65 FR 48965 August 10, 2000 A-533-810 4th Administrative Review New Shipper Review POR: 2/98 - 1/99 Public Document I/1: Z. Smith x0189 MEMORANDUM TO: Richard W. Moreland Acting Assistant Secretary for Import Administration FROM: Susan Kuhbach Acting Deputy Assistant Secretary for Import Administration SUBJECT: Issues and Decision Memorandum for the Administrative Review and New Shipper Review of the Antidumping Duty Order on Stainless Steel Bar from India -- February 1, 1998 through January 31, 1999 Summary We have analyzed the comments and rebuttals of interested parties in the fourth administrative review and new shipper review of the antidumping duty order covering stainless steel bar from India. As a result of our analysis, we have made changes, including corrections of certain inadvertent programming and clerical errors, in the margin calculations. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum. Below is the complete list of the issues in these reviews for which we received comments and rebuttals by parties: Facts Available Cost of Production/Constructed Value Export Price Affiliation Normal Value Verification Ministerial Errors Other Issues Background On March 8, 2000, the Department of Commerce ("the Department") published the preliminary results of administrative review and new shipper review of the antidumping duty order on stainless steel bar from India (see Stainless Steel Bar From India; Preliminary Results of Antidumping Duty Administrative Review and New Shipper Review and Partial Rescission of Administrative Review, 65 FR 12209 ("Preliminary Results"). The period of review ("POR") is February 1, 1998, through January 31, 1999. We invited parties to comment on our preliminary results of review. At the request of certain interested parties, we held a public hearing on May 22, 2000. On July 12, 2000, we extended the deadline for the final results of these reviews to not later than August 4, 2000 (see Stainless Steel Bar From India; Notice of Extension of Time Limit for Administrative Review and New Shipper Review, 65 FR 42989). Discussion of the Issues 1. Facts Available Comment 1: Partial Adverse Facts Available -- Panchmahal Respondent's Arguments: Panchmahal argues that the Department's application of adverse facts available in the Preliminary Results was inappropriate. In particular, it argues that the Department's Preliminary Results offer no basis for the application of adverse facts available and, therefore, such a decision in these final results would be unlawful. Panchmahal contends that because it attempted to cooperate to the best of its ability with the Department's requests for information any adverse inference is unwarranted. Panchmahal notes that it provided the Department with worksheets demonstrating its ability to report its cost information pursuant to the Department's request, but that the revisions were inadvertently omitted from its cost of production ("COP") and constructed value ("CV") databases. Despite its willingness to correct this error, Panchmahal notes that the Department refused to accept the revised databases. According to Panchmahal, this constitutes unlawful discriminatory treatment given the fact that the Department continued to address and remedy deficient submissions of other respondents in this review. In support of its argument, Panchmahal refers to Ta Chen Stainless Steel v. U.S., Slip Op. 99-117 at 42 (Court of International Trade ("CIT") 1999), in which the court stated the following: Even if Commerce's procedures and questions are clear, this may be insufficient {under the dumping statute} to prevent Commerce from having to provide a respondent with the opportunity to remedy a deficient submission when it discovers the omission early enough for remediation to occur. Panchmahal asserts that the impetus for the confusion regarding the reporting requirements of the cost of production information was the Department's original questionnaire, which did not include a variable for size with respect to the model-specific control numbers. Accordingly, Panchmahal's reporting methodology did not take into account the size of the merchandise. Because the inaccuracy of Panchmahal's cost information was a result of the Department's failure to provide instructions as to the methods for compiling information, the company argues that it is unlawful to apply facts available. See Daewoo Elec. Co. v. U.S., 13 CIT 253, 266 (1989). Furthermore, Panchmahal contends that it is unlawful to apply facts available if the Department has issued "potentially misleading questions." See Usinor Sacilor v. U.S., 907 F. Supp. 426, 427 (CIT 1995) ("Usinor Sacilor v. U.S."). Finally, Panchmahal argues that the 21.02 percent adverse facts available rate is unlawful and not corroborated, and has been discredited. Thus, the company contends that it cannot be used for the final results. Petitioners' Arguments: The petitioners argue that the Department should continue to rely on adverse facts available for Panchmahal for purposes of the final results because the company failed to comply with the Department's instructions to revise its cost information on the basis of size and finish. While the petitioners acknowledge that Panchmahal submitted examples of these requested revisions in the form of worksheets, they contend that the company's response was so incomplete that the revisions illustrated in the worksheets could not be incorporated into Panchmahal's databases. Moreover, the petitioners note that the worksheets submitted by Panchmahal pertain only to cold-finished bar and not to its sales of hot-rolled bar. The petitioners assert that the Department is not responsible for correcting deficient information received by a respondent and that it is the respondent's burden to provide complete and accurate information. In support of their argument, the petitioners cite Tianjin Mach. Import & Export Corp. v. U.S., 16 CIT 931, 936, 806 F. Supp. 1008, 1015, (1992), which states that "the burden of creating an adequate record lies with respondents and not with Commerce." The petitioners point out that Panchmahal failed to report control numbers inclusive of product size and, thus, the company's U.S. sales database would have to be revised in addition to its COP and CV databases to ensure that size-specific cost data was assigned to the correct sales in the event of any margin calculation. The petitioners note that the Department requested model size in its questionnaire and record evidence indicates that Panchmahal clearly understood this request. Finally, the petitioners argue that Panchmahal's failure to report its cost information in the manner requested by the Department has resulted in an incomplete record that cannot serve as a reliable basis for calculating a dumping margin. Specifically, the petitioners argue that without this information the Department is unable to accurately determine whether Panchmahal's comparison market sales were below the cost of production and in substantial quantities. In addition, the petitioners note that cost information is necessary to calculate an appropriate margin in all instances because Panchmahal does not have comparison market sales of identical merchandise to that sold in the United States. The petitioners disagree that the 21.02 percent cannot be used. They state that 1) the statute allows the Department to use petition rates as facts available; 2) the rate has never been altered; and 3) the Department has satisfied the corroboration requirement. Department's Position: Upon reviewing the arguments presented by interested parties, as well as conducting a complete and thorough review of all information on the record, we have determined that the continued use of total adverse facts available with respect to Panchmahal is unwarranted. Pursuant to section 782(e) of the Act, we will not decline to consider information that is submitted, even if it does not meet all of our requirements, if the information was timely, could have been verified, is not so incomplete that it cannot serve as a reliable basis for our determination, the submitting party demonstrates that it acted to the best of its ability in providing the information and meeting our requirements, and the information can be used without undue difficulties. With respect to the information submitted by Panchmahal, we find that a sufficient amount of it meets these requirements and, thus, we have not declined to use it in our final results. In our Preliminary Results (at 65 FR 12209, 12211), we found that the cost information provided by Panchmahal was incomplete and could not serve as a reliable basis for reaching an appropriate dumping margin. Thus, in accordance with section 776(a) of the Act, we resorted to facts otherwise available. In determining the appropriate facts available to apply, we made an adverse inference after finding that Panchmahal did not cooperate by acting to the best of its ability to comply with a request for information. However, upon further review, we note that Panchmahal did provide responses to our original questionnaire as well as two supplemental submissions over an eight-month period. Notwithstanding a few omissions, discussed below, the responses addressed our requests for further information and clarification. The submissions were made by the deadlines we established and were subject to verification. Furthermore, in reviewing Panchmahal's responses and their supporting documentation, although they are not entirely complete, we find that the information is sufficiently complete to serve as a reliable basis for reaching a determination without creating undue difficulties. In particular, we are able to use this information while employing an adverse inference in applying the facts available with respect to missing or unreliable information. We also find that, while Panchmahal did not respond to our requests to report specific cost information, the submissions were otherwise clear and responsive to our requests for information and clarification. Lastly, Panchmahal acted to the best of its ability throughout the review with respect to this usable information. Thus, the use of a total adverse facts available rate is unwarranted in this case. Therefore, in making this determination we have only resorted to the use of facts available with respect to certain portions of our margin analysis, as opposed to assigning the adverse facts available rate. Specifically, we have used facts otherwise available with respect to determining two things: 1) the basis of normal value and 2) with respect to certain revisions of Panchmahal's CV database. Our use of facts available in these two instances is discussed below. First, as noted in our Preliminary Results (at 12211), we requested that Panchmahal revise the cost information contained in its databases. Specifically, we requested that Panchmahal revise the cost information in its home market, U.S. market, CV, and COP databases to take into consideration different costs associated with differences in size and finishing operations for each unique product reported. We also repeatedly asked Panchmahal to explain in its worksheets how it derived its reported per-unit cost data. However, as