Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, From the People's Republic of China; Final Results of Antidumping Duty Administrative Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-803]

Heavy Forged Hand Tools, Finished or Unfinished, With or Without

Handles, From the People's Republic of China; Final Results of

Antidumping Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

reviews.

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SUMMARY: On November 12, 1997, the Department of Commerce published the

preliminary results of its administrative reviews of the antidumping

duty orders on heavy forged hand tools from the People's Republic of

China. The period of review is February 1, 1996, through January 31,

1997.

We gave interested parties an opportunity to comment on our

preliminary results. Based upon our analysis of the comments received,

we have changed the results from those presented in the preliminary

results of reviews.

EFFECTIVE DATE: April 6, 1998.

FOR FURTHER INFORMATION CONTACT: Matthew Blaskovich or Wendy Frankel,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, NW,

Washington, D.C. 20230; telephone: (202) 482-4697 or (202) 482-5849,

respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise stated, 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, as amended (the

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

otherwise indicated, all citations to the Department of Commerce's (the

Department's) regulations are references to the provisions codified at

19 CFR part 353 (April 1997).

Background

On November 12, 1997, the Department published in the Federal

Register the preliminary results of the administrative reviews of the

antidumping duty orders on heavy forged hand tools, finished or

unfinished, with or without handles (HFHTs) from the People's Republic

of China (PRC) (62 FR 60684). We received case and rebuttal briefs from

the petitioner, O. Ames Co., and its division, Woodings-Verona. We also

received consolidated case and rebuttal briefs from the respondents.

One respondent also submitted an additional case brief. The Department

has now completed these administrative reviews in accordance with

section 751 of the Act.

Scope of Reviews

Imports covered by these reviews are shipments of HFHTs from the

PRC comprising the following classes or kinds of merchandise: (1)

Hammers and sledges with heads over 1.5 kg (3.33 pounds) (hammers/

sledges); (2) bars over 18 inches in length, track tools, and wedges

(bars/wedges); (3) picks/mattocks; and (4) axes/adzes.

HFHTs include heads for drilling hammers, sledges, axes, mauls,

picks, and mattocks, which may or may not be painted, which may or may

not be finished, or which may or may not be imported with handles;

assorted bar products and track tools including wrecking bars, digging

bars and tampers; and steel wool splitting wedges. HFHTs are

manufactured through a hot forge operation in which steel is sheared to

required length, heated to forging temperature, and formed to final

shape on forging equipment using dies specific to the desired product

shape and size. Depending on the product, finishing operations may

include shot-blasting, grinding, polishing, and painting, and the

insertion of handles for handled products. HFHTs are currently provided

for under the following Harmonized Tariff System (HTS) subheadings:

8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically

excluded are hammers and sledges with heads 1.5 kg (3.33 pounds)in

weight and under, hoes and rakes, and bars 18 inches in length and

under. Although the HTS subheadings are provided for convenience and

customs purposes, our written description of the scope of these orders

is dispositive.

These reviews cover five exporters of HFHTs from the PRC, Shandong

Huarong General Group Corporation (Shandong Huarong), Liaoning

Machinery Import & Export Corporation (LMC), Fujian Machinery Import &

Export Corporation (FMEC), Shandong Machinery & Equipment Import &

Export Corporation (SMC), and Tianjin Machinery & Equipment Import &

Export Corporation (TMC) (collectively, the respondents). The period of

review (POR) is February 1, 1996, through January 31, 1997.

[[Page 16759]]

Analysis of the Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received case and rebuttal briefs from the

petitioner and case and rebuttal briefs filed by the respondents

collectively, as well as a separate case brief from LMC.

Comment 1: Surrogate Value for Labor

The petitioner argues that the Department erroneously calculated

labor costs by using surrogate value data sources in the publication,

Statistics on Occupational Wages and Hours of Work (SOOW). The

petitioner asserts that the data is deficient and inappropriate for use

in this review because (1) the wage and salary rates listed in the SOOW

are reported on a wide range of rates for a particular activity (e.g.,

the industry segment, ``Manufacture of metal products (except machinery

and equipment)'') from which the Department calculated a simple

average; (2) the SOOW excludes fringe benefits payments, thereby

understating labor values; and (3) this data has never been used before

in HFHTs or any other antidumping proceeding. The petitioner argues

that the Department should use data from The Yearbook of Labour

Statistics (YLS), which provides more specific wage rate data and has

been used in prior reviews of this proceeding.

The respondents contend that the labor data presented in the SOOW

is more appropriate than that available in the YLS for use in this

proceeding. The respondents note that the SOOW contains considerably

more contemporaneous data (i.e., from October, 1994 and 1995) than the

YLS (the latest edition contains data from 1991). Moreover, the

respondents claim, the SOOW labor data meets or exceeds minimum wages

of reporting countries, since it includes basic wages, cost-of-living

allowances and some fringe benefits. The respondents claim that

contrary to the petitioner's assertions, the SOOW data generally

results in an overstated HFHTs labor value since the SOOW data is based

upon wages paid to full-time skilled workers, while the HFHTs industry

(1) reports labor costs based on ``cap'' valuations, (caps generally

represent the maximum amount of time spent to produce and pack the

merchandise); (2) employs mostly unskilled and occasionally part-time

workers; and (3) is labor intensive, and therefore representative of

the lower end of the SOOW wage scale. Moreover, the respondents contend

that the SOOW data is specific to the metal industry, which the YLS

neglects to address. In addition, the respondents refute the

petitioner's claim that the SOOW is a new source of data and note that

the International Labor Office in Geneva, Switzerland, prepares both

the YLS and the SOOW. Further, according to the respondents, any

differences in ``total wages'' reported in the SOOW and ``labor costs''

in the YLS are minimal. Finally, the respondents claim that the

petitioner's objection to the Department's use of the SOOW data is

untimely, because the petitioner neglected to address this issue when

the Department was soliciting surrogate value data for this

administrative review.

DOC Position: We agree with the respondents, in part; however, we

do not consider the petitioner's comments on our selection of labor

values used for the preliminary results as untimely. While we have

considered the shortcomings of the SOOW data (e.g., it does not include

all fringe benefits), we have determined that for this review period,

the SOOW data reasonably reflects labor costs for the HFHTs industry.

It is the Department's aim to use surrogate price data which is:

(1) an average non-export value; (2) representative of a range of

prices within the POR if submitted by an interested party, or most

contemporaneous with the POR; (3) product-specific; and (4) tax-

exclusive. See Final Results of Antidumping Duty Administrative Review;

Sebacic Acid from the People's Republic of China, 62 FR 10530, 10534

(March 7, 1997). The data in the SOOW meets all four of these criteria.

