Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Canada: Final Results of Antidumping Duty Administrative Reviews and Determination To Revoke in Part

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-822, A-122-823]

Certain Corrosion-Resistant Carbon Steel Flat Products and

Certain Cut-to-Length Carbon Steel Plate From Canada: Final Results of

Antidumping Duty Administrative Reviews and Determination To Revoke in

Part

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of the antidumping duty administrative

review of certain corrosion-resistant carbon steel flat products and

certain cut-to-length carbon steel plate from Canada and determination

to revoke in part.

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

SUMMARY: On July 10, 1998, the Department of Commerce (``the

Department'') published the preliminary results of its administrative

reviews of the antidumping duty orders on certain corrosion-resistant

carbon steel flat products and certain cut-to-length carbon steel plate

from Canada. These reviews cover six manufacturers/exporters of the

subject merchandise to the United States (three manufacturers/exporters

of corrosion-resistant carbon steel and four manufacturers/exporters of

cut-to-length carbon steel plate), and the period August 1, 1996,

through July 31, 1997. We gave interested parties an opportunity to

comment on our preliminary results. As a result of these comments, we

have changed the results from those presented in the preliminary

results of review.

EFFECTIVE DATE: January 13, 1999.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor (Dofasco, Inc. and

Sorevco Inc. (collectively, Dofasco)); Eric Scheier (Continuous Colour

Coat (CCC)); Lesley Stagliano (Algoma Inc. (Algoma)); Gideon Katz,

(Gerdau MRM Steel (MRM)), A.J. Forsyth and Co., Ltd. (Forsyth) and

Stelco, Inc. (Stelco) corrosion resistant); Laurel LaCivita (Stelco

plate); or Maureen Flannery, Import Administration, International Trade

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

Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-

4733.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act), are 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's regulations are to 19 CFR

part 351 (1998).

Background

On July 10, 1998, we published in the Federal Register (63 FR

37320) the preliminary results of the administrative reviews of the

antidumping duty orders on certain corrosion-resistant carbon steel

flat products and certain cut-to-length carbon steel plate from Canada

(Preliminary Results). We gave interested parties an opportunity to

comment on our preliminary results. We received written comments from

Algoma, CCC, Dofasco, Stelco, and Forsyth, and from the petitioners

(Bethlehem Steel Corporation, U.S. Steel Group (a unit of USX

Corporation), Inland Steel Industries, Inc., Gulf States Steel Inc. of

Alabama, Sharon Steel Corporation, Geneva Steel, and Lukens Steel

Company). We have now completed these administrative reviews in

accordance with section 751(a) of the Act.

Scope of Reviews

The products covered by these administrative reviews constitute two

separate ``classes or kinds'' of merchandise: (1) Certain corrosion-

resistant carbon steel flat products, and (2) certain cut-to-length

carbon steel plate.

The first class or kind, certain corrosion-resistant steel,

includes flat-rolled carbon steel products, of rectangular shape,

either clad, plated, or coated with corrosion-resistant metals such as

zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based alloys,

whether or not corrugated or painted, varnished or coated with plastics

or other nonmetallic substances in addition to the metallic coating, in

coils (whether or not in successively superimposed layers) and of a

width of 0.5 inch or greater, or in straight lengths which, if of a

thickness less than 4.75 millimeters, are of a width of 0.5 inch or

greater and which measures at least 10 times the thickness or if of a

thickness of 4.75 millimeters or more are of a width which exceeds 150

millimeters and measures at least twice the thickness, as currently

classifiable in the HTS under item numbers 7210.30.0030, 7210.30.0060,

7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000,

7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000,

7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000,

7212.30.5000,

[[Page 2174]]

7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000,

7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560,

7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. Included in

this review are corrosion-resistant flat-rolled products of non-

rectangular cross-section where such 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. Excluded from this review are flat-

rolled steel products either plated or coated with tin, lead, chromium,

chromium oxides, both tin and lead (``terne plate''), or both chromium

and chromium oxides (``tin-free steel''), whether or not painted,

varnished or coated with plastics or other nonmetallic substances in

addition to the metallic coating. Also excluded from this review are

clad products in straight lengths of 0.1875 inch or more in composite

thickness and of a width which exceeds 150 millimeters and measures at

least twice the thickness. Also excluded from this review are certain

clad stainless flat-rolled products, which are three-layered corrosion-

resistant carbon steel flat-rolled products less than 4.75 millimeters

in composite thickness that consist of a carbon steel flat-rolled

product clad on both sides with stainless steel in a 20%-60%-20% ratio.

The second class or kind, certain cut-to-length plate, includes

hot-rolled carbon steel universal mill plates (i.e., flat-rolled

products rolled on four faces or in a closed box pass, of a width

exceeding 150 millimeters but not exceeding 1,250 millimeters and of a

thickness of not less than 4 millimeters, not in coils and without

patterns in relief), of rectangular shape, neither clad, plated nor

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

plastics or other nonmetallic substances; and certain hot-rolled carbon

steel flat-rolled products in straight lengths, of rectangular shape,

hot rolled, neither clad, plated, nor coated with metal, whether or not

painted, varnished, or coated with plastics or other nonmetallic

substances, 4.75 millimeters or more in thickness and of a width which

exceeds 150 millimeters and measures at least twice the thickness, as

currently classifiable in the HTS under item numbers 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. Included in this review are flat-rolled products of non-

rectangular cross-section where such 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. Excluded from this review is grade X-

70 plate. Also excluded is cut-to-length carbon steel plate meeting the

following criteria: (1) 100% dry steel plates, virgin steel, no scrap

content (free of Cobalt-60 and other radioactive nuclides); (2) .290

inches maximum thickness, plus 0.0, minus .030 inches; (3) 48.00 inch

wide, plus .05, minus 0.0 inches; (4) 10 foot lengths, plus 0.5, minus

0.0 inches; (5) flatness, plus/minus 0.5 inch over 10 feet; (6) AISI

1006; (7) tension leveled; (8) pickled and oiled; and (9) carbon

content, 0.3 to 0.8 (maximum).

With respect to both classes or kinds, the HTS item numbers are

provided for convenience and Customs purposes. The written description

remains dispositive of the scope of these reviews.

Fair Value Comparisons

To determine whether sales of subject merchandise from Canada to

the United States were made at less than fair value, we compared the

Export Price (EP) to the Normal Value (NV), as described in the

``Export Price'' and ``Normal Value'' sections of the preliminary

results of review notice. On January 8, 1998, the Court of Appeals for

the Federal Circuit issued a decision in CEMEX v. United States, 133

F.3d 897 (Fed Cir. 1998). In that case, based on the pre-URAA version

of the Act, the Court discussed the appropriateness of using

constructed value (CV) as the basis for foreign market value when the

Department finds home market sales to be outside the ``ordinary course

of trade.'' This issue was not raised by any party in this proceeding.

However, the URAA amended the definition of sales outside the

``ordinary course of trade'' to include sales below cost. See section

771(15) of the Act. Consequently, the Department has reconsidered its

practice in accordance with this court decision and has determined that

it would be inappropriate to resort directly to CV, in lieu of foreign

market sales, as the basis for NV if the Department finds foreign

market sales of merchandise identical or most similar to that sold in

the United States to be outside the ``ordinary course of trade.'' We

will match a given U.S. sale to foreign market sales of the next most

similar model when all sales of the most comparable model are below

cost. The Department will use CV as the basis for NV only when there

are no above-cost sales that are otherwise suitable for comparison.

Therefore, in this proceeding, when making comparisons in accordance

with section 771(16) of the Act, we considered all products sold in the

home market as described in the ``Scope of Review'' section of this

notice, above, that were in the ordinary course of trade for purposes

of determining appropriate product comparisons to U.S. sales. Where

there were no sales of identical merchandise in the home market made in

the ordinary course of trade to compare to U.S. sales, we compared U.S.

sales to sales of the most similar foreign like product made in the

ordinary course of trade, based on the characteristics listed in

Sections B and C of our antidumping questionnaire. We have implemented

the Court's decision in this case, to the extent that the data on the

record permitted.

Determination Not To Revoke in Part: Stelco Cut-to-Length Carbon

Steel Plate and Corrosion-Resistant Carbon Steel Flat Products, and

Determination To Revoke in Part: Algoma Cut-to-Length Carbon Steel

Plate

On August 28, 1997, Algoma submitted a request, in accordance with

19 CFR 351.222(b), that the Department revoke the order covering cut-

to-length carbon steel plate from Canada with respect to its sales of

this merchandise. On August 29, 1997, Stelco submitted a request that

the Department revoke the orders covering cut-to-length carbon steel

plate and corrosion-resistant steel from Canada with respect to its

sales of this merchandise. In accordance with 19 CFR

351.222(b)(2)(iii), these requests were accompanied by certifications

from Algoma and Stelco that they had not sold the subject merchandise

at less than NV for a three-year period, including this review period,

and would not do so in the future. Algoma and Stelco also agreed to

their immediate reinstatement in the relevant antidumping order, as

long as any firm is subject to the order, if the Department concludes

under 19 CFR 351.216 that, subsequent to revocation, they sold the

subject merchandise at less than NV.

The Department conducted verifications of Algoma's and Stelco's

responses for this period of review. In the two prior reviews of this

order we determined that Algoma and Stelco sold cut-to-length carbon

steel plate from Canada at not less than NV or at de minimis margins.

We determine that

[[Page 2175]]

both Algoma and Stelco sold cut-to-length carbon steel plate at not

less than NV during the instant review period.

On August 10, 1998, petitioners submitted argumentation opposing

Algoma's and Stelco's revocation requests. On December 4, 1998, we

placed on the record of this review the results of research that we

conducted to help us determine the likelihood of resumed dumping, and

opened the record for further comment on this issue. See memorandum to

the file, dated December 4, 1998.

In determining whether to revoke an antidumping order in part, we

must conclude pursuant to Sec. 351.222(b)(2), that: (1) The company has

sold subject merchandise at not less than normal value to the United

States in commercial quantities for three consecutive reviews; (2) it

is not likely that the companies eligible for revocation will in the

future sell the subject merchandise at less than NV; and (3) the

company agrees to its immediate reinstatement in the order if the

Department concludes that the company, subsequent to the revocation,

sold the subject merchandise at less than NV.

In the present case, the Department has found that Stelco has had

zero or de minimis dumping margins for three consecutive reviews.

However, in determining whether the three years of no dumping are a

sufficient basis to make a revocation determination, the Department

must be able to determine that the company has continued to participate

meaningfully in the U.S. market during each of the three years at

issue. See Pure Magnesium from Canada, 63 FR 26147 (May 12, 1998). This

practice has been codified by Sec. 351.222(d)(1) of the Department's

regulations, which state that, ``before revoking an order or

terminating a suspended investigation, the Secretary must be satisfied

that, during each of the three (or five) years, there were exports to

the United States in commercial quantities of the subject merchandise

to which a revocation or termination will apply.'' 19 CFR 351.222(d)(1)

(emphasis added). For purposes of revocation, the Department must be

able to determine that past margins are reflective of a company's

normal commercial activity. Sales during the POR which, in the

aggregate, are an abnormally small quantity do not provide a reasonable

basis for determining that the discipline of the order is no longer

necessary to offset dumping.

Based on the current record, we find that Stelco did not sell

merchandise in the United States in commercial quantities during the

second administrative review (one of the three consecutive reviews

cited by Stelco to support its request for revocation). During the POR

covered by that review (August 1994 though July 1995), Stelco made only

one sale in the United States. Moreover, this sale was only for 36 tons

of subject merchandise. By contrast, during the period covered by the

antidumping investigation, which was only six months long, Stelco made

several thousand sales totaling approximately 30,000 tons. In other

words, Stelco's sales for the entire year covered by the second review

period were only 0.12% of its sales volume during the six-months

covered by the investigation. Similarly, during the current POR, Stelco

sold approximately 2000 tons of subject merchandise in the United

States. While this amount is small in comparison to the amount sold

prior to issuance of the order, it is over 50 times greater than the

amount sold during the period covered by the second administrative

review. Consequently, although Stelco received a de minimis margin

during the second administrative review, this margin was not based on

commercial quantities within the meaning of the revocation regulation.

The number of sales and total sales volume is so small, both in

absolute terms, and in comparison with the period of investigation and

other review periods, that it does not provide any meaningful

information on Stelco's normal commercial experience. Therefore, we

find that Stelco does not qualify for revocation from the order on

steel plate under Sec. 351.222(b)(1)(i) and (d)(1).

We find that Algoma has met all of the requirements for revocation

under Sec. 351.222(b)(1) of the Department's regulations. As we

explained in Dynamic Random Access Memory Semiconductors of One

Megabyte or Above From the Republic of Korea, Notice of Final Results

of Antidumping Duty Administrative Review and Determination Not To

Revoke Order In Part, 62 FR 39809, 39810 (July 24, 1997) (DRAMS from

Korea), in evaluating the issue of likelihood, the Department has

considered three years of sales in the United States with no dumping

margins, plus an agreement to reinstatement in the order, to be

indicative of expected future behavior. Absent other evidence, the

Department considers such facts to be determinative of the likelihood

issue.

Algoma has sold merchandise in the United States at not less than

NV for three consecutive reviews. Moreover, during each of these

periods, Algoma's aggregate sales were made in commercial quantities.

Algoma has also agreed to its immediate reinstatement in the order if

we conclude, subsequent to the revocation, that Algoma has sold the

subject merchandise at less than NV. Finally, no party has argued that

Algoma is not eligible for revocation based on likelihood under

Sec. 351.222(b)(2)(ii), and we find that there is not sufficient

support for such a conclusion. Therefore, based on its consecutive

years of zero or de minimis margins, and reinstatement agreement, and

in the absence of evidence to the contrary, we conclude that it is not

likely that Algoma will sell subject merchandise in the United States

at less than fair value.

