(INDIRSU) included certain expenses that do not concern the under-

reported expenses, namely handling and storage expenses. In the

preliminary results, the Department increased the INDIRSU field by the

ratio of the unreported selling expenses to the reported selling

expenses. TPC argues that by doing so, the Department inadvertently

increased the handling and storage expenses as well. TPC requests that

the Department recalculate the indirect selling expenses so as not to

increase the handling and storage expenses.

The petitioner argues that the Department correctly calculated

indirect selling expenses, and maintain that there is no evidence on

the record to support the correction proposed by TPC.

DOC Position: We agree with TPC. The record shows that the expenses

reported in the indirect selling expense field included unrelated

brokerage and handling expenses, and that these expenses varied by

warehouse. See TPC's November 12, 1996 questionnaire response at 139;

see also CEP verification report at Exhibit LA-31. For these final

results, we have revised the indirect selling expenses so as not to

increase the reported brokerage and handling expenses.

Inventory Carrying Costs: TPC argues that the Department erred in

implementing a correction to inventory carrying costs presented by TPC

at verification. According to TPC, these expenses varied by warehouse

location, and the Department erred in identifying the Kansas warehouse.

The petitioner argues that there is no evidence on the record for

TPC's claim that the warehouse in question was incorrectly identified.

DOC Position: We agree with TPC. In its preliminary results of

review, the Department's program erroneously referred to the Kansas

warehouse as ``Kansas'', but TPC identified this warehouse using other

codes. We have revised the program to correct this error for the final

results.

International Freight: TPC argues that the Department, in

attempting to correct errors in TPC's reported international freight

expenses for CEP sales that were identified by TPC at the outset of

verification, made the following three errors: (1) the Department

identified the destination based on the field DESTINU (which provides

the location of the end customer) rather than WARLOC (which provides

the location of the warehouse the merchandise was actually shipped to),

(2) the Department did not apply a weight factor to the reported

freight rates to convert the freight expenses to a standard 20 oz. case

equivalent weight basis (the basis on which prices and adjustments are

used in the program), and (3) the Department incorrectly applied the

rate for eight-ounce merchandise to shipments to a single warehouse,

rather than all warehouses.

The petitioner argues that there is no basis in the record to

support TPC's allegation with respect to the third error described

above.

DOC Position: We agree with TPC on all three points. We note, with

respect to the third error, that TPC demonstrated at verification that

the rate for shipments of eight-ounce merchandise applied to all

shipments, irrespective of destination. See CEP verification report at

Exhibit S-41.

CEP Selling Expenses: TPC argues that the Department incorrectly

double counted inventory carrying expenses in the calculation of CEP

selling expenses, and also deducted these expenses twice from U.S.

price.

The petitioner does not comment on this claim.

DOC Position: We agree with TPC, and have revised the final results

accordingly.

U.S. Commissions: TPC argues that the Department improperly treated

U.S. commissions incurred on CEP sales in the margin calculation

program, by both deducting such commissions from U.S. price and adding

the same commissions to normal value.

The petitioner disagrees that commissions were double counted, and

argue that U.S. commissions were deducted from normal value in the form

of a commission offset.

DOC Position: We agree with TPC that we double counted U.S.

commissions incurred on CEP sales in the preliminary results by

subtracting these commissions from U.S. price and adding them to NV.

The commission offset alluded to by petitioners consists of home market

indirect selling expenses, capped by the amount of U.S. commissions.

Although such an offset, when capped by U.S. expenses, results in a

deduction from normal value in the amount of the U.S. expenses, the

actual adjustment is for home market expenses rather than U.S.

commissions. We have revised the margin calculation program

accordingly. We note that the language suggested by TPC to correct this

error pertains only to price-to-price comparisons. Since an identical

error

[[Page 7397]]

was made for price-to-CV comparisons, we have also corrected this

error.

Entered Values: TPC argues that the Department should incorporate

into the margin calculation program revised entered value data that

were presented at the outset of verification.

The petitioner does not comment on TPC's request.

DOC Position: We agree with TPC, and have incorporated the revised

entered value information.

Sales Issues--TIPCO

Comment 1: Knowledge of Final Destination

TIPCO argues that the Department erred in disregarding certain U.S.

sales based on a finding that the producer that supplied TIPCO with the

merchandise involved in these sales knew the merchandise was destined

for export to the United States. According to TIPCO, the manufacturer

knew that its merchandise was destined for export, but did not know

with certainty that it would be exported to the United States. TIPCO

argues that the Department should therefore regard the sales in

question as subject to TIPCO's antidumping margins, rather than the

margins corresponding to the manufacturer of the merchandise.