First, it reflects an average non-export value. Second, the October

1994 and 1995 SOOW data is the most contemporaneous surrogate labor

data available for India. Third, the SOOW data is specific to the metal

industry. We used wage rate data included in the category ``Manufacture

of metal products, except machinery and equipment,'' because this

category was the best match for the HFHTs industry. Fourth, the SOOW

data is tax-exclusive. In addition, we disagree with the petitioner

that the SOOW data understates labor values because, as the respondents

note, the SOOW data reflects salary rates for skilled, full-time

workers in generally capital intensive industries, whereas, the HFHTs

industry utilizes predominately unskilled laborers (often working part-

time) in labor intensive production. Further, we note that

notwithstanding the petitioner's argument regarding the YLS data, the

petitioner has not submitted the YLS data on the record for this

review, and therefore, we are unable to address any specific claims

with regard to the YLS data. As the SOOW data reasonably reflects labor

costs in the HFHTs industry, we will continue to use SOOW data in

calculating labor costs for these final results.

Comment 2: Labor and Paint Factors--Facts Available

The petitioner contends that the statute, regulations, and

legislative history are clear with regard to the circumstances meriting

the Department's use of facts available (FA), and concurs with the

Department's decision to apply adverse FA in determining LMC's labor

and paint costs for the production of wedges. However, the petitioner

objects to the Department's use of LMC's highest reported ``cap'' data

as FA rather than resorting to an overall adverse FA rate. The

petitioner cites the Department's October 31, 1997, verification report

and October 31, 1997, Memorandum to Richard Moreland regarding use of

FA (FA Memo, 10/31/97) to support its claim that LMC could not

substantiate the validity of its reported labor and paint consumption

costs, and thus, the Department should not rely on any of the reported

data despite its higher cost in relation to other ``cap'' amounts. The

petitioner argues that using such data would be contrary to Department

practice and the antidumping statute, as it would allow LMC to profit

from its lack of cooperation. The petitioner cites to Department and

court precedent to show that as FA the Department should use the

highest margin calculated for another producer of wedges in this

proceeding.

LMC stresses the fact that its factory is an extremely small

operation with limited record-keeping abilities, thus the Department

should apply a less stringent standard in valuing labor and paint

costs. LMC notes that the amounts it reported were comparable to the

figures the Department verified for Shandong Huarong, and the

Department was able to adequately verify all other factor inputs at

LMC. Therefore, according to LMC, the Department should reasonably

assume that LMC's reported ``cap'' valuations are representative of its

labor and paint costs. Further, LMC contests the petitioner's

recommendation that the Department use total FA, given the

circumstances. LMC contends that the petitioner's arguments hinge on

limited situations and precedent where total FA was applied, and are

not applicable for this proceeding. LMC argues that, at most, the

Department should use the partial FA as assigned in the preliminary

results.

[[Page 16760]]

DOC Position: As indicated in the preliminary results, the

Department could not verify LMC's reported labor and paint consumption

figures for the wedge models produced. Therefore, pursuant to section

776(a) of the Act, we used FA for labor and paint. We disagree with the

petitioner that our failure to apply a total FA margin is inconsistent

with the antidumping statute and Department precedent. While the

statute allows the Department to use FA in reaching the applicable

determination, it does not indicate what facts the Department must

employ in applying FA, and does not require the application of total FA

in every instance.

In deciding to use partial FA, we note that we adequately verified

all other factor inputs reported by LMC. As labor and paint constitute

a relatively small proportion of total costs, the integrity of the

overall response is not called into question by the labor and paint

verification problem, and the use of partial FA is appropriate.

We further note that the cases cited by the petitioner, including

NSK Ltd. v. United States, 809 F. Supp. 115, 119 (CIT 1992), merely

affirm the broad discretion granted to the Department in applying FA

and do not compel the Department to apply total FA under the

circumstances present in this review.

On the other hand, the fact that at verification LMC provided

minimal data for paint consumption and no data for labor consumption,

despite our requests for information during verification, influenced

our decision to apply adverse FA. As a result, pursuant to section

776(b) of the Act, we determined that LMC failed to cooperate by not

acting to the best of its ability with regard to labor and paint

factors and we used an adverse inference in applying FA for those

factors.

Contrary to the petitioner's arguments, the data we selected as

adverse partial FA does not reward LMC for failing to cooperate. While

LMC's reported labor and paint amounts were comparable to those amounts

verified for Shandong Huarong, the ``cap'' amounts used as adverse FA

were greater than the highest ``caps'' reported for paint and unskilled

labor by any other PRC producer of wedges in this review. Thus, by

using LMC's highest ``cap'' amounts for paint and labor for any of its

wedges as FA, the Department is satisfied that LMC will not benefit

from its lack of cooperation.

Moreover, the statute permits the Department to rely on information

placed on the record when making an adverse inference in using FA, such

as the ``cap'' information provided by LMC. See section 776(b)(4) of

the Act. Therefore, use of partial FA was a reasonable exercise of our

authority, and we determine that our selection of the highest reported

``caps'' by the respondent as adverse partial FA was appropriate in

this case.

Comment 3: LMC Steel Factors

The petitioner contends that LMC has presented contradictory

information for the record regarding its steel usage. The petitioner

contrasts LMC's original questionnaire response, which states, ``[t]he

steel which is used is either ordinary 1045 grade steel round bar or

rod or ordinary 1045 grade steel hexagonal bar or rod,'' with LMC's

supplemental response, which claims that it uses scrap wheels from

railroad cars. Furthermore, the petitioner alleges, record evidence

does not demonstrate that LMC uses scrap railroad wheels in the

production of the subject merchandise, nor was the Department able to

substantiate the claimed scrap steel usage during verification at LMC's

supplier. Moreover, the petitioner argues that LMC offered no

information on the costs of producing the subject merchandise from

scrap (i.e., scrap railroad wheels). The petitioner argues that given

these inconsistencies and other errors, the Department should use total

FA, and assign LMC either the average or the highest margin calculated

for cooperative respondents of bars/wedges in this proceeding.

Citing the Notice of Final Determination of Sales at Less Than Fair

Value; Collated Roofing Nails From the People's Republic of China, 62

FR 51410 (October 1, 1997) (Nails), LMC notes that the Department will

accept data which is timely, verifiable, sufficiently complete,

demonstrated to be provided based on the best of the respondent's

ability, and can be used without undue difficulties. LMC explained

that, prior to verification, it corrected the reporting error in its

original response by stating in its July 24, 1997, supplemental

submission that it used scrap railroad wheels instead of steel bars to

produce wedges. In addition, LMC contends that the Department confirmed

the factory's usage of scrap railroad wheels in the production of the

subject merchandise. LMC cites the Notice of Final Determination of

Sales at Less Than Fair Value; Brake Drums and Brake Rotors from the

People's Republic of China, 62 FR 9160, (February 28, 1997) (Brake

Drums) to demonstrate that the respondents are not required to submit

error free responses to avoid the use of FA. LMC contends that the

Department will use total FA only when a respondent is ``totally

uncooperative.''

DOC Position: We disagree with the petitioner's argument that

record evidence does not sufficiently demonstrate that LMC uses scrap

railroad wheels in the production of the subject merchandise. During

the factors verification conducted at the factory of LMC's supplier, we

confirmed the supplier's use of scrap railroad wheels. See Factors

Verification Report (LMC), October 31, 1997. In examining the company's

records we were able to confirm the purchase of scrap railroad wheels,

and found nothing to indicate the use of other steel inputs during the

period in question.