explained below, Panchmahal did not submit the requested changes and explanations relating to the cost data, and did not offer any explanation at the time of its submission as to why the changes had not been made. While Panchmahal contends that the information it did provide for the record is sufficient for us to make the necessary changes to all of its databases, it is not. Specifically, with respect to our repeated requests to Panchmahal to explain how it derived its reported per-unit cost data, we were unable to relate the information in Panchmahal's worksheets to the corresponding reported COP data, even after we requested Panchmahal to explain the link between its worksheets and the COP database (which is necessary for our sales-below-cost investigation). Additionally, Panchmahal's worksheets are specific to certain products only and do not provide information on each of the products under review that were sold by Panchmahal. Furthermore, in response to our request to revise all of its cost data and databases (U.S., home market, COP, and CV) to include additional costs associated with differences in sizes and finishing operations (which had been previously excluded from the reported cost data) for all unique products in both the home and U.S. markets, Panchmahal's response was that "we have calculated approximate costs for three different diameter ranges (size ranges). . .These have not been included in our data base response of section C wherein average cost for POR is given. . ." Even though Panchmahal did calculate specific costs based on size and finishing operations for some of the unique products it sold (i.e. only for its unique models sold to the United States) and provided worksheets showing these calculations, the costs were not calculated for all of Panchmahal's unique products, only those products sold in the U.S. market. Furthermore, Panchmahal did not revise any of its U.S. or CV cost data to include these additional costs. Thus, although Panchmahal showed that it could make cost differentiations based on size and finishing operation differences, it did not do so for all of its unique products (i.e. the products it sold in the home market), and it did not include these additional costs in any of its cost databases. Panchmahal's response, noted above, suggests that it was aware of its error. This error affected Panchmahal's COP database and also, as discussed below, its CV database. Because, as noted above, Panchmahal's COP database is incomplete, we are unable to test whether the company's home market sales were made below COP. Thus, necessary information is not available on the record, and the COP data is too incomplete to serve as a reliable basis for the determination, thus warranting the use of facts available in place of the COP data under sections 776(a) and 782(e) of the Act. Moreover, we conclude that Panchmahal has not acted to the best of its ability with respect to this data. Thus an adverse inference is warranted under section 776(b) of the Act. We have therefore determined, as facts available, to use CV as the basis for normal value because we must assume that all home market sales are below cost without any reliable COP data to prove otherwise. Further, we have used an adverse inference in calculating CV. Although the Department has determined that the CV information on the record is sufficient to calculate normal value, in one instance in which the CV database is lacking, namely the allocation of costs based on size and finishing operation, discussed above, we have applied facts available. As noted above, although we asked Panchmahal to revise its cost data to take into consideration differences in size and finishing operation for all of its unique products, Panchmahal reported this data in a worksheet only for its CV sales, and then did not incorporate the data from the worksheet into its CV database. As facts available, we have added the highest size and finishing operation cost for each unique product reported by Panchmahal in its worksheet to each unique product reported in the CV database to derive the total reported CV. Although usable CV data is on the record, because Panchmahal did not submit part of the CV information in the form and manner requested by the Department (i.e. Panchmahal chose not revise its CV costs to include the additional costs associated with differences in finishing operation and size that it reported in its worksheets), the use of partial facts available for the portion of the improperly reported CV data is warranted under sections 776(a) of the Act. A more thorough discussion of Panchmahal's calculations can be found in the Memorandum to File, Calculation Notes for Final Results for Panchmahal Steel Ltd., dated August 3, 2000. In using the highest costs associated with these two product characteristics (size and finishing operation), we have also made an inference that is adverse to Panchmahal which is warranted under section 776(b) of the Act. (See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Structural Steel Beams From South Korea, 65 FR 41437 (July 5, 2000) for another example of a case where we used an adverse inference in applying partial facts available.) The use of an adverse inference is appropriate because, as discussed above, Panchmahal failed to cooperate by not acting to the best of its ability to comply with our request to revise its reporting of cost information, its CV information in this instance. Specifically, in its February 18, 2000, second supplemental questionnaire response at page 1, in response to our request to revise its cost reporting data, Panchmahal stated that, it does not "maintain record of cost data on sizewise & different finish therefore, accurate break up of cost is not possible at our end. Nevertheless, we have calculated approximate costs for three different diameter ranges . . ." (emphasis added). As noted above, the costs it reported were the different size and finishing operations costs for the CV data. However, as noted above, Panchmahal failed to revise its CV database to included these additional costs. Also as noted above, Panchmahal's response indicated that it was aware of its error but did not correct it. Furthermore, Panchmahal failed completely to report these costs for the unique products sold in its home market. Panchmahal contends that its failure to report the necessary information was caused by a clerical error contained in our original questionnaire with respect to the reporting of size. We are unpersuaded by this argument. The company's exclusion of the size characteristic in its reported control numbers cannot be explained by our clerical error, especially because 1) as requested in the original questionnaire, Panchmahal did report the size of each home market and U.S. sale in its databases, but then neglected to include the size variable in its control numbers despite its contention that it included all of the product characteristics in its control numbers (as was noted on page B-10 of Panchmahal's July 12, 1999, response) and 2) we indicated to Panchmahal in a subsequent supplemental questionnaire the necessity of reporting costs on a size and finish basis. In addition, Panchmahal contends that the Department discriminated against the company by refusing to accept its revised databases while accepting further submissions from other respondents. We find this argument to be without merit. In accordance with our regulations, each company in this review has been given individual deadlines for submitting information. The deadlines for solicited factual information are established by the Department (see section 351.301(c)(2)(ii) of the Department's regulations). The regulations make clear that "failure to submit requested information in the requested form and manner by the date specified may result in use of facts available under section 776 of the Act and § 351.308." Panchmahal was treated the same as every other company in this review in that questionnaire responses were requested and deadlines were established in accordance with our regulations. While we acknowledge that we accepted submissions, pursuant to our requests, from other respondents participating in the review after Panchmahal's last submission, we note that those respondents were submitting information according to their own individual deadlines for submitting information, as noted above. In addition, the Department notes that statutory time limits and administrative needs necessitate a cut-off point for each respondent with respect to the number of times the Department will solicit information from respondents. In the instant example, Panchmahal was given the same number of opportunities to respond to the Department's questionnaires as the other respondents. Thus, any claim that the Department treated Panchmahal in a unique or discriminatory manner is without merit. Finally, with respect to Panchmahal's argument that the 21.02 percent petition rate cannot be applied to them, we note that this argument is moot as we have not resorted to total adverse facts available for Panchmahal. However, we fully discuss the issue of an adverse facts available rate in Comment 5 below with respect to Parekh. Comment 2: Adverse Facts Available -- Sindia Petitioners' Arguments: The petitioners argue that the Department should apply adverse facts available to Sindia for the final results because it failed to provide complete and accurate COP information in response to the Department's sales-below-cost investigation. Specifically, the petitioners argue that the Department cannot use Sindia's reported material costs because the company calculated separate unit material costs for identical models sold in the home market and U.S. market rather than computing a single, weighted-average material cost for each model across markets. In addition, they argue that Sindia's calculation methodology fails to take into account the material costs associated with its sales of the foreign like product to various third-country markets during the POR and, therefore, the reported material costs do not accurately reflect the costs incurred by the company during the POR. Moreover, the petitioners contend that Sindia is attempting to control the review process through the submission of piecemeal information and, thus, Sindia should receive the highest margin rate from the LTFV investigation. The petitioners cite Pistachio Group of the Association of Food Industries v. U.S., 671 F. Supp. 31, 40 (CIT 1987) and Atlantic Sugar, Ltd. v. U.S., 744 F. 2d. 1556, 1560 (CIT 1997) in support of their argument. If the Department does not apply total adverse facts available to Sindia, the petitioners argue that the Department should make an upward adjustment to the per-unit material costs reported by Sindia equal to the largest percentage difference between the material values reported for a particular model sold in the home market and U.S. market. Alternatively, the petitioners suggest using the highest material cost reported by Sindia for identical models sold in the home market and U.S. market as facts available. Lastly, for those models without an identical match in the comparison market, the petitioners state that the Department