Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon-Quality Steel Plate Products from Indonesia

DEPARTMENT OF COMMERCE

International Trade Administration

[A-560-805]

Notice of Final Determination of Sales at Less Than Fair Value:

Certain Cut-to-Length Carbon-Quality Steel Plate Products from

Indonesia

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: December 29, 1999.

FOR FURTHER INFORMATION CONTACT: Barbara Wojcik-Betancourt or Brian C.

Smith, Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230; telephone: (202) 482-0629 or (202) 482-1766,

respectively.

The Applicable Statute: Unless otherwise indicated, all citations

to the Tariff Act of 1930, as amended (``the Act''), are references to

the provisions effective January 1, 1995, the effective date of the

amendments made to the Act by the Uruguay Round Agreements Act

(``URAA''). In addition, unless otherwise indicated, all citations to

the Department of Commerce (``Department'') regulations are to the

regulations at 19 CFR Part 351 (1999).

Final Determination: We determine that certain cut-to-length

carbon-quality steel plate products (``CTL Plate'') from Indonesia are

being sold in the United States at less than fair value (``LTFV''), as

provided in section 735 of the Act. The estimated margins are shown in

the ``Suspension of Liquidation'' section of this notice.

Case History

Since the preliminary determination (Notice of Preliminary

Determination of Sales at Less Than Fair Value: Certain Cut-To-Length

Carbon Quality Steel Plate Products from Indonesia, 64 FR 41206 (July

29, 1999)) (Preliminary Determination), the following events have

occurred:

On July 23, 1999, the Department received Krakatau's response to

the Department's July 8, 1999, supplemental questionnaire. Even though

the Department received Krakatau's response three days after the

questionnaire response deadline, Department officials examined the data

to determine whether Krakatau fully responded to the Department's

questionnaire. On July 28, 1999, the Department informed Krakatau that

it was not going to proceed with verification of Krakatau's response

because it did not adequately address the sales-related and cost-

related questions. Also, on July 28, 1999, the petitioners 1

alleged ministerial errors in the preliminary determination. On July

29, and 30, 1999, Krakatau submitted letters objecting to the

Department's decision not to conduct verification.

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\1\ The petitioners are Bethlehem Steel Corporation, Gulf States

Steel, Inc., IPSCO Steel Inc., Tuscaloosa Steel Corporation, the

United Steelworkers of America, and the U.S. Steel Group (a unit of

USX Corporation).

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On August 4, 1999, PT Gunawan Dianjaya Steel (``Gunawan'') and PT

Jaya Pari Steel Corporation (``Jaya Pari'') submitted a proposal for a

suspension agreement to the Department. Department officials

subsequently met with counsel for Gunawan/Jaya Pari and an official

from the Indonesian government to discuss the likelihood of a

suspension agreement (see Memorandum to the File from Wendy Frankel,

Special Assistant to the Deputy Assistant Secretary, dated August 27,

1999). In that meeting, Department officials indicated that a

suspension agreement in this case was unlikely because the proposed

agreement did not meet the requisite conditions.

From August 10 through 19, 1999, we conducted verification of

Gunawan/Jaya Pari's sales and cost responses to the antidumping

questionnaire. On August 17, 1999, the Department issued the amended

preliminary determination, correcting certain ministerial errors, and

postponed the final determination until no later than 135 days after

publication of the preliminary determination (see Notice of Amendment

of the Preliminary Determination of Sales at Less Than Fair Value:

Certain Cut-To-Length Carbon-Quality Steel Plate Products from

Indonesia, 64 FR 46341, August 25, 1999) (``Amended Prelim'').

On August 24, 1999, Krakatau requested a hearing. In response to

numerous improperly filed letters sent by Krakatau between August 12

and 24, 1999, the Department issued a letter to Krakatau on August 25,

1999, explaining the procedures for submitting case and rebuttal briefs

and extending the deadlines for submitting such documents.

During September and October 1999, we issued our verification

reports for Gunawan/Jaya Pari. The petitioners and Gunawan/Jaya Pari

submitted case briefs on October 19, 1999, and rebuttal briefs on

October 25, 1999. The Department received Krakatau's case brief on

October 14, 1999, and rebuttal brief on October 25, 1999. On October

27, 1999, the Department held a public hearing.

On November 22, 1999, the petitioners alleged that one of the

respondents either had not reported certain U.S. sales made during the

period of investigation (``POI'') or had not reported price reductions

for certain U.S. sales made during the POI. Because we do not have

sufficient information on the record to substantiate this allegation,

and because this allegation was made at a very late stage of the

proceeding, we did not consider it for purposes of this final

determination. However, if an antidumping duty order is ultimately

issued in this case, we will

[[Page 73165]]

examine carefully all sales of this company in any future review.

Scope of Investigation

For purposes of this investigation, the products covered by the

scope of this investigation are certain hot-rolled carbon-quality

steel: (1) universal mill plates (i.e., flat-rolled products rolled on

four faces or in a closed box pass, of a width exceeding 150 mm but not

exceeding 1250 mm, and of a nominal or actual thickness of not less

than 4 mm, which are cut-to-length (not in coils) and without patterns

in relief), of iron or non-alloy-quality steel; and (2) flat-rolled

products, hot-rolled, of a nominal or actual thickness of 4.75 mm or

more and of a width which exceeds 150 mm and measures at least twice

the thickness, and which are cut-to-length (not in coils). Steel

products to be included in this scope are of rectangular, square,

circular or other shape and of rectangular or non-rectangular cross-

section where such non-rectangular cross-section is achieved subsequent

to the rolling process (i.e., products which have been ``worked after

rolling'')--for example, products which have been beveled or rounded at

the edges. Steel products that meet the noted physical characteristics

that are painted, varnished or coated with plastic or other non-

metallic substances are included within this scope. Also, specifically

included in this scope are high strength, low alloy (``HSLA'') steels.

HSLA steels are recognized as steels with micro-alloying levels of

elements such as chromium, copper, niobium, titanium, vanadium, and

molybdenum. Steel products to be included in this scope, regardless of

Harmonized Tariff Schedule of the United States (``HTSUS'')

definitions, are products in which: (1) iron predominates, by weight,

over each of the other contained elements, (2) the carbon content is

two percent or less, by weight, and (3) none of the elements listed

below is equal to or exceeds the quantity, by weight, respectively

indicated: 1.80 percent of manganese, or 1.50 percent of silicon, or

1.00 percent of copper, or 0.50 percent of aluminum, or 1.25 percent of

chromium, or 0.30 percent of cobalt, or 0.40 percent of lead, or 1.25

percent of nickel, or 0.30 percent of tungsten, or 0.10 percent of

molybdenum, or 0.10 percent of niobium, or 0.41 percent of titanium, or

0.15 percent of vanadium, or 0.15 percent zirconium. All products that

meet the written physical description, and in which the chemistry

quantities do not equal or exceed any one of the levels listed above,

are within the scope of this investigation unless otherwise

specifically excluded. The following products are specifically excluded

from this investigation: (1) products clad, plated, or coated with

metal, whether or not painted, varnished or coated with plastic or

other non-metallic substances; (2) SAE grades (formerly AISI grades) of

series 2300 and above; (3) products made to ASTM A710 and A736 or their

proprietary equivalents; (4) abrasion-resistant steels (i.e., USS AR

400, USS AR 500); (5) products made to ASTM A202, A225, A514 grade S,

A517 grade S, or their proprietary equivalents; (6) ball bearing

steels; (7) tool steels; and (8) silicon manganese steel or silicon

electric steel.

The merchandise subject to this investigation is classified in the

HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030,

7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000,

7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045,

7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050,

7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000,

7226.91.8000, 7226.99.0000.

Although the HTSUS subheadings are provided for convenience and

Customs purposes, the written description of the merchandise under

investigation is dispositive.

Period of Investigation

The POI is January 1, through December 31, 1998.

Facts Available

Because we did not receive an adequate questionnaire response from

Krakatau, we could not conduct verification and, therefore, could not

use its data for the final determination. For the reasons explained in

detail below, we have applied to Krakatau an adverse facts available

margin, the highest margin alleged in the petition (52.42 percent), for

purposes of the final determination.

1. Application of Facts Available

Section 776(a) of the Act provides that, if an interested party

withholds information that has been requested by the Department, fails

to provide such information in a timely manner or in the form or manner

requested, significantly impedes a proceeding under the antidumping

statute, or provides information which cannot be verified, the

Department shall use, subject to sections 782(c)(1), (d) and (e), facts

otherwise available in reaching the applicable determination.

Section 782(c)(1) of the Act provides that, if an interested party

promptly notifies the Department that it is unable to submit the

information requested in the requested form and manner, together with a

full explanation and suggested alternative forms in which such party is

able to submit the information, the Department shall take into

consideration the ability of the party to submit the information in the

requested form and manner and may modify such requirements to the

extent necessary to avoid imposing an unreasonable burden on that

party.