Further, we concur with LMC's claim that it notified the Department

in a timely fashion regarding an inadvertent error in reporting steel

inputs. In its July 24, 1997, supplemental questionnaire response, LMC

stated that it used scrap railroad wheels in the production of the

subject merchandise. LMC submitted this correction as part of a

response to the Department's supplemental questionnaire. Therefore, we

consider the changes made by LMC in reporting for steel inputs to be a

clarification of the record, consistent with the Department's requests

for factual information and reporting requirements.

Comment 4: Surrogate Values for Steel Scrap

The petitioner argues that record evidence does not support the

Department's use of HTS category 7204.4100, or likewise, any scrap

category in valuing LMC's steel costs. The petitioner claims that

railroad scrap is a premium quality scrap as opposed to the scrap by-

products included in this category, which comprises the cheapest grades

of scrap available, generally having a high copper content and,

therefore, limited usefulness.

LMC notes that although the petitioner argues that HTS category

7204.4100 is not the correct HTS category for valuing the steel scrap

inputs in this case, the petitioner could not propose a more

appropriate category. LMC contends that the Department is correct in

using HTS category 7204.4100 in valuating its railroad wheel scrap,

since this category covers a wide range of steel scrap.

While LMC asserts that the Department used the correct HTS category

to value steel inputs, LMC contends that the Department should

recalculate the surrogate value within the HTS subheading used. LMC

argues that the March 1996 Indian imports from Germany, Korea, and the

United Kingdom are small in quantity and

[[Page 16761]]

aberrational in price, and therefore, should be disregarded to avoid

distorting the per unit scrap value.

Notwithstanding its above argument, the petitioner contends that,

should the Department continue to value steel using this HTS category,

given the high quality and value attributed to scrap railroad wheels,

the Department should not disregard the March 1996 Indian imports from

Germany, Korea, and the United Kingdom, as requested by LMC. The

petitioner notes that LMC has not provided any information which

demonstrates that such import data is aberrational, but merely is

seeking to drop the highest scrap values from the import data.

DOC Position: Section 773(c) of the Act directs the Department to

value steel used by PRC producers during the POR by using prices of

comparable steel in a market-economy country. We used the best data

available, which is the data in HTS category 7204.4100. Despite its

argument that we should not use this HTS category to value LMC's steel,

the petitioner has provided no alternative HTS category that would be

more appropriate for valuing LMC's scrap railroad wheels than HTS

category 7204.4100. We will, therefore, continue to use this category

for the final results.

With respect to the exclusion of data pertaining to small,

aberrantly priced import quantities from individual countries, we agree

with the respondents that inclusion of such data potentially may be

distortive. It is our practice to disregard small-quantity import data

when the per-unit value is substantially different from the per-unit

values of the larger quantity imports of that product from other

countries. See, e.g., Heavy Forged Hand Tools, Finished or Unfinished,

With or Without Handles, from the People's Republic of China, Final

Results of Administrative Reviews, 62 FR 11813 (March 13, 1997)

(Department's response to Comment 2); Tapered Roller Bearings and Parts

Thereof, Finished or Unfinished, from Romania, Final Results of

Antidumping Duty Administrative Review, 62 FR 37194 (July 11, 1997)

(Department's response to Comment 1). Consistent with prior HFHTs

reviews, we compared the March 1996 Indian data covering imports from

Germany, the United Kingdom and Korea, with the Indian import data for

the period February through August 1996 (excluding March), U.S. import

data for the period January through October 1996, as well as Indonesian

data for the calendar year 1996. We have determined that this Indian

import data reflects small-quantity pricing and, therefore, will

exclude such import data from our surrogate value calculation for these

final results.

Comment 5: Use of Actual Factor Data or Use of ``Caps'

Citing Brake Drums (Department's response to Comment 19), LMC

contends that the Department should apply the verified usage factors

for coal, steel and ``other inputs'', rather than the respective

``cap'' amounts reported in its questionnaire response. With respect to

coal, LMC claimed that the average per-wedge consumption figures

determined at verification are lower than the reported ``caps'' because

the ``caps'' were derived during a period when it used less efficient

coal.

The petitioner contends the Department should not make

modifications to the data reporting methodology established for these

reviews. The petitioner states that LMC, as well as the other

respondents, have chosen to report their cost data according to a long

established ``cap'' reporting methodology. The petitioner argues that

since LMC did not report factor values based on the information

contained in its books and records, it would not be appropriate for the

Department to accept the verified data simply because the factory had

no prior experience with the antidumping process, as argued by LMC.

DOC Position: During verification, we were only able to derive

average coal consumption figures for all wedges (as opposed to actual

model-specific wedge consumption figures) due to LMC's lack of records

detailing coal consumption on a model-specific basis. See Factors

Verification Report (LMC), at 7, (October 31, 1997). There is no record

evidence to indicate that the average verified figures are any more

accurate with regard to model-specific coal consumption during the POR

than the reported model-specific ``cap'' amounts. LMC claimed that the

average wedge consumption figures provided at verification are lower

than the reported ``caps,'' because the ``caps'' were established

during a period when less efficient coal was used. However, LMC was not

able to substantiate this claim. Thus, we have continued to use the

reported ``caps'' for coal consumption in these final results of

reviews.

The purpose of examining the ``caps'' at verification was to

determine the accuracy of LMC's questionnaire responses. Verification

is not normally an appropriate venue for the submission of new factual

information, and we generally collect and use information gleaned at

verification only when minor discrepancies are found or when we believe

a respondent's methodology may not have been reasonable but can be

simply changed. In this case, verification was an opportunity to

determine whether LMC's and Shandong Huarong's ``caps'' represented a

reasonable approximation of the factor inputs used in the production

and distribution of the subject merchandise. 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, 2093, (January

15, 1997) (Department's response to Comment 4) (AFBs). Our conclusion

was that there was no reason to believe that the actual data would

differ significantly from the ``caps''. For instance, as a result of

verifying LMC's response, we determined that while the steel and

packing ``caps'' overstated some factor inputs and underestimated

others, on balance LMC's ``caps'' were a reasonable reflection of its

actual experience and that any deviation from the reported ``caps''

would be insignificant. This is in contrast to the circumstances in

Brake Drums, where the verified data differed so significantly from the

reported information that use of the reported data would have distorted

the margin. See Brake Drums, (Department's response to comment 19).

LMC's proposal would convert verification, which is an opportunity

to check the accuracy of information previously submitted, into a data-

gathering exercise. Furthermore, in LMC's case, although we have the

data to replace the estimated steel and packing ``caps'' with actual

consumption or usage, the change to our calculations, given the

advanced stage of these reviews, would impose an unreasonable burden

with no significant increase in accuracy in light of the results of our

verification. Therefore, we have used LMC's ``caps'' as reported,

except paint and labor. See the Department's position to comment 2 for

a discussion of paint and labor, and AFBs. With regard to LMC's

comments on ``other inputs,'' we are not sure what specific items LMC

is referencing, and therefore, are unable to address this issue.