should increase the reported material costs by the average difference between the material costs of those models sold in the home market and U.S. market. Respondent's Arguments: Sindia argues that the application of adverse facts available is not appropriate because it never failed to cooperate with the Department but, rather, acted to the best of its ability by providing complete and timely questionnaire and supplemental responses. Accordingly, Sindia contends that it has in no way impeded the proceeding. With respect to the petitioners' arguments concerning its material costs, Sindia explains that it used sales volume as the weighting factor in its calculations because its production volume is based completely on customer demand. Therefore, the model-specific sales quantities reported in its cost response are identical to the production quantities during the POR. Regarding the petitioners' assertion that the material costs reported by Sindia do not accurately reflect the costs incurred by the company during the POR, Sindia refers to the Department's antidumping questionnaire (at 2), which states that costs should be reported "based on the actual costs incurred . . . as recorded under {a company's} normal accounting systems." Pursuant to these instructions, Sindia explains that it used the actual raw material costs recorded in its accounting system to calculate the material costs for each model sold in the domestic and U.S. markets, respectively, during the POR. Furthermore, Sindia notes that it contacted Department officials with respect to this issue and received confirmation that it was appropriate to calculate separate costs of production for identical models sold in different markets. Moreover, Sindia holds that, contrary to the petitioners' claims, the reported costs reflect the most accurate measurement of the material costs incurred to manufacture the merchandise under review because this information relates directly to the models sold in the domestic and U.S. markets and, therefore, the Department should accept this information. Department's Position: We do not agree that applying adverse facts available is appropriate for Sindia. We find that the information provided by the company is complete and can serve as a reliable basis for calculating an antidumping duty margin. Our practice is to calculate a single, model-specific cost of materials ("COM") value for both COP and CV. Although the allocation methodology used by Sindia to calculate material expenses is inconsistent with the Department's instructions (i.e., report material expenses on a model-specific basis), we are able to calculate a weighted-average COM for each model based on the data supplied by the company. Accordingly, we have averaged the material expenses reported for identical models and weighted this amount by the sales quantity reported, which is equivalent to production quantity. While we acknowledge that this methodology does not take into account Sindia's production of merchandise that was sold to third-country markets, we have found that it is reasonably demonstrative of the company's complete costs because the cost differences between home market and U.S. market sales of identical merchandise were relatively small. A more thorough discussion of our calculations can be found in the Memorandum to the File RE: Calculation Memorandum for Sindia, dated August 3, 2000. Comment 3: Adverse Facts Available -- Venus Petitioners' Arguments: The petitioners argue that the Department should use adverse facts available when determining Venus' margin for the final results. According to the petitioners, Venus failed to cooperate to the best of its ability because it did not attempt to obtain COP data from its affiliated supplier as instructed by the Department. According to the petitioners, the Department should apply adverse facts available to all of Venus' sales because the use of transfer prices would not accurately capture the material costs for the calculation of COP and CV. The petitioners also note calculation inconsistencies in Venus' reporting of transfer prices and in its reporting of different material costs for identical products. Based on the above, the petitioners argue that Venus' COP and CV information should be disregarded altogether and the Department should assign the adverse facts available margin to Venus' sales. Respondent's Arguments: Venus argues that there is no justification for the Department to use adverse facts available because it acted to the best of its ability, provided information requested by the Department, and did not impede the proceeding. Venus contends that, contrary to the petitioners' assertions, it did obtain and use, as appropriate, COP data from its affiliated parties. While Venus concedes that it did not provide detailed evidence of the COP derivation, it argues that the Department did not ask for such evidence. Instead, according to Venus, the Department required the company to use the highest of the transfer price, market value, or COP of the inputs in question. Venus argues that it did follow this instruction and, thus, did not impede the proceeding in any way. Department's Position: We agree with Venus and have used the company's information to calculate its margin. Venus followed our instructions, provided its information in the form and manner requested and met all of our deadlines. In our last supplemental questionnaire, we asked Venus to base its COP and CV unit material costs on the higher of the following: the market price between Venus and its unaffiliated supplier; the transfer price between Venus and its affiliated supplier; or the cost faced by Venus' affiliated supplier. While the company did not provide specific information on each of these costs, our supplemental questionnaire was not specific in making this requirement. Rather, we were very thorough in explaining to Venus that it was required to use the highest of the three values when calculating its COP and CV. In response, Venus has stated and demonstrated through an example that it used the highest value when calculating COP and CV. Moreover, Venus' response was subject to verification. Therefore, we do not find it necessary to resort to facts available. However, as noted above, our practice is to calculate a single, model- specific COM value for both COP and CV. Venus did not do that, instead reporting the COM for each sale in the home and U.S. markets. Accordingly, as with Sindia, we have averaged the material expenses reported for identical models and weighted this amount by the sales quantity reported. While we acknowledge that this methodology does not take into account Venus' production of merchandise that was sold to other third-country markets, we have found that it is reasonably demonstrative of the company's complete costs because the cost differences between the comparison market and U.S. market sales of identical merchandise were relatively small. A more thorough discussion of our calculations can be found in Venus' calculation memorandum. (See Memorandum to File, Calculation Adjustments for Venus Wire Industries Limited ("Venus"), dated August 3, 2000.) Comment 4: Adverse Facts Available -- Viraj Respondent's Arguments: Viraj argues that the Department's application of adverse facts available in the Preliminary Results was inappropriate. Specifically, Viraj contends that the Department did not allow it to meaningfully participate in the current review because, according to Viraj, the Department did not notify the company in a timely manner about its concerns regarding whether all merchandise covered by the scope of the review was being reported. Furthermore, Viraj argues that the Department was unclear in its early supplemental questionnaires and in questionnaires to other companies as to the exact nature of Viraj's reporting deficiency and what should be reported under the scope of the review. Viraj cites to Usinor Sacilor v. U.S. where the court states that the Department should "be precise in its requests thereby affording companies adequate notice to defend their interests." According to Viraj, the Department did not give Viraj adequate time to revise its home market reporting to include all merchandise within the scope of the review once the Department clarified what should be reported. Thus, Viraj argues that it was treated in a discriminatory manner because the Department continued to collect information from other respondents in the review, even after the deadline for submitting information for Viraj had passed, and considered that information while refusing to consider information from Viraj. Viraj additionally argues that there is sufficient information on the record, based on the information it was able to submit by the Department's deadline in its revised home market submissions, to calculate a dumping margin for Viraj without resorting to the use of facts available. Lastly, Viraj argues that the use of adverse facts available is unjust because the company made every effort to cooperate to the best of its ability. Viraj states that it submitted thousands of pages of information, and made every effort within its limited time considerations, to comply with the Department's requirements. Petitioners' Arguments: The petitioners dispute Viraj's arguments that it was wrongly assigned an adverse facts available rate and that it was not allowed meaningful participation in the review. First, the petitioners point out that the original questionnaire included a full description of the scope of the merchandise covered by the review and, therefore, was clear in what should be reported. Second, the petitioners state that the Department repeatedly noted in its questionnaires that, if Viraj had any questions about its reporting obligations, it should contact the Department immediately. Third, the petitioners point out that Viraj has participated in previous reviews of this proceeding and should have been aware of the reporting requirements and the description of scope merchandise. Finally, the petitioners note that comments on the public record regarding black bar and bright bar made concerning unrelated companies has no bearing on Viraj's individual reporting requirements. The petitioners also dispute Viraj's argument that there is sufficient information on the record to serve as a basis for calculating a dumping margin. The petitioners argue that the information on the record, as was noted by the Department in the Preliminary Results, was substantially incomplete, and that the lack of information on such items as home market product characteristics, VCOM, and COP data for home market sales, precludes the use of the home market information that was submitted for the record. Additionally, the petitioners disagree with Viraj's contention that it cooperated to the best of its ability in responding to the Department's questionnaire. The petitioners argue that, despite Viraj's statements, Viraj was aware, based on its actions in a previous segment of this proceeding, what merchandise should be reported based on the scope description. The petitioners state that Viraj withheld information requested by the Department, and even when Viraj attempted to submit the information, did