Section 782(d) of the Act provides that, if the Department

determines that a response to a request for information does not comply

with the request, the Department will inform the person submitting the

response of the nature of the deficiency and shall, to the extent

practicable, provide that person the opportunity to remedy or explain

the deficiency. If that person submits further information that

continues to be unsatisfactory, or this information is not submitted

within the applicable time limits, the Department may, subject to

section 782(e), disregard all or part of the original and subsequent

responses, as appropriate.

Pursuant to section 782(e) of the Act, notwithstanding the

Department's determination that the submitted information is

``deficient'' under section 782(d) of the Act, the Department shall not

decline to consider such information if all of the following

requirements are satisfied: (1) The information is submitted by the

established deadline; (2) the information can be verified; (3) the

information is not so incomplete that it cannot serve as a reliable

basis for reaching the applicable determination; (4) the interested

party has demonstrated that it acted to the best of its ability; and

(5) the information can be used without undue difficulties.

In this investigation, Krakatau failed to provide the information

necessary to properly calculate a dumping margin, in the form and

manner requested by the Department. As explained below, in response to

Krakatau's request for assistance under section 782(c)(1), the

Department attempted to assist Krakatau under section 782(c)(2) in

understanding the Department's reporting requirements by visiting its

facilities to respond to its questions and issuing it various

supplemental questionnaires and instructional letters prior to the

preliminary determination. We also provided Krakatau with an

opportunity to supplement its questionnaire response after the

preliminary determination in order to

[[Page 73166]]

address numerous deficiencies and omissions of data which rendered its

previous response inadequate for use in the preliminary determination.

Krakatau's supplemental response continued to contain numerous

deficiencies and omissions of data, and did not provide alternative

methodologies, which prevented the Department from conducting

verification and using its data in the final determination. Thus,

pursuant to sections 776(a)(2)(A) and (B) of the Act, and having

satisfied the requirements under sections 782(c)(2), (d) and (e), the

Department must apply facts otherwise available in this case.

2. Selection of Facts Available

Section 776(b) of the Act provides that adverse inferences may be

used in selecting from the facts available if a party has failed to

cooperate by not acting to the best of its ability to comply with a

request for information. Section 776(b) also authorizes the Department

to use as adverse facts available information derived from the

petition, the final determination from the LTFV investigation, a

previous administrative review, or any other information placed on the

record. Section 776(c) of the Act requires the Department to

corroborate, to the extent practicable, secondary information used as

facts available. Secondary information is defined as ``information

derived from the petition that gave rise to the investigation or

review, the final determination concerning the subject merchandise, or

any previous review under section 751 concerning the subject

merchandise.'' See the Statement of Administrative Action (``SAA'') at

870.

In this case, Krakatau, a pro se company, had requested the

Department's assistance in responding to the questionnaire under

section 782(c) of the Act. In response to Krakatau's request for

assistance, the Department helped Krakatau to understand the reporting

requirements. The Department's assistance in this regard included

sending staff to Krakatau's facilities in Jakarta, Indonesia, to

clarify and elaborate on the Department's reporting requirements

contained in the questionnaire and numerous subsequent Departmental

letters instructing Krakatau of the Department's reporting requirements

in general and informing it of its reporting deficiencies in

particular. Krakatau was provided numerous opportunities and extensions

of time to fully respond to the Department's questionnaire (see

Preliminary Determination at 64 FR 41207, 41209). However, despite the

assistance offered by the Department's staff, Krakatau failed to

provide a questionnaire response that addressed the most important

deficiencies identified by the Department in its May 27 and July 8,

1999, supplemental questionnaires. Moreover, Krakatau failed to provide

a reasonable explanation for its failure to comply with these standard

requests for information. Accordingly, the Department finds that

Krakatau did not act to the best of its ability to provide the

information requested, despite the extensive assistance provided by the

Department. Therefore, we have used an adverse inference in selecting

the facts available to determine Krakatau's final margin.

In the preliminary determination, recognizing Krakatau's effort to

comply with the Department's information requests and in light of its

claimed reporting difficulties up until that time, the Department

assigned Krakatau the simple average of the margins contained in the

petition under section 776(b) of the Act, which the Department

corroborated, to the extent practicable, from independent sources

reasonably at its disposal under section 776(c) of the Act (see

Preliminary Determination at 64 FR 41209, and Memorandum to the File

regarding the Facts Available Rate and Corroboration of Secondary

Information dated July 19, 1999). However, for the final determination,

we have determined it is more appropriate to assign Krakatau the

highest margin in the petition, 52.42 percent, which is also higher

than the rate calculated for the only other respondent in this

investigation, because Krakatau did not provide an adequate response

that the Department could verify and use in the final determination,

despite the numerous opportunities and extensive assistance afforded to

it by the Department as explained above. (See Krakatau Comment 1 in the

``Interested Party Comments'' section of this notice for further

discussion.) We continue to find this margin corroborated for the

reasons discussed in the preliminary determination.

Fair Value Comparisons

We made our fair value comparisons in the manner described in the

preliminary determination (see Preliminary Determination at 64 FR

41209). Gunawan/Jaya Pari argued that the Department should use two

averaging periods in its margin calculations to account for the effect

of low inflation during the second half of the POI. We continued to

find that Indonesia experienced significant inflation throughout the

POI, as measured by the Wholesale Price Index, published in the

September 1998--September 1999 issues of International Monetary Fund's

(``IMF's'') International Financial Statistics (see Memorandum from the

Team to the File, ``Inflation Data Used and Statistical Analysis

Performed for Determining Whether High Inflation Was Present During the

Period of Investigation,'' dated December 13, 1999). For the reasons

discussed in detail in Comment 1 of the ``Gunawan/Jaya Pari Interested

Party Comments'' section of this notice below, we continued to use

monthly averages within one averaging period for purposes of this final

determination

Product Comparisons

We made our product comparisons using the same methodology as in

the preliminary determination (see Preliminary Determination at 64 FR

41209).

Level of Trade

Consistent with our preliminary determination, we continue to find

that no level of trade (``LOT'') adjustment under section 773(a)(7)(A)

of the Act is warranted because the U.S. sales and home market sales

made by Gunawan and Jaya Pari were at the same LOT (see Preliminary

Determination at 64 FR 41210).

Export Price

As in the preliminary determination, for both Gunawan and Jaya

Pari, we used export price (``EP'') methodology, in accordance with

section 772(a) of the Act, because the merchandise was sold directly to

the first unaffiliated purchaser in the United States prior to

importation and constructed export price (``CEP'') methodology was not

otherwise indicated.

Gunawan/Jaya Pari

We calculated EP using the same methodology as in the preliminary

determination, with the following exceptions:

Based on our verification findings, we made the following revisions

to Gunawan's U.S. sales database: (1) for some sales, we deducted an

amount from EP for Indonesian port handling charges and loading

charges; (2) we revised the reported U.S. inland freight expenses from

the factory to the port of exportation to reflect actual expenses for

all sales; (3) we corrected an amount reported for a quantity discount

noted for one sales invoice; and (4) we corrected an amount reported

for bank charges noted for a different sales invoice (see September 16,

1999,

[[Page 73167]]

Gunawan verification report for further discussion).

Based on our verification findings, we made the following revisions

to Jaya Pari's U.S. sales database: (1) we revised the reported U.S.

inland freight expenses from the factory to the port of exportation to

reflect actual expenses for all sales; (2) and we corrected the

reported advertising expenses because Jaya Pari used an incorrect

allocation factor (see September 23, 1999, Jaya Pari verification

report for further discussion).

Normal Value

After testing home market viability and whether home market sales

were made at prices below the cost of production (``COP''), we

calculated normal value (``NV'') as noted in the ``Price-to-Price

Comparisons'' and ``Price-to-CV Comparisons'' sections of this notice.

As noted in the preliminary determination, we did not conduct an arm's-

length test on affiliated party transactions because we continued to

find that Gunawan and Jaya Pari met the criteria for collapsing

affiliated companies. Therefore, we continued to treat Gunawan and Jaya

Pari as a single entity for purposes of our analysis (see Preliminary

Determination at 64 FR 41209-41210).

1. Cost of Production Analysis

As discussed in the preliminary determination, we conducted an

investigation to determine whether Gunawan/Jaya Pari made sales of the

foreign like product in the home market during the POI at prices below

the COP within the meaning of section 773(b)(1) of the Act. We

calculated COP based on the same methodology used in the preliminary

determination on a model-specific basis, except where we modified the

margin calculation program to reflect certain adjustments and updated

cost data based on verification findings (see Final Calculation

Memorandum, dated December 13, 1999). Specifically, we relied on the

respondents' COP and CV amounts except as follows:

A. We adjusted the reported nominal monthly depreciation expense

figures to reflect each month's currency levels.