Regarding Stelco's request for revocation with respect to

corrosion-resistant steel, we note that in the last two administrative

reviews we determined that Stelco sold corrosion-resistant steel at

less than NV. See Certain Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length Carbon Steel Plate From Canada:

Final Results of Antidumping Duty Administrative Reviews, 62 FR 12725

(March 16, 1998) and Certain Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length Carbon Steel Plate From Canada:

Final Results of Antidumping Duty Administrative Reviews, 62 FR 18448

(April 15, 1997)(1994/95 Canadian Steel). Although the final results of

these reviews are subject to litigation, that litigation is not yet

complete. Additionally, as discussed below, we have determined that

Stelco sold corrosion-resistant steel at less than NV during the period

covered by this review. Consequently, we determine that because Stelco

does not have three consecutive years of zero or de minimis margins on

corrosion-resistant steel, Stelco is not eligible for revocation of the

order on corrosion-resistant steel under 19 CFR 351.222(b).

Facts Available

As we explained in the preliminary results, we determine that the

use of facts available is appropriate for Forsyth in accordance with

section 776(a) of the Act, because it failed to report all of its home

market sales made during the POR.

Where necessary information is missing from the record, the

Department may apply facts available under section 776 of the Act.

Further, where that information is missing because a respondent has

failed to cooperate to the best of its ability, section 776(b) of the

Act authorizes the Department to use facts available that are adverse

to the interests of that respondent, which may include information

derived from the petition, the final determination, a

[[Page 2176]]

previous administrative review, or other information placed on the

record. Forsyth did not respond to our repeated requests that it report

all of its home market sales; rather, it presented arguments as to why

it could omit many of those sales. As we explained in the preliminary

determination, we disagree with these arguments. Therefore, we conclude

that Forsyth has failed to cooperate to the best of its ability.

As adverse facts available for Forsyth, we are using the highest

dumping margin from any segment of this proceeding, 68.70 percent. This

is the rate used as facts available in the LTFV final determination,

and is found in the petition. See Memorandum to the File ``Preliminary

Results of Cut-to-Length Carbon Steel Plate from Canada; Corroboration

of Antidumping Duty Margin Used as Facts Available for A.J. Forsyth''

July 2, 1998 (Corroboration Memo).

Section 776(c) provides that the Department shall, to the extent

practicable, corroborate ``secondary information'' by reviewing

independent sources reasonably at its disposal. The Statement of

Administrative Action (SAA) accompanying the URAA at 870, clarifies

that ``secondary information'' includes information from the petition

in the LTFV investigation, the final determination, or information from

a previous section 751 review of the subject merchandise. The SAA also

provides that ``corroborate'' means simply that the Department will

satisfy itself that the secondary information to be used has probative

value. Id.

In accordance with this requirement, we corroborated the LTFV

margin to the extent practicable. We examined the basis of the rates

contained in the petition. Petitioners based both U.S. price and normal

value on actual prices from price quotations to U.S. customers and

price lists for plate sold by respondents. See Petition Requesting the

Imposition of Antidumping Duties on Imports of Cut-to-Length Carbon

Steel Plate from Canada, June 30, 1992 and July 14, 1992 (amended

petition). The price lists and price quotes that support the petition

margin are independent sources. Furthermore, the Department did not

receive any information or comment from the respondent or other

interested parties in this review concerning the U.S. prices and normal

values contained in the petition, and is aware of no other independent

sources of information that would enable us to further corroborate the

margin calculated in the petition. We note that the SAA, at 870,

specifically states that where ``corroboration may not be practicable

in a given circumstance,'' the Department may nevertheless apply an

adverse inference. Based on these reasons, the Department considers the

LTFV rate used as adverse facts available to be corroborated.

Changes From the Preliminary Results

The Department is implementing a change in this review in the

calculation of U.S. credit expense for Algoma, CCC, MRM, and Dofasco,

to be consistent with the Department's current practice, as outlined in

Import Administration Bulletin 98.2: Imputed Credit Expenses And

Interest Rate (February 23, 1998) (Policy Bulletin 98.2).

It is the Department's practice to calculate the U.S. credit

expense using a short-term interest rate tied to the currency in which

the sales are denominated. This interest rate should be based on the

respondent's weighted-average short-term borrowing experience in the

currency of the transaction. In cases, such as these, where Algoma,

CCC, MRM and Dofasco have no short-term borrowings in the currency of

the transaction, we will use publicly available information to

establish a short-term interest rate applicable to the currency of the

transaction. Since we are addressing the U.S. dollar transactions for

these companies, for these final results we have used the average

short-term lending rates calculated by the Federal Reserve to impute

credit expenses. Specifically, we have used the Federal Reserve's

weighted-average data for commercial and industrial loans maturing

between one month and one year from the time the loan is made. See

Final Analysis Memoranda for Algoma, CCC, MRM, and Dofasco, on file in

room B-099 of the Commerce Department.

Interested Party Comments

Algoma

Comment 1: Credit Expenses

Petitioners allege that the errors found in the reported credit

expenses at verification indicate that the information cannot be

verified. Petitioners also contend that Algoma did not report credit

expenses to the best of its ability and that, therefore, the Department

should apply adverse facts available. Petitioners argue that the

Department cannot rely on Algoma's data to conclude that the credit

expense errors were isolated because, rather than the Department

verifying this assertion itself, the Department relied on Algoma to

independently verify that there were no other errors in its reporting

of payment dates. Petitioners argue that, unlike in Melamine

Institutional Dinnerware from Indonesia: Final Determination of Sales

at Less Than Fair Value, 62 FR 1719, 1723 (January 13, 1997), where the

Department corrected errors found at verification after verifying that

the errors were isolated, the Department did not verify that the errors

in Algoma's reporting of credit expenses were isolated.

Petitioners contend that the errors discovered by the Department

during verification were significant because Algoma reported credit

expenses where it actually received advance payments. Thus, petitioners

argue, Algoma failed verification, and the Department should apply

facts available, as it did in Stainless Steel Bars from Spain; Final

Results of Admin. Review, 59 FR 66931, 66935 (December 28, 1994),

Circular Welded Non-Alloy Steel Pipe and Tube from Mexico; Final

Results of Admin. Review, 62 FR 37014, 37016 (July 10, 1997), and

Svenskt Stal AV v. United States, Ct. No. 96-05-01372 Slip Op., 97-123

(August 29, 1997). Petitioners also cite section 776(a) of the Act,

which states that if information provided by a respondent cannot be

verified, the Department shall use facts available in reaching its

determination.

Petitioners assert that Algoma failed to report to the best of its

ability at verification because it did not disclose the errors in its

reported credit expenses for the affected home market sales either

prior to, or at the outset, of verification. Citing 19 U.S. C.

1677e(b), petitioners state that if a party fails to cooperate by not

acting to the best of its ability to comply with a request for

information, the Department may draw an adverse inference in its

selection of facts otherwise available. In Cut-to-Length Steel Plate

from South Africa: Final Results of Admin. Review, 62 FR 61731, 61739

(November 19, 1997), the Department applied the highest credit expense

reported on a U.S. sale to all U.S. sales when the respondent failed to

report to the best of its ability.

Algoma disagrees with petitioners. Algoma notes that the Department

found two discrepancies at verification involving reported payment

dates, neither of which was significant. The first error was a

typographical error in the reported date of payment for a pre-selected

home market sale. In the second error, Algoma's accounting department

posted the payment against the date on which the amount was due instead

of the date on which the cash was received for a sale in which there

was an advance payment by the customer. Algoma argues that, contrary to

petitioners' allegation, the other advance payment errors were not

uncovered by the Department's verification team, but were discovered

[[Page 2177]]

when Algoma searched its entire submission for transactions where the

customer prepayment was received. Algoma determined that other errors

of the same type existed and voluntarily disclosed this information to

the Department on its own initiative during verification.

Algoma argues that the Department's Sales Verification Report at

pages 13-14 shows that the Department verified the extent of Algoma's

credit errors by examining the results of a computer query conducted on

the sales database, and verified the corrected information. Algoma

points out that the errors could not have been included in the

corrections memorandum provided at the beginning of verification

because Algoma was not aware of them at that time. Algoma further

argues that the errors at issue were both small in effect and isolated

in scope. Algoma argues that, because the Department corrected the

transactions at issue, verified the remainder of Algoma's file, and

used the corrected information in its preliminary results of review, no

further action by the Department is appropriate or necessary.

Department's Position: We agree with Algoma. At verification, we

reviewed the method by which Algoma searched its database for the

payment date errors, and we examined the full universe of sales in

which these errors occurred. Since all of these credit expense errors

occurred in sales where there were advance payments, we consider these

errors to be isolated in nature. Therefore, we are making no changes to

our calculations for the final results of review other than permitting

Algoma to correct the errors. For further discussion of this issue,

refer to the November 3, 1998 Memorandum to the File: Final Results of

the Antidumping Administrative Review of Cut-to-Length (CTL) Carbon

Steel Plate from Canada (Algoma's Issues Memo).

Comment 2: Freight Expenses

Petitioners argue that there are a number of U.S. sales for which

Algoma reported having received freight revenue but for which it did

not report a corresponding freight expense. Petitioners state that the

Department should apply to these sales the highest U.S. freight expense

reported for any U.S. sale as adverse facts available.

Petitioners argue that it was only after verification was underway

that Algoma ran an ``internal edit check'' and identified deleted

freight expense data for some of these sales. Petitioners argue that

Algoma should have reported this data to the Department before

verification, since the freight charges for these sales were reported

in Algoma's November 21, 1997 sales tape, but were ``inexplicably''

deleted from its later submissions. Petitioners allege that when Algoma

deleted the freight charges from its sales tapes in its subsequent

responses, it did not report the freight expenses to the best of its

ability. As with Algoma's credit expenses, petitioners argue that

Algoma's independent analysis of its database provides no justification

to conclude that the error is ``isolated,'' and that the sample of

sales verified cannot be considered to be representative of Algoma's

reporting as a whole. Petitioners contend that because Algoma failed to

report to the best of its ability, the Department should draw an

adverse inference and apply the highest U.S. freight expense reported

for any U.S. sale to the sales in question. Petitioners cite Welded

Carbon Steel Pipe and Tube from Turkey: Final Results of Administrative

Antidumping Review, 61 FR 69067, 69073 (December 31, 1996), and Foam

Extruded PVC from the United Kingdom: Final Results of Administrative

Antidumping Review, 61 FR 51411, 51414 (October 2, 1996).

Algoma contends that the Department has already rejected

petitioners' argument that U.S. freight expenses were misreported.

Algoma explains that, in unusual instances, a carrier may neglect to

bill Algoma for transport provided. In these instances, Algoma incurs

no freight expense, and the proper accounting treatment is to show no

freight expense. The proper treatment of freight revenue is to report

it whenever the customer pays for freight. Therefore, Algoma claims,

for some of the sales petitioners reference, freight expense and

revenue were correctly reported.

With respect to sales for which a freight expense was incurred but

not reported, Algoma further maintains that it was not aware of the

computer error prior to verification because none of the sales

preselected by the Department raised the issue. Algoma did not discover

the error until it began preparing its response to petitioners'

allegations, after verification commenced. On the night before

verification, it received petitioners' letter asking the Department to

examine certain transactions where no freight charges were reported.

Algoma found that in one of the transactions mentioned in the letter,

freight revenue was reported, but there was no corresponding freight

expense. Algoma then conducted a search to identify other such

transactions. Algoma maintains that the correct information was

verified by the Department and that no ``discrepancy'' existed because

the correct data was on the record prior to verification.

Department's Position: We agree with Algoma. Algoma reported the

freight expense errors to the best of its ability at verification and

disclosed them to the Department on its own initiative. At

verification, we examined the method by which Algoma determined that

the reported freight expense was in error, and found no reason to

believe that the errors were indicative of a corrupt database. We also

found that some of the sales in question were indeed reported

correctly, and that other sales at issue were correctly reported prior

to verification. Finally, reliability of these expenses is enhanced by

the fact that Algoma reported all of them in its initial submission,

which is on the record. The apparently inadvertent omissions only

showed up in later submissions of the same information. Since the

Department found Algoma's database to be reliable, we believe that the

freight expense errors were isolated in nature. Therefore, we will

include the corrected data for the freight expense in our final

calculations. See Algoma's Issues Memo for further discussion of this

issue.

Comment 3: Inclusion of Certain Sales

Petitioners argue that certain sales should be included as part of

the sales database due to a date of sale issue, the details of which

are proprietary.

Algoma contends that the Department should continue to exclude

certain transactions as part of its margin calculation because the

product type and quantity shipped for these sales (under an agreement)

was not fixed until the date of shipment (and invoicing). Algoma states

that these transactions were removed from the original sales tape and

thereafter reported in a separate data file because their dates of sale

(invoice date) fell outside of the contemporaneous reporting window.

Algoma argues that it originally included these sales in its November

21, 1997 sales listing in the belief that they had been made pursuant

to a long-term contract that fixed the material terms of sale (e.g.,

product description, price, and quantity) on the date of initial

agreement between the parties. Algoma alleges, however, that as

demonstrated at verification, the material terms of sale (i.e., the

product description and quantities) were amended several times after

that date.

Algoma maintains that, in accordance with the Department's long-

standing ``date of sale'' methodology, it is improper to use the date

of initial agreement as the date of sale for these

[[Page 2178]]

transactions because the material terms of sale were not established

with finality on that date.

Department's Position: We agree with Algoma. The material terms of

these sales were amended, and the date on which these terms became

fixed (i.e., the date of sale), falls outside of the period of review

(``POR''). Because this issue is not subject to further summarization,

see Algoma's Issues Memo for a more detailed proprietary discussion.

Comment 4: Date of Sale

Petitioners argue that Algoma's date of sale is the order entry

date rather than the invoice date, because, they claim, both price and

quantity terms of sale are fixed on the order entry date for both U.S.

and home market sales. Petitioners maintain that, under Sec. 351.401(i)

of the Department's regulations, the Secretary may use a date of sale

other than the date of invoice if the Secretary is satisfied that an

alternative date more accurately reflects the date on which the

exporter or producer established the material terms of sale.