not submit enough information for the Department to calculate a dumping margin. Thus, according to the petitioners, Viraj failed to cooperate to the best of its ability and the Department's facts available determination is justified. Department's Position: Upon reviewing the arguments presented by interested parties, as well as conducting a complete and thorough review of all information on the record, we have determined that the continued use of total adverse facts available with respect to Viraj is unwarranted. As noted above, pursuant to section 782(e) of the Act, if submitted information meets certain criteria we will not decline to consider it even if it does not meet all of our requirements. With respect to the majority of information submitted by Viraj, we find that it meets these criteria and, thus, we have not declined to use it in our final results. In our Preliminary Results (at 12210), we found that the home market sales information provided by Viraj was incomplete and could not serve as a reliable basis for the calculation of normal value. Thus, in accordance with section 776(a) of the Act, we resorted to facts otherwise available. In determining the appropriate facts available to apply, we made an adverse inference after finding that Viraj did not cooperate by acting to the best of its ability to comply with a request for information. However, upon further review, we note that Viraj provided a response to our original questionnaire as well as two supplemental submissions over a nine- month period. In all but one instance, the responses addressed our requests for further information and clarification to some degree. (In the one instance where it did not, the Department finds that Viraj's non- responsiveness was due to confusion and not lack of cooperation.) We accepted these responses as timely and the information submitted could have been verified. Furthermore, Viraj's responses are sufficiently complete to serve as a reliable basis for reaching a determination without creating undue difficulties. Lastly, we find that Viraj acted to the best of its ability throughout the review with respect to this usable information. Thus, the use of a total adverse facts available rate is unwarranted in this case. Therefore, contrary to our Preliminary Results, in making this determination we have only resorted to the use of facts available with respect to certain portions of our margin analysis, as opposed to assigning a margin as total facts available. See Preliminary Results at 12210. Specifically, we have used facts otherwise available with respect to choosing the appropriate comparison market as a basis for normal value and when determining margins for U.S. sales that do not have identical matches. Our use of facts available in these two instances is discussed below. As noted in our Preliminary Results (at 12210), we repeatedly asked Viraj to report whether it had viable home market sales of the merchandise under review and, if so, to provide a complete home market sales response. In its February 9, 2000, submission, Viraj submitted a database of previously unreported home market sales made during the POR. The database did not have a corresponding narrative and, thus, contrary to Viraj's arguments, it is incomplete and cannot serve as a basis for calculating normal value. Because the home market information is incomplete, we must resort to the use of facts otherwise available under section 776(a) of the Act. As facts available, we are using Viraj's sales to a third-country market as the basis for normal value. In determining the appropriate facts available, we have not made an adverse inference, as we did in the Preliminary Results. After reviewing the arguments received from the parties and reviewing all of the information on the record, we have not found that Viraj failed to cooperate by not acting to the best of its ability. Instead, we have found that Viraj did cooperate to the best of its ability in complying with our requests for additional information, as we further discuss below. Viraj has argued that the Department did not make the exact nature of its reporting deficiency (what should be reported under the scope) clear to the company until our final supplemental questionnaire and that we did not allow the company adequate time to respond to our request. While we agree with the petitioners that our original questionnaire and supplemental questionnaires were clear as to what Viraj was required to submit, we believe that Viraj continued to be confused as to its reporting responsibilities. We find this to be compelling in light of the inappropriate inferences from our dealings with other respondents that appear to have been made by Viraj's counsel and passed on to the company. Specifically, Viraj's counsel has repeatedly cited to information given to another respondent in this review, Isibars, as one of the reasons why Viraj did not understand what home market sales should be reported as merchandise under review. As noted in the Department's February 28, 2000, memorandum to Richard Moreland, Facts Otherwise Available for Viraj Impoexpo Ltd., both Isibars and another respondent in this review, Chandan, individually requested clarification about what they should be reporting as subject merchandise. Viraj did not. It appears that Viraj's counsel, who is representing all three companies, inappropriately passed on to Viraj the Department's response to Isibars even though that response was specific to Isibars (as was the Department's response to Chandan specific to Chandan). Therefore, the Department finds that the use of an adverse inference with respect to Viraj is not appropriate. That Viraj did not fail to cooperate fully is evidenced by the fact that, once we made our question more specific, Viraj did report the existence of home market sales and attempted to provide us with the information requested. We note that Viraj attempted to submit the corresponding home market narrative response within a week of submitting the database but we rejected the submission because the deadline for submitting factual information had passed. Finally, we acknowledge that, in this specific situation, the two weeks we provided Viraj to prepare a complete home market response and database may not have been sufficient, especially given the many compounding factors reported by the company. While the petitioners have argued that the information on the record is substantially incomplete and, thus, cannot be used as a basis for calculating a dumping margin, we agree only in part. As noted above and in our Preliminary Results, we find the home market sales information to be so incomplete that it cannot serve as a basis for calculating normal value. However, we did not make such a determination with respect to Viraj's third-country sales information (Viraj provided a thorough response with respect to its third-country market sales and we had the opportunity to ask them numerous supplemental questions on these sales). Thus, while we did not resort to third-country sales in our Preliminary Results, upon further review we have determined that the third-country sales information on the record is sufficient to calculate normal value. In the one instance in which the third-country data is lacking, namely the reporting of useable VCOMs, we have, as facts available, banded the company's sale of different stainless steel bar sizes in order to obtain more identical matches. In those instances where the banding of sizes did not produce an identical match for a U.S. sale, we have, as facts available, assigned the "all others" rate established in the LTFV investigation. A more thorough discussion of our calculations can be found in Viraj's calculation memorandum. Comment 5: Corroboration Respondents' Arguments: In the Preliminary Results, the Department relied upon 21.02 percent as the adverse facts available rate. That margin was based on the margin assigned to Mukand Limited during the LTFV investigation. Respondents Panchmahal and Viraj argue that this margin has since been discredited by the calculated margin of 3.87 percent in the LTFV investigation. Thus, they state that this margin cannot be used as a facts available rate. To support their argument, they cite, inter alia, Persulfates from the People's Republic of China, 65 FR 18963 (April 10, 2000), citing D & L Supply Co. v. U.S., 113 F.3d 1220,1221 (Fed. Cir. 1997) and Borden Inc. v. U.S., 4 F.Supp. 2d 1221, 1246-48 (CIT 1998). Moreover, the respondents state that, because the 21.02 percent rate is based on a single price quote, the rate is unlawful. They cite to Rhone Poulenc v. U.S., 899 F. 2d 1185, 1187-88 (Fed. Cir. 1990), where the court found unlawful the use of a dumping margin calculated based on one or a few sales as facts available. Furthermore, they state that the margin is outdated (based on data that is seven years old). Finally, the respondents cite to the Statement of Administrative Action (at 870), which states that the Department is required to corroborate secondary information using independent sources. The implication of this citation is that the Department has not met its corroboration requirement. Petitioners' Arguments: The petitioners refute the respondents' arguments that the 21.02 percent margin cannot be used. The petitioners note that the statute allows the Department to use a petition rate as facts available (see section 776(b)(1) of the Act). According to the petitioners, the respondents' reliance on D & L Supply Co. v. U.S. is misplaced to support an implied discrediting of the petition rate. Rather, they state that petition rates have to be "expressly held invalid." Moreover, the petition rate, the petitioners note, has never been "questioned or altered" by the Department or the courts. Regarding the respondents' argument that the 21.02 percent margin is unlawful because it was based on one price quote, the petitioners note that the Department has calculated margins in previous segments based on one or a few sales. Finally, the petitioners state that the Department has satisfied the corroboration requirement because "it is not necessary to question the reliability of a margin used in a prior segment of a proceeding" and because the Department found no instances to indicate the margin is inappropriate. Department's Position: As stated in Facts Available Comments 1 and 4 above, we have not applied total adverse facts available to Panchmahal and Viraj. However, Parekh did not respond to our questionnaire. Nor did the company indicate that it was experiencing difficulties in responding to the questionnaire. Therefore, we have determined that Parekh did not cooperate to the best of its ability. In the Preliminary Results, we assigned the company the adverse facts available rate of 21.02 percent. In the preliminary results, we stated that this "margin was calculated for sales by Mukand Limited during the original less-than-fair-value ('LTFV') investigation and represents the highest weighted-average margin determined for any firm during any segment of this proceeding." However, having examined the matter more closely, we find that the 21.02 percent rate was the highest rate listed in the petition and was not a