The petitioner argues that the evidence on the record supports a

conclusion that the manufacturer knew that its merchandise was destined

for the United States.

DOC Position: We agree with the petitioner. The Department found at

verification that the manufacturer of the merchandise in question was

responsible for labeling, packing, and loading of the merchandise into

containers. The labels applied by the manufacturer were standard U.S.

market labels, listing U.S. distributors and nutrition facts as

required by U.S. government regulations. Moreover, as explained by

TIPCO officials at verification, CPF products with such labels are

exported exclusively to the U.S. market. See Memorandum from Case

Analysts to Office Director, Regarding Verification of Sales by TIPCO,

July 30, 1997, at 5-6. Since the manufacturer was clearly in possession

of information indicating the destination of the subject merchandise,

we have determined that the manufacturer knew, or should have known,

the ultimate destination of the subject merchandise purchased by TIPCO.

Therefore, we have continued to exclude these sales from TIPCO's margin

calculation for purposes of the final results of this review.

Comment 2: Use of CV for Certain U.S. Sales of Other Producers'

Merchandise

TIPCO argues that the Department erred in comparing certain U.S.

sales of merchandise produced by other manufacturers to constructed

value, rather than comparing these sales to third-country sales of

identical or similar products produced by TIPCO. TIPCO acknowledges

that it did not sell merchandise produced by these suppliers to the

third-country market (Germany) during the POR. However, according to

TIPCO, it is more logical to compare the selling prices of other

producers' merchandise to the selling prices of identical or similar

TIPCO merchandise than to the costs of TIPCO merchandise.

The petitioner argues that the Department properly used CV for

comparison to the sales in question. According to the petitioner, the

Department did not learn of the identity of the producers of that

merchandise until verification, and was thus unable to collect

information on third-country sales involving merchandise produced by

the same suppliers. The petitioner contends that there is therefore no

basis for comparison of the U.S. sales in question to third-country

sales of merchandise produced by TIPCO.

DOC Position: We disagree with TIPCO. The statutory definition of

foreign like product requires sales of merchandise produced by the same

manufacturer as that involved in the U.S. sales. See section 771(16) of

the Act. Given this requirement, the record does not contain evidence

that there are third-country sales of a foreign like product that would

serve as a proper basis for comparison of the merchandise produced by

the other manufacturers. Because TIPCO did not inform the Department

until verification that certain of its U.S. sales involved merchandise

produced by other manufacturers, and did not identify any sales of such

merchandise in the comparison market, there is no foreign-like product

to which the sales in question can be compared. Further, because TIPCO

did not report the cost of the merchandise produced by the other

manufacturer, there is no basis on which to calculate a constructed

value using the actual cost of that merchandise. Therefore, the only

alternative left to the Department is to compare the U.S. sales in

question to the constructed value reported by TIPCO with respect to

merchandise produced by TIPCO.

Comment 3: Double-Counting of Packing Charges

TIPCO argues that the Department double-counted packing in the

calculation of constructed value.

The petitioner does not address TIPCO's comment.

DOC Position: We agree with TIPCO, and have revised the margin

calculation program to eliminate the double-counting of packing in the

calculation of constructed value.

Cost Issues--General

Fruit Cost Allocation Methodology: Respondents SFP and TIPCO claim

that the Department's decision to allocate joint production costs

(including fruit costs) using a net realizable value (NRV) methodology

is unlawful. According to the respondents, the courts have disallowed

the use of value-based data to allocate shared costs, finding that such

allocations undermine the statutory requirement that production costs

serve as an independent yardstick by which to judge the fairness of

prices. Specifically, the respondents argue that the Court of Appeals

for the Federal Circuit (CAFC) ruled in IPSCO Inc. v. United States,

965 F.2d 1056 (CAFC 1992)(IPSCO) that value-based cost allocations are

unlawful, and the Court of International Trade (CIT) applied this

ruling to the present case in The Thai Pineapple Public Co., Ltd. et

al. v. United States, 946 F. Supp. 11 (CIT November 8, 1996), appeal

filed May 15, 1997 (TIPCO). The respondents argue that, based on these

precedents, the Department should accept an allocation of joint fruit

costs on the basis of the weight of fruit used.