Comment 6: Surrogate Country Determination for Picks/Mattocks

The respondents contend that the Department should use a different

surrogate country in valuing steel inputs for the production of picks/

mattocks. The respondents assert that the Department determined in a

prior HFHTs review that Indian steel import data prior to 1995 was

unusable due to the small volume of imports in HTS

[[Page 16762]]

category 7214.50. Further, given the fact that there is no Indian

import data for HTS category 7214.50 for the period after March 1996,

the respondents contend that there is no indication such data will be

available in the future, thus making this HTS category unreliable as a

data source and inhibiting the respondents' ability to establish non-

dumped prices for current and future reviews in light of exchange rate

fluctuations. The respondents state that the Department's statutory

language allows for a flexible approach to selecting surrogate country

data, and suggests that there is no reason why the Department needs to

use the same surrogate country for each of the four distinct hand tool

product categories.

The respondents contend that the Department should use Indonesia as

the surrogate country in valuing steel for picks/mattocks. The

respondents state that there is considerable Indonesian import data

specific to the POR as utilized in other antidumping proceedings, which

the Department should use for this proceeding.

The respondents argue that, should the Department continue to use

the Indian import statistics for HTS 7214.50 from the period April 1995

through March 1996, the Department should disregard Indian imports from

Austria and Japan, as was done in the prior review since this data is

too small in quantity and too high in value. The respondents further

contend that the Department should also disregard Belgian imports in

its factor valuation. The respondents suggest that the Belgian import

values are very high compared to imports from Brazil and Saudi Arabia,

and therefore, may include special bar quality steel (SBQ), a high

grade of steel, not used to produce the subject merchandise. According

to the respondents, the Department has consistently determined that

import data is aberrational and thus, unusable when the imports are too

small in quantity to be reliable and extremely high in value compared

to other sources. Finally, the respondents state that if the Department

continues to use the April 1995 through March 1996 data, it should

adjust that data for inflation.

The petitioner contends that the Department should continue to

value steel using Indian surrogate country data. The petitioner

emphasizes that the Department has consistently rejected the use of

Indonesian surrogate data in previous reviews of HFHTs. The petitioner

further contends that the respondents offer no justification why the

Department should utilize Indonesian surrogate value data only for

picks/mattocks, as opposed to other categories of the subject

merchandise, most of which are made from steel that falls under the

same HTS subheading. Moreover, the petitioner asserts that there is no

deficiency in the data; the data encompasses a time frame which

overlaps the POR by two months. The petitioner also refutes the

respondents' arguments that the Department's reliance on Indian

surrogate values has disadvantaged them because of the delay and lack

of reliability of these statistics. The petitioner notes that all

countries have delays in issuing import statistics and maintains that

contrary to the respondents' arguments, the practice of using prior

year Indian import statistics and adjusting them for inflation, should

in fact make it easier for PRC producers to establish non-dumped

prices.

The petitioner further contends that import data can not be

rejected on the mere basis that values are too high or low, and notes

that the Department only rejects aberrational surrogate value data. The

petitioner also refutes the respondents' speculation that the price

differential between the current Belgian values and the values from

other countries proves that the Belgian imports include SBQ steel.

Moreover, the petitioner contends that no grounds exist for the

exclusion of the Belgian data, even if it does reflect imports of SBQ

steel. The petitioner notes that the Department acknowledged in the

prior review that HTS category 7214.50 includes both merchant quality

as well as SBQ steel, but it is still the appropriate subcategory to

use for surrogate steel values for the production of HFHTs since 1045

carbon steel, the steel actually used in the production of HFHTs, is

also classified under this HTS subheading. In light of these facts, the

petitioner concludes that Belgian imports should not be excluded from

the Department's calculation of steel values. Finally, the petitioner

claims that the Department should confirm that HTS category 7214.50

has, in fact, been reclassified as HTS category 7214.99.

DOC Position: Section 773(c) of the Act directs the Department to

value steel used by PRC producers during the POR by using prices of

comparable steel in a market-economy country. See the Department's

position with regard to comment 4. With the exception of LMC, all of

the respondents use 1045 carbon steel to produce HFHTs. We verified

this fact in this review with regard to Shandong Huarong (in prior

reviews, the identical steel grade was used by the respondents). This

type of steel is classified under HTS category 7214.50 of the Indian

import statistics. Therefore, in our preliminary results, we used the

most recently published Indian surrogate data under this category,

which provides import values for the period April 1995 through March

1996. Consistent with Department policy and our practice in prior

reviews, we inflated the calculated factor value to reflect current

prices. Moreover, because the respondents have not substantiated their

claim that the data used for the preliminary results are unreliable, we

do not agree that we should alter our methodology or use a different

surrogate country to value steel for the production of picks/mattocks

for purposes of these final results. Although the respondents assert

that there is import data more specific to the POR, they have provided

no record evidence to support their contention that Indonesian

surrogate value data would be more appropriate in the picks/mattocks

review. Further, we dispute the respondents' claim that the factor

value was based on a small volume of Indian imports, when in fact the

factor value calculated for the prior 1995-1996 HFHTs review was based

on a considerably smaller import volume.

Further, we note that as we could not substantiate the petitioner's

claim that HTS category 7214.50 was reclassified as HTS category

7214.99, we have continued to value steel using HTS category 7214.50 of

the Indian import statistics.

With regard to Indian imports from Austria and Japan, as in the

prior review, we have determined that the respective import quantities

are significantly smaller than the imports from other countries during

the April 1995 through March 1996 period, and the per-unit values

significantly higher. The Department's policy is to disregard imports

of small quantities in calculating surrogate values when the per-unit

value of these imports is at variance with other information on the

record. See the Department's response with regard to comment 4. We

therefore have excluded the Japanese and Austrian imports from our

calculations as the per-unit values of those imports are substantially

different from the per-unit values of the larger quantity imports under

that HTS category from other countries. We do not agree with the

respondents, however, concerning the Belgian imports. Although the per-

unit value of Belgian imports into India under the HTS category are

higher than the per-unit values of other imports (except from Japan and

Austria), the quantities of the Belgian imports are comparable to those

from the remaining countries and there is no information on the record

to substantiate the

[[Page 16763]]

respondents' claim that these values are in any way aberrational.

Therefore, we have continued to include them in our factor valuations

for these final results.

Comment 7: Ocean Freight

The respondents contend that the source used by the Department to

calculate the ocean freight rate between Qingdao/Dalian and Los Angeles

for these reviews was inappropriate because the rate used was based on

proprietary information and is not available to all shippers. The

respondents argue that the proprietary nature of this data puts other

shippers at a disadvantage since they do not have access to this

information. Further, the respondents claim that this rate is highly

inflated since it was based on sample shipments and is not

representative of other shipments of the subject merchandise, even

those made by the same shipper. In addition, the respondents assert

that this rate should not be used, since shipments identified on record

as going to Los Angeles may in fact go to the adjacent port of Long

Beach.

The other source used by the Department to calculate ocean freight

charges was based on Federal Maritime Commission (FMC) data used in

Brake Drums. Although the respondents do not contest the use of these

rates, they request that the Department make downward adjustments to

these rates in order to account for price changes between July/August

1995 (the period from which the data was derived) and the POR, by using

indices from the Bureau of Labor Statistics, Division of International

Prices, U.S. Department of Labor.