calculated rate for Mukand. Section 776(b) of the Act notes that an adverse facts available rate may include reliance on information derived from: (1) the petition; (2) a final determination in the investigation; (3) any previous review; or (4) any other information placed on the record. Thus, the statute does not limit the specific sources from which the Department may obtain information for use as facts available. The SAA recognizes the importance of facts available as an investigative tool in antidumping proceedings. The Department's potential use of facts available provides the only incentive to foreign exporters and producers to respond to the Department's questionnaires. See SAA at 868. Section 776(c) of the Act mandates that the Department, to the extent practicable, shall corroborate secondary information (such as petition data) using independent sources reasonably at its disposal. In accordance with the law, the Department, to the extent practicable, will examine the reliability and relevance of the information used. To corroborate the selected margin, we compared it to individual transaction margins for companies in this review with weighted-average margins above de minimis. We found that the selected margin falls in the middle of the range of individual transaction margins and that there was a substantial number of sales, made in the ordinary course of trade, in commercial quantities, with margins near or exceeding 21.02 percent. This evidence supports the reliability of this margin and an inference that the selected rate might reflect Parekh's actual dumping margin. Further, with respect to the relevance of the selected margin to Parekh, in accordance with De Cecco (1), we also examined whether any information on the record would discredit the selected rate as reasonable facts available for Parekh. No such information exists. In particular, there is no information, such as reliable evidence of Parekh's export prices, that might lead to a conclusion that a different rate would be more appropriate. We also noted that the margins found did not correlate with the category of producer, i.e., integrated producer or finisher. Accordingly, we have continued to assign to Parekh, in the instant review, the rate of 21.02 percent as adverse facts available. This is consistent with section 776(b) of the Act which states that adverse inferences may include reliance on information derived from the petition. Thus, we have considered information reasonably at our disposal and no record evidence exists indicating that the highest petition rate is aberrational, uncorroborated, or unduly punitive. Finally, we note that Parekh was subject to the 21.02 percent rate prior to this review. (See Stainless Steel Bar from India; Final Results of Antidumping Duty New Shipper Review, 65 FR 3662 (January 24, 2000).) By assigning the rate of 21.02 percent, we avoid a situation in which Parekh would be better off by not responding in this review than it would have been had this review not been conducted at all. 2. Cost of Production/Constructed Value Comment 1: Major Input Rule -- Facor Petitioners' Comments: The petitioners argue that in the Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils From Belgium, 64 FR 15476 (March 31, 1999) ("Plate from Belgium") the Department found that certain raw materials used in the production of stainless steel, such as steel scrap and ferro-alloys, were major inputs for stainless steel products and should also be treated as such in this review. The petitioners argue that Facor's contention that these inputs are not "major" is based on an analyses that understates the percentage of cost that the materials represent because the company calculates their value as a percentage of the COP as opposed to the COM. Based on their examination of the information, the petitioners contend that the inputs in question do fall under the major input rule. Thus, the petitioners argue that the Department should make adjustments to Facor's reported cost in order to ensure that the higher of the market price, the transfer price, or the COP of the inputs is used in accordance with sections 773(f)(2) and 773(f)(3) of the Act. Respondent's Arguments: Facor argues that the inputs in question were obtained from a division of the same company and as such the Department need not and does not apply the major input rule. Facor cites AK Steel Corporation v. United States, No. 99-1296, Slip Op. at 12 (Fed. Cir. February 23, 2000) to support its argument. Department's Position: We agree with Facor that major inputs obtained from a division of the same company are not subject to the major input rule. In this instance, the inputs in question were purchased by a division of Facor (from an unaffiliated supplier) and transferred from that division to Facor's production division. Thus, the major input rule does not apply and an analysis of whether these inputs are "major" is unnecessary. Finally, we note that the petitioners have erroneously referenced our finding in Plate from Belgium. Contrary to the petitioners' assertion, we did not find that certain raw materials were major inputs. In fact, we specifically stated that "we are unable to reach the question of whether the affiliated party purchases of raw materials constitute major inputs" (see, Plate from Belgium at 15491). Comment 2: Major Input Rule -- Venus Petitioners' Arguments: The petitioners argue that Venus inappropriately used an affiliated supplier's transfer price when calculating COP and CV. According to the petitioners, Venus failed to demonstrate, in accordance with the "major input rule" (section 773(f)(3) of the Act), that these transfer prices were at arm's length or at above-cost prices. Because the Department initiated a sales-below-cost investigation of Venus' sales, the petitioners argue that the potential exists that Venus' reported transfer prices were less than the affiliates' cost of production. The petitioners further contend that because Venus failed to provide the COP of the affiliates' inputs, the transfer prices should not be used when calculating COP and CV. Respondent's Arguments: Venus states that it did use the highest of market price, transfer price, and cost of production when valuing the inputs purchased from affiliated parties. Venus notes that it did not provide detailed information on the COP of these inputs because the cost of production was not the highest value. Rather, according to Venus, because the market price paid to the unaffiliated supplier is the highest of the three values, it used that value in the calculation of COP and CV and, thus, the details of these inputs' costs were not necessary. Department's Position: As noted in Facts Available Comment 3 above, we have found that, in accordance with our instructions, Venus used the highest of transfer price, COP, and market price when calculating COP and CV. See Facts Available Comment 3 for a complete discussion of this issue. Comment 3: Materials -- Cost Adjustment for India's DEPB Export Incentive Program Petitioners' Arguments: The petitioners argue that Facor has inappropriately adjusted its material costs based on India's Duty Entitlement Passbook ("DEPB") System, and that such an adjustment should not be allowed for other respondents. According to the petitioners, benefits received under the DEPB program fail to qualify as duty drawback adjustments to U.S. price or as offsets to a company's material costs. The petitioners argue that both types of adjustments are unwarranted because the program fails the Department's two-pronged duty drawback test. The petitioners contend that the very nature of the Indian program makes it impossible for a respondent to prove affirmatively the existence of a direct link between the exemption of import duties and the exportation of the finished product. The petitioners point to the fact that under the DEPB program the Indian government does not require the importation of raw materials nor does it require the exporter to provide information on how exported products incorporated imported materials for which duties were paid. In particular, the petitioners contend that companies receive duty exemptions regardless of whether they are used to account for imported raw materials and irrespective of the actual amount of raw material purchased and imported and the amount of duty rebated upon exportation. The petitioners also point to the fact that the market price of the exported item, not the duty payable on inputs, triggers the amount of the entitlement which weakens the supposition of any supposed link between import duty and rebate. In support of their argument, the petitioners cite to Stainless Steel Round Wire From India; Final Determination of Sales at Less Than Fair Value, 64 FR 17319, 17322 (April 9, 1999) ("SSRW from India"). According to the petitioners, this case supports a Department policy that rebates received under the DEPB program cannot be claimed either as an offset to a company's cost of production or as an increase to U.S. price because the Department found that the respondent involved was unable to demonstrate a link between the revenue received and the cost of purchasing raw materials. Lastly, the petitioners argue that if the Department were to reduce CV by DEPB rebates it would not result in a normal value calculated "as if it were sold in the home market." Respondents' Arguments: Facor argues that the Department's two-pronged test only applies to determinations of whether an adjustment to U.S. price should be made for duty drawback. According to Facor, the Department rejected sales and cost adjustments for DEPB benefits in SSRW from India for different reasons. While an adjustment to export price was rejected because the respondent failed to meet the Department's two-pronged test, as petitioners claim, the cost adjustment was rejected because there was no link between the benefits received and raw material costs. Facor argues that it has demonstrated a sufficient link between the benefits it received under the program and its material costs to justify an adjustment to material costs. Lastly, Facor argues that if the Department decides to exclude DEPB benefits from its production costs, the Department should still make a downward adjustment to CV when calculating normal value. Pursuant to SSRW from India, Panchmahal argues that if the Department does not make an upward adjustment to U.S. price in connection with the DEPB credits received, its raw material expenses used in the calculation of CV should be reduced by the amount of credits received. Although it purchases raw materials from local suppliers, Sindia argues that the DEPB credits it receives are applied to its material purchases and, therefore, the material costs incurred by the company are reduced. Accordingly, Sindia urges the Department to adjust CV to account for the DEPB export incentives received. Department's Position: For each of the companies requesting an adjustment, we have analyzed the utilization of benefits received under the DEPB program in order to determine whether an adjustment to material costs is warranted. In the case of Panchmahal and Sindia, we have not found evidence of a sufficient link between the DEPB