Petitioners base their contention on a reference in the Department's

verification report to a chart examined at verification in which Algoma

compared the quantity of merchandise ordered to the quantity of

merchandise shipped. The report stated, ``there does not appear to be a

significant difference between the number of pieces shipped and the

number of pieces ordered.'' (Memorandum to the File: Report on the

Sales Verification of Algoma Steel Corporation in the 8/1/96-7/31/97

Administrative Review of the Antidumping Duty Order on Cut-to-Length

Carbon Steel Plate from Canada (May 22, 1998) (Algoma Sales

Verification Report)). Petitioners also cite Stainless Steel Bar from

India: Final Results, 63 FR 3536, 3537 (January 23, 1998), in which the

Department used the purchase order date as the date of sale because no

material changes occurred between the purchase order date and the

invoice date. Petitioners also cite Canned Pineapple Fruit from

Thailand: Final Results, 63 FR 7392, 7394 (February 13, 1998), and

Circular Welded Non-Alloy Steel Pipe from Korea: Final Results, 63 FR

32833, 32836 (June 16, 1998), in which the Department used the contract

date as the date of sale.

Algoma argues that the Department's presumption in favor of using

the invoice date as the date of sale in the preliminary results notice

is justified. Algoma disagrees with petitioners' argument in favor of

the order entry date because it relies exclusively on a statement made

by the Department in the Algoma Sales Verification Report relating to a

chart that Algoma prepared, and it ignores the facts on which the

Department based its conclusion. Algoma asserts that the verification

report also states that the verifiers ``found no discrepancies with

their (Algoma's) date of sale.'' According to Algoma, the data show

that the quantity shipped differs from the quantity ordered on a

regular basis, which is sufficient to sustain the use of invoice date

in accordance with the Department's practice. Algoma cites the preamble

to the Department's regulations, published in the Federal Register on

May 19, 1997, in which the Department stated:

A preliminary agreement on terms, even if reduced to writing, in

an industry where renegotiation is common does not provide any

reliable indication that the terms are truly ``established'' in the

minds of the buyer and seller. This holds even if, for a particular

sale, the terms were not renegotiated.

62 FR 27349.

Algoma concludes that, because the terms of sale, in particular the

quantity shipped, are commonly subject to further negotiation up to the

date of shipment, the Department's use of the invoice date as the date

of sale is justified in this case.

Department's Position: We agree with Algoma. As stated in

Sec. 351.401(i) of the Department's regulations, we normally use the

invoice date as the date of sale. At verification, we examined a chart

comparing the quantity ordered to the quantity shipped/invoiced for a

certain number of sales, and found that the quantity changed between

the order date and the invoice date for a number of sales; see Exhibit

40, page S6506, of the Algoma Sales Verification Report. Therefore, we

have continued to use Algoma's invoice date as the date of sale in

accordance with our normal practice. See Memorandum to the File:

Analysis for Algoma Steel Inc. for the Final Results of the Fourth

Administrative Review, on file in room B-099 of the Commerce

Department.

Comment 5: Imputed Credit

Algoma argues that the Department should include banking fees in

the Canadian dollar-denominated interest rate used to impute credit

expenses for home market sales, even though Algoma did not include them

in its calculations prior to verification. Algoma points out that, at

the outset of verification, it disclosed to the Department that it had

omitted certain banking fees that were paid in connection with the

short-term revolving credit facility from its calculation of the

Canadian dollar short-term interest expense factor. Algoma claims that

page 36 of the annual report submitted as part of its Section A

Response identifies the following bank charges related to short-term

borrowing made during the POR under Algoma's ``revolving credit

facility'' which opened in 1995: an amortized ``issuance cost,''

``annual fees,'' and ``fees determined by the amount of the unused

portion of the facility during the course of a given month.''

Algoma claims that the Department should not consider this

information as ``new'' because Algoma established on the record well

before verification that it incurred such banking fees as part of its

actual total cost of short-term Canadian borrowings under the credit

facility in question. Algoma claims that it identified the total amount

of such ``interest and fees on operating line'' incurred during the

1997 calendar year (overlapping half of the POR) in its first

supplemental questionnaire response, and reconciled the reported amount

of these bank charges to its audited financial statement in the second

supplemental questionnaire response.

Algoma maintains that petitioners were aware of the credit line,

and specifically asked the Department to examine the issue at

verification, and to place the entire credit agreement on the record.

Furthermore, Algoma argues that the information is not ``new'' because

not only is it on the record, but it was examined at verification.

Algoma cites both the Department's sales verification report and cost

verification report in making its claim that the amount of the bank

fees was verified in order to reconcile the reported interest payment

amounts to Algoma's audited financial statements at verification.

Algoma states that the Department examined and verified the bank fees

in the cost verification for six of the twelve months of the POR.

Algoma adds that the Department's normal practice requires it to

include these costs in Algoma's home market credit expenses, and that

not doing so would understate Algoma's actual cost of short-term

borrowing. Algoma cites Certain Cold-Rolled Carbon Steel Plate Products

from Korea; Final Results of Antidumping Duty Administrative Review,

Comment 2, 62 FR 781801 (January 7, 1998), and Large Power Transformers

from Italy; Final Results of Antidumping Duty Administrative Review, 52

FR 46806 (December 10, 1987), where the Department included bank

charges incurred as part of respondent's credit expense calculation.

Algoma also cites Nylon Impression Fabric from Japan; Final Results, 51

FR 15816 (April 28, 1986).

[[Page 2179]]

Petitioners contend that because Algoma's home market credit

expenses failed verification, whether the bank fees are included in

calculating Algoma's home market credit expenses is irrelevant.

Petitioners also dispute Algoma's contention that the information

regarding bank fees was on the record before verification. Petitioners

claim that the information from Algoma's 1996 Annual Report that was

included in Algoma's Section A Response did not include data for six

months of the POR (January 1997 to July 1997). In addition, petitioners

argue that, in its January 29, 1998 supplemental questionnaire

response, Algoma referred to the data as ``interest and other fees on

the operating line'' without detailing the nature of the ``fees.''

Petitioners also argue that the only figure that was reconciled was

Algoma's ``Net Financing Expenses'' for calendar year 1996, and cite

Algoma's Response to the Department's Second Supplemental Questionnaire

(March 20, 1998) at Attachment D-43.

Petitioners contend that the Department neither accepted the

information on the bank fees, nor verified the data during Algoma's

sales verification. See Algoma Sales Verification Report at 15.

Petitioners state that the Department specifically refused to examine

the fees because they constituted untimely new information, and cite

the Department's Analysis Memorandum for Algoma for the Preliminary

Results of the Fourth Administrative Review of Certain Cut-to-Length

Carbon Steel Plate from Canada for the period August 1, 1996--July 31,

1997 (July 10, 1998). Petitioners argue that the fact that the

Department examined the bank fees during the cost verification is of no

consequence, because the fees were examined solely to confirm Algoma's

net financing expenses during the 1996 calendar year, not to confirm

Algoma's short-term interest expenses during the POR (July 31, 1997

through August 1, 1997).

Department's Position: We agree with Algoma. The Department

considers Algoma's revolving credit facility to be short-term

borrowings. Consequently, the banking fees associated with the

revolving credit facility are part of the total cost to Algoma of

short-term Canadian borrowings and therefore, should be included in the

short-term interest rate used to calculate imputed credit expenses.

Although the banking fees were not included in Algoma's credit expense

calculation prior to verification, information pertaining to the nature

of these banking fees was recorded in Algoma's Annual Reports which

Algoma submitted prior to verification. In addition, we examined these

banking fees during verification. Thus, we do not consider the

information pertaining to the banking fees to be ``new'' information.

We have recalculated Algoma's imputed home market credit expenses to

include these banking fees. When we corrected the home market credit

expense, we noted that there were several missing payment dates in

Algoma's sales tape. For these sales, we applied the verified average

number of days between the shipment date and the payment date.

Comment 7: Clerical Errors

Petitioners claim that the Department made three clerical errors in

the preliminary results, and therefore should correct them in the final

results. These errors pertain to the calculation of certain credit

expenses, the deduction for early payments, and the freight movement

calculation. In the home market credit expense calculation, petitioners

claim that the Department omitted billing adjustments, freight revenue,

and other discounts as part of the gross unit price. Petitioners state

that, in the definition statement of the total discounts and rebates in

the model match program, the Department omitted early payments.

Petitioners point out that, in the margin program, the Department

placed the parenthesis in the wrong part of the calculation string for

movement expenses.

Department's Position: We agree with petitioners regarding all

three ministerial errors. We have corrected these errors for the final

results.

Dofasco

Comment 1: Use of ``Partial'' Freight Data

Petitioners argue that, as in the third review, the Department

should reject the actual freight data Dofasco submitted for some of its

sales in favor of the minimum and maximum freight rates to each

destination, which Dofasco has provided for all sales. Petitioner

contends that the Department's practice is to disregard sales

information reported on a selective basis, as stated in Stainless Steel

Wire Rod from Sweden, 63 FR 40449, 40455 (July 29, 1998) (SSWR from

Sweden). Petitioner adds that using such ``partial'' information would

``encourage (respondent) to selectively disclose only that information

which would benefit its position.'' (Final Results of Administrative

Review; Tapered Roller Bearings and Parts Thereof, Finished and

Unfinished From Japan, and Tapered Roller Bearings, Four Inches or Less

in Outside Diameter, and Components Thereof, from Japan, 63 FR 20585,

20591 (April 27, 1998) (TRBs 1998)). Petitioner also states that, if

the Department used this information, there would be no incentive for

respondents to provide complete information (TRBs 1998, citing Nippon

Pillow Block Sales Co., Ltd. and FYH Bearing Units USA, Inc. v. United

States, 903 F. Supp. 89, 95 (CIT 1995) and Persico Pizzamiglio, S.A. v.

United States, No. 92-11-00783, Slip Op. 94-61 at 23 (April 14, 1994)).

Finally, petitioner claims that the potential for manipulation

requires that the Department reject ``selectively disclosed information

* * * even when there is no direct evidence that such manipulation

actually occurred.'' In support, petitioner cites Final Results of

Antidumping Duty Administrative Review, Tapered Roller Bearings, Four

Inches or Less in Diameter, and Components Thereof, from Japan, 59 FR

56035, 56049 (November 10, 1994) (TRBs 1994), Final Results of

Antidumping Duty Administrative Review; Certain Cold-Rolled Carbon

Steel Flat Products from Germany, 60 FR 65264, 65274 (December 19,

1995) (Steel from Germany), and C.F. Koenig & Bauer-Albert AG v. United

States, No. 96-10-02298, Slip Op. 98-83 (CIT 1998) at 6.

Dofasco argues that the Department does not require respondents to

report freight on an actual sales-specific basis, but in many instances

has allowed respondents to report freight using alternate methodologies

when necessary. Dofasco points out that the questionnaire specifically

allows respondents to report freight on something other than an actual

sale-by-sale basis ``when to do otherwise would create a significant

burden because of the manner in which your (the respondent's)

accounting records are maintained.'' Dofasco adds that, in the third

administrative review of this order, the Department allowed respondents

to report estimated freight expenses as long as they were reasonable

and any differences between the estimated amounts and actual freight

charges were minor. Respondent cites Final Results of Antidumping

Administrative Review; Certain Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length Carbon Steel Plate from Canada, 63

FR 12725, 12740 (March 16, 1998) (Third Review Final Results) and Final

Determination of Sales at Less Than Fair Value; Small Diameter Circular

Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from

Italy, 60 FR 31981, 31987 (June 19, 1995).

[[Page 2180]]

Dofasco denies that it has selectively reported actual freight,

arguing that it has been consistently forthcoming with the Department

about its inability to track actual freight for all of its sales.

Dofasco asserts that it has reported actual freight for those carriers

that bill Dofasco through an electronic data interface system, which

enables Dofasco to calculate via computer the actual cost for each coil

shipped to these companies. Because some carriers do not use this

system, Dofasco states, it would be burdensome to report actual freight

for all those carriers not using the system. Furthermore, Dofasco adds,

the Department has verified these facts, and found no discrepancies.

Therefore, petitioners' allegations with respect to ``potential

manipulation'' are misplaced.

Department's Position: We disagree with petitioners. In the third

administrative review, we did not use respondents's actual freight data

because we found that the computerized system it used to bill its

customers for freight was not working properly, and there was nothing

on the record to demonstrate the accuracy of the freight expenses as

reported. See Third Review Final Results, 63 FR at 12739. In the

current review, we verified the accuracy of Dofasco's response

regarding its freight billing system and found no discrepancies. Thus,

we have used Dofasco's reported actual freight expenses for those sales

for which this data was available. Because we verified this expense to

our satisfaction, we do not consider Dofasco's data to be ``selective''

or ``partial,'' nor do we believe that Dofasco attempted to manipulate

the margin outcome by reporting its freight data in the manner that it

did.

We note that in the TRBs cases cited by petitioners, the Department

had reason to believe that the respondents' data was incomplete, unlike

here. In SSWR from Sweden, we found at verification that the respondent

could have reported transaction-specific data, but reported average

figures instead. We therefore rejected the reported average figures in

favor of transaction-specific information. In contrast, we have

concluded that Dofasco has reported transaction-specific data for as

many sales as possible, as stated above. We therefore have not changed

the preliminary results with respect to freight expenses.

Comment 2: EP vs. CEP Sales

Petitioners argue that the Department should treat all sales made

through Dofasco's U.S. subsidiary as constructed export price (CEP)

sales, in accordance with the Department's practice when an affiliate

involved in the sales process as something more than a ``processor of

sales-related documentation'' or a ``communications link.'' In support,

petitioners cite: Final Determination of Sales at Less Than Fair Value;

Stainless Steel Wire Rod from Spain, 63 FR 40391, 40395 (July 29, 1998)

(Stainless Steel Wire Rod from Spain); and Preliminary Results of

Antidumping Duty Administrative Review; Roller Chain Other than Bicycle

from Japan, 63 FR 25457 (May 18, 1998)(Roller Chain from Japan).

Petitioners detail evidence from the proprietary record, specifically

the Department's Report on the Sales Verification of Dofasco Inc. (May

28, 1998) (Dofasco Sales Verification Report), which they claim

demonstrates that Dofasco USA (DUSA) performed sales functions that

render CEP treatment appropriate.