In the alternative, SFP argues that the Department should accept

the allocation basis used in its normal accounting system during the

POR. SFP points out that after the Department rejected the weight-based

allocation of fruit costs in the original investigation (because such

an allocation did not capture qualitative differences among different

parts of a pineapple), SFP changed the manner in which fruit costs were

allocated in its normal accounting system during the period of the

first review, so as to ensure that qualitative differences among

different parts of the fruit were properly reflected.

TIPCO adds that, even if an NRV methodology were a permissible

basis for allocation of costs, the Department incorrectly calculated

the NRV ratios based on sales prices and costs incurred during a five-

year period prior to the POR, instead of using TIPCO's submitted POR

NRV costs. TIPCO argues that if the Department insists on

[[Page 7398]]

using a value-based methodology, it should, at a minimum, base any such

methodology solely on NRV ratios derived from costs and revenues during

the POR.

In addition, TIPCO argues that the Department improperly applied

NRV ratios to shared ``upstream'' labor and overhead expenses, which

were incurred in the production of both CPF and juice. TIPCO contends

that such expenses are not dependent on qualitative differences among

raw material inputs, and should be allocated on a weight basis.

The petitioner argues that the Department's practice fully supports

the use of a value-based allocation for shared costs, and that an NRV

methodology results in a more reasonable and accurate allocation of

costs than a weight-based methodology. The petitioner further argues

that the new methodology used by SFP in its normal accounting system

was in fact a weight-based method, and was therefore unreliable.

In addition, the petitioner contends that the use of an NRV

methodology is entirely consistent with court rulings that establish

that the Department's allocation methodologies must reflect actual

production costs based on a company's normal (i.e., historical)

allocation formulas consistent with generally accepted accounting

principles. According to the petitioner, the use of POR data to

calculate NRV ratios (as advocated by TIPCO) would be inappropriate

given that the cost allocation methodologies followed during the POR

represented a change from the historical allocation bases.

The petitioner also claims that the Department properly allocated

TIPCO's shared labor and overhead costs using an NRV methodology. The

petitioner notes that the NRV ratios were derived in order to allocate

all pre-split-off costs, including labor and overhead, and that labor

and overhead cost data were used to derive the NRV ratios.

DOC Position: We agree with the petitioner. The Department's long-

standing practice, now codified at section 773(f)(1)(A) of the Act, is

to rely on data from a respondent's normal books and records if they

are prepared in accordance with home country generally accepted

accounting principles (GAAP) and reasonably reflect the costs of

producing the merchandise. Also, as described in section 773(f)(1)(A)

of the Act, the Department must consider whether reported allocations

``have been historically used by the exporter or producer.''

In the Preliminary Results, we found that the respondents had

abandoned their historical fruit cost allocation methodologies during

the POR. See Preliminary Results at 62 FR 42487, 42490. We carefully

reviewed each of the new cost allocation methodologies to determine

whether they were in accordance with home country GAAP and whether they

allocated costs reasonably. We determined that the newly adopted fruit

cost allocation methodologies were based on the relative weight of the

fruit contained in the CPF produced. Id. As discussed in the final

determination in the underlying investigation, the allocation of

pineapple fruit costs among products solely on the basis of weight

(i.e., a quantitative factor) is inappropriate. See Final Determination

of Sales at Less Than Fair Value: Canned Pineapple Fruit from Thailand,

60 FR 29553, 29561 (June 5, 1995) (Final Determination).\3\ Since the

newly adopted allocation methodologies do not incorporate any measure

of the qualitative factor of the different parts of the pineapple, we

find that such methodologies do not reasonably reflect the costs

associated with production of canned pineapple fruit. A reasonable

fruit cost allocation methodology is one that reflects the

significantly different quality of the fruit parts that are used in the

production of CPF versus those used in the production of juice

products. Id. An allocation methodology based on net realizable value

data recognizes these differences while a weight-based approach does

not.

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

\3\ Although, as noted above, this aspect of the Final

Determination was overturned by the CIT in TIPCO, it is currently on

appeal before the CAFC.

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

We disagree with respondents' arguments that the Court of Appeals

for the Federal Circuit (CAFC) ruled in IPSCO Inc. v. United States,

965 F.2d 1056 (CAFC 1992)(IPSCO) that value-based cost allocations are

unlawful. IPSCO involved the Department's use of an appropriate

methodology for allocating costs between two grades of steel pipe.