benefits received and their material costs to support an adjustment. With respect to Sindia, the company has provided no link between the benefits it received under the program and its cost of imported raw materials. In fact, Sindia acknowledges that it did not import any goods using the credits it reported but instead transferred its credits to other parties. Accordingly, we have not offset Sindia's material costs. With respect to Panchmahal, the company has not demonstrated a sufficient link between the benefits received under the program and its cost of imported raw materials. Specifically, Panchmahal did not adequately explain what portion of its production contains imported material as opposed to domestically sourced material nor did it provide information on the total amount of material imported and the total amount of credits used for importation during the POR. However, in the case of Facor, we find evidence of a sufficient link to warrant an offset to material costs. Facor demonstrated that its material costs are actually reduced because of credits received pursuant to exports of the merchandise under review. Specifically, Facor demonstrated through DEPB records and import documentation that it uses credits received to cover duties applicable on imported materials used in its production. Thus, Facor's material costs are actually lower as a result of its exportation. This conclusion is supported by the LTFV investigation. As in the investigation, the facts of this case warrant an adjustment to costs for government credits received because the revenues are "directly related" to Facor's purchases of imported raw materials used to produce the merchandise under review and represent an appropriate offset to Facor's raw material costs (see Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar from India, 59 FR 66915, 66920 (December 28, 1994). However, Facor was unable to demonstrate that the imported raw materials were used exclusively to manufacture the subject merchandise and, thus, that the reduction in material costs only applied to such production. Therefore, we have applied the reduction in material costs across all of Facor's production as opposed to applying it exclusively to the company's production of exported merchandise. We disagree with the petitioners that a company must pass our two-prong duty drawback test in order to receive an offset to material costs. The two-prong test is specific to analyzing whether a duty drawback adjustment to U.S. price is warranted under section 772(c)(1)(B) of the Act, and is not applicable to our analysis of whether a company's material costs have been reduced for purposes of calculating COP and CV under sections 773(b) and 773(e). In SSRW from India, we did not apply such a test in rejecting the respondent's request for a material cost offset. Rather, we rejected the respondent's request because we found no link between revenue received and a reduction in material costs. We further disagree with the petitioners' contention that the functioning of the Indian program makes it impossible for a respondent to be eligible for a duty drawback adjustment or an offset to material costs. In those cases where we have analyzed requests for a duty drawback adjustment or an adjustment to material costs pursuant to this program, we have only found that the particular utilization of the program by a company results in ineligible adjustments, not that the way the program itself operates would always make it impossible for a respondent to be eligible for an adjustment. As discussed above, when a company is able to demonstrate a sufficient link between revenue received and a reduction in material costs then it is appropriate to reflect such a reduction in our COM calculations. Likewise, when a company meets the requirements of our two- prong test for a duty drawback adjustment we will make the adjustment to U.S. price. While the way a particular program operates may make passing such tests more difficult, it does not necessarily prohibit a company from fulfilling our requirements. Comment 4: Materials -- Sindia and Direct Raw Material Costs Petitioners' Arguments: The petitioners contend that Sindia incorrectly reported its direct raw material costs. Specifically, the company did not report identical per-unit raw material costs for identical products. The petitioners contend that Sindia's cost questionnaire response is unreliable and, therefore, should be rejected. They argue that the Department should apply adverse facts available to value the costs. If adverse facts available are not applied, the petitioners argue, the Department should revise Sindia's reported raw material costs by making an upward adjustment based on the highest reported cost differences between certain products. Alternatively, the petitioners suggest that the Department use the highest reported per-unit direct raw material cost for each product. Respondent's Arguments: Sindia states that there is no reason for not using its costs as reported. The company contends that the raw material costs are based on its actual costs. In addition, Sindia claims that the Department never asked it to revise its reported costs. Department's Position: As stated above in Comment 2 of the "Facts Available" section above, we have revised Sindia's raw material costs to derive one per-unit material cost for each unique product. Comment 5: Materials -- Sindia and Internal Taxes Petitioners' Arguments: The petitioners argue that if the Department accepts Sindia's cost of production information, it should add an amount for internal taxes to Sindia's per unit material costs because the company ignored the Department's request to demonstrate that these taxes were remitted or refunded upon exportation. In addition, Sindia failed to report the amount of taxes excluded and the applicable tax rate. For these reasons, the petitioners suggest that the Department increase Sindia's material costs by 18 percent and 4 percent, respectively, which represent the central excise tax and average sales tax imposed on products sold in India. Respondent's Arguments: In response to the petitioners' argument, Sindia refers to page D-14 of the Department's antidumping questionnaire, which states the following: Report the net unit amount incurred for all internal taxes (other than value-added taxes) imposed on purchases of direct materials used to produce the merchandise under review. Sindia explains that, as petitioners contend, a sales tax and a central excise tax are normally levied on purchases of direct materials within India. However, with respect to direct materials purchased to manufacture the merchandise under review, Sindia notes that it is not required to pay a sales tax on its material purchases because its manufacturing unit is located in an underdeveloped area. With regard to the central excise tax, Sindia explains that this is a modified value added tax (MODVAT) and, thus, pursuant to the Department's instructions, it did not report this amount. Based on this tax system, Sindia contends that it properly followed the Department's instructions and reported "0" for this field in its original cost of production questionnaire response. Sindia further argues the MODVAT tax system has no impact on its actual material costs and, therefore, there is no justification for adding an amount for internal taxes to the cost of raw materials. Department's Position: As noted by respondent, the petitioners' accusation that Sindia failed to provide this information is incorrect. In its original cost of production questionnaire response, Sindia reported "0" in its COP and CV databases with respect to internal taxes. Accordingly, we agree with Sindia and have incorporated this amount into our calculations. Comment 6: Materials -- Sindia's Yield Loss Ratio Petitioners' Arguments: The petitioners argue that the amounts of waste and scrap used in Sindia's calculation of its yield loss ratios do not correspond to the amount reported in its 1998-99 Annual Report. Thus, the Department should revise Sindia's yield loss ratios using the amount of waste and scrap reported in Sindia's Annual Report. Respondent's Arguments: Sindia acknowledges that there is a difference in the waste and scrap reported in its Section D supplemental questionnaire response and the amounts that were reported in its 1998-99 Annual Report. Sindia claims that the difference has no material effect. Department's Position: We agree with the petitioners. We have revised the yield loss ratios to reflect the actual waste and scrap amounts reported in Sindia's Annual Report. Comment 7: Overhead -- Sindia's Insurance Expense Petitioners' Arguments: The petitioners argue that the Department should revise Sindia's insurance expense, reported in fixed overhead costs, to reflect the total insurance expense from Sindia's Annual Report. Respondent's Arguments: Sindia states that a portion of the total insurance expense was included in cost of sales. Department's Position: We agree with the petitioners. Thus, we have adjusted fixed overhead costs to include the total insurance expense and have removed the amount for insurance that Sindia included in its cost of sales figure. Comment 8: Overhead -- Sindia's Allocation Petitioners' Arguments: The petitioners argue that the Department should allocate Sindia's fixed overhead costs over the company's actual production figure rather than the derived production figure calculated by Sindia to assign its conversion costs. The petitioners maintain that fixed costs, by definition, remain unchanged in a given period despite fluctuations in activity. Thus, Sindia incurred the same fixed costs regardless of the company's production experience during the POR. Respondent's Arguments: Sindia counters by arguing that because the Department has accepted its use of derived production for purposes of allocating variable overhead costs, the application of derived production as the basis to assign fixed costs should also be deemed as an acceptable methodology by the Department. Department's Position: We agree with Sindia. Consistent with its methodology for calculating unit variable costs, Sindia allocated its fixed overhead costs on the basis of processing time. Sindia used the derived production figure to calculate a per-unit fixed overhead figure and multiplied this amount by the number of production runs necessary for the different shapes of merchandise produced by Sindia. We believe this methodology provides an accurate measurement of unit fixed overhead costs for Sindia. Comment 9: Interest Expense -- Sindia Petitioners' Arguments: Sindia reported that 25 percent of its interest expense is allocated to the cost of production. The petitioners maintain that the Department's standard practice dictates that the entire amount of net interest expense reported in the company's audited financial statements be used to calculate the interest expense ratio. See, Stainless Steel Bar from India; Final Results of Antidumping Duty Administrative Review and New Shipper Review, 64 FR 13,771, 13,776 (March 22, 1999). The petitioners argue that there is no basis in law or fact for the Department to consider only 25 percent of Sindia's net interest