Petitioners point out that, in the Final Results of Antidumping

Duty Administrative Reviews: Certain Cold-Rolled and Corrosion-

Resistant Carbon Steel Flat Products from Korea (Steel from Korea), 63

FR 13170 (March 18, 1998), the Department found that just because the

affiliate's role ``is not autonomous with respect to the sales

process,'' this does not mean that its ``role in the process is

ancillary.'' Thus, petitioners state, even if the Department were to

find that DUSA had no independent sales negotiating authority, that

fact would not be dispositive. Furthermore, petitioners state, the

Department has recently made clear that it will ``consider the sale to

be CEP unless the record demonstrates that the U.S. affiliate's

involvement in making the sale is incidental or ancillary.'' (Steel

from Korea, 63 FR at 13177, 13182-83.) Petitioners conclude that

Dofasco has failed to submit any evidence to support such a finding.

Dofasco argues that the Department correctly determined that

Dofasco properly classified its U.S. sales through DUSA as export price

(EP) sales. Dofasco points out that the Department has made the same

determination in all three previous reviews. As the facts during this

review are almost exactly the same as in the previous reviews, Dofasco

argues, the Department should continue to classify the DUSA sales as EP

sales.

Dofasco cites the preamble to the Department's new regulations,

which states that the Department considers transactions to be EP

whenever: (1) The producer or exporter ships the merchandise directly

to the unaffiliated purchaser without it being introduced into the U.S.

affiliate's inventory; and (2) the affiliated entity acts only as a

processor of documentation and a communication link between the foreign

respondent and the unaffiliated purchaser (62 FR 27296, 27351). Dofasco

maintains that the last factor has been interpreted by the Department

as turning largely upon the extent to which the affiliate is involved

in negotiating the sales, a role which the Department has stated must

be ``incidental or ancillary.'' Steel from Korea at 63 FR 13183.

Furthermore, Dofasco states, the Department has never suggested that

merely signing contracts is sufficient to characterize the U.S.

subsidiary's role as being more than ``incidental or ancillary.''

Rather, the Department has recently elucidated that this threshold is

passed only when the U.S. affiliate is ``substantially involved in the

sales process (e.g., negotiating prices), or if the affiliate ``played

a major role in negotiating and bringing about the sale, from the

bidding stage through the final contract.'' See Roller Chain from

Japan, 63 FR at 25457, and Certain Cut-to-Length Carbon Steel Plate

from Germany, 62 FR 18390, 18391-92 (April 15, 1997), respectively.

Dofasco states that, unlike the respondents in these cases, the

Department consistently has found that DUSA's role in the sales process

is not ``substantial'' or more than ``incidental or ancillary.''

Respondent cites the Dofasco Sales Verification Report at 4. Respondent

argues that petitioners mischaracterized proprietary sections of the

verification report in order to support their position that DUSA's role

in the sales process was substantial enough to warrant CEP treatment.

Dofasco concludes that nothing has changed since the first, second, and

third administrative reviews that should alter the Department's

previous determination that sales through DUSA were EP sales.

Department's Position: We have not changed our preliminary results

with respect to this issue. As we stated in the third review final

results, we do not believe that the criteria for CEP treatment as

stated in Steel from Korea have been met in this case. In that notice,

we explain that CEP treatment is appropriate where certain facts

indicate ``that the subject merchandise is first sold in the United

States by or for the account of the producer or exporter.'' Such a

finding requires that: (1) The merchandise was shipped directly from

the manufacturer to the unaffiliated U.S. customer; (2) this was the

customary commercial channel between the parties; and (3) the function

of the U.S. affiliate is limited to that of a ``processor of sales-

related documentation'' and a ``communications link'' with the

[[Page 2181]]

unrelated U.S. buyer. We also stated that where the factors indicate

that the activities of the U.S. affiliate are ancillary to the sale

(e.g., arranging transportation or customs clearance, and invoicing),

we will treat the transactions as EP sales. Furthermore, when the U.S.

affiliate has more than an incidental involvement in making sales (e.g.

solicits sales, negotiates contracts or prices) or providing customer

support, we treat the transactions as CEP sales. See Third Review Final

Results, discussing Steel from Korea. We do not find that DUSA has more

than an incidental involvement in the sales process.

We agree with petitioners' argument that, pursuant to Steel from

Korea, even if the Department were to find that DUSA had no independent

sales negotiating authority, that fact would not be dispositive that

DUSA's role in the sales process was ancillary. As in Steel from Korea,

we have considered the totality of the evidence regarding Dofasco's

sales process. Unlike in Roller Chain from Japan and Stainless Steel

Wire Rod from Spain, cited by petitioners, we find that the evidence

does not suggest that DUSA's role in the selling process was anything

beyond an ancillary role. In those cases we found that the U.S. selling

agents' involvement in the sales process was extensive when compared to

that of the exporters, and that the majority of selling functions

occurred in the United States. As much of the information regarding

DUSA's selling functions is proprietary, see the Final Results Analysis

Memorandum on file in room B-099 of the Commerce Department.

Finally, we note that petitioners have not presented any new

arguments with respect to this issue, nor is the fact pattern with

respect to sales made through DUSA significantly different from past

reviews. We again verified Dofasco's sales and distribution process,

and found nothing to support petitioners' arguments. Therefore, we have

treated Dofasco's sales to the United States as EP sales in these final

results.

Comment 3: Clerical Error--Movement Expenses

Petitioners argue that, for certain sales, the Department failed to

include, in U.S. movement expenses per unit freight expenses Dofasco

incurred when shipping subject merchandise from a warehouse or

processor to its U.S. customers. For certain sales, Dofasco reported

these freight expenses in the computer field INLFWCU, a variable

petitioners allege the Department failed to include in its calculation

of total movement expenses. Respondents agree with petitioners.

Department's Position: We agree that we failed to account for this

additional freight variable in the calculation, and have made the

necessary correction for the final results of review.

Comment 4: Clerical Error--Freight Expenses

Petitioners claim that, for certain sales, the Department's

computer program incorrectly calculates movement expenses. Petitioner

states that the program is meant to deduct actual freight in lieu of

maximum freight, unless actual freight is set to missing. For certain

observations, however, the program fails to correctly execute this

operation.

Respondent agrees with petitioners, stating that, for both U.S. and

home market variables, Dofasco mistakenly set the actual freight

variables to zero instead of setting them to missing in the computer

program.

Department's Position: We agree, and have revised the computer

program accordingly.

Comment 5: Clerical Error--Packing

Petitioners claim that U.S. packing expenses were twice multiplied

by the rate for conversion to U.S. dollars in the Department's margin

calculation program. Respondent agrees with petitioners.

Department's Position: We agree, and have revised the computer

program accordingly.

CCC

Comment 1: Valuation of Major Input

Petitioners argue that CCC improperly reported the value of steel

substrate purchased from Stelco by reporting transfer prices rather

than market prices, and that the Department should therefore adjust the

value of CCC's steel substrate to reflect market prices. Petitioners

claim that CCC's questionnaire response indicates that CCC purchased

identical substrate from an affiliated and unaffiliated party.

Therefore, petitioners state, section 773(f)(2) of the Act requires the

Department to disregard the transfer price paid for the major input,

and to base the value of the input ``on the information available as to

what the amount would have been if the transaction had occurred between

persons who are not affiliated.'' Petitioners argue that the Department

should therefore adjust the price reported by CCC to reflect the

difference between the transfer and market prices shown on these two

invoices, as it did in Final Determination of Sales at Less Than Fair

Value: Ferrosilicon from Brazil, 61 FR 59411 (November 22, 1996);

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

Atlantic Salmon From Chile (Salmon from Chile), 63 FR 31434 (June 9,

1998); and Final Results of Antidumping Duty Administrative Reviews on

Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts

Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden

and the United Kingdom (AFBs January 1997), 62 FR 2081 (January 15,

1997).

Petitioners claim that the evidence on the record shows that the

substrate CCC purchased from Stelco, an affiliated party, and from a

third, unaffiliated party were identical. Petitioners argue that CCC

has neither explained the differences it claims existed between the

Stelco and third-party substrate, nor cited to any part of the record

where the differences are reflected.

CCC argues that, as stated in its January 29, 1998 questionnaire

response, it does not purchase identical merchandise from Stelco and

from other suppliers. CCC claims that the invoices provided in the

questionnaire response were the only two that CCC could find that would

show the comparability of Stelco and third-party substrate, and argues

that one cannot infer from the two invoices alone that all Stelco

substrate was sold at below-market prices. Therefore, CCC argues, the

Department should continue to use transfer prices to value substrate

purchased by CCC.

CCC argues that a closer examination of the two invoices shows that

Stelco offered CCC an allowance or discount on this purchase and that,

without this discount, the Stelco and the third-party invoice prices

are equal. CCC claims that the Department accepted respondent's

argument that a price differential between transfer price and market

price was due to a verified early payment discount, and continued to

calculate costs using the discounted transfer price even though the

transfer price was lower than the related market price in Final

Determination of Sales at Less Than Fair Value: Porcelain-On-Steel

Cookware from Mexico, 63 FR 38373 (July 16, 1998) (Cookware from

Mexico).

Department's Position: We agree with petitioners, in part, and have

adjusted all transfer prices reported by CCC to reflect market prices.

Sections 773 (f)(2) and (3) of the Act stipulate that major inputs

purchased from affiliated parties may be valued at the highest of

market value, transfer price or the affiliate's cost of

[[Page 2182]]

production. In AFBs January 1997, the Department found that ``in the

case of a transaction between affiliated persons involving a major

input, we will use the highest of the transfer price between the

affiliated parties, the market price between unaffiliated parties, and

the affiliated supplier's cost of producing the major input.'' 62 FR

2081; see also 19 CFR 351.407(b).

CCC has argued that the substrates on the two invoices it provided

are not identical and cannot be compared. It is unclear whether the

differences between the products on the invoices are substantial enough

that they cannot be compared without adjustment. However, assuming the

differences between the merchandise on the two invoices is significant,

it is CCC that provided these invoices in order to substantiate its

claim that its transfer price from its affiliate Stelco was equivalent

to a market price. CCC now attempts to impeach the very comparison of

invoices it urged the Department to make. If the differences between

the merchandise covered by the two invoices were significant enough

that the invoice prices should only have been compared after some

adjustment, then CCC should have quantified the difference or provided

some other means for the Department to adjust for the difference and

make the comparison. See Sec. 351.401(b)(1). If the Department cannot

make this comparison, then there is no evidence on the record to

support CCC's claim that its inputs purchased from Stelco were at or

above market value, and this claim must be rejected. If, on the other

hand, petitioners are correct that there are no differences between the

merchandise on the two invoices which would preclude comparison, then a

comparison of the two shows that prices of the Stelco input are lower

than the price from the unaffiliated supplier.

With regard to CCC's claim that we should use the price of the

input from Stelco because, disregarding a discount Stelco granted, the

Stelco price is the same as the price from the unaffiliated supplier,

we disagree. The Department has long recognized that discounts must be

taken into account in determining what the true price is. For example,

in AFBs January 1997, 62 FR at 2090, we explained that, in identifying

the true starting price, the Department must first adjust the gross

price for any discounts, rebates, or other price adjustments. As

discussed in adjusting our final regulation, the Department must

consider discounts in identifying the ``net outlay of funds by the

purchaser.'' See Antidumping Duties, Countervailing Duties; Final Rule,

62 FR 27296, 27300 (Final Rule) and 19 CFR 351.102 (definition of price

adjustment) and 19 CFR 351.401(c). The same principles apply when

identifying the actual transfer price for the major input rule; such

transfer price must reflect any discounts, rebates or other price

adjustments in order to determine CCC's net outlay of funds for the

input.

CCC's reliance on Cookware from Mexico is misplaced. In that case

the Department clearly stated that it was not accounting for price

adjustments because it could only determine that they had been offered,

and not whether they had actually been granted. By contrast, in the

present case it is clear that Stelco actually granted the discount to

CCC.

Since the final price for the Stelco invoice is less than the final

price on the third-party, market price invoice, we have valued CCC's

steel input for these final results by adjusting CCC's reported

transfer prices to reflect the ratio between the final prices on these

two invoices.

Comment 2: Imputed U.S. Credit

Petitioners argue that the surrogate interest rate used by the

Department to value CCC's U.S. credit expense should be increased by a

premium to reflect CCC's actual borrowing experience in the home

market. Petitioners argue that, in LMI-LaMettali Industriale, S.p.A. v.

United States 912 F.2d 455 (Fed. Cir. 1990) (LMI), the Court ruled that

the surrogate U.S. dollar-denominated interest rate used by the

Department to impute U.S. credit expense must conform with ``commercial

reality.'' Petitioners note that the Department's Final Determination

of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel

Plate from Sweden, 61 FR 15772 (April 9, 1996) explains that

determining whether a surrogate rate conforms with commercial reality

takes into account the many ``varied factors that determine at what

rate a firm can borrow funds, such as the size of the firm, its

creditworthiness, and its relationship with the lending bank.''

Petitioners argue that, based on CCC's home market borrowing history

(as explained in CCC's November 17 and January 30 questionnaire

responses), CCC would not have received the prime rate in the United

States, defined by the International Monetary Fund as the ``(r)ate that

the largest banks charge their most creditworthy business customers on

short-term loans.'' Therefore, petitioners argue that basing CCC's

imputed U.S. credit expenses on the prime rate would not conform with

``commercial reality.'' Petitioners argue that the Department should

add a premium to the average U.S. prime rate and recalculate CCC's

imputed U.S. credit expense accordingly. Petitioners state that in the

Final Determination of Sales at Less Than Fair Value: Oil Country

Tubular Goods from Austria, 60 FR 33555 (June 28, 1995) (OCTG), the

Department used the New York State prime rate plus one percent as a

surrogate rate to impute U.S. credit expenses where the respondent had

no U.S. dollar-denominated borrowings.

Finally, petitioners claim that the Department's calculation of the

average U.S. prime interest rate was erroneous. Petitioners argue that

the calculation should be based on a 360-day year, not a 365-day year.