B. We adjusted the reported costs based on the corrections provided

by Gunawan and Jaya Pari at the first day of verification.

C. We revised Jaya Pari's reported per-unit variable and fixed

overhead to include the company's year-end audit adjustments.

D. We recalculated the yield adjustment factor applied to direct

labor, variable and fixed overhead by dividing the rupiah/kilogram cost

by the yield adjustment factor, rather than multiplying by the yield

adjustment factor.

E. For those months in which Jaya Pari had no production, we

allocated the factory overhead and labor costs incurred to the months

where production occurred.

F. For months in which Gunawan and Jaya Pari had no purchases of

slabs, as a surrogate cost, we used the most recent previous month's

average purchase price indexed for inflation. However, we used

Gunawan's average purchase price for slab in January 1998 as a

surrogate for Jaya Pari's January 1998 slab costs.

G. We revised the scrap offset by indexing the monthly scrap sales

revenue before calculating an annual average, and then calculated the

scrap offset for each month by indexing the annual average back to each

month.

H. We revised Jaya Pari and Gunawan's reported general and

administrative (``G&A'') expense and interest expense by indexing each

month's nominal G&A expense, interest expense, and cost of sales figure

for inflation. We excluded the interest on accounts receivable included

in ``other income'' as an offset in the G&A expense calculation.

I. We recalculated Gunawan and Jaya Pari's total indexed foreign

exchange gains attributable to accounts payable as a percentage of the

indexed cost of sales and multiplied this percentage by the total cost

of manufacturing (``COM'') of each product control number.

J. We corrected the error made in calculating total COM based on

the petitioners' comments on page 23 of their case brief.

K. We corrected our calculation of the indexed, weight-averaged

costs based on the petitioners' comments on pages 23 and 24 of their

case brief.

L. We revised Gunawan's reported conversion costs to account for

cost differences associated with rolling products of different

thicknesses. In making this adjustment, we have applied adverse facts

available to Gunawan's reported conversion costs, as explained in

detail below.

Gunawan allocated monthly conversion costs to all products based on

total production quantities each month. This assignment of conversion

costs does not allow for the accurate accounting of cost differences

between products. For example, products with different thicknesses

require different amounts of processing (i.e., reduction). Critical to

the Department's calculation of a dumping margin is the establishment

of proper comparisons between prices of similar products sold in

Indonesia and the United States. Without accurate difference-in-

merchandise (``DIFMER'') cost data for the various products, the

Department cannot properly account for the differences in physical

characteristics and associated price differences between products sold

in Indonesia and the United States. Additionally, without costs that

accurately account for cost differences associated with physical

differences (e.g., differences in thickness) for each product sold in

Indonesia, we cannot conduct a meaningful cost test to evaluate whether

products have been sold in Indonesia at less than the COP.

Gunawan responded to Sections B, C and D of the antidumping duty

questionnaire on April 26, 1999. On May 21, 1999, the Department issued

a supplemental questionnaire requesting further clarification of

Gunawan's method of allocating conversion costs. The Department

received Gunawan's response to the supplemental questionnaire on June

14, 1999, in which Gunawan indicated that it could not provide more

product-specific costs. At verification, we found that there were

differences in the amount of reduction required to produce a given

thickness of plate. Therefore, we believe that Gunawan could have

developed a way of differentiating costs based on the reduction

necessary to produce the various thicknesses of plate.

Because Gunawan did not submit the conversion cost data as

requested, we have determined that it did not act to the best of its

ability. Therefore, application of adverse facts available is warranted

in accordance with section 776(b) of the Act (see standard for the

application of facts available set forth above in ``Facts Available''

section of this notice). However, because the company was otherwise

cooperative, we have not drawn the most adverse inference. (See e.g.,

Krupp Stahl AG v. U.S., 822 F. Supp. 789, 793 (Ct. Int'l Trade 1993),

which referenced a Court of Appeals' opinion sanctioning the

Department's practice to take into account the level of respondents'

cooperation; and Notice of Final Determination of Sales at Less Than

Fair Value: Steel Wire Rod from Germany, 63 FR 8953, 8955 (February 23,

1998).) Specifically, we have relied on the reported control-number-

specific direct material costs and variable overhead costs. However,

for the fixed overhead costs, we identified the largest expense

(depreciation) and allocated the portion attributable to rolling based

on reduction time. We first calculated the average reduction required

to produce

[[Page 73168]]

all thicknesses of plate and then compared the average reduction to

each thickness reported. We found that one thickness of plate required

more reduction on average than all other plates produced. We calculated

the percentage difference between the average reduction and the

reduction required to produce this thickness of plate and increased the

depreciation expense attributable to rolling by this percentage.

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

respondents' 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.'' Where 20 percent or more of the respondents' 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'' in accordance

with sections 773(b)(2)(B) and (C) of the Act, and because the below

cost sales of the product were at prices which would not permit

recovery of all costs within a reasonable period of time, in accordance

with section 773(b)(2)(D) of the Act.

We found that, for certain grades of CTL plate, more than 20

percent of Gunawan/Jaya Pari's home market sales within an extended

period of time were at prices less than the COP. Further, the prices

did not provide for the recovery of costs within a reasonable period of

time. We therefore excluded these sales and used the remaining sales as

the basis for determining NV if such sales existed, in accordance with

section 773(b)(1) of the Act. For those U.S. sales of CTL plate for

which there were no comparable home market sales in the ordinary course

of trade, we compared EPs to CV, in accordance with section 773(a)(4)

of the Act.

2. Calculation of CV

We calculated CV using the same methodology as in the preliminary

determination, except where we made certain adjustments, as discussed

above, and updated cost data based on verification findings and revised

our calculation of CV profit based on the petitioners' comments on

pages 23 and 24 of their case brief (see ``Cost of Production

Analysis'' section of this notice and Final Calculation Memorandum,

dated December 13, 1999 for further discussion).

Price-to-Price Comparisons

For price-to-price comparisons, we calculated NV based on the same

methodology used in the preliminary determination, with the following

exceptions based on verification findings: (1) we corrected the amount

reported for commissions for certain Gunawan home market sales; (2) we

determined that Gunawan's reported early payment discounts are, in

fact, billing adjustments and deducted these reported amounts, where

applicable, from the gross unit price; (3) we corrected the amounts

reported for advertising expenses for all of Jaya Pari's home market

sales; and (4) for one Jaya Pari sales invoice, we corrected the amount

reported for inland freight from the plant to the customer (see

September 16, 1999, Gunawan verification report, September 23, 1999,

Jaya Pari verification report, and Comment 2 in the ``Interested Party

Comments'' section of this notice for further discussion).

Price-to-CV Comparisons

For price-to-CV comparisons, we applied the same general

methodology used in the preliminary determination (see Preliminary

Determination at 64 FR 41212).

Critical Circumstances

Section 735(a)(3) of the Act provides that if a petitioner alleges

critical circumstances, the Department will determine whether there is

a reasonable basis to believe or suspect that:

(A)(i) there is a history of dumping and material injury by reason

of dumped imports in the United States or elsewhere of the subject

merchandise, or (ii) the person by whom, or for whose account, the

merchandise was imported knew or should have known that the exporter

was selling the subject merchandise at less than its fair value and

that there would be material injury by reason of such sales, and (B)

there have been massive imports of the subject merchandise over a

relatively short period.

As noted in the preliminary critical circumstances determination,

we are not aware of any existing antidumping order in any country on

CTL plate from Indonesia. Therefore, we examined whether there was

importer knowledge. In determining whether an importer knew or should

have known that the exporter was selling the subject merchandise at

less than its fair value and thereby causing material injury, the

Department normally considers margins of 25 percent or more for EP

sales (and margins of 15 percent or more for CEP sales) sufficient to

impute knowledge of dumping (see Notice of Final Determinations 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); and Notice

of Final Determination of Sales at Less Than Fair Value: Stainless

Steel Sheet and Strip in Coils from Japan, 64 FR 30574 (June 8, 1999)

(Stainless Steel Sheet and Strip in Coils from Japan)). All respondents

in this proceeding have made EP sales to the United States.

The Department's final margin for Gunawan and Jaya Pari exceeds 25

percent (see ``Suspension of Liquidation'' section below). Therefore,

we continue to determine that importers knew or should have known that

Gunawan and Jaya Pari made sales of the subject merchandise at prices

below fair value. As to the knowledge of injury from such dumped

imports, in the present case, the International Trade Commission

(``ITC'') preliminarily determined that there is reasonable indication

that the U.S. CTL plate industry is experiencing present material

injury. Therefore, we continue to find that the ``importer knowledge of

dumping and material injury'' criterion is met with respect to CTL

plate from Indonesia.