The petitioner contends that the record disproves the respondents'

claims that the source used to derive ocean freight charges for the Los

Angeles route is proprietary since this information is contained in the

October 31, 1997 public memorandum to the file regarding surrogate

value selection for the preliminary results of these administrative

reviews. The petitioner also contends that the Department must rely on

verified record evidence regarding U.S. ports of entry, and disregard

the respondents' new claim that Long Beach may be the actual port of

entry on shipments destined for Los Angeles. The petitioner questions

the integrity of the respondents' port of entry claims, and therefore,

asserts that the Department should use as FA, Los Angeles as port of

entry for all shipments to the United States. In addition, the

petitioner contends that the respondents' request that the Department

adjust the FMC rates based on publicly available indices is untimely,

since such data should have been presented when the Department

solicited publicly available information on surrogate values. Moreover,

the petitioner notes that the respondents provide no details on what

these indices are or how they are maintained, and so there is no

reasonable basis upon which to determine if they are even relevant to

these reviews of HFHTs.

DOC Position: The ocean freight rate derived for shipments from

Qingdao and Dalian to Los Angeles is public information derived from

phone conversations with company officials at SeaLand Services, an

international freight company. In our October 30, 1996, memorandum to

the file in the prior administrative review of HFHTs, we inadvertently

treated this as proprietary information. We have since confirmed with

SeaLand Services officials that this is public information. See Memo to

the File (March 12, 1998); Telephone Conversation between Department

officials and SeaLand Services. Therefore, the respondents' assertion

that this is not publicly available information is misplaced. Further,

the respondents claim that certain shipments destined for Los Angeles

may have instead been delivered to the adjacent port of Long Beach. We

examined shipping and sales documentation during verification, and

found no merchandise destined for Los Angeles diverted to Long Beach.

Since nothing on the record demonstrates that certain shipments were

diverted to Long Beach, we will continue to rely on record evidence

regarding port of entry data and apply the appropriate freight charge.

Finally, with respect to the respondents' argument that the FMC

rates used by the Department are overstated, the respondents have not

provided any information on the record to substantiate this claim nor

to demonstrate why it would be appropriate to adjust such rates based

on certain indices from the U.S. Department of Labor. Therefore, we are

not making any adjustments to the FMC rates used to calculate ocean

freight for these final results of reviews.

Comment 8: Double-Counting Freight and Energy Costs as Part of SG&A,

Overhead and Profit

The respondents contend that the Department overstated normal value

by double-counting freight and energy costs. Specifically, the

respondents argue that in addition to the separately stated freight and

energy costs included in normal value, freight and energy costs were

included in the selling, general and administrative expenses (SG&A),

factory overhead, and the profit elements of normal value (i.e., the

financial statement used to compute selling, general and administrative

expenses (SG&A), factory overhead, and profit ratios already include

freight and energy costs either in the raw materials and energy costs

themselves or in the ``other expenses'' category of SG&A). Therefore,

the respondents argue, in order to avoid double-counting, and in

accordance with the methodology used in Brake Drums (Department's

position to comment 10), the Department should compute company-specific

SG&A, factory overhead and profit amounts by multiplying the ratios

used to compute these factors against the total sum of direct materials

and direct labor, rather than the sum of direct materials, freight,

direct labor, and energy.

The petitioner asserts that the Department correctly calculated and

applied the ratios used to compute SG&A, factory overhead, and profit.

The petitioner points out that the Indian financial statements used to

compute these ratios did not separately report freight and freight

related expenses. Thus, the petitioner claims it is reasonable to

conclude that freight expenses were included within the direct costs

(e.g., materials and labor) reported in the financial statements. The

petitioner asserts that because the Department included material and

energy costs in the denominator of the ratio used to compute SG&A,

factory overhead, and profit ratios the Department was correct to

include them in the constructed value elements to which these ratios

were applied. The petitioner further asserts that Brake Drums only

applies if freight and freight related items are reported in the SG&A

category of the financial statement used to derive the SG&A, factory

overhead, and profit ratios. The petitioner maintains that the Indian

financial data did not indicate that freight expenses were included as

part of SG&A, and therefore, the Department's conclusion that these

expenses were included as part of the direct costs was reasonable and

appropriate.

DOC Position: We agree with the petitioner. In Brake Drums, the

Department computed the overhead and SG&A ratios by using expenses

listed on an Indian producer's financial statement that included

freight (and delivery) expenses. By contrast, in this case, the

respondents have provided no record evidence to suggest that the

``other expenses'' category under SG&A on the financial statements from

the Reserve Bank of India Bulletin includes freight. Therefore, we have

no reason to believe

[[Page 16764]]

that we have double-counted freight expenses in our calculation of

normal value.

Furthermore, we disagree with the respondents' claim that the

Department double counted energy costs because we excluded energy costs

from the surrogate overhead expenses that were used to calculate the

overhead, SG&A, and profit ratios. Therefore, applying these ratios to

factors that included energy costs did not overstate energy costs.

Comment 9: Inland Freight

Citing Sigma Corporation v. United States, 117 F. 3d 1401 (Fed.

Cir., July 7, 1997) (Sigma), the respondents argue that the

Department's method of calculating inland freight (i.e., using the

distance from the supplier to the factory without comparing it to the

distance from the port to the factory) is invalid. The respondents

argue that in accordance with the Department practice subsequent to

Sigma (see e.g., Natural Bristle Paintbrushes and Brush Heads From the

People's Republic of China; Preliminary Results of Antidumping Duty

Administrative Review, 62 FR 60228 (November 7, 1997) (Paintbrushes),

the Department should amend inland freight expenses for each of the

respondents to reflect the shorter of the distance between a) the

closest PRC port and the factory or b) the PRC input supplier and the

HFHT factory.

Further, the respondents contend that the Department should not

increase normal value for inland freight expenses where the PRC

producer is located at or near a port, since material inputs were

transported over only very short distances. Again, citing Sigma, the

respondents note that the cost of some inland freight in the exporting

country is included in the import values, since the merchandise has to

be transported from the factory to the port of export. The respondents

claim that these inherent freight costs offset any inland freight costs

incurred in the PRC for factories located in or near a port city. Thus,

the respondents conclude that adding additional freight expenses to NV

would result in double-counting.

The petitioner notes that in Sigma, the Court of Appeals for the

Federal Circuit (CAFC) assumed that the PRC producer chooses between

imports and internally produced merchandise on the basis of delivered

price. The petitioner argues that this assumption only makes sense if

the full delivered cost is used. Thus, the petitioner argues, if the

Department adopts the lesser distance approach discussed above, it

should include in normal value import duties on material inputs. The

petitioner notes, however, that the Department has excluded surrogate

country import duties from factor values in the past on the grounds

that the factors of production methodology constructs a value for

exported merchandise where duties have been rebated under duty drawback

laws. However, the petitioner asserts that the respondents are not

eligible for duty drawback on HFHTs because they cannot determine

whether they produce HFHTs using domestic or imported steel and, thus,

they do not choose suppliers based on the potential of duty drawback.