There were no physical differences between the two grades of pipe, only

differences in quality and market value. Furthermore, the same

materials, labor, and overhead went into the manufacturing lot that

yielded both grades of pipe. Given these facts, the Department, in its

final determination for the underlying case, allocated production costs

equally between the two grades of pipe, reasoning that because they

were produced simultaneously, the two grades of pipe in fact had

identical production costs.

This aspect of the case was upheld in IPSCO, based on the CAFC's

holding that the Department ``computed constructed value according to

the unambiguous terms of [the Act].'' IPSCO at 1061. While the CAFC

noted, in deferring to the Department's ``consistent and reasonable

interpretation of section 1677b(e),'' that the allocation of costs

based on relative value resulted in an unreasonable circular

methodology (i.e., because the value of the pipe became a factor in

determining cost which became the basis for measuring the fairness of

the selling price of pipe), nowhere did the appellate court indicate

that use of an allocation methodology based on relative value was

legally impermissible. Id. On the contrary, IPSCO suggests that the

courts will defer to the Department's preference for reliance on a

respondent's normal allocation methodologies, particularly when there

are significant differences in the raw materials. The Department's

reasoning in the instant case (i.e., that the use of the pineapple

cylinder in production of CPF and the use of the shells, cores, and

ends, in production of juice and concentrate, requires a value-based

allocation basis) is thus fully consistent with IPSCO.

We disagree with SFP that its normal accounting system during the

POR allocated fruit costs in a manner that accounted for qualitative

differences in the different parts of the fruit. Due to the proprietary

nature of the facts at issue, our analysis of SFP's normal allocation

methodology is contained in the proprietary version of a memorandum in

the Department's Central Records Unit. See Memorandum from William

Jones through Cathie Miller to the File, Regarding SFP Fruit Cost

Allocation (December 5, 1997). As discussed in that memo, we have

determined that SFP's normal allocation methodology during the POR does

not ``reasonably reflect'' the cost of producing the merchandise and we

cannot employ this method in our COP analysis. Alternatively, we have

applied the NRV methodology used for the preliminary results in our

calculations for these final results.

In response to TIPCO's argument that NRV ratios, to be used at all,

should have been based on POR data, we continue to believe that we

correctly relied upon historical data in calculating the NRV ratios

used in the Preliminary Results. The NRV is commonly defined as the

predicted selling price in the ordinary course of business less

reasonably predictable costs of completion and disposal. See Cost

Accounting: A Managerial Emphasis at 550 (Horngren, 9th ed.

[[Page 7399]]

1997). In order to calculate NRV ratios for the Preliminary Results, it

was necessary to compare historical cost and sales data for pineapple

fruit products over a period encompassing several years prior to the

antidumping proceeding, and also to include data for markets where

allegations of dumping had not been lodged. We therefore collected

company-specific historical data from 1990 through 1994 and used this

information to perform our calculations and adjust the allocation of

shared costs.

Finally, with respect to the allocation of TIPCO's joint labor and

overhead costs, we continue to believe that these costs should be

allocated in the same manner as the costs of purchasing fruit. The

Department recognizes that a ``joint production process occurs when

`two or more products result simultaneously from the use of one raw

materials as production takes place.' '' See Polyethylene Terephthalate

Film, Sheet and Strip from the Republic of Korea; Final Results of

Antidumping Duty Administrative Review and Notice of Revocation in

Part, 61 FR 58374, 58376 (November 14, 1996) (PET Film) (quoting

Keeler, Management Accountants' Handbook, Fourth Ed. at 11:1).

Moreover, a joint production process produces two distinct products and

the essential point of that process is that the raw material, labor and

overhead costs prior to the initial split-off requires an allocation to

the final products. See Management Accountant's Handbook at 11:1. CPF

and juice result from a joint production process because they both rely

on the use of a single raw material, pineapple fruit. From the time

when the fruit is purchased or grown until the fruit is processed in

the Ginaca machine (which separates the fruit into its various parts),

CPF and juice share the joint raw material, labor, and overhead costs.

(After the Ginaca machine separates the fruit (i.e., the ``split-off

point''), the cored pineapple cylinders are processed into CPF, and the

remaining portions of the pineapple (i.e., the shells, cores and ends)

are processed separately in order to extract pineapple juice.) Since

all costs up to the split-off point are joint costs, and since, as

discussed above, there are qualitative differences in the different

parts of the pineapple, all such costs (including labor and overhead)

must be allocated in a manner that reflects those differences.