Because we have found that the first statutory criterion is met

with regard to Gunawan and Jaya Pari, we must consider the second

statutory criterion: whether imports of the merchandise have been

massive over a relatively short period. According to 19 CFR 351.206(h),

we consider the following to determine whether imports have been

massive over a relatively short period of time: (1) volume and value of

the imports; (2) seasonal trends (if applicable); and (3) the share of

domestic consumption accounted for by the imports.

When examining volume and value data, the Department typically

compares the export volume for equal periods immediately preceding and

following the filing of the petition. Under 19 CFR 351.206(h), unless

the imports in the comparison period have increased by at least 15

percent over the imports during the base period, we will not consider

the imports to have been ``massive.'' The Department examines shipment

information submitted by the respondent or import statistics when

respondent-specific shipment information is not available.

To determine whether imports of subject merchandise have been

massive over a relatively short period, we compared Gunawan/Jaya Pari's

export volume for the four months subsequent to the filing of the

petition (March-June 1999) to that during the four months prior to the

filing of the petition (November 1998-February 1999). These

[[Page 73169]]

periods were selected based on the Department's practice of using the

longest period for which information is available from the month that

the petition was submitted through the date of the preliminary

determination.

Based on our analysis, we find that the increase in imports was not

greater than 15 percent with respect to Gunawan/Jaya Pari, as our

verification findings indicate that these companies had no exports of

subject merchandise to the United States during the period March-June

1999 (see July 9, 1999, submission; page nine of September 16, 1999,

Gunawan verification report; and page eight of September 23, 1999, Jaya

Pari verification report). Therefore, we do not find critical

circumstances with respect to Gunawan/Jaya Pari.

Because the margin we have assigned to Krakatau is 52.42 percent,

and thus exceeds 25 percent, we have imputed knowledge of dumping to

Krakatau. However, information on the record sufficiently establishes

that Krakatau's exports of subject merchandise to the United States

have not increased massively since the filing of the petition. U.S.

Customs import data indicate that Gunawan/Jaya Pari accounted for the

vast majority of imports of subject merchandise into the United States

during the POI. Moreover, since the filing of the petition, U.S.

Customs import data do not indicate evidence of massive imports of

subject merchandise from Indonesia (see July 19, 1999, Memorandum to

the File Regarding Import Statistics Used for Preliminary Critical

Circumstances Determination). Thus, we continue to determine that no

critical circumstances exist for Krakatau.

Because the margin for all other Indonesian exporters/producers of

the subject merchandise is 42.36 percent (i.e., Gunawan/Jaya Pari's

margin), and thus exceeds 25 percent, we have imputed knowledge of

dumping to ``All Others.'' However, we considered that the increase in

imports was not greater than 15 percent with respect to Gunawan/Jaya

Pari. We also considered U.S. Customs data on overall imports from

Indonesia of the products at issue. Based on our review of Gunawan/Jaya

Pari's shipment data and the U.S. Customs import data, we find that

imports from all non-investigated exporters (i.e., ``all others'') were

also not massive during the relevant comparison periods. Given these

factors, the Department determines that there are no critical

circumstances with regard to ``all other'' imports of CTL Plate from

Indonesia (see Stainless Steel Sheet and Strip in Coils from Japan at

64 FR 30585).

Currency Conversion

As in the preliminary determination, we made currency conversions

into U.S. dollars based on the exchange rates in effect on the dates of

the U.S. sales as certified by the Federal Reserve Bank, in accordance

with section 773A of the Act.

Verification

As provided in section 782(i) of the Act, we verified the

information submitted by Gunawan/Jaya Pari for use in our final

determination. We used standard verification procedures, including

examination of relevant accounting and production records and original

source documents provided by Gunawan/Jaya Pari.

Interested Party Comments

Gunawan/Jaya Pari Comments

Comment 1: Application of the High-Inflation Methodology to the POI

The respondents contend that the Department should divide the POI

into two separate parts when accounting for the effect of inflation on

the COP in order to make a fair comparison between home market costs

and home market prices and between home market sales and U.S. sales.

Specifically, the respondents state that the IMF wholesale price

indices indicate that the Indonesian economy was experiencing

hyperinflation only in the first six months of the POI, based on

applying the Department's monthly and annual high inflation benchmarks

of five and 50 percent, respectively. In support of their position, the

respondents cite to the Preliminary Results of Antidumping Duty

Administrative Review and Extension of Final Results of Administrative

Review: Gray Portland Cement and Clinker from Mexico, 64 FR 48778,

48783 (September 8, 1999) (Cement). The respondents further note that

the inflation rate in Indonesia declined significantly during the

fourth quarter of the POI and continued to decline after the POI. The

respondents also point out that section 777A(d)(1)(A) of the Act and

section 351.414(d)(3) of the Department's regulations grant the

Department the authority to use averaging periods less than the POI

when NV, EP (or CEP) varies significantly over the POI, and that the

Department has exercised its authority in prior antidumping duty cases

to apply shorter weighted-average periods to investigations involving a

country experiencing high inflation. In support of this position, the

respondents cite to numerous cases where the Department split the POI

or period of review (``POR'') for various reasons (see, e.g.,

Preliminary Results of Antidumping Duty Administrative Review: Certain

Pasta from Turkey, 64 FR 43157, 43158 (August 9, 1999) (Pasta); Final

Determination of Sales at Less Than Fair Value: Certain Preserved

Mushrooms from Chile, 63 FR 56613, 56620 (October 22, 1998)

(Mushrooms); Final Results of Antidumping Duty Administrative Review:

Certain Fresh Cut Flowers from Colombia, 62 FR 53287, 53299 (October

14, 1997) (Flowers from Colombia); Final Determination of Sales at Less

Than Fair Value: Fresh Cut Roses from Colombia, 60 FR 6980, 6993

(February 6, 1995) (Roses); and Final Determination of Sales at Less

Than Fair Value: Salmon from Chile, 63 FR 31432 (June 9, 1998)

(Salmon)). Furthermore, the respondents state that the Department has

recognized in prior antidumping duty cases that it should not apply the

high inflation methodology to the period in which no high inflation

exists, and as a result, the Department has separated the POI into

high-inflation and non-high-inflation periods. In addition, the

respondents claim that the Department has stated in previous high

inflation cases that the monthly averaging method is not dispositive

when examining the entire POI to determine high inflation. In support

of these positions, the respondents cite to the Final Determination of

Sales at Less Than Fair Value: Certain Fresh Cut Flowers from Peru, 52

FR 7000, 7002 (March 6, 1987) (Flowers from Peru); Final Results of

Antidumping Duty Administrative Review: Ferrosilicon from Brazil, 61 FR

59407, 59408 (November 22, 1996) (Ferrosilicon); and Final Results of

Antidumping Duty Administrative Review: Certain Welded Carbon Steel

Pipe and Tube from Turkey, 62 FR 51629, 51630 (October 2, 1997) (Pipe

and Tube from Turkey). Therefore, the respondents claim that the

Department has recognized in the past that under certain circumstances,

the appropriate high inflation period may not be the entire POI, which

applies in this case, as well. Finally, the respondents claim that the

Department has in practice determined shorter-than-POI, weighted-

average periods to avoid distortive effects on dumping margins. In

support of this claim, the respondents cite to the Final Determination

of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in

Coils from the Republic of Korea, 64 FR 30664, 30676 (June 8, 1999)

(Steel Sheet and Strip); Final Determination of Sales at Less Than Fair

Value: Static Random Access Memory Semiconductors from Taiwan,

[[Page 73170]]

63 FR 8909, 8925 (February 23, 1998) (SRAMs); 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) (DRAMS); and Final Determination of

Sales at Less Than Fair Value: Erasable Programable Read Only Memories

from Japan, 51 FR 39680, 39682 (October 30, 1986) (EPROMs from Japan).

The petitioners contend that Indonesia did experience high

inflation during the second half of the POI, and that even if it had

not, the Department's normal practice is to apply its high inflation

methodology to the entire POI, not just to a particular segment of that

period. The petitioners also maintain that the calculation performed by

the respondents to determine whether high inflation existed in the

second half of the POI is flawed because it did not include July 1998's

inflation figure, nor did it take into account the compounding effects

of inflation.

DOC Position: We agree with the petitioners. Based on the

respondents' request, we have examined the issue of whether the

Department should apply its high-inflation methodology based on whether

Indonesia experienced high inflation throughout the POI. As a matter of

practice, when the Department uses its high-inflation methodology, we

index the costs reported in each POI month, even if inflation was

absent during certain portions of the period for which the costs were

reported (i.e., the POI), and make sales comparisons on a monthly

average basis, rather than on a POI average basis, in order to minimize

the effects of inflation on our analysis.