The petitioner contests the respondents' argument that foreign

freight costs inherently included in surrogate country import values

``offset'' the inland freight costs incurred in the country of import.

Regardless of a factory's location, the petitioner argues that there

are still expenses related to transporting the merchandise from the

port to the factory (e.g., unloading at the port, loading onto inland

freight transportation vessel, and unloading at the factory).

Referencing the Department's determination in the 1993-1994 HFHTs

reviews, the petitioner goes on to argue that a per-mile charge does

not fully capture freight charges for short distances because the fixed

costs of loading and unloading will constitute a higher proportion of

total freight cost than on long hauls. In the 1993-1994 reviews, the

Department used the freight cost for shipping goods between 25-100

kilometers (km) as the cost for shipping goods less than 100 km. For

these instant reviews, the petitioner urges the Department to apply the

same methodology.

DOC Position: The CAFC's decision in Sigma requires that we revise

our calculation of source-to-factory surrogate freight values for those

material inputs that are valued based on CIF import values in the

surrogate country. The Sigma decision states that the Department should

not use a methodology that assumes import prices do not have freight

included and thus values the freight cost based on the full distance

from the domestic input supplier to producer in all cases. Accordingly,

we have added to CIF surrogate values from India a surrogate freight

cost using the shorter of the reported distances from either (1) The

closest PRC port to the HFHT factory, or (2) the domestic input

supplier to the HFHT factory. Where the same input is sourced by the

same producer from more than one source, we used the shorter of the

reported distances for each supplier. See Final Determination of Sales

at Less Than Fair Value: Certain Cut To Length Carbon Steel Plate From

the People's Republic of China, 62 FR 61964, 61977 (November 20, 1997).

In addition, we determined in the 1993-1994 HFHTs review that the fixed

costs of loading and unloading short hauls will form a higher

proportion of the total cost than long hauls, so minor differences in

the distances shipped should not have a significant effect on the total

cost. Therefore, where a producer is located at or near a port, we have

determined that certain freight charges (e.g., loading and unloading)

are still incurred, and thus, have included inland freight expenses to

reflect the respective distance between the producer and the port, even

if that distance was less than 25 kilometers.

Finally, we disagree with the petitioner's suggestion that the

Department add import duties to calculate the factor values for steel.

The Department values inputs used by NME producers by determining the

cost or price of the input in a market economy that is at a level of

economic development comparable to that of the NME. See section

773(c)(4) of the Act. Since the Department's NME methodology is aimed

at constructing the value of the merchandise for export, it is

appropriate to use the costs the surrogate producer would face in

producing merchandise for export. In this regard, when the Department

uses import prices to value an input, the price of the input is

adjusted to make it a delivered price by adding an amount for freight.

See Pure Magnesium From the People's Republic of China: Final Results

of Antidumping Duty New Shipper Review, 63 FR 3085, 3087 (January 21,

1998). However, consistent with our standard practice, we do not add

Indian import duties to the values reported in the published Indian

import statistics as those duties would have been rebated upon export

of the finished products. See Certain Cased Pencils From the People's

Republic of China: Notice of Final Determination of Sales at Less Than

Fair Value, 59 FR 55625, 55634 (November 8, 1994); Certain Helical

Spring Lock Washers From the People's Republic of China: Final

Determination of Sales at Less Than Fair Value, 58 FR 48833, 48841

(September 20, 1993)(Lock Washers). We note that the cases cited by the

petitioners, including Lock Washers, do not support adding import

duties to the factor values. As Sigma only required the Department to

alter its method of valuing foreign inland freight, we will

[[Page 16765]]

follow the Department's practice of not adding import duties to factor

values.

Comment 10: Exchange Rate Conversion

The respondents contend that in accordance with Section 773A(a) of

the statute, the Department should convert factor values in rupees to

U.S. dollar values using the exchange rate in effect on the date of the

U.S. sale. In the preliminary determination, the Department converted

factor values to U.S. dollar values using the average exchange rate for

the POR.

DOC Position: We agree with the respondents. We converted Indian

rupees into U.S. Dollars using daily exchange rates in accordance with

section 773A(a) of the Act.

Comment 11: Surrogate Values for Packing Materials

The respondents claim that the Department used inappropriate

surrogate values for certain packing materials (i.e., pallets, paper

cartons and big iron knots or buttons--the case briefs refer to these

items interchangeably). First, the respondents contend that during the

period used to value pallets (February, through August 1996), Indian

imports under the appropriate HTS category were very small, resulting

in an overstated surrogate value for pallets. Consistent with the

Department's practice in previous HFHTs reviews (see 1994-1995 and

1995-1996 reviews), the respondents urge the Department to disregard

the Indian imports because of the limited quantity imported during the

POR. As an alternative, the respondents ask that the Department use

data from another surrogate country or value pallets by inflating the

value used in the 1995-1996 HFHTs review.

The respondents further contend that the HTS category 4819.10, used

to value cartons, covers many products that range widely in value. In

addition, some of the imports are very small, indicating that they are

not commercial shipments but samples or special orders. For these

reasons, and the significant increase in the average value of Indian

entries under this HTS subheading since the 1994-1995 review, the

respondents request that the Department disregard all such imports that

are less than one-half metric ton (or 500 kilograms). Furthermore, the

respondents request that the Department compare the resulting value

with values derived from other surrogate countries to determine if the

value is aberrational.

Finally, the respondents contend that the iron knots utilized by

the respondents are not similar to any of the metal packing material

classified in HTS category 8309.90.09, which was used to value iron

knots. Thus, the respondents contend that the Department grossly

overvalued iron knots for the preliminary determination.

The petitioner claims that the import volume (155 pallets) that the

Department used to compute the surrogate value for pallets is much

closer to the volume actually used by the respondents in these reviews

than the 1993 import volume (33,423 pallets) the respondents suggest

the Department use to compute this surrogate value, and therefore, more

accurately reflects the price the respondents would have paid for this

item.

The petitioner refutes the respondents' argument regarding the

calculation of Indian surrogate values for paper cartons, noting that

since individual cartons weigh a very small amount, what appears to be

a small number by weight is actually a significant number of cartons.

Finally, the petitioner argues that the Department should reject

the respondents' claim regarding the Indian surrogate values for iron

buttons because it is unsupported by any record evidence, and because

the respondents provide no alternative method for this valuation.

DOC Position: We have carefully reviewed the information on the

record of these reviews with regard to our calculation of surrogate

values for pallets, paper cartons and iron knots. With respect to

pallets, we compared the Indian import data with the Indian import data

used in the prior review and with the Indonesian import data for the

calendar year 1996. (U.S. data is reported in number of pallets rather

than by weight, and therefore is not comparable.) We have determined

that the quantities of Indian and Indonesian imports were very small in

comparison to Indian imports in the prior period. Therefore, for these

final results we have used the values from the 1995-1996 reviews and

indexed them forward to the POR.