CCC disagrees that the Department should add a premium to CCC's

surrogate interest rate and that the Department should use the average

U.S. prime rate as a basis upon which to calculate CCC's imputed

credit. CCC notes that the Department's Policy Bulletin 98.2 instructs

the Department to use ``the Federal Reserve's weighted-average data for

commercial and industrial loans maturing between one month and one year

from the time the loan is made,'' rather than the prime rate when a

respondent has no short-term borrowings in the United States. CCC adds

that the Department used the Federal Reserve's weighted-average data

for commercial and industrial loans for CCC in the previous review of

corrosion-resistant steel from Canada. CCC argues that use of the

Federal Reserve's weighted-average data for commercial and industrial

loans would conform with petitioners' demands that the rate used

``comport with `commercial reality,' '' as it was the prime rate's

failure to meet with commercial reality that led the Department to

reject its use in the Policy Bulletin, and adopt a more realistic

average of commercial and industrial loan rates.

CCC states that the Department should also reject petitioners'

suggestion to increase the prime rate by a premium. First, CCC argues

that the premium was derived from CCC's proprietary home market

borrowing rate, and therefore has no bearing on what CCC's rate would

be in the United States. CCC cites LMI and the Department's Policy

Bulletin 98.2, which it claims establishes clear guidelines against the

use of an interest rate in the home market as a surrogate for the

calculation of credit in the U.S. market. Further, CCC argues that OCTG

is factually unique in several ways: (1) It was the exporter's U.S.

sales agent who customarily charged customers an interest rate of prime

plus a one percent premium for late revenue; (2) the rate

[[Page 2183]]

had no connection to interest rates offered to the company in the home

market; and (3) this rate represented the rate commonly used in the

United States at that time. CCC also notes that the Department in OCTG

rejected the possibility of using the home market interest rate.

Department's Position: We agree with CCC. For these final results,

we have used the Federal Reserve's weighted-average data for commercial

and industrial loans, instead of the prime rate, which we used for the

preliminary results.

As discussed in Policy Bulletin 98.2, prior to a 1990 ruling by the

Court of Appeals for the Federal Circuit (CAFC) in LMI, the Department

had a practice of using a respondent's home market borrowing rates to

impute both U.S. and home market credit expenses. In LMI, the CAFC

ruled that the cost of credit ``must be imputed on the basis of usual

and reasonable commercial behavior.'' In ruling on the specific facts

of LMI, the CAFC did set forth certain general principles; it stated

that ``the imputation of credit cost * * * is a reflection of the time

value of money,'' that it ``must correspond to a * * * figure

reasonably calculated to account for such value during the gap period

between delivery and payment,'' and that it should conform with

``commercial reality.''

In developing a consistent, predictable policy establishing a

preferred surrogate U.S. dollar interest rate in all cases where

respondents have no U.S. dollar short-term loans, we have employed

three criteria: (1) The surrogate rate should be reasonable; (2) it

should be readily obtainable and predictable; and (3) it should be a

short-term interest rate actually realized by borrowers in the course

of ``usual commercial behavior'' in the United States. The Policy

Bulletin states that the use of unadjusted home market borrowing rates

to impute credit expenses on U.S. sales does not recognize the effect

of currency changes between date of shipment and date of payment on

repatriating revenue and that therefore, unadjusted home market

borrowing rates are not an accurate measure of the value of the loan

made by the seller to the purchaser if the sale (the loan) is made in

U.S. dollars.

In Steel from Sweden and in Certain Corrosion-Resistant Carbon

Steel Flat Products from Australia; Final Results of Antidumping Duty

Administrative Reviews, 61 FR 14049, 14054 (March 29, 1996), the

Department selected the average short-term lending rates calculated by

the Federal Reserve as surrogate U.S. interest rates. Each quarter, the

Federal Reserve collects data on loans made during the first full week

of the mid-month of each quarter by sampling 340 commercial banks of

all sizes. The sample data are used to estimate the terms of loans

extended during that quarter at all insured commercial banks. These

Federal Reserve rates meet the three criteria discussed above. They

represent a reasonable surrogate for respondents' U.S. dollar borrowing

rates because they are calculated based on a variety of actual dollar

loans to U.S. customers, and because they are readily available to all

interested parties and are easy to obtain. Therefore, we have used the

Federal Reserve's weighted-average data for commercial and industrial

loans maturing between one month and one year from the time the loan is

made to impute credit during the POR for CCC.

We disagree with petitioners' argument that CCC's rate should be

increased by a premium based on home market borrowings. In support of

their claim that the rate should be increased by a premium, petitioners

cite to OCTG. However, the methodology used in OCTG has limited

applicability because it was developed using facts specific to that

particular case. In OCTG, the Department found that the New York prime

rate plus one percent reflected the manner in which the respondent's

related U.S. sales agent measured the time value of late revenue as an

ordinary business practice. Additionally, as stated in the Policy

Bulletin, home market borrowings should not be used to impute U.S.

credit.

We disagree with petitioners' argument that the calculation should

be based on a 360-day year rather than a 365-day year. Petitioners made

no substantive argument in favor of a 360-day year or against a 365-day

year. Because the Department has no policy that would compel such a

change, we have continued to calculate imputed credit based on a 365-

day year.

Comment 3: Allocation of Post-Sale Price Adjustments

Petitioners argue that the Department should not accept CCC's post-

sale price adjustments (PSPAs) in either the home market or the U.S.

market. Petitioners argue that PSPAs must be allocated over only those

sales on which they were incurred in order to qualify as an adjustment

to price in the Department's antidumping calculations, and that CCC did

not comply satisfactorily with the Department's information requests.

Petitioners argue that the Department should reject CCC's claim that

its PSPAs have been reported on a transaction-specific basis.

Petitioners argue that CCC has failed to satisfy its burden to document

and support its entitlement to report PSPAs on an allocated basis. They

claim that in some cases CCC allocated PSPAs on invoices or work orders

regardless of whether the adjustment applied to all transactions

recorded on the invoice or work order. Furthermore, petitioners claim

that CCC has failed to demonstrate that it was not feasible to report

the PSPAs on a transaction-specific basis, and has, in fact, tied some

PSPAs to specific sales transactions. Petitioners maintain that because

CCC was able to report some of its PSPAs on a transaction-specific

basis, CCC could therefore have reported all of its PSPAs in this

manner. Because CCC did not do so, petitioners contend that CCC did not

act to the best of its ability in responding to the Department's

request for information. Petitioners argue that CCC failed to

demonstrate its entitlement to those adjustments and, therefore, the

Department should deny the PSPAs sought by CCC to home market and U.S.

prices based on Timken Co. v. United States, 673 F. Supp. at 513

(Timken) and sections 782(d) and (e) of the Act. Petitioners claim that

section 782(d) of the Act allows the Department to disregard

information submitted by a respondent when it does not comply

satisfactorily with a request for information after being informed of

the deficiency and being provided an opportunity to remedy it.

Petitioners also state that section 782(e) of the Act provides that the

respondent must demonstrate that ``it acted to the best of its ability

in providing the information'' and that ``the information can be used

without undue difficulties.'' Petitioners claim that when a respondent

has improperly allocated PSPAs for home market sales, it is the

Department's practice to disallow all claimed adjustments to price for

those sales, as indicated in: Final Results of Antidumping Duty

Administrative Reviews; Antifriction Bearings (Other than Tapered

Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan,

Singapore, and the United Kingdom (AFBs 1996), 61 FR 66472, 66498

(December 17, 1996); Final Results of Antidumping Duty Administrative

Reviews; Antifriction Bearings (Other than Tapered Roller Bearings) and

Parts Thereof from France, 63 FR 33320 (June 18, 1998) (AFBs 1998); and

TRBs 1998.

Petitioners maintain that the Court's decision in AK Steel Corp.,

et al. v. United States, Court No. 96-05-01312, Slip Op. 98-106 (CIT

July 23, 1998) (AK Steel) to uphold CCC's method of

[[Page 2184]]

reporting PSPAs demonstrates the Court's presumption that allocations

of PSPAs are suspect because of the possible distortion to prices and

dumping margins caused by such allocations. Petitioners argue that the

Court upheld CCC's method of reporting PSPAs only after finding that

documentation obtained at verification allowed the Department to

analyze the details of the allocations to determine whether they were

distortive, and that because no such documentation has been provided in

this review, the Department should not allow CCC's reporting

methodology.

Petitioners claim that the ability to report some, but not all,

PSPAs on a transaction-specific basis creates the potential for

manipulation, and cite the CIT's ruling in Koenig & Bauer-Albert AG v.

United States, Court No. 96-10-02298, Slip. Op. 98-83, that the

Department may deny favorable adjustments sought by a respondent based

not only on actual evidence of price manipulation, but also on the

potential for manipulation. Petitioners also cite Steel from Germany

and Tapered Roller Bearings, Four Inches or Less in Diameter, and

Components Thereof, from Japan, 59 FR 56035 (November 10, 1994) to this

effect. Petitioners assert that, for some customers, CCC applied

adjustments across all sales (including subject and non-subject

merchandise) when they could only tie the credit or debit note to a

particular customer. Petitioners claim that this reporting methodology

has increased the potential for distortion.

Petitioners claim that the Department's new regulations (see Final

Rule, 62 FR 27296) concerning allocated PSPAs are contrary to the

Department's longstanding practice and the URAA which, petitioners

state, nowhere permits respondents to report inaccurate prices.

However, petitioners argue that, even under its new regulations, the

Department must continue to deny CCC its claimed PSPAs.

Petitioners claim that an allocation of a PSPA over several sales

or invoices could distort the prices if the sales covered were of

different control numbers (CONNUMs) or were made in different months.

In such a situation, the prices of the sales receiving their share of

the allocated credit would not be weight-averaged in calculating normal

value for a particular month. Thus, all sales that receive an

allocation of credit would have an incorrect gross unit price, which

will in turn distort the dumping margin. Petitioners argue that because

each of the adjustments is a given percentage of the unit price, all

those sales which have had the adjustment allocated to them, even

though they were not in the group of sales to which the adjustment is

correctly attributed, have been modified by that percentage.

Petitioners maintain that the potential for distortion by allowing

credit to be allocated over sales with different CONNUMS or months of

sale is present in CCC's case as well. Petitioners argue that the

criteria applied in AFBs 1998 is flawed because it puts the burden on

the petitioners to prove the existence of distortions.

CCC argues that its reported PSPAs should again be accepted by the

Department as they were in the second and third administrative reviews

because they are allocated as specifically as possible and are not

distortive. CCC notes that the Department rejected petitioners'

arguments concerning CCC's PSPAs in the second and third administrative

reviews. CCC states that the Department verified CCC's methodology in

the second administrative review and found that CCC applied its PSPAs

using the most precise methodology possible, and in a manner not

unreasonably distortive.

CCC disagrees with petitioners' assertion that CCC never explained

why it was able in some instances to tie credit and debit notes to

specific invoices and work orders, and in others it was not. CCC notes

that it stated in its November 17, 1997 questionnaire response, and its

January 29, 1998 and March 23, 1998 supplemental questionnaire

responses, that in instances where a credit or debit note is allocated

over all sales to a customer rather than to a specific invoice or work-

order, it is because the credit or debit note only referenced a

customer and did not reference a work order or invoice. CCC maintains

that its PSPAs are transaction-specific, stating that when a specific

credit or debit note was applied to more than one invoice and/or work

order, it was because the credit or debit note applied to those

invoices and/or work orders, and that the information available to CCC

on the credit or debit note permitted no more specific allocation. CCC

cites Tapered Roller Bearings and Parts Thereof, Finished and

Unfinished, from Japan and Tapered Roller Bearings, Four Inches or Less

in Outside Diameter and Components Thereof, from Japan, 63 FR 2558

(January 15, 1998) as an instance in which the Department accepted

respondent's explanations of why more specific reporting was not

possible as evidence of fact.

CCC maintains that there is no evidence, as petitioners allege,

that CCC is attempting to manipulate that data, and that the record

evidence such as the number of positive adjustments in the home market

and negative adjustments in the U.S. market shows that, on the

contrary, CCC is not trying to manipulate the data. CCC cites the

Department's regulations at Sec. 351.401(g)(1) as stating that the

Department ``may consider allocated expenses and PSPAs when

transaction-specific reporting is not feasible provided (that) * * *

the allocation method does not cause inaccuracies or distortions' and

at Sec. 351.401(g)(3) as stating that ``(i)n determining the

feasibility of transaction-specific reporting or whether an allocation

is calculated on as specific a basis as is feasible, the Secretary will

take into account the records maintained by the party in question in

the ordinary course of business.''

CCC argues that the Department's decision to accept CCC's claimed

PSPAs is consistent with its decisions in numerous other cases,

including AFBs 1998, and Certain Cut-To-Length Carbon Steel Plate From

Brazil: Final Results of Antidumping Duty Administrative Review, 63 FR

12744 (March 16, 1998).

CCC disagrees that the Court in AK Steel upheld the Department's

acceptance of the adjustments only after finding that the documentation

obtained at verification allowed the Department to analyze the details

of the allocations.

Furthermore, CCC argues that such argumentation is moot because it

submitted all of the requested documentation in this review, and

because a verification was not conducted. CCC states that the

Department's methodology was upheld in The Timken Co. v. United States,

Court No. 97-04-00562, Slip. Op. 98-92 (CIT July 2, 1998) (Timken

1998). CCC also disagrees with petitioners that the Department's

current practice is at odds with the URAA, stating that the Department

noted in AK Steel that the URAA reaffirmed the Department's practice of

allowing allocated post-sale PSPAs. CCC argues that in the Timken 1998

case, the Department stated that (1) post-URAA law directs it to accept

information that may not have met its previous requirements and that

(2) it had determined, based in part on previous verifications, that

CCC was incapable of providing data on a transaction-specific basis and

that CCC's reported data was reliable. CCC concludes that, based on

evidence on the record in this proceeding as well as the precedents in

this proceeding and the law, the Department should accept CCC's PSPAs.