The reason for this methodology is that in order to calculate a

weighted-average cost for the POI, all monthly costs during the POI

must be restated on an equivalent currency value basis using inflation

indices during that period. The POI weighted-average cost is then

restated to the currency value of each respective POI month in order to

minimize the distortive impact of inflation. The Department's high-

inflation methodology does not increase actual costs, but rather,

allows the Department to calculate the weighted-average period cost

from monthly data that is stated in different currency levels. See

Final Results of Antidumping Duty Administrative Review: Certain Welded

Carbon Steel Pipe and Tube from Turkey, 63 FR 35190 (June 29, 1998)

Although the Department's past practice has been to treat an

economy as hyperinflationary if the annual inflation rate is greater

than 50 percent, since Pipe and Tube from Turkey the Department has

modified its practice and used a 25 percent per annum inflation rate as

a general guide for assessing the impact of inflation on an economy and

for determining whether an economy experienced high inflation rather

than hyperinflation during the POI or POR (see Preliminary

Determination of Sales at Less Than Fair Value: Stainless Steel Sheet

and Strip in Coils from South Korea, 64 FR 137, 139 (January 4, 1999)).

The Department's use of this benchmark was illustrated in Cement where

the Department found that a 16 percent Mexican annual inflation rate

did not warrant application of the Department's high-inflation

methodology (see Cement at 64 FR 48778). In Pipe and Tube from Turkey,

where the POR extended from May 1, 1993, through April 30, 1994, the

Department indicated that it separately examined the inflation rate

during two segments of the POR because each segment covered portions of

different years and we had to determine what the annual inflation rate

was during the POR. In this context, the Department applied its then

existing benchmark of 50 percent to determine whether high inflation

existed in either 1993 or 1994. The Department did not restrict its

examination of the issue to quarters within a year, but instead

examined the two years in their entirety, which overlapped the POR and

the months in the POR as a whole, in order to determine whether Turkey

should be treated as hyperinflationary during the POR. Moreover, in

Pipe and Tube from Turkey, the Department expressed a clear preference

not to break the POR into discrete periods for high-inflation analysis,

and stated that its finding in Flowers from Peru, made over 10 years

ago, where the Department split the POI in its application of inflation

methodology, was not a reflection of the Department's more recent

practice in conducting inflation analysis. Rather, the Department

stated a desire to examine the high-inflation issue by examining and

considering the entire review period. The respondents in this case

claim that a decline in the inflation rate in the fourth quarter of

1998 and a continuing decline in the inflation rate during the first

quarter of 1999 are compelling reasons for departing from this

methodology. The Department disagrees that it should perform its high-

inflation analysis on a quarterly basis or consider the impact of

inflation during periods extending past a POI or POR.

Though the facts in our case are different from those present in

Ferrosilicon, where the Department determined not to apply its high-

inflation methodology, the methodology employed in the present case is

consistent with the one in Ferrosilicon in that the existence or

absence of high inflation during the relevant portion of the review or

investigatory period was the single most important contributing factor

in determining whether to apply the high-inflation methodology to the

POI or POR as a whole. Moreover, the approach taken in Ferrosilicon for

examining whether high inflation existed during the POR as a whole

(i.e., focusing on the annualized rate of inflation over the entire POR

or POI rather than quarters or abbreviated time periods) is also

consistent with Pipe and Tube from Turkey, which, as noted above, is

more relevant to our particular situation (see Ferrosilicon at 59408).

Unlike in Flowers from Colombia, Mushrooms, Salmon and Roses, the

issue in our case is not whether to adjust or exclude certain cost

items which have a significant impact on home market prices without

applying our high-inflation methodology. In the present case, our

current practice of applying an annualized benchmark to determine the

existence of high inflation during the POI shows that Indonesia

experienced high inflation during the entire POI at a level which

requires the use of the Department's high-inflation methodology (see,

Memorandum from the Team to the File, ``Inflation Data Used and

Statistical Analysis Performed for Determining Whether High Inflation

Was Present During the Period of Investigation,'' dated December 13,

1999). No individual adjustments are necessary beyond those warranted

by the application of the Department's high-inflation methodology.

Accordingly, we have continued to apply our high inflation methodology

to the entire POI.

Since we have determined that inflation existed throughout the POI,

there is no need to consider splitting the POI into two averaging

periods under 19 CFR 351.414(d)(3).

The effect of currency devaluations resulting from the Asian

financial crisis of 1997, as opposed to the existence or absence of

inflation, was the principal reason for splitting up the POI in the

more Korean case involving Steel Sheet and Strip. In that case, the

Department determined that the precipitous drop in the value of the

home market currency caused significant differences in home market

prices and, thus, warranted the POI split. As for the recent Taiwanese

case involving SRAMs, the Department did use shorter averaging periods

to avoid distortive effects due to declining costs and prices. The

Department did

[[Page 73171]]

not, however, apply different methodologies to different parts of the

POI. Finally, as is the case with the Department's outdated

inflationary analysis and decision made in Flowers from Peru, decisions

made by the Department in EPROMs from Japan are also not a reflection

of the Department's current practice with respect to the inflation

issue. Accordingly, the Department has continued to apply its high-

inflation methodology over the entire POI in this case.

Comment 2: Home Market Early Payment Discount

The petitioners contend that the Department should disallow

Gunawan's early payment discount because it constitutes a post-sale

price adjustment that is not part of Gunawan's normal business

practice. Specifically, the petitioners maintain that information in

Gunawan's response indicates that Gunawan grants the discount in

question to its home market customers on a discretionary basis, and

that the discount percentage is not specified on documentation, or

linked to the quantity or value of the sale. Rather, the petitioners

allege that the discount is set by Gunawan's sales department on an ad

hoc basis since the customer is unaware at the time of sale of any

terms or conditions it must meet to receive the discount. Finally, the

petitioners contend that the Department should disallow this adjustment

to NV because Gunawan failed to demonstrate at verification that the

discount was part of its normal business practice. In support of their

position, the petitioners cite to numerous cases where the Department

granted a post-sale price adjustment if it reflected the respondent's

normal business practice. See, e.g., Final Results of Antidumping Duty

Administrative Review: Certain Corrosion-Resistant Carbon Steel Flat

Products from Japan, 64 FR 12951, 12958 (March 16, 1999); Final Results

of Antidumping Duty Administrative Review: Gray Portland Cement and

Clinker from Mexico, 64 FR 13148, 13167 (March 17, 1999); Final Results

of Antidumping Duty Administrative Review: Antifriction Bearings and

Parts Thereof from France, 63 FR 33320, 33327 (June 18, 1998) and 60 FR

10900, 10930 (February 28, 1995); and the Final Results of Antidumping

Duty Administrative Review: Certain Corrosion-Resistant Steel Flat

Products and Certain Cut-to-Length Carbon Steel Plate from Canada, 61

FR 13815, 13823 (March 28, 1996).

Gunawan maintains that the Department should continue to allow

Gunawan's early payment discount because the Department verified that

the ad hoc method by which Gunawan grants the discount is its normal

business practice. Gunawan also states that the Department examined at

verification Gunawan's policy for granting this discount and its

reporting of this discount in the sales listing, and found no

discrepancies in its reported discount programs. With regard to the

administrative cases relied upon by the petitioners, Gunawan points out

that this proceeding is an investigation and that the likelihood that

it can manipulate its dumping margin by granting the discount in the

future is not germane to a LTFV proceeding.

DOC Position: We agree in part with Gunawan. After reviewing data

referenced in the Gunawan sales verification report (i.e., verification

exhibit 30), we note that the record evidence indicates the post-sale

adjustment, referred to as an ``early payment discount'' by both

Gunawan and the petitioners, is actually a billing adjustment

associated with defective merchandise sold in the home market. Based on

the invoices examined at verification, the Department found that the

disputed amounts were noted on credit memos which were issued after the

sale invoices were sent to home market customers, and that the credits

were mostly associated with claims of defective merchandise which was

not returned to Gunawan. Therefore, we are treating the amounts at

issue as billing adjustments and deducting them, where applicable, from

the gross unit price. Finally, the above-referenced administrative

cases relied upon by the petitioners have no applicability in this case

because, unlike those cases where the issue was whether a respondent

granted rebates in its normal course of business, the issue in this

proceeding is whether to make a deduction to Gunawan's home market

price based on credit memos noting returns of defective merchandise

which Gunawan issues to its customers in the normal course of business.

Comment 3: Depreciation Expenses

The petitioners state that the Department should adjust Gunawan's

depreciation expenses to account for the effects of inflation and to

permit a more appropriate matching of costs and prices based on

equivalent currency units. The petitioners argue that Gunawan's

reported depreciation expenses are based on the nominal value of

assets, since they were last revalued, and reflect neither the

inflation experienced in Indonesia since the last revaluation nor the

inflation experienced during the POI. The petitioners argue that the

Department should adjust the depreciation expenses for the effects of

inflation occurring prior to the POI, as well as for the effects of

inflation during the POI.