We do not agree with the respondents' assertions concerning paper

cartons. We have compared the Indian import data for the HTS category

used to value cartons for these reviews to the U.S. and Indonesian

import data for the calendar year 1996, and to the Indian data used in

the prior review period. We note that the data used for the current

review does not represent a small quantity of imports in comparison to

the Indian data from the prior review. Although the U.S. and Indonesian

import quantities were much larger than the Indian imports, the per-

unit values do not indicate that the smaller quantity Indian imports

are aberrantly priced.

With respect to the respondents' assertion that the Department

erroneously valued iron knots, we note that we used the most

appropriate data available. Respondents did not provide any evidence to

support their contention that this HTS category is inappropriate.

Therefore, for these final results, we will inflate the surrogate

value used for pallets for the 1995-1996 review, but will continue to

use the Indian surrogate values used in the preliminary results for

paper cartons and iron knots.

Comment 12: Marine Insurance

Citing to the Notice of Final Determination of Sales at Less Than

Fair Value; Melamine Institutional Dinnerware Products from China, 62

FR 1708, 1710 (January 13, 1997) (Melamine), the respondents contend

that the Department should value marine insurance based on value of the

subject merchandise and not according to weight. The respondents

further contend that marine insurance rates should not be indexed

(adjusted for inflation), because although the value of the property

being insured is increasing, it is not clear that the insurance rates

have increased.

The petitioner notes that in Melamine, the Department calculated

marine insurance on the value of the subject merchandise because the

record of that review demonstrated that marine insurance was incurred

on a value basis. In these reviews, the petitioner contends, the

respondents provide no evidence to show they incurred marine insurance

based on the value of the merchandise, thus, the Department should not

divert from the methodology used in the preliminary results of these

reviews and in previous HFHTs reviews of calculating marine insurance

based on the weight of the merchandise.

DOC Position: We have carefully reviewed the record in this review

and have determined that one respondent, LMC, incurred this expense on

the value of the merchandise. However, the record does not provide

conclusive evidence that the other respondents incurred marine

insurance expenses based on the value of the merchandise. In prior

HFHTs reviews, we have valued marine insurance based on weight because

record evidence indicated that is how these charges were incurred. In

the current reviews, with the exception of LMC, the respondents have

not submitted any evidence to the contrary. Thus, for these final

results, we will continue to value marine insurance expenses based on

weight for all

[[Page 16766]]

respondents except for LMC. Where we valued marine insurance expense by

using surrogate value amounts based on weight from a prior period, we

will inflate these surrogate values to reflect POR price levels. Where

we used surrogate values for marine insurance based on value, there is

no need to inflate the values since they already represent current POR

values.

Comment 13: FMEC--Ocean Freight

FMEC argues that the ocean freight charge used by the Department in

these reviews is highly inflated and should be revised using a rate

based on publicly available data.

The petitioner notes that FMEC provides no support for its argument

with regard to ocean freight.

DOC Position: We agree with the petitioner that FMEC has not

substantiated its contention that the ocean freight rate used by the

Department in these reviews was inflated. In addition, we note that the

rates used are based on publicly available data. See the Department's

position with regard to comment 7. Therefore, we have not revised our

ocean freight calculations for these final results.

Comment 14: Shandong Huarong--Ocean Freight

Noting that it shipped subject merchandise using a market economy

carrier, Shandong Huarong asserts that the Department should use the

actual cost of these shipments rather than a surrogate value, for these

expenses, regardless of the fact that it payed the shipper in Chinese

currency (Renminbi). Shandong Huarong acknowledges that the

Department's practice in NME reviews has been to require that the

carrier be a market-economy shipper and that the payment be made in

hard currency for the Department to use those actual expenses. However,

Shandong Huarong contends the Department's second condition (i.e., that

payment be made in a market-economy currency) is no longer important

since the service originated in the PRC, and therefore should be paid

for with local currency. Shandong Huarong states that the Department

can compare the converted rates to other publicly available ocean

freight rates, to determine whether these rates are reasonable.

The petitioner contends the Department should not abandon its

established methodology of only using the actual price of an input if

the NME manufacturer purchases the input from a market-economy supplier

and pays in a convertible currency. According to the petitioner, there

is no assurance that using prices paid to market-economy suppliers in

Renminbi are free from the same distortions that render prices of

inputs purchased within the PRC unusable.

DOC Position: It is the Department's established practice to use

the actual cost of a service in its calculations for an NME proceeding

only when the service is provided by a market economy vendor and paid

for in a convertible currency. See Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished, From the People's Republic of China;

Final Results of Antidumping Duty Administrative Reviews, 61 FR 65527,

655541 (December 13, 1996), and Sulfanilic Acid From the People's

Republic of China; Final Results of Antidumping Duty Administrative

Review, 61 FR 53711, 53716 (October 15, 1996). Although Shandong

Huarong utilized a market-economy shipper for certain shipments, it

paid a PRC trading company for the service in Renminbi, and, therefore,

did not meet the latter condition. Therefore, we will continue to use a

surrogate cost in valuing shipments utilizing PRC freight forwarders.

Comment 15: Shandong Huarong--Steel Factors

Shandong Huarong requests that the Department use the verified

amounts for steel and packing material inputs, rather than its reported

``caps.'' Shandong Huarong points out that the actual steel and steel

scrap consumption amounts vary significantly from the ``caps.''

Asserting that the statute requires the Department to use verified

data, Shandong Huarong notes that the Department corrects data for

errors found at verification. More specifically, Shandong Huarong

points out that ``in the past the Department corrected the ``cap''

figures by using the verified numbers.''

The petitioner contends that the Department should rely upon

Shandong Huarong's record data if differences between the ``caps'' and

actual data are not significant. However, noting that it is established

Department policy only to allow corrections for minor errors discovered

at verification, the petitioner contends that should differences

between reported ``caps'' and verified actual amounts be significant,

then the Department should reject the data on record and resort to FA.

DOC Position: We disagree with Shandong Huarong's claim that use of

actual steel consumption data collected during verification is

warranted, as opposed to use of its reported steel ``caps.'' As a

result of verifying Shandong Huarong's response, we determined that any

deviations from its reported ``caps'' were insignificant, and

therefore, we determined that on balance, Shandong Huarong's reported

``caps'' reflected a reasonable estimate of its actual costs. In

addition, we note that there is no record evidence to support Shandong

Huarong's contentions that we adjusted reported ``caps'' in prior

reviews to reflect differences found at verification. In Melamine, we

note that although adjustments were made as a result of verification

findings, respondents in that case reported predominately actual costs,

in contrast to the ``cap'' reporting methodology used in the HFHTs

review proceedings. Verification in that case was to verify the actual

costs, not to determine if what had been reported represents a

reasonable estimate of actual costs. Therefore, for these final

results, we will continue to use the reported ``caps'' with regard to

Shandong Huarong's steel inputs. See the Department's response with

regard to comment 5 for further discussion of this issue.

Comment 16: Shandong Huarong--Inland Freight

Shandong Huarong states that the price it paid to local suppliers

of steel included freight charges, thus, the Department should use the

verified information and not add additional freight charges to the

price Shandong Huarong paid for steel.