expense. Sindia's Arguments: Sindia maintains that because the company operated at low capacity during the POR, the Department should allocate only 25 percent of the interest charges reported in its 1998-99 Annual Report for purposes of calculating the interest expense ratio. Department's Position: We disagree with Sindia. The Department normally computes the interest expense factor based on the respondent's audited financial statements for the full-year period that most closely corresponds to the POR (see the Department's questionnaire at D-17). Thus, we have used the entire amount of Sindia's interest expense, as reported in its 1998-99 Annual Report, for purposes of calculating the interest expense ratio. Comment 10: General and Administrative and Interest Expenses -- Sindia Petitioners' Arguments: The petitioners argue that Sindia's general and administrative (G&A) and interest expense ratios are distorted because Sindia's cost of sales calculation includes certain items that are associated with the selling and transport of merchandise. Accordingly, these expenses should be removed from Sindia's cost of sales calculation in order to calculate accurate G&A and interest expense ratios. Sindia's Arguments: In response to the petitioners' argument, Sindia asserts that with respect to its U.S. sales, the selling and freight charges incurred by Sindia and its affiliated reseller are associated with selling the subject merchandise and, therefore, it is correct to include these expenses in the cost of sales calculation. Department's Position: We agree with the petitioners. In order to prevent these expenses from being distorted or counted twice, we have excluded certain selling and transport charges reported in Sindia's home market and U.S. sales databases from its cost of sales calculation. A more thorough discussion of our calculations can be found in Sindia's calculation memorandum. 3. Export Price Comment 1: Duty Drawback -- Adjustment for India's DEPB Export Incentive Program Respondent's Arguments: Panchmahal argues that it is standard Department practice to make a duty drawback adjustment if entitlement to a rebate upon exportation is dependent on the payment of import duties. Consistent with this practice, Panchmahal contends that it should receive a duty drawback adjustment because, as the record demonstrates, it uses the India's DEPB System benefits to pay import duties on the imports of raw material, which are subsequently used in the manufacture of stainless steel bar. Petitioners' Arguments: The petitioners refer to SSRW from India in which the Department reiterated its two-prong test with respect to making an upward adjustment to U.S. price. The petitioners contend that Panchmahal does not meet these criteria because the credits it receives are not direct rebates of import duties and are tied to neither actual imports of raw materials nor exports of finished products. Likewise, petitioners state that Panchmahal has presented no evidence regarding the relationship between the credit amounts claimed under DEPB and imports, nor has it explained how the Government of India calculates the amounts paid. Department's Position: When evaluating a duty drawback program, we consider whether the import duty and duty drawback are directly linked to, and dependent upon, one another and whether the company claiming the adjustment can show that there were sufficient imports of the imported raw materials to account for the drawback received on the exported product (see Certain Welded Carbon Standard Steel Pipes and Tubes from India, 62 FR 47632, 47634 (September 10, 1997)). While Panchmahal provided documentation establishing a link between import duties paid and duty drawbacks generally received under the program, the company did not demonstrate that the amount of duty drawback received corresponded to the import duties paid. Furthermore, Panchmahal did not demonstrate that it imported inputs in sufficient quantities to account for rebates received under the program. Accordingly, no adjustment to the U.S. price for duty drawback has been made. Comment 2: Interest Revenue -- Isibars Respondent's Argument: Isibars argues that an upward adjustment should be made to the U.S. sales price for those transactions in which Isibars collected interest revenue from its U.S. importer. Isibars contends that the information submitted to the Department after the Preliminary Results confirm that these interest amounts were actually collected from its U.S. importer. Petitioners' Argument: The petitioners counter that, contrary to Isibars' assertion, Isibars did not submit any evidence of actual interest payments or copies of payment agreements with its U.S. importer. Department's Position: When calculating EP it is our practice to increase the U.S. price by any interest revenue received in association with specific sales. Therefore, we agree with Isibars and have adjusted the company's U.S. sales to reflect the interest revenue received. Contrary to the petitioners' assertions, Isibars did provide evidence that it receives interest revenue. Although such evidence was not in the form identified by the petitioners, we do not require this form and have found the information on the record to be sufficient. 4. Affiliation Comment 1: Control -- Isibars' Relationship With Its Importer Petitioners' Arguments: The petitioners contend that the Department should classify Isibars' U.S. transactions as constructed export price ("CEP") sales on the grounds that Isibars and its U.S. importer are affiliated under section 771(33)(G) of the Act. The petitioners state that record evidence establishes that Isibars was integrally involved throughout the sales process with respect to its U.S. sales and that its U.S. importer acted as Isibars' selling agent, not as an independent purchaser/reseller during the POR. In support of their argument, the petitioners cite to Engineered Process Gas Turbo Compressor Systems, Whether Assembled or Unassembled, and Whether Complete or Incomplete from Japan; Notice of Final Determination of Sales at Less Than Fair Value, 62 FR 24,394, 24,403 (May 5, 1997) ("Turbo Compressors from Japan"), where the Department found that the respondent and its U.S. importers were affiliated on the basis of a principal-agent relationship even in the absence of a written contract or stock ownership between the parties. The petitioners note that the Department focused its decision in Turbo Compressors from Japan primarily on the respondent's direct role in the sale transaction at issue and its ability to control the transaction. They contend that Isibars' involvement in its importer's U.S. sales transactions is even more direct and active than the actions described in Turbo Compressors from Japan. Specifically, the petitioners note that Isibars was not only involved in marketing its product through visits to its importer's U.S. customers, but that it was also directly involved in liquidating its importer's inventory. The petitioners argue that Isibars' involvement in the pre- and post-sale periods clearly demonstrate that a principal-agent relationship exists between Isibars and its U.S. importer and, therefore, the Department should find that Isibars' has control of its U.S. importer and that an agency relationship exists within meaning of section 351.102(b) of the Department's regulations. The petitioners also argue that Isibars and its U.S. importer are otherwise affiliated within the meaning of section 771(33)(F) of the Act. That is, even assuming that the U.S. importer did not act as an agent for Isibars, the petitioners maintain that various elements of the business relationship between the companies provide further evidence of affiliation. First, the Memorandum of Understanding ("MOU") signed between the parties implicitly expresses that the importer would serve as an agent of Isibars in the U.S. market. Although the MOU was never acted upon, the record is clear that an agency relationship existed between Isibars and its U.S. importer during the POR. Second, Isibars and its importer maintain an informal agreement for mutual exclusivity in the U.S. market. Third, affiliation exists through debt financing because the U.S. importer did not pay Isibars for a significant portion of the subject merchandise shipments. The petitioners further contend that the Department should apply facts available to Isibars' U.S. sales because Isibars has not provided all the information necessary regarding its importer's sales to the first unaffiliated customer in the United States and, therefore, there is not sufficient information on the record for properly calculating dumping margins pursuant to the Department's CEP methodology. Moreover, according to the petitioners, adverse facts available are appropriate in this situation because Isibars withheld necessary information and its U.S. importer refused to submit its financial statements requested by the Department. Pursuant to section 782(e) of the Act, the Department should assign to Isibars the adverse facts available rate of 21.02 percent in the final results because it has failed to cooperate to the best of its ability in complying with the Department's requests for information. Respondent's Arguments: Isibars maintains its relationship with its U.S. importer fails to meet the criteria for establishing an agency relationship. Unlike the situation in Turbo Compressors from Japan, record evidence does not support the petitioners' assertion that Isibars negotiates, or has control of, the prices charged by its U.S. importer. Rather, record evidence clearly shows that the U.S. importer took title to the subject merchandise and resold these products for its own profit. Accordingly, Isibars maintains that, contrary to the petitioners' claims, it does not engage in a principal-agent relationship business relationship with its U.S. importer. Isibars states that, contrary to the petitioners' unsupported speculation, its involvement in the liquidation of certain inventory was the result of its U.S. importer's inability to compensate Isibars for unpaid sales and in no way indicates that a principal-agent relationship exists between the companies. Isibars contends that actions such as these can be expected even among unaffiliated buyers and sellers in an attempt to reconcile payment problems. Likewise, Isibars maintains that the joint marketing efforts carried out with its U.S. importer does not demonstrate that Isibars had control of the sales process. In addition, Isibars disputes the petitioners' claim that the MOU is evidence of affiliation because this contract was never finalized or acted upon. Despite the intention of the contract, Isibars argues that the decision not to act on the MOU indicates that Isibars never achieved control of its U.S. importer. With respect to Isibars' agreement with its importer for mutual exclusivity in the U.S. market, Isibars contends that this informal agreement does not constitute affiliation. In support of its argument, Isibars refers to Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea: Final Results of Antidumping Duty Administrative Reviews, 62 FR 18404, 18441 (April 15, 1997), in which the Department stated the following: exclusive sales contracts are a common commercial arrangement all over the world. These arrangements are typically made at arm's length and...do not normally indicate control of one party over the other. We have no evidence that the distributors entered into these contracts other than voluntarily and that these contracts cannot be terminated at regular intervals by either party. Moreover, Isibars continues, the petitioners' claim of affiliation through debt financing is completely unsupported because its U.S. importer was required to pay Isibars irrespective of whether or not the importer was able to resell the merchandise. Isibars contends that this is supported by the sample sales documentation submitted on the record of this proceeding. In regard to the petitioners' contention that Isibars' U.S. importer refused to cooperate, Isibars explains that its U.S. importer requested that it not be required to submit its financial statements because this information is highly confidential and does not contain any information with respect to its relationship with Isibars. Isibars notes that in response to this request, the Department has not made any additional requests for this information. Therefore, the petitioners' argument for the application of adverse facts available should be rejected. Assuming the Department deemed its U.S. importer as being uncooperative, Isibars asserts that it would be inappropriate to penalize Isibars for the actions of a third party given that Isibars does not have the authority to compel its importer to provide anything to the Department. See, Koyo Serlo Co. v. U.S., 905 F. Supp. 1112 (CIT 1995). Department's Position: We disagree with the petitioners. In determining whether parties are affiliated, the Department examines a range of criteria. In this case, we found that an agency relationship does not exist between Isibars and its U.S. customer because the relationship between the two does not fall under the definition of "Affiliated Persons" contained in section 771(33) of the Act. Therefore, because Isibars and its U.S. customer are not affiliated persons, we have continued to rely on our EP methodology to establish the U.S. price. An analysis of any potential affiliation in this case would fall under section 771(33)(F) or 771(33)(G) of the Act, both of which deal with the issue of control. Section 351.102(b) of our regulations states that in determining whether control over another person exists, the Department will consider "corporate or family groupings; franchise or joint venture agreements; debt financing; and close supplier relationships" among other factors. Our regulations further state at section 351.102(b) that we "will not find that control exists on the basis of the factors unless the relationship has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product." Regarding the relationship between Isibars and its U.S. customer, we note that the record evidence demonstrates that Isibars had no control over the price, among other terms of sale, with respect to the transactions between its U.S. importer and the importer's customers. Nor do we find evidence of control over production or cost decisions that would warrant our treatment of the two companies as affiliated. The Department disagrees with the petitioners' argument that there is affiliation due to debt financing because Isibars' U.S. customer failed to pay Isibars on time. In past reviews, the Department has ruled that late payment of debts is not uncommon and is not sufficient evidence of affiliation. See, Stainless Steel Bar from India; Final Results of New Shipper Antidumping Duty Administrative Review, 62 FR 4029, 4030 (January 28, 1997). In addition, the U.S. importer took title to and inventoried the merchandise purchased from Isibars. Likewise, with respect to the petitioners' claim that Isibars provided the U.S. importer with debt financing, Isibars has provided documentation indicating that the U.S. importer is contractually bound to pay Isibars for the subject merchandise purchased during the POR. We also disagree with the petitioners' argument that the MOU that was signed in April 1997 is evidence of affiliation. Both parties have certified to the accuracy of the statement that the agreement was never acted on and no shares were sold. The parties cite production delays and changes in the financial situation of both companies as inducing Isibars to terminate the MOU. See, Isibars Response to the Department's Supplemental Questionnaire, April 7, 2000. Further, in regard to the broader corporate relationship between the parties, we agree with the respondent that neither the MOU nor the informal agreement for mutual exclusivity in the U.S. market provided Isibars the ability to exercise control over its U.S. customer. Although certain facts on the record may show that the parties acted cooperatively in the U.S. market, this cooperation does not diminish the fact that Isibars and its U.S. customer are independent companies, each seeking to maximize its own profit. Finally, in light of our discussion above, we find that Isibars provided all necessary information for a determination on this issue. Thus, the use of facts available, as suggested by the petitioners, would be inappropriate. 5. Normal Value Comment 1: Circumstance-of-Sale Adjustments -- Panchmahal Petitioners' Arguments: The petitioners argue that Panchmahal's use of a theoretical pay period in its calculation of home market credit cost results in an inaccurate circumstance-of-sale adjustment and, therefore, distorts normal value. The petitioners assert that the theoretical pay period should not replace the actual payment history of Panchmahal's customers during the POR. Department's Position: This issue is moot because we resorted to CV as a basis for Panchmahal's NV and, thus, a circumstance-of-sale adjustment is not appropriate. See Facts Available, Comment 1 above. Comment 2: Level of Trade -- Panchmahal Petitioners' Arguments: The petitioners contend that Panchmahal failed to provide the necessary information to support its request for a level-of- trade adjustment despite numerous opportunities to comply with the Department's information requests. Department's Position: This issue is moot because we resorted to CV as a basis for Panchmahal's NV and, thus, a level-of-trade adjustment is not appropriate. See Facts Available, Comment 1 above. Comment 3: Difference-in-Merchandise Adjustments -- Facor Petitioners' Arguments: The petitioners argue that the Department should make corresponding changes to variable cost of manufacture and total cost of manufacture based upon the Department's decision on how to treat benefits received under the DEPB program and the so-called major inputs. Department's Position: As noted in Comments 1 and 3 of the Cost of Production/Constructed Value section above, we have adjusted Facor's cost information to properly account for benefits received under the DEPB Export Incentive Program. We have also adjusted variable cost of manufacture and total cost of manufacture as appropriate. Comment 4: Difference-in-Merchandise Adjustments -- Sindia Petitioners' Arguments: Referring to Sindia's statement in its questionnaire response that annealing expenses relate to job work charges, the petitioners argue that the annealing charges included in Sindia's calculation of variable overhead are substantially lower than the amount of job work charges reported in its 1998-99 Annual Report. Thus, the Department should revise Sindia's variable overhead calculation using the actual job work charges reported in Sindia's Annual Report. Sindia's Arguments: Sindia explains that annealing expenses are only a component of the job work charges reported in its 1998-99 Annual Report. Because the other expenses included in job work charges do not relate to the production of the merchandise under review, Sindia applied only annealing charges from this category to its calculation of variable overhead. Department's Position: We agree with Sindia. The petitioners incorrectly assume from Sindia's statement in its questionnaire response that annealing expenses are equivalent to job work charges reported in Sindia's 1998-99 Annual Report. Thus, we have not adjusted the annealing charges included in Sindia's calculation of variable overhead. 6. Verification Comment 1: Changes Based Upon Findings at Verification -- Facor Petitioners' Arguments: The petitioners argue that the Department must ensure that all corrections presented by Facor at the beginning of verification are actually incorporated in the databases used by the Department in its margin calculation. The petitioners also note that the calculation of Facor's credit expense should be based on the actual interest rate incurred by Facor when financing its accounts receivable. Respondent's Arguments: Facor states that the corrections it identified at verification were incorporated in the data it submitted after verification. With respect to the calculation of Facor's credit expense, Facor agrees that this one change was not incorporated in the revised data submission and concurs that the Department should make the necessary adjustment. Department's Position: We have reviewed the data used in the calculation of Facor's margin and have confirmed that the changes presented by Facor at the beginning of verification have been incorporated. Furthermore, we have made the change noted above to Facor's credit expense. 7. Ministerial Errors Comment 1: Clerical Errors -- Facor Respondent's Arguments: Facor alleged two errors in the Department's margin calculation -- (1) incorrect identification of similar products and (2) an error in the treatment of credit in the calculation of constructed value. Department's Position: We agree with Facor that these are errors in the margin calculation. We have made changes to the margin program for both errors for these final results. 8. Other Issues Comment 1: Request for Published Margin - Bhansali Respondent's Arguments: Bhansali Bright Bars Pvt. Ltd (Bhansali) requests that the Department list its zero margin in the final results. Petitioners' Argument: The petitioners argue that Bhansali is not entitled to receive a zero rate because the review is rescinded for the company. Department's Position: We agree with the petitioners. Bhansali reported that it had no shipments during this POR; we confirmed this with the Customs Service. Therefore, in accordance with section 351.213(d)(3) of our regulations, we rescinded the review for Bhansali. Recommendation Based on our analysis of the comments received, we recommend adopting all of the above positions and adjusting all related margin calculations accordingly. If these recommendations are accepted, we will publish the final results of review and the final weighted-average dumping margins for all reviewed firms in the Federal Register. Agree________ Disagree________ _____________________ Richard W. Moreland Acting Assistant Secretary for Import Administration _____________________ Date _________________________________________________________________________ footnote: 1. F.LII De CECCO Di Filippo Fara S. Martino S.p.A. vs. United States, No. 99-1318 (Fed. Circ. June 16, 2000) ("De Cecco").