The respondents argue that the Department has already taken into

account the effects of inflation by indexing the total amount of

reported fixed overhead expenses (i.e., the account in which

depreciation expense was recorded) in its cost calculation and,

therefore, should not further index for inflation. According to

respondents, further indexing the monthly amount of depreciation

expense will result in double counting. The respondents argue that the

Department's long-standing practice is to rely on data from a

respondent's normal books and records if they are prepared in

accordance with the generally accepted accounting principles (``GAAP'')

of the exporting country.

DOC Position: We agree with the petitioners, in part. The

depreciation expense at issue is included in fixed overhead expense.

Because the depreciation expense reported for each month was based on

fixed assets values recorded in currency levels at the beginning of the

POI, it is not enough to index each monthly depreciation expense from

that month to the end of the period. Each monthly depreciation expense

must be indexed, on a monthly basis, to account for the full change in

currency value between the beginning and the end of the POI, before an

average COP for the period can be calculated. The reported monthly

depreciation expense figures are all stated in the currency level of

the first month of the POI and, therefore, must all be indexed for

inflation on a monthly basis over the full POI. In this case, the

monthly inflation rates during the POI were significant.

We disagree with the petitioners that the nominal monthly

depreciation expenses should be adjusted for inflation that occurred

prior to the POI. We note that one of the two collapsed respondents

revalued their assets during the last quarter of 1998 and the other

revalued its assets in 1996. Inflation in Indonesia since this pre-POI

revaluation has not been significant. Thus, we do not consider it

appropriate to adjust the pre-POI fixed asset valuations as recorded in

their normal books and records. For the final determination, we have

indexed the monthly depreciation expense to account for the high

inflation during, but not prior to, the POI.

[[Page 73172]]

Comment 4: First-Day Verification Corrections

The petitioners argue that the Department should, pursuant to 19

CFR 351.301(b), reject the undisclosed and untimely major modifications

contained in Gunawan's August 24, 1999 and Jaya Pari's September 1,

1999 submissions. The petitioners argue that it is the Department's

longstanding policy not to accept the submission of new information at

verification unless: (1) The need for that information was not evident

previously, (2) that information makes minor corrections to information

already on the record, or (3) that information corroborates, supports,

or clarifies information already on the record. According to the

petitioners, the corrections submitted by Gunawan and Jaya Pari on the

first day of verification significantly affect the financial expense

calculation and the foreign exchange gains and losses on accounts

payable. The petitioners claim that these ``major'' modifications

cannot be characterized as ``minor corrections'' and, therefore, should

be rejected as new information.

The respondents argue that the Department should reject the

petitioners' claim that the corrections submitted by Gunawan and Jaya

Pari at verification constitute an untimely submission of new factual

information. The respondents argue that these minor corrections were

made timely on the first day of verification and included worksheets

showing the effects of the corrections which the Department verified.

The respondents argue that the corrections were minor in nature and

significance, and were related only to exchange gains and losses, which

represent a minor part of the total reported costs. The respondents

argue that these corrections went in both positive and negative

directions, which in turn had an insignificant impact on the margin

calculation, and, therefore, the Department should include these

corrections in its calculation of the respondents' dumping margin in

the final determination.

DOC Position: We agree with the respondents that the corrections

presented on the first day of verification were minor and were of the

type typically identified by the respondents during preparation for

verification. These corrections were minor in that they affected only

specific accounts, did not change the reporting methodology, and

corroborated, supported, and clarified information already on the

record. Therefore, we have included the corrections for purposes of the

final determination.

Comment 5: Slab Costs

The petitioners argue that the Department should adjust the

respondents' reported slab costs. The petitioners argue that where

Gunawan and Jaya Pari had no purchases of slabs in a given month, the

Department should construct a current monthly cost by using the most

recent preceding month's cost, adjusted for the effects of inflation,

instead of the unadjusted slab costs reported by the respondents. In

addition, the petitioners disagree with the respondents' claim that all

slab costs were denominated in U.S. dollars. According to the

petitioners, it is not clear from the record how much of the slab

purchases were made in U.S. dollars or Indonesian rupiah. The

petitioners argue that as a surrogate for Jaya Pari's January 1998 mild

slab costs the Department should use Gunawan's January 1998 mild slab

purchases, because Gunawan's average January purchase price is more

representative of January slab costs than is the price reported by Jaya

Pari, a price from the previous year.

The respondents argue that the Department should not adjust the

purchase price of slab for inflation, but instead use the slab costs as

reported. The respondents are opposed to the petitioners' argument that

the respondents' reported slab costs for a month in which there were no

purchases should be adjusted by the Indonesian inflation indices. The

respondents argue that when they produce subject merchandise in a month

in which there are no purchases, they are consuming slab from

inventory, which was purchased in previous months. Therefore, they

argue that the cost of slab in any given month was equal to the slab

cost of the previous month, irrespective of inflation in Indonesia

because they did not incur any additional acquisition costs for these

slabs. Accordingly, the Department should not revalue the slab costs

for those months in which there were no purchases.

The respondents also argue that the Department should not use

Gunawan's January 1998 mild slab purchase price as a surrogate for Jaya

Pari's January 1998 mild slab costs as suggested by the petitioners.

The respondents state that they purchased all of their material inputs

in U.S. dollars from sources outside of Indonesia and there were no

significant price increases during the POI. The respondents argue that

because the acquisition cost of slabs in U.S. dollars is not affected

by Indonesian market conditions and is also not affected by inflation,

no adjustments should be made to the slab purchase price.

Lastly, the respondents argue that since the IMF's wholesale price

indices show that Indonesia has not had high inflation subsequent to

July 1998, the Department's high-inflation methodology should not be

applied to costs during the period from July through December 1998.

DOC Position: We agree with the petitioners that replacement cost

(i.e., the purchase price for the current month) should be used to

value slabs for Gunawan and Jaya Pari. Moreover, we agree that for

those months in which there were no slab purchases, the preceding

month's purchase price, adjusted for the effects of inflation, should

be used. In cases where the respondent experiences inflation in the

comparison market during the POI, the Department requires the

respondent to report current costs for the calculation of COP and CV.

This methodology entails valuing any materials used to produce the

subject merchandise at the average purchase price of those materials

during the month of consumption (i.e., the normal inventory value of

consumed raw materials is replaced by the average monthly purchase

price for those materials).

We disagree with the respondents that all purchases of slabs were

made in U.S. dollars. In fact, some purchases, and all of the

miscellaneous acquisition fees, were made in rupiah. Moreover, we

disagree that when slab purchases are made in U.S. dollars the book

value is not affected by inflation. This is because the U.S. dollar-

denominated purchase price is converted to rupiah in the month of

purchase. Since the company was experiencing high inflation during the

POI, its currency was losing value in relation to the U.S. dollar and,

therefore, in Indonesian rupiah terms the slabs were increasing in

price.

We also agree with the petitioners that it is more appropriate to

use Gunawan's weighted-average, per-unit purchase price in January 1998

for mild slab as a surrogate for Jaya Pari's January 1998 mild slab

costs. Gunawan's average January purchase price is more representative

of January slab costs than the price Jaya Pari paid months ago. Simply

indexing the price paid in the previous period would only account for

increases in the purchase price due to inflation, but would not reflect

other market-based pressures on slab prices. We note further that Jaya

Pari has been collapsed with Gunawan as a single respondent for margin

calculation purposes, and also that it purchased slab from Gunawan

during the POI. Therefore, we find that it is appropriate

[[Page 73173]]

to used Gunawan's slab cost as a surrogate for Jaya Pari's slab cost in

January 1998.

Finally, we disagree with the respondents' argument that the

Department's high-inflation methodology should not be applied to the

period from July through December 1998. First, we note that the IMF's

wholesale price indices show that Indonesia continued to experience

inflation through September 1998. Second, our practice is to use the

high-inflation methodology for the entire POI if a country experiences

a significant level of inflation throughout that period, as was the

case in Indonesia. The Department's high-inflation methodology does not

increase costs, but rather, allows the Department to calculate the

weighted-average period cost from monthly data that is stated in

different currency levels. Therefore, we have continued to apply the

high-inflation methodology in our calculation of the POI costs.

Comment 6: G&A Expenses

The petitioners argue that the Department should exclude Gunawan's

``other income,'' resulting from interest on accounts receivable, as an

offset in the calculation of its G&A expense factor. The petitioners

argue that this interest on accounts receivable was from a company that

did not pay its invoices on time and is not related to Gunawan's

production operations.

The respondents argue that the Department should not exclude

interest income from accounts receivable, which was included in ``other

income,'' from the calculation of G&A expenses because it is directly

related to subject merchandise. Alternatively, the respondents argue

that this interest income should be deducted from the respondents'

indirect selling expenses.