Department's Position: We agree with CCC. In light of the

Department's determinations in recent cases and the

[[Page 2185]]

facts on the record, we accept CCC's price adjustments.

Section 351.401(c) of the Department's regulations states that the

Department, ``(i)n calculating export price, constructed export price,

and normal value (where normal value is based on price), will use a

price that is net of any price adjustment, as defined in

Sec. 351.102(b), that is reasonably attributable to the subject

merchandise or the foreign like product (whichever is applicable).''

PSPAs are defined in the regulations at Sec. 351.102(b) as ``any change

in the price charged for subject merchandise or the foreign like

product, such as discounts, rebates and post-sale PSPAs, that are

reflected in the purchaser's net outlay.''

With regard to the fact that CCC allocated these adjustments, we

note that Sec. 351.401(g)(1) of the Department's regulations directs us

to ``consider allocated expenses and PSPAs when transaction-specific

reporting is not feasible, provided (we are) satisfied that the

allocation method used does not cause inaccuracies or distortions.''

This policy has been upheld in Timken 1998. Although CCC allocated

price adjustments on a customer invoice- or work order-specific basis,

we determine that CCC acted to the best of its ability in reporting

this information. While the Department stated in Final Rule 62 FR at

27344 that respondents should not be ``allowed to eliminate dumping

margins by providing PSPAs `after the fact,' '' there is no evidence on

the record in these reviews that demonstrates that this is occurring.

In recent AFBs cases, we addressed the relevance of Torrington Co.

v. United States, 82 F.3d 1039, 1047-51 (Fed. Circ 1996) (Torrington

I), to the allocation of adjustments. We noted that, while the CAFC in

its decision in Torrington I questioned whether PSPAs constituted

expenses (see Torrington I at n.15), the Court maintained that, if the

adjustments were expenses, they had to be treated as direct selling

expenses. Significantly, ``the CAFC did not find that such PSPAs could

not be based on allocations'' (AFBs October 1997 62 FR at 54050).

We have not found CCC's allocation methodologies to be unreasonably

distortive. During the POR, CCC granted credit or debit notes to

certain customers. CCC calculated adjustment factors by dividing the

total price adjustments paid to a given customer by the total POR sales

to that customer. CCC grants these price adjustments to customers in

two ways: (1) On the basis of their overall sales to the particular

customer; or, (2) over a specific invoice to a customer.

Where CCC granted the price adjustment to a customer on the basis

of its overall sales, then there is no distortion in attributing the

adjustment to the sales on which it was earned. See, Final Rule, 62 FR

at 27347 and Smith Corona, 713 F.2d at 1580.

Where CCC granted the price adjustment on an invoice, CCC has

claimed that it cannot tie the credit/debit note to the particular

invoice. Therefore, it has allocated such notes by customer. First,

where a price adjustment is granted on an entire invoice, it is

appropriate to attribute the amount of the adjustment to all

merchandise on the invoice. Where an invoice covers several articles of

merchandise, an adjustment granted on the entire invoice cannot be tied

to any specific article.

Further, where a respondent has acted to the best of its ability,

and cannot provide information about adjustments on a basis more narrow

than customer-specific allocations, the Department has concluded that

such an allocation may be reasonable. See e.g., AFBs January 1997, at

2096 (comment 9).

We disagree with petitioner's interpretation of the applicability

of section 782(d) and 782(e) of the Act to CCC's reporting methodology.

In explaining why it was not able to tie credit notes to individual

transactions, CCC has complied satisfactorily with the request for that

information. Thus, there is no longer a deficiency in CCC's data. CCC

also demonstrated that ``it acted to the best of its ability in

providing the information.'' Lastly, the information can clearly be

used ``without undue difficulties.''

We agree with petitioners that the burden lies with respondents to

place necessary information on the record. It is the responsibility of

the respondent to demonstrate that its methodology is not unreasonably

inaccurate or distortive. However, we believe that CCC has met that

burden with the explanations provided in their submissions for this

review period, and through verification of sales made in the second

administrative review. CCC has stated that adjustments are allocated

across the invoices, work orders, or customers to which they apply, and

that it cannot report adjustments on a more specific basis. There is

nothing on the record to indicate that either of these statements is

not based in fact.

With regards to CCC's allocations of these price adjustments over

nonsubject merchandise, we have in the past accepted allocations over

nonsubject merchandise as provided for in 19 CFR 351.401(g)(4). First,

if a respondent grants and reports a price adjustment as a fixed

percentage of the sales to which it pertains, the fact that this pool

of sales may include non-scope merchandise does not distort the amount

of the adjustment the respondent granted and reported on sales of

subject merchandise because the same adjustment percentage applied to

both scope and non-scope merchandise. Second, with respect to CCC's

price adjustments granted on invoices, CCC's in-scope and out-of-scope

merchandise is sufficiently similar in terms of its value, physical

characteristics, and the manner in which it is sold that we cannot

presume the adjustments would be granted disproportionately between the

two. Consequently, even if an invoice covered out-of-scope merchandise,

CCC's allocation is still reasonable and not distortive. See Final

Rule, 62 FR at 27348 (May 19, 1997).

We disagree with petitioners argument that the Court's decision in

AK Steel upholding CCC's method of reporting PSPAs demonstrates the

Court's presumption that allocations of PSPAs are suspect because of

the possible distortion to prices and dumping margins caused by such

allocations. In AK Steel, the Court upheld the Department's finding

that CCC's allocation of the credit note across sales made pursuant to

the work-order identified on the form was sufficiently specific, and

that based on the facts on the record, a more specific methodology was

not possible. In this review we again conclude, based on the

information on the record, that CCC's allocation of the credit note

across sales made pursuant to the work-order identified on the form was

sufficiently specific.

The Court in AK Steel also disagreed with plaintiff's argument that

the flaw in CCC's allocation methodology caused it to report all sales

involved incorrectly. Plaintiffs in AK Steel claimed there that the

methodology used by CCC had an averaging effect on prices, i.e., the

transactions that did not involve the coil received price reductions

when there was in fact no reduction in price, and the transaction that

did involve the coil did not receive the full amount of the credit.

The Court, however, found plaintiffs' arguments unpersuasive and

agreed with the Department that CCC's PSPA methodology was acceptable

under the circumstances.

We disagree with petitioners' claim that because CCC's allocations

were not verified in this review, they are not acceptable.

The fact that CCC was not verified in this review does not require

an adverse inference in this case. Furthermore, we

[[Page 2186]]

found at verification during the second review that CCC's methodology

was reasonable and not distortive, and that CCC's reporting was as

specific as possible. Since CCC's reporting methodology is the same as

it has been in the past, we are accepting CCC's allocations. This

concurs with the Court's ruling in Timken that the Department may

determine, based in part on institutional knowledge attained in

previous verifications, that a respondent is incapable of providing

data on a transaction-specific basis, and that its data is reliable.

We find that CCC's allocation methodologies are not unreasonably

distortive, nor are they potentially distortive, as we are satisfied

that each adjustment was granted in proportion to the value of each

sale to which it applied.

Comment 4: Currency Conversion Error

Petitioners note that the Department made a currency conversion

error in calculating PACKINGU and, as a result, in the calculation of

CVPROFIT, TOTCV and FUPDOL.

Department's Position: We agree with petitioners and have corrected

the currency conversion accordingly.

Forsyth

Comment 1: Adverse Facts Available

Forsyth claims that the Department's decision to assign the margin

based on total adverse FA did not reflect the level-of-trade

information that Forsyth provided on the record, and did not take into

account any meaningful consideration of either Forsyth's ability to

provide corporate sales-specific data on a large number of small

transactions or Forsyth's request that the Department conduct

verification. Forsyth claims that the Department's rejection of

Forsyth's level-of-trade argument, which characterized Forsyth's

distribution division services as product-related rather than sales-

related, is not supported by the record. Forsyth claims that its

distribution division services are intimately linked to the ability of

those divisions to sell products to a unique class of customers.

Petitioners argue that the Department correctly applied adverse

facts available since Forsyth repeatedly refused to report its

distribution division sales. Petitioners argue that the Department only

excludes home market sales from a respondent's reporting requirements

due to level of trade differences, if ever, in the context of

downstream sales, and that Forsyth's distribution division sales are

not downstream sales. Petitioners cite Certain Cut-to-Length Carbon

Steel Plate From Brazil: Final Results of Antidumping Duty

Administrative Review, 62 FR 18486, 18491 (April 15, 1997).

While petitioners claim that the Department's level-of-trade

analysis was unnecessary, since all home market sales were not

reported, they argue that record evidence supports the Department's

level-of-trade determination. They cite section 773(a)(7)(A) of the Act

and Sec. 351.412 of the Department's regulations to argue that a

difference in level of trade can only exist where there is a difference

in selling functions. Petitioners further cite SSWR from Sweden at

40455, which states that the burden is on respondent to demonstrate

that its categorizations of level of trade are correct.

Department's Position: We agree with petitioners. Forsyth failed to

report a majority of its home market sales of subject merchandise and

did not prove a difference in level of trade between its U.S. sales and

its home market distribution division sales. We have thus continued to

base Forsyth's antidumping duty margin on adverse facts available. See

``Facts Available'' section of this notice, and Certain Corrosion-

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

Steel Plate from Canada: Preliminary Results of Antidumping Duty

Administrative Reviews and Intent to Revoke in-Part, 63 FR 37320, 37327

(July 10, 1998).

Stelco

Comment 1: The Time Frame for Making a Request for Revocation

Petitioners argue that the Department should deny Stelco's request

for revocation since Stelco did not file its request for revocation

during the anniversary month of the publication of the antidumping

order, as required by Sec. 351.222(e) of the Department's regulations.

Petitioners argue that Sec. 351.222(f) allows the Department to

consider such a request only if the request is timely.

Petitioners argue that Samsung Elec. Co. v. United States

(Samsung), 946 F. Supp. 5, 8 (CIT 1996) establishes the obligation to

request revocation during the anniversary month as a ``mandatory,

bright line requirement.'' (Emphasis added by petitioners.) Petitioners

note that not only did Stelco fail to make its request in a timely

fashion, but that it also failed to request an extension or provide any

explanation for its failure to meet the statutory deadline for a

revocation request. Therefore, since Stelco failed to pass the bright

line test established in Samsung, petitioners argue that the Department

should deny Stelco's request for revocation.

Petitioners point out that the Department highlighted the

importance of submitting timely requests in Electrolytic Manganese

Dioxide from Japan; Final Results of Antidumping Duty Administrative

Review, 58 FR 28551 (May 14, 1993) (EMD). In EMD, petitioners failed to

file a timely cost of production (COP) allegation because the

Department had failed to process their administrative protective order

(APO) application in a timely fashion. Although the Department

acknowledged the delay in processing the petitioners' APO applications,

the Department refused to consider the petitioners' untimely COP

allegation because the petitioners could have preserved their right to

submit a timely COP allegation by requesting an extension of the

regulatory deadline. Since petitioners elected not to request an

extension of the deadline for filing a COP allegation, the Department

did not examine the untimely allegation, but merely enforced the

regulatory deadlines. Petitioners conclude that the Department should

reject Stelco's request for revocation as untimely just as it rejected

petitioners' cost allegation in the EMD case.

Petitioners note that Stelco contends in its June 12, 1998

submission that the Department considered an untimely request for

revocation on the part of Frutopic, a respondent in Frozen Concentrated

Orange Juice from Brazil; Final Results and Termination in Part of

Antidumping Duty Administrative Review; Revocation in Part of the

Antidumping Duty Order, 56 FR 52510 (October 21, 1991) (Orange Juice).

Stelco contends that the untimely request was considered because it was

filed only four days after the regulatory deadline. Petitioners point

out, on the contrary, that Frutopic filed an extension request on the

last day of the anniversary month in question, explained why it needed

the extension, and was granted an ``explicit extension of time to

submit the revocation request.'' See, Orange Juice, 56 FR 52510

(October 21, 1991). Petitioners further point out that Frutopic in

effect demonstrated ``good cause'' when requesting its extension by

explaining in detail why it needed one, even though the regulations

explicitly allowing extensions for ``good cause'' was not introduced

until 1997.

Petitioners argue that the necessity of showing ``good cause'' to

obtain an extension under Sec. 351.302(b) is not a toothless

requirement. Petitioners point out that in Stainless Steel Bar from

India; Final Results of Antidumping Duty Administrative Review, 63 FR

[[Page 2187]]

13622 (March 20, 1998), Mukand, the respondent, requested a one-day

extension to file its case brief on the day the brief was due.

Petitioners note that the Department was not satisfied with Mukand's

explanation that it was not able to file the brief in a timely fashion

due to ``technical difficulties'' and requested and received a more

extensive explanation before granting the extension. Petitioners argue

that the Department should not hold Stelco to a lesser standard for

requesting a revocation than it held Mukand for filing a case brief.

Finally, petitioners contend that Stelco's September 8, 1998

request for revocation should not be considered an ``amendment'' to

Stelco's August 29, 1997 request for an administrative review.

Petitioners point out that the Department's regulations [no cite given]

allow a timely revocation request to be considered to include a request

for administrative review, but there is no similar provision allowing a

request for review to automatically include a revocation request.

Therefore, petitioners contend that the Department cannot ignore

the time limits imposed by its own regulations. Since Stelco did not

comply with the deadlines for requesting a revocation in accordance

with Sec. 351.222(e) or requesting an extension in accordance with

Sec. 351.302(b) of the Department's regulations, petitioners argue that

the Department should reject Stelco's untimely request for a

revocation.

Stelco argues that both the antidumping statute and the

Department's regulations are silent as to the time frame for accepting

requests for revocation. Stelco notes that section 751(d)(1) of the

Act, the only relevant statutory provision, states: ``the

administrative authority may revoke, in whole, or in part, a

countervailing duty or antidumping duty order for finding * * * after a

review under subsection (a) or (b) of this section.'' Therefore, Stelco

argues that Congress did not specify any procedure, or identify any

criteria that must be considered, other than conducting a review, in

determining whether to revoke a particular antidumping duty order.