The petitioner contends that Shandong Huarong did not offer

evidence to support its argument that the steel price it paid included

freight. The petitioner recommends that the Department continue to

include a surrogate value for freight in its calculation of normal

value.

DOC Position: We disagree with Shandong Huarong. As the Department

values the steel inputs used by PRC producers in a comparable market-

economy, its argument that domestic steel prices are inclusive of

freight charges is irrelevant. Therefore, we have made no adjustments

to Shandong Huarong's freight charges, with the exception of our change

in valuing freight in accordance with Sigma. See the Department's

position with regard to comment 9.

Comment 17: SMC--Inland Freight

SMC claims the Department should use the freight rate applicable

for distances between 100 and 250 KM, and not the rate for 250-500 KM

distances, to value the freight on subject merchandise shipments from a

[[Page 16767]]

particular producer that is 250 km from SMC.

The petitioner contends that given that both rates apply to the

distance in question, the Department made a reasonable selection and

should continue to use the rate for 250-500 KM in its final

determination.

DOC Position: We agree with the petitioner that both rates apply to

the distance in question. Therefore, we have determined to average the

two rates applicable for distances of 250 kilometers (i.e., the rate

applicable for distances between 100 and 250 km and the rate applicable

for distances between 250 and 500 km).

Comment 18: Ministerial Error Allegations

The respondents alleged that the Department made the following

ministerial errors: (1) Shandong Huarong claims that the Department

erred by triple counting the cost of transporting coal for certain

suppliers; (2) SMC claims that the Department erred in including

brokerage, handling and ocean freight charges on an FOB Qingdao sale;

and (3) TMC claims that the Department made a data entry error on

certain inland freight distances.

The petitioner requests that the Department reject these

corrections as they constitute new factual information.

DOC Position: We do not agree that any of these issues constitutes

new information. We have reviewed the margin programs and determined

that we inadvertently made data entry errors with regard to the first

two items above, and have made the appropriate corrections for these

final results. However, with regard to the third item, we do not agree

that we incorrectly entered certain freight distances for TMC because

we simply used the distances TMC reported for the transactions in

question in our calculations. Further, we determined that there is

nothing on the record to indicate that those distances were

inaccurately reported.

Comment 19: SMC's Own Data Entry Errors

SMC purports to have discovered several inadvertent data entry

errors on its part with regard to net weight, inland freight distance

and gross unit prices for seven observations. SMC requests that the

Department accept these data corrections now for incorporation into the

final results of reviews.

The petitioner requests that the Department reject these

corrections as they constitute new factual information.

DOC Position: The Department will accept corrections of clerical

errors made in a party's submission under the following conditions: (1)

The error in question must be demonstrated to be a clerical error, not

a methodological error, an error in judgment, or a substantive error;

(2) the Department must be satisfied that the corrective documentation

provided in support of the clerical error allegation is reliable; (3)

the respondent must have availed itself of the earliest reasonable

opportunity to correct the error; (4) the clerical error allegation,

and any corrective documentation, must be submitted to the Department

no later than the due date for the respondent's administrative case

brief; (5) the clerical error must not entail a substantial revision of

the response; and (6) the respondent's corrective documentation must

not contradict information previously determined to be accurate at

verification. See Certain Fresh Cut Flowers From Colombia; Final

Results of Antidumping Duty Administrative Reviews, 61 FR 42833, 42834

(August 19, 1996) (modifying Department policy in response to NTN

Bearing Corp. v. United States, 74 F. 3d 1204 (Fed. Cir. 1995)).

While we note that SMC alleges a clerical, rather than a

substantive error, we are not satisfied that the information provided

by SMC is reliable. In its case brief, SMC merely noted various errors

contained in it submissions without supplementing the allegation with

corroborating or substantiating documentation. We do not agree with

SMC's claim that the nature of the error is ``obvious on its face''

since SMC has provided no documentation for the record which would

support that contention. Therefore, we are denying SMC's request that

we revise alleged data entry errors.

Other Ministerial Errors

We have also corrected an inadvertent error in calculating net U.S.

price regarding Shandong Huarong for the preliminary results. We have

corrected this error by deducting the foreign inland freight expense

from U.S. price for these final results.

Final Results of Review

As a result of our review, we have determined that the following

margins exist:

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

Margin

Manufacturer/exporter Time period (percent)

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

Shandong Huarong General Group

Corporation:

Bars/Wedges........................... 2/1/96-1/31/97 34.00

Liaoning Machinery Import & Export

Corporation (LMC):

Bars/Wedges........................... 2/1/96-1/31/97 2.94

Fujian Machinery Import & Export

Corporation (FMEC):

Axes/Adzes............................ 2/1/96-1/31/97 5.11

Hammers/Sledges....................... 2/1/96-1/31/97 5.71

Shandong Machinery Import & Export

Corporation (SMC):

Bars/Wedges........................... 2/1/96-1/31/97 38.30

Hammers/Sledges....................... 2/1/96-1/31/97 19.31

Picks/Mattocks........................ 2/1/96-1/31/97 32.38

Tianjin Machinery Import & Export

Corporation (TMC):

Axes/Adzes............................ 2/1/96-1/31/97 1.96

Hammers/Sledges....................... 2/1/96-1/31/97 27.60

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

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between United States price and normal value may vary from

the percentages stated above. The Department will issue appraisement

instructions directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

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

shipments of HFHTs from the PRC entered, or withdrawn from warehouse,

for consumption on or after the publication date of these final

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

deposit

[[Page 16768]]

rates for the reviewed companies named above, all of which have

separate rates, will be the rates for those firms as stated above for

the classes or kinds of merchandise listed above; (2) for axes/adzes

from SMC, which are not covered by these reviews, the cash deposit rate

will be the rate established in the most recent review of that class or

kind of merchandise in which SMC received a separate rate; (3) for

bars/wedges and picks/mattocks from TMC and FMEC, which are not covered

by these reviews, the cash deposit rate will be the rate established in

the most recent review of those classes or kinds of merchandise in

which these respondents received a separate rate; and (4) the cash

deposit rates for non-PRC exporters of the subject merchandise from the

PRC will be the rate applicable to the PRC supplier of that exporter.

For all other PRC producers or exporters of HFHTs not covered by these

review proceedings, the PRC-wide rates are 44.41 percent for hammers/

sledges, 66.32 percent for bars/wedges, 108.2 percent for picks/

mattocks and 21.93 percent for axes/adzes.

This notice serves as a final reminder to importers of their

responsibility under section 353.26 of the Department's regulations to

file a certificate regarding reimbursement of antidumping duties prior

to liquidation of the relevant entries during this review period.

Failure to comply with this requirement could result in the Secretary's

presumption that reimbursement of antidumping duties occurred and the

subsequent assessment of double antidumping duties.

This notice also serves as a reminder to the parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with section 353.34(d) of the Department's

regulations. Timely notification of return/destruction of APO materials

or conversion to judicial protective order is hereby requested. Failure

to comply with the regulations and the terms of an APO is a

sanctionable violation.

This determination is issued and published in accordance with

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: March 27, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-8846 Filed 4-3-98; 8:45 am]

BILLING CODE 3510-DS-P