DOC Position: We agree with the petitioners that the interest on

accounts receivable, which was included in ``other income,'' should not

be used as an offset in the G&A expense calculation. Interest income

earned on accounts receivable is treated as an adjustment to the

selling price. The Department's standard questionnaire directs a

respondent to report such interest income in a separate field on the

sales database in order to allow for the adjustment to the selling

price. Accordingly, we have disallowed this interest income on accounts

receivable as an offset to G&A expense. We do agree with the

respondents that the interest income should be deducted from the

respondents' indirect selling expenses and have done so for the final

margin calculation.

Comment 7: Scrap Sales

The petitioners argue that because of the high inflation

experienced in Indonesia, the Department should first index the monthly

scrap sales revenue before calculating an annual average.

The respondents agree that the Department should first index the

monthly amounts of scrap before calculating an average, but argue that

the indexing should be limited to data for the period from January

through June 1998.

DOC Position: We agree with the petitioners that because of the

high inflation experienced in Indonesia, we should first index the

monthly scrap sales revenue before calculating an annual average.

Gunawan calculated the scrap offset by dividing the total scrap sales

revenue for the year by the total quantity of plate produced during the

year. Since the monthly scrap sales revenue that was summarized to

obtain the total scrap sales revenue was in different currency levels,

we have first indexed the monthly amounts using the Wholesale Price

Index as reported in the International Financial Statistics before

calculating an annual average. We then calculated the scrap offset for

each month by indexing the annual average back to each month. Finally,

we disagree with the respondents concerning their argument that the

indexing should be limited to the period from January through June

1998, consistent with our decision to apply high-inflation methodology

to the entire POI. See DOC Position to Comment 1 above for further

discussion.

Comment 8: Foreign Exchange Loss on Accounts Payable

The respondents argue that the Department should not include the

exchange losses on accounts payable attributable to the purchase of

slab in the calculation of the COP. The respondents argue that, because

costs included in CV are eventually converted into U.S. dollars, the

Department should base slab purchase costs on the U.S. dollar-

denominated purchase price to avoid the conversion from U.S. dollars to

Indonesian rupiah and back to U.S. dollars which creates a loss that

does not exist in dollar terms. The respondents argue that the exchange

loss on accounts payable arose solely from different exchange rates

used between the date of recording purchases in their books and the

date of payment. The respondents also argue that the Department should

exclude this exchange loss since it was only a ``book'' loss which did

not add to the real COP.

In addition to the above argument, the respondents state that by

indexing the slab purchase price and then including the exchange loss

on accounts payable from the purchase of slab, the Department has

double counted costs in the calculation of the COP. The respondents

state that they are being made to record exchange losses in their books

due to the Indonesian rupiah depreciating against the U.S. dollar

which, in turn, was due to inflation in the Indonesian economy.

The petitioners argue that the Department should continue to

include the respondents' foreign exchange losses on accounts payable in

the calculation of COP and CV. They argue that the respondents must

convert their slab costs into Indonesian rupiah since their normal

books and records are maintained in Indonesian rupiah, and as a result

of doing so, they realize exchange gains and losses on accounts

payable. The petitioners state that these foreign exchange gains and

losses on accounts payable are a result of the Indonesian rupiah

depreciating between the time slab is purchased and the time payment is

made. The petitioners claim that this is a real economic loss, which is

recognized by the respondent and is recorded in their financial

accounting system. The petitioners argue that the conversion of these

Indonesian rupiah costs back into U.S. dollars for purposes of

calculating CV does not create the loss, it is simply a convention of

the dumping analysis. In addition, the petitioners argue that the

Department has consistently held that foreign exchange losses on

accounts payable must be included in costs. See Notice of Final

Determination of Sales at Less Than Fair Value: Steel Wire Rod From

Trinidad & Tobago, 63 FR 9177, 9182 (February 24, 1998) (Steel Wire

Rod).

DOC Position: We disagree with the respondents. Foreign exchange

losses realized in connection with accounts payable should be included

in the COP and CV calculations. See Notice of Final Determination of

Sales at Less Than Fair Value: Stainless Steel Round Wire from Korea,

64 FR 17342 (April 9, 1999) and Steel Wire Rod at 63 FR 9182. The

foreign exchange losses on accounts payable were a result of the

Indonesian rupiah depreciating between the time the slab was purchased

and the time the payment was made. In simple terms, when the payment is

made it takes more Indonesian rupiah than the original amount recorded

for the purchase. This is a real economic loss, which was recognized by

the respondents and was recorded in their financial accounting system.

The Department includes these losses in the COM because they are the

[[Page 73174]]

direct result of purchasing inputs for the manufacturing process. We

also disagree with the respondents' argument that if the slabs were

purchased in U.S. dollars and paid out of the company's U.S. dollar

reserves, there is no exchange loss. Even if the payment of slabs were

made from U.S. dollar reserves, there is still an exchange loss on the

payment of the slabs, because the originally agreed upon price in

rupiah terms has increased. We further note that any exchange gain on

U.S. dollar reserves would be included by the Department in the

calculation of financial expense.

Moreover, we disagree with the respondents' assertion that the

Department has double counted costs by both including the exchange

losses and indexing the monthly slab costs in its calculation of the

COP and CV. The indexing simply allows the Department to calculate an

average period cost from monthly amounts that are denominated in

different currency levels. The average cost is then restated in

currency levels for each month in which a sale took place. The

inclusion of the foreign exchange loss recognizes that the respondent

paid a higher amount for the slab than originally recorded.

Comment 9: Foreign Exchange Gains on Accounts Receivable

The respondents argue that the Department should include the

foreign exchange gains from accounts receivable as an offset to the

foreign exchange loss from accounts payable. The respondents argue

that, by excluding this offset amount, the Department departed from the

objectives and principles of GAAP, which is to ensure that each company

fairly presents its financial position, operating position and any

change to its financial position. The respondents state that in their

normal financial practices, the companies do not manage specific

accounts, but instead manage their net exposed position. Therefore, any

change in relative currency values will be offset with no cost to the

company. The respondents argue that if the gains on accounts receivable

were excluded, a distortion in the real financial position of the

company would occur because the cost of exchange losses actually

suffered would be overstated.

The petitioners argue that the Department should not include

foreign exchange gains from accounts receivable in the calculation of

the respondents' costs. They state that it is the Department's practice

to include foreign exchange gains and losses on financial assets and

liabilities in the COP and CV calculations, provided that the gains and

losses are related to the company's production operations. Since the

foreign exchange gains and losses incurred on accounts receivable are

related to sales operations, rather than to production, the petitioners

maintain these amounts should not be included in the calculation of COP

and CV. See Notice of Final Results of Antidumping Duty Administrative

Review: Canned Pineapple Fruit From Thailand, 63 FR 7392, 7401

(February 13, 1998) and Steel Wire Rod at 63 FR 9182.

DOC Position: We agree with the petitioners that foreign exchange

gains and losses arising from sales transactions should not be included

in the calculation of COP and CV. The Department's longstanding

practice is to exclude exchange gains and losses on accounts

receivable. See, e.g., Notice of Final Results of Antidumping Duty

Administrative Review: Circular Welded Non-Alloy Steel Pipe and Tube

from Mexico, 62 FR 37014,37026 (July 10, 1997) (Comment 31) (where the

Department did not include exchange gains and losses on accounts

receivables, because these gains and losses related to selling

activities rather than production activities); and Pipe and Tube from

Turkey at 62 FR 51629-01 (October 2, 1997). The Department normally

includes in its calculation of COP and CV foreign exchange gains and

losses resulting from transactions related to a company's manufacturing

operations (e.g., purchases of inputs). See, e.g., Final Determination

of Sales Less Than Fair Value: Polyethylene Tenephthalate Film, Sheet,

and Strip From the Republic of Korea, 56 FR 16305, 16313 (April 22,

1991). We do not consider foreign exchange gains and losses arising

from sales transactions to relate to manufacturing activities of a

company. Accordingly, for the final determination we included in COP

and CV exchange gains and losses arising from purchase transactions

(accounts payables) (see Comment 8), but disallowed exchange gains and

losses arising from sales transactions.

Krakatau Comments

Comment 1: Application of Facts Available

Krakatau maintains that the Department's use of facts available in

its case violates Articles 2.2.1.1 and 6.8 of the Antidumping Duty

Agreement of the World Trade Organization because the Department could

have used its questionnaire response to arrive at a calculated margin

for Krakatau without undue difficulties. Krakatau further maintains

that the Department's insistence that Krakatau provide costs on a

control-number-specific basis based on its cost records and Krakatau's

inability to provide such costs are no justification for rejecting

Krakatau's response and applying facts available.