Accordingly, it would be inappropriate to allocate the labor and

overhead costs on a weight basis, as urged by TIPCO. Instead, for these

final results we continue to allocate these costs on the basis of NRV

ratios, since such an allocation reasonably reflects qualitative

differences that exist between the joint raw materials used to produce

CPF and juice.

Cost Issues--TPC

Comment 1: Calculation of Average Cost for POR

TPC argues that the Department should have calculated a separate

cost of production for each fiscal year for which sales in the

comparison market were compared to costs (i.e., 1994, 1995, and 1996),

rather than calculating a single average cost for the POR on the basis

of 1995 and 1996 data. TPC contends that the calculation of a single

average cost for the POR is not required by statute, and maintains that

the Department has calculated separate fiscal year costs in other cases

where the use of a single average cost would have created a distortion.

TPC argues that calculation of separate fiscal year costs is necessary

in this case in order to account for substantial increases in the cost

of fresh pineapple and interest expenses from year to year. According

to TPC, the calculation of a single average cost for the POR in the

Preliminary Results distorted the price-cost comparison in such a way

that sales early in the period appear to be below cost, while sales

late in the period appear to have high profit margins. TPC further

claims that this result was exacerbated because the Department did not

include 1994 cost data in the calculation of the single average POR

cost. TPC argues that a distortion also arises because its merchandise

is held in inventory, so that, for instance, sales in early 1995 are

made out of inventory produced in 1994. According to TPC, prices are

determined based on the cost of inventory, and therefore a comparison

of sales in early 1995 to average costs in 1995 would create a

distortion. TPC argues that, instead, the Department should assign

fiscal year costs to sales taking into account the average inventory

period for each product.

The petitioner responds that it would be contrary to law and the

Department's practice to rely on costs outside the POR. The petitioner

points out that in the underlying investigation, the Department

explicitly determined to use costs for the POI and not costs for the

period before the POI, and that in the investigation the Department

rejected arguments similar to those made by TPC in this review.

According to the petitioner, the Department generally does not analyze

the holding period in determining the appropriate reporting period for

cost information, and TPC has offered no new arguments beyond those

raised by the respondents in the underlying investigation. The

petitioner further argues that the prevailing market conditions during

the period reflected steady prices despite increasing costs, so that

there is no evidence that a distortion arises from the comparison of

prices to an average POR cost.

DOC Position: We disagree with TPC. The Department's normal

methodology with respect to the averaging of costs is to calculate a

single weighted-average cost for the entire period of investigation or

review, except in unusual cases where there are substantial changes in

cost, e.g., cases involving high-inflation economies. See Circular

Welded Non-Alloy Steel Pipe and Tube From Mexico; Final Results of

Antidumping Duty Administrative Review, 62 FR 37014, 37024 (July 10,

1997); see also Final Determination of Sales at Less Than Fair Value:

Certain Welded Stainless Steel Pipes and Tubes From Taiwan, 57 FR 53705

(November 12, 1992). This methodology is reasonable and in accordance

with law, and has been consistently followed regardless of whether the

costs of production inputs during the period were higher or lower than

the costs in other periods. See, e.g., Final Determination of Sales at

Less than Fair Value: Stainless SteelBar From Spain, 59 FR 66931

(December 28, 1994)(the Department declined to accept the petitioner's

argument that the appropriate cost period was that period prior to the

period of investigation, which reflected higher costs).

The Department believes that, absent strong evidence to the

contrary, the cost structure during the POR (or period of

investigation) is representative and can be used to calculate an

estimate of the cost of production of that foreign like product in the

ordinary course of business. Thus, although the statute grants the

Department latitude in determining the appropriate cost reporting

period, the Department has consistently required and used the per-unit

weighted-average costs incurred during the POR.

The Department has departed from its normal practice of using POR

weighted-average costs in certain rare situations where cost and price

averages calculated over the entire period did not permit an

appropriate comparison. See, e.g., Notice of Preliminary Determination

of Sales at Less Than Fair Value and Postponement of Final

Determination: Static Random Access Memory Semiconductors From Taiwan,

62 FR 51442, 51444 (October 1, 1997); Final Determination of Sales at

Less

[[Page 7400]]

Than Fair Value: Erasable Programmable Read Only Memories (EPROMs) from

Japan, 51 FR 39680, 39682 (October 30, 1986); Final Determination of

Sales at Less Than Fair Value: Dynamic Random Access Memory

Semiconductors of One Megabit and Above From the Republic of Korea, 58

FR 15467, 15476 (March 23, 1993). However, we find that the pineapple

industry did not experience significant price movements over the POR,

and therefore we continue to believe that the costs incurred during the

POR are reasonably representative of TPC's cost experience and the most

relevant data to analyze whether current sales permit recovery of

costs.