Stelco claims that the regulations are also silent as to the issue

of how the Department should handle a revocation request made outside

of the anniversary month. They note that Sec. 351.222(e)(1) of the

Department's regulations states: ``During the third and subsequent

anniversary months of the publication of the antidumping order or

suspension of an antidumping investigation, an exporter or producer may

request in writing that the Secretary revoke an order or terminate a

suspended investigation.'' Stelco argues that section provides the

month within which an exporter or producer may choose to request

revocation, and is silent as to how revocation requests received during

other months should be handled. Stelco notes that there are no

requirements in the regulations that the Department reject an untimely

request for revocation.

Stelco argues that the Department has discretion to accept an

untimely revocation request. It notes that Samsung states that

``Commerce has not routinely accepted revocation requests under 19 CFR

353.23 [now 19 CFR 351.222] after the regulatory deadline'' Samsung,

946 F.Supp. at 9 (emphasis added), and interprets this passage to

indicate that on some occasions the Department does accept late

requests for revocation.

Stelco argues that the following cases demonstrate that the

Department has discretion to accept untimely requests for revocation:

Certain Fresh Cut Flowers from Colombia; Final Results of Antidumping

Duty Administrative Reviews, 61 FR 42833, 42863 (August 19, 1996), in

which the Department declined to revoke not because the request was

untimely (emphasis added by Stelco) but because the respondent failed

to meet all substantive criteria for revocation; Polyethylene

Terephthalate Film from Korea: Preliminary Results of Antidumping duty

Administrative Review, Intent to Revoke the Order in Part and

Termination in Part, 61 FR 36032, 36033 (July 9, 1996), in which the

Department permitted the respondent to amend its timely revocation

request one year after making the original request; EMDs, in which

Stelco claims that the Department pointed out that its regulatory

deadline ``is a discretionary, not a mandatory, deadline'' (emphasis

added by Stelco) (see EMDs, 58 FR 2855, 28553 (May 14, 1993).

Finally, Stelco notes that petitioners' contention that the

Department should reject Stelco's request for revocation rests on

procedural technicalities, without providing any substantive factors

which the Department should weigh in deciding whether to accept the

request for consideration. Stelco notes that the request for revocation

was submitted five working days late, and did not pose an

administrative burden since it was submitted well before the

publication of the notice of initiation. Stelco further notes that

petitioners did not raise any objections to the timeliness of the

revocation request until June 5, 1998, nine months after the revocation

was made.

Department's Position: We disagree with petitioners that the

Department should automatically deny Stelco's request for a revocation

solely on the basis that the request for revocation was filed one week

after the end of the anniversary month.

Petitioners argue that Samsung established the obligation to

request revocation during the anniversary month as a ``mandatory,

bright line requirement'' without distinguishing between the facts in

the Samsung litigation and in the current review. However, the Samsung

case involved a revocation request which was four-and-one-half years

late. The underlying rationale for the Court's decision was based on

administrative efficiency. Samsung states ``(t)he burden placed on

Commerce by the submission of factual information after a deadline is

relatively light compared to the administrative burden imposed on

Commerce by an untimely request for revocation.'' The Court goes on to

note that in response to a request for revocation, Commerce must

initiate and conduct an entire investigation and that ``(i)f the

plaintiff could command Commerce to conduct such an investigation at

its whim rather than only once per year, Commerce's administrative

efficiency would be adversely affected.''

Stelco's situation is clearly distinguished from the plaintiff's in

Samsung. Unlike the situation in Samsung, the reviews of this order

have been conducted in a timely fashion. At the time of the initiation

of this fourth review, Stelco had established a history of a zero and a

de minimis margin in the second and third reviews. Both the Department

and petitioners were, and had been, aware of that history, and thus

were aware that Stelco could be eligible for revocation. Stelco amended

its request for review to include a request for revocation five working

days, not four-and-one-half years, after a timely request for review.

The amendment was accepted by the Department and its timeliness was not

even questioned by petitioners until nine months after initiation

(Initiation of Antidumping and Countervailing Duty Administrative

Reviews and Requests for Revocation in Part, 62 FR 50292, (September

25, 1998)). On July 10, 1998, the Department issued its preliminary

results of review, noting that Stelco made a request for revocation in

an amendment to its request for review on September 8, 1998. See

Preliminary Results, 63 FR at 37321. In that notice, we set forth the

arguments and record evidence concerning Stelco's revocation and

expressed our intention to revoke the

[[Page 2188]]

order with respect to Stelco if the preliminary findings were upheld in

the final results of review (Preliminary Results at 37321).

Consequently, by initiating the review without rejecting the

untimeliness of Stelco's request for revocation, and by giving full

consideration to Stelco's request in the preliminary results of review,

the Department effectively granted Stelco an extension of its deadline

to file its request for revocation as permitted under 19 CFR

351.302(b). In addition, because Stelco's request for revocation was

filed well before the review was initiated, it did not impose an

additional burden on the conduct of the administrative review and

petitioners were not deprived of effective notification of Stelco's

request. Finally, the fairness of considering Stelco's untimely request

for revocation in the face of two years of de minimis margins,

outweighs the burden imposed by Stelco's untimely and unopposed request

for revocation.

We disagree with Stelco's contention that both the antidumping

statute and the Department regulations are silent as to the time for

accepting requests for revocation. Section 351.222 of the Department's

regulations clearly specifies that a producer or exporter may request

revocation during the ``third and subsequent annual anniversary months

of the publication of the antidumping order * * *'' (Final Rule, 62 FR

27296 (May 19, 1997).) Section 351.222(f) reinforces the importance of

the timeliness of the request for revocation by stating: ``(u)pon

receipt of a timely request for revocation * * *'' (Final Rule 62 FR at

27400). Samsung further argues that, ``even if the regulation does not

provide a bright line requirement as to the year of filing, it still

provides a bright line test as to the month of filing and Commerce also

would retain discretion to discount stale information.'' Therefore,

both the Department's regulations and practice have established the

anniversary month as the time period in which to file a request for

revocation. In this instance, however, the Department has effectively

granted an extension by accepting Stelco's amended request for review.

Comment 2: The Merits of Stelco's Request for Revocation

Petitioners argue that if the Department considers Stelco's request

for revocation, it should deny the request on the merits of its case.

Petitioners claim that Stelco cannot demonstrate that it is not likely

to sell the subject merchandise at less than NV in the future as

required by section 351(b)(2)(ii) of the Department's regulations.

Petitioners allege that before the Department can conclude that

Stelco is not likely to dump if the order is revoked, Stelco must show

that it can successfully export normal commercial quantities without

resorting to dumping. Petitioners note that the preamble to the

Department's final regulations states: the underlying assumption behind

a revocation based on the absence of dumping or countervailable

subsidization is that a respondent, by engaging in fair trade for a

specified period of time, has demonstrated that it will not resume its

unfair trade practice following the revocation of an order. If the

respondent is not selling in commercial quantities characteristic of

that company for the duration of the specified period, petitioners

argue, this assumption becomes weaker. (See Final Rule, 62 FR 27296,

27326 (May 19, 1997).)

Petitioners additionally point out that Sec. 351.222(d)(1) of the

Department's regulations requires that ``(B)efore revoking an order * *

*, the Secretary must be satisfied that, during each of the three * * *

years, there were exports to the United States in commercial quantities

of the subject merchandise to which a revocation * * * will apply.''

(See Final Rule, 62 FR 27296, 27400 (May 19, 1997).) Petitioners

contend that Stelco cannot demonstrate that it is not likely to resume

dumping in accordance with this regulation because it cannot

demonstrate that it made sales in commercial quantities during each of

the past three years. Petitioners have provided proprietary charts

demonstrating the volume and value of the subject merchandise sold in

the United States during each of the four administrative reviews which

quantify the extreme decline in Stelco's sales since the original

investigation.

Petitioners also note that the Department has refused to revoke an

antidumping duty order with respect to a particular respondent because

that respondent's U.S. sales of the subject merchandise fell

substantially after the imposition of the antidumping duty order. (See

Brass Sheet and Strip from Germany; Final Results of Antidumping Duty

Administrative Review and Determination Not to Revoke in Part (BSS

Germany), 61 FR 49727, 49731 (September 23, 1996) and Pure Magnesium

from Canada; Preliminary Results of Antidumping Administrative Review

and Notice of Intent not to Revoke Order in Part (Pure Magnesium), 63

FR 26147 (May 12, 1998).)

Petitioners point out that the Department's memoranda to the file

show that the Bureau of Labor Statistics producer price index (BLS

index) for carbon steel plate dropped by 3.2 percent from September to

October of this year, and the Statistics Canada producer price index

for carbon steel sheet, strip, and plate dropped 2 percent from August

to September of this year and remained at a depressed level in October.

Petitioners add that this weakening in both the U.S. and Canadian

markets occurred just as Stelco is reportedly completing a substantial

upgrade of its plate mill that will double its current plate production

capacity. Petitioners cite a Calgary Herald newspaper article

describing the project (``Stelco to Revamp Main Hamilton Mill,''

Calgary Herald at D5 (March 19, 1997).) Petitioners claim that Stelco's

doubling of capacity at a time when U.S. and Canadian prices are

falling places pressure on Stelco to dump plate in the U.S. market.

Thus, petitioners argue, revocation of the order would make resumed

dumping likely.

Petitioners claim that Stelco cannot demonstrate that it is not

likely to resume dumping in the future based on the information which

is currently on the record in the instant administrative review.

Consequently, petitioners contend that the Department must solicit

information from petitioners and Stelco concerning: (1) The total

quantity by weight and by value and numbers of Stelco's U.S. plate

sales for the second and third review periods and the period for the

initial investigation; (2) currency movements between the U.S. dollar

and the Canadian dollar; and (3) conditions and trends in the U.S. and

Canadian steel industries.

Stelco disputes petitioners' contention that it did not import

``normal commercial quantities'' over the past three successive review

periods. Stelco claims that each and every one of its sales made after

the imposition of the antidumping order were ``bona fide''

transactions.

Stelco contends that petitioners' argument that the Department must

deny Stelco's revocation request because it did not import ``normal

commercial quantities'' over the past three successive review periods

is incorrect for two reasons. First, Stelco contends that the

Department has never defined ``normal commercial quantities'' and has

held commercial quantities to constitute as little as a single shipment

(See BSS Germany). Second, Stelco argues that a decrease in the volume

of merchandise following the imposition of an antidumping duty order is

relevant only in determining whether a respondent is able to compete in

the

[[Page 2189]]

U.S. market without dumping, and does not automatically require the

Department to reject a revocation request. Stelco argues that the

Department's examination of a respondent's ``ability to compete in the

U.S. market without dumping'' is only one factor in a multi-factor

{revocation} analysis, including the ``respondent's prices and margins

in the preceding periods * * *, the conditions and trends in the

domestic and home market industries, (and) currency movements.'' (See

Brass Sheet and Strip from Canada: Preliminary Results of Antidumping

Duty Administrative Review and Notice of Intent to Revoke Order in

Part, 63 FR 6519, (February 9, 1998) (BSS Canada); BSS Germany, and

Pure Magnesium.

Stelco argues that the Department has often noted that a

respondent's lack of dumping over the course of three years is

``generally predictive of future behavior.'' (See Pure Magnesium, 63 FR

26147, 26149 (May 12, 1998).) However, Stelco admits that in some prior

cases, the Department has also examined other factors when determining

the likelihood of future dumping, such as: (1) Conditions and trends in

the domestic and home market industries, (2) currency movements, and

(3) the ability of a respondent to compete in the U.S. market without

dumping. Stelco argues that the record supports its contention that it

is unlikely to resume dumping in the future.

Stelco contends that factual information and forecasts by industry

analysis on the record demonstrates unequivocally strong demand in the

U.S. and Canadian markets eliminating any economic reason for Stelco to

sell the subject merchandise at depressed prices in the U.S. market.

Stelco also argues that exchange rate information on the record

indicates that the Canadian dollar has been stable or depreciating,

thereby making it unlikely that Stelco will sell merchandise to the

U.S. at dumped prices.

Finally, Stelco argues that its recent pricing trends (i.e. its

three-year history of not dumping), which is also on the record,

indicate that Stelco is able to compete in the U.S. market without

selling at dumped prices.

Additional comments and information regarding the likelihood of

future dumping by Stelco were added to the record on December 4 and

December 9, 1998. See ``Determination Not to Revoke,'' above.

Department's Position: We agree with petitioners that Stelco has

not sold subject merchandise in commercial quantities at not less than

normal value for three consecutive years, as required by

Sec. 351.222(b)(2)(i) and (d)(1) of the Department's regulations.

Therefore, we are not revoking the antidumping order on steel plate

with respect to Stelco. For further details, see the ``Determination

Not to Revoke'' section above.

Stelco's argument that, in BSS Germany, the Department determined a

single sale to be in commercial quantities is not determinative in the

instant case. First, the determination of what constitutes commercial

quantities must be made on a case-specific basis. Here, a single sale

of only 36 tons of steel plate is so insignificant in comparison with

the volume of sales prior to the imposition of the antidumping order,

as well as in comparison with subsequent review periods, as to fail to

constitute a commercial quantity. Second, the determination in BSS

Germany was based on a finding of ``likelihood'' of resumed dumping,

and not on a finding that the company did not have three consecutive

years of sales in commercial quantities at not less than NV.

Stelco has argued that the Department examines a number of items in

determining whether to revoke an antidumping order. However,

respondents must meet the threshold criterion of three consecutive

years of sales in commercial quantities at not less than NV in order to

be eligible for revocation. When that criterion has been met, and the

record contains evidence regarding the likelihood of resumption of

dumping, then the Department looks to additional indicators, such as

the condition of the U.S. and domestic markets. See BSS Germany and BSS

Canada. As noted above, this additional step was not necessary in this

case.

Because Stelco is ineligible for revocation under

Sec. 351.222(b)(2)(i), based on the fact that it has not had three

consecutive years of sales in commercial quantities at not less than

NV, we need not address comments regarding U.S. and Canadian market

conditions, or Stelco's planned mill expansion.