The petitioners maintain that the Department should assign Krakatau

the higher of the highest dumping margin alleged in the petition or

calculated in the final determination, rather than the simple average

of the dumping margins alleged in the petition, because Krakatau has

not provided an adequate questionnaire response. The petitioners argue

that if the Department assigns Krakatau the simple average of the

petition dumping margins, Krakatau might receive a lower rate than it

might otherwise have received if it had cooperated, thus rewarding

Krakatau for not providing complete and accurate information in a

timely manner.

DOC Position: We agree with the petitioners. We did not request

that Krakatau provide cost and sales information that other respondents

in numerous antidumping duty proceedings have not been able to provide,

without undue hardship, in response to the Department's antidumping

duty questionnaire. Furthermore, Krakatau was given significant

guidance and assistance by the Department throughout this

investigation, but was unable to provide the Department with an

adequate response that could be verified and used in the final

determination. Consequently, the Department has no choice but to

continue to resort to facts available with respect to Krakatau in the

final determination as explained in detail below.

We provided Krakatau with numerous opportunities and guidance

throughout this proceeding to enable it to submit its cost and sales

data on a control-number-specific basis, as requested by the

Department's questionnaire, for purposes of calculating a margin for

Krakatau based on its own data. Despite the Department's numerous

attempts to assist Krakatau, Krakatau failed to provide critical

information needed for calculating a margin, thereby rendering its

information severely deficient and unusable. Specifically, prior to the

preliminary determination, the Department issued Krakatau a number of

instructional letters, including a second supplemental questionnaire

which was explicit regarding the information the Department needed from

Krakatau in order to further consider its response for verification and

the final determination (see July 8, 1999, letter from the Department

to Krakatau). In the July 8, 1999, letter, the Department requested for

each sales control number, production costs and

[[Page 73175]]

sales expenses unique to the control number, along with worksheets

showing how Krakatau arrived at its calculations for the requested

costs and sales expenses. Moreover, we requested Krakatau to provide

the costs for each control number on a monthly basis since evidence

suggested that Indonesia experienced high inflation throughout the POI.

In addition, the July 8, 1999, letter provided Krakatau with step-by-

step instructions for submitting the requested information noted above.

The July 8, 1999, letter also stated that if Krakatau could not

establish a unique cost for each product, it must describe in detail

the reason it could not provide such information. In summary, this

letter was designed to assist Krakatau and give Krakatau one final

opportunity to comply with the Department's reporting requirements

because the Department was fully aware that Krakatau was a pro se

company and had requested assistance in a timely manner under section

782(c)(1) of the Act. Having received the Department's assistance in

this regard under section 782(c)(2) of the Act, the ultimate burden was

on Krakatau to supply the Department with the requested information.

In its response to the Department's July 8, 1999, letter, Krakatau

(1) did not report control-number-specific, monthly costs (critical for

making fair value comparisons); (2) did not provide the requested

worksheets necessary for determining whether it properly reported its

sales expenses on a per-unit basis; and (3) did not explain in detail

why it was not able to provide the sales and cost information the

Department routinely requests and receives from respondents in other

antidumping duty cases. Furthermore, Krakatau offered no alternative

methodologies for meeting the Department's request for information

given its alleged inability to provide such information in the manner

requested by the Department. Rather, Krakatau continued to report a

standard sales expense amount irrespective of the POI month for each

control number reported in its home market and U.S. sales listings

without showing or explaining its calculation methodology, and one

standard production cost for each POI month which did not differentiate

between control numbers. With these significant deficiencies still

present in Krakatau's July 23, 1999, supplemental response, we notified

Krakatau on July 27, 1999, that the Department was unable to conduct a

meaningful verification of its response and that the supplemental

information Krakatau submitted on July 23, along with the information

previously submitted on June 25, 1999, did not provide the Department

with an appropriate basis on which to calculate an antidumping duty

margin for Krakatau in the final determination (see July 27, 1999,

letter from the Department to Krakatau).

Because Krakatau did not provide an adequate response that the

Department could verify and use in the final determination, despite

numerous opportunities and assistance afforded to it by the Department,

the Department does not consider Krakatau to have cooperated to the

best of its ability in this proceeding. Therefore, the Department has

relied on adverse facts available in accordance with section 776(b) of

the Act in making its final determination with respect to Krakatau.

Accordingly, the Department has assigned Krakatau the highest dumping

margin alleged in the petition, which is higher than the margin

calculated for Gunawan/Jaya Pari. See also ``Facts Available'' section

of this notice.

Comment 2: Exclusion From Investigation

Krakatau claims that its negligible exports of subject merchandise

to the U.S. market during the POI could not possibly cause or threaten

material injury to the domestic industry. Therefore, Krakatau maintains

that the Department should not impose antidumping duties on Krakatau's

U.S. exports of the subject merchandise.

The petitioners did not comment on this issue.

DOC Position: We disagree with Krakatau. The ITC, not the

Department, determines whether imports of the subject merchandise from

Indonesia have caused or threaten material injury to the domestic

industry. Therefore, Krakatau's argument is not one in which the

Department has jurisdiction to address. The Department determines

whether dumping exists. If we find dumping and the ITC finds material

injury, we must impose antidumping duties.

Comment 3: Adequacy of Questionnaire Response

Krakatau claims that it did not know how to report its information

in the format requested by the Department's original and supplemental

questionnaires because it was unfamiliar with the requirements of the

U.S. antidumping duty law and because it could not afford the services

of a consultant to prepare its response due to the adverse impact of

the Indonesian economic crisis on its operations. Instead, Krakatau

points out that it used its own resources to respond to the

Department's questionnaires to the best of its ability. In addition,

Krakatau alleges that the Department's guidance was inadequate in terms

of assisting it in reporting its cost and sales information in the

format requested by the Department. Therefore, Krakatau maintains that

the Department should not resort to facts available with respect to

Krakatau because Krakatau was unable to provide the Department with

certain requested information (i.e., assigning product control numbers

and reporting control number-specific costs) for which Krakatau did not

maintain or record in its accounting records.

The petitioners did not comment on this issue.

DOC Position: We disagree with Krakatau. As discussed in the

Department's position to Comment 1, the Department provided Krakatau

with numerous opportunities to submit in a timely manner critical cost

and sales information in the format requested in the Department's

antidumping duty questionnaire. In the final supplemental questionnaire

the Department issued to Krakatau on July 8, 1999, the Department

provided Krakatau with the actual calculation steps it needed to follow

in order to report its sales expenses in the manner requested by the

antidumping duty questionnaire. Additionally, in the supplemental

questionnaire, the Department outlined for Krakatau how it could comply

with the Department's request to report monthly, control-number-

specific cost data based on Krakatau's description of its own cost

records. Krakatau failed to provide the requested information despite

the Department's assistance efforts. In addition to these detailed

explanations and guidelines, we took the unusual step of sending a

Department official to Jakarta to answer any questions Krakatau staff

had concerning the contents of the Department's questionnaires. Having

received this assistance, the burden was on Krakatau to provide the

requested information. It did not. Therefore, the Department has no

alternative but to resort to adverse facts available in Krakatau's

case. (See ``Comment 1 above and ``Facts Available'' section of this

notice for discussion of adverse facts available rate assigned to

Krakatau.)

Continuation of Suspension of Liquidation

In accordance with section 735(c)(1)(B) of the Act, we are

directing the Customs Service to continue to suspend liquidation of all

entries of subject merchandise that are entered, or withdrawn from

warehouse, for

[[Page 73176]]

consumption on or after the date of publication of the final

determination in the Federal Register. The Customs Service shall

continue to require a cash deposit or posting of a bond equal to the

estimated amount by which the normal value exceeds the U.S. price as

shown below. These suspension of liquidation instructions will remain

in effect until further notice. The weighted-average dumping margins

are as follows:

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

Weighted-

average

Exporter/manufacturer margin

percentage

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

Gunawan/Jaya Pari.......................................... 42.36

PT Krakatau Steel.......................................... 52.42

All Others................................................. 42.36

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

ITC Notification

In accordance with section 735(d) of the Act, we have notified the

ITC of our determination. As our final determination is affirmative,

the ITC will, within 45 days, determine whether these imports are

materially injuring, or threaten material injury to, the U.S. industry.

If the ITC determines that material injury, or threat of material

injury does not exist, the proceeding will be terminated and all

securities posted will be refunded or canceled. If the ITC determines

that such injury does exist, the Department will issue an antidumping

duty order directing Customs officials to assess antidumping duties on

all imports of the subject merchandise entered for consumption on or

after the effective date of the suspension of liquidation.

This determination is issued and published in accordance with

sections 735(d) and 777(i)(1) of the Act.

Dated: December 13, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-33232 Filed 12-28-99; 8:45 am]

BILLING CODE 3510-DS-P