As for the ``significant'' increase in the cost of the raw material

input that TPC claims to have experienced during the POR, we note that

as with all commodities, price fluctuations in the raw pineapple are to

be expected, as prices are dependent upon the supply and demand of that

commodity. TPC has not identified, and we do not know of, any past case

where the Department has abandoned its normal POR cost methodology on

the basis of a fluctuation in the price of raw material inputs.

Further, TPC's assertion that the cost of pineapple fruit increased

substantially during the POR is misleading. While TPC is correct that

the average cost of pineapple fruit was higher at the end of the POR

than it was at the beginning of the POR, the average monthly costs

fluctuated both upward and downward throughout the POR. Moreover, in

its brief, TPC understates the 1994 average cost of pineapple fruit,

relying on an average cost of pineapple for 1994 that included costs

for nine months before the earliest 1994 sale it was required to

report.

We are also unpersuaded by TPC's argument that its interest

expenses increased substantially over the period, thus warranting

calculation of separate costs for each fiscal year. The increase in

interest rates noted by TPC is greatest when comparing the average

interest expenses for 1994 to those for 1995. However, the interest

expense ratio reported by TPC for 1995 is not, on its face,

aberrational, whereas the interest expense ratio for 1994 (which TPC

has treated as proprietary, and therefore cannot be disclosed in this

notice), is strikingly low. See TPC case brief at 7.

As for TPC's additional argument that the average POR cost relied

upon in the Preliminary Results is distorted by the exclusion of 1994

fiscal year costs from the average, we note that the Department's

practice is to base its cost calculation on fiscal years overlapping

the POR. No part of the TPC 1994 fiscal year overlaps the POR. Although

third-country market sales in the last three months of 1994 might serve

as a comparison basis for U.S. sales at the beginning of the POR under

the Department's 90/60 day window for matching, we are unpersuaded that

this is a sufficient reason to depart from the Department's practice.

We have therefore continued to base the calculation of the weighted-

average cost for the POR on 1995 and 1996 costs.

In sum, we find no compelling reason to depart from the

Department's normal practice and to calculate separate costs for each

fiscal year. We have continued to rely on a single weighted-average

cost for the POR, based on 1995 and 1996 costs.

Cost Issues--SFP

Comment 1: Adjustment to Direct Labor and Overhead

SFP states that the Department inadvertently included a direct

labor and overhead adjustment in its calculation of SFP's COP and CV.

SFP argues that the adjustment would have been appropriate if the

Department had used SFP's unadjusted costs, as reflected in its normal

accounting records; but since the Department accepted SFP's revised

allocation of labor and overhead costs, the adjustment is not

necessary.

The petitioner claims that SFP is mistaken in claiming that the

Department included the direct labor and overhead adjustment in the

calculation of COP and CV for the preliminary results.

DOC Position: We agree with the respondent. The direct labor and

overhead adjustment was included in the Department's calculation of

SFP's cost of manufacturing used in the preliminary results. This can

be confirmed by adding the materials, labor and overhead amounts shown

in the cost calculation memo and comparing them to the cost of

manufacturing also reported in that memo. Further, since the Department

accepted SFP's revised allocation of labor and overhead costs, the

adjustment in question was not necessary. We have revised labor and

overhead costs accordingly for these final results.

Comment 2: Adjustments to Year-End Physical Inventory

SFP claims that the Department incorrectly included SFP's year-end

inventory count adjustments in the calculation of COP and CV. SFP

argues that these adjustments were recorded to correct for errors that

occurred in tracking CPF inventory movement from production to semi-

finished goods inventory, and then to finished goods inventory and

sales. According to SFP, the Department's use of actual production

quantities in its cost calculations has already accounted for a portion

of its year-end adjustments, and the remaining adjustments are

irrelevant to the cost of manufacturing since these adjustments are

related to post-production inventory movement. SFP argues that in the

alternative, if the year-end adjustments are included, the Department

should use SFP's original, uncorrected production figures as the

starting point for the calculation of unit costs.

The petitioner argues that SFP's original production figures

contained errors and therefore should not be used for unit cost

calculations. The petitioner further argues that SFP's year-end

adjustments were not reflected in its submitted cost data, and that the

Department therefore correctly revised SFP's production costs to

include the adjustments.