Regarding Stelco's request for revocation with respect to

corrosion-resistant steel, we note that, in the last two administrative

reviews, we determined that Stelco sold corrosion-resistant steel at

less than NV. See Certain Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length Carbon Steel Plate From Canada:

Final Results of Antidumping Duty Administrative Reviews, 62 FR 12725

(March 16, 1998) and Certain Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length Carbon Steel Plate From Canada:

Final Results of Antidumping Duty Administrative Reviews, 62 FR 18448

(April 15, 1997)(1994/95 Canadian Steel). Although the final results of

these reviews are subject to litigation, that litigation is not yet

complete. Additionally, as discussed below, we have determined that

Stelco sold corrosion-resistant steel at less than NV during the period

covered by this review. Consequently, we determine that, because Stelco

does not have three consecutive years of zero or de minimis margins on

corrosion-resistant steel, Stelco is not eligible for revocation of the

order on corrosion-resistant steel under 19 CFR 351.222(b).

Comment 3: Clerical Errors

Petitioners claim that the model match program used to calculate

the results of review does not account for all plate qualities that

Stelco has reported. Petitioners proposed the addition of two lines of

computer code to remedy the omission.

DOC position: We agree and have corrected the error to include all

qualities of plate that were reported by Stelco.

Comment 4: Major Input Rule

Stelco argues that there is no factual or legal basis for the

Department's decision to increase Stelco's submitted actual costs of

production for painting services supplied by Baycoat for corrosion-

resistant products. Stelco maintains that the Department erroneously

used the transfer price from Baycoat instead of Baycoat's reported cost

of production to value Baycoat's painting services. Stelco asserts that

the WTO Antidumping Agreement and section 773(f)(1) of the Act provide

that the Department must examine and calculate a particular exporter's

cost of manufacture.

Stelco also claims that its actual cost for Baycoat's painting

services is not equal to the total invoice price, but rather that it is

equal to the total invoice price minus half of Baycoat's profits, since

Baycoat is jointly owned by Stelco and Dofasco. Stelco points to a

draft remand determination on this issue in which the Department states

that the return of profit is independent of the number or value of

sales of painting services to Stelco.

Stelco argues that the statutory language of the ``major input

rule'' does not require the Department to increase an affiliated

supplier's actual cost of production in valuing its major inputs.

Stelco claims that in 1994/95 Canadian Steel, the Department determined

that the major input rule required the Department to value inputs

supplied by affiliates at the transfer price provided

[[Page 2190]]

that the transfer price reflects market value and was not below the

cost of production. Stelco also refers to the Draft Remand

Determination for Article 1904 Binational Panel Review USA-97-1904-03

(August 4, 1998), in which the Department stated that ``the normal

application of these provisions dictates that transfer price is the

appropriate basis for Stelco's cost of production with respect to the

Baycoat inputs.'' Stelco argues that in H.R. Rep. No. 40, 100th Cong.,

1st Sess., pt. 1, at 137 (1987), Congress did not intend for this

provision to be used to increase costs beyond a company's actual cost

of production. In addition, Stelco claims that Torrington Co. v. United

States (``Torrington'') (881 F. Supp 622, 642-643 (CIT 1995)) and SKF

USA Inc. v. United States (``SKF'') (888 F. Supp 152, 156 (CIT 1995))

supports its contention that a COP valuation is appropriate when it is

below transfer price.

Stelco further argues that the major input rule does not apply to

affiliated suppliers that are collapsed with the respondent. Stelco

refers to C. Marsh and J. Miller, Use and Measurement of Production

Costs Under U.S. Antidumping Law (September 19, 1995) to illustrate

that pursuant to consolidation rules under generally accepted

accounting principles, companies within a consolidated group record

actual costs incurred for inter-company purchases and sales. Stelco

also refers to Certain Forged Steel Crankshafts from the United

Kingdom, 61 FR 54613, 54614 (October 21, 1996) (Crankshafts) and Steel

from Korea in which the Department did not apply the major input rule

with regard to transactions between divisions of the same corporation.

To show that Department precedent mandates the collapsing of Stelco and

Baycoat, Stelco cites Preliminary Results of Antidumping Administrative

Review: Sulfanilic Acid from the People's Republic of China, 61 FR

25196, 25197 (May 20, 1996); Final Determinations of Sales at LTFV:

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

Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel

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

from Japan, 58 FR 37154 (July 9, 1993); Nihon Cement Co., Ltd. v.

United States, 17 C.I.T. 400 (1993).

Finally, Stelco argues that a June 4, 1998 binational panel ruling

specifically rejected the Department's use of invoice prices from

Baycoat as the value of the painting service that Stelco obtains from

Baycoat. See Decision of the Panel: North American Free Trade

Agreement, Article 1904 Binational Panel Review, USA-97-1904-3 (June 4,

1998) at 10 (Panel Decision) (Public Document).

Petitioners argue that the Department correctly used the transfer

price to value the painting services received from Baycoat. Petitioners

further ague that the statute makes no provision for the rejection of

transfer price where such price exceeds the input's cost of production

and there is no evidence that the transfer price is below market value.

They further argue that the legislative history of the major input rule

shows that the phrase ``amount represented as the value of [the]

input'' refers to the transfer price, and that a conference committee

report gives a similar definition. See H. Conf. Rep. No. 100-576 at

595, reprinted in 1988 U.S.S.C.A.N. 1547, 1628. Petitioners also

contend that the Court of International Trade, has construed

subsections (f)(2) and (f)(3) to require a comparison of market value

and cost with transfer price. See Timken Co. v. United States, Consol.

Court No. 96-12-02686, Slip Op. 97-164 (CIT Dec. 3, 1997) at 30-31.

Petitioners argue that the binational review unequivocally sustained

the discretion of the Department to use the unadjusted Baycoat invoice

price as the valuation of Baycoat's painting services.

Petitioners contend that the transfer price is the appropriate

valuation under the Department's regulations, specifically 19 CFR

351.407(b), which says that the Department will determine the value of

a major input purchased from an affiliated person based on the higher

of the price paid, the market value, or the cost of production.

Furthermore, petitioners argue that there is no provision in the

statute or any precedent that would permit any adjustment for profit

made to the transfer price. Petitioners also note that in the normal

course of business Stelco records its costs for the Baycoat services at

the transfer price.

Petitioners argue that Stelco's assertion that the Department

should treat Stelco and its affiliated suppliers as a single entity is

baseless. Petitioners state that Stelco has failed to establish that

Baycoat is a ``division'' of Stelco, and that the requirements for

collapsing Baycoat and Stelco into one entity have not been satisfied.

Finally, petitioners assert that there is no precedent for any

exceptions to the application of the major input rule.

Department's Position: We agree with petitioners that it is

appropriate to use the transfer price to value Stelco's major inputs.

Under section 773(f)(2) of the Act, the Department's current practice

is to request information on both the transfer price and the market

value of the input and to choose the higher of the two valuations.

Pursuant to section 773(f)(3) of the Act, the Department may alter this

valuation only in those cases where the input is ``major'' and the

value determined under section 773(f)(2) is lower than the COP of the

inputs. All parties agree that the inputs in question are major inputs

within the meaning of section 773(f)(3); we have determined that the

value determined under section 773(f)(2) is not lower than the COP of

the inputs.

In Torrington and SKF, which concerned the calculation of CV, the

Department had not requested or received information on the transfer

prices of the inputs. The CIT did not say that the Department was

prohibited from requesting the transfer prices of the inputs; rather,

it said that the Department was within its discretion to choose to rely

on cost information. Here, because of the Department's current policy,

the Department requested and received the transfer prices of the

inputs. These transfer prices are greater than Baycoat's COP.

The policy applied here was the policy applied by the Department in

the second review of this case and is currently reflected in 19 CFR

351.403(b). The Department held in the second administrative review

that the statute directs it ``to value inputs supplied by affiliated

persons at the transfer price between the entities provided that such a

price reflects the price commonly charged in the market and, for major

inputs, is not below the cost of producing the input.'' See 1994/95

Canadian Steel at 62 FR 18464.

Stelco also argues that it and Baycoat should be treated as a

single entity for determining cost of production. However, Stelco has

not established either that Baycoat is a ``division'' of Stelco or that

the requirements for ``collapsing,'' under 19 CFR 351.401(f), have been

satisfied with respect to Baycoat. In Crankshafts, respondent argued

that because it and its affiliated supplier were ``both unincorporated

operating divisions within a single entity, * * * they are parts of the

same company and share a common steel COP.'' The Department ruled that

the record evidence indicated that they were divisions of the same

corporation, as opposed to distinct, although affiliated, legal

entities, and found that the major input rule did not apply on that

basis. Unlike the respondent in Crankshafts, Stelco does not contend

that Baycoat is an actual division of Stelco with no independent legal

existence. Rather, Stelco contends that it and Baycoat should be

treated as a single entity solely for purposes of the

[[Page 2191]]

major input rule. As petitioners point out, the Department rejected a

similar argument in Mechanical Transfer Presses from Japan 55 FR 335

(January 4, 1990) in which respondent maintained that its wholly-owned

subsidiaries ``function(ed) as divisions.'' The Department noted that

the ``wholly-owned subsidiaries are separate legal entities,'' as

opposed to mere divisions, and thus applied the major input rule. The

subsidiary in question here, Baycoat, is clearly a separate legal

entity and thus the rule of Crankshafts does not apply.

Steel from Korea represents another instance where we have

determined that the major input rule does not apply. In that case we

disregarded the major input rule for transactions between producers of

the subject merchandise where we had determined that such producers

should be collapsed for purposes of analyzing sales. The criteria

applied for determining whether sales collapsing is appropriate do not

apply, however, in cases where the affiliated supplier does not have

the capacity to produce the subject merchandise. See 19 CFR 351.401(f).

In this review, it is clear that Baycoat does not produce subject

merchandise. We agree with petitioners that Stelco has not established

a basis for the treatment of Stelco's affiliated suppliers as

``collapsed'' entities. Furthermore, a year-end profit distribution

does not function as an adjustment to price. The entitlement to a

profit distribution arises from the ownership interest, not from the

sale.

The binational panel agreed with the Department ``that subsection

(f)(3) does not require the rejection of the transfer price'' and ruled

that ``on the face of the statute, the Department is within its

discretion to utilize the transactions between Stelco and Baycoat'' as

the cost for Baycoat's services. See Panel Decision at 10. For these

reasons, the Department has allowed no adjustments to the transfer

price between Stelco and Baycoat.

Comment 5: Clerical Errors

Both Stelco and petitioners claim that the Department made clerical

calculation errors in the preliminary determination. Stelco argues that

the Department failed to apply reported billing adjustments, the CEP

offset adjustment, and appropriate currency conversions for advertising

expenses and inventory carrying costs. With regard to the recalculation

of Stelco's painting costs, Stelco claims that the Department

incorrectly recalculated Stelco's yield loss, used an incorrect TCOM

variable, and did not complete the programming language needed to

ensure that the Baycoat adjustment was applied only to Baycoat orders.

Petitioners claim that the Department neglected to include the home

market interest revenue variable in the arm's length test, incorrectly

defined the DIFFCODE variable used for matching in the model match, and

incorrectly converted U.S. packing expense into U.S. dollars.

Department's Position: We agree with Stelco and with petitioners

and have corrected the clerical errors described above.

Final Results of Review

As a result of our review, we determine the dumping margins (in

percent) for the period August 1, 1996, through July 31, 1997 to be as

follows:

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

Margin

Manufacturer/exporter (percent)

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

Corrosion-Resistant Steel:

Dofasco.................................................. 0.98

CCC...................................................... 2.26

Stelco................................................... 2.73

Cut-to-Length Plate:

Algoma................................................... *0.23

MRM...................................................... 0.00

Stelco................................................... 0.00

Forsyth.................................................. 68.70

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

* De minimis.

The Department will determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. For assessment

purposes, we have calculated importer-specific ad valorem duty

assessment rates for the merchandise based on the ratio of the total

amount of antidumping duties calculated for the examined sales during

the POR to the total quantity of sales examined during the POR.

Individual differences between U.S. 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 these final results for all shipments of the

subject merchandise entered, or withdrawn from warehouse, for

consumption on or after the publication date as provided by section

751(a)(1) of the Act: (1) The cash deposit rate for each reviewed

company will be the rates stated above (except that no deposit will be

required for firms with zero or de minimis margins, i.e., margins less

than 0.5 percent); (2) for exporters not covered in this review, but

covered in the LTFV investigation or a previous review, the cash

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

for the most recent period; (3) if the exporter is not a firm covered

in this review, a previous review, or the original LTFV investigation,

but the manufacturer is, the cash deposit rate will be the rate

established for the most recent period for the manufacturer of the

merchandise; and (4) the cash deposit rate for all other manufacturers

or exporters will continue to be the ``all others'' rate established in

the LTFV investigations, which were 18.71 percent for corrosion-

resistant steel products and 61.88 percent for plate (see Amended Final

Determination, 60 FR 49582 (September 26, 1995)). These deposit

requirements, when imposed, shall remain in effect until publication of

the final results of the next administrative reviews.

We are revoking the antidumping duty order on certain cut-to-length

carbon steel plate from Canada with respect to Algoma and Stelco, in

accordance with section 751(d) of the Act and 19 CFR 353.25(a)(2). This

revocation applies to all entries of the subject merchandise from

Canada entered, or withdrawn from warehouse, for consumption on or

after August 31, 1997. The Department will order the suspension of

liquidation ended for all such entries and will instruct the Customs

Service to release any cash deposit or bonds. The Department will

further instruct the Customs Service to refund with interest any cash

deposits on entries made on or after August 31, 1997.

Notification of Interested Parties

This notice also serves as a final reminder to importers of their

responsibility under 19 CFR 351.402(f) to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of the antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective orders (APOs) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d)(1)(1997). Timely written

notification of the 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.

These administrative reviews and notices are in accordance with

section

[[Page 2192]]

751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.213 and 19

CFR 351.221(b)(5).

Dated: January 4, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-691 Filed 1-12-99; 8:45 am]

BILLING CODE 3510-DS-P