DOC Position: We agree with the petitioner. The submitted cost data

did not include any of SFP's year-end inventory adjustments, and the

inventory tracking errors involved costs that arose throughout the POR.

SFP accumulated these costs and reported them in the inventory amount

on its balance sheet. These costs were not reflected on SFP's income

statement until the end of 1996, when year-end adjustments were

applied, nor were they included in the reported costs. Therefore, we

have continued to include the year-end adjustments in our cost

calculations for the final results. In applying the adjustments, we

have pro-rated the total amount between the first six months of 1996

and the last six months of 1996 on the basis of production quantities.

Comment 3: Appropriate Period for G&A and Interest Expenses

SFP argues that the Department incorrectly calculated G&A and

interest expenses. According to SFP, the Department's long-standing

policy is to calculate G&A expenses from the audited financial

statements which most closely correspond to the POR. SFP had two sets

of financial statements during the POR, reflecting the fact that SFP

changed its fiscal period to the calendar year at the end of 1995. The

first set of financial statements covered the period October 1994

through September 1995, and the second set covers the last three months

of 1995 (the ``stub'' year). In the preliminary results, the Department

based G&A and interest expenses on the first of these financial

statements only.

[[Page 7401]]

SFP argues that the Department should have also included in its

calculation the expenses shown in SFP's stub year 1995 financial

statements. SFP argues that in Steel Products from Canada the

Department included expenses from a period of less than a full year in

its G&A and interest expense calculations. See Certain Corrosion-

Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon

Steel Plate from Canada; Final Results of Antidumping Duty

Administrative Reviews, 61 FR 13815, 13829-30 (March 28, 1996).

The petitioner argues that the Department followed its normal

practice when it calculated SFP's G&A expenses using the audited

financial statements for the fiscal year ending in September 1995. The

petitioner claims that the Department's use of full year annual data to

calculate SFP's G&A expenses was consistent with the methodology used

in Final Determination of Sales at Less Than Fair Value: Furfuryl

Alcohol from Thailand, 60 FR 22557, 22560-61 (May 8, 1995), where the

Department stated that because of their nature as period costs, and due

to the irregular manner in which many companies record G&A expenses,

the Department generally looks to a full-year period in computing G&A

expenses for COP and CV.

DOC Position: We agree with SFP. While stub year 1995 encompasses

only three months, it represents an audited fiscal period (thus

properly reflecting all costs related to this period), and falls

entirely within our POR. We have therefore recalculated SFP's G&A and

interest expense rates for these final results using both the audited

financial statements for the year ending September 30, 1995, as well as

the audited financial statements for the ``stub year'' ending December

31, 1995.

Comment 4--Movement Charges in G&A Expenses

SFP claims that the Department improperly included ocean freight

charges in the calculation of G&A expenses. SFP argues that these

charges are direct selling expenses, not G&A expenses. SFP further

argues that all of its sales during the POR were made on an FOB

Thailand basis, so that any ocean freight expenses are unrelated to

subject merchandise.

The petitioner argues that the Department properly included ocean

freight charges in the calculation of G&A expenses. The petitioner

claims that SFP classifies these costs as G&A expenses in its

accounting system and thus they should be included in the G&A expense

calculation.

DOC Position: We agree with SFP. Ocean freight charges are properly

classified as a movement expense and thus should not be included in the

calculation of G&A expenses. Accordingly, we have corrected the G&A

expense calculation for these final results by excluding the ocean

freight charges.

Cost Issues--TIPCO

Comment 1: Foreign Exchange Gains and Losses on Accounts Receivable

TIPCO claims that the Department erred when it removed foreign

exchange gains from the calculation of G&A expenses. TIPCO contends

that a portion of the excluded exchange gains were related to loans and

purchase transactions and therefore should be allowed as an offset to

TIPCO's G&A expenses. TIPCO also argues that the remaining exchange

gains are akin to gains on financing activity and thus should be

treated in a manner similar to interest income on short-term financial

assets. Therefore, TIPCO argues, the Department should apply the

remaining exchange gains as an offset to interest expenses.

The petitioner argues that the Department properly followed its

stated policy when it excluded foreign exchange gains earned on

accounts receivable from the calculation of TIPCO's G&A expenses. See,

e.g., Notice of Final Determination of Sales at Less than Fair Value:

Certain Pasta from Italy, 61 FR 30326, 30364 (June 14, 1996). The

petitioner also notes that it is Department practice to exclude foreign

exchange gains on accounts receivable from the calculation of net

interest expenses. See, e.g., Notice of Final Determination of Sales at

Less than Fair Value: Silicomanganese from Venezuela, 59 FR 55436,

55440 (November 7, 1994). The petitioner claims that TIPCO did not

provide any information or explanation in support of its claim that

exchange gains on accounts receivable were related to financing

activities and, therefore, these amounts should be excluded from the

calculations of TIPCO's G&A expenses and net interest expenses for the

final results.

DOC Position: We agree with the petitioner. It is Department

practice to include foreign exchange gains and losses on financial

assets and liabilities in our COP and CV calculations, provided that

the gains and losses are related to the company's production. Since the

foreign exchange gains and losses incurred on accounts receivable are

related to the sales function, rather than to production, these amounts

should not be included in the calculations of COP and CV. Accordingly,

we have excluded these amounts from G&A expenses and net interest

expenses for the final results. However, we have included foreign

exchange gains and losses incurred on loans in the calculation of COP

and CV, as TIPCO demonstrated that these gains and losses were related

to the company's financing activities.

Comment 2: Calculation of Profit for CV

TIPCO argues that the Department failed to include packing in the

revenue and cost components of the CV profit calculation. According to

TIPCO, the profit realized on sales must be allocated over the entire

cost experience, and packing is a component of cost of goods sold.

The petitioner argues that the Department was correct in excluding

packing from the profit calculation for TIPCO, because the home market

net price and COP net price calculated by the Department did not

include packing.

DOC Position: We agree with the petitioner. In the Preliminary

Results, we calculated the profit rate in the margin program exclusive

of packing. Therefore, the profit rate is correctly applied to a cost

of manufacturing and general expense amount exclusive of packing.

Accordingly, we have not revised the profit calculation for these final

results.

Final Results of Review

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

exist for the period January 11, 1995, through June 30, 1996:

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

Margin

Manufacturer/exporter (percent)

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

Siam Food Products Public Company Ltd...................... 12.85

The Thai Pineapple Public Company, Ltd..................... 27.85

Thai Pineapple Canning Industry Corp., Ltd................. 21.54

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

The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. As discussed above,

because the number of transactions involved in this review and other

simplification methods prevent entry-by-entry assessments, we have

calculated exporter/importer-specific assessment rates. With respect to

both EP and CEP sales, we divided the total dumping margins for the

reviewed sales by the total entered value of those reviewed sales for

each importer. We will direct Customs to assess the resulting

percentage margins against the entered Customs values for the subject

[[Page 7402]]

merchandise on each of that importer's entries under the relevant order

during the review period. While the Department is aware that the

entered value of the reviewed sales is not necessarily equal to the

entered value of entries during the POR (particularly for CEP sales),

use of entered value of sales as the basis of the assessment rate

permits the Department to collect a reasonable approximation of the

antidumping duties which would have been determined if the Department

had reviewed those sales of merchandise actually entered during the

POR.

Furthermore, the following deposit requirements will be effective

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

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

final results of this administrative review, as provided by section

751(a) of the Act: (1) The cash deposit rate for SFP, TIPCO, and TPC

will be the rate established above; (2) for merchandise exported by

manufacturers or exporters not covered in this review but covered in

the original less than fair value (LTFV) investigation, the cash

deposit will continue to be the company-specific rate published in the

final determination of the LTFV investigation; (3) if the exporter is

not a firm covered in this review or the LTFV investigation, but the

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

manufacturer of the merchandise in these final results of review or the

LTFV investigation; and (4) if neither the exporter nor the

manufacturer is a firm covered in this review or the LTFV

investigation, the cash deposit rate will be 24.64 percent, the ``all

others'' rate established in the LTFV investigation.

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

This notice also serves as final reminder to importers of their

responsibility to file a certificate regarding the reimbursement of

antidumping duties prior to liquidation of the relevant entries during

this review period. Failure to comply with this requirement could

result in the Secretary's presumption that reimbursement of antidumping

duties occurred and the subsequent assessment of double antidumping

duties.

This notice also is the only reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the return or destruction of proprietary information

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

comply is a violation of the APO.

This administrative review and notice are in accordance with

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

Dated: February 3, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-3763 Filed 2-12-98; 8:45 am]

BILLING CODE